Gain Capital Holdings Inc
Annual Report 2018

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2018OR¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the Transition Period from to .Commission File Number 001-35008 GAIN CAPITAL HOLDINGS, INC.(Exact name of registrant as specified in its charter) Delaware 20-4568600(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) Bedminster One135 Route 202/206Bedminster, New Jersey 07921(Address of principal executive offices) (Zip Code)Registrant’s telephone number, including area code: (908) 731-0700Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of exchange on which registeredCommon stock, $0.00001 New York Stock Exchange Indicate by a check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x NoIndicate by a check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x NoIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. ý Yes ¨ NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submittedpursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter periodthat the registrant was required to submit such files). ý Yes ¨ NoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the bestof the registrant’s knowledge, in definitive proxy or information statements incorporated by reference into Part III of this Form 10-K or any amendment to thisForm 10-K. ýIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or anemerging grown company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”in Rule 12b-2 of the Exchange Act.Table of ContentsLarge accelerated filer ¨Accelerated filerýNon-accelerated filer ¨ Smaller reporting company¨If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition periodfor complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes ý NoThe aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2018 was approximately $207 million.As of March 4, 2019, the registrant had 37,385,602 shares of common stock, $0.00001 par value per share, outstanding.DOCUMENTS INCORPORATED BY REFERENCECertain information contained in the registrant’s Definitive Proxy Statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscalyear is incorporated by reference into Part III of this Form 10-K.Table of ContentsGAIN Capital Holdings, Inc.FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 PART I Item 1.Business4Item 1A.Risk Factors16Item 1B.Unresolved Staff Comments30Item 2.Properties31Item 3.Legal Proceedings31Item 4.Mine Safety Disclosures31 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities32Item 6.Selected Financial Data35Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations37Item 7A.Quantitative and Qualitative Disclosures about Market Risk61Item 8.Financial Statements and Supplementary Data63Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure64Item 9A.Controls and Procedures64Item 9B.Other Information66 PART III Item 10.Directors, Executive Officers and Corporate Governance67Item 11.Executive Compensation67Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters67Item 13.Certain Relationships and Related Transactions, and Director Independence67Item 14.Principal Accountant Fees and Services67 PART IV Item 15.Exhibits and Financial Statement Schedules68 EXHIBIT INDEXF-42 SIGNATURESF-493Table of ContentsPART IFORWARD-LOOKING INFORMATIONIn this Annual Report on Form 10-K, the words “GAIN,” the “Company,” “our,” “we” and “us” refer to GAIN Capital Holdings, Inc. and, except asotherwise specified herein, to GAIN’s subsidiaries. GAIN’s fiscal year ended on December 31, 2018.This Annual Report on Form 10-K contains a number of forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of1934 as amended (the “Exchange Act”). These forward-looking statements are based on current expectations, estimates, forecasts and projections about theindustry and markets in which GAIN operates and management’s current beliefs and assumptions. Any statements contained herein (including, withoutlimitation, statements to the effect that management or GAIN “believes,” “expects,” “anticipates,” “plans” and similar expressions) that are not statements ofhistorical fact should be considered forward-looking statements and should be read in conjunction with the consolidated financial statements and notes toconsolidated financial statements included in this report and the section entitled “Management’s Discussion and Analysis of Financial Condition andResults of Operations.” These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult topredict. There are a number of important factors that could cause actual results to differ materially from those indicated by such forward-looking statements.These factors include, without limitation, those set forth in the section entitled “Item 1A. Risk Factors” below and discussed elsewhere herein. The risks anduncertainties described below are not the only ones we face. We expressly disclaim any obligation to update any forward-looking statements, except as maybe required by law.ITEM 1.BUSINESSOVERVIEWWe are a global provider of trading services and solutions, specializing in over-the-counter, or OTC, and exchange-traded markets. Our retail and futuressegments service customers in more than 180 countries worldwide, and we conduct business from our offices in Bedminster, New Jersey; New York, NewYork; Chicago, Illinois; Powell, Ohio; London, England; Tokyo, Japan; Sydney, Australia; Shanghai, China; Hong Kong; Dubai, U.A.E.; Krakow, Polandand Singapore.We have invested considerable resources since our inception to develop our proprietary trading platforms to provide our customers with advanced pricediscovery, trade execution and order management functions, while improving our ability to acquire and service our customers efficiently, as well as managemarket and credit risk associated with our customer’s trading activity. Today our customers can trade through web-based, downloadable and mobile tradingplatforms and have access to innovative trading tools to assist them with research and analysis, trade execution and account management.We operate our business in two segments. Through our retail segment, we provide customers around the world access to a diverse range of global financialmarkets. We offer our customers access to over 15,000 global financial markets, including spot foreign exchange (forex), precious metals trading, as well ascontracts for difference (CFDs), which are investment products with returns linked to the performance of underlying assets. We offer CFDs on currencies,commodities, indices, individual equities, cryptocurrencies, bonds, options and interest rate products. In the United Kingdom, we offer spread bets, which areinvestment products similar to CFDs, but that offer more favorable tax treatment for residents of that country. In addition to these OTC products, our futuressegment offers exchange-traded futures and options on futures on more than 30 global exchanges. Each of our operating segments is discussed in more detailbelow. For financial information regarding our segments, please refer to Note 23 to our audited consolidated financial statements included in this AnnualReport.As a global provider of online trading services, our results of operations are impacted by a number of external factors, including market volatility,competition, the regulatory environment in the various jurisdictions and markets in which we operate and the financial condition of the retail customers towhom we provide our services. These are not the only factors impacting our results of operations for the most recent fiscal period, and additional factors mayimpact our results of operations in future periods. In addition, please refer to “Item 1A. Risk Factors” for a discussion of other factors that may impact ourbusiness.The following table sets forth the key financial data and operating metrics for our business: Key Financial Data4Table of Contents (in millions) Year Ended December 31, 2018 2017 2016 2015 2014Net Revenue$358.0 $278.2 $382.8 $401.6 $334.7Net income/(loss) applicable to GAIN Capital Holdings, Inc.$92.9 $(11.2) $35.3 $10.3 $24.9Adjusted net income/(loss)(1)$29.1 $(11.3) $39.7 $25.4 $31.9 Key Operating Metrics (Unaudited) Year Ended December 31, 2018 2017 2016 2015 2014Retail OTC Trading Volume (billions)$2,612.4 $2,473.6 $2,822.0 $3,985.8 $2,430.5OTC Average Daily Volume (billions)$10.1 $9.6 $10.9 $15.4 $9.4Active OTC Accounts (2)123,171 132,262 126,528 142,836 91,328Client Assets (millions)$626.7 $749.6 $599.5 $675.6 $563.2 Futures Number of Futures Contracts (3)7,965,545 6,857,870 8,304,376 8,623,392 7,027,008Futures Average Daily Contracts31,609 27,322 32,954 34,356 28,108Active Futures Accounts (2)7,717 7,838 8,368 8,668 8,184Client Assets (millions)$215.8 $229.2 $346.0 $245.0 $196.4(1)Adjusted net income is a non-GAAP financial measure and represents our net income excluding certain one-time costs and benefits. Please refer to“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” under heading “Key Income Statement LineItems and Key Operating Metrics” and under heading “Reconciliation of Non-GAAP Financial Measures” for discussion and reconciliation of non-GAAP financial measures.(2)Represents accounts which executed a transaction over the last 12 months.(3)Futures contracts represent the total number of contracts transacted by customers of our futures business.For financial information by geographic area, please refer to Note 23 to our audited consolidated financial statements included in this Annual Report.Growth StrategiesWe intend to grow our business and increase our profitability principally by employing the following strategies: •Pursuing organic growth by:•Leveraging our global footprint and powerful brand assets to increase our overall share in the markets we operate;•Introducing new, innovative products and services; including upgraded and enhanced trading platforms and decision support tools thatenhance the customer experience and improve competitive position;•Increasing our marketing investment to drive new account growth and asset gathering; and•Optimizing client onboarding to improve acquisition results and return on our marketing investment.•Increasing operational excellence by:•Increasing automation, thereby reducing service costs;5Table of Contents•Simplifying our technology “stack”;•Seeking to achieve an optimal balance between insourcing versus outsourcing; and•Developing regional centers to provide administrative and support functions more efficiently.•Reducing revenue volatility through:•Reducing the variability between customer transaction revenue (CTR) and reported results;•Implementing artificial intelligence driven hedging programs;•Decreasing the cost of hedging; and•Further optimizing trade flow.•We will also continue to selectively review mergers and acquisitions and other inorganic opportunities which complement our organic growthstrategy.Tender OfferOn October 9th, the Company announced that it had commenced a "modified Dutch auction" tender offer to purchase up to $50 million of shares of itscommon stock, or such lesser number of shares of its common stock as are properly tendered and not properly withdrawn, at a price not less than $7.24 norgreater than $7.94 per share of common stock. On November 9th, the Company accepted for purchase 6,377,551 shares of its common stock at a price of$7.84 per share (reflecting a proration factor of approximately 0.95664), for an aggregate cost of approximately $50 million, excluding fees and expensesrelating to the tender offer. At the time these shares represented approximately 14 percent of the shares outstanding.Sale of GTX ECN BusinessOn June 29, 2018, we completed the sale of the assets of our GTX ECN business, an institutional platform for trading foreignexchange, to 360T, a subsidiary of Deutsche Börse AG, pursuant to an Asset Purchase Agreement dated as of May 29, 2018 (the “Purchase Agreement”). ThePurchase Agreement provides for a cash purchase price for the GTX business of $100 million, less a working capital adjustment, which amounted to a $0.2million reduction in the purchase price. The Purchase Agreement contains customary representations and warranties that generally survive until the firstanniversary of the closing date. We have also agreed to certain non-competition and non-solicitation obligations relating to the GTX business and itsemployees that expire on the third anniversary of the closing date. We have continued to provide certain transition services to the buyer following theclosing date. The parties have entered into commercial agreements relating to a continued business relationship between GAIN and 360T.Prior to its sale, we reported the results of our GTX ECN business as part of our institutional segment. We have determinedthat the institutional reportable segment met the discontinued operations criteria set forth in ASC Subtopic 205-20-45,Presentation of Financial Statements, in the quarter ended June 30, 2018. As such, the institutional segment results have beenclassified as discontinued operations in the accompanying Consolidated Statements of Operations andComprehensive Income. For more information relating to the discontinued operations of our GTX ECN business, please seeNote 3 to our Consolidated Financial Statements elsewhere in this report.Our Retail SegmentOur retail segment represented 83.9% of our net revenue for the year ended December 31, 2018. We conduct our retail business primarily through ourFOREX.com and City Index brands. As of December 31, 2018, we had 155,293 funded retail accounts.Through our retail segment, we provide customers around the world access to a diverse range of global financial markets. We offer our customers access toover 15,000 global financial markets, including spot foreign exchange (forex), precious metals trading, as well as CFDs, which are investment products withreturns linked to the performance of underlying assets. We offer CFDs on currencies, commodities, indices, individual equities, cryptocurrencies, bonds,options and interest rate products. In the United Kingdom, we offer spread bets, which are investment products similar to CFDs, but that offer more favorabletax treatment for residents of that country. We offer these products under the diverse regulatory environments in which we operate. Because ofU.S. regulations, neither we, nor our subsidiaries, offer CFDs or spread bets in the United States or to U.S. residents.We seek to attract and support our customers through direct and indirect channels. Our primary direct channels for our retail segment are our Internetwebsites, FOREX.com and Cityindex.com, which are available in multiple languages, including6Table of ContentsEnglish, Chinese, Japanese and Arabic. Our indirect channel includes our relationships with introducing brokers, who solicit customers on our behalf, andwhite label partners, who offer our trading services to their customers under their own brand. Total retail trading volume sourced through direct and indirectchannels was 76% and 24%, respectively, for the year ended December 31, 2018.We generate revenue in our retail segment in two ways: (1) trading revenue from our market making activities for OTC products, earned principally from thebid/offer spread we offer our customers and fees, including financing charges for positions held overnight, commissions on equity CFD trades, and otheraccount related fees and (2) any net gains and losses generated through changes in the market value of the currencies and other products held in our netexposure.In 2018, we generated approximately 69.2% of our retail segment trading volume from customers outside the United States. For a discussion of the risksassociated with our retail segment operations outside the United States, please refer to “Item 1A. Risk Factors.”The following sections provide additional information regarding our retail business:Innovative trading toolsWe have made significant investment in the development and support of our award-winning proprietary trading technology in order to provide our customerswith an enhanced customer experience and multiple ways to trade and manage their accounts, tailored to their level of experience and preferred mode ofaccess. In addition, we selectively offer third party trading tools that we believe complement our proprietary offerings. We believe that our proprietary tradingtechnology has and will continue to provide us with a significant competitive advantage because we have the ability to adapt quickly to our customers’changing needs, rapidly incorporate new products and features and offer our customers multiple ways to engage with us.Competitive pricing and fast, accurate trade executionWe have longstanding relationships with a large number of institutional liquidity providers, as well as access to multiple liquidity venues. This allows us tooffer our customers superior liquidity and more competitive pricing with tighter bid/offer spreads than many of our competitors. In addition, we havedeveloped a proprietary pricing engine that electronically aggregates quotes from our liquidity sources. This ensures that our prices accurately reflect currentmarket price levels and allows us to provide our customers with fast, accurate trade execution.Efficient customer onboarding and account managementWe have developed proprietary technology to handle numerous aspects of account onboarding and customer service including account opening andcustomer verification process, fast online account funding and withdrawals with a wide variety of automated payment methods, and on-demand delivery ofcustomer information, such as account statements and other account-related reporting. We also offer account opening and funding functions on our mobiletrading applications in order to provide a superior experience to the large number of customers who trade primarily through their mobile devices. Given thehighly regulated and global nature of our business, these processes are customized to each regulatory jurisdiction in which we operate, and are furthertailored to customer needs and preferences in specific countries in order to make it easier for clients in these countries to open accounts with us and then tofund and trade in those accounts.Sophisticated risk managementBecause we are exposed to market, credit and other risks in connection with our retail business, developing and maintaining robust risk managementcapabilities is a high priority.We allow our customers to trade notional amounts greater than the funds they have on deposit with us through the use of leverage, making management ofcredit risk a key focus for us. We manage customer credit risk through a combination of providing trading tools that allow our customers to monitor their riskexposure and avoid taking on excessive risk, as well as automated processes that close customer positions in accordance with our policies, in the event thefunds in customers' accounts are not sufficient to hold their positions. One such tool available on our trading platforms is a real-time margin monitoring toolthat enables customers to know when they are approaching their margin limits. If a customer's equity falls below the amount required to support one or morepositions, automated alerts are sent to make them aware, so they can manage their position. If the customer's equity falls further beyond their liquidationlevel, we automatically liquidate positions to bring the customer's account into margin compliance. If this is necessary, a further automated confirmation issent to the client to confirm the action taken.7Table of ContentsIn addition, we actively monitor and assess various market factors, including volatility and liquidity, and take steps to address identified risks, such asproactively adjusting required customer margin (both initial and maintenance).With respect to market risk, when a retail customer executes a trade with us, the trade may be naturally hedged against an offsetting trade from anothercustomer, hedged through an offsetting trade with one of our liquidity providers or may become part of our net exposure portfolio. For naturally hedgedtrades, we receive the entire bid/offer spread we offer our customers on the two offsetting transactions. For trades hedged with our liquidity providers, we earnthe difference between the retail bid/offer spread we offer our customers and the wholesale bid/offer spread we receive from our liquidity providers. Customertrades in our net exposure portfolio are managed pursuant to our risk-management policies and procedures, including risk limits established by the RiskCommittee of our Board of Directors, and we receive the net gains or losses generated through the management of our net exposure.Our risk management policies and procedures have been developed to enable us to effectively manage our exposure to market risk, particularly in connectionwith the management of our net exposure. Our net exposure is evaluated continuously and is continuously rebalanced in real-time throughout the tradingday, thereby minimizing the risk we will be adversely affected by changes in the market prices of the products we hold. This real-time rebalancing of ourportfolio enables us to curtail risk in both up and down market scenarios.Our risk management policies and procedures are established and reviewed regularly by the Risk Committee of our Board of Directors. Our risk-managementteam monitors risk exposure continuously and updates senior management both informally over the course of the trading day and formally through real-time,intraday and end-of-day reporting. We do not actively initiate proprietary market positions in anticipation of future movements in the relative prices of theproducts we offer.CustomersOur retail customers consist primarily of self-directed traders, who execute trades on their own behalf. A small number of our customers have engaged anintermediary to make trading decisions on their behalf.Our typical self-directed customer is generally comfortable making trading decisions and is specifically interested in trading leveraged products, whichgenerally have a higher risk/reward profile. For the year ended December 31, 2018, self-directed customers represented approximately 99.7% of our retailtrading volume.The intermediaries engaged by our managed account customers, which we refer to as authorized traders, include professional money managers, which tradeaggregated customer funds, and individuals that trade for a small number of customer accounts. For the year ended December 31, 2018, managed accountcustomers collectively represented approximately 0.3% of our retail trading volume.Sales and MarketingIn connection with our retail business, we look to acquire new customers as cost-efficiently as possible, primarily through online marketing efforts such asadvertising on third-party websites, search engine marketing and affiliate marketing. Our experienced in-house marketing team creates highly targeted onlinecampaigns tailored to experienced traders, as well as marketing programs and materials designed to support and educate newer traders. We use sophisticatedtracking and measurement techniques to monitor the results of individual campaigns and continually work to optimize our overall marketing results.One of our principal lead-generation tools is to offer prospective customers access to free registered practice trading accounts for a 30-day trial period. From aprospective customer’s point of view, we believe the registered practice trading account serves two important functions. First, it allows the prospectivecustomer to evaluate our trading platform, tools and services. Second, for less experienced traders, it serves as an educational tool, providing the prospectivecustomers with the opportunity to try trading in a risk-free environment, without committing any capital. During this trial period, our customer service team isavailable to assist and educate the prospective customers. We also work with introducing brokers in order to expand our customer base. We work with a variety of different types of introducing brokers, ranging fromsmall, specialized firms that specifically identify and solicit customers interested in forex and CFD trading, to larger, more established financial servicesfirms. Introducing brokers direct customers to us in return for either a commission on each referred customer’s trading volume or a share of net revenuegenerated by each referred customer’s trading activity. We also offer a global affiliate program to which third parties refer customers to us in exchange for aone-time payment.8Table of ContentsCompetitionThe market for our retail services is rapidly evolving and highly competitive. Our competitors vary by region in terms of regulatory status, breadth of productoffering, size and geographic scope of operations. Our main competitors during 2018 can be categorized as follows:•Regulated Forex Firms such as OANDA Corporation. For more information, please refer to Note 9 to our audited consolidated financial statementsincluded in this Annual Report. •Global Multi-Asset Trading Firms, including firms such as IG Group Holdings plc, CMC Group and Plus500 Ltd. These firms generally offer a broadset of asset classes and earn a significant percentage of their revenue from CFDs, forex and exchange-traded products.Our Futures SegmentOur futures segment offers execution and related services for exchange-traded futures and futures options on major U.S. and European exchanges. We clearour customers’ trades through our regulated FCM, GAIN Capital Group, LLC (“GCGL”). In 2014, we expanded our futures business by acquiring a majorityinterest in Global Asset Advisors, LLC (“GAA”), a Chicago-based futures brokerage firm which principally markets to and services clients under the DanielsTrading (“DTR”) brand. GAA is an introducing broker targeting retail and professional traders, primarily in equities and agricultural products. At the sametime, we also acquired a majority interest in Top Third Ag Marketing, LLC (“TT”), an introducing broker, which uses options-based hedging strategies tohelp clients manage the risks of agricultural production. Pursuant to the exercise of put options set out in the governing documents of GAA and TT, weacquired the remaining minority interest in GAA in September 2018 and the remaining interest in TT as of February 1, 2019. As such, as of the date of thisreport, both companies are now wholly-owned subsidiaries.Revenue in our futures segment is primarily generated through commissions earned on futures and futures options trades. Our futures segment represented11.1% of our net revenue for the year ended December 31, 2018.Advanced Trading PlatformOur futures segment provides customers an enhanced experience through our GAIN Trader proprietary trading platform. We have invested in high-speedconnectivity to provide access to over 30 global electronic exchanges, which allows us to deliver streaming quotes and high-speed executions. The GAINTrader platform has a robust suite of trading tools, including charting tools, custom alerts and indicators, as well as automated trading and risk managementtools. Our futures segment also provides Trade Desk Manager, a version of our GAIN Trader platform offered to other introducing brokers, which allows themto manage their customers’ accounts. In addition, we facilitate connection to our trading services through Application Programming Interface (APIs) fromother front-end applications, and we license a white label version of our GAIN Trader platform to select third parties.Risk ManagementIn our futures segment, we are exposed to credit risk as it relates to customer positions. If an adverse market move occurs and triggers an additional marginrequirement, we may be unable to collect the additional margin in a timely manner, or at all. In such a case, we would incur bad debt expense, which couldhave a material adverse effect on our results of operations. To mitigate this risk, we monitor all client accounts in near real time using multiple tool andprocesses designed to ensure that our client accounts are trading within their means.Sales and MarketingAs with our retail segment, we seek to acquire futures customers as cost-efficiently as possible. Our principal source of new customers comes from a largenetwork of introducing brokers. Furthermore, sales leads are generated through seminars, online advertising and other media. In addition to our marketingefforts, we attract our futures segment customers through dedicated sales staff at GCGL, GAA and TT. These sales teams focus on a variety of sectors andprovide differentiated services to our customers.CompetitionOur futures segment is comprised of both introducing-broker (IB) business as well as direct client offerings that span service level (self-directed to fullservice). For our IB business our largest competitors are RJO'Brien and ADM Investor Services and to a lesser extent Rosenthal Collins Group (RCG) andINTL FC Stone. 9Table of ContentsOur direct full-service business is concentrated in the agricultural hedge sector where we compete with Allendale, Advance Trading and Roach Ag Market aswell as a number of boutique smaller rural IBs. For our self-directed, direct business, we compete with Interactive Brokers, TD Ameritrade, E*Trade FinancialCorporation and TradeStation. All these firms own and operate their own proprietary trading platforms as GAIN does and they offer futures trading as acomplement to their core equity trading clientele.Intellectual PropertyWe rely on a combination of trademark, copyright, trade secret and unfair competition laws in the United States and other jurisdictions to protect ourproprietary technology, intellectual property rights and our brands (e.g., FOREX.com, GAIN Capital, and City Index). We also enter into confidentiality andinvention assignment agreements with our employees and consultants, and confidentiality agreements with other third parties. We rigorously control accessto our proprietary technology. Currently, we do not have any pending or issued patents.We use a variety of service marks that have been registered with the U.S. Patent and Trademark Office, including: GAIN Capital (registered service mark),FOREX.com GAIN Capital Group (registered service mark), Forex Insider (registered service mark), ForexTrader (registered service mark), FOREX.com(registered service mark), It’s Your World. Trade It. (registered service mark), GAIN Capital Futures (registered service mark), and GAIN Futures. We also haveregistered trademarks covering our City Index brand name and logo in a variety of jurisdictions, including Australia, the United Kingdom, European Union,Singapore and China.RegulationOverviewOur business and industry are highly regulated. Our operating subsidiaries are regulated in a number of jurisdictions, including the United States, the UnitedKingdom (through which we have historically accessed regulatory passport rights to operate in a number of European Economic Area jurisdictions), Japan,Australia, Hong Kong, Canada, Singapore and the Cayman Islands. Government regulators and self-regulatory organizations oversee the conduct of ourbusiness in many ways, and several perform regular examinations to monitor our compliance with applicable statutes, regulations and rules. These statutes,regulations and rules cover all aspects of our business, including:•sales and marketing activities, including our interaction with, and solicitation of, customers;•trading practices, including the types of products and services we may offer;•the methods by which customers can fund accounts with us;•treatment of customer assets, including custody, control, safekeeping and, in certain countries, segregation of our customer funds and securities;•offer fair and transparent markets including offering symmetrical pricing;•maintaining specified minimum amounts of capital and limiting withdrawals of funds from our regulated operating subsidiaries;•continuing education requirements for our employees;•anti-money laundering practices;•recordkeeping and reporting; and•supervision regarding the conduct of directors, officers and employees.In some jurisdictions in which we offer our products and services, we are not subject to regulation as a result of the nature of the market or the manner inwhich we conduct our business. We consult with legal counsel in jurisdictions in which we operate on a regular basis as to whether we have the requiredauthorizations, licenses or approvals or whether we may conduct our business cross-border with residents in that jurisdiction without obtaining localregulatory authorization, approval or consent. To the extent that we wish to serve customers in a jurisdiction in which we determine licensing or registrationis required, we may also elect to direct such customers to a licensed white label or other partner, rather than pursuing licensing or registration ourselves.Though we conduct our business in a manner which we believe complies with applicable local law, regulators may assert authority over activities that theydeem to take place within the jurisdiction they regulate, and new laws, rules or regulations may be enacted that change the regulatory landscape and result innew, or clarify preexisting, registration or licensing requirements.10Table of ContentsThe primary responsibility for ensuring that we maintain compliance with all applicable regulatory requirements is vested in our legal and compliancedepartments. In addition, our legal and compliance departments are responsible for our ongoing training and education programs, supervision of ourpersonnel required to be licensed by one or more of our regulators, review of sales, marketing and other communications and other related functions. Inaddition, our sales employees are licensed pursuant to applicable regulation.U.S. RegulationIn the United States, the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) regulate our forex and futures tradingactivities. Historically, the principal legislation covering our U.S. forex business was the Commodity Exchange Act, which provides for federal regulation ofall commodities and futures trading activities and requires all futures and commodity options to be traded on organized exchanges. In recent years, as in thecase of other companies in the financial services industry, our forex business has been subject to increasing regulatory oversight. The CFTC ReauthorizationAct, which grants the CFTC express authority to regulate the retail forex industry includes a series of rules which regulate various aspects of our business,including:•creating “retail foreign exchange dealers,” or RFEDs, a regulated category of forex brokers focused on retail investors that are permitted to act ascounterparty to retail forex transactions;•imposing an initial minimum security deposit amount between 2.0% and 5.0%, depending on the pair, of the notional value for retail forextransactions in “major currency” pairs and between 5.0% and 20.0%, depending on the pair, of the notional value for retail forex transactions in“non-major currency” pairs;•providing that introducing brokers, money managers and fund managers must either (i) register with the CFTC and become members of the NFA orapply for an exemption from registration and (ii) meet the minimum net capital requirements applicable to futures and commodity optionsintroducing brokers or enter into a guarantee agreement with a CFTC-regulated forex dealer member and permitting only one such guaranteeagreement per introducing broker;•requiring that a risk disclosure statement be provided to every retail forex customer, including disclosure of the number of profitable andunprofitable non-discretionary accounts maintained by the forex broker during the four most recent calendar quarters; and•prohibiting RFEDs, FCMs and introducing brokers from including statements in sales and marketing materials that would appear to convey topotential retail forex customers that there is a guaranty against loss, and requiring that FCMs, RFEDs and introducing brokers provide retail forexcustomers with enhanced written disclosure statements that, among other things, inform customers of the risk of loss and in 2018 the NFA imposedadditional rule measures including but not limited to:◦requiring swap dealers to file information related swap valuation disputes; and◦additional disclosures and transparency regarding costs per trade; and◦enhancements to the AML program requiring inclusion of FINCEN due diligence requirements; and◦increased margin requirements for Turkish Lira (12%) and South African Rand (7%); and◦requiring additional disclosures to clients for firms offering virtual currenciesIn July 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act. A number of significant provisionscontained in the law affected our business. Specifically, the Dodd-Frank Act included:•rules that, beginning in October 2010, required us to ensure that our customers residing in the United States have accounts open only with our NFA-member operating entity, GCGL; and•amendments to the Commodity Exchange Act that, beginning on July 15, 2011, required essentially all retail transactions in any commodity otherthan foreign currency to be executed on an exchange, rather than OTC.The Dodd-Frank Act also provides for additional regulation of swaps and security-based swaps, including some types of foreign exchange and metalsderivatives in which we engage. The Dodd-Frank Act requires the registration of swap dealers with the CFTC and imposes significant regulatory requirementson swap dealers and swap execution facilities. Effective February 27, 2013, GAIN GTX, LLC became provisionally registered as a swap dealer. During 2016,GTX SEF, LLC became permanently registered as a swap execution facility, although it withdrew its registration with the CFTC as a swap execution facilityon December 30, 2018. The CFTC and NFA have adopted, and may adopt, new rules including those more recently adopted requiring RFEDs to providegreater transparency about the cost associated with their forex transactions; required notification to NFA for FCMs that decide to offer customers the abilityto trade any virtual currency futures product and11Table of Contentsmonthly risk data reporting requirements for Swap Dealers. Our operations in the U.S. are also subject to regulatory capital requirements that require variousof our subsidiaries to maintain a minimum level of net capital relative to customer obligations. For more information, please see “Item 7. Management’sDiscussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Regulatory Capital Requirements.”U.S. Patriot Act and Anti-Money LaunderingLike other companies in the financial services industry, we are subject to a variety of statutory and regulatory requirements concerning our relationships withcustomers and the review and monitoring of their transactions. Specifically, we are subject to the Uniting and Strengthening America by ProvidingAppropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, which requires that we maintain a comprehensiveanti-money laundering, or AML, program, a customer identification program, or CIP, designate an AML compliance officer, provide specified employeetraining and conduct an annual independent audit of our AML program. Consistent with the USA PATRIOT Act, our CIP includes both documentary andnon-documentary review and analysis of potential customers. Under our CIP, we review each prospective customer’s identity internally and also contract withthird-party firms to aid in identity verification and to perform background checks. As part of the background check, all prospective customers are screenedagainst the U.S. Treasury Department’s Office of Foreign Assets and Control, Specially Designated Nationals and Blocked Persons lists. Our AML Programalso includes procedures for verifying beneficial owners and control persons of legal entity customers in accordance with the Financial Crimes EnforcementNetwork’s Customer Due Diligence Rule, or FinCEN CDD Rule. These procedures and tools, coupled with our periodic training, assist us in complying withthe USA PATRIOT Act, as well as the CFTC, NFA, FinCEN, and OFAC applicable AML, CDD and CIP requirements.United Kingdom RegulationGAIN Capital U.K., Ltd. (“GCUK”) and Trade Facts, Ltd. (“Trade Facts”) collectively, the (“U.K. Entities”) are registered in the U.K. and are regulated by theFinancial Conduct Authority in respect of their trading activity. These U.K. Entities are required to comply with relevant U.K. and E.U. legislation andregulation. Please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources -Regulatory Capital Requirements” for a discussion of minimum regulatory capital requirements applicable to our U.K. businesses.ESMA Intervention MeasuresIn March 2018, ESMA announced product intervention measures to further regulate the marketing, distribution or sale of CFDs to retail investors in theEuropean Union. These measures require firms to:•implement leverage limits ranging between 30:1 and 2:1 by imposing minimum margin as a percentage of the overall exposure that the CFDprovides;•close out a customer’s position when their funds fall to 50% of the margin needed to maintain their open positions on their CFD account;•provide a negative balance protection that guarantees that a client cannot lose more than the total funds in their CFD account;•stop offering monetary and non-monetary inducements to encourage trading;•provide a standardised risk warning, which requires firms to tell potential customers the percentage of their retail client accounts that make losses.While the restrictions on leverage did affect our clients' trading patterns, the Company has taken actions that mitigated the impact of ESMA’s regulations andcurrently does not expect that the regulations will have a material adverse impact on the Company’s results of operations or financial condition.These measures became effective on August 1, 2018 and have since been extended twice. The expectation is that in time the various EU regulators willintroduce similar, permanent measures in their own jurisdictions. Specifically, in December 2018 the FCA released a consultation paper in which it proposedto permanently restrict the sale, marketing and distribution of CFDs to retail customers in the UK. The proposed measures are similar to ESMA’s existingtemporary restrictions, but extend the restrictiopns to closely substitutable products, including knock- out products and turbo certificates.Furthermore, the FCA has announced that it will release a consultation paper in early 2019 on a potential ban on the sale of CFDs referencingcryptocurrencies to retail consumers. This follows the commitment made in the UK Crypto-asset Taskforce Final Report published in October 2018.12Table of ContentsClient Money RulesGCUK is subject to the FCA’s Client Money rules. Under these rules, we are required to:•maintain adequate segregation of client funds;•maintain adequate records in order to identify appropriate client details;•have adequate organizational arrangements in place to minimize the risk that client money may be paid for by the account of a client whose moneyhas not yet been received by us;•undertake daily internal and external client money reconciliations within an appropriate risk and control framework; and•appoint an individual who is responsible for Client Asset Sourcebook, or CASS, oversight.Anti-Money Laundering and SanctionsAs in the U.S., we are subject to statutory and regulatory requirements concerning our relationships with customers and the review and monitoring of theirtransactions. Specifically, GCUK is subject to ongoing customer due diligence, or CDD, obligations under the Money Laundering Regulations 2017 (MLR),and the FCA Handbook.The prescribed CDD measures require the U.K. Entities to (i) verify customer identity and understand the nature and purpose of the proposed relationship onthe basis of documents, data or information obtained from a reliable and independent source and (ii) review and monitor their customer’s transactions andactivities. The U.K. Entities are required to determine the extent of CDD measures required for each customer on a risk sensitive basis depending on the typeof customer, business relationship, product or transaction and we must be able to demonstrate that such measures are appropriate in view of the risks of moneylaundering and terrorist financing. Our procedures are based on the Joint Money Laundering Steering Group’s Guidance for the U.K. Financial Sector, whichprovides guidance to firms for the determination of appropriate CDD measures.The FCA requires the U.K. Entities to have systems and controls in place to enable them to identify, assess, monitor and manage money laundering risk.Accordingly, we have the requisite systems and controls in place which are comprehensive and proportionate to the nature, scale and complexity of ouractivities. We provide appropriate training to our employees in relation to money laundering and retain documentation of our risk management policies andrisk profile in relation to money laundering. As required, we provide regular reports to our Money Laundering Reporting Officer, or MLRO, on the operationand effectiveness of these systems and controls, including details of our regular assessments of the adequacy of these systems and controls to ensure theircompliance with FCA requirements.Our systems and controls also include CDD and other measures to identify where customers and others with whom we transact may be subject to financialsanctions, including those initiated or adopted by the U.K. Treasury or the EU.EMIRThe E.U. European Market Infrastructure Regulation (Regulation (EU) 648/2012), or EMIR, imposes requirements on entities that enter into any form ofderivative contract, including foreign exchange derivatives, and applies directly to firms in the E.U. that trade derivatives and indirectly to non-E.U. firmsthat trade derivatives with E.U. firms. Accordingly, GCUK needs to:•report all derivative contracts and their lifecycle events (concluded, modified and terminated) to which we are a party to a trade repository eitherby ourselves or through a third party;•keep all records relating to concluding of derivative contracts and any subsequent modification for 5 years;•comply with the risk management requirements for OTC bilateral derivatives, including portfolio reconciliation, portfolio compression, recordkeeping, dispute resolution and margining (these requirements began to be phased in starting in September 2016); and•clear through central counterparties all OTC derivatives which will be subject to the mandatory clearing obligation.Appropriateness assessmentsWhere firms offer “execution only” services for certain financial instruments which are deemed “complex”, E.U. Markets in Financial Instruments Directive(Directive 2004/39/EC), or MiFID I, requires firms to assess the appropriateness of those13Table of Contentsinvestments for retail clients. For this assessment, we are required to collect information about our existing and potential clients’ knowledge and experiencewith regard to specific products and services, including:•the types of services, transactions and financial instruments with which the retail client is familiar;•the nature, volume, and frequency of the retail client’s transactions in financial instruments and the period over which they have been carriedout; and•the level of education, and profession or relevant former profession of the retail client or potential retail client.We are required to offer to a retail client or transact for them only those products that are deemed appropriate for their knowledge, experience and othercircumstances. If the retail client demands a product that has been assessed as inappropriate for the retail client’s circumstances by us, we may either refuse tooffer the product to the client or allow them access to the product but we are required to give the retail client a warning that the product may be inappropriateto its circumstances. We are not required to undertake this analysis for professional clients as we are entitled to assume that a professional client has thenecessary knowledge and experience in order to understand the risks involved in relation to the particular products or services for which they have beenclassified as a professional client.MiFID IIMiFID I applied in the U.K. from November 2007 but has been recast into a new directive, the Markets in Financial Instruments Directive II (Directive2014/65/EU), or MiFID II, and a new regulation, the Markets in Financial Instruments Regulation (Regulation 600/2014), or MiFIR. The changesimplemented by MiFID II and MiFIR took effect on January 3, 2018.MiFID II:•expands the number of financial instruments for which firms are required to carry out an appropriateness assessment before providing anexecution only service to retail clients;•extends the pre- and post-trade transparency regime to derivatives traded on regulated markets, multi-lateral trading facilities, or MTFs, andorganized trading facilities, or OTFs;•expands transaction reporting to those financial instruments traded on MTFs, OTFs, and those financial instruments where the underlyinginstrument is traded on a Trading Venue; and•gives E.U. Member State regulators the new power to ban or restrict the marketing, distribution or sale of a financial instrument or types offinancial practice where there is a threat to investor protection, the orderly functioning and integrity of markets or to financial stability. TheEuropean Banking Authority and the European Securities and Markets Authority have similar powers to impose a ban on an EU-wide basis or inrelation to a particular E.U. Member State.Packaged Retail and Insurance-based Investment Products (PRIIPs)Regulation 1286/486 on key information documents for packaged retail and insurance-based investment products, or the PRIIPs Regulation, took effect inthe U.K. from January 1, 2018, reflecting a delay from the original implementation date of December 31, 2016. U.K. Entities now need to comply with thenew regime set out in the PRIIPs Regulation in relation to PRIIPS that they manufacture, advise on or sell to retail clients. The FCA regards derivatives(including options, futures, and contracts for differences) as falling within the definition of a PRIIP. The new regime requires us to provide retail clients with astandardized key information document, or KID, in good time before any transaction in derivatives is concluded or for transactions concluded by distancecommunications, after the transaction has taken place, but only if it is not possible to provide the KID in advance and the client consents.Other International RegulationWe have provided below a brief description of the key aspects of the regulations governing our operations in the jurisdictions outside of the U.S. and theUnited Kingdom in which we have registered with, or obtained a license from, the local regulator, as well as material regulatory developments affecting ourbusiness in other jurisdictions important to our business, including developments that have presented risks or uncertainties for our operations.JapanGAIN Capital Japan Co., Ltd., or GCJP, is a registered Type I financial instruments business firm regulated by the Japan Financial Services Agency, or FSA, inaccordance with Financial Instruments and Exchange Law (Law No. 25 of 1948, as amended). GC Japan is a member of the Financial Futures Association ofJapan. GCJP is subject to a minimum capital14Table of Contentsadequacy ratio of 140%, which is derived by dividing Net Capital (as defined in Law No. 25) by the sum of GCJP’s market, counterparty credit risk andoperational risk. Recently announced regulations in Japan will also require GCJP to conduct daily stress tests of open client positions starting in January2020 and to implement daily transaction reporting starting in January 2021. At December 31, 2018, GCJP maintained $9.6 million more than the minimumrequired regulatory capital for a total of 9.0 times the required capital.AustraliaGAIN Capital Australia, Pty. Ltd., or GCAU, is regulated under the laws of Australia, including the Corporations Act 2001 (Commonwealth of Australia). TheAustralian Securities and Investments Commission ("ASIC") is the corporate, markets and financial services regulator in Australia responsible foradministering aspects of the Corporations Act 2001. GCAU holds an Australian Financial Services License that has been issued by ASIC. GCAU is requiredto maintain a minimum capital requirement of approximately $0.7 million (1.0 million AUD). The regulatory capital held is required to be in excess of 110%of its requirements at all times. At December 31, 2018, GCAU maintained $5.5 million more than the minimum required regulatory capital for a total of 8.9times the required capital.Hong KongGAIN Capital-Forex.com Hong Kong, Ltd., or GCHK, is licensed by the Securities and Futures Commission, or SFC, to carry out Type 3 Regulated Activity,Leveraged Foreign Exchange Trading. GCHK is subject to the requirements of section 145 of the Securities and Futures Ordinance (Cap.571). Under this rule,GCHK is required to maintain a minimum liquid capital requirement of $1.9 million. At December 31, 2018, GCHK maintained $1.7 million more than theminimum required regulatory capital for a total of 1.9 times the required capital. As a result of a shift in strategic priorities in the region, a process hascommenced with the SFC to return GCHK's license, which is expected to be completed during 2019.Cayman IslandsGAIN Global Markets, Inc., or GGMI, our Cayman Islands subsidiary, is a registered securities arranger and market maker with the Cayman Islands MonetaryAuthority, or CIMA. GGMI is required to maintain a capital level that is the greater of one quarter of relevant annual expenditure, or approximately $0.2million. At December 31, 2018, GGMI maintained $1.4 million more than the minimum required regulatory capital for a total of 8.0 times the requiredcapital.CanadaGAIN Capital-Forex.com Canada, Ltd., or GCCA, is a Dealer Member of the Investment Industry Regulatory Organization of Canada, or IIROC, and regulatedunder the laws of Canada, including the Canadian Investor Protection Fund. In Canada, the securities industry is governed by provincial or territoriallegislation, and there is no national regulator. Local legislation differs from province to province and territory to territory, but generally requires that forexdealing representatives register with applicable regulators and self-regulatory organizations in order to offer forex and/or CFD products to retail clients.GCCA’s principal provincial regulator is the Ontario Securities Commission, or OSC. GCCA is required to maintain risk-adjusted capital in excess of theminimum capital requirement. At December 31, 2018, GCCA maintained $1.2 million more than the minimum required regulatory capital for a total of 7.0times the required capital.SingaporeGAIN Capital Singapore Pte., Ltd., or GCS, is registered by the Monetary Authority of Singapore, or MAS, and operates as an approved holder of CapitalMarket Services License. GCS is subject to the requirements of MAS and pursuant to the Securities and Futures Act (Cap 289). Under these rules GCS isrequired to maintain a minimum base capital of approximately $3.7 million (5.0 million SGD) and Financial Resources in excess of 120% of the total riskrequirements, which is calculated as the sum of operational, counterparty, large exposure and market risk at all times. MAS recently announced changes inallowed maximum leverage that are scheduled to become effective in October 2019 that will, among other things, reduce the maximum leverage that can beoffered to certain classes of investors to 20-to-1 from the current limit of 50-to-1. At December 31, 2018, GCS maintained $5.3 million more than the requiredminimum regulatory capital for a total of 2.4 times the required capital.Global Anti-Money LaunderingOur anti-money laundering and customer identification programs are designed to comply with applicable rules and regulations on a global basis. In addition,we have developed proprietary methods for risk-management and continue to add specialized processes, queries and automated reports designed to identifypotential money laundering, fraud and other suspicious activities.Employees15Table of ContentsAs of December 31, 2018, we had 638 employees. None of our employees are covered by collective bargaining agreements.Corporate InformationWe were incorporated in Delaware in October 1999 as GAIN Capital, Inc. Our principal executive offices are located at Bedminster One, 135 Route 202/206,Bedminster, New Jersey 07921. Other offices include Bedminster, New Jersey; New York, New York; Chicago, Illinois; Powell, Ohio; London, England;Tokyo, Japan; Sydney, Australia; Shanghai, China; Hong Kong; Dubai, U.A.E.; Krakow, Poland; and Singapore. A complete list of our subsidiaries can befound in Exhibit 21.1 to this Annual Report.Available InformationGAIN maintains a corporate website with the address www.gaincapital.com. Its intended use is as a regular means of disclosing material public informationand for complying with disclosure obligations under Regulation FD promulgated by the SEC. Such disclosures are included on the website under theheading “Investor Relations.” Accordingly, investors should monitor such portions of the website, in addition to following our press releases, SEC filings andpublic conference calls and webcasts.We are not incorporating information contained in the website by reference into this Annual Report on Form 10-K. We will make available, free of chargethrough the website under the heading “Investor Relations,” our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports onForm 8-K, and any amendments to these reports as soon as reasonably practicable after electronically filing such material with, or furnishing such material to,the SEC. In addition, we make available on our website (i) our Proxy Statements and reports filed by officers and directors under Section 16(a) of theExchange Act, (ii) the charters for the committees of our Board of Directors, including the Audit Committee, Compensation Committee, Nominating andCorporate Governance Committee and Risk Committee and (iii) our Code of Business Conduct and Ethics governing our directors, officers and employees.We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics that are required to be disclosedpursuant to the rules of the SEC and the New York Stock Exchange.The SEC maintains a website, www.sec.gov, containing the reports, proxy statements and other information that we file with the SEC.ITEM 1A. RISK FACTORSRisks Related to Our BusinessOur revenue and profitability are influenced by trading volume and market volatility, which are directly impacted by domestic and international marketand economic conditions that are beyond our control.During recent years, there has been significant disruption and volatility in the global financial markets. Our revenue is influenced by the general level oftrading activity in the global financial markets. Our revenue and operating results may vary significantly from period to period due primarily to movementsand trends in the world’s financial markets and to fluctuations in trading levels. We have generally experienced greater trading volume in periods of volatilemarkets. In the event we experience lower levels of market volatility, our revenue and profitability will likely be negatively affected. In addition, ourcustomer base is primarily comprised of individual retail customers who view trading in the markets we offer as an alternative investment class. If globaleconomic conditions limit the disposable income of our customers, our business could be materially adversely affected as our customers may choose tocurtail their trading, which could result in reduced customer trading volume and trading revenue.Like other financial services firms, our business and profitability are directly affected by elements that are beyond our control, such as economic and politicalconditions, broad trends in business and finance, changes in the volume of market transactions, changes in supply and demand for products in which we offerleveraged derivatives, movements in currency exchange rates, changes in the financial strength of market participants, legislative and regulatory changes,changes in the markets in which such transactions occur, changes in how such transactions are processed and disruptions due to terrorism, war or extremeweather events. Any one or more of these factors, or other factors, may adversely affect our business and results of operations and cash flows. A weakness inrelevant markets could result in reduced trading activity by our customers and, therefore, could have a material adverse effect on our business, financialcondition and results of operations and cash flows. As a result, period-to-period comparisons of our operating results may not be meaningful and our futureoperating results may be subject to significant fluctuations or declines.16Table of ContentsOur risk management policies and procedures may not be effective and may leave us exposed to unidentified or unexpected risks.We are dependent on our risk-management policies and the adherence to such policies by our staff. Our policies, procedures and practices used to identify,monitor and control a variety of risks, including risks related to human error, customer defaults, market movements, technology, fraud and money-laundering,are established and reviewed by the Risk Committee of our Board of Directors. Some of our methods for managing risk are discretionary by nature and arebased on internally developed controls and observed historical market behavior, and also involve reliance on standard industry practices. These methodsmay not adequately prevent losses, particularly as they relate to extreme market movements, which may be significantly greater than historical fluctuations inthe market. Our risk-management methods also may not adequately prevent losses due to technical errors if our testing and quality control practices are noteffective in preventing software or hardware failures. In addition, we may elect to adjust our risk-management policies to allow for an increase in risk appetite,which could expose us to the risk of greater losses. Our risk-management methods rely on a combination of technical and human controls and supervisionthat are subject to error and failure. These methods may not protect us against all risks or may protect us less than anticipated, in which case our business,financial condition and results of operations and cash flows may be materially adversely affected.Our trading activities involve significant risks and unforeseen events that could have a material adverse effect on our business, financial condition, resultsof operations and cash flows.We offer our clients access to a wide array of leveraged derivative products, including forex, CFDs, spread bets, futures, futures options, and gold and silverspot trading products. Our trading activities in these various products involve significant risks.Through our retail trading activities, our principal sources of revenues and profits arise from the difference between the prices at which we buy and sell, or selland buy, the leveraged derivatives we offer. We may incur trading losses for a variety of reasons, including:•price changes in leveraged derivatives;•lack of liquidity or adverse price movements in leveraged derivatives in which we have positions; and•inaccuracies in our proprietary pricing mechanism, or rate engine, which evaluates, monitors and assimilates market data and reevaluates ouroutstanding price quotes, and is designed to publish prices reflective of prevailing market conditions throughout the trading day.These risks may affect the prices at which we are able to sell or buy leveraged derivatives or may limit or restrict our ability to either resell leveragedderivatives that we have purchased or repurchase leveraged derivatives that we have sold.In addition, competitive forces often require us to match the breadth of quotes our competitors display and to hold varying amounts and types of leveragedderivatives at any given time. By having to maintain positions in certain leveraged derivatives, we are subjected to a high degree of risk. We may not be ableto manage such risk successfully and may experience significant losses from such activities, which could have a material adverse effect on our business,financial condition, results of operations and cash flows.All of the risks that pertain to our trading activities in the leveraged derivative products we offer also apply to any other products we may offer in the future.These risks include market risk, counterparty risk, liquidity risk, technology risk, third-party risk and risk of human error. In addition, unexpected events canoccur that can result in great financial loss to us, including our inability to effectively integrate new products into our existing trading platforms or our failureto properly manage the market risks associated with making markets for new products. The profit margins for these products may not be similar to the profitmargins we have realized with respect to forex trading.In our futures segment, we are also exposed to debit/deficit risk with our clients for exchange-traded futures and options on futures. An adverse market moverelated to a client’s position may result in a debit balance, which, if we are unable to collect, would result in a bad debt expense. Such an expense could havea material adverse effect on our results of operations.The accounting method for convertible debt securities that may be settled in cash, such as our 4.125% Convertible Senior Notes due 2020 and our 5.00%Convertible Senior Notes due 2022, could have a material effect on our reported financial results.Accounting Standards Codification 470-20, Debt with Conversion and Other Options, or ASC 470-20. ASC 470-20 requires an entity to separately accountfor the liability and equity components of convertible debt instruments whose conversion may be settled entirely or partially in cash (such as our 4.125%Convertible Senior Notes due 2020 and our 5.00% Convertible Senior17Table of ContentsNotes due 2022) in a manner that reflects the issuer’s economic interest cost for non-convertible debt. The liability component of the notes is initially valuedat the fair value of a similar debt instrument that does not have an associated equity component and is reflected as a liability in our Consolidated BalanceSheets in an amount equal to the fair value. The equity component of the notes is included in the additional paid-in capital section of our shareholders’equity on our Consolidated Balance Sheets, and the value of the equity component is treated as original issue discount for purposes of accounting for thedebt component. This original issue discount is amortized to non-cash interest expense over the term of the notes, and, as a result, we record a greater amountof interest expense in current periods. Accordingly, we will report lower net income in our financial results than would have been recorded had we reflectedonly cash interest expense in our consolidated income statement because ASC 470-20 will require the interest expense associated with the notes to includeboth the current period’s amortization of the original issue discount and the notes’ cash coupon interest, which could adversely affect our reported or futurefinancial results, the trading price of our common stock and the trading price of the notes.In addition, under certain circumstances, convertible debt instruments whose conversion may be settled entirely or partly in cash (such as our 4.125%Convertible Senior Notes due 2020 and our 5.00% Convertible Senior Notes due 2022) are currently accounted for using the treasury stock method. Underthis method, the shares issuable upon conversion of the notes are not included in the calculation of diluted earnings per share unless the conversion value ofthe notes exceeds their principal amount at the end of the relevant reporting period. If the conversion value exceeds their principal amount, then, for dilutedearnings per share purposes, the notes are accounted for as if the number of shares of common stock that would be necessary to settle the excess, if we electedto settle the excess in shares, were issued. The accounting standards in the future may not continue to permit the use of the treasury stock method. If we areunable to use the treasury stock method in accounting for the shares, if any, issuable upon conversion of the notes, then our diluted earnings per share couldbe adversely affected.Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our businessto pay our substantial debt.Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our 4.125% Convertible SeniorNotes due 2020, which were issued in connection with our acquisition of City Index, and our 5.00% Convertible Senior Notes due 2022, which were issuedin August 2017, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our businessmay not continue to generate cash flow from operations in the future sufficient to service our debt because of factors beyond our control. If we are unable togenerate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capitalon terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition atsuch time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debtobligations.Any disruption or corruption of our proprietary technology could have a material adverse effect on our business, financial condition and results ofoperations and cash flows.We rely on our proprietary technology to receive and properly process internal and external data. Any disruption in the proper functioning or any corruptionof our software or erroneous or corrupted data may cause us to make erroneous trades, accept customers from jurisdictions where we do not possess the properlicenses, authorizations or permits or require us to suspend our services, any of which could have a material adverse effect on our business, financialcondition and results of operations and cash flows.Systems failures could cause interruptions in our services or decreases in the responsiveness of our services, which could harm our business.If our systems fail to perform, we could experience disruptions in operations, slower response times or decreased customer satisfaction. Our ability to facilitatetransactions successfully and provide high quality customer service depends on the efficient and uninterrupted operation of our computer andcommunications hardware and software systems. These systems have in the past experienced periodic interruptions and disruptions in operations, which webelieve will continue to occur from time to time. Our systems also are vulnerable to damage or interruption from human error, natural disasters, power loss,telecommunication failures, break-ins, sabotage, computer viruses, intentional acts of vandalism and similar events. We do not have fully redundantcapabilities. While we currently maintain a disaster recovery plan, or DRP, which is intended to minimize service interruptions and secure data integrity, ourDRP may not work effectively during an emergency. Any systems failure that causes an interruption in our services or decreases the responsiveness of ourservices could impair our reputation, damage our brand name and materially adversely affect our business, financial condition and results of operations andcash flows.18Table of ContentsWe may not be able to develop and adopt new technologies in a timely fashion, which could adversely impact our ability to compete in the markets inwhich we operate.Our success in the past has largely been attributable to our proprietary technology that has taken many years to develop. If our competitors develop moreadvanced technologies, we may be required to devote substantial resources to the development of more advanced technology to remain competitive. Ourindustry is characterized by rapidly changing technology, evolving industry standards and changing trading systems, practices and techniques. We may notbe able to keep up with these rapid changes in the future, develop new technology, realize a return on amounts invested in developing new technologies orremain competitive in the future.Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation tosuffer.In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of ourcustomers, and personally identifiable information of our customers and employees, in our data centers and on our networks. The secure processing,maintenance and transmission of this information is critical to our operations. Despite our security measures, we have from time to time experienced third-party cyberattacks as well as unintentional errors that can damage our systems or expose sensitive information, and our information technology andinfrastructure may be vulnerable to future attacks by hackers or compromised due to employee error, malfeasance or other disruptions, such as “distributeddenial of service” or similar cyberattacks. Any such event could compromise our networks and the information stored there could be accessed, publiclydisclosed, lost or stolen.While our liability for known past events has not been material to our business, financial condition, results of operations or cash flows, any such access,disclosure or other loss of information could result in future legal claims or proceedings, liability under laws that protect the privacy of personal information,regulatory penalties, disruption of our operations and the services we provide to customers, damage to our reputation or a loss of confidence in our productsand services, any of which could adversely affect our business, financial condition, results of operations and cash flows. Although we maintain cyber riskinsurance, this insurance may not be sufficient to cover all of our losses from any future breaches of our systems.Products linked to cryptocurrencies could expose us to technology, regulatory and financial risks.We offer derivative products linked to Bitcoin and other cryptocurrencies in certain jurisdictions, and intend to expand the types of products offered, theassociated types of cryptocurrencies and the jurisdictions in which the products are offered. The distributed ledger technology underlying cryptocurrenciesand other similar financial assets is evolving at a rapid pace and may be vulnerable to cyberattacks or have other inherent weaknesses that are not yetapparent. We may be, or may become, exposed to risks related to cryptocurrencies or other financial products that rely on distributed ledger technologythrough our facilitation of clients’ activities involving such financial products linked to distributed ledger technology.There is currently no broadly accepted regulatory framework for Bitcoin or other cryptocurrencies, and the regulation of cryptocurrencies is developing andchanging rapidly in the United States and other countries around the world. For example, in the United States, it is unclear whether many cryptocurrencies are“securities” under federal securities laws, and the implications for us if any of our products are linked to cryptocurrencies that are determined to be securitiescould be significant and adverse. In addition, some market observers have asserted that material price increases in many cryptocurrency markets, such as thatfor Bitcoin, may indicate the existence of a “bubble,” and if markets for any cryptocurrencies linked to our products suffer severe declines, our customerscould experience significant losses and we could lose their business.We may not be able to protect our intellectual property rights or may be prevented from using intellectual property necessary for our business.We rely on a combination of trademark, copyright, trade secret and unfair competition laws in the United States and other jurisdictions in which we operate toprotect our proprietary technology, intellectual property rights and our brands. We do not have any patents. While we rigorously control access to ourproprietary technology and enter into confidentiality and invention assignment agreements with our employees, consultants and other third parties, it ispossible that third parties may copy or otherwise obtain and use our proprietary technology without authorization or otherwise infringe on our rights. Suchunauthorized use and infringement would undermine the competitive benefits offered by our proprietary technology and could adversely impact our businessand results of operations.We also license or are permitted to use intellectual property or technologies owned by others. In the event such intellectual property or technology becomesmaterial to our business, the loss of our license or our inability to otherwise continue use of19Table of Contentssuch technologies would have a material adverse effect on our business. We may also face claims of infringement that could interfere with our ability to usetechnology that is material to our business operations.Attrition of customer accounts and failure to attract new accounts in a cost-effective manner could have a material adverse effect on our business,financial condition and results of operations and cash flows.Our customer base is primarily comprised of individual retail customers. Although we offer products and tailored services designed to educate, support andretain our customers, our efforts to attract new customers or reduce the attrition rate of our existing customers may not be successful. If we are unable tomaintain or increase our customer retention rates or generate a sufficient number of new customers in a cost-effective manner, our business, financialcondition and results of operations and cash flows would likely be adversely affected. Although we have spent significant financial resources on sales andmarketing expenses and related expenses and plan to continue to do so, these efforts may not be cost-effective at attracting new customers. In particular, webelieve that rates for desirable advertising and marketing placements, including online, search engine, print and television advertising, are likely to increasein the foreseeable future, and we may be disadvantaged relative to our larger competitors in our ability to expand or maintain our advertising and marketingcommitments. Additionally, our sales and marketing methods are subject to regulation by the CFTC, and NFA, in the United States, the FCA, in the UnitedKingdom and by other regulators in other jurisdictions. The rules and regulations of these organizations impose specific limitations on our sales methods,advertising and marketing. If we do not achieve our advertising objectives, our profitability and growth may be materially adversely affected. We are subject to litigation risk which could adversely affect our reputation, business, financial condition and results of operations and cash flows.Many aspects of our business involve risks that expose us to potential liability under federal, state and local laws, both in the U.S. and in the otherjurisdictions in which we operate, as well as the rules and enforcement efforts of our regulators and self-regulatory organizations worldwide. These risksinclude, among others, disputes over trade terms with customers and other market participants, customer losses resulting from system delay or failure andcustomer claims that we made materially false or misleading statements or lost or diverted customer assets in our custody. We may also be subject toregulatory investigation and enforcement actions seeking to impose significant fines or other sanctions, which in turn could trigger civil litigation for ourprevious operations that may be deemed to have violated applicable rules and regulations in one or more jurisdictions.The volume of claims and the amount of damages and fines claimed in litigation and regulatory proceedings against financial services firms has beenincreasing and may continue to increase. The amounts involved in the trades we execute, together with rapid price movements in our derivative products, canresult in potentially large damage claims in any litigation resulting from such trades. Dissatisfied customers, regulators or self-regulatory organizations maymake claims against us regarding the quality of trade execution, improperly settled trades, mismanagement or even fraud, and these claims may increase asour business expands.Litigation may also arise from disputes over the exercise of our rights with respect to customer accounts and collateral. Although our customer agreementsgenerally provide that we may exercise such rights with respect to customer accounts and collateral as we deem reasonably necessary for our protection, ourexercise of these rights may lead to claims by customers that we did so improperly.We may also have to rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the validity and scope of the proprietaryrights of others or defend against claims of infringement or invalidity. Even if we prevail in any litigation or enforcement proceedings against us, we couldincur significant legal expenses defending against the claims, even those without merit. Moreover, because even claims without merit can damage ourreputation or raise concerns among our customers, we may feel compelled to settle claims at significant cost. The initiation of any claim, proceeding orinvestigation against us, or an adverse resolution of any such matter, could have a material adverse effect on our reputation, business, financial condition andresults of operations and cash flows.We may be subject to customer litigation, financial losses, regulatory sanctions and harm to our reputation as a result of employee misconduct or errorsthat are difficult to detect and deter.There have been a number of highly publicized cases involving fraud or other misconduct by employees of financial services firms in recent years. Ouremployees could execute unauthorized transactions for our customers, use customer assets improperly or without authorization, carry out improper activitieson behalf of customers or use confidential customer or company information for personal or other improper purposes, as well as improperly record orotherwise try to hide improper activities from us.20Table of ContentsIn addition, employee errors, including mistakes in executing, recording or reporting transactions for customers, may cause us to enter into transactions thatcustomers disavow and refuse to settle. Employee errors expose us to the risk of material losses until the errors are detected and the transactions are unwoundor reversed. The risk of employee error or miscommunication may be greater for products that are new or have non-standardized terms. Further, such errorsmay be more likely to occur following any acquisitions during the integration of or migration from technological systems. Misconduct by our employees orformer employees could subject us to financial losses or regulatory sanctions and seriously harm our reputation. It may not be possible to detect or deteremployee misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Our employees may also commit goodfaith errors that could subject us to financial claims for negligence or otherwise, as well as regulatory actions.Misconduct by employees of our customers can also expose us to claims for financial losses or regulatory proceedings when it is alleged we or our employeesknew or should have known that an employee of our customer was not authorized to undertake certain transactions. Dissatisfied customers can make claimsagainst us, including claims for negligence, fraud, unauthorized trading, failure to supervise, breach of fiduciary duty, employee errors, intentionalmisconduct, unauthorized transactions by persons associated with us or failures in the processing of transactions.Our customer accounts may be vulnerable to identity theft and credit card fraud.Credit card issuers have adopted credit card security guidelines as part of their ongoing efforts to prevent identity theft and credit card fraud. We continue towork with credit card issuers to ensure that our services, including customer account maintenance, comply with these rules. When there is unauthorizedaccess to credit card data that results in financial loss, there is the potential that we could experience reputational damage and parties could seek damagesfrom us.If our reputation is harmed, or the reputation of the online financial services industry as a whole is harmed, our business, financial condition and results ofoperations and cash flows may be materially adversely affected.Our ability to attract and retain customers and employees may be adversely affected if our reputation is damaged. If we fail, or appear to fail, to deal withissues that may give rise to reputation risk, our business prospects could be materially adversely affected. These issues include, but are not limited to,appropriately dealing with potential conflicts of interest, legal and regulatory requirements, ethical issues, money-laundering, privacy, client data protection,record keeping, sales and trading practices, and the proper identification of the legal, credit, liquidity, and market risks inherent in our business. Failure toappropriately address these issues could also give rise to additional legal risk to us, which could, in turn, increase the size and number of claims and damagesasserted against us or subject us to regulatory enforcement actions, fines and penalties. Any such sanctions could materially adversely affect our reputation,thereby reducing our ability to attract and retain customers and employees.In addition, our ability to attract and retain customers may be adversely affected if the reputation of the online financial services industry as a whole or theforex and CFD industry is damaged. In recent years, a number of financial services firms have suffered significant damage to their reputations from highlypublicized incidents that in turn resulted in significant and in some cases irreparable harm to their business. A perception of instability within the onlinefinancial services industry also could materially adversely affect our ability to attract and retain customers.The loss of our key employees could materially adversely affect our business, including our ability to grow our business.Our key employees, including Glenn Stevens, our chief executive officer, have significant experience in the forex and CFD industry and have madesignificant contributions to our business. In addition, other senior employees have made significant contributions to our business. Our continued success isdependent upon the retention of these and other key executive officers and employees, as well as the services provided by our trading staff, technology andprogramming specialists and a number of other key managerial, marketing, planning, financial, technical and operations personnel. The loss of such keypersonnel could have a material adverse effect on our business. In addition, our ability to grow our business is dependent, to a large degree, on our ability toretain such employees. The industries in which we operate are highly competitive and we may be adversely affected if we are unable to compete effectively.The OTC derivatives market served by our retail segment is rapidly evolving and characterized by intense competition and evolving domestic and globalregulatory oversight and rules. Tighter spreads and increased competition could make our business less profitable. Our prospects may be materially adverselyaffected by our ability to adapt to these changes and21Table of Contentseffectively manage the risks, expenses and difficulties frequently encountered in the operation of a business in a rapidly evolving industry. We face similarcompetitive pressure in our futures segment.In addition, our competitors include sophisticated institutions which have larger customer bases, more established name recognition and substantially greaterfinancial, marketing, technological and personnel resources than we do. These advantages may enable them, among other things, to:•develop products and services that are similar to ours, or that are more attractive to customers than ours in one or more of our markets;•provide products and services we do not offer;•provide execution and clearing services that are more rapid, reliable, efficient or less expensive than ours;•offer products and services at prices below ours to gain market share and to promote other businesses, such as forex options, futures, listed securities,CFDs, precious metals and OTC derivatives;•adapt at a faster rate to market conditions, new technologies and customer demands;•offer better, faster and more reliable technology;•outbid us for desirable acquisition targets;•more efficiently engage in and expand existing relationships with strategic alliances;•market, promote and sell their products and services more effectively; and•develop stronger relationships with customers.These competitors, including commercial and investment banking firms, may have access to capital in greater amounts and at lower costs than we do, and,therefore, may be better able to respond to changes in the industries in which we operate, to compete for skilled professionals, to finance acquisitions, to fundinternal growth and to compete for market share generally. Access to capital is critical to our business to satisfy regulatory obligations and liquidityrequirements. Among other things, access to capital determines our creditworthiness, which if perceived negatively in the market could materially impair ourability to attract customer assets. Access to capital also determines the degree to which we can expand our operations. Therefore, if we are unable to maintainor increase our capital on competitive terms, we could be at a significant competitive disadvantage, and our ability to maintain or increase our revenue andearnings could be materially impaired. Also, new or existing competitors in our markets could make it difficult for us to maintain our current market share orincrease it in desirable markets. Increased competition could also result in narrowing bid/offer spreads, which could materially adversely affect our business,financial condition and results of operations and cash flows. Any reduction in revenues without a commensurate reduction in expenses would decrease ourprofitability. We may not be able to compete effectively against these firms, particularly those with greater financial resources, and our failure to do so couldmaterially and adversely affect our business, financial condition and results of operations and cash flows.We may be unable to successfully execute our growth strategy.As we continue to seek to grow our business, we intend to execute a growth strategy that involves a number of different initiatives designed to organicallygrow our product offering and customer base and leverage our global brands, including an increase in our marketing spending relative to past periods. Wewill also seek to increase operational efficiency and reduce revenue volatility while still selectively pursuing acquisition opportunities. We also intend tocontinue to expand and upgrade the reliability and scalability of our transaction processing systems, network infrastructure and other aspects of ourproprietary technology. We may not be able to successfully execute all or any of these initiatives, and the results may vary from our expectations. Further,even if these initiatives are successful, we may not be able to expand and upgrade our technology systems and infrastructure to accommodate increases in ourbusiness activity in a timely manner, which could lead to operational breakdowns and delays, loss of customers, a reduction in the growth of our customerbase, increased operating expenses, financial losses, increased litigation or customer claims, regulatory sanctions or increased regulatory scrutiny. Inaddition, we will need to continue to attract, hire and retain highly skilled and motivated executives and employees to both execute our growth strategy andto manage the resulting growth effectively.We may be unable to respond to customers’ demands for new services and products and our business, financial condition and results of operations andcash flows may be materially adversely affected.The market for Internet-based and mobile trading is characterized by:•changing customer demands;•the need to enhance existing services and products or introduce new services and products;•evolving industry practices; and•rapidly evolving technology solutions.22Table of ContentsNew services and products provided by our competitors may render our existing services and products less competitive. Our future success will depend, inpart, on our ability to respond to customers’ demands for new services and products on a timely and cost-effective basis and to adapt to address theincreasingly sophisticated requirements and varied needs of our customers and prospective customers. We may not be successful in developing, introducingor marketing new services and products. In addition, our new service and product enhancements may not achieve market acceptance. Any failure on our partto anticipate or respond adequately to customer requirements or changing industry practices, or any significant delays in the development, introduction oravailability of new services, products or service or product enhancements could have a material adverse effect on our business, financial condition and resultsof operations and cash flows.Our international operations present special challenges and our failure to adequately address such challenges or compete in these markets, either directlyor through joint ventures with local firms, could have a material adverse effect on our business, financial condition and results of operations and cashflows.In 2018, we generated approximately 69.2% of our retail segment trading volume from customers outside the United States. Expanding our business in newmarkets is an important part of our growth strategy. Due to certain cultural, regulatory and other challenges relevant to those markets, however, we may be ata competitive disadvantage in those regions relative to local firms or to international firms that have a well-established local presence. These challengesinclude:•less developed or mature local technological infrastructure and higher costs, which could make our products and services less attractive or accessiblein emerging markets;•difficulty in complying with the diverse regulatory requirements of multiple jurisdictions, which may be more burdensome, not clearly defined andsubject to unexpected changes, potentially exposing us to significant compliance costs and regulatory penalties;•less developed and established local financial and banking infrastructure, which could make our products and services less accessible;•reduced protection of intellectual property rights;•inability to enforce contracts;•difficulties and costs associated with staffing and managing foreign operations, including reliance on newly hired local personnel;•tariffs and other trade barriers;•currency and tax laws that may prevent or restrict the transfer of capital and profits among our various operations around the world; and•time zone, language and cultural differences among personnel in different areas of the world.In addition, in order to be competitive in these local markets, or in some cases because of restrictions on the ability of foreign firms to do business locally, wemay seek to operate through joint ventures with local firms. Doing business through joint ventures may limit our ability to control the conduct of thebusiness and could expose us to reputational and greater operational risks. We may also face intense competition from other international firms overrelatively scarce opportunities for market entry. Given the intense competition from other international brokers that are also seeking to enter these newmarkets, we may have difficulty finding suitable local firms willing to enter into the kinds of relationships with us that we may need to gain access to thesemarkets. This competition could make it difficult for us to expand our business internationally as planned.If our operating subsidiaries are unable to pay us dividends when needed, we may be unable to satisfy our obligations when they arise.As a holding company, nearly all of our funds generated from operations are generated by our operating subsidiaries. Historically, we have accessed thesefunds through receipt of dividends from these subsidiaries. Some of our subsidiaries are subject to regulation and requirements of various regulatory bodies,including the CFTC and NFA in the United States, the FCA in the United Kingdom, the FSA in Japan, the SFC in Hong Kong, IIROC and the OntarioSecurities Commission, or OSC, in Canada, MAS in Singapore, ASIC in Australia, and the CIMA in the Cayman Islands, relating to liquidity and capitalstandards, which may have the effect of limiting funds available for the payment of dividends to the holding company. Accordingly, if our operatingsubsidiaries are unable to pay us dividends and make other payments to us when needed, due to regulatory restrictions or otherwise, we may be unable tosatisfy our obligations when they arise.Our acquisition strategy may result in transaction expenses, integration and consolidation risks.23Table of ContentsAlthough we expect to increase our focus on organic growth, we will continue to selectively pursue acquisition opportunities that may arise. Suchacquisitions will involve transaction expenses, including, but not limited to, fees paid to legal, financial, tax and accounting advisors, filing fees and printingcosts. Other risks associated with future acquisitions may include:•diversion of management time and focus from operating our business;•transition of operations, users and customers onto our existing platforms or onto platforms of the acquired company;•difficulties in integrating the operations of the acquired business;•failure to realize anticipated operational or financial synergies; and•liability for activities of the acquired company before the acquisition, such as violations of laws, commercial disputes, tax liabilities, and otherknown and unknown liabilities. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, amortization expenses, impairment of goodwill andpurchased long-lived assets, and restructuring charges, any of which could harm our financial condition or results. Our failure to address these risks or otherproblems encountered in connection with our future acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions or incurunanticipated liabilities, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.Risks Related to RegulationFailure to comply with the rapidly evolving laws and regulations governing our businesses may result in regulatory agencies taking action against us,which could significantly harm our business.Substantially all of our operations are conducted through subsidiaries that are regulated by governmental bodies or self-regulatory organizations. Many ofthe regulations we are governed by are intended to protect the public, our customers and the integrity of the markets, and not necessarily our shareholders.Among other things, we are subject to regulation with regard to:•sales and marketing activities, including our interaction with, and solicitation of, customers;•trading practices, including the types of investment products we may offer;•the methods by which customers can fund accounts with us;•treatment of customer assets, including custody, control, safekeeping and, in certain countries, segregation of our customer funds and securities;•maintaining specified minimum amounts of capital and limiting withdrawals of funds from our regulated operating subsidiaries;•continuing education requirements for our employees;•anti-money laundering practices;•record keeping and reporting; and•supervision regarding the conduct of directors, officers and employees.Compliance with these regulations is complicated, time consuming and expensive. Our ability to comply with all applicable laws and regulations isdependent in large part on our internal legal and compliance functions, as well as our ability to attract and retain qualified personnel, which we may not beable to do. Regulators and self-regulatory organizations broadly oversee the conduct of our business and several perform regular examinations of ouroperations to monitor our compliance with applicable laws and regulations. If a regulator finds that we have failed to comply with applicable rules andregulations, we may be subject to censure, fines, cease-and-desist orders, suspension of our business, removal of personnel, civil litigation or other sanctions,including, in some cases, increased reporting requirements or other undertakings, revocation of our operating licenses or criminal conviction. In addition, wecould incur significant legal expenses in defending ourselves against and resolving actions or investigations by such regulatory agencies. An adverseresolution of any future actions or investigations by such regulatory agencies against us could result in a negative perception of our company and cause themarket price of our common stock to decline or otherwise have a material adverse effect on our business, financial condition, results of operations and cashflows.The withdrawal of the UK from membership in the EU, commonly referred to as Brexit, could cause disruptions to, and create uncertainty surrounding, ourbusiness in the UK and EU.On June 23, 2016, voters in the UK approved an advisory referendum to withdraw membership from the EU, which proposed exit (referred to as Brexit) couldcause disruptions to, and create uncertainty surrounding, our business in the UK and EU, including our historical right to serve customers in the EU on apassport basis due to the licenses we hold in the UK. Brexit24Table of Contentscould also impact our existing and future relationships with suppliers and employees in the UK and EU by disrupting the free movement of goods, services,and people between the UK, the EU, and elsewhere. As a result, Brexit could have an adverse effect on our future business, financial results and operations.The long-term nature of the UK’s relationship with the EU is unclear and there is considerable uncertainty when any relationship will be agreed andimplemented. The effects of Brexit will depend on any agreements the UK makes to retain access to EU markets either during a transitional period or morepermanently. Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to replace orreplicate. Further, uncertainty around these and related issues could lead to adverse effects on the economy of the UK and the other economies in which weoperate. There can be no assurance that any or all of these events will not have a material adverse effect on our business operations, results of operations andfinancial condition.Regulatory changes in the jurisdictions in which we operate may disrupt our operations or require us to comply with additional regulatory requirements.Recently, the legislative and regulatory environment in which we operate has undergone significant changes, and U.S. and foreign regulators have expressedtheir intention to review existing regulation in a number of areas. For example, in March 2018, ESMA announced product intervention measures to furtherregulate the marketing, distribution or sale of CFDs to retail investors in the European Union. These measures require firms to:•implement leverage limits ranging between 30:1 and 2:1 by imposing minimum margin as a percentage of the overall exposure that the CFDprovides;•close out a customer’s position when their funds fall to 50% of the margin needed to maintain their open positions on their CFD account;•provide a negative balance protection that guarantees that a client cannot lose more than the total funds in their CFD account;•stop offering monetary and non-monetary inducements to encourage trading;•provide a standardised risk warning, which requires firms to tell potential customers the percentage of their retail client accounts that make losses.While the restrictions on leverage did affect our clients' trading patterns, the Company has taken actions that mitigated the impact of ESMA’s regulations andcurrently does not expect that the regulations will have a material adverse impact on the Company’s results of operations or financial condition.In China, recent activity suggests that the Chinese government may be looking to adopt specific regulations governing trading of foreign exchange and CFDproducts. Our ability to expand our presence in various jurisdictions throughout the world will depend on the nature of future changes to the regulatoryenvironment and our ability to continue to comply with evolving requirements. Any of these new regulatory developments, alone or in combination, couldhave a material adverse effect on our business and profitability.As we operate in many jurisdictions without local registration, licensing or authorization, we may be subject to possible enforcement action and sanctionfor our operations in such jurisdictions if our operations are determined to have violated regulations in those jurisdictions. Further, we may be required tocease operations in one or more of the countries in which we operate without registration, licensing or authorization, or our growth may be limited bynewly imposed regulatory or other restrictions.For the year ended December 31, 2018, although a majority of our retail trading volume was attributable to customers resident in a jurisdiction where we orour white label partners are licensed, regulated or deal with customers cross-border in a manner that we believe does not require us to be regulated in thatjurisdiction, a portion of our retail trading volume was attributable to customers in jurisdictions in which we or our white label partners are not currentlylicensed or authorized by the local government or applicable self-regulatory organization. This includes jurisdictions, such as China, from which we derivematerial revenue and profit and in which the local government has not adopted specific regulations governing the trading of foreign exchange and CFDproducts of the types we offer to retail clients. We determine the nature and extent of services we can offer and the manner in which we conduct our businessin the various jurisdictions in which we serve customers based on a variety of factors, including legal advice received from local counsel, our review ofapplicable U.S. and local laws and regulations and, in some cases, our discussions with local regulators. In cases in which we operate in jurisdictions based onlocal legal advice and/or cross border in a manner that we believe does not require us to be regulated in a particular jurisdiction, we are exposed to the riskthat our legal, regulatory and other analysis is subsequently determined by a local regulatory agency or other authority to be incorrect and that we have notbeen in compliance with local laws or regulations, including local25Table of Contentslicensing or authorization requirements, and to the risk that the regulatory environment in a jurisdiction may change, including in a circumstance where lawsor regulations or licensing or authorization requirements that previously were not enforced become subject to enforcement.In such jurisdictions in which we are not licensed or authorized, we may be subject to a variety of restrictions regarding the manner in which we conduct ourbusiness or serve customers, including restrictions on:•our sales and marketing activities;•the use of a website specifically targeted to potential customers in a particular country;•our ability to have a physical presence in a particular country; or•the types of services we may offer customers physically present in each country.These restrictions may have a material adverse affect on our results of operations and financial condition and/or may limit our ability to grow or continue tooperate our business in any such jurisdiction or may result in increased overhead costs or degradation in our services in that jurisdiction. Consequently, wecannot assure you that our operations in jurisdictions where we are not licensed or authorized will continue uninterrupted or that our international expansionplans will be achieved.We may be subject to possible enforcement action and penalties if we are determined to have previously offered, or currently offer, our services in violationof applicable laws and regulations in any of the markets in which we serve customers. In any such case, we may be required to cease the conduct of ourbusiness with customers in one or more jurisdictions. We may also determine that compliance with the laws or licensing, authorization or other regulatoryrequirements for continuing the business in one or more jurisdictions are too onerous to justify making the necessary changes. In addition, any such eventcould negatively impact our relationship with the regulators or self-regulatory organizations in the jurisdictions where we are subject to regulation.We are required to maintain high levels of capital, which could constrain our growth and subject us to regulatory sanctions.Our regulators have stringent rules requiring that we maintain specific minimum levels of regulatory capital in our operating subsidiaries. In the UnitedStates, as a FCM, and a RFED, we are required to maintain adjusted net capital of $20.0 million plus 5.0% of the amount of retail customer liabilities over$10.0 million, plus 10% of all liabilities owed to eligible contract participant counterparties acting as a dealer that are not an affiliate. On a worldwide basis,as of December 31, 2018, we were required to maintain approximately $99.0 million in minimum capital in the aggregate across all jurisdictions. Regulatorscontinue to evaluate and modify regulatory capital requirements from time to time in response to market events and to improve the stability of theinternational financial system. Additional revisions to this framework or new capital adequacy rules applicable to us may be proposed and ultimatelyadopted, which could further increase our minimum capital requirements in the future.Even if regulators do not change existing regulations or adopt new ones, our minimum capital requirements will generally increase in proportion to the sizeof the business conducted by our regulated subsidiaries. As a result, we will need to increase our regulatory capital in order to expand our operations andincrease our revenue, and our inability to increase our capital on a cost-efficient basis could constrain our growth. In addition, in many cases, we are notpermitted to withdraw regulatory capital maintained by our subsidiaries without prior regulatory approval or notice, which could constrain our ability toallocate our capital resources most efficiently throughout our global operations. In particular, these restrictions could adversely affect our ability to withdrawfunds needed to satisfy our ongoing operating expenses, debt service and other cash needs and could affect any future decision by our Board of Directorsregarding the payment of our quarterly dividends. Regulators monitor our levels of capital closely and we are required to report the amount of regulatorycapital we maintain to our regulators on a regular basis, and must report any deficiencies or material declines promptly. While we expect that our currentamount of regulatory capital will be sufficient to meet anticipated short-term increases in requirements, any failure to maintain the required levels ofregulatory capital, or to report any capital deficiencies or material declines in capital could result in severe sanctions, including fines, censure, restrictions onour ability to conduct business and revocation of our registrations. The imposition of one or more of these sanctions could ultimately lead to our liquidation,or the liquidation of one or more of our operating subsidiaries.Interpretation of corporate tax laws and regulations and changes in such laws and regulations, as well as adverse determinations regarding theapplication of such laws and regulations, could adversely affect our earnings.We are subject to the income tax laws of the U.S., its states and municipalities and those of the foreign jurisdictions in which we have significant businessoperations. These tax laws are complex and may be subject to different interpretations. We must make judgments and interpretations about the application ofthese inherently complex tax laws when determining the provision for income taxes and must also make estimates about when in the future certain itemsaffect taxable income in the various tax26Table of Contentsjurisdictions. Disputes over interpretations of the tax laws may be settled with the taxing authority upon examination or audit. In addition, changes to theInternal Revenue Code, administrative rulings or court decisions could increase our provision for income taxes and reduce our earnings.On December 22, 2017, President Trump signed into law P.L. no 115-97 “Tax Cuts and Jobs Act” which includes a broad range of tax law changes affectingbusinesses, including corporate tax rates, business deductions, and international tax provisions. Throughout 2018, the Treasury department has issuedadministrative guidance on the application of various provisions of the Tax Cuts and Jobs Act, so there is less uncertainty as to how these new provisions willbe interpreted and applied by the Internal Revenue Service. At the state level, however, many states have not yet issued administrative guidance with respectto these provisions of the Tax Cuts and Jobs Act, and uncertainty remains as to how these new provisions will be interpreted and applied by the various statetaxing authorities.Servicing customers via the Internet may require us to comply with the laws and regulations of each country in which we are deemed to conduct business.Failure to comply with such laws may negatively impact our financial results.Since our services are available over the Internet in foreign countries and we have customers residing in foreign countries, foreign jurisdictions may requireus to qualify to do business in their country. We believe that the number of our customers residing outside of the United States will continue to increase overtime. We are required to comply with the laws and regulations of each country in which we conduct business, including laws and regulations currently inplace or which may be enacted related to Internet services available to the residents of each country from service providers located elsewhere. For example,the Cyprus Securities and Exchange Commission recently announced that it will require any registered investment firm in Cyprus that wishes to offerproducts to customers offered in another country to provide evidence of its authorization to offer products in that other country. If one of our regulators wereto adopt a similar requirement, we could be subject to increased regulatory compliance costs or may be required to modify our business and operations. Anyfailure to develop effective compliance and reporting systems could result in regulatory penalties in the applicable jurisdiction, which could have a materialadverse effect on our business, financial condition and results of operations and cash flows.Procedures and requirements of the Patriot Act and other anti-money laundering and know your customer regulations may expose us to significant costsor penalties.As participants in the financial services industry, we are, and our subsidiaries are, subject to numerous laws and regulations, including the United StatesPatriot Act, that require that we know our customers and monitor transactions for suspicious financial activities. The cost of complying with the Patriot Actand similar laws and regulations is significant. We face the risk that our policies, procedures, technology and personnel directed toward complying with theselaws and regulations are insufficient and that we could be subject to significant criminal and civil penalties due to noncompliance. Such penalties could havea material adverse effect on our business, financial condition and results of operations and cash flows.Risks Related to Third PartiesIf we lose access to our prime brokers and other liquidity providers, we may be unable to provide competitive trading services, which will materiallyadversely affect our business, financial condition and results of operations and cash flows.We rely on third-party financial institutions to provide us with market liquidity. We maintain relationships with a large network of liquidity providers,including established global prime brokers such as J.P. Morgan, Citibank and UBS. We depend on these relationships, particularly those with our primebrokers, for our access to a pool of liquidity to ensure that we are able to execute our customers’ trades in the products we offer at the notional amounts ourcustomers request. These liquidity providers, although under contract with us, may terminate our arrangements at any time. If we were to experience adisruption in the services provided by a liquidity provider, particularly one of our prime brokers, due to a financial, technical or other adverse development,our business could be materially adversely affected to the extent that we are unable to transfer positions and margin balances to another liquidity providerthat allows us to offer competitive trading services in a timely fashion. In the event of the insolvency of one of our prime broker or other liquidity providers,we might not be able to recover any or all of the funds we have on deposit with such entity since we will be among the entity’s unsecured creditors. In theevent that we no longer have access to the levels of liquidity that we currently have, we may be unable to provide competitive trading services, which wouldmaterially adversely affect our business, financial condition and results of operations and cash flows.A systemic market event that impacts the various market participants with whom we interact could have a material adverse effect on our business,financial condition and results of operations and cash flows.27Table of ContentsWe interact with various third parties through our relationships with our liquidity providers, white label partners and introducing brokers. Some of thesemarket participants could be overleveraged. In the event of sudden, large market price movements, such market participants may not be able to meet theirobligations to brokers who, in turn, may not be able to meet their obligations to their counterparties. As a result, a systemic collapse in the financial systemcould occur, which would have a material adverse effect on our business, financial condition and results of operations and cash flows.We are subject to risk of default by financial institutions that hold our funds and our customers’ funds.We have significant deposits of our own funds and our customers' funds with banks and other financial institutions, including liquidity providers. In theevent of the insolvency of one of these financial institutions, we might not be able to fully recover the assets we have deposited since we will be among theinstitution’s unsecured creditors. As a result, our business could be materially adversely affected by the loss of these funds.Retail Forex customer funds deposited with us in the United States are not permitted to be segregated from our own funds for purposes of applicableCFTC, NFA, bankruptcy or insolvency laws and regulations, meaning such funds may be at risk of default if we were to become insolvent.Pursuant to CFTC and NFA regulations for our U.S.-regulated subsidiaries, retail forex customer funds deposited with us are not permitted to be segregatedfrom our own funds for purposes of applicable CFTC, NFA, bankruptcy and insolvency laws and regulations. Although we are required to designate andreport specific depository accounts as accounts holding assets to cover our obligations to retail forex customers; our customers’ funds may be aggregatedwith our own for these purposes. In the event we were to become insolvent, our customers may be unable to fully recover the funds they have deposited withus, as they will be among our unsecured creditors, and the extent to which these funds will be entitled to insurance by the Federal Deposit InsuranceCorporation is uncertain.We are subject to credit risk in that a customer’s losses may exceed the amount of cash in their account.Our trading operations require a commitment of our capital and involve risk of loss because of the potential that a customer’s losses may exceed the amountof cash in their account. Our margin policy allows customers to leverage their account balances by trading notional amounts that may be significantly largerthan their cash balances. We mark our customers’ accounts to market each time a price in their portfolio changes. While this allows us to closely monitor eachcustomer’s exposure, it does not guarantee our ability to eliminate negative customer account balances prior to an adverse price change or other marketevents. Although we have the ability to alter our margin requirements without prior notice to our customers, this may not eliminate the risk that our access toliquidity becomes limited or market conditions, including price volatility and liquidity constraints, change faster than our ability to modify our marginrequirements. Changes in market conditions or unforeseen extreme market events could result in our customers experiencing losses in excess of the fundsthey have deposited with us. In such an event, we may not be able to recover the negative client equity from our customers, which may result in our incurringa bad debt expense. In addition, if we cannot recover funds from our customers, we may nonetheless be required to fund positions we hold with our liquidityproviders or other third parties. Any of the foregoing events could have a material adverse effect on our business, financial condition, results of operationsand cash flows.Failure of third-party systems or third-party service and software providers upon which we rely could adversely affect our business.We rely on certain third-party computer systems or third-party service and software providers, including trading platforms, back-office systems, Internetservice providers, software development partners and communications facilities. For example, for the year ended December 31, 2018, 34.5% of our retailtrading volume was derived from trades utilizing the MetaTrader platform, a third-party trading platform we license that is particularly popular in theinternational retail trading community. Any interruption in these third-party services, or deterioration in their performance or quality, could adversely affectour business. If our arrangement with any third party is terminated, we may not be able to find alternative systems or service providers on a timely basis or oncommercially reasonable terms. This could have a material adverse effect on our business, financial condition and results of operations and cash flows.28Table of ContentsFailure to maintain relationships with introducing brokers who direct new customers to us could have a material adverse effect on our business, financialcondition and results of operations and cash flows.We have relationships with introducing brokers who direct new customers to us and provide marketing and other services for these customers. In certainjurisdictions, we are only able to provide our services through introducing brokers. For the year ended December 31, 2018, approximately 10.3% of our retailtrading volume was derived from introducing brokers. Many of our relationships with introducing brokers are nonexclusive or may be terminated by thebrokers on short notice. In addition, under our agreements with introducing brokers, they have no obligation to provide us with new customers or minimumlevels of transaction volume. Our failure to maintain our relationships with these introducing brokers, the failure of the introducing brokers to provide us withcustomers or our failure to create new relationships with introducing brokers would result in a loss of revenue, which could have a material adverse effect onour business, financial condition and results of operations and cash flows. To the extent any of our competitors offers more attractive compensation terms toone or more of our introducing brokers, we could lose the brokers’ services or be required to increase the compensation we pay to retain the brokers. Inaddition, we may agree to set the compensation for one or more introducing brokers at a level where, based on the transaction volume generated by customersdirected to us by such brokers, it would have been more economically attractive to seek to acquire the customers directly rather than through the introducingbroker.Our business or reputation could be harmed by introducing broker misconduct or errors that are difficult to detect and deter.It may be perceived that we are responsible for any improper conduct by our introducing brokers, even though we do not control their activities. Many of ourintroducing brokers operate websites, which they use to advertise our services or direct customers to us. It is difficult for us to closely monitor the contents oftheir websites to ensure that the statements they make in relation to our services are accurate and comply with applicable rules and regulations. Anydisciplinary action taken against any of our introducing brokers in the United States and abroad could have a material adverse effect on our reputation,damage our brand name and materially adversely affect our business, financial condition and results of operations and cash flows.Risks Related to our Common StockThe market price of our common stock may be volatile.Our results of operations and cash flows have fluctuated significantly from period to period in the past based on a variety of factors, including some that arebeyond our control, such as currency volatility and fluctuations in trading volume. These variations, along with any failure to achieve operating results thatmeet or exceed the expectations of our investors and the market as a whole, could result in significant price and volume fluctuations in our common stock.Other factors that could affect the market price of our common stock include:•future announcements concerning us or our competitors, including the announcement of acquisitions;•changes in government regulations or in the status of our regulatory approvals or licensure;•public perceptions of risks associated with our services or operations;•developments in our industry; and•general economic, market and political conditions and other factors that may be unrelated to our operating performance or the operatingperformance of our competitors.If securities analysts stop publishing research or reports about us or our business or if they downgrade our common stock, the market price of our commonstock could decline.The market for our common stock relies in part on the research and reports that industry or financial analysts publish about us or our business. We do notcontrol these analysts. If any analyst who covers us downgrades our stock or lowers its future stock price targets or estimates of our operating results, ourstock price could decline rapidly. Furthermore, if any analyst ceases to cover us, we could lose visibility in the market, which in turn could cause the marketprice of our common stock to decline.Our stockholder rights plan may prevent efforts by our stockholders to effect a change of control of our company or a change in our management.We have adopted a stockholder rights plan, commonly referred to as a poison pill. The rights plan is intended to deter an attempt to acquire us in a manner oron terms not approved by our Board of Directors. The rights plan will not prevent an acquisition that is approved by our Board of Directors. Our rights plancould substantially impede the ability of public29Table of Contentsstockholders to benefit from a change in control and, as a result, may reduce the market price of our common stock and the ability of holders of our commonstock to realize any potential change of control premium.We may be unable to obtain capital when we need it, on acceptable terms, or at all.Our business depends on the availability of adequate funding and regulatory capital under applicable regulatory requirements. Historically, we have satisfiedthese needs from internally generated funds and from our offering of convertible debt securities. While we currently anticipate that our available cashresources will be sufficient to meet our presently anticipated working capital and capital expenditure requirements for at least the next 12 months, we mayneed to raise additional funds which could impact the number of shares to issue to:•support more rapid expansion;•develop new or enhanced services and products;•respond to competitive pressures;•acquire new businesses, products or technologies; or•respond to unanticipated requirements.Additional financing may not be available when needed on terms favorable to us or at all.The limited liquidity for our common stock could affect your ability to sell your shares at a satisfactory price.Our common stock is relatively illiquid. As of March 4, 2019, we had 37,385,602 shares of common stock outstanding (excluding shares held by us astreasury stock). The average daily trading volume in our common stock during the 60 calendar days ended March 4, 2019 was approximately 190,141 shares.A more active public market for our common stock may not develop, which could continue to adversely affect the liquidity of our common stock andadversely affect the trading price of our common stock. Moreover, without a large public float, our common stock is less liquid than the stock of companieswith broader public ownership and, as a result, the trading prices of our common stock may be more volatile than that of other companies or the market as awhole. In addition, in the absence of an active public trading market, you may be unable to liquidate your investment in us at a satisfactory price.Stockholders may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions, conversion of our4.125% Convertible Senior Notes due 2020 or our 5.00% Convertible Senior Notes due 2022, or otherwise.As of December 31, 2018, we had approximately 65.5 million shares of common stock authorized but unissued. As of December 31, 2018, we have reservedan aggregate of 3.5 million shares for issuance under our equity incentive compensation plans.In addition, our 4.125% Convertible Senior Notes due 2020, which were issued in April 2015 in connection with our acquisition of City Index, areconvertible into shares of our common stock, although we may, at our election and subject to certain limitations, choose to settle any conversion by thepayment or delivery of cash, shares of our common stock, or a combination thereof. Prior to October 1, 2019, these notes may be converted only upon theoccurrence of specified events set forth in the indenture pursuant to which they were issued, while on or after October 1, 2019, holders may convert theirnotes at any time.Our 5.00% Convertible Senior Notes due 2022, which were issued in August 2017, are convertible into shares of our common stock, although we may, at ourelection and subject to certain limitations, choose to settle any conversion by the payment or delivery of cash, shares of our common stock, or a combinationthereof. Prior to April 15, 2022, these notes may be converted only upon the occurrence of specified events set forth in indenture pursuant to which they wereissued, while on or after April 15, 2022, holders may convert their notes at any time.Any common stock that we issue, including under our 2015 Plan, 2011 Employee Stock Purchase Plan or other equity incentive plans that we may adopt inthe future, or upon conversion of any of our convertible senior notes, will dilute the percentage ownership held by investors who own our common stock.ITEM 1B. UNRESOLVED STAFF COMMENTSThere are no unresolved staff comments.30Table of ContentsITEM 2. PROPERTIESWe are a global provider of trading services and solutions, specializing in over-the-counter, or OTC, and exchange-traded markets. Our retail and futuressegments service customers in more than 180 countries worldwide, and we conduct business from our offices in Bedminster, New Jersey; New York, NewYork; Chicago, Illinois; Powell, Ohio; London, England; Tokyo, Japan; Sydney, Australia; Shanghai, China; Hong Kong; Dubai, U.A.E.; Krakow, Polandand Singapore. Our retail segment conducts business in each of these locations, except our locations in Illinois and Ohio, which are focused primarily on ourfutures segment. Our corporate segment is primarily located in our corporate headquarters in Bedminster, New Jersey. All of our office space was leased as ofDecember 31, 2018.While we believe that these facilities are adequate to meet our current needs, it may become necessary to secure additional space in the future toaccommodate any future growth. We believe that such additional space will be available as needed in the future on commercially reasonable terms.ITEM 3. LEGAL PROCEEDINGSWe are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of our management, the outcome of such otherclaims and legal actions, if decided adversely, is not expected to have a material adverse effect on our quarterly or annual operating results, cash flows orconsolidated financial position.ITEM 4. MINE SAFETY DISCLOSURESNot Applicable.31Table of ContentsPART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESOur common stock began trading on the New York Stock Exchange under the symbol “GCAP” on December 15, 2010. Prior to that date, there was noestablished trading market for our common stock. As of March 4, 2019, we estimate that we had approximately 64 stockholders of record. Because many ofour shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of underlyingbeneficial stockholders represented by these record holders.DIVIDEND POLICYIn October 2011, our Board of Directors approved a policy of paying quarterly dividends, subject to available cash flow from operations, other considerationsand the determination by our Board of Directors of the amount. Until November 2016, we paid a quarterly $0.05 per share dividend to holders of our commonstock. In November 2016, our Board of Directors approved a change in the dividend policy which increased the dividend to $0.06 per share to holders of ourcommon stock. The latest dividend of $0.06 per share was announced on February 28, 2019 and is payable on March 29, 2019 to stockholders of record onMarch 26, 2019.Although we intend to continue our policy of paying quarterly dividends, any declaration and payment of dividends will be at the discretion of our Board ofDirectors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictionswith respect to the payment of dividends, and other considerations that our Board of Directors deems relevant. The Board’s ability to declare a dividend isalso subject to limits imposed by Delaware corporate law. In addition, our subsidiaries are permitted to pay dividends to us subject to (i) certain regulatoryrestrictions related to the maintenance of minimum net capital in those of our subsidiaries that are subject to net capital requirements imposed by applicablelaw or regulation and (ii) general restrictions imposed on dividend payments under the laws of the jurisdiction of incorporation or organization of eachsubsidiary.RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIESNone.REPURCHASES OF COMMON STOCKDuring the year ended December 31, 2018, we repurchased approximately 1.8 million shares of our common stock pursuant to the terms of our approvedstock repurchase plan.32Table of Contents Total Maximum Number Number of Shares (or Approximate Purchased as Dollar Value) of Part of Publicly Shares that May Total Number Announced Yet Be Purchased of Shares Average Price Plans or Under the Plans orPeriodPurchased(1) Paid per Share(1) Programs(1) Programs(1)(2)(3)January 2018124,337 $8.04 124,337 $12,264,759February 2018225,497 $6.87 225,497 $10,710,340March 2018230,230 $7.06 230,230 $9,080,835April 2018190,761 $7.60 190,761 $32,627,108May 2018163,137 $8.12 163,137 $31,298,959June 2018164,918 $7.88 164,918 $29,995,746July 2018140,775 $7.64 140,775 $28,918,018August 2018161,579 $7.12 161,579 $27,764,886September 2018149,270 $6.87 149,270 $26,736,982October 201861,895 $6.46 61,895 $26,335,763November 201842,455 $7.30 42,455 $26,024,926December 2018184,206 $6.88 184,206 $25,947,931(1) On May 16, 2011, the Company announced that its Board of Directors approved a share repurchase plan, which authorized the expenditure of up to $10.0million for the purchase of the Company’s common stock. On May 6, 2013, the Company announced that the Board of Directors approved to increase thetotal amount available for the purchase of the Company’s common stock by $15.0 million. On May 3, 2016, the Company’s Board of Directors approved toincrease the total amount available for the purchase of the Company’s common stock by an additional $15.0 million, including amounts allocable to certainprior purchases made in March, April and May 2016. On November 3, 2016, the Company announced that its Board of Directors had increased the totalamount available for the repurchase of the Company’s common stock under the Company’s share repurchase plan to $30.0 million.(2) Transaction fees related to the share purchases are deducted from the total remaining allowable expenditure amount.(3) On August 14, 2017, in connection and concurrent with the offering of the Company's 5.00% Convertible Senior Notes due in 2022, the Board ofDirectors approved the expenditure of up to $15.0 million for the purchase of the Company's common stock, of which $14.5 million was repurchased. OnApril 24, 2018, the Board of Directors approved an increase in the total amount of available cash for the purchase of the Company's common stock of $25.0million.On November 6, 2018, the Company settled a "modified Dutch auction" tender offer to purchase 6.4 million shares of its common stock at a price of $7.84 pershare for an aggregate cost of $50 million excluding fees and expenses relating to the tender offer. The tender offer was made upon the terms and subject tothe conditions described in the offer to purchase and in the related letter of transmittal, each of which are attached as exhibits to the Company's Schedule TO,as filed with the SEC on October 9, 2018. The tender offer is not reflected in the table above.STOCK PERFORMANCE GRAPHThe following performance chart assumes an investment of $100 on December 15, 2010 (the date our shares began trading on the NYSE) and compares thechange at December 31, 2013 through December 31, 2018 in the market price for our common stock with the Russell 2000 Index, the NASDAQ CompositeIndex, and a peer group identified by us (the “Selected Peer Group Index”). The Selected Peer Group Index was selected to include publicly-traded companiesengaging in one or more of our lines of business.The Selected Peer Group Index is weighted according to the respective issuer’s stock market capitalization and is comprised of the following companies:BGC Partners, Inc., CMC Markets plc, DST Systems, Inc., E*Trade Financial Corporation, FactSet33Table of ContentsResearch Systems, Inc., IG Group Holdings plc, INTL FCStone, Inc., Investment Technology Group, Inc., MarketAxess Holdings, Inc., MSCI, Inc., Plus500Ltd., and Virtu Financial, Inc.The comparisons in the graphs below are based on historical data and are not intended to forecast the possible future performance of our common stock.EQUITY COMPENSATION PLAN INFORMATIONThe following table provides information with respect to our compensation plans under which equity compensation was authorized as of December 31, 2018. Number of securities remaining Number of Weighted-average available for future securities to be exercise price issuance under issued upon exercise of equity compensation of outstanding outstanding plans (excluding options, warrants options, warrants securities reflected and rights and rights in column (a))Plan category(a) (b) (c)Equity compensation plans approved by security holders955,319 $6.05 3,460,28834Table of ContentsITEM 6. SELECTED FINANCIAL DATAThe financial data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and our audited consolidated financial statements as of December 31, 2018 and 2017 and for the years ended December 31, 2018, December 31,2017 and December 31, 2016, included in this annual report on Form 10-K.Certain prior period amounts have been reclassified to conform with current period presentation. Specifically, the Company has reclassified the GTX businessto income from discontinued operations within the Selected Consolidated Statements of Operations and Comprehensive Income below. Prior to its sale, wereported the results of our GTX ECN business as part of our institutional segment. We have determined that the institutional reportable segment met thediscontinued operations criteria in the quarter ended June 30, 2018. For more information relating to the discontinued operations of our GTX ECN businessplease see Note 3 to the Consolidated Financial Statements and elsewhere in this report.Our historical results of operations are not necessarily indicative of future results. Selected Consolidated Statement of Operations and Comprehensive Income (in thousands, except share and per share data) Year Ended December 31, 2018 2017 2016 2015(1) 2014Consolidated Statement of Operations andComprehensive Income Data: Net revenue$357,957 $278,238 $382,750 $401,558 $334,659Total operating expense$307,926 $280,994 $329,736 $393,175 $293,263Income/(loss) before income tax expense/(benefit)$36,491 $(19,521) $42,593 $(839) $35,248Net income/(loss) applicable to GAIN CapitalHoldings, Inc.$92,889 $(11,195) $35,272 $10,279 $24,877Earnings/(loss) per common share: Basic$0.60 $(0.29) $0.55 $0.22 $0.61Diluted$0.60 $(0.29) $0.55 $0.21 $0.58Weighted average common shares outstanding used incomputing earnings/(loss) per common share Basic43,731,881 46,740,097 48,588,917 47,601,979 40,561,644Diluted44,189,324 46,740,097 48,785,674 48,379,051 43,214,895Cash dividends per share$0.24 $0.24 $0.21 $0.20 $0.20 Selected Consolidated Balance Sheet (in thousands unless otherwise stated) Year Ended December 31, 2018 2017 2016 2015(1) 2014Consolidated Balance Sheet Data: Cash and cash equivalents$278,850 $209,688 $234,760 $171,888 $139,351Cash and securities held for customers$842,478 $978,828 $945,468 $920,621 $759,559Receivables from brokers$84,271 $78,503 $61,096 $121,153 $134,908Total assets$1,332,548 $1,448,647 $1,430,084 $1,424,559 $1,183,301Payables to customers$842,478 $978,828 $945,468 $920,621 $759,559Convertible senior notes$132,109 $132,221 $124,769 $121,740 $68,367Total shareholders' equity$297,773 $285,748 $294,182 $306,084 $249,92035Table of Contents(1)There were material business combinations that occurred in 2015, which impacted the comparability of the amounts shown above.36Table of ContentsITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes theretoprovided under “Item 8. Financial Statements and Supplementary Data” contained elsewhere within this Annual Report on Form 10-K.OverviewWe are a global provider of trading services and solutions, specializing in over-the-counter, or OTC, and exchange-traded markets. We offer our customersaccess to a diverse range of over 15,000 global financial markets, including spot foreign exchange, or forex, and precious metals trading, as well as “contractsfor difference”, or CFDs, which are investment products with returns linked to the performance of underlying assets.We operate our business in two segments. Through our retail segment, we provide our retail customers around the world with access to a diverse range ofglobal financial markets, including spot forex, precious metals, spread bets and CFDs on commodities, indices, individual equities and interest rate products,as well OTC options on forex. Our futures segment offers execution and risk management services for exchange-traded futures and futures options on majorU.S. and European futures and options exchanges. Each of our operating segments is discussed in more detail below.As a global provider of online trading services, our results of operations are impacted by a number of external market factors, including market volatility andtransaction volumes, competition, the regulatory environment in the various jurisdictions and markets in which we operate and the financial condition of theretail customers to whom we provide our services. These are not the only factors impacting our results of operations for the most recent fiscal period, andadditional or other factors may impact, or have different degrees of impact, on our results of operations in future periods. Please see “Item 1A. Risk Factors”for a discussion of other factors that may impact our business.Market Environment and Trading VolatilityOur revenue and operating results may vary significantly from period to period primarily due to movements and trends in the world’s financial markets and tofluctuations in market volatility. Market volatility is driven by a range of external factors, some of which are market specific and some of which are correlatedto general macroeconomic conditions. As a general rule, our businesses typically benefit from volatility in the prices of the products that we offer, as periodsof increased volatility often coincide with higher levels of trading by our clients and a higher volume of transactions. However, periods of extreme volatilitymay result in significant market dislocations that can also lead clients to reduce their trading activity. In addition, volatility that results in market pricesmoving within a relatively narrow band of prices may lead to less profitable trading activity. Also, low or extremely high market volatility can adverselyaffect our ability to profitably manage our net exposure, which represents the unhedged portion of the trading positions we enter into with customers in ourretail segment.Our financial performance throughout 2018 reflects the results of our ongoing efforts to pursue organic growth. We believe our increased marketinginvestment has contributed to the increase in new direct account growth relative to 2017. Further, the increase in direct volume compared to 2017 was due tohigher volume per active customers, indicating higher client quality.CompetitionThe products we offer have generally been accessible to retail investors for a significantly shorter period than many other securities products, such as cashequities, and our industry is rapidly evolving and characterized by intense competition. Entering new markets often requires us to lower our pricing in orderto attract customers and compete with other companies which have already established customer bases in such markets. In addition, in existing markets, onoccasion we make short-term decisions to be more aggressive regarding the pricing we offer our customers, or we may decide to offer additional services atreduced rates, or free of charge, in order to attract customers and take market share from our competitors.Regulatory EnvironmentIn March 2018, ESMA announced product intervention measures to further regulate the marketing, distribution or sale of CFDsto retail investors in the European Union. These measures include leverage limits which vary based on the underlying asset, amargin close out rule on a per account basis, negative balance protection on a per account basis, a restriction on incentivesoffered to trade CFDs and a required standardized risk warning. These measures have now been published in the OfficialJournal of the European Union and became effective on August 1, 2018. While it is too early to assess the long-term impact ofthe ESMA changes introduced on August 1, 2018, particularly during a period of low volatility, early indications remain in line37Table of Contentswith the Company’s initial expectations that the restrictions on leverage are not expected to have a material adverse impact onthe Company’s results of operations or financial condition.As a result of historical and/or future regulatory changes, we may be required to change our business strategy, including thenature of the products that we offer, the target market for our products or our overall strategy toward one or more geographicmarkets.Part of our growth strategy is to enter new markets, and as we do so we will become subject to regulation in those markets. Complying with differentregulatory regimes in multiple markets is expensive, and in many markets the regulatory environment is unclear and evolving.Sale of GTX ECN BusinessOn June 29, 2018, we completed the sale of the assets of our GTX ECN business, an institutional platform for trading foreignexchange, to 360T, a subsidiary of Deutsche Börse AG, pursuant to an Asset Purchase Agreement dated as of May 29, 2018 (the “Purchase Agreement”). ThePurchase Agreement provides for a cash purchase price for the GTX business of $100 million, less a working capital adjustment, which amounted to a $0.2million reduction in the purchase price. The Purchase Agreement contains customary representations and warranties that generally survive until the firstanniversary of the closing date. We have also agreed to certain non-competition and non-solicitation obligations relating to the GTX business and itsemployees that expire on the third anniversary of the closing date. We have continued to provide certain transition services to the buyer following theclosing date. The parties have entered into commercial agreements relating to a continued business relationship between GAIN and 360T.Prior to its sale, we reported the results of our GTX ECN business as part of our institutional segment. We have determinedthat the institutional reportable segment met the discontinued operations criteria set forth in ASC Subtopic 205-20-45,Presentation of Financial Statements, in the quarter ended June 30, 2018. As such, the institutional segment results have beenclassified as discontinued operations in the accompanying Consolidated Statements of Operations andComprehensive Income. For more information relating to the discontinued operations of our GTX ECN business, please seeNote 3 to our Consolidated Financial Statements elsewhere in this report.FXCM Asset AcquisitionOn February 7, 2017, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Forex Capital Markets L.L.C. (“FXCM"). Pursuant to theterms of the Purchase Agreement, FXCM transferred substantially all of its U.S.-domiciled customer accounts to us effective as of February 24, 2017. Inconsideration of the transfer of these accounts, we agreed to pay FXCM, without duplication:•$500 per account for each transferred account that first executes a new trade with GAIN during the 76-day period immediately following the closingof the account transfer (the “Initial Period”); and•$250 per account for each transferred account that (i) did not execute a new trade with GAIN during the Initial Period and (ii) executes a new tradewith GAIN during the 77-day period immediately following the last day of the Initial Period.We paid $7.2 million to FXCM as consideration for the purchased accounts for the twelve months ended December 31, 2017, which was capitalized andincluded as an intangible asset to be amortized on a straight line basis over its two year useful life.Credit FacilityOn August 3, 2017, we entered into a Credit Agreement (the “Credit Agreement”), with Barclays Bank PLC (“Barclays”), as Administrative Agent, CollateralAgent, Arranger and Documentation Agent, Sterling National Bank as Joint Bookrunner (“Sterling”), and the other lenders from time to time party thereto(together with Barclays and Sterling, the “Lenders”).The Credit Agreement provides for a U.S. $50.0 million senior secured first lien revolving credit facility (the “Facility”), to be made available upon certainterms and conditions described below. Upon our request, the Facility may be increased by up to $25.0 million, with a minimum increase of $5.0 million. EachLender has the absolute discretion to provide all or any part of the requested increase, or to decline to participate in the increase. Amounts available under theFacility may be borrowed, repaid and reborrowed on and after the closing date until the third anniversary of the closing date (the “Maturity Date”). Allamounts outstanding under the Facility will initially bear interest, at our option, at a rate per annum equal to (i) the “Cost of38Table of ContentsFunds Rate” or, if applicable, “Base Rate” plus 1.75% per annum, or (ii) “LIBOR Rate” plus 2.75% per annum, in each case as such terms are defined in theCredit Agreement. Beginning on the date on which we deliver to the Lenders financial statements for the first full fiscal quarter after the closing date, theapplicable margin for the Facility will be determined on a sliding scale based on our Consolidated Gross Leverage Ratio (as defined in the Facility). As ofDecember 31, 2018 the interest rate is 7.50%.All obligations under the Facility are guaranteed by each of our direct or indirect wholly-owned domestic subsidiaries (excluding our regulated subsidiaries)(collectively, the “Guarantors”). The obligations under the Facility are secured by a first priority security interest in all of the capital stock of each subsidiaryowned by us or a Guarantor (collectively, the “Collateral”), which pledge, in the case of any foreign subsidiary, is limited to 65.0% of the voting stock ofsuch foreign subsidiary and is limited to foreign subsidiaries directly owned by us or a Guarantor.The Facility contains customary financial covenants, tested quarterly, including with respect to our Consolidated Gross Leverage Ratio, ConsolidatedInterest Coverage Ratio and Minimum Net Capital, in each case as such terms are defined in the Credit Agreement. The Facility contains such representationsand warranties by us and the Guarantors as are customary for transactions and facilities of this type, subject to baskets for permitted acquisitions, dispositions,incurrence of additional indebtedness and similar transactions.On May 29, 2018, the Lenders entered into Consent and Waiver, pursuant to which the Lenders consented to the consummationof the sale of the GTX ECN business, and further agreed that, notwithstanding any other terms of the Credit Agreement, theCompany could utilize a portion of the proceeds of the GTX ECN sale to repurchase the Company's outstanding 4.125%Convertible Senior Notes due 2020 and the Company's outstanding common stock, with such repurchases of common stockbeing excluded for purposes of the equity repurchase limits included in the Credit Agreement until the first anniversary of theConsent and Waiver. In a Second Consent and Waiver dated as of October 9, 2018, the Lenders agreed to extend the repurchaseperiod for the common stock to December 31, 2019, and also consented to the Company's $50.0 million modified Dutchauction tender offer, which was discussed in more detail below in “Part II. Item 5. Repurchases of Common Stock.”In addition to other events of default that are customary for transactions and facilities of this type (subject to applicable grace periods and materialitystandards).Convertible NotesOn August 22, 2017, we issued $92.0 million aggregate principal amount of our 5.00% Convertible Senior Notes due 2022, which amount includes theexercise in full of the over-allotment option granted to the initial purchasers of the notes, in a private offering to qualified institutional buyers pursuant toRule 144A under the Securities Act of 1933, as amended. The notes bear interest at a fixed rate of 5.00% per year, payable semi-annually in arrears onFebruary 15 and August 15 of each year, beginning on February 15, 2018. The notes are convertible into cash, shares of our common stock, or a combinationthereof, at our election. The notes will mature on August 15, 2022, unless earlier converted, redeemed or repurchased. We may not redeem the notes prior toAugust 15, 2020. The net proceeds from the offering of these notes were approximately $88.4 million, after deducting discounts to the initial purchasers andoffering expenses payable by the Company.Key Income Statement Line Items and Key Operating MetricsThe following section briefly describes the key components of our revenues and expenses, our use of non-GAAP financial measures, and key operatingmetrics we use to evaluate the performance of our business.RevenueRevenue from our business consists of retail revenue, futures revenue, other revenue and interest revenue.Retail RevenueRetail revenue is our largest source of revenue. Retail revenue is principally comprised of trading revenue from our retail segment.Trading revenue in our retail segment is generated by forex products and non-forex products, including spot forex, precious metals, spread bets and CFDs oncurrencies, commodities, indices, individual equities, cryptocurrencies, bonds, options and interest rate products, as well as OTC options on forex.We generate revenue in our retail segment in two ways: (1) trading revenue from our market making activities for OTC39Table of Contentsproducts, earned principally from the bid/offer spread we offer our customers and fees, including financing charges for positions held overnight, commissionson equity CFD trades, and other account related fees and (2) any net gains and losses generated through changes in the market value of the currencies andother products held in our net exposure.Retail revenue represented 83.9% and 83.1% of our total net revenue for the year ended December 31, 2018 and 2017, respectively.For the year ended December 31, 2018, approximately 97% of our average daily retail trading volume was either naturally hedged or hedged by us with oneof our liquidity providers, which is substantially similar to our average daily retail trading volume hedged of approximately 97% and 98% in 2017 and 2016,respectively. The remaining 3%, 3%, and 2% of our average daily retail trading volume in 2018, 2017 and 2016, respectively, consisted of our net exposure.We manage our net exposure by applying position and exposure limits established under our risk-management policies and by continuous, active monitoringby our trading and risk teams. Based on our risk management policies and procedures, over time a portion of our net exposure may be hedged with ourliquidity providers. Although we do not actively initiate proprietary market positions in anticipation of future movements in the relative prices of theproducts we offer, through our net exposure we are likely to have open positions in various products at any given time. In the event of unfavorable marketmovements, we may experience losses on such positions. Please refer to “Item 1. Business” under heading Sophisticated risk management for further detailsregarding our risk management policies for the retail segment.Futures RevenueFutures revenue consists primarily of commissions earned on futures and futures options trades. The Company executes trades on behalf of our futurescustomers, for which we earn commissions. The Company is not exposed to any market risk in connection with that activity. The Company’s futures revenueperformance obligations also consist of trade execution and are satisfied on the trade date; accordingly, commission revenues are recorded on the trade date.Other RevenueOther revenue primarily comprises foreign currency translation gains and losses, as well as inactivity fees. During the twelve months ended December 31,2018, corporate and other revenue also including a one-time receipt of a $5.4 million class action settlement.Net Interest RevenueNet interest revenue/expense consists primarily of the revenue generated by our cash and customer cash held by us at banks and on deposit as collateral withour liquidity providers as well as U.S. Treasury bills, less interest paid to our customers.Our cash and customer cash is generally invested in money market funds, which primarily invest in short-term United States government securities, treasurybills, and other money market instruments. Interest paid to customers varies primarily due to the net value of a customer account. A customer’s net accountvalue equals cash on deposit plus the mark-to-market of open positions as of the measurement date. Interest income and interest expense are recorded whenearned and incurred, respectively. Net interest revenue was $10.6 million for the year ended December 31, 2018, compared to net interest revenue of $4.7million for the year ended December 31, 2017.ExpensesOur expenses are principally comprised of the following:Employee Compensation and BenefitsEmployee compensation and benefits includes salaries, bonuses, commissions, stock-based compensation, contributions to benefit programs and otherrelated employee costs.Selling and MarketingOur marketing strategy employs a combination of direct online marketing and focused branding programs, with the goal of raising awareness and cost-effectively acquiring customers for our products and services, as well as client engagement and retention.40Table of ContentsReferral FeesReferral fees consist of compensation paid to our white label partners and introducing brokers. We generally provide white label partners with the platform,systems, and back-office services necessary for them to offer trading services to their customers. Introducing brokers identify and direct customers to us.Referral fees expense also includes payments made to affiliates for referring customer to us.Referral fees are largely variable and change principally based on the level of customer trading volume directed to us from our white label partners andintroducing brokers, the specific terms of our agreements with the white label partners and introducing brokers, which vary on a partner-by-partner andregional basis, and the relative percentage of trading volume generated from particular relationships in any given period. The majority of our white label andintroducing broker partners are paid based on the trading volume generated by the customers they introduce, directly or indirectly, to us, rather than on arevenue sharing basis. As such, during periods in which their customers’ trading activity is not profitable for us, if the associated trading volume remainshigh, we may be required to make larger payments to these partners despite the fact that we are generating lower revenue from the customers that they haveintroduced. Our retail indirect business accounted for 24.3% , 33.3%, 43.5% of retail trading volume in the years ended December 31, 2018, 2017 and 2016,respectively. The decline in indirect volume was due to our focus on expanding our direct business as part of our organic growth strategy, and ongoing effortsto optimize our indirect channel.Trading ExpensesTrading expenses consist of exchange fees paid to exchanges and other third-parties for exchange market data that we provide to our customers or use tocreate our own derived data products, as well as fees for news services and fees paid to prime brokers in connection with our futures segment.General and AdministrativeGeneral and administrative expenses consist of bank fees, professional fees, occupancy and equipment and other miscellaneous expenses.Depreciation and AmortizationDepreciation and amortization consists of the recognition of expense for physical assets and software purchased for use over a period of several years and ofthe amortization of internally developed software.Purchased Intangible AmortizationPurchased intangible amortization consists of amortization related to intangible assets we acquired in connection with our acquisitions. The principalintangible assets acquired were technology, customer relationships and a non-compete agreement. These intangible assets have useful lives ranging from oneyear to ten years.Communications and TechnologyCommunications and technology consists of communication fees, data fees, product development, software and maintenance expenses.Bad Debt ProvisionBad debt provision represents the amounts estimated for the uncollectibility of certain outstanding balances during the period.Restructuring ExpensesIn 2017 and 2016 we incurred restructuring expenses, which reflected costs arising from headcount reductions and other exit costs, measured and disclosed inaccordance with FASB ASC 420 Exit or Disposal Cost Obligations and ASC 712 Compensation - Nonretirement Postemployment Benefits.Acquisition ExpensesIn 2016 we incurred acquisition-related expenses, which included professional services costs, such as legal, accounting, valuation and other costs specifiedin FASB ASC 805. These costs are expensed as incurred.Integration ExpensesIn 2017 and 2016 we incurred integration expenses, which are acquisition-related costs that are incurred while integrating an acquired company into theconsolidated group. These costs include retention bonuses paid to employees and the cost of retiring redundant assets.41Table of ContentsLegal SettlementOn April 28, 2016, we entered into a settlement agreement with the claimants in the Cameron Farley Ltd. matter. Please refer to Note 18 to our auditedconsolidated financial statements for more detail. Pursuant to the terms of the settlement agreement, we agreed to make a one-time settlement payment inexchange for a full and final settlement of all claims. The settlement amount, net of insurance recoveries, totaled approximately $9.2 million.In November 2018, we settled on an ongoing contractual dispute with a service provider relating to the historical deployment of software supporting one ofour legacy trading platforms. Pursuant to the terms of the settlement, we agreed to make a one-time settlement payment of approximately $5.3 million inexchange for a full and final settlement of all claims.Impairment of InvestmentIn 2017 we recognized an impairment expense due to an impairment of a small equity method investment, and in 2018 we recovered a portion of theinvestment from its owners.Interest Expense on Long Term BorrowingsInterest expense on long term borrowings consists of interest expense on our 4.125% Convertible Senior Notes due 2020, issued in April 2015 as part of theconsideration for the City Index acquisition, and interest expense on our 5.00% Convertible Senior Notes due 2022.Non-GAAP Financial MeasuresWe use liquidity available, adjusted net income and adjusted earnings per common share, each of which is a non-GAAP financial measure, to evaluate ourbusiness. We believe our reporting of liquidity available, adjusted net income and adjusted earnings per share assists investors in evaluating our operatingperformance. Liquidity available, adjusted net income and adjusted earnings per common share are not measures of financial performance calculated inaccordance with GAAP. They should be considered in addition to, but not as a substitute for, other measures of our financial performance reported inaccordance with GAAP, such as net income and earnings per common share. Below is a discussion and reconciliation of these non-GAAP financial measures.Liquidity AvailableLiquidity available is a non-GAAP financial measure and consists of our Cash and cash equivalents, plus our Receivables from banks and brokers, plusrevolving credit facility, less the minimum regulatory capital requirements applicable to our business. We use this non-GAAP measure to evaluate our abilityto fund growth in our business.Adjusted Net Income and Adjusted Earnings Per ShareAdjusted net income is a non-GAAP financial measure and represents our net income excluding certain one-time costs and benefits. In addition, adjusted netincome excludes the legal settlement in April 2016 related to Cameron Farley, the debt extinguishment in 2017, a settlement related to a contractual disputewith vendor in November 2018 and a class action settlement in December 2018. We exclude these items from our adjusted net income and adjusted earningsper share, because we view these as transactions that are not part of our core operations, which we believe to be the most meaningful indicators of theCompany’s performance.Adjusted earnings per share is a non-GAAP financial measure and represents our adjusted net income per share. We believe these financial measures assistinvestors in evaluating our operating performance. These non-GAAP financial measures have certain limitations, including that they do not havestandardized meanings. Therefore, our definitions may be different from similar non-GAAP financial measures used by other companies or analysts, and itmay be difficult to compare our financial performance to that of other companies.Reconciliation of Non-GAAP Financial MeasuresFor a reconciliation of free cash available to Cash and cash equivalents, please refer to the “Liquidity and Capital Resources” section below. The followingtable provides a reconciliation of GAAP net income to adjusted net income and adjusted earnings per common share (amounts in thousands except per shareamounts): Year Ended December 31, 2018 2017 201642Table of ContentsNet income/(loss) from continuing operations$27,977 $(14,853) $31,692 Income tax expense/(benefit)8,514 (5,011) 10,839 Equity in net loss of affiliate— 343 62Pre-tax income/(loss)36,491 (19,521) 42,593Adjustments: Impairment of Investment(130) 620 —Other corporate expenses— 827 —Class action settlement(5,398) — —PP&E write-off1,332 — —Dutch auction fees768 — —Restructuring expense762 — 1,041Integration expense— — 2,788Legal settlement5,306 — 9,205Loss on extinguishment of debt— 4,944 —Total adjustments2,640 6,391 13,034Adjusted pre-tax income/(loss)39,131 (13,130) 55,627Adjusted income tax expense/(benefit)9,261 (2,786) 13,712Equity in net loss of affiliate— (343) (62)Non-controlling interest(737) (620) (2,140)Adjusted net income/(loss) (non-GAAP)$29,133 $(11,307) $39,713 Adjusted earnings/(loss) per common share (non-GAAP): Basic$0.67 $(0.24) $0.82 Diluted$0.66 $(0.24) $0.81 Year Ended December 31, 2018 2017 2016Income tax expense/(benefit)$8,514 $(5,011) $10,839 Uncertain tax position (1)(233) (4,604) 1,115Tax reform (2)— 4,516 —One off adjustments (3)(514) (2,137) (3,988)Adjusted income tax expense/(benefit)$9,261 $(2,786) $13,712 Adjusted tax rate (4)23.6% 21.2% 24.6%(1)Represents adjustment caused by a favorable U.S. tax ruling of $(0.2) million in 2018, release of interest and penalties associated with deemeddividends based on amended prior year filings and IRS approved change in accounting method of $4.6 and $1.1 million in 2017 and 2016,respectively(2)Tax adjustments required under the Tax Cuts and Jobs Act (TCJA)(3)Represents adjustments to tax relating to a legal settlement of $5.3 million taxed at 21%, restructuring of $0.7 million taxed at 19%, a PP&E write offof $1.3 million taxed at 19%, fees associated with the share tender of $0.8 million taxed at 21%, a class action settlement of $(5.4) million taxed at21% and an impairment adjustment of $(0.1) million taxed at 19% during 2018; loss on extinguishment of debt expense of $4.9 million taxed at 35%,other corporate expenses of $0.8 million taxed at 35% and an impairment of investment expense of $0.6 million taxed at 19% in 2017; a legalsettlement of $9.2 million taxed at 35%, restructuring of $1.0 taxed at 20% and integration of $2.8 taxed at 20%(4)Adjusted tax rate calculated as Adjusted tax (expense)/benefit divided by Adjusted pre tax income/(loss)43Table of ContentsOperating MetricsIn addition to the financial measures discussed above, we review various key operating metrics, which are described below, to evaluate the performance ofour businesses. Key Operating Metrics (Unaudited) Year Ended December 31, 2018 2017 2016 2015 2014Retail OTC Trading Volume (billions)$2,612.4 $2,473.6 $2,822 $3,985.8 $2,430.5OTC Average Daily Volume (billions)$10.1 $9.6 $10.9 $15.4 $9.4Active OTC Accounts (1) (2)123,171 132,262 126,528 142,836 91,328Client Assets (millions)$626.7 $749.6 $599.5 $675.6 $563.2 Futures Number of Futures Contracts (3)7,965,545 6,857,870 8,304,376 8,623,392 7,027,008Futures Average Daily Contracts31,609 27,322 32,954 34,356 28,108Active Futures Accounts (1)7,717 7,838 8,368 8,668 8,184Client Assets (millions)$215.8 $229.2 $346.0 $245.0 $196.4(1)Represents accounts which executed a transaction over the last 12 months.(2)We have updated our historical active account disclosures to reflect a change in definition for certain accounts.(3)Futures contracts represent the total number of contracts transacted by customers of our futures business.OTC Trading VolumeOTC trading volume is the U.S. dollar equivalent of the aggregate notional value of OTC trades executed by customers in our retail segment.OTC Average Daily VolumeAverage daily volume is the U.S. dollar equivalent of the aggregate notional value of trades executed by our customers in a given period divided by thenumber of trading days in the given period.Active OTC AccountsActive OTC accounts represents retail segment customers who executed at least one trade during the relevant period. We believe active OTC accounts is animportant operating metric because it correlates to trading volume and revenue in our retail segment.Client AssetsClient assets represent amounts due to clients in our retail and futures segments, including customer deposits and unrealized gains or losses arising from openpositions.Number of Futures ContractsNumber of futures contracts represent the total number of contracts transacted by customers in our futures segment.Futures Average Daily ContractsAverage daily futures contracts is the number of futures contracts transacted by our futures customers in a given period divided by the number of trading daysin the given period.Active Futures AccountsActive futures accounts represent customers who executed at least one futures trade during the relevant period.44Table of ContentsWe believe that our customer trading volumes are driven by eight main factors. Four of these factors are broad external factors outside of our control thatgenerally impact customer trading volumes, and include:•overall economic conditions and outlook;•volatility of financial markets;•legislative changes; and•regulatory changes.The volatility of financial markets has generally been positively correlated with customer trading volume. Our customer trading volume is also affected bythe following four additional factors:•the effectiveness of our sales activities;•the competitiveness of our products and services;•the effectiveness of our customer service team; and•the effectiveness of our marketing activities.In order to increase customer trading volume, we focus our marketing and our customer service and education activities on attracting new customers andextending the duration and scope of the relationship our customers have with us.Results of OperationsIn light of the sale of our GTX ECN business in June 2018, which comprised our institutional segment, the results of theinstitutional segment are presented as discontinued operations in our Consolidated Statements of Operations andComprehensive Income.Our segment reporting structure includes two operating segments (retail and futures). These operating segments are discussed in more detail below. We alsoreport information relating to general corporate services in a third segment, corporate and other. Please refer to Notes 1 and 23 to our audited consolidatedfinancial statements for additional information.Unless otherwise stated, financial results discussed herein refer to our continuing operations in our retail, futures, and corporateand other segments.45Table of ContentsYear Ended December 31, 2018 Compared to Year Ended December 31, 2017Revenue (amounts in thousands) Year Ended December 31, 2018 2017 $ Change % ChangeREVENUE: Retail revenue$300,206 $231,100 $69,106 29.9%Futures revenue39,705 37,964 1,741 4.6%Other revenue7,406 4,478 2,928 65.4%Total non-interest revenue347,317 273,542 73,775 27.0%Interest revenue12,503 5,579 6,924 124.1%Interest expense1,863 883 980 111.0%Total net interest revenue10,640 4,696 5,944 126.6%Net revenue$357,957 $278,238 $79,719 28.7%The increase in retail revenue for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to an increase intrading volume, as well as in increase in overall revenue capture compared to the prior year. The increased trading volume for the year ended December 31,2018 primarily reflects a return to more normalized volatility levels as compared to the historically low levels experienced in the year ended December 31,2017.The increase in futures revenue for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to an increase involume.The increase in other revenue for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the receipt of apayment as part of a class action settlement, partially offset by changes in foreign currency revaluations.The increase in interest revenue for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the Company'sfocus on increasing yields from its cash deposits via an increased variety of investment products, supported by base rate increases in certain jurisdictions,including the U.S., during the course of the year.46Table of ContentsExpenses (amounts in thousands) Year Ended December 31, 2018 2017 $ Change % ChangeEmployee compensation and benefits$89,070 $82,686 $6,384 7.7 %Selling and marketing36,460 31,115 5,345 17.2 %Referral fees40,026 53,671 (13,645) (25.4)%Trading expenses22,899 19,406 3,493 18.0 %General and administrative55,239 43,506 11,733 27.0 %Depreciation and amortization19,654 17,045 2,609 15.3 %Purchased intangible amortization14,171 13,966 205 1.5 %Communications and technology21,961 19,226 2,735 14.2 %Bad debt provision2,508 (247) 2,755 NMRestructuring expenses762 — 762 100.0 %Legal settlement5,306 — 5,306 100.0 %Impairment of investment(130) 620 (750) (121.0)%Total operating expense307,926 280,994 26,932 9.6 %OPERATING PROFIT/(LOSS)50,031 (2,756) 52,787 NMInterest expense on long term borrowings13,540 11,821 1,719 14.5 %Loss on extinguishment of debt— 4,944 (4,944) (100.0)%INCOME/(LOSS) BEFORE INCOME TAX(BENEFIT)/EXPENSE36,491 (19,521) 56,012 286.9 %Income tax expense/(benefit)$8,514 $(5,011) $13,525 269.9 %The increase in employee compensation and benefits for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarilydue to an increase in amounts to be paid pursuant to the Company's incentive compensation plan due to stronger financial results for the period endedDecember 31, 2018.The increase in selling and marketing expense for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due toincreases in marketing expenditures for our retail segment to support our key strategy of organic growth, with the aim of growing new and active directcustomers going forward.The decrease in referral fees for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the decrease inindirect volume and a lower referral fee per million due to ongoing partner optimization efforts during the year ended December 31, 2018.The increase in trading expenses for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the increasedclearing fees in the futures business due to an increase in volume.The increase in general and administrative expenses for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily dueto an increase in payment processing fees and spreadbet duty driven by higher customer engagement and an increase in professional fees related to tax andlegal services. The increase in general and administrative expenses also reflected an increase in irrecoverable value-added sales tax in the U.K. caused achange in the mix of business booked through our U.K. operating subsidiary, as well as the effect of a one-time credit received in the prior year.The increase in communications and technology expense for the year ended December 31, 2018 compared to the year ended December 31, 2017 wasprimarily related to an increase in software maintenance costs.The increase in bad debt provision for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the negativebalances experienced by certain of our customers caused by the increased volatility during the year ended December 31, 2018.47Table of ContentsThe increase in legal settlement was due to the Company settling an ongoing contractual dispute with a service provider relating to the historical deploymentof software supporting one of our legacy trading platforms.The decrease in impairment of investment for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to arecovery of funds received from a small equity method investment.During the third quarter of 2017, we repurchased $71.8 million in principal amount of our 4.125% Convertible Senior Notes due 2018 using a portion of thenet proceeds of the offering of our 5.00% Convertible Senior Notes due 2022. As a result, we recognized a debt extinguishment loss of $4.9 million for theyear ended December 31, 2017.Income tax expense for the year ended December 31, 2018 increased $13.5 million, with a tax expense of $8.5 million compared to a tax benefit of $5.0million in the year ended December 31, 2017. Our effective tax rate for the year ended December 31, 2018 was 23.3%, compared to an effective tax rate of25.7% for the year ended December 31, 2017. The decrease in effective tax rate was primarily due to a change in the mix of earnings from different foreignjurisdictions, the impact of the release of income tax contingency reserves, as well as changes due to the Tax Cuts and Jobs Act. Please refer to Note 20 to ouraudited consolidated financial statements for more detail.Segment Results - Year Ended December 31, 2018 Compared to Year Ended December 31, 2017Retail Segment (amounts in thousands) Year Ended December 31, 2018 2017 $ Change % ChangeNet revenue$310,984 $237,420 $73,564 31.0 % Employee compensation and benefits55,447 52,297 3,150 6.0 %Selling and marketing35,378 29,931 5,447 18.2 %Referral fees26,899 39,711 (12,812) (32.3)%Other operating expenses72,747 57,951 14,796 25.5 %Segment profit$120,513 $57,530 $62,983 109.5 %The increase in retail segment net revenue for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to anincrease in trading volume, as well as in increase in overall revenue capture compared to the prior year. The increased trading volume for the year endedDecember 31, 2018 primarily reflects a return to more normalized volatility levels as compared to the historically low levels experienced in the year endedDecember 31, 2017.The increase in employee compensation and benefits expenses for the retail segment for the year ended December 31, 2018 compared to the year endedDecember 31, 2017 was primarily due to an increase in amounts to be paid pursuant to the Company's incentive compensation plan due to stronger financialresults during the year ended December 31, 2018.The increase in selling and marketing expense for the retail segment for the year ended December 31, 2018 compared to the year ended December 31, 2017was primarily related to supporting our key strategy of organic growth, with the aim of growing new and active direct customers going forward.The decrease in referral fees for the retail segment for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due tothe decrease in indirect volume and a lower referral fee per million due to ongoing partner optimization efforts during the year ended December 31, 2018.The increase in other operating expenses for the retail segment for the year ended December 31, 2018 compared to the year ended December 31, 2017 wasprimarily due to an increase in bad debt provision due to the negative balances experienced by certain of our customers for the year ended December 31,2018, increased payment processing fees and spreadbet duty driven by higher customer engagement and an increase in communications and technologyexpense for software maintenance. The increase in other operating expenses also reflected an increase in irrecoverable value-added sales tax in the U.K.caused by a change in the mix of business booked through our U.K. operating subsidiary, as well as the effect of a one-time credit received in the prior year.48Table of ContentsOther operating expenses for the retail segment include general and administrative expenses, communication and technology expenses, trading expenses,and bad debt.Futures Segment (amounts in thousands) Year Ended December 31, 2018 2017 $ Change % ChangeNet revenue$43,967 $40,290 $3,677 9.1 % Employee compensation and benefits9,868 9,387 481 5.1 %Selling and marketing811 786 25 3.2 %Referral fees13,127 13,960 (833) (6.0)%Other operating expenses13,989 12,932 1,057 8.2 %Segment profit$6,172 $3,225 $2,947 91.4 %The increase in futures segment net revenue for the year ended December 31, 2018 compared to the year ended December 31, 2017 was due to an increase involume coupled with improved interest income.The increase in employee compensation and benefits expenses for the futures segment for the year ended December 31, 2018 compared to the year endedDecember 31, 2017 was primarily due to an increase in sales commissions based on the increase in volume, as well as an increase in amounts to be paidpursuant to the Company's incentive compensation plan due to stronger financial results during the year ended December 31, 2018.Selling and marketing expenses for the futures segment remained relatively flat for the year ended December 31, 2018 compared to the year ended December31, 2017.The decrease in referral fees for the futures segment for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily dueto a change in mix caused by an increase in volume from customers introduced by lower cost partners, leading to lower overall referral fees per contract.The increase in other operating expenses for the futures segment for the year ended December 31, 2018 compared to the year ended December 31, 2017 wasprimarily due to an increase in trading costs related to higher volumes.Other operating expenses from the futures segment include general and administrative expenses, communication and technology expenses, and tradingexpenses, and bad debt.Corporate and Other (amounts in thousands) Year Ended December 31, 2018 2017 $ Change % ChangeOther revenue$(2,392) $528 $(2,920) (553.0)% Employee compensation and benefits23,756 21,002 2,754 13.1 %Selling and marketing271 398 (127) (31.9)%Other operating expenses13,770 10,181 3,589 35.3 %Loss$(40,189) $(31,053) $(9,136) (29.4)%Corporate and other provides general corporate services to the Company’s segments. Corporate and other revenue primarily comprises foreign currencytransaction gains and losses. The decrease in corporate and other revenue for the year ended December 31, 2018 compared to the year ended December 31,2017 was primarily due to changes in foreign currency revaluations.The increase in employee compensation and benefits expenses for employees not attributed to any of our operating segments, such as our executive officers,for the year ended December 31, 2018 compared to the year ended December 31, 2017 was49Table of Contentsprimarily due to an increase in amounts to be paid pursuant to the Company's incentive compensation plan due to stronger financial results for the year endedDecember 31, 2018.Selling and marketing expenses not attributed to any of our operating segments remained relatively flat for the year ended December 31, 2018 compared tothe year ended December 31, 2017.The increase in other operating expenses not attributed to any of our operating segments for the year ended December 31, 2018 compared to the year endedDecember 31, 2017 was primarily due to an increase in professional fees related to tax and legal services. The increase in other operating expenses alsoreflected an increase in irrecoverable value-added sales tax in the U.K. caused by change in the mix of business booked through our U.K. operatingsubsidiary, as well as the effect of a one-time credit received in the prior year.Year Ended December 31, 2017 Compared to Year Ended December 31, 2016Revenue (amounts in thousands) Year Ended December 31, 2017 2016 $ Change % ChangeREVENUE: Retail revenue$231,100 $330,744 $(99,644) (30.1)%Futures revenue37,964 47,430 (9,466) (20.0)%Other revenue4,478 3,504 974 27.8 %Total non-interest revenue273,542 381,678 (108,136) (28.3)%Interest revenue5,579 1,624 3,955 243.5 %Interest expense883 552 331 60.0 %Total net interest revenue4,696 1,072 3,624 338.1 %Net revenue$278,238 $382,750 $(104,512) (27.3)%The decrease in retail revenue for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to a decrease involume related to indirect customers and overall revenue capture compared to the prior year, primarily due to historically low levels of market volatility.The decrease in futures revenue for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to a decrease involume across all futures customer types.The increase in other revenue for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to changes in foreigncurrency revaluations, partially offset by a decrease in data fees relating to dormant customer accounts.50Table of ContentsExpenses (amounts in thousands) Year Ended December 31, 2017 2016 $ Change % ChangeEmployee compensation and benefits$82,686 $90,617 $(7,931) (8.8)%Selling and marketing31,115 28,642 2,473 8.6 %Referral fees53,671 70,752 (17,081) (24.1)%Trading expenses19,406 23,399 (3,993) (17.1)%General and administrative43,506 53,206 (9,700) (18.2)%Depreciation and amortization17,045 13,203 3,842 29.1 %Purchased intangible amortization13,966 12,872 1,094 8.5 %Communications and technology19,226 19,857 (631) (3.2)%Bad debt provision(247) 4,154 (4,401) (105.9)%Restructuring expenses— 1,041 (1,041) (100.0)%Integration expenses— 2,788 (2,788) (100.0)%Legal settlement— 9,205 (9,205) (100.0)%Impairment of investment620 — 620 100.0 %Total operating expense280,994 329,736 (48,742) (14.8)%OPERATING PROFIT(2,756) 53,014 (55,770) (105.2)%Interest expense on long term borrowings11,821 10,421 1,400 13.4 %Loss on extinguishment of debt4,944 — 4,944 100.0 %INCOME BEFORE INCOME TAX EXPENSE/(BENEFIT)(19,521) 42,593 (62,114) (145.8)%Income tax expense/(benefit)$(5,011) $10,839 $(15,850) (146.2)%The decrease in employee compensation and benefits for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarilydue to a reduction in commission-based payments as a result of the decrease in volume and changes in methodology for calculating certain employeecommissions for the period ended December 31, 2017.The increase in selling and marketing expense for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due toincreases in marketing expenditures for our retail segment to support our organic growth strategy during the year ended December 31, 2017.The decrease in referral fees for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to the decrease inindirect volume during the year ended December 31, 2017 as part of ongoing partner optimization.The decrease in trading expenses for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to a decrease inclearing fees and market data payments in line with the decrease in volume.The decrease in general and administrative expenses for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily dueto a reduction in vendor payments, specifically in audit fees and regulatory assessments, and a reduction in rent due to renegotiation or extension of leasedfacilities, as well as a reduction in banking fees.The decrease in communications and technology expense for the year ended December 31, 2017 compared to the year ended December 31, 2016 wasprimarily due to a decrease in spending on third-party services during the year ended December 31, 2017 as part of our ongoing cost saving plan.The decrease in bad debt provision for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to largerecoveries from 2015 and 2016 debtors offset by minimal bad debt incurred within the year.On April 28, 2016, we entered into a settlement agreement with the claimants in the Cameron Farley Ltd. matter. Pursuant to the terms of the settlementagreement, we agreed to make a one-time settlement payment in exchange for a full and final settlement of all claims. The settlement amount, net of insurancerecoveries, totaled approximately $9.2 million.51Table of ContentsThe increase in impairment of investment for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to animpairment of a small equity method investment.During the third quarter of 2017, we repurchased $71.8 million in principal amount of our 4.125% Convertible Senior Notes due 2018 using a portion of thenet proceeds of the offering of our 5.00% Convertible Senior Notes due 2022. As a result, we recognized a debt extinguishment loss of $4.9 million for theyear ended December 31, 2017.Income tax expense for the year ended December 31, 2017 decreased $15.9 million, with a tax benefit of $5.0 million compared to a tax expense of $10.8million in the year ended December 31, 2016. Our effective tax rate for the year ended December 31, 2017 was 25.7%, compared to an effective tax rate of25.5% for the year ended December 31, 2016. The increase in effective tax rate was primarily due to a change in the mix of earnings from different foreignjurisdictions, the impact of the release of income tax contingency reserves, as well as changes due to the Tax Cuts and Jobs Act. Please refer to Note 20 to ouraudited consolidated financial statements for more detail.Segment Results - Year Ended December 31, 2017 Compared to Year Ended December 31, 2016Retail Segment (amounts in thousands) Year Ended December 31, 2017 2016 $ Change % ChangeNet revenue$237,420 $336,354 $(98,934) (29.4)% Employee compensation and benefits52,297 52,640 (343) (0.7)%Selling and marketing29,931 27,666 2,265 8.2 %Referral fees39,711 55,080 (15,369) (27.9)%Other operating expenses57,951 69,859 (11,908) (17.0)%Segment profit$57,530 $131,109 $(73,579) (56.1)%The decrease in retail segment net revenue for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to adecrease in volume related to indirect customers with revenue capture trailing the prior year, primarily due to historically low levels of volatility.The decrease in employee compensation and benefits expenses for the retail segment for the year ended December 31, 2017 compared to the year endedDecember 31, 2016 was primarily due to a reduction in our annual employee incentive compensation costs based on the decrease in our results for the yearended December 31, 2017.The increase in selling and marketing expenses for the retail segment for the retail segment for the year ended December 31, 2017 compared to the year endedDecember 31, 2016 was primarily due to an increase in marketing expenditures to support our organic growth strategy during the year ended December 31,2017.The decrease in referral fees for the retail segment for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due tothe decrease in indirect volume for the year ended December 31, 2017 as part of ongoing partner optimization.The decrease in other operating expenses for the retail segment for the year ended December 31, 2017 compared to the year ended December 31, 2016 wasprimarily due to a reduction in bank charges and UK trading expenses, as well as a reduction in bad debt related to large recoveries from 2015 and 2016debtors, offset by minimal bad debt incurred in 2017.Other operating expenses for the retail segment include general and administrative expenses, communication and technology expenses, trading expenses,and bad debt.52Table of ContentsFutures Segment (amounts in thousands) Year Ended December 31, 2017 2016 $ Change % ChangeNet revenue$40,290 $48,084 $(7,794) (16.2)% Employee compensation and benefits9,387 11,967 (2,580) (21.6)%Selling and marketing786 972 (186) (19.1)%Referral fees13,960 15,672 (1,712) (10.9)%Other operating expenses12,932 14,769 (1,837) (12.4)%Segment profit$3,225 $4,704 $(1,479) (31.4)%The decrease in futures segment net revenue for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to adecrease in volume across all customer types.The decrease in employee compensation and benefits expenses for the futures segment for the year ended December 31, 2017 compared to the year endedDecember 31, 2016 was primarily due to lower commissions paid to employees as a result of the decrease in trading volume and related revenue.Selling and marketing expenses for the futures segment remained relatively flat for the year ended December 31, 2017 compared to the year ended December31, 2016.The decrease in referral fees for the futures segment for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily dueto a decrease in trading volume.The decrease in other operating expenses for the futures segment for the year ended December 31, 2017 compared to the year ended December 31, 2016 wasprimarily due to a decrease in charges from our clearing brokers due to the decrease in trading volume.Other operating expenses from the futures segment include general and administrative expenses, communication and technology expenses, trading expenses,and bad debt.Corporate and Other (amounts in thousands) Year Ended December 31, 2017 2016 $ Change % ChangeOther revenue$528 $(1,688) $2,216 (131.3)% Employee compensation and benefits21,002 26,010 (5,008) (19.3)%Selling and marketing398 4 394 NMOther operating expenses10,181 15,988 (5,807) (36.3)%Loss$(31,053) $(43,690) $12,637 28.9 %The increase in corporate and other revenue for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due tochanges in foreign currency revaluations.The decrease in employee compensation and benefits expenses for employees not attributed to any of our operating segments, such as our executive officers,for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to a reduction in our annual employee incentivecompensation costs based on the decrease in results for the year ended December 31, 2017.The increase in selling and marketing expenses not attributed to any of our operating segments for the year ended December 31, 2017 compared to the yearended December 31, 2016 was primarily related to marketing for the Company’s payments service offering.53Table of ContentsThe decrease in other operating expenses not attributed to any of our operating segments for the year ended December 31, 2017 compared to the year endedDecember 31, 2016 was primarily due to a reduction in corporate related insurance costs, temporary staffing costs, vendor payments and a reduction in rentpayments due to renegotiation or extension of leased facilities as part of our ongoing cost saving plan.Liquidity and Capital ResourcesWe have historically financed our liquidity and capital needs primarily through the use of funds generated from operations by our subsidiaries, the issuanceof debt and equity securities, including the 4.125% Convertible Senior Notes due 2020 that were issued in 2015 in connection with our acquisition of CityIndex, the 5.00% Convertible Senior Notes due 2022 that were issued in the third quarter of 2017, and access to secured lines of credit, such as the revolvingcredit facility entered into in August 2017. In June 2018, we completed the sale of our GTX ECN business for a purchase price of $100 million, less a workingcapital adjustment which amounted to a $0.2 million reduction in the purchase price, resulting in cash sale proceeds of approximately $85.0 million, net oftaxes and transaction-related expenses and fees. Those proceeds helped fund the share tender Dutch auction in November 2018, under which almost 6.4million shares of common stock were repurchased at $7.84 per share, for a total purchase price of $50.0 million. We plan to finance our future operatingliquidity and regulatory capital needs in a manner consistent with our past practice. We expect that our capital expenditures for the next 12 months willremain in line with 2018 of between $14 million and $16 million.Our cash and cash equivalents and customer cash and cash equivalents are held at banks, deposits at liquidity providers, in money market funds that invest inhighly liquid investment grade securities including short-term U.S. treasury bills, as well as directly in U.S. treasury bills. In general, we believe all of ourinvestments and deposits are of high credit quality and we have more than adequate liquidity to conduct our businesses.Several of our operating subsidiaries are subject to requirements of regulatory bodies, including the CFTC and NFA in the United States, the FCA in theUnited Kingdom, the FSA in Japan, the SFC in Hong Kong, IIROC and the OSC in Canada, MAS in Singapore, ASIC in Australia, and the CIMA in theCayman Islands, which limit funds available for the payment of dividends to GAIN Capital Holdings, Inc. As a result, we may be unable to access fundswhich are generated by our operating subsidiaries when we need them.Regulatory Capital RequirementsThe following table illustrates the minimum regulatory capital our subsidiaries were required to maintain as of December 31, 2018 and the actual amounts ofcapital that were maintained on that date (amounts in millions):Entity NameMinimumRegulatoryCapitalRequirements CapitalLevelsMaintained ExcessNetCapitalGAIN Capital Group, LLC$34.2 $53.9 $19.7GAIN Capital Securities, Inc.0.1 0.4 0.3GAIN Capital U.K., Ltd.56.2 194.3 138.1GAIN Capital Japan Co., Ltd.1.2 10.8 9.6GAIN Capital Australia, Pty. Ltd.0.7 6.2 5.5GAIN Capital-Forex.com Hong Kong, Ltd.1.9 3.6 1.7GAIN Global Markets, Inc.0.2 1.6 1.4GAIN Capital-Forex.com Canada, Ltd.0.2 1.4 1.2GAIN Capital Singapore Pte., Ltd.3.7 9.0 5.3Trade Facts, Ltd.0.6 3.4 2.8Global Assets Advisors, LLC0.0 2.7 2.7Total$99.0 $287.3 $188.3Our futures commission merchant and forex dealer subsidiary, GCGL, is subject to the Commodity Futures Trading Commission Net Capital Rule (Rule 1.17)and NFA Financial Requirements, Sections 1 and 11. Under applicable provisions of these regulations, GCGL is required to maintain adjusted net capital ofthe greater of $1.0 million or 8% of Customer and Non-Customer Risk Maintenance Margin, or $20.0 million plus 5% of all liabilities owed to retailcustomers exceeding $10.054Table of Contentsmillion, plus 10% of all liabilities owed to eligible contract participant counterparties acting as a dealer that are not an affiliate. Net capital represents currentassets less total liabilities as defined by CFTC Rule 1.17. GCGL’s current assets primarily consist of cash and cash equivalents reported on its balance sheetas cash, receivables from brokers and trading securities, which are generally short-term U.S. government securities. GCGL’s total liabilities include payablesto customers, accrued expenses, accounts payable, sales and marketing expense payable, introducing broker fees payable and other liabilities. From netcapital we take certain percentage deductions or haircuts against assets held based on factors required by the Commodity Exchange Act to calculate adjustednet capital. GCGL’s net capital and adjusted net capital changes from day to day. As of December 31, 2018, GCGL had net capital of approximately $53.9million and net capital requirements and haircut charges of $34.2 million. As of December 31, 2018, GAIN Capital Group’s excess net capital was $19.7million. We believe that we currently have sufficient capital to satisfy these on-going minimum net capital requirements. In accordance with CFTCregulation 1.12 and NFA Financial Requirements Section 1, a 20.0% decrease in GCGL’s net capital and a 30.0% decrease in excess net capital due to aplanned equity withdrawal requires regulatory notification and/or approval.GAIN Capital Securities, Inc. (“GCSI”) is a broker-dealer registered with the SEC under the Securities Exchange Act of 1934, as amended. GCSI is a memberof the Financial Industry Regulatory Authority (“FINRA”), Municipal Securities Rulemaking Board (“MSRB”), and Securities Investor ProtectionCorporation (“SIPC”). Pursuant to the SEC’s Uniform Net Capital Rule 15c3-1, GCSI is required to maintain a minimum net capital balance (as defined) of$0.1 million. GCSI must also maintain a ratio of aggregate indebtedness (as defined) to net capital of not more than 15 to 1. At December 31, 2018, GCSImaintained $0.3 million more than the minimum required regulatory capital for a total of 4.0 times the required capital.GCUK is regulated by the FCA as a full scope €730k IFPRU Investment Firm. GCUK is required to maintain the greater of approximately $0.8 million(€730,000) or the Financial Resources Requirement, which is calculated as the sum of the firm’s operational, credit, counterparty, concentration and marketrisk. At December 31, 2018, GCUK maintained $138.1 million more than the minimum required regulatory capital for a total of 3.5 times the required capital.GAIN Capital Japan Co., Ltd. ("GCJP") is a registered Type I financial instruments business firm regulated by the Japan Financial Services Agency (“FSA”) inaccordance with Financial Instruments and Exchange Law (Law No. 25 of 1948, as amended). GCJP is a member of the Financial Futures Association ofJapan. GCJP is subject to a minimum capital adequacy ratio of 140%, which is derived by dividing Net Capital (as defined in Law No. 25) by the sum ofGCJP’s market, counterparty credit risk and operational risk. At December 31, 2018, GC Japan maintained $9.6 million more than the minimum requiredregulatory capital for a total of 9.0 times the required capital.GAIN Capital Australia, Pty. Ltd. ("GCAU") is regulated under the laws of Australia, including the Corporations Act 2001 (Commonwealth of Australia).GCAU holds an Australian Financial Services License that has been issued by ASIC. GCAU is required to maintain a minimum capital requirement of $0.7million (1.0 million AUD). The regulatory capital held is required to be in excess of 110% of its requirements at all times. At December 31, 2018, GCAUmaintained $5.5 million more than the minimum required regulatory capital for a total of 8.9 times the required capital.GAIN Capital-Forex.com Hong Kong, Ltd. ("GCHK") is licensed by the Securities and Futures Commission (“SFC”) to carry out Type 3 Regulated Activity,Leveraged Foreign Exchange Trading. GCHK is subject to the requirements of section 145 of the Securities and Futures Ordinance (Cap.571). Under this rule,GCHK is required to maintain a minimum liquid capital requirement of $1.9 million (15.0 million HKD). At December 31, 2018, GCHK maintained $1.7million more than the minimum required regulatory capital for a total of 1.9 times the required capital.GAIN Global Markets, Inc. ("GGMI"), the Company’s Cayman Island subsidiary, is a registered securities arranger and market maker with the Cayman IslandsMonetary Authority (“CIMA”). GGMI is required to maintain a capital level that is the greater of one quarter of relevant annual expenditure, or the financialresources requirement which is the sum of the Base Requirement, counterparty and position risk requirement, or $0.2 million. At December 31, 2018, GGMImaintained $1.4 million more than the minimum required regulatory capital for a total of 8.0 times the required capital.GAIN Capital-Forex.com Canada, Ltd. ("GCCA") is a Dealer Member of the Investment Industry Regulatory Organization of Canada (“IIROC”) and regulatedunder the laws of Canada, including the Canadian Investor Protection Fund. In Canada, the securities industry is governed by provincial or territoriallegislation, and there is no national regulator. Local legislation differs from province to province and territory to territory, but generally requires that forexdealing representatives register with applicable regulators and self-regulatory organizations in order to offer forex and/or CFD products to retail clients.GCCA’s principal provincial regulator is the Ontario Securities Commission, or OSC. GCCA is required to maintain risk-adjusted capital in excess of theminimum capital requirement. At December 31, 2018, GCCA maintained $1.2 million more than the minimum required regulatory capital for a total of 7.0times the required capital.55Table of ContentsGAIN Capital Singapore Pte., Ltd. ("GCS") is registered by the Monetary Authority of Singapore (“MAS”) and operates as an approved holder of CapitalMarket Services License. GCS is subject to the requirements of MAS and pursuant to the Securities and Futures Act (Cap 289). Under these rules GCS isrequired to maintain a minimum base capital of approximately $3.7 million (5.0 million SGD) and Financial Resources in excess of 120% of the total riskrequirements, which is calculated as the sum of operational, counterparty, large exposure and market risk at all times. At December 31, 2018, GCS maintained$5.3 million more than the required minimum regulatory capital for a total of 2.4 times the required capital.Trade Facts, Ltd. ("Trade Facts") is regulated by the FCA as a BIPRU Limited License Firm. Trade Facts is required to maintain the greater of a base financialresource requirement of approximately $0.1 million (€0.05 million) and a capital requirement of the higher of either credit risk plus market risk or a fixedoverhead requirement. At December 31, 2018, Trade Facts maintained $2.8 million more than the minimum required regulatory capital for a total of 5.7 timesthe required capital.GAA is a registered Introducing Broker and is subject to the CFTC Net Capital Rule (Rule 1.17). Under applicable provisions of these rules, GAA is requiredto maintain adjusted net capital of less than $0.1 million. At December 31, 2018, GAA maintained $2.7 million more than the minimum required regulatorycapital.Effective from 2016, the FCA began transitioning in additional capital requirements in the form of a conservation buffer and a countercyclical capital bufferas set out in Capital Requirements Directive, or CRD IV, Article 160 Transitional Provisions for Capital Buffers. The transitional period began on January 1,2016 and the minimum common equity tier 1 capital ratio requirement, currently at 6.375% for the year of 2018, increased to 7.0% as of January 1, 2019. Thefirm maintained a common equity tier 1 capital ratio of 25.9% as at December 31, 2018, the effect of the countercyclical buffer on the firm's existing capitalrequirements is negligible.Operating CashWe are required to maintain cash on deposit with our liquidity providers in order to conduct our hedging activities. As of December 31, 2018, we posted$84.3 million in cash with liquidity providers. As of December 31, 2018, our total client assets were $842.5 million compared to $978.8 million as ofDecember 31, 2017, a decrease of $136.3 million. Total client assets represent amounts due to clients, including deposits and unrealized gains or lossesarising from open positions.The table set forth below provides a measure of our available liquidity as of December 31, 2018 and 2017, respectively. We believe our reporting of availableliquidity assists investors in evaluating our performance. We use this non-GAAP measure to evaluate our ability to continue to fund growth in our business(amounts in millions): December 31, 2018 December 31, 2017Cash and cash equivalents$278.9 $209.7Receivables from brokers84.3 78.5Revolving credit facility (undrawn)50.0 50.0 Net operating cash413.2 338.2Less: Minimum regulatory requirements(99.0) (112.9)Less: Payables to brokers(1.6) (2.8)Less: Convertible senior notes due 2018— (6.4) Liquidity (1)$312.6 $216.1(1)Our Convertible Senior Notes due 2020 and 2022 are excluded given their long-dated maturityThe increase in our liquidity for the twelve months ended December 31, 2018 was primarily due to net income of $92.9 million, plus non-cash expenses of$33.8 million, and a $13.9 million decrease in our minimum regulatory requirements, partially offset by the purchase of treasury stock of $63.6 million andthe $6.4 million settlement of the remaining Convertible Senior Notes issues on November 27, 2013.Convertible Senior NotesOn November 27, 2013, the Company issued $80.0 million principal amount of 4.125% Convertible Senior Notes maturing on December 1, 2018. TheCompany received net proceeds of $77.9 million, after deducting the initial purchasers' discount. These Convertible Senior Notes pay interest semi-annuallyon June 1 and December 1 at a rate of 4.125% per year, which commenced on June 1, 2014. During the first quarter of 2016, the Company repurchased $1.9million in principal amount of the convertible56Table of Contentssenior notes due in 2018, for an aggregate purchase price of $1.7 million. During the third quarter of 2017, the Company repurchased $71.8 million inprincipal amount of the convertible senior notes due in 2018, for an aggregate purchase price of $73.7 million with the proceeds from the issuance ofConvertible Senior Notes due in 2022. As a result, we recognized an extinguishment loss of $4.9 million. During the fourth quarter of 2018, the Companysettled the remaining $6.4 million in outstanding notes at maturity.On April 1, 2015, as part of the consideration for our acquisition of City Index, we issued $60.0 million aggregate principal amount of our 4.125%Convertible Senior Notes due 2020 to City Index Group Limited. These notes bear interest at a fixed rate of 4.125% per year, payable semi-annually in arrearson April 1 and October 1 of each year, beginning on October 1, 2015. The notes are convertible into cash, shares of our common stock, or a combinationthereof, at our election, subject to certain limitations. The notes will mature on April 1, 2020, unless earlier converted, redeemed or repurchased. We may notredeem the notes until the two year period prior to the maturity date of the notes.On August 22, 2017, we issued $92.0 million aggregate principal amount of our 5.00% Convertible Senior Notes due 2022, which includes the exercise infull of the over-allotment option granted to the initial purchasers of the notes, in a private offering to qualified institutional buyers pursuant to Rule 144Aunder the Securities Act of 1933, as amended. The notes bear interest at a fixed rate of 5.00% per year, payable semi-annually in arrears on February 15 andAugust 15 of each year, beginning on February 15, 2018. The notes are convertible into cash, shares of our common stock, or a combination thereof, at ourelection. The notes will mature on August 15, 2022, unless earlier converted, redeemed or repurchased. We may not redeem the notes prior to August 15,2020. The net proceeds from the offering of these notes were approximately $88.4 million, after deducting discounts to the initial purchasers and estimatedoffering expenses payable by the Company.Under applicable U.S. Generally Accepted Accounting Principles (“GAAP”), an entity must separately account for the liability and equity components ofconvertible debt instruments whose conversion may be settled entirely or partially in cash in a manner that reflects the issuer’s economic interest cost for non-convertible debt. The liability component of the notes is initially valued at the fair value of a similar debt instrument that does not have an associated equitycomponent and is reflected as a liability in our consolidated balance sheet in an amount equal to the fair value, which, as of December 31, 2018 and 2017,was $132.1 million and $132.2 million, respectively. The equity component of the notes is included in the additional paid-in capital section of ourshareholders’ equity on our Consolidated Balance Sheets, and the value of the equity component is treated as original issue discount for purposes ofaccounting for the debt component. The equity component, as of December 31, 2018 and 2017, for our convertible senior notes was $38.6 million and $38.6million, respectively. This original issue discount is amortized to non-cash interest expense over the term of the notes, and, as a result, we record a greateramount of interest expense in current periods. Accordingly, we reported lower net income in our financial results than would have been recorded had wereflected only cash interest expense in our consolidated income statement because ASC 470-20 requires the interest expense associated with the notes toinclude both the current period’s amortization of the original issue discount and the notes’ cash coupon interest, which could adversely affect our reported orfuture financial results, the trading price of our common stock and the trading price of the notes.In addition, under certain circumstances, convertible debt instruments whose conversion may be settled entirely or partly in cash (such as 4.125%Convertible Senior Notes due 2020 and 5.00% Convertible Senior Notes due 2022) are currently accounted for using the treasury stock method. Under thismethod, the shares issuable upon conversion of the notes are not included in the calculation of diluted earnings per share unless the conversion value of thenotes exceeds their principal amount at the end of the relevant reporting period. If the conversion value exceeds their principal amount, then, for dilutedearnings per share purposes, the notes are accounted for as if the number of shares of common stock that would be necessary to settle the excess, if we electedto settle the excess in shares, were issued. The accounting standards in the future may not continue to permit the use of the treasury stock method. If we areunable to use the treasury stock method in accounting for the shares, if any, issuable upon conversion of the notes, then our diluted earnings (loss) per sharecould be adversely affected.Credit FacilityOn August 3, 2017, the Company entered into a Credit Agreement, dated as of August 2, 2017, for a three year U.S. $50.0 million senior secured first lienrevolving credit facility that matures in August 2020. Upon request of the Company, the credit facility may be increased by up to $25.0 million, with aminimum increase of $5.0 million. The credit facility contains covenants that are customary for an issuer with senior debt. As of December 31, 2018, we werein compliance with the covenants for our credit facility. The Company will pay a quarterly commitment fee based on the undrawn portion of the facility andinterest on amounts drawn.As of December 31, 2018, there were no amounts outstanding under the revolving line of credit.57Table of ContentsCash FlowThe following table sets forth a summary of our cash flow for each of the three years ended December 31, 2018 (amounts in thousands): Year ended December 31, 2018 2017 2016Net cash (used in)/provided by operating activities$(129,274) $5,779 $202,055Net cash provided by/(used in) investing activities78,868 (28,114) (31,327)Net cash used in financing activities(79,330) (21,530) (21,175)Effect of exchange rate changes on cash and cash equivalents(42,164) 52,153 (61,834)NET (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS, ANDRESTRICTED CASH$(171,900) $8,288 $87,719The primary drivers of our cash flow provided by/(used for) operating activities are net income, adjusted for non-cash charges, such as depreciation andamortization, and amounts posted as collateral with liquidity providers.Our largest operating expenses are employee compensation and benefits, marketing and referral fees. Employee compensation and benefits include salaries,bonuses and other employee related costs, as well as commissions paid to certain sales personnel. Marketing expenses consist primarily of selling andpromotional costs to support our retail and futures brands. Referral fees consist primarily of payments made to our white label partners and introducingbrokers.Unrealized gains and losses on cash positions revalued at prevailing foreign currency exchange rates are included in trading revenue but have no directimpact on cash flow from operations. Gains and losses become realized and impact cash flow from operations when customer transactions are liquidated. Tosome extent, the amount of net deposits made by our customers in any given period is influenced by the impact of unrealized gains and losses on ourcustomer balances, such that customers may be required to post additional funds to maintain open positions or may choose to withdraw excess funds on openpositions.Year Ended December 31, 2018 Compared to Year Ended December 31, 2017Operating ActivitiesCash used for operating activities was $129.3 million for the year ended December 31, 2018, compared to $5.8 million provided by operating activities forthe year ended December 31, 2017. Payables to customers decreased approximately $104.6 million, the Company purchased $103.8 million of U.S. Treasurysecurities held for customers and had a gain on the sale of GTX of $69.3 million for the year ended December 31, 2018. This was partially offset by anincrease in net income of approximately $104.2 million.Investing ActivitiesCash provided by investing activities was $78.9 million for the year ended December 31, 2018, compared to $28.1 million used for investing activities in theyear ended December 31, 2017. The increase was primarily due to the proceeds from the sale of the GTX business of $96.5 million.Financing ActivitiesCash used for financing activities was $79.3 million for the year ended December 31, 2018, compared to $21.5 million used for financing activities for theyear ended December 31, 2017. Cash used for the purchase of treasury stock increased $37.4 million due to our stock repurchase activities, in particular forpurchases made as part of the modified Dutch offering.Year Ended December 31, 2017 Compared to Year Ended December 31, 2016Operating ActivitiesCash provided by operating activities was $5.8 million for the year ended December 31, 2017, compared to $202.1 million provided by operating activitiesfor the year ended December 31, 2016. Payables to customers decreased approximately $82.6 million, net income decreased $48.0 million and receivablesfrom brokers decreased $75.9 million for the year ended December 31, 2017.Investing Activities58Table of ContentsCash used for investing activities was $28.1 million for the year ended December 31, 2017, compared to $31.3 million used for investing activities in theyear ended December 31, 2016. There was a net decrease of $3.0 million in the cash used for the purchase of property and equipment.Financing ActivitiesCash used for financing activities was $21.5 million for the year ended December 31, 2017, compared to $21.2 million used for financing activities for theyear ended December 31, 2016. Cash used for the purchase of treasury stock increased $17.2 million due to our stock repurchase activities, in particular forpurchases made as part of the convertible refinancing, offset by the net impact of the convertible note refinancing of $17.7 million for the year endedDecember 31, 2017.Capital ExpendituresCapital expenditures were $14.7 million for the year ended December 31, 2018, compared to $20.9 million for the year ended December 31, 2017 and $23.9million for the year ended December 31, 2016. Capital expenditures for the years ended December 31, 2018, 2017, and 2016 were primarily related to thedevelopment and additional features to various trading platforms and websites.Off-Balance-Sheet ArrangementsAt December 31, 2018 and 2017 we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to asstructured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or othercontractually narrow or limited purposes.Contractual ObligationsThe following table sets forth our contractual obligations as of December 31, 2018 (amounts in thousands): Less than 1-3 3-5 More thanTotal 1 Year Years Years 5 YearsPurchase Obligations$27,668 $19,003 $7,780 $885 $—Operating Leases17,843 4,601 6,332 4,907 2,003Total$45,511 $23,604 $14,112 $5,792 $2,003The amounts reported above for “Purchase Obligations” are calculated to include mandatory pre-cancellation notice periods, if any. Excluded from theamounts set forth above are obligations relating to the $60.0 million in principal amount of our 4.125% Convertible Senior Notes due 2020 that were issuedin 2015 in connection with our acquisition of City Index, and the $92.0 million in principal amount of our 5.00% Convertible Senior Notes due 2022 that weissued in the third quarter of 2017, as our obligations under these Convertible Senior Notes are not certain to be settled in cash. By their terms, theseConvertible Senior Notes may be settled in cash, shares of our common stock or in a combination of shares and cash at our discretion. Purchase obligationsdue in less than one year primarily consist of agreements with service providers related to maintenance, data, system support and network services.Critical Accounting Policies and EstimatesOur consolidated financial statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. The preparationof these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Weevaluate these estimates and assumptions on an ongoing basis. We base our estimates on the information currently available to us and on various otherassumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions orconditions.An accounting policy is deemed to be critical if it requires management’s most difficult, subjective, or complex judgments, often as a result of the need tomake estimates about the effects of matters that are inherently uncertain. While our significant accounting policies are described in more detail in the notes toour consolidated financial statements, we believe the following59Table of Contentsaccounting policies are critical to the estimates and assumptions used in the preparation of our consolidated financial statements.Goodwill and Intangible AssetsWe obtained goodwill and intangible assets as a result of the acquisitions of certain of our subsidiaries. Goodwill represents the excess of the cost over thefair market value of net assets acquired. We are required to periodically assess whether any of our goodwill is impaired. In order to do this, we apply judgmentin determining our reporting units, which represent our business segments. In accordance with relevant GAAP, we test goodwill for impairment on an annualbasis during the fourth quarter and on an interim basis when conditions indicate impairment may have occurred. When testing for goodwill impairment, theCompany first assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely thannot that the fair value of a reporting unit is less than its carrying amount. If the Company concludes it is more likely than not that the fair value of a reportingunit is less than its carrying amount, a quantitative fair value test is performed to determine any potential impairment loss. We performed our annual test forgoodwill impairment in the fourth quarter of 2018 and noted there was no impairment. Intangible assets with definite useful lives are subject to amortization and are evaluated for recoverability when events or changes in circumstances indicatethat an intangible asset’s carrying amount may not be recoverable in accordance with ASC 360, Property, Plant, and Equipment. If such an event or changeoccurs, we estimate cash flows directly associated with the use of the intangible asset to test its recoverability and assess its remaining useful life. Theprojected cash flows require assumptions related to revenue growth, operating margins and other relevant market, economic and regulatory factors. If theexpected undiscounted future cash flows from the use and eventual disposition of a finite‑lived intangible asset or asset group are not sufficient to recover thecarrying value of the asset, we then compare the carrying amount to its current fair value. We estimate the fair value using market prices for similar assets, ifavailable, or by using a discounted cash flow model. We then recognize an impairment loss for the amount by which the carrying amount exceeds its fairvalue. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.Income TaxesASC 740, Income Taxes, establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for incometaxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences ofevents that have been recognized in an entity’s financial statements or tax returns. A valuation allowance may be recorded against deferred tax assets if it ismore likely than not that those assets will not be realized. Judgment is required in assessing the future tax consequences of events that have been recognizedin our financial statements or tax returns. Fluctuations in the actual outcome of these future tax consequences could materially impact our financial positionor results of operations. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by thetaxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measuredbased on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate resolution. We considermany factors when evaluating and estimating our tax positions and tax benefits. Such estimates involve interpretations of regulations, rulings, case law, etc.and are inherently complex. Our estimates may require periodic adjustments and may not accurately anticipate actual outcomes as resolution of income taxtreatments in individual jurisdictions typically would not be known for several years after completion of any fiscal year. The impact of our reassessment ofuncertain tax positions in accordance with ASC 740 did not have a material impact on the results of operations, financial condition or liquidity.Recent Accounting PronouncementsRecently AdoptedIn January 2017, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2017-04, “Intangibles-Goodwill andOther (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the impliedfair value of goodwill to measure a goodwill impairment charge (Step 2) from the goodwill impairment test. Instead, an impairment charge will equal theamount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed theamount of goodwill allocated to the reporting unit. The guidance will be effective for the Company for its annual or any interimgoodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted after January 1, 2017. The Company has adoptedthis ASU as of January 1, 2018, which did not impact the results of operations or financial condition.60Table of ContentsIn November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash,” which requires that companies present cash, cashequivalents and amounts generally described as restricted cash or restricted cash equivalents (restricted cash) when reconcilingbeginning-of-period and end-of-period totals on the Statement of Cash Flows. The Company has retrospectively adopted thisASU as of January 1, 2018 and includes cash and cash equivalents held for customers as restricted cash. As a result, Net cashprovided by operating activities on the Statement of Cash Flows increased by $77.2 million and decreased by $5.4 million for the twelve months endedDecember 31, 2016 and 2017, respectively.The Company defines restricted cash to include cash and cash equivalents held for customers, which represents cash and otherhighly liquid assets held to fund customer liabilities in connection with trading positions. Included in this balance are fundsdeposited by customers and funds accruing to customers as a result of trades or contracts. The Company records acorresponding liability in connection with this amount in Payables to customers. In addition, the Company holds certaincustomer funds in segregated or secured broker accounts. Legally segregated balances are not available for general use, inaccordance with certain jurisdictional regulatory requirements.In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which is part of ASC Topic 606.It defines how companies report revenues from contracts with customers and also requires certain enhanced disclosures. Thestandard’s provisions and related amendments are effective for annual reporting periods beginning after December 15, 2017.On January 1, 2018, the Company adopted this guidance, which did not have a material impact on the Company’s financialstatements. A substantial portion of revenue falls within the scope of ASC Topic 825, Financial Instruments, which is excluded from the scope of the newguidance. The Company adopted ASU No. 2014-09 using the modified retrospective approach. See Note 4 Revenue Recognition for additional disclosure.Not Yet AdoptedIn February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which amended the guidance on accounting forleases. The FASB issued this update to increase transparency and comparability among organizations. This update requiresrecognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.The accounting standard update originally required the use of a modified retrospective approach reflecting the application of the standard to leases existingat, or entered into after, the beginning of the earliest comparative period presented in the financial statements with the option to elect certain practicalexpedients. A subsequent amendment to the standard provides an additional and optional transition method that allows entities to initially apply the newleases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continueto be in accordance with current GAAP (ASC Topic 840) if the optional transition method is elected. While we are still evaluating the method of adoption, wecurrently anticipate adopting the standard using the optional transition method with no restatement of comparative periods and a cumulative effectadjustment recognized as of the date of adoption.We expect that this standard will not have a material effect on our financial statements due to the recognition of new right of use "(ROU)" assets and leaseliabilities on our consolidated balance sheet for real estate and equipment operating leases. As part of our implementation process, we have assessed our leasearrangements and evaluated practical expedient and accounting policy elections to meet the reporting requirements of this standard. We are also currentlyevaluating the changes in controls and processes that are necessary to implement the new standard, but do not expect material changes. We expect to elect allof the standard’s available practical expedients on adoption. Consequently, on adoption, we expect to recognize additional operating liabilities ranging from$14.0 million to $16.0 million, with corresponding ROU assets of approximately the same amount based on the present value of the remaining minimumrental payments under current leasing standards for existing operating leases. The majority of our leases are for office space.In February 2018, the FASB issued ASU No. 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220),” toaddress certain income tax effects in Accumulated Other Comprehensive Income (AOCI) resulting from the tax reform enactedin 2017. The amended guidance provides an option to reclassify tax effects within AOCI to retained earnings in the period inwhich the effect of the tax reform is recorded. The amendments are effective for fiscal years beginning after December 15,2018, including interim periods. Early adoption is permitted. This will not have an impact on the Company as there are nobalances in AOCI that are tax effected.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK61Table of ContentsMarket risk refers to the potential for adverse changes in the value of a Company’s financial instruments as a result of changes in market conditions. We donot hold financial instruments for trading purposes on a long-term basis. We continually evaluate our exposure to market risk and oversee the establishmentof policies, procedures and controls to ensure that market risks are identified and analyzed on an ongoing basis.Interest Rate RiskInterest rate risk arises from the possibility that changes in interest rates will impact our Consolidated Financial Statements. Our net interest revenue isdirectly affected by the short-term interest rates we earn from re-investing our cash and our customers' cash. As a result, a portion of our interest income willdecline if interest rates fall. Short-term interest rates are highly sensitive to factors that are beyond our control, including general economic conditions andthe policies of various governmental and regulatory authorities. Our cash and cash equivalents and customer cash and cash equivalents are held in cash andcash equivalents including cash at banks, deposits at liquidity providers, in money market funds that invest in highly liquid investment grade securitiesincluding short-term U.S. treasury bills, as well as directly in U.S. treasury bills. The interest rates earned on these deposits and investments affects our interestrevenue. We estimate that as of December 31, 2018, an immediate 100 basis point decrease in short-term interest rates would result in approximately $8.8million more in annual pretax income.Foreign Currency RiskCurrency risk arises from the possibility that fluctuations in foreign exchange rates will impact the value of our earnings and assets. Entities that have assetsand liabilities denominated in currencies other than the primary economic environment in which the entity operates are subject to re-translation.We monitor our exchange rate exposure and may make settlements to reduce our exposure. We do not take proprietary directional market positions.Virtually all sales and related operating costs are denominated in the currency of the local country and translated into USD for consolidated reportingpurposes. Although the majority of the assets and liabilities of these subsidiaries are denominated in the functional currency of the subsidiary, they may alsohold assets or liabilities denominated in other currencies. These items may give rise to foreign currency transaction gains and losses. As a result, our results ofoperations and financial position are exposed to changing currency exchange rates. We may consider entering into hedging transactions to mitigate ourexposure to foreign currency exchange rates. These hedging transactions may not be successful.Credit RiskOur trading operations require a commitment of our capital and involve risk of loss because of the potential that a customer’s losses may exceed the amountof cash in their account. While we are able to closely monitor each customer’s exposure, it does not guarantee our ability to eliminate negative customeraccount balances prior to an adverse currency price change or other market events, such as the extreme volatility in the Swiss franc following the SNB marketevent in January 2015. Changes in market conditions or unforeseen extreme market events could result in our customers experiencing losses in excess of thefunds they have deposited with us. In such an event, we may not be able to recover the negative client equity from our customers, which could materiallyadversely affect our results of operations. In addition, if we cannot recover funds from our customers, we may nonetheless be required to fund positions wehold with our liquidity providers or other third parties and, in such an event, our available funds may not be sufficient to meet our obligations to these thirdparties, which could materially adversely affect our business, financial condition, results of operations and cash flows.In order to help mitigate this risk, we require that each trade must be collateralized in accordance with our margin policies described below. Each customer isrequired to have minimum funds in their account for opening positions, which we refer to as the initial margin, and for maintaining positions, which we referto as maintenance margin, depending on the product being traded. Margin requirements are expressed as a percentage of the customer’s total position in thatproduct, and the customer’s total margin requirement is based on the aggregate margin requirement across all of the positions that a customer holds at anyone moment in time. Each net position in a particular product is margined separately. Accordingly, we do not net across different positions, thereby followinga more conservative margin policy. Our systems automatically monitor each customer’s margin requirements in real time, and we confirm that each of ourcustomers has sufficient cash collateral in his or her account before we execute their trades. We may also adjust required customer margins (both initial andmaintenance) from time to time based on our monitoring of various factors, including volatility and liquidity. If at any point in time a customer’s tradingposition does not comply with the applicable margin requirement, the position may be automatically liquidated, partially or62Table of Contentsentirely, in accordance with our margin policies and procedures. This policy protects both us and the customer. Our margin and liquidation policies are setforth in our customer agreements.We are also exposed to potential credit risk relating to the counterparties with which we hedge our trades and the financial institutions with which we depositcash. We mitigate these risks by transacting with several of the largest financial institutions in the world, with limits on our exposure to any single financialinstitution. In the event that our access to one or more financial institutions becomes limited, our ability to hedge may be impaired.Market RiskWe are exposed to market risk in connection with our retail trading activities. Because we act as counterparty to our retail customers’ transactions, we areexposed to risk on each trade that the market price of our position will decline. Accordingly, accurate and efficient management of our net exposure is a highpriority, and as such we have developed both automated and manual policies and procedures to manage our exposure. These risk-management policies andprocedures are established and reviewed regularly by the Risk Committee of our Board of Directors. Our risk-management policies require quantitativeanalyses by instrument, as well as assessment of a range of market inputs, including trade size, dealing rate, customer margin and market liquidity. Our risk-management procedures require our team of senior traders to monitor risk exposure on a continuous basis and update senior management both informallyover the course of the trading day and formally through intraday and end of day reporting. A key component of our approach to managing market risk is thatwe do not initiate market positions for our own account in anticipation of future movements in the relative prices of products we offer. To facilitate our risk-management activities, we maintain levels of capital in excess of those currently required under applicable regulations. As of December 31, 2018, wemaintained capital levels of $287.3 million, which represented approximately 2.9 times the capital we were required to hold under applicable regulations.Cash Liquidity RiskIn normal conditions, our market making business and related services is self-financing as we generate sufficient cash flows to pay our expenses as theybecome due. As a result, we generally do not face the risk that we will be unable to raise cash quickly enough to meet our payment obligations as they arise.Our cash flows, however, are influenced by customer trading volume, currency volatility and liquidity in markets in which we have positions. These factorsare directly impacted by domestic and international market and economic conditions that are beyond our control. In an effort to manage this risk, we havesecured a substantial liquidity pool by establishing trading relationships with several financial institutions. These relationships provide us with sufficientaccess to liquidity to allow us to consistently execute significant trades in varying market conditions at the notional amounts our customers desire byproviding us with as much as 50:1 leverage on the notional amounts of our available collateral we have on deposit with such financial institutions. Wegenerally maintain collateral on deposit, which includes our funds and our customers’ funds, with our liquidity providers. Collateral on deposit ranged from$92.3 million to $198.2 million in the aggregate during the year ended December 31, 2018.In addition, our trading operations involve the risk of losses due to the potential failure of our customers to perform their obligations under the transactionswe enter into with them, which increases our exposure to cash liquidity risk. To reduce this risk, our margin policy requires that we mark our customers’accounts to market each time the market price of a position in their portfolio changes and provides for automatic liquidation of positions, as described above.Operational RiskOur operations are subject to broad and various risks resulting from technological interruptions, failures or capacity constraints in addition to risks involvinghuman error or misconduct. Regarding technological risks, we are heavily dependent on the capacity and reliability of the computer and communicationssystems supporting our operations. Our computer infrastructure is potentially vulnerable to physical or electronic computer break-ins, viruses and similardisruptive problems and security breaches. We have established a program to monitor our computer systems, platforms and related technologies and topromptly address issues that arise. We have also established disaster recovery facilities in strategic locations to ensure that we can continue to operate withlimited interruptions in the event that our primary systems are damaged. As with our technological systems, we have established policies and proceduresdesigned to monitor and prevent both human errors, such as clerical mistakes or incorrectly placed trades, as well as human misconduct, such as unauthorizedtrading, fraud or negligence. In addition, we seek to mitigate the impact of any operational issues by maintaining insurance coverage for variouscontingencies.ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAOur consolidated financial statements are included in pages F-1 to F-53 of this Annual Report on Form 10-K.63Table of ContentsITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURES(a) Evaluation of Disclosure Controls and ProceduresThe Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reportsunder the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periodsspecified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer(“CEO”) and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding required disclosure.Management of the Company, with the participation of its CEO and CFO, evaluated the effectiveness of the Company’s disclosure controls and procedures.Based on their evaluation, as of the end of the period covered by this Form 10-K, the Company’s CEO and CFO have concluded that the Company’sdisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective.(b) Management’s Report On Internal Control Over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting isdefined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executiveand principal financial officers and is affected by the Company’s Board of Directors, management and other personnel, to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles (“GAAP”) and includes those policies and procedures that:•Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP,and that our receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company; and•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on the financial statements.Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detectmisstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time. Our system containsself-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018. In making this assessment,management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-IntegratedFramework (2013). Based on this assessment, management, including the Company’s CEO and CFO, concluded that our internal control over financialreporting was effective as of December 31, 2018.Our independent registered public accounting firm has audited and issued a report on the effectiveness of our internal control over financial reporting as ofDecember 31, 2018 as stated in their report on the following page.(c) Changes in Internal Control Over Financial ReportingThere have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for thethree months ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financialreporting.64Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and Board of DirectorsGAIN Capital Holdings, Inc.Opinion on Internal Control Over Financial ReportingWe have audited GAIN Capital Holdings, Inc. and subsidiaries (the Company) internal control over financial reporting as of December 31, 2018, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of the Company as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, shareholders’equity, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes and financial statement schedule I(collectively, the consolidated financial statements), and our report dated March 11, 2019, expressed an unqualified opinion on those consolidated financialstatements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financialreporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ KPMG LLPNew York, New YorkMarch 11, 201965Table of ContentsITEM 9B. OTHER INFORMATIONNone.66Table of ContentsPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEInformation required to be included in this item is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A, whichwe intend to file within 120 days of the end of our fiscal year.Our Code of Business Conduct and Ethics (the “Code”) applies to all of our employees, directors and officers, including our principal executive officer,principal financial officer and principal accounting officer, or persons performing similar functions. We make the Code available free of charge through ourinvestor relations website, which is located at ir.gaincapital.com. We intend to disclose any amendments to, or waivers from, the Code that are required to bepublicly disclosed pursuant to rules of the SEC and the New York Stock Exchange in filings with the SEC and by posting such information on our website.ITEM 11. EXECUTIVE COMPENSATIONInformation required to be included in this item is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A, whichwe intend to file within 120 days of the end of our fiscal year.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSInformation required to be included in this item is incorporated by reference to our proxy statement to be filed pursuant to Regulation 14A, which we intendto file within 120 days of the end of our fiscal year.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEInformation required to be included in this item is incorporated by reference to our proxy statement to be filed pursuant to Regulation 14A, which we intendto file within 120 days of the end of our fiscal year.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESInformation to be included in this item is incorporated by reference to our proxy statement to be filed pursuant to Regulation 14A, which we intend to filewithin 120 days of the end of our fiscal year.67Table of ContentsPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESFinancial Statements and Schedules:1. Financial StatementsThe following financial statements and report of independent registered public accounting firm are included herein:Report of Independent Registered Public Accounting FirmF-2Consolidated Balance Sheets as of December 31, 2018 and 2017F-4Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31,2018, 2017 and 2016F-5Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2018,2017 and 2016F-6Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016F-8Notes to Consolidated Financial StatementsF-102. Financial Statement SchedulesThe following supplemental schedule is filed herewith:Schedule I - Condensed Financial Information of GAIN Capital Holdings, Inc., (Parent Company Only) asof December 31, 2018 and 2017 and for the Years ended December 31, 2018, 2017, and 2016F-58Schedules other than those listed above have been omitted because they are not applicable or the requiredinformation is included in the financial statements or notes thereto.68Table of ContentsINDEX TOCONSOLIDATED FINANCIAL STATEMENTS ANDFINANCIAL STATEMENT SCHEDULEConsolidated Financial Statements: Report of Independent Registered Public Accounting FirmF-2Consolidated Balance Sheets as of December 31, 2018 and 2017F-3Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 2017, and 2016F-4Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2018, 2017, and 2016F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017, and 2016F-7Notes to Consolidated Financial StatementsF-9 Financial Statement Schedule: Schedule I - Condensed Financial Information of GAIN Capital Holdings, Inc. (Parent Company Only) as of December 31, 2018 and 2017 and for theYears ended December 31, 2018, 2017 and 2016F-39F-1Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and Board of DirectorsGAIN Capital Holdings, Inc.:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of GAIN Capital Holdings, Inc. and subsidiaries (the Company) as of December 31, 2018and 2017, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years inthe three‑year period ended December 31, 2018, and the related notes and financial statement schedule I (collectively, the consolidated financial statements).In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018and 2017, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2018, in conformity withU.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 11, 2019 expressed an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ KPMG LLPWe have served as the Company’s auditor since 2016.New York, New YorkMarch 11, 2019F-2Table of ContentsGAIN CAPITAL HOLDINGS, INC.Consolidated Balance Sheets(in thousands, except share data) December 31, 2018 December 31, 2017ASSETS: Cash and cash equivalents$278,850 $209,688Cash and securities held for customers842,478 978,828Receivables from brokers84,271 78,503Property and equipment, net30,579 40,742Intangible assets, net32,195 61,969Goodwill27,820 33,036Other assets36,355 45,881Total assets$1,332,548 $1,448,647LIABILITIES AND SHAREHOLDERS’ EQUITY: Liabilities Payables to customers$842,478 $978,828Payables to brokers1,635 2,789Accrued compensation and benefits11,227 10,104Accrued expenses and other liabilities41,562 33,947Income tax payable5,764 599Convertible senior notes132,109 132,221Total liabilities$1,034,775 $1,158,488Commitments and contingent liabilities Redeemable non-controlling interests$— $4,411Shareholders’ equity Common stock ($0.00001 par value; 120 million shares authorized, 54,507,742 shares issued and37,821,686 shares outstanding as of December 31, 2018; 120 million shares authorized,53,612,340 shares issued and 45,152,299 shares outstanding as of December 31, 2017)$— $—Additional paid-in capital243,216 235,659Retained earnings204,483 122,686Accumulated other comprehensive loss(29,410) (15,670)Treasury stock, at cost 16,686,056 shares at December 31, 2018 and 8,460,041 at December 31,2017, respectively)(120,516) (56,927)Total shareholders’ equity297,773 285,748Total liabilities and shareholders’ equity$1,332,548 $1,448,647The accompanying notes are an integral part of these consolidated financial statements.F-3Table of ContentsGAIN CAPITAL HOLDINGS, INC.Consolidated Statements of Operations and Comprehensive Income(in thousands) Year Ended December 31, 2018 2017 2016REVENUE: Retail revenue$300,206 $231,100 $330,744Futures revenue39,705 37,964 47,430Other revenue7,406 4,478 3,504Total non-interest revenue347,317 273,542 381,678Interest revenue12,503 5,579 1,624Interest expense1,863 883 552Total net interest revenue10,640 4,696 1,072Net revenue$357,957 $278,238 $382,750EXPENSES: Employee compensation and benefits$89,070 $82,686 $90,617Selling and marketing36,460 31,115 28,642Referral fees40,026 53,671 70,752Trading expenses22,899 19,406 23,399General and administrative55,239 43,506 53,206Depreciation and amortization19,654 17,045 13,203Purchased intangible amortization14,171 13,966 12,872Communications and technology21,961 19,226 19,857Bad debt provision2,508 (247) 4,154Restructuring expenses762 — 1,041Integration expenses— — 2,788Legal settlement5,306 — 9,205Impairment of investment(130) 620 —Total operating expense307,926 280,994 329,736OPERATING PROFIT/(LOSS)50,031 (2,756) 53,014Interest expense on long term borrowings13,540 11,821 10,421Loss on extinguishment of debt— 4,944 —INCOME/(LOSS) BEFORE INCOME TAX (BENEFIT)/EXPENSE36,491 (19,521) 42,593Income tax expense/(benefit)8,514 (5,011) 10,839Equity in net loss of affiliate— (343) (62)Net income/(loss) from continuing operations27,977 (14,853) 31,692Income from discontinued operations, including gain on sale of $69,292, net of income tax of $4,75665,649 4,278 5,720NET INCOME/(LOSS)93,626 (10,575) 37,412Net income attributable to non-controlling interest737 620 2,140NET INCOME/(LOSS) APPLICABLE TO GAIN CAPITAL HOLDINGS, INC.92,889 (11,195) 35,272Other comprehensive (loss)/income: Foreign currency translation adjustment(13,740) 21,172 (30,977)COMPREHENSIVE INCOME APPLICABLE TO GAIN CAPITAL HOLDINGS, INC.$79,149 $9,977 $4,295The accompanying notes are an integral part of these consolidated financial statements.F-4Table of ContentsGAIN CAPITAL HOLDINGS, INC.Consolidated Statement of Changes in Shareholders’ Equity(in thousands, except share data) Common Stock TreasuryStock AdditionalPaid inCapital RetainedEarnings AccumulatedOtherComprehensiveIncome Total Shares (1) Amount BALANCE—January 1, 201648,771,015 $— $(21,808) $212,981 $120,776 $(5,865) $306,084Net income applicable to GAIN CapitalHoldings, Inc.— — — — 35,272 — 35,272Exercise of options179,501 — — 706 — — 706Conversion of restricted stock intocommon stock500,253 — — — — — —Issuance of common stock for theemployee stock purchase plan96,173 — — 611 — — 611Purchase of treasury stock(1,317,369) — (8,894) — — — (8,894)Shares withheld for net settlements ofshare-based awards(9,330) — (65) — — — (65)Share-based compensation— — — 4,151 — — 4,151Tax effect of debt discount onconvertible notes— — — 48 — — 48Repurchase of convertible notes— — — (105) — — (105)Adjustment to the redemption value ofput options related to non-controllinginterests— — — — (2,715) — (2,715)Adjustment to fair value of redeemablenon-controlling interests— — — — 258 — 258Dividends declared— — — — (10,192) — (10,192)Foreign currency translation adjustment— — — — — (30,977) (30,977)BALANCE—December 31, 201648,220,243 $— $(30,767) $218,392 $143,399 $(36,842) $294,182Net loss applicable to GAIN CapitalHoldings, Inc.— — — — (11,195) — (11,195)Exercise of options88,427 — — 356 — — 356Conversion of restricted stock intocommon stock572,060 — — — — — —Issuance of common stock for theemployee stock purchase plan103,042 — — 642 — — 642Purchase of treasury stock(3,776,283) — (25,778) — — — (25,778)Shares withheld for net settlements ofshare-based awards(55,190) — (382) — — — (382)Share-based compensation— — — 5,093 — — 5,093Recognition of debt discount onconvertible notes— — — 18,399 — — 18,399Tax effect of debt discount onconvertible notes— — — (7,037) — — (7,037)Repurchase of convertible notes— — — (186) — — (186)Adjustment to the redemption value ofput options related to non-controllinginterests— — — — 1,656 — 1,656Dividends declared— — — — (11,174) — (11,174)Foreign currency translation adjustment— — — — — 21,172 21,172BALANCE—December 31, 201745,152,299 $— $(56,927) $235,659 $122,686 $(15,670) $285,748Net income applicable to GAIN CapitalHoldings, Inc.— — — — 92,889 — 92,889F-5Table of ContentsExercise of options169,695 — — 1,004 — — 1,004Conversion of restricted stock intocommon stock651,503 — — — — — —Issuance of common stock for theemployee stock purchase plan74,204 — — 515 — — 515Purchase of treasury stock(8,216,611) — (63,514) — — — (63,514)Shares withheld for net settlements ofshare-based awards(9,404) — (75) — — — (75)Share-based compensation— — — 6,038 — — 6,038Adjustment to the redemption value ofput options related to non-controllinginterests— — — — (816) — (816)Dividends declared— — — — (10,276) — (10,276)Foreign currency translation adjustment— — — — — (13,740) (13,740)BALANCE—December 31, 201837,821,686 $— $(120,516) $243,216 $204,483 $(29,410) $297,773The accompanying notes are an integral part of these consolidated financial statements.F-6Table of ContentsGAIN CAPITAL HOLDINGS, INC.Consolidated Statements of Cash Flows(in thousands) Year Ended December 31, 2018 2017 2016CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss)$93,626 $(10,575) $37,412Adjustments to reconcile net income/(loss) to cash (used in)/provided by operating activities Loss/(gain) on foreign currency exchange rates2,362 (719) 1,692Depreciation and amortization35,107 34,017 28,921Non-cash integration costs— — 366Deferred tax benefit(2,815) (2,630) (3,481)Amortization of deferred financing costs648 495 442Bad debt provision/(recovery)2,508 (247) 4,154Convertible senior notes discount amortization5,590 4,917 4,311Share-based compensation6,038 5,093 4,151Loss/(gain) on extinguishment of debt— 4,944 (89)Equity in net loss of affiliate— 343 62Loss on disposal of fixed assets1,332 — —Gain on sale of GTX(69,292) — —Interest earned on investments(930) — —Impairment of cost basis investment— 620 —Changes in operating assets and liabilities: Securities held for customers(103,781) — —Receivables from brokers(8,411) (17,549) 58,360Payables to brokers(972) 2,789 —Other assets6,267 5,872 (13,079)Payables to customers(109,957) (5,352) 77,216Accrued compensation and benefits(1,117) (3,942) 2,045Accrued expenses and other liabilities7,548 (10,059) (6,703)Income tax payable6,975 (2,238) 6,275Net cash (used in)/provided by operating activities(129,274) 5,779 202,055Cash (used in)/provided by operating activities - continuing operations(147,884) 18,595 192,411Cash provided by/(used in) operating activities - discontinued operations18,610 (12,816) 9,644CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment(14,745) (20,930) (23,883)Purchase of partial interest of GAA/TT(2,906) — (7,444)Proceeds from sale of GTX96,519 — —Acquisition of FXCM assets— (7,184) —Net cash provided by/(used in) investing activities78,868 (28,114) (31,327)Cash (used in) investing activities - continuing operations(16,806) (27,187) (30,069)Cash provided by/(used in) investing activities - discontinued operations95,674 (927) (1,258)CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options1,004 356 706Proceeds from employee stock purchase plan515 642 611Purchase of treasury stock(63,589) (26,160) (8,959)Dividend payments(10,276) (11,174) (10,192)Distributions to non-controlling interest holders(634) (1,147) (1,605)F-7Table of ContentsConvertible note issuance, net of commissions— 89,010 —Maturity and repurchase of convertible notes(6,350) (73,057) (1,736)Net cash used in financing activities$(79,330) $(21,530) $(21,175)Effect of exchange rate changes on cash and cash equivalents(42,164) 52,153 (61,834)NET (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(171,900) 8,288 87,719CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of year$1,188,516 $1,180,228 $1,092,509CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of year$1,016,616 $1,188,516 $1,180,228Cash and cash equivalents278,850 $209,688 234,760Cash and cash equivalents held for customers (see note 2)737,766 $978,828 945,468CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of year1,016,616 $1,188,516 1,180,228SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest$9,111 $5,660 $6,251Income taxes$8,648 $4,512 $8,438Non-cash financing activities: Deferred taxes related to convertible senior notes issued$— $(7,037) $—Adjustment to the redemption value of put options related to non-controlling interests$(816) $1,656 $(2,715)The accompanying notes are an integral part of these consolidated financial statements.F-8Table of ContentsGAIN CAPITAL HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. ORGANIZATION AND BASIS OF PRESENTATIONGAIN Capital Holdings, Inc. (together with its subsidiaries, the “Company”), is a Delaware corporation formed and incorporated on March 24, 2006. GAINHoldings, LLC is a wholly-owned subsidiary of GAIN Capital Holdings, Inc., and owns all outstanding membership units of GAIN Capital Group, LLC(“Group, LLC”), the Company’s primary regulated entity in the United States. GAIN Capital Holdings Ltd. is the holding company of the Company’s primaryregulated entity in the United Kingdom.The Company is a global provider of trading services and solutions, specializing in over-the-counter, or OTC, and exchange-traded markets. The Companyoperates its business in two segments. Through its retail segment, the Company provides its retail customers around the world with access to a diverse rangeof global financial markets, including spot forex, precious metals, spread bets and contracts for difference, or CFDs, on currencies, commodities, indices,individual equities, cryptocurrencies, bonds and interest rate products, as well as OTC options. The Company’s futures segment offers execution and riskmanagement services for exchange-traded products on major U.S. and European exchanges, including Bitcoin. For more information about the Company’ssegments, please refer to Note 23.Group, LLC is a Retail Foreign Exchange Dealer (“RFED”) and a Futures Commission Merchant (“FCM”) registered with the Commodity Futures TradingCommission (the “CFTC”). As such, it is subject to the regulations of the CFTC, an agency of the U.S. government, and the rules of the National FuturesAssociation (“NFA”), an industry self-regulatory organization.GAIN Capital UK Limited (“GCUK") is registered in the United Kingdom (“U.K.”) and regulated by the Financial Conduct Authority (“FCA”) as a full scope€730k IFPRU Investment Firm.In December 2016, the Company acquired additional ownership interests in each of Global Asset Advisors, LLC (“GAA”) and Top Third Ag Marketing, LLC(“Top Third”), increasing its ownership percentage of each company to 79%. In September 2018, the Company acquired the remaining ownership interest inGAA for approximately $2.9 million.The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”)and have been prepared in accordance with the regulations of the Securities and Exchange Commission (“SEC”).Sale of GTX ECN BusinessOn June 29, 2018, the Company completed the sale of the GTX ECN business, which previously comprised the Company's institutional segment, to DeutscheBörse Group via its FX unit, 360T, for a total purchase price of $100 million less a working capital adjustment which amounted to a $0.2 million reduction inthe purchase price. The Company determined that the institutional segment met the discontinued operations criteria set forth in Accounting StandardsCodification (“ASC”) Subtopic 205-20-45, Presentation of Financial Statements, in the quarter ended June 30, 2018. As such, the institutional segmentresults have been classified as discontinued operations in the accompanying Consolidated Statements of Operations and Comprehensive Income. For moreinformation relating to the discontinued operations of the Company's GTX ECN business, please see Note 3.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESConsolidationThe consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and other subsidiaries in which the Companyholds a controlling financial interest. All intercompany transactions and balances are eliminated in consolidation.Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of theconsolidated financial statements and the reported amountsF-9Table of Contentsof revenue and expenses during the reporting period. Estimates, by their nature, are based on judgment and available information. Therefore, actual resultscould differ from those estimates and could have a material impact on the consolidated financial statements, and it is possible that such changes could occurin the near term.Revenue RecognitionRevenue is recognized in accordance with revenue recognition guidance set forth in ASC 606, Revenues from Contracts with Customers. The Companyprimarily generates revenue through market making and by providing trading execution services for its clients. The Company categorizes revenue as Retailrevenue, Futures revenue, Other revenue and Net interest revenue.Retail revenue is the Company’s largest source of revenue. Retail revenue comprises trading revenue from the retail OTC business and advisory businesses.OTC trading includes forex trading (“forex”), metals trading, CFDs and spread-betting (in markets which do not prohibit such transactions), as well as otherfinancial products.Gains or losses are realized when customer transactions are liquidated. Unrealized gains or losses on trading positions are revalued at prevailing foreigncurrency exchange rates (the difference between contract price and market price) at the date of the balance sheet and are included in Receivables frombrokers, Payables to customers, and Payables to brokers on the Consolidated Balance Sheets. Changes in net unrealized gains or losses are recordedin Retail revenue on the Consolidated Statements of Operations and Comprehensive Income. Retail revenue is recorded on a trade date basis.Futures revenue consists of revenue from the Company’s futures business, which offers exchange-based trading execution services, focusing on the indices,agricultural hedging, and commodities sectors. Revenues in this business are generated through commissions, which are earned for executing the Company’scustomers' trades. These revenues are booked on a trade date basis. The Company acts in an agency capacity with respect to the clearing of trades, but is aprincipal with respect to fees paid to introducing brokers in its futures business. The Company does not assume any market risk with respect to customertrades in this business.Other revenue primarily comprises account management and transaction fees, inactivity, training fees charged to customer accounts, and receipt of classaction settlements, as well as foreign currency transaction gains and losses.Net interest revenue consists primarily of the revenue generated by our cash and customer cash held by us at banks, as well as funds on deposit as collateralwith our liquidity providers, less interest paid to our customers.Interest revenue and interest expense are recorded when earned and incurred, respectively. Cash and cash equivalentsThe Company considers all highly liquid investments with an original maturity of 90 days or less at the time of acquisition to be cash equivalents. TheCompany’s cash equivalents consisted of U.S. treasury bills and money market accounts with an initial maturity of 90 days or less. Cash equivalents arerecorded at fair value.Cash and securities held for customersCash and securities held for customers represents cash, and highly liquid assets held to fund customer liabilities in connection with trading positions andcustomers' cash balances. Included in this balance are funds deposited by customers and funds accruing to customers as a result of trades or contracts. TheCompany records a corresponding liability in connection with this amount in Payables to customers on the Consolidated Balance Sheet. As of December 31,2018, $104.7 million of total cash and securities held for customers are invested in U.S. government and agency securities. Such securities are carried at fairvalue, with unrealized and realized gains and losses included in interest revenue in the Consolidated Statement of Operations and Comprehensive Income. Inaddition, the Company holds certain customer funds in segregated or secured broker accounts. Legally segregated balances are not available for general use,in accordance with certain jurisdictional regulatory requirements.The table below further breaks out the Cash and securities held for customers on the Consolidated Balance Sheet as of December 31, 2018: Twelve Months Ended December 31, 201820172016Cash and cash equivalents held for customers$737,766$978,828$945,468F-10Table of ContentsMarketable securities held for customers104,712——Cash and securities held for customers$842,478$978,828$945,468Receivables from BrokersReceivables from brokers include funds that the Company has posted with brokers as collateral required by agreements for holding hedging positions. Also,Receivables from brokers contains funds required to collateralize customer futures trading. These amounts are reflected as Receivables from brokers on theConsolidated Balance Sheets and include gains or losses realized on settled contracts, as well as unrealized gains or losses on open positions.Fair Value MeasurementsCertain financial assets and liabilities are measured at fair value in accordance with applicable accounting guidance, as discussed in Note 5 Fair ValueInformation.Other financial assets and liabilities are not measured at fair value on a recurring basis but nevertheless approximate fair value due to their short termmaturities. Such financial assets and liabilities include: Receivables from brokers; Convertible senior notes; certain other assets; Payables to customers;Payables to brokers; and Accrued expenses and other liabilities.The above referenced receivables and payables include open trading positions which are held at fair value which change in value as the price of theunderlying product changes. The prices approximate the amounts at which the Company can settle the positions at the balance sheet date.Concentrations of Credit RiskThe Company owns financial instruments that subject the Company to credit risk. These financial instruments are held primarily in Cash and cashequivalents as well as Cash and securities held for customers. The Company’s credit risk is managed by investing cash and cash equivalents primarily inhigh-quality money market and, from time to time, U.S. Government instruments. The majority of the Company’s cash and cash equivalents are held at tenfinancial institutions.The Company also has credit risk related to receivables from brokers included in Receivables from brokers and Cash and cash equivalents. As ofDecember 31, 2018 and 2017, 34% and 41%, respectively, of the Company’s brokers receivables included in the Consolidated Balance Sheets were from onelarge, global financial institution.Property and Equipment and Other Long-Lived AssetsProperty and equipment are recorded at cost, net of accumulated depreciation. Identifiable significant improvements are capitalized and expenditures formaintenance and repairs are charged to expense as incurred.Property and equipment are depreciated on a straight-line basis over a three year useful life, except for leasehold improvements, which are depreciated on astraight-line basis over the shorter of the lease term or estimated useful life.The Company accounts for costs incurred to develop its trading platforms and related software in accordance with ASC 350-40, Internal-Use Software. ASC350-40 requires that such technology be capitalized in the application development stages. Costs related to training, administration and non-value-addedmaintenance are charged to expense as incurred. Capitalized software development costs are being amortized over the useful life of the software, which theCompany has estimated at three years.In accordance with ASC 360-10, Property, Plant and Equipment, the Company periodically evaluates the carrying value of long-lived assets when eventsand circumstances warrant such review. The carrying value of a long-lived asset is considered impaired when the anticipated identifiable undiscounted cashflows from such an asset (or asset group) are less than the carrying value. In that event, a loss is recognized in the amount by which the carrying value exceedsthe fair market value of the long-lived asset. This standard applies to assets held for use and not to assets held for sale. The Company has no assets held forsale. The Company has identified no such impairment indicators as of December 31, 2018 or December 31, 2017.Foreign CurrenciesItems included in the consolidated financial statements of each of the Company’s subsidiaries are measured using the currency of the primary economicenvironment in which the subsidiaries operate (the functional currency). The Company has determined that it’s functional currency is U.S. dollars (USD). TheCompany’s Accumulated other comprehensive income/(loss) consists of foreign currency translation adjustments from subsidiaries not using the USD as theirfunctional currency.F-11Table of ContentsForeign currency transactions are remeasured into functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from the remeasurement of monetary assets and liabilities denominated in foreigncurrencies at period end exchange rates are recognized in Other revenue on the Consolidated Statements of Operations and Comprehensive Income. TheCompany recorded a foreign exchange loss of $2.4 million, gain of $0.7 million, and loss of $1.7 million, for the years ended December 31, 2018, 2017, and2016, respectively.Intangible AssetsGAAP addressing intangible assets requires purchased intangible assets other than goodwill to be amortized over their estimated useful lives unless theirlives are determined to be indefinite. If indefinite-lived assets are determined to have a finite life in the future, the Company will amortize the carrying valueover the remaining estimated useful life at that time.The Company analyzes its business, legal and regulatory environment at least annually and on an interim basis when conditions indicate impairment mayhave occurred to determine whether its indefinite-lived intangible assets are likely to be impaired. This qualitative assessment indicated that it is more likelythan not that the Company’s indefinite lived intangible assets are not impaired. Please refer to Note 9 for additional information.GoodwillThe Company recognized goodwill as a result of the acquisitions of certain subsidiaries. Goodwill represents the excess of the cost over the fair market valueof net assets acquired. In accordance with relevant GAAP, the Company tests goodwill for impairment on an annual basis during the fourth quarter and on aninterim basis when conditions indicate impairment may have occurred (please refer to Note 9). In performing these assessments, management relies on andconsiders a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, comparable markettransactions (to the extent available), other market data and the Company’s overall market capitalization. There are inherent uncertainties related to thesefactors which require judgment in applying them to the analysis of goodwill and intangible assets for impairment.When testing for goodwill impairment, the Company first assesses qualitative factors to determine whether the existence of events or circumstances leads to adetermination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company concludes it is more likelythan not that the fair value of a reporting unit is less than its carrying amount, a quantitative fair value test is performed.Under the quantitative test, the fair value of each reporting unit is compared to its carrying value in order to identify potential impairment. If the fair value ofa reporting unit exceeds the carrying value of its net assets, goodwill is not considered impaired and no further testing is required. If the carrying value of thenet assets exceeds the fair value of a reporting unit, impairment is indicated at the reporting unit level and an impairment charge will be recorded. Animpairment charge will equal the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the amount of goodwill allocatedto the reporting unit. For the year ended December 31, 2018, the Company performed a qualitative analysis for each of its reporting units to determine whether it was more likelythan not that the fair value was less than the carrying value. As a result of this assessment, the Company determined that it was not necessary to perform aquantitative impairment test and concluded that goodwill assigned to each reporting unit was not impaired at December 31, 2018.DerivativesForex, metals, and CFDs allow for exchanging the difference in value of a particular asset such as a stock index, energy product, or gold contracts, betweenthe time at which a contract is opened and the time at which it is closed. The Company’s retail customer open positions and positions held with liquidityproviders are considered derivatives under the accounting guidance in ASC 815, Derivatives and Hedging. Therefore, they are accounted for at fair value,and included in Receivables from brokers, Payables to customers, and Payables to brokers in the Consolidated Balance Sheets. The Company did notdesignate any of its derivatives as hedging instruments. Net gains and losses with respect to derivative instruments are reflected in Retail Revenue in theaccompanying Consolidated Statements of Operations and Comprehensive Income.Allowance for Doubtful AccountsThe Company records an increase in the allowance for doubtful accounts when the prospect of collecting a specific customer account balance becomesdoubtful. Management specifically analyzes accounts receivable and historical bad debt experience when evaluating the adequacy of the allowance fordoubtful accounts. Changes in estimates are recognized in current yearF-12Table of Contentsearnings. The customer receivables, net of allowance for doubtful accounts, are included in Other assets on the Consolidated Balance Sheets. The relatedexpense is recorded in Bad debt provision on the Consolidated Statements of Operations and Comprehensive Income.Payables to CustomersPayables to customers, included on the Consolidated Balance Sheets, include amounts due on cash and margin transactions. These transactions includedeposits, commissions and realized gains or losses arising from settled trades. The payables balance also reflects unrealized gains or losses arising from openpositions in customer accounts. The Company engages in white label arrangements with other regulated financial institutions. The payables balance includesamounts deposited by these financial institutions in order for the Company to act as a clearing broker.Payables to BrokersPayables to brokers comprise open trades, which are measured at fair value and the cash due to or from brokers, which is not measured at fair value butapproximates fair value. These balances result when the Company’s hedging trades produce a loss and necessitate a margin call to re-capitalize positions orsettle losses.Referral fees Introducing brokers direct customers to the Company in return for a commission on each referred customer’s trading volume or a share of net revenuegenerated by each referred customer’s trading activity. White label partners offer our trading services to their customers under their own brand. Their fees arereferred to as introducing broker fees and are recorded on a trade date basis, in Referral Fees, in the Consolidated Statements of Operations andComprehensive Income.Trading ExpensesTrading expenses consist of exchange fees paid to stock exchanges and other third-parties for exchange market data that the Company provides to itscustomers or uses to create its own derived data products, as well as fees for news services and clearing fees paid to prime brokers in connection with itsfutures business. These costs are expensed as incurred.Income TaxesIncome taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assetsand liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to berecovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactmentdate. A valuation allowance is recorded against deferred tax assets if it is more likely than not that such assets will not be realized. Contingent income taxliabilities are recorded when the criteria for loss recognition have been met. An uncertain tax position is recognized based on the determination of whether ornot a tax position is more likely than not to be sustained upon examination based upon the technical merits of the position. If this recognition threshold ismet, the tax benefit is then measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Asof December 31, 2017, the Company asserts that the earnings of its foreign subsidiaries will be permanently reinvested in the working capital and otherbusiness needs of the subsidiaries to the extent that repatriation of these earnings would trigger additional capital gains tax and/or foreign withholding taxes.There were no changes to this assertion in 2018. As such, amounts that can be brought back without triggering capital gains and/or foreign withholding taxeswill not be considered permanently reinvested. Based on our analysis, we do not believe that the potential impact of the unrecognized deferred tax liabilityassociated with the repatriation of such earnings would be material to the financial statements.Share Based CompensationShare-based compensation expense requires measurement of compensation cost for share-based awards at fair value and recognition of compensation costover the vesting period, net of estimated forfeitures. For awards with service and performance conditions, the Company recognizes compensation cost on astraight-line basis over the requisite service period.The fair value of stock options granted is estimated using the Black-Scholes option-pricing model, which considers, among other factors, the expected termof the award and the expected volatility of the Company’s stock price. Although the Black-Scholes model meets the requirements of ASC 718,Compensation-Stock Compensation, the fair values generated by the model may not be indicative of the actual fair values of the underlying awards, as it doesnot consider other factors important to those share-based compensation awards, such as continued employment, periodic vesting requirements and limitedtransferability.F-13Table of ContentsThe risk-free interest rate used in the Black-Scholes option-pricing model is based on the U.S. Treasury yield curve in effect at the time of grant. The expectedoption life is based on historical experience of employee exercise behavior. Expected volatility is based on historical volatility, implied volatility, priceobservations taken at regular intervals and other factors deemed appropriate. Expected dividend is based upon the current dividend rate. There were no stockoptions granted in 2018.The fair value of restricted stock unit awards is based on the fair value of the Company’s common stock on the grant date.Treasury SharesIn accordance with ASC 505-30, Equity - Treasury Stock, the Company treats the cost of acquired shares purchased as a deduction from shareholders’ equityand as a reduction of the total shares outstanding when calculating earnings per share.Earnings Per Common ShareBasic earnings per common share is calculated using the weighted average common shares outstanding during the year. Common equivalent shares fromstock options and restricted stock awards, using the treasury stock method, are also included in the diluted per share calculations unless their effect ofinclusion would be anti-dilutive. Please refer to Note 17 for discussion of the impact of the Company’s convertible notes and non-controlling interests onEPS.Recent Accounting Pronouncements Recently AdoptedIn January 2017, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2017-04, “Intangibles-Goodwill andOther (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the impliedfair value of goodwill to measure a goodwill impairment charge (Step 2) from the goodwill impairment test. Instead, an impairment charge will equal theamount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed theamount of goodwill allocated to the reporting unit. The guidance will be effective for the Company for its annual or any interimgoodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted after January 1, 2017. The Company has adoptedthis ASU as of January 1, 2018, which did not impact the results of operations or financial condition.In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash,” which requires that companies present cash, cashequivalents and amounts generally described as restricted cash or restricted cash equivalents (restricted cash) when reconcilingbeginning-of-period and end-of-period totals on the Statement of Cash Flows. The Company has retrospectively adopted thisASU as of January 1, 2018 and includes cash and cash equivalents held for customers as restricted cash. As a result, Net cashprovided by operating activities on the Statement of Cash Flows increased by $77.2 million and decreased by $5.4 million for the twelve months endedDecember 31, 2016 and 2017, respectively.The Company defines restricted cash to include cash and cash equivalents held for customers, which represents cash and otherhighly liquid assets held to fund customer liabilities in connection with trading positions. Included in this balance are fundsdeposited by customers and funds accruing to customers as a result of trades or contracts. The Company records acorresponding liability in connection with this amount in Payables to customers. In addition, the Company holds certaincustomer funds in segregated or secured broker accounts. Legally segregated balances are not available for general use, inaccordance with certain jurisdictional regulatory requirements.In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which is part of ASC Topic 606.It defines how companies report revenues from contracts with customers and also requires certain enhanced disclosures. Thestandard’s provisions and related amendments are effective for annual reporting periods beginning after December 15, 2017.On January 1, 2018, the Company adopted this guidance, which did not have a material impact on the Company’s financialstatements. A substantial portion of revenue falls within the scope of ASC Topic 825, Financial Instruments, which is excluded from the scope of the newguidance. The Company adopted ASU No. 2014-09 using the modified retrospective approach. See Note 4 Revenue Recognition for additional disclosure.Recent Accounting Pronouncements Not Yet AdoptedIn February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which amended the guidance on accounting forleases. The FASB issued this update to increase transparency and comparability among organizations. This update requiresrecognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.F-14Table of ContentsThe accounting standard update originally required the use of a modified retrospective approach reflecting the application of the standard to leases existingat, or entered into after, the beginning of the earliest comparative period presented in the financial statements with the option to elect certain practicalexpedients. A subsequent amendment to the standard provides an additional and optional transition method that allows entities to initially apply the newleases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continueto be in accordance with current GAAP (ASC Topic 840) if the optional transition method is elected. While we are still evaluating the method of adoption, wecurrently anticipate adopting the standard using the optional transition method with no restatement of comparative periods and a cumulative effectadjustment recognized as of the date of adoption.We expect that this standard will not have a material effect on our financial statements due to the recognition of new Right of Use (ROU) assets and leaseliabilities on our consolidated balance sheet for real estate and equipment operating leases. As part of our implementation process, we have assessed our leasearrangements and evaluated practical expedient and accounting policy elections to meet the reporting requirements of this standard. We are also currentlyevaluating the changes in controls and processes that are necessary to implement the new standard, but do not expect material changes. We expect to elect allof the standard’s available practical expedients on adoption. Consequently, on adoption, we expect to recognize additional operating liabilities ranging from$14.0 million to $16.0 million, with corresponding ROU assets of approximately the same amount based on the present value of the remaining minimumrental payments under current leasing standards for existing operating leases. The majority of our leases are for office space.In February 2018, the FASB issued ASU No. 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220),” toaddress certain income tax effects in Accumulated Other Comprehensive Income (AOCI) resulting from the tax reform enactedin 2017. The amended guidance provides an option to reclassify tax effects within AOCI to retained earnings in the period inwhich the effect of the tax reform is recorded. The amendments are effective for fiscal years beginning after December 15,2018, including interim periods. Early adoption is permitted. This will not have an impact on the Company as there are nobalances in AOCI that are tax effected.3. DISCONTINUED OPERATIONSOn June 29, 2018, the Company completed the sale of its GTX ECN business, which previously comprised the Company's institutional segment, to DeutscheBörse via its FX unit, 360T, for a total purchase price of $100 million less a working capital adjustment which amounted to a $0.2 million reduction inpurchase price.The Company recorded a gain of $69.3 million on the sale of the GTX business.The Company determined that the sale of the GTX business qualifies as a discontinued operation under the criteria set forth in ASC 205-20-45, Presentationof Financial Statements and the Company does not have any significant continuing involvement in these operations.The results of operations from the discontinued segment for the twelve months ended December 31, 2018 are as follows (in thousands): Twelve Months Ended December 31, 2018 2017REVENUE: Institutional revenue$16,379 $30,136Other revenue/(loss)(2) —Total non-interest revenue16,377 30,136Interest revenue103 250Total net interest revenue103 250Net revenue$16,480 $30,386EXPENSES: Employee compensation and benefits$5,973 $12,532Trading expenses5,439 9,635F-15Table of ContentsOther expenses3,955 5,785Total operating expense15,367 27,952OPERATING PROFIT1,113 2,434Gain on sale of discontinued operations69,292 —INCOME BEFORE INCOME TAX EXPENSE/(BENEFIT)70,405 2,434Income tax expense/(benefit)4,756 (1,844)NET INCOME FROM DISCONTINUED OPERATIONS$65,649 $4,278Since the sale of the GTX ECN business closed on June 29, 2018, there were no assets held for sale as of December 31, 2018. As of December 31, 2017, totalassets of $28.5 million and total liabilities of $3.8 million were related to the discontinued segment.4 . REVENUE RECOGNITIONIn May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which is part of ASC Topic 606. It defines how companiesreport revenues from contracts with customers and also requires certain enhanced disclosures. The standard’s provisions and related amendments are effectivefor annual reporting periods beginning after December 15, 2017. On January 1, 2018, the Company adopted this guidance, which did not have a materialimpact on the Company’s financial statements. A substantial portion of the Company's retail revenue as well as interest revenue are within the scope of ASCTopic 825, “Financial Instruments”, which is excluded from the scope of ASC Topic 606. Additionally, the Company’s futures segment revenue was notmaterially impacted as the satisfaction of performance obligations under the new guidance is materially consistent with the Company’s previous revenuerecognition policies. Accordingly, the adoption of the new standard did not result in a transition adjustment to opening retained earnings, and as a result,revenues for contracts with customers would not have been adjusted in prior periods and are not presented herein on an adjusted basis.Similarly, the amended guidance did not have a material impact on the recognition of costs incurred to obtain new contracts. As a result of the adoption ofthe new guidance, the Company recorded a gross up of $1.0 million for the twelve months ended December 31, 2018 which impacted referral fee expense inthe Company's discontinued operations. The Company adopted ASU No. 2014-09 using the modified retrospective approach.Under ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to customers in exchange for an amount thatreflects the consideration the Company expects to be entitled to in transferring those goods or services. The following is a description of the Company’srevenue recognition policies as they relate to revenue from contracts with customers.Futures RevenueFutures revenue consists primarily of commissions earned on futures and futures options trades. The Company executes trades on behalf of our futurescustomers, for which we earn commissions. The Company is not exposed to any market risk in connection with that activity. The Company’s futures revenueperformance obligations also consist of trade execution and are satisfied on the trade date; accordingly, commission revenues are recorded on the trade date.Disaggregation of RevenuesThe following table presents the Company’s revenue from contracts with customers disaggregated by the services described above for the futures segment forthe twelve months ended December 31, 2018: Twelve Months Ended December 31, 2018Futures Direct Customers (1)$14,549Indirect Customers (2)25,156Other (3)4,262Total Segment Revenue$43,967F-16Table of Contents(1)Direct customers are all customers not classified as indirect(2)Indirect customers are referred to the Company by introducing brokers(3)Other revenue is mostly comprised of interest and feesContract Assets and Contract LiabilitiesThe timing of revenue recognition may differ from the timing of payment from customers. The Company records a receivable when revenue is recognizedprior to payment, and when the Company has an unconditional right to payment. The Company records a contract liability when payment is received, priorto the time at which the service obligation is satisfied.5. FAIR VALUE INFORMATIONGAAP defines fair value as the price that would be received in exchange for an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date. The guidance establishes a three level hierarchy that ranks the quality and reliability of information used in developingfair value estimates for financial instruments. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority tounobservable data. In cases where two or more levels of inputs are used to determine fair value, a financial instrument’s level is determined based on thelowest level input that is considered significant to the fair value measurement in its entirety. The three levels of fair value hierarchy are summarized below: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 directlyor indirectly; andLevel 3 - Valuations that require inputs that are both unobservable to a market participant and significant to the fair value measurement.For assets and liabilities that are transferred between levels during the period, fair values are ascribed as if the assets or liabilities had been transferred as of thebeginning of the period.The following table presents the Company’s assets and liabilities that were measured at fair value on a recurring basis during the reporting period and therelated hierarchy levels (amounts in thousands): Fair Value Measurements on a Recurring Basisas of December 31, 2018 Level 1 Level 2 Level 3 TotalFinancial Assets/(Liabilities): Cash and cash equivalents: Money market accounts$186,142 $— $— $186,142Cash and securities held for customers: US treasury bills: U.S. government and agency securities104,712 — — 104,712Receivable from brokers: Broker derivative contracts— (7,637) — (7,637)Other assets: Certificates of deposit176 — — 176Other128 — — 128Payables to customers: Customer derivative contracts— 144,440 $— 144,440Payables to brokers: Broker derivative contracts 1,457 1,457Total$291,158 $138,260 $— $429,418 F-17Table of Contents Fair Value Measurements on a Recurring Basisas of December 31, 2017 Level 1 Level 2 Level 3 TotalFinancial Assets/(Liabilities): Cash and cash equivalents: Money market accounts$219,286 $— $— $219,286Cash and securities held for customers: US treasury bills: U.S. government and agency securities105,190 — — 105,190Receivable from brokers: Broker derivative contracts— 4,966 — 4,966Other assets: Certificates of deposit175 — — 175Other130 — — 130Payables to customers: Customer derivative contracts— 129,966 — 129,966Payables to brokers: Broker derivative contracts— (3,170) (3,170)Total$324,781 $131,762 $— $456,543The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the years endedDecember 31, 2018 and December 31, 2017, nor has there been any movement between levels during these respective periods.Level 1 Financial AssetsThe Company has U.S. Treasury bills, money market accounts and certificates of deposit that are Level 1 financial instruments that are recorded based uponlisted or quoted market rates. The U.S. Treasury bills and money market accounts are recorded in Cash and cash equivalents and Cash and securities held forcustomers and the certificates of deposit are recorded in Other Assets.Level 2 Financial Assets and LiabilitiesThe Company has customer derivative contracts that are Level 2 financial instruments recorded in Payables to customers.The Company has broker derivative contracts that are Level 2 financial instruments recorded in Receivables from brokers and Payables to brokers.The fair values of these Level 2 financial instruments are based upon directly observable values for underlying instruments.Level 3 Financial LiabilitiesThe Company did not have any Level 3 Financial Assets or Liabilities on December 31, 2018 or December 31, 2017.Financial Instruments Not Measured at Fair ValueThe table below presents the carrying value, fair value and fair value hierarchy category of certain financial instruments that are not measured at fair value inthe consolidated balance sheets (amounts in thousands).Receivables from brokers comprise open trades, which are measured at fair value (disclosed above), and the Company’s posted funds with brokers that arerequired as collateral for holding trading positions, which are not measured at fair value but approximate fair value. These deposits approximate fair valuebecause they are cash balances that the Company may withdraw at its discretion. Settlement would be expected to occur within a relatively short period oftime once a withdrawal is initiated.Payables to customers comprise open trades, which are measured at fair value (disclosed above), and customer deposits that the Company holds for its role asclearing broker. These deposits are not measured at fair value, but approximate fair value, because they are cash balances that the Company or its customerscan settle at either party’s discretion. Such settlement would occur within a relatively short period of time once a withdrawal is initiated.F-18Table of ContentsPayables to brokers comprise open trades, which are measured at fair value (disclosed above) and the cash due to or from brokers. The cash within thisbalance is not measured at fair value but does approximate fair value, because it is immediately payable to the brokers. Settlement occurs as soon as a brokerinitiates a margin call.The carrying value of Convertible senior notes represents the notes’ principal amounts net of unamortized discount (please refer to Note 15). The Companyassessed the notes’ fair value as determined by current Company-specific and risk free interest rates as of the balance sheet date.The table below represents the financial assets and liabilities at their carrying value and fair value: (amounts in thousands)As of December 31, 2018 Fair Value Measurements using: Carrying Value Fair Value Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) SignificantObservableInputs(Level 2) SignificantUnobservableInputs(Level 3)Financial Assets: Receivables from brokers$91,908 $91,908 $— $91,908 $—Financial Liabilities: Payables to customers$986,918 $986,918 $— $986,918 $—Payables to brokers$3,092 $3,092 $— $3,092 $—Convertible senior notes$132,109 $158,752 $— $158,752 $— As of December 31, 2017 Fair Value Measurements using: Carrying Value Fair Value Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) SignificantObservableInputs(Level 2) SignificantUnobservableInputs(Level 3)Financial Assets: Receivables from brokers$73,537 $73,537 $— $73,537 $—Payables to brokers$381 $381 $— $381 $—Financial Liabilities: Payables to customers$1,108,794 $1,108,794 $— $1,108,794 $—Convertible senior notes$132,221 $205,073 $— $205,073 $—6. DERIVATIVESThe Company’s contracts with its customers and its liquidity providers are deemed to be derivative instruments. The table below represents the fair values ofthe Company’s derivative instruments reported within Receivables from brokers, Payables to customers and Payables to brokers on the accompanyingConsolidated Balance Sheets (amounts in thousands): December 31, 2018 Gross amounts ofassets forderivative openpositions at fairvalue Gross amount of(liabilities) forderivative openpositions at fairvalue Net amounts ofassets/(liabilities)for derivativeopen positions atfair valueDerivative Instruments: Foreign currency exchange contracts$100,158 $(20,382) $79,776CFD contracts77,014 (21,220) 55,794Metals contracts6,438 (3,748) 2,690Total$183,610 $(45,350) $138,260 December 31, 2018F-19Table of Contents Cash Collateral Net amounts ofassets/(liabilities)for derivativeopen positions atfair value Net amounts ofassets/(liabilities)presented in thebalance sheetDerivative Assets/(Liabilities:) Receivables from brokers$91,908 $(7,637) $84,271Payables to customers$(986,918) $144,440 $(842,478)Payables to brokers$(3,092) $1,457 $(1,635) December 31, 2017 Gross amounts ofassets forderivative openpositions at fairvalue Gross amount of(liabilities) forderivative openpositions at fairvalue Net amounts ofassets/(liabilities)for derivativeopen positions atfair valueDerivative Instruments: Foreign currency exchange contracts$121,104 $(31,556) $89,548CFD contracts102,659 (62,322) 40,337Metals contracts4,084 (2,207) 1,877Total$227,847 $(96,085) $131,762 December 31, 2017 Cash Collateral Net amounts ofassets/(liabilities)for derivativeopen positions atfair value Net amounts ofassets/(liabilities)presented in thebalance sheetDerivative Assets/(Liabilities): Receivables from brokers$73,537 $4,966 $78,503Payables to customers$(1,108,794) $129,966 $(978,828)Payables to brokers$381 $(3,170) $(2,789)The Company’s derivatives include different underlyings which vary in price. Foreign exchange contracts typically have prices less than two dollars, whilecertain metals contracts and CFDs can have considerably higher prices. The amounts reported within Receivables from brokers, Payables to customers,Payables to brokers on the Consolidated Balance Sheets are derived from the number of contracts below (amounts in thousands): December 31, 2018 Total contracts in longpositions Total contracts in shortpositionsDerivative Instruments: Foreign currency exchange contracts3,780,488 3,238,781CFD contracts98,840 134,546Metals contracts489 188Total3,879,817 3,373,515 December 31, 2017 Total contracts in longpositions Total contracts in shortpositionsDerivative Instruments: Foreign currency exchange contracts2,075,789 4,148,056CFD contracts126,519 174,835Metals contracts414 217F-20Table of ContentsTotal2,202,722 4,323,108The Company did not designate any of its derivatives as hedging instruments. Net gains with respect to derivative instruments reflected in Retail Revenue inthe accompanying Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2018 and 2017 were as follows(amounts in thousands): For the Years Ended December 31, 2018 2017Derivative Instruments: Foreign currency exchange contracts$165,477 $114,149CFD contracts112,640 101,663Metals contracts22,019 15,151Total$300,136 $230,9637. RECEIVABLES FROM BROKERSThe Company has posted funds with brokers as collateral required by agreements for holding trading positions. These amounts are reflected as Receivablesfrom brokers on the Consolidated Balance Sheets.Amounts receivable from brokers consisted of the following as of (amounts in thousands): December 31, 2018 December 31, 2017Required collateral$91,908 $73,537Open foreign exchange positions(7,637) 4,966Total$84,271 $78,5038. PROPERTY AND EQUIPMENTProperty and equipment, including leasehold improvements and capitalized software development costs, consisted of the following as of (amounts inthousands): December 31, 2018 December 31, 2017Software$60,218 $57,047Computer equipment13,790 18,390Leasehold improvements10,814 11,068Telephone equipment646 643Office equipment1,948 2,110Furniture and fixtures3,294 3,592Web site development costs635 386Gross property and equipment91,345 93,236Less: Accumulated depreciation and amortization(60,766) (52,494)Property and equipment, net$30,579 $40,742Depreciation and amortization expense for property and equipment was $19.7 million, $17.0 million and $13.2 million for the years ended December 31,2018, 2017, and 2016, respectively.The Company wrote off certain property and equipment that became obsolete for the year ended December 31, 2018. This resulted in an additional charge of$1.3 million for the year ended December 31, 2018. The additional charge was recorded in General and administrative expenses.The Company retired $8.8 million of fully depreciated property and equipment for the year ended December 31, 2018.9. INTANGIBLE ASSETSThe Company’s various intangible assets consisted of the following as of (amounts in thousands): F-21Table of Contents December 31, 2018 December 31, 2017IntangiblesGross AccumulatedAmortization Net Gross AccumulatedAmortization NetCustomer list$58,494 $(40,208) $18,286 $60,420 $(31,698) $28,722Technology49,430 (38,555) 10,875 72,204 (43,270) 28,934Trademark7,308 (4,637) 2,671 7,680 (3,730) 3,950Total finite lived intangibles$115,232 $(83,400) $31,832 $140,304 $(78,698) $61,606Trademarks not subject toamortization(1)363 — 363 363 — 363Total intangibles assets$115,595 $(83,400) $32,195 $140,667 $(78,698) $61,969(1) These indefinite-life trademarks relate to the Forex.com and foreignexchange.com domain names where management determined there was no legal, regulatory ortechnological limitation on their useful lives. The Company compares the recorded value of the indefinite-life intangible assets to their fair value on an annual basis andwhenever circumstances arise that indicate that impairment may have occurred.The Company had the following identifiable intangible assets and weighted average amortization periods as of December 31, 2018:Intangible AssetAmount (in thousands) Weighted averageamortization periodCustomer list$58,494 7.4Technology49,430 7.2Trademark(1)7,671 6.9Total intangible assets$115,595 (1) Trademarks with an indefinite life, as described above, comprise $0.4 million of the $7.7 million of trademarks.Amortization expense for the purchased intangibles was $14.2 million, $14.0 million and $12.9 million for the years ended December 31, 2018, 2017, and2016, respectively.On February 7, 2017, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Forex Capital Markets L.L.C. (“FXCM”).Pursuant to the terms of the Purchase Agreement, FXCM transferred substantially all of its U.S.-domiciled customer accounts to the Company effective as ofFebruary 24, 2017. The Company has paid $7.2 million to FXCM as consideration for the purchased accounts for the full year 2017, which was capitalizedand included as an intangible asset and amortized on a straight line basis over its two year useful life.Future annual estimated amortization expense is as follows (amounts in thousands):Years Ended December 31,: 2019$8,79020206,98420216,90920223,84920232,704Thereafter2,596Total$31,832GoodwillGoodwill is evaluated for impairment on an annual basis during the fourth quarter and in interim periods when events or changes indicate the carrying valuemay not be recoverable. As a result of the sale of the GTX ECN business, the Company tested the institutional goodwill for impairment using data as of June30, 2018 and concluded there was no impairment. The $4.6 million of institutional goodwill was allocated to discontinued operations.The Company operates under two reporting units, retail and futures. There were no additions or impairments to the carrying value of the Company’s goodwillduring the year ended December 31, 2018.F-22Table of ContentsFor the year ended December 31, 2018, the Company performed a qualitative analysis to determine whether it was more likely than not that the fair value ofits reporting units was less than their carrying value. As a result of this assessment, the Company determined that it was not necessary to perform aquantitative impairment test and concluded that goodwill assigned to each of its reporting units was not impaired at December 31, 2018.As of December 31, 2018 and December 31, 2017, the Company had recorded goodwill of approximately $27.8 million and $33.0 million, respectively. Thedecrease of $5.2 million was primarily related to the discontinued operations of GTX.The following represents the changes in the carrying amount of goodwill by segment for 2018 and 2017 (amounts in thousands):Retail Institutional Futures TotalCarrying amount of goodwill as of December 31, 2017$25,952 $4,650 $2,434 $33,036Foreign currency translation adjustments(517) (34) (49) (600)Discontinued operations— (4,616) — (4,616)Carrying amount of goodwill as of December 31, 2018$25,435 $— $2,385 $27,82010. OTHER ASSETSOther assets consisted of the following as of (amounts in thousands): December 31, 2018 December 31, 2017Vendor and security deposits$6,964 $11,923Income tax receivable383 2,132Deferred tax assets, net13,217 10,698GTX trade receivables— 5,758Customer debit positions4,146 2,384Allowance on customer debit positions(4,126) (1,959)Prepaid assets8,323 9,523Miscellaneous receivables7,111 4,872Deferred commitment fees337 550Total other assets$36,355 $45,881The allowance for doubtful accounts consisted of the following (amounts in thousands):Balance as of January 1, 2016$(6,832)Addition to provision(4,154)Amounts collected/written off1,749Balance as of December 31, 2016$(9,237)Addition to provision247Amounts collected/written off7,031Balance as of December 31, 2017$(1,959)Addition to provision(2,508)Amounts collected/written off341Balance as of December 31, 2018$(4,126)11. RELATED PARTY TRANSACTIONSCertain officers and directors of the Company have personal funds on deposit in separate customer accounts with the Company. These accounts are recordedin Payables to customers on the Consolidated Balance Sheets. The aggregate amount of these funds was $0.4 million and $0.2 million at December 31, 2018and December 31, 2017, respectively.F-23Table of ContentsIPGL Limited, the majority selling shareholder in the acquisition of City Index, has a trading account with the Company which is recorded in Payables tocustomers on the Consolidated Balance Sheet. The aggregate amount of these funds was $11.7 million and $15.9 million at December 31, 2018 andDecember 31, 2017, respectively.The net revenue generated by any individual related party was not deemed to be material in 2018.12. RESTRUCTURINGThe Company incurred $0.8 million, $0.0 million, and $1.0 million of restructuring expenses for the twelve months ended December 31, 2018, 2017, and2016, respectively. These expenses reflected the cost of reducing global headcount following some strategic decisions in 2018 as well as the City Indexacquisition in 2016 and are recorded in Restructuring expenses in the Consolidated Statements of Operations and Comprehensive Income. All restructuringliabilities have all been paid as of December 31, 2018.13. NON-CONTROLLING INTERESTSNon-controlling interestsIn March 2014, the Company acquired controlling interests in GAA and Top Third. The Company purchased 55% of each entity, and the respective sellersmaintained a 45% interest in each entity, subject to immediately exercisable call options for the Company to purchase the remaining interests, as well as putoptions for the sellers to sell their remaining interests in each entity to the Company that were to become exercisable in 2017. In December 2016, theCompany acquired an additional 24% of each entity. In connection with the purchase of these additional interests, the Company and the respective sellersagreed that neither would exercise the call options or put options with respect to the remaining interests prior to December 31, 2017. In December 2017, theCompany and the sellers of TT extended their agreement that neither would exercise the relevant call options or put options through December 31, 2018.In February 2018, the minority owners of GAA notified the Company that they were exercising their put option with respect to their combined 21%ownership of GAA. In September 2018, the Company settled its purchase of the minority ownership interests in GAA for approximately $2.9 million. InDecember 2018, the minority owners of TT notified the Company that they were exercising their put option with respect to their combined 21% ownership ofTT. The purchase of the ownership interests subject to the put option had not settled as of December 31, 2018. However, because of the issuance of theexercise notice, the related non-controlling interest in TT was reclassified to a liability. The purchase of the minority ownership interest closed on February 1,2019 for approximately $2.4 million.In accordance with ASC 480-10-S99-3A, Classification and Measurement of Redeemable Securities, non-controlling interests are classified outside ofpermanent equity as their redemption is not (i) mandatory, (ii) at fixed prices, and (iii) exclusively within the Company’s control.Prior to December 31, 2018, the non-controlling interests were not classified as liabilities, because redemption was not mandatory or at fixed prices. Theyalso were not classified as equity because their redemption is not exclusively in the Company’s control. Therefore, the non-controlling interests were held intemporary equity in the Consolidated Balance Sheets.The table below reflects the non-controlling interests effects on the Company’s financial statements: Redeemable non-controllinginterestsDecember 31, 2016$6,594Adjustment to the redemption value of non-controlling interests(1,656)Net income attributable to non-controlling interests620Distributions to non-controlling interest holders(1,147)December 31, 2017$4,411Adjustment to the redemption value of non-controlling interests816Net income attributable to non-controlling interests737Distributions to non-controlling interest holders(634)Purchase of additional shares of non-controlling interest(2,906)Reclassification to liabilities(2,424)F-24Table of ContentsDecember 31, 2018$—14. REVOLVING CREDIT ARRANGEMENTOn August 3, 2017, the Company entered into a Credit Agreement, dated as of August 2, 2017, for a three year U.S. $50.0 million senior secured first lienrevolving credit facility that matures in August 2020. Upon request of the Company, the credit facility may be increased by up to $25.0 million, with aminimum increase of $5.0 million. The credit facility contains covenants that are customary for an issuer with senior debt. The commitment fees of $0.5million paid at establishment of the credit facility will be amortized over the life of the facility and was recorded to Other Assets. As of December 31, 2018,the Company was in compliance with the covenants for our credit facility.As of December 31, 2018, there were no amounts outstanding under the revolving line of credit.15. CONVERTIBLE SENIOR NOTESConvertible Senior Notes due 2022On August 22, 2017, the Company issued $92.0 million aggregate principal amount of its 5.00% Convertible Senior Notes due 2022, which amount includesthe exercise in full of the over-allotment option granted to the initial purchasers of the Notes, in a private offering to qualified institutional buyers pursuant toRule 144A under the Securities Act of 1933, as amended. The Notes bear interest at a fixed rate of 5.00% per year, payable semi-annually in arrears onFebruary 15 and August 15 of each year, beginning on February 15, 2018. The Notes are convertible into cash, shares of the Company’s common stock, or acombination thereof, at the Company’s election. The Company currently intends to settle the debt in cash. The Notes will mature on August 15, 2022, unlessearlier converted, redeemed or repurchased. The Company may not redeem the Notes prior to August 15, 2020. The net proceeds from the Note Offering wereapproximately $89.0 million, after deducting discounts to the initial purchasers but prior to taking into account any estimated offering expenses payable bythe Company.Prior to the close of business on the business day immediately preceding April 15, 2022, the Notes may be converted only upon the occurrence of specifiedevents set forth in the Indenture. On or after April 15, 2022, until the close of business on the business day immediately preceding the maturity date, holdersmay convert their Notes at any time. Subject to the foregoing, the Notes are convertible at the option of the holders and will be settled, at the Company’selection, by the payment or delivery of cash, shares of the Company’s common stock, or a combination thereof. The conversion rate is initially 122.0107shares of the Company’s common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $8.20 per share ofcommon stock). The conversion rate and the corresponding conversion price will be subject to adjustment in some circumstances described in the Indenture. If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all or part of theirNotes at a purchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, thefundamental change repurchase date. In addition, in certain circumstances, the Company may be required to increase the conversion rate for any Notesconverted in connection with a make-whole fundamental change (as defined in the Indenture). The Company may not redeem the Notes prior to August 15, 2020. On and after August 15, 2020, and prior to the maturity date, the Company may redeem forcash all, but not less than all, of the Notes if the last reported sale price of its common stock equals or exceeds 130% of the applicable conversion price for atleast 20 trading days, whether or not consecutive, during the 30 consecutive trading day period ending on the trading day immediately preceding the datethe Company delivers notice of the redemption. The redemption price will equal 100% of the principal amount of the Notes to be redeemed, plus any accruedand unpaid interest to, but excluding, the redemption date. In addition, if the Company calls the Notes for redemption, a make-whole fundamental changewill be deemed to occur. As a result, the Company will, in certain circumstances, increase the conversion rate for holders who convert their Notes after theCompany delivers a notice of redemption and before the close of business on the business day immediately preceding the relevant redemption date.Convertible Senior Notes due 2020On April 1, 2015, as part of the City Index acquisition consideration, the Company issued to the sellers $60.0 million aggregate principal amount of 4.125%Convertible Senior Notes maturing on April 1, 2020. These Convertible Senior Notes pay interest semi-annually on April 1 and October 1 at a rate of 4.125%per year, which commenced on October 1, 2015. The Company currently intends to settle the debt in cash.F-25Table of ContentsPrior to the date that is six months immediately preceding the maturity date, the Convertible Notes will be convertible only upon the occurrence of specifiedevents set forth in the Note Indenture. Thereafter, until the close of business on the business day immediately preceding the maturity date, holders mayconvert their Convertible Notes at any time. The Company will settle conversions of the Convertible Notes by paying or delivering, as the case may be, cash,shares of Common Stock or a combination thereof, at its election. The conversion rate for the Convertible Notes will be equal to $1,000, divided by theinitial conversion price, rounded to the nearest 1/10,000th share of Common Stock. The initial conversion price will be equal to 125% of the arithmeticaverage of the daily volume-weighted average price for the Common Stock over the 20 consecutive trading day period ending on, and including, the tradingday immediately preceding the closing date; provided that the initial conversion price shall not exceed the greater of (i) $9.25 and (ii) the last reported saleprice of the Common Stock on the Closing Date; and shall not be less than $7.20. As of December 31, 2018, the conversion ratio is 103.8488 shares of theCompany’s common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $9.63 per share of common stock). Theconversion rate and the corresponding conversion price will be subject to customary anti-dilution adjustments, as described in the Note Indenture, including,but not limited to, Common Stock splits, Common Stock combinations, issuances of Common Stock as a dividend on the Common Stock, issuances ofoptions rights, warrants or other securities of the Company as a dividend on the Common Stock, payment by the Company of any cash dividend in excess of$0.05 per quarter per share of Common Stock, and above-market tender offers or exchange offers by the Company or its subsidiaries for the Common Stock.In addition, in certain circumstances, the Company may be required to increase the conversion rate for any Convertible Notes converted in connection with amake-whole fundamental change as defined in the Note Indenture.If the Company undergoes a fundamental change, holders may require the Company to repurchase for cash all or part of their Convertible Notes at a purchaseprice equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the date ofrepurchase.Prior to the date that is two years immediately preceding the maturity date, the Company will not have the right to redeem the Convertible Notes. During thetwo year period immediately preceding the maturity date, the Company may redeem for cash all, but not less than all, of the Convertible Notes if the lastreported sale price of the Common Stock equals or exceeds 130% of the conversion price for the Convertible Notes for at least 20 trading days, whether or notconsecutive, during the 30 consecutive trading day period ending on the trading day immediately preceding the date the Company delivers notice ofredemption. If the Company elects to redeem the Convertible Notes, holders may convert their Convertible Notes at any time prior to the close of business onthe business day immediately preceding the redemption date.The Indenture will contain events of default customary for convertible debt securities (with customary grace periods, as applicable) and will provide that,upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company, all outstanding ConvertibleNotes will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then theholders of at least 25% in aggregate principal amount of the then outstanding Convertible Notes or the trustee may declare all of the outstanding ConvertibleNotes to be due and payable immediately.Convertible Senior Notes due 2018On November 27, 2013, the Company issued $80.0 million principal amount of 4.125% Convertible Senior Notes maturing on December 1, 2018. TheCompany received net proceeds of $77.9 million, after deducting the initial purchasers' discount. These Convertible Senior Notes pay interest semi-annuallyon June 1 and December 1 at a rate of 4.125% per year, which commenced on June 1, 2014. During the first quarter of 2016, the Company repurchased $1.9million in principal amount of the convertible senior notes due in 2018, for an aggregate purchase price of $1.7 million. During the third quarter of 2017, theCompany repurchased $71.8 million in principal amount of the convertible senior notes due in 2018, for an aggregate purchase price of $73.7 million withthe proceeds from the issuance of Convertible Senior Notes due in 2022. As a result we recognized an extinguishment loss of $4.9 million. During the fourthquarter of 2018, the Company settled the remaining $6.4 million in outstanding notes at maturity.An entity must separately account for the liability and equity components of a convertible debt instrument that may be settled entirely or partially in cashupon conversion. The separate accounting must reflect the issuer’s economic interest cost. The fair value of the equity component, net of pro-rata initialpurchasers’ discounts, is included in the additional paid-in capital section of shareholders' equity in the Company’s Consolidated Balance Sheets. Theprincipal amount of the Convertible Senior Notes is reduced by unamortized original issue discount, which reflects the Convertible Senior Notes fair value.The original issue discount will be amortized over the life of the Convertible Senior Notes due 2022, 2020 and 2018 using the effective interest rate of10.4%, 8.6% and 8.1%, respectively.F-26Table of ContentsAs of December 31, 2018 and 2017, the Company’s common stock had not met the convertibility criteria noted in the offering memorandum. Therefore, theConvertible Senior Notes were not dilutive as of December 31, 2018 and 2017.The balances of the liability and equity components as of December 31, 2018 and 2017 were as follows (amounts in thousands):December 31, December 31,2018 2017Liability component - principal$152,000 $158,350Deferred bond discount(19,503) (25,624)Deferred financing cost(388) (505)Liability component - net carrying value$132,109 $132,221 Additional paid in capital$39,405 $39,405Discount attributable to equity(826) (826)Equity component$38,579 $38,579Interest expense related to the Convertible Senior Notes, included in Interest expense on long term borrowings in the Consolidated Statements of Operationsand Comprehensive Income, was as follows (amounts in thousands): For the Fiscal Year Ended December 31,2018 2017Interest expense - stated coupon rate$7,315 $6,535Interest expense - amortization of deferred bond discount and costs6,225 5,286Total interest expense - convertible note$13,540 $11,82116. SHARE BASED PAYMENTSTotal share-based compensation expense recognized during 2018, 2017 and 2016 consisted of the following (amounts in thousands): For the Years Ended December 31, 2018 2017 2016Employee compensation and benefits$6,038 $5,093 $4,151On September 30, 2015, the Company’s board of directors adopted the GAIN Capital Holdings, Inc. 2015 Omnibus Incentive Compensation Plan, (the "2015Plan"), which became effective November 30, 2015.The 2015 Plan replaced the GAIN Capital Holdings, Inc. 2010 Omnibus Incentive Compensation Plan, (the “2010 Plan”). The 2015 Plan has available 3.5million shares for awards to employees, nonemployee directors, consultants, and advisors in the form of incentive stock options (“ISO”), nonqualified stockoptions (“NQSO"), restricted stock awards (“RSA”), time-based restricted stock units (“RSU”), performance-based restricted stock units (“PSU”), stockappreciation rights and other stock-based awards. The "evergreen" provision that allowed the Company to authorize additional shares to be issued under the2010 plan was removed from the 2015 Plan. Accordingly, the maximum number of shares that can be issued will be fixed and cannot be increased in thefuture without shareholder approval.Under the 2015 Plan, the Compensation Committee of the Board of Directors (the “Compensation Committee”) will determine the exercise price of theoptions granted and may grant options to purchase shares of the Company’s common stock in amounts as determined by the Compensation Committee. TheCompensation Committee may grant options that are intended to qualify as ISOs under Section 422 of the Internal Revenue Code, or NQSOs which are notintended to so qualify. ISOs may only be granted to employees. Anyone eligible to participate in the 2015 Plan may receive a grant of NQSOs. The exerciseprice of a stock option granted under the 2015 Plan cannot be less than the fair market value of a share of the Company’s common stock on the date theoption is granted. All options granted under the 2015 Plan expire seven years from the date of grant.Stock OptionsF-27Table of ContentsThe following table summarizes the stock option activity under all plans from January 1, 2018 through December 31, 2018 (in thousands, except per shareamounts): Options Outstanding Weighted Weighted Average Number of Average Remaining Aggregate Options Exercise Price Life (Years) Intrinsic ValueOutstanding January 1, 2018 1,295 $6.25 2.65 $4,857Granted — — 0.00 Exercised (170) 5.91 0.61 Forfeited/Expired (170) 7.67 0.15 Outstanding December 31, 2018 955 $6.05 2.32 $932Vested and expected to vest options 950 $6.05 2.31 $932Exercisable, December 31, 2018 802 $5.81 1.97 $932 Fair market value of common stock at exercise date $1,352 Cost to exercise 1,004 Net value of stock options exercised $348 The total intrinsic value of stock options exercised during 2018, 2017, and 2016, respectively, was $0.3 million, $0.3 million and $0.5 million. During 2018,the Company had 0.1 million stock options vest. The Company received $1.0 million, $0.4 million, and $0.7 million from stock option exercises in 2018,2017, and 2016, respectively.The Company made no stock option grants in 2018 or 2017 and granted 0.2 million options to employees in 2016. The weighted average grant-date fairvalue of stock options granted in the year ended December 31, 2016 was $2.18.The Compensation Committee approved stock option grants with a fair market value estimated under a Black-Scholes option pricing valuation model usingthe following assumptions: For the Fiscal Year Ended December 31, 2018 2017 2016Valuation Assumptions Risk-free rateNA NA 1.19%Expected volatilityNA NA 47.63%Expected term (years)NA NA 4.75Dividend yieldNA NA 3.0%The expected volatility was calculated on the basis of the volatility of the Company's common stock. The average risk free rate is based upon the risk free rateof the U.S. Treasury bond rate with a maturity commensurate with the expected term.Restricted Stock Units and Restricted Stock AwardsThe 2015 Plan provides for the issuance of RSUs that are convertible on a 1:1 basis into shares of the Company’s common stock. The Company maintains arestricted stock unit account for each grantee. RSU grants typically vest evenly over three or four years, with the relevant percentage vesting on eachanniversary date of the grant. After the RSUs vest, the grantee shall receive payment in the form of cash, shares of the Company’s common stock, or acombination of the two, as determined by the Company. Payment of cash and issuance of shares shall be made upon the vesting date, upon a predetermineddelivery date, upon a change in control of the Company, or upon the employee leaving the Company. The Company has historically settled these awardsthrough the issuance of common stock to recipients and intends to continue to do so. RSUs are assigned the value of the Company’s common stock at date ofgrant issuance, and the grant date fair value is amortized over a three or four year period.F-28Table of ContentsWhile the Company has historically issued RSUs with time-based vesting, in 2018, the Company also issued RSUs with performance-based vesting. Thenumber of shares issuable upon vesting will be determined by the Company's performance relative to certain operating performance targets established by theCompany. Vesting is contingent upon the recipient's continued service to the Company through the vesting period. A portion of these performance-basedgrants vest on the two year anniversary of the grant date, with the remainder vesting three years after the grant date. The Company recognized expense forthese performance-based RSUs on the basis of the Company's best estimate of fair value as of December 31, 2018.The Company granted 0.5 million time-based RSUs and 0.4 million performance-based RSUs in 2018. In 2017 and 2016, 1.0 million and 0.9 million time-based RSUs, respectively, were granted to employees and members of the Board of Directors.A summary of the status of the Company’s non-vested shares of RSUs as of December 31, 2018 and changes during the year ended December 31, 2018 arepresented below (in thousands, except per share amounts): Number Weighted Average Number Weighted Average of Time Grant Date of Performance Grant DateNon-Vested SharesBased RSUs Fair Value Based RSUs Fair ValueNon-vested at January 1, 20181,725 $7.93 — $—Granted494 7.83 420 7.91Vested(652) 8.05 — —Forfeited(224) 7.84 — —Non-vested at December 31, 20181,343 $7.88 420 $7.91The total grant-date fair value of time-based RSUs granted during the years ended December 31, 2018, December 31, 2017 and December 31, 2016 was $3.9million, $7.9 million, and $6.2 million, respectively. The total grant fair value of performance-based RSUs granted during the year ended December 31, 2018was $3.3 million.As of December 31, 2018, there was $10.8 million of total unrecognized compensation cost related to non-vested share-based compensation arrangementsgranted under the 2015 Plan. The cost is expected to be recognized over a weighted-average period of approximately two years. Employee Stock Purchase PlanThe 2011 Employee Stock Purchase Plan (“ESPP”) was adopted by the Company’s Board of Directors on November 22, 2010. The ESPP became effective onJanuary 1, 2011. The ESPP permits eligible employees to purchase shares of the Company’s common stock at a 15% discount from the lesser of the fairmarket value per share of the Company’s common stock on the first day of the offering period or the fair market value of the Company’s common stock on theinterim purchase date through after-tax payroll deductions. The total number of shares reserved for issuance under the ESPP was initially 500,000. It isintended that the ESPP meet the requirements for an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. For the year endedDecember 31, 2018 and December 31, 2017, 74,204 shares and 103,042 shares were issued under the ESPP, respectively. The discount on the ESPP of $0.1million is recorded in Employee compensation and benefits in the Consolidated Statement of Operations and Comprehensive Income.17. EARNINGS PER COMMON SHAREBasic and diluted earnings/(loss) per common share are computed by dividing net income/(loss) by the weighted average number of common sharesoutstanding during the period. Diluted earnings/(loss) per share includes the determinants of basic net income per share and, in addition, gives effect to thepotential dilution that would occur if securities or other contracts to issue common stock were exercised, vested or converted into common stock, unless theyare anti-dilutive. Diluted weighted average common shares include vested and unvested stock options, unvested restricted stock units and unvested restrictedstock awards. Approximately 0.4 million and 0.5 million stock options were excluded from the calculation of diluted earnings/(loss) per share for the yearsended December 31, 2018 and 2017, respectively, as they were anti-dilutive.Diluted earnings/(loss) per share excludes any shares of Company common stock potentially issuable under the Company’s convertible senior notes, whichare discussed in Note 15. Based upon an assumed trading price of $10 for each share of the Company’s common stock, and if the relevant conditions underthe indenture governing the 2020, and 2022 convertible seniorF-29Table of Contentsnotes were satisfied, there would be an additional 0.1 million, and 2.0 million dilutive shares as of December 31, 2018 for the 2020 and 2022 notes,respectively.The following table sets forth the computation of earnings/(loss) per share (amounts in thousands except share and per share data): For the years ended December 31,2018 2017 2016Net income/(loss) from continuing operations$27,977 $(14,853) $31,692Less income attributable to non-controlling interests737 620 2,140Net income/(loss) from continuing operations$27,240 $(15,473) $29,552Adjustment (1)(816) 1,656 (2,715)Net income/(loss) available to GAIN common shareholders from continuing operations$26,424 $(13,817) $26,837 Net income from discontinued operations65,649 4,278 5,720 Weighted average common shares outstanding: Basic weighted average common shares outstanding43,731,881 46,740,097 48,588,917Effect of dilutive securities: Stock options250,726 245,259 163,223 RSUs/RSAs206,717 35,746 33,534Diluted weighted average common shares outstanding44,189,324 46,740,097 48,785,674 Basic earnings/(loss) from continuing operations$0.60 $(0.29) $0.55Basic earnings from discontinued operations$1.50 $0.09 $0.12 Diluted earnings/(loss) from continuing operations$0.60 $(0.29) $0.55Diluted earnings from discontinued operations$1.49 $0.09 $0.12 (1)During the years ending December 31, 2018, 2017 and 2016, the Company concluded that the carrying value of the Company’s redeemable non-controlling interests was less than their redemption value, requiring that an adjustment to the carrying value be recorded for purposes of calculatingearnings per common share. The adjustment to increase or reduce the carrying value will, respectively, reduce or increase earnings per common shareby reducing or increasing net income available to common shareholders.18. LEGALFrom time to time the Company becomes involved in legal proceedings and in each case the Company assesses the likely liability and/or the amount ofdamages as appropriate. Where available information indicates that it is probable a liability had been incurred at the date of the consolidated financialstatements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income. In manyproceedings, however, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the amount of any loss. Inaddition, even where loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized losscontingency, it is often not possible to reasonably estimate the size of the possible loss or range of loss.For certain legal proceedings, the Company can estimate possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amountsaccrued. For certain other legal proceedings, the Company cannot reasonably estimate such losses, if any, since the Company cannot predict if, how or whensuch proceedings will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for proceedings that are in theirearly stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues must be developed, including the need todiscover and determine important factual matters and the need to address novel or unsettled legal questions relevant to the proceedings in question, before aloss or additional loss or range of loss can be reasonably estimated for any proceeding.LitigationF-30Table of ContentsOn February 16, 2012, the Company received a Letter of Claim on behalf of certain individuals who had lost money in an investment scheme operated by athird-party money management firm, incorporated in the United Kingdom, which has since been closed down by the United Kingdom’s Financial ServicesAuthority. The investment firm, Cameron Farley Ltd, had opened a corporate account with the Company and invested the individuals’ money, representingsuch funds as its own, while operating a fraudulent scheme. Though a complaint had been filed and served on the Company, the claimants requested, and theCompany agreed, to follow the United Kingdom’s Pre-Action Protocol, a pre-litigation process intended to resolve matters without the need to engage informal litigation. On April 28, 2016, the parties entered into a Settlement Agreement in which the Company agreed to make a one-time settlement payment inexchange for a full and final settlement of all claims. For the year ended December 31, 2016, the settlement amount, net of insurance recoveries, totaledapproximately $9.2 million.In November 2018, we settled on an ongoing contractual dispute with a service provider relating to the historical deployment of software supporting one ofour legacy trading platforms. Pursuant to the terms of the settlement, we agreed to make a one-time settlement payment of approximately $5.3 million inexchange for a full and final settlement of all claims.19. COMMITMENTS AND CONTINGENCIESLeases & Purchase Obligations — The Company leases office space under non-cancelable operating lease agreements that expire on various dates through2025. Such leases do not require any contingent rental payments or impose any financial restrictions. Certain of the Company’s leases include renewaloptions and escalation clauses. In addition, the Company has certain non-cancelable purchase obligations for its operational needs. Future annual minimumlease payments for the Company’s non-cancellable operating leases and purchase obligations are as follows (amounts in thousands):Years Ended December 31,: 2019$23,604202010,37420213,73820223,48020232,3122024 and beyond2,003Total$45,511Rent expense, which is recorded on a straight-line basis, was $4.4 million, $2.6 million, and $2.9 million for the years ended December 31, 2018, 2017 and2016, respectively.20. INCOME TAXESThe following table presents the U.S. and non-U.S. components of (loss)/income before income tax (benefit)/expense for the years ended December 31, 2018,2017, and 2016 (amounts in thousands): For the Fiscal Year Ended December 31, 2018 2017 2016U.S.$3,158 $(14,829) $4,831Non-U.S.33,333 (4,692) 37,762Total income/(loss) before tax expense/(benefit)$36,491 $(19,521) $42,593F-31Table of ContentsIncome tax (benefit)/expense consisted of (amounts in thousands): For the Fiscal Year Ended December 31, 2018 2017 2016Current Federal$2,102 $(4,254) $3,979State1,253 275 139U.K.6,672 771 8,859Japan328 188 64Australia1,264 571 —Other non-U.S.90 36 569Total current income tax expense/(benefit)11,709 (2,413) 13,610Deferred Federal(2,330) (967) 337State(711) (893) (727)U.K.(599) (1,558) 601Singapore548 412 (2,162)Japan70 175 (528)Other non-U.S.(173) 233 (618)Change in valuation allowance— — 326Total deferred tax benefit(3,195) (2,598) (2,771)Total income tax expense/(benefit)$8,514 $(5,011) $10,839Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities andare measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. The Company’s net deferred tax assetsare included in Other assets on the Consolidated Balance Sheets.Significant components of the Company’s deferred tax assets and liabilities were as follows (amounts in thousands): December 31, 2018 2017Deferred tax assets Net operating losses$6,832 $10,380Share-based compensation994 1,105Intangible assets4,291 1,538Basis difference in property and equipment4,262 4,002Other1,999 1,720Total deferred tax assets18,378 18,745Valuation allowance(904) (1,062)Total deferred tax assets after valuation allowance17,474 17,683 Deferred tax liabilities Unrealized trading losses— (1,384)Discount on convertible note(4,257) (5,601)Total deferred liabilities(4,257) (6,985)Net deferred tax assets$13,217 $10,698F-32Table of ContentsThe Company has $40.0 million in net operating loss (“NOL”) carry forwards as of December 31, 2018. As of December 31, 2018, the Company has NOL’s inthe following jurisdictions: $27.0 million in the UK, $6.9 million in Singapore, $2.9 million in the Netherlands, $2.9 million in various US states, and $0.3million in various minor jurisdictions. These NOLs begin to expire in 2020. The Company has a deferred tax asset of $6.8 million relating to these NOLs forwhich it has established a valuation allowance of $0.9 million. The net change in the valuation allowance is $0.2 million.The following table reconciles the effective tax rate to the U.S. federal statutory income tax rate: 2018 2017 2016Federal income tax at statutory rate21.00 % 35.00 % 35.00 %Increase/(decrease) in effective tax rate resulting from: State income tax1.17 % 2.06 % (0.90)%Foreign rate differential0.07 % (60.93)% 14.67 %GILTI10.75 % — % — %Impact of non-controlling interests(0.42)% 1.11 % (1.76)%162 (m)1.32 % (0.74)% 0.37 %Uncertain tax positions(0.64)% 23.58 % 2.62 %Impairment of investment— % — % 9.28 %Non-taxable dividend— % 54.65 % (35.67)%U.K. bank tax1.28 % — % 3.24 %Rate changes— % (9.41)% (1.49)%Toll tax inclusion— % (22.72)% — %Foreign tax credit(9.22)% 9.00 % — %True-ups and deferred tax adjustments(2.00)% (2.33)% (2.59)%Other permanent differences0.02 % (3.60)% 2.68 %Effective Tax Rate23.33 % 25.67 % 25.45 %In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No.118 (“SAB 118”). SAB 118 allowed for the recordingof a provisional estimate to reflect the income tax impact of the Tax Act and provides a measurement period of up to one year from the enactment date.Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of theeffects and recorded provisional amounts in the financial statements as of December 31, 2017. Specifically provisional amounts were recorded in respect ofthe provisions of the Tax Act that relate to mandatory deemed repatriation of untaxed foreign earnings, offset by current year losses and a foreign tax credit.In 2018, the Company completed its review of the Tax Act, taking into account guidance issued by the Internal Revenue Service (“IRS”) and madeadjustments required to the provisional amount recorded as explained further below.In 2018, the Company had a number of discrete tax items that impacted its effective tax rate:•In Q4 2018, the Company completed its income tax accounting for its US tax liability with respect to its untaxed foreign earnings, including theimpact of foreign tax credits and state taxes, as a result of the Tax Cuts and Jobs Act, enacted on December 22, 2017, within the measurement period.As a result, the Company recorded a tax benefit of $1.3 million.•The Company has elected to treat the new Global Intangible Low Tax Income (“GILTI”) inclusion, resulting from the enactment of the Tax Cuts andJobs Act, as a period cost. The Company recorded tax expense of $0.6 million as the impact of GILTI, net of applicable foreign tax credits.•The Company received a favorable ruling from the U.S. competent authority regarding a challenge to an IRS adjustment filed by the Company. As aresult of the ruling, the Company increased its previously accrued benefit by an additional $0.2 million.F-33Table of ContentsAt December 31, 2018, the Company asserts that the earnings of its foreign subsidiaries will be permanently reinvested in the working capital and otherbusiness needs of the subsidiaries to the extent that repatriation of these earnings would trigger additional capital gains and/or foreign withholding taxes. Assuch, amounts that can be brought back without triggering capital gains and/or foreign withholding taxes will not be considered permanently reinvested.Based on our analysis, we do not believe that the potential impact of the unrecognized deferred tax liability associated with the repatriation of such earningswould be material to the financial statements.At December 31, 2018, the Company did not have any uncertain tax positions.The following table summarizes the activity to the gross unrecognized tax benefits from uncertain tax positions (amounts in thousands):As of December 31,2018 2017 2016Beginning balance as of January 1$— $4,628 $11,801Increases based on tax positions related to the current period— — —Decreases based on tax positions related to prior periods— (4,331) (6,617)Decreases related to settlements— (297) (554)Decreases related to a lapse of applicable statute of limitations— — (2)Ending balance as of December 31$— $— $4,628Included in the balance of unrecognized tax benefits as of December 31, 2018, December 31, 2017, and December 31, 2016 are $0.0 million, $0.0 million and$4.6 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate. The Company’s open tax years range from 2015 through2018 for its U.S. federal returns, from 2016 through 2018 for the U.K., from 2013 through 2018 for Japan, and from 2013 through 2018 for its major statejurisdictions. It is reasonably possible that the amount of liability for unrecognized tax benefits could change during the next 12 months due to openexaminations. An estimate of the range of the possible change cannot be made until issues are further developed or examinations closed.In addition to the total unrecognized tax benefits noted above, the Company recorded $0.0 million, $0.0 million, and $0.9 million of penalties and interestfor the years ended December 31, 2018, December 31, 2017 and December 31, 2016, respectively. These amounts are recorded in Income taxexpense/(benefit) in the Consolidated Statements of Operations and Comprehensive Income and are part of the uncertain tax positions impact whenreconciling the federal income tax rate to the Company’s effective tax rate.21. RETIREMENT PLANSThe Company sponsors a “Safe Harbor” 401(k) retirement plan which was put into effect as of January 1, 2011. The plan provides for a 100% match by theCompany on the first 3% of the employee’s salary contributed to the plan and 50% on the next 2% with immediate vesting on all employer contributions,subject to IRS limitations. Substantially all of the Company’s employees are eligible to participate in the plan.The expense recorded to employee compensation and benefits on the Consolidated Statements of Operations and Comprehensive Income by the Companyfor its employees’ participation in the respective plans during the years ended December 31, 2018, 2017 and 2016 was $0.9 million, $0.7 million, and $0.8million, respectively.22. REGULATORY REQUIREMENTSThe following table illustrates the minimum regulatory capital our subsidiaries were required to maintain as of December 31, 2018 and the actual amounts ofcapital that were maintained (amounts in millions):F-34Table of ContentsEntity NameMinimumRegulatoryCapitalRequirements CapitalLevelsMaintained ExcessNetCapital Percent ofRequirementMaintainedGAIN Capital Group, LLC$34.2 $53.9 $19.7 158%GAIN Capital Securities, Inc.0.1 0.4 0.3 400%GAIN Capital U.K., Ltd.56.2 194.3 138.1 346%GAIN Capital Japan Co., Ltd.1.2 10.8 9.6 900%GAIN Capital Australia, Pty. Ltd.0.7 6.2 5.5 886%GAIN Capital-Forex.com Hong Kong, Ltd.1.9 3.6 1.7 189%GAIN Global Markets, Inc.0.2 1.6 1.4 800%GAIN Capital-Forex.com Canada, Ltd.0.2 1.4 1.2 700%GAIN Capital Singapore Pte., Ltd.3.7 9.0 5.3 243%Trade Facts, Ltd.0.6 3.4 2.8 567%Global Assets Advisors, LLC0.0 2.7 2.7 100%Total$99.0 $287.3 $188.3 290%23. SEGMENT INFORMATIONASC 280, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments.Operating segments are defined as components of an enterprise which engage in business activities from which they may earn revenues and incur expensesand about which separate financial information is available that is evaluated regularly by the chief operating decision-maker, or decision making group, indeciding how to allocate resources and in assessing performance. Reportable segments are defined as an operating segment that either (a) exceeds 10% ofrevenue, or (b) reported profit or loss in absolute amount exceeds 10% of profit of all operating segments that did not report a loss or (c) exceeds 10% of thecombined assets of all operating segments. The Company’s operations relate to global trading services and solutions.During the twelve months ended December 31, 2018, the Company completed its implementation of global support groups in the areas of finance, legal,human resources, and treasury. These groups are now centrally managed and support all business functions. Therefore, all costs related to these groupspreviously recorded within the retail segment will now be classified in our corporate and other segment to better align the cost reporting with the supportservices. The change in segment reporting has no impact on the net profit or loss of the Company. To enable comparisons with prior period performance,historical segment information for the periods included in the tables below reflect this reporting change.Retail SegmentBusiness in the retail segment is conducted primarily through the Company’s FOREX.com and City Index brands. The Company provides its retail customersaround the world with access to over 15,000 global financial markets, including spot forex, precious metals and CFDs on commodities, indices, individualequities, cryptocurrencies, bonds and interest rate products, as well as OTC options on forex. In the United Kingdom, the Company also offer spread bets,which are investment products similar to CFDs, but that offer more favorable tax treatment to residents of that country.Futures SegmentThe futures segment offers execution and related services for exchange-traded futures and futures options on major U.S. and European exchanges. TheCompany offers futures services through its subsidiary, GAIN Capital Group, LLC, under the GAIN Capital Futures brand. In addition, in 2014, the Companyexpanded its futures business by acquiring majority interests in GAA and TT.Corporate and otherCorporate and other provides general corporate services to the Company’s segments. Corporate and other revenue primarily comprises foreign currencytransaction gains and losses.Selected financial information by segment is presented in the following tables (amounts in thousands): Retail Year Ended December 31,F-35Table of Contents 2018 2017 2016Net revenue$310,984 $237,420 $336,354 Employee compensation and benefits55,447 52,297 52,640Selling and marketing35,378 29,931 27,666Referral fees26,899 39,711 55,080Other operating expenses72,747 57,951 69,859Segment profit$120,513 $57,530 $131,109 Futures Year Ended December 31, 2018 2017 2016Net revenue$43,967 40,290 48,084 Employee compensation and benefits9,868 9,387 11,967Selling and marketing811 786 972Referral fees13,127 13,960 15,672Other operating expenses13,989 12,932 14,769Segment profit$6,172 $3,225 $4,704 Corporate and Other Year Ended December 31, 2018 2017 2016Other revenue$(2,392) $528 $(1,688) Employee compensation and benefits23,756 21,002 26,010Selling and marketing271 398 4Other operating expenses13,770 10,181 15,988Loss$(40,189) $(31,053) $(43,690)F-36Table of ContentsReconciliation of operating segment profit to (loss)/income before income tax (benefit)/expense For the Fiscal Year Ended December 31, 2018 2017 2016Retail segment$120,513 $57,530 $131,109Futures segment6,172 3,225 4,704Corporate and other(40,189) (31,053) (43,690)SEGMENT PROFIT86,496 29,702 92,123Depreciation and amortization19,654 17,045 13,203Purchased intangible amortization14,171 13,966 12,872Restructuring expenses762 — 1,041Integration expenses— — 2,788Impairment of investment(130) 620 —Legal settlement5,306 — 9,205Class action settlement(5,398) — —Dutch auction fees768 — —PP&E write-off1,332 — —Other corporate expenses— 827 —OPERATING PROFIT/(LOSS)50,031 (2,756) 53,014Interest expense on long term borrowings13,540 11,821 10,421Loss on extinguishment of debt— 4,944 —INCOME/(LOSS) BEFORE INCOME TAX (BENEFIT)/EXPENSE$36,491 $(19,521) $42,593Net revenue by geographic area for the years ended December 31, 2018, 2017 and 2016 is as follows (amounts in thousands): 2018 2017 2016Net Revenue(1): North America(2)$164,040 $115,547 $114,713Europe(3)129,807 154,028 264,879Other64,110 8,663 3,158Total Net Revenue$357,957 $278,238 $382,750(1) - Net revenue is attributed to individual countries based on the jurisdiction of the formation of the reporting entity that records the transaction.(2) - Includes U.S. net revenue of $143.6 million, $106.2 million, and $114.4 million for 2018, 2017, and 2016 respectively.(3) - Includes U.K. net revenue of $129.7 million and $154.2 million, and $264.7 million for 2018, 2017, and 2016 respectively.Long-lived assets by geographic area as of December 31, 2018 and 2017 are as follows (amounts in thousands): 2018 2017Long-lived assets(1): North America(2)$8,875 $8,848Europe(3)21,427 29,961Other277 1,933Total long-lived assets$30,579 $40,742(1) - Long-lived assets are comprised of property and equipment, net. They exclude goodwill, other intangible assets and other assets, which are not attributable to any onegeographic location.(2) - Includes U.S. long-lived assets of $8.9 million and $8.8 million for 2018 and 2017, respectively.(3) - Includes U.K. long-lived assets of $21.4 million and $30.0 million for 2018 and 2017, respectively.F-37Table of Contents24. QUARTERLY FINANCIAL DATA (UNAUDITED)The following table sets forth selected quarterly financial data for 2018 and 2017 (in thousands, except per share data): First Second Third Fourth Quarter Quarter Quarter QuarterFor the Year Ended December 31, 2018 Total non-interest revenue$96,660 $81,750 $92,754 $76,152Net revenue$98,360 $84,185 $95,541 $79,870Income/(loss) before income tax expense$19,590 $6,569 $13,939 $(3,608)Net income/(loss) from continuing operations$15,398 $6,832 $9,969 $(739)Income from discontinued operations$863 $60,642 $2,344 $(1,681)Net income/(loss)$16,261 $67,474 $12,313 $(2,419)Net income attributable to non-controlling interest$175 $326 $137 $99Net income/(loss) applicable to GAIN Capital Holdings, Inc.$16,086 $67,148 $12,176 $(2,518)Basic earnings/(loss) from continuing operations$0.25 $0.13 $0.22 $(0.02)Diluted earnings/(loss) from continuing operations$0.25 $0.13 $0.22 $(0.02) For the Year Ended December 31, 2017 Total non-interest revenue$50,522 $89,466 $72,403 $61,151Net revenue$51,180 $90,591 $73,760 $62,707Income/(loss) before income tax expense$(24,349) $15,090 $(2,943) $(7,289)Net income/(loss) from continuing operations$(18,435) $13,523 $(3,083) $(6,827)Income from discontinued operations$(351) $569 $728 $3,301Net income/(loss)$(18,786) $14,092 $(2,355) $(3,526)Net income attributable to non-controlling interest$85 $153 $225 $157Net income/(loss) applicable to GAIN Capital Holdings, Inc.$(18,871) $13,939 $(2,580) $(3,683)Basic earnings/(loss) from continuing operations$(0.39) $0.30 $(0.06) $(0.16)Diluted earnings/(loss) from continuing operations$(0.39) $0.30 $(0.06) $(0.16)25. SUBSEQUENT EVENTSIn February 2019, the Company announced the payment of a $0.06 dividend per share of Common Stock payable on March 29, 2019 to stockholders ofrecord on March 26, 2019.F-38Table of ContentsSchedule IGAIN CAPITAL HOLDINGS, INC.(Parent Company Only)Condensed Balance Sheets(in thousands, except share data) December 31, 2018 December 31, 2017ASSETS: Cash and cash equivalents$6,507 $138Equity investments in subsidiaries470,767 523,353Receivables from affiliates12,615 —Income tax receivable279 1,864Deferred tax assets, net7,632 4,969Other assets491 3,153 Total assets$498,291 $533,477LIABILITIES AND SHAREHOLDERS’ EQUITY: Liabilities Accrued expenses and other liabilities$7,182 $7,170Payable to affiliates61,227 108,338Convertible senior notes132,109 132,221 Total liabilities200,518 247,729Commitments and contingent liabilities (refer to Note 3) Shareholders’ Equity Common stock ($0.00001 par value; 120 million shares authorized, 54,507,742 shares issued and37,821,686 shares outstanding as of December 31, 2018; 120 million shares authorized,53,612,340 shares issued and 45,152,299 shares outstanding as of December 31, 2017)— —Additional paid-in capital243,216 235,659Retained earnings204,483 122,686Accumulated other comprehensive loss(29,410) (15,670)Treasury stock, at cost 16,686,056 shares at December 31, 2018 and 8,460,041 at December 31,2017, respectively)(120,516) (56,927) Total shareholders’ equity297,773 285,748 Total liabilities and shareholders’ equity$498,291 $533,477The accompanying notes are an integral part of these condensed financial statements.F-39Table of ContentsSchedule IGAIN CAPITAL HOLDINGS, INC.(Parent Company Only)Condensed Statements of Operations and Comprehensive Income(in thousands) Year Ended December 31, 2018 2017 2016REVENUE: Dividends from subsidiaries$146,416 $6,900 $—Gain on legal settlements5,398 — —Interest and other556 30 64Total revenue$152,370 $6,930 $64EXPENSES: Interest expense$491 $204 $39Employee compensation and benefits957 728 6,852Legal settlement5,260 2 9,205General and administrative6,156 4,905 6,413Total operating expense$12,864 $5,839 $22,509Interest expense on long term borrowings13,540 11,821 10,421Loss on extinguishment of debt— 4,944 —Income from discontinued operations2,589 — —INCOME/(LOSS) BEFORE INCOME TAX EXPENSE$123,377 $(15,674) $(32,866)Income tax expense/(benefit)5,067 (7,614) 2,603NET INCOME/(LOSS) BEFORE UNDISTRIBUTED EARNINGS OF SUBSIDIARIES$118,310 $(8,060) $(35,469)Equity in (loss)/earnings of subsidiaries(25,421) (3,135) 70,741NET INCOME/(LOSS)92,889 (11,195) 35,272Other comprehensive income/(loss): Foreign currency translation adjustment(13,740) 21,172 (30,977)TOTAL COMPREHENSIVE INCOME$79,149 $9,977 $4,295The accompanying notes are an integral part of these condensed financial statements.F-40Table of ContentsSchedule IGAIN CAPITAL HOLDINGS, INC.(Parent Company Only)Condensed Statements of Cash Flows(in thousands) Year Ended December 31, 2018 2017 2016CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss)$92,889 $(11,195) $35,272Adjustments to reconcile net income/(loss) to cash provided by operating activities Equity in loss/(earnings) of subsidiaries25,421 3,135 (70,741)Loss/(gain) on extinguishment of debt— 4,944 (89)(Gain)/loss on foreign currency exchange rates(6) (16) 21Deferred tax benefit(2,661) (1,891) (1,098)Amortization of deferred financing costs648 495 442Non-Cash dividends (received)/paid(52,166) — 28Share-based compensation955 5,093 4,151Convertible senior notes discount amortization5,590 4,917 4,310Changes in operating assets and liabilities: Receivables from affiliates(12,615) — 2,442Other assets2,662 2,944 (5,861)Income tax payable1,583 (945) 13,121Accrued compensation and benefits— (60) (151)Accrued expenses and other liabilities12 (6,972) (6,948)Payable to affiliates10,145 18,828 64,064Cash provided by operating activities72,457 19,277 38,963CASH FLOWS FROM INVESTING ACTIVITIES: Investment in and funding of subsidiaries12,608 (2,106) (16,513)Cash provided by/(used in) investing activities12,608 (2,106) (16,513)CASH FLOWS FROM FINANCING ACTIVITIES: Convertible note issuance, net of commissions— 89,010 —Maturity and repurchase of convertible notes(6,350) (73,057) (1,735)Proceeds from exercise of stock options1,004 — 706Proceeds from employee stock purchase plan515 642 610Purchase of treasury stock(63,589) (26,160) (8,959)Excess tax benefit from employee stock option exercises— 356 49Dividend payments(10,276) (11,174) (10,222)Cash used in financing activities(78,696) (20,383) (19,551)INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS6,369 (3,212) 2,899CASH AND CASH EQUIVALENTS — Beginning of year138 3,350 451CASH AND CASH EQUIVALENTS — End of year$6,507 $138 $3,350SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest paid$7,525 $5,012 $5,830Tax refunds/(tax payments)$6,150 $827 $(3,552)The accompanying notes are an integral part of these condensed financial statements.F-41Table of ContentsSCHEDULE I —GAIN CAPITAL HOLDINGS, INC.(PARENT COMPANY ONLY)NOTES TO CONDENSED FINANCIAL STATEMENTS1. Basis of PresentationBasis of Financial Information — The accompanying condensed financial statements of GAIN Capital Holdings, Inc. (“Parent Company”), including thenotes thereto, should be read in conjunction with the consolidated financial statements of GAIN Capital Holdings, Inc. and Subsidiaries (the “Company”) andthe related notes.The condensed financial statements are prepared in accordance with accounting principles generally accepted in the U.S. which require the Company orParent Company to make estimates and assumptions regarding valuations of certain financial instruments and other matters that affect the Parent CompanyFinancial Statements and related disclosures. Actual results could differ from these estimates.The Company has several subsidiaries that are subjected to minimum net capital requirements as noted in Note 22 - Regulatory Requirements, in theaccompanying consolidated financial statements. In accordance with SEC Rule § 210.12-04 Condensed financial information of registrant, the condensedfinancial information of the Parent Company is required to be presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of theconsolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidatedsubsidiaries shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) whichas of the end of the most recent fiscal year may not be transferred to the Parent Company by subsidiaries in the form of loans, advances or cash dividendswithout the consent of a third party such as the primary regulators of the Company’s operating subsidiaries.The Parent Company on a stand-alone basis, has accounted for majority-owned subsidiaries using the equity method of accounting.2. Transactions with SubsidiariesThe Parent Company has transactions with its subsidiaries determined on an agreed upon basis. Cash dividends from subsidiaries were $94.3 million, $6.9million, and $0.0 million for the years ended December 31, 2018, 2017, and 2016, respectively.3. Commitments and ContingenciesFor a discussion of commitments and contingencies, please refer to Note 19 to the Company’s consolidated financial statements.ITEM 16. FORM 10-K SUMMARYNone.3. Exhibit IndexExhibitNo. Description 2.1† Asset Purchase Agreement dated as of April 20, 2011 by and among GAIN Capital Group, LLC and DeutscheBank AG, acting through is London Branch (incorporated by reference to Exhibit 2.1 of the Registrant’sForm 10-Q for the quarter ended March 31, 2011, filed on May 16, 2011, No. 001-35008). 2.2 Stock Purchase Agreement, dated as of April 24, 2013, by and among GAIN Capital Holdings, Inc., Gary J.Tilkin and Global Futures & Forex, Ltd. (incorporated by reference to Exhibit 2.1 of the Registrant’s Form10-Q for the quarter ended March 31, 2013, filed on May 10, 2013, No. 001-35008). F-42Table of Contents 2.3 Amended and Restated Stock Purchase Agreement, dated as of September 24, 2013, by and among GAINCapital Holdings, Inc., Gary J. Tilkin and Global Futures & Forex, Ltd. (incorporated by reference to Exhibit2.1 to the Registrant’s Current Report on Form 8-K, filed on September 25, 2013, No. 001-35008). 2.4 Share Purchase Agreement, dated as of October 31, 2014, by and among GAIN Capital Holdings, Inc., CityIndex Group Limited, INCAP Gaming B.V. and IPGL Limited (incorporated by reference to Exhibit 2.1 of theRegistrant’s Current Report on Form 8-K/A, filed on January 12, 2015, No. 001-35008). 3.1 Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.3 of theRegistrant’s Registration Statement on Form S-1, as amended, No. 333-161632). 3.2 Certificate of Designation of Series A Participating Cumulative Preferred Stock of GAIN Capital Holdings,Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on April10, 2013, No. 001-35008). 3.3 Amended and Restated By-laws (incorporated by reference to Exhibit 3.2 of the Registrant’s RegistrationStatement on Form S-1, as amended, No. 333-161632). 4.1 Specimen Certificate evidencing shares of common stock (incorporated by reference to Exhibit 4.1 of theRegistrant’s Registration Statement on Form S-1, as amended, No. 333-161632). 4.2 Investor Rights Agreement, dated January 11, 2008, by and among the Company, the Investors and theFounding Stockholders, as defined therein (incorporated by reference to Exhibit 4.2 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632). 4.3 Amendment to Investor Rights Agreement, dated as of November 18, 2013, by and among the Company, theInvestors named therein and the Founding Stockholder, as defined therein (incorporated by reference toExhibit 4.3 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013, as filedon March 17, 2014, No. 001-35008). 4.4 Rights Agreement, dated as of April 9, 2013, between GAIN Capital Holdings, Inc. and Broadridge CorporateIssuer Solutions, Inc., as Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s CurrentReport on Form 8-K, filed on April 10, 2013, No. 001-35008). 4.5 Amendment No. 1 to the Rights Agreement, dated as of April 8, 2016, between GAIN Capital Holdings, Inc.and Broadridge Corporate Issuer Solutions, Inc., as Rights Agent (incorporated by reference to Exhibit 4.1 tothe Registrant’s Current Report on Form 8-K, filed on April 11, 2016, No. 001-35008). 4.6 Indenture, dated as of November 27, 2013, between GAIN Capital Holdings, Inc. and The Bank of New YorkMellon (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed onNovember 27, 2013, No. 001-35008). 4.7 Indenture, dated as of April 1, 2015, between GAIN Capital Holdings, Inc. and The Bank of New YorkMellon (incorporated by reference to Exhibit 4.11 of the Registrant’s Registration Statement on Form S-3, asamended, No. 333-208175). 4.8 Indenture, dated as of August 22, 2017, between GAIN Capital Holdings, Inc. and The Bank of New YorkMellon (incorporated by reference to exhibit 4.1 of the Registrant’s Current Report on Form 8-K, filed onAugust 23, 2017, No. 001-35008). F-43Table of Contents4.9 Form of 5.00% Convertible Senior Notes due 2022 (included in Exhibit 4.7). 10.1 2015 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A of the Registrant’sDefinitive Proxy Statement on Schedule 14A, filed on October 15, 2015, No. 001-35008).** 10.2 2011 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.3 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632).** 10.3 Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.3 of the Registrant’sForm 10-K for the year ended December 31, 2010, filed on March 30, 2011, No. 001-35008).** 10.4 Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.4 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632). ** 10.5 Form of Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.5 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632). ** 10.6 Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.6 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632). ** 10.7 Form of Restricted Stock Unit Agreement (CEO - Performance Vesting) (incorporated by reference to Exhibit10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filedNovember 6, 2018, No. 001-35008).** 10.8 Form of Restricted Stock Unit Agreement (CEO - Time Vesting) (incorporated by reference to Exhibit 10.2 ofthe Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filed November 6,2018, No. 001-35008).** 10.9 Form of Restricted Stock Unit Agreement (Executive - Performance Vesting) (incorporated by reference toExhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018,filed November 6, 2018, No. 001-35008).** 10.10 Form of Restricted Stock Unit Agreement (Executive - Time Vesting) (incorporated by reference to Exhibit10.4 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filedNovember 6, 2018, No. 001-35008).** 10.11 Form of Restricted Stock Unit Agreement (Employee - Performance Vesting) (incorporated by reference toExhibit 10.5 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018,filed November 6, 2018, No. 001-35008).** 10.12 Form of Restricted Stock Unit Agreement (Employee - Time Vesting) (incorporated by reference to Exhibit10.6 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filedNovember 6, 2018, No. 001-35008).** 10.13 Form of Indemnification Agreement with the Company’s Non-Employee Directors (incorporated by referenceto Exhibit 10.10 of the Registrant’s Registration Statement on Form S-1, as amended, No. 333-161632).** F-44Table of Contents10.14† FX Prime Brokerage Master Agreement, dated as of December 6, 2006, by and between GAIN Capital Group,LLC and The Royal Bank of Scotland, plc. (incorporated by reference to Exhibit 10.24 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632). 10.15† FX Prime Brokerage Agreement, dated as of July 8, 2005, by and between UBS AG and GAIN Capital, Inc.(incorporated by reference to Exhibit 10.25 of the Registrant’s Registration Statement on Form S-1, asamended, No. 333-161632). 10.16† Foreign Exchange Prime Brokerage Agency Agreement, dated as of July 12, 2006, by and between GAINCapital Group, LLC and The Royal Bank of Scotland, plc. (incorporated by reference to Exhibit 10.26 of theRegistrant’s Registration Statement on Form S-1, as amended, No. 333-161632). 10.17† Foreign Exchange Prime Brokerage Agreement, dated October 18, 2005, by and between Deutsche Bank AG,London Branch and GCAM, LLC (incorporated by reference to Exhibit 10.27 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632). 10.18 Amendment to Foreign Exchange Prime Brokerage Agreement, dated January 26, 2006, by and betweenDeutsche Bank AG, London Branch and GCAM, LLC (incorporated by reference to Exhibit 10.28 of theRegistrant’s Registration Statement on Form S-1, as amended, No. 333-161632). 10.19 Form of ISDA Master Agreement, 1992 edition (incorporated by reference to Exhibit 10.29 of theRegistrant’s Registration Statement on Form S-1, as amended, No. 333-161632). 10.2 Form of Introducing Broker Agreement (incorporated by reference to Exhibit 10.30 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632). 10.21 Form of Agreement for White Label Services (incorporated by reference to Exhibit 10.31 of the Registrant’sRegistration Statement on Form S-1, as amended, No. 333-161632). 10.22 Lease and Lease Agreement, dated August 18, 2009, by and between S/K Bed One Associates LLC and GAINCapital Holdings, Inc. (incorporated by reference to Exhibit 10.37 of the Registrant’s Registration Statementon Form S-1, as amended, No. 333-161632). 10.23† License Agreement, dated August 9, 2007, by and between GAIN Capital Group, LLC and MetaQuotesSoftware Corp. (incorporated by reference to Exhibit 10.43 of the Registrant’s Registration Statement onForm S-1, as amended, No. 333-161632). 10.24† Agreement, dated November 22, 2004, by and between esignal, a division of Interactive Data Corporation,and GAIN Capital, Inc. (incorporated by reference to Exhibit 10.44 of the Registrant’s RegistrationStatement on Form S-1, as amended, No. 333-161632). 10.25 Form of ISDA Master Agreement, 2002 edition (incorporated by reference to Exhibit 10.49 of theRegistrant’s Registration Statement on Form S-1, as amended, No. 333-161632). 10.26* Executive Employment Agreement, dated October 22, 2018, by and between GAIN Capital Holdings, Inc.and Glenn Stevens.** F-45Table of Contents10.27* Executive Employment Agreement, dated February 5, 2019, by and between GAIN Capital Holdings, Inc.and Samantha Roady.** 10.28* Executive Employment Agreement, dated February 4, 2019, by and between GAIN Capital Holdings, Inc.and Diego Rotsztain .** 10.29 Service Agreement, dated as of March 9, 2011, by and between City Index Limited and Nigel Rose(incorporated by reference to Exhibit 10.31 of the Registrant's Annual Report on Form 10-K for the yearended December 31, 2015, filed on March 17, 2016, No. 001-35008).** 10.30 Executive Employment Agreement, dated November 7, 2017, by and between GAIN Capital UK Ltd. andAlastair Hine (incorporated by reference to Exhibit 10.45 of the Registrant's Annual Report on Form 10-K forthe year ended December 31, 2017, filed on March 14, 2018, No. 001-35008). ** 10.31 Asset Purchase Agreement, dated as of October 5, 2010, by and among GAIN Capital Group, LLC, GAINCapital-Forex.com U.K., and GAIN Capital Forex.com Japan, Co. Ltd., and Capital Market Services, LLC,Capital Market Services UK Ltd., Capital Market Services International - BM, Ltd., and CMS Japan K.K.(incorporated by reference to Exhibit 10.64 of the Registrant’s Registration Statement on Form S-1, asamended, No. 333-161632). 10.32 Amendment No. 1 to Asset Purchase Agreement, dated as of November 23, 2010, by and among GAINCapital Group, LLC, GAIN Capital-Forex.com U.K., and GAIN Capital Forex.com Japan, Co. Ltd., andCapital Market Services, LLC, Capital Market Services UK Ltd., Capital Market Services International - BM,Ltd., and CMS Japan K.K. (incorporated by reference to Exhibit 10.65 of the Registrant’s RegistrationStatement on Form S-1, as amended, No. 333-161632). 10.33 Stock Purchase Agreement between optionsXpress Holdings, Inc. and GAIN Capital Group, LLC dated as ofJune 27, 2012 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Qfor the quarter ended June 30, 2012, filed August 9, 2012, No. 001-35008). 10.34 Stockholders’ Agreement, dated as of April 24, 2013, by and among GAIN Capital Holdings, Inc. and Gary J.Tilkin (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q for the quarter ended March31, 2013, filed on May 10, 2013, No. 001-35008). 10.35 Amended and Restated Stockholders’ Agreement, dated as of September 24, 2013, by and between GAINCapital Holdings, Inc. and Gary J. Tilkin (incorporated by reference to Exhibit 10.1 of the Registrant’s Form10-Q for the quarter ended September 30, 2013, filed on November 12, 2013, No. 001-35008). 10.36 Membership Interest Purchase Agreement, dated as of March 7, 2014, by and among GAIN Capital Holdings,Inc., Global Asset Advisors, LLC, Lucky Good Dog, L.L.C., Glenn A. Swanson and Andrew W. Daniels(incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the quarterended March 31, 2014, filed on May 12, 2014, No. 001-35008). 10.37 Membership Interest Purchase Agreement, dated as of March 7, 2014, by and among GAIN Capital Holdings,Inc., Top Third Ag Marketing LLC, Global Asset Advisors, LLC, Lucky Good Dog, L.L.C., Glenn A.Swanson and Mark Gold (incorporated by reference to Exhibit 10.2 of the Registrant's Quarterly Report onForm 10-Q for the quarter ended March 31, 2014, filed on May 12, 2014, No. 001-35008). F-46Table of Contents 10.38 Asset Purchase Agreement, dated as of July 10, 2014, between GAIN GTX Bermuda, Ltd., GAIN CapitalHoldings, Inc. and Valaquenta Intellectual Properties Limited (incorporated by reference to Exhibit 10.1 ofthe Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed on November11, 2014, No. 001-35008). 10.39 Asset Purchase Agreement, dated as of July 10, 2014, between GAIN GTX Bermuda, Ltd., GAIN CapitalHoldings, Inc. and Forexster Limited (incorporated by reference to Exhibit 10.2 of the Registrant's QuarterlyReport on Form 10-Q for the quarter ended September 30, 2014, filed on November 11, 2014, No. 001-35008). 10.40 Stockholders' Agreement, effective as of October 31, 2014, among GAIN Capital Holdings, Inc., City IndexGroup Limited and the other parties identified as "Stockholders" therein (incorporated by reference toExhibit 10.1 of the Registrant's Current Report on Form 8-K/A, filed on January 12, 2015, No. 001-35008). 10.41 Form of Registration Rights Agreement among GAIN Capital Holdings, Inc., City Index Group Limited,INCAP Gaming B.V. and the other parties identified as "Investors" therein (incorporated by reference toExhibit 10.2 of the Registrant's Current Report on Form 8-K/A, filed on January 12, 2015, No. 001-35008). 10.42 Letter Agreement, dated as of December 10, 2014, by and among GAIN Capital Holdings, Inc., VantagePointVenture Partners IV (Q), L.P., VantagePoint Venture Partners IV, L.P., VantagePoint Venture Partners IVPrincipals Fund, L.P. and VP New York Venture Partners, L.P. 10.43 Asset Purchase Agreement, dated as of February 7, 2017, by and between GAIN Capital Group, LLC andForex Capital Markets L.L.C. (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Reporton Form 10-Q for the quarter ended March 31, 2017, filed on May 10, 2017, No. 001-35008) 10.44 Asset Purchase Agreement, dated as of May 29, 2018, between 360tGTX, Inc. and GAIN Capital Holdings,Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for thequarter ended June 30, 2018, filed on August 9, 2018, No. 001-35008) 10.45 Credit Facility, dated as of August 2, 2017, by and among GAIN Capital Holdings, Inc., Barclays Bank PLC,Sterling National Bank and the lenders set forth therein (incorporated by reference to Exhibit 10.1 of theRegistrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed on August 8, 2017,No. 001-35008). 21.1* Subsidiaries of the Registrant. 23.1* Consent of KPMG LLP 31.1* Certification of Chief Executive Officer pursuant to rule 13a-14(a) under the Securities Exchange Act of1934, as amended. 31.2* Certification of Chief Financial Officer pursuant to rule 13a-14(a) under the Securities Exchange Act of1934, as amended. 32.1* Certification of Chief Executive Officer as required by section 906 of the Sarbanes-Oxley Act of 2002. F-47Table of Contents32.2* Certification of Chief Financial Officer as required by section 906 of the Sarbanes-Oxley Act of 2002. 101.INS+ XBRL Instance 101.SCH+ XBRL Taxonomy Extension Schema 101.CAL+ XBRL Taxonomy Extension Calculation 101.DEF+ XBRL Taxonomy Extension Definition 101.LAB+ XBRL Taxonomy Extension Labels 101.PRE+ XBRL Taxonomy Extension Presentation *Filed herewith.**Compensation related contract. †Confidential treatment requested. Confidential materials omitted and filed separately with the Securities and ExchangeCommission. +XBRL (Extensible Business Reporting Language) information is furnished and not filed, and is not a part of a registrationstatement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed forpurposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability underthese sections.F-48Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto duly authorized on the 11th day of March, 2019.GAIN CAPITAL HOLDINGS, INC.By:/s/ Glenn H. Stevens Glenn H. Stevens President and Chief Executive Officer(Principal Executive Officer)Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized. Signature Title Date /s/ Glenn H. Stevens President, Chief Executive Officer and Director(Principal Executive Officer) March 11, 2019Glenn H. Stevens /s/ Nigel Rose Chief Financial Officer (Principal Financial Officerand Principal Accounting Officer) March 11, 2019Nigel Rose /s/ Joseph A. Schenk Chairman of the Board of Directors March 11, 2019Joseph A. Schenk /s/ Peter Quick Director March 11, 2019Peter Quick /s/ Christopher W. Calhoun Director March 11, 2019Christopher W. Calhoun /s/ Thomas Bevilacqua Director March 11, 2019Thomas Bevilacqua /s/ Christopher S. Sugden Director March 11, 2019Christopher S. Sugden Director March 11, 2019Jason Granite /s/ Alex Goor Director March 11, 2019Alex Goor F-49Exhibit 10.26EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of October 22, 2018 (the “Effective Date”) and is byand between GAIN Capital Holdings, Inc., a corporation organized under the laws of Delaware (the “Company”) and Glenn H.Stevens (the “Executive”).WHEREAS, the Executive and the Company previously entered into an employment agreement, as amended from time to time, datedMay 5, 2015 (the “Original Effective Date”); andWHEREAS, the parties desire to amend and restate the employment agreement on the terms and conditions set forth herein.The parties hereto, intending to be legally bound, hereby agree as follows:1.Employment Term. The Company hereby agrees to continue to employ the Executive and the Executivehereby agrees to continue such employment, as the Chief Executive Officer for the Company from the Effective Date andcontinuing through the third anniversary of the Effective Date, unless terminated sooner pursuant to Section 8 hereof;provided that, on the third anniversary of the Effective Date and each annual anniversary thereafter (such date and eachannual anniversary thereof, a “Renewal Date”), this Agreement shall automatically extend, upon the same terms andconditions, for successive periods of one year, unless either party provides written notice of his or its intention not to extendthe term of the Agreement at least 90 days prior to the applicable Renewal Date. The period during which the Executive isemployed by the Company pursuant to the terms of this Agreement is referred to as the “Term”.2.Representations and Warranties. The Executive represents that the Executive is entering into thisAgreement voluntarily and that Executive’s employment hereunder and his compliance with the terms and conditions ofthis Agreement will not conflict with or result in the breach of any agreement to which the Executive is a party or bywhich the Executive may be bound, or any legal duty that the Executive owes or may owe to another.3.Duties and Extent of Services.(a) During the Term, the Executive shall serve as the Chief Executive Officer of the Company and, assuch, the Executive shall serve as the chief executive officer of the Company and all of its subsidiaries, with such1#91155124v3 duties, responsibilities and authority as are consistent with such position, subject to the oversight of the Board ofDirectors of the Company (the “Board”), and shall so serve faithfully and to the best of the Executive’s ability underthe direction and supervision of the Board. As an executive officer of the Company, the Executive shall be entitled toall of the benefits and protections to which all officers of the Company are entitled pursuant to the Company’sAmended and Restated Certificate of Incorporation, which shall include, but not be limited to, the rights ofindemnification set forth in such Amended and Restated Certificate of Incorporation, and coverage under theCompany’s directors’ and officers’ liability insurance, as are in effect from time to time.(b) During the Term, the Executive agrees to devote substantially his full business time, attention, andenergies to the Company’s business and shall not be engaged in any other business activity, whether or not suchbusiness activity is pursued for gain, profit or other pecuniary advantage; provided, that subject to the Executive’scompliance with Sections 14, 15 and 16 herein, the Executive may serve in charitable and civic positions and serveon corporate boards and committees of for-profit companies, in each case with the prior consent of the Board, whichconsent shall not be unreasonably withheld. The Executive covenants, warrants and represents that he shall devote hisfull and best efforts to the fulfillment of his employment obligations, and he shall exercise the highest degree ofloyalty and the highest standards of conduct in the performance of his duties.4.Compensation.(a)Base Salary. The Company shall pay the Executive an annualized base salary (the “BaseSalary”) to be determined by the Board’s Compensation Committee (the “Compensation Committee”), subject tothe terms of this Section 4(a) and this Agreement. The Executive’s Base Salary as of the Effective Date is $650,000.The Executive’s Base Salary shall be reviewed periodically by the Compensation Committee and, in the solediscretion of the Compensation Committee, the Base Salary may be increased (but not decreased) effective as of anydate determined by the Compensation Committee. The Executive’s Base Salary shall be paid in equal installments inaccordance with the Company’s standard policy regarding payment of compensation to employees, which policy is asof the Effective Date to make payments two times a month. The Executive shall not receive any additionalcompensation from any subsidiary of the Company.(b)Bonus. During the Executive’s employment under this Agreement, the Company shall causethe Executive to be eligible to participate2#91155124v3 in each bonus or incentive compensation plan, program or policy maintained by the Company from time to time, inwhole or in part, for the executive officers of the Company (each, an “Incentive Compensation Plan” and paymentsthereunder, “Incentive Compensation”). The Executive’s target and maximum compensation under, and hisperformance goals and other terms of participation in, each Incentive Compensation Plan shall be determined by theCompensation Committee in its sole discretion. Subject to the provisions of Section 9 and Section 10 herein, any suchIncentive Compensation is not guaranteed and is contingent upon the Executive and the Company achievingestablished deliverables or other goals. Subject to the provisions of Section 9 and Section 10 herein, any suchIncentive Compensation shall not be considered “earned” by the Executive until the Company has allocated paymentto be made to the Executive for any performance period. Payment under any such Incentive Compensation Plan shallbe made, if at all, after the close of the relevant performance period and by no later than March 15th of the year afterthe year in which the performance period ends. Notwithstanding anything herein to the contrary, to the extentpermitted or required by governing law, the Compensation Committee shall have discretion to adjust Executive’scompensation for the following year to account for, or to require the Executive to repay to the Company, the amountof any Incentive Compensation to the extent the Compensation Committee or the Board determines that suchIncentive Compensation was not actually earned by the Executive due to (i) the amount of such payment being basedon the achievement of financial results that were subsequently the subject of a material accounting restatement thatoccurs within three years of such payment (except in the case of a restatement due to a change in accounting policy orsimple error); (ii) the Executive having engaged in fraud, gross negligence or intentional misconduct; or (iii) theExecutive having deliberately misled the market or the Company’s stockholders regarding the Company’s financialperformance.(c)Equity. During the Term, the Executive will be eligible to participate in all long-term equityincentive programs made available to other executive officers and that are established by the Company for itsemployees, including the 2015 Omnibus Incentive Compensation Plan (or a successor thereto), at levels determinedby the Compensation Committee in its sole discretion commensurate with the Executive’s position. All equity grantsmade to the Executive will vest in accordance with a vesting schedule that is consistent with other grants under the2015 Omnibus Incentive CompensationPlan (or successor plan) and will be subject in all respects to the terms of the 2015 Omnibus Incentive CompensationPlan (or successor plan) and the agreement evidencing such grant. Notwithstanding any provision to the3#91155124v3 contrary in any applicable grant agreement or the Company’s 2015 Omnibus Incentive Compensation Plan (or asuccessor plan), on a termination of theExecutive’s employment by the Company without Cause, by the Executive forGood Reason or due to death or Disability whether or not in connection with a Change in Control, all shares subjectto Company equity grants (including without limitation stock options, stock units and stock awards), whether grantedbefore or after the Effective Date, shall immediately vest in full and/or become immediately exercisable or payable onthe date of termination of Executive’s employment and, with respect to any such equity grants that vest in whole or inpart based on the satisfaction of performance-based or market-based conditions, such equity grants will vest with suchconditions deemed to have been satisfied based on achievement of such conditions as follows:(i)If such termination of the Executive’s employment is the result of termination by the Company without Cause orby the Executive for Good Reason other than in connection with or after a Change in Control, or due to theExecutive’s death or Disability, then:(A) if such termination occurs prior to the end of the applicable measurement period for suchperformance-based or market-based conditions, such conditions will be deemed to have been satisfied based onachievement of 100% of target performance; and(B) if such termination occurs after the end of the applicable measurement period for such performance-based or market-based conditions, such conditions will be deemed to have been satisfied based on the Company’sactual performance relative to such conditions.(ii)If such termination of the Executive’s employment is the result of termination by the Company without Cause orby the Executive for Good Reason in connection with or after a Change in Control, then:(A)if the Change in Control and such termination each occur prior to the end of the applicablemeasurement period for such performance-based or market-based conditions, such conditions will be deemed to havebeen satisfied based on achievement of 100% of target performance; and(B)if the Change of Control occurs prior to the end of the applicable performance measurementperiod for such performance-based or market-based conditions and the termination occurs after the end of such4#91155124v3 measurement period, such conditions will be deemed to have been satisfied based on the greater of (1) theachievement of 100% of target performance or(2) the Company’s actual performance relative to such conditions; and (C) if the Change in Control and such termination each occurafter the end of the applicable measurement period for such performance-based or market-based conditions, suchconditions will be deemed to have been satisfied based on the Company’s actual performance relative to suchconditions.5.Benefits. During the Term, the Executive shall be entitled to participate in any and all benefit programs andarrangements generally made available by the Company to executive officers, including, but not limited to, pension plans,contributory and noncontributory welfare and benefit plans, disability plans and medical, death benefit and life insuranceplans for which the Executive may be eligible during the Term. Furthermore, the Executive shall be permitted that number ofdays of paid time off (“PTO”) during each calendar year as, consistent with Company policy, are provided to similarlysituated employees; however, in no event shall the Executive receive fewer than six weeks of PTO (30 business days). PTOmay be used for vacation, professional enrichment and education. Unused PTO shall accrue from one calendar year toanother consistent with Company policy.6.Expenses. During the Executive’s employment, the Executive will be reimbursed for travel, entertainment andother out-of-pocket expenses reasonably incurred by the Executive on behalf of the Company in the performance of theExecutive’s duties hereunder, so long as (i) such expenses are consistent with the type and amount of expenses thatcustomarily would be incurred by similarly situated corporate executives in the United States; and (ii) the Executive timelyprovides copies of receipts for expenses in accordance with Company policy.7.Company Policy.(a)The Executive acknowledges that the Executive is subjectto insider information policies designed to preclude the Company’s employees from violating the federal securities laws bytrading on material, nonpublic information or passing such information on to others in breach of any duty owed to theCompany or any third party. The Executive shall promptly execute any agreements generally distributed by the Company orto its employees requiring employees to abide by the Company’s insider information policies.5#91155124v3 (b) The Executive has the right under federal law to certainprotections for cooperating with or reporting legal violations to the Securities and Exchange Commission (the “SEC”) and/orits Office of the Whistleblower, as well as certain other governmental entities and self-regulatory organizations. As such,nothing in this Agreement or otherwise is intended to prohibit the Executive from disclosing this Agreement to, or fromcooperating with or reporting violations to, the SEC or any other such governmental entity or selfregulatory organization, andthe Executive may do so without notifying the Company. The Company may not retaliate against the Executive for any ofthese activities, and nothing in this Agreement or otherwise would require the Executive to waive any monetary award orother payment that the Executive might become entitled to from the SEC or any other governmental entity. Further, nothingin this Agreement or otherwise precludes the Executive from filing a charge of discrimination with the Equal EmploymentOpportunity Commission or a like charge or complaint with a state or local fair employment practice agency. However, oncethis Agreement becomes effective, the Executive may not receive a monetary award or any other form of personal relief inconnection with any such charge or complaint that the Executive filed or is filed on the Executive’s behalf.(c) Notwithstanding any other provision of this Agreement, as provided for in the Defend Trade Secrets Act of2016 (18 U.S.C. § 1833(b)): (i) The Executive will not be held criminally or civillyliable under any federal or state trade secret law for any disclosure of a trade secret that:(A)is made: (1) in confidence to a federal, state,or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose ofreporting or investigating a suspected violation of law; or(B)is made in a complaint or other document that is filed under seal in a lawsuit or otherproceeding. (ii) Without limiting the forgoing, if the Executive filesa lawsuit for retaliation by the Company for reporting a suspected6#91155124v3 violation of law, the Executive may disclose the Company's trade secrets to the Executive’s attorney and usethe trade secret information in the court proceeding if the Executive:(A)files any document containing the trade secret under seal; and(B)does not disclose the trade secret, except pursuant to court order.8.Termination.(a) Disability. In accordance with applicable law, theCompany may terminate the Executive’s employment at any time after the Executive becomes Disabled. As usedherein, “Disabled” means the incapacity of the Executive, on more than 75% of the standard business days (Mondaythrough Friday) over any six-month period, due to injury, illness, disease or bodily or mental infirmity, to engage inthe performance of all of the essential functions of his position, in spite of any reasonable accommodation.(b) Death. The Executive’s employment with the Company will terminate upon the death of theExecutive.(c) Termination with Cause. The Company may terminate the Executive’s employment at any time forCause by providing written notice of such termination to the Executive. As used herein, “Cause” means any of thefollowing, as determined by the Board:(i) the Executive’s material breach of this Agreement;(ii) the Executive’s gross negligence (other than as aresult of disability or occurring after the Executive’s provision of notice in connection with aresignation for Good Reason) or willful misconduct in carrying out his duties hereunder, resultingin harm to the Company;(iii) the Executive’s material breach of any of hisfiduciary obligations as an officer of the Company;(iv) any conviction by a court of law of, or entry of a7#91155124v3 pleading of guilty or nolo contendere by the Executive with respect to, a felony or any other crimefor which fraud or dishonesty is a material element, excluding traffic violations; or(v) the Executive willfully or recklessly engages inconduct which is materially injurious to the Company, monetarily or otherwise.For purposes of determining Cause, no act or omission by the Executive shall be considered “willful” unless it is done oromitted in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Anyact or failure to act based upon: (a) authority given pursuant to a resolution duly adopted by the Board or (b) advice of counsel for theCompany, shall be conclusively presumed to be done or omitted to be done by the Executive in good faith and in the best interests ofthe Company. In addition, as to subsections (i)-(iii) above, if the action or inaction in question is susceptible of a cure, then no findingof Cause shall occur prior to written notice to the Executive setting forth in reasonable detail the action or inaction at issue, and theExecutive’s failure to cure such condition following a cure period of no less than fifteen days.(d) Termination Without Cause. The Company, at the direction of the Board, may terminate theExecutive’s employment without Cause at any time upon no less than ninety days’ prior written notice or ninety days’compensation and benefits pursuant to Section 4 and Section 5, respectively, in lieu of notice.(e) Resignation for Good Reason. The Executive may resign from his employment with the Companyfor Good Reason by providing written notice to the Board that an event constituting Good Reason has occurred and theExecutive desires to resign from his employment with the Company as a result. Other than following a Change in Control, suchnotice must be provided to the Board by the Executive within 60 days following the initial occurrence of the event constitutingGood Reason. For the avoidance of doubt, following a Change in Control, notice from the Executive to the Board that an eventconstituting Good Reason has occurred may be provided by the Executive at any time during the 18-month period followingthe Change in Control that is referred to in Section 10(a) below. After receipt of such written notice, the Board shall have aperiod of 30 days to cure such event; provided, however, the Board, may, at its sole option, determine not to cure such eventand accept the Executive’s resignation, effective 30 days following the Board’s receipt of the Executive’s notice that an eventconstituting Good Reason has occurred. If, in the reasonable judgment of the Executive, the Board does not cure the eventconstituting8#91155124v3 Good Reason within the requisite 30-day period, the Executive’s employment with the Company shall terminate on account ofGood Reason 30 days following the expiration of the Board’s cure period, unless the Board determines to terminate theExecutive’s employment prior to such date. As used herein, “Good Reason” means that, without the Executive’s consent, anyof the following has occurred:(i)a material diminution in the Executive’s authority, duties, responsibilities or job title;(ii)a diminution in the Executive’s Base Salary; provided, however, that following theoccurrence of a Change in Control, a diminution in total target compensation opportunity (including adiminution in target Incentive Compensation or a diminution in annual equity grants, in each case ascompared to the corresponding amounts for the fiscal year that immediately precedes the fiscal year in whichan event of Good Reason has occurred, as set forth in a notice to the Board pursuant to Section 8(e)), shallalso constitute “Good Reason”;(iii)a relocation of the Company’s principal offices in Bedminster, New Jersey, or of theExecutive’s principal office (if different), to a location that is not within the New York metropolitan area; or(iv)any action or inaction by the Company that constitutes a material breach by theCompany of its obligations under this Agreement.(f) Resignation without Good Reason. The Executive may resign from his employment with theCompany without Good Reason (as that term is defined in Section 8(e)) at any time upon no less than 90 days’ priorwritten notice to the Board. Upon such notice of resignation, the Company may, at its sole option, accept theExecutive’s resignation effective as of a date prior to the resignation date specified in the notice, and in such event,the earlier date will be the effective date of termination of the Executive’s employment for all purposes hereunder.9.Compensation Upon Termination Other than in Connection with a Change in Control.(a) Disability. Upon termination of employment pursuant to Section 8(a), the Executive will receive anyBase Salary accrued and unpaid as9#91155124v3 of such date as well as any accrued but unused PTO and appropriate expense reimbursements. Such amounts will bepaid as soon as practicable after the termination of employment. With respect to Incentive Compensation,notwithstanding any eligibility requirement that the Executive must be employed by the Company as of the date onwhich the Incentive Compensation is paid (A) for any unpaid Incentive Compensation relating to the fiscal year priorto the fiscal year in which the Executive’s employment is terminated (the “Termination Year”), in accordance withSection 4(b), the Executive will receive any accrued and unpaid Incentive Compensation for which he is eligible forsuch prior fiscal year (which amount shall be equal to the actual Incentive Compensation achieved for such fiscalyear), with such amount to be paid in a lump sum as soon as practicable after the termination of employment, but notlater than 30 days following the date of the Executive’s termination of employment and (B) with respect to IncentiveCompensation for theTermination Year, the Executive will be eligible to receive Incentive Compensation calculated as follows: (X) the ProRata Ratio (as defined below) times (Y) the sum of (i) for the portion of the Incentive Compensation that would becalculated based on the Company’s achievement of operating metrics (such as, without limitation, revenue andEBITDA targets), an amount for such portion of the Executive’s Incentive Compensation derived from theCompany’s achievement of operating metrics calculated based on the actual operating performance of the Companyduring the full calendar months in which the Executive remained employed extrapolated on a linear basis for the fullfiscal year (assuming, however, for these purposes, 100% achievement of any applicable operating metrics relating tothe performance of the Company’s common stock price), plus (ii) for the portion of the Incentive Compensation thatwould be calculated based on the Executive’s achievement of personal objectives, an amount for such portion of theExecutive’s Incentive Compensation calculated based on the assumed achievement by the Executive of 100% of theExecutive’s personal objectives, with such IncentiveCompensation being paid in a lump sum at the time that the IncentiveCompensation is payable to other executives (it being understood that if theExecutive’s target Incentive Compensation has not been determined for the Termination Year, the target IncentiveCompensation used to calculate the amount payable to the Executive pursuant to this Section 9(a) will be equal to theExecutive’s target Incentive Compensation for the fiscal year immediately prior to the Termination Year). In addition,the Company will also pay to the Executive an amount equal to 24 months of the Executive’s monthly Base10#91155124v3 Salary, which shall be paid to the Executive in accordance with the Company’s normal payroll practices in equalinstallments over the 12-month period following the Executive’s last day of employment but not later than 60 daysfollowing the date of Executive’s last day of employment with the Company. The Executive’s Company equitygrants (including without limitation stock options, stock units and stock awards) that are outstanding immediatelyprior to the Executive’s termination of employment shall be treated in accordance with Section 4(c). The Companyshall have no further obligations under this Agreement to the Executive. As used herein, the “Pro Rata Ratio” shallmean the number of full calendar months in which the Executive was employed during the Termination Year dividedby 12.(b)Death. In the event of the Executive’s death, the Executive’s estate will receive any BaseSalary accrued and unpaid as of such date as well as any accrued but unused PTO and appropriate expensereimbursements. Such amounts will be paid as soon as practicable after the termination of employment. With respectto Incentive Compensation, notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid (A) for any unpaid Incentive Compensationrelating to the fiscal year prior to the Termination Year, in accordance with Section 4(b), the Executive’s estate willreceive any accrued and unpaid Incentive Compensation for which he is eligible for such prior fiscal year (whichamount shall be equal to the actual Incentive Compensation achieved for such fiscal year), with such amount to bepaid in a lump sum as soon as practicable after the termination of employment, but not later than 30 days followingthe date of the Executive’s termination of employment and (B) with respect to Incentive Compensation for theTermination Year, the Executive’s estate will be eligible to receive Incentive Compensation calculated as follows: (X)the Pro Rata Ratio times (Y) the sum of (i) for the portion of the Incentive Compensation that would be calculatedbased on the Company’s achievement of operating metrics (such as, without limitation, revenue and EBITDAtargets), an amount for such portion of the Executive’s Incentive Compensation derived from the Company’sachievement of operating metrics calculated based on the actual operating performance of the Company during thefull calendar months in which the Executive remained employed extrapolated on a linear basis for the full fiscal year(assuming, however, for these purposes, 100% achievement of any applicable operating metrics relating to theperformance of the Company’s common stock price), plus (ii) for the portion of the Incentive Compensation thatwould be calculated based on the Executive’s achievement of personal objectives, an amount for11#91155124v3 such portion of the Executive’s Incentive Compensation calculated based on the assumed achievement by theExecutive of 100% of the Executive’s personal objectives, with such Incentive Compensation being paid in a lumpsum at the time that the Incentive Compensation is payable to other executives (it being understood that if theExecutive’s target Incentive Compensation has not been determined for the Termination Year, the target IncentiveCompensation used to calculate the amount payable to the Executive pursuant to this Section 9(b) will be equal to theExecutive’s target Incentive Compensation for the fiscal year immediately prior to the Termination Year). In addition,the Company will also pay to the Executive’s estate in a lump sum not later than 30 days following the Executive’slast day of employment an amount equal to 24 months of theExecutive’s monthly Base Salary. The Executive’s Company equity grants (including without limitation stockoptions, stock units and stock awards) that are outstanding immediately prior to the Executive’s death shall be treatedin accordance with Section 4(c). The Company shall have no further obligations under this Agreement to theExecutive’s estate.(c)Termination without Cause or Resignation with Good Reason Other than in Connection witha Change in Control. If, other than in connection with a Change in Control as defined in Section 10, the Companyterminates the Executive’s employment without Cause pursuant to Section 8(d) or if the Executive resigns for GoodReason pursuant to Section 8(e), the Company will pay the Executive his Base Salary accrued and unpaid as of thedate of termination of employment, as well as any accrued but unused PTO and appropriate expense reimbursements.Such amounts will be paid as soon as practicable after the termination of employment. In addition, subject to theExecutive’s execution and nonrevocation of the general release of claims described in Section 11 below, as well asthe Executive’s compliance with the restrictive covenants set forth in Sections 13 through 16 below, the Companywill also pay and/or provide to the Executive the following:(i) severance in an amount equal to 24 months of the Executive’s monthly Base Salary (the“Severance Amount”), which shall be paid to the Executive in accordance with the Company’s normalpayroll practices in equal installments over the 24-month period following Executive’s last day ofemployment and which shall commence as soon as administratively practicable following the expiration ofthe revocation period for the general release, but not later than 60 days following the date of Executive’s lastday of employment with the Company;12#91155124v3 (ii) in accordance with Section 4(b), the Executive will receive any accrued and unpaidIncentive Compensation, for which he is eligible for the fiscal year prior to such termination (which amountshall be equal to the actual Incentive Compensation achieved for such fiscal year), with such amount to bepaid in a lump sum as soon as practicable after the termination of employment, but not later than 30 daysfollowing the date of the Executive’s termination of employment;(iii) notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid, if the Executive’s employment isterminated before such date in accordance with Section 8(d) or 8(e), the Executive will be eligible to receiveIncentive Compensation calculated as follows: (X) the Pro Rata Ratio times (Y) the sum of (i) for the portionof the Incentive Compensation that would be calculated based on the Company’s achievement of operatingmetrics (such as, without limitation, revenue and EBITDA targets), an amount for such portion of theExecutive’s Incentive Compensation derived from the Company’s achievement of operating metricscalculated based on the actual operating performance of the Company during the full calendar months inwhich the Executive remained employed extrapolated on a linear basis for the full fiscal year (assuming,however, for these purposes, 100% achievement of any applicable operating metrics relating to theperformance of the Company’s common stock price), plus (ii) for the portion of the Incentive Compensationthat would be calculated based on the Executive’s achievement of personal objectives, an amount for suchportion of the Executive’s Incentive Compensation calculated based on the assumed achievement by theExecutive of 100% of the Executive’s personal objectives, with such Incentive Compensation being paid in alump sum at the time that the Incentive Compensation is payable to other executives (it being understood thatif the Executive’s target Incentive Compensation has not been determined for the Termination Year, thetarget Incentive Compensation used to calculate the amount payable to the Executive pursuant to this Section9(c)(iii) will be equal to the Executive’s target Incentive Compensation for the fiscal year immediately priorto the Termination Year);(iv) an amount equal to two times the Executive’s aggregate Incentive Compensation for theTermination Year assuming (A) achievement by the Company of 100% of any applicable operating metrics(such as, without limitation, revenue, EBITDA and stock performance targets) and (B) achievement by theExecutive of 100% of13#91155124v3 the Executive’s personal objectives (it being understood that if the Executive’s target Incentive Compensationhas not been determined for the Termination Year, the Executive’s target Incentive Compensation for thefiscal year immediately prior to the Termination Year shall be used), which shall be paid to the Executive inaccordance with the Company’s normal payroll practices in equal installments over the 12month periodfollowing Executive’s last day of employment and which shall commence as soon as administrativelypracticable following the expiration of the revocation period for the general release, but not later than 60 daysfollowing the date of Executive’s last day of employment with the Company;(v) the Executive’s Company equity grants (includingwithout limitation stock options, stock units and stock awards) that are outstanding immediately prior to theExecutive’s termination of employment shall be treated in accordance with Section 4(c); and(vi) to the extent permitted under applicable law, the Company will provide continued healthbenefits to the Executive at the same premium rates charged to other then current employees of the Company,or, at its option, waive that portion of the cost for COBRA continuation coverage that is in excess of whatthen current employees of the Company pay for health benefits under the Company’s plan, for the 24-monthperiod following his termination of employment, unless the Executive is eligible to be covered by healthinsurance provided by a future employer.(d)Termination with Cause and Resignation without Good Reason. If the Company terminatesthe Executive’s employment with Cause pursuant to Section 8(c), if the Executive resigns without Good Reasonpursuant to Section 8(f), or if the Executive is entitled to the severance benefits pursuant to Section 9(c) or Section10(a) and either does not execute or revokes the general release of claims required pursuant to Section 11, or is inmaterial breach of any of the covenants set forth in Section 13, 14, 15, 16 or 17 below, the Company will pay theExecutive his Base Salary accrued and unpaid as of the date of termination of employment as well as any accrued butunused PTO and appropriate expense reimbursements. Such amounts will be paid as soon as practicable after thetermination of employment and, following such payments, the Company shall have no further obligations under thisAgreement to the Executive.14#91155124v3 (e)Nonrenewal of This Agreement. If the Company provides written notice of nonrenewal of thisAgreement in accordance with Section 1 herein, the Executive’s termination of employment in connection with theCompany’s nonrenewal of this Agreement shall be deemed to be a termination of the Executive’s employment by theCompany without Cause and the Executive shall be eligible for the payments and severance benefits set forth inSection 9(c) herein, subject to the provisions of Section 9(c).10. Change in Control.(a)Termination without Cause or Resignation with Good Reason in Connection with a Changein Control. If, on or within 18 months after a Change in Control, and whether or not this Agreement was not renewedin accordance with Section 1 herein, the Company or its successor terminates the Executive’s employment withoutCause pursuant to Section 8(d) or if the Executive resigns for Good Reason pursuant to Section 8(e), the Executive isentitled to his Base Salary accrued and unpaid as of the date of termination of employment as well as any accrued butunused PTO and appropriate expense reimbursements. Such amounts will be paid as soon as practicable after thetermination of employment. In addition, subject to the Executive’s execution and nonrevocation of the general releaseof claims described in Section 11 below, as well as the Executive’s compliance with the restrictive covenants set forthin Sections 13 through 16 below, the Executive shall be entitled to the following:(i) severance in an amount equal to 24 months of theExecutive’s monthly Base Salary (the “Change in Control Severance Amount”), which shall be paid tothe Executive in a lump sum as soon as administratively practicable following the expiration of therevocation period for the general release, but not later than 60 days following the date of the Executive’s lastday of employment with theCompany;(ii) in accordance with Section 4(b), the Executive will receive any accrued and unpaidIncentive Compensation, for which he is eligible, for the fiscal year prior to such termination (which amountshall be equal to the actual Incentive Compensation achieved for such fiscal year; provided, however, that if aChange in Control occurs during the fiscal year prior to such Termination Year, the Incentive Compensationto which the Executive shall be entitled with respect to the fiscal year prior to the Termination Year shallequal the target15#91155124v3 Incentive Compensation for such fiscal year), with such amount to be paid in a lump sum as soon aspracticable after the termination of employment with the Company, but not later than 30 days following thedate of the Executive’s termination of employment;(iii) notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid, the Executive will be eligible toreceive Incentive Compensation calculated as follows: (A) if the Executive’s employment is terminated on orprior to July 31 of the Termination Year, (X) the Pro Rata Ratio times (Y) the Executive’s target IncentiveCompensation for the applicable period, or (B) if the Executive’s employment is terminated after July 31 ofthe TerminationYear, the Pro Rata Ratio times the greater of (1) the Executive’s target Incentive Compensation for suchfiscal year or (2) the sum of (i) for the portion of the Incentive Compensation that would be calculated basedon the Company’s achievement of operating metrics (such as, without limitation, revenue and EBITDAtargets), an amount for such portion of the Executive’s Incentive Compensation derived from the Company’sachievement of operating metrics calculated based on the actual operating performance of the Companyduring the full calendar months in which the Executive remained employed extrapolated on a linear basis forthe full fiscal year (assuming, however, for these purposes, 100% achievement of any applicable operatingmetrics relating to the performance of the Company’s common stock price), plus (ii) for the portion of theIncentive Compensation that would be calculated based on the Executive’s achievement of personalobjectives, an amount for such portion of the Executive’s Incentive Compensation calculated based on theassumed achievement by the Executive of 100% of the Executive’s personal objectives (it being understood,in each case, that if Executive’s target Incentive Compensation has not been determined for the TerminationYear, the target Incentive Compensation used to calculate the amount payable to the Executive pursuant tothis Section 10(a)(iii) will be equal to the Executive’s target Incentive Compensation for the fiscal yearimmediately prior to the Termination Year), with such pro rata Incentive Compensation being paid in a lumpsum as soon as administratively practicable following the expiration of the revocation16#91155124v3 period for the general release, but not later than 60 days following the date of the Executive’s last day ofemployment with the Company;(iv) an amount equal to two times the Executive’s aggregate target Incentive Compensation forthe Termination Year (it being understood that if such target Incentive Compensation has not beendetermined for the Termination Year, the Executive’s target Incentive Compensation for the fiscal yearimmediately prior to the Termination Year shall be used), with such amount to be paid in a lump sum as soonas administratively practicable following the expiration of the revocation period for the general release, butnot later than 60 days following the date of the Executive’s last day of employment with the Company;(v) the Executive’s Company equity grants (including without limitation stock options, stockunits and stock awards) that are outstanding immediately prior to the Executive’s termination of employmentshall be treated in accordance with Section 4(c); and(vi) to the extent permitted under applicable law, the Company will provide continued healthbenefits to the Executive at the same premium rates charged to other then current employees of the Company,or at its option, waive that portion of the cost for COBRA continuation coverage that is in excess of whatthen current employees of the Company pay for health benefits under the Company’s plan, for the 24-monthperiod following his termination of employment, unless the Executive is eligible to be covered by healthinsurance provided by a future employer.(b)For the avoidance of doubt, Section 4(c) and the provisions in the Company's 2015 OmnibusIncentive Compensation Plan (or successor or predecessor equity compensation plans, as applicable) relating to theacceleration of vesting of equity awards in the event of a Change in Control shall apply to any equity awards held bythe Executive; it being understood that, in the event of a Change in Control, any equity award held by the Executiveother than a stock option or a stock appreciation right (which shall be subject to the terms of the applicable equitycompensation plan and award agreement thereunder) may not be cancelled without a cash payment to the Executivein an amount equal to the Fair Market Value (as defined in the 2015 Omnibus Incentive Compensation Plan) of theshares of Company Stock underlying such cancelled equity award or a grant to the Executive of an equity award ofthe17#91155124v3 surviving corporation (or a parent or subsidiary of the surviving corporation) of equal value.(c)If there is a dispute as to whether grounds triggering termination with or without Cause orresignation with or without Good Reason have occurred, in each case in connection with a Change in Control, andExecutive prevails in his claim that his termination constituted a termination without Cause or a resignation withGood Reason, then any fees and expenses arising from the resolution of such dispute (including any reasonablyincurred attorneys’ fees and expenses of Executive) shall be paid by the Company or its successor, as the case maybe.(d)For purposes of this Agreement, “Change in Control” means a (i) Change in Ownership ofthe Company, (ii) Change in Effective Control of the Company,(iii) Change in the Ownership of Assets of theCompany, in the case of each of clauses (i), (ii) and (iii), as described herein and construed in accordance withSection 409A of the Internal Revenue Code of 1986, as amended, and the regulations and Treasury guidance issuedthereunder (the “Code”), or (iv) a liquidation or dissolution of the Company; except that no Change in Control shallbe deemed to occur as a result of a change of ownership resulting from the death of a stockholder or a transaction inwhich the Company becomes a subsidiary of another corporation and in which the stockholders of the Company,immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling suchstockholders to more than 50% of all votes to which all stockholders of the parent corporation would be entitled in theelection of directors (without consideration of the rights of any class of stock to elect directors by a separate classvote).(i)A “Change in Ownership of the Company” shall occur on the date that any one Person acquires, or PersonsActing as a Group acquire, ownership of the capital stock of the Company that, together with the stockpreviously held by such Person or Group, constitutes more than 50% of the total fair market value or totalvoting power of the capital stock of the Company. However, if any one Person is, or Persons Acting as aGroup are, considered to own more than 50% of the total fair market value or total voting power of thecapital stock of the Company, the acquisition of additional stock by the same Person or Persons Acting as aGroup is not considered to cause a Change in Ownership of the Company or to cause a Change in EffectiveControl of the Company (as described below). An increase in the percentage of capital stock owned by anyone Person, or Persons18#91155124v3 Acting as a Group, as a result of a transaction in which the Company acquires its stock in exchange forproperty will be treated as an acquisition of stock.(ii)A “Change in Effective Control of the Company”shall occur if in any 12-month period, (A) a Person, or Persons Acting as a Group, acquires ownership ofcapital stock of the Company possessing 30% or more of the total voting power of the capital stock of theCompany, or (B) a majority of the members of the Board are not Continuing Directors. “ContinuingDirectors” means, as of any date of determination, any member of the Board who (1) was a member of theBoard on the Original Effective Date or (2) was nominated for election, elected or appointed to the Boardwith the approval of a majority of the Continuing Directors who were members of the Board at the time ofsuch nomination, election or appointment (either by a specific vote or by approval of the Company’s proxystatement in which such member was named as a nominee for election as a director, without objection tosuch nomination).(iii)A “Change in the Ownership of Assets of the Company” shall occur on the date that any one Personacquires, or Persons Acting as a Group acquire (or has or have acquired during the 12-month period endingon the date of the most recent acquisition by such Person or Persons), assets from the Company that have atotal gross fair market value equal to or more than 40% of the total gross fair market value of all of the assetsof the Company immediately before such acquisition or acquisitions. For this purpose, “gross fair marketvalue” means the value of the assets of the Company, or the value of the assets being disposed of,determined without regard to any liabilities associated with such assets.(iv)The following rules of construction apply in interpreting the definition of Change in Control:(a)A “Person” means any individual, entity or group within the meaning of Section 13(d)(3) or14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules andregulations thereunder, other than employee benefit plans sponsored or maintained by the Company and byentities controlled19#91155124v3 by the Company or an underwriter of the capital stock of the Company in a registered public offering.(b)Persons will be considered to be “Persons Acting as a Group” (or “Group”) if (i) they areconsidered to be acting as a group within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Actand the rules and regulations thereunder or (ii) they are owners of a corporation or other entity that enters intoa merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.If a Person owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition ofstock, or similar transaction, such shareholder is considered to be acting as a Group with other shareholdersonly with respect to the ownership in that corporation before the transaction giving rise to the change and notwith respect to the ownership interest in the other corporation. Persons will not be considered to be acting asa Group solely because they purchase assets of the same corporation at the same time or purchase or ownstock of the same corporation at the same time, or as a result of the same public offering.(c)For purposes of the definition of Change in Control, “fair market value” shall be determinedby the Board.(d)A Change in Control shall not include a transfer to a related person as described in CodeSection 409A or a public offering of capital stock of the Company.(e)For purposes of the definition of Change in Control, Code Section 318(a) applies to determinestock ownership. Stock underlying a vested option is considered owned by the individual who holds thevested option (and the stock underlying an unvested option is not considered owned by the individual whoholds the unvested option). For purposes of the preceding sentence, however, if a vested option is20#91155124v3 exercisable for stock that is not substantially vested (as defined by Treas. Reg. § 1.83-3(b) and (j)), the stockunderlying the option is not treated as owned by the individual who holds the option.11.Release of Claims. As a condition for the payments of theSeverance Amount or the Change in Control Severance Amount and Incentive Compensation provided in Section 9(c) orSection 10(a), as well as the acceleration of equity vesting and continuation of health benefits provided pursuant to suchsections of this Agreement, the Executive must execute a general release of all claims (including claims under local, state andfederal laws, but excluding claims for payment due under Section 9(c) or Section 10(a) and subject to Section 7(b)) that theExecutive has or may have against the Company and current and former related individuals or entities (the “Release”). TheRelease shall be in a form reasonably acceptable to the Company, and shall include confidentiality, cooperation, and non-disparagement provisions, as well as other terms requested by the Company that are typical of an executive severanceagreement. The consideration provided for in Section 9(c) or Section 10(a) is conditioned upon and will not be paid (or beprovided) until the execution of the Release and the expiration of any revocation period; provided that notwithstanding anyprovision of this Agreement to the contrary, in no event shall the timing of the Executive’s execution of the Release, directlyor indirectly, result in the Executive designating the calendar year of payment, and if a payment that is subject to execution ofthe Release could be made in more than one taxable year, payment shall be made in the later taxable year. The Companyshall provide the Release to the Executive by no later than 10 days after the Executive terminates employment with theCompany, and the Executive shall execute the Release during the statutory time period specified by applicable law. If theRelease is not executed during the statutory time period specified by applicable law, the Company’s obligation to pay anySeverance Amount, Change in Control Severance Amount or Incentive Compensation and to provide any acceleration ofvesting and continued health benefits provided for in Section 9(c) or Section 10(a) pursuant to this Agreement shallterminate.12. Section 280G Contingent Cutback. The Executive shall bear all expense of, and be solely responsible for, allfederal, state, local or foreign taxes due with respect to any payment received under this Agreement, including, withoutlimitation, any excise tax imposed by Code Section 4999. Notwithstanding anything to the contrary in this Agreement, in theevent that any payment or benefit received or to be received by the Executive pursuant to the terms of this Agreement or inconnection21#91155124v3 with the Executive’s termination of employment or contingent upon a Change in Control pursuant to any plan orarrangement or other agreement with the Company or any affiliate (collectively, the “Payments”) would be subject to theexcise tax imposed by Code Section 4999, as determined by the Company, then the Payments shall be reduced to the extentnecessary to prevent any portion of the Payments from becoming nondeductible by the Company under Code Section 280Gor subject to the excise tax imposed under Code Section 4999, but only if, by reason of that reduction, the net after-taxbenefit received by the Executive exceeds the net after-tax benefit the Executive would receive if no reduction was made.For this purpose, “net after-tax benefit” means (i) the total of all Payments that would constitute “excess parachutepayments” within the meaning of Code Section 280G, less (ii) the amount of all federal, state, and local income taxespayable with respect to the Payments calculated at the maximum marginal income tax rate for each year in which thePayments shall be paid to the Executive (based on the rate in effect for that year as set forth in the Code as in effect at thetime of the first payment of the Payments), less (iii) the amount of excise taxes imposed on the Payments described in clause(i) above by Code Section 4999. If, pursuant to this Section 12, Payments are to be reduced, the parties shall determinewhich Payments shall be reduced in a manner so as to avoid the imposition of additional taxes under Code Section 409A.13.Confidentiality; Return of Company Property.(a)The Executive acknowledges that, by reason of Executive’s employment by the Company, Executivewill have access to confidential information of the Company, including without limitation information and knowledgepertaining to products, inventions, discoveries, improvements, innovations, designs, ideas, trade secrets, proprietaryinformation, business strategies, packaging, advertising, marketing, distribution and sales methods, sales and profit figures,employees, customers and clients, and relationships between the Company and its business partners, including dealers,traders, distributors, sales representatives, wholesalers, customers, clients, suppliers and others who have business dealingswith them (“Confidential Information”). The Executive acknowledges that such Confidential Information is a valuable andunique asset of the Company and covenants that, both during and after the Term, subject to Section 7(b), Executive will notdisclose any Confidential Information to any person or entity, except as the Executive’s duties as an employee of theCompany may require, without the prior written authorization of the Board. The obligation of confidentiality imposed bythis Section 13 shall not apply to Confidential Information that otherwise becomes generally known to the public through noact of the Executive in breach of this Agreement or any other party in22#91155124v3 violation of an existing confidentiality agreement with the Company, or which is required to be disclosed by court order orapplicable law.(b)All records, designs, patents, business plans, financial statements, manuals, memoranda, lists, researchand development plans and products, and other property delivered to or compiled by the Executive by or on behalf of theCompany or its vendors or customers that pertain to the business of the Company shall be and remain the property of theCompany, and be subject at all times to its discretion and control. Likewise, all property, including without limitation alldocuments, whether in computer or hard copy form, that Executive creates or receives during and as a result of hisemployment by the Company, shall be returned to the Company upon request and at the end of the Executive’semployment.14. Non-Competition. While the Executive is employed at the Company and for a period of 18 months after thetermination of his employment with the Company for any reason, other than following termination without Cause orResignation for Good Reason after a Change in Control, pursuant to Section 10, in which case such period shall be sixmonths (as applicable, the “Restricted Period”), the Executive will not, directly or indirectly, own, maintain, finance,operate, engage in, assist, be employed by, contract with, license, or have any interest in, or association with, a business orenterprise primarily engaged in or planning to be primarily engaged in, the Internet-based trading of foreign exchange orCFDs.15. Solicitation of Clients. During the Restricted Period, the Executive shall not, directly or indirectly, includingthrough any other person or entity, seek business from any Client on behalf of any enterprise or business other than theCompany, refer business generated from any Client to any enterprise or business other than the Company, or receivecommissions based on sales or otherwise relating to the business from any Client, enterprise or business other than theCompany, provided that such solicitation, if successful, would have an adverse effect on the Company. For purposes of thisAgreement, “Client” means any person, firm, corporation, limited liability company, partnership, association or otherentity(i) to which the Company sold or provided services during the 12-month period prior to the time at which anydetermination is required to be made as to whether any such person, firm, corporation, partnership, association or other entityis a Client or (ii) who or which has been approached by an employee of the Company for the purpose of soliciting businessfor the Company and which business was reasonably expected to generate revenue in excess of $100,000 per annum.16. Solicitation of Employees. During the Restricted Period, the Executive, directly or indirectly, shall not contactor solicit any employee of the23#91155124v3 Company for the purpose of hiring them or causing them to terminate their employment relationship with the Company.17. Inventions, Ideas, Processes and Designs. All inventions, ideas, processes, programs, software and designs(including all improvements) conceived or made by the Executive during his employment with the Company (whether ornot actually conceived during regular business hours) and related to the business of the Company, or the business approvedby the Board to be engaged in by the Company, shall be disclosed in writing promptly to the Company and shall be the soleand exclusive property of the Company. An invention, idea, process, program, software or design (including animprovement) shall be deemed related to the actual or approved business of the Company if it (x) was made with theCompany’s equipment, supplies, facilities, or Confidential Information, (y) results from work performed by the Executivefor the Company, or (z) pertains to the current business or demonstrably anticipated research or development work of theCompany. The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyrightapplications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, anddesigns to the Company. The decision to file for patent or copyright protection or to maintain such development as a tradesecret shall be in the sole discretion of the Company, and the Executive shall be bound by such decision.18. Specific Performance/Remedies. The Executive acknowledges that the services to be rendered by theExecutive are of a special, unique and extraordinary character and, in connection with such services, the Executive will haveaccess to Confidential Information vital to the Company’s business. The Executive further agrees that the covenantscontained in Sections 13, 14, 15, 16 and 17 are reasonable and necessary to protect the legitimate business interests of theCompany. By reason of this, the Executive consents and agrees that if the Executive violates any of the provisions ofSections 13, 14, 15, 16 and 17 hereof, the Company would sustain irreparable injury and that monetary damages would notprovide adequate remedy to the Company. The Executive hereby agrees that the Company shall be entitled to have Sections13, 14, 15, 16 and 17 hereof specifically enforced (including, without limitation, by injunctions and restraining orders) byany court in the State of New Jersey having equity jurisdiction and agrees to be subject to the jurisdiction of said court. As afurther and nonexclusive remedy, the Executive understands that a breach of the covenants contained in Sections 13, 14, 15,16 and 17 above that causes material harm to the Company as reasonably determined by the Board (which determinationshall be binding and final) shall eliminate the Executive’s entitlement to any further payment of the Severance Amount,Change in Control Severance Amount, Incentive Compensation, acceleration of equity vesting of equity grants andcontinued health24#91155124v3 benefits provided for in Section 9(c) or Section 10(a), and the Executive shall be required to return any such amounts thatrelate to the period of noncompliance during the Restricted Period in the event of such a breach (including, withoutlimitation, the amount of any gain realized by the Executive upon the acceleration of equity vesting of equity grants).Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available to it forsuch breach or threatened breach, including the recovery of damages from the Executive.19. Complete Agreement. This Agreement embodies the entire agreement of the parties with respect to theExecutive’s employment, compensation, benefits and related items and supersedes any other prior oral or writtenagreements, arrangements or understandings between the Executive and the Company including without limitation thatcertain Employment Agreement entered into as of April 13, 2012, by and between the Executive and the Company, and thatcertain Employment Agreement entered into as of May 5, 2015, by and between the Executive and the Company, other thanthe Company’s 2015 Omnibus Incentive Compensation Plan and the award agreements reflecting outstanding equity awardsheld by the Executive as of the date of this Agreement, each of which shall continue to control such equity awards except asexpressly modified by this Agreement. This Agreement may not be changed or terminated orally but only by an agreementin writing signed by the parties hereto.20. Waiver. The waiver by either party of a breach of any provision of this Agreement by the other party shall notoperate or be construed as a waiver of any subsequent breach by such party.21. Governing Law; Assignability.(a)This Agreement shall be governed by, and construed inaccordance with, the laws of the State of New Jersey without reference to the choice of law provisions thereof.(b)The Executive may not, without the Company’s priorwritten consent, delegate, assign, transfer, convey, pledge, encumber or otherwise dispose of this Agreement or anyinterest herein. Any such attempt shall be null and void and without effect. The Company and the Executive agreethat this Agreement and all of the Company’s rights and obligations hereunder may be assigned or transferred by theCompany and shall be assumed by and be binding upon any successor to the Company.22. Severability. If any provision of this Agreement or any part thereof, including, without limitation, Section 13,14, 15, 16 or 17, as applied to either25#91155124v3 party or to any circumstances shall be adjudged by a court of competent jurisdiction to be void or unenforceable, the sameshall in no way affect any other provision of this Agreement or remaining parts thereof, which shall be given full effectwithout regard to the invalid or unenforceable part thereof, or the validity or enforceability of this Agreement. In the event anarbitrator or court of competent jurisdiction deems the restrictive covenants unreasonably lengthy in time or overly broad inscope, it is the intention and agreement of the parties that those provisions which are not fully enforceable be deemed ashaving been modified to the extent necessary to render them reasonable and enforceable and that they be enforced to suchextent.23. Notices. All notices to the Company or the Executive, permitted or required hereunder, shall be in writing andshall be delivered personally, by telecopier or by courier service providing for next-day delivery or sent by registered orcertified mail, return receipt requested, to the following addresses:If to the Company:GAIN Capital Holdings, Inc.Bedminster One135 Route 202/206Bedminster, New Jersey 07921 Attention: Chairman of the BoardIf to the Executive, to:Glenn Stevens c/o GAIN Capital Holdings, Inc.Bedminster One135 Route 202/206Bedminster, New Jersey 07921 Either party may change the address to which notices shall be sent by sending written notice of such change of address tothe other party. Any such notice shall be deemed given, if delivered personally, upon receipt; if telecopied, when telecopied;if sent by courier service providing for next-day delivery, the next business day following deposit with such courier service;and if sent by certified or registered mail, three days after deposit (postage prepaid) with the U.S. mail service.26#91155124v3 24. Section 409A.(a) This Agreement shall be interpreted to avoid the impositionof any additional taxes under Code Section 409A. If any payment or benefit cannot be provided or made at the timespecified herein without incurring additional taxes under Code Section 409A, then such benefit or payment shall beprovided in full at the earliest time thereafter when such sanctions will not be imposed. The preceding provisions,however, shall not be construed as a guarantee by the Company of any particular tax effect to the Executive underthis Agreement. For purposes of Code Section 409A, each payment under this Agreement shall be treated as aseparate payment and the right to a series of installment payments under this Agreement shall be treated as a right to aseries of separate payments. In no event may the Executive, directly or indirectly, designate the calendar year ofpayment.(b) To the maximum extent permitted under Code Section 409A, the cash severance payments payableunder this Agreement are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409Al(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg.§1.409A-l(b)(9)(iii) or any successor provision; provided, however, any amount payable to the Executive during thesix-month period following the Executive’s termination date that does not qualify within either of the foregoingexceptions and is deemed as deferred compensation subject to the requirements of Code Section 409A, then suchamount shall hereinafter be referred to as the “Excess Amount.” If the Executive is a “key employee” of a publiclytraded corporation under Section 409A at the time of his separation from service and if payment of the ExcessAmount under this Agreement is required to be delayed for a period of six months after separation from servicepursuant to Code Section 409A, then notwithstanding anything in this Agreement to the contrary, payment of suchamount shall be delayed as required by Code Section 409A, and the accumulated postponed amount shall be paid in alump sum payment within 10 days after the end of the six-month period. If the Executive dies during thepostponement period prior to the payment of the postponed amount, the amounts withheld on account of Section409A shall be paid to the personal representative of the Executive’s estate within 60 days after the date of theExecutive’s death. A “key employee” shall mean an employee who, at any time during the 12-month period endingon the identification date, is a “specified employee” under Code Section 409A, as determined by the Board, in its solediscretion. The determination of key employees, including the number and27#91155124v3 identity of persons considered key employees and the identification date, shall be made by the Board in accordancewith the provisions of Code Sections 416(i) and 409A.(c) To the extent the Executive is, at the time of his termination of employment under this Agreement,participating in one or more deferred compensation arrangements subject to Code Section 409A, the payments andbenefits provided under those arrangements shall continue to be governed by, and to become due and payable inaccordance with, the specific terms and conditions of those arrangements, and nothing in this Agreement shall bedeemed to modify or alter those terms and conditions.(d) “Termination of employment,” “resignation,” or words of similar import, as used in thisAgreement means, for purposes of any payments under this Agreement that are payments of deferred compensationsubject to Code Section 409A, the Executive’s “separation from service” as defined in Code Section 409A.(e) Nothing herein shall be construed as having modified the time and form of payment of any amountsor payments of “deferred compensation” (as defined under Treas. Reg. § 1.409A-l(b)(l), after giving effect to theexemptions in Treas. Reg. §§ 1.409A-l(b)(3) through (b)(12)) that were otherwise payable pursuant to the terms ofany agreement between Company and the Executive in effect on or after January 1, 2005 and prior to the date of thisAgreement.(f) All reimbursements provided under this Agreement shall be made or provided in accordance with therequirements of Code Section 409A, including, where applicable, the requirement that (i) any reimbursement is forexpenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii)the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible forreimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before thelast day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement isnot subject to liquidation or exchange for another benefit.25. Withholding of Taxes and Other Employee Deductions. The Company may withhold from any benefits andpayments made pursuant to this Agreement (whether actually or constructively made to the Executive or treated as includedin the Executive’s income under Section 409A of the Code) all federal, state, city, foreign and other applicable taxes andwithholdings as may be required pursuant to any law or28#91155124v3 governmental regulation or ruling and all other customary deductions made with respect to the Company’s employeesgenerally.26. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemedan original, and all of which taken together shall constitute one and the same instrument.27. Separation. All covenants that, by their terms, naturally would survive the termination or expiration of thisAgreement, including but not limited to Sections 11, 12, 13, 14 and 15 hereof, shall survive the termination or expiration ofthis Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Employment Agreement as of the date first above written.GAIN CAPITAL HOLDINGS, INC.By: /s/ Joseph Schenk Name: Joseph Schenk Title: Chairman of the Board /s/ Glenn H. Stevens Glenn H. Stevens 29#91155124v3 Exhibit 10.27EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of February 5, 2019 (the “Effective Date”) and is byand between GAIN Capital Holdings, Inc., a corporation organized under the laws of Delaware (the “Company”) and SamanthaRoady (the “Executive”).WHEREAS, the Executive and the Company previously entered into an employment agreement dated May 5, 2015 (the “OriginalEffective Date”); andWHEREAS, the parties desire to amend and restate the employment agreement on the terms and conditions set forth herein.The parties hereto, intending to be legally bound, hereby agree as follows:1.Employment Term. The Company hereby agrees to continue to employ the Executive and theExecutive hereby agrees to continue such employment, as the Chief Commercial Officer for the Company from the EffectiveDate and continuing through the third anniversary of the Effective Date, unless terminated sooner pursuant to Section 8hereof; provided that, on the third anniversary of the Effective Date and each annual anniversary thereafter (such date andeach annual anniversary thereof, a “Renewal Date”), this Agreement shall automatically extend, upon the same terms andconditions, for successive periods of one year, unless either party provides written notice of her or its intention not to extendthe term of the Agreement at least 90 days prior to the applicable Renewal Date. The period during which the Executive isemployed by the Company pursuant to the terms of this Agreement is referred to as the “Term”.2. Representations and Warranties. The Executive represents that the Executive is entering into this Agreementvoluntarily and that Executive’s employment hereunder and her compliance with the terms and conditions of this Agreementwill not conflict with or result in the breach of any agreement to which the Executive is a party or by which the Executivemay be bound, or any legal duty that the Executive owes or may owe to another.3. Duties and Extent of Services.(a) During the Term, the Executive shall serve as the Chief Commercial Officer of the Company and, assuch, the Executive shall serve as the chief commercial officer of the Company and all of its subsidiaries, with suchduties, responsibilities and authority as are consistent with such position, subject to the oversight of the Board ofDirectors of the Company (the “Board”), and shall so serve faithfully and to the best of the Executive’s ability underthe direction and supervision of the Chief Executive Officer. As an executive officer of the Company, the Executiveshall be entitled to all of the benefits and protections to which all officers of the Company are entitled pursuant to theCompany’s Amended and Restated Certificate of Incorporation, which shall include, but not be limited to, the rightsof indemnification set forth in such Amended and Restated Certificate of Incorporation, and coverage under theCompany’s directors’ and officers’ liability insurance, as are in effect from time to time.(b) During the Term, the Executive agrees to devote substantially her full business time, attention, andenergies to the Company’s business and shall not be engaged in any other business activity, whether or not suchbusiness activity is pursued for gain, profit or other pecuniary advantage; provided, that subject to the Executive’scompliance with Sections 14, 15 and 16 herein, the Executive may serve in charitable and civic positions and serveon corporate boards and committees of for-profit companies, in each case with the prior written consent of the ChiefExecutive Officer, which consent shall not be unreasonably withheld. The Executive covenants, warrants andrepresents that she shall devote her full and best efforts to the fulfillment of her employment obligations, and she shallexercise the highest degree of loyalty and the highest standards of conduct in the performance of her duties.4. Compensation.(a) Base Salary. The Company shall pay the Executive an annualized base salary (the “Base Salary”) tobe determined by the Board’s Compensation Committee (the “Compensation Committee”), subject to the terms ofthis Section 4(a) and this Agreement. The Executive’s Base Salary as of the Effective Date is $375,000. TheExecutive’s Base Salary shall be reviewed periodically by the Compensation Committee and, in the sole discretion ofthe Compensation Committee, the Base Salary may be increased (but not decreased) effective as of any datedetermined by the Compensation Committee. The Executive’s Base Salary shall be paid in equal installments inaccordance with the Company’s standard policy regarding payment of compensation to employees, which policy isas of the Effective Date to make payments two times a month. The Executive shall not receive any additionalcompensation from any subsidiary of the Company.(b) Bonus. During the Executive’s employment under this Agreement, the Company shall cause theExecutive to be eligible to participate in each bonus or incentive compensation plan, program or policy maintained bythe Company from time to time, in whole or in part, for the executive officers of the Company (each, an “IncentiveCompensation Plan” and payments thereunder, “Incentive Compensation”). The Executive’s target and maximumcompensation under, and her performance goals and other terms of participation in, each Incentive CompensationPlan shall be determined by the Compensation Committee in its sole discretion. Subject to the provisions of Section 9and Section 10 herein, any such Incentive Compensation is not guaranteed and is contingent upon the Executive andthe Company achieving established deliverables or other goals. Subject to the provisions of Section 9 and Section 10herein, any such Incentive Compensation shall not be considered “earned” by the Executive until the Company hasallocated payment to be made to the Executive for any performance period. Payment under any such IncentiveCompensation Plan shall be made, if at all, after the close of the relevant performance period and by no later thanMarch 15th of the year after the year in which the performance period ends. Notwithstanding anything herein to thecontrary, to the extent permitted or required by governing law, the Compensation Committee shall have discretion toadjust Executive’s compensation for the following year to account for, or to require the Executive to repay to theCompany, the amount of any Incentive Compensation to the extent the Compensation Committee or the Boarddetermines that such Incentive Compensation was not actually earned by the Executive due to %3. the amount ofsuch payment being based on the achievement of financial results that were subsequently the subject of a materialaccounting restatement that occurs within three years of such payment (except in the case of a restatement due to achange in accounting policy or simple error); %3. the Executive having engaged in fraud, gross negligence orintentional misconduct; or %3. the Executive having deliberately misled the market or the Company’s stockholdersregarding the Company’s financial performance.(c) Equity. During the Term, the Executive will be eligible to participate in all long-term equity incentiveprograms made available to other executive officers and that are established by the Company for its employees,including the 2015 Omnibus Incentive Compensation Plan (or a successor thereto), at levels determined by theCompensation Committee in its sole discretion commensurate with the Executive’s position. All equity grants madeto the Executive will vest in accordance with a vesting schedule that is consistent with other grants under the 2015Omnibus Incentive Compensation Plan (or successor plan) and will be subject in all respects to the terms of the 2015Omnibus Incentive Compensation Plan (or successor plan), the agreement evidencing such grant and, to the extentapplicable, Section 9(c)(v), Section 9(c)(vi), Section 10(a)(v) and Section 10(a)(vi).5. Benefits. During the Term, the Executive shall be entitled to participate in any and all benefit programs andarrangements generally made available by the Company to executive officers, including, but not limited to, pension plans,contributory and noncontributory welfare and benefit plans, disability plans and medical, death benefit and life insuranceplans for which the Executive may be eligible during the Term. Furthermore, the Executive shall be permitted that number ofdays of paid time off (“PTO”) during each calendar year as, consistent with Company policy, are provided to similarlysituated employees; however, in no event shall the Executive receive fewer than six weeks of PTO (30 business days). PTOmay be used for vacation, professional enrichment and education. Unused PTO shall accrue from one calendar year toanother consistent with Company policy.6. Expenses. During the Executive’s employment, the Executive will be reimbursed for travel, entertainment andother out-of-pocket expenses reasonably incurred by the Executive on behalf of the Company in the performance of theExecutive’s duties hereunder, so long as %2. such expenses are consistent with the type and amount of expenses thatcustomarily would be incurred by similarly situated corporate executives in the United States; and %2. the Executive timelyprovides copies of receipts for expenses in accordance with Company policy.7. Company Policy.(a) The Executive acknowledges that the Executive is subject to insider information policies designed topreclude the Company’s employees from violating the federal securities laws by trading on material, nonpublicinformation or passing such information on to others in breach of any duty owed to the Company or any third party.The Executive shall promptly execute any agreements generally distributed by the Company or to its employeesrequiring employees to abide by the Company’s insider information policies.(b) The Executive has the right under federal law to certain protections for cooperating with or reportinglegal violations to the Securities and Exchange Commission (the “SEC”) and/or its Office of the Whistleblower, aswell as certain other governmental entities and self-regulatory organizations. As such, nothing in this Agreement orotherwise is intended to prohibit the Executive from disclosing this Agreement to, or from cooperating with orreporting violations to, the SEC or any other such governmental entity or self-regulatory organization, and theExecutive may do so without notifying the Company. The Company may not retaliate against the Executive for anyof these activities, and nothing in this Agreement or otherwise would require the Executive to waive any monetaryaward or other payment that the Executive might become entitled to from the SEC or any other governmental entity.Further, nothing in this Agreement or otherwise precludes the Executive from filing a charge of discrimination withthe Equal Employment Opportunity Commission or a like charge or complaint with a state or local fair employmentpractice agency. However, once this Agreement becomes effective, the Executive may not receive a monetary awardor any other form of personal relief in connection with any such charge or complaint that the Executive filed or isfiled on the Executive’s behalf.(c) Notwithstanding any other provision of this Agreement, as provided for in the Defend TradeSecrets Act of 2016 (18 U.S.C. § 1833(b)):(i) The Executive will not be held criminally or civilly liable under any federal orstate trade secret law for any disclosure of a trade secret that:(A) is made: (1) in confidence to a federal, state, or local government official, eitherdirectly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspectedviolation of law; or(B) is made in a complaint or other document that is filed under seal in a lawsuit orother proceeding.(ii) Without limiting the forgoing, if the Executive files a lawsuit for retaliation by theCompany for reporting a suspected violation of law, the Executive may disclose the Company’s trade secretsto the Executive’s attorney and use the trade secret information in the court proceeding if the Executive:(A) files any document containing the trade secret under seal; and(B) does not disclose the trade secret, except pursuant to court order.8. Termination.(a) Disability. In accordance with applicable law, the Company may terminate the Executive’semployment at any time after the Executive becomes Disabled. As used herein, “Disabled” means the incapacity ofthe Executive, on more than 75% of the standard business days (Monday through Friday) over any six-month period,due to injury, illness, disease or bodily or mental infirmity, to engage in the performance of all of the essentialfunctions of her position, in spite of any reasonable accommodation.(b) Death. The Executive’s employment with the Company will terminate upon the death of theExecutive.(c) Termination with Cause. The Company may terminate the Executive’s employment at any time forCause by providing written notice of such termination to the Executive. As used herein, “Cause” means any of thefollowing, as determined by the Board:(i) the Executive’s material breach of this Agreement;(ii) the Executive’s gross negligence (other than as a result of disability or occurring after theExecutive’s provision of notice in connection with a resignation for Good Reason) or willful misconduct incarrying out her duties hereunder, resulting in harm to the Company;(iii) the Executive’s material breach of any of her fiduciary obligations as an officer of theCompany;(iv) any conviction by a court of law of, or entry of a pleading of guilty or nolo contendere bythe Executive with respect to, a felony or any other crime for which fraud or dishonesty is a material element,excluding traffic violations; or(v) the Executive willfully or recklessly engages in conduct which is materially injurious to theCompany, monetarily or otherwise.For purposes of determining Cause, no act or omission by the Executive shall be considered “willful” unless it is done oromitted in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Anyact or failure to act based upon: (a) authority given pursuant to a resolution duly adopted by the Board or (b) advice of counsel for theCompany, shall be conclusively presumed to be done or omitted to be done by the Executive in good faith and in the best interests ofthe Company. In addition, as to subsections (i)-(iii) above, if the action or inaction in question is susceptible of a cure, then no findingof Cause shall occur prior to written notice to the Executive setting forth in reasonable detail the action or inaction at issue, and theExecutive’s failure to cure such condition following a cure period of no less than fifteen days.(d) Termination Without Cause. The Company, at the direction of the Board, may terminate theExecutive’s employment without Cause at any time upon no less than ninety days’ prior written notice or ninetydays’ compensation and benefits pursuant to Section 4 and Section 5, respectively, in lieu of notice.(e) Resignation for Good Reason. The Executive may resign from her employment with the Companyfor Good Reason by providing written notice to the Chief Executive Officer that an event constituting Good Reasonhas occurred and the Executive desires to resign from her employment with the Company as a result. Other thanfollowing a Change in Control, such notice must be provided to the Chief Executive Officer by the Executive within60 days following the initial occurrence of the event constituting Good Reason. For the avoidance of doubt,following a Change in Control, notice from the Executive to the Chief Executive Officer that an event constitutingGood Reason has occurred may be provided by the Executive at any time during the 12-month period following theChange in Control that is referred to in Section 10(a) below. After receipt of such written notice, the Chief ExecutiveOfficer shall have a period of 30 days to cure such event; provided, however, the Chief Executive Officer, may, at hisor her sole option, determine not to cure such event and accept the Executive’s resignation, effective 30 daysfollowing the Chief Executive Officer’s receipt of the Executive’s notice that an event constituting Good Reason hasoccurred. If, in the reasonable judgment of the Executive, the Chief Executive Officer does not cure the eventconstituting Good Reason within the requisite 30-day period, the Executive’s employment with the Company shallterminate on account of Good Reason 30 days following the expiration of the Chief Executive Officer’s cure period,unless the Chief Executive Officer determines to terminate the Executive’s employment prior to such date. As usedherein, “Good Reason” means that, without the Executive’s consent, any of the following has occurred:(i) a material diminution in the Executive’s authority, duties, responsibilities or job title;(ii) a diminution in the Executive’s Base Salary; provided, however, that following theoccurrence of a Change in Control, a diminution in total target compensation opportunity (including adiminution in target Incentive Compensation or a diminution in annual equity grants, in each case ascompared to the corresponding amounts for the fiscal year that immediately precedes the fiscal year in whichan event of Good Reason has occurred, as set forth in a notice to the Board pursuant to Section 8(e)), shallalso constitute “Good Reason”;(iii) a relocation of the Company’s principal offices in Bedminster, New Jersey, or of theExecutive’s principal office (if different), to a location that is not within the New York metropolitan area; or(iv) any action or inaction by the Company that constitutes a material breach by the Companyof its obligations under this Agreement.(f) Resignation without Good Reason. The Executive may resign from her employment with theCompany without Good Reason (as that term is defined in Section 8(e)) at any time upon no less than 90 days’ priorwritten notice to the Chief Executive Officer. Upon such notice of resignation, the Company may, at its sole option,accept the Executive’s resignation effective as of a date prior to the resignation date specified in the notice, and insuch event, the earlier date will be the effective date of termination of the Executive’s employment for all purposeshereunder.9. Compensation Upon Termination Other than in Connection with a Change in Control.(a) Disability. Upon termination of employment pursuant to Section 8(a), the Executive will receive anyBase Salary accrued and unpaid as of such date as well as any accrued but unused PTO and appropriate expensereimbursements. Such amounts will be paid as soon as practicable after the termination of employment. With respectto Incentive Compensation, notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid (A) for any unpaid Incentive Compensationrelating to the fiscal year prior to the fiscal year in which the Executive’s employment is terminated (the“Termination Year”), in accordance with Section 4(b), the Executive will receive any accrued and unpaid IncentiveCompensation for which she is eligible for such prior fiscal year (which amount shall be equal to the actual IncentiveCompensation achieved for such fiscal year), with such amount to be paid in a lump sum as soon as practicable afterthe termination of employment, but not later than 30 days following the date of the Executive’s termination ofemployment and (B) with respect to Incentive Compensation for the Termination Year, the Executive will be eligibleto receive Incentive Compensation calculated as follows: (X) the Pro Rata Ratio (as defined below) times (Y) the sumof (i) for the portion of the Incentive Compensation that would be calculated based on the Company’s achievement ofoperating metrics (such as, without limitation, revenue and EBITDA targets), an amount for such portion of theExecutive’s Incentive Compensation derived from the Company’s achievement of operating metrics calculated basedon the actual operating performance of the Company during the full calendar months in which the Executiveremained employed extrapolated on a linear basis for the full fiscal year (assuming, however, for these purposes,100% achievement of any applicable operating metrics relating to the performance of the Company’s common stockprice), plus (ii) for the portion of the Incentive Compensation that would be calculated based on the Executive’sachievement of personal objectives, an amount for such portion of the Executive’s Incentive Compensation calculatedbased on the assumed achievement by the Executive of 100% of the Executive’s personal objectives, with suchIncentive Compensation being paid in a lump sum at the time that the Incentive Compensation is payable to otherexecutives (it being understood that if the Executive’s target Incentive Compensation has not been determined for theTermination Year, the target Incentive Compensation used to calculate the amount payable to the Executive pursuantto this Section 9(a) will be equal to the Executive’s target Incentive Compensation for the fiscal year immediatelyprior to the Termination Year). In addition, the Company will also pay to the Executive an amount equal to 18months of the Executive’s monthly Base Salary, which shall be paid to the Executive in accordance with theCompany’s normal payroll practices in equal installments over the 12-month period following the Executive’s lastday of employment but not later than 60 days following the date of Executive’s last day of employment with theCompany. The Executive’s Company equity grants (including without limitation stock options, stock units and stockawards) that are outstanding immediately prior to the Executive’s termination of employment shall be treated inaccordance with the applicable grant agreement and the Company’s 2015 Omnibus Incentive Compensation Plan (ora successor plan), subject to the terms of this Agreement. The Company shall have no further obligations under thisAgreement to the Executive. As used herein, the “Pro Rata Ratio” shall mean the number of full calendar months inwhich the Executive was employed during the Termination Year divided by 12.(b) Death. In the event of the Executive’s death, the Executive’s estate will receive any Base Salaryaccrued and unpaid as of such date as well as any accrued but unused PTO and appropriate expense reimbursements.Such amounts will be paid as soon as practicable after the termination of employment. With respect to IncentiveCompensation, notwithstanding any eligibility requirement that the Executive must be employed by the Company asof the date on which the Incentive Compensation is paid (A) for any unpaid Incentive Compensation relating to thefiscal year prior to the Termination Year, in accordance with Section 4(b), the Executive’s estate will receive anyaccrued and unpaid Incentive Compensation for which she is eligible for such prior fiscal year (which amount shallbe equal to the actual Incentive Compensation achieved for such fiscal year), with such amount to be paid in a lumpsum as soon as practicable after the termination of employment, but not later than 30 days following the date of theExecutive’s termination of employment and (B) with respect to Incentive Compensation for the Termination Year,the Executive’s estate will be eligible to receive Incentive Compensation calculated as follows: (X) the Pro Rata Ratiotimes (Y) the sum of (i) for the portion of the Incentive Compensation that would be calculated based on theCompany’s achievement of operating metrics (such as, without limitation, revenue and EBITDA targets), an amountfor such portion of the Executive’s Incentive Compensation derived from the Company’s achievement of operatingmetrics calculated based on the actual operating performance of the Company during the full calendar months inwhich the Executive remained employed extrapolated on a linear basis for the full fiscal year (assuming, however, forthese purposes, 100% achievement of any applicable operating metrics relating to the performance of the Company’scommon stock price), plus (ii) for the portion of the Incentive Compensation that would be calculated based on theExecutive’s achievement of personal objectives, an amount for such portion of the Executive’s IncentiveCompensation calculated based on the assumed achievement by the Executive of 100% of the Executive’s personalobjectives, with such Incentive Compensation being paid in a lump sum at the time that the Incentive Compensationis payable to other executives (it being understood that if the Executive’s target Incentive Compensation has not beendetermined for the Termination Year, the target Incentive Compensation used to calculate the amount payable to theExecutive pursuant to this Section 9(b) will be equal to the Executive’s target Incentive Compensation for the fiscalyear immediately prior to the Termination Year). In addition, the Company will also pay to the Executive’s estate in alump sum not later than 30 days following the Executive’s last day of employment an amount equal to 18 months ofthe Executive’s monthly Base Salary. The Executive’s Company equity grants (including without limitation stockoptions, stock units and stock awards) that are outstanding immediately prior to the Executive’s death shall be treatedin accordance with the applicable grant agreement and the Company’s 2015 Omnibus Incentive Compensation Plan(or a successor plan), subject to the terms of this Agreement. The Company shall have no further obligations underthis Agreement to the Executive’s estate.(c) Termination without Cause or Resignation with Good Reason Other than in Connection with aChange in Control. If, other than in connection with a Change in Control as defined in Section 10, the Companyterminates the Executive’s employment without Cause pursuant to Section 8(d) or if the Executive resigns for GoodReason pursuant to Section 8(e), the Company will pay the Executive her Base Salary accrued and unpaid as of thedate of termination of employment, as well as any accrued but unused PTO and appropriate expense reimbursements.Such amounts will be paid as soon as practicable after the termination of employment. In addition, subject to theExecutive’s execution and nonrevocation of the general release of claims described in Section 11 below, as well asthe Executive’s compliance with the restrictive covenants set forth in Sections 13 through 16 below, the Companywill also pay and/or provide to the Executive the following:(i) severance in an amount equal to 18 months of the Executive’s monthly Base Salary (the“Severance Amount”), which shall be paid to the Executive in accordance with the Company’s normalpayroll practices in equal installments over the 18-month period following Executive’s last day ofemployment and which shall commence as soon as administratively practicable following the expiration ofthe revocation period for the general release, but not later than 60 days following the date of Executive’s lastday of employment with the Company;(ii) in accordance with Section 4(b), the Executive will receive any accrued and unpaidIncentive Compensation, for which she is eligible for the fiscal year prior to such termination (which amountshall be equal to the actual Incentive Compensation achieved for such fiscal year), with such amount to bepaid in a lump sum as soon as practicable after the termination of employment, but not later than 30 daysfollowing the date of the Executive’s termination of employment;(iii) notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid, if the Executive’s employment isterminated before such date in accordance with Section 8(d) or 8(e), the Executive will be eligible to receiveIncentive Compensation calculated as follows: (X) the Pro Rata Ratio times (Y) the sum of (i) for the portionof the Incentive Compensation that would be calculated based on the Company’s achievement of operatingmetrics (such as, without limitation, revenue and EBITDA targets), an amount for such portion of theExecutive’s Incentive Compensation derived from the Company’s achievement of operating metricscalculated based on the actual operating performance of the Company during the full calendar months inwhich the Executive remained employed extrapolated on a linear basis for the full fiscal year (assuming,however, for these purposes, 100% achievement of any applicable operating metrics relating to theperformance of the Company’s common stock price), plus (ii) for the portion of the Incentive Compensationthat would be calculated based on the Executive’s achievement of personal objectives, an amount for suchportion of the Executive’s Incentive Compensation calculated based on the assumed achievement by theExecutive of 100% of the Executive’s personal objectives, with such Incentive Compensation being paid in alump sum at the time that the Incentive Compensation is payable to other executives (it being understood thatif the Executive’s target Incentive Compensation has not been determined for the Termination Year, thetarget Incentive Compensation used to calculate the amount payable to the Executive pursuant to this Section9(c)(iii) will be equal to the Executive’s target Incentive Compensation for the fiscal year immediately priorto the Termination Year);(iv) an amount equal to one and a half (1.5) times the Executive’s aggregate IncentiveCompensation for the Termination Year assuming (A) achievement by the Company of 100% of anyapplicable operating metrics (such as, without limitation, revenue, EBITDA and stock performance targets)and (B) achievement by the Executive of 100% of the Executive’s personal objectives (it being understoodthat if the Executive’s target Incentive Compensation has not been determined for the Termination Year, theExecutive’s target Incentive Compensation for the fiscal year immediately prior to the Termination Year shallbe used), which shall be paid to the Executive in accordance with the Company’s normal payroll practices inequal installments over the 12-month period following Executive’s last day of employment and which shallcommence as soon as administratively practicable following the expiration of the revocation period for thegeneral release, but not later than 60 days following the date of Executive’s last day of employment with theCompany;(v) notwithstanding any provision to the contrary in any applicable grant agreement or theCompany’s 2015 Omnibus Incentive Compensation Plan (or a successor plan), all shares subject toCompany equity grants (including without limitation stock options, stock units and stock awards) that vestsolely on the Executive’s continued employment with the Company for a specified period of time held by theExecutive at the time of her termination date that would have vested from the date of grant through the end ofthe 18-month period following the Executive’s termination date if the vesting schedule for such grants werebased on a monthly vesting schedule, as opposed to the vesting schedule set forth in her grant agreement,shall immediately vest in full and/or become immediately exercisable or payable on the Executive’stermination date (examples of the vesting described in this clause (v) are included on Schedule solely 1 forillustrative purposes);(vi) notwithstanding any provision to the contrary in any applicable grant agreement or theCompany’s 2015 Omnibus Incentive Compensation Plan (or a successor plan), all shares subject toCompany equity grants (including without limitation stock options, stock units and stock awards) that vest inwhole or in part based on the satisfaction of performance-based or market-based conditions held by theExecutive at the time of his termination date shall be treated as follows:(A) the number of shares subject to each such outstanding grant (the “Grant Amount”)shall be determined in accordance with the terms of the applicable grant agreement, and by applying thefollowing performance assumptions to the target grant amount specified therein:(1) if such termination occurs prior to the end of the applicable measurementperiod for such performance-based or market-based conditions, such conditions will be deemed to have beensatisfied based on achievement of 100% of target performance; and(2) if such termination occurs after the end of the applicable measurement periodfor such performance-based or market-based conditions, such conditions will be deemed to have beensatisfied based on the Company’s actual performance relative to such conditions;(B) each such outstanding grant that would have vested from the date of grant throughthe end of the 18-month period following the Executive’s termination date if the vesting schedule for theapplicable Grant Amount were based on a monthly vesting schedule, as opposed to the vesting schedule setforth in his grant agreement, shall immediately vest in full and/or become immediately exercisable or payableon the Executive’s termination date (examples of the vesting described in this clause (vi) are included onSchedule 1 solely for illustrative purposes); and(vii) to the extent permitted under applicable law, the Company will provide continued healthbenefits to the Executive at the same premium rates charged to other then current employees of the Company,or, at its option, waive that portion of the cost for COBRA continuation coverage that is in excess of whatthen current employees of the Company pay for health benefits under the Company’s plan, for the 18-monthperiod following her termination of employment, unless the Executive is eligible to be covered by healthinsurance provided by a future employer.(d) Termination with Cause and Resignation without Good Reason. If the Company terminates theExecutive’s employment with Cause pursuant to Section 8(c), if the Executive resigns without Good Reasonpursuant to Section 8(f), or if the Executive is entitled to the severance benefits pursuant to Section 9(c) or Section10(a) and either does not execute or revokes the general release of claims required pursuant to Section 11, or is inmaterial breach of any of the covenants set forth in Section 13, 14, 15, 16 or 17 below, the Company will pay theExecutive her Base Salary accrued and unpaid as of the date of termination of employment as well as any accrued butunused PTO and appropriate expense reimbursements. Such amounts will be paid as soon as practicable after thetermination of employment and, following such payments, the Company shall have no further obligations under thisAgreement to the Executive.(e) Nonrenewal of This Agreement. If the Company provides written notice of nonrenewal of thisAgreement in accordance with Section 1 herein, the Executive’s termination of employment in connection with theCompany’s nonenewal of this Agreement shall be deemed to be a termination of the Executive’s employment by theCompany without Cause and the Executive shall be eligible for the payments and severance benefits set forth inSection 9(c) herein, subject to the provisions of Section 9(c).10. Change in Control.(a) Termination without Cause or Resignation with Good Reason in Connection with a Change inControl. If, on or within 12 months after a Change in Control, and whether or not this Agreement was not renewed inaccordance with Section 1 herein, the Company or its successor terminates the Executive’s employment withoutCause pursuant to Section 8(d) or if the Executive resigns for Good Reason pursuant to Section 8(e), the Executive isentitled to her Base Salary accrued and unpaid as of the date of termination of employment as well as any accrued butunused PTO and appropriate expense reimbursements. Such amounts will be paid as soon as practicable after thetermination of employment. In addition, subject to the Executive’s execution and nonrevocation of the general releaseof claims described in Section 11 below, as well as the Executive’s compliance with the restrictive covenants set forthin Sections 13 through 16 below, the Executive shall be entitled to the following:(i) severance in an amount equal to 24 months of the Executive’s monthly Base Salary (the“Change in Control Severance Amount”), which shall be paid to the Executive in a lump sum as soon asadministratively practicable following the expiration of the revocation period for the general release, but notlater than 60 days following the date of the Executive’s last day of employment with the Company;(ii) in accordance with Section 4(b), the Executive will receive any accrued and unpaidIncentive Compensation, for which she is eligible, for the fiscal year prior to such termination (which amountshall be equal to the actual Incentive Compensation achieved for such fiscal year; provided, however, that if aChange in Control occurs during the fiscal year prior to such Termination Year, the Incentive Compensationto which the Executive shall be entitled with respect to the fiscal year prior to the Termination Year shallequal the target Incentive Compensation for such fiscal year), with such amount to be paid in a lump sum assoon as practicable after the termination of employment with the Company, but not later than 30 daysfollowing the date of the Executive’s termination of employment;(iii) notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid, the Executive will be eligible toreceive Incentive Compensation calculated as follows: (A) if the Executive’s employment is terminated on orprior to July 31 of the Termination Year, (X) the Pro Rata Ratio times (Y) the Executive’s target IncentiveCompensation for the applicable period, or (B) if the Executive’s employment is terminated after July 31 ofthe Termination Year, the Pro Rata Ratio times the greater of (1) the Executive’s target IncentiveCompensation for such fiscal year or (2) the sum of (i) for the portion of the Incentive Compensation thatwould be calculated based on the Company’s achievement of operating metrics (such as, without limitation,revenue and EBITDA targets), an amount for such portion of the Executive’s Incentive Compensationderived from the Company’s achievement of operating metrics calculated based on the actual operatingperformance of the Company during the full calendar months in which the Executive remained employedextrapolated on a linear basis for the full fiscal year (assuming, however, for these purposes, 100%achievement of any applicable operating metrics relating to the performance of the Company’s commonstock price), plus (ii) for the portion of the Incentive Compensation that would be calculated based on theExecutive’s achievement of personal objectives, an amount for such portion of the Executive’s IncentiveCompensation calculated based on the assumed achievement by the Executive of 100% of the Executive’spersonal objectives (it being understood, in each case, that if Executive’s target Incentive Compensation hasnot been determined for the Termination Year, the target Incentive Compensation used to calculate theamount payable to the Executive pursuant to this Section 10(a)(iii) will be equal to the Executive’s targetIncentive Compensation for the fiscal year immediately prior to the Termination Year), with such pro rataIncentive Compensation being paid in a lump sum as soon as administratively practicable following theexpiration of the revocation period for the general release, but not later than 60 days following the date of theExecutive’s last day of employment with the Company;(iv) an amount equal to two times the Executive’s aggregate target Incentive Compensation forthe Termination Year (it being understood that if such target Incentive Compensation has not beendetermined for the Termination Year, the Executive’s target Incentive Compensation for the fiscal yearimmediately prior to the Termination Year shall be used), with such amount to be paid in a lump sum as soonas administratively practicable following the expiration of the revocation period for the general release, butnot later than 60 days following the date of the Executive’s last day of employment with the Company;(v) notwithstanding any provision to the contrary in any applicable grant agreement or theCompany’s 2015 Omnibus Incentive Compensation Plan (or a successor plan), any and all shares subject toCompany equity grants (including without limitation stock options, stock units and stock awards) that did notvest effective as of the Change in Control and continue to vest solely on the Executive’s continuedemployment with the Company for a specified period of time held by the Executive at the time of hertermination shall immediately vest in full and/or become immediately exercisable or payable on theExecutive’s termination date;(vi) notwithstanding any provision to the contrary in any applicable grant agreement or theCompany’s 2015 Omnibus Incentive Compensation Plan (or a successor plan), any and all shares subject toCompany equity grants (including without limitation stock options, stock units and stock awards) that did notvest effective as of the Change in Control and continue to vest in whole or in part based on the satisfaction ofperformance-based or market-based conditions held by the Executive at the time of his termination shall betreated as follows:(A) the Grant Amount shall be determined in accordance with the terms of theapplicable grant agreement, and by applying the following performance assumptions to the target grantamount specified therein:(1) if the Change in Control and such termination each occur prior to the end ofthe applicable measurement period for such performance-based or market-based conditions, such conditionswill be deemed to have been satisfied based on achievement of 100% of target performance;(2) if the Change in Control occurs prior to the end of the applicableperformance measurement period for such performance-based or market-based conditions and the terminationoccurs after the end of such measurement period, such conditions will be deemed to have been satisfiedbased on the greater of (1) the achievement of 100% of target performance or (2) the Company’s actualperformance relative to such conditions; and(3) if the Change in Control and such termination each occur after the end of theapplicable measurement period for such performance-based or market-based conditions, such conditions willbe deemed to have been satisfied based on the Company’s actual performance relative to such conditions;(B) notwithstanding the vesting schedule set forth in his grant agreement, the applicableGrant Amount shall immediately vest in full and/or become immediately exercisable or payable on theExecutive’s termination date; and(vii) to the extent permitted under applicable law, the Company will provide continued healthbenefits to the Executive at the same premium rates charged to other then current employees of the Company,or at its option, waive that portion of the cost for COBRA continuation coverage that is in excess of whatthen current employees of the Company pay for health benefits under the Company’s plan, for the 24-monthperiod following her termination of employment, unless the Executive is eligible to be covered by healthinsurance provided by a future employer.(b) For the avoidance of doubt, Section 9(c)(v), Section 9(c)(vi), Section 10(a)(v), Section 10(a)(vi) andthe provisions in the Company's 2015 Omnibus Incentive Compensation Plan (or successor or predecessor equitycompensation plans, as applicable) relating to the acceleration of vesting of equity awards in the event of a Change inControl shall apply to any equity awards held by the Executive; it being understood that, in the event of a Change inControl, any equity award held by the Executive other than a stock option or a stock appreciation right (which shallbe subject to the terms of the applicable equity compensation plan and award agreement thereunder) may not becancelled without a cash payment to the Executive in an amount equal to the Fair Market Value (as defined in the2015 Omnibus Incentive Compensation Plan) of the shares of Company Stock underlying such cancelled equityaward or a grant to the Executive of an equity award of the surviving corporation (or a parent or subsidiary of thesurviving corporation) of equal value.(c) If there is a dispute as to whether grounds triggering termination with or without Cause or resignationwith or without Good Reason have occurred, in each case in connection with a Change in Control, and Executiveprevails in her claim that her termination constituted a termination without Cause or a resignation with Good Reason,then any fees and expenses arising from the resolution of such dispute (including any reasonably incurred attorneys’fees and expenses of Executive) shall be paid by the Company or its successor, as the case may be.(d) For purposes of this Agreement, “Change in Control” means a (i) Change in Ownership of theCompany, (ii) Change in Effective Control of the Company, (iii) Change in the Ownership of Assets of theCompany, in the case of each of clauses (i), (ii) and (iii), as described herein and construed in accordance withSection 409A of the Internal Revenue Code of 1986, as amended, and the regulations and Treasury guidance issuedthereunder (the “Code”), or (iv) a liquidation or dissolution of the Company; except that no Change in Control shallbe deemed to occur as a result of a change of ownership resulting from the death of a stockholder or a transaction inwhich the Company becomes a subsidiary of another corporation and in which the stockholders of the Company,immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling suchstockholders to more than 50% of all votes to which all stockholders of the parent corporation would be entitled in theelection of directors (without consideration of the rights of any class of stock to elect directors by a separate classvote).(i) A “Change in Ownership of the Company” shall occur on the date that any one Personacquires, or Persons Acting as a Group acquire, ownership of the capital stock of the Company that, togetherwith the stock previously held by such Person or Group, constitutes more than 50% of the total fair marketvalue or total voting power of the capital stock of the Company. However, if any one Person is, or PersonsActing as a Group are, considered to own more than 50% of the total fair market value or total voting powerof the capital stock of the Company, the acquisition of additional stock by the same Person or Persons Actingas a Group is not considered to cause a Change in Ownership of the Company or to cause a Change inEffective Control of the Company (as described below). An increase in the percentage of capital stockowned by any one Person, or Persons Acting as a Group, as a result of a transaction in which the Companyacquires its stock in exchange for property will be treated as an acquisition of stock.(ii) A “Change in Effective Control of the Company” shall occur if in any 12-month period, (A)a Person, or Persons Acting as a Group, acquires ownership of capital stock of the Company possessing 30%or more of the total voting power of the capital stock of the Company, or (B) a majority of the members ofthe Board are not Continuing Directors. “Continuing Directors” means, as of any date of determination, anymember of the Board who (1) was a member of the Board on the Original Effective Date or (2) wasnominated for election, elected or appointed to the Board with the approval of a majority of the ContinuingDirectors who were members of the Board at the time of such nomination, election or appointment (either bya specific vote or by approval of the Company’s proxy statement in which such member was named as anominee for election as a director, without objection to such nomination).(iii) A “Change in the Ownership of Assets of the Company” shall occur on the date that anyone Person acquires, or Persons Acting as a Group acquire (or has or have acquired during the 12-monthperiod ending on the date of the most recent acquisition by such Person or Persons), assets from theCompany that have a total gross fair market value equal to or more than 40% of the total gross fair marketvalue of all of the assets of the Company immediately before such acquisition or acquisitions. For thispurpose, “gross fair market value” means the value of the assets of the Company, or the value of the assetsbeing disposed of, determined without regard to any liabilities associated with such assets.(iv) The following rules of construction apply in interpreting the definition of Change inControl:(a) A “Person” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder, otherthan employee benefit plans sponsored or maintained by the Company and by entities controlled by the Company or anunderwriter of the capital stock of the Company in a registered public offering.(b) Persons will be considered to be “Persons Acting as a Group” (or “Group”) if (i) they are considered to be actingas a group within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act and the rules and regulationsthereunder or (ii) they are owners of a corporation or other entity that enters into a merger, consolidation, purchase oracquisition of stock, or similar business transaction with the Company. If a Person owns stock in both corporations thatenter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder isconsidered to be acting as a Group with other shareholders only with respect to the ownership in that corporation beforethe transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Personswill not be considered to be acting as a Group solely because they purchase assets of the same corporation at the sametime or purchase or own stock of the same corporation at the same time, or as a result of the same public offering.(c) For purposes of the definition of Change in Control, “fair market value” shall be determined by the Board.(d) A Change in Control shall not include a transfer to a related person as described in Code Section 409A or a publicoffering of capital stock of the Company.(e) For purposes of the definition of Change in Control, Code Section 318(a) applies to determine stock ownership.Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stockunderlying an unvested option is not considered owned by the individual who holds the unvested option). For purposesof the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as definedby Treas. Reg. § 1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holdsthe option.11. Release of Claims. As a condition for the payments of the Severance Amount or the Change in ControlSeverance Amount and Incentive Compensation provided in Section 9(c) or Section 10(a), as well as the acceleration ofequity vesting and continuation of health benefits provided pursuant to such sections of this Agreement, the Executive mustexecute a general release of all claims (including claims under local, state and federal laws, but excluding claims for paymentdue under Section 9(c) or Section 10(a) and subject to Section 7(b) and (c)) that the Executive has or may have against theCompany and current and former related individuals or entities (the “Release”). The Release shall be in a form reasonablyacceptable to the Company, and shall include confidentiality, cooperation, and non-disparagement provisions, as well asother terms requested by the Company that are typical of an executive severance agreement. The consideration provided forin Section 9(c) or Section 10(a) is conditioned upon and will not be paid (or be provided) until the execution of the Releaseand the expiration of any revocation period; provided that notwithstanding any provision of this Agreement to the contrary,in no event shall the timing of the Executive’s execution of the Release, directly or indirectly, result in the Executivedesignating the calendar year of payment, and if a payment that is subject to execution of the Release could be made in morethan one taxable year, payment shall be made in the later taxable year. The Company shall provide the Release to theExecutive by no later than 10 days after the Executive terminates employment with the Company, and the Executive shallexecute the Release during the statutory time period specified by applicable law. If the Release is not executed during thestatutory time period specified by applicable law, the Company’s obligation to pay any Severance Amount, Change inControl Severance Amount or Incentive Compensation and to provide any acceleration of vesting and continued healthbenefits provided for in Section 9(c) or Section 10(a) pursuant to this Agreement shall terminate.12. Section 280G Contingent Cutback. The Executive shall bear all expense of, and be solely responsible for, allfederal, state, local or foreign taxes due with respect to any payment received under this Agreement, including, withoutlimitation, any excise tax imposed by Code Section 4999. Notwithstanding anything to the contrary in this Agreement, in theevent that any payment or benefit received or to be received by the Executive pursuant to the terms of this Agreement or inconnection with the Executive’s termination of employment or contingent upon a Change in Control pursuant to any plan orarrangement or other agreement with the Company or any affiliate (collectively, the “Payments”) would be subject to theexcise tax imposed by Code Section 4999, as determined by the Company, then the Payments shall be reduced to the extentnecessary to prevent any portion of the Payments from becoming nondeductible by the Company under Code Section 280Gor subject to the excise tax imposed under Code Section 4999, but only if, by reason of that reduction, the net after-taxbenefit received by the Executive exceeds the net after-tax benefit the Executive would receive if no reduction was made.For this purpose, “net after-tax benefit” means %3. the total of all Payments that would constitute “excess parachutepayments” within the meaning of Code Section 280G, less %3. the amount of all federal, state, and local income taxespayable with respect to the Payments calculated at the maximum marginal income tax rate for each year in which thePayments shall be paid to the Executive (based on the rate in effect for that year as set forth in the Code as in effect at thetime of the first payment of the Payments), less %3. the amount of excise taxes imposed on the Payments described in clause(i) above by Code Section 4999. If, pursuant to this Section 12, Payments are to be reduced, the parties shall determinewhich Payments shall be reduced in a manner so as to avoid the imposition of additional taxes under Code Section 409A.13. Confidentiality; Return of Company Property.(a) The Executive acknowledges that, by reason of Executive’s employment by the Company, Executivewill have access to confidential information of the Company, including without limitation information and knowledgepertaining to products, inventions, discoveries, improvements, innovations, designs, ideas, trade secrets, proprietaryinformation, business strategies, packaging, advertising, marketing, distribution and sales methods, sales and profitfigures, employees, customers and clients, and relationships between the Company and its business partners,including dealers, traders, distributors, sales representatives, wholesalers, customers, clients, suppliers and others whohave business dealings with them (“Confidential Information”). The Executive acknowledges that suchConfidential Information is a valuable and unique asset of the Company and covenants that, both during and after theTerm, subject to Section 7, Executive will not disclose any Confidential Information to any person or entity, except asthe Executive’s duties as an employee of the Company may require, without the prior written authorization of theBoard. The obligation of confidentiality imposed by this Section 13 shall not apply to Confidential Information thatotherwise becomes generally known to the public through no act of the Executive in breach of this Agreement or anyother party in violation of an existing confidentiality agreement with the Company, or which is required to bedisclosed by court order or applicable law.(b) All records, designs, patents, business plans, financial statements, manuals, memoranda, lists,research and development plans and products, and other property delivered to or compiled by the Executive by or onbehalf of the Company or its vendors or customers that pertain to the business of the Company shall be and remainthe property of the Company, and be subject at all times to its discretion and control. Likewise, all property, includingwithout limitation all documents, whether in computer or hard copy form, that Executive creates or receives duringand as a result of her employment by the Company, shall be returned to the Company upon request and at the end ofthe Executive’s employment.14. Non-Competition. While the Executive is employed at the Company and for a period of 12 months after thetermination of her employment with the Company for any reason, other than following termination without Cause orresignation for Good Reason after a Change in Control, pursuant to Section 10, in which case such period shall be sixmonths (as applicable, the “Restricted Period”), the Executive will not, directly or indirectly, own, maintain, finance,operate, engage in, assist, be employed by, contract with, license, or have any interest in, or association with, a business orenterprise primarily engaged in or planning to be primarily engaged in, the Internet-based trading of foreign exchange orCFDs.15. Solicitation of Clients. During the Restricted Period, the Executive shall not, directly or indirectly, includingthrough any other person or entity, seek business from any Client on behalf of any enterprise or business other than theCompany, refer business generated from any Client to any enterprise or business other than the Company, or receivecommissions based on sales or otherwise relating to the business from any Client, enterprise or business other than theCompany, provided that such solicitation, if successful, would have an adverse effect on the Company. For purposes of thisAgreement, “Client” means any person, firm, corporation, limited liability company, partnership, association or other entity%3. to which the Company sold or provided services during the 12-month period prior to the time at which anydetermination is required to be made as to whether any such person, firm, corporation, partnership, association or other entityis a Client or %3. who or which has been approached by an employee of the Company for the purpose of soliciting businessfor the Company and which business was reasonably expected to generate revenue in excess of $100,000 per annum.16. Solicitation of Employees. During the Restricted Period, the Executive, directly or indirectly, shall not contactor solicit any employee of the Company for the purpose of hiring them or causing them to terminate their employmentrelationship with the Company.17. Inventions, Ideas, Processes and Designs. All inventions, ideas, processes, programs, software and designs(including all improvements) conceived or made by the Executive during her employment with the Company (whether or notactually conceived during regular business hours) and related to the business of the Company, or the business approved bythe Board to be engaged in by the Company, shall be disclosed in writing promptly to the Company and shall be the sole andexclusive property of the Company. An invention, idea, process, program, software or design (including an improvement)shall be deemed related to the actual or approved business of the Company if it (x) was made with the Company’sequipment, supplies, facilities, or Confidential Information, (y) results from work performed by the Executive for theCompany, or (z) pertains to the current business or demonstrably anticipated research or development work of the Company.The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications forsuch developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to theCompany. The decision to file for patent or copyright protection or to maintain such development as a trade secret shall be inthe sole discretion of the Company, and the Executive shall be bound by such decision.18. Specific Performance/Remedies. The Executive acknowledges that the services to be rendered by theExecutive are of a special, unique and extraordinary character and, in connection with such services, the Executive will haveaccess to Confidential Information vital to the Company’s business. The Executive further agrees that the covenantscontained in Sections 13, 14, 15, 16 and 17 are reasonable and necessary to protect the legitimate business interests of theCompany. By reason of this, the Executive consents and agrees that if the Executive violates any of the provisions ofSections 13, 14, 15, 16 and 17 hereof, the Company would sustain irreparable injury and that monetary damages would notprovide adequate remedy to the Company. The Executive hereby agrees that the Company shall be entitled to have Sections13, 14, 15, 16 and 17 hereof specifically enforced (including, without limitation, by injunctions and restraining orders) byany court in the State of New Jersey having equity jurisdiction and agrees to be subject to the jurisdiction of said court. As afurther and nonexclusive remedy, the Executive understands that a breach of the covenants contained in Sections 13, 14, 15,16 and 17 above that causes material harm to the Company as reasonably determined by the Board (which determinationshall be binding and final) shall eliminate the Executive’s entitlement to any further payment of the Severance Amount,Change in Control Severance Amount, Incentive Compensation, acceleration of equity vesting of equity grants andcontinued health benefits provided for in Section 9(c) or Section 10(a), and the Executive shall be required to return any suchamounts that relate to the period of noncompliance during the Restricted Period in the event of such a breach (including,without limitation, the amount of any gain realized by the Executive upon the acceleration of equity vesting of equity grants).Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available to it forsuch breach or threatened breach, including the recovery of damages from the Executive.19. Complete Agreement. This Agreement embodies the entire agreement of the parties with respect to theExecutive’s employment, compensation, benefits and related items and supersedes any other prior oral or written agreements,arrangements or understandings between the Executive and the Company including without limitation that certainEmployment Agreement entered into as of April 13, 2012, by and between the Executive and the Company, and that certainEmployment Agreement entered into as of May 5, 2015, by and between the Executive and the Company, other than theCompany’s 2015 Omnibus Incentive Compensation Plan and the award agreements reflecting outstanding equity awardsheld by the Executive as of the date of this Agreement, each of which shall continue to control such equity awards except asexpressly modified by this Agreement. This Agreement may not be changed or terminated orally but only by an agreement inwriting signed by the parties hereto.20. Waiver. The waiver by either party of a breach of any provision of this Agreement by the other party shall notoperate or be construed as a waiver of any subsequent breach by such party.21. Governing Law; Assignability.(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State ofNew Jersey without reference to the choice of law provisions thereof.(b) The Executive may not, without the Company’s prior written consent, delegate, assign, transfer,convey, pledge, encumber or otherwise dispose of this Agreement or any interest herein. Any such attempt shall benull and void and without effect. The Company and the Executive agree that this Agreement and all of theCompany’s rights and obligations hereunder may be assigned or transferred by the Company and shall be assumedby and be binding upon any successor to the Company.22. Severability. If any provision of this Agreement or any part thereof, including, without limitation, Section 13,14, 15, 16 or 17, as applied to either party or to any circumstances shall be adjudged by a court of competent jurisdiction tobe void or unenforceable, the same shall in no way affect any other provision of this Agreement or remaining parts thereof,which shall be given full effect without regard to the invalid or unenforceable part thereof, or the validity or enforceability ofthis Agreement. In the event an arbitrator or court of competent jurisdiction deems the restrictive covenants unreasonablylengthy in time or overly broad in scope, it is the intention and agreement of the parties that those provisions which are notfully enforceable be deemed as having been modified to the extent necessary to render them reasonable and enforceable andthat they be enforced to such extent.23. Notices. All notices to the Company or the Executive, permitted or required hereunder, shall be in writing andshall be delivered personally, by telecopier or by courier service providing for next-day delivery or sent by registered orcertified mail, return receipt requested, to the following addresses:If to the Company:GAIN Capital Holdings, Inc. Bedminster One 135 Route 202/206 Bedminster, New Jersey 07921 Attention: Chief Executive OfficerIf to the Executive, to:Samantha Roady c/o GAIN Capital Holdings, Inc. Bedminster One 135 Route 202/206 Bedminster, New Jersey 07921 Either party may change the address to which notices shall be sent by sending written notice of such change of address to theother party. Any such notice shall be deemed given, if delivered personally, upon receipt; if telecopied, when telecopied; if sentby courier service providing for next-day delivery, the next business day following deposit with such courier service; and ifsent by certified or registered mail, three days after deposit (postage prepaid) with the U.S. mail service.24. Section 409A.(a) This Agreement shall be interpreted to avoid the imposition of any additional taxes under CodeSection 409A. If any payment or benefit cannot be provided or made at the time specified herein without incurringadditional taxes under Code Section 409A, then such benefit or payment shall be provided in full at the earliest timethereafter when such sanctions will not be imposed. The preceding provisions, however, shall not be construed as aguarantee by the Company of any particular tax effect to the Executive under this Agreement. For purposes of CodeSection 409A, each payment under this Agreement shall be treated as a separate payment and the right to a series ofinstallment payments under this Agreement shall be treated as a right to a series of separate payments. In no eventmay the Executive, directly or indirectly, designate the calendar year of payment.(b) To the maximum extent permitted under Code Section 409A, the cash severance payments payableunder this Agreement are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-l(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg.§1.409A-l(b)(9)(iii) or any successor provision; provided, however, any amount payable to the Executive during thesix-month period following the Executive’s termination date that does not qualify within either of the foregoingexceptions and is deemed as deferred compensation subject to the requirements of Code Section 409A, then suchamount shall hereinafter be referred to as the “Excess Amount.” If the Executive is a “key employee” of a publiclytraded corporation under Section 409A at the time of her separation from service and if payment of the ExcessAmount under this Agreement is required to be delayed for a period of six months after separation from servicepursuant to Code Section 409A, then notwithstanding anything in this Agreement to the contrary, payment of suchamount shall be delayed as required by Code Section 409A, and the accumulated postponed amount shall be paid ina lump sum payment within 10 days after the end of the six-month period. If the Executive dies during thepostponement period prior to the payment of the postponed amount, the amounts withheld on account of Section409A shall be paid to the personal representative of the Executive’s estate within 60 days after the date of theExecutive’s death. A “key employee” shall mean an employee who, at any time during the 12-month period endingon the identification date, is a “specified employee” under Code Section 409A, as determined by the Board, in its solediscretion. The determination of key employees, including the number and identity of persons considered keyemployees and the identification date, shall be made by the Board in accordance with the provisions of Code Sections416(i) and 409A.(c) To the extent the Executive is, at the time of her termination of employment under this Agreement,participating in one or more deferred compensation arrangements subject to Code Section 409A, the payments andbenefits provided under those arrangements shall continue to be governed by, and to become due and payable inaccordance with, the specific terms and conditions of those arrangements, and nothing in this Agreement shall bedeemed to modify or alter those terms and conditions.(d) “Termination of employment,” “resignation,” or words of similar import, as used in thisAgreement means, for purposes of any payments under this Agreement that are payments of deferred compensationsubject to Code Section 409A, the Executive’s “separation from service” as defined in Code Section 409A.(e) Nothing herein shall be construed as having modified the time and form of payment of any amountsor payments of “deferred compensation” (as defined under Treas. Reg. § 1.409A-l(b)(l), after giving effect to theexemptions in Treas. Reg. §§ 1.409A-l(b)(3) through (b)(12)) that were otherwise payable pursuant to the terms ofany agreement between Company and the Executive in effect on or after January 1, 2005 and prior to the date of thisAgreement.(f) All reimbursements provided under this Agreement shall be made or provided in accordance with therequirements of Code Section 409A, including, where applicable, the requirement that %3. any reimbursement is forexpenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement),%3. the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible forreimbursement in any other calendar year, %3. the reimbursement of an eligible expense will be made on or beforethe last day of the calendar year following the year in which the expense is incurred and %3. the right toreimbursement is not subject to liquidation or exchange for another benefit.25. Withholding of Taxes and Other Employee Deductions. The Company may withhold from any benefits andpayments made pursuant to this Agreement (whether actually or constructively made to the Executive or treated as includedin the Executive’s income under Section 409A of the Code) all federal, state, city, foreign and other applicable taxes andwithholdings as may be required pursuant to any law or governmental regulation or ruling and all other customary deductionsmade with respect to the Company’s employees generally.26. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemedan original, and all of which taken together shall constitute one and the same instrument.27. Separation. All covenants that, by their terms, naturally would survive the termination or expiration of thisAgreement, including but not limited to Sections 11, 12, 13, 14 and 15 hereof, shall survive the termination or expiration ofthis Agreement.IN WITNESS WHEREOF, the parties hereto have duly executed this Employment Agreement as of the date first above written.GAIN CAPITAL HOLDINGS, INC.By:/s/ Glenn H. Stevens Name: Glenn H. Stevens Title: President and Chief ExecutiveOfficer/s/ Samantha RoadySamantha RoadySchedule IIllustration of Vesting Pursuant to Section 9(c)(v):Example 1Grant Date: March 15, 2018Grant Amount: 36,000 time based restricted stock unitsVesting Schedule: Three years (1/3 on each anniversary of grant date)Termination Date: June 15, 2018Total Vested: 21,000Step 1: Convert vesting to a monthly schedule36,000 units ÷ 36 months = 1,000 units per monthStep 2: Calculate vesting from grant date through 18-months following termination3 months + 18 months = 21 months; 21 months x 1,000 units per month = 21,000Example 2Grant Date: March 15, 2018Grant Amount: 36,000 time based restricted stock unitsVesting Schedule: Three years (1/3 on each anniversary of grant date)Termination Date: May 15, 2019Total Vested:32,000 (12,000 of which would have vested in the ordinary course on March 15, 2019 and 20,000 ofwhich accelerate in connection with the termination on May 15, 2019)Step 1: Convert vesting to a monthly schedule36,000 units ÷ 36 months = 1,000 units per monthStep 2: Calculate vesting from grant date through 18-months following termination14 months + 18 months = 32 months; 32 months x 1,000 units per month = 32,000Illustration of Vesting Pursuant to Section 9(c)(vi):Example 1Grant Date: March 15, 2018Target Grant Amount: 36,000 performance based restricted stock unitsMeasurement Period: Fiscal years 2018 and 2109Performance Adjustment:Target grant amount multiplied by % of performance target achievedVesting Schedule: Three years (2/3 on 2nd anniversary of grant date, 1/3 on 3rd anniversary)Termination Date: June 15, 2018Total Vested: 21,000Step 1: Identify Grant AmountTermination before end of applicable measurement period results in deemed achievement of 100% of target performance36,000 units x 100% achievement = 36,000 unitsStep 2: Convert vesting to a monthly schedule36,000 units ÷ 36 months = 1,000 units per monthStep 3: Calculate vesting from grant date through 18-months following termination3 months + 18 months = 21 months; 21 months x 1,000 units per month = 21,000Example 2Grant Date: March 15, 2018Target Grant Amount: 36,000 performance based restricted stock unitsMeasurement Period: Fiscal years 2018 and 2109Performance Adjustment:Target grant amount multiplied by % of performance target achievedVesting Schedule: Three year (2/3 on 2nd anniversary of grant date, 1/3 on 3rd anniversary)Termination Date: May 15, 2020Total Vested:28,800 (19,296 of which would have vested in the ordinary course on March 15, 2020 and 9,504 ofwhich accelerate in connection with the termination on May 15, 2020) Step 1: Identify Grant AmountTermination after end of applicable measurement period results in calculation based on actual performance (assume 80%achievement for purposes of this example)36,000 units x 80% achievement = 28,800 unitsStep 2: Convert vesting to a monthly schedule28,800 units ÷ 36 months = 800 units per monthStep 3: Calculate vesting from grant date through 18-months following termination26 months + remaining 10 months = 36 months; 36 months x 800 units per month = 28,800 Exhibit 10.28EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of February 4, 2019 (the “Effective Date”) and is byand between GAIN Capital Holdings, Inc., a corporation organized under the laws of Delaware (the “Company”) and DiegoRotsztain (the “Executive”).WHEREAS, the Executive and the Company previously entered into an employment agreement dated May 5, 2015 (the “OriginalEffective Date”); andWHEREAS, the parties desire to amend and restate the employment agreement on the terms and conditions set forth herein.The parties hereto, intending to be legally bound, hereby agree as follows:1.Employment Term. The Company hereby agrees to continue to employ the Executive and theExecutive hereby agrees to continue such employment, as the Executive Vice President, Head of Corporate Developmentand General Counsel for the Company from the Effective Date and continuing through the third anniversary of the EffectiveDate, unless terminated sooner pursuant to Section 8 hereof; provided that, on the third anniversary of the Effective Date andeach annual anniversary thereafter (such date and each annual anniversary thereof, a “Renewal Date”), this Agreement shallautomatically extend, upon the same terms and conditions, for successive periods of one year, unless either party provideswritten notice of his or its intention not to extend the term of the Agreement at least 90 days prior to the applicable RenewalDate. The period during which the Executive is employed by the Company pursuant to the terms of this Agreement isreferred to as the “Term”.2. Representations and Warranties. The Executive represents that the Executive is entering into this Agreementvoluntarily and that Executive’s employment hereunder and his compliance with the terms and conditions of this Agreementwill not conflict with or result in the breach of any agreement to which the Executive is a party or by which the Executivemay be bound, or any legal duty that the Executive owes or may owe to another.3. Duties and Extent of Services.(a) During the Term, the Executive shall serve as the Executive Vice President, Head of CorporateDevelopment and General Counsel of the Company and, as such, the Executive shall serve as the chief legal officerof the Company and all of its subsidiaries, with such duties, responsibilities and authority as are consistent with suchposition, subject to the oversight of the Board of Directors of the Company (the “Board”), and shall so servefaithfully and to the best of the Executive’s ability under the direction and supervision of the Chief Executive Officer.As an executive officer of the Company, the Executive shall be entitled to all of the benefits and protections to whichall officers of the Company are entitled pursuant to the Company’s Amended and Restated Certificate ofIncorporation, which shall include, but not be limited to, the rights of indemnification set forth in such Amended andRestated Certificate of Incorporation, and coverage under the Company’s directors’ and officers’ liability insurance,as are in effect from time to time.(b) During the Term, the Executive agrees to devote substantially his full business time, attention, andenergies to the Company’s business and shall not be engaged in any other business activity, whether or not suchbusiness activity is pursued for gain, profit or other pecuniary advantage; provided, that subject to the Executive’scompliance with Sections 14, 15 and 16 herein, the Executive may serve in charitable and civic positions and serveon corporate boards and committees of for-profit companies, in each case with the prior written consent of the ChiefExecutive Officer, which consent shall not be unreasonably withheld. The Executive covenants, warrants andrepresents that he shall devote his full and best efforts to the fulfillment of his employment obligations, and he shallexercise the highest degree of loyalty and the highest standards of conduct in the performance of his duties.4. Compensation.(a) Base Salary. The Company shall pay the Executive an annualized base salary (the “Base Salary”) tobe determined by the Board’s Compensation Committee (the “Compensation Committee”), subject to the terms ofthis Section 4(a) and this Agreement. The Executive’s Base Salary as of the Effective Date is $425,000. TheExecutive’s Base Salary shall be reviewed periodically by the Compensation Committee and, in the sole discretion ofthe Compensation Committee, the Base Salary may be increased (but not decreased) effective as of any datedetermined by the Compensation Committee. The Executive’s Base Salary shall be paid in equal installments inaccordance with the Company’s standard policy regarding payment of compensation to employees, which policy isas of the Effective Date to make payments two times a month. The Executive shall not receive any additionalcompensation from any subsidiary of the Company.(b) Bonus. During the Executive’s employment under this Agreement, the Company shall cause theExecutive to be eligible to participate in each bonus or incentive compensation plan, program or policy maintained bythe Company from time to time, in whole or in part, for the executive officers of the Company (each, an “IncentiveCompensation Plan” and payments thereunder, “Incentive Compensation”). The Executive’s target and maximumcompensation under, and his performance goals and other terms of participation in, each Incentive CompensationPlan shall be determined by the Compensation Committee in its sole discretion. Subject to the provisions of Section 9and Section 10 herein, any such Incentive Compensation is not guaranteed and is contingent upon the Executive andthe Company achieving established deliverables or other goals. Subject to the provisions of Section 9 and Section 10herein, any such Incentive Compensation shall not be considered “earned” by the Executive until the Company hasallocated payment to be made to the Executive for any performance period. Payment under any such IncentiveCompensation Plan shall be made, if at all, after the close of the relevant performance period and by no later thanMarch 15th of the year after the year in which the performance period ends. Notwithstanding anything herein to thecontrary, to the extent permitted or required by governing law, the Compensation Committee shall have discretion toadjust Executive’s compensation for the following year to account for, or to require the Executive to repay to theCompany, the amount of any Incentive Compensation to the extent the Compensation Committee or the Boarddetermines that such Incentive Compensation was not actually earned by the Executive due to %3. the amount ofsuch payment being based on the achievement of financial results that were subsequently the subject of a materialaccounting restatement that occurs within three years of such payment (except in the case of a restatement due to achange in accounting policy or simple error); %3. the Executive having engaged in fraud, gross negligence orintentional misconduct; or %3. the Executive having deliberately misled the market or the Company’s stockholdersregarding the Company’s financial performance.(c) Equity. During the Term, the Executive will be eligible to participate in all long-term equity incentiveprograms made available to other executive officers and that are established by the Company for its employees,including the 2015 Omnibus Incentive Compensation Plan (or a successor thereto), at levels determined by theCompensation Committee in its sole discretion commensurate with the Executive’s position. All equity grants madeto the Executive will vest in accordance with a vesting schedule that is consistent with other grants under the 2015Omnibus Incentive Compensation Plan (or successor plan) and will be subject in all respects to the terms of the 2015Omnibus Incentive Compensation Plan (or successor plan), the agreement evidencing such grant and, to the extentapplicable, Section 9(c)(v), Section 9(c)(vi), Section 10(a)(v) and Section 10(a)(vi).(d) Miscellaneous. The Company shall pay on the Executive’s behalf, or reimburse the Executive for, allfees and expenses relating to %3. New Jersey State Bar licensing and other fees required to be paid in order to bepermitted to practice law in the State of New Jersey; %3. national, state and other bar association and/or committeefees that relate to activities the Executive reasonably believes are necessary and appropriate to undertake relating tothe practice of law; and %3. any fees and expenses required to be paid or incurred in connection with the Executive’ssatisfaction of continuing legal education requirements in the State of New York and the State of New Jersey. Inaddition, to the extent the Executive reasonably believes it becomes necessary for the Executive to become a memberof the Bar of the State of New Jersey, the Company will pay for any course or program the Executive reasonablybelieves is necessary for him to prepare for the New Jersey State bar exam, as well as any bar exam registration orother related fees and expenses.5. Benefits. During the Term, the Executive shall be entitled to participate in any and all benefit programs andarrangements generally made available by the Company to executive officers, including, but not limited to, pension plans,contributory and noncontributory welfare and benefit plans, disability plans and medical, death benefit and life insuranceplans for which the Executive may be eligible during the Term. Furthermore, the Executive shall be permitted that number ofdays of paid time off (“PTO”) during each calendar year as, consistent with Company policy, are provided to similarlysituated employees; however, in no event shall the Executive receive fewer than six weeks of PTO (30 business days). PTOmay be used for vacation, professional enrichment and education. Unused PTO shall accrue from one calendar year toanother consistent with Company policy. In addition, if pursuant to Section 4(d), the Executive believes it is reasonablynecessary for him to prepare for and take the bar exam for the State of New Jersey, the Executive shall have up to four weeksof additional PTO, taken in advance of any such bar exam, during which he shall prepare for any such examination.6. Expenses. During the Executive’s employment, the Executive will be reimbursed for travel, entertainment andother out-of-pocket expenses reasonably incurred by the Executive on behalf of the Company in the performance of theExecutive’s duties hereunder, so long as %2. such expenses are consistent with the type and amount of expenses thatcustomarily would be incurred by similarly situated corporate executives in the United States; and %2. the Executive timelyprovides copies of receipts for expenses in accordance with Company policy.7. Company Policy.(a) The Executive acknowledges that the Executive is subject to insider information policies designed topreclude the Company’s employees from violating the federal securities laws by trading on material, nonpublicinformation or passing such information on to others in breach of any duty owed to the Company or any third party.The Executive shall promptly execute any agreements generally distributed by the Company or to its employeesrequiring employees to abide by the Company’s insider information policies.(b) The Executive has the right under federal law to certain protections for cooperating with or reportinglegal violations to the Securities and Exchange Commission (the “SEC”) and/or its Office of the Whistleblower, aswell as certain other governmental entities and self-regulatory organizations. As such, nothing in this Agreement orotherwise is intended to prohibit the Executive from disclosing this Agreement to, or from cooperating with orreporting violations to, the SEC or any other such governmental entity or self-regulatory organization, and theExecutive may do so without notifying the Company. The Company may not retaliate against the Executive for anyof these activities, and nothing in this Agreement or otherwise would require the Executive to waive any monetaryaward or other payment that the Executive might become entitled to from the SEC or any other governmental entity.Further, nothing in this Agreement or otherwise precludes the Executive from filing a charge of discrimination withthe Equal Employment Opportunity Commission or a like charge or complaint with a state or local fair employmentpractice agency. However, once this Agreement becomes effective, the Executive may not receive a monetary awardor any other form of personal relief in connection with any such charge or complaint that the Executive filed or isfiled on the Executive’s behalf.(c) Notwithstanding any other provision of this Agreement, as provided for in the Defend TradeSecrets Act of 2016 (18 U.S.C. § 1833(b)):(i) The Executive will not be held criminally or civilly liable under any federal orstate trade secret law for any disclosure of a trade secret that:(A) is made: (1) in confidence to a federal, state, or local government official, eitherdirectly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspectedviolation of law; or(B) is made in a complaint or other document that is filed under seal in a lawsuit orother proceeding.(ii) Without limiting the forgoing, if the Executive files a lawsuit for retaliation by theCompany for reporting a suspected violation of law, the Executive may disclose the Company’s trade secretsto the Executive’s attorney and use the trade secret information in the court proceeding if the Executive:(A) files any document containing the trade secret under seal; and(B) does not disclose the trade secret, except pursuant to court order.8. Termination.(a) Disability. In accordance with applicable law, the Company may terminate the Executive’semployment at any time after the Executive becomes Disabled. As used herein, “Disabled” means the incapacity ofthe Executive, on more than 75% of the standard business days (Monday through Friday) over any six-month period,due to injury, illness, disease or bodily or mental infirmity, to engage in the performance of all of the essentialfunctions of his position, in spite of any reasonable accommodation.(b) Death. The Executive’s employment with the Company will terminate upon the death of theExecutive.(c) Termination with Cause. The Company may terminate the Executive’s employment at any time forCause by providing written notice of such termination to the Executive. As used herein, “Cause” means any of thefollowing, as determined by the Board:(i) the Executive’s material breach of this Agreement;(ii) the Executive’s gross negligence (other than as a result of disability or occurring after theExecutive’s provision of notice in connection with a resignation for Good Reason) or willful misconduct incarrying out his duties hereunder, resulting in harm to the Company;(iii) the Executive’s material breach of any of his fiduciary obligations as an officer of theCompany;(iv) any conviction by a court of law of, or entry of a pleading of guilty or nolo contendere bythe Executive with respect to, a felony or any other crime for which fraud or dishonesty is a material element,excluding traffic violations; or(v) the Executive willfully or recklessly engages in conduct which is materially injurious to theCompany, monetarily or otherwise.For purposes of determining Cause, no act or omission by the Executive shall be considered “willful” unless it is done oromitted in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Anyact or failure to act based upon: (a) authority given pursuant to a resolution duly adopted by the Board or (b) advice of counsel for theCompany, shall be conclusively presumed to be done or omitted to be done by the Executive in good faith and in the best interests ofthe Company. In addition, as to subsections (i)-(iii) above, if the action or inaction in question is susceptible of a cure, then no findingof Cause shall occur prior to written notice to the Executive setting forth in reasonable detail the action or inaction at issue, and theExecutive’s failure to cure such condition following a cure period of no less than fifteen days.(d) Termination Without Cause. The Company, at the direction of the Board, may terminate theExecutive’s employment without Cause at any time upon no less than ninety days’ prior written notice or ninetydays’ compensation and benefits pursuant to Section 4 and Section 5, respectively, in lieu of notice.(e) Resignation for Good Reason. The Executive may resign from his employment with the Companyfor Good Reason by providing written notice to the Chief Executive Officer that an event constituting Good Reasonhas occurred and the Executive desires to resign from his employment with the Company as a result. Other thanfollowing a Change in Control, such notice must be provided to the Chief Executive Officer by the Executive within60 days following the initial occurrence of the event constituting Good Reason. For the avoidance of doubt,following a Change in Control, notice from the Executive to the Chief Executive Officer that an event constitutingGood Reason has occurred may be provided by the Executive at any time during the 12-month period following theChange in Control that is referred to in Section 10(a) below. After receipt of such written notice, the Chief ExecutiveOfficer shall have a period of 30 days to cure such event; provided, however, the Chief Executive Officer, may, at hisor her sole option, determine not to cure such event and accept the Executive’s resignation, effective 30 daysfollowing the Chief Executive Officer’s receipt of the Executive’s notice that an event constituting Good Reason hasoccurred. If, in the reasonable judgment of the Executive, the Chief Executive Officer does not cure the eventconstituting Good Reason within the requisite 30-day period, the Executive’s employment with the Company shallterminate on account of Good Reason 30 days following the expiration of the Chief Executive Officer’s cure period,unless the Chief Executive Officer determines to terminate the Executive’s employment prior to such date. As usedherein, “Good Reason” means that, without the Executive’s consent, any of the following has occurred:(i) a material diminution in the Executive’s authority, duties, responsibilities or job title;(ii) a diminution in the Executive’s Base Salary; provided, however, that following theoccurrence of a Change in Control, a diminution in total target compensation opportunity (including adiminution in target Incentive Compensation or a diminution in annual equity grants, in each case ascompared to the corresponding amounts for the fiscal year that immediately precedes the fiscal year in whichan event of Good Reason has occurred, as set forth in a notice to the Board pursuant to Section 8(e)), shallalso constitute “Good Reason”;(iii) a relocation of the Company’s principal offices in Bedminster, New Jersey, or of theExecutive’s principal office (if different), to a location that is not within the New York metropolitan area; or(iv) any action or inaction by the Company that constitutes a material breach by the Companyof its obligations under this Agreement.(f) Resignation without Good Reason. The Executive may resign from his employment with theCompany without Good Reason (as that term is defined in Section 8(e)) at any time upon no less than 90 days’ priorwritten notice to the Chief Executive Officer. Upon such notice of resignation, the Company may, at its sole option,accept the Executive’s resignation effective as of a date prior to the resignation date specified in the notice, and insuch event, the earlier date will be the effective date of termination of the Executive’s employment for all purposeshereunder.9. Compensation Upon Termination Other than in Connection with a Change in Control.(a) Disability. Upon termination of employment pursuant to Section 8(a), the Executive will receive anyBase Salary accrued and unpaid as of such date as well as any accrued but unused PTO and appropriate expensereimbursements. Such amounts will be paid as soon as practicable after the termination of employment. With respectto Incentive Compensation, notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid (A) for any unpaid Incentive Compensationrelating to the fiscal year prior to the fiscal year in which the Executive’s employment is terminated (the“Termination Year”), in accordance with Section 4(b), the Executive will receive any accrued and unpaid IncentiveCompensation for which he is eligible for such prior fiscal year (which amount shall be equal to the actual IncentiveCompensation achieved for such fiscal year), with such amount to be paid in a lump sum as soon as practicable afterthe termination of employment, but not later than 30 days following the date of the Executive’s termination ofemployment and (B) with respect to Incentive Compensation for the Termination Year, the Executive will be eligibleto receive Incentive Compensation calculated as follows: (X) the Pro Rata Ratio (as defined below) times (Y) the sumof (i) for the portion of the Incentive Compensation that would be calculated based on the Company’s achievement ofoperating metrics (such as, without limitation, revenue and EBITDA targets), an amount for such portion of theExecutive’s Incentive Compensation derived from the Company’s achievement of operating metrics calculated basedon the actual operating performance of the Company during the full calendar months in which the Executiveremained employed extrapolated on a linear basis for the full fiscal year (assuming, however, for these purposes,100% achievement of any applicable operating metrics relating to the performance of the Company’s common stockprice), plus (ii) for the portion of the Incentive Compensation that would be calculated based on the Executive’sachievement of personal objectives, an amount for such portion of the Executive’s Incentive Compensation calculatedbased on the assumed achievement by the Executive of 100% of the Executive’s personal objectives, with suchIncentive Compensation being paid in a lump sum at the time that the Incentive Compensation is payable to otherexecutives (it being understood that if the Executive’s target Incentive Compensation has not been determined for theTermination Year, the target Incentive Compensation used to calculate the amount payable to the Executive pursuantto this Section 9(a) will be equal to the Executive’s target Incentive Compensation for the fiscal year immediatelyprior to the Termination Year). In addition, the Company will also pay to the Executive an amount equal to 18months of the Executive’s monthly Base Salary, which shall be paid to the Executive in accordance with theCompany’s normal payroll practices in equal installments over the 12-month period following the Executive’s lastday of employment but not later than 60 days following the date of Executive’s last day of employment with theCompany. The Executive’s Company equity grants (including without limitation stock options, stock units and stockawards) that are outstanding immediately prior to the Executive’s termination of employment shall be treated inaccordance with the applicable grant agreement and the Company’s 2015 Omnibus Incentive Compensation Plan (ora successor plan), subject to the terms of this Agreement. The Company shall have no further obligations under thisAgreement to the Executive. As used herein, the “Pro Rata Ratio” shall mean the number of full calendar months inwhich the Executive was employed during the Termination Year divided by 12.(b) Death. In the event of the Executive’s death, the Executive’s estate will receive any Base Salaryaccrued and unpaid as of such date as well as any accrued but unused PTO and appropriate expense reimbursements.Such amounts will be paid as soon as practicable after the termination of employment. With respect to IncentiveCompensation, notwithstanding any eligibility requirement that the Executive must be employed by the Company asof the date on which the Incentive Compensation is paid (A) for any unpaid Incentive Compensation relating to thefiscal year prior to the Termination Year, in accordance with Section 4(b), the Executive’s estate will receive anyaccrued and unpaid Incentive Compensation for which he is eligible for such prior fiscal year (which amount shall beequal to the actual Incentive Compensation achieved for such fiscal year), with such amount to be paid in a lump sumas soon as practicable after the termination of employment, but not later than 30 days following the date of theExecutive’s termination of employment and (B) with respect to Incentive Compensation for the Termination Year,the Executive’s estate will be eligible to receive Incentive Compensation calculated as follows: (X) the Pro Rata Ratiotimes (Y) the sum of (i) for the portion of the Incentive Compensation that would be calculated based on theCompany’s achievement of operating metrics (such as, without limitation, revenue and EBITDA targets), an amountfor such portion of the Executive’s Incentive Compensation derived from the Company’s achievement of operatingmetrics calculated based on the actual operating performance of the Company during the full calendar months inwhich the Executive remained employed extrapolated on a linear basis for the full fiscal year (assuming, however, forthese purposes, 100% achievement of any applicable operating metrics relating to the performance of the Company’scommon stock price), plus (ii) for the portion of the Incentive Compensation that would be calculated based on theExecutive’s achievement of personal objectives, an amount for such portion of the Executive’s IncentiveCompensation calculated based on the assumed achievement by the Executive of 100% of the Executive’s personalobjectives, with such Incentive Compensation being paid in a lump sum at the time that the Incentive Compensationis payable to other executives (it being understood that if the Executive’s target Incentive Compensation has not beendetermined for the Termination Year, the target Incentive Compensation used to calculate the amount payable to theExecutive pursuant to this Section 9(b) will be equal to the Executive’s target Incentive Compensation for the fiscalyear immediately prior to the Termination Year). In addition, the Company will also pay to the Executive’s estate in alump sum not later than 30 days following the Executive’s last day of employment an amount equal to 18 months ofthe Executive’s monthly Base Salary. The Executive’s Company equity grants (including without limitation stockoptions, stock units and stock awards) that are outstanding immediately prior to the Executive’s death shall be treatedin accordance with the applicable grant agreement and the Company’s 2015 Omnibus Incentive Compensation Plan(or a successor plan), subject to the terms of this Agreement. The Company shall have no further obligations underthis Agreement to the Executive’s estate.(c) Termination without Cause or Resignation with Good Reason Other than in Connection with aChange in Control. If, other than in connection with a Change in Control as defined in Section 10, the Companyterminates the Executive’s employment without Cause pursuant to Section 8(d) or if the Executive resigns for GoodReason pursuant to Section 8(e), the Company will pay the Executive his Base Salary accrued and unpaid as of thedate of termination of employment, as well as any accrued but unused PTO and appropriate expense reimbursements.Such amounts will be paid as soon as practicable after the termination of employment. In addition, subject to theExecutive’s execution and nonrevocation of the general release of claims described in Section 11 below, as well asthe Executive’s compliance with the restrictive covenants set forth in Sections 13 through 16 below, the Companywill also pay and/or provide to the Executive the following:(i) severance in an amount equal to 18 months of the Executive’s monthly Base Salary (the“Severance Amount”), which shall be paid to the Executive in accordance with the Company’s normalpayroll practices in equal installments over the 18-month period following Executive’s last day ofemployment and which shall commence as soon as administratively practicable following the expiration ofthe revocation period for the general release, but not later than 60 days following the date of Executive’s lastday of employment with the Company;(ii) in accordance with Section 4(b), the Executive will receive any accrued and unpaidIncentive Compensation, for which he is eligible for the fiscal year prior to such termination (which amountshall be equal to the actual Incentive Compensation achieved for such fiscal year), with such amount to bepaid in a lump sum as soon as practicable after the termination of employment, but not later than 30 daysfollowing the date of the Executive’s termination of employment;(iii) notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid, if the Executive’s employment isterminated before such date in accordance with Section 8(d) or 8(e), the Executive will be eligible to receiveIncentive Compensation calculated as follows: (X) the Pro Rata Ratio times (Y) the sum of (i) for the portionof the Incentive Compensation that would be calculated based on the Company’s achievement of operatingmetrics (such as, without limitation, revenue and EBITDA targets), an amount for such portion of theExecutive’s Incentive Compensation derived from the Company’s achievement of operating metricscalculated based on the actual operating performance of the Company during the full calendar months inwhich the Executive remained employed extrapolated on a linear basis for the full fiscal year (assuming,however, for these purposes, 100% achievement of any applicable operating metrics relating to theperformance of the Company’s common stock price), plus (ii) for the portion of the Incentive Compensationthat would be calculated based on the Executive’s achievement of personal objectives, an amount for suchportion of the Executive’s Incentive Compensation calculated based on the assumed achievement by theExecutive of 100% of the Executive’s personal objectives, with such Incentive Compensation being paid in alump sum at the time that the Incentive Compensation is payable to other executives (it being understood thatif the Executive’s target Incentive Compensation has not been determined for the Termination Year, thetarget Incentive Compensation used to calculate the amount payable to the Executive pursuant to this Section9(c)(iii) will be equal to the Executive’s target Incentive Compensation for the fiscal year immediately priorto the Termination Year);(iv) an amount equal to one and a half (1.5) times the Executive’s aggregate IncentiveCompensation for the Termination Year assuming (A) achievement by the Company of 100% of anyapplicable operating metrics (such as, without limitation, revenue, EBITDA and stock performance targets)and (B) achievement by the Executive of 100% of the Executive’s personal objectives (it being understoodthat if the Executive’s target Incentive Compensation has not been determined for the Termination Year, theExecutive’s target Incentive Compensation for the fiscal year immediately prior to the Termination Year shallbe used), which shall be paid to the Executive in accordance with the Company’s normal payroll practices inequal installments over the 12-month period following Executive’s last day of employment and which shallcommence as soon as administratively practicable following the expiration of the revocation period for thegeneral release, but not later than 60 days following the date of Executive’s last day of employment with theCompany;(v) notwithstanding any provision to the contrary in any applicable grant agreement or theCompany’s 2015 Omnibus Incentive Compensation Plan (or a successor plan), all shares subject toCompany equity grants (including without limitation stock options, stock units and stock awards) that vestsolely on the Executive’s continued employment with the Company for a specified period of time held by theExecutive at the time of his termination date that would have vested from the date of grant through the end ofthe 18-month period following the Executive’s termination date if the vesting schedule for such grants werebased on a monthly vesting schedule, as opposed to the vesting schedule set forth in his grant agreement,shall immediately vest in full and/or become immediately exercisable or payable on the Executive’stermination date (examples of the vesting described in this clause (v) are included on Schedule solely 1 forillustrative purposes);(vi) notwithstanding any provision to the contrary in any applicable grant agreement or theCompany’s 2015 Omnibus Incentive Compensation Plan (or a successor plan), all shares subject toCompany equity grants (including without limitation stock options, stock units and stock awards) that vest inwhole or in part based on the satisfaction of performance-based or market-based conditions held by theExecutive at the time of his termination date shall be treated as follows:(A) the number of shares subject to each such outstanding grant (the “Grant Amount”)shall be determined in accordance with the terms of the applicable grant agreement, and by applying thefollowing performance assumptions to the target grant amount specified therein:(1) if such termination occurs prior to the end of theapplicable measurement period for such performance-based or market-based conditions, such conditions willbe deemed to have been satisfied based on achievement of 100% of target performance; and(2) if such termination occurs after the end ofthe applicable measurement period for such performance-based or market-based conditions, such conditionswill be deemed to have been satisfied based on the Company’s actual performance relative to suchconditions;(B) each such outstanding grant that would have vested from the date of grant throughthe end of the 18-month period following the Executive’s termination date if the vesting schedule for theapplicable Grant Amount were based on a monthly vesting schedule, as opposed to the vesting schedule setforth in his grant agreement, shall immediately vest in full and/or become immediately exercisable or payableon the Executive’s termination date (examples of the vesting described in this clause (vi) are included onSchedule 1 solely for illustrative purposes); and(vii) to the extent permitted under applicable law, the Company will provide continued healthbenefits to the Executive at the same premium rates charged to other then current employees of the Company,or, at its option, waive that portion of the cost for COBRA continuation coverage that is in excess of whatthen current employees of the Company pay for health benefits under the Company’s plan, for the 18-monthperiod following his termination of employment, unless the Executive is eligible to be covered by healthinsurance provided by a future employer.(d) Termination with Cause and Resignation without Good Reason. If the Company terminates theExecutive’s employment with Cause pursuant to Section 8(c), if the Executive resigns without Good Reasonpursuant to Section 8(f), or if the Executive is entitled to the severance benefits pursuant to Section 9(c) or Section10(a) and either does not execute or revokes the general release of claims required pursuant to Section 11, or is inmaterial breach of any of the covenants set forth in Section 13, 14, 15, 16 or 17 below, the Company will pay theExecutive his Base Salary accrued and unpaid as of the date of termination of employment as well as any accrued butunused PTO and appropriate expense reimbursements. Such amounts will be paid as soon as practicable after thetermination of employment and, following such payments, the Company shall have no further obligations under thisAgreement to the Executive.(e) Nonrenewal of This Agreement. If the Company provides written notice of nonrenewal of thisAgreement in accordance with Section 1 herein, the Executive’s termination of employment in connection with theCompany’s nonenewal of this Agreement shall be deemed to be a termination of the Executive’s employment by theCompany without Cause and the Executive shall be eligible for the payments and severance benefits set forth inSection 9(c) herein, subject to the provisions of Section 9(c).10. Change in Control.(a) Termination without Cause or Resignation with Good Reason in Connection with a Change inControl. If, on or within 12 months after a Change in Control, and whether or not this Agreement was not renewed inaccordance with Section 1 herein, the Company or its successor terminates the Executive’s employment withoutCause pursuant to Section 8(d) or if the Executive resigns for Good Reason pursuant to Section 8(e), the Executive isentitled to his Base Salary accrued and unpaid as of the date of termination of employment as well as any accrued butunused PTO and appropriate expense reimbursements. Such amounts will be paid as soon as practicable after thetermination of employment. In addition, subject to the Executive’s execution and nonrevocation of the general releaseof claims described in Section 11 below, as well as the Executive’s compliance with the restrictive covenants set forthin Sections 13 through 16 below, the Executive shall be entitled to the following:(i) severance in an amount equal to 24 months of the Executive’s monthly Base Salary (the“Change in Control Severance Amount”), which shall be paid to the Executive in a lump sum as soon asadministratively practicable following the expiration of the revocation period for the general release, but notlater than 60 days following the date of the Executive’s last day of employment with the Company;(ii) in accordance with Section 4(b), the Executive will receive any accrued and unpaidIncentive Compensation, for which he is eligible, for the fiscal year prior to such termination (which amountshall be equal to the actual Incentive Compensation achieved for such fiscal year; provided, however, that if aChange in Control occurs during the fiscal year prior to such Termination Year, the Incentive Compensationto which the Executive shall be entitled with respect to the fiscal year prior to the Termination Year shallequal the target Incentive Compensation for such fiscal year), with such amount to be paid in a lump sum assoon as practicable after the termination of employment with the Company, but not later than 30 daysfollowing the date of the Executive’s termination of employment;(iii) notwithstanding any eligibility requirement that the Executive must be employed by theCompany as of the date on which the Incentive Compensation is paid, the Executive will be eligible toreceive Incentive Compensation calculated as follows: (A) if the Executive’s employment is terminated on orprior to July 31 of the Termination Year, (X) the Pro Rata Ratio times (Y) the Executive’s target IncentiveCompensation for the applicable period, or (B) if the Executive’s employment is terminated after July 31 ofthe Termination Year, the Pro Rata Ratio times the greater of (1) the Executive’s target IncentiveCompensation for such fiscal year or (2) the sum of (i) for the portion of the Incentive Compensation thatwould be calculated based on the Company’s achievement of operating metrics (such as, without limitation,revenue and EBITDA targets), an amount for such portion of the Executive’s Incentive Compensationderived from the Company’s achievement of operating metrics calculated based on the actual operatingperformance of the Company during the full calendar months in which the Executive remained employedextrapolated on a linear basis for the full fiscal year (assuming, however, for these purposes, 100%achievement of any applicable operating metrics relating to the performance of the Company’s commonstock price), plus (ii) for the portion of the Incentive Compensation that would be calculated based on theExecutive’s achievement of personal objectives, an amount for such portion of the Executive’s IncentiveCompensation calculated based on the assumed achievement by the Executive of 100% of the Executive’spersonal objectives (it being understood, in each case, that if Executive’s target Incentive Compensation hasnot been determined for the Termination Year, the target Incentive Compensation used to calculate theamount payable to the Executive pursuant to this Section 10(a)(iii) will be equal to the Executive’s targetIncentive Compensation for the fiscal year immediately prior to the Termination Year), with such pro rataIncentive Compensation being paid in a lump sum as soon as administratively practicable following theexpiration of the revocation period for the general release, but not later than 60 days following the date of theExecutive’s last day of employment with the Company;(iv) an amount equal to two times the Executive’s aggregate target Incentive Compensation forthe Termination Year (it being understood that if such target Incentive Compensation has not beendetermined for the Termination Year, the Executive’s target Incentive Compensation for the fiscal yearimmediately prior to the Termination Year shall be used), with such amount to be paid in a lump sum as soonas administratively practicable following the expiration of the revocation period for the general release, butnot later than 60 days following the date of the Executive’s last day of employment with the Company;(v) notwithstanding any provision to the contrary in any applicable grant agreement or theCompany’s 2015 Omnibus Incentive Compensation Plan (or a successor plan), any and all shares subject toCompany equity grants (including without limitation stock options, stock units and stock awards) that did notvest effective as of the Change in Control and continue to vest solely on the Executive’s continuedemployment with the Company for a specified period of time held by the Executive at the time of histermination shall immediately vest in full and/or become immediately exercisable or payable on theExecutive’s termination date;(vi) notwithstanding any provision to the contrary in any applicable grant agreement or theCompany’s 2015 Omnibus Incentive Compensation Plan (or a successor plan), any and all shares subject toCompany equity grants (including without limitation stock options, stock units and stock awards) that did notvest effective as of the Change in Control and continue to vest in whole or in part based on the satisfaction ofperformance-based or market-based conditions held by the Executive at the time of his termination shall betreated as follows:(A) the Grant Amount shall be determined in accordance with the terms of theapplicable grant agreement, and by applying the following performance assumptions to the target grantamount specified therein:(1) if the Change in Control and such termination each occur prior to the end ofthe applicable measurement period for such performance-based or market-based conditions, such conditionswill be deemed to have been satisfied based on achievement of 100% of target performance;(2) if the Change in Control occurs prior to the end of the applicableperformance measurement period for such performance-based or market-based conditions and thetermination occurs after the end of such measurement period, such conditions will be deemed to have beensatisfied based on the greater of (1) the achievement of 100% of target performance or (2) the Company’sactual performance relative to such conditions; and(3) if the Change in Control and such termination each occur after the end of theapplicable measurement period for such performance-based or market-based conditions, such conditions willbe deemed to have been satisfied based on the Company’s actual performance relative to such conditions;(B) notwithstanding the vesting schedule set forth in his grant agreement, theapplicable Grant Amount shall immediately vest in full and/or become immediately exercisable or payableon the Executive’s termination date; and(vii) to the extent permitted under applicable law, the Company will provide continued healthbenefits to the Executive at the same premium rates charged to other then current employees of the Company,or at its option, waive that portion of the cost for COBRA continuation coverage that is in excess of whatthen current employees of the Company pay for health benefits under the Company’s plan, for the 24-monthperiod following his termination of employment, unless the Executive is eligible to be covered by healthinsurance provided by a future employer.(b) For the avoidance of doubt, Section 9(c)(v), Section 9(c)(vi), Section 10(a)(v), Section 10(a)(vi) andthe provisions in the Company's 2015 Omnibus Incentive Compensation Plan (or successor or predecessor equitycompensation plans, as applicable) relating to the acceleration of vesting of equity awards in the event of a Change inControl shall apply to any equity awards held by the Executive; it being understood that, in the event of a Change inControl, any equity award held by the Executive other than a stock option or a stock appreciation right (which shallbe subject to the terms of the applicable equity compensation plan and award agreement thereunder) may not becancelled without a cash payment to the Executive in an amount equal to the Fair Market Value (as defined in the2015 Omnibus Incentive Compensation Plan) of the shares of Company Stock underlying such cancelled equityaward or a grant to the Executive of an equity award of the surviving corporation (or a parent or subsidiary of thesurviving corporation) of equal value.(c) If there is a dispute as to whether grounds triggering termination with or without Cause or resignationwith or without Good Reason have occurred, in each case in connection with a Change in Control, and Executiveprevails in his claim that his termination constituted a termination without Cause or a resignation with Good Reason,then any fees and expenses arising from the resolution of such dispute (including any reasonably incurred attorneys’fees and expenses of Executive) shall be paid by the Company or its successor, as the case may be.(d) For purposes of this Agreement, “Change in Control” means a (i) Change in Ownership of theCompany, (ii) Change in Effective Control of the Company, (iii) Change in the Ownership of Assets of theCompany, in the case of each of clauses (i), (ii) and (iii), as described herein and construed in accordance withSection 409A of the Internal Revenue Code of 1986, as amended, and the regulations and Treasury guidance issuedthereunder (the “Code”), or (iv) a liquidation or dissolution of the Company; except that no Change in Control shallbe deemed to occur as a result of a change of ownership resulting from the death of a stockholder or a transaction inwhich the Company becomes a subsidiary of another corporation and in which the stockholders of the Company,immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling suchstockholders to more than 50% of all votes to which all stockholders of the parent corporation would be entitled in theelection of directors (without consideration of the rights of any class of stock to elect directors by a separate classvote).(i) A “Change in Ownership of the Company” shall occur on the date that any one Personacquires, or Persons Acting as a Group acquire, ownership of the capital stock of the Company that, togetherwith the stock previously held by such Person or Group, constitutes more than 50% of the total fair marketvalue or total voting power of the capital stock of the Company. However, if any one Person is, or PersonsActing as a Group are, considered to own more than 50% of the total fair market value or total voting powerof the capital stock of the Company, the acquisition of additional stock by the same Person or Persons Actingas a Group is not considered to cause a Change in Ownership of the Company or to cause a Change inEffective Control of the Company (as described below). An increase in the percentage of capital stockowned by any one Person, or Persons Acting as a Group, as a result of a transaction in which the Companyacquires its stock in exchange for property will be treated as an acquisition of stock.(ii) A “Change in Effective Control of the Company” shall occur if in any 12-month period, (A)a Person, or Persons Acting as a Group, acquires ownership of capital stock of the Company possessing 30%or more of the total voting power of the capital stock of the Company, or (B) a majority of the members ofthe Board are not Continuing Directors. “Continuing Directors” means, as of any date of determination, anymember of the Board who (1) was a member of the Board on the Original Effective Date or (2) wasnominated for election, elected or appointed to the Board with the approval of a majority of the ContinuingDirectors who were members of the Board at the time of such nomination, election or appointment (either bya specific vote or by approval of the Company’s proxy statement in which such member was named as anominee for election as a director, without objection to such nomination).(iii) A “Change in the Ownership of Assets of the Company” shall occur on the date that anyone Person acquires, or Persons Acting as a Group acquire (or has or have acquired during the 12-monthperiod ending on the date of the most recent acquisition by such Person or Persons), assets from theCompany that have a total gross fair market value equal to or more than 40% of the total gross fair marketvalue of all of the assets of the Company immediately before such acquisition or acquisitions. For thispurpose, “gross fair market value” means the value of the assets of the Company, or the value of the assetsbeing disposed of, determined without regard to any liabilities associated with such assets.(iv) The following rules of construction apply in interpreting the definition of Change inControl:(a) A “Person” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder, otherthan employee benefit plans sponsored or maintained by the Company and by entities controlled by the Company or anunderwriter of the capital stock of the Company in a registered public offering.(b) Persons will be considered to be “Persons Acting as a Group” (or “Group”) if (i) they are considered to be actingas a group within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act and the rules and regulationsthereunder or (ii) they are owners of a corporation or other entity that enters into a merger, consolidation, purchase oracquisition of stock, or similar business transaction with the Company. If a Person owns stock in both corporations thatenter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder isconsidered to be acting as a Group with other shareholders only with respect to the ownership in that corporation beforethe transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Personswill not be considered to be acting as a Group solely because they purchase assets of the same corporation at the sametime or purchase or own stock of the same corporation at the same time, or as a result of the same public offering.(c) For purposes of the definition of Change in Control, “fair market value” shall be determined by the Board.(d) A Change in Control shall not include a transfer to a related person as described in Code Section 409A or a publicoffering of capital stock of the Company.(e) For purposes of the definition of Change in Control, Code Section 318(a) applies to determine stock ownership.Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stockunderlying an unvested option is not considered owned by the individual who holds the unvested option). For purposesof the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as definedby Treas. Reg. § 1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holdsthe option.11. Release of Claims. As a condition for the payments of the Severance Amount or the Change in ControlSeverance Amount and Incentive Compensation provided in Section 9(c) or Section 10(a), as well as the acceleration ofequity vesting and continuation of health benefits provided pursuant to such sections of this Agreement, the Executive mustexecute a general release of all claims (including claims under local, state and federal laws, but excluding claims for paymentdue under Section 9(c) or Section 10(a) and subject to Section 7(b) and (c)) that the Executive has or may have against theCompany and current and former related individuals or entities (the “Release”). The Release shall be in a form reasonablyacceptable to the Company, and shall include confidentiality, cooperation, and non-disparagement provisions, as well asother terms requested by the Company that are typical of an executive severance agreement. The consideration provided forin Section 9(c) or Section 10(a) is conditioned upon and will not be paid (or be provided) until the execution of the Releaseand the expiration of any revocation period; provided that notwithstanding any provision of this Agreement to the contrary,in no event shall the timing of the Executive’s execution of the Release, directly or indirectly, result in the Executivedesignating the calendar year of payment, and if a payment that is subject to execution of the Release could be made in morethan one taxable year, payment shall be made in the later taxable year. The Company shall provide the Release to theExecutive by no later than 10 days after the Executive terminates employment with the Company, and the Executive shallexecute the Release during the statutory time period specified by applicable law. If the Release is not executed during thestatutory time period specified by applicable law, the Company’s obligation to pay any Severance Amount, Change inControl Severance Amount or Incentive Compensation and to provide any acceleration of vesting and continued healthbenefits provided for in Section 9(c) or Section 10(a) pursuant to this Agreement shall terminate.12. Section 280G Contingent Cutback. The Executive shall bear all expense of, and be solely responsible for, allfederal, state, local or foreign taxes due with respect to any payment received under this Agreement, including, withoutlimitation, any excise tax imposed by Code Section 4999. Notwithstanding anything to the contrary in this Agreement, in theevent that any payment or benefit received or to be received by the Executive pursuant to the terms of this Agreement or inconnection with the Executive’s termination of employment or contingent upon a Change in Control pursuant to any plan orarrangement or other agreement with the Company or any affiliate (collectively, the “Payments”) would be subject to theexcise tax imposed by Code Section 4999, as determined by the Company, then the Payments shall be reduced to the extentnecessary to prevent any portion of the Payments from becoming nondeductible by the Company under Code Section 280Gor subject to the excise tax imposed under Code Section 4999, but only if, by reason of that reduction, the net after-taxbenefit received by the Executive exceeds the net after-tax benefit the Executive would receive if no reduction was made.For this purpose, “net after-tax benefit” means %3. the total of all Payments that would constitute “excess parachutepayments” within the meaning of Code Section 280G, less %3. the amount of all federal, state, and local income taxespayable with respect to the Payments calculated at the maximum marginal income tax rate for each year in which thePayments shall be paid to the Executive (based on the rate in effect for that year as set forth in the Code as in effect at thetime of the first payment of the Payments), less %3. the amount of excise taxes imposed on the Payments described in clause(i) above by Code Section 4999. If, pursuant to this Section 12, Payments are to be reduced, the parties shall determinewhich Payments shall be reduced in a manner so as to avoid the imposition of additional taxes under Code Section 409A.13. Confidentiality; Return of Company Property.(a) The Executive acknowledges that, by reason of Executive’s employment by the Company, Executivewill have access to confidential information of the Company, including without limitation information and knowledgepertaining to products, inventions, discoveries, improvements, innovations, designs, ideas, trade secrets, proprietaryinformation, business strategies, packaging, advertising, marketing, distribution and sales methods, sales and profitfigures, employees, customers and clients, and relationships between the Company and its business partners,including dealers, traders, distributors, sales representatives, wholesalers, customers, clients, suppliers and others whohave business dealings with them (“Confidential Information”). The Executive acknowledges that suchConfidential Information is a valuable and unique asset of the Company and covenants that, both during and after theTerm, subject to Section 7, Executive will not disclose any Confidential Information to any person or entity, except asthe Executive’s duties as an employee of the Company may require, without the prior written authorization of theBoard. The obligation of confidentiality imposed by this Section 13 shall not apply to Confidential Information thatotherwise becomes generally known to the public through no act of the Executive in breach of this Agreement or anyother party in violation of an existing confidentiality agreement with the Company, or which is required to bedisclosed by court order or applicable law.(b) All records, designs, patents, business plans, financial statements, manuals, memoranda, lists,research and development plans and products, and other property delivered to or compiled by the Executive by or onbehalf of the Company or its vendors or customers that pertain to the business of the Company shall be and remainthe property of the Company, and be subject at all times to its discretion and control. Likewise, all property, includingwithout limitation all documents, whether in computer or hard copy form, that Executive creates or receives duringand as a result of his employment by the Company, shall be returned to the Company upon request and at the end ofthe Executive’s employment.14. Non-Competition. While the Executive is employed at the Company and for a period of 12 months after thetermination of his employment with the Company for any reason, other than following termination without Cause orresignation for Good Reason after a Change in Control, pursuant to Section 10, in which case such period shall be sixmonths (as applicable, the “Restricted Period”), the Executive will not, directly or indirectly, own, maintain, finance,operate, engage in, assist, be employed by, contract with, license, or have any interest in, or association with, a business orenterprise primarily engaged in or planning to be primarily engaged in, the Internet-based trading of foreign exchange orCFDs.15. Solicitation of Clients. During the Restricted Period, the Executive shall not, directly or indirectly, includingthrough any other person or entity, seek business from any Client on behalf of any enterprise or business other than theCompany, refer business generated from any Client to any enterprise or business other than the Company, or receivecommissions based on sales or otherwise relating to the business from any Client, enterprise or business other than theCompany, provided that such solicitation, if successful, would have an adverse effect on the Company. For purposes of thisAgreement, “Client” means any person, firm, corporation, limited liability company, partnership, association or other entity%3. to which the Company sold or provided services during the 12-month period prior to the time at which anydetermination is required to be made as to whether any such person, firm, corporation, partnership, association or other entityis a Client or %3. who or which has been approached by an employee of the Company for the purpose of soliciting businessfor the Company and which business was reasonably expected to generate revenue in excess of $100,000 per annum.16. Solicitation of Employees. During the Restricted Period, the Executive, directly or indirectly, shall not contactor solicit any employee of the Company for the purpose of hiring them or causing them to terminate their employmentrelationship with the Company.17. Inventions, Ideas, Processes and Designs. All inventions, ideas, processes, programs, software and designs(including all improvements) conceived or made by the Executive during his employment with the Company (whether or notactually conceived during regular business hours) and related to the business of the Company, or the business approved bythe Board to be engaged in by the Company, shall be disclosed in writing promptly to the Company and shall be the sole andexclusive property of the Company. An invention, idea, process, program, software or design (including an improvement)shall be deemed related to the actual or approved business of the Company if it (x) was made with the Company’sequipment, supplies, facilities, or Confidential Information, (y) results from work performed by the Executive for theCompany, or (z) pertains to the current business or demonstrably anticipated research or development work of the Company.The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications forsuch developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to theCompany. The decision to file for patent or copyright protection or to maintain such development as a trade secret shall be inthe sole discretion of the Company, and the Executive shall be bound by such decision.18. Specific Performance/Remedies. The Executive acknowledges that the services to be rendered by theExecutive are of a special, unique and extraordinary character and, in connection with such services, the Executive will haveaccess to Confidential Information vital to the Company’s business. The Executive further agrees that the covenantscontained in Sections 13, 14, 15, 16 and 17 are reasonable and necessary to protect the legitimate business interests of theCompany. By reason of this, the Executive consents and agrees that if the Executive violates any of the provisions ofSections 13, 14, 15, 16 and 17 hereof, the Company would sustain irreparable injury and that monetary damages would notprovide adequate remedy to the Company. The Executive hereby agrees that the Company shall be entitled to have Sections13, 14, 15, 16 and 17 hereof specifically enforced (including, without limitation, by injunctions and restraining orders) byany court in the State of New Jersey having equity jurisdiction and agrees to be subject to the jurisdiction of said court. As afurther and nonexclusive remedy, the Executive understands that a breach of the covenants contained in Sections 13, 14, 15,16 and 17 above that causes material harm to the Company as reasonably determined by the Board (which determinationshall be binding and final) shall eliminate the Executive’s entitlement to any further payment of the Severance Amount,Change in Control Severance Amount, Incentive Compensation, acceleration of equity vesting of equity grants andcontinued health benefits provided for in Section 9(c) or Section 10(a), and the Executive shall be required to return any suchamounts that relate to the period of noncompliance during the Restricted Period in the event of such a breach (including,without limitation, the amount of any gain realized by the Executive upon the acceleration of equity vesting of equity grants).Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available to it forsuch breach or threatened breach, including the recovery of damages from the Executive.19. Complete Agreement. This Agreement embodies the entire agreement of the parties with respect to theExecutive’s employment, compensation, benefits and related items and supersedes any other prior oral or written agreements,arrangements or understandings between the Executive and the Company including without limitation that certainEmployment Agreement entered into as of April 13, 2012, by and between the Executive and the Company, and that certainEmployment Agreement entered into as of May 5, 2015, by and between the Executive and the Company, other than theCompany’s 2015 Omnibus Incentive Compensation Plan and the award agreements reflecting outstanding equity awardsheld by the Executive as of the date of this Agreement, each of which shall continue to control such equity awards except asexpressly modified by this Agreement. This Agreement may not be changed or terminated orally but only by an agreement inwriting signed by the parties hereto.20. Waiver. The waiver by either party of a breach of any provision of this Agreement by the other party shall notoperate or be construed as a waiver of any subsequent breach by such party.21. Governing Law; Assignability.(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State ofNew Jersey without reference to the choice of law provisions thereof.(b) The Executive may not, without the Company’s prior written consent, delegate, assign, transfer,convey, pledge, encumber or otherwise dispose of this Agreement or any interest herein. Any such attempt shall benull and void and without effect. The Company and the Executive agree that this Agreement and all of theCompany’s rights and obligations hereunder may be assigned or transferred by the Company and shall be assumedby and be binding upon any successor to the Company.22. Severability. If any provision of this Agreement or any part thereof, including, without limitation, Section 13,14, 15, 16 or 17, as applied to either party or to any circumstances shall be adjudged by a court of competent jurisdiction tobe void or unenforceable, the same shall in no way affect any other provision of this Agreement or remaining parts thereof,which shall be given full effect without regard to the invalid or unenforceable part thereof, or the validity or enforceability ofthis Agreement. In the event an arbitrator or court of competent jurisdiction deems the restrictive covenants unreasonablylengthy in time or overly broad in scope, it is the intention and agreement of the parties that those provisions which are notfully enforceable be deemed as having been modified to the extent necessary to render them reasonable and enforceable andthat they be enforced to such extent.23. Notices. All notices to the Company or the Executive, permitted or required hereunder, shall be in writing andshall be delivered personally, by telecopier or by courier service providing for next-day delivery or sent by registered orcertified mail, return receipt requested, to the following addresses:If to the Company:GAIN Capital Holdings, Inc. Bedminster One 135 Route 202/206 Bedminster, New Jersey 07921 Attention: Chief Executive OfficerIf to the Executive, to:Diego Rotsztain c/o GAIN Capital Holdings, Inc. Bedminster One 135 Route 202/206 Bedminster, New Jersey 07921 Either party may change the address to which notices shall be sent by sending written notice of such change of address to theother party. Any such notice shall be deemed given, if delivered personally, upon receipt; if telecopied, when telecopied; if sentby courier service providing for next-day delivery, the next business day following deposit with such courier service; and ifsent by certified or registered mail, three days after deposit (postage prepaid) with the U.S. mail service.24. Section 409A.(a) This Agreement shall be interpreted to avoid the imposition of any additional taxes under CodeSection 409A. If any payment or benefit cannot be provided or made at the time specified herein without incurringadditional taxes under Code Section 409A, then such benefit or payment shall be provided in full at the earliest timethereafter when such sanctions will not be imposed. The preceding provisions, however, shall not be construed as aguarantee by the Company of any particular tax effect to the Executive under this Agreement. For purposes of CodeSection 409A, each payment under this Agreement shall be treated as a separate payment and the right to a series ofinstallment payments under this Agreement shall be treated as a right to a series of separate payments. In no eventmay the Executive, directly or indirectly, designate the calendar year of payment.(b) To the maximum extent permitted under Code Section 409A, the cash severance payments payableunder this Agreement are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-l(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg.§1.409A-l(b)(9)(iii) or any successor provision; provided, however, any amount payable to the Executive during thesix-month period following the Executive’s termination date that does not qualify within either of the foregoingexceptions and is deemed as deferred compensation subject to the requirements of Code Section 409A, then suchamount shall hereinafter be referred to as the “Excess Amount.” If the Executive is a “key employee” of a publiclytraded corporation under Section 409A at the time of his separation from service and if payment of the ExcessAmount under this Agreement is required to be delayed for a period of six months after separation from servicepursuant to Code Section 409A, then notwithstanding anything in this Agreement to the contrary, payment of suchamount shall be delayed as required by Code Section 409A, and the accumulated postponed amount shall be paid ina lump sum payment within 10 days after the end of the six-month period. If the Executive dies during thepostponement period prior to the payment of the postponed amount, the amounts withheld on account of Section409A shall be paid to the personal representative of the Executive’s estate within 60 days after the date of theExecutive’s death. A “key employee” shall mean an employee who, at any time during the 12-month period endingon the identification date, is a “specified employee” under Code Section 409A, as determined by the Board, in its solediscretion. The determination of key employees, including the number and identity of persons considered keyemployees and the identification date, shall be made by the Board in accordance with the provisions of Code Sections416(i) and 409A.(c) To the extent the Executive is, at the time of his termination of employment under this Agreement,participating in one or more deferred compensation arrangements subject to Code Section 409A, the payments andbenefits provided under those arrangements shall continue to be governed by, and to become due and payable inaccordance with, the specific terms and conditions of those arrangements, and nothing in this Agreement shall bedeemed to modify or alter those terms and conditions.(d) “Termination of employment,” “resignation,” or words of similar import, as used in thisAgreement means, for purposes of any payments under this Agreement that are payments of deferred compensationsubject to Code Section 409A, the Executive’s “separation from service” as defined in Code Section 409A.(e) Nothing herein shall be construed as having modified the time and form of payment of any amountsor payments of “deferred compensation” (as defined under Treas. Reg. § 1.409A-l(b)(l), after giving effect to theexemptions in Treas. Reg. §§ 1.409A-l(b)(3) through (b)(12)) that were otherwise payable pursuant to the terms ofany agreement between Company and the Executive in effect on or after January 1, 2005 and prior to the date of thisAgreement.(f) All reimbursements provided under this Agreement shall be made or provided in accordance with therequirements of Code Section 409A, including, where applicable, the requirement that %3. any reimbursement is forexpenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement),%3. the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible forreimbursement in any other calendar year, %3. the reimbursement of an eligible expense will be made on or beforethe last day of the calendar year following the year in which the expense is incurred and %3. the right toreimbursement is not subject to liquidation or exchange for another benefit.25. Withholding of Taxes and Other Employee Deductions. The Company may withhold from any benefits andpayments made pursuant to this Agreement (whether actually or constructively made to the Executive or treated as includedin the Executive’s income under Section 409A of the Code) all federal, state, city, foreign and other applicable taxes andwithholdings as may be required pursuant to any law or governmental regulation or ruling and all other customary deductionsmade with respect to the Company’s employees generally.26. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemedan original, and all of which taken together shall constitute one and the same instrument.27. Separation. All covenants that, by their terms, naturally would survive the termination or expiration of thisAgreement, including but not limited to Sections 11, 12, 13, 14 and 15 hereof, shall survive the termination or expiration ofthis Agreement.IN WITNESS WHEREOF, the parties hereto have duly executed this Employment Agreement as of the date first above written.GAIN CAPITAL HOLDINGS, INC.By:/s/ Glenn H. Stevens Name: Glenn H. Stevens Title: President and Chief ExecutiveOfficer/s/ Diego RotsztainDiego RotsztainSchedule IIllustration of Vesting Pursuant to Section 9(c)(v):Example 1Grant Date: March 15, 2018Grant Amount: 36,000 time based restricted stock unitsVesting Schedule: Three years (1/3 on each anniversary of grant date)Termination Date: June 15, 2018Total Vested: 21,000Step 1: Convert vesting to a monthly schedule36,000 units ÷ 36 months = 1,000 units per monthStep 2: Calculate vesting from grant date through 18-months following termination3 months + 18 months = 21 months; 21 months x 1,000 units per month = 21,000Example 2Grant Date: March 15, 2018Grant Amount: 36,000 time based restricted stock unitsVesting Schedule: Three years (1/3 on each anniversary of grant date)Termination Date: May 15, 2019Total Vested:32,000 (12,000 of which would have vested in the ordinary course on March 15, 2019 and 20,000 ofwhich accelerate in connection with the termination on May 15, 2019)Step 1: Convert vesting to a monthly schedule36,000 units ÷ 36 months = 1,000 units per monthStep 2: Calculate vesting from grant date through 18-months following termination14 months + 18 months = 32 months; 32 months x 1,000 units per month = 32,000Illustration of Vesting Pursuant to Section 9(c)(vi):Example 1Grant Date: March 15, 2018Target Grant Amount: 36,000 performance based restricted stock unitsMeasurement Period: Fiscal years 2018 and 2109Performance Adjustment:Target grant amount multiplied by % of performance target achievedVesting Schedule: Three years (2/3 on 2nd anniversary of grant date, 1/3 on 3rd anniversary)Termination Date: June 15, 2018Total Vested: 21,000Step 1: Identify Grant AmountTermination before end of applicable measurement period results in deemed achievement of 100% of target performance36,000 units x 100% achievement = 36,000 unitsStep 2: Convert vesting to a monthly schedule36,000 units ÷ 36 months = 1,000 units per monthStep 3: Calculate vesting from grant date through 18-months following termination3 months + 18 months = 21 months; 21 months x 1,000 units per month = 21,000Example 2Grant Date: March 15, 2018Target Grant Amount: 36,000 performance based restricted stock unitsMeasurement Period: Fiscal years 2018 and 2109Performance Adjustment:Target grant amount multiplied by % of performance target achievedVesting Schedule: Three year (2/3 on 2nd anniversary of grant date, 1/3 on 3rd anniversary)Termination Date: May 15, 2020Total Vested:28,800 (19,296 of which would have vested in the ordinary course on March 15, 2020 and 9,504 ofwhich accelerate in connection with the termination on May 15, 2020) Step 1: Identify Grant AmountTermination after end of applicable measurement period results in calculation based on actual performance (assume 80%achievement for purposes of this example)36,000 units x 80% achievement = 28,800 unitsStep 2: Convert vesting to a monthly schedule28,800 units ÷ 36 months = 800 units per monthStep 3: Calculate vesting from grant date through 18-months following termination26 months + remaining 10 months = 36 months; 36 months x 800 units per month = 28,800 Exhibit 21.1List of SubsidiariesEntity NameJurisdiction of IncorporationGAIN Capital Holdings Ltd.England and WalesGAIN Capital UK LimitedEngland and WalesGAIN Capital Australia Pty. Ltd.AustraliaGAIN Capital Singapore Pte. Ltd.SingaporeGCAM, LLCDelawareGAIN Holdings, LLCDelawareGAIN Capital Group, LLCDelawareS.L. Bruce Financial CorporationOhioGAIN Capital Securities, Inc.DelawareGAIN Capital Holdings International, LLCDelawareGAIN Global Markets, Inc.Cayman IslandsIsland Traders (Cayman), LimitedCayman IslandsGAIN Capital-Forex.com Hong Kong, Ltd.Hong KongGAIN Capital Japan Co., Ltd.JapanGAIN Capital-Forex.com U.K., Ltd.England and WalesGAIN Capital-Forex.com Canada, Ltd.CanadaGAIN GTX, LLCDelawareGAIN GTX, Singapore Pte. Ltd.SingaporeGAIN Capital Holdings International, B.V.The NetherlandsGAIN Capital International Finance Company, B.V.The NetherlandsGAIN Capital GTX International, B.V.The NetherlandsGAIN Capital – Forex.com International, B.V.The NetherlandsGAIN Global Markets International, B.V.The NetherlandsGAIN Capital – Forex.com Cyprus Ltd.CyprusGTX SEF, LLCDelawareGlobal Futures & Forex, Ltd.MichiganGlobal Asset Advisors, LLCIllinoisTop Third AG Marketing, LLCDelawareGAIN Global Markets Bermuda, Ltd.BermudaTrade Facts Ltd.EnglandGTX Bermuda, Ltd.BermudaGain Capital Technology Consulting Hong Kong LimitedHong KongGain Capital Payments Ltd.England and WalesCity Index Academy Ltd.England and WalesCity Index Inc.DelawareFX Solutions LLCNew JerseyJia Rao Network Technology Co. Ltd.ChinaGTX (Switzerland) GmbHSwitzerlandGain Capital Poland sp z.o.o.PolandEXHIBIT 23.1Consent of Independent Registered Public Accounting FirmThe Board of DirectorsGAIN Capital Holdings, Inc.:We consent to the incorporation by reference in the registration statements (No. 333‑208175) on Form S-3 and (No. 333-211097 and No. 333-211097) onForm S-8, respectively, of GAIN Capital Holdings, Inc. of our reports dated March 11, 2019, with respect to the consolidated balance sheets of GAIN CapitalHoldings, Inc. as of December 31, 2018 and 2017, and the related consolidated statements of operations and comprehensive income, changes in shareholders’equity, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes and financial statement schedule I(collectively, the “consolidated financial statements”), and the effectiveness of internal control over financial reporting as of December 31, 2018, whichreport appears in the December 31, 2018 annual report on Form 10‑K of GAIN Capital Holdings, Inc./s/ KPMG LLPNew York, New YorkMarch 11, 2019Exhibit 31.1CERTIFICATION PURSUANT TORULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDEDI, Glenn H. Stevens, certify that: 1.I have reviewed this annual report on Form 10-K of GAIN Capital Holdings, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 11, 2019 /s/ Glenn H. Stevens Glenn H. Stevens President and Chief Executive Officer(Principal Executive Officer) Exhibit 31.2CERTIFICATION PURSUANT TORULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDEDI, Nigel Rose, certify that: 1.I have reviewed this annual report on Form 10-K of GAIN Capital Holdings, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 11, 2019 /s/ Nigel Rose Nigel Rose Chief Financial Officer(Principal Financial and Accounting Officer) Exhibit 32.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER,AS REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, Glenn H. Stevens, the undersigned Chief Executive Officer and President of GAIN Capital Holdings, Inc., a Delaware corporation (the “Company”), herebycertify pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that to my knowledge: 1.The accompanying annual report on Form 10-K for the fiscal year ended December 31, 2018 (the “Report”) fully complies with therequirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: March 11, 2019 /s/ Glenn H. StevensGlenn H. StevensChief Executive Officer and President(Principal Executive Officer)A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will beretained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Exhibit 32.2CERTIFICATION OF CHIEF FINANCIAL OFFICER,AS REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, Nigel Rose, the undersigned Chief Financial Officer of GAIN Capital Holdings, Inc., a Delaware corporation (the “Company”), hereby certify pursuant to 18U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that to my knowledge: 1.The accompanying annual report on Form 10-K for the fiscal year ended December 31, 2018 (the “Report”) fully complies with therequirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: March 11, 2019 /s/ Nigel RoseNigel RoseChief Financial Officer(Principal Financial and Accounting Officer)A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will beretained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 

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