2024
Annual
Report
About Virtu
Corporate Information
Our Numbers
A message from our CEO
Community Engagement
A Look Back at 2024
12
18
10
4
6
8
1
2
3
4
5
6
Virtu Financial 2024 Annual Report
4 // 20
A MESSAGE FROM OUR CEO
Dear Fellow Shareholders,
As we reflect on the past year, we can clearly see
that our continued investments and focus has
helped to solidify our position as a global leader
in market-making and execution services. Our
commitment to innovation, disciplined capital
management, and operational excellence has
enabled us to navigate complex markets and
deliver value to our clients and shareholders.
Strategic growth and innovation: In 2024, we
continued our efforts to expand our presence
across more asset classes, including global
options, fixed income, ETFs, and digital assets.
Our investments in technology have allowed us
to provide competitive pricing and liquidity across
over 50 countries, serving a diverse client base that
includes asset managers, hedge funds, and retail
broker-dealers.
Operational excellence and financial discipline:
We maintained a strong focus on cost
management, achieving a 58% adjusted EBITDA
margin in 2024. Our disciplined approach to
expenses, coupled with strategic investments in
our trading infrastructure and personnel, have
positioned us to compete effectively while serving
our clients.
Capital allocation and shareholder returns: Our
capital allocation strategy remains centered on
returning capital to shareholders. In 2024, we
repurchased 6.7 million shares, bringing our total
repurchases to 50 million shares, or $1.3 billion,
representing 19.2% of shares outstanding, net
of issuances, since the program’s inception. We
also maintained our annual dividend for the 10th
straight year, underscoring our commitment to
returning capital to shareholders.
Talent and culture: Our success is driven by the
dedication and expertise of our global team. With
approximately 950 employees worldwide, we
foster a culture that combines the agility of a tech
startup with the rigor of a financial institution. This
environment empowers our teams to innovate
and excel, ensuring that we remain at the forefront
of the industry.
Shaping the future: We remain actively engaged
with market stakeholders around the world as
we advocate for and help shape sound market
structure policy. We remain committed to
bringing transparency, efficiency, and fairness to
global markets.
Virtu Financial 2024 Annual Report
5 // 20
Looking ahead: As we enter 2025, Virtu is
well-positioned to continue its growth trajectory,
and we will remain focused on:
•
Enhancing our technological capabilities to
support evolving client needs.
•
Expanding our footprint in emerging asset
classes and markets.
•
Maintaining operational effi ciency and fi nancial
discipline.
•
Delivering consistent value to our shareholders
through strategic capital management.
We appreciate your continued support and
confi dence and together we look forward to
another year of innovation, growth, and success.
Douglas A. Cifu
Co-founder & CEO
Virtu Financial 2024 Annual Report
6 // 20
Maintaining our competitive edge requires
uncommon effort to identify, attract and retain
best-in-class people who fit our values, culture
and share our vision, globally.
Our environment must reflect the communities
and cultures in which we operate. With our
giveback initiatives, employee appreciation,
learning programs, thoughtful recruitment
strategies and student outreach, we allow our
people-centric values to uplift our employees
and local communities. We believe these
efforts not only enrich the workforce, but also
empower individuals to be their best selves and
bring that out in others.
Powered by change,
focused on the future.
Internal Training Initiatives
Between our bootcamp programs, Coursera offerings
and our employee-made internal training videos, we
encourage continuous learning both in person and
online across a variety of scopes.
Recruitment
Early identification initiatives establish a broad
pipeline for talent. In 2024, we had our largest
percentage of interns convert for full-time hire.
We are excited to have these bright young minds
officially join the teams they bonded with over
their summer experience.
Women’s Professional Development Programs
Virtu continues to provide opportunities for women
to grow both personally and professionally. With
our 7th annual Women’s Winternship and first ever
women’s new hire mentorship program, we not only
maintain a pipeline to attract diverse talent, but also
empower our employees within the firm.
COMMUNITY ENGAGEMENT
Virtu Financial 2024 Annual Report
7 // 20
Wall Street Rides FAR (for Autism Research)
This was our fifth consecutive year sponsoring the
Wall Street Rides FAR (for Autism Research) cycling
event to benefit the Autism Science Foundation,
with employee engagement around the world.
Governor’s Island Composting and Cleanup
At Virtu, we value the importance of taking care
of our natural environment. Our global offices
contribute by cleaning our local communities and
learning how to reduce our footprint.
The Bowery Mission
Virtu has a longstanding partnership with The
Bowery Mission. Each year, we organize a variety of
initiatives to raise funds, donate items and serve food
to those in need.
Central Texas Food Bank in Austin
Throughout the year, Virtuians and our summer
interns make trips to local food banks to help
package and deliver fresh groceries in an effort to
combat food instability.
At Virtu, our charitable efforts are not episodic. There is no one-time yearly obligation, our
employees give back all year long. Virtu has a very localized approach to giving. What matters
to our clients and employees matters to Virtu. We approach charity from all angles, from our
employee donation match program, natural disaster and humanitarian relief campaigns,
sponsorship events, happy hour fundraisers and wishlist and supply drives. We also have
partnered with various organizations for over a decade, including Ronald McDonald House, Birch
Family Services, Bowery Mission and Women’s Warriors.
Virtu Financial 2024 Annual Report
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Awards
Virtu exhibits unwavering success as our employees, products
and services receive prestigious accolades throughout the year.
A LOOK BACK AT 2024
Bloomberg US Institutional Equity Trading Study
Virtu TCA ranks #1
Bloomberg US Institutional Equity Trading Study
Virtu Triton EMS ranks #2
Bloomberg US Institutional Equity Trading Study
Virtu Algo Wheel ranks #2
The TRADE EMS Survey
Virtu awarded for Best User Experience, Best Provider
– Large Clients, Best Provider – UK and Europe, Best
Market Access and Best Product Adaptability
Swiss ETF Awards
Virtu awarded Best Market Marker
European Markets Choice Awards
Virtu Triton EMS awarded Best Equity E/OMS
Markets Media Women in Finance Americas
Virtu’s Lisha Qiu awarded Rising Star and Rachele
Princiotto Excellence in Service Providers
The TRADE Algo Survey
Virtu awarded for Best Access to Market and Best
Dark Pool Capabilities
Markets Media Women in Finance Asia
Virtu’s Michelle Hosea awarded Rising Star
Markets Media Women in Finance Europe
Virtu’s Trish McMenamin awarded Excellence in Legal
and Compliance and Leah Goldsberry Rising Star
Virtu Financial 2024 Annual Report
9 // 20
Virtu sponsored and hosted events in 2024, including our
95+
Events
second annual Virtu Winter Conference in Stockholm, which hosted around
160 attendees from over 70+ firms across the Nordic region and beyond, as
well as 26 external speakers (mainly buyside).
Cindy Lee appointed Virtu’s CFO
As of August 1st 2024, Cindy Lee succeeded Sean
Galvin as our Chief Financial Officer. Cindy, our
previous Deputy CFO, is a longtime Virtuian who
joined the firm in 2011. She will undoubdtedly be
an extraordinary CFO given her knowledge of
Virtu, her finance expertise, and the instrumental
role she has played in our success.
Management
Virtu Financial 2024 Annual Report
10 // 20
$1.60bb
$6.4mm
adjusted net trading income1
adjusted net trading income per1 day
OUR NUMBERS
19.4%
buyback % since program inception (through 12/31/24) 2, 3
919
$3.55
adjusted EBITDA margin1
normalized adjusted EPS1
58%
adjusted EBITDA margin1
1 Normalized Adjusted EPS, Adjusted Net Trading Income, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial
measures. Please refer to Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in
our 2024 Form 10-K for a discussion of non-GAAP financial measures and a reconciliation to the GAAP results for the year ended
December 31, 2024.
2 Shares repurchased calculated on a settlement date basis.
3 Percentage of Shares Outstanding is calculated net of share issuances, and is calculated compared to shares outstanding on
9/30/2020 (Share Repurchase Program was incepted in November 2020).
$534mm
net income
Virtu Financial 2024 Annual Report
11 // 20
OUR PRIORITIES FOR 2025
Enhancing our technological capabilities to support
evolving client needs.
1
Expanding our footprint in emerging asset classes
and markets.
2
Maintaining operational efficiency and financial
discipline.
3
Delivering consistent value to our shareholders
through strategic capital management.
4
Virtu Financial 2024 Annual Report
12 // 20
We are traders, researchers and technologists
who are inspired by the unique challenges we
solve every day. With a commitment to integrity,
excellence and innovation, we aim to offer the
highest quality products an services to our clients
while keeping transparency at the forefront of
everything we do.
ABOUT VIRTU
Where the brightest
minds excel.
Virtu Financial 2024 Annual Report
13 // 20
OUR DNA
At Virtu, leadership comes from everyone. We
believe the key to our success stems from the
mindset that every individual feels empowered to
excel and contribute to the growth of the firm.
Our culture combines the creativity and speed of
a tech startup with the stability and discipline of
a financial services firm. We thrive because our
flat, supportive team culture, and we believe that
people flourish when given opportunities to make
a real impact. We encourage and equip our teams
to constantly innovate.
Everyone makes
an impact.
Virtu Financial 2024 Annual Report
13 // 20
OUR CULTURE
Virtu Financial 2024 Annual Report
14 // 20
Virtu is a technology service provider to the
global financial markets.
Global Execution
Capabilities
Our footprint connects
235+ venues in over 50
countries
Workflow Solutions
World-class product set of
execution and trading tools
embedded in the workflow
of clients
Engaged participants
Global, blue chip client base
Access to multiple
sources of liquidity
•
Retail/RIA
•
Institutional blocks
•
Principal market
making flow
Multi-Asset Class
We transact in over 25,000
financial instruments in all major
asset classes.
Trading Analytics & Data
•
End-to-end pre-, intra- and
post-trade analytics
•
Outlier monitoring
•
Peer Group data
2,000+
Clients
Virtu provides an end-to-end suite of technology-enabled products and services.
Multiple Asset Classes
• Global Equities
• ETFs
• FICC
• Options
Liquidity Pools
• Principle
• Retail
• Institutional
Market Leader Across Products
• vEQ Link Liquidity
• OTC Securities
• ATS/MTF/RFQ Platforms
• Block Trading
• ETFs
• FX And Metals
EXECUTION TOOLS AND LIQUIDITY POOLS
Efficient and transparent trading
Virtu Financial 2024 Annual Report
15 // 20
Portfolio Management
• Portfolio Optimization
• Cost Curves
• Fair Value
• Risk Models
• Execution Consulting
Pre-Trade
• Pre-trade TCA
• Agency Cost Estimator
(ACE)
• Commission Management
• Risk Analysis
• Liquidity Studies
• Index Analysis
Trade
• Algos
• DMA/SOR
• High-touch/Blocks
• Real-time TCA
• 3rd party liquidity access
• Order delivery to desk
• At-the-Market (ATM)
offerings
Post-Trade
• Frontier Prism
• Clearance/settlement
Workfl ow tools
• Peer Group data
• Venue analysis/outlier
monitoring
• Post-trade TCA
• MIS/reporting
• Open Tech (data APIs)
Multi-asset execution and analytics tools and services
VES CLIENT SOLUTIONS
Our complete suite of solutions
covers the trade-lifecycle.
We leverage our exceptional technology, market structure
expertise and scale to drive value and lower execution costs for
our clients throughout the multi-asset trade cycle.
Virtu Financial 2024 Annual Report
16 // 20
25,000+
securities
235+
venues
60+
accessible global markets
50+
countries
Source: Virtu Financial, 2019
GLOBAL REACH
Virtu Financial 2024 Annual Report
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North America Austin • Boston • Chicago • New York •
Palm Beach Gardens • Short Hills • Westchester • Toronto
EMEA Dublin • London • Paris
APAC Hong Kong • Singapore • Sydney
Virtu Financial 2024 Annual Report
18 // 20
Annual Meeting
The Annual Meeting of Shareholders of Virtu Financial, Inc. will be held
virtually on June 2, 2025 at 9:00 AM ET.
Transfer Agent and Registrar
Equiniti Trust company, LLC
Stock
Since the Company’s initial public offering on April 16, 2015, shares of Virtu
have been quoted on the NASDAQ, and trade under the symbol “VIRT”.
Independent Registered
Accounting Firm
PricewaterhouseCoopers LLP
Contact
1633 Broadway
41st Floor
New York, NY 10019
+1.646.682.6000
—
investor_relations@virtu.com | media@virtu.com
Corporate Information
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission file number: 001-37352
Virtu Financial, Inc.
(Exact name of registrant as specified in its charter)
Delaware
32-0420206
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1633 Broadway
10019
New York, New York
(Address of principal executive offices)
(Zip Code)
(212) 418-0100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Class A common stock, par value $0.00001 per share
VIRT
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ☐ No ☒
Indicate 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 1934 during 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 filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth 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.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
(Do not check if a smaller reporting company)
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
1
Class of Stock
Shares Outstanding as of
February 18, 2025
Class A common stock, par value $0.00001 per share
86,618,617
Class C common stock, par value $0.00001 per share
8,194,847
Class D common stock, par value $0.00001 per share
60,091,740
The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant as of June 28, 2024 was
approximately 1,833 million, based on the closing price of $22.45 per share as reported by Nasdaq on such date.
Portions of Part III of this Form 10-K are incorporated by reference from the Registrant’s definitive proxy statement (the “2025 Proxy
Statement”) for its 2025 annual meeting of shareholders to be filed with the Securities and Exchange Commission no later than 120 days after
the end of the Registrant’s fiscal year.
2
VIRTU FINANCIAL, INC. AND SUBSIDIARIES
INDEX TO FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2024
PAGE
NUMBER
PART I
ITEM 1.
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
ITEM 1A.
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
ITEM 1B.
UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42
ITEM 1C.
CYBERSECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
ITEM 2.
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
ITEM 3.
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
ITEM 4.
MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . .
46
ITEM 6.
RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . .
77
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . .
79
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
ITEM 9A.
CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
ITEM 9B.
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
142
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS .
143
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE . . . . . . . . . . . . .
145
ITEM 11.
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
146
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
147
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
148
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . .
150
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
156
3
Unless the context otherwise requires, the terms “we,” “us,” “our,” “Virtu” and the “Company” refer to Virtu
Financial, Inc., a Delaware corporation, and its consolidated subsidiaries and the term “Virtu Financial” refers to Virtu
Financial LLC, a Delaware limited liability company and a consolidated subsidiary of ours.
4
PART I
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements. You should not place undue reliance on
forward-looking statements because they are subject to numerous uncertainties and factors relating to our operations and
business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking
statements include information concerning our possible or assumed future results of operations, including descriptions of our
business strategy. These forward-looking statements can be identified by the use of forward-looking terminology, including the
terms “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project” or, in each case, their
negative, or other variations or comparable terminology and expressions. These statements are based on assumptions that we
have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate under the circumstances. As you read and consider this
Annual Report on Form 10-K, you should understand that forward-looking statements are not guarantees of performance or
results and that our actual results of operations, financial condition and liquidity, and the development of the industry in which
we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Annual
Report on Form 10-K. By their nature, forward-looking statements involve known and unknown risks and uncertainties,
including those described under the heading “Risk Factors” in this Annual Report on Form 10-K, because they relate to events
and depend on circumstances that may or may not occur in the future. Although we believe that the forward-looking statements
contained in this Annual Report on Form 10-K are based on reasonable assumptions, you should be aware that many factors,
including those described under the heading “Risk Factors” in this Annual Report on Form 10-K, could affect our actual
financial results or results of operations and cash flows, and could cause actual results to differ materially from those in such
forward-looking statements, including but not limited to:
• volatility in levels of overall trading activity;
• dependence upon trading counterparties, clients and clearing houses performing their obligations to us;
• failures of our customized trading platform;
• risks inherent to the electronic market making business and trading generally;
• SEC rule proposals focused on equity markets may, if adopted, materially change U.S. equity market structure,
including reducing overall trading volumes, reducing off-exchange trading and market making opportunities,
requiring additional tools, platforms and services to register as an alternative trading system (“ATS”) or exchange,
and generally increasing the implicit and explicit cost as well as the complexity of the U.S. equities eco-system for
all participants, all of which could have an adverse effect on our business;
• additionally, enhanced regulatory and media scrutiny, including attention to electronic trading, wholesale market
making and off-exchange trading, payment for order flow, and other market structure topics and both the impact
of additional potential changes in regulation or law as well as the potential impact upon public perception of us or
of companies in our industry could also have an adverse effect on our business;
• increased competition in market making activities and execution services;
• dependence on continued access to sources of liquidity;
• risks associated with self-clearing and other operational elements of our business, including but not limited to
risks related to funding and liquidity;
• obligations to comply with applicable regulatory capital requirements;
• litigation or other legal and regulatory-based liabilities;
• changes in laws, rules or regulations, including proposed legislation that would impose taxes on certain financial
transactions in the European Union, the U.S. (and certain states therein) and other jurisdictions and other potential
changes which could increase our corporate or other tax obligations in one or more jurisdictions;
• obligations to comply with laws and regulations applicable to our operations in the U.S. and abroad;
• need to maintain and continue developing proprietary technologies;
• capacity constraints, system failures, and delays;
• dependence on third-party infrastructure or systems;
• use of open source software;
5
• failure to protect or enforce our intellectual property rights in our proprietary technology;
• failure to protect confidential and proprietary information;
• failure to protect our systems from internal or external cyber threats that could result in damage to our computer
systems, business interruption, loss of data, monetary payment demands or other consequences;
• risks associated with international operations and expansion, including failed acquisitions or dispositions;
• the effects of and changes in economic conditions (such as volatility in the financial markets, increased inflation,
monetary conditions and foreign currency and continued or exasperated exchange rate fluctuations, foreign
currency controls and/or government mandated pricing controls, as well as in trade, tariff, monetary, fiscal and tax
policies in international markets), political conditions (such as military actions and terrorist activities), and other
global events such as fires, natural disasters, pandemics or extreme weather;
• risks associated with potential growth and associated corporate actions;
• inability to access, or delay in accessing the capital markets to sell shares or raise additional capital;
• risks associated with new and emerging asset classes and eco-systems in which we may participate, including
digital assets, including risks related to volatility in the underlying assets, regulatory uncertainty, evolving
industry practices and standards around custody, clearing and settlement, and other risks inherent in a new and
evolving asset class;
• loss of key executives and failure to recruit and retain qualified personnel;
• risks associated with losing access to a significant exchange or other trading venue; and
• risks associated with changes in governmental administrations and agencies.
We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or
circumstances that may arise after the date of this Annual Report on Form 10-K.
ITEM 1. BUSINESS
Overview
We are a leading financial firm that leverages cutting edge technology to deliver liquidity to the global markets and
innovative, transparent trading solutions to our clients. Leveraging our global market structure expertise and scaled, multi-asset
infrastructure, we provide our clients a robust product suite including offerings in execution, liquidity sourcing, analytics and
broker-neutral, multi-dealer platforms in workflow technology. Our product offerings allow our clients to trade on hundreds of
venues across over 50 countries and in multiple asset classes, including global equities, Exchange Traded Funds (“ETFs”),
options, foreign exchange, futures, fixed income, cryptocurrencies, and myriad other commodities. Our integrated, multi-asset
analytics platform provides a range of pre- and post-trade services, data products and compliance tools that our clients rely upon
to invest, trade and manage risk across global markets. We believe that our broad diversification, in combination with our
proprietary technology platform and low-cost structure, gives us the scale necessary to grow our business around the globe as
we service clients and facilitate risk transfer between global capital markets participants by providing liquidity, while at the
same time earning attractive margins and returns.
Technology and operational efficiency are at the core of our business, and our focus on market making and order
routing technology is a key element of our success. We have developed a proprietary, multi-asset, multi-currency technology
platform that is highly reliable, scalable and modular, and we integrate directly with exchanges, liquidity centers, and our
clients. Our market data, order routing, transaction processing, risk management and market surveillance technology modules
manage our market making and institutional agency activities in an efficient manner that enables us to scale our activities
globally, across additional securities and other financial instruments and asset classes, without significant incremental costs or
third-party licensing or processing fees.
We believe that technology-enabled market makers like Virtu serve an important role in maintaining and improving
the overall health and efficiency of the global capital markets by providing market participants with an efficient means to
transfer risk and analyze the quality of execution. We believe that market participants benefit from the increased liquidity,
lower overall trading costs and execution transparency that Virtu provides.
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Our execution services and client solutions products are designed to be transparent, because we believe transparency
makes markets more efficient and helps investors make better, more informed decisions. We use the latest technology to create
and deliver liquidity to global markets and innovative trading solutions and analytics tools to our clients. We interact directly
with hundreds of retail brokers, Registered Investment Advisors, private client networks, sell-side brokers, and buy-side
institutions.
We have two operating segments: Market Making and Execution Services, and one non-operating segment: Corporate.
Our management allocates resources, assesses performance and manages our business according to these segments.
We primarily conduct our Americas equities business through our SEC registered broker-dealer, Virtu Americas, LLC
(“VAL”). We are registered with the Central Bank of Ireland (“CBI”) and the Financial Conduct Authority (“FCA”) in the UK
for our European trading, the Canadian Investment Regulatory Organization (“CIRO”) and the Ontario Securities Commission
for our Canadian trading, and the Monetary Authority of Singapore (“MAS”), Securities and Futures Commission of Hong
Kong (“SFC”), and Australian Securities and Investments Commission (“ASIC”) for our Asia-Pacific (“APAC”) trading. We
are registered as a market maker or liquidity provider and/or enter into direct obligations to provide liquidity on nearly every
exchange or venue that offers such programs. We engage regularly with regulators around the world on issues affecting
electronic trading and other matters that may affect our business and the operation of the financial markets and advocate for
increased transparency. In the U.S., we conduct our business from our headquarters in New York City and our offices in
Boston, Austin, Texas, Chicago, Short Hills, New Jersey, Rye Brook, New York, and Palm Beach Gardens, Florida. Abroad,
we conduct our business through trading centers located in London, Dublin, Paris, Singapore, Hong Kong, Toronto, and
Sydney.
Business Segments
Market Making
Our Market Making segment principally consists of market making in the cash, futures, and options markets across
global equities, fixed income, currencies, cryptocurrencies, and commodities. As a leading, low-cost market maker dedicated to
improving efficiency and providing liquidity across multiple asset classes and geographies, we aim to provide critical market
functionality and robust price competition in the securities and other financial instruments in which we provide liquidity. The
scale and diversity of our market making activities provide added liquidity and transparency to the financial markets, which we
believe are necessary and valuable components to the efficient functioning of markets and benefit all market participants. We
support transparent and efficient, technologically advanced marketplaces, and advocate for legislation and regulation that
promotes fair and transparent access to the financial markets.
As a market maker, we commit capital on a principal basis by offering to buy securities from, or sell securities to,
broker dealers, banks and institutions. We engage in principal trading in the Market Making segment direct to clients as well as
on exchanges, ATSs and other market centers. As a complement to electronic market making, our cash trading business handles
specialized orders and transacts on the OTC Link ATS operated by OTC Markets Group Inc.
We make markets in a number of different asset classes, which are discussed in more detail below. We register as
market makers and liquidity providers where available and support affirmative market making obligations.
We provide competitive and deep liquidity that helps to create more efficient markets around the world. We stand
ready, at any time, to buy or sell a broad range of securities and other financial instruments, and we generate revenue by buying
and selling large volumes of securities and other financial instruments while earning small bid/ask spreads.
We believe the overall level of volumes and realized volatility as well as the attractiveness of the order flow we
interact with and the level of retail participation in the various markets we serve have the greatest impact on our businesses.
Increases in market volatility can cause bid/ask spreads to temporarily widen as market participants are more willing to transact
immediately and as a result market makers’ capture rate per notional amount transacted increases.
Technology is at the core of our business. Our team of in-house software engineers develops our software and
applications, and we utilize optimized infrastructure to integrate directly with the exchanges and other trading venues on which
we provide liquidity. Our focus on technology and our ability to leverage our technology enables us to be one of the lowest cost
providers of liquidity to the global electronic trading marketplace.
Leveraging the scalability and low costs of our platform, we are able to test and rapidly deploy new liquidity
provisioning strategies, expand to new securities, asset classes and geographies and increase transaction volumes at little
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incremental cost. These efficiencies are central to our ability to deliver consistently positive Adjusted Net Trading Income (as
defined below) as our profitability per trade and per instrument is not significant, particularly in U.S. equities.
Our transaction processing is automated over the full life cycle of a trade. Our market making platform generates and
disseminates continuous bid and offer quotes. At the moment when a trade is executed, our systems capture and deliver this
information back to the source, in most cases within a fraction of a second, and the trade record is written into our clearing
system, where it flows through a chain of control accounts that allow us to automatically and efficiently reconcile trades,
positions and payments until the final settlement occurs.
We have built and continuously refine our automated and integrated, real time systems for global trading, risk
management, clearing and cash management, among other purposes. We have also assembled a proprietary connectivity
network between us and exchanges around the world. Efficiency and speed in performing prescribed functions are always
crucial requirements for our systems, and generally, we focus on opportunities in markets that are sufficiently advanced to
allow the seamless deployment of our automated strategies, risk management system and core technology.
Our core operations team across our offices in North America, APAC and Europe monitors our systems 24 hours a
day, five days a week. This function provides coverage for our full technology platform, including our market data, order
routing, transaction processing, and risk management technology modules.
Clients and Products
We offer direct-to-client market making services across multiple asset classes primarily to sell-side clients including
global, national and regional broker dealers and banks as well as buy-side clients comprising, among others, mutual funds,
pension plans, plan sponsors, hedge funds, trusts and endowments in North America, Europe and Asia.
We generally compete based on execution quality, market coverage, and client service. In direct-to-client electronic
market making in U.S. equities, execution quality is generally measured based on factors that include speed of execution,
fulfillment rates, opportunity and amounts of price improvement, using metrics defined in SEC Rule 605. In other asset classes,
metrics for execution quality are not prescribed by applicable regulation, and in many cases, are client defined.
We continually work to provide clients with high quality, low-cost trade executions that enable them to satisfy their
fiduciary obligation to seek the best execution on behalf of their customer. We continually refine our automated order routing
models so that we may remain competitive.
Global Equities
We trade over 25,000 listed and over-the-counter (“OTC”) securities including, among others, equity related futures
and exchange traded products (“ETPs”), on sixteen U.S. Securities and Exchange Commission (“SEC”) registered exchanges
and other market centers around the world, including the New York Stock Exchange (“NYSE”), the Nasdaq, NYSE Arca, Cboe
BATS, Chicago Stock Exchange, the Members Exchange (“MEMX”), the TSX in Canada, Bovespa in Brazil and BMV in
Mexico, as well as other ATSs and more than 20 private liquidity pools.
Our strategy globally is to utilize high speed, efficient connections to all of the registered exchanges and market
centers, including the London Stock Exchange, Cboe Europe Equities, Euronext, Six Swiss Exchange, Australian Securities
Exchange, Tokyo Stock Exchange and Singapore Exchange, as well as other trading venues and additional pools of liquidity to
which we can gain access either directly or through a broker.
As ETPs and other similar products, including Exchange Traded Funds (“ETFs”), have proliferated both domestically
and internationally, demand has increased for trading the underlying assets or hedging such products. Our technology has
enabled us to expand into providing liquidity to this growing area by making markets across these assets in a variety of trading
venues globally. We are authorized participants, and can create and/or redeem ETPs.
Global Fixed Income, Currencies and Commodities (“FICC”), Options, and Other
Our Fixed Income market making includes our activity in U.S. Treasury securities and other sovereign debt, corporate
bonds, and other debt instruments. We trade these products on a variety of specialized exchanges, direct to counterparties, and
other trading venues, including BrokerTec, eSpeed, DealerWeb, Bloomberg, Tradeweb, MarketAxess, and BGC’s Fenics UST.
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Our Currencies market making, including spot, futures and forwards, comprises our activity in over 80 currency pairs,
including deliverable, non-deliverable, fiat, and digital currencies, across dozens of venues and direct to counterparties. We are
a leading participant in the major foreign exchange venues, including LSEG, Currenex, Cboe FX, and CME.
Our Commodities market making takes place on the CME, ICE, and Nasdaq Futures in crude oil, natural gas, heating
oil, and gasoline futures. We trade approximately 100 energy products and futures on the ICE, CME, and TOCOM. We also
actively trade precious metals, including gold, silver, platinum and palladium, as well as base metals such as aluminum and
copper.
Our Options and Other market making includes our activity on all of the U.S. options exchanges of which we are a
member (i.e., Cboe, ISE, and NYSE Arca) and on the U.S. futures exchanges, as well as our activity in cryptocurrencies. Our
cryptocurrency market making includes spot, perpetuals, futures, and ETFs and takes place across over 55 venues and
exchanges.
Execution Services
We offer agency execution services and trading venues that provide transparent trading in global equities, ETFs, fixed
income, currencies, and commodities to institutions, banks and broker dealers. We generally earn commissions when
transacting as an agent for our clients. Within the Execution Services segment, we offer the following categories of products
and services:
•
Agency-based, execution-only trading, done through a variety of access points including:
◦
algorithmic trading and order routing;
◦
institutional sales traders who offer portfolio trading and single stock sales trading providing execution
expertise for program, block and riskless principal trades in global equities and ETFs; and
◦
matching of client conditional orders via POSIT Alert and in our ATSs, including Virtu MatchIt and POSIT.
•
Workflow Technology, and our integrated, broker-neutral trading tools delivered across the globe including order and
execution management systems and order management software applications and network connectivity; and
•
Trading Analytics, including
◦
tools enabling portfolio managers and traders to improve pre-trade and real-time execution performance and
post-trade analysis;
◦
portfolio construction and optimization decisions; and
◦
securities valuation.
Clients and Products
We offer agency execution services across multiple asset classes to buy-side clients including mutual funds, pension
plans, plan sponsors, hedge funds, trusts and endowments and sell-side clients including global, national and regional broker
dealers and banks in North America, Europe and Asia. In 2024, our Execution Services segment did not have any client that
accounted for more than 10% of our total commissions earned.
Clients may access a broad range of products and services that includes electronic execution services in global equities
via algorithmic trading, order routing and an execution management system (“EMS”) as well as internal crossing through our
registered ATSs. Our ATSs provide clients with important sources of non-displayed liquidity. We also offer clients voice access
to global markets including sales and trading for equities, ETFs and options. Certain broker-dealer affiliates also engage in
foreign exchange trading to facilitate equity trades by clients in different currencies as well as other client foreign exchange
trades unrelated to equity trades. We handle large complex trades, accessing liquidity from our order flow and other sources.
We provide soft dollar and commission recapture programs.
In this segment, we generally compete on trading technology, execution performance, costs, client service, market
coverage, liquidity, platform capabilities and anonymity. We draw on in-house developed trading technologies to meet client
criteria for execution quality and for managing trading costs. As a result, we are able to attract a diverse array of clients in terms
of strategy, size and style. We also provide algorithmic trading and order routing that combine technology, access to our
differentiated liquidity and support from experienced professionals to help clients execute trades. The segment also includes the
results of our capital markets business, in which we act as an agent for issuers in connection with at-the-market offerings and
buyback programs.
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Agency-based, Execution-only Trading
Our clients may access a broad range of products and services that includes electronic execution services in global
equities via algorithmic trading, order routing and an EMS as well as internal crossing through our registered ATSs. Our
algorithms and order routers help portfolio managers and traders to trade orders quickly, comprehensively and cost-efficiently
from our EMS or our Order Management System (“OMS”) and most third-party trading platforms. Our institutional sales
traders offer portfolio trading and single stock sales trading which provides execution expertise for program, block and riskless
principal trades in global equities and ETFs.
We provide matching of client orders in our ATSs, including Virtu MatchIt, POSIT ATS, and POSIT MTF. MatchIt
provides two crossing sessions, a Main Session and a Conditional Session. The Main Session provides continuous crossing with
price/time priority and is available to our subsidiaries and external subscribers. The Conditional Session accepts conditional
orders with price/size priority, and is only available to our subsidiaries. POSIT provides continuous crossing of non-displayed
(or dark) equity orders and price improvement opportunities within the published best bid and offer price. In the U.S., POSIT
Alert is a block crossing mechanism within POSIT ATS. POSIT Alert unites liquidity sourced directly from trader OMSs with
conditional orders from electronic participants for matching using a conditional order process. In addition, POSIT MTF Auction
provides frequent batch auctions which display indicative size/price prior to trade execution.
Workflow Technology
Our workflow technology tools are designed to meet the needs of a broad range of trading styles. As an example,
Triton Valor, the most recent release of our multi-asset and broker-neutral Triton EMS, helps to bring integrated execution and
analytical tools to the user’s desktop, including the Algo Wheel, an algorithmic way for a portfolio manager to intelligently
allocate volume between different providers. Triton supports global list-based and single-stock trading, as well as futures and
options capabilities and includes ITG Net, a fully integrated and supported financial services communications network. Triton
also provides traders with access to scalable, low-latency, multi-asset trading opportunities. Our OMS combines portfolio
management, compliance functionality, and a fully integrated and supported financial services communications network (ITG
Net) with a consolidated, outsourced service for global trade matching and settlement that provides connectivity to the
industry’s post-trade utilities, as well as support for multiple, flexible settlement communication methods and a real-time
process monitor.
ITG Net is our global financial communications network that provides reliable and fully-supported connectivity
between buy-side and sell-side firms for multi-asset order routing and indication-of-interest messages with Virtu and third-party
trading platforms. ITG Net supports approximately 9,000 global billable connections to more than 600 unique execution
destinations worldwide. ITG Net also integrates the trading products of third-party brokers and ATSs into our OMS and EMS
platforms.
RFQ-hub, a multi-asset platform for global listed and over-the-counter (“OTC”) financial instruments, connects
buy-side trading desks and portfolio managers with a large network of sell-side market makers in Europe, North America and
the APAC region, allowing these trading desks to place requests-for-quotes (“RFQ”) in negotiated equities, futures, options,
swaps, convertible bonds, structured products and commodities. RFQ-hub is available as a stand-alone platform and can also be
integrated with Triton in certain regions. In May 2022, we formed a consortium of strategic partners and investors to own and
support the growth of the RFQ-hub business. Through a series of related transactions, we sold a substantial minority interest in
the business to multiple strategic partners and have maintained a majority ownership interest. In April 2024, the Company
entered into a Unit Purchase Agreement to sell a 49% interest in RFQ-hub, and the transaction is expected to close in 2025,
subject to the satisfaction of certain closing conditions, including the receipt of specified regulatory approvals. See Note 3
“Business Held for Sale” for further details.
We offer administration and consolidation of client commission arrangements across a wide range of our clients’
preferred brokerage and research providers through Commission Manager, a robust, multi-asset, web-based commission
management portal, and Budget Tracker, which enables asset managers to set research allocations and create and track budgets
for their end clients. We also offer a comprehensive research payment account solution, enabling clients to unbundle research
and execution payments to comply with the European Markets in Financial Instruments Directive (“MiFID”) II regulations.
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Analytics
Our trading analytics suite helps enable portfolio managers and traders to analyze execution performance before the
trade happens (pre-trade) and during trading (real-time) by providing trading analytics and risk models that help them perform
predictive analysis, manage risk, change strategy and reduce trading costs. Trading costs are affected by multiple factors, such
as execution strategies, time horizon, volatility, spread, volume and order size. Our trading analytics suite is designed to gauge
the effects of these factors and aid in the understanding of the trade-off between market impact and opportunity cost. For
example, our transaction cost analysis (“TCA”) offers measurement and reporting capabilities to analyze costs and performance
across the trading continuum. TCA assesses trading performance and implicit costs under various market conditions so users
can adjust strategies and potentially reduce costs and boost investment performance. TCA is also available for foreign exchange
transactions (FX TCA) and for corporate and sovereign bond trading (FI TCA).
Corporate
Our Corporate segment contains investments principally in strategic financial services-oriented opportunities and
maintains corporate overhead expenses and all other income and expenses that are not attributable to our operating segments.
Risk Management
We are acutely focused on risk management. Our market making activities involve taking on risk positions and our
execution services business involves providing trading, clearing and related services on behalf of customers and clients. These
activities expose us to market, counterparty, operational, and regulatory risk. We aim to mitigate these risks through prudent
risk management practices.
We have senior risk personnel who report independently into the Board Risk Committee. We also have a Risk
Advisory Committee, which includes key personnel from each of our regions globally and is comprised of our senior risk
personnel, members of our senior management team, senior technologists and traders, and certain other senior officers. Our
Risk Advisory Committee provides advice to our senior management team in connection with our key risk management
policies, procedures and risk limits. Our Board of Directors, through the Board Risk Committee, is periodically apprised of risk
events, risk profiles, trends and the activities of our Risk Advisory Committee, including our risk management policies,
procedures and controls.
Our approach to managing risk includes the following practices:
•
Pre-Trade Risk Controls. Messages that leave our trading environment must first pass through a series of preset risk
controls, which are intended to minimize the likelihood of unintended activities by our algorithms. Certain risk
controls, when triggered, result in a strategy lockdown, which requires a manual reset in order to restart the strategy.
•
Model Restrictions. Trading models have limits in place which restrict individual position sizes, sector exposures and
imbalanced portfolios with significant directional risks. Trading strategies are designed to automatically reduce
exposures when limits are reached. The models are monitored continuously by the trading team and the risk managers.
•
Aggregate Exposure Monitoring. Pursuant to our risk management policies, our automated management information
systems monitor in real-time and generate reports on daily and periodic bases. Exposures monitored include:
◦
Risk Profiles
◦
Statistical Risk Measures including Value at Risk (“VaR”), and Equity Betas
◦
Stress and Scenario analysis
◦
Concentration measures
◦
Profit and Loss analysis
◦
Trading performance reports
•
Our trading assets and liabilities are marked-to-market daily for financial reporting purposes by reference to official
exchange prices, and they are re-valued continuously throughout the trading day for risk management and asset/
liability management purposes.
•
Operational Controls. We have a series of automated controls over our business. Key automated controls include:
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◦
Our technical operations system continuously monitors our network and the proper functioning of each of our
trading centers around the world;
◦
Our market making system continuously evaluates the listed securities and other financial products in which
we provide bid and offer quotes and changes its bids and offers to reflect changes in market conditions. The
latency of communicating with exchanges and market centers is reduced through continuous software and
network engineering innovation, allowing us to achieve real-time controls over market exposure. We connect
to exchanges and other electronic venues through a network of co-location facilities around the world that are
monitored 24 hours a day, five days a week, by our staff of experienced network professionals;
◦
Our clearing system captures trades in real-time and performs automated reconciliations of trades and
positions, corporate action processing, options exercises, securities lending and inventory management,
allowing us to effectively manage operational risk; and
◦
Software developed to support our market making systems performs daily profit and loss and position
reconciliations.
Additionally, we conduct after event reviews where operational issues are evaluated and risk mitigations are identified
and subsequently implemented.
•
Credit Controls. Trading notional limits are applied to customers and counterparts. These are monitored throughout the
day by trading support and risk professionals.
•
Liquidity Controls. We seek to minimize liquidity risk by focusing in highly active and liquid instruments. Less liquid
instruments are identified and restrictions are in place as to the size of positions we hold in such instruments.
Our approach to risk mitigation can in some cases limit our overall opportunities, including by adding a degree of
latency to our trading infrastructure which can, for example, prevent us from earning outsized returns in times of extreme
market volatility. We believe that these trade-offs are necessary to properly limit risk.
We leverage technology and automation to perform many functions within Virtu. Cyber threats are a risk that we are
exposed to as a result of our heavy utilization of technology. These threats could include the introduction of malicious code or
unauthorized access, and could result in data loss or destruction, business interruption, financial loss, and the unavailability of
service and other risks. We have taken steps to mitigate the various cyber threats, and we devote resources to maintain and
regularly upgrade our systems and networks and review the ever-changing threat landscape. Cybersecurity risk is managed as
part of our overall information technology risk framework under the direction of our Chief Information Security Officer. We
periodically review policies and procedures to seek to ensure they are effective in mitigating current cyber and other
information security threats. In addition to the policy reviews, we continue to look to implement solutions that enhance
preventive and detection capabilities. We also maintain insurance coverage that may, subject to policy terms and conditions,
cover certain aspects of cyber risks. However, such insurance may be insufficient to cover all losses or may not provide any
coverage.
Competition
The financial services industry generally, and the institutional securities brokerage business in which we operate, are
extremely competitive, and we expect them to remain so for the foreseeable future. Our full suite of products does not directly
compete with any particular firm; however, individual products compete with various firms and consortia.
Within the market making segment, our competition has been registered market making firms ranging from sole
proprietors with very limited resources to large, integrated broker-dealers. Today, a range of market participants may compete
with us for revenues generated by market making activities across one or more asset classes and geographies, including market
participants, such as Citadel Securities, Susquehanna International Group LLP, Two Sigma, Jane Street, DRW Holdings, IMC,
and Optiver.
In the execution services segment, our low-touch agency algorithmic execution and smart order routing products, as
well as our high-touch agency execution and portfolio trading services, compete with agency-only and other sell-side firms. Our
trading and portfolio analytics compete with offerings from several sell-side-affiliated and independent companies. Our POSIT
and MatchIt ATSs compete with various national and regional securities exchanges, ATSs, Electronic Communication
Networks, MTFs and systematic internalizers for trade execution services. Our EMS, OMS, connectivity and RFQ services
compete with offerings from independent vendors, agency-only firms and other sell-side firms.
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Some of our competitors in market making and execution services are larger than we are and have more captive order
flow in certain assets. Technology and software innovation is a primary focus for us, rather than relying solely on the speed of
our network. We believe that our scalable technology allows us to access new markets and increase volumes with limited
incremental costs.
Intellectual Property and Other Proprietary Rights
We rely on federal, state and international laws that govern trade secrets, trademarks, domain names, patents,
copyright and contract law to protect our intellectual property and proprietary technology. We enter into confidentiality,
intellectual property invention assignment and/or non-competition and non-solicitation agreements or restrictions with our
employees, independent contractors and business partners, and we control access to, and distribution of, our intellectual
property.
Human Capital Resources
As of February 14, 2025, we had approximately 969 employees, located in twelve countries around the world, all of
whom were employed on a full-time basis and in good standing. The approximate regional representation of our workforce is as
follows: 70% Americas, 19% EMEA and 11% APAC. None of our employees are covered by collective bargaining agreements.
We believe that our employee relations are good.
In shaping our culture, we aim to combine a high standard of excellence, technological innovation and agility and
operational and financial discipline. We believe that our flat and transparent structure and our collaborative and collegial
approach enable our employees to grow, develop and maximize their impact on our organization. To attract and retain top talent
in our highly competitive industry, we have designed our compensation and benefits programs to promote the retention and
growth of our employees along with their health, well-being and financial security. Our short- and long-term incentive
programs are aligned with key business objectives and are intended to motivate strong performance. Our employees are eligible
for medical, dental and vision insurance, a savings/retirement plan, life and disability insurance, and various wellness programs
and we review the competitiveness of our compensation and benefits periodically. As an equal opportunity employer, all
qualified applicants receive consideration without regard to race, national origin, gender, gender identity, sexual orientation,
protected veteran status, disability, age or any other legally protected status.
Regulation
We conduct our U.S. equities and options market making and provide execution services through VAL, our
SEC-registered broker-dealer. VAL is regulated by the SEC and its designated examining authority is the Financial Industry
Regulatory Authority, Inc. (“FINRA”). VAL is also registered as a floor trader firm with the Commodity Futures Trading
Commission (“CFTC”).
We are a full clearing member of the National Securities Clearing Corporation (“NSCC”) and the Depository Trust &
Clearing Corporation (“DTCC”). Our activities in U.S. equities are both self-cleared and rely on fully-disclosed clearing
arrangements with third-party clearing firms. We use the services of prime brokers, primarily in other asset classes, who
provide us direct market access to markets and often cross-margining and margin financing in return for execution and clearing
fees. We continually monitor the credit quality of our prime brokers and rely on large multinational banks for most of our
execution and clearing needs globally.
Our energy, commodities and currency market making and trading activities are primarily conducted through Virtu
Financial Global Markets LLC.
We conduct our European, Middle Eastern and African (“EMEA”) market making activities from Dublin and through
our subsidiary Virtu Financial Ireland Limited (“VFIL”), which is authorized as an “Investment Firm” with the CBI. We
conduct our EMEA execution services trading activity from Dublin, London, and Paris through our subsidiary Virtu Europe
Trading Limited (“VETL”) (f/k/a Virtu ITG Europe Limited). VETL is authorized and regulated by the CBI as an “Investment
Firm” and maintains branch offices in London and Paris. The London branch office of VETL is authorized and regulated by the
FCA. VETL’s Paris branch is registered with the Banque de France. VETL also operates a multi-lateral trading facility
(“MTF”) in Ireland and Virtu ITG UK Limited (“VIUK”), a U.K. investment firm, operates a MTF in the U.K. VIUK is an
investment firm which is authorized and regulated by the FCA.
We conduct our APAC market making activities, including much of our market making in cryptocurrency products
from Singapore and through our Singapore subsidiary, Virtu Financial Singapore Pte. Ltd. Virtu Financial Singapore Pte. Ltd. is
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registered with the MAS for an investment incentive arrangement and licensed by the MAS to deal in certain capital markets
instruments. We conduct our APAC execution services trading activities from Singapore, Hong Kong, and Australia through
our subsidiaries Virtu ITG Singapore Pte. Limited, Virtu ITG Hong Kong Limited, and Virtu ITG Australia Limited. Virtu ITG
Singapore Pte. Limited is a holder of a Capital Markets Services License from the MAS, which is its principal regulator. Virtu
ITG Hong Kong Limited is a participating organization of the Hong Kong Stock Exchange and a holder of a securities dealer’s
license issued by the SFC, which is its principal regulator. Virtu ITG Australia Limited is a market participant of the Australian
Securities Exchange (“ASX”) and Chi-X Australia Limited, and is also a holder of an Australian Financial Services License
issued by the ASIC, which is its principal regulator.
Our Canadian market making activities and our Canadian execution services trading activities are conducted through
our subsidiary Virtu Canada Corp (f/k/a Virtu ITG Canada Corp.). Virtu Canada Corp. is a Canadian broker-dealer registered as
an investment dealer with CIRO, Ontario Securities Commission (“OSC”), the Autorité Des Marchés Financiers in Quebec,
Alberta Securities Commission (“ASC”), British Columbia Securities Commission, Manitoba Securities Commission, New
Brunswick Securities Commission, Nova Scotia Securities Commission and Saskatchewan Financial Services Commission.
Virtu Canada Corp. is also registered as a Futures Commission Merchant in Ontario and Manitoba and Derivatives Dealer in
Quebec.
Most aspects of our business are subject to regulation under federal, state and foreign laws and regulations, as well as
the rules of the various self-regulatory organization (“SROs”) of which our broker-dealer subsidiaries are members. The SEC,
FINRA, CFTC, NFA, U.S. state securities regulators, the European Securities and Markets Authority (“ESMA”) in the
European Union, the CBI in Ireland, FCA in the U.K., Banque de France in France, MAS in Singapore, SFC in Hong Kong,
ASIC in Australia, CIRO and OSC in Canada, other SROs and other U.S. and foreign governmental regulatory bodies
promulgate numerous rules and regulations that may impact our business. As a matter of public policy, regulatory bodies are
charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of
investors in those markets, including, but not limited to, trading practices, order handling, best execution practices, anti-money
laundering and financial crimes, handling of material non-public information, safeguarding data, compliance with exchange and
clearinghouse rules, capital adequacy, customer protection, reporting, record retention, market access and the conduct of
officers, employees and other associated persons.
Rulemaking by these and other regulators (foreign and domestic), including resulting market structure changes, has
had an impact on our regulated subsidiaries by directly affecting our method of operation and, at times, our profitability.
Legislation can impose, and has imposed, significant obligations on broker-dealers, including our regulated subsidiaries. These
increased obligations require the implementation and maintenance of internal practices, procedures and controls, and the need
for additional employee resources, and have increased our costs, and may subject us to government and regulatory inquiries,
claims or penalties. Changes in market structure can also necessitate restructuring our operations for compliance in certain
jurisdictions which has cost implications.
Failure to comply with any laws, rules or regulations could result in administrative or court proceedings, censures,
fines, penalties, judgments, disgorgement, restitution and censures, suspension or expulsion from a certain jurisdiction, SRO or
market, the revocation or limitation of licenses and/or business activities, the issuance of cease-and-desist orders or injunctions
or the suspension or disqualification of the entity and/or its officers, employees or other associated persons and could negatively
impact our reputation with clients or prospective clients and, in turn, impact our revenues. From time to time, we are the subject
of requests for information and documents from the SEC, FINRA and other regulators which could lead to administrative or
court proceedings. It is our practice to cooperate and comply with the requests for information and documents. Regulatory
inquiries can require substantial expenditures of time and money and can have an adverse impact on our reputation, customer
relationship and profitability.
The regulatory environment in which we operate is subject to constant change. Our business, financial condition, and
operating results may also be adversely affected as a result of new or revised legislation or regulations imposed by the U.S.
Congress, foreign legislative bodies, state securities regulators, U.S. and foreign governmental regulatory bodies and SROs.
Additional regulations, changes in existing laws and rules, or changes in interpretations or enforcement of existing laws and
rules often directly affect the method of operation and profitability of regulated broker-dealers. We cannot predict what effect,
if any, future legislative or regulatory changes might have. However, there have been in the past, and could be in the future,
significant technological, operational and compliance costs associated with the obligations which derive from compliance with
such regulations. Regulators may propose market structure changes particularly considering the continued regulatory,
congressional and media scrutiny of U.S. equities market structure, the retail trading environment in the U.S., wholesale market
making and the relationships between retail broker-dealers and market making firms, including but not limited to payment for
order flow arrangements, other remuneration arrangements such as profit-sharing relationships and exchange fee and rebate
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structures, ATSs and off-exchange trading more generally, high frequency trading, short selling, market fragmentation,
colocation, and access to market data feeds.
The SEC and other SROs have recently enacted and considered rules that may affect our operations and profitability.
Specifically, the SEC under the previous administration (i) adopted rule amendments to minimum pricing increments under
Rule 612 of Regulation NMS, access fee caps under Rule 610 of Regulation NMS, acceleration of the implementation of
certain Market Data Infrastructure Rules, and an amendment to the odd-lot information definition adopted under the MDI rules
(collectively referred to as the “tick size, access fees and infostructure rule proposals”), which have a compliance date
commencing in November 2025, (ii) adopted amendments to Rule 605 of Regulation NMS, which has a compliance date on or
about December 15, 2025, (iii) approved a funding model submitted by several exchanges in relation to the Consolidated Audit
Trail (CAT) which provides for fee collection commencing November 2024 but is currently subject to legal challenge, and (iv)
adopted rules to amend the definitions of “dealer” and “government securities dealer” within the Exchange Act, which would
have broadened the scope of these registrant categories, though this rule was recently vacated by the United States District
Court. Additional recent proposals which have not been adopted include (i) Proposed Rule 615 of Regulation NMS, which
proposes to dramatically change the U.S. equities market structure, the routing, handling and potentially the amount, character,
and cost of retail order flow, (ii) Regulation Best Execution, which would impose best execution requirements on broker-
dealers which would be distinct from, but overlapping with, FINRA’s existing best execution rule (Rule 5310), (iii) a series of
amendments to the definition of Exchange and Alternative Trading Systems (ATS), which would expand the scope of exchange
and ATS registration and compliance requirements, and (iv) a proposal to restrict volume based tiered pricing by equity
exchanges in certain cases. If adopted, these or other potential rule changes may alter the market structure for NMS securities in
ways that would disfavor the current competing market center model and lessen the amount of volume executed off-exchange
in favor of a central limit order book model or other centralized model for order interaction. Proposed revisions to SEC Rule
3b-16, Regulation ATS, and Regulation SCI would increase the number of technology platforms that meet the definition of an
exchange and would then be required to register as an exchange or alternatively operate as an ATS, and/or operate under the
more complex and costly Regulation SCI regime. Proposed changes to Regulation ATS would revise the format of Form ATS
required to be filed and would impose additional disclosures and costs to rewrite and refile those forms. Further, on April 23,
2024, the Federal Trade Commission (FTC) announced a final rule banning most non-compete clauses in employer-employee
contracts. The final rule was scheduled to become effective on September 4, 2024, but it was enjoined by a federal district court
in September 2024 on the grounds that the rule exceeds the FTC’s authority. The FTC is appealing the ruling, and therefore its
implementation has not yet been definitively resolved. These recently adopted and potential additional changes and others may
impose additional technological, operational and compliance costs on us and create uncertainty with regard to their effects.
The Dodd-Frank Act, which has been implemented through extensive rulemaking by the SEC, the CFTC, and other
governmental agencies, includes the “Volcker Rule,” which significantly limits the ability of banks and their affiliates to engage
in proprietary trading, and Title VII, which provides a framework for the regulation of the swap markets. One of our
subsidiaries is registered with the CFTC as a floor trader, and is exempt from registration as a swap dealer based on its current
activity. Registration as a swap dealer would subject our subsidiary to various requirements, including those related to capital,
conduct, and reporting.
We have foreign subsidiaries and plan to continue to expand our international presence. The market making and
execution services industry in many foreign countries is heavily regulated, much like in the U.S. The varying compliance
requirements of these different regulatory jurisdictions and other factors may limit our ability to conduct business or expand
internationally. MiFID II represented significant change in the operation of European capital markets and became effective on
January 3, 2018. MiFID II introduced requirements for increased pre- and post-trade transparency, technological and
organizational requirements for firms deploying algorithmic trading techniques, restrictions on dark trading, and the roll out of
a new bi-lateral OTC equity trading regime called the Systematic Internaliser regime. MiFID II contains detailed rules as to the
types of platform upon which European equities trading can be conducted, including Regulated Markets, MTFs, Organized
Trading Facilities, Systematic Internalisers or equivalent third-country venues. MiFID II also requires market makers, such as
VFIL, to post firm quotes at competitive prices and contains supplemental requirements with regards to investment firms’ pre-
trade risk controls relating to the safe operation of electronic systems. MiFID II also imposed additional requirements on
trading platforms, such as additional technological requirements, clock synchronization, microsecond processing granularity,
pre-trade risk controls, transaction reporting requirements and limits on the ratio of unexecuted orders to trades. The MiFID II
regime has been under review, with European Union authorities making further changes to the regime. On February 28, 2024,
Directive (EU) 2024/790 amending MiFID II and Regulation (EU) 2024/791 amending Regulation (EU) No 600/2014 (also
known as “MiFIR”) as regards enhancing data transparency, removing obstacles to the emergence of consolidated tapes,
optimizing the trading obligations and prohibiting receiving payment for order flow were each adopted. The two acts entered
into force on March 28, 2024, with the MiFIR amending regulation applying from that date, and the MiFID II amendments
requiring adoption by Member States by September 29, 2025. These changes at the ‘Level 1’ legislative level include a
substantial number of ‘Level 2’ measures, including by means of regulatory technical standards and implementing technical
standards, that are yet to be developed.
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Further, in light of the U.K.’s withdrawal of its membership from the E.U., which is commonly referred to as “Brexit,”
the passporting regime under MiFID II, which enables firms to provide services to countries across the E.U., no longer
encompasses the U.K. VFIL and VETL continue to access U.K. markets, however, these entities do so not on the basis of
MiFID passporting rights, but as third-country entities pursuant to U.K. law. Following Brexit, VETL had continued initially to
service its U.K. client-base by means of the U.K. FCA’s Temporary Permissions Regime, pursuant to which its former MiFID
branch was deemed to be authorized and regulated by the FCA under U.K. law. As of December 8, 2023, VETL’s application
for its London branch to be authorized as a third-country branch was approved by the FCA, facilitating the long-term
operational footprint of VETL’s branch in the U.K.
Each of these legislative and regulatory requirements imposes additional technological, operational and compliance
costs on us. New laws, rules or regulations as well as any regulatory or legal actions or proceedings, changes in legislation or
regulation and changes in market customs and practices could have a material adverse effect on our business, financial
condition, results of operations, and cash flows.
Certain of our subsidiaries are subject to regulatory capital rules of the SEC, FINRA, other SROs and foreign
regulators. These rules, which specify minimum capital requirements for our regulated subsidiaries, are designed to measure the
general financial integrity and liquidity of a broker-dealer and require that at least a minimum part of its assets be kept in
relatively liquid form. Failure to maintain required minimum capital may subject a regulated subsidiary to a fine, requirement to
cease conducting business, suspension, revocation of registration or expulsion by applicable regulatory authorities, and
ultimately could require the relevant entity’s liquidation. See “Item 1A. Risk Factors - Risks Related to Our Business - Non-
compliance with applicable laws or regulatory requirements could subject us to sanctions and could negatively impact our
reputation, prospects, revenues and earnings.”
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Corporate History
We and our predecessors have been in the electronic trading and market making business for more than 20 years. We
conduct our business through Virtu Financial LLC (“Virtu Financial”) and its subsidiaries. We completed our initial public
offering (“IPO”) in April 2015, after which shares of our Class A common stock, par value $0.00001 per share (the “Class A
Common Stock”) began trading on Nasdaq under the ticker symbol “VIRT.”
Prior to our IPO, we completed a series of reorganization transactions (the “Reorganization Transactions”) pursuant to
which, among other things, we acquired equity interests in Virtu Financial as a result of certain mergers involving wholly
owned subsidiaries of ours, an affiliate of Silver Lake Partners and Temasek Holdings (Private) Limited (“Temasek”), and an
affiliate of Temasek (the “Temasek Pre-IPO Member”) (the “Mergers”), and in exchange we issued to an affiliate of Silver
Lake Partners (such affiliate, the “Silver Lake Post-IPO Stockholder”) and an affiliate of Temasek (such affiliate, the “Temasek
Post-IPO Stockholder”, and together with the Silver Lake Post-IPO Stockholder, the “Investor Post-IPO Stockholders”), shares
of our Class A Common Stock and rights to receive payments under a tax receivable agreement described below, we became
the sole managing member of Virtu Financial, all of the existing equity interests in Virtu Financial were reclassified into non-
voting common interest units (“Virtu Financial Units”), our certificate of incorporation was amended and restated to authorize
the issuance of four classes of common stock: Class A Common Stock, Class B Common Stock (as defined below), Class C
Common Stock (as defined below) and Class D Common Stock (as defined below), and the holders of Virtu Financial Units
other than us subscribed for shares of Class C common stock, par value $0.00001 per share (the “Class C Common Stock”) or
Class D common stock, par value $0.00001 per share (the “Class D Common Stock”) (in the case of the Founder Post-IPO
Member, as defined below) in an amount equal to the number of Virtu Financial Units held by such member.
The Class A Common Stock and Class C Common Stock each provide holders with one vote on all matters submitted
to a vote of stockholders, and the Class B Common Stock, par value $0.00001 per share (the “Class B Common Stock”) and
Class D Common Stock each provide holders with 10 votes on all matters submitted to a vote of stockholders. The holders of
Class C Common Stock and Class D Common Stock do not have any of the economic rights (including rights to dividends and
distributions upon liquidation) provided to holders of Class A Common Stock and Class B Common Stock. Shares of our
common stock generally vote together as a single class on all matters submitted to a vote of our stockholders.
As a result of the completion of the IPO, the Reorganization Transactions, the July 2017 Private Placement (as defined
below), and certain other secondary offerings and permitted exchanges by current and former employees of Virtu Financial
Units for shares of the Company’s Class A Common Stock, the Company holds an approximately 56.9% interest in Virtu
Financial at December 31, 2024. The remaining issued and outstanding Virtu Financial Units are held by an affiliate of Mr.
Vincent Viola (the “Founder Post-IPO Member”), two entities whose equity holders include certain current and former
members of the management of Virtu Financial, and certain other current and former members of management of Virtu
Financial (collectively, the “Virtu Post-IPO Members”). The Founder Post-IPO Member controls approximately 87.0% of the
combined voting power of our outstanding common stock as of December 31, 2024. As a result, the Founder Post-IPO Member
controls any actions requiring the general approval of our stockholders, including the election of our Board of Directors, the
adoption of amendments to our certificate of incorporation and bylaws and the approval of any merger or sale of substantially
all of our assets. The Founder Post-IPO Member is controlled by family members of Mr. Viola, our Founder and Chairman
Emeritus.
We have completed two significant acquisitions that have expanded and complemented Virtu Financial’s original
electronic trading and market making business. On July 20, 2017 (the “KCG Closing Date”), the Company completed the all-
cash acquisition (the “Acquisition of KCG”) of KCG Holdings, Inc. (“KCG”) and on March 1, 2019 (the “ITG Closing Date”),
we completed our acquisition of Investment Technology Group, Inc. (“ITG”) in an all-cash transaction (the “ITG Acquisition”).
Available Information
Our website address is www.virtu.com. The information on our website is not, and shall not be deemed to be, a part of
this Annual Report on Form 10-K or incorporated into any other filings we make with the SEC. Our Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available free
of charge on our website as soon as possible after we electronically file them with, or furnish them to, the SEC.
Our Investor Relations Department can be contacted at Virtu Financial, Inc., 1633 Broadway, New York, NY, 10019,
Attn: Investor Relations, e-mail: investor_relations@virtu.com.
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From time to time, we use our website, public conference calls, and social media channels, including our X account
(x.com/virtufinancial), our LinkedIn account (linkedin.com/company/virtu-financial), and our Instagram account
(instagram.com/virtu.financial), as additional means of disclosing public information to investors, the media and others
interested in us. It is possible that certain information we post on our website and on social media could be deemed to be
material information, and we encourage investors, the media and others interested in us to review the business and financial
information we post on our website and on the social media channels identified above. The information on our website and our
social media channels is not incorporated by reference into this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS
Risk Factors Summary
The summary of risks below provides an overview of the principal risks we are exposed to in the normal course of our
business activities. This summary does not contain all of the information that may be important to you, and you should read the
more detailed discussion of risks that follows this summary.
Business and Operations
•
Our revenues and profitability depend on trading volume, volatility, retail participation and other characteristics in the
markets in which we operate and the order flow with which we interact and therefore are subject to factors beyond our
control, are prone to significant fluctuations and are difficult to predict.
•
We are dependent upon our trading counterparties, clients and clearing houses to perform their obligations to us.
•
We may incur losses in our market making activities and our execution services businesses due to failures of our
customized trading platform, due to market risk or from a lack of perfect information.
•
The valuation of the securities we hold at any particular time may result in large and occasionally anomalous swings in
the value of our positions and in our earnings in any period.
•
We face substantial competition and other competitive dynamics which could harm our financial performance.
•
Our market making business is concentrated in U.S. equities; accordingly, our operating results may be negatively
impacted by changes that affect the U.S. equity markets.
•
We could lose significant sources of revenues if we lose any of our larger clients or sources of order flow or lose
access to an important exchange or other trading venue or if we fail to adapt to proposed new regulations, should they
become final rules.
•
We are subject to liquidity risk in our operations.
•
Self-clearing and other elements of our trade processing expose us to operational, financial and liquidity risks.
•
We have a substantial amount of indebtedness, which could negatively impact our business and financial condition,
and may limit our flexibility in operating our business.
•
We depend on our technology and our results may be negatively impacted if we cannot remain competitive.
•
Artificial intelligence and machine learning are new and emerging technologies and could ultimately cause harm to our
business.
•
Our reliance on our computer systems and software could expose us to material financial and reputational harm if any
of our computer systems or software were subject to any material disruption or corruption.
•
We could be the target of a significant cyber-attack, threat or incident that impairs internal systems, results in adverse
consequences to information our system process, store or transmit or causes reputation or monetary damages as a
consequence.
•
Our business may be harmed by computer and communication systems malfunctions, human error, failures and delays.
•
Failure or poor performance of third-party software, infrastructure or systems could adversely affect our business.
•
The use of open source software may expose us to additional risks.
•
We may not be able to protect our intellectual property rights or may be prevented from using intellectual property
necessary for our business.
•
Fluctuations in currency exchange rates could negatively impact our earnings.
•
We may incur material losses on foreign exchange transactions entered into on behalf of clients and be exposed to
material liquidity risk due to counterparty defaults or errors.
•
We may experience risks associated with future growth or expansion of our operations or acquisitions, strategic
investments or dispositions of businesses, and we may never realize the anticipated benefits of such activities.
•
Our future efforts to sell shares of our common stock or raise additional capital may be inhibited by regulations.
•
We are dependent on the continued service of certain key executives, the loss or diminished performance of whom
could have a material adverse effect on our business and our success depends, in part, on our ability to identify, recruit
and retain skilled management and technical personnel.
18
•
We may be subject to increased risks or business disruption, incur losses or suffer reputational harm in relation to or as
a result of climate change.
•
Cryptocurrency is an emerging asset class that carries unique risk, including the risk of financial loss.
Legal and Regulatory
•
Regulatory and legal uncertainties could harm our business.
•
Pending, proposed and other potential changes in laws and rules may adversely impact our business.
•
Non-compliance with applicable laws or regulatory requirements could subject us to sanctions and could negatively
impact our reputation, prospects, revenues and earnings.
•
We are subject to risks relating to litigation and potential securities law liability.
•
Proposed legislation in the European Union, the U.S. and other jurisdictions that would impose taxes on certain
financial transactions could have a material adverse effect on our business and financial results.
•
We are exposed to risks associated with our international operations and expansion and failure to comply with laws
and regulations applicable to such operations may increase costs, reduce profits, limit growth or subject us to liability.
•
Brexit continues to pose a risk of negatively impacting the global economy, financial markets and our business.
•
In connection with our historical acquisitions, the Company is subject to potential liabilities that could materially and
adversely affect our business.
Organization and Structure
•
We are a holding company and our principal asset is our 56.9% of equity interest in Virtu Financial, and we are
accordingly dependent upon distributions from Virtu Financial to pay dividends, if any, taxes and other expenses.
•
We are controlled by the Founder Post-IPO Member, whose interests in our business may be different than the
interests of other shareholders, and certain statutory provisions afforded to stockholders are not applicable to us.
•
We may be unable to remain in compliance with the covenants contained in our Credit Agreement and our obligation
to comply with these covenants may adversely affect our ability to operate our business.
•
We are exempt from certain corporate governance requirements since we are a “controlled company” within the
meaning of the Nasdaq rules, and as a result our stockholders do not have the protections afforded by these corporate
governance requirements.
•
We are required to pay the Virtu Post-IPO Members and the Investor Post-IPO Stockholders for certain tax benefits we
may claim, and the amounts we may pay could be significant.
Class A Common Stock
•
Substantial future sales of shares of our Class A common stock in the public market could cause our stock price to fall.
•
Failure to establish and maintain effective internal control over financial reporting could have a material adverse effect
on our business, financial condition, results of operations and cash flows, and stock price.
•
We intend to pay regular dividends to our stockholders, but our ability to do so may be limited by our holding
company structure, contractual restrictions and regulatory requirements.
•
Provisions in our charter documents and certain rules imposed by regulatory authorities may delay or prevent our
acquisition by a third party.
General
•
Our stock price may be volatile.
•
We incur increased costs as a result of being a public company.
•
Our stock price and trading volume could decline as a result of inaccurate or unfavorable research, or the cessation of
research coverage, about us or our business published by securities or industry analysts.
•
We may incur losses as a result of unforeseen or catastrophic events, including the emergence of another pandemic,
social unrest, terrorist attacks, extreme weather events or other natural disasters.
•
Our reported financial results depend on management’s selection of accounting methods and certain assumptions and
estimates.
19
Risks Related to Our Business and Operations
Our revenues and profitability depend on trading volume, volatility, retail participation and other characteristics of the
markets in which we operate and the order flow with which we interact, and therefore are subject to factors beyond our
control, are prone to significant fluctuations and are difficult to predict.
Our revenues and profitability depend in part on the level of trading activity of securities, derivatives and other
financial products on exchanges and in other trading venues in the U.S. and abroad, which are directly affected by factors
beyond our control, including economic and political conditions, regulatory changes, emergencies and pandemics, broad trends
in business and finance and changes in the markets in which such transactions occur. Weaknesses in the markets in which we
operate, including economic slowdowns in recent years, have historically resulted in reduced trading volumes for us. Declines
in trading volumes generally result in lower revenues from market making and transaction execution activities. Lower levels of
volatility generally have the same directional impact. Declines in market values of securities or other financial instruments can
also result in illiquid markets, which can also result in lower revenues and profitability from market making and transaction
execution activities. Lower price levels of securities and other financial instruments, as well as compressed bid/ask spreads,
which often follow lower pricing, decreases in retail participation levels and other changes in market and/or order flow
characteristics can further diminish the opportunities across markets we serve and order flow with which we interact, resulting
in reduced revenues and profitability. These factors can also increase the potential for losses on securities or other financial
instruments held in inventory and failures of buyers and sellers to fulfill their obligations and settle their trades, as well as
claims and litigation. Declines in the trading activity of institutional or “buy-side” market participants may result in lower
revenue and/or diminished opportunities for us to earn commissions from execution activities. Any of the foregoing factors
could have a material adverse effect on our business, financial condition, results of operations and cash flows. In the past, our
revenues and operating results have varied significantly from period to period due primarily to movements and trends in the
underlying markets and to fluctuations in trading volumes and volatility levels. As a result, period to period comparisons of our
revenues and operating results may not be meaningful, and future revenues and profitability may be subject to significant
fluctuations or declines.
We are dependent upon our trading counterparties, clients and clearing houses to perform their obligations to us.
Our business consists of providing consistent two-sided liquidity to market participants across numerous geographies
and asset classes as well as providing trade execution and related services to clients. In the event of a systemic market event,
resulting from large price movements or otherwise, certain market participants may not be able to meet their obligations to their
trading counterparties, who, in turn, may not be able to meet their obligations to their other trading counterparties, which could
lead to major defaults by one or more market participants. Further, one or more counterparties or clients may suffer liquidity or
solvency challenges as a result of internal or other idiosyncratic events, and this may prevent these counterparties or clients, and
potentially their counterparties or clients, from meeting their obligations to us. Following the implementation of certain
mandates under the Dodd-Frank Act in the U.S. and similar legislation worldwide, many trades in the securities and futures
markets, though not all, and an increasing number of trades in the over-the-counter derivatives markets, are cleared through
central counterparties. These central counterparties assume, and specialize in managing, counterparty performance risk relating
to such trades. However, even when trades are cleared in this manner, there can be no assurance that a clearing house’s risk
management methodology will be adequate to manage one or more defaults. Given the concentration of counterparty
performance risk that is concentrated in central clearing parties, any failure by a clearing house to properly manage a default
could lead to a systemic market failure. If our trading counterparties do not meet their obligations to us, or if any central
clearing parties fail to properly manage defaults by market participants, we could suffer a material adverse effect on our
business, financial condition, results of operations and cash flows.
We may incur losses in our market making activities and our execution services businesses due to failures of our customized
trading platform, due to market risk or from a lack of perfect information.
The success of our business is substantially dependent on the accuracy and performance of our customized trading
platform, which evaluates and monitors the risks inherent in our market making strategies and execution services business,
assimilates market data and reevaluates our outstanding quotes and positions continuously throughout the trading day. Our
strategies are designed to automatically rebalance our positions throughout the trading day to manage risk exposures on our
positions. Flaws in our strategies, order management system, risk management processes, latencies or inaccuracies in the
market data that we use to generate our quotes, or human error in managing risk parameters or other strategy inputs, may lead to
unexpected and unprofitable trades, which may result in material trading losses and could have a material adverse effect on our
business, financial condition, results of operations and cash flows.
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A significant portion of our revenues are derived from our trading as principal in our role as a formal or registered
market maker and liquidity provider on various exchanges and markets, as well as direct to customer market making. We may
incur trading losses relating to these activities since each primarily involves the purchase, sale or short sale of securities, futures
and other financial instruments for our own account. In any period, we may incur significant trading losses for a variety of
reasons, including price changes, performance, size and volatility of portfolios we may hold in connection with our customer
market making activities, lack of liquidity in instruments in which we have positions and the required performance of our
market making obligations. Furthermore, we may from time to time develop large position concentrations in securities or other
financial instruments of a single issuer or issuers engaged in a specific industry, or alternatively a single future or other financial
instrument, which would result in the risk of higher trading losses than if our concentration were lower.
These risks may limit or restrict, for example, our ability to either resell securities we have purchased or to repurchase
securities we have sold. In addition, we may experience difficulty borrowing securities to make delivery to purchasers to whom
we have sold securities short or lenders from whom we have borrowed securities.
In our role as a market maker, we attempt to derive a profit from bid/ask spreads. However, competitive forces often
require us to match or improve upon the quotes that other market makers display, thereby narrowing bid/ask spreads, and to
hold long or short positions in securities, futures or other financial instruments. We may at times trade with others who have
information that may be more accurate or complete than the information we have, and as a result we may accumulate
unfavorable positions preceding large price movements in a given instrument. We cannot assure you that we will be able to
manage these risks successfully or that we will not experience significant losses from such activities, which could have a
material adverse effect on our business, financial condition, results of operations and cash flows.
Our risk management activities related to our on-exchange market making strategies utilize a four-pronged approach,
consisting of strategy lockdowns, centralized strategy monitoring, aggregate exposure monitoring and operational controls. In
particular, messages that leave our trading environment first must pass through a series of preset risk controls or “lockdowns”
that are intended to minimize the likelihood of unintended activities. In certain cases, this layer of risk management, which adds
a layer of latency to our process, may limit our ability to profit from acute volatility in the markets. This would be the case, for
example, where a particular strategy being utilized by one of our traders is temporarily locked down for generating revenue in
excess of the preset risk limit. Even if we are able to quickly and correctly identify the reasons for a lockdown and quickly
resume the trading strategy, we may limit our potential upside as a result of our risk management policies.
The valuation of the securities we hold at any particular time may result in large and occasionally anomalous swings in the
value of our positions and in our earnings in any period.
The market prices of our long and short positions are reflected on our books at closing prices, which are typically the
last trade prices before the official close of the primary exchange on which each such security trades. Given that we manage a
globally integrated portfolio, we may have large and substantially offsetting positions in securities that trade on different
exchanges that close at different times of the trading day and may be denominated in different currencies. Further, there may be
large and occasionally anomalous swings in the value of our positions on any particular day and in our earnings in any period.
Such swings may be especially pronounced on the last business day of each calendar quarter, as the discrepancy in official
closing prices resulting from the asynchronous closing times may cause us to recognize a gain or loss in one quarter which
would be substantially offset by a corresponding loss or gain in the following quarter.
We face substantial competition and other competitive dynamics which could harm our financial performance.
Revenues from our market making activities depend on our ability to offer to buy and sell financial instruments at
prices that are attractive and represent the best bid and/or offer in a given instrument at a given time. To attract order flow, we
compete with other firms not only on our ability to provide liquidity at competitive prices, but also on other factors such as
order execution speed and technology. Similarly, revenues from our technology services and agency execution services depend
on our ability to offer cutting edge technology and risk management solutions. Across our businesses, our relationships with
clients, customers and other counterparties could be adversely impacted by competitive dynamics across the industry, including
but not limited to consolidation in the retail brokerage industry or asset management industry.
Our competitors include other registered market makers, as well as unregulated or lesser-regulated trading and
technology firms that also compete to provide liquidity and execution services. Our competitors range from sole proprietors
with very limited resources to highly sophisticated groups, hedge funds, well-capitalized broker-dealers and proprietary trading
firms or other market makers that have substantially greater financial and other resources than we do. These larger and better
capitalized competitors may be better able to respond to changes in the market making industry, to compete for skilled
professionals, to finance acquisitions, to fund internal growth, to manage costs and expenses and to compete for market share
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generally. Trading firms that are not registered as broker-dealers or broker-dealers not registered as market makers may in some
instances have certain advantages over more regulated firms, including our subsidiaries that may allow them to bypass
regulatory restrictions and trade more cheaply than more regulated participants on some markets or exchanges. In addition, we
may in the future face enhanced competition from new market participants that may also have substantially greater financial
and other resources than we do, which may result in compressed bid/ask spreads in the marketplace that may negatively impact
our financial performance. Moreover, current and potential competitors may establish cooperative relationships among
themselves or with third parties or may consolidate to enhance their services and products. The trend toward increased
competition in our business is expected to continue, and it is possible that our competitors may acquire increased market share.
Increased competition or consolidation in the marketplace could reduce the bid/ask spreads on which our business and
profitability depend, and may also reduce commissions paid by institutional clients for execution services, negatively impacting
our financial performance. As a result, there can be no assurance that we will be able to compete effectively with current or
future competitors, which could have a material adverse effect on our business, financial condition, results of operations and
cash flows.
Our market making business is concentrated in U.S. equities; accordingly, our operating results may be negatively impacted
by changes that affect the U.S. equity markets.
The majority of our market making revenue for 2024 was derived from our market making in U.S. equities. The level
of activity in the U.S. equity markets is directly affected by factors beyond our control, including U.S. economic and political
conditions, broad trends in business and finance, legislative and regulatory changes and changes in volume and price levels of
U.S. equity transactions. As a result, to the extent these or other factors reduce trading volume or volatility or result in a
downturn in the U.S. equity markets, we may experience a material adverse effect on our business, financial condition and
operating results.
We could lose significant sources of revenues if we lose any of our larger clients or sources of order flow or lose access to an
important exchange or other trading venue or if we fail to adapt to proposed new regulations, should they become final
rules.
During a given period, a limited number of clients may account for a significant portion of our order flow, revenues
and profitability, and we expect a large portion of the future demand for, and profitability from, our trade execution services to
remain concentrated within a limited number of clients. The loss of one or more larger clients could have an adverse effect on
our revenues and profitability in the future. None of these clients is currently contractually obligated to utilize us for trade
execution services and, accordingly, these clients may direct their trade execution business to other execution providers or
market centers at any time. Some of these clients have grown organically or acquired market makers and specialist firms to
internalize order flow or have entered into strategic relationships with competitors. There can be no assurance that we will be
able to retain these significant clients or that such clients will maintain or increase their demand for our trade execution
services. Further, the continued integration of legacy systems and the development of new systems could result in disruptions to
our ongoing businesses and relationships or cause issues with standards, controls, procedures and policies that adversely affect
our ability to maintain relationships with customers, or to solicit new customers. Further, changes in applicable laws,
regulations or rules could adversely impact our relationship with any such client or opportunities to interact with order flows
from such clients. The loss, or a significant reduction, of demand for our services from any of these clients could have a
material adverse effect on our business, financial condition, results of operations and cash flows.
Similarly, changes in applicable laws, regulations or rules promulgated by government administrations, regulators or
exchanges could conceivably prevent us from providing liquidity directly to clients or counterparties or other trading venue
where we provide liquidity today. Following recent regulatory attention on U.S. equities market structure, including the practice
of wholesale market making and other forms of off exchange trading, the SEC proposed the adoption of new Rule 615, which,
if adopted, would dramatically change U.S. equities market structure, the routing, handling and potentially the amount,
character and cost of retail order flow, and therefore may substantially diminish the volume of our transactions with retail client
orders. This and other potential legal and regulatory changes are discussed in further detail in “Item 1A. Risk Factors—Legal
and Regulatory Risks.” Though our revenues are diversified across exchanges and other trading venues, asset classes and
geographies, the loss of access to or reduction in opportunities to transact with one or more significant clients or counterparties,
exchanges or other trading venues for any reason could have a material adverse effect on our business, financial condition,
results of operations and cash flows.
We are subject to liquidity risk in our operations.
We require liquidity to fund various ongoing obligations, including operating expenses, margin requirements, capital
expenditures, debt service and dividend payments. Our main sources of liquidity are cash flow from the operations of our
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subsidiaries, our broker-dealer revolving credit facilities (described under “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources - Long-Term Borrowings”), margin financing
provided by our prime brokers and cash on hand. Our liquidity could be materially impaired by a number of factors, including
increased funding requirements for margin or settlement with central clearinghouses, prime brokers or counterparties, reduced
business activity due to a market downturn, adverse regulatory action or a downgrade of our credit rating. If our business
activities decrease or we are unable to borrow additional funds in the future on terms that are acceptable to us, or at all, we
could suffer a material adverse effect on our business, financial condition, results of operations and cash flows.
Self-clearing and other elements of our trade processing operations expose us to significant operational, financial and
liquidity risks.
We currently self-clear a substantial portion of our domestic equity trades and may expand our self-clearing operations
internationally and across product offerings and asset classes in the future. Self-clearing exposes our business to operational
risks, including business disruption, operational inefficiencies, liquidity, financing risks, counterparty performance risk and
potentially increased expenses and lost revenue opportunities. While our clearing platform, operational processes, risk
methodologies, enhanced infrastructure and current and future financing arrangements have been carefully designed, we may
nevertheless encounter difficulties that may lead to operating inefficiencies, including delays in implementation, disruption in
the infrastructure that supports the business, inadequate liquidity and financial loss. Any such delay, disruption or failure could
negatively impact our ability to effect transactions and manage our exposure to risk and could have a material adverse effect on
our business, financial condition, results of operations cash flows.
In connection with our operation of our client execution services business, we are required to finance certain of our
clients’ unsettled positions from time to time and we could be held responsible for the defaults of our clients. Default by our
clients may also give rise to our incurring penalties imposed by execution venues, regulatory authorities and clearing and
settlement organizations. Although we regularly review our credit exposure, default risk may arise from events or
circumstances that may be difficult to detect or foresee. In addition, concerns about, or a default by, one institution could lead to
significant liquidity problems, losses or defaults by other institutions that could in turn adversely affect us.
Additionally, elevated levels of volume and volatility, which have and may continue to result in material increases in
our trading activities both in our market making segment and in our execution services segment, have previously and may in the
future result in significantly increased margin requirements with the National Securities Clearing Corporation (“NSCC”), the
Options Clearing Corporation (“OCC”), as well as certain prime brokers, clearing brokers, and other counterparties. In order to
manage these increased daily funding obligations, we have taken and may continue to have to take measures to increase
available short-term liquidity and to reduce our short-term funding requirements, which may require us to depend on additional
sources of liquidity and upon the availability of third parties for services such as trade clearing, and have required and may
continue to require us to limit certain of our activities in certain asset classes or products. If such sources of short-term liquidity
or third-party services are not available, or if we encounter challenges obtaining such short-term liquidity or third-party services
on terms favorable to us or at all, then our business, financial condition and results of operations may be adversely impacted.
We have a substantial amount of indebtedness, which could negatively impact our business and financial condition, and
may limit our flexibility in operating our business.
As of December 31, 2024, we had an aggregate of $1,767.3 million outstanding indebtedness under our long-term
borrowings. In 2022, we incurred $1.8 billion of term loans under the Credit Agreement (as defined below) in connection with a
refinancing transaction entered into on January 13, 2022, which was subsequently amended to $1.2 billion on June 21, 2024. In
2024, we also incurred $0.5 billion of senior secured first lien notes. See Note 9 “Borrowings” of Part II, Item 8 “Financial
Statements and Supplementary Data” of this Annual Report on Form 10-K for further details. If we cannot generate sufficient
cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets, or issue equity to obtain
necessary funds. We do not know whether we will be able to take any of such actions on a timely basis, on terms satisfactory to
us or at all.
The Credit Agreement also provides for a revolving credit facility which allows us to borrow on a revolving basis,
subject to maximum borrowing limit of $250.0 million, which was subsequently amended to $300.0 million, under which we
had no borrowing outstanding as of December 31, 2024. Additionally, we are party to an uncommitted facility (the
“Uncommitted Facility”), subject to a maximum borrowing limit of $400.0 million, under which we had no borrowings
outstanding as of December 31, 2024. We are also a party to a $650.0 million broker-dealer revolving credit facility (the
“Committed Facility”) under which we had no borrowings outstanding as of December 31, 2024. Also, certain of our non-
guarantor subsidiaries are party to various short-term credit facilities with various prime brokers and other financial institutions
in an aggregate amount of $623.2 million under which we had $123.0 million in borrowings outstanding at December 31, 2024.
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The credit agreement entered into on January 13, 2022 by and among VFH, the lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent and subsequently amended on June 21, 2024 (the “Credit Agreement”), and any
other existing or future indebtedness of ours may contain, a number of covenants that impose significant operating and financial
restrictions on us, including restrictions on our and our restricted subsidiaries’ ability to, among other things:
•
incur additional debt, guarantee indebtedness or issue certain preferred equity interests;
•
pay dividends on or make distributions in respect of, or repurchase or redeem, our equity interests or make other
restricted payments;
•
prepay, redeem or repurchase certain debt;
•
make loans or certain investments;
•
sell certain assets;
•
create liens on our assets;
•
consolidate, merge or sell or otherwise dispose of all or substantially all of our assets;
•
enter into certain transactions with our affiliates;
•
enter into agreements restricting our subsidiaries’ ability to pay dividends; and
•
designate our subsidiaries as unrestricted subsidiaries.
As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable
to successfully execute our strategy, engage in favorable business activities or finance future operations or capital needs. In
addition, the revolving credit facility under the Credit Agreement is subject to a springing financial covenant which, if in effect,
may require us to take action to reduce our debt or to act in a manner contrary to our business objectives.
We may be unable to remain in compliance with covenants contained in the Credit Agreement, and our obligation to
comply with these covenants may adversely affect our ability to operate our business. A failure to comply with the covenants
under the Credit Agreement or any of our other future indebtedness could result in an event of default, which, if not cured or
waived, could have a material adverse effect on our business, financial condition, results of operations and cash flows. If any
such event of default has occurred and is continuing, the lenders under our Credit Agreement, among other things:
•
will not be required to lend any additional amounts to us; or
•
could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be
immediately due and payable and terminate all commitments to extend further credit;
any of which could result in cross defaults under our other indebtedness. If we default on our indebtedness, our business,
financial condition and results of operation could suffer a material adverse effect.
We pledge substantially all of our and our guarantor subsidiaries’ assets as collateral under the Credit Agreement. If
we were unable to repay such indebtedness, the lenders under the Credit Agreement could proceed to exercise remedies against
the collateral granted to them to secure that indebtedness. If any of our outstanding indebtedness under the Credit Agreement or
our other indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay such
indebtedness in full. We do not have sufficient working capital to satisfy our debt obligations in the event of an acceleration of
all or a significant part of our outstanding indebtedness.
Despite our substantial indebtedness, we may still be able to incur significantly more debt, which could intensify the
risks associated with our substantial indebtedness.
Borrowings under the Credit Agreement, the Uncommitted Facility and the Committed Facility are at variable rates of
interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on certain of our variable rate
indebtedness will increase even though the amount borrowed remained the same, and our net income and cash flows, including
cash available for servicing our indebtedness, will correspondingly decrease. We have entered into, and may enter into
additional, interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest
rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any
swaps we enter into may not fully mitigate our interest rate risk, may prove disadvantageous or may create additional risks.
Rising interest rates could also limit our ability to refinance existing debt when it matures or cause us to pay higher interest
rates upon refinancing.
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We depend on our technology, and our future results may be negatively impacted if we cannot remain technologically
competitive.
We believe that our success in the past has largely been attributable to our technology, which has taken many years
and significant capital expenditures to develop. If technology equivalent to ours becomes more widely available for any reason,
our operating results may be negatively impacted. Additionally, adoption or development of similar or more advanced
technologies by our competitors, including but not limited to artificial intelligence and related technologies, may require that we
devote substantial resources to the development of more advanced technology to remain competitive. Regulators and exchanges
may also introduce risk control and other technological requirements on our business that could result in increased costs of
compliance and divert our technological resources away from their primary strategy development and maintenance duties. The
markets in which we compete are characterized by rapidly changing technology, evolving industry standards and changing
trading systems, practices and techniques. The widespread adoption of new internet, networking or telecommunications
technologies or other technological changes could require us to incur substantial expenditures to modify or adapt our services or
infrastructure. We may not be able to anticipate or respond adequately or in a cost-efficient and competitive manner to
technological advancements (including advancements related to low-latency technologies, execution and messaging speeds) or
changing industry standards. If any of these risks materialize, it could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
Artificial intelligence and machine learning are new and emerging technologies and could ultimately cause harm to our
business.
We currently and in the future may leverage internally developed and third-party developed artificial intelligence in
certain limited aspects of our business and internal processes. Third parties with whom we interact and on whom we rely for
services may also utilize these emerging technologies. We believe these technologies have the potential to improve efficiency,
accuracy and scalability of certain business and technological processes but they also present potential risks and liabilities,
including the potential for enhanced governmental or regulatory regulation and scrutiny, litigation, compliance issues, ethical
concerns, confidentiality or security risks, errors, artificial intelligence hallucinations, as well as other factors that could
adversely affect our reputation, business, operating results, and financial condition. There can be no assurance that we will
realize any potential improvements or enhancements in our business from these technologies.
Our reliance on our computer systems and software could expose us to material financial and reputational harm if any of
our computer systems or software were subject to any material disruption or corruption.
We rely significantly on our computer systems and software to receive and properly process internal and external data
and utilize such data to generate orders and other messages. A disruption or corruption of the proper functioning of our
computer systems or software could cause us to make erroneous trades or result in other negative circumstances, which could
result in material losses or reputational harm. We cannot guarantee that our efforts to maintain competitive computer systems
and software will be successful. Our computer systems and software may fail or be subject to bugs or other errors, including
human error, resulting in service interruptions or other unintended consequences. If any of these risks materialize, they could
have a material adverse effect on our business, financial condition, results of operations and cash flows.
We could be the target of a significant cyber-attack, threat or incident that impairs internal systems, results in adverse
consequences to information our system process, store or transmit or causes reputation or monetary damages as a
consequence.
Our business relies on technology and automation to perform significant functions within our firm. Because of our
reliance on technology, we may be susceptible to various forms of cyber-attacks by third parties or insiders. Like other financial
services firms, we and our third-party service providers have been in the past and may in the future be the target of cyber-
attacks. Though we take steps to mitigate the various cyber threats and devote significant resources to maintain and update our
systems and networks, we may be unable to anticipate attacks or to implement adequate preventative measures. We are not
aware of any material losses we have incurred relating to cyber-attacks or other information security breaches, though we may
experience such material losses in the future. Our cybersecurity measures may not detect or prevent all attempts to compromise
our systems, including denial-of-service attacks, viruses, malicious software, attacks leveraging artificial intelligence tools or
methods, ransomware, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions
that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain or
otherwise result in financial losses or damages to our firm. Furthermore, security measures employed by third-party service
providers may ultimately prove to be ineffective at countering threats and therefore could result in adverse impacts to our
business, operations, or confidential information, depending upon our relationship with and exposure to a given services
provider and the nature of the services provided. Although we maintain insurance coverage that may, subject to policy terms
and conditions, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or may not
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cover any losses. Breaches of our cybersecurity measures or those of our third-party service providers could result in any of the
following: unauthorized access to our systems; unauthorized access to and misappropriation of information or data, including
confidential or proprietary information about ourselves, third parties with whom we do business or our proprietary systems;
viruses, worms, spyware, ransomware, or other malware being placed in our systems and intellectual property; deletion or
modification of client information; or a denial-of-service or other interruptions to our business operations. Any actual or
perceived breach of our cybersecurity could damage our reputation, expose us to a risk of loss or litigation and possible
liability, require us to expend significant capital and other resources to alleviate problems caused by such breaches and
otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our business may be harmed by computer and communication systems malfunctions, human error, failures and delays.
Our business activities are heavily dependent on the integrity and performance of the computer and communications
systems supporting them. Our systems and operations are vulnerable to damage or interruption from human error, software
bugs and errors, electronic and physical security breaches, natural disasters, economic or political developments, pandemics,
weather events, power loss, utility or internet outages, computer viruses, intentional acts of vandalism, terrorism, geopolitical
and/or global conflict, war and other similar events. Extraordinary trading volumes or other events could cause our computer
systems to operate in ways that we did not intend, at an unacceptably low speed or even fail. While we have invested significant
amounts of capital to upgrade the capacity, reliability and scalability of our systems, there can be no assurance that our systems
will always operate properly or be sufficient to handle such extraordinary trading volumes. Any disruption for any reason in the
proper functioning or any corruption of our software or erroneous or corrupted data may cause us to make erroneous trades or
suspend our services and could have a material adverse effect on our business, financial condition, results of operations and
cash flows.
Although our systems and infrastructure are generally designed to accommodate additional growth without redesign or
replacement, we may need to make significant investments in additional hardware and software to accommodate growth.
Failure to make necessary expansions and upgrades to our systems and infrastructure could not only limit our growth and
business prospects but could also cause substantial losses and have a material adverse effect on our business, financial
condition, results of operations and cash flows.
Since the timing and impact of disasters and disruptions are unpredictable, we may not be able to respond to actual
events as they occur. Business disruptions can vary in their scope and significance and can affect one or more of our facilities.
These disruptions may occur as a result of events that affect only our buildings or systems or those of such third parties, or as a
result of events with a broader impact globally, regionally or in the cities where those buildings or systems are located,
including, but not limited to, natural disasters, economic or political developments, pandemics, weather events, terrorism,
geopolitical and/or global conflict, war and other similar events.
Further, the severity of the disruption can also vary from minimal to severe. Although we have employed efforts to
develop, implement and maintain reasonable disaster recovery and business continuity plans, we cannot guarantee that our
systems will fully recover after a significant business disruption in a timely fashion or at all. Our ability to conduct business
may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which we
are located. This may include a disruption involving electrical, satellite, undersea cable or other communications, internet,
transportation or other services facilities used by us, our employees or third parties with which we conduct business. If we are
prevented from using any of our current trading operations, or if our business continuity operations do not work effectively, we
may not have complete business continuity, which could have a material adverse effect on our business, financial condition,
results of operations and cash flows.
Failure or poor performance of third-party software, infrastructure or systems on which we rely could adversely affect our
business.
We depend on third parties to provide and maintain certain infrastructure that is critical to our business. For example,
we rely on third parties to provide software, data center services and dedicated fiber optic, microwave, wireline and wireless
communication infrastructure. This infrastructure may malfunction or fail due to events outside of our control, which could
disrupt our operations and have a material adverse effect on our business, financial condition, results of operations and cash
flows. Any failure to maintain and renew our relationships with these third parties on commercially favorable terms, or to enter
into similar relationships in the future, could have a material adverse effect on our business, financial condition, results of
operations and cash flows.
We also rely on certain third-party software, third-party computer systems and third-party service providers, including
clearing systems, exchange systems, alternate trading systems, order routing systems, internet service providers,
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communications facilities and other facilities. Any interruption in these third-party services or software, deterioration in their
performance, or other improper operation could interfere with our trading activities, cause losses due to erroneous or delayed
responses, or otherwise be disruptive to our business. If our arrangements with any third party are terminated, we may not be
able to find an alternative source of software or systems support on a timely basis or on commercially reasonable terms. This
could also have a material adverse effect on our business, financial condition, results of operations and cash flows.
The use of open source software may expose us to additional risks.
We use software development tools covered by open source licenses and may incorporate such open source software
into our proprietary software from time to time. “Open source software” refers to any code, shareware or other software that is
made generally available to the public without requiring payment of fees or royalties and/or that may require disclosure or
licensing of any software that incorporates such source code, shareware or other software. Given the nature of open source
software, third parties might assert contractual or copyright and other intellectual property-related claims against us based on
our use of such tools and software programs or might seek to compel the disclosure of the source code of our software or other
proprietary information. If any such claims materialize, we could be required to (i) seek licenses from third parties in order to
continue to use such tools and software or to continue to operate certain elements of our technology, (ii) release certain
proprietary software code comprising our modifications to such open source software, (iii) make our software available under
the terms of an open source license, (iv) re-engineer all, or a portion of, that software, any of which could materially and
adversely affect our business, financial condition, results of operations and cash flows or (v) be required to pay significant
damages as a result of substantiated unauthorized use. While we monitor the use of all open source software in our solutions,
processes and technology and try to ensure that no open source software is used (i) in such a way as to require us to disclose the
source code to the related solution when we do not wish to do so nor (ii) in connection with critical or fundamental elements of
our software or technology, such use may have inadvertently occurred in deploying our proprietary solutions. If a third-party
software provider has incorporated certain types of open source software into software we license from such third party for our
products and solutions, we could, under certain circumstances, be required to disclose the source code to our solutions. In
addition to risks related to license requirements, usage of open software can lead to greater risks than use of third-party
commercial software because open source licensors generally do not provide warranties or controls on the origin of the
software. Many of the risks associated with usage of open source software cannot be eliminated and could potentially have a
material adverse effect on our business, financial condition, results of operations and cash flows.
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 federal and state law, trade secrets, trademarks, domain names, copyrights and contract law to protect our
intellectual property and proprietary technology. It is possible that third parties may copy or otherwise obtain and use our
intellectual property or proprietary technology without authorization or otherwise infringe on our rights. For example, while we
have a policy of entering into confidentiality, intellectual property invention assignment and/or non-competition and
non-solicitation agreements or restrictions with our employees, independent contractors and business partners, such agreements
may not provide adequate protection or may be breached, or our proprietary technology may otherwise become available to or
be independently developed by our competitors. The promulgation of laws or rules which require the maintenance of source
code or other intellectual property in a repository subject to certain requirements and/or which enhance or facilitate access to
such source code by regulatory authorities could inhibit our ability to protect against unauthorized dissemination or use of our
intellectual property. Third parties have alleged and may in the future allege that we are infringing, misappropriating or
otherwise violating their intellectual property rights. Third parties may initiate litigation against us without warning, or may
send us letters or other communications that make allegations without initiating litigation. We may elect not to respond to these
letters or other communications if we believe they are without merit, or we may attempt to resolve these disputes out of court by
negotiating a license, but in either case it is possible that such disputes will ultimately result in litigation. Any such claims could
interfere with our ability to use technology or intellectual property that is material to the operation of our business. Such claims
may be made by competitors seeking to obtain a competitive advantage or by other parties, such as entities that purchase
intellectual property assets for the purpose of bringing infringement claims. We also periodically employ individuals who were
previously employed by our competitors or potential competitors, and we may therefore be subject to claims that such
employees have used or disclosed the alleged trade secrets or other proprietary information of their former employers.
At times we rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the
validity and scope of the proprietary rights of others or defend against claims of infringement or invalidity. Any such litigation,
whether successful or unsuccessful, could result in substantial costs and the diversion of resources and the attention of
management. If unsuccessful, such litigation could result in the loss of important intellectual property rights, require us to pay
substantial damages, subject us to injunctions that prevent us from using certain intellectual property, require us to make
admissions that affect our reputation in the marketplace and require us to enter into license agreements that may not be
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available on favorable terms or at all. Finally, even if we prevail in any litigation, the remedy may not be commercially
meaningful or fully compensate us for the harm we suffer or the costs we incur. Any of the foregoing could have a material
adverse effect on our business, financial condition, results of operations and cash flows.
Fluctuations in currency exchange rates could negatively impact our earnings.
A significant portion of our international business is conducted in currencies other than the U.S. dollar, and therefore
changes in foreign exchange rates relative to the U.S. dollar have in the past and can in the future affect the value of our
non-U.S. dollar net assets, revenues and expenses. Although we closely monitor potential exposures as a result of these
fluctuations in currencies, and where cost-justified we adopt strategies that are designed to reduce the impact of these
fluctuations on our financial performance, including the financing of non-U.S. dollar assets with borrowings in the same
currency and the use of various hedging transactions related to net assets, revenues, expenses or cash flows, there can be no
assurance that we will be successful in managing our foreign exchange risk. Our exposure to currency exchange rate
fluctuations will grow if the relative contribution of our operations outside the U.S. increases. Any material fluctuations in
currencies could have a material effect on our financial condition, results of operations and cash flows.
We may incur material losses on foreign exchange transactions entered into on behalf of clients and be exposed to material
liquidity risk due to counterparty defaults or errors.
We enable clients to settle cross-border equity transactions in their local currency through the use of foreign exchange
contracts. These arrangements typically involve the delivery of securities or cash to a counterparty that is not processed through
a central clearing facility in exchange for a simultaneous receipt of cash or securities. We may operate as either a principal or
agent in these transactions. As a result, a default by one of our counterparties prior to the settlement of their obligation could
materially impact our liquidity and have a material adverse effect on our financial condition and results of operations.
In addition, we are exposed to operational risk. Employee and technological errors in executing, recording or reporting
foreign exchange transactions may result in material losses due to the large size of such transactions and the underlying market
risk in correcting such errors.
We may experience risks associated with future growth or expansion of our operations or acquisitions, strategic investments
or dispositions of businesses, and we may never realize the anticipated benefits of such activities.
As a part of our business strategy, we may make acquisitions or significant investments in and/or disposals of
businesses. Any such future acquisitions, investments and/or dispositions would be accompanied by risks such as assessment of
values for acquired businesses, intangible assets and technologies, difficulties in assimilating the operations and personnel of
acquired companies or businesses, diversion of our management’s attention from ongoing business concerns, our potential
inability to maximize our financial and strategic position through the successful incorporation or disposition of operations,
maintenance of uniform standards, controls, procedures and policies and the impairment of existing relationships with
employees, contractors, suppliers and customers as a result of the integration of new management personnel and cost-saving
initiatives. We cannot guarantee that we will be able to successfully integrate any company or business that we might acquire in
the future, and our failure to do so could harm our current business.
In addition, we may not realize the anticipated benefits of any such transactions, and there may be other unanticipated
or unidentified effects. While we would seek protection, for example, through warranties and indemnities in the case of
acquisitions, significant liabilities may not be identified in due diligence or come to light after the expiration of warranty or
indemnity periods. Additionally, while we would seek to limit our ongoing exposure, for example, through liability caps and
period limits on warranties and indemnities in the case of disposals, some warranties and indemnities may give rise to
unexpected and significant liabilities. If we fail to realize any such anticipated benefits, or if we experience any such
unanticipated or unidentified effects in connection with any future acquisitions, investments or dispositions, we could suffer a
material adverse effect on our business, financial condition, results of operations and cash flows. Finally, strategic investments
may involve additional risks associated with holding a minority or noncontrolling position in an illiquid business or asset,
including losses on investment along with failures to realize anticipated strategic benefits associated with an investment.
Our future efforts to sell shares of our common stock or raise additional capital may be inhibited by regulations.
As certain of our subsidiaries are members of FINRA and other SROs, we are subject to certain regulations regarding
changes in ownership or control and material changes in operations. For example, FINRA Rule 1017 generally provides that
FINRA approval must be obtained in connection with certain change of ownership or control transactions, such as a transaction
that results in a single entity or person owning 25% or more our equity. Similarly, VFIL, VETL and VIUK, our regulated
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subsidiaries in Ireland and the U.K., are subject to change in control regulations promulgated by the CBI and/or the FCA, and
other registered or regulated foreign subsidiaries may be subject to similar regulations in applicable jurisdictions. As a result of
these regulations, our future efforts to sell shares of our common stock or raise additional capital may be delayed or prohibited.
We may be subject to similar restrictions in other jurisdictions in which we operate.
We are dependent on the continued service of certain key executives, the loss or diminished performance of whom could
have a material adverse effect on our business, and our success depends in part on our ability to identify, recruit and retain
skilled management and technical personnel.
Our performance is substantially dependent on the performance of our senior management, including Douglas Cifu,
our Chief Executive Officer, Joseph Molluso, our Co-President and Co-Chief Operating Officer, Brett Fairclough, our Co-
President and Co-Chief Operating Officer, Cindy Lee, our Chief Financial Officer and Stephen Cavoli, our Executive Vice
President, Global Head of Execution Services. In connection with and subsequent to the IPO, we have entered into employment
and other related agreements with certain members of our senior management team that restrict their ability to compete with us
should they decide to leave our Company. Even though we have entered into these agreements, we cannot be sure that any
member of our senior management will remain with us or that they will not compete with us in the future. The loss of any
member of our senior management team could impair our ability to execute our business plan and growth strategy and have a
negative impact on our revenues, in addition to potentially causing employee morale problems and/or the loss of key
employees. In particular, Mr. Cifu invests in other businesses and spends time on such matters, which could divert his attention
from us. Our employment agreement with Mr. Cifu specifically permits his participation in and attention to certain other
business activities, including but not necessarily limited to his role as the Vice Chairman and Alternate Governor of the Florida
Panthers, a National Hockey League franchise. We cannot guarantee that these or other permitted outside activities will not
impact his performance as Chief Executive Officer.
Our future success depends, in part, upon our continued ability to identify, attract, hire and retain highly qualified
personnel, including skilled technical, management, product and technology, trading, sales and marketing personnel, all of
whom are in high demand and are often subject to competing offers. Competition for qualified personnel in the financial
services industry is intense and we cannot assure you that we will be able to hire or retain a sufficient number of qualified
personnel to meet our requirements, or that we will be able to do so at salary, benefit and other compensation costs that are
acceptable to us or that would allow us to achieve operating results consistent with our historical results. A loss of qualified
employees, or an inability to attract, retain and motivate additional highly skilled employees in the future, could have a material
adverse effect on our business.
We may be subject to increased risks or business disruption, incur losses or suffer reputational harm in relation to or as a
result of climate change.
Climate change could manifest as a financial risk to us either through changes in the physical climate or from the
process of transitioning to a low-carbon economy, including changes in climate policy or in the regulation of financial
institutions with respect to risks posed by climate change. Potential events or disruptions of this nature include significant
rainfall, flooding, increased frequency or intensity of wildfires, prolonged drought, rising sea levels and rising heat index, any
of which could result in operational risk to our Company or could cause broader market wide disruptions. Additionally, our
reputation and client relationships may be damaged as a result of our involvement, or our clients’ involvement, in certain
industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to
conduct or change our activities in response to considerations relating to climate change. New regulations or guidance relating
to climate change, as well as the perspectives of shareholders, employees and other stakeholders regarding climate change, may
affect whether and on what terms and conditions we engage in certain activities or offer certain products.
Cryptocurrency and other digital assets are an emerging asset class that carries unique risk, including the risk of financial
loss.
The value of cryptocurrencies and other digital assets, whether traded in spot, ETP/ETF, or other form, is based in part
on market adoption and future expectations, which may or may not be realized. As a result, the prices of cryptocurrencies and
other digital assets are highly speculative. Due to this highly volatile nature, prices of cryptocurrencies and other digital assets
have been subject to dramatic fluctuations which may impact our balance sheet. For example, if the price of the
cryptocurrencies we hold in inventory drops below the price we paid to acquire this inventory, we could incur a loss. Moreover,
if our systems fail at managing our inventory or customer orders, we could be left with excess inventory that increases our
exposure to the volatility of the price of cryptocurrencies.
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Further, because cryptocurrency, along with other digital assets, is a new and emerging asset class with unique
electronic exposure, there is a high degree of fraud, theft, cyberattacks and other forms of risk in the cryptocurrency space, and
legal, regulatory and market standards around market conduct, transparency, custody, segregation of client assets, clearing and
settlement for these assets, including when traded in spot, ETP/ETF, or other form, are all evolving or unsettled, which can
increase risks for us and other market participants. The potential for new rules or regulations or the application of existing rules
or regulations related to cryptocurrency and digital assets could also increase the costs and risks associated with participating in
these markets. While the Company employs a variety of controls to mitigate risk of loss and theft in the cryptocurrency
positions we maintain, it is possible, for example, for electronic wallet keys to become lost or stolen, for blockchains to
experience detrimental changes, such as forks, or for our cryptocurrency exchange and custodian partners to experience
cybersecurity incidents. In the event of such events, we could experience financial loss, we could lose customers and clients as a
result of reputational damage, and we may face regulatory or legal consequences. Although we maintain insurance, there can be
no assurance that liabilities or losses we may incur will be covered under such policies or that the amount of insurance will be
adequate.
Legal and Regulatory Risks
Regulatory and legal uncertainties could harm our business.
Securities and derivatives businesses are heavily regulated. Firms in the financial services industry have been subject
to an increasingly regulated environment over recent years, and penalties and fines sought by regulatory authorities have
increased considerably. In addition, following recent congressional, regulatory and news media attention to U.S. equities market
structure, the regulatory and enforcement environment has created uncertainty with respect to various types of transactions that
historically had been entered into by financial services firms and that were generally believed to be permissible and appropriate.
The retail trading environment in the U.S., relationships between broker-dealers and market making firms, short selling and
“high frequency” and other forms of low latency or electronic trading strategies have continued to be the focus of extensive
regulatory scrutiny by federal, state and foreign regulators and SROs, and such scrutiny may continue. Our market making and
trading activities are characterized by substantial volumes, an emphasis on technology and certain other characteristics that are
also commonly associated with high frequency trading and we engage in direct-to-client market making services across
multiple asset classes primarily to sell-side clients including global, national and regional broker-dealers and banks and in the
context of our market making and trading activities, we are party to various remuneration and rebate arrangements, including
payment for order flow, profit-sharing relationships, and exchange fee and rebate structures.
Additionally, the regulatory and legal status and classification of various cryptocurrencies and other digital assets is
subject to substantial uncertainty. For example, a given digital asset could be considered a security, a commodity or currency, or
some combination thereof, and therefore may be subject to rules and regulations promulgated by federal regulators, including
but not limited to the SEC, the CFTC, the Department of Treasury, in addition to state regulators. Changes in this regulatory
environment, including changing interpretations and the implementation of new or varying regulatory requirements by the
government, may significantly affect or change the manner in which we currently conduct some aspects of our business or may
significantly impact or limit our ability to increase our participation or could otherwise expose us to potential liability or losses.
In addition, the financial services industry is heavily regulated in many foreign countries. The varying compliance
requirements of these different regulatory jurisdictions and other factors may limit our ability to conduct business or expand
internationally. For example, MiFID, which was implemented in November 2007, has been replaced by MiFID II/Markets in
Financial Investments Regulation (“MiFIR”), which was adopted by the European Parliament on April 15, 2014 and by the
Council on May 13, 2014, entered into force on July 2, 2014, and became effective on January 3, 2018. MiFID II requires
certain types of firms, including VFIL, to post firm quotes at competitive prices and supplements previous requirements with
regard to investment firms’ risk controls related to the safe operation of electronic systems. MiFID II also imposed additional
requirements on market structure, such as the introduction of a harmonized tick size regime, the introduction of trading venues
known as Organized Trading Facilities, and the promulgation of a bilateral trading arrangement called the Systematic
Internaliser regime, new open access provisions, market making requirements and various other pre- and post-trade risk
management requirements. The MiFID II regime has been under review, with European Union authorities making further
changes to the regime. On February 28, 2024, Directive (EU) 2024/790 amending MiFID II and Regulation (EU) 2024/791
amending Regulation (EU) No 600/2014 (also known as “MiFIR”) as regards enhancing data transparency, removing obstacles
to the emergence of consolidated tapes, optimizing the trading obligations and prohibiting receiving payment for order flow
were each adopted. The two acts entered into force on March 28, 2024, with the MiFIR amending regulation applying from that
date, and the MiFID II amendments requiring adoption by Member States by September 29, 2025. These changes at the ‘Level
1’ legislative level include a substantial number of ‘Level 2’ measures, including by means of regulatory technical standards
and implementing technical standards, that are yet to be developed. Each of these and other proposals may impose
technological and compliance costs on us. Any of these laws, rules or regulations, as well as changes in legislation or regulation
and changes in market customs and practices could have a material adverse effect on our business, financial condition, results of
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operations and cash flows. These risks may be enhanced by recent scrutiny of electronic trading and market structure from
regulators, lawmakers and the financial news media.
In addition, we maintain borrowing facilities with banks, prime brokers and Futures Commission Merchants
(“FCMs”), and we obtain uncommitted margin financing from our prime brokers and FCMs, which are in many cases affiliated
with banks. In response to the 2008 financial crisis, the Basel Committee on Banking Supervision issued a new, more stringent
capital and liquidity framework known as Basel III, which national banking regulators have been implementing in the various
jurisdictions in which our lenders may be incorporated. In the E.U., on December 24, 2019, a Regulation on the prudential
requirements for Investment Firms (“IFR”) and a Directive on the prudential supervision of Investments Firms (“IFD”) entered
into force. The IFR and IFD introduced new prudential requirements for investment firms, classifying them into different
categories depending on the Company’s balance-sheet size and types of activity. The main provisions of the IFR and IFD were
applicable from the end of June 2021. Article 60 of the IFR and Article 66 of the IFD mandate that the European Commission
submit a report to the Council and the Parliament regarding multiple aspects of the IFR and IFD, which may include a
legislative proposal to amend the prudential framework applicable to investment firms. On February 1, 2023, the Commission
submitted a Call for Advice to the European Banking Authority (“EBA”) and ESMA in this context. On June 3, 2024, the
European Banking Authority and ESMA issued a Discussion Paper, calling for advice from respondents in the public on the
investment firms prudential framework, seeking comments by September 3, 2024. The Discussion Paper seeks comments in
respect of various elements of the IFR and IFD, including the categorization of investment firms, the adequacy and
methodology of own funds requirements, the liquidity requirements, prudential consolidation of investment firm groups,
remuneration, among others. Developments in prudential rules could in certain cases lead to more stringent capital and liquidity
requirements, which could also result in certain of our lenders revising the terms of our borrowing facilities or margin financing
arrangements, reducing the amount of financing they provide, or ceasing to provide us financing, each of which could have a
material adverse effect on our business, financial condition, results of operations and cash flows.
Pending, proposed and other potential changes in laws and rules may adversely impact our business.
Certain market participants, SROs, government officials and regulators have requested that the U.S. Congress, the
SEC, and the CFTC propose and adopt additional laws and rules, including rules relating to payment for order flow, off-
exchange trading, additional registration requirements, restrictions on co-location, order-to-execution ratios, minimum quote
life for orders, incremental messaging fees to be imposed by exchanges for “excessive” order placements and/or cancellations,
further transaction taxes, tick sizes, changes to maker/taker rebates programs, and other market structure proposals. For
example, the Committee on Financial Services of the U.S. House of Representatives held hearings on the events surrounding
the January 2021 market volatility and disruptions surrounding Gamestop and other “meme” stocks at which various members
of Congress expressed their concerns about various market practices, including payment for order flow and short-selling. The
prior SEC administration proposed several rule changes focused on equity market structure reform, some of which have been
adopted. Specifically, the SEC under the previous administration (i) adopted rule amendments to minimum pricing increments
under Rule 612 of Regulation NMS, access fee caps under Rule 610 of Regulation NMS, acceleration of the implementation of
certain Market Data Infrastructure Rules, and an amendment to the odd-lot information definition adopted under the MDI rules
(collectively referred to as the “tick size, access fees and infrastructure rule proposals”) which have a compliance date
commencing in November 2025, (ii) adopted amendments to Rule 605 of Regulation NMS, which has a compliance date on or
about December 15, 2025, (iii) approved a funding model submitted by several exchanges in relation to the Consolidated Audit
Trail (CAT) which provides for fee collection commencing November 2024 but is currently subject to legal challenge, and (iv)
adopted rules to amend the definitions of “dealer” and “government securities dealer” within the Exchange Act, which would
have broadened the scope of these registrant categories, though this rule was recently vacated by the United States District
Court. Additional proposals under the prior SEC administration which could impact our operations if adopted include (i)
Proposed Rule 615 of Regulation NMS, which proposes to dramatically change the U.S. equities market structure, the routing,
handling and potentially the amount, character, and cost of retail order flow, (ii) Regulation Best Execution, which would
impose best execution requirements on broker-dealers which would be distinct from, but overlapping with, FINRA’s existing
best execution rule (Rule 5310), (iii) a series of amendments to the definition of Exchange and Alternative Trading Systems
(ATS), which would expand the scope of exchange and ATS registration and compliance requirements, and (iv) a proposal to
restrict volume based tiered pricing by equity exchanges in certain cases. If adopted, these or other potential rule changes may
alter the market structure for NMS securities in ways that would disfavor the current competing market center model and lessen
the amount of volume executed off-exchange in favor of a central limit order book model or other centralized model for order
interaction. Proposed revisions to SEC Rule 3b-16, Regulation ATS, and Regulation SCI would increase the number of
technology platforms that meet the definition of an exchange and would then be required to register as an exchange or
alternatively operate as an ATS, and/or operate under the more complex and costly Regulation SCI regime. Proposed changes
to Regulation ATS would revise the format of Form ATS required to be filed and would impose additional disclosures and costs
to rewrite and refile those forms. Further, on April 23, 2024, the Federal Trade Commission (FTC) announced a final rule
banning most non-compete clauses in employer-employee contracts. The final rule was scheduled to become effective on
September 4, 2024, but it was enjoined by a federal district court in September 2024 on the grounds that the rule exceeds the
FTC’s authority. The FTC is appealing the ruling and therefore its implementation has not yet been definitively resolved. These
recently adopted and potential additional changes, as well as other rules, regulations, executive orders or other changes in the
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legal or regulatory environment applicable to us and our business, may impose additional technological, operational and
compliance costs on us and create uncertainty with regard to their effects. Regulators may propose other market structure
changes, particularly considering the continued regulatory, congressional and media scrutiny of U.S. equities market structure,
the retail trading environment in the U.S., wholesale market making and the relationships between retail broker-dealers and
market making firms, including but not limited to payment for order flow arrangements, other remuneration arrangements such
as profit-sharing relationships and exchange fee and rebate structures, ATSs and off-exchange trading more generally, high
frequency trading, short selling, market fragmentation, colocation, and access to market data feeds.
Any or all of these proposals or additional proposals may be adopted by the SEC, CFTC or other U.S. or foreign
legislative or regulatory bodies, and news media attention to electronic trading and market structure could increase the
likelihood of adoption. These potential market structure and regulatory changes could cause a change in the manner in which
we make markets, limit, restrict or otherwise adversely affect our ability to interact with certain order flow, impose additional
costs and expenses on our business or otherwise have a material adverse effect on our business, financial condition, results of
operations and cash flows.
Non-compliance with applicable laws or regulatory requirements could subject us to sanctions and could negatively impact
our reputation, prospects, revenues and earnings.
Our subsidiaries are subject to regulations in the U.S., and our foreign subsidiaries are subject to regulations abroad, in
each case covering all aspects of their business. Regulatory bodies that exercise or may exercise authority over us include,
without limitation, in the U.S., the SEC, FINRA, the Chicago Mercantile Exchange, the Intercontinental Exchange, the CFTC,
the NFA Exchanges and the various state securities regulators; in the European Union, ESMA; in Ireland, the CBI; in
Switzerland, the Swiss Financial Market Supervisory Authority; in France, the Autorité des Marchés Financiers (“AMF”); in
the United Kingdom, the FCA; in Hong Kong, the SFC; in Australia, the ASIC; in Canada, the CIRO and various Canadian
provincial securities commissions; in Singapore, the MAS; in India, the Securities and Exchange Board of India; and in Japan,
the Financial Services Agency and the Japan Securities Dealers Association. Our mode of operation and profitability may be
directly affected by additional legislation and changes in rules promulgated by various domestic and foreign government
agencies and SROs that oversee our businesses, as well as by changes in the interpretation or enforcement of existing laws and
rules, including the potential imposition of additional capital and margin requirements and/or transaction taxes. While we
endeavor to deliver required annual filings in all jurisdictions in a timely manner, we cannot guarantee that we will meet every
applicable filing deadline globally. Noncompliance with applicable laws or regulations could result in sanctions being levied
against us, including fines, penalties, judgments, disgorgement, restitution and censures, suspension or expulsion from a certain
jurisdiction, SRO or market or the revocation or limitation of licenses. Noncompliance with applicable laws or regulations
could also negatively impact our reputation, prospects, revenues and earnings. In addition, changes in current laws or
regulations or in governmental policies could negatively impact our operations, revenues and earnings.
Domestic and foreign stock exchanges, other SROs and state and foreign securities commissions can censure, fine,
impose undertakings, issue cease-and-desist orders and suspend or expel a broker-dealer or other market participant or any of
its officers or employees. Our ability to comply with all applicable laws and rules is largely dependent on our internal systems
to endeavor to ensure compliance, as well as our ability to attract and retain qualified compliance personnel. We could be
subject to disciplinary or other actions in the future due to claimed noncompliance, which could have a material adverse effect
on our business, financial condition, results of operations and cash flows. We have been, are currently, and may in the future be,
the subject of one or more regulatory or SRO enforcement actions, including but not limited to targeted and routine regulatory
inquiries and investigations involving Best Execution, Regulation NMS, Regulation SHO, Regulation SCI, market access rules,
capital requirements and other domestic and foreign securities rules and regulations. We and other broker-dealers and trading
firms have also been the subject of requests for information and documents from the SEC and other regulators. We have
cooperated and complied with these requests for information and documents. Our business or reputation could be negatively
impacted if it were determined that disciplinary or other enforcement actions were required. To continue to operate and to
expand our services internationally, we will have to comply with the regulatory controls of each country in which we conduct
or intend to conduct business, the requirements of which may not be clearly defined. The varying compliance requirements of
these different regulatory jurisdictions, which are often unclear, may limit our ability to continue existing international
operations and further expand internationally.
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Certain of our subsidiaries are subject to regulatory capital rules of the SEC, FINRA, other SROs and foreign
regulators. These rules, which specify minimum capital requirements for our regulated subsidiaries, are designed to measure the
general financial integrity and liquidity of a broker-dealer and require that at least a minimum part of its assets be kept in
relatively liquid form. In general, net capital is defined as net worth (assets minus liabilities), plus qualifying subordinated
borrowings, less certain mandatory deductions that result from, among other things, excluding assets that are not readily
convertible into cash and from valuing conservatively certain other assets. Among these deductions are adjustments, commonly
called haircuts, which reflect the possibility of a decline in the market value of an asset before disposition, and non-allowable
assets.
Failure to maintain the required minimum capital may subject our regulated subsidiaries to a fine, the requirement to
cease conducting business, suspension, revocation of registration or expulsion by the applicable regulatory authorities,
reputational harm, and ultimately could require the relevant entity’s liquidation. Events relating to capital adequacy could give
rise to regulatory actions that could limit business expansion or require business reduction. SEC and SRO net capital rules
prohibit payments of dividends, redemptions of stock, prepayments of subordinated indebtedness and the making of any
unsecured advances or loans to a stockholder, employee or affiliate, in certain circumstances, including if such payment would
reduce the Company’s net capital below required levels. Similar issues and risks arise in connection with the capital adequacy
requirements of foreign regulators.
A change in the net capital rules, the imposition of new rules or any unusually large charges against net capital could
limit our operations that require the intensive use of capital and also could restrict our ability to withdraw capital from our
broker-dealer subsidiaries. A significant operating loss or any unusually large charge against net capital could negatively impact
our ability to expand or even maintain our present levels of business. Similar issues and risks arise in connection with the
capital adequacy requirements of foreign regulators. Any of these results could have a material adverse effect on our business,
financial condition, results of operations and cash flows.
We are subject to risks relating to litigation and potential securities law liability.
We are exposed to substantial risks of liability under federal and state securities laws and other federal and state laws
and court decisions, as well as rules and regulations promulgated by the SEC, the CFTC, state securities regulators, SROs and
foreign regulatory agencies. These risks may be enhanced by recent scrutiny of electronic trading and market structure from
regulators, lawmakers and the financial news media. We are also subject to the risk of litigation and claims that may be without
merit. At present and from time to time, we, our past and present officers, directors and employees are and may be named in
legal actions, regulatory investigations and proceedings, arbitrations and administrative claims and may be subject to claims
alleging the violations of laws, rules and regulations, some of which may ultimately result in the payment of fines, awards,
judgments and settlements. We could incur significant legal expenses in defending ourselves against and resolving lawsuits or
claims even if we believe them to be meritless. An adverse resolution of any current or future lawsuits or claims against us
could result in a negative perception of our Company and cause the market price of our common stock to decline or otherwise
have a material adverse effect on our business, financial condition, results of operations and cash flows.
Proposed legislation in the European Union, the U.S. and other jurisdictions that would impose taxes on certain financial
transactions could have a material adverse effect on our business and financial results.
On September 28, 2011, the former president of the European Commission officially presented a plan to create a new
financial transactions tax which in February 2013 was formally presented for consideration by the European Commission under
an enhanced cooperation procedure among 11 European Union Member States (Belgium, Germany, Estonia, Greece, Spain,
France, Italy, Austria, Portugal, Slovenia and Slovakia) for the purposes of a financial transaction tax among those Member
States (the “EU Financial Transaction Tax”). The EU Financial Transaction Tax was initially intended to be implemented
within those 11 European Union Member States in January 2014. In 2016, Estonia, one of the original members, withdrew its
support for the proposal. As of December 31, 2024, such tax has not yet been implemented. On October 15, 2020, the Spanish
Government published Law 5/2020 on the Spanish Financial Transaction Tax (“Spanish FTT”). The Spanish FTT constitutes a
tax to be applied to acquisitions of equity shares in Spanish companies having a market capitalization greater than EUR1bn (as
of 1st December the previous year), that are admitted to trading on a Spanish market or a market based in another E.U. member
state. The Spanish FTT was applied to transactions from trade date of January 14, 2020, although it does contain certain
exemptions, including in relation to market making activity.
In 2013, former U.S. Representative Peter DeFazio and former Senator Thomas Harkin introduced proposed
legislation, a bill entitled the “Wall Street Trading and Speculators Tax Act,” which would have, subject to certain exceptions,
imposed an excise tax on the purchase of a security, including equities, bonds, debentures, other debt and interests in derivative
financial instruments, if the purchase occurred or was cleared on a trading facility in the U.S. and the purchaser or seller is a
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U.S. person. More recently, in late 2018 and 2019 U.S. legislators, including U.S. Senators Kirsten Gillibrand and Brian Schatz,
announced proposals or plans that include a financial transaction fee. At the state level, the state of New Jersey considered a bill
in the state legislature providing for a financial transaction tax on trades processed on any server located in New Jersey, with
other states, including New York, discussing similar measures. Discussions in New York have included a proposed bill which
would reestablish a stock transfer tax by repealing a rebate previously implemented and applied to such tax since 1981.
Additional legislation may be proposed at the federal and state levels from time to time.
These proposed transaction taxes would apply to certain aspects of our business and transactions in which we are
involved. Any such tax would increase our cost of doing business to the extent that (i) the tax is regularly applicable to
transactions in the markets in which we operate, (ii) the tax does not include exceptions for market makers or market making
activities that is broad enough to cover our activities or (iii) we are unable to widen our bid/ask spreads in the markets in which
such a tax would be applicable to compensate for its imposition. Furthermore, the proposed taxes may reduce or negatively
impact trading volume and transactions on which we are dependent for revenues. While it is difficult to assess the impact the
proposed taxes could have on us, if either transaction tax is implemented or any similar tax is implemented in any other
jurisdiction in which we operate, our business, financial condition, results of operations and cash flows could suffer a material
adverse effect, and could be impacted to a greater degree than other market participants.
We are exposed to risks associated with our international operations and expansion and failure to comply with laws and
regulations applicable to our international operations may increase costs, reduce profits, limit growth or subject us to
liability.
We are exposed to risks and uncertainties inherent in doing business in international markets, particularly in the
heavily regulated broker-dealer industry. Such risks and uncertainties include political, economic and financial instability,
unexpected changes in regulatory requirements, tariffs and other trade barriers, exchange rate fluctuations, applicable currency
controls, the imposition of restrictions on currency conversion or the transfer of funds, limitations on our ability to repatriate
non-U.S. earnings in a tax efficient manner and difficulties in staffing and managing foreign operations, including reliance on
local experts. Such restrictions generally include those by imposed by the Foreign Corrupt Practices Act (the “FCPA”) and
trade sanctions administered by the Office of Foreign Assets Control (“OFAC”). The FCPA is intended to prohibit bribery of
foreign officials and requires companies whose securities are listed in the U.S. to keep books and records that accurately and
fairly reflect those companies’ transactions and to devise and maintain an adequate system of internal accounting controls.
OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against
designated foreign states, organizations and individuals. Though we have policies in place designed to comply with applicable
OFAC sanctions, rules and regulations as well as the FCPA and equivalent laws and rules of other jurisdictions, if we fail to
comply with these laws and regulations, we could be exposed to claims for damages, financial penalties, reputational harm,
incarceration of employees and restrictions on our operations and cash flows.
In addition, the varying compliance requirements of these different regulatory jurisdictions and other factors may limit
our ability to successfully conduct or expand our business internationally and may increase our costs of investment. Expansion
into international locations involves substantial operational and execution risk. We may not be able to manage these costs or
risks effectively.
Brexit continues to pose a risk of negatively impacting the global economy, financial markets and our business.
Following the UK’s withdrawal of its membership from the EU in 2020, an event commonly referred to as “Brexit”
and the conclusion of a subsequent transition period in 2021, U.K. investment firms which had previously used passporting
permissions under MiFID II to provide services to clients in the E.U., ceased to subject to the E.U.’s MiFID II regime, and E.U.
investment firms could no longer automatically access U.K. markets on the basis of MiFID passporting rights. Following
Brexit, Virtu services its UK client-base via various means, including a UK authorized third-country branch of VETL, and by
its UK investment firm, VIUK, which is authorized and regulated by the FCA with permission to operate an MTF.
Poor future relations between the U.K. and E.U., however, could adversely affect European or worldwide political,
fiscal, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory
agencies and financial markets. Disruptions and uncertainty caused by these events may also cause our clients to closely
monitor their costs and reduce their spending budget on our services. Potential regulatory divergence between the U.K. and
E.U. could cause disruption to our business in EMEA, through incurring implementation costs and/or other operational uplift
required to comply with the distinct legal regimes. Any of these effects of the U.K.’s departure from the E.U., and others we
cannot anticipate or that may evolve over time, could adversely affect our business, results of operations and financial
condition.
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In connection with our historical acquisitions, the Company is subject to potential liabilities that could materially and
adversely affect our business.
In connection with the Acquisition of KCG and the ITG Acquisition, we assumed potential liabilities, indemnification
obligations, and other risks relating to KCG’s and ITG’s business, including but not limited to those liabilities and risks arising
from or related to pending, threatened or potential litigation or regulatory matters. In some instances, these matters may
ultimately result in a disciplinary action and/or a civil or administrative action, penalties, fines, judgments, censures and
settlements. To the extent we have not identified such liabilities or miscalculated their potential financial impact, these
liabilities could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash
flows.
Risks Related to Our Organization and Structure
We are a holding company and our principal asset is our 56.9% of equity interest in Virtu Financial, and we are accordingly
dependent upon distributions from Virtu Financial to pay dividends, if any, taxes and other expenses.
We are a holding company and our principal asset is our direct and indirect ownership of 56.9% of the Virtu Financial
Units as of December 31, 2024. We have no independent means of generating revenue. As the sole managing member of Virtu
Financial, we cause Virtu Financial to make distributions to its equity holders, including the Founder Post-IPO Member, Virtu
Employee Holdco, certain current and former members of management of the Company and their affiliates (the “Management
Members”) and us, in amounts sufficient to fund dividends to our stockholders in accordance with our dividend policy and, as
further described below, to cover all applicable taxes payable by us and any payments we are obligated to make under the tax
receivable agreements we entered into as part of the Reorganization Transactions, but we are limited in our ability to cause
Virtu Financial to make these and other distributions to us (including for purposes of paying corporate and other overhead
expenses and dividends) under our Credit Agreement governing our $1,245.0 million in aggregate principal amount of Senior
Secured First Lien Term B-1 Loans due 2031 (“First Lien Term B-1 Loan Facility”). In addition, certain laws and regulations
may result in restrictions on Virtu Financial’s ability to make distributions to its equity holders (including us), or the ability of
its subsidiaries to make distributions to it. These include:
•
the SEC Uniform Net Capital Rule (Rule 15c3-1), which requires Virtu Financial’s registered broker-dealer
subsidiary to maintain specified levels of net capital;
•
FINRA Rule 4110, which imposes a requirement of prior FINRA approval for any distribution by Virtu
Financial’s FINRA member registered broker-dealer subsidiary in excess of 10% of its excess net capital; and
•
the requirement for prior approval from the CBI before Virtu Financial’s regulated Irish subsidiary completes any
distribution or dividend.
To the extent that we need funds and Virtu Financial is restricted from making such distributions to us, under
applicable law or regulation, as a result of covenants in our Credit Agreement, we may not be able to obtain such funds on
terms acceptable to us or at all and as a result could suffer a material adverse effect on our liquidity and financial condition.
Under the Third Amended and Restated Limited Liability Company Agreement of Virtu Financial (as amended, the
“Amended and Restated Virtu Financial LLC Agreement”), Virtu Financial from time to time makes distributions in cash to its
equity holders, including the Founder Post-IPO Member, the trust that holds equity interests in Virtu Financial on behalf of
certain employees of ours based outside the United States, which we refer to as the “Employee Trust”, Virtu Employee Holdco
and us, in amounts sufficient to cover the taxes on their allocable share of the taxable income of Virtu Financial. These
distributions are treated as advances and may be computed based on Virtu Financial’s estimate of the net taxable income of
Virtu Financial allocable to each holder of Virtu Financial Units multiplied by an assumed tax rate equal to the highest effective
marginal combined U.S. federal, state and local income tax rate prescribed for an individual or corporate resident in New York,
New York (taking into account the non-deductibility of certain expenses and the character of our income), or another rate as
determined by the Company in its discretion for one or more holders. As a result of (i) potential differences in the amount of net
taxable income allocable to us and to Virtu Financial’s other equity holders, (ii) the lower tax rate applicable to corporations
than individuals, (iii) the favorable tax benefits that we anticipate from (a) the exchange of Virtu Financial Units and
corresponding shares of Class C Common Stock or Class D Common Stock, (b) payments under the tax receivable agreements
and (c) future deductions attributable to the prior acquisition of interests in Virtu Financial by certain affiliates of Silver Lake
Partners and Temasek, and (vi) additional distributions of profits which may be generated by Virtu Financial and its
subsidiaries to equity holders, we expect that the distributions we receive may exceed our tax liabilities, regular dividend and
other obligations. Our Board of Directors will determine the appropriate uses for any excess cash so accumulated, which may
include, among other uses, the payment of obligations under the tax receivable agreements, the payment of other expenses or
the repurchase of shares of common stock or Virtu Financial Units. We will have no obligation to distribute such cash (or other
available cash) to our shareholders. No adjustments to the exchange ratio for Virtu Financial Units and corresponding shares of
35
common stock will be made as a result of any cash distribution by us or any retention of cash by us, and in any event the ratio
will remain one-to-one.
We are controlled by the Founder Post-IPO Member, whose interests in our business may be different than yours, and
certain statutory provisions afforded to stockholders are not applicable to us.
The Founder Post-IPO Member controls approximately 87.0% of the combined voting power of our common stock as
a result of its ownership of our Class C and Class D Common Stock, each share of which is entitled to 1 vote and 10 votes,
respectively, on all matters submitted to a vote of our stockholders.
The Founder Post-IPO Member has the ability to substantially control our Company, including the ability to control
any action requiring the general approval of our stockholders, including the election of our Board of Directors, the adoption of
amendments to our certificate of incorporation and by-laws and the approval of any merger or sale of substantially all of our
assets. This concentration of ownership and voting power may also delay, defer or even prevent an acquisition by a third party
or other change of control of our Company and may make some transactions more difficult or impossible without the support of
the Founder Post-IPO Member, even if such events are in the best interests of minority stockholders. This concentration of
voting power with the Founder Post-IPO Member may have a negative impact on the price of our Class A Common Stock. In
addition, because shares of our Class B Common Stock and Class D Common Stock each have 10 votes per share on matters
submitted to a vote of our stockholders, the Founder Post-IPO Member is able to control our Company as long as it owns at
least 25% of our issued and outstanding Common Stock.
The Founder Post-IPO Member’s interests may not be fully aligned with yours, which could lead to actions that are not
in your best interest. Because the Founder Post-IPO Member holds part of its economic interest in our business through Virtu
Financial, rather than through the public company, it may have conflicting interests with holders of shares of our Class A
Common Stock. For example, the Founder Post-IPO Member may have a different tax position from us, which could influence
its decisions regarding whether and when we should dispose of assets or incur new or refinance existing indebtedness,
especially in light of the existence of the tax receivable agreements that we entered into in connection with the IPO, and
whether and when we should undergo certain changes of control within the meaning of the tax receivable agreements or
terminate the tax receivable agreements. In addition, the structuring of future transactions may take into consideration these tax
or other considerations even where no similar benefit would accrue to us. See “Item 1A. Risk Factors - Risks Related to Our
Organizational Structure - We are required to pay the Virtu Post-IPO Members and the Investor Post-IPO Stockholders for
certain tax benefits we may claim, and the amounts we may pay could be significant.” In addition, pursuant to an exchange
agreement, the holders of Virtu Financial Units and shares of our Class C Common Stock or Class D Common Stock are not
required to participate in a proposed sale of our Company that is tax-free for our stockholders unless the transaction is also
tax-free for such holders of Virtu Financial Units and shares of our Class C Common Stock or Class D Common Stock. This
requirement could limit structural alternatives available to us in any such proposed transaction and could have the effect of
discouraging transactions that might benefit you as a holder of shares of our Class A Common Stock. In addition, the Founder
Post-IPO Member’s significant ownership in us and resulting ability to effectively control us may discourage someone from
making a significant equity investment in us, or could discourage transactions involving a change in control, including
transactions in which you as a holder of shares of our Class A Common Stock might otherwise receive a premium for your
shares over the then-current market price.
We have opted out of Section 203 of the General Corporation Law of the State of Delaware (the “Delaware General
Corporation Law”), which prohibits a publicly held Delaware corporation from engaging in a business combination transaction
with an interested stockholder for a period of three years after the interested stockholder became such unless the transaction fits
within an applicable exemption, such as board approval of the business combination or the transaction which resulted in such
stockholder becoming an interested stockholder. Therefore, the Founder Post-IPO Member is able to transfer control of us to a
third party by transferring its shares of our common stock (subject to certain restrictions and limitations), which would not
require the approval of our Board of Directors or our other stockholders.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the doctrine
of “corporate opportunity” does not apply against the Founder Post-IPO Member, Mr. Viola, any of our non-employee directors
or any of their respective affiliates in a manner that would prohibit them from investing in competing businesses or doing
business with our clients or customers. In addition, subject to the restrictions on competitive activities described below,
Mr. Cifu is permitted to become engaged in, or provide services to, any other business or activity in which Mr. Viola is
currently engaged or permitted to become engaged, to the extent that Mr. Cifu’s level of participation in such businesses or
activities is consistent with his current participation in such businesses and activities. The Amended and Restated Virtu
Financial LLC Agreement provides that Mr. Viola, in addition to our other executive officers and our employees that are Virtu
Post-IPO Members, including Mr. Cifu, may not directly or indirectly engage in certain competitive activities until the third
36
anniversary of the date on which such person ceases to be an officer, director or employee of ours. Our non-employee directors
are not subject to any such restriction. To the extent that the Founder Post-IPO Member, Mr. Viola, our non-employee directors
or any of their respective affiliates invests in other businesses, they may have differing interests than our other stockholders.
Messrs. Viola and Cifu also have business relationships outside of our business.
We may be unable to remain in compliance with the covenants contained in our Credit Agreement and our obligation to
comply with these covenants may adversely affect our ability to operate our business.
The covenants in our Credit Agreement may negatively impact our ability to finance future operations or capital needs
or to engage in other business activities. Our Credit Agreement restricts our ability to, among other things, incur additional
indebtedness, dispose of assets, guarantee debt obligations, repay other indebtedness, pay dividends, pledge assets, make
investments, including in certain of our operating subsidiaries, make acquisitions or consummate mergers or consolidations and
engage in certain transactions with subsidiaries and affiliates.
A failure to comply with the restrictions contained in our Credit Agreement could lead to an event of default, which
could result in an acceleration of our indebtedness. Our future operating results may not be sufficient to enable compliance with
the covenants in our Credit Agreement or to remedy such a default. In addition, in the event of an acceleration, we may not
have or be able to obtain sufficient funds to refinance our indebtedness or to make any accelerated payments. Even if we were
able to obtain new financing, we would not be able to guarantee that the new financing would be on commercially reasonable
terms. If we default on our indebtedness, our business, financial condition and results of operation could suffer a material
adverse effect.
We are exempt from certain corporate governance requirements since we are a “controlled company” within the meaning of
the Nasdaq rules, and as a result our stockholders do not have the protections afforded by these corporate governance
requirements.
The Founder Post-IPO Member controls more than 50% of our combined voting power. As a result, we are considered
a “controlled company” for purposes of the Nasdaq rules and corporate governance standards, and therefore we are permitted
and may elect not to or may have elected not to, comply with certain Nasdaq corporate governance requirements, including
those that would otherwise require our Board of Directors to have a majority of independent directors and require that we either
establish a Compensation and Nominating and Corporate Governance Committees, each comprised entirely of independent
directors, or otherwise ensure that the compensation of our executive officers and nominees for directors are determined or
recommended to the Board of Directors by the independent members of the Board of Directors. Accordingly, holders of our
Class A Common Stock do not have the same protections afforded to stockholders of companies that are subject to all of the
Nasdaq rules and corporate governance standards, and the ability of our independent directors to influence our business policies
and affairs may be reduced.
We are required to pay the Virtu Post-IPO Members and the Investor Post-IPO Stockholders for certain tax benefits we may
claim, and the amounts we may pay could be significant.
In connection with the Reorganization Transactions, we acquired equity interests in Virtu Financial from an affiliate of
Silver Lake Partners (which, following a secondary offering completed in November 2015, no longer holds any equity interest
in us) and the Temasek Pre-IPO Member in the Mergers. In addition, we used a portion of the net proceeds from our IPO and
our Secondary Offerings (as defined below) to purchase Virtu Financial Units and corresponding shares of Class C Common
Stock from certain Virtu Post-IPO Members, including affiliates of Silver Lake Partners (the “Silver Lake Post-IPO
Members”), the Founder Post-IPO Member, and certain employees. These acquisitions of interests in Virtu Financial, along
with certain subsequent exchanges of interests in Virtu Financial by current and former employees, resulted in tax basis
adjustments to the assets of Virtu Financial that were allocated to us and our subsidiaries. Future acquisitions of interests in
Virtu Financial are expected to produce favorable tax attributes. In addition, future exchanges by the Virtu Post-IPO Members
of Virtu Financial Units and corresponding shares of Class C Common Stock or Class D Common Stock, as the case may be,
for shares of our Class A Common Stock or Class B Common Stock, respectively, are expected to produce favorable tax
attributes. These tax attributes would not be available to us in the absence of such transactions. Both the existing and anticipated
tax basis adjustments are expected to reduce the amount of tax that we would otherwise be required to pay in the future.
We entered into three tax receivable agreements with the Virtu Post-IPO Members and the Investor Post-IPO
Stockholders (one with the Founder Post-IPO Member, the Employee Trust, Virtu Employee Holdco and other post IPO
investors, other than affiliates of Silver Lake Partners and affiliates of Temasek, another with the Investor Post-IPO
Stockholders and the other with the Silver Lake Post-IPO Members) that provide for the payment by us to the Virtu Post-IPO
Members and the Investor Post-IPO Stockholders (or their transferees of Virtu Financial Units or other assignees) of 85% of the
37
amount of actual cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a
result of (i) any increase in tax basis in Virtu Financial’s assets resulting from (a) the acquisition of equity interests in Virtu
Financial from an affiliate of Silver Lake Partners and Temasek, and the Temasek Pre-IPO Member in the Reorganization
Transactions (which represents the unamortized portion of the increase in tax basis in Virtu Financial’s assets resulting from a
prior acquisition of interests in Virtu Financial by an affiliate of Silver Lake Partners and Temasek, and the Temasek Pre-IPO
Member), (b) the purchases of Virtu Financial Units (along with the corresponding shares of our Class C Common Stock or
Class D Common Stock, as applicable) from certain of the Virtu Post-IPO Members using a portion of the net proceeds from
the IPO or in any subsequent offering (including, without limitation, the Secondary Offerings), (c) exchanges by the Virtu Post-
IPO Members of Virtu Financial Units (along with the corresponding shares of our Class C Common Stock or Class D
Common Stock, as applicable) for shares of our Class A Common Stock or Class B Common Stock, as applicable, or (d)
payments under the tax receivable agreements, (ii) any net operating losses available to us as a result of the Mergers and (iii) tax
benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreements.
The actual increase in tax basis, as well as the amount and timing of any payments under these tax receivable
agreements, will vary depending upon a number of factors, including the timing of exchanges by the Virtu Post-IPO Members,
the price of our Class A Common Stock at the time of the exchange, the extent to which such exchanges are taxable, the amount
and timing of the taxable income we generate in the future and the tax rate then applicable and the portion of our payments
under the tax receivable agreements constituting imputed interest.
The payments we are required to make under the tax receivable agreements, which represent 85% of the amount of
actual cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize, could be
substantial. We expect that, as a result of the amount of the increases in the tax basis of the tangible and intangible assets of
Virtu Financial, assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize in
full the potential tax benefits described above, future payments to the Virtu Post-IPO Members and the Investor Post-IPO
Stockholders in respect of the purchases, the exchanges and the Mergers in connection with the IPO, the purchases and
exchanges completed in connection with our subsequent public offerings, the Secondary Offerings, and exchanges by
employees and other Virtu Post-IPO Members will range from approximately $0.1 million to $22.1 million per year over the
next 15 years. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to
these amounts. The payments under the tax receivable agreements are not conditioned upon the Virtu Post-IPO Members’ or
the Investor Post-IPO Stockholders’ continued ownership of us.
In addition, although we are not aware of any issue that would cause the Internal Revenue Service (the “IRS”) to
challenge the tax basis increases or other benefits arising under the tax receivable agreements, the Virtu Post-IPO Members and
the Investor Post-IPO Stockholders (or their transferees or other assignees) will not reimburse us for any payments previously
made if such tax basis increases or other tax benefits are subsequently disallowed, except that any excess payments made to the
Virtu Post-IPO Members and the Investor Post-IPO Stockholders will be netted against future payments otherwise to be made
under the tax receivable agreements, if any, after our determination of such excess. As a result, in such circumstances we could
make payments to the Virtu Post-IPO Members and the Investor Post-IPO Stockholders under the tax receivable agreements
that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact
our liquidity.
In addition, the tax receivable agreements provide that, upon certain mergers, asset sales or other forms of business
combination, or certain other changes of control, our or our successor’s obligations with respect to tax benefits would be based
on certain assumptions, including that we or our successor would have sufficient taxable income to fully utilize the increased
tax deductions and tax basis and other benefits covered by the tax receivable agreements. As a result, upon a change of control,
we could be required to make payments under a tax receivable agreement that are greater than the specified percentage of our
actual cash tax savings, which could negatively impact our liquidity.
In addition, the tax receivable agreements provide that in the case of a change in control of the Company, the Virtu
Post-IPO Members and the Investor Post-IPO Stockholders have the option to terminate the applicable tax receivable
agreement, and we are required to make a payment to such electing party in an amount equal to the present value of future
payments (calculated using a discount rate equal to the lesser of 6.5% or LIBOR plus 100 basis points, which may differ from
our, or a potential acquirer’s, then-current cost of capital) under the tax receivable agreement, which payment would be based
on certain assumptions, including those relating to our future taxable income. In these situations, our obligations under the tax
receivable agreements could have a substantial negative impact on our, or a potential acquirer’s, liquidity and could have the
effect of delaying, deferring, modifying or preventing certain mergers, asset sales, other forms of business combinations or
other changes of control. These provisions of the tax receivable agreements may result in situations where the Virtu Post-IPO
Members and the Investor Post-IPO Stockholders have interests that differ from or are in addition to those of our other
38
shareholders. In addition, we could be required to make payments under the tax receivable agreements that are substantial and
in excess of our, or a potential acquirer’s, actual cash savings in income tax.
Finally, because we are a holding company with no operations of our own, our ability to make payments under the tax
receivable agreements are dependent on the ability of our subsidiaries to make distributions to us. Our Credit Agreement
restricts the ability of our subsidiaries to make distributions to us, which could affect our ability to make payments under the tax
receivable agreements. To the extent that we are unable to make payments under the tax receivable agreements for any reason,
such payments will be deferred and will accrue interest until paid, which could negatively impact our results of operations and
cash flows and could also affect our liquidity in periods in which such payments are made.
Risks Related to Our Class A Common Stock
Substantial future sales of shares of our Class A common stock in the public market could cause our stock price to fall.
As of December 31, 2024, we had 84,976,325 shares of Class A Common Stock outstanding and 5,564,532 shares of
Class A Common Stock issuable pursuant to the Amended and Restated 2015 Management Incentive Plan (as defined below)
upon the vesting of granted but unvested restricted stock units, excluding 2,606,625 shares of Class A Common Stock issuable
pursuant to the Amended and Restated 2015 Management Incentive Plan but not yet granted, and 68,653,710 shares of Class A
Common Stock issuable upon potential exchanges and/or conversions. Of these shares, 79,128,972 shares sold in the IPO and
the Secondary Offerings are freely tradable without further restriction under the Securities Act. The remaining balance of
80,065,595 shares of Class A Common Stock outstanding as of December 31, 2024 (including shares issuable upon exchange
and/or conversion, or vesting) are “restricted securities,” as that term is defined under Rule 144 of the Securities Act. The
holders of these 79,008,091 shares of our Class A Common Stock, including shares issuable upon exchange, conversion or
vesting as described above, are entitled to dispose of their shares pursuant to (i) the applicable holding period, volume and other
restrictions of Rule 144 or (ii) another exemption from registration under the Securities Act. Additional sales of a substantial
number of our shares of Class A Common Stock in the public market, or the perception that sales could occur, could have a
material adverse effect on the price of our Class A Common Stock.
We have filed a registration statement under the Securities Act registering 26,000,000 shares of our Class A Common
Stock reserved for issuance under our Amended and Restated 2015 Management Incentive Plan, 2,606,625 of which are
issuable, and we entered into the Registration Rights Agreement (as defined below) pursuant to which we granted demand and
piggyback registration rights to the Founder Post-IPO Member, Temasek, another former stockholder, and piggyback
registration rights to certain of the other Virtu Post-IPO Members.
Failure to establish and maintain effective internal control over financial reporting could have a material adverse effect on
our business, financial condition, results of operations and cash flows, and stock price.
Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial reports
and is important in helping to prevent financial fraud. If we are unable to maintain adequate internal controls over financial
reporting, our business and operating results could be harmed. Under applicable SEC rules we must maintain internal controls
over financial reporting to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and
the related rules of the SEC, which require, among other things, our management to assess annually the effectiveness of our
internal control over financial reporting and our independent registered public accounting firm to issue a report on the
effectiveness of internal control over financial reporting with our Annual Report on Form 10-K. The internal control assessment
required by Section 404 of Sarbanes-Oxley may divert internal resources and we may experience higher operating expenses,
higher independent auditor and consulting fees during the implementation of these changes. Any material weaknesses or any
failure to implement required new or improved controls or difficulties encountered in their implementation could cause us to
fail to meet our reporting obligations or result in material misstatements in our consolidated financial statements. If our
management or our independent registered public accounting firm were to conclude in their reports that our internal control
over financial reporting was not effective, investors could lose confidence in our reported financial information, and the trading
price of our Class A Common Stock could drop significantly. Failure to comply with Section 404 of Sarbanes-Oxley could
potentially subject us to sanctions or investigations by the SEC, FINRA or other regulatory authorities, as well as increase the
risk of liability arising from litigation based on securities law.
We intend to pay regular dividends to our stockholders, but our ability to do so may be limited by our holding company
structure, contractual restrictions and regulatory requirements.
We intend to pay cash dividends on a quarterly basis. See Item 5, “Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.” However, we are a holding company, with our principal asset
39
being our direct and indirect equity interests in Virtu Financial, and we will have no independent means of generating revenue.
Accordingly, as the sole managing member of Virtu Financial, we intend to cause, and will rely on, Virtu Financial to make
distributions to its equity holders, including the Founder Post-IPO Member, the Employee Trust, Virtu Employee Holdco and
us, to fund our dividends. When Virtu Financial makes such distributions, the other equity holders of Virtu Financial will be
entitled to receive equivalent distributions pro rata based on their economic interests in Virtu Financial. In order for Virtu
Financial to make distributions, it may need to receive distributions from its subsidiaries. Certain of these subsidiaries are or
may in the future be subject to regulatory capital requirements that limit the size or frequency of distributions. See “Item 1A.
Risk Factors - Risks Related to Our Business - Non-compliance with applicable laws or regulatory requirements could subject
us to sanctions and could negatively impact our reputation, prospects, revenues and earnings.” If Virtu Financial is unable to
cause these subsidiaries to make distributions, we may not receive adequate distributions from Virtu Financial in order to fund
our dividends.
Our Board of Directors will periodically review the cash generated from our business and the capital expenditures
required to finance our global growth plans and determine whether to modify the amount of regular dividends and/or declare
periodic special dividends to our stockholders. Our Board of Directors will take into account general economic and business
conditions, including our financial condition, results of operations and cash flows, capital requirements, contractual restrictions,
including restrictions contained in our Credit Agreement, business prospects and other factors that our Board of Directors
considers relevant. There can be no assurance that our Board of Directors will not reduce the amount of regular cash dividends
or cause us to cease paying dividends altogether. In addition, our Credit Agreement limits the amount of distributions our
subsidiaries, including Virtu Financial, can make to us and the purposes for which distributions could be made. Accordingly,
we may not be able to pay dividends even if our Board of Directors would otherwise deem it appropriate. See “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”
Provisions in our charter documents and certain rules imposed by regulatory authorities may delay or prevent our
acquisition by a third party.
Our amended and restated certificate of incorporation and by-laws contain several provisions that may make it more
difficult or expensive for a third party to acquire control of us without the approval of our Board of Directors. These provisions,
which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that stockholders may
consider favorable, include the following, some of which may only become effective when the Founder Post-IPO Member or
any of its affiliates or permitted transferees no longer beneficially own shares representing 25% of our issued and outstanding
common stock (the “Triggering Event”):
•
the 10 vote per share feature of our Class B Common Stock and Class D Common Stock;
•
the division of our Board of Directors into three classes and the election of each class for three-year terms;
•
the sole ability of the Board of Directors to fill a vacancy created by the expansion of the Board of Directors;
•
advance notice requirements for stockholder proposals and director nominations;
•
after the Triggering Event, provisions limiting stockholders’ ability to call special meetings of stockholders, to
require special meetings of stockholders to be called and to take action by written consent;
•
after the Triggering Event, in certain cases, the approval of holders of at least 75% of the shares entitled to vote
generally on the making, alteration, amendment or repeal of our certificate of incorporation or by-laws will be
required to adopt, amend or repeal our by-laws, or amend or repeal certain provisions of our certificate of
incorporation;
•
after the Triggering Event, the required approval of holders of at least 75% of the shares entitled to vote at an
election of the directors to remove directors, which removal may only be for cause; and
•
the ability of our Board of Directors to designate the terms of and issue new series of preferred stock without
stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect
of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have
not been approved by our Board of Directors.
These provisions of our amended and restated certificate of incorporation and by-laws could discourage potential
takeover attempts and reduce the price that investors might be willing to pay for shares of our Class A Common Stock in the
future, which could reduce the market price of our Class A Common Stock.
In addition, a third party attempting to acquire us or a substantial position in our Class A Common Stock may be
delayed or ultimately prevented from doing so by change in ownership or control regulations to which certain of our regulated
subsidiaries are subject. FINRA Rule 1017 generally provides that FINRA approval must be obtained in connection with any
transaction resulting in a single person or entity owning, directly or indirectly, 25% or more of a member firm’s equity and
would include a change in control of a parent company. Similarly, VFIL, VETL and VIUK are subject to change in control
40
regulations promulgated by the CBI and/or the FCA. We may also be subject to similar restrictions in other jurisdictions in
which we operate. These regulations could discourage potential takeover attempts and reduce the price that investors might be
willing to pay for shares of our Class A Common Stock in the future, which could reduce the market price of our Class A
Common Stock.
General Risks
Our stock price may be volatile.
The market price of our Class A Common Stock is subject to significant fluctuations in response to, among other
factors, variations in our operating results and market conditions specific to our business. Furthermore, in recent years the stock
market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market
price of securities issued by many companies, including companies in our industry. The changes frequently appear to occur
without regard to the operating performance of the affected companies. As such, the price of our Class A Common Stock could
fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce the price of
our Class A Common Stock and materially affect the value of your investment.
We incur increased costs as a result of being a public company.
As a public company, we incur significant levels of legal, accounting and other expenses. Sarbanes-Oxley and related
rules of the SEC, together with the listing requirements of Nasdaq, impose significant requirements relating to disclosure
controls and procedures and internal control over financial reporting. We have incurred costs as a result of compliance with
these public company requirements, and we may need to hire additional qualified personnel in order to continue to satisfy these
public company requirements. We are required to expend considerable time and resources complying with public company
regulations. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our
Class A Common Stock, fines, sanctions and other regulatory action.
Our stock price and trading volume could decline as a result of inaccurate or unfavorable research, or the cessation of
research cover, about our business published by securities or industry analysts.
The trading market for our Class A Common Stock may be affected by the research and reports that securities or
industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades our Class A
Common Stock or publishes inaccurate or unfavorable research about our business, our stock price could decline. In addition,
the analysts’ projections may have little or no relationship to the results we actually achieve and could cause our stock price to
decline if we fail to meet their projections. If one or more of these analysts ceases coverage of us or fails to publish reports on
us regularly, our stock price or trading volume could decline.
We may incur losses as a result of unforeseen or catastrophic events, including the emergence of another pandemic,
terrorist attacks, geopolitical and/or global conflict, war, extreme weather events or other natural disasters.
The occurrence of unforeseen or catastrophic events, including the emergence of a pandemic or other widespread
health emergency (or concerns over the possibility of such an emergency), vandalism, terrorist attacks, geopolitical and/or
global conflict, war, extreme terrestrial or solar weather events or other natural disasters, could create economic and financial
disruptions, and could lead to operational difficulties (including travel limitations) that could impair our ability to manage our
businesses.
Although we have employed efforts to develop, implement and maintain reasonable disaster recovery and business
continuity plans, we cannot guarantee that our systems will fully recover after a significant business disruption in a timely
fashion or at all. Our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports
our businesses and the communities in which we are located. This may include a disruption involving electrical, satellite,
undersea cable or other communications, internet, transportation or other services facilities used by us, our employees or third
parties with which we conduct business. If we are prevented from using any of our current trading operations, or if our business
continuity operations do not work effectively, we may not have complete business continuity, which could have a material
adverse effect on our business, financial condition, results of operations and cash flows.
41
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 1C. CYBERSECURITY
Virtu has established a Global Security team that, together with the Company’s Chief Information Security Officer
(“CISO”), is responsible for the strategic planning, execution, and enforcement of security initiatives and policies for the
Company’s business units (the “Security Program”). The CISO reports directly to the Chief Executive Officer, and together
with the Global Security team, possesses significant experience in various roles involving managing information security,
developing cybersecurity strategy, and implementing effective information and cybersecurity programs. As part of its Security
Program, the Company has developed policies and procedures governing cybersecurity (the “Cybersecurity Program”).
Virtu’s Cybersecurity Program is driven by a threat analysis, laying out standards and requirements pertaining to, but
not limited to, penetration testing, endpoint protection, incident management, access controls, mobile security, data
classification, third-party access, encryption, system hardening and patching, vulnerability management, passwords, data
destruction, physical security, and vendor risk assessment. We also conduct training and awareness exercises to mitigate
employee-related cyber risks. In addition to these elements of the Cybersecurity Program aimed at mitigating risk, the Company
has developed an Incident Management procedure that addresses escalation and reporting of security incidents in the event that
they do occur and has conducted various cross-functional table top exercises to develop and refine a coordinated response plan.
The Company also maintains insurance coverage that, subject to its terms and conditions, is intended to address costs associated
with certain aspects of cyber-related incidents. These processes are intended to identify and remediate cybersecurity incidents,
and also provide the framework for our proactive identification, assessment, and management of potentially material risks from
a wide range of cybersecurity threats. Risks identified through these processes are identified to and evaluated by our CISO, who
periodically reports to our Board and Risk Committee as described below on any such risks determined by the Global Security
team to be potentially material.
Our Cybersecurity Program is periodically evaluated by internal and external experts through penetration and
vulnerability testing and other exercises which help us identify and assess material risks, evaluate the effectiveness of our
Security Program in mitigating and managing these risks, and improve our security measures and planning, including by
comparison to other companies and to industry standards. The results of these assessments are reviewed by our CISO and other
members of management and are shared with the Risk Committee of our Board of Directors (the “Risk Committee”).
Our Risk Committee assists our Board of Directors (the “Board”) in its oversight of cybersecurity risk in accordance
with its charter. The Risk Committee receives at least annually, and the Board receives periodically, reports from our CISO and
other members of senior management, which include updates on the Company’s cyber risks and threats, its Cybersecurity
Program, the status of projects to augment our information security systems, assessments of the Security Program, and the
emerging threat landscape.
We face a number of cybersecurity risks in connection with our business. Although we maintain and enforce our
Cybersecurity Program, we may not detect or prevent all attempts to compromise our systems or otherwise cause breaches or
disruptions, which could result in material impacts to our operations or financial condition. As of the date of the filing of this
Annual Report on Form 10-K, we are not aware of any material impact to our results of operations or financial conditions
resulting from cyberattacks or other information security breaches. For more information about the cybersecurity risks we face,
see the risk factor entitled “We could be the target of a significant cyber-attack, threat or incident that impairs internal systems,
results in adverse consequences to information our system process, store or transmit or causes reputation or monetary damages
as a consequence” in Item 1A - Risk Factors.
43
ITEM 2. PROPERTIES
Our headquarters are located in leased office space at 1633 Broadway, New York, NY 10019. We also lease space for
our offices in the U.S., Canada, Europe, and Asia-Pacific, and services in all segments are performed in each of these locations.
We believe that our existing facilities are adequate to meet our current requirements.
ITEM 3. LEGAL PROCEEDINGS
The information required by this item is set forth in the “Legal Proceedings” section in Note 15 “Commitments,
Contingencies and Guarantees” to the Company’s Consolidated Financial Statements included in Part II, Item 8 “Financial
Statements and Supplementary Data”, which is incorporated by reference herein.
ITEM 4. MINE SAFETY DISCLOSURES
None.
44
PART II
45
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Class A Common Stock trade on Nasdaq under the ticker symbol “VIRT.” There is no established public trading
market for Class B Common Stock, Class C Common Stock or Class D Common Stock.
Holders
Based on information made available to us by the transfer agent, as of February 19, 2025, there are forty-five
stockholders of record of our Class A Common Stock, one of which was Cede & Co., a nominee for The Depository Trust
Company, zero stockholders of record of our Class B Common Stock, six stockholders of record of our Class C Common Stock
and one stockholder of record of our Class D Common Stock. All of our Class A Common Stock held by brokerage firms,
banks and other financial institutions as nominees for beneficial owners is considered to be held of record by Cede & Co., who
is considered to be one stockholder of record. A substantially greater number of holders of our Class A Common Stock are
“street name” or beneficial holders, whose shares of Class A Common Stock are held of record by banks, brokers and other
financial institutions. Because such shares of Class A Common Stock are held on behalf of stockholders, and not by the
stockholders directly, and because a stockholder can have multiple positions with different brokerage firms, banks and other
financial institutions, we are unable to determine the total number of stockholders we have.
Dividend and Capital Return Policy
Our Board of Directors has adopted a policy of returning excess cash to our stockholders. The Board of Directors
declared and we paid quarterly cash dividends of $0.24 during the years ended December 31, 2024, 2023, and 2022. The
Company intends to continue paying regular quarterly dividends to holders of our Class A Common Stock and Class B
Common Stock and to holders of RSUs and RSAs (each as defined below); however, the payment of dividends will be subject
to general economic and business conditions, including the Company’s financial condition, results of operations and cash flows,
capital requirements, contractual restrictions, including restrictions contained in our Credit Agreement, regulatory restrictions,
business prospects and other factors that the Company’s Board of Directors considers relevant. The terms of the Credit
Agreement contain a number of covenants, including a restriction on our and our restricted subsidiaries’ ability to pay dividends
on, or make distributions in respect of, our equity interests. See “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources - Long-Term Borrowings.”
Stock Performance
The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the
Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the
Securities Act or the Exchange Act except to the extent we specifically incorporate it by reference into such filing. Our stock
price performance shown in the graph below is not indicative of future stock price performance.
The stock performance graph below compares the performance of an investment in our Class A Common Stock, from
December 31, 2019 through December 31, 2024, with the S&P 500 Index and the NYSE Arca Securities Broker/Dealer Index.
The graph assumes $100 was invested in our Class A Common Stock, the S&P 500 Index and the NYSE Arca Securities
46
Broker/Dealer Index. It assumes that dividends were reinvested on the date of payment without payment of any commissions or
consideration of income taxes.
Virtu Financial, Inc.
S&P 500 Index
NYSE ARCA Securities Broker/Dealer Index
12/31/2019
6/30/2020
12/31/2020
6/30/2021
12/31/2021
6/30/2022
12/30/2022
6/30/2023
12/29/2023
6/28/2024
12/30/2024
50
100
150
200
250
300
Index
12/31/2019
6/30/2020
12/31/2020
6/30/2021
12/31/2021
6/30/2022
12/30/2022
6/30/2023
12/29/2023
06/28/2024
12/30/2024
Virtu Financial
Inc.
100.00
151.08
164.42
177.26
188.33
149.69
133.33
108.76
132.35
144.56
234.78
S&P 500
100.00
95.96
116.26
133.02
147.52
117.17
118.84
137.75
147.64
169.01
182.83
NYSE Arca
Securities
Broker/Dealer
100.00
93.62
130.03
161.55
167.66
131.31
154.67
162.44
191.92
217.47
278.21
Stock and Common Units Repurchases
Pursuant to the exchange agreement (the “Exchange Agreement”) entered into on April 15, 2015 by and among the
Company, Virtu Financial and holders of Virtu Financial Units, Virtu Financial Units (along with the corresponding shares of
our Class C Common Stock or Class D Common Stock, as applicable) may be exchanged at any time for shares of our Class A
Common Stock or Class B Common Stock, as applicable, on a one-for-one basis, subject to customary conversion rate
adjustments for stock splits, stock dividends and reclassifications.
On November 6, 2020, the Company’s Board of Directors authorized a share repurchase program of up to $100.0
million in Class A common stock and Virtu Financial Units by December 31, 2021. On February 11, 2021, the Company’s
Board of Directors authorized the expansion of the program to $170 million. On May 4, 2021 the Company’s Board of directors
authorized the expansion of the program, increasing the total authorized to $470 million and extending the duration of the
program through May 4, 2022. On November 3, 2021 the Company’s Board of Directors authorized the expansion of the
program by an additional $750 million to $1,220 million total and extending the duration of the program through November 3,
2023, which was subsequently extended through December 31, 2024. On April 24, 2024, the Company’s Board of Directors
authorized the expansion of the program by an additional $500 million to $1,720 million and extended the duration through
47
April 24, 2026. The Company may repurchase shares from time to time in open market transactions, privately negotiated
transactions or by other means. Repurchases may also be made under Rule 10b5-1 plans. The timing and amount of repurchase
transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal
requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice.
There are no assurances that any further repurchases will actually occur. From the inception of the program through December
31, 2024, the Company has repurchased approximately 50.3 million shares of Class A Common Stock and Virtu Financial
Units for approximately $1,281.8 million. The Company has approximately $438.2 million of remaining capacity for future
purchases of shares of Class A Common Stock and Virtu Financial Units under the program.
The following table contains information about the Company’s purchases of its Class A Common Stock during the
three months ended December 31, 2024:
Period
Total Number
of Shares
Purchased (1)
Average Price
Paid per Share
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Plans or
Programs
October 1, 2024 - October 31, 2024
Class A Common Stock repurchases
666,538
$
31.85
635,708
$ 475,055,810
November 1, 2024 - November 30, 2024
Class A Common Stock repurchases
518,675
34.7
518,675
457,056,187
December 1, 2024 - December 31, 2024
Class A Common Stock repurchases
518,886
36.50
517,749
438,159,344
Total Common Stock repurchases
1,704,099
$
34.13
1,672,132
$ 438,159,344
(1) Includes the repurchase of 31,967 shares from employees in order to satisfy statutory tax withholding requirements upon the net settlement of
equity awards for the three months ended December 31, 2024
During the year ended December 31, 2024, pursuant to the Exchange Agreement, certain current and former
employees elected to exchange 43,391 units in Virtu Financial held directly or on their behalf by Virtu Employee Holdco LLC
(“Employee Holdco”) on a one-for-one basis for shares of Class A Common Stock. The shares of our Class A Common Stock
were issued in reliance on the registration exemption contained in Section 4(a)(2) of the Securities Act, on the basis that the
transaction did not involve a public offering. No underwriters were involved in the transaction.
Equity Compensation Plan Information
The following table provides information about shares of common stock available for future awards under all of the
Company’s equity compensation plans as of December 31, 2024:
Plan Category
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
Weighted-
average exercise
price of
outstanding
options, warrants
and rights
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in first
column)
Equity compensation plans
approved by security holders
Amended and Restated 2015
Management Incentive Plan
813,750
$
19.00
2,606,625
Equity compensation plans not
approved by security holders
None
—
—
—
Total
813,750
$
19.00
2,606,625
48
ITEM 6. RESERVED
49
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following management’s discussion and analysis covers the years ended December 31, 2024 and 2023 should be read in
conjunction with the audited Consolidated Financial Statements and accompanying notes for the year ended December 31,
2024, which are included in Part II, Item 8 of this Annual Report on Form 10-K. This management’s discussion and analysis
contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those
discussed below. Unless otherwise stated, all amounts are presented in thousands of dollars.
For discussion around our results of operations for the year ended December 31, 2023 and for a comparison of our results of
operations for the year ended December 31, 2023 and year ended December 31, 2022, see Item 7, Management’s Discussion
and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for fiscal year ended
December 31, 2023, filed with the SEC on February 16, 2024.
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements. You should not place undue reliance on
forward-looking statements because they are subject to numerous uncertainties and factors relating to our operations and
business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking
statements include information concerning our possible or assumed future results of operations, including descriptions of our
business strategy. These forward-looking statements can be identified by the use of forward-looking terminology, including the
terms “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project” or, in each case, their
negative, or other variations or comparable terminology and expressions. These statements are based on assumptions that we
have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate under the circumstances. As you read and consider this
Annual Report on Form 10-K, you should understand that forward-looking statements are not guarantees of performance or
results and that our actual results of operations, financial condition and liquidity, and the development of the industry in which
we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Annual
Report on Form 10-K. By their nature, forward-looking statements involve known and unknown risks and uncertainties,
including those described under the heading “Risk Factors” in our Annual Report on Form 10-K, because they relate to events
and depend on circumstances that may or may not occur in the future. Although we believe that the forward-looking statements
contained in this Annual Report on Form 10-K are based on reasonable assumptions, you should be aware that many factors,
including those described under the heading “Risk Factors” in this Annual Report on Form 10-K, could affect our actual
financial results or results of operations and cash flows, and could cause actual results to differ materially from those in such
forward-looking statements, including but not limited to:
• volatility in levels of overall trading activity;
• dependence upon trading counterparties, clients and clearing houses performing their obligations to us;
• failures of our customized trading platform;
• risks inherent to the electronic market making business and trading generally;
• SEC proposals under the prior administration focused on equity markets which may, if adopted, materially change
U.S. equity market structure, including by reducing overall trading volumes, reducing off-exchange trading and
market making opportunities, requiring additional tools, platforms and services to register as an ATS or exchange,
and generally increasing the implicit and explicit cost as well as the complexity of the U.S. equities eco-system for
all participants;
• additionally, enhanced regulatory, congressional, and media scrutiny, including attention to electronic trading,
wholesale market making and off-exchange trading, payment for order flow, and other market structure topics
may result in additional potential changes in regulation or law which could have an adverse effect on our business
as well as adversely impact the public’s perception of us or of companies in our industry;
• increased competition in market making activities and execution services;
• dependence on continued access to sources of liquidity;
• risks associated with self-clearing and other operational elements of our business, including but limited to risks
related to funding and liquidity;
• obligations to comply with applicable regulatory capital requirements;
50
• litigation or other legal and regulatory-based liabilities;
• changes in laws, rules or regulations, including proposed legislation that would impose taxes on certain financial
transactions in the European Union, the U.S. (and certain states therein) and other jurisdictions and other potential
changes which could increase our corporate or other tax obligations in one or more jurisdictions;
• obligations to comply with laws and regulations applicable to our operations in the U.S. and abroad;
• need to maintain and continue developing proprietary technologies;
• capacity constraints, system failures, and delays;
• dependence on third-party infrastructure or systems;
• use of open source software;
• failure to protect or enforce our intellectual property rights in our proprietary technology;
• failure to protect confidential and proprietary information;
• failure to protect our systems from internal or external cyber threats that could result in damage to our computer
systems, business interruption, loss of data, monetary payment demands or other consequences;
• risks associated with international operations and expansion, including failed acquisitions or dispositions;
• the effects of and changes in economic conditions (such as volatility in the financial markets, increased inflation,
monetary conditions and foreign currency and continued or exacerbated exchange rate fluctuations, foreign
currency controls and/or government mandated pricing controls, as well as in trade, tariff, monetary, fiscal and tax
policies in international markets), political conditions (such as military actions and terrorist activities), and other
global events such as fires, geopolitical conflicts, natural disasters, pandemics or extreme weather;
• risks associated with potential growth and associated corporate actions;
• risks associated with new and emerging asset classes and eco-systems in which we may participate, including
digital assets, including risks related to volatility in the underlying assets, regulatory uncertainty, evolving
industry practices and standards around custody, clearing and settlement, and other risks inherent in a new and
evolving asset class;
• inability to access, or delay in accessing, the capital markets to sell shares or raise additional capital;
• loss of key executives and failure to recruit and retain qualified personnel;
• risks associated with losing access to a significant exchange or other trading venue; and
• risks associated with changes in governmental administrations and agencies.
Our forward-looking statements made herein are made only as of the date of this Annual Report on Form 10-K. We
expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to
reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any
such statements are based. All subsequent written and oral forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the cautionary statements contained in this Annual Report on Form 10-K.
Unless the context otherwise requires, the terms “we,” “us,” “our,” “Virtu” and the “Company” refer to Virtu
Financial, Inc., a Delaware corporation, and its consolidated subsidiaries and the term “Virtu Financial” refers to Virtu
Financial LLC, a Delaware limited liability company and a consolidated subsidiary of ours.
Basis of Preparation
Our Consolidated Financial Statements for the years ended December 31, 2024 and 2023 reflect our operations and
those of our consolidated subsidiaries.
51
Overview
We are a leading financial services firm that leverages cutting edge technology to deliver liquidity to the global
markets and innovative, transparent trading solutions to our clients. Leveraging our global market structure expertise and
scaled, multi-asset technology infrastructure, we provide our clients with a robust product suite including offerings in
execution, liquidity sourcing, analytics and broker-neutral, multi-dealer platforms in workflow technology. Our product
offerings allow our clients to trade on hundreds of venues across over 50 countries and in multiple asset classes, including
global equities, ETFs, options, foreign exchange, futures, fixed income, cryptocurrencies and other commodities. Our
integrated, multi-asset analytics platform provides a range of pre- and post-trade services, data products and compliance tools
that our clients rely upon to invest, trade and manage risk across global markets. We believe that our broad diversification, in
combination with our proprietary technology platform and low-cost structure gives us the scale necessary to grow our business
around the globe as we service clients and facilitate risk transfer between global capital markets participants by providing
liquidity, while at the same time earning attractive margins and returns.
Technology and operational efficiency are at the core of our business, and our focus on technology is a key element of
our success. We have developed a proprietary, multi-asset, multi-currency technology platform that is highly reliable, scalable
and modular, and we integrate directly with exchanges, liquidity centers, and our clients. Our market data, order routing,
transaction processing, risk management and market surveillance technology modules manage our market making and
execution services activities in an efficient manner and enable us to scale our activities globally across additional securities and
other financial instruments and asset classes without significant incremental costs or third-party licensing or processing fees.
We believe that technology-enabled market makers and execution services providers like Virtu serve an important role
in maintaining and enhancing the overall health and efficiency of the global capital markets by ensuring that market participants
have an efficient means to invest, transfer risk and analyze the quality of executions. We believe that market participants benefit
from the increased liquidity, lower overall trading costs and execution transparency that Virtu provides.
Our execution services and client solutions products are designed to be transparent, because we believe transparency
makes markets more efficient and helps investors make better, more informed decisions. We use the latest technology to create
and deliver liquidity to global markets and innovative trading solutions and analytics tools to our clients. We interact directly
with hundreds of retail brokers, Registered Investment Advisors, private client networks, sell-side brokers, and buy-side
institutions.
We have two operating segments: Market Making and Execution Services, and one non-operating segment: Corporate.
Our management allocates resources, assesses performance and manages our business according to these segments.
Market Making
We leverage cutting edge technology to provide competitive and deep liquidity that helps to create more efficient
markets around the world. As a market maker and liquidity provider, we stand ready, at any time, to buy or sell a broad range of
securities and other financial instruments, and we generate profits by buying and selling large volumes of securities and other
financial instruments and earning small bid/ask spreads. Our market structure expertise, broad diversification, and scalable
execution technology enable us to provide competitive bids and offers in over 25,000 securities and other financial instruments,
on over 250 venues, in 40 countries worldwide. We use the latest technology to create and deliver liquidity to the global
markets and automate our market making, risk controls, and post-trade processes. As a market maker, we interact directly with
hundreds of retail brokers, Registered Investment Advisors, private client networks, sell-side brokers, and buy-side institutions.
We believe the overall level of volumes and realized volatility as well as the attractiveness of the order flow we
interact with and the level of retail participation in the various markets we serve have the greatest impact on the financial
performance of our market making businesses. Increases in market volatility can cause bid/ask spreads to widen as market
participants are more willing to pay market makers like us to transact immediately and as a result, market makers’ capture rate
per notional amount transacted may increase.
52
Execution Services
We offer client execution services and trading venues that provide transparent trading in global equities, ETFs, fixed
income, currencies, and commodities to institutions, banks and broker-dealers. We generally earn commissions when
transacting as an agent for our clients. Client-based, execution-only trading within this segment is done through a variety of
access points including: (a) algorithmic trading and order routing; (b) institutional sales traders who offer portfolio trading and
single stock sales trading which provides execution expertise for program, block and riskless principal trades in global equities
and ETFs; and (c) matching of client conditional orders in POSIT Alert and in our ATSs, including Virtu MatchIt and
POSIT. We also earn revenues (a) by providing our proprietary technology and infrastructure to select third parties for a service
fee, (b) through workflow technology and our integrated, broker-neutral trading tools delivered across the globe, including
order and execution management systems and order management software applications and network connectivity and (c)
through trading analytics, including (1) tools enabling portfolio managers and traders to improve pre-trade, real-time and post-
trade execution performance, (2) portfolio construction and optimization decisions and (3) securities valuation. The segment
also includes the results of our capital markets business, in which we act as an agent for issuers in connection with at-the-
market offerings and buyback programs.
Corporate
Our Corporate segment contains investments principally in strategic financial services-oriented opportunities and
maintains corporate overhead expenses and all other income and expenses that are not attributable to our other segments.
Credit Agreement
On January 13, 2022 (the “Credit Agreement Closing Date”), VFH and Virtu Financial entered into a credit agreement,
with the lenders party thereto, JPMorgan Chase Bank, N.A. as administrative agent and JPMorgan Chase bank, N.A., Goldman
Sachs Bank USA, RBC Capital Markets, Barclays Bank plc, Jefferies Finance LLC, BMO Capital Markets Corp., and CIBC
World Markets Corp., as joint lead arrangers and bookrunners (the “Original Credit Agreement”). The Original Credit
Agreement provides (i) a senior secured first lien term loan in an aggregate principal amount of $1,800.0 million, drawn in its
entirety on the Credit Agreement Closing Date, the proceeds of which were used by VFH to repay all amounts outstanding
under the previous credit agreement entered into in relation to the ITG Acquisition, to pay fees and expenses in connection
therewith, to fund share repurchases under the Company’s repurchase program and for general corporate purposes, and (ii) a
$250.0 million senior secured first lien revolving facility to VFH, with a $20.0 million letter of credit subfacility and a $20.0
million swingline subfacility.
On June 21, 2024 (the “Amendment Effective Date”), the Company entered into Amendment No. 1 to the Original
Credit Agreement (as amended, the “Credit Agreement”) and completed the issuance of the Notes (as defined below). Pursuant
to the Credit Agreement, $1,245.0 million in aggregate principal amount of Senior Secured First Lien Term B-1 Loans due
2031 (the “New Term Loans”) were issued, the proceeds of which were used, along with the proceeds of the Notes, to repay in
full all term loans previously outstanding under the Original Credit Agreement. Additionally, the Credit Agreement provides an
increase in its senior secured first lien revolving credit facility from $250.0 million to $300.0 million and an extension of the
maturity thereof to three years after the Amendment Effective Date.
The New Term Loans will bear interest, at the Company’s election, at either (i) the greatest of (a) the prime rate in
effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c)
term SOFR for a borrowing with an interest period of one month plus 1.00% and (d) 1.00%, plus, in each case, 1.75%, or (ii)
the greater of (x) term SOFR for the interest period in effect and (y) 0%, plus, in each case, 2.75%. The New Term Loans will
mature on the seventh anniversary of the Amendment Effective Date and amortize in annual installments equal to 1.0% of the
original aggregate principal amount of the New Term Loans. The New Term Loans are also subject to contingent principal
payments based on excess cash flow and certain other triggering events.
Indenture
On June 21, 2024, VFH and Valor Co-Issuer, Inc., a subsidiary of Virtu Financial, (the “Co-Issuer”) completed the
offering of $500.0 million aggregate principal amount of 7.50% senior secured first lien notes due 2031 (the “Notes”). The
Notes were issued under an Indenture, dated as of June 21, 2024 (the “Indenture”), among the VFH, the Co-Issuer, Virtu
Financial and the subsidiary guarantors party thereto, and U.S. Bank Trust Company, National Association, as the trustee and
collateral agent. The Notes mature on June 15, 2031. Interest on the Notes accrues at 7.50% per annum, payable every six
months through maturity on each June 15 and December 15, beginning on December 15, 2024. We refer to VFH and the Co-
Issuer together as, the “Issuers.”
53
Amended and Restated 2015 Management Incentive Plan
The Company’s Board of Directors and stockholders adopted the 2015 Management Incentive Plan, which became
effective upon consummation of the Company’s IPO and was subsequently amended and restated following receipt of approval
from the Company’s stockholders on June 30, 2017 (the “Amended and Restated 2015 Management Incentive Plan”). The
Amended and Restated 2015 Management Incentive Plan provides for the grant of stock options, restricted stock units, and
other awards based on an aggregate of 16,000,000 shares of Class A Common Stock, par value $0.00001 per share (the “Class
A Common Stock”), subject to additional sublimits, including limits on the total option grant to any one participant in a single
year and the total performance award to any one participant in a single year. On April 23, 2020, the Company’s Board of
Directors adopted an amendment to the Company’s Amended and Restated 2015 Management Incentive Plan in order to
increase the number of shares of the Company’s Class A Common Stock reserved for issuance, and in respect of which awards
may be granted under the Amended and Restated 2015 Plan from 16,000,000 to an aggregate of 21,000,000 shares of Class A
Common Stock. On April 22, 2022, the Company’s Board of Directors adopted another amendment to the Company’s
Amended and Restated 2015 Management Incentive Plan to increase the number of shares to an aggregate of 26,000,000 shares
of Class A Common Stock and the amendment was approved by the Company’s shareholders at the Company’s annual meeting
of shareholders on June 2, 2022.
In connection with the IPO, non-qualified stock options to purchase 9,228,000 shares were granted at the IPO per
share price, each of which vested in equal annual installments over a period of four years from the grant date and expire not
later than 10 years from the grant date. Subsequent to the IPO and through December 31, 2024, options to purchase 1,646,500
shares in the aggregate were forfeited and 6,767,750 options were exercised. The fair value of the stock option grants was
determined through the application of the Black-Scholes-Merton model and was recognized on a straight-line basis over the
vesting period.
54
Components of Our Results of Operations
The following table shows our i) Total revenue, ii) Total operating expenses, and iii) Income before income taxes and
noncontrolling interest by segment for the years ended December 31, 2024, 2023, and 2022:
(in thousands)
Years Ended December 31,
Market Making
2024
2023
2022
Total revenue
$
2,374,096
$
1,843,523
$
1,812,839
Total operating expenses
1,783,044
1,527,921
1,332,280
Income (loss) before income taxes and noncontrolling interest
591,052
315,602
480,559
Execution Services
Total revenue
507,230
446,542
514,241
Total operating expenses
445,470
436,102
472,899
Income (loss) before income taxes and noncontrolling interest
61,760
10,440
41,342
Corporate
Total revenue
(4,377)
3,308
37,732
Total operating expenses
3,465
4,219
2,835
Income (loss) before income taxes and noncontrolling interest
(7,842)
(911)
34,897
Consolidated
Total revenue
2,876,949
2,293,373
2,364,812
Total operating expenses
2,231,979
1,968,242
1,808,014
Income (loss) before income taxes and noncontrolling interest
$
644,970
$
325,131
$
556,798
The following table shows our results of operations for the years ended December 31, 2024, 2023, and 2022:
55
Years Ended December 31,
(in thousands)
2024
2023
2022
Revenues:
Trading income, net
$
1,822,437
$
1,301,344
$
1,628,898
Interest and dividends income
462,070
462,566
159,120
Commissions, net and technology services
516,783
455,598
529,845
Other, net
75,659
73,865
46,949
Total revenue
2,876,949
2,293,373
2,364,812
Operating Expenses:
Brokerage, exchange, clearance fees and payments for order flow, net
674,426
508,358
619,168
Communication and data processing
236,446
230,760
219,505
Employee compensation and payroll taxes
434,823
394,039
390,947
Interest and dividends expense
529,177
500,467
231,060
Operations and administrative
97,002
98,972
86,069
Depreciation and amortization
65,816
63,306
66,377
Amortization of purchased intangibles and acquired capitalized
software
50,471
63,960
64,837
Termination of office leases
16,224
455
6,982
Debt issue cost related to debt refinancing, prepayment and
commitment fees
29,479
8,317
29,910
Transaction advisory fees and expenses
313
314
1,124
Financing interest expense on long-term borrowings
97,802
99,294
92,035
Total operating expenses
2,231,979
1,968,242
1,808,014
Income before income taxes and noncontrolling interest
644,970
325,131
556,798
Provision for income taxes
110,435
61,210
88,466
Net income
$
534,535
$
263,921
$
468,332
Selected Operating Margins
GAAP Net income Margin (1)
18.6 %
11.5 %
19.8 %
(1)
Calculated by dividing Net income by Total revenue.
56
Net income available to stockholders and basic and diluted earnings per share are presented below:
Years Ended December 31,
(in thousands, except for share or per share data)
2024
2023
2022
Net income
$
534,535
$
263,921
$
468,332
Noncontrolling interest
(258,120)
(121,885)
(203,306)
Net income available for common stockholders
$
276,415
$
142,036
$
265,026
Earnings per share
Basic
$
2.98
$
1.42
$
2.45
Diluted
$
2.97
$
1.42
$
2.44
Weighted average common shares outstanding
Basic
87,482,162
94,076,165
103,997,767
Diluted
87,821,576
94,076,165
104,422,443
Total Revenues
Revenues are generated through market marking activities, commissions and fees on execution services activities,
which include recurring subscriptions on workflow technology and analytic products. The majority of our revenues are generated
through market making activities, which are recorded as Trading income, net and Interest and dividends income. Commissions
and fees are derived from commissions charged for trade executions in client execution services. Recurring revenues are
primarily derived from workflow technology connectivity fees generated for matching client orders, and analytics services to
select third parties. Revenues from connectivity fees are recognized and billed to clients on a monthly basis. Revenues from
commissions attributable to analytic products under bundled arrangements are recognized over the course of the year as the
performance obligations for those analytics products are satisfied.
Trading income, net. Trading income, net represents revenue earned from bid/ask spreads. Trading income is generated
in the normal course of our market making activities and is typically proportional to the level of trading activity, or volumes, and
bid/ask spreads in the asset classes we serve. Our trading income is highly diversified by asset class and geography and
comprises small amounts earned on millions of trades on various exchanges. Our trading income, net, results from gains and
losses associated with trading strategies, which are designed to capture small bid/ask spreads, while hedging risks. Trading
income, net, accounted for 63% and 57% of our total revenues for the years ended December 31, 2024 and 2023, respectively.
Interest and dividends income. Our market making activities require us to hold securities on a regular basis, and we
generate revenues in the form of interest and dividends income from these securities. Interest is also earned on securities
borrowed from other market participants pursuant to collateralized financing arrangements and on cash held by brokers.
Dividends income arises from holding market making positions over dates on which dividends are paid to shareholders of
record.
Commissions, net and technology services. We earn revenues on transactions for which we charge explicit
commissions, which include the majority of our institutional client orders. Commissions and fees are primarily affected by
changes in our equities, fixed income and futures transaction volumes with institutional clients, which vary based on client
relationships; changes in commission rates; client experience on the various platforms; level of volume-based fees from
providing liquidity to other trading venues; and the level of our soft dollar and commission recapture activity. Client commission
fees are charged for client trades executed by us on behalf of third-party broker-dealers and other financial institutions. Revenue
is recognized on a trade date basis, which is the point at which the performance obligation to the customer is satisfied, based on
the trade being executed. In addition, we offer workflow technology and analytics services to select third parties. Revenues are
derived from fees generated by matching sell-side and buy-side clients orders, and from analytic products delivered to the
clients.
Other, net. We have interests in multiple strategic investments and telecommunications joint ventures (“JVs”). We
record our pro-rata share of our JVs’ earnings or losses within Other, net, while fees related to the use of communication services
provided by the JVs are recorded within Communications and data processing.
57
We have a noncontrolling investment (the “JNX Investment”) in Japannext Co., Ltd. (“JNX”), a proprietary trading
system based in Tokyo. In connection with the investment, we issued bonds to certain affiliates of JNX and used the proceeds to
partially finance the transaction. Revenues or losses are recognized due to the changes in fair value of the investment or
fluctuations in Japanese Yen conversion rates within Other, net.
Other, net can also include gains on sales of strategic investments and businesses, settlement fund recoveries, as well as
revenues from service agreements related to the sale of businesses.
Operating Expenses
Brokerage, exchange, clearance fees and payments for order flow, net. Brokerage, exchange, clearance fees and
payments for order flow are our most significant expenses, which include the direct expenses of executing and clearing
transactions that we consummate in the course of our market making activities. Brokerage, exchange, clearance fees and
payments for order flow primarily consist of fees charged by third parties for executing, processing and settling trades. These
fees generally increase and decrease in direct correlation with the level of our trading activity. Execution fees are paid primarily
to exchanges and venues where we trade. Clearance fees are paid to clearing houses and clearing agents. Payments for order flow
represent payments to broker-dealer clients, in the normal course of business, for directing their order flow in U.S. equities to the
Company. Rebates based on volume discounts, credits or payments received from exchanges or other marketplaces are netted
against brokerage, exchange, clearance fees and payments for order flow.
Communication and data processing. Communication and data processing represent primarily fixed expenses for data
center co-location, network lines and connectivity for our trading centers and co-location facilities. Communications expense
consists primarily of the cost of voice and data telecommunication lines supporting our business, including connectivity to data
centers, exchanges, markets and liquidity pools around the world, and data processing expense consists primarily of market data
subscription fees that we pay to third parties to receive price quotes and related information.
Employee compensation and payroll taxes. Employee compensation and payroll taxes include employee salaries, cash
and non-cash incentive compensation, employee benefits, payroll taxes, severance and other employee related costs. Employee
compensation and payroll taxes also includes non-cash compensation expenses with respect to restricted stock units and
restricted stock awards pursuant to the Amended and Restated 2015 Management Incentive Plan.
Interest and dividends expense. We incur interest expense from loaning certain equity securities in the general course
of our market making activities pursuant to collateralized lending transactions. Typically, dividends expense is incurred when a
dividend is paid on securities sold short.
Operations and administrative. Operations and administrative expense represents occupancy, recruiting, travel and
related expense, professional fees and other expenses.
Depreciation and amortization. Depreciation and amortization expense results from the depreciation of fixed assets and
leased equipment, such as computing and communications hardware, as well as amortization of leasehold improvements and
capitalized in-house software development. We depreciate our computer hardware and related software, office hardware and
furniture and fixtures on a straight-line basis over a period of 3 to 7 years based on the estimated useful life of the underlying
asset, and we amortize our capitalized software development costs on a straight-line basis over a period of 1.5 to 3 years, which
represents the estimated useful lives of the underlying software. We amortize leasehold improvements on a straight-line basis
over the lesser of the life of the improvement or the term of the lease.
Amortization of purchased intangibles and acquired capitalized software. Amortization of purchased intangibles and
acquired capitalized software represents the amortization of finite lived intangible assets acquired in connection with the
Acquisition of KCG and the ITG Acquisition. These assets are amortized over their useful lives, ranging from 1 to 15 years,
except for certain assets which were categorized as having indefinite useful lives.
Termination of office leases. Termination of office leases represents the write-off expense and asset retirement
obligations related to certain office space we ceased use of as part of the effort to integrate and consolidate office space. The
aggregate write-off amount includes the impairment of operating lease right-of-use assets, leasehold improvements and fixed
assets, and dilapidation charges.
Debt issue cost related to debt refinancing, prepayment and commitment fees. As a result of the refinancing or early
termination of our long-term borrowings, we accelerate the capitalized debt issue cost and the discount on the term loan that
58
would otherwise be amortized or accreted over the life of the term loan. Premium paid in connection with retiring outstanding
bonds, and commitment fees paid for lines of credit are also included in this category.
Transaction advisory fees and expenses. Transaction advisory fees and expenses primarily reflect professional fees
incurred by us in connection with one or more acquisitions or dispositions.
Financing interest expense on long-term borrowings. Financing interest expense reflects interest accrued on
outstanding indebtedness under our long-term borrowing arrangements.
Provision for income taxes
We are subject to U.S. federal, state and local income tax at the rate applicable to corporations less the rate attributable
to the noncontrolling interest in Virtu Financial. Our non-U.S. operations are also subject to foreign income tax at the applicable
corporate rates.
Our effective tax rate is subject to significant variation due to several factors, including variability in our pre-tax and
taxable income and loss and the jurisdictions to which they relate, changes in how we do business, acquisitions and investments,
audit-related developments, tax law developments (including changes in statutes, regulations, case law, and administrative
practices), and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, our effective tax
rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and
non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. Our effective tax rate may also be
impacted by changes in the portion of income that is attributable to the noncontrolling interest.
We regularly assess whether it is more likely than not that we will realize our deferred tax assets in each taxing
jurisdiction in which we operate. In performing this assessment with respect to each jurisdiction, we review all available
evidence, including actual and expected future earnings, capital gains, and investment in such jurisdiction, the carry-forward
periods available to us for tax reporting purposes, and other relevant factors. See Note 14 “Income Taxes” of Part II, Item 8
“Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
59
Non-GAAP Financial Measures and Other Items
To supplement our Consolidated Financial Statements presented in accordance with generally accepted accounting
principles in the United States (“U.S. GAAP”), we use the following non-U.S. GAAP (“Non-GAAP”) financial measures of
financial performance:
•
“Adjusted Net Trading Income”, which is the amount of revenue we generate from our market making activities,
or Trading income, net, plus Commissions, net and technology services, plus Interest and dividends income, less
direct costs associated with those revenues, including Brokerage, exchange, clearance fees and payments for
order flow, net, and Interest and dividends expense. We also disclose Adjusted Net Trading Income by segment,
and as daily averages by dividing Adjusted Net Trading Income by the number of trading days in a given period.
Starting in the fourth quarter of 2024, we began counting days on which U.S. equities exchanges close early or
otherwise operate for less than a full trading day as half-days, whereas previously such days were counted as
whole days. Prior periods have not been restated as the impact of the change is immaterial in relation to our
average daily Adjusted Net Trading Income. Management believes that Adjusted Net Trading Income is useful
for comparing general operating performance from period to period. Although we use Adjusted Net Trading
Income as a financial measure to assess the performance of our business, the use of Adjusted Net Trading
Income is limited because it does not include certain material costs that are necessary to operate our business.
Our presentation of Adjusted Net Trading Income should not be construed as an indication that our future results
will be unaffected by revenues or expenses that are not directly associated with our core business activities.
•
“EBITDA”, which measures our operating performance by adjusting Net Income to exclude Financing interest
expense on long-term borrowings, Debt issue cost related to debt refinancing, prepayment, and commitment fees,
Depreciation and amortization, Amortization of purchased intangibles and acquired capitalized software, and
Income tax expense, and “Adjusted EBITDA”, which measures our operating performance by further adjusting
EBITDA to exclude severance, transaction advisory fees and expenses, termination of office leases, charges
related to share-based compensation and other expenses, which includes reserves for legal matters, and Other,
net, which includes gains and losses from strategic investments, the sales of businesses, and other income.
•
“Normalized Adjusted Net Income”, “Normalized Adjusted Net Income before income taxes”, “Normalized
provision for income taxes”, and “Normalized Adjusted EPS”, which we calculate by adjusting Net Income to
exclude certain items, and other non-cash items, assuming that all vested and unvested Virtu Financial Units have
been exchanged for Class A Common Stock, and applying an effective tax rate, which was approximately 24%.
•
Operating Margins, which are calculated by dividing net income, EBITDA, and Adjusted EBITDA by Adjusted
Net Trading Income.
Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted
Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted EPS, and Operating Margins
(collectively, the “Company’s Non-GAAP Measures”) are non-GAAP financial measures used by management in evaluating
operating performance and in making strategic decisions. In addition, the Company’s Non-GAAP Measures or similar non-
GAAP financial measures are used by research analysts, investment bankers and lenders to assess our operating performance.
Management believes that the presentation of the Company’s Non-GAAP Measures provides useful information to investors
regarding our results of operations and cash flows because they assist both investors and management in analyzing and
benchmarking the performance and value of our business. The Company’s Non-GAAP Measures provide indicators of general
economic performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes
that these measurements are useful for comparing general operating performance from period to period. Furthermore, our Credit
Agreement contains covenants and other tests based on metrics similar to Adjusted EBITDA. Other companies may define
Adjusted Net Trading Income, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before
income taxes, Normalized provision for income taxes, Normalized Adjusted EPS, and Operating Margins differently, and as a
result the Company’s Non-GAAP Measures may not be directly comparable to those of other companies. Although we use the
Company’s Non-GAAP Measures as financial measures to assess the performance of our business, such use is limited because
they do not include certain material costs necessary to operate our business.
The Company’s Non-GAAP Measures should be considered in addition to, and not as a substitute for, Net Income in
accordance with U.S. GAAP as a measure of performance. Our presentation of the Company’s Non-GAAP Measures should
not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. The Company’s
Non-GAAP Measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for
analysis of our results as reported under U.S. GAAP. Some of these limitations are:
•
they do not reflect every cash expenditure, future requirements for capital expenditures or contractual
commitments;
60
•
our EBITDA-based measures do not reflect the significant interest expense or the cash requirements necessary to
service interest or principal payment on our debt;
•
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will
often have to be replaced or require improvements in the future, and our EBITDA-based measures do not reflect
any cash requirement for such replacements or improvements;
•
they are not adjusted for all non-cash income or expense items that are reflected in our consolidated statements of
cash flows;
•
they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of
our ongoing operations; and
•
they do not reflect limitations on our costs related to transferring earnings from our subsidiaries to us.
Because of these limitations, the Company’s Non-GAAP Measures are not intended as alternatives to Net Income as
indicators of our operating performance and should not be considered as measures of discretionary cash available to us to invest
in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for
these limitations by using the Company’s Non-GAAP Measures along with other comparative tools, together with U.S. GAAP
measurements, to assist in the evaluation of operating performance. These U.S. GAAP measurements include operating Net
Income, cash flows from operations and cash flow data. See below a reconciliation of each of the Company’s Non-GAAP
Measures to the most directly comparable U.S. GAAP measure.
The following table reconciles the Consolidated Statements of Comprehensive Income to arrive at Adjusted Net
Trading Income, EBITDA, Adjusted EBITDA, and Operating Margins for the years ended December 31, 2024, 2023, and 2022.
Years Ended December 31,
(in thousands)
2024
2023
2022
Reconciliation of Trading income, net to Adjusted Net Trading Income
Trading income, net
$ 1,822,437
$ 1,301,344
$ 1,628,898
Interest and dividends income
462,070
462,566
159,120
Commissions, net and technology services
516,783
455,598
529,845
Brokerage, exchange, clearance fees and payments for order flow, net
(674,426)
(508,358)
(619,168)
Interest and dividends expense
(529,177)
(500,467)
(231,060)
Adjusted Net Trading Income
$ 1,597,687
$ 1,210,683
$ 1,467,635
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Net income
$
534,535
$
263,921
$
468,332
Financing interest expense on long-term borrowings
97,802
99,294
92,035
Debt issue cost related to debt refinancing, prepayment, and commitment fees
29,479
8,317
29,910
Depreciation and amortization
65,816
63,306
66,377
Amortization of purchased intangibles and acquired capitalized software
50,471
63,960
64,837
Provision for income taxes
110,435
61,210
88,466
EBITDA
$
888,538
$
560,008
$
809,957
Severance
7,930
8,793
8,070
Transaction advisory fees and expenses
313
314
1,124
Termination of office leases
16,224
455
6,982
Other
(69,795)
(65,536)
(34,229)
Share based compensation
75,475
63,933
67,219
Adjusted EBITDA
$
918,685
$
567,967
$
859,123
Selected Operating Margins
GAAP Net income Margin (1)
18.6 %
11.5 %
19.8 %
Non-GAAP Net income Margin (2)
33.5 %
21.8 %
31.9 %
EBITDA Margin (3)
55.6 %
46.3 %
55.2 %
Adjusted EBITDA Margin (4)
57.5 %
46.9 %
58.5 %
(1)
Calculated by dividing Net Income by Total Revenue.
(2)
Calculated by dividing Net Income by Adjusted Net Trading Income.
61
(3)
Calculated by dividing EBITDA by Adjusted Net Trading Income.
(4)
Calculated by dividing Adjusted EBITDA by Adjusted Net Trading Income.
The following table reconciles Net Income to arrive at Normalized Adjusted Net Income before income taxes,
Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS for the years ended
December 31, 2024, 2023, and 2022:
Years Ended December 31,
(in thousands, except share and per share data)
2024
2023
2022
Reconciliation of Net Income to Normalized Adjusted Net Income
Net income
$
534,535
$
263,921
$
468,332
Provision for income taxes
110,435
61,210
88,466
Income before income taxes
644,970
325,131
556,798
Amortization of purchased intangibles and acquired capitalized software
50,471
63,960
64,837
Debt issue cost related to debt refinancing, prepayment, and commitment fees
29,479
8,317
29,910
Severance
7,930
8,793
8,070
Transaction advisory fees and expenses
313
314
1,124
Termination of office leases
16,224
455
6,982
Other
(69,795)
(65,536)
(34,229)
Share based compensation
75,475
63,933
67,219
Normalized Adjusted Net Income before income taxes
755,067
405,367
700,711
Normalized provision for income taxes (1)
181,217
97,286
168,171
Normalized Adjusted Net Income
$
573,850
$
308,081
$
532,540
Weighted Average Adjusted shares outstanding (2)
161,845,371
167,782,513
177,688,188
Basic earnings per share
$
2.98
$
1.42
$
2.45
Normalized Adjusted EPS
$
3.55
$
1.84
$
3.00
(1)
Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 24% for all periods presented.
(2)
Assumes that (1) holders of all vested and unvested non-vesting Virtu Financial Units (together with corresponding shares of the
Company’s Class C common stock, par value $0.00001 per share (the “Class C Common Stock”)) have exercised their right to
exchange such Virtu Financial Units for shares of Class A Common Stock on a one-for-one basis, (2) holders of all Virtu Financial
Units (together with corresponding shares of the Company’s Class D common stock, par value $0.00001 per share (the “Class D
Common Stock”)) have exercised their right to exchange such Virtu Financial Units for shares of the Company’s Class B common
stock, par value $0.00001 per share (the “Class B Common Stock”) on a one-for-one basis, and subsequently exercised their right to
convert the shares of Class B Common Stock into shares of Class A Common Stock on a one-for-one basis. Includes additional shares
from the dilutive impact of options, restricted stock units and restricted stock awards outstanding under the Amended and Restated
2015 Management Incentive Plan and the Amended and Restated ITG 2007 Equity Plan during the years ended December 31, 2024,
2023, and 2022.
62
The following tables reconcile Trading income, net to Adjusted Net Trading Income by segment for the years ended
December 31, 2024, 2023, and 2022:
Year Ended December 31, 2024
(in thousands)
Market
Making
Execution
Services
Corporate
Total
Trading income, net
$
1,798,942
$
23,495
$
—
$
1,822,437
Commissions, net and technology services
42,376
474,407
—
516,783
Interest and dividends income
451,329
10,741
—
462,070
Brokerage, exchange, clearance fees and payments
for order flow, net
(573,382)
(101,044)
—
(674,426)
Interest and dividends expense
(524,158)
(5,019)
—
(529,177)
Adjusted Net Trading Income
$
1,195,107
$
402,580
$
—
$
1,597,687
Year Ended December 31, 2023
(in thousands)
Market
Making
Execution
Services
Corporate
Total
Trading income, net
$
1,283,680
$
17,664
$
—
$
1,301,344
Commissions, net and technology services
29,571
426,027
—
455,598
Interest and dividends income
451,859
10,707
—
462,566
Brokerage, exchange, clearance fees and payments
for order flow, net
(420,608)
(87,750)
—
(508,358)
Interest and dividends expense
(497,895)
(2,572)
—
(500,467)
Adjusted Net Trading Income
$
846,607
$
364,076
$
—
$
1,210,683
Year Ended December 31, 2022
(in thousands)
Market
Making
Execution
Services
Corporate
Total
Trading income, net
$
1,607,819
$
21,079
$
—
$
1,628,898
Commissions, net and technology services
42,180
487,665
—
529,845
Interest and dividends income
158,664
456
—
159,120
Brokerage, exchange, clearance fees and payments
for order flow, net
(524,762)
(94,406)
—
(619,168)
Interest and dividends expense
(225,427)
(5,633)
—
(231,060)
Adjusted Net Trading Income
$
1,058,474
$
409,161
$
—
$
1,467,635
The following table shows our Adjusted Net Trading Income and average daily Adjusted Net Trading Income by
segment for the years ended December 31, 2024, 2023, and 2022:
(in thousands, except %)
2024
2023
2022
Adjusted Net Trading Income
by Segment:
Total
Average
Daily (1)
%
Total
Average
Daily
%
Total
Average
Daily
%
Market Making
$ 1,195,107
$ 4,771
74.8 %
$
846,607
$ 3,386
69.9 %
$ 1,058,474
$ 4,217
72.1 %
Execution Services
402,580
1,607
25.2 %
364,076
1,456
30.1 %
409,161
1,630
27.9 %
Corporate
—
—
— %
—
—
— %
—
—
— %
Adjusted Net Trading Income
$ 1,597,687
$ 6,378
100.0 %
$ 1,210,683
$ 4,842
100.0 %
$ 1,467,635
$ 5,847
100.0 %
(1) Effective fourth quarter 2024, we began counting days on which U.S. equities exchanges close early or otherwise operate for less than a full trading
day as half-days. Prior periods have not been restated as the impact of the change is immaterial in relation to our average daily Adjusted Net Trading
Income.
63
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Total Revenues
Our total revenues increased $583.5 million, or 25.4%, to $2,876.9 million for the year ended December 31, 2024,
compared to $2,293.4 million for the year ended December 31, 2023. This increase was primarily attributable to an increase of
$521.1 million in Trading income, net due to higher trading volumes and increased opportunities across global markets and an
increase of $61.2 million in Commissions, net and technology services driven by strengthened institutional engagement during
the year ended December 31, 2024 compared to the same period in 2023.
The following table shows the total revenues by segment for the years ended December 31, 2024 and 2023.
Years Ended December 31,
(in thousands, except for percentage)
2024
2023
% Change
Market Making
Trading income, net
$
1,798,942
$
1,283,680
40.1%
Interest and dividends income
451,329
451,859
(0.1)%
Commissions, net and technology services
42,376
29,571
43.3%
Other, net
81,449
78,413
3.9%
Total revenues from Market Making
$
2,374,096
$
1,843,523
28.8%
Execution Services
Trading income, net
$
23,495
$
17,664
33.0%
Interest and dividends income
10,741
10,707
0.3%
Commissions, net and technology services
474,407
426,027
11.4%
Other, net
(1,413)
(7,856)
(82.0)%
Total revenues from Execution Services
$
507,230
$
446,542
13.6%
Corporate
Other, net
$
(4,377) $
3,308
NM
Total revenues from Corporate
$
(4,377) $
3,308
NM
Consolidated
Trading income, net
$
1,822,437
$
1,301,344
40.0%
Interest and dividends income
462,070
462,566
(0.1)%
Commissions, net and technology services
516,783
455,598
13.4%
Other, net
75,659
73,865
2.4%
Total revenues
$
2,876,949
$
2,293,373
25.4%
Trading income, net. Trading income, net was primarily earned by our Market Making segment. Trading income, net,
increased $521.1 million, or 40.0%, to $1,822.4 million for the year ended December 31, 2024, compared to $1,301.3 million
for the year ended December 31, 2023. The increase was largely a result of higher trading volumes and increased opportunities
across global markets during the year ended December 31, 2024 compared to the same period in 2023. Rather than analyzing
Trading income, net, in isolation, we evaluate it in the broader context of our Adjusted Net Trading Income, together with
Interest and dividends income, Commissions, net and technology services, Interest and dividends expense, and Brokerage,
exchange, clearance fees and payments for order flow, net, each of which are described below.
Interest and dividends income. Interest and dividends income was primarily earned by our Market Making segment.
Interest and dividends income remained around the same level year-over-year, slightly decreasing by $0.5 million, or 0.1%, to
$462.1 million for the year ended December 31, 2024, compared to $462.6 million for the year ended December 31, 2023.
Fluctuations were primarily attributable to changes in interest income earned on cash collateral posted as part of securities
borrowed transactions and securities purchased under the agreements to resell, driven by the movements of interest rates as well
as the level of our activities in securities borrowing and reverse repurchase agreements. The slight decrease was due to overall
lower interest rates for the period compared to the same period during the prior year. As indicated above, rather than analyzing
interest and dividends income in isolation, we evaluate it in the broader context of our Adjusted Net Trading Income.
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Commissions, net and technology services. Commissions, net and technology services revenues were primarily earned
by our Execution Services segment. Commissions, net and technology services revenues increased $61.2 million, or 13.4%, to
$516.8 million for the year ended December 31, 2024, compared to $455.6 million for the year ended December 31, 2023. This
increase was driven by relatively higher client volumes and increasing institutional engagement compared to the same period in
2023. As indicated above, rather than analyzing commission income in isolation, we evaluate it in the broader context of our
Adjusted Net Trading Income.
Other, net. Other, net increased $1.8 million, or 2.4%, to $75.7 million for the year ended December 31, 2024,
compared to $73.9 million for the year ended December 31, 2023. The income for the years ended December 31, 2024 and
2023 were primarily related to gains on settlement fund recoveries in which we are eligible to participate based on our
transactions in the applicable products.
Adjusted Net Trading Income
Adjusted Net Trading Income, which is a non-GAAP measure, increased $387.0 million, or 32.0%, to $1,597.7 million
for the year ended December 31, 2024, compared to $1,210.7 million for the year ended December 31, 2023. This increase was
primarily attributable to higher Trading income, net and Commissions, net and technology services, as noted above, partially
offset by higher Brokerage, exchange, clearance fees and payments for order flow, net and Interest and dividends expense as
described below. Average daily Adjusted Net Trading Income increased $1.6 million, or 33.3%, to $6.4 million for the year
ended December 31, 2024, compared to $4.8 million for the year ended December 31, 2023. Taking shortened trading days into
consideration for the year ended December 31, 2024, the number of trading days was 250.5 days, compared to 250 days for the
year ended December 31, 2023 under the previous trading day convention. For a full description of Adjusted Net Trading
Income and a reconciliation of Adjusted Net Trading Income to trading income, net, see “Non-GAAP Financial Measures and
Other Items” in this “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations”.
Operating Expenses
Our operating expenses increased $263.8 million, or 13.4%, to $2,232.0 million for the year ended December 31,
2024, compared to $1,968.2 million for the year ended December 31, 2023. The increase was primarily driven by increases in
Brokerage, exchange, clearance fees and payments for order flow, net, Interest and dividends expense, Employee compensation
and payroll taxes, and Debt issue cost related to debt refinancing, prepayment and commitment fees.
Brokerage, exchange, clearance fees and payments for order flow, net. Brokerage, exchange, clearance fees and
payments for order flow, net, increased $166.0 million, or 32.7%, to $674.4 million for the year ended December 31, 2024,
compared to $508.4 million for the year ended December 31, 2023. These costs vary period to period based upon the level and
composition of our trading activities. We evaluate this category, representing direct costs associated with transacting our
business, in the broader context of our Adjusted Net Trading Income.
Communication and data processing. Communication and data processing expense increased $5.6 million, or 2.4%,
to $236.4 million for the year ended December 31, 2024, compared to $230.8 million for the year ended December 31, 2023.
This increase was primarily attributable to increased connectivity spending on market data, subscription, and communication
networks maintained by our joint ventures.
Employee compensation and payroll taxes. Employee compensation and payroll taxes increased $40.8 million, or
10.4%, to $434.8 million for the year ended December 31, 2024, compared to $394.0 million for the year ended December 31,
2023. The increase in compensation levels was primarily attributable to an increase in accrued incentive compensation, which is
recorded at management’s discretion and is generally accrued in connection with the overall level of profitability on a year-to-
date basis, as well as the anticipated mix of cash and stock-based awards.
We have capitalized and therefore excluded employee compensation and benefits related to software development of
$44.7 million and $40.4 million for the years ended December 31, 2024 and 2023, respectively.
Interest and dividends expense. Interest and dividends expense increased $28.7 million, or 5.7%, to $529.2 million for
the year ended December 31, 2024, compared to $500.5 million for the year ended December 31, 2023. This increase was
primarily attributable to higher interest expense incurred on cash collateral received driven by an increase in securities lending
transactions, as well as higher dividends expense with respect to securities sold, not yet purchased for the period compared to
the same period during the prior year. As indicated above, rather than analyzing interest and dividends expense in isolation, we
generally evaluate it in the broader context of our Adjusted Net Trading Income.
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Operations and administrative. Operations and administrative expense decreased $2.0 million, or 2.0%, to $97.0
million for the year ended December 31, 2024, compared to $99.0 million for the year ended December 31, 2023. The decrease
was primarily driven by a decrease in occupancy expenses.
Depreciation and amortization. Depreciation and amortization increased $2.5 million, or 3.9%, to $65.8 million for
the year ended December 31, 2024, compared to $63.3 million for the year ended December 31, 2023. This increase was driven
primarily by increased amortization of capitalized software compared to the prior period.
Amortization of purchased intangibles and acquired capitalized software. Amortization of purchased intangibles and
acquired capitalized software decreased $13.5 million, or 21.1%, to $50.5 million for the year ended December 31, 2024,
compared to $64.0 million for the year ended December 31, 2023. This decrease was primarily attributable to certain intangible
assets being fully amortized in 2023 and during 2024.
Termination of office leases. Termination of office leases increased $15.7 million to $16.2 million for the year ended
December 31, 2024, compared to $0.5 million for the year ended December 31, 2023. The increase was related to the
impairment of lease right-of-use assets and asset retirement obligations for certain abandoned or vacated office spaces in 2024.
Debt issue cost related to debt refinancing, prepayment and commitment fees. Expense from debt issue cost related
to debt refinancing, prepayment and commitment fees increased $21.2 million, or 255.4%, to $29.5 million for the year ended
December 31, 2024, compared to $8.3 million for the year ended December 31, 2023. The increase was primarily driven by the
acceleration of capitalized debt issue cost and discount on our previous term loan as a result of refinancing during the year
ended December 31, 2024. See Note 9 “Borrowings” of Part II, Item 8 “Financial Statements and Supplementary Data” of this
Annual Report on Form 10-K for additional details.
Transaction advisory fees and expenses. Transaction advisory fees and expenses were insignificant for the years
ended December 31, 2024 and December 31, 2023. These expenses, when incurred, are primarily in relation to our strategic
investment portfolio.
Financing interest expense on long term borrowings. Financing interest expense on long-term borrowings decreased
$1.5 million, or 1.5%, to $97.8 million for the year ended December 31, 2024, compared to $99.3 million for the year ended
December 31, 2023. This decrease was attributable to the decrease in outstanding principal as a result of the voluntary
prepayment in December 2023, the amortization of the amounts in AOCI related to the interest rate swaps terminated in
December 2023, as well as a lower overall interest rate after our debt refinancing described in Note 9 “Borrowings”.
Provision for income taxes
We incur corporate tax at the U.S. federal income tax rate on our taxable income, as adjusted for noncontrolling
interest in Virtu Financial. Our income tax expense reflects such U.S. federal income tax as well as taxes payable by certain of
our non-U.S. subsidiaries. Our provision for income taxes and effective tax rate was $110.4 million and 17.1% for the year
ended December 31, 2024, compared to a provision for income taxes and effective tax rate of $61.2 million and 18.8% for the
year ended December 31, 2023.
Liquidity and Capital Resources
General
As of December 31, 2024, we had $872.5 million in Cash and cash equivalents. This balance is maintained primarily
to support operating activities, for capital expenditures and for short-term access to liquidity, and for other general corporate
purposes. As of December 31, 2024, we had borrowings under our prime brokerage credit facilities of approximately $123.0
million, borrowings under our broker dealer facilities of $10.0 million, and long-term debt outstanding in an aggregate principal
amount of approximately $1,767.3 million.
The majority of our trading assets consist of exchange-listed marketable securities, which are marked-to-market daily,
and collateralized receivables from broker-dealers and clearing organizations arising from proprietary securities transactions.
Collateralized receivables consist primarily of securities borrowed, receivables from clearing houses for settlement of securities
transactions and, to a lesser extent, securities purchased under agreements to resell. We actively manage our liquidity, and we
maintain significant borrowing facilities through the securities lending markets and with banks and prime brokers. We have
continually received the benefit of uncommitted margin financing from our prime brokers globally. These margin facilities are
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secured by securities in accounts held at the prime brokers. For purposes of providing additional liquidity, we maintain a
committed credit facility and an uncommitted credit facility for our wholly-owned U.S. broker-dealer subsidiary, as discussed
in Note 9 “Borrowings” of Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Short-term Liquidity and Capital Resources
Based on our current level of operations, we believe our cash flows from operations, available cash and cash
equivalents, and available borrowings under our broker-dealer credit facilities will be adequate to meet our future liquidity
needs for the next twelve months. We anticipate that our primary upcoming cash and liquidity needs will be increased due to
margin requirements from increased trading activities in markets where we currently provide liquidity and in new markets into
which we plan to expand. We manage and monitor our margin and liquidity needs on a real-time basis and can adjust our
requirements both intra-day and inter-day, as required.
We expect our principal sources of future liquidity to come from cash flows provided by operating activities and
financing activities. Certain of our cash balances are insured by the Federal Deposit Insurance Corporation, generally up to
$250,000 per account but without a cap under certain conditions. From time to time these cash balances may exceed insured
limits, but we select financial institutions deemed highly credit worthy to minimize risk. We consider highly liquid investments
with original maturities of less than three months, when acquired, to be cash equivalents.
Long-term Liquidity and Capital Resources
Our principal demand for funds beyond the next twelve months will be payments on our long-term debt, operating
lease payments, common stock repurchases under our share repurchase program, and dividend payments. Based on our current
level of operations, we believe our cash flow from operations, and ability to raise funding, will be sufficient to fund capital
demands.
Tax Receivable Agreements
Generally, we are required under the tax receivable agreements entered into in connection with our IPO to make
payments to certain direct or indirect equity holders of Virtu Financial that are generally equal to 85% of the applicable cash tax
savings, if any, that we realize as a result of favorable tax attributes that are available to us as a result of the IPO and certain
reorganization transactions undertaken in connection therewith, for exchanges of membership interests for Class A Common
Stock or Class B Common Stock and payments made under the tax receivable agreements. We will retain the remaining 15% of
any such cash tax savings. We expect that future payments to certain direct or indirect equity holders of Virtu Financial
described in Note 5 “Tax Receivable Agreements” of Part II, Item 8 “Financial Statements and Supplementary Data” of this
Annual Report on Form 10-K are expected to range from approximately $0.1 million to $22.1 million per year over the next 15
years. Such payments will occur only after we have filed our U.S. federal and state income tax returns and realized the cash tax
savings from the favorable tax attributes. We made payments totaling $114.0 million from February 2017 through December
2024. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these
amounts. We currently expect to fund these payments from realized cash tax savings from the favorable tax attributes.
Under the tax receivable agreements, as a result of certain types of transactions and other factors, including a
transaction resulting in a change of control, we may also be required to make payments to certain direct or indirect equity
holders of Virtu Financial in amounts equal to the present value of future payments we are obligated to make under the tax
receivable agreements. We would expect any acceleration of these payments to be funded from the realized favorable tax
attributes. However, if the payments under the tax receivable agreements are accelerated, we may be required to raise additional
debt or equity to fund such payments. To the extent that we are unable to make payments under the tax receivable agreements
for any reason (including because our Credit Agreement restricts the ability of our subsidiaries to make distributions to us) such
payments will be deferred and will accrue interest until paid.
Regulatory Capital Requirements
Our principal U.S. subsidiary, Virtu Americas LLC (“VAL”) is subject to separate regulation and capital requirements
in the U.S. and other jurisdictions. VAL is a registered U.S. broker-dealer, and its primary regulators include the SEC and the
Financial Industry Regulatory Authority (“FINRA”). In June 2023 our U.S. subsidiary RFQ-hub Americas LLC (“RAL”, which
is currently held for sale, as described in Note 3 “Business Held for Sale”) became a registered U.S. broker-dealer and as such
is subject to regulation and capital requirements from its primary regulators, the SEC and FINRA.
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The SEC and FINRA impose rules that require notification when regulatory capital falls below certain pre-defined
criteria. These rules also dictate the ratio of debt-to-equity in the regulatory capital composition of a broker-dealer and constrain
the ability of a broker-dealer to expand its business under certain circumstances. If a firm fails to maintain the required
regulatory capital, it may be subject to suspension or revocation of registration by the applicable regulatory agency, and
suspension or expulsion by these regulators could ultimately lead to the Company’s liquidation. Additionally, certain applicable
rules impose requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and
requiring prior notice to and/or approval from the SEC and FINRA for certain capital withdrawals. VAL is also subject to
rules set forth by NYSE and is required to maintain a certain level of capital in connection with the operation of its designated
market maker business.
Our Canadian subsidiaries, Virtu Canada Corp (f/k/a Virtu ITG Canada Corp.) and Virtu Financial Canada ULC, are
subject to regulatory capital requirements and periodic requirements to report their regulatory capital and submit other
regulatory reports set forth by the Canadian Investment Regulatory Organization. Our Irish subsidiaries, Virtu Financial Ireland
Limited (“VFIL”) and Virtu Europe Trading Limited (“VETL”) (f/k/a Virtu ITG Europe Limited) are regulated by the Central
Bank of Ireland as Investment Firms and in accordance with European Union law are required to maintain a minimum amount
of regulatory capital based upon their positions, financial conditions, and other factors. In addition to periodic requirements to
report their regulatory capital and submit other regulatory reports, VFIL and VETL are required to obtain consent prior to
receiving capital contributions or making capital distributions from their regulatory capital. Failure to comply with their
regulatory capital requirements could result in regulatory sanction or revocation of their regulatory license. Virtu ITG UK
Limited is regulated by the Financial Conduct Authority in the United Kingdom and is subject to similar prudential capital
requirements. Virtu ITG Australia Limited, and Virtu ITG Hong Kong Limited are also subject to local regulatory capital
requirements and are regulated by the Australian Securities and Investments Commission, the Securities and Futures
Commission of Hong Kong, respectively. Virtu ITG Singapore Pte. Limited and Virtu Financial Singapore Pte. Ltd. have
similar regulatory requirements and are regulated by the Monetary Authority of Singapore.
See Note 21 “Regulatory Requirement” of Part II, Item 8 “Financial Statements and Supplementary Data” of this
Annual Report on Form 10-K for a discussion of regulatory capital requirements of our regulated subsidiaries.
Broker Dealer Credit Facilities, Short-Term Bank Loans, and Prime Brokerage Credit Facilities
We maintain various broker-dealer facilities and short-term credit facilities as part of our daily trading operations. See
Note 9 “Borrowings” of Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K
for details on our various credit facilities. As of December 31, 2024, there was an outstanding principal balance on our broker-
dealer facilities of $10.0 million, and the outstanding aggregate short-term credit facilities with various prime brokers and other
financial institutions from which the Company receives execution or clearing services was approximately $123.0 million, which
was netted within Receivables from broker-dealers and clearing organizations on the Consolidated Statements of Financial
Condition of Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Credit Agreement
On January 13, 2022 (the “Credit Agreement Closing Date”), Virtu Financial, VFH Parent LLC, a Delaware limited
liability company and a subsidiary of Virtu Financial (“VFH”), entered into a credit agreement, with the lenders party thereto,
JPMorgan Chase Bank, N.A. as administrative agent and JPMorgan Chase bank, N.A., Goldman Sachs Bank USA, RBC
Capital Markets, Barclays Bank plc, Jefferies Finance LLC, BMO Capital Markets Corp., and CIBC World Markets Corp., as
joint lead arrangers and bookrunners (the “Original Credit Agreement”). The Original Credit Agreement provides (i) a senior
secured first lien term loan in an aggregate principal amount of $1,800.0 million, drawn in its entirety on the Credit Agreement
Closing Date, the proceeds of which were used by VFH to repay all amounts outstanding under the previous credit agreement
entered into in relation to the ITG Acquisition, to pay fees and expenses in connection therewith, to fund share repurchases
under the Company’s repurchase program and for general corporate purposes, and (ii) a $250.0 million senior secured first lien
revolving facility to VFH, with a $20.0 million letter of credit subfacility and a $20.0 million swingline subfacility.
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The term loan borrowings and revolver borrowings under the Original Credit Agreement bear interest at a per annum
rate equal to, at the Company’s election, either (i) the greatest of (a) the prime rate in effect, (b) the greater of (1) the federal
funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c) an adjusted term Secured Overnight
Financing Rate (“SOFR”) rate with an interest period of one month plus 1.00% and (d)(1) in the case of term loan borrowings,
1.50% and (2) in the case of revolver borrowings, 1.00%, plus, (x) in the case of term loan borrowings, 2.00% and (y) in the
case of revolver borrowings, 1.50% or (ii) the greater of (a) an adjusted term SOFR rate for the interest period in effect and (b)
(1) in the case of term loan borrowings, 0.50% and (2) in the case of revolver borrowings, 0.00%, plus, (x) in the case of term
loan borrowings, 3.00% and (y) in the case of revolver borrowings, 2.50%. In addition, a commitment fee accrues at a rate of
0.50% per annum on the average daily unused amount of the revolving facility, with step-downs to 0.375% and 0.25% per
annum based on VFH’s first lien leverage ratio, and is payable quarterly in arrears.
In October 2019, the Company entered into a five-year $525.0 million floating-to-fixed interest rate swap agreement.
In January 2020, the Company entered into a five-year $1,000.0 million floating-to-fixed interest rate swap agreement. These
two interest rate swaps met the criteria to be considered and were designated as qualifying cash flow hedges under ASC 815 in
the first quarter of 2020, and they effectively fixed interest payment obligations on $525.0 million and $1,000.0 million of
principal under the previous first lien term loan facility in relation to the ITG Acquisition at rates of 4.3% and 4.4% through
September 2024 and January 2025, respectively. In April 2021, each of the swap agreements described above was novated to
another counterparty and amended in connection with such novation. The amendments included certain changes to collateral
posting obligations and also had the effect of increasing the effective fixed interest payment obligations to rates of 4.5%, with
respect to the earlier maturing swap arrangement, and 4.6% with respect to the later maturing swap arrangement. In January
2022, in order to align the swap agreements with the Original Credit Agreement, the Company amended each of the swap
agreements to align the floating rate term of such swap agreements to SOFR. The effective fixed interest payment obligations
remained at 4.5%, with respect to the earlier maturing swap arrangement, and 4.6% with respect to the later maturing swap
arrangement.
In December 2023, the Company terminated the two interest rate swap arrangements and received $55.8 million in
proceeds from the counterparty. The Company therefore dedesignated those cash flow hedges under ASC 815, and the amounts
in AOCI related to the terminated swaps are amortized through interest expense. The Company simultaneously entered into a
two-year $1,525.0 million floating-to-fixed interest rate swap agreement with the same counterparty (the “December 2023
Swap”). The December 2023 Swap met the criteria to be considered and was designated as a qualifying cash flow hedge under
ASC 815 as of December 2023, and it effectively fixed interest payment obligations on $1,525.0 million of principal under the
First Lien Term Loan Facility at a rate of 7.5% through November 2025, based on the interest rates set forth in the Original
Credit Agreement.
On June 21, 2024 (the “Amendment Effective Date”), the Company entered into Amendment No. 1 to the Original
Credit Agreement (the “Credit Agreement”) and completed the issuance of the Notes (as defined below). Pursuant to the Credit
Agreement, $1,245.0 million in aggregate principal amount of senior secured first lien term B-1 loans due 2031 (the “New
Term Loans”) were issued, the proceeds of which were used, along with the proceeds of the Notes, to repay in full all term
loans previously outstanding under the Original Credit Agreement. Additionally, the Credit Agreement provides an increase in
its senior secured first lien revolving credit facility from $250.0 million to $300.0 million and an extension of the maturity
thereof to three years after the Amendment Effective Date.
The New Term Loans will bear interest, at the Company’s election, at either (i) the greatest of (a) the prime rate in
effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c)
term SOFR for a borrowing with an interest period of one month plus 1.00% and (d) 1.00%, plus, in each case, 1.75%, or (ii)
the greater of (x) term SOFR for the interest period in effect and (y) 0%, plus, in each case, 2.75%. The New Term Loans will
mature on the seventh anniversary of the Amendment Effective Date and amortize in annual installments equal to 1.0% of the
original aggregate principal amount of the New Term Loans. The New Term Loans are also subject to contingent principal
payments based on excess cash flow and certain other triggering events.
The revolving facility under the Credit Agreement is subject to a springing net first lien leverage ratio which may
spring into effect as of the last day of a fiscal quarter if usage of the aggregate revolving commitments exceeds a specified level
as of such date. VFH is also subject to contingent principal prepayments based on excess cash flow and certain other triggering
events. Borrowings under the Credit Agreement are guaranteed by Virtu Financial and VFH’s material non-regulated domestic
restricted subsidiaries and secured by substantially all of the assets of VFH and the guarantors, in each case, subject to certain
exceptions.
The Credit Agreement contains certain customary covenants and events of default, including relating to a change of
control. If an event of default occurs and is continuing, the lenders under the Credit Agreement will be entitled to take various
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actions, including the acceleration of amounts outstanding under the Credit Agreement and all actions permitted to be taken by
a secured creditor in respect of the collateral securing the obligations under the Credit Agreement.
As of December 31, 2024, $1,245.0 million was outstanding under the term loans. We were in compliance with all
applicable covenants under the Credit Agreement as of December 31, 2024.
In connection with its entry into the Credit Agreement and the associated reduction in term loan balance, the Company
partially terminated the December 2023 Swap, reducing the notional amount thereof from $1,525.0 million to $1,075.0 million
and received $2.0 million in proceeds from the counterparty. The cash flow hedge was proportionally dedesignated under ASC
815 as of June 21, 2024. As a result of the partial dedesignation, we recognized a gain of $5.7 million in Other Income. The
current interest rate swap effectively fixed interest payment obligations on the $1,075.0 million of principal of the New Term
Loans at a rate of 7.17% through November 2025, based on the interest rates set forth in the Credit Agreement.
Senior Secured First Lien Notes
On June 21, 2024, VFH and Valor Co-Issuer, Inc., a subsidiary of Virtu Financial, (the “Co-Issuer”) completed the
offering of $500.0 million aggregate principal amount of 7.50% senior secured first lien notes due 2031 (the “Notes”). The
Notes were issued under an Indenture, dated as of June 21, 2024 (the “Indenture”), among the VFH, the Co-Issuer, Virtu
Financial and the subsidiary guarantors party thereto, and U.S. Bank Trust Company, National Association, as the trustee and
collateral agent. The Notes mature on June 15, 2031. Interest on the Notes accrues at 7.50% per annum, payable every six
months through maturity on each June 15 and December 15, beginning on December 15, 2024. We refer to VFH and the Co-
Issuer together as, the “Issuers.”
The Notes and the related guarantees are secured by first-priority perfected liens on substantially all of the Issuers’ and
guarantors’ existing and future assets, subject to certain exceptions, including all material personal property, a pledge of the
capital stock of the Issuers, the guarantors (other than Virtu Financial) and the direct subsidiaries of the Issuers and the
guarantors and 100% of the non-voting capital stock and up to 65.0% of the voting capital stock of any now-owned or later
acquired foreign subsidiaries that are directly owned by the Issuers or any of the guarantors, which assets also secure
obligations under the Credit Agreement on a first-priority basis.
The Indenture imposes certain limitations on our ability to (i) incur or guarantee additional indebtedness or issue
preferred stock; (ii) pay dividends, make certain investments and make repayments on indebtedness that is subordinated in right
of payment to the Notes and make other “restricted payments”; (iii) create liens on their assets to secure debt; (iv) enter into
transactions with affiliates; (v) merge, consolidate or amalgamate with another company; (vi) transfer and sell assets; and (vii)
permit restrictions on the payment of dividends by Virtu Financial’s subsidiaries. The Indenture also contains customary events
of default, including, among others, payment defaults related to the failure to pay principal or interest on Notes, covenant
defaults, final maturity default or cross-acceleration with respect to material indebtedness and certain bankruptcy events.
Prior to June 15, 2027, we may redeem some or all of the Notes at a redemption price equal to 100% of the principal
amount plus accrued and unpaid interest, if any, to (but not including) the date of redemption, plus an applicable “make whole”
premium.
Prior to June 15, 2027, we may also redeem up to 40% of the aggregate principal amount of the Notes with the net
cash proceeds from certain equity offerings at a redemption price equal to 107.500% of the principal amount thereof, plus
accrued and unpaid interest, if any, to (but not including) the date of redemption.
Prior to June 15, 2027, we may also, on one or more occasions, redeem during each successive twelve-month period
following June 21, 2024 up to 10% of the aggregate original principal amount of notes, at a redemption price equal to 103% of
the principal amount of notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.
On or after June 15, 2027, we may redeem some or all of the Notes, at the following redemption prices (expressed as
percentages of principal amount), plus accrued and unpaid interest to (but not including) the date of redemption, if redeemed
during the 12-month period beginning on June 15 of the years indicated below:
Period
Percentage
2027
103.750%
2028
101.875%
2029 and thereafter
100.000%
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Upon the occurrence of specified change of control events as defined in the Indenture, we must offer to repurchase the
outstanding Notes at 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to (but excluding) the
purchase date.
Cash Flows
Our main sources of liquidity are cash flow from the operations of our subsidiaries, our broker-dealer credit facilities
(as described above), margin financing provided by our prime brokers and cash on hand.
The table below summarizes our primary sources and uses of cash for the years ended December 31, 2024, 2023, and
2022.
Years Ended December 31,
Net cash provided by (used in):
2024
2023
2022
Operating activities
$
598,991
$
491,777
$
706,803
Investing activities
(61,847)
(94,484)
(29,530)
Financing activities
(469,565)
(585,032)
(735,745)
Effect of exchange rate changes on cash and cash equivalents
(9,048)
4,957
(24,239)
Net increase (decrease) in cash and cash equivalents
$
58,531
$
(182,782) $
(82,711)
Operating Activities
Net cash provided by operating activities was $599.0 million for the year ended December 31, 2024, compared to net
cash provided by operating activities of $491.8 million for the year ended December 31, 2023. The change in net cash provided
by operating activities was primarily attributable to higher net income as well as movements in noncash adjustments for the
year ended December 31, 2024 compared to the prior period.
Investing Activities
Net cash used in investing activities, which includes cash used with respect to capitalized software and cash used in the
acquisition of property and equipment, was $61.8 million for the year ended December 31, 2024, compared with net cash used
in investing activities of $94.5 million for the year ended December 31, 2023. The change in net cash used in investing
activities was primarily attributable to decreases in acquisition of property and equipment and other investing activities for the
year ended December 31, 2024.
Financing Activities
Net cash used in financing activities was $469.6 million for the year ended December 31, 2024, compared to Net cash
used in financing activities of $585.0 million for the year ended December 31, 2023. The cash used in financing activities for
the year ended December 31, 2024 was primarily attributable to $1,741.9 million of net proceeds from long-term borrowings
and $38.5 million of net proceeds from short-term borrowings, offset by $1,727.0 million of repayment of our previous long-
term borrowings, $299.4 million in dividends to stockholders and distributions made to noncontrolling interests, and $191.1
million in purchases of treasury stock. The cash used in financing activities of $585.0 million during the same period of 2023
primarily reflects $306.1 million net dividends to stockholders and distributions to noncontrolling interests and $229.0 million
purchase of treasury stock.
Share Repurchase Program
On November 6, 2020, the Company’s Board of Directors authorized a new share repurchase program of up to $100.0
million in Class A common stock and Virtu Financial Units by December 31, 2021. Subsequently, the Company’s Board of
Directors authorized expansions of the share repurchase program on February 11, 2021 to $170.0 million, on May 4, 2021 to
$470.0 million (and extended the duration through May 4, 2022), on November 3, 2021 to $1,220.0 million (and extended the
duration through November 3, 2023, and on November 2, 2023, further extended the program through December 31, 2024), and
on April 24, 2024 to $1,720 million (and extended the duration through April 24, 2026).
The share repurchase program authorizes the Company to repurchase shares from time to time in open market
transactions, privately negotiated transactions or by other means. Repurchases are also permitted to be made under Rule 10b5-1
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plans. The timing and amount of repurchase transactions are determined by the Company’s management based on its evaluation
of market conditions, share price, cash sources, legal requirements and other factors. From the inception of the program through
December 31, 2024, the Company repurchased approximately 50.3 million shares of Class A Common Stock and Virtu
Financial Units for approximately $1,281.8 million. As of December 31, 2024, the Company has approximately of $438.2
million remaining capacity for future purchases of shares of Class A Common Stock and Virtu Financial Units under the
program.
Contractual Obligations
Our expected material cash requirements include the following contractual obligations:
Debt
As of December 31, 2024, we had $1,245.0 million of outstanding principal on our First Lien Term B-1 Loan Facility.
Each year, we are required to repay $12.5 million of this balance, with the remaining principal due in 2031. As of December 31,
2024, we also had $500.0 million of outstanding principal on our Senior Secured First Lien Notes, and the principal amount is
due in 2031. Additionally, $22.3 million of our long-term debt related to the SBI bonds is due in 2026. See Note 9
“Borrowings” in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for more
details.
Leases
We have lease arrangements, primarily for office space and technology and equipment. As of December 31, 2024, we
had $74.2 million of operating lease payments and $8.5 million of finance lease payments due within twelve months, and
$191.2 million of operating lease payments and $17.0 million of finance leases payments due after twelve months.
Tax Receivable Agreement
The ultimate amounts owed under the tax receivable agreement and timing of the amounts due are not presently
known. As of December 31, 2024, a total of $196.6 million has been recorded for amounts due pursuant to tax receivable
agreements in the Consolidated Financial Statements representing management’s best estimate of the amounts currently
expected to be owed under the tax receivable agreement, as savings are realized as a result of favorable tax attributes.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the applicable
reporting period. Critical accounting policies are those that are the most important portrayal of our financial condition, results of
operations and cash flows, and that require our most difficult, subjective and complex judgments as a result of the need to make
estimates about the effect of matters that are inherently uncertain.
While our significant accounting policies are described in more detail in the notes to our consolidated financial
statements, our most critical accounting policies are discussed below. In applying such policies, we must use some amounts that
are based upon our informed judgments and best estimates. Estimates, by their nature, are based upon judgments and available
information. The estimates that we make are based upon historical factors, current circumstances and the experience and
judgment of management. We evaluate our assumptions and estimates on an ongoing basis. Our actual results may differ from
these estimates under different assumptions or conditions.
Valuation of Financial Instruments
Due to the nature of our operations, substantially all of our financial instrument assets, comprised of financial
instruments owned, securities purchased under agreements to resell, and receivables from brokers, dealers and clearing
organizations are carried at fair value based on published market prices and are marked to market daily, or are assets which are
short-term in nature and are reflected at amounts approximating fair value. Similarly, all of our financial instrument liabilities
that arise from financial instruments sold but not yet purchased, securities sold under agreements to repurchase, securities
loaned, and payables to brokers, dealers and clearing organizations are short-term in nature and are reported at quoted market
prices or at amounts approximating fair value.
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Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the
exit price) in an orderly transaction between market participants at the measurement date. Financial instruments measured and
reported at fair value are classified and disclosed in one of the following categories based on inputs:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical,
unrestricted assets or liabilities;
Level 2 — Quoted prices in markets that are not active and financial instruments for which all significant inputs are
observable, either directly or indirectly; or
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and
unobservable
The fair values for substantially all of our financial instruments owned and financial instruments sold but not yet
purchased are based on observable prices and inputs and are classified in levels 1 and 2 of the fair value hierarchy. Instruments
categorized within level 3 of the fair value hierarchy are those which require one or more significant inputs that are not
observable. Estimating the fair value of level 3 financial instruments requires judgments to be made. Due to the relative
immateriality of our financial instruments classified as level 3, we do not believe that a significant change to the inputs
underlying the fair value of our level 3 financial instruments would have a material impact on our Consolidated Financial
Statements. See Note 10 “Financial Assets and Liabilities” of Part II, Item 8 “Financial Statements and Supplementary Data” of
this Annual Report on Form 10-K for further information about fair value measurements.
Revenue Recognition
Trading Income, Net
Trading income, net, consists of trading gains and losses that are recorded on a trade date basis and reported on a net
basis. Trading income, net, is comprised of changes in fair value of financial instruments owned and financial instruments sold,
not yet purchased assets and liabilities (i.e., unrealized gains and losses) and realized gains and losses on equities, fixed income
securities, currencies and commodities.
Interest and Dividends Income/Interest and Dividends Expense
Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of
income earned on collateralized financing arrangements and on cash held by brokers and banks. Interest expense includes
interest expense from collateralized transactions, margin and related short-term lending facilities. Dividends are recorded on the
ex-dividend date, and interest is recognized on an accrual basis.
Commissions, Net and Technology Services
Commissions, net, which primarily comprise commissions earned on institutional client orders, are recorded on a trade
date basis, which is the point at which the performance obligation to the customer is satisfied. Under a commission
management program, we allow institutional clients to allocate a portion of their gross commissions to pay for research and
other services provided by third parties. As we act as an agent in these transactions, we record such expenses on a net basis
within Commissions, net and technology services in the Consolidated Statements of Comprehensive Income.
Workflow technology revenues consist of order and trade execution management and order routing services we
provide through our front-end workflow solutions and network capabilities.
We provide trade order routing from our execution management system (“EMS”) to our execution services offerings,
with each trade order routed through the EMS representing a separate performance obligation, which is the trade date for that
trade order routed, that is satisfied at a point in time. A portion of the commissions earned on the trade is then allocated to
Workflow Technology based on the stand-alone selling price paid by third-party brokers for order routing. The remaining
commission is allocated to Commissions, net using a residual allocation approach. Commissions earned are fixed and revenue
is recognized on the trade date.
We participate in commission share arrangements, where trade orders are routed to third-party brokers from our EMS
and our order management system (“OMS”). Commission share revenues from third-party brokers are generally fixed and
revenue is recognized at a point in time on the trade date.
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We also provide OMS and related software products and connectivity services to customers and recognize license fee
revenues and monthly connectivity fees. License fee revenues, generated for the use of our OMS and other software products,
are fixed and recognized at the point in time at which the customer is able to use and benefit from the license. Connectivity
revenue is variable in nature, based on the number of live connections, and is recognized over time on a monthly basis using a
time-based measure of progress.
Analytics revenues are earned from providing customers with analytics products and services, including trading and
portfolio analytics tools. We provide analytics products and services to customers and recognize subscription fees, which are
fixed for the contract term, based on when the products and services are delivered. Analytics services can be delivered either
over time (when customers are provided with distinct ongoing access to analytics data) or at a point in time (when reports are
only delivered to the customer on a periodic basis). Over time performance obligations are recognized using a time-based
measure of progress on a monthly basis, since the analytics products and services are continually provided to the client. Point in
time performance obligations are recognized when the analytics reports are delivered to the client.
Analytics products and services can also be paid for through variable bundled arrangements with trade execution
services. Customers agree to pay for analytics products and services with commissions generated from trade execution services,
and commissions are allocated to the analytics performance obligation(s) using:
(i)
the commission value for each customer for the products and services it receives, which is priced using the
value for similar stand-alone subscription arrangements; and
(ii)
a calculated ratio of the commission value for the products and services relative to the total amount of
commissions generated from the customer.
For these bundled commission arrangements, the allocated commissions to each analytics performance obligation are
then recognized as revenue when the analytics product is delivered, either over time or at a point in time. These allocated
commissions may be deferred if the allocated amount exceeds the amount recognizable based on delivery.
Share-Based Compensation
We account for share-based compensation transactions with employees under the provisions of the Financial
Accounting Standards Board's Accounting Standards Codification (“ASC”) 718, Compensation: Stock Compensation. Share-
based compensation transactions with employees are measured based on the fair value of equity instruments issued.
Share-based awards issued for compensation in connection with or subsequent to the Reorganization Transactions and
the IPO pursuant to our Amended and Restated 2015 Management Incentive Plan were in the form of stock options, Class A
Common Stock, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). The fair value of the stock option grants
is determined through the application of the Black-Scholes-Merton model. The fair value of the Class A Common Stock and
RSUs is determined based on the volume weighted average price for the three days preceding the grant. With respect to the
RSUs, we account for forfeitures as they occur. The fair value of RSAs is determined based on the closing price as of the date
of grant. The fair value of share-based awards granted to employees is expensed based on the vesting conditions and is
recognized on a straight-line basis over the vesting period, or, in the case of RSAs subject to performance conditions, from the
date that achievement becomes probable through the remainder of the vesting period. The assessment of the performance
condition becomes certain within the year of grant. At year end there is no future assessment that would affect grants with a
performance condition. We record as treasury stock shares repurchased from employees for the purpose of settling tax liabilities
incurred upon the issuance of common stock, the vesting of RSUs or the exercise of stock options.
Income Taxes
We conduct our business globally through a number of separate legal entities. Consequently, our effective tax rate is
dependent upon the geographic distribution of our earnings or losses and the tax laws and regulations of each legal jurisdiction
in which we operate.
Certain of our wholly owned subsidiaries are subject to income taxes in foreign jurisdictions. The provision for income
tax is composed of current tax and deferred tax. Current tax represents the tax on current year tax returns, using tax rates
enacted at the balance sheet date. A deferred tax asset is recognized only to the extent that it is probable that future taxable
income will be available against which the asset can be utilized.
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We are currently subject to audit in various jurisdictions, and these jurisdictions may assess additional income tax
liabilities against us. Developments in an audit, litigation, or the relevant laws, regulations, administrative practices, principles,
and interpretations could have a material effect on our operating results or cash flows in the period or periods for which that
development occurs, as well as for prior and subsequent periods. We recognize the tax benefit from an uncertain tax position in
accordance with ASC 740, Income Taxes, only if it is more likely than not that the tax position will be sustained on
examination by the applicable taxing authority, including resolution of the appeals or litigation processes, based on the technical
merits of the position. The tax benefits recognized in the Consolidated Financial Statements from such a position are measured
based on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate
resolution. Many factors are considered when evaluating and estimating the tax positions and tax benefits. Such estimates
involve interpretations of regulations, rulings, case law, etc. and are inherently complex. Our estimates may require periodic
adjustments and may not accurately anticipate actual outcomes as resolution of income tax treatments in individual jurisdictions
typically would not be known for several years after completion of any fiscal year. We believe the judgments and estimates
discussed above are reasonable. However, if actual results are not consistent with our estimates or assumptions, we may be
exposed to losses or gains that could be material.
Tax Receivable Agreements
We are required under the tax receivable agreements entered into in connection with our IPO to make payments to
certain direct or indirect equity holders of Virtu Financial that are generally equal to 85% of the applicable cash tax savings, if
any, that we realize as a result of favorable tax attributes that are available to us as a result of the Reorganization Transactions,
for exchanges of membership interests for Class A Common Stock or Class B Common Stock and payments made under the tax
receivable agreements. An exchange of membership interests by the Virtu Members for Class A Common Stock or Class B
Common Stock (an “Exchange”) during the year will give rise to favorable tax attributes that may generate cash tax savings
specific to the Exchange, to be realized over a specific period of time (generally 15 years). At each Exchange, we estimate the
cumulative tax receivable agreement obligations to be reported on the consolidated financial statements. The tax attributes are
computed as the difference between our basis in the partnership interest (“outside basis”) as compared to our share of the
adjusted tax basis of partnership property (“inside basis”), at the time of each Exchange. The computation of inside basis
requires judgments in estimating the components included in the inside basis as of the date of the Exchange (such as, cash
received on hypothetical sale of assets, allocation of gain/loss at the time of the Exchange taking into account complex
partnership tax rules). In addition, we estimate the period of time that may generate cash tax savings of such tax attributes and
the realizability of the tax attributes.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the underlying net tangible and intangible assets of our
acquisitions. Goodwill is not amortized but is assessed for impairment on an annual basis and between annual assessments
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is assessed at
the reporting unit level, which is defined as an operating segment or one level below the operating segment.
When assessing impairment, an entity may perform an initial qualitative assessment, under which it assesses
qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying
amount, including goodwill. In evaluating whether it is more likely than not that the fair value of a reporting unit is less than its
carrying amount, an entity shall assess relevant events and circumstances, including the following:
•
general economic conditions;
•
limitations on accessing capital;
•
fluctuations in foreign exchange rates or other developments in equity and credit markets;
•
industry and market considerations such as a deterioration in the environment in which an entity operates, an
increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute
terms and relative to peers), a change in the market for an entity’s products or services, or a regulatory or political
development;
•
cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and
cash flows;
•
overall financial performance such as negative or declining cash flows or a decline in actual or planned
revenue or earnings compared with actual and projected results of relevant prior periods;
•
other relevant entity-specific events such as changes in management, key personnel, strategy, or customers,
contemplation of bankruptcy, or litigation.
If, after assessing the totality of such events or circumstances, an entity determines that it is not more likely than not
that the fair value of a reporting unit is less than its carrying amount, then no further goodwill impairment testing is necessary.
75
If further testing is necessary, the fair value of the reporting unit is compared to its carrying value; if the fair value of
the reporting unit is less than its carrying value, a goodwill impairment loss is recorded, equal to the excess of the reporting
unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). Our estimate of
goodwill impairment, if indicated based on results of the qualitative assessment, is highly dependent on our estimate of a
reporting unit’s fair value.
We assess goodwill for impairment on an annual basis as of July 1st and on an interim basis when certain events or
circumstances exist. In the impairment assessment as of July 1, 2024, we performed a qualitative assessment as described above
for each reporting unit. No impairment of goodwill was identified.
Valuation of intangible assets involves the use of significant estimates and assumptions with respect to the timing and
amounts of revenue growth rates, customer attrition rates, future tax rates, royalty rates, contributory asset charges, discount
rate and the resulting cash flows. We amortize finite-lived intangible assets over their estimated useful lives. Our largest finite-
lived intangible asset is customer relationships, which is being amortized over an estimated useful life of ten to twelve years.
Had we used a shorter estimated useful life of seven years, the Company would have recorded an additional $18.4 million,
$21.7 million, and $21.7 million for the years ended December 31, 2024, 2023, and 2022, respectively. We test finite-lived
intangible assets for impairment when impairment indicators are present, and if impaired, they are written down to fair value.
Recent Accounting Pronouncements
For a discussion of recently issued accounting developments and their impact or potential impact on our consolidated
financial statements, see Note 2 “Summary of Significant Accounting Policies” of Part II, Item 8 “Financial Statements and
Supplementary Data” of this Annual Report on Form 10-K.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
We are exposed to various market risks in the ordinary course of business. The risks primarily relate to changes in the
value of financial instruments due to factors such as market prices, interest rates, and currency rates.
Our on-exchange market making activities are not dependent on the direction of any particular market and are
designed to minimize capital at risk at any given time by limiting the notional size of our positions. Our on-exchange market
making strategies involve continuously quoting two-sided markets in various financial instruments with the intention of
profiting by capturing the spread between the bid and offer price. If another market participant executes against the strategy’s
bid or offer by crossing the spread, the strategy will attempt to lock in a return by either exiting the position or hedging in one
or more different correlated instruments that represent economically equivalent value to the primary instrument. Such primary
or hedging instruments include but are not limited to securities and derivatives such as: common shares, exchange traded
products, American Depositary Receipts (“ADRs”), options, bonds, futures, spot currencies and commodities. Substantially all
of the financial instruments we trade are liquid and can be liquidated within a short time frame at low cost.
Our customer market making activities involve the taking of position risks. The risks at any point in time are limited
by the notional size of positions as well as other factors. The overall portfolio risks are quantified using internal risk models and
monitored by the Company’s senior trading personnel, the independent risk group and senior management.
We use various proprietary risk management tools in managing our market risk on a continuous basis (including
intraday). In order to minimize the likelihood of unintended activities by our market making strategies, if our risk management
system detects a trading strategy generating revenues outside of our preset limits, it will freeze, or “lockdown”, that strategy and
alert risk management personnel and management.
For working capital purposes, we invest in money market funds and maintain interest and non-interest bearing
balances at banks and in our trading accounts with clearing brokers, which are classified as Cash and cash equivalents and
Receivables from broker-dealers and clearing organizations, respectively, on the Consolidated Statements of Financial
Condition. These financial instruments do not have maturity dates; the balances are short-term, which helps to mitigate our
market risks. We also invest our working capital in short-term U.S. government securities, which are included in Financial
instruments owned on the Consolidated Statements of Financial Condition. Our cash and cash equivalents held in foreign
currencies are subject to the exposure of foreign currency fluctuations. These balances are monitored daily and are hedged or
reduced when appropriate and therefore not material to our overall cash position.
In the normal course of business, we maintain inventories of exchange-listed and other equity securities, and to a lesser
extent, fixed income securities and listed equity options. The fair value of these financial instruments at December 31, 2024 and
December 31, 2023 was $7.8 billion and $7.4 billion, respectively, in long positions and $6.4 billion and $6.1 billion,
respectively, in short positions. We also enter into futures contracts, which are recorded on our Consolidated Statements of
Financial Condition within Receivable from brokers, dealers and clearing organizations or Payable to brokers, dealers and
clearing organizations as applicable.
We calculate daily the potential losses that might arise from a series of different stress events. These include both
single factor and multi factor shocks to asset prices based off both historical events and hypothetical scenarios. The stress
calculations include a full recalculation of any option positions, non-linear positions and leverage. Senior management and the
independent risk group carefully monitor the highest stress scenarios to help mitigate the risk of exposure to extreme events.
The purchase and sale of futures contracts requires margin deposits with a Futures Commission Merchant (“FCM”).
The Commodity Exchange Act requires an FCM to segregate all customer transactions and assets from the FCM’s proprietary
activities. A customer’s cash and other equity deposited with an FCM are considered commingled with all other customer funds
subject to the FCM’s segregation requirements. In the event of an FCM’s insolvency, recovery may be limited to the
Company’s pro rata share of segregated customer funds available. It is possible that the recovery amount could be less than the
total cash and other equity deposited.
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Interest Rate Risk, Derivative Instruments
In the normal course of business, we utilize derivative financial instruments in connection with our proprietary trading
activities. We carry our trading derivative instruments at fair value with gains and losses included in Trading income, net, in the
accompanying Consolidated Statements of Comprehensive Income. Fair value of derivatives that are freely tradable and listed
on a national exchange is determined at their last sale price as of the last business day of the period. Since gains and losses are
included in earnings, we have elected not to separately disclose gains and losses on derivative instruments, but instead to
disclose gains and losses within trading revenue for both derivative and non-derivative instruments.
We also use derivative instruments for risk management purposes, including cash flow hedges used to manage interest
rate risk on long-term borrowings and net investment hedges used to manage foreign exchange risk. We have entered into
floating-to-fixed interest rate swap agreements in order to manage interest rate risk associated with our long-term debt
obligations. Additionally, we may seek to reduce the impact of fluctuations in foreign exchange rates on our net investment in
certain non-U.S. operations through the use of foreign currency forward contracts. For interest rate swap agreements and
foreign currency forward contracts designated as hedges, we assess our risk management objectives and strategy, including
identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed
prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair value of
the interest rate swaps or forward contracts. For instruments that meet the criteria to be considered hedging instruments under
ASC 815, any gains or losses, to the extent effective, are included in Accumulated other comprehensive income on the
Consolidated Statements of Financial Condition and Other comprehensive income on the Consolidated Statements of
Comprehensive Income. The ineffective portion, if any, is recorded in Other, net on the Consolidated Statements of
Comprehensive Income.
Futures Contracts. As part of our proprietary market making trading strategies, we use futures contracts to gain
exposure to changes in values of various indices, commodities, interest rates or foreign currencies. A futures contract represents
a commitment for the future purchase or sale of an asset at a specified price on a specified date. Upon entering into a futures
contract, we are required to pledge to the broker an amount of cash, U.S. government securities or other assets equal to a certain
percentage of the contract amount. Subsequent payments, known as variation margin, are made or received by us each day,
depending on the daily fluctuations in the fair values of the underlying securities. We recognize a gain or loss equal to the daily
variation margin.
Due from Broker-Dealers and Clearing Organizations. Management periodically evaluates our counterparty credit
exposures to various brokers and clearing organizations with a view to limiting potential losses resulting from counterparty
insolvency.
Foreign Currency Risk
As a result of our international market making and execution services activities and accumulated earnings in our
foreign subsidiaries, our income and net worth are subject to fluctuation in foreign exchange rates. While we generate revenues
in several currencies, the majority of our operating expenses are denominated in U.S. dollars. Therefore, depreciation in these
other currencies against the U.S. dollar would negatively impact revenue upon translation to the U.S. dollar. The impact of any
translation of our foreign denominated earnings to the U.S. dollar is mitigated, however, through the impact of daily hedging
practices that are employed by the company.
Approximately 17.9% and 16.2% of our total revenues for the years ended December 31, 2024 and 2023, respectively,
were denominated in non-U.S. dollar currencies. We estimate that a hypothetical 10% adverse change in the value of the U.S.
dollar relative to our foreign denominated earnings would have resulted in decreases in total revenues of $51.4 million and
$37.3 million for the years ended December 31, 2024 and 2023, respectively.
Assets and liabilities of subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars at
period-end exchange rates. Income, expense and cash flow items are translated at average exchange rates prevailing during the
period. The resulting currency translation adjustments are recorded as foreign exchange translation adjustment in our
Consolidated Statements of Comprehensive Income and Consolidated Statements of Changes in Equity. Our primary currency
translation exposures historically relate to net investments in subsidiaries having functional currencies denominated in the Euro,
Pound Sterling, and Canadian dollar.
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Financial Instruments with Off Balance Sheet Risk
We enter into various transactions involving derivatives and other off-balance sheet financial instruments. These
financial instruments include futures, forward contracts, swaps, and exchange-traded options. These derivative financial
instruments are used to conduct trading activities and manage market risks and are, therefore, subject to varying degrees of
market and credit risk. Derivative transactions are entered into for trading purposes or to economically hedge other positions or
transactions.
Futures and forward contracts provide for delayed delivery of the underlying instrument. In situations where we write
listed options, we receive a premium in exchange for giving the buyer the right to buy or sell the security at a future date at a
contracted price. The contractual or notional amounts related to these financial instruments reflect the volume and activity and
do not necessarily reflect the amounts at risk. Futures contracts are executed on an exchange, and cash settlement is made on a
daily basis for market movements, typically with a central clearing house as the counterparty. Accordingly, futures contracts
generally do not have credit risk. The credit risk for forward contracts, options, and swaps is limited to the unrealized market
valuation gains recorded in the Consolidated Statements of Financial Condition. Market risk is substantially dependent upon the
value of the underlying financial instruments and is affected by market forces, such as volatility and changes in interest and
foreign exchange rates.
ITEM 8. FINANCIAL STATEMENTS
Index to Consolidated Financial Statements
PAGE
NUMBER
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
80
Consolidated Statements of Financial Condition
82
Consolidated Statements of Comprehensive Income
84
Consolidated Statements of Changes in Equity
85
Consolidated Statements of Cash Flows
87
Notes to Consolidated Financial Statements
89
79
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Virtu Financial, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial condition of Virtu Financial, Inc. and its subsidiaries
(the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of comprehensive income, of
changes in equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related
notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control
over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
80
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Trading income, net (“Trading Income”)
As described in Note 2 to the consolidated financial statements, $1.822 billion of the Company’s Trading Income for the year
ended December 31, 2024 is composed of changes in the fair value of trading assets and liabilities (i.e., unrealized gains and
losses) and realized gains and losses on trading assets and liabilities. Trading gains and losses on financial instruments owned
and financial instruments sold, not yet purchased, are recorded on the trade date and reported on a net basis in the consolidated
statements of comprehensive income.
The principal considerations for our determination that performing procedures relating to Trading Income is a critical audit
matter are the significant audit effort in performing procedures and evaluating audit evidence related to the transactions which
comprise the trading income.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
management’s calculation of Trading Income, including controls over the completeness, accuracy, existence, and valuation of
trading assets and trading liabilities. These procedures also included, among others, testing of the inputs used by management in
their trading income calculations and independently recalculating trading income. The procedures performed over testing of the
inputs include (i) confirming a sample of trading assets, trading liabilities and cash (collectively the “equity value”) within each
trading portfolio at the balance sheet date with external third parties; (ii) developing independent prices for a sample of trading
assets and liabilities at the balance sheet date and comparing management’s prices to the independently developed prices; (iii)
testing a sample of purchases and sales throughout the year by agreeing the quantity and price to settlement documentation, and
(iv) testing the equity value of a sample of trading portfolios throughout the year and at year-end by comparing the amounts to
third party clearing statements.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 21, 2025
We have served as the Company’s auditor since 2018.
81
Assets
Cash and cash equivalents
$
872,513
$
820,436
Cash restricted or segregated under regulations and other
41,478
35,024
Securities borrowed
2,294,529
1,722,440
Securities purchased under agreements to resell
983,941
1,512,114
Receivables from broker-dealers and clearing organizations ($51,595 and $— at fair value, as of December 31,
2024 and December 31, 2023, respectively)
1,100,850
737,724
Trading assets, at fair value:
Financial instruments owned
5,520,015
6,127,752
Financial instruments owned and pledged
2,282,637
1,230,859
Receivables from customers
149,804
106,245
Property, equipment and capitalized software (net of accumulated depreciation of $380,202 and $367,779 as of
December 31, 2024 and December 31, 2023, respectively)
91,415
100,365
Operating lease right-of-use assets
175,046
229,499
Goodwill
1,148,926
1,148,926
Intangibles (net of accumulated amortization of $428,460 and $381,973 as of December 31, 2024 and December
31, 2023, respectively)
203,188
257,520
Deferred tax assets
135,046
133,760
Assets of business held for sale
4,615
—
Other assets ($158,326 and $84,521, at fair value, as of December 31, 2024 and December 31, 2023, respectively)
357,740
303,720
Total assets
$
15,361,743
$ 14,466,384
Liabilities and equity
Liabilities
Short-term borrowings
$
38,541
$
—
Securities loaned
2,431,878
1,329,446
Securities sold under agreements to repurchase
1,271,788
1,795,994
Payables to broker-dealers and clearing organizations ($136,736 and $7,661, at fair value, as of December 31, 2024
and December 31, 2023, respectively)
918,566
1,167,712
Payables to customers
46,112
23,229
Trading liabilities, at fair value:
Financial instruments sold, not yet purchased
6,440,971
6,071,352
Tax receivable agreement obligations
196,592
216,480
Accounts payable, accrued expenses and other liabilities
558,100
451,293
Operating lease liabilities
229,825
278,317
Long-term borrowings
1,740,467
1,727,205
Liabilities of business held for sale
1,526
—
Total liabilities
13,874,366
13,061,028
Commitments and Contingencies (Note 15)
Virtu Financial Inc. Stockholders' equity
Class A common stock (par value $0.00001), Authorized — 1,000,000,000 and 1,000,000,000 shares, Issued —
137,479,751 and 134,901,037 shares, Outstanding — 84,976,325 and 89,092,686 shares at December 31, 2024 and
December 31, 2023, respectively
1
1
Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and
Outstanding — 0 and 0 shares at December 31, 2024 and December 31, 2023, respectively
—
—
Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued and
Outstanding — 8,561,970 and 8,607,998 shares at December 31, 2024 and December 31, 2023, respectively
—
—
Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued and
Outstanding — 60,091,740 and 60,091,740 shares at December 31, 2024 and December 31, 2023, respectively
1
1
Treasury stock, at cost, 52,503,426 and 45,808,351 shares at December 31, 2024 and December 31, 2023,
respectively
(1,339,913)
(1,166,299)
Additional paid-in capital
1,432,240
1,351,574
Retained earnings (accumulated deficit)
1,168,908
1,000,403
(in thousands, except share data)
December 31,
2024
December 31,
2023
Virtu Financial, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
82
Accumulated other comprehensive income (loss)
(7,063)
17,047
Total Virtu Financial Inc. stockholders' equity
1,254,174
1,202,727
Noncontrolling interest
233,203
202,629
Total equity
1,487,377
1,405,356
Total liabilities and equity
$
15,361,743
$ 14,466,384
(in thousands, except share data)
December 31,
2024
December 31,
2023
See accompanying Notes to the Consolidated Financial Statements.
Virtu Financial, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
83
Years Ended December 31,
(in thousands, except share and per share data)
2024
2023
2022
Revenues:
Trading income, net
$ 1,822,437
$ 1,301,344
$ 1,628,898
Interest and dividends income
462,070
462,566
159,120
Commissions, net and technology services
516,783
455,598
529,845
Other, net
75,659
73,865
46,949
Total revenue
2,876,949
2,293,373
2,364,812
Operating Expenses:
Brokerage, exchange, clearance fees and payments for order flow, net
674,426
508,358
619,168
Communication and data processing
236,446
230,760
219,505
Employee compensation and payroll taxes
434,823
394,039
390,947
Interest and dividends expense
529,177
500,467
231,060
Operations and administrative
97,002
98,972
86,069
Depreciation and amortization
65,816
63,306
66,377
Amortization of purchased intangibles and acquired capitalized software
50,471
63,960
64,837
Termination of office leases
16,224
455
6,982
Debt issue cost related to debt refinancing, prepayment and commitment fees
29,479
8,317
29,910
Transaction advisory fees and expenses
313
314
1,124
Financing interest expense on long-term borrowings
97,802
99,294
92,035
Total operating expenses
2,231,979
1,968,242
1,808,014
Income before income taxes and noncontrolling interest
644,970
325,131
556,798
Provision for income taxes
110,435
61,210
88,466
Net income
534,535
263,921
468,332
Noncontrolling interest
(258,120)
(121,885)
(203,306)
Net income available for common stockholders
$
276,415
$
142,036
$
265,026
Earnings per share
Basic
$
2.98
$
1.42
$
2.45
Diluted
$
2.97
$
1.42
$
2.44
Weighted average common shares outstanding
Basic
87,482,162
94,076,165
103,997,767
Diluted
87,821,576
94,076,165
104,422,443
Net income
$
534,535
$
263,921
$
468,332
Other comprehensive income
Foreign exchange translation adjustment, net of taxes
(9,048)
4,957
(24,254)
Net change in unrealized cash flow hedges gain (loss), net of taxes
(32,251)
(36,993)
90,865
Comprehensive income
493,236
231,885
534,943
Less: Comprehensive income attributable to noncontrolling interest
(240,931)
(104,406)
(228,117)
Comprehensive income attributable to common stockholders
$
252,305
$
127,479
$
306,826
See accompanying Notes to the Consolidated Financial Statements.
Virtu Financial, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
84
Balance at December 31, 2021
131,497,645
$
1
9,359,065
$
—
60,091,740
$
1
(18,326,863)
$ (494,075)
$
1,223,119
$
830,538
$
(10,196)
$
1,549,388
$
314,230
$
1,863,618
Share based compensation
1,897,030
—
—
—
—
—
—
—
71,597
—
—
71,597
—
71,597
Repurchase of Class C common stock
—
—
(236,069)
—
—
—
—
—
(8,256)
—
—
(8,256)
—
(8,256)
Treasury stock purchases
(684,730)
—
—
—
—
—
(16,195,427)
(460,562)
—
(19,982)
—
(480,544)
—
(480,544)
Stock option exercised
268,879
—
—
—
—
—
—
—
5,109
—
—
5,109
—
5,109
Net Income
—
—
—
—
—
—
—
—
—
265,026
—
265,026
203,306
468,332
Foreign exchange translation adjustment
—
—
—
—
—
—
—
—
—
—
(13,605)
(13,605)
(10,649)
(24,254)
Net change in unrealized cash flow hedges gains
—
—
—
—
—
—
—
—
—
—
55,405
55,405
35,460
90,865
Dividends ($0.24 per share of Class A common
stock and participating Restricted Stock Unit and
Restricted Stock Award) and distributions from
Virtu Financial to non-controlling interest
—
—
—
—
—
—
—
—
—
(103,265)
—
(103,265)
(272,019)
(375,284)
Issuance of Common Stock in connection with
employee exchanges
92,930
—
—
—
—
—
—
—
—
—
—
—
—
—
Repurchase of Virtu Financial Units and
corresponding number of Class C common stock in
connection with employee exchanges
—
—
(92,930)
—
—
—
—
—
—
—
—
—
—
—
Contributions from noncontrolling interests
—
—
—
—
—
—
—
—
—
—
—
—
39,200
39,200
Issuance of tax receivable agreements in connection
with employee exchange
—
—
—
—
—
—
—
—
1,044
—
—
1,044
—
1,044
Balance at December 31, 2022
133,071,754
$
1
9,030,066
$
—
60,091,740
$
1
(34,522,290)
$ (954,637)
$
1,292,613
$
972,317
$
31,604
$
1,341,899
$
309,528
$
1,651,427
Share based compensation
2,627,823
—
—
—
—
—
—
—
66,644
—
—
66,644
—
66,644
Repurchase of Class C common stock
—
—
(235,674)
—
—
—
—
—
(3,896)
—
—
(3,896)
—
(3,896)
Treasury stock purchases
(984,934)
—
—
—
—
—
(11,286,061)
(211,662)
—
(19,119)
—
(230,781)
—
(230,781)
Stock option exercised
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Net Income
—
—
—
—
—
—
—
—
—
142,036
—
142,036
121,885
263,921
Foreign exchange translation adjustment
—
—
—
—
—
—
—
—
—
—
6,952
6,952
(1,995)
4,957
Net change in unrealized cash flow hedges gains
—
—
—
—
—
—
—
—
—
—
(21,509)
(21,509)
(15,484)
(36,993)
Dividends ($0.24 per share of Class A common
stock and participating Restricted Stock Unit and
Restricted Stock Award) and distributions from
Virtu Financial to non-controlling interest
—
—
—
—
—
—
—
—
—
(94,831)
—
(94,831)
(211,305)
(306,136)
Issuance of Common Stock in connection with
employee exchanges
186,394
—
—
—
—
—
—
—
—
—
—
—
—
—
Repurchase of Virtu Financial Units and
corresponding number of Class C common stock in
connection with employee exchanges
—
—
(186,394)
—
—
—
—
—
—
—
—
—
—
—
Issuance of tax receivable agreements in connection
with employee exchange
—
—
—
—
—
—
—
—
(3,787)
—
—
(3,787)
—
(3,787)
Balance at December 31, 2023
134,901,037
$
1
8,607,998
$
—
60,091,740
$
1
(45,808,351)
$ (1,166,299)
$
1,351,574
$
1,000,403
$
17,047
$
1,202,727
$
202,629
$
1,405,356
Share based compensation
2,884,150
—
—
—
—
—
—
—
67,741
—
—
67,741
—
67,741
Repurchase of Class C common stock
—
—
(2,637)
—
—
—
—
—
(76)
—
—
(76)
—
(76)
Treasury stock purchases
(1,044,103)
—
—
—
—
—
(6,695,075)
(173,614)
—
(18,864)
—
(192,478)
—
(192,478)
Stock option exercised
695,276
—
—
—
—
—
—
—
13,210
—
—
13,210
—
13,210
Net Income
—
—
—
—
—
—
—
—
—
276,415
—
276,415
258,120
534,535
Foreign exchange translation adjustment
—
—
—
—
—
—
—
—
—
—
(5,637)
(5,637)
(3,411)
(9,048)
Net change in unrealized cash flow hedges gains
—
—
—
—
—
—
—
—
—
—
(18,473)
(18,473)
(13,778)
(32,251)
Class A Common Stock
Class C Common Stock
Class D Common Stock
Treasury Stock
Additional
Paid-in
Capital
Retained
Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (loss)
Total Virtu
Financial Inc.
Stockholders'
Equity
Noncontrolling
Interest
Total Equity
(in thousands, except share and interest data)
Shares
Amounts
Shares
Amounts
Shares
Amounts
Shares
Amounts
Amounts
Virtu Financial, Inc. and Subsidiaries
Consolidated Statements of Changes in Equity
Years Ended December 31, 2024, 2023, and 2022
85
Distribution from Virtu Financial to noncontrolling
interest
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Dividends ($0.24 per share of Class A common
stock and participating Restricted Stock Unit and
Restricted Stock Award) and distributions from
Virtu Financial to non-controlling interest
—
—
—
—
—
—
—
—
—
(89,046)
—
(89,046)
(210,357)
(299,403)
Issuance of Class A common stock
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Issuance of Common Stock in connection with
employee exchanges
43,391
—
—
—
—
—
—
—
—
—
—
—
—
—
Repurchase of Virtu Financial Units and
corresponding number of Class C common stock in
connection with employee exchanges
—
—
(43,391)
—
—
—
—
—
—
—
—
—
—
—
Contributions from noncontrolling interests
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Issuance of tax receivable agreements in connection
with employee exchange
—
—
—
—
—
—
—
—
(209)
—
—
(209)
—
(209)
Balance at December 31, 2024
137,479,751
$
1
8,561,970
$
—
60,091,740
$
1
(52,503,426)
$ (1,339,913)
$
1,432,240
$
1,168,908
$
(7,063)
$
1,254,174
$
233,203
$
1,487,377
Class A Common Stock
Class C Common Stock
Class D Common Stock
Treasury Stock
Additional
Paid-in
Capital
Retained
Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (loss)
Total Virtu
Financial Inc.
Stockholders'
Equity
Noncontrolling
Interest
Total Equity
(in thousands, except share and interest data)
Shares
Amounts
Shares
Amounts
Shares
Amounts
Shares
Amounts
Amounts
See accompanying Notes to the Consolidated Financial Statements.
Virtu Financial, Inc. and Subsidiaries
Consolidated Statements of Changes in Equity
Years Ended December 31, 2024 and 2023
86
Cash flows from operating activities
Net income
$
534,535
$
263,921
$
468,332
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
65,816
63,306
66,377
Amortization of purchased intangibles and acquired capitalized software
50,471
63,960
64,837
Debt issue cost related to debt refinancing and prepayment
22,563
1,098
24,316
Amortization of debt issuance costs and deferred financing fees
6,861
11,388
6,919
Termination of office leases
16,224
455
4,707
Share-based compensation
75,475
63,933
67,219
Deferred taxes
4,247
19,069
(3,468)
Other
(37,145)
(12,795)
11,392
Changes in operating assets and liabilities:
Securities borrowed
(572,089)
(534,766)
161,648
Securities purchased under agreements to resell
528,173
(1,175,115)
(217,546)
Receivables from broker-dealers and clearing organizations
(363,320)
290,193
(1,110)
Trading assets, at fair value
(444,041)
(2,728,059)
(373,597)
Receivables from customers
(43,559)
(25,415)
65,646
Operating lease right-of-use assets
44,422
(42,057)
28,670
Other assets
(57,404)
20,331
(62,799)
Securities loaned
1,102,432
269,014
(81,616)
Securities sold under agreements to repurchase
(524,206)
1,168,445
113,224
Payables to broker-dealers and clearing organizations
(244,057)
886,208
(276,646)
Payables to customers
22,883
(23,296)
(8,474)
Trading liabilities, at fair value
369,619
1,874,378
686,195
Operating lease liabilities
(48,492)
39,115
(33,322)
Accounts payable, accrued expenses and other liabilities
89,583
(1,534)
(4,101)
Net cash provided by operating activities
598,991
491,777
706,803
Cash flows from investing activities
Development of capitalized software
(41,886)
(38,355)
(37,658)
Acquisition of property and equipment
(12,427)
(37,774)
(27,201)
Other investing activities
(7,534)
(18,355)
35,329
Net cash used in investing activities
(61,847)
(94,484)
(29,530)
Cash flows from financing activities
Dividends to stockholders and distributions from Virtu Financial to noncontrolling interest
(299,403)
(306,136)
(375,284)
Repurchase of Class C common stock
—
(1,566)
(8,256)
Purchase of treasury stock
(191,138)
(229,012)
(480,544)
Stock options exercised
13,210
—
5,109
Short-term borrowings, net
38,541
(3,944)
(59,112)
Proceeds from long-term borrowings
1,741,888
—
1,800,000
Repayment of long-term borrowings
(1,727,000)
(73,000)
(1,599,774)
Proceeds from interest rate swaps
1,955
55,830
—
Payment of tax receivable agreement obligations
(20,226)
(23,275)
(21,343)
Debt issuance costs
(27,392)
(3,929)
(35,741)
Contributions from noncontrolling interests
—
—
39,200
Net cash used in financing activities
(469,565)
(585,032)
(735,745)
Effect of exchange rate changes on cash and cash equivalents
(9,048)
4,957
(24,239)
Net increase (decrease) in cash and cash equivalents
58,531
(182,782)
(82,711)
Cash, cash equivalents, and restricted or segregated cash, beginning of period
855,460
1,038,242
1,120,953
Cash, cash equivalents, and restricted or segregated cash, end of period
$
913,991
$
855,460
$
1,038,242
Years Ended December 31,
(in thousands)
2024
2023
2022
Virtu Financial, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
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Supplementary disclosure of cash flow information
Cash paid for interest
$
586,279
$
632,263
$
246,985
Cash paid for taxes
43,418
38,687
103,965
Non-cash investing activities
Share-based and accrued incentive compensation to developers relating to capitalized software
23,162
19,691
17,356
Non-cash financing activities
Tax receivable agreement described in Note 5
(209)
(3,787)
1,044
Repurchase of Class C common stock
(76)
(2,330)
—
Purchase of treasury stock
(1,340)
—
—
Years Ended December 31,
(in thousands)
2024
2023
2022
See accompanying Notes to the Consolidated Financial Statements.
Virtu Financial, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
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Virtu Financial, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
(dollars in thousands, except shares and per share amounts, unless otherwise noted)
1. Organization and Basis of Presentation
Organization
The accompanying Consolidated Financial Statements include the accounts and operations of Virtu Financial, Inc.
(“VFI” or, collectively with its wholly owned or controlled subsidiaries, “Virtu” or the “Company”). VFI is a Delaware
corporation whose primary asset is its ownership interest in Virtu Financial LLC (“Virtu Financial”). As of December 31, 2024,
VFI owned approximately 56.9% of the membership interests of Virtu Financial. VFI is the sole managing member of Virtu
Financial and operates and controls all of the businesses and affairs of Virtu Financial and its subsidiaries (the “Group”).
The Company is a leading financial firm that leverages cutting edge technology to deliver liquidity to the global
markets and innovative, transparent trading solutions to its clients. The Company provides deep liquidity in over 25,000
financial instruments, on over 250 venues, in 40 countries worldwide to help create more efficient markets. Leveraging its
global market structure expertise and scaled, multi-asset infrastructure, the Company provides its clients with a robust product
suite including offerings in execution, liquidity sourcing, analytics and broker-neutral, multi-dealer platforms in workflow
technology. The Company’s product offerings allow its clients to trade on hundreds of venues in over 50 countries and across
multiple asset classes, including global equities, Exchange-Traded Funds (“ETFs”), options, foreign exchange, futures, fixed
income, cryptocurrencies, and other commodities. The Company’s integrated, multi-asset analytics platform provides a range of
pre- and post-trade services, data products and compliance tools that its clients rely upon to invest, trade and manage risk across
global markets.
The Company has completed two significant acquisitions that have expanded and complemented Virtu Financial's
original electronic trading and marking making business. On July 20, 2017, the Company completed the all-cash acquisition of
KCG Holdings, Inc. (“KCG”) (the “Acquisition of KCG”). On March 1, 2019 (the “ITG Closing Date”), the Company
completed the acquisition of Investment Technology Group, Inc. and its subsidiaries (“ITG”) in an all-cash transaction (the
“ITG Acquisition”).
Virtu Financial’s principal United States (“U.S.”) subsidiary is Virtu Americas LLC (“VAL”), which is a U.S. broker-
dealer. Other principal U.S. subsidiaries include Virtu Financial Global Markets LLC, a U.S. trading entity focused on futures
and currencies; Virtu ITG Analytics LLC, a provider of pre- and post-trade analysis, fair value, and trade optimization services;
and Virtu ITG Platforms LLC, a provider of workflow technology solutions and network connectivity services. Principal
foreign subsidiaries include Virtu Financial Ireland Limited (“VFIL”) and Virtu Europe Trading Limited (“VETL”) (f/k/a Virtu
ITG Europe Limited), each formed in Ireland; Virtu ITG UK Limited (“VIUK”), formed in the United Kingdom; Virtu Canada
Corp (f/k/a Virtu ITG Canada Corp.), formed in Canada; Virtu Financial Asia Pty Ltd. and Virtu ITG Australia Limited, each
formed in Australia; Virtu ITG Hong Kong Limited, formed in Hong Kong; and Virtu Financial Singapore Pte. Ltd. and Virtu
ITG Singapore Pte. Ltd., each formed in Singapore, all of which are trading entities focused on asset classes in their respective
geographic regions.
The Company has two operating segments: (i) Market Making and (ii) Execution Services; and one non-operating
segment: Corporate. See Note 22 “Geographic Information and Business Segments” for a further discussion of the Company’s
segments.
On April 19, 2024, the Company entered into a Unit Purchase Agreement with MarketAxess Holdings Inc.
(“MarketAxess”) to sell a 49% interest in the multi-asset request-for-quote communication platform joint venture (“JV”), RFQ-
hub Holdings LLC. See Note 3 “Business Held for Sale” for further details.
Basis of Consolidation and Form of Presentation
These Consolidated Financial Statements are presented in U.S. dollars, have been prepared pursuant to the rules and
regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10-K
and accounting standards generally accepted in the United States of America (“U.S. GAAP”) promulgated by the Financial
Accounting Standards Board (“FASB”) in the Accounting Standards Codification (“ASC” or the “Codification”), and reflect all
adjustments that, in the opinion of management, are normal and recurring, and that are necessary for a fair statement of the
results for the periods presented. The Consolidated Financial Statements of the Company include its equity interests in Virtu
Financial and its subsidiaries. As sole managing member of Virtu Financial, the Company exerts control over the Group’s
operations. The Company consolidates Virtu Financial and its subsidiaries’ financial statements and records the interests in
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Virtu Financial that the Company does not own as noncontrolling interests. All intercompany accounts and transactions have
been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Use of Estimates
The Company’s Consolidated Financial Statements are prepared in conformity with U.S. GAAP, which require
management to make estimates and assumptions regarding measurements including the fair value of trading assets and
liabilities, allowance for doubtful accounts, goodwill and intangibles, compensation accruals, capitalized software, income tax,
tax receivable agreements, leases, litigation accruals, and other matters that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts
of revenue and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates.
Earnings Per Share
Earnings per share (“EPS”) is calculated on both a basic and diluted basis. Basic EPS excludes dilution and is
calculated by dividing income available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS is calculated by dividing the net income available for common stockholders by the
diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in
addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future.
The Company grants restricted stock awards (“RSAs”) and restricted stock units (“RSUs”), certain of which entitle
recipients to receive non-forfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of
common stock. As a result, the unvested RSAs and participating unvested RSUs meet the definition of a participating security
requiring the application of the two-class method. Under the two-class method, earnings available to common shareholders,
including both distributed and undistributed earnings, are allocated to each class of common stock and participating securities
according to dividends declared and participating rights in undistributed earnings, which may cause diluted EPS to be more
dilutive than the calculation using the treasury stock method.
Cash and Cash Equivalents
Cash and cash equivalents include money market accounts, which are payable on demand, and short-term investments
with an original maturity of less than 90 days. The Company maintains cash in bank deposit accounts that, at times, may exceed
federally insured limits. The Company manages this risk by selecting financial institutions deemed highly creditworthy to
minimize the risk.
Cash restricted or segregated under regulations and other represents (i) special reserve bank accounts for the exclusive
benefit of customers (“Special Reserve Bank Account”) maintained by VAL in accordance with Rule 15c3-3 of the Securities
Exchange Act of 1934, as amended (“Customer Protection Rule”), and special reserve accounts for the exclusive benefit of
proprietary accounts of broker-dealers, (ii) funds on deposit for Canadian and European trade clearing and settlement activity,
(iii) segregated balances under a collateral account control agreement for the benefit of certain customers in Hong Kong, and
(iv) funds relating to the securitization of bank guarantees supporting certain of the Company’s foreign leases.
Securities Borrowed and Securities Loaned
The Company conducts securities borrowing and lending activities with external counterparties. In connection with
these transactions, the Company receives or posts collateral, which comprises cash and/or securities. In accordance with
substantially all of its securities borrow agreements, the Company is permitted to sell or repledge the securities received.
Securities borrowed or loaned are recorded based on the amount of cash collateral advanced or received. The initial cash
collateral advanced or received generally approximates or is greater than 102% of the fair value of the underlying securities
borrowed or loaned. The Company monitors the fair value of securities borrowed and loaned, and delivers or obtains additional
collateral as appropriate. Receivables and payables with the same counterparty are not offset in the Consolidated Statements of
Financial Condition. Interest received or paid by the Company for these transactions is recorded gross on an accrual basis under
Interest and dividends income or Interest and dividends expense in the Consolidated Statements of Comprehensive Income.
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Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase
In a repurchase agreement, securities sold under agreements to repurchase are treated as collateralized financing
transactions and are recorded at contract value, plus accrued interest, which approximates fair value. It is the Company's policy
that its custodian take possession of the underlying collateral securities with a fair value approximately equal to the principal
amount of the repurchase transaction, including accrued interest. For reverse repurchase agreements, the Company typically
requires delivery of collateral with a fair value approximately equal to the carrying value of the relevant assets in the
Consolidated Statements of Financial Condition. To ensure that the fair value of the underlying collateral remains sufficient, the
collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual
provisions. The Company does not net securities purchased under agreements to resell transactions with securities sold under
agreements to repurchase transactions entered into with the same counterparty.
The Company has entered into bilateral and tri-party term and overnight repurchase and other collateralized financing
agreements which bear interest at negotiated rates. The Company receives cash and makes delivery of financial instruments to a
custodian who monitors the market value of these instruments on a daily basis. The market value of the instruments delivered
must be equal to or in excess of the principal amount loaned under the repurchase agreements plus the agreed upon margin
requirement. The custodian may request additional collateral, if appropriate. Interest received or paid by the Company for these
transactions is recorded gross on an accrual basis under Interest and dividends income or Interest and dividends expense in the
Consolidated Statements of Comprehensive Income.
Receivables from/Payables to Broker-dealers and Clearing Organizations
Receivables from and payables to broker-dealers and clearing organizations primarily represent amounts due for
unsettled trades, open equity in futures transactions, securities failed to deliver or failed to receive, deposits with clearing
organizations or exchanges, and balances due from or due to prime brokers in relation to the Company’s trading. Amounts
receivable from broker-dealers and clearing organizations may be restricted to the extent that they serve as deposits for
securities sold, not yet purchased. The Company presents its balances, including outstanding principal balances on all broker
credit facilities, on a net-by-counterparty basis within receivables from and payables to broker-dealers and clearing
organizations when the criteria for offsetting are met.
In the normal course of business, a significant portion of the Company’s securities transactions, money balances, and
security positions are transacted with several third-party brokers. The Company is subject to credit risk to the extent any broker
with whom it conducts business is unable to fulfill contractual obligations on its behalf. The Company monitors the financial
condition of such brokers to minimize the risk of any losses from these counterparties.
Financial Instruments Owned Including Those Pledged as Collateral and Financial Instruments Sold, Not Yet Purchased
Financial instruments owned and Financial instruments sold, not yet purchased relate to market making and trading
activities, and include listed and other equity securities, listed equity options and fixed income securities.
The Company records Financial instruments owned, Financial instruments owned and pledged, and Financial
instruments sold, not yet purchased at fair value. Gains and losses arising from financial instrument transactions are recorded
net on a trade-date basis in Trading income, net, in the Consolidated Statements of Comprehensive Income.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the
exit price) in an orderly transaction between market participants at the measurement date. Fair value measurements are not
adjusted for transaction costs. The recognition of “block discounts” for large holdings of unrestricted financial instruments
where quoted prices are readily and regularly available in an active market is prohibited. The Company categorizes its financial
instruments into a three level hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy level assigned to each financial instrument is based on the assessment of the transparency and reliability of the inputs
used in the valuation of such financial instruments at the measurement date based on the lowest level of input that is significant
to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements).
Financial instruments measured and reported at fair value are classified and disclosed in one of the following
categories based on inputs:
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Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical,
unrestricted assets or liabilities;
Level 2 — Quoted prices in markets that are not active and financial instruments for which all significant inputs are
observable, either directly or indirectly; or
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and
unobservable.
Fair Value Option
The fair value option election allows entities to make an irrevocable election of fair value as the initial and subsequent
measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair
value option has been elected are recorded in other, net in the Consolidated Statements of Comprehensive Income. The decision
to elect the fair value option is determined on an instrument by instrument basis, which must be applied to an entire instrument
and is irrevocable once elected.
Derivative Instruments - Trading
Derivative instruments are used for trading purposes, including economic hedges of trading instruments, are carried at
fair value, and include futures, forward contracts, and options. The Company does not apply hedge accounting as defined in
ASC 815, Derivatives and Hedging, and accordingly gains or losses on these derivative instruments are recognized currently
within Trading income, net in the Consolidated Statements of Comprehensive Income. Fair values for exchange-traded
derivatives, principally futures, are based on quoted market prices. Fair values for over-the-counter derivative instruments,
principally forward contracts, are based on the values of the underlying financial instruments within the contract. The
underlying instruments are currencies, which are actively traded.
The Company presents its trading derivatives balances on a net-by-counterparty basis when the criteria for offsetting
are met. Cash flows associated with such derivative activities are included in cash flows from operating activities on the
Consolidated Statements of Cash Flows.
Derivative Instruments - Hedging
The Company may use derivative instruments for risk management purposes, including cash flow hedges used to
manage interest rate risk on long-term borrowings. The Company has entered into floating-to-fixed interest rate swap
agreements in order to manage interest rate risk associated with its long-term debt obligations.
For interest rate swap agreements designated as hedges, the Company assesses its risk management objectives and
strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to
be assessed prospectively and retrospectively. The effectiveness of the hedge is assessed based on the overall changes in the fair
value of the interest rate swaps. For instruments that meet the criteria to be considered hedging instruments under ASC 815, any
gains or losses, to the extent effective, are included in Accumulated other comprehensive income on the Consolidated
Statements of Financial Condition and Other comprehensive income on the Consolidated Statements of Comprehensive
Income. The ineffective portion, if any, is recorded in Other, net on the Consolidated Statements of Comprehensive Income.
The Company presents its hedging derivatives balances on a net-by-counterparty basis when the criteria for offsetting
are met. Balances associated with hedging derivatives are recorded within Receivables from/Payables to broker-dealers and
clearing organizations on the Consolidated Statements of Financial Condition. Cash flows associated with such derivative
activities are included in cash flows from operating activities on the Consolidated Statements of Cash Flows.
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Property and Equipment
Property and equipment are carried at cost, less accumulated depreciation, except for the assets acquired in connection
with acquisitions using the purchase accounting method, which were recorded at fair value on date of acquisition. Depreciation
is provided using the straight-line method over estimated useful lives of the underlying assets. Routine maintenance, repairs and
replacement costs are expensed as incurred and improvements that appreciably extend the useful life of the assets are
capitalized. When property and equipment are sold or otherwise disposed of, the cost and related accumulated depreciation are
removed from the accounts and any resulting gain or loss is recognized in income. Property and equipment are reviewed for
impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.
Furniture, fixtures, and equipment are depreciated over three to seven years. Leasehold improvements are amortized over the
lesser of the life of the improvement or the term of the lease.
Capitalized Software
The Company capitalizes costs of materials, consultants, and payroll and payroll-related costs for employees incurred
in developing internal-use software. Costs incurred during the preliminary project and post-implementation stages are charged
to expense.
Management’s judgment is required in determining the point at which various projects enter the stages at which costs
may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over
which the costs are amortized.
Capitalized software development costs and related accumulated amortization are included in Property, equipment and
capitalized software in the accompanying Consolidated Statements of Financial Condition and are amortized over a period of
1.5 to 3 years, which represents the estimated useful lives of the underlying software.
Leases
The Company determines if an arrangement is a lease at the inception of the arrangement. Operating leases are
included in Operating lease right-of-use (“ROU”) assets and Operating lease liabilities on the Consolidated Statements of
Financial Condition. Operating lease ROU assets are assets that represent the lessee’s right to use, or control the use of, a
specified asset for the lease term. Finance leases consist primarily of leases for technology and equipment and are included in
Property, equipment, and capitalized software and Accounts payable, accrued expenses and other liabilities on the Consolidated
Statements of Financial Condition. ROU assets and lease liabilities are recognized based on the present value of the future
minimum lease payments over the lease term at the commencement date. The Company uses its incremental borrowing rate,
based on the information available at the commencement date of the lease, in determining the present value of future payments.
The ROU assets are reduced by lease incentives and initial direct costs incurred. The Company’s lease terms may include
options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense
for operating leases and amortization of the finance lease ROU asset is recognized on a straight-line basis over the lease term.
Lease expense related to the leasing of corporate office space is recorded in Operations and Administrative expenses on the
Consolidated Statements of Comprehensive Income. Lease expense related to the leasing of data centers and other technology is
recorded in Communication and Data Processing on the Consolidated Statements of Comprehensive Income. Certain of the
Company’s lease agreements contain fixed lease payments that contain lease and non-lease components; for such leases, the
Company accounts for the lease and non-lease components as a single lease component. The Company nets its sublease income
against corresponding lease expenses within Operations and Administrative expenses on the Consolidated Statements of
Comprehensive Income.
Goodwill
Goodwill represents the excess of the purchase price over the underlying net tangible and intangible assets of the
Company’s acquisitions. Goodwill is not amortized but is assessed for impairment on an annual basis and between annual
assessments whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill
is assessed at the reporting unit level, which is defined as an operating segment or one level below the operating segment.
The Company assesses goodwill for impairment on an annual basis on July 1 and on an interim basis when certain
events occur or certain circumstances exist. In the impairment assessment as of July 1, 2024, the Company assessed qualitative
factors as described in ASC 350-20 for each of its reporting units for any indicators that the fair values of the reporting units
were less than their carrying values. No impairment was identified.
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Intangible Assets
The Company amortizes finite-lived intangible assets over their estimated useful lives. Finite-lived intangible assets
are tested for impairment when impairment indicators are present, and if impaired, they are written down to fair value.
Exchange Memberships and Stock
Exchange memberships are recorded at cost or, if any other than temporary impairment in value has occurred, at a
value that reflects management’s estimate of fair value. Exchange stock includes shares that entitle the Company to certain
trading privileges.
Trading Income, net
Trading income, net is composed of changes in the fair value of trading assets and liabilities (i.e., unrealized gains and
losses) and realized gains and losses on trading assets and liabilities. Trading gains and losses on financial instruments owned
and financial instruments sold, not yet purchased are recorded on the trade date and reported on a net basis in the Consolidated
Statements of Comprehensive Income.
Commissions, net and Technology Services
Commissions, net, which primarily comprise commissions earned on institutional client orders, are recorded on a trade
date basis. Under a commission management program, the Company allows institutional clients to allocate a portion of their
gross commissions to pay for research and other services provided by third parties. As the Company acts as an agent in these
transactions, it records such expenses on a net basis within Commissions, net and technology services in the Consolidated
Statements of Comprehensive Income.
The Company provides order management software (“OMS”) and related software products and connectivity services
to customers and recognizes license fee revenues and monthly connectivity fees. License fee revenues, generated for the use of
the Company’s OMS and other software products, is fixed and recognized at the point in time at which the customer is able to
use and benefit from the license. Connectivity revenue is variable in nature, based on the number of live connections, and is
recognized over time on a monthly basis using a time-based measure of progress.
The Company also provides analytics products and services to customers and recognizes subscription fees, which are
fixed for the contract term, based on when the products and services are delivered. Analytics products and services may be
bundled with trade execution services, in which case commissions are allocated to the analytics performance obligations using
an allocation methodology.
Interest and Dividends Income/Interest and Dividends Expense
Interest income and interest expense are accrued in accordance with contractual rates. Interest income consists of
interest earned on collateralized financing arrangements and on cash held by brokers. Interest expense includes interest expense
from collateralized transactions, margin and related lines of credit. Dividends on financial instruments owned including those
pledged as collateral and financial instruments sold, not yet purchased are recorded on the ex-dividend date and interest is
recognized on an accrual basis.
Brokerage, Exchange, Clearance Fees and Payments for Order Flow, Net
Brokerage, exchange, clearance fees and payments for order flow, net, comprise the costs of executing and clearing
trades and are accrued on a trade date basis in the Consolidated Statements of Comprehensive Income. These costs are net of
rebates, which consist of volume discounts, credits or payments received from exchanges or other marketplaces related to the
placement and/or removal of liquidity from the order flow in the marketplace. Rebates are recorded on an accrual basis.
Payments for order flow represent payments to broker-dealer clients, in the normal course of business, for directing their order
flow in U.S. equities to the Company.
Income Taxes
The Company is subject to U.S. federal, state and local income taxes on its taxable income. The Company’s
subsidiaries are subject to income taxes in the respective jurisdictions (including foreign jurisdictions) in which they operate.
94
The provision for income tax comprises current tax and deferred tax. Current tax represents the tax on current year tax
returns, using tax rates enacted at the balance sheet date. Deferred tax assets are recognized in full and then reduced by a
valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be recognized.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax
position will be sustained on examination by the applicable taxing authority, including resolution of the appeals or litigation
processes, based on the technical merits of the position. The tax benefits recognized in the Consolidated Financial Statements
from such a position are measured based on the largest benefit for each such position that has a greater than fifty percent
likelihood of being realized upon ultimate resolution. Many factors are considered when evaluating and estimating the tax
positions and tax benefits. Such estimates involve interpretations of regulations, rulings, case law, etc. and are inherently
complex. The Company’s estimates may require periodic adjustments and may not accurately anticipate actual outcomes as
resolution of income tax treatments in individual jurisdictions typically would not be known for several years after completion
of any fiscal year.
Comprehensive Income
Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The
Company’s OCI comprises foreign currency translation adjustments, net of taxes and mark-to-market gains and losses on the
Company’s derivative instruments designated as hedging instruments under ASC 815, net of taxes.
Assets and liabilities of operations having non-U.S. dollar functional currencies are translated at period-end exchange
rates, and revenues and expenses are translated at weighted average exchange rates for the period. Gains and losses resulting
from translating foreign currency financial statements, net of related tax effects, are reflected in Accumulated OCI, a
component of stockholders’ equity. While certain of the Company’s foreign subsidiaries use the U.S. dollar as their functional
currency, the Company also has subsidiaries that utilize a functional currency other than the U.S. dollar, primarily comprising
its subsidiaries domiciled in Ireland, which utilize the Euro and Pound Sterling as the functional currency, and subsidiaries
domiciled in Canada, which utilize the Canadian dollar as the functional currency.
The Company may use derivative instruments for risk management purposes, including cash flow hedges used to
manage interest rate risk on long-term borrowings and net investment hedges used to manage foreign exchange risk. For
instruments that meet the criteria to be considered hedging instruments under ASC 815, any gains or losses are initially
included in Accumulated OCI on the Consolidated Statements of Financial Condition and OCI on the Consolidated Statements
of Comprehensive Income, as the hedged item affects earnings.
Share-Based Compensation
Share-based awards issued for compensation in connection with or subsequent to the Company’s initial public offering
in April 2015 (the “IPO”) and certain reorganization transactions consummated in connection with the IPO (the
“Reorganization Transactions”) pursuant to the Virtu Financial, Inc. 2015 Management Incentive Plan (as amended, the
“Amended and Restated 2015 Management Incentive Plan”) are in the form of stock options, Class A common stock, par value
$0.00001 per share (the “Class A Common Stock”), RSAs and RSUs, as applicable. The fair values of the Class A Common
Stock and RSUs are determined based on the volume weighted average price for the three days preceding the grant. With
respect to the RSUs, forfeitures are accounted for as they occur. The fair value of RSAs is determined based on the closing
price as of the grant date. The fair value of share-based awards granted to employees is expensed based on the vesting
conditions and is recognized on a straight-line basis over the vesting period, or, in the case of RSAs subject to performance
conditions, from the date that achievement of the performance target becomes probable through the remainder of the vesting
period. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities
incurred upon the issuance of Class A Common Stock, the vesting of RSUs or the exercise of stock options.
Variable Interest Entities
A variable interest entity (“VIE”) is an entity that lacks one or more of the following characteristics: (i) the total equity
investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the
power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the
losses of the entity and the right to receive the residual returns of the entity.
The Company will be considered to have a controlling financial interest and will consolidate a VIE if it has both (i) the
power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation
to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
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Accounting Pronouncements, Recently Adopted
Fair Value Measurement - In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity
Securities Subject to Contractual Sale Restrictions (Topic 820). The ASU clarifies the impact of contractual sale restrictions on
the fair value of an equity security. Additionally, this ASU requires disclosure of the nature and remaining duration of the sale
restriction. The Company adopted this ASU on January 1, 2024, and it did not have a material impact on its Consolidated
Financial Statements.
Leases—Common Control Arrangements - In March 2023, the FASB issued ASU 2023-01, Leases—Common
Control Arrangements (Topic 842). This ASU provides updated guidance for accounting for common control leases and
leasehold improvements. The Company adopted this ASU on January 1, 2024, and it did not have a material impact on its
Consolidated Financial Statements.
Investments—Equity Method and Joint Ventures - In March 2023, the FASB issued ASU 2023-02, Investments—
Equity Method and Joint Ventures (Topic 323). This ASU provides updated guidance for accounting for investments in tax
credit structures. The Company adopted this ASU on January 1, 2024, and it did not have a material impact on its Consolidated
Financial Statements.
Segment Reporting - In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). This ASU
requires incremental disclosures related to a public entity’s reportable segments. It aims to provide financial statement users
with more disaggregated information, specifically, significant expenses for each reportable segment. The Company adopted this
ASU during the year ended December 31, 2024 and included additional required disclosures in Note 22 “Geographic
Information and Business Segments.” The ASU did not have other material impact on the Company’s Consolidated Financial
Statements.
Accounting Pronouncements, Not Yet Adopted as of December 31, 2024
Business Combinations—Joint Venture Formations - In August 2023, the FASB issued ASU 2023-05, Business
Combinations—Joint Venture Formations (Subtopic 805-60). This ASU provides updated guidance on accounting for the
formation of joint ventures. This ASU is effective prospectively for joint ventures formed on or after January 1, 2025. The
Company does not expect it to have a material impact on its Consolidated Financial Statements.
Intangibles—Goodwill and Other—Crypto Assets - In December 2023, the FASB issued ASU 2023-08, Intangibles—
Goodwill and Other—Crypto Assets (Subtopic 350-60). This ASU requires measurement of in-scope crypto assets at fair value
and provides updated guidance on presentation and disclosure requirements for crypto assets. This ASU is effective for periods
beginning after December 15, 2024. The Company is currently evaluating the impact of this ASU but does not expect it to have
a material impact on its Consolidated Financial Statements and related disclosures.
Income Taxes - In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). This ASU requires
disclosure of additional information on effective tax rate reconciliation and income taxes paid. This ASU is effective for periods
beginning after December 15, 2024. The Company is currently evaluating the impact of this ASU but does not expect it to have
a material impact on its Consolidated Financial Statements and related disclosures.
Compensation—Stock Compensation - In March 2024, the FASB issued ASU 2024-01, Compensation—Stock
Compensation (Topic 718). This ASU clarifies ASC 718 scope application for profits interest or similar awards through
illustrative examples. This ASU is effective for periods beginning after December 15, 2024. The Company is currently
evaluating the impact of this ASU, but does not expect it to have a material impact on its Consolidated Financial Statements and
related disclosures.
Codification Improvements - In March 2024, the FASB issued ASU 2024-02, Codification Improvements. This ASU
aims to improve and simplify the language and structure of the Codification by removing references to Concepts Statements.
This amendment is effective for periods beginning after December 15, 2024. The Company is currently evaluating the impact of
this ASU, but does not expect it to have a material impact on its Consolidated Financial Statements and related disclosures.
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures - In November 2024,
the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
(Subtopic 220-40). This ASU requires disclosure of disaggregated information of Income Statement expense captions that
include certain costs, such as employee compensation, depreciation, and intangible asset amortization. It also requires
disclosure of the total amounts of selling expenses, along with an entity's definition of selling expenses. This amendment is
96
effective for periods beginning after December 15, 2027. The Company is currently evaluating the impact of this ASU, but does
not expect it to have a material impact on its Consolidated Financial Statements and related disclosures.
3. Business Held for Sale
On April 19, 2024, the Company entered into a Unit Purchase Agreement with MarketAxess Holdings Inc.
(“MarketAxess”) pursuant to which the Company has agreed to sell a 49% interest in the multi-asset request-for-quote
communication platform JV, RFQ-hub Holdings LLC (“RFQ-hub Holdings,” or collectively with its wholly owned or
controlled subsidiaries, “RFQ-hub”, which includes RFQ-hub Americas LLC, or “RAL”). The sale is anticipated to close in
2025 but remains subject to various closing conditions including the receipt of certain regulatory approvals. Upon the closing of
the sale, the Company will retain a minority stake in RFQ-hub.
A summary of the assets and liabilities of business held for sale is summarized as follows:
(in thousands)
Business assets and liabilities held for sale as of December 31, 2024:
Receivables from broker-dealers and clearing organizations
$
194
Property, equipment and capitalized software (net)
854
Intangibles (net)
3,486
Other assets
81
Liabilities
$
(1,526)
Total carrying value of RFQ-hub as of December 31, 2024:
$
3,089
4. Earnings per Share
The below table contains a reconciliation of Net income before income taxes and noncontrolling interest to Net income
available for common stockholders:
Years Ended December 31,
(in thousands)
2024
2023
2022
Income before income taxes and noncontrolling interest
$
644,970
$
325,131
$
556,798
Provision for income taxes
110,435
61,210
88,466
Net income
534,535
263,921
468,332
Noncontrolling interest
(258,120)
(121,885)
(203,306)
Net income available for common stockholders
$
276,415
$
142,036
$
265,026
97
The calculation of basic and diluted earnings per share is presented below:
Years Ended December 31,
(in thousands, except for share or per share data)
2024
2023
2022
Basic earnings per share:
Net income available for common stockholders
$
276,415
$
142,036
$
265,026
Less: Dividends and undistributed earnings allocated to participating securities
(16,021)
(8,151)
(9,811)
Net income available for common stockholders, net of dividends and undistributed
earnings allocated to participating securities
260,394
133,885
255,215
Weighted average shares of common stock outstanding:
Class A
87,482,162
94,076,165
103,997,767
Basic earnings per share
$
2.98
$
1.42
$
2.45
Years Ended December 31,
(in thousands, except for share or per share data)
2024
2023
2022
Diluted earnings per share:
Net income available for common stockholders, net of dividends and undistributed
earnings allocated to participating securities
$
260,394
$
133,885
$
255,215
Weighted average shares of common stock outstanding:
Class A
Issued and outstanding
87,482,162
94,076,165
103,997,767
Issuable pursuant to Amended and Restated 2015 Management Incentive Plan
339,414
—
424,676
87,821,576
94,076,165
104,422,443
Diluted earnings per share (1)
$
2.97
$
1.42
$
2.44
(1) Excluded from the computation of diluted Earnings per share were 37,274 unexercised stock options for the year ended December 31,
2023, because inclusion of the options would have been anti-dilutive. There were none excluded for the year ended December 31, 2024.
98
5. Tax Receivable Agreements
In connection with the IPO and the Reorganization Transactions, the Company entered into tax receivable agreements
(“TRA”) to make payments to certain pre-IPO equity holders (“Virtu Members”) that are generally equal to 85% of the
applicable cash tax savings, if any, that the Company actually realizes as a result of favorable tax attributes that were and will
continue to be available to the Company as a result of the Reorganization Transactions, exchanges of membership interests for
Class A Common Stock or Class B common stock, par value $0.00001 per share (the “Class B Common Stock”), (an
“Exchange”), and payments made under the tax receivable agreements. An Exchange during the year will give rise to favorable
tax attributes that may generate cash tax savings specific to the Exchange to be realized over a specific period of time (generally
15 years). At each Exchange, management estimates the Company’s cumulative TRA obligations to be reported on the
Consolidated Statements of Financial Condition, which amounted to $196.6 million and $216.5 million as of December 31,
2024 and December 31, 2023, respectively. The tax attributes are computed as the difference between the Company’s basis in
the partnership interest (“outside basis”) as compared to the Company’s share of the adjusted tax basis of partnership property
(“inside basis”) at the time of each Exchange. The computation of inside basis requires management to make judgments in
estimating the components included in the inside basis as of the date of the Exchange (i.e., cash received by the Company on
hypothetical sale of assets, allocation of gain/loss to the Company at the time of the Exchange taking into account complex
partnership tax rules). In addition, management estimates the period of time that may generate cash tax savings of such tax
attributes and the realizability of the tax attributes. Payments will occur only after the filing of the U.S. federal and state income
tax returns and realization of the cash tax savings from the favorable tax attributes. The Company made payments totaling
$114.0 million from February 2017 through December 2024 with respect to its TRA obligation.
As a result of (i) the purchase of equity interests in Virtu Financial from certain Virtu Members in connection with the
Reorganization Transactions, (ii) the purchase of non-voting common interest units in Virtu Financial (the “Virtu Financial
Units”) (along with the corresponding shares of Class C common stock, par value $0.00001 per share (the “Class C Common
Stock”)) from certain of the Virtu Members in connection with the IPO, (iii) the purchase of Virtu Financial Units (along with
the corresponding shares of Class C Common Stock) and the exchange of Virtu Financial Units (along with the corresponding
shares of Class C Common Stock) for shares of Class A Common Stock in connection with the secondary offerings completed
in November 2015 (the “November 2015 Secondary Offering”) and September 2016 (the “September 2016 Secondary
Offering”), and (iv) the purchase of Virtu Financial Units (along with corresponding shares of the Company’s Class D common
stock, par value $0.00001 per share (the “Class D Common Stock”) in connection with the May 2018 Secondary Offering
(defined below) and the May 2019 Secondary Offering (defined below, and, together with the November 2015 Secondary
Offering, the September 2016 Secondary Offering, and the May 2018 Secondary Offering, the “Secondary Offerings”),
payments to certain Virtu Members in respect of the purchases are expected to range from approximately $0.1 million to $22.1
million per year over the next 15 years.
At December 31, 2024 and December 31, 2023, the Company’s remaining deferred tax assets that relate to the matters
described above were approximately $114.4 million and $135.7 million, respectively, and the Company’s liabilities over the
next 15 years pursuant to the tax receivable agreements were approximately $196.6 million and $216.5 million for December
31, 2024 and December 31, 2023, respectively. The amounts recorded as of December 31, 2024 and December 31, 2023 are
based on best estimates available at the respective dates and may be subject to change after the filing of the Company’s U.S.
federal and state income tax returns for the years in which tax savings were realized.
For the purposes of the tax receivable agreements discussed above, the cash savings realized by the Company are
computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have
been required to pay had there been (i) no increase to the tax basis of the assets of Virtu Financial as a result of the purchase or
exchange of Virtu Financial Units, (ii) no tax benefit from the tax basis in the intangible assets of Virtu Financial on the date of
the IPO and (iii) no tax benefit as a result of the Net Operating Losses (“NOLs”) and other tax attributes of Virtu Financial.
Subsequent adjustments of the tax receivable agreements obligations due to certain events (e.g., changes to the expected
realization of NOLs or changes in tax rates) will be recognized within income before taxes and noncontrolling interests in the
Consolidated Statements of Comprehensive Income.
6. Goodwill and Intangible Assets
The Company has two operating segments: (i) Market Making; and (ii) Execution Services; and one non-operating
segment: Corporate. As of December 31, 2024 and December 31, 2023, the Company’s total amount of goodwill recorded was
$1,148.9 million. No goodwill impairment was recognized during the years ended December 31, 2024 and 2023.
The following table presents the details of goodwill by segment as of December 31, 2024 and December 31, 2023:
99
(in thousands)
Market
Making
Execution
Services
Corporate
Total
Balance as of period-end
$
755,292
$
393,634
$
—
$
1,148,926
As described in Note 3 “Business Held for Sale”, the Company reclassified an aggregated net carrying amount of $3.5
million ($7.5 million of gross carrying amount net of $4.0 million accumulated amortization) from Intangible assets to Assets of
business held for sale.
As of December 31, 2024 and December 31, 2023, the Company’s total amount of intangible assets recorded was
$203.2 million and $257.5 million, respectively. Acquired intangible assets consisted of the following as of December 31, 2024
and December 31, 2023:
As of December 31, 2024
(in thousands)
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Useful Lives
(Years)
Customer relationships
$
479,130
$
(281,315)
$
197,815
10
to
12
Technology
136,000
(136,000)
—
1
to
6
Favorable occupancy leases
5,895
(5,645)
250
3
to
15
Exchange memberships
3,998
—
3,998
Indefinite
Trade name
3,600
(3,600)
—
3
ETF issuer relationships
950
(950)
—
9
ETF buyer relationships
950
(950)
—
9
Other
1,125
—
1,125
Indefinite
$
631,648
$
(428,460)
$
203,188
As of December 31, 2023
(in thousands)
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Useful Lives
(Years)
Customer relationships
$
486,600
$
(237,829)
$
248,771
10
to
12
Technology
136,000
(133,467)
2,533
1
to
6
Favorable occupancy leases
5,895
(5,177)
718
3
to
15
Exchange memberships
3,998
—
3,998
Indefinite
Trade name
3,600
(3,600)
—
3
ETF issuer relationships
950
(950)
—
9
ETF buyer relationships
950
(950)
—
9
Other
1,500
—
1,500
Indefinite
$
639,493
$
(381,973)
$
257,520
Amortization expense relating to finite-lived intangible assets was approximately $50.5 million, $64.0 million, and
$64.8 million for the years ended December 31, 2024, 2023, and 2022, respectively. This is included in Amortization of
purchased intangibles and acquired capitalized software in the accompanying Consolidated Statements of Comprehensive
Income.
The Company expects to record amortization expense as follows over the next five subsequent years:
(in thousands)
2025
47,132
2026
47,132
2027
47,132
2028
47,132
2029
9,466
100
7. Receivables from/Payables to Broker-Dealers and Clearing Organizations
The following is a summary of receivables from and payables to brokers-dealers and clearing organizations at
December 31, 2024 and December 31, 2023:
(in thousands)
December 31, 2024
December 31, 2023
Assets
Due from prime brokers
$
344,662
$
208,639
Deposits with clearing organizations
223,582
182,008
Net equity with futures commission merchants
199,771
166,808
Unsettled trades with clearing organizations
17,239
1,096
Securities failed to deliver
274,072
148,822
Commissions and fees
41,524
30,351
Total receivables from broker-dealers and clearing organizations
$
1,100,850
$
737,724
Liabilities
Due to prime brokers
$
583,914
$
780,310
Net equity with futures commission merchants (1)
(16,651)
(36,059)
Unsettled trades with clearing organizations
251,036
313,875
Securities failed to receive
94,941
104,702
Commissions and fees
5,326
4,884
Total payables to broker-dealers and clearing organizations
$
918,566
$
1,167,712
(1) The Company presents its balances, including outstanding principal balances on all broker credit facilities, on a net-by-counterparty basis within
receivables from and payables to broker-dealers and clearing organizations when the criteria for offsetting are met.
Included as a deduction from “Due from prime brokers” and “Net equity with futures commission merchants” is the
outstanding principal balance on all of the Company’s prime brokerage credit facilities (described in Note 9 “Borrowings”) of
approximately $123.0 million and $175.3 million as of December 31, 2024 and December 31, 2023, respectively. The loan
proceeds from the credit facilities are available only to meet the initial margin requirements associated with the Company’s
ordinary course futures and other trading positions, which are held in the Company’s trading accounts with an affiliate of the
respective financial institutions. The credit facilities are fully collateralized by the Company’s trading accounts and deposit
accounts with these financial institutions. “Securities failed to deliver” and “Securities failed to receive” include amounts with a
clearing organization and other broker-dealers.
8. Collateralized Transactions
The Company is permitted to sell or repledge securities received as collateral and use these securities to secure
repurchase agreements, enter into securities lending transactions or deliver these securities to counterparties or clearing
organizations to cover short positions. At December 31, 2024 and December 31, 2023, substantially all of the securities
received as collateral have been repledged.
The fair value of the collateralized transactions at December 31, 2024 and December 31, 2023 are summarized as
follows:
(in thousands)
December 31, 2024
December 31, 2023
Securities received as collateral:
Securities borrowed
$
2,222,054
$
1,665,860
Securities purchased under agreements to resell
983,753
1,512,114
$
3,205,807
$
3,177,974
In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily
margin and clearing fund requirements.
Financial instruments owned and pledged, where the counterparty has the right to repledge, at December 31, 2024 and
December 31, 2023 consisted of the following:
101
(in thousands)
December 31, 2024
December 31, 2023
Equities
$
2,269,299
$
1,222,559
Exchange traded notes
13,338
8,300
$
2,282,637
$
1,230,859
9. Borrowings
Short-term Borrowings, net
The following summarizes the Company’s short-term borrowing balances outstanding, net of related debt issuance
costs, with each described in further detail below.
December 31, 2024
(in thousands)
Borrowing
Outstanding
Deferred Debt
Issuance Cost
Short-term
Borrowings, net
Broker-dealer credit facilities
$
10,000
$
—
$
10,000
Short-term bank loans
28,541
—
28,541
$
38,541
$
—
$
38,541
December 31, 2023
(in thousands)
Borrowing
Outstanding
Deferred Debt
Issuance Cost
Short-term
Borrowings, net
Broker-dealer credit facilities
$
—
$
—
$
—
$
—
$
—
$
—
Broker-Dealer Credit Facilities
The Company is a party to two secured credit facilities with a financial institution to finance overnight securities
positions purchased as part of its ordinary course U.S. broker-dealer market making activities. One of the facilities (the
“Uncommitted Facility”) is provided on an uncommitted basis with an aggregate borrowing limit of $400 million, and is
collateralized by VAL’s trading and deposit account maintained at the financial institution. The second credit facility (the
“Committed Facility”) with the same financial institution has a borrowing limit of $650 million. The Committed Facility
consists of two borrowing bases: Borrowing Base A Loan is to be used to finance the purchase and settlement of securities;
Borrowing Base B Loan is to be used to fund margin deposit with the National Securities Clearing Corporation. Borrowing
Base A Loans are available up to $650 million and bear interest at the adjusted Secured Overnight Financing Rate (“SOFR”) or
base rate plus 1.25% per annum. Borrowing Base B Loans are subject to a sublimit of $300 million and bear interest at the
adjusted SOFR or base rate plus 2.50% per annum. A commitment fee of 0.50% per annum on the average daily unused portion
of this facility is payable quarterly in arrears.
Virtu Financial Singapore Pte. Ltd. is a party to a revolving credit facility with a financial institution (the “Overdraft
Facility”) to provide a source of short-term financing. The facility has an aggregate borrowing limit of $10 million, and bears
interest at the adjusted SOFR or base rate plus 3.5% per annum.
The following summarizes the Company’s broker-dealer credit facilities’ carrying values, net of unamortized debt
issuance costs, where applicable. These balances are included within Short-term borrowings on the Consolidated Statements of
Financial Condition.
At December 31, 2024
(in thousands)
Interest Rate
Financing
Available
Borrowing
Outstanding
Deferred Debt
Issuance Cost
Outstanding
Borrowings, net
Broker-dealer credit facilities:
Uncommitted facility (1)
5.50%
$
400,000
$
—
$
—
$
—
Committed facility (2)
5.75%
650,000
—
—
—
Overdraft facility
7.99%
10,000
10,000
—
10,000
$
1,060,000
$
10,000
$
—
$
10,000
(1) $0.3 million of deferred debt issuance costs are included within Other assets on the Consolidated Statements of Financial Condition.
(2) Interest rate for Borrowing Base A Loan and Borrowing Base B Loan under the Committed Facility was 5.75% and 7.00%, respectively. There was no balance outstanding
under Borrowing Base B Loan as of December 31, 2024.
102
At December 31, 2023
(in thousands)
Interest Rate
Financing
Available
Borrowing
Outstanding
Deferred Debt
Issuance Cost
Outstanding
Borrowings, net
Broker-dealer credit facilities:
Uncommitted facility (1)
6.50%
$
400,000
$
—
$
—
$
—
Committed facility
6.75%
650,000
—
—
—
Overdraft facility
8.88%
10,000
—
—
—
$
1,060,000
$
—
$
—
$
—
(1) $2.3 million of deferred debt issuance costs are included within Other assets on the Consolidated Statement of Financial Condition.
The following summarizes interest expense for the broker-dealer facilities. Interest expense is included within Interest
and dividends expense in the accompanying Consolidated Statements of Comprehensive Income.
Years Ended December 31,
(in thousands)
2024
2023
2022
Broker-dealer credit facilities:
Uncommitted facility
$
3,823
$
5,431
$
4,247
Committed facility
3,614
533
112
Overdraft facility
472
274
144
$
7,909
$
6,238
$
4,503
Short-Term Bank Loans
The Company’s international securities clearance and settlement activities are funded with operating cash or with
short-term bank loans in the form of overdraft facilities. At December 31, 2024, there was $28.5 million of short-term bank
loans associated with international settlement activities outstanding under these facilities at a weighted average interest rate of
approximately 5.0%. At December 31, 2023, there was no balance associated with international settlement activities
outstanding under these facilities. Outstanding short-term bank loan balances are included within Short-term borrowings on the
Consolidated Statements of Financial Condition.
In November 2024, Virtu Financial Singapore Pte. Ltd. entered into an agreement with a financial institution for a
short-term bank loan with a total capacity of $50.0 million. At December 31, 2024, there was no balance outstanding under this
short-term bank loan.
Prime Brokerage Credit Facilities
The Company maintains short-term credit facilities with various prime brokers and other financial institutions from
which it receives execution or clearing services. The proceeds of these facilities are used to meet margin requirements
associated with the products traded by the Company in the ordinary course, and amounts borrowed are collateralized by the
Company’s trading accounts with the applicable financial institution.
At December 31, 2024
(in thousands)
Weighted Average
Interest Rate
Financing
Available
Borrowing
Outstanding
Prime Brokerage Credit Facilities:
Prime brokerage credit facilities (1)
6.69%
$
623,168
$
122,953
$
623,168
$
122,953
At December 31, 2023
(in thousands)
Weighted Average
Interest Rate
Financing
Available
Borrowing
Outstanding
Prime Brokerage Credit Facilities:
Prime brokerage credit facilities (1)
7.96%
$
599,180
$
175,256
$
599,180
$
175,256
(1) Outstanding borrowings are included with Receivables from/Payables to broker-dealers and clearing organizations within the Consolidated Statements of
Financial Condition.
103
Interest expense in relation to the facilities was $9.7 million, $13.1 million, and $9.3 million for the years ended
December 31, 2024, 2023, and 2022, respectively.
Long-Term Borrowings
The following summarizes the Company’s long-term borrowings, net of unamortized discount and debt issuance costs,
where applicable:
At December 31, 2024
(in thousands)
Maturity
Date
Interest
Rate
Outstanding
Principal
Discount
Deferred Debt
Issuance Cost
Outstanding
Borrowings, net
Long-term borrowings:
First Lien Term B-1 Loan Facility
June 2031
7.11%
$
1,245,000
$
(2,876) $
(15,242) $
1,226,882
Senior Secured First Lien Notes
June 2031
7.50%
500,000
—
(8,680)
491,320
SBI bonds
January 2026
5.00%
22,265
—
—
22,265
$
1,767,265
$
(2,876) $
(23,922) $
1,740,467
At December 31, 2023
(in thousands)
Maturity
Date
Interest
Rate
Outstanding
Principal
Discount
Deferred Debt
Issuance Cost
Outstanding
Borrowings, net
Long-term borrowings:
First Lien Term Loan Facility
January 2029
8.46%
$
1,727,000
$
(3,107) $
(21,504) $
1,702,389
SBI bonds
January 2026
5.00%
24,816
—
—
24,816
$
1,751,816
$
(3,107) $
(21,504) $
1,727,205
Credit Agreement
On January 13, 2022 (the “Credit Agreement Closing Date”), Virtu Financial, VFH Parent LLC, a Delaware limited
liability company and a subsidiary of Virtu Financial (“VFH”), entered into a credit agreement with the lenders party thereto,
JPMorgan Chase Bank, N.A. as administrative agent and JPMorgan Chase Bank, N.A., Goldman Sachs Bank USA, RBC
Capital Markets, Barclays Bank plc, Jefferies Finance LLC, BMO Capital Markets Corp., and CIBC World Markets Corp., as
joint lead arrangers and bookrunners (the “Original Credit Agreement”). The Original Credit Agreement provides (i) a senior
secured first lien term loan in an aggregate principal amount of $1,800.0 million, drawn in its entirety on the Original Credit
Agreement Closing Date, the proceeds of which were used by VFH to repay all amounts outstanding under the previous credit
agreement entered into in relation to the ITG Acquisition, to pay fees and expenses in connection therewith, to fund share
repurchases under the Company’s repurchase program, and for general corporate purposes, and (ii) a $250.0 million senior
secured first lien revolving facility to VFH, with a $20.0 million letter of credit subfacility and a $20.0 million swingline
subfacility.
The term loan borrowings and revolver borrowings under the Original Credit Agreement bear interest at a per annum
rate equal to, at the Company’s election, either (i) the greatest of (a) the prime rate in effect, (b) the greater of (1) the federal
funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c) an adjusted term SOFR rate with an
interest period of one month plus 1.00% and (d)(1) in the case of term loan borrowings, 1.50% and (2) in the case of revolver
borrowings, 1.00%, plus, (x) in the case of term loan borrowings, 2.00% and (y) in the case of revolver borrowings, 1.50%, or
(ii) the greater of (a) an adjusted term SOFR rate for the interest period in effect and (b) (1) in the case of term loan borrowings,
0.50% and (2) in the case of revolver borrowings, 0.00%, plus, (x) in the case of term loan borrowings, 3.00% and (y) in the
case of revolver borrowings, 2.50%. In addition, a commitment fee accrues at a rate of 0.50% per annum on the average daily
unused amount of the revolving facility, with step-downs to 0.375% and 0.25% per annum based on VFH’s first lien leverage
ratio, and is payable quarterly in arrears.
The term loans amortize in annual installments equal to 1.0% of the original aggregate principal amount of the term
loans and the Company repaid $18.0 million on January 13, 2023. On December 12, 2023, the Company made a voluntary
prepayment of $55.0 million, and the payment is applied toward subsequent annual amortization installments.
In October 2019, the Company entered into a five-year $525.0 million floating-to-fixed interest rate swap agreement.
In January 2020, the Company also entered into a five-year $1,000.0 million floating-to-fixed interest rate swap agreement.
These two interest rate swaps met the criteria to be considered and were designated qualifying cash flow hedges under ASC 815
in the first quarter of 2020, and they effectively fixed interest payment obligations on $525.0 million and $1,000 million of
principal under the previous first lien term loan facility in relation to the ITG Acquisition at rates of 4.3% and 4.4% through
104
September 2024 and January 2025, respectively. In April 2021, each of the swap agreements described above was novated to
another counterparty and amended in connection with such novation. The amendments included certain changes to collateral
posting obligations, and also had the effect of increasing the effective fixed interest payment obligations to rates of 4.5%, with
respect to the earlier maturing swap arrangement, and 4.6% with respect to the later maturing swap arrangement. In January
2022, in order to align the swap agreements with the Original Credit Agreement, the Company amended each of the swap
agreements to align the floating rate term of such swap agreements to SOFR. The effective fixed interest payment obligations
remained at 4.5%, with respect to the earlier maturing swap arrangement, and 4.6% with respect to the later maturing swap
arrangement.
In December 2023, the Company terminated the two interest rate swap arrangements and received $55.8 million in
proceeds from the counterparty. The Company therefore dedesignated those cash flow hedges under ASC 815, and the amounts
in AOCI related to the terminated swaps are amortized through interest expense. The Company simultaneously entered into a
two-year $1,525.0 million floating-to-fixed interest rate swap agreement with the same counterparty (the “December 2023
Swap”). The December 2023 Swap met the criteria to be considered and was designated as a qualifying cash flow hedge under
ASC 815 as of December 2023, and it effectively fixed interest payment obligations on $1,525.0 million of principal under the
First Lien Term Loan Facility at a rate of 7.5% through November 2025, based on the interest rates set forth in the Original
Credit Agreement.
On June 21, 2024 (the “Amendment Effective Date”), the Company entered into Amendment No. 1 to the Original
Credit Agreement (the “Credit Agreement”) and completed the issuance of the Notes (as defined below). Pursuant to the Credit
Agreement, $1,245.0 million in aggregate principal amount of Senior Secured First Lien Term B-1 Loans due 2031 (the “New
Term Loans”) were issued, the proceeds of which were used, along with the proceeds of the Notes, to repay in full all term
loans previously outstanding under the Original Credit Agreement. Additionally, the Credit Agreement provides an increase in
its senior secured first lien revolving credit facility from $250.0 million to $300.0 million and an extension of the maturity
thereof to three years after the Amendment Effective Date.
The New Term Loans will bear interest, at the Company’s election, at either (i) the greatest of (a) the prime rate in
effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c)
term SOFR for a borrowing with an interest period of one month plus 1.00% and (d) 1.00%, plus, in each case, 1.75%, or (ii)
the greater of (x) term SOFR for the interest period in effect and (y) 0%, plus, in each case, 2.75%. The New Term Loans will
mature on the seventh anniversary of the Amendment Effective Date and amortize in annual installments equal to 1.0% of the
original aggregate principal amount of the New Term Loans. The New Term Loans are also subject to contingent principal
payments based on excess cash flow and certain other triggering events.
The revolving facility under the Credit Agreement is subject to a springing net first lien leverage ratio test which may
spring into effect as of the last day of a fiscal quarter if usage of the aggregate revolving commitments exceeds a specified level
as of such date. VFH is also subject to contingent principal prepayments based on excess cash flow and certain other triggering
events. Borrowings under the Credit Agreement are guaranteed by Virtu Financial and VFH’s material non-regulated domestic
restricted subsidiaries and secured by substantially all of the assets of VFH and the guarantors, in each case, subject to certain
exceptions.
The Credit Agreement contains certain customary covenants and events of default, including relating to a change of
control. If an event of default occurs and is continuing, the lenders under the Credit Agreement will be entitled to take various
actions, including the acceleration of amounts outstanding under the Credit Agreement and all actions permitted to be taken by
a secured creditor in respect of the collateral securing the obligations under the Credit Agreement.
As of December 31, 2024, $1,245.0 million was outstanding under the term loans, and there were no amounts
outstanding under the first lien revolving facility.
In connection with its entry into the Credit Agreement and the associated reduction in term loan balance, the Company
partially terminated the December 2023 Swap, reducing the notional amount thereof from $1,525.0 million to $1,075.0 million
and received $2.0 million in proceeds from the counterparty. The cash flow hedge was proportionally dedesignated under ASC
815 as of June 21, 2024. As a result of the partial dedesignation, we recognized a gain of $5.7 million in Other Income. The
current interest rate swap effectively fixed interest payment obligations on the $1,075.0 million of principal of the New Term
Loans at a rate of 7.17% through November 2025, based on the interest rates set forth in the Credit Agreement.
Senior Secured First Lien Notes
105
On June 21, 2024, VFH and Valor Co-Issuer, Inc., a subsidiary of Virtu Financial, (the “Co-Issuer”) completed the
offering of $500.0 million aggregate principal amount of 7.50% senior secured first lien notes due 2031 (the “Notes”). The
Notes were issued under an Indenture, dated as of June 21, 2024 (the “Indenture”), among the VFH, the Co-Issuer, Virtu
Financial and the subsidiary guarantors party thereto, and U.S. Bank Trust Company, National Association, as the trustee and
collateral agent. The Notes mature on June 15, 2031. Interest on the Notes accrues at 7.50% per annum, payable every six
months through maturity on each June 15 and December 15, beginning on December 15, 2024. We refer to VFH and the Co-
Issuer together as, the “Issuers.”
The Notes and the related guarantees are secured by first-priority perfected liens on substantially all of the Issuers’ and
guarantors’ existing and future assets, subject to certain exceptions, including all material personal property, a pledge of the
capital stock of the Issuers, the guarantors (other than Virtu Financial) and the direct subsidiaries of the Issuers and the
guarantors and 100% of the non-voting capital stock and up to 65.0% of the voting capital stock of any now-owned or later
acquired foreign subsidiaries that are directly owned by the Issuers or any of the guarantors, which assets also secure
obligations under the Credit Agreement on a first-priority basis.
The Indenture imposes certain limitations on our ability to (i) incur or guarantee additional indebtedness or issue
preferred stock; (ii) pay dividends, make certain investments and make repayments on indebtedness that is subordinated in right
of payment to the Notes and make other “restricted payments”; (iii) create liens on their assets to secure debt; (iv) enter into
transactions with affiliates; (v) merge, consolidate or amalgamate with another company; (vi) transfer and sell assets; and (vii)
permit restrictions on the payment of dividends by Virtu Financial’s subsidiaries. The Indenture also contains customary events
of default, including, among others, payment defaults related to the failure to pay principal or interest on Notes, covenant
defaults, final maturity default or cross-acceleration with respect to material indebtedness and certain bankruptcy events.
Prior to June 15, 2027, we may redeem some or all of the Notes at a redemption price equal to 100% of the principal
amount plus accrued and unpaid interest, if any, to (but not including) the date of redemption, plus an applicable “make whole”
premium.
Prior to June 15, 2027, we may also redeem up to 40% of the aggregate principal amount of the Notes with the net
cash proceeds from certain equity offerings at a redemption price equal to 107.500% of the principal amount thereof, plus
accrued and unpaid interest, if any, to (but not including) the date of redemption.
Prior to June 15, 2027, we may also, on one or more occasions, redeem during each successive twelve-month period
following June 21, 2024 up to 10% of the aggregate original principal amount of notes, at a redemption price equal to 103% of
the principal amount of notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.
On or after June 15, 2027, we may redeem some or all of the Notes, at the following redemption prices (expressed as
percentages of principal amount), plus accrued and unpaid interest to (but not including) the date of redemption, if redeemed
during the 12-month period beginning on June 15 of the years indicated below:
Period
Percentage
2027
103.750%
2028
101.875%
2029 and thereafter
100.000%
Upon the occurrence of specified change of control events as defined in the Indenture, we must offer to repurchase the
outstanding Notes at 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to (but excluding) the
purchase date.
106
SBI Bonds
On July 25, 2016, VFH issued Japanese Yen Bonds (collectively the “SBI Bonds”) in the aggregate principal amount
of ¥3.5 billion ($33.1 million at issuance date) to SBI Life Insurance Co., Ltd. and SBI Insurance Co., Ltd. The proceeds from
the SBI Bonds were used to partially fund the investment in Japannext Co., Ltd. (as described in Note 10 “Financial Assets and
Liabilities”). The SBI Bonds are guaranteed by Virtu Financial. The SBI Bonds are subject to fluctuations on the Japanese Yen
currency rates relative to the Company’s reporting currency (U.S. Dollar) with the changes reflected in Other, net in the
Consolidated Statements of Comprehensive Income. In December 2022, the maturity of the SBI Bonds was extended to 2026.
The principal balance was ¥3.5 billion ($22.3 million) as of December 31, 2024 and ¥3.5 billion ($24.8 million) as of December
31, 2023. The Company had gains of $2.6 million, $1.9 million, and $4.0 million during the years ended December 31, 2024,
2023, and 2022, respectively, due to changes in foreign currency rates.
As of December 31, 2024, aggregate future required minimum principal payments based on the terms of the long-term
borrowings were as follows:
(in thousands)
2025
12,450
2026
34,715
2027
12,450
2028
12,450
2029
12,450
Thereafter
1,682,750
Total principal of long-term borrowings
$
1,767,265
10. Financial Assets and Liabilities
Financial Instruments Measured at Fair Value
The fair value of equities, options, on-the-run U.S. government obligations, exchange traded notes and digital assets is
estimated using recently executed transactions and market price quotations in active markets and are categorized as Level 1
with the exception of inactively traded equities and certain other financial instruments, which are categorized as Level 2. The
Company’s corporate bonds, derivative contracts, other U.S. and non-U.S. government obligations and receivables and
payables linked to digital assets have been categorized as Level 2. Fair value of the Company’s derivative contracts is based on
the indicative prices obtained from a number of banks and broker-dealers, as well as management’s own analyses. The
indicative prices have been independently validated through the Company’s risk management systems, which are designed to
check prices with information independently obtained from exchanges and venues where such financial instruments are listed or
to compare prices of similar instruments with similar maturities for listed financial futures in foreign exchange.
The Company prices certain financial instruments held for trading at fair value based on theoretical prices, which can
differ from quoted market prices. The theoretical prices reflect price adjustments primarily caused by the fact that the Company
continuously prices its financial instruments based on all available information. This information includes prices for identical
and near-identical positions, as well as the prices for securities underlying the Company’s positions, on other exchanges that are
open after the exchange on which the financial instruments is traded closes. The Company validates that all price adjustments
can be substantiated with market inputs and checks the theoretical prices independently. Consequently, such financial
instruments are classified as Level 2.
107
Fair value measurements for those items measured on a recurring basis are summarized below as of December 31,
2024:
December 31, 2024
(in thousands)
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Counterparty
and Cash
Collateral
Netting
Total Fair
Value
Assets
Financial instruments owned, at fair value:
Equity securities
$
686,827
$
2,471,450
$
—
$
—
$ 3,158,277
U.S. and Non-U.S. government obligations
348,761
908,625
—
—
1,257,386
Corporate Bonds
—
967,377
—
—
967,377
Exchange traded notes
885
40,602
—
—
41,487
Currency forwards
—
716,970
—
(676,905)
40,065
Options
55,423
—
—
—
55,423
$
1,091,896
$
5,105,024
$
—
$
(676,905) $ 5,520,015
Financial instruments owned, pledged as collateral:
Equity securities
$
1,639,404
$
629,895
$
—
$
—
$ 2,269,299
Exchange traded notes
—
13,338
—
—
13,338
$
1,639,404
$
643,233
$
—
$
—
$ 2,282,637
Other Assets
Equity investment
$
—
$
—
$
75,843
$
—
$
75,843
Digital assets
81,671
—
—
—
81,671
Exchange stock
812
—
—
—
812
$
82,483
$
—
$
75,843
$
—
$
158,326
Receivables from broker dealers and clearing organizations:
Receivables linked to digital assets
51,595
51,595
$
—
$
51,595
$
—
$
—
$
51,595
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equity securities
$
1,837,195
$
1,854,883
$
—
$
—
$ 3,692,078
U.S. and Non-U.S. government obligations
107,045
1,313,955
—
—
1,421,000
Corporate Bonds
—
1,249,413
—
—
1,249,413
Exchange traded notes
15
73,225
—
—
73,240
Currency forwards
—
681,878
—
(681,878)
—
Options
5,240
—
—
—
5,240
$
1,949,495
$
5,173,354
$
—
$
(681,878) $ 6,440,971
Payables to broker dealers and clearing organizations:
Interest rate swap
$
—
$
2,572
$
—
$
—
$
2,572
Payables linked to digital assets
—
134,164
—
—
134,164
$
—
$
136,736
$
—
$
—
$
136,736
108
Fair value measurements for those items measured on a recurring basis are summarized below as of December 31,
2023:
December 31, 2023
(in thousands)
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Counterparty
and Cash
Collateral
Netting
Total Fair
Value
Assets
Financial instruments owned, at fair value:
Equity securities
$
710,699
$
1,844,106
$
—
$
—
$ 2,554,805
U.S. and Non-U.S. government obligations
521,542
1,775,177
—
—
2,296,719
Corporate Bonds
—
1,232,097
—
—
1,232,097
Exchange traded notes
10
18,055
—
—
18,065
Currency forwards
—
377,279
—
(354,698)
22,581
Options
3,485
—
—
—
3,485
$
1,235,736
$
5,246,714
$
—
$
(354,698) $ 6,127,752
Financial instruments owned, pledged as collateral:
Equity securities
$
871,237
$
351,322
$
—
$
—
$ 1,222,559
Exchange traded notes
3
8,297
—
—
8,300
$
871,240
$
359,619
$
—
$
—
$ 1,230,859
Other Assets
Equity investment
$
—
$
—
$
81,805
$
—
$
81,805
Exchange stock
2,716
—
—
—
2,716
$
2,716
$
—
$
81,805
$
—
$
84,521
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equity securities
$
1,447,726
$
1,165,091
$
—
$
—
$ 2,612,817
U.S. and Non-U.S. government obligations
181,393
1,891,556
—
—
2,072,949
Corporate Bonds
—
1,358,522
—
—
1,358,522
Exchange traded notes
—
21,104
—
—
21,104
Currency forwards
—
339,085
—
(336,311)
2,774
Options
3,186
—
—
—
3,186
$
1,632,305
$
4,775,358
$
—
$
(336,311) $ 6,071,352
Payables to broker dealers and clearing organizations:
Interest rate swap
$
—
$
7,661
$
—
$
—
$
7,661
$
—
$
7,661
$
—
$
—
$
7,661
JNX Investment
The Company has a minority investment (the “JNX Investment”) in Japannext Co., Ltd. (“JNX”), formerly known as
SBI Japannext Co., Ltd., a proprietary trading system based in Tokyo. In connection with the JNX Investment, the Company
issued the SBI Bonds (as described in Note 9 “Borrowings”) and used the proceeds to partially finance the transaction. The
JNX Investment is included within Level 3 of the fair value hierarchy. As of December 31, 2024 and December 31, 2023, the
fair value of the JNX Investment was determined using a weighted average of valuations using 1) the discounted cash flow
method, an income approach; 2) a market approach based on average enterprise value/EBITDA ratios of comparable
companies; and to a lesser extent 3) a transaction approach based on transaction values of comparable companies. The fair
value measurement is highly sensitive to significant changes in the unobservable inputs, and significant increases (decreases) in
discount rate or decreases (increases) in enterprise value/EBITDA multiples would result in a significantly lower (higher) fair
value measurement.
109
The table below presents information on the valuation techniques, significant unobservable inputs and their ranges for
the JNX Investment:
December 31, 2024
(in thousands)
Fair Value
Valuation Technique
Significant
Unobservable Input
Range
Weighted
Average
Equity investment
$
75,843
Discounted cash flow
Estimated revenue
growth
5.0% - 5.0%
5.0 %
Discount rate
16.4% - 16.4%
16.4 %
Market
Future enterprise
value/ EBIDTA ratio
7.5x - 18.0x
13.2x
December 31, 2023
(in thousands)
Fair Value
Valuation
Technique
Significant
Unobservable Input
Range
Weighted
Average
Equity investment
$
81,805
Discounted cash flow
Estimated revenue
growth
5.0% - 6.8%
5.8 %
Discount rate
15.6% - 15.6%
15.6 %
Market
Future enterprise
value/ EBIDTA ratio
8.7x - 17.8x
12.9x
Changes in the fair value of the JNX Investment are included within Other, net in the Consolidated Statements of
Comprehensive Income.
The following presents the changes in the Company’s Level 3 financial instruments measured at fair value on a
recurring basis:
Year Ended December 31, 2024
(in thousands)
Balance at
December 31,
2023
Purchases
Total
Realized and
Unrealized
Gains /
(Losses) (1)
Net Transfers
into (out of)
Level 3
Settlement
Balance at
December 31,
2024
Change in Net
Unrealized
Gains /
(Losses) on
Investments
still held at
December 31,
2024
Assets
Other assets:
Equity investment
$
81,805
$
—
$
(5,962) $
—
$
—
$
75,843
$
(5,962)
Total
$
81,805
$
—
$
(5,962) $
—
$
—
$
75,843
$
(5,962)
(1) Total realized and unrealized gains/(losses) includes gains and losses due to fluctuations in currency rates as well as gains and losses recognized on
changes in the fair value of the JNX Investment.
Year Ended December 31, 2023
(in thousands)
Balance at
December 31,
2022
Purchases
Total
Realized and
Unrealized
Gains /
(Losses) (1)
Net Transfers
into (out of)
Level 3
Settlement
Balance at
December 31,
2023
Change in Net
Unrealized
Gains /
(Losses) on
Investments
still held at
December 31,
2023
Assets
Other assets:
Equity investment
$
76,613
$
—
$
5,192
$
—
$
—
$
81,805
$
5,192
Total
$
76,613
$
—
$
5,192
$
—
$
—
$
81,805
$
5,192
(1) Total realized and unrealized gains/(losses) includes gains and losses due to fluctuations in currency rates as well as gains and losses recognized on
changes in the fair value of the JNX Investment.
110
Financial Instruments Not Measured at Fair Value
The table below presents the carrying value, fair value and fair value hierarchy category of certain financial
instruments that are not measured at fair value on the Consolidated Statements of Financial Condition. The table below
excludes non-financial assets and liabilities. The carrying value of financial instruments not measured at fair value categorized
in the fair value hierarchy as Level 1 and Level 2 approximates fair value due to the relatively short-term nature of the
underlying assets. The fair value of the Company’s long-term borrowings is based on quoted prices from the market for similar
instruments, and is categorized as Level 2 in the fair value hierarchy.
The table below summarizes financial assets and liabilities not carried at fair value on a recurring basis as of December
31, 2024:
December 31, 2024
Carrying
Value
Quoted Prices
in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
(in thousands)
Fair Value
(Level 1)
(Level 2)
(Level 3)
Assets
Cash and cash equivalents
$
872,513
$
872,513
$
872,513
$
—
$
—
Cash restricted or segregated under regulations and other
41,478
41,478
41,478
—
—
Securities borrowed
2,294,529
2,294,529
—
2,294,529
—
Securities purchased under agreements to resell
983,941
983,941
—
983,941
—
Receivables from broker-dealers and clearing organizations
1,049,255
1,049,255
—
1,049,255
—
Receivables from customers
149,804
149,804
—
149,804
—
Other assets (1)
31,726
31,726
11,121
20,605
—
Total Assets
$
5,423,246
$
5,423,246
$
925,112
$
4,498,134
$
—
Liabilities
Short-term borrowings
$
38,541
$
38,541
$
—
$
38,541
$
—
Long-term borrowings
1,740,467
1,788,719
—
1,788,719
—
Securities loaned
2,431,878
2,431,878
—
2,431,878
—
Securities sold under agreements to repurchase
1,271,788
1,271,788
—
1,271,788
—
Payables to broker-dealers and clearing organizations
781,830
781,830
—
781,830
—
Payables to customers
46,112
46,112
—
46,112
—
Other liabilities (2)
26,114
26,114
—
26,114
—
Total Liabilities
$
6,336,730
$
6,384,982
$
—
$
6,384,982
$
—
(1) Includes cash collateral and deposits, and interest and dividends receivables.
(2) Includes deposits, interest and dividends payable.
111
The table below summarizes financial assets and liabilities not carried at fair value on a recurring basis as of December
31, 2023:
December 31, 2023
Carrying
Value
Quoted Prices
in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
(in thousands)
Fair Value
(Level 1)
(Level 2)
(Level 3)
Assets
Cash and cash equivalents
$
820,436
$
820,436
$
820,436
$
—
$
—
Cash restricted or segregated under regulations and other
35,024
35,024
35,024
—
—
Securities borrowed
1,722,440
1,722,440
—
1,722,440
—
Securities purchased under agreements to resell
1,512,114
1,512,114
—
1,512,114
—
Receivables from broker-dealers and clearing organizations
737,724
737,724
—
737,724
—
Receivables from customers
106,245
106,245
—
106,245
—
Other assets (1)
31,022
31,022
10,444
20,578
—
Total Assets
$
4,965,005
$
4,965,005
$
865,904
$
4,099,101
$
—
Liabilities
Short-term borrowings
$
—
$
—
$
—
$
—
$
—
Long-term borrowings
1,727,205
1,758,292
—
1,758,292
—
Securities loaned
1,329,446
1,329,446
—
1,329,446
—
Securities sold under agreements to repurchase
1,795,994
1,795,994
—
1,795,994
—
Payables to broker-dealers and clearing organizations
1,160,051
1,160,051
—
1,160,051
—
Payables to customers
23,229
23,229
—
23,229
—
Other liabilities (2)
19,300
19,300
—
19,300
—
Total Liabilities
$
6,055,225
$
6,086,312
$
—
$
6,086,312
$
—
(1) Includes cash collateral and deposits, and interest and dividends receivables.
(2) Includes deposits, interest and dividends payable.
Offsetting of Financial Assets and Liabilities
The Company does not net securities borrowed and securities loaned, or securities purchased under agreements to
resell and securities sold under agreements to repurchase. These financial instruments are presented on a gross basis in the
Consolidated Statements of Financial Condition. In the tables below, the amounts of financial instruments owned that are not
offset in the Consolidated Statements of Financial Condition, but could be netted against financial liabilities with specific
counterparties under legally enforceable master netting agreements in the event of default, are presented to provide financial
statement readers with the Company’s estimate of its net exposure to counterparties for these financial instruments.
112
The following tables set forth the gross and net presentation of certain financial assets and financial liabilities as of
December 31, 2024 and December 31, 2023:
December 31, 2024
Gross Amounts
of Recognized
Assets
Amounts Offset in
the Consolidated
Statements of
Financial
Condition
Net Amounts of
Assets Presented
in the
Consolidated
Statements of
Financial
Condition
Amounts Not Offset in the
Consolidated Statements of
Financial Condition
(in thousands)
Financial
Instrument
Collateral
Counterparty
Netting/ Cash
Collateral
Net Amount
Offsetting of Financial Assets:
Securities borrowed
$
2,294,529
$
—
$
2,294,529
$
(2,222,054) $
(39,309) $
33,166
Securities purchased under
agreements to resell
983,941
—
983,941
(983,753)
—
188
Trading assets, at fair value:
Currency forwards
716,970
(676,905)
40,065
—
—
40,065
Options
55,423
—
55,423
—
(55,423)
—
Total
$
4,050,863
$
(676,905) $
3,373,958
$
(3,205,807) $
(94,732) $
73,419
Gross Amounts
of Recognized
Liabilities
Amounts Offset in
the Consolidated
Statements of
Financial
Condition
Net Amounts of
Liabilities
Presented in the
Consolidated
Statement of
Financial
Condition
Amounts Not Offset in the
Consolidated Statements of
Financial Condition
(in thousands)
Financial
Instrument
Collateral
Counterparty
Netting/ Cash
Collateral
Net Amount
Offsetting of Financial Liabilities:
Securities loaned
$
2,431,878
$
—
$
2,431,878
$
(2,375,372) $
(48,545) $
7,961
Securities sold under agreements
to repurchase
1,271,788
—
1,271,788
(1,271,573)
—
215
Payable to broker-dealers and
clearing organizations:
Interest rate swaps
2,572
—
2,572
—
—
2,572
Trading liabilities, at fair value:
Currency forwards
681,878
(681,878)
—
—
—
—
Options
5,240
—
5,240
—
(5,213)
27
Total
$
4,393,356
$
(681,878) $
3,711,478
$
(3,646,945) $
(53,758) $
10,775
December 31, 2023
Gross Amounts
of Recognized
Assets
Amounts Offset in
the Consolidated
Statements of
Financial
Condition
Net Amounts of
Assets Presented
in the
Consolidated
Statements of
Financial
Condition
Amounts Not Offset in the
Consolidated Statements of
Financial Condition
(in thousands)
Financial
Instrument
Collateral
Counterparty
Netting/ Cash
Collateral
Net Amount
Offsetting of Financial Assets:
Securities borrowed
$
1,722,440
$
—
$
1,722,440
$
(1,665,860) $
(27,538) $
29,042
Securities purchased under
agreements to resell
1,512,114
—
1,512,114
(1,512,114)
—
—
Trading assets, at fair value:
Currency forwards
377,279
(354,698)
22,581
—
—
22,581
Options
3,485
—
3,485
—
(2,914)
571
Total
$
3,615,318
$
(354,698) $
3,260,620
$
(3,177,974) $
(30,452) $
52,194
113
Gross Amounts
of Recognized
Liabilities
Amounts Offset in
the Consolidated
Statements of
Financial
Condition
Net Amounts of
Liabilities
Presented in the
Consolidated
Statement of
Financial
Condition
Amounts Not Offset in the
Consolidated Statements of
Financial Condition
(in thousands)
Financial
Instrument
Collateral
Counterparty
Netting/ Cash
Collateral
Net Amount
Offsetting of Financial Liabilities:
Securities loaned
$
1,329,446
$
—
$
1,329,446
$
(1,291,376) $
(31,509) $
6,561
Securities sold under agreements
to repurchase
1,795,994
—
1,795,994
(1,795,994)
—
—
Payables to broker-dealers and
clearing organizations:
Interest rate swaps
7,661
—
7,661
—
—
7,661
Trading liabilities, at fair value:
Currency forwards
339,085
(336,311)
2,774
—
—
2,774
Options
3,186
—
3,186
—
(2,914)
272
Total
$
3,475,372
$
(336,311) $
3,139,061
$
(3,087,370) $
(34,423) $
17,268
The following table presents gross obligations for securities sold under agreements to repurchase and for securities
lending transactions by remaining contractual maturity and the class of collateral pledged as of December 31, 2024 and
December 31, 2023:
December 31, 2024
Remaining Contractual Maturity
(in thousands)
Overnight and
Continuous
Less than 30
days
30 - 60
days
61 - 90
Days
Greater than
90
days
Total
Securities sold under agreements to repurchase:
Equity securities
$
—
$
190,000
$
185,000
$
75,000
$
—
$
450,000
U.S. and Non-U.S. government obligations
821,788
—
—
—
—
821,788
Total
$
821,788
$
190,000
$
185,000
$
75,000
$
—
$
1,271,788
Securities loaned:
Equity securities
$
2,431,878
$
—
$
—
$
—
$
—
$
2,431,878
Total
$
2,431,878
$
—
$
—
$
—
$
—
$
2,431,878
December 31, 2023
Remaining Contractual Maturity
(in thousands)
Overnight and
Continuous
Less than 30
days
30 - 60
days
61 - 90
Days
Greater than
90
days
Total
Securities sold under agreements to repurchase:
Equity securities
$
—
$
140,000
$
185,000
$
75,000
$
—
$
400,000
U.S. and Non-U.S. government obligations
1,395,994
—
—
—
—
1,395,994
Total
$
1,395,994
$
140,000
$
185,000
$
75,000
$
—
$
1,795,994
Securities loaned:
Equity securities
$
1,329,446
$
—
$
—
$
—
$
—
$
1,329,446
Total
$
1,329,446
$
—
$
—
$
—
$
—
$
1,329,446
114
11. Derivative Instruments
The fair value of the Company’s derivative instruments on a gross basis consisted of the following at December 31,
2024 and December 31, 2023:
(in thousands)
December 31, 2024
December 31, 2023
Derivatives Assets
Financial Statement Location
Fair Value
Notional
Fair Value
Notional
Derivative instruments not
designated as hedging instruments:
Equities futures
Receivables from broker-dealers and
clearing organizations
$
(541) $
1,069,167
$
(741) $
1,944,872
Commodity futures
Receivables from broker-dealers and
clearing organizations
5,096
5,610,161
(7,017)
6,489,328
Currency futures
Receivables from broker-dealers and
clearing organizations
(6,093)
5,211,677
707
6,964,937
Fixed income futures
Receivables from broker-dealers and
clearing organizations
(3,890)
110,748
1
5,989
Options
Financial instruments owned
55,423
808,189
3,485
1,167,643
Currency forwards
Financial instruments owned
716,970
42,202,047
377,279
33,579,641
Derivatives Liabilities
Financial Statement Location
Fair Value
Notional
Fair Value
Notional
Derivative instruments not
designated as hedging instruments:
Equities futures
Payables to broker-dealers and clearing
organizations
$
527
$
1,774,043
$
(558) $
501,978
Commodity futures
Payables to broker-dealers and clearing
organizations
(277)
56,331
(4)
25,462
Currency futures
Payables to broker-dealers and clearing
organizations
7,382
2,232,543
12,031
1,518,087
Fixed income futures
Payables to broker-dealers and clearing
organizations
(74)
21,077
165
82,044
Options
Financial instruments sold, not yet
purchased
5,240
820,023
3,186
1,173,351
Currency forwards
Financial instruments sold, not yet
purchased
681,878
42,184,501
339,085
33,560,544
Derivative instruments designated as
hedging instruments:
Interest rate swaps
Payables to broker-dealers and clearing
organizations
2,572
1,075,000
7,661
1,525,000
Amounts included in receivables from and payables to broker-dealers and clearing organizations represent net
variation margin on long and short futures contracts as well as amounts receivable or payable on interest rate swaps.
The following table summarizes the net gain (loss) from derivative instruments not designated as hedging instruments
under ASC 815, which are recorded in total revenues, and from those designated as hedging instruments under ASC 815, which
are initially recorded in other comprehensive income in the accompanying Consolidated Statements of Comprehensive Income
for the years ended December 31, 2024, 2023, and 2022.
115
Years Ended December 31,
(in thousands)
Financial Statements Location
2024
2023
2022
Derivative instruments not
designated as hedging instruments:
Futures
Trading income, net
$
218,016
$
297,345
$
257,258
Currency forwards
Trading income, net
(93,647)
(150,071)
12,492
Options
Trading income, net
100,174
21,224
30,339
Interest rate swap on term loan (1)
Other, net
5,686
(1,720)
(1,879)
Terminated interest rate swaps (2)
Financing interest expense on
long-term borrowings
(39,782)
(3,994)
—
$
190,447
$
162,784
$
298,210
Derivative instruments designated as
hedging instruments:
Interest rate swaps (1)
Other comprehensive income
$
5,842
$
(35,990) $
106,329
$
5,842
$
(35,990) $
106,329
(1) The Company entered into a two-year $1,525 million floating-to-fixed interest rate agreement in December 2023 (the “December 2023 Swap”). The two-
year interest rate swap met the criteria to be considered as a qualifying cash flow hedge under ASC 815 as of December 2023, and the mark-to-market gains
(losses) on the instrument was deferred within Other comprehensive income on the Consolidated Statements of Comprehensive Income. In June 2024, the
Company partially terminated and dedesignated a portion of our ongoing December 2023 Swap to an updated notional of $1,075 million, and recorded a gain of
$5.7 million in Other, net. See Note 9 “Borrowings” for further details.
(2) The Company records the amortization of AOCI balances related to its previously terminated interest rate swaps in Financing interest expense on long-term
borrowings on the Consolidated Statements of Comprehensive Income. See Note 9 “Borrowings” for further details on the terminated swaps.
12. Variable Interest Entities
A variable interest entity (“VIE”) is an entity that lacks one or more of the following characteristics: (i) the total equity
investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the
power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the
losses of the entity and the right to receive the residual returns of the entity.
The Company will be considered to have a controlling financial interest and will consolidate a VIE if it has both (i) the
power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation
to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The Company has an interest in a joint venture (“JV”) that builds and maintains communication networks and related
assets globally. The Company and its JV partners each pay monthly fees for the use of the communication networks in
connection with their respective trading activities, and the JV may sell excess bandwidth that is not utilized by the JV members
to third parties. As of December 31, 2024, the Company held a noncontrolling interest of 50.0% in the JV.
The Company previously held a noncontrolling interest of 12.5% in another JV that also builds and maintains
communication networks and related assets and followed a similar fee arrangement. As of September 1, 2024, the Company
had disposed of its interest in this JV.
The Company has an interest in a JV that offers derivatives trading technology and execution services to broker-
dealers, professional traders and select hedge funds. As of December 31, 2024, the Company held approximately a 9.8%
noncontrolling interest in this JV.
The Company has an interest in a JV that operates a member-owned equities exchange with the goal of increasing
competition and transparency, while reducing fixed costs and simplifying execution of equity trading in the U.S. As of
December 31, 2024, the Company held approximately a 13.1% noncontrolling interest in this JV.
The Company has an interest in a JV that was formed for the purpose of developing and operating a cryptocurrency
trading platform with the goal of increasing competition and transparency, while improving trading performance and reducing
operational risk. As of December 31, 2024, the Company held approximately a 9.1% noncontrolling interest in this JV.
The Company’s JVs noted above meet the criteria to be considered VIEs, which it does not consolidate. The Company
records its interest in the JVs under the equity method of accounting and records its investment in the JVs within Other assets
and its amounts payable for communication services provided by the telecommunication JVs within Accounts payable, accrued
116
expenses and other liabilities on the Statements of Financial Condition as applicable. The Company records its pro-rata share of
each JV's earnings or losses within Other, net and fees related to the use of communication services provided by the JVs within
Communications and data processing on the Consolidated Statements of Comprehensive Income.
The Company’s exposure to the obligations of these VIEs is generally limited to its interests in each respective JV,
which is the carrying value of the equity investment in each JV.
The following table presents the Company’s nonconsolidated VIEs at December 31, 2024:
Carrying Amount
Maximum
Exposure to
Loss
VIEs' assets
(in thousands)
Asset
Liability
Equity investment
$
66,970
$
—
$
66,970
$
345,235
The following table presents the Company’s nonconsolidated VIEs at December 31, 2023:
Carrying Amount
Maximum
Exposure to
Loss
VIEs' assets
(in thousands)
Asset
Liability
Equity investment
$
59,713
$
—
$
59,713
$
273,905
The Company formed a JV to support the growth and expansion of a multi-asset request-for-quote communication
platform in 2022. As of December 31, 2024, the Company held a 51% controlling interest in this entity. This JV meets the
criteria to be considered a VIE, and based on the standard for control set forth above, the Company consolidates this entity and
records the interest that the Company does not own as noncontrolling interest in the Consolidated Financial Statements.
On April 19, 2024, the Company entered into an agreement to sell a 49% interest in the multi-asset request-for-quote
communication platform JV. The sale is subject to various closing conditions including the receipt of certain regulatory
approvals. Upon the closing of the sale, the Company will retain a minority stake in the JV. See Note 3 “Business Held for
Sale” for further details.
13. Revenues from Contracts with Customers
Commissions, net. The Company earns commission revenue by acting as an agent on behalf of customers. The
Company’s performance obligations consist of trade execution and clearing services and are satisfied on the trade date;
accordingly, commission revenues are recorded on the trade date. Commission revenues are received on settlement date;
therefore, a receivable is recognized as of the trade date. Under a commission management program, the Company allows
institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third
parties. As the Company acts as an agent in these transactions, it records such expenses on a net basis within Commissions, net
and technology services in the Consolidated Statements of Comprehensive Income.
Workflow technology. Through its front-end workflow solutions and network capabilities, the Company provides order
and trade execution management and order routing services.
The Company provides trade order routing from its execution management system (“EMS”) to its execution services
offerings, with each trade order routed through the EMS representing a separate performance obligation, which is the trade date
for that trade order routed, that is satisfied at a point in time. Commissions earned are fixed and revenue is recognized on the
trade date. A portion of the commissions earned on the trade is then allocated to workflow technology based on the stand-alone
selling price paid by third-party brokers for order routing. The remaining commission is allocated to Commissions, net using a
residual allocation approach.
The Company participates in commission sharing arrangements, where trade orders are routed to third-party brokers
from its EMS and its order management system (“OMS”). Commission share revenues from third-party brokers are generally
fixed and revenue is recognized at a point in time on the trade date.
The Company provides OMS and related software products and connectivity services to customers and recognizes
license fee revenues and monthly connectivity fees. License fee revenues, generated for the use of the Company’s OMS and
117
other software products, are fixed and recognized at the point in time at which the customer is able to use and benefit from the
license. Connectivity revenue is variable in nature, based on the number of live connections, and is recognized over time on a
monthly basis using a time-based measure of progress.
Analytics. The Company provides customers with analytics products and services, including trading and portfolio
analytics tools. The Company provides analytics products and services to customers and recognizes subscription fees, which are
fixed for the contract term, based on when the products and services are delivered. Analytics services can be delivered either
over time (when customers are provided with distinct ongoing access to analytics data) or at a point in time (when reports are
only delivered to the customer on a periodic basis). Over time performance obligations are recognized using a time-based
measure of progress on a monthly basis, since the analytics products and services are continually provided to the client. Point in
time performance obligations are recognized when the analytics reports are delivered to the client.
Analytics products and services can also be paid for through variable bundled arrangements with trade execution
services. Customers agree to pay for analytics products and services with commissions generated from trade execution services,
and commissions are allocated to the analytics performance obligation(s) using:
(i) the commission value for each customer for the products and services it receives, which is priced using the
value for similar stand-alone subscription arrangements; and
(ii) a calculated ratio of the commission value for the products and services relative to the total amount of
commissions generated from the customer.
For these bundled commission arrangements, the allocated commissions to each analytics performance obligation are
then recognized as revenue when the analytics product is delivered, either over time or at a point in time. These allocated
commissions may be deferred if the allocated amount exceeds the amount recognizable based on delivery.
Disaggregation of Revenues
The following tables present the Company’s revenue from contracts with customers disaggregated by service, and
timing of revenue recognition, reconciled to the Company’s segments, for the years ended December 31, 2024, 2023, and 2022:
Year Ended December 31, 2024
(in thousands)
Market Making
Execution
Services
Corporate
Total
Revenues from contracts with customers:
Commissions, net
$
42,376
$
340,211
$
—
$
382,587
Workflow technology
—
95,827
—
95,827
Analytics
—
38,369
—
38,369
Total revenue from contracts with customers
42,376
474,407
—
516,783
Other sources of revenue
2,331,720
32,823
(4,377)
2,360,166
Total revenues
$
2,374,096
$
507,230
$
(4,377) $
2,876,949
Timing of revenue recognition:
Services transferred at a point in time
$
2,374,096
$
435,503
$
(4,377) $
2,805,222
Services transferred over time
—
71,727
—
71,727
Total revenues
$
2,374,096
$
507,230
$
(4,377) $
2,876,949
118
Year Ended December 31, 2023
(in thousands)
Market Making
Execution
Services
Corporate
Total
Revenues from contracts with customers:
Commissions, net
$
29,571
$
297,089
$
—
$
326,660
Workflow technology
—
90,654
—
90,654
Analytics
—
38,284
—
38,284
Total revenue from contracts with customers
29,571
426,027
—
455,598
Other sources of revenue
1,813,952
20,515
3,308
1,837,775
Total revenues
$
1,843,523
$
446,542
$
3,308
$
2,293,373
Timing of revenue recognition:
Services transferred at a point in time
$
1,843,523
$
374,306
$
3,308
$
2,221,137
Services transferred over time
—
72,236
—
72,236
Total revenues
$
1,843,523
$
446,542
$
3,308
$
2,293,373
Year Ended December 31, 2022
(in thousands)
Market Making
Execution
Services
Corporate
Total
Revenues from contracts with customers:
Commissions, net
$
42,180
$
356,090
$
—
$
398,270
Workflow technology
—
91,667
—
91,667
Analytics
—
39,908
—
39,908
Total revenue from contracts with customers
42,180
487,665
—
529,845
Other sources of revenue
1,770,659
26,576
37,732
1,834,967
Total revenues
$
1,812,839
$
514,241
$
37,732
$
2,364,812
Timing of revenue recognition:
Services transferred at a point in time
$
1,812,839
$
444,483
$
37,732
$
2,295,054
Services transferred over time
—
69,758
—
69,758
Total revenues
$
1,812,839
$
514,241
$
37,732
$
2,364,812
Remaining Performance Obligations and Revenue Recognized from Past Performance Obligations
As of December 31, 2024 and 2023, the aggregate amount of the transaction price allocated to the performance
obligations relating to workflow technology and analytics revenues that are unsatisfied (or partially unsatisfied) was not
material.
Contract Assets and Contract Liabilities
The timing of the revenue recognition may differ from the timing of payment from customers. The Company records a
receivable when revenue is recognized prior to payment, and when the Company has an unconditional right to payment. The
Company records a contract liability when payment is received prior to the time at which the satisfaction of the service
obligation occurs.
Receivables related to revenues from contracts with customers amounted to $62.1 million and $56.4 million as of
December 31, 2024 and December 31, 2023, respectively. The Company did not identify any contract assets. There were no
impairment losses on receivables as of December 31, 2024.
Deferred revenue primarily relates to deferred commissions allocated to analytics products and subscription fees billed
119
in advance of satisfying the performance obligations. Deferred revenue related to contracts with customers was $8.1 million and
$8.4 million as of December 31, 2024 and December 31, 2023, respectively. The Company recognized the full amount of
revenue during the years ended December 31, 2024 and 2023, that had been recorded as deferred revenue in the respective prior
year.
The Company has not identified any costs to obtain or fulfill its contracts under ASC 606.
14. Income Taxes
Income before income taxes and noncontrolling interest is as follows for the years ended December 31, 2024, 2023,
and 2022:
Years Ended December 31,
2024
2023
2022
(in thousands)
U.S. operations
$
456,613
$
248,987
$
426,902
Non-U.S. operations
188,357
76,144
129,896
$
644,970
$
325,131
$
556,798
The provision for income taxes consists of the following for the years ended December 31, 2024, 2023, and 2022:
Years Ended December 31,
(in thousands)
2024
2023
2022
Current provision (benefit)
Federal
$
52,009
$
14,959
$
40,887
State and Local
18,634
12,972
17,216
Foreign
33,652
18,016
26,974
Deferred provision (benefit)
Federal
5,194
9,125
911
State and Local
875
1,832
131
Foreign
71
4,306
2,347
Provision for income taxes
$
110,435
$
61,210
$
88,466
The reconciliation of the tax provision at the U.S. federal statutory rate to the provision for income taxes for the
years ended December 31, 2024, 2023, and 2022 is as follows:
Years Ended December 31,
2024
2023
2022
(in thousands, except percentages)
Tax provision at the U.S. federal statutory rate
21.0 %
21.0 %
21.0 %
Less: rate attributable to noncontrolling interest
(9.0) %
(8.7) %
(8.3) %
State and local taxes, net of federal benefit
2.4 %
3.5 %
2.5 %
Non-deductible expenses, net
0.3 %
0.5 %
0.3 %
Excess tax benefit(deficiency) from share based compensation
0.1 %
0.3 %
(0.3) %
Foreign taxes
5.2 %
6.9 %
5.1 %
Foreign tax credits
(2.3) %
(3.8) %
(2.8) %
Other, net
(0.6) %
(0.9) %
(1.6) %
Effective tax rate
17.1 %
18.8 %
15.9 %
The components of the deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows:
120
December 31,
(in thousands)
2024
2023
Deferred income tax assets
Tax Receivable Agreement
$
114,402
$
135,709
Share-based compensation
15,053
18,152
Fixed assets and other
32,980
14,084
Tax credits and net operating loss carryforwards
10,334
57,138
Less: Valuation allowance on net operating loss carryforwards and tax credits
(10,334)
(57,138)
Total deferred income tax assets
$
162,435
$
167,945
Deferred income tax liabilities
Intangibles
$
27,389
$
34,185
Fixed assets
431
101
Total deferred income tax liabilities
$
27,820
$
34,286
The Company is subject to U.S. federal, state and local income tax at the rate applicable to corporations for the share
of income that is not attributable to the noncontrolling interest in Virtu Financial. These noncontrolling interests are subject to
U.S. taxation at the partner level. Accordingly, for the years ended December 31, 2024, 2023, and 2022, the income attributable
to these noncontrolling interests is reported in the Consolidated Statements of Comprehensive Income, but the related U.S.
income tax expense attributable to these noncontrolling interests is not reported by the Company as it is the obligation of the
individual partners. Income tax expense includes foreign, state and local income tax where certain of the Company’s
subsidiaries are subject to corporate taxation.
Included in Other assets on the Consolidated Statements of Financial Condition at December 31, 2024 and December
31, 2023 are current income tax receivables of $13.2 million and $44.3 million, respectively. These balances primarily comprise
prepayments of income tax and income tax benefits due to the Company from federal, state and local, and foreign tax
jurisdictions based on income before taxes. Included in Accounts payable, accrued expenses and other liabilities on the
Consolidated Statements of Financial Condition at December 31, 2024 and December 31, 2023 are current tax liabilities of
$22.5 million and $6.8 million, respectively. These balances primarily comprise income taxes owed to federal, state and local,
and foreign tax jurisdictions based on income before taxes.
Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with
the IPO (see Note 5 “Tax Receivable Agreements”), differences in the valuation of financial assets and liabilities, and other
temporary differences arising from the deductibility of compensation, depreciation, and other expenses in different time periods
for book and income tax return purposes.
There are no expiration dates on the deferred tax assets. The provisions of ASC 740 require that carrying amounts of
deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Accordingly, the need to establish valuation allowances for deferred
tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the
realization of the deferred tax assets. At December 31, 2024, the Company did not have any U.S. federal, state or local net
operating loss carryforwards and therefore the Company did not record a deferred tax asset related to any federal net operating
loss carryforwards.
The Company has non-U.S. net operating losses at December 31, 2024 and 2023 of $58.2 million and $304.5 million,
respectively, and has recorded related deferred tax assets of $10.3 million and $57.1 million, respectively. A full valuation
allowance was recorded against these deferred tax assets at December 31, 2024 and 2023 as it is more likely than not that these
deferred tax assets will not be realized. No valuation allowance against the remaining deferred taxes was recorded as of
December 31, 2024 and 2023 because it is more likely than not that these deferred tax assets will be fully realized.
The Company is subject to taxation in U.S. federal, state, local and foreign jurisdictions. As of December 31, 2024, the
Company’s tax years for 2015 through 2023 and 2017 through 2023 are subject to examination by U.S. and non-U.S. tax
authorities, respectively. In addition, the Company is subject to state and local income tax examinations in various jurisdictions
for the tax years 2013 through 2023. The outcome of these examinations is not yet determinable. However, the Company
anticipates that adjustments to the unrecognized tax benefits, if any, will not result in a material change to the financial
condition, results of operations and cash flows.
121
The Company’s policy for recording interest and penalties associated with audits is to record such items as a
component of income or loss before income taxes and noncontrolling interest. Penalties, if any, are recorded in Operations and
administrative expense and interest received or paid is recorded in Other, net or Operations and administrative expense in the
Consolidated Statements of Comprehensive Income.
The Company had $8.3 million of unrecognized tax benefits as of December 31, 2024, all of which would affect the
Company’s effective tax rate if recognized. The Company has determined that there are no uncertain tax positions that would
have a material impact on the Company’s financial position as of December 31, 2024.
The table below presents the changes in the liability for unrecognized tax benefits. This liability is included in
Accounts payable and accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.
(in thousands)
Balance at December 31, 2022
$
6,614
Decreases based on tax positions related to prior period
—
Increase based on tax positions related to current period
188
Balance at December 31, 2023
6,802
Decreases based on tax positions related to prior period
—
Increase based on tax positions related to current period
1,464
Balance at December 31, 2024
$
8,266
15. Commitments, Contingencies and Guarantees
Legal and Regulatory Proceedings
In the ordinary course of business, the nature of the Company’s business subjects it to claims, lawsuits, regulatory
examinations or investigations and other proceedings, any of which could result in the imposition of fines, penalties or other
sanctions against the Company. The Company and its subsidiaries are subject to several of these matters at the present time. As
previously disclosed in prior regulatory filings, the U.S. Securities and Exchange Commission undertook an investigation of
aspects of the Company’s internal information access barriers. The Company cooperated with this civil investigation and
engaged in settlement discussions but has been unable to reach a settlement. In September 2023, the SEC filed an action against
the Company alleging violations of federal securities laws with respect to the Company’s information barriers policies and
procedures for a specified time period in and around January 2018 to April 2019 and related statements made by the Company
during such period. The Company believes it has meritorious defenses and is defending itself vigorously. Specifically, the
Company is asserting, among other defenses, that it maintained reasonable policies, procedures and controls to protect data
during the period consistent with applicable law, that related statements made to clients and investors were true and accurate,
and that the statute of limitations has expired with respect to certain claims.
In matters related to the SEC investigation noted above, the Company and certain of its current and former executive
officers were named as defendants on May 19, 2023 in Hiebert v. Virtu Financial, Inc., No. 23-cv-03770 and on October 31,
2023 in City of Birmingham Retirement and Relief System v. Virtu Financial, Inc., No. 23-cv-08123. The complaints were each
filed by purported stockholders in the Eastern District of New York on behalf of a putative class and assert that the Company
made materially false and misleading statements and omissions in its public filings in violation of federal securities laws. The
complaints were subsequently consolidated and recaptioned in re Virtu Financial, Inc. Securities Litigation, No. 23-cv-03770.
The Company also has received requests for information related to the SEC investigation pursuant to Section 220 of the
Delaware General Corporation Law from counsel for purported stockholders. The Company believes it has meritorious
defenses against pending or contemplated claims that its public disclosures were inadequate or misleading. The Company
maintains that such disclosures were true and accurate and compliant with applicable law and will defend itself vigorously.
On November 30, 2020, the Company was named as a defendant in In re United States Oil Fund, LP Securities
Litigation, No. 20-cv-4740. The consolidated amended complaint was filed in federal district court in New York on behalf of a
putative class, and asserts claims against the Company and numerous other financial institutions under Section 11 of the
Securities Act of 1933 in connection with trading in United States Oil Fund, LP, a crude oil ETF. The complaint also names the
ETF, its sponsor, and related individuals as defendants. The complaint did not specify the amount of alleged damages.
Defendants moved to dismiss the consolidated amended complaint on January 29, 2021; the motion is fully briefed and pending
before the court. The Company believes that the claims are without merit and is defending itself vigorously.
122
On March 7, 2022, the Company was named as a defendant in Iron Workers Local No. 55 Pension Fund v. Virtu
Financial, Inc., No. 2022-0211-PAF pending in the Court of Chancery of the State of Delaware. The complaint, filed by a
purported stockholder, seeks to compel the inspection of certain Company books and records pursuant to Section 220 of the
Delaware General Corporation Law. The complaint (the “220 Complaint”) alleged that the stockholder sought Company
information to investigate (a) whether wrongdoing or mismanagement occurred in connection with distributions made to the
partners of Virtu Financial pursuant to the Company’s Up-C corporate structure; (b) the independence and disinterestedness of
the Company’s directors and/or officers and whether the directors breached their fiduciary duties; and (c) potential damages
relating thereto. The Company made substantial productions of documents and other information in response to plaintiff's
requests. In January 2025, the plaintiff voluntarily dismissed the 220 Complaint and filed a complaint in the Court of Chancery
of the State of Delaware naming the Company and its directors, officers, and controlling stockholder as defendants, alleging
breaches of fiduciary duties which purportedly have caused harm to holders of the Company’s class A common stock. The
Company believes the allegations are without merit and intends to defend against them vigorously.
On October 17, 2022, the Company’s subsidiary, along with several other parties, was named as a defendant in
Mallinckrodt PLC, et al. (Reorganized Debtors); Opioid Master Disbursement Trust II v. Argos Capital Appreciation Master
Fund LP et al No. 20-12522. The complaint alleges that Mallinckrodt PLC engaged in a share repurchase program from 2015
through 2018 pursuant to which it repurchased its own shares in various open market transactions, a period during which it was
allegedly insolvent. The plaintiff is seeking to unwind the transactions consummated under the program, alleging such
transactions constituted fraudulent transfers by the debtor. The Company believes it has meritorious defenses against any
unwinding of transactions, which it has asserted, and will continue to defend itself vigorously.
On December 1, 2022, the Company’s subsidiary, along with several other parties, was named as a defendant in
Northwest Biotherapeutics, Inc. v. Canaccord Genuity LLC, et al No. 1:22-cv-10185. The initial complaint alleged that
defendants engaged in market manipulation in the plaintiff’s stock during a period from 2018 to 2022. A first amended
complaint was filed on April 10, 2023, bringing substantially the same allegations as the initial complaint. The first amended
complaint was dismissed with leave to amend on February 14, 2024. Plaintiff filed a second amended complaint on March 18,
2024. Neither the operative complaint nor prior iterations specify the amount of alleged damages. The Company believes that
the claims are without merit and is defending itself vigorously.
On October 7, 2024, the Company and its 50% owned subsidiary, NLN Holdings, LLC, along with several other
defendants, were named in a lawsuit brought by Skywave Networks, LLC in the United States District Court for the Northern
District of Illinois, Skywave Networks, LLC v. DiSomma, et al., 1:24-cv-09650 (N.D.Ill.). The complaint alleges that defendants
engaged in violations of federal law, 18 U.S.C. sec. 1962, in connection with the application for and utilization of various
licenses issued by the Federal Communications Commission, purportedly harming plaintiffs’ attempts to offer certain network
communications capacity on a commercial basis. The complaint does not specify any amount of alleged damages. On February
13, 2025, the plaintiffs filed a First Amended Complaint which does not specify any amount of alleged damages. The Company
believes that the claims are without merit and intends to defend itself vigorously.
Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, particularly in regulatory
examinations or investigations or other proceedings in which substantial or indeterminate judgments, settlements,
disgorgements, restitution, penalties, injunctions, damages or fines are sought, or where such matters are in the early stages, the
Company cannot estimate losses or ranges of losses for such matters where there is only a reasonable possibility that a loss may
be incurred, and utilizes its judgment in accordance with applicable accounting standards in booking any associated estimated
liability. It is not presently possible to determine the ultimate exposure to these matters and it is possible that the resolution of
the outstanding matters will significantly exceed any estimated liabilities accrued by the Company. In addition, there are
numerous factors that result in a greater degree of complexity in class-action lawsuits as compared to other types of litigation.
There can be no assurance that these various legal proceedings will not significantly exceed any estimated liability accrued by
the Company or have a material adverse effect on the Company’s results of operations in any future period, and a material
judgment, fine or sanction could have a material adverse impact on the Company’s financial condition, results of operations and
cash flows. However, it is the opinion of management, after consultation with legal counsel that, based on information currently
available, the ultimate outcome of these matters will not have a material adverse impact on the business, financial condition or
operating results of the Company, although they might be material to the operating results for any particular reporting period.
The Company carries directors’ and officers’ liability insurance coverage and other insurance coverage for potential claims,
including securities actions, against the Company and its respective directors and officers.
123
Other Legal and Regulatory Matters
The Company owns subsidiaries including regulated entities that are subject to extensive oversight under federal, state
and applicable international laws as well as self-regulatory organization (“SRO”) rules. Changes in market structure and the
need to remain competitive require constant changes to the Company’s systems, order routing and order handling procedures.
The Company makes these changes while continuously endeavoring to comply with many complex laws and rules.
Compliance, surveillance and trading issues common in the securities industry are monitored by, reported to, and/or reviewed in
the ordinary course of business by the Company’s regulators in the U.S. and abroad. As a major order flow execution
destination, the Company is named from time to time in, or is asked to respond to a number of regulatory matters brought by
U.S. regulators, foreign regulators, SROs, as well as actions brought by private plaintiffs, which arise from its business
activities. There has recently been an increased focus by regulators on Anti-Money Laundering and sanctions compliance by
broker-dealers and similar entities, as well as an enhanced interest on suspicious activity reporting and transactions involving
microcap and low-priced securities. In addition, there has been increased regulatory, congressional and media scrutiny of U.S.
equities market structure, the retail trading environment in the U.S., wholesale market making and the relationships between
retail broker-dealers and market making firms including, but not limited to, payment for order flow arrangements, other
remuneration arrangements such as profit-sharing relationships and exchange fee and rebate structures, alternative trading
systems and off-exchange trading more generally, high frequency trading, short selling, market fragmentation, colocation, and
access to market data feeds. In 2022 and 2023, the SEC under the prior administration proposed several rule changes focused on
equity market structure reform, certain of which have been adopted while others remain pending. The SEC has recently (i)
adopted rule amendments to minimum pricing increments under Rule 612 of Regulation NMS, access fee caps under Rule 610
of Regulation NMS, acceleration of the implementation of certain Market Data Infrastructure Rules, and an amendment to the
odd-lot information definition adopted under the MDI rules (collectively referred to as the “tick size, access fees and
infostructure rule proposals”) which have a compliance date commencing in November 2025, though are currently subject to
ongoing legal challenge, (ii) adopted amendments to Rule 605 of Regulation NMS, which has a compliance date on or about
December 15, 2025, (iii) approved a funding model submitted by several exchanges in relation to the Consolidated Audit Trail
(CAT) which provides for fee collection commencing in November but is currently subject to legal challenge, and (iv) adopted
rules to amend the definitions of “dealer” and “government securities dealer” within the Exchange Act, which would have
broadened the scope of these registrant categories, though this rule was recently vacated by a United States district court. The
remaining pending proposals include, but are not limited to, (i) Proposed Rule 615 of Regulation NMS, which proposes to
dramatically change U.S. equities market structure, the routing, handling and potentially the amount, character and cost of retail
order flow, (ii) Regulation Best Execution, which would impose best execution requirements on broker-dealers which would be
distinct from, but overlapping with, FINRA’s existing best execution rule (Rule 5310), (iii) a series of amendments to the
definition of Exchange and Alternative Trading Systems (ATS), which would expand the scope of exchange and ATS
registration and compliance requirements, (iv) proposed amendments to expand and update Regulation Systems Compliance
and Integrity (SCI), and (v) a proposal to restrict volume based tiered pricing by equity exchanges in certain cases, and the SEC
has indicated that additional rule proposals may be forthcoming. Further, on April 23, 2024, the Federal Trade Commission
(FTC) announced a final rule banning most non-compete clauses in employer-employee contracts. The final rule was scheduled
to become effective on September 4, 2024, but it was enjoined by a federal district court in September 2024 on the grounds that
the rule exceeds the FTC's authority. The FTC is appealing the ruling and therefore its implementation has not yet been
definitively resolved. These pending or potential rule changes, to the extent adopted, along with those that have recently been
adopted, could adversely affect the Company’s business or the Company’s industry. As indicated above, from time to time, the
Company is the subject of requests for information and documents from the SEC, the Financial Industry Regulatory Authority
(“FINRA”), state attorneys general, and other regulators and governmental authorities. It is the Company’s practice to cooperate
and comply with the requests for information and documents.
As indicated above, the Company is currently the subject of various regulatory reviews and investigations by state,
federal and foreign regulators and SROs, including the SEC and FINRA. In some instances, these matters may result in a
disciplinary action and/or a civil or administrative action.
Representations and Warranties; Indemnification Arrangements
In the normal course of its operations, the Company enters into contracts that contain a variety of representations and
warranties in addition to indemnification obligations, including indemnification obligations in connection with the Acquisition
of KCG and the ITG Acquisition. The Company’s maximum exposure under these arrangements is currently unknown, as any
such exposure could relate to claims not yet brought or events which have not yet occurred.
Consistent with standard business practices in the normal course of business, the Company enters into contracts that
contain a variety of representations and warranties and general indemnifications. The Company has also provided general
indemnifications to its managers, officers, directors, employees, and agents against expenses, legal fees, judgments, fines,
settlements, and other amounts actually and reasonably incurred by such persons under certain circumstances as more fully
124
disclosed in its operating agreement. The overall maximum amount of the obligations (if any) cannot reasonably be estimated as
it will depend on the facts and circumstances that give rise to any future claims.
16. Leases
The Company’s leases are primarily for corporate office space, datacenters, and technology equipment. The leases
have remaining terms of one to eight years, some of which include options to extend the initial term at the Company’s
discretion. The lease terms used in calculating ROU assets and lease liabilities include the options to extend the initial term
when the Company is reasonably certain of exercising the options. The Company’s lease agreements do not contain any
material residual value guarantees, restrictions or covenants. In addition to the base rental costs, the Company’s lease
agreements for corporate office space generally provide for rent escalations resulting from increased assessments for operating
expenses, real estate taxes and other charges. Payments for such reimbursable expenses are considered variable and are
recognized as variable lease costs in the period in which the obligation for those payments was incurred.
The Company also subleases certain office space and facilities to third parties. The subleases have remaining terms of
one to eight years. The Company recognizes amounts received from subleases on a straight-line basis over the term of the
sublease within Operations and administrative expense on the Consolidated Statements of Comprehensive Income.
As the implied discount rate for most of the Company’s leases is not readily determinable, the Company uses its
incremental borrowing rate on its secured borrowings in determining the present value of lease payments.
For the year ended December 31, 2024, the Company recognized $16.2 million in Termination of office leases on the
Consolidated Statements of Comprehensive Income, primarily comprising of $10.0 million of impairments of ROU assets and
$6.5 million of costs related to asset retirement obligations associated with its unoccupied leased office spaces.
Lease assets and liabilities are summarized as follows:
(in thousands)
Financial Statement Location
December 31, 2024
December 31, 2023
Operating leases
Operating lease right-of-use assets
Operating lease right-of-use assets
$
175,046
$
229,499
Operating lease liabilities
Operating lease liabilities
229,825
278,317
Finance leases
Property and equipment, at cost
Property, equipment, and capitalized software, net
42,915
40,857
Accumulated depreciation
Property, equipment, and capitalized software, net
(20,755)
(11,781)
Finance lease liabilities
Accounts payable, accrued expenses, and other liabilities
23,095
29,609
Weighted average remaining lease term and discount rate are as follows:
December 31, 2024
December 31, 2023
Weighted average remaining lease term
Operating leases
4.60 years
5.25 years
Finance leases
3.53 years
3.50 years
Weighted average discount rate
Operating leases
6.36 %
6.40 %
Finance leases
5.97 %
5.51 %
125
The components of lease expense are as follows:
Years Ended December 31,
(in thousands)
2024
2023
2022
Operating lease cost:
Fixed
$
73,046
$
76,424
$
72,749
Variable
5,856
6,151
6,079
Impairment of ROU Asset
10,031
—
5,270
Total Operating lease cost
$
88,933
$
82,575
$
84,098
Sublease income
16,896
19,506
19,679
Finance lease cost:
Amortization of ROU Asset
$
10,512
$
9,079
$
7,685
Interest on lease liabilities
1,559
1,156
366
Total Finance lease cost
$
12,071
$
10,235
$
8,051
See Note 2 “Summary of Significant Accounting Policies” in Part II Item 8 “Financial Statements and Supplementary
Data” of this Form 10-K for details on the classification of these expenses in the Consolidated Statements of Comprehensive
Income.
Future minimum lease payments under operating and finance leases with non-cancelable lease terms, as of December
31, 2024, are as follows:
(in thousands)
Operating Leases
Finance Leases
2025
$
74,236
$
8,494
2026
71,501
7,499
2027
34,841
6,329
2028
28,850
2,757
2029
21,553
408
2030 and thereafter
34,497
—
Total lease payments
$
265,478
$
25,487
Less imputed interest
(35,653)
(2,392)
Total lease liability
$
229,825
$
23,095
17. Cash
The following table provides a reconciliation of cash and cash equivalents together with restricted or segregated cash
as reported within the Consolidated Statements of Financial Condition to the sum of the same such amounts shown in the
Consolidated Statements of Cash Flows.
(in thousands)
December 31,
2024
December 31,
2023
Cash and cash equivalents
$
872,513
$
820,436
Cash restricted or segregated under regulations and other
41,478
35,024
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
$
913,991
$
855,460
126
18. Capital Structure
The Company has four classes of authorized common stock. The Class A Common Stock and the Class C Common
Stock have one vote per share. The Class B Common Stock and the Class D Common Stock have 10 votes per share. Shares of
the Company’s common stock generally vote together as a single class on all matters submitted to a vote of the Company’s
stockholders. The Founder Member controls approximately 87.0% of the combined voting power of our common stock as a
result of its ownership of our Class A, Class C and Class D Common Stock. The Company holds approximately a 56.9%
interest in Virtu Financial at December 31, 2024.
During the period prior to the Company’s IPO and certain reorganization transactions consummated in connection with
the IPO, Class A-2 profits interests and Class B interests in Virtu Financial were issued to Employee Holdco (as defined below)
on behalf of certain key employees and stakeholders. In connection with these reorganization transactions, all Class A-2 profits
interests and Class B interests were reclassified into Virtu Financial Units. As of December 31, 2024 and December 31, 2023,
there were 3,994,744 and 4,040,772 Virtu Financial Units outstanding held by Employee Holdco (as defined below),
respectively, and 46,028, 422,068, and 328,999 of such Virtu Financial Units and corresponding Class C Common Stock were
exchanged into Class A Common Stock, forfeited or repurchased during the years ended December 31, 2024, 2023, and 2022,
respectively.
Amended and Restated 2015 Management Incentive Plan
The Company’s Board of Directors and stockholders adopted the 2015 Management Incentive Plan, which became
effective upon consummation of the IPO, and was subsequently amended and restated following receipt of approval from the
Company’s stockholders on June 30, 2017, June 5, 2020 and June 2, 2022. The Amended and Restated 2015 Management
Incentive Plan provides for the grant of stock options, restricted stock units, and other awards based on an aggregate of
26,000,000 shares of Class A Common Stock, subject to additional sublimits, including limits on the total option grant to any
one participant in a single year and the total performance award to any one participant in a single year.
On November 13, 2020, the Company amended its form award agreement for the issuance of RSUs to provide for the
continued vesting of outstanding RSU awards upon the occurrence of a qualified retirement (the “RSU Amendment”). A
qualified retirement generally means a voluntary resignation by the participant (i) after five years of service, (ii) the participant
attaining the age of 50 and (iii) the sum of the participant’s age and service at the time of termination equaling or exceeding 65.
Continued vesting is subject to the participant entering into a 2 year non-compete. The RSU Amendment was authorized and
approved by the Compensation Committee of the Company’s Board of Directors. As a result of the RSU Amendment, currently
issued and outstanding RSUs held by the Company’s employees, including its executive officers, shall be deemed to be subject
to the amended terms of the form award agreement, and any future RSU awards shall also be governed by such amended terms.
Share Repurchase Program
On November 6, 2020, the Company’s Board of Directors authorized a share repurchase program of up to
$100.0 million in Class A common stock and Virtu Financial Units by December 31, 2021. On February 11, 2021, the
Company’s Board of Directors authorized the expansion of the program by an additional $70 million in Class A Common Stock
and Virtu Financial Units. On May 4, 2021, the Company’s Board of Directors authorized the expansion of the Company’s
share repurchase program, increasing the total authorized amount by an additional $300 million in Class A Common Stock and
Virtu Financial Units and extending the duration of the program through May 4, 2022. On November 3, 2021 the Company’s
Board of Directors authorized another expansion of the program by an additional $750 million to $1,220 million and extending
the duration of the program through November 3, 2023, which was subsequently extended through December 31, 2024. On
April 24, 2024, the Company’s Board of Directors authorized the expansion of the program by an additional $500 million to
$1,720 million and extended the duration through April 24, 2026. The share repurchase program authorizes the Company to
repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means.
Repurchases are also permitted to be made under Rule 10b5-1 plans. The timing and amount of repurchase transactions are
determined by the Company’s management based on its evaluation of market conditions, share price, cash sources, legal
requirements and other factors. From the inception of the program through December 31, 2024, the Company repurchased
approximately 50.3 million shares of Class A Common Stock and Virtu Financial Units for approximately $1,281.8 million. As
of December 31, 2024, the Company has approximately $438.2 million remaining capacity for future purchases of shares of
Class A Common Stock and Virtu Financial Units under the program.
127
Employee Exchanges
During the years ended December 31, 2024, 2023, and 2022, pursuant to the exchange agreement by and among the
Company, Virtu Financial and holders of Virtu Financial Units, certain current and former employees elected to exchange
43,391, 186,394, and 92,930 units, respectively, in Virtu Financial held directly or on their behalf by Virtu Employee Holdco
LLC (“Employee Holdco”) on a one-for-one basis for shares of Class A Common Stock.
Accumulated Other Comprehensive Income
The following table presents the changes in Other Comprehensive Income for the years ended December 31, 2024 and
2023:
Year Ended December 31, 2024
(in thousands)
AOCI Beginning
Balance
Amounts
recorded
in AOCI
Amounts
reclassified from
AOCI to income
AOCI Ending
Balance
Net change in unrealized cash flow hedges gains
(losses) (1)
$
23,416
$
13,384
$
(31,857) $
4,943
Foreign exchange translation adjustment
(6,369)
(5,637)
—
(12,006)
Total
$
17,047
$
7,747
$
(31,857) $
(7,063)
(1) Amounts reclassified from AOCI to income are included within Financing interest expense on long-term borrowings on the Consolidated Statements of
Comprehensive Income. As of December 31, 2024, the Company expects approximately $3.6 million to be reclassified from AOCI into earnings over the
next 12 months. The timing of the reclassification is based on the interest payment schedule of the long-term borrowings.
Year Ended December 31, 2023
(in thousands)
AOCI Beginning
Balance
Amounts
recorded
in AOCI
Amounts
reclassified from
AOCI to income
AOCI Ending
Balance
Net change in unrealized cash flow hedges gains
(losses) (1)
$
44,925
$
8,798
$
(30,307) $
23,416
Foreign exchange translation adjustment
(13,321)
6,952
—
(6,369)
Total
$
31,604
$
15,750
$
(30,307) $
17,047
(1) Amounts reclassified from AOCI to income are included within Financing interest expense on long-term borrowings on the Consolidated Statements of
Comprehensive Income.
Year Ended December 31, 2022
(in thousands)
AOCI Beginning
Balance
Amounts
recorded
in AOCI
Amounts
reclassified from
AOCI to income
AOCI Ending
Balance
Net change in unrealized cash flow hedges gains
(losses) (1)
$
(10,480) $
55,955
$
(550) $
44,925
Foreign exchange translation adjustment
284
(13,605)
—
(13,321)
Total
$
(10,196) $
42,350
$
(550) $
31,604
(1) Amounts reclassified from AOCI to income are included within Financing interest expense on long-term borrowings on the Consolidated Statements of
Comprehensive Income.
19. Share-based Compensation
Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 18 “Capital Structure”,
and in connection with the IPO, non-qualified stock options to purchase shares of Class A Common Stock were granted, each of
which vests in equal annual installments over a period of four years from grant date and expires not later than 10 years from the
date of grant.
128
The following table summarizes activity related to stock options for the years ended December 31, 2024, 2023, and
2022:
Options Outstanding
Options Exercisable
Number of
Options
Weighted Average
Exercise Price Per
Share
Weighted Average
Remaining
Contractual Life
Number of
Options
Weighted Average
Exercise Price
Per Share
At December 31, 2021
1,795,655
$
19.00
3.24
1,795,655
$
19.00
Granted
—
—
—
—
—
Exercised
(268,879)
19.00
—
(268,879)
19.00
Forfeited or expired
(5,000)
—
—
(5,000)
—
At December 31, 2022
1,521,776
$
19.00
2.24
1,521,776
$
19.00
Granted
—
—
—
—
—
Exercised
—
—
—
—
—
Forfeited or expired
(10,000)
—
—
(10,000)
—
At December 31, 2023
1,511,776
$
19.00
1.24
1,511,776
$
19.00
Granted
—
—
—
—
—
Exercised
(695,276)
19.00
—
(695,276)
19.00
Forfeited or expired
(2,750)
—
—
(2,750)
—
At December 31, 2024
813,750
$
19.00
0.24
813,750
$
19.00
The expected life was determined based on an average of vesting and contractual period. The risk-free interest rate was
determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was
determined based on historical volatilities of comparable companies. The expected dividend yield was determined based on
estimated future dividend payments divided by the IPO stock price.
Class A Common Stock, Restricted Stock Units and Restricted Stock Awards
Pursuant to the Amended and Restated 2015 Management Incentive Plan as described in Note 18 “Capital Structure”,
subsequent to the IPO, shares of immediately vested Class A Common Stock, restricted stock units (“RSUs”) and restricted
stock awards (“RSAs”) were granted, with RSUs and RSAs vesting over a period of up to 4 years. The fair value of the Class A
Common Stock and RSUs was determined based on a volume weighted average price and the expense is recognized on a
straight-line basis over the vesting period. The fair value of the RSAs was determined based on the closing price as of the date
of grant and the expense is recognized from the date that achievement of the performance target becomes probable through the
remainder of the vesting period. Performance targets are based on the Company’s adjusted EBITDA for certain future periods.
For the years ended December 31, 2024, 2023, and 2022, respectively, there were 878,091, 868,315, and 580,710 shares of
immediately vested Class A Common Stock granted as part of year-end compensation. In addition, the Company accrued
compensation expense of $29.1 million, $22.2 million, and $31.9 million for the years ended December 31, 2024, 2023, and
2022, respectively, related to immediately vested Class A Common Stock expected to be awarded as part of year-end incentive
compensation, which was included in Employee compensation and payroll taxes on the Consolidated Statements of
Comprehensive Income and Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of
Financial Condition.
129
The following table summarizes activity related to RSUs and RSAs for the years ended December 31, 2024, 2023, and
2022:
Number of
RSUs and RSAs
Weighted
Average Fair
Value
At December 31, 2021
3,224,447
$
24.30
Granted
3,046,623
29.83
Forfeited
(419,207)
26.01
Vested
(1,897,030)
24.80
At December 31, 2022
3,954,833
$
28.13
Granted (1)
3,763,217
19.28
Forfeited
(187,053)
26.45
Vested
(2,627,823)
23.46
At December 31, 2023
4,903,174
$
23.90
Granted
3,679,417
18.74
Forfeited
(133,909)
21.67
Vested
(2,884,150)
21.54
At December 31, 2024
5,564,532
$
21.77
(1) Excluded in the number of RSUs and RSAs are 37,500 participating RSAs for years ended December 31, 2023, where the grant date has not been achieved
because the performance conditions have not been met.
The Company recognized $46.4 million, $42.5 million, and $36.2 million for the years ended December 31, 2024,
2023, and 2022, respectively, of compensation expense in relation to RSUs. As of December 31, 2024 and December 31, 2023,
total unrecognized share-based compensation expense related to unvested RSUs was $53.5 million and $55.2 million,
respectively, and this amount is to be recognized over a weighted average period of 0.9 years and 0.9 years, respectively.
Awards in which the specific performance conditions have not been met are not included in unrecognized share-based
compensation expense.
On November 13, 2020, the Company adopted the Virtu Financial, Inc. Deferred Compensation Plan (the “DCP”). The
DCP permits eligible executive officers and other employees to defer cash or equity-based compensation beginning in the
calendar year ending December 31, 2021, subject to certain limitations and restrictions. Deferrals of cash compensation may
also be directed to notional investments in certain of the employee investment opportunities.
20. Property, Equipment and Capitalized Software
Property, equipment and capitalized software consisted of the following at December 31, 2024 and December 31,
2023:
(in thousands)
December 31,
2024
December 31,
2023
Capitalized software costs
$
131,876
$
136,873
Leasehold improvements
21,143
22,188
Furniture and equipment
318,598
309,083
Total
471,617
468,144
Less: Accumulated depreciation and amortization
(380,202)
(367,779)
Total property, equipment and capitalized software, net
$
91,415
$
100,365
Depreciation expense for property and equipment for the years ended December 31, 2024, 2023, and 2022 was
approximately $24.5 million, $25.6 million, and $26.1 million, respectively, and is included within depreciation and
amortization expense in the Consolidated Statements of Comprehensive Income.
The Company’s capitalized software development costs were approximately $44.7 million, $40.4 million, and $35.5
million for the years ended December 31, 2024, 2023, and 2022, respectively. The related amortization expense was
approximately $41.3 million, $37.7 million, and $40.2 million for the years ended December 31, 2024, 2023, and 2022,
respectively, and is included within Depreciation and amortization in the Consolidated Statements of Comprehensive Income.
130
21. Regulatory Requirement
U.S. Subsidiary
The Company’s U.S. broker-dealer subsidiaries VAL and RFQ-hub Americas LLC (“RAL”, which is currently held
for sale, as described in Note 3 “Business Held for Sale”), are subject to the SEC Uniform Net Capital Rule 15c3-1, which
requires the maintenance of minimum net capital as detailed in the table below. RAL became a U.S. broker-dealer in June 2023.
Pursuant to New York Stock Exchange (“NYSE”) rules, VAL was also required to maintain $1.0 million of capital in
connection with the operation of its designated market maker (“DMM”) business as of December 31, 2024. The required
amount is determined under the exchange rules as the greater of (i) $1.0 million or (ii) $75,000 for every 0.1% of NYSE
transaction dollar volume in each of the securities for which the Company is registered as the DMM.
The regulatory capital and regulatory capital requirements of the Company’s U.S. subsidiaries as of December 31,
2024 was as follows:
(in thousands)
Regulatory Capital
Regulatory Capital
Requirement
Excess Regulatory
Capital
Virtu Americas LLC
$
455,678
$
1,532
$
454,146
RFQ-hub Americas LLC
602
9
593
As of December 31, 2024, VAL had $34.9 million of cash in special reserve bank accounts for the benefit of
customers pursuant to SEC Rule 15c3-3, Computation for Determination of Reserve Requirements, and $6.4 million of cash in
reserve bank accounts for the benefit of proprietary accounts of brokers. The balances are included within Cash restricted or
segregated under regulations and other on the Consolidated Statements of Financial Condition.
The regulatory capital and regulatory capital requirements of the Company’s U.S. subsidiaries as of December 31,
2023 was as follows:
(in thousands)
Regulatory Capital
Regulatory Capital
Requirement
Excess Regulatory
Capital
Virtu Americas LLC
$
412,626
$
1,000
$
411,626
RFQ-hub Americas LLC
1,425
15
1,410
As of December 31, 2023, VAL had $28.7 million of cash in special reserve bank accounts for the benefit of
customers pursuant to SEC Rule 15c3-3, Computation for Determination of Reserve Requirements, and $6.1 million of cash in
reserve bank accounts for the benefit of proprietary accounts of brokers.
Foreign Subsidiaries
The Company’s foreign subsidiaries are subject to regulatory capital requirements set by local regulatory bodies,
including the Canadian Investment Regulatory Organization (“CIRO”), the Central Bank of Ireland (“CBI”), the Financial
Conduct Authority (“FCA”) in the United Kingdom, the Australian Securities and Investments Commission (“ASIC”), the
Securities and Futures Commission in Hong Kong (“SFC”), and the Monetary Authority of Singapore (“MAS”).
131
The regulatory net capital balances and regulatory capital requirements applicable to the Company’s foreign
subsidiaries as of December 31, 2024 were as follows:
(in thousands)
Regulatory Capital
Regulatory Capital
Requirement
Excess Regulatory
Capital
Canada
Virtu Canada Corp
$
12,327
$
174
$
12,153
Virtu Financial Canada ULC (1)
—
—
—
Ireland
Virtu Europe Trading Limited
57,834
26,359
31,475
Virtu Financial Ireland Limited
76,457
29,764
46,693
United Kingdom
Virtu ITG UK Limited
2,043
939
1,104
Asia Pacific
Virtu ITG Australia Limited
24,928
9,550
15,378
Virtu ITG Hong Kong Limited
5,392
426
4,966
Virtu ITG Singapore Pte Limited
1,120
166
954
Virtu Financial Singapore Pte. Ltd.
219,817
136,891
82,926
(1) Virtu Financial Canada ULC has resigned from membership from the Canadian Investment Regulatory Organization (“CIRO”) effective January 22, 2025, and its
regulatory capital requirement as of December 31, 2024 was waived by CIRO.
As of December 31, 2024, Virtu Europe Trading Limited had $37 thousand of segregated funds on deposit for trade
clearing and settlement activity, and Virtu ITG Hong Kong Ltd. had $30 thousand of segregated balances under a collateral
account control agreement for the benefit of certain customers.
The regulatory net capital balances and regulatory capital requirements applicable to the Company’s foreign
subsidiaries as of December 31, 2023 were as follows:
(in thousands)
Regulatory Capital
Regulatory Capital
Requirement
Excess Regulatory
Capital
Canada
Virtu Canada Corp
$
14,630
$
189
$
14,441
Virtu Financial Canada ULC
1,197
189
1,008
Ireland
Virtu Europe Trading Limited
86,370
27,821
58,549
Virtu Financial Ireland Limited
88,939
40,459
48,480
United Kingdom
Virtu ITG UK Limited
2,040
955
1,085
Asia Pacific
Virtu ITG Australia Limited
24,788
3,856
20,932
Virtu ITG Hong Kong Limited
2,786
445
2,341
Virtu ITG Singapore Pte Limited
953
130
823
Virtu Financial Singapore Pte. Ltd.
126,022
73,407
52,615
As of December 31, 2023, Virtu Europe Trading Limited had $36 thousand of segregated funds on deposit for trade
clearing and settlement activity, and Virtu ITG Hong Kong Ltd had $30 thousand of segregated balances under a collateral
account control agreement for the benefit of certain customers.
22. Geographic Information and Business Segments
The Company has two operating segments: (i) Market Making and (ii) Execution Services; and one non-operating
segment: Corporate.
The Market Making segment principally consists of market making in the cash, futures, and options markets across
global equities, fixed income, currencies, cryptocurrencies, and commodities. As a market maker, the Company commits capital
on a principal basis by offering to buy securities from, or sell securities to, broker-dealers, banks and institutions. The Company
engages in principal trading in the Market Making segment direct to clients as well as in a supplemental capacity on exchanges,
Electronic Communications Networks (“ECNs”) and alternative trading systems (“ATSs”). The Company is an active
participant on all major global equity and futures exchanges and also trades on substantially all domestic electronic options
132
exchanges. As a complement to electronic market making, the cash trading business handles specialized orders and also
transacts on the OTC Link ATS operated by OTC Markets Group Inc.
The Execution Services segment comprises client-based trading and trading venues, offering execution services in
global equities, options, futures and fixed income on behalf of institutions, banks and broker-dealers. The Company earns
commissions as an agent on behalf of clients as well as between principals to transactions; in addition, the Company will
commit capital on behalf of clients as needed. Client-based, execution-only trading in the segment is done primarily through a
variety of access points including: (i) algorithmic trading and order routing in global equities and options; (ii) institutional sales
traders who offer portfolio trading and single stock sales trading which provides execution expertise for program, block and
riskless principal trades in global equities and ETFs; and (iii) matching of client conditional orders in POSIT Alert and client
orders in the Company’s ATSs, including Virtu MatchIt, and POSIT. The Execution Services segment also includes revenues
derived from providing (a) proprietary risk management and trading infrastructure technology to select third parties for a
service fee, (b) workflow technology, the Company’s integrated, broker-neutral trading tools delivered across the globe
including trade order and execution management and order management software applications and network connectivity and (c)
trading analytics, including (1) tools enabling portfolio managers and traders to improve pre-trade, real-time and post-trade
execution performance, (2) portfolio construction and optimization decisions and (3) securities valuation. The segment also
includes the results of the Company’s capital markets business, in which the Company acts as an agent for issuers in connection
with at-the-market offerings and buyback programs.
The Corporate segment contains the Company’s investments, principally in strategic trading-related opportunities and
maintains corporate overhead expenses and all other income and expenses that are not attributable to the Company’s other
segments. The segment is not considered a reportable operating segment as its results are not regularly reviewed by the
Company’s Chief Operating Decisions Makers (“CODMs”).
The accounting policies of the segments are the same as those described in Note 2 “Summary of Significant
Accounting Policies”. The Company’s CODMs are the Chief Executive Officer and the Chief Operating Officers. The CODMs
use a top-line approach in regards to evaluating segment performance and making business decisions on resource allocations,
focusing on each segment's trading-related activities. Revenues, including breakdown of key trading-driven components of
revenues, trading-related operating expenses, and pre-tax earnings by segment are regularly provided to the CODMs. The
CODMs review trading-related results by monitoring period-over-period trends and considering variances between actuals and
expectations. Corporate overhead and other shared expenses, as well as assets and liabilities by segment are not used for
evaluating segment performance or in deciding how to allocate resources to segments.
The Company’s total revenues, operating expenses, and income (loss) before income taxes and noncontrolling interest
(“Pre-tax earnings”) by segment for the years ended December 31, 2024, 2023, and 2022 are summarized in the following table:
133
(in thousands)
Market
Making
Execution
Services
Corporate (1)
Consolidated
Total
2024
Total revenues
$
2,374,096
$
507,230
$
(4,377) $
2,876,949
Operating expenses:
Brokerage, exchange, clearance fees and payments for order flow, net
573,382
101,044
—
674,426
Interest and dividends expense
524,158
5,019
—
529,177
Other segment items (2)
685,504
339,407
3,465
1,028,376
Total operating expenses
1,783,044
445,470
3,465
2,231,979
Income (loss) before income taxes and noncontrolling interest
$
591,052
$
61,760
$
(7,842) $
644,970
2023
Total revenues
$
1,843,523
$
446,542
$
3,308
$
2,293,373
Operating expenses:
Brokerage, exchange, clearance fees and payments for order flow, net
420,608
87,750
—
508,358
Interest and dividends expense
497,895
2,572
—
500,467
Other segment items (2)
609,418
345,780
4,219
959,417
Total operating expenses
1,527,921
436,102
4,219
1,968,242
Income (loss) before income taxes and noncontrolling interest
$
315,602
$
10,440
$
(911) $
325,131
2022
Total revenues
$
1,812,839
$
514,241
$
37,732
$
2,364,812
Operating expenses:
Brokerage, exchange, clearance fees and payments for order flow, net
524,762
94,406
—
619,168
Interest and dividends expense
225,427
5,633
—
231,060
Other segment items (2)
582,091
372,860
2,835
957,786
Total operating expenses
1,332,280
472,899
2,835
1,808,014
Income (loss) before income taxes and noncontrolling interest
$
480,559
$
41,342
$
34,897
$
556,798
(1) Corporate is a non-operating segment. The Company presents its information as a part of reconciliation to Consolidated Totals.
(2) Other segment items for both reportable segments include: Communication and data processing, Employee compensation and payroll taxes, Operations and
administrative, Depreciation and amortization, Financing interest expense on long-term borrowings, and Debt issue cost related to debt refinancing, prepayment
and commitment fees.
The Company operates its business in the U.S. and internationally, primarily in Europe and Asia. Significant
transactions and balances between geographic regions occur primarily as a result of certain of the Company’s subsidiaries
incurring operating expenses such as employee compensation, communications and data processing and other overhead costs,
for the purpose of providing execution, clearing and other support services to affiliates. Charges for transactions between
regions are designed to approximate full costs. Intra-region income and expenses and related balances have been eliminated in
the geographic information presented below to accurately reflect the external business conducted in each geographical region.
The revenues are attributed to countries based on the locations of the subsidiaries. The following table presents total revenues
by geographic area for the years ended December 31, 2024, 2023, and 2022:
Year Ended December 31,
(in thousands)
2024
2023
2022
Revenues:
United States
$
2,362,481
$
1,920,748
$
1,914,223
Ireland
273,215
206,507
222,178
Others
241,253
166,118
228,411
Total revenues
$
2,876,949
$
2,293,373
$
2,364,812
23. Related Party Transactions
The Company incurs expenses and maintains balances with its affiliates in the ordinary course of business. As of
December 31, 2024, and December 31, 2023, the Company had a net payables to its affiliates of $0.1 million and a net payables
to its affiliates of $1.5 million, respectively.
134
The Company has held a minority interest in JNX since 2016 (see Note 10 “Financial Assets and Liabilities”). The
Company pays exchange fees to JNX for the trading activities conducted on its proprietary trading system. The Company paid
$11.1 million, $12.1 million, and $13.8 million for the years ended December 31, 2024, 2023, and 2022, respectively, to JNX
for these trading activities.
The Company pays monthly use fees to a JV in which it holds an interest (see Note 12 “Variable Interest Entities”).
These monthly fees are for the use of communication networks operated by the JV and are recorded within Communications
and data processing on the Consolidated Statements of Comprehensive Income. The Company previously held a similar
arrangement with another telecommunication JV and paid a monthly use fee, and the Company disposed of its interests in this
JV and ended the monthly fee arrangement as of September 1, 2024. The Company made payments to these JVs of $35.5
million, $32.6 million, and $27.7 million to the JVs for the years ended December 31, 2024, 2023, and 2022, respectively.
The Company has an interest in Members Exchange, a member-owned equities exchange. The Company pays
regulatory and transaction fees and receives rebates from trading activities. The Company paid $8.0 million, paid $4.8 million,
and received $16.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.
The Company made a one-time payment of $0.1 million to a founder-affiliated corporation for expenses related to the
Company’s corporate events held in 2024.
In the second quarter of 2022, the Company formed a JV to support the growth and expansion of a multi-asset request-
for-quote communication platform. The Company consolidates this JV and recorded noncontrolling interest of $39.2 million in
the Consolidated Statements of Changes in Equity during the year ended December 31, 2022. See Note 12 “Variable Interest
Entities” for further details. On April 19, 2024, the Company entered into an agreement to sell a 49% interest in this JV. The
sale is subject to various closing conditions including the receipt of certain regulatory approvals. Upon the closing of the sale,
the Company will retain a minority stake in the JV. See Note 3 “Business Held for Sale” for further details.
24. Parent Company
VFI is the sole managing member of Virtu Financial, which guarantees the indebtedness of its direct subsidiary
under the First Lien Term B-1 Loan Facility (see Note 9 “Borrowings”). VFI is limited to its ability to receive distributions
(including for purposes of paying corporate and other overhead expenses and dividends) from Virtu Financial under the Credit
Agreement. The following financial statements (the “Parent Company Only Financial Statements”) should be read in
conjunction with the Consolidated Financial Statements of the Company and the foregoing.
135
Virtu Financial, Inc.
(Parent Company Only)
Statements of Financial Condition
(In thousands except interest data)
December 31,
2024
December 31,
2023
Assets
Cash
$
30,369
$
27,981
Deferred tax asset
131,568
130,344
Investment in subsidiary
3,039,061
2,955,137
Other assets
18,942
49,964
Total assets
$
3,219,940
$
3,163,426
Liabilities, redeemable membership interest and equity
Liabilities
Payable to affiliate
$
1,741,974
$
1,738,291
Accounts payable and accrued expenses and other liabilities
25,200
3,928
Deferred tax liabilities
2,000
2,000
Tax receivable agreement obligations
196,592
216,480
Total liabilities
1,965,766
1,960,699
Virtu Financial Inc. Stockholders' equity
Class A common stock (par value $0.00001), Authorized — 1,000,000,000 and 1,000,000,000 shares,
Issued — 137,479,751 and 134,901,037 shares, Outstanding — 84,976,325 and 89,092,686 shares at
December 31, 2024 and December 31, 2023, respectively
1
1
Class B common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares, Issued
and Outstanding — 0 and 0 shares at December 31, 2024 and December 31, 2023, respectively
—
—
Class C common stock (par value $0.00001), Authorized — 90,000,000 and 90,000,000 shares, Issued
and Outstanding — 8,561,970 and 8,607,998 shares at December 31, 2024 and December 31, 2023,
respectively
—
—
Class D common stock (par value $0.00001), Authorized — 175,000,000 and 175,000,000 shares,
Issued and Outstanding — 60,091,740 and 60,091,740 shares at December 31, 2024 and December 31,
2023, respectively
1
1
Treasury stock, at cost, 52,503,426 and 45,808,351 shares at December 31, 2024 and December 31,
2023, respectively
(1,339,913)
(1,166,299)
Additional paid-in capital
1,432,240
1,351,574
Retained earnings (accumulated deficit)
1,168,908
1,000,403
Accumulated other comprehensive income (loss)
(7,063)
17,047
Total Virtu Financial Inc. stockholders' equity
1,254,174
1,202,727
Total liabilities and stockholders' equity
$
3,219,940
$
3,163,426
136
Virtu Financial, Inc.
(Parent Company Only)
Statements of Comprehensive Income
Years Ended December 31,
(in thousands)
2024
2023
2022
Revenues:
Other Income
$
—
$
—
$
—
—
—
—
Operating Expenses:
Operations and administrative
(142)
(213)
36
Income (loss) before equity in income of subsidiary
142
213
(36)
Equity in income (loss) of subsidiary, net of tax
534,393
263,708
468,368
Net income (loss)
$
534,535
$
263,921
$
468,332
Net income (loss) attributable to common stockholders
$
534,535
$
263,921
$
468,332
Other comprehensive income (loss):
Foreign currency translation adjustment, net of taxes
(5,637)
6,952
(13,604)
Net change in unrealized cash flow hedges gains (losses), net of taxes
(18,473)
(21,509)
55,404
Comprehensive income (loss)
$
510,425
$
249,364
$
510,132
137
Virtu Financial, Inc.
(Parent Company Only)
Statements of Cash Flows
Years Ended December 31,
(in thousands)
2024
2023
2022
Cash flows from operating activities
Net income
$
534,535
$
263,921
$
468,332
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of subsidiary, net of tax
(139,113)
223,376
239,807
Tax receivable agreement obligation reduction
338
997
819
Deferred taxes
(1,224)
8,795
9,884
Changes in operating assets and liabilities:
50,878
1,129
(11,132)
Net cash provided by operating activities
445,414
498,218
707,710
Cash flows from investing activities
Investments in subsidiaries, equity basis
67,741
66,644
71,597
Net cash provided by investing activities
67,741
66,644
71,597
Cash flows from financing activities
Dividends to stockholders and distributions from Virtu Financial to noncontrolling interest
(299,403)
(306,136)
(375,284)
Repurchase of Class C common stock
—
(1,566)
(8,256)
Purchase of treasury stock
(191,138)
(229,012)
(480,544)
Tax receivable agreement obligations
(20,226)
(23,275)
(21,343)
Issuance of common stock in connection with secondary offering, net of offering costs
—
—
—
Net cash used in financing activities
(510,767)
(559,989)
(885,427)
Net increase (decrease) in Cash
2,388
4,873
(106,120)
Cash, beginning of period
27,981
23,108
129,228
Cash, end of period
$
30,369
$
27,981
$
23,108
Supplemental disclosure of cash flow information:
Taxes paid
$
10,675
$
14,957
$
64,775
Non-cash financing activities
Tax receivable agreement described in Note 5
(209)
(3,787)
1,044
Repurchase of Class C common stock
(76)
(2,330)
—
Purchase of treasury stock
(1,340)
—
—
25. Subsequent Events
The Company has evaluated subsequent events for adjustment to or disclosure in its Consolidated Financial Statements
through the date of this report, and has not identified any recordable or disclosable events, not otherwise reported in these
Consolidated Financial Statements or the notes thereto, except for the following:
On January 29, 2025, the Company’s Board of Directors declared a dividend of $0.24 per share of Class A Common
Stock and Class B Common Stock and per participating Restricted Stock Unit and Restricted Stock Award that will be paid on
March 17, 2025 to holders of record as of February 28, 2025.
On February 19, 2025 (the “Amendment No. 2 Effective Date”), the Company entered into Amendment No. 2
(“Amendment No. 2”), which amended the Credit Agreement.
Amendment No. 2 amends the Credit Agreement to, among other things, effect a repricing of the $1,245.0 million in
aggregate principal amount of senior secured first lien term B-1 loans due 2031 outstanding under the Credit Agreement (the
“Existing Term Loans”) by establishing a new refinancing tranche of $1,245.0 million in aggregate principal amount of senior
secured first lien term B-2 loans (the “New Term B-2 Loans”), the proceeds of which were used to repay in full the Existing
Term Loans on the Amendment No. 2 Effective Date.
138
The New Term B-2 Loans bear interest, at the Company’s election, at either (i) the greatest of (a) the prime rate in
effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c)
term SOFR for a borrowing with an interest period of one month plus 1.0% and (d) 1.0%, plus, in each case, 1.50%, or (ii) the
greater of (x) term SOFR for the interest period in effect and (y) 0%, plus, in each case, 2.50%.
The New Term B-2 Loans will mature on June 21, 2031 and amortize in annual installments equal to 1.0% of the
original aggregate principal amount of the New Term B-2 Loans due on each anniversary of the Amendment No. 2 Effective
Date. The New Term B-2 Loans are also subject to contingent principal payments based on excess cash flow and certain other
triggering events.
139
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer,
management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31,
2024. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31,
2024, our disclosure controls and procedures were effective to ensure information required to be disclosed by us in the reports
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the
SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our
disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, with the Company have been detected. These
inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur
because of simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management override of controls.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions. Over time, a control may become inadequate because of changes in conditions or because the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and may not be detected.
140
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes
those written policies and procedures that:
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles;
•
provide reasonable assurance that receipts and expenditures are being made only in accordance with management and
director authorization; and
•
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control - Integrated Framework (2013).
Based on this assessment, management determined that as of December 31, 2024, internal control over financial
reporting is effective.
PricewaterhouseCoopers LLP has audited our internal control over financial reporting as of December 31, 2024. Their
report is included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Changes to Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)
occurred during the three months ended December 31, 2024 that has or is reasonably likely to materially affect, our internal
control over financial reporting.
141
ITEM 9B. OTHER INFORMATION
During the three months and the year ended December 31, 2024, no director or “officer” (as defined in Rule 16a-1(f)
under the Exchange Act) of the Company adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or a “non-Rule
10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K under the Exchange Act.
142
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
143
PART III
144
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Information with respect to this Item, including the information required by Item 408(b) of Regulation S-K related to
our insider trading policies and procedures, will be set forth in our 2025 Proxy Statement, which will be filed with the
Securities and Exchange Commission no later than 120 days after December 31, 2024. For the limited purpose of providing the
information necessary to comply with this Item 10, the 2025 Proxy Statement is incorporated herein by this reference. All
references to the 2025 Proxy Statement in this Part III are exclusive of the information set forth under the caption “Audit
Committee Report.”
Our Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors and
employees, which is available on our website (www.virtu.com) under “Corporate Governance.” We intend to satisfy the
disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of
Business Conduct and Ethics by posting such information on our website at the address and location specified above.
145
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this Item will be set forth in our 2025 Proxy Statement, which will be filed with the
Securities and Exchange Commission no later than 120 days after December 31, 2024. For the limited purpose of providing the
information necessary to comply with this Item 11, the 2025 Proxy Statement is incorporated herein by this reference.
146
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information with respect to this Item will be set forth in our 2025 Proxy Statement, which will be filed with the
Securities and Exchange Commission no later than 120 days after December 31, 2024. For the limited purpose of providing the
information necessary to comply with this Item 12, the 2025 Proxy Statement is incorporated herein by this reference.
147
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information with respect to this Item will be set forth in our 2025 Proxy Statement, which will be filed with the
Securities and Exchange Commission no later than 120 days after December 31, 2024. For the limited purpose of providing the
information necessary to comply with this Item 13, the 2025 Proxy Statement is incorporated herein by this reference.
148
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information with respect to this Item will be set forth in our 2025 Proxy Statement, which will be filed with the
Securities and Exchange Commission no later than 120 days after December 31, 2024. For the limited purpose of providing the
information necessary to comply with this Item 14, the 2025 Proxy Statement is incorporated herein by this reference.
149
PART IV
ITEM 15. EXHIBITS
Exhibit Number
Description
2.1
Reorganization Agreement, dated April 15, 2015, by and among Virtu Financial, Inc., Virtu Financial
Merger Sub LLC, Virtu Financial Intermediate Holdings LLC, Virtu Financial Merger Sub II LLC,
Virtu Financial Intermediate Holdings II LLC, Virtu Financial LLC, VFH Parent LLC, SLP Virtu
Investors, LLC, SLP III EW Feeder I, L.P., SLP III EW Feeder II, L.P., Silver Lake Technology
Associates III, L.P., SLP III EW Feeder LLC, Havelock Fund Investments Pte Ltd., Wilbur Investments
LLC, VV Investment LLC, Virtu East MIP LLC, Virtu Employee Holdco LLC, TJMT Holdings LLC
(f/k/a Virtu Holdings LLC), Virtu Financial Holdings LLC and the Other Class A Members named
therein (incorporated herein by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form
10-Q, as amended (File No. 001-37352), filed on May 29, 2015).
2.2
Merger Agreement, dated April 15, 2015, by and among Virtu Financial, Inc., Virtu Financial Merger
Sub LLC, Virtu Financial Intermediate Holdings LLC, SLP III EW Feeder Corp., SLP III EW Feeder I,
L.P. and Havelock Fund Investments Pte Ltd (incorporated herein by reference to Exhibit 2.2 to the
Company’s quarterly report on Form 10-Q, as amended (File No. 001-37352),filed on May 29, 2015).
2.3
Merger Agreement, dated April 15, 2015, by and among Virtu Financial, Inc., Virtu Financial Merger
Sub II LLC, Virtu Financial Intermediate Holdings II LLC and Wilbur Investments LLC (incorporated
herein by reference to Exhibit 2.3 to the Company’s Quarterly Report on Form 10-Q, as amended (File
No. 001-37352), filed on May 29, 2015).
2.4
Agreement and Plan of Merger, dated April 20, 2017, by and among Virtu Financial, Inc., Orchestra
Merger Sub, Inc. and KCG Holdings, Inc. (incorporated herein by reference to Exhibit 2.1 to the
Company’s Current Report on Form 8-K (File No. 001-37352) filed on April 21, 2017).
2.5
Temasek Investment Agreement, dated April 20, 2017, by and between Virtu Financial, Inc. and
Aranda Investments Pte. Ltd. (incorporated herein by reference to Exhibit 2.2 to the Company’s
Quarterly Report on Form 10-Q (File No. 001-37352) filed on May 10, 2017).
2.6
Agreement and Plan of Merger, dated November 6, 2018, by and among Virtu Financial, Inc., Impala
Merger Sub, Inc. and Investment Technology Group, Inc. (incorporated herein by reference to Exhibit
2.1 to the Company’s Current Report on Form 8-K (File No. 001-37352) filed on November 8, 2018).
3.1
Second Amended and Restated Certificate of Incorporation of the Registrant (incorporated herein by
reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37352), filed
on July 28, 2023).
3.2
Second Amended and Restated Certificate of Incorporation of the Registrant (Redline Version)
(incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement on
Schedule 14A (File No. 001-37352), filed on April 27, 2023).
3.3
Amended and Restated By-laws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the
Company’s Quarterly Report on Form 10-Q, as amended (File No. 001-37352), filed on May 29, 2015).
4.1
Description of the Capital Stock (incorporated herein by reference to Exhibit 4.1 to the Company’s
Annual Report on Form 10-K (File No. 001-37352) filed on February 28, 2020).
4.2
Indenture, dated as of June 21, 2024, by and among Virtu Financial LLC, as Holdings, VFH Parent
LLC, as Issuer, Valor Co-Issuer, Inc., as Co-Issuer, the Subsidiary Guarantors, and U.S. Bank National
Association, as Trustee and Collateral Agent (incorporated herein by reference to Exhibit 4.1 to the
Company’s Quarterly Report on Form 10-Q (File No. 001-37352) filed on July 26, 2024).
10.1†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan (incorporated herein by
reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 (File No. 333-219110)
filed on June 30, 2017).
10.2†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Form of Restricted Stock
Unit and Common Stock Award Agreement (incorporated herein by reference to Exhibit 10.4 to the
Company’s Annual Report on Form 10-K (File No. 001-37352) filed on February 25, 2021).
10.3†
Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.2 to the
Company’s Amendment No. 2 to Form S-1 Registration Statement (File No. 333-194473) filed on
February 20, 2015).
10.4
Credit Agreement, dated January 13, 2022, among Virtu Financial LLC, as Holdings, VFH Parent LLC,
as Borrower, the Lenders, Issuing Banks and Swingline Lender Party Hereto, and JPMorgan Chase
Bank, N.A., as Administrative Agent, and Jefferies Finance LLC and RBC Capital Markets, as Joint
Lead Arrangers and Joint Bookrunners (incorporated herein by reference to Exhibit 10.11 to the
Company’s Annual Report on Form 10-K (File No. 001-37352), filed on February 18, 2022).
150
10.5
Stockholders Agreement, dated as of April 15, 2015, by and among Virtu Financial, Inc. and the
stockholders named therein (incorporated herein by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q, as amended (File No. 001-37352) filed on May 29, 2015).
10.6
Exchange Agreement, dated as of April 15, 2015, by and among Virtu Financial LLC, Virtu Financial,
Inc. and the holders of Common Units and shares of Class C Common Stock or Class D Common Stock
(as each defined therein) (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly
Report on Form 10-Q, as amended (File No. 001-37352) filed on May 29, 2015).
10.7
Tax Receivable Agreement, dated as of April 15, 2015, by and among Virtu Financial, Inc., TJMT
Holdings LLC, Virtu Employee Holdco, the Management Members and other pre-IPO investors
(incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, as
amended (File No. 001-37352) filed on May 29, 2015).
10.8
Tax Receivable Agreement, dated as of April 15, 2015, by and between Virtu Financial, Inc. and the
Investor Post-IPO Stockholders (incorporated herein by reference to Exhibit 10.6 to the Company’s
Quarterly Report on Form 10-Q, as amended (File No. 001-37352) filed on May 29, 2015).
10.9
Tax Receivable Agreement, dated as of April 15, 2015, by and among Virtu Financial, Inc. and the
Silver Lake Post-IPO Members (incorporated herein by reference to Exhibit 10.7 to the Company’s
Quarterly Report on Form 10-Q, as amended (File No. 001-37352) filed on May 29, 2015).
10.10
Third Amended and Restated Limited Liability Company Agreement of Virtu Financial LLC, dated as
of April 15, 2015 (incorporated herein by reference to Exhibit 10.8 to the Company’s Quarterly Report
on Form 10-Q, as amended (File No. 001-37352) filed on May 29, 2015).
10.11
Amended and Restated Limited Liability Company Agreement of Virtu Employee Holdco LLC, dated
as of April 15, 2015 (incorporated herein by reference to Exhibit 10.9 to the Company’s Quarterly
Report on Form 10-Q, as amended (File No. 001-37352), filed on May 29, 2015).
10.12
Class C Common Stock Subscription Agreement, dated as of April 15, 2015 (incorporated herein by
reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q, as amended (File No.
001-37352) filed on May 29, 2015).
10.13
Class D Common Stock Subscription Agreement, dated as of April 15, 2015 (incorporated herein by
reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q, as amended (File No.
001-37352) filed on May 29, 2015).
10.14
Stockholders Agreement, dated April 20, 2017, by and among Virtu Financial, Inc., TJMT Holdings
LLC, Aranda Investments Pte. Ltd., Havelock Fund Investments Pte Ltd. and North Island Holdings I,
LP (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q
(File No. 001-37352) filed on May 10, 2017).
10.15
Amended and Restated Registration Rights Agreement, dated April 20, 2017, by and among Virtu
Financial, Inc., TJMT Holdings LLC, Aranda Investments Pte. Ltd., Havelock Fund Investments Pte
Ltd., North Island Holdings I, LP and the additional holders named therein (incorporated herein by
reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37352) filed
on May 10, 2017).
10.16
Second Amendment, dated as of June 2, 2017, to the Third Amended and Restated Limited Liability
Company Agreement of Virtu Financial LLC, by and among Virtu Financial LLC, Virtu Financial, Inc.
and TJMT Holdings LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K (File No. 001-37352) filed on June 2, 2017).
10.17
Third Amendment, dated as of January 5, 2018, to the Third Amended and Restated Limited Liability
Company Agreement of Virtu Financial LLC, dated as of April 15, 2015 (incorporated herein by
reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K (File No. 001-37352), filed
on March 13, 2018).
10.18
Amendment No. 1 to the Amended and Restated Registration Rights Agreement, dated May 10, 2018,
by and among Virtu Financial, Inc., TJMT Holdings LLC, North Island Holdings I, LP, Havelock Fund
Investments Pte Ltd and Aranda Investments Pte. Ltd (incorporated herein by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K (File No. 001-37352), filed on May 15, 2018).
10.19†
Investment Technology Group, Inc. 2007 Omnibus Equity Compensation Plan, Amended and Restated
Effective June 8, 2017 (incorporated herein by reference to Exhibit 4.3 to the Company’s Registration
Statement on Form S-8 (File No. 333-230012) filed on March 1, 2019).
10.20†
Virtu Financial, Inc. 2015 Amended and Restated Management Incentive Plan Restricted Stock Unit
and Common Stock Award Agreement, dated as of February 1, 2021, by and between Virtu Financial,
Inc. and Douglas A. Cifu (incorporated herein by reference to Exhibit 10.34 to the Company’s Annual
Report on Form 10-K (File No. 001-37352) filed on February 25, 2021).
10.21†
Virtu Financial, Inc. 2015 Amended and Restated Management Incentive Plan Restricted Stock Unit
and Common Stock Award Agreement, dated as of February 1, 2021, by and between Virtu Financial,
Inc. and Joseph Molluso (incorporated herein by reference to Exhibit 10.37 to the Company’s Annual
Report on Form 10-K (File No. 001-37352) filed on February 25, 2021).
151
10.22†
Virtu Financial, Inc. 2015 Amended and Restated Management Incentive Plan Restricted Stock Unit
and Common Stock Award Agreement, dated as of February 1, 2021, by and between Virtu Financial,
Inc. and Brett Fairclough (incorporated herein by reference to Exhibit 10.38 to the Company’s Annual
Report on Form 10-K (File No. 001-37352) filed on February 25, 2021).
10.23†
Virtu Financial, Inc. 2015 Amended and Restated Management Incentive Plan Restricted Stock Unit
and Common Stock Award Agreement, dated as of February 1, 2021, by and between Virtu Financial,
Inc. and Stephen Cavoli (incorporated herein by reference to Exhibit 10.39 to the Company’s Annual
Report on Form 10-K (File No. 001-37352) filed on February 25, 2021).
10.24†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of December 24, 2021, by and between Virtu Financial, Inc.
and Douglas A. Cifu (incorporated herein by reference to Exhibit 10.42 to the Company’s Annual
Report on Form 10-K (File No. 001-37352), filed on February 18, 2022).
10.25†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of February 3, 2022, by and between Virtu Financial, Inc. and
Douglas A. Cifu (incorporated herein by reference to Exhibit 10.43 to the Company’s Annual Report on
Form 10-K (File No. 001-37352), filed on February 18, 2022).
10.26†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of February 3, 2022, by and between Virtu Financial, Inc. and
Joseph Molluso (incorporated herein by reference to Exhibit 10.44 to the Company’s Annual Report on
Form 10-K (File No. 001-37352), filed on February 18, 2022).
10.27†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit and Common Stock Award Agreement, dated as of February 3, 2022, by and between Virtu
Financial, Inc. and Sean Galvin (incorporated herein by reference to Exhibit 10.45 to the Company’s
Annual Report on Form 10-K (File No. 001-37352), filed on February 18, 2022).
10.28†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of February 3, 2022, by and between Virtu Financial, Inc. and
Sean Galvin (incorporated herein by reference to Exhibit 10.46 to the Company’s Annual Report on
Form 10-K (File No. 001-37352), filed on February 18, 2022).
10.29†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit and Common Stock Award Agreement, dated as of February 3, 2022, by and between Virtu
Financial, Inc. and Brett Fairclough (incorporated herein by reference to Exhibit 10.47 to the
Company’s Annual Report on Form 10-K (File No. 001-37352), filed on February 18, 2022).
10.30†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit and Common Stock Award Agreement, dated as of February 3, 2022, by and between Virtu
Financial, Inc. and Stephen Cavoli (incorporated herein by reference to Exhibit 10.48 to the Company’s
Annual Report on Form 10-K (File No. 001-37352), filed on February 18, 2022).
10.31†
Virtu Financial, Inc. Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.40 to
the Company’s Annual Report on Form 10-K (File No. 001-37352) filed on February 25, 2021)
10.32†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of March 1, 2022, by and between Virtu Financial, Inc. and
Douglas A. Cifu (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q (File No. 001-37352) filed on May 3, 2022).
10.33†
Virtu Financial, Inc. Second Amended and Restated Employment Agreement, dated as of April 29,
2022, by and between Virtu Financial, Inc. and Douglas A. Cifu (incorporated herein by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37352) filed on August 2,
2022).
10.34†
Virtu Financial, Inc. Amended and Restated Employment Agreement, dated as of December 1, 2022, by
and between Virtu Financial Operating LLC and Joseph Molluso (incorporated herein by reference to
Exhibit 10.46 to the Company’s Annual Report on Form 10-K (File No. 001-37352) filed on February
17, 2023).
10.35†
Virtu Financial, Inc. Amended and Restated Employment Agreement, dated as of December 1, 2022, by
and between Virtu Financial Operating LLC and Brett Fairclough (incorporated herein by reference to
Exhibit 10.47 to the Company’s Annual Report on Form 10-K (File No. 001-37352) filed on February
17, 2023).
10.36†
Virtu Financial, Inc. Amended and Restated Employment Agreement, dated as of December 1, 2022, by
and between Virtu Financial Operating LLC and Stephen Cavoli (incorporated herein by reference to
Exhibit 10.48 to the Company’s Annual Report on Form 10-K (File No. 001-37352) filed on February
17, 2023).
152
10.37†
Virtu Financial, Inc. 2015 Amended and Restated Management Incentive Plan Amendment No. 1 to
Employee Restricted Stock Unit Award Agreement dated as of December 1, 2022 to Restricted Stock
Unit Award Agreement dated as of March 1, 2022, by and between Virtu Financial, Inc. and Douglas
A. Cifu (incorporated herein by reference to Exhibit 10.49 to the Company’s Annual Report on Form
10-K (File No. 001-37352) filed on February 17, 2023).
10.38†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of February 3, 2023, by and between Virtu Financial, Inc. and
Douglas A. Cifu (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q (File No. 001-37352) filed on April 28, 2023).
10.39†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of February 3, 2023, by and between Virtu Financial, Inc. and
Joseph Molluso (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report
on Form 10-Q (File No. 001-37352) filed on April 28, 2023).
10.40†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of February 3, 2023, by and between Virtu Financial, Inc. and
Stephen Cavoli (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on
Form 10-Q (File No. 001-37352) filed on April 28, 2023).
10.41†
Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement, dated as of February 3, 2023, by and between Virtu Financial, Inc. and
Brett Fairclough (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report
on Form 10-Q (File No. 001-37352) filed on April 28, 2023).
10.42†
Virtu Financial Inc. Amended and Restated 2015 Management Incentive Plan Employee Restricted
Stock Unit Award Agreement (incorporated herein by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q (File No. 001-37352) filed on April 26, 2024).
10.43
Amendment No. 1, dated June 21, 2024, to the Credit Agreement, dated January 13, 2022, among Virtu
Financial LLC, as Holdings, VFH Parent LLC, as Borrower, the Lenders, and JPMorgan Chase Bank,
N.A., as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q (File No. 001-37352) filed on July 26, 2024).
10.44†
Employment Agreement, dated as of April 29, 2024, by and between Virtu Financial Operating LLC
and Cindy Lee (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on
Form 10-Q (File No. 001-37352) filed on July 26, 2024).
10.45*
Amendment No. 2, dated February 19, 2025, to the Credit Agreement, dated January 13, 2022 (as
amended by Amendment No. 1, dated June 21, 2024), among Virtu Financial LLC, as Holdings, VFH
Parent LLC, as Borrower, the Lenders, and JPMorgan Chase Bank, N.A., as Administrative Agent.
19.1*
Virtu Financial, Inc. Securities Trading Policy.
21.1*
Subsidiaries of Virtu Financial, Inc.
23.1*
Consent of PricewaterhouseCoopers LLP.
31.1*
Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Securities
Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2*
Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Securities
Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
97.1
Virtu Financial, Inc. Clawback Policy (incorporated herein by reference to Exhibit 97.1 to the
Company’s Quarterly Report on Form 10-K (File No. 001-37352) filed on February 16, 2024).
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase
101.LAB*
XBRL Taxonomy Extension Label Linkbase
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase
101.DEF*
XBRL Taxonomy Extension Definition Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith.
153
† Management contract or compensatory plan or arrangement.
154
ITEM 16. FORM 10-K SUMMARY
None.
155
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Virtu Financial, Inc.
DATE:
February 21, 2025
By:
/s/ Douglas A. Cifu
Douglas A. Cifu
Chief Executive Officer
DATE:
February 21, 2025
By:
/s/ Cindy Lee
Cindy Lee
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Douglas A. Cifu and Cindy Lee, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of
substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and
all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in
connection therewith the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about
the premises, as fully and to all intents and purposes as he or she might or could do in person hereby ratifying and confirming
all that said attorneys-in-fact and agents, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
156
Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the report has been signed
below by the following persons on behalf of the Registrant and in the capacities indicated on February 21, 2025.
Signature
Title
/s/ Douglas A. Cifu
Chief Executive Officer
(Principal Executive Officer) and Director
Douglas A. Cifu
/s/ Cindy Lee
Chief Financial Officer
(Principal Financial and Accounting Officer)
Cindy Lee
/s/ Michael Viola
Chairman of the Board of Directors
Michael Viola
/s/ Vincent Viola
Chairman Emeritus and Director
Vincent Viola
/s/ William F. Cruger, Jr.
Director
William F. Cruger, Jr.
/s/ Virginia Gambale
Director
Virginia Gambale
/s/ Joseph J. Grano, Jr.
Director
Joseph J. Grano, Jr.
/s/ Joanne Minieri
Director
Joanne Minieri
/s/ John D. Nixon
Director
John D. Nixon
/s/ Christopher Quick
Director
Christopher Quick
/s/ David Urban
Director
David Urban
157
Virtu Financial 2024 Annual Report
19 // 20
Cautionary Statement Regarding Forward Looking Statements
This presentation may contain “forward-looking statements” made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Statements regarding Virtu Financial, Inc.’s (“Virtu’s”, the
“Company’s” or “our”) business that are not historical facts are forward-looking statements. Forward-looking
statements should not be read as a guarantee of future performance or results, and will not necessarily
be accurate indications of the times at, or by which, such performance or results will be achieved. The
Company assumes no obligation to update forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting forward-looking information, and if the Company does
update one or more forward-looking statements, no inference should be drawn that the Company will make
additional updates with respect thereto or with respect to other forward-looking statements. Forward-looking
statements are based on information available at the time and/or management’s good faith belief with
respect to future events, and is subject to risks and uncertainties, some or all of which are not predictable or
within Virtu’s control, that could cause actual performance or results to differ materially from those expressed
in the statements. Those risks and uncertainties include, without limitation: fluctuations in trading volume
and volatilities in the markets in which we operate; the ability of our trading counterparties, clients and
various clearing houses to perform their obligations to us; the performance and reliability of our customized
trading platform; the risk of material trading losses from our market making activities; swings in valuations
in securities or other instruments in which we hold positions; increasing competition and consolidation
in our industry; the risk that cash flow from our operations and other available sources of liquidity will not
be sufficient to fund our various ongoing obligations, including operating expenses, short term funding
requirements, margin requirements, capital expenditures, debt service and dividend payments; potential
consequences of SEC proposals under the prior administration focused on equity markets which may, if
adopted, result in reduced overall and off-exchange trading volumes and market making opportunities,
impose additional or heightened regulatory obligations on market makers and other market participants, and
generally increase the implicit and explicit cost as well as the complexity of the U.S. equities eco-system for
all participants; regulatory and legal uncertainties and other potential changes associated with our industry,
particularly in light of increased attention from media, regulators and lawmakers to market structure and
related issues including but not limited to the retail trading environment, wholesale market making and off
exchange trading more generally and payment for order flow arrangements; potential adverse results from
legal or regulatory proceedings; our ability to remain technologically competitive and to ensure that the
technology we utilize is not vulnerable to security risks, hacking and cyber-attacks; risks associated with third
party software and technology infrastructure. For a discussion of the risks and uncertainties which could
cause actual results to differ from those contained in forward-looking statements, see Virtu’s Securities and
Exchange Commission filings, including but not limited to Virtu’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC.
GAAP and Non-GAAP Results
This presentation includes or may include certain non-GAAP financial measures, including Adjusted EPS,
Normalized Adjusted EPS, Adjusted Net Trading Income, Normalized Adjusted Net Income, Normalized
Adjusted Pre-Tax Income, EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Trading
Capital, Invested Capital, Adjusted Operating Expense and Adjusted Compensation Expense. Non-GAAP
financial measures should be considered only as supplemental to, and not as superior to, financial measures
prepared in accordance with GAAP. Other companies may use similarly titled non‐GAAP financial measures
that are calculated differently from the way we calculate such measures. Accordingly, our non‐GAAP financial
measures may not be comparable to similar measures used by other companies. We caution investors not
to place undue reliance on such non‐GAAP measures, but instead to consider them with the most directly
comparable GAAP measure. Non‐GAAP financial measures have limitations as analytical tools, and should
not be considered in isolation, or as a substitute for our results as reported under GAAP. A reconciliation of
non‐GAAP measures to the most directly comparable financial measure prepared in accordance with GAAP is
included at the end of this presentation.
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