Amended and updated 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. 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 21,000,000 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.

                                       38
--------------------------------------------------------------------------------
  Table of Contents
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.

Investment Technology Group, Inc. Modified and Maintained. Omnibus share compensation plan 2007

On the ITG Closing Date, the Company assumed the Amended and Restated ITG 2007
Equity Plan and the Assumed Awards. As of the ITG Closing Date, the aggregate
number of shares of Class A Common Stock subject to such Assumed Awards was
2,497,028 and the aggregate number of shares of Class A Common Stock that
remained issuable pursuant to the Amended and Restated ITG 2007 Equity Plan was
1,230,406.

Share Repurchase Program

On May 4, 2021, the Company's Board of Directors authorized the expansion of the
Company's share repurchase program, increasing the total authorized amount by
$300 million to $470 million in Class A Common Stock and Virtu Financial Units
and extending the duration of the program through May 4, 2022. The share
repurchase program authorizes the Company to repurchase shares from time to time
in open market transactions, privately negotiated transactions or by other
means. Repurchases are also permitted to be made under Rule 10b5-1 plans. The
timing and amount of repurchase transactions are determined by the Company's
management based on its evaluation of market conditions, share price, cash
sources, legal requirements and other factors. From the inception of the program
through September 30, 2021, the Company repurchased approximately 12.5 million
shares of Class A Common Stock and Virtu Financial Units for approximately
$337.5 million. As of September 30, 2021, the Company has approximately
$132.5 million remaining capacity for future purchases of shares of Class A
Common Stock and Virtu Financial Units under the program.

Employee exchanges

During the nine months ended September 30, 2021 and 2020, 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
405,272 and 2,420,239 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.

Mandate issuance

On March 20, 2020, in connection with and in consideration of the Founder
Member's commitments under the Founder Member Loan Facility (as described in
Note 9 "Borrowings"), the Company delivered to the Founder Member a warrant (the
"Warrant") to purchase shares of the Company's Class A Common Stock. Pursuant to
the Warrant, the Founder Member may purchase up to 3,000,000 shares of Class A
Common Stock. If at any time during the term of the Founder Member Loan
Facility, the Founder Member Loans equal to or greater than $100 million had
remained outstanding for a certain period of time specified in the Warrant, the
number of shares would have increased to 10,000,000. The Founder Member Loan
Facility Term expired on September 20, 2020 without the Company having borrowed
any Founder Member Loans thereunder (as described in Note 9 "Borrowings"), and
as a result no such increase in the number of shares which may be purchased has
occurred or will occur pursuant to the terms of the Warrant. The exercise price
per share of the Class A Common Stock issuable pursuant to the Warrant is
$22.98, which in accordance with the terms of the Warrant, is equal to the
average of the volume weighted average prices of the Class A Common Stock for
the ten (10) trading days following May 7, 2020, the date on which the Company
publicly announced its earnings results for the first quarter of 2020. The
Warrant may be exercised to purchase up to 3,000,000 shares of the Company's
Class A Common Stock on any date after May 22, 2020 up to and including January
15, 2022. The Warrant and Class A Common Stock issuable pursuant to the Warrant
were offered, and will be issued and sold, in reliance on the exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), set forth under Section 4(a)(2) of the Securities Act
relating to sales by an issuer not involving any public offering.

The fair value of the Warrant was determined using a Black-Scholes-Merton model,
and was recorded as a debt issuance cost within Other Assets on the Condensed
Consolidated Statements of Financial Condition and as an increase to Additional
paid-in capital on the Condensed Consolidated Statements of Changes in Equity.
The balance was amortized on a straight-line basis from March 20, 2020 through
September 20, 2020, the date on which the Founder Member Loan Facility
                                       39

————————————————– ——————————-

The table of contents has expired and has been recorded as an expense in debt issuance costs related to debt refinancing, prepayments and commitment fees in the Condensed Consolidated Statements of Comprehensive Income.

Accumulated other comprehensive income (loss)

The following table shows the changes in other comprehensive income (loss) for the three and nine months ended. September 30, 2021 and 2020:

Three months ended September 30, 2021

Amounts recognized Amounts reclassified AOCI Closing (in thousands)

                             AOCI Beginning Balance               in AOCI             from AOCI to income            Balance
Net change in unrealized cash flow
hedges gains (losses) (1)                 $         (24,952)              $         (1,612)         $           3,803          $    (22,761)
Foreign exchange translation
adjustment                                            5,835                         (4,912)                         -                   923
Total                                     $         (19,117)              $         (6,524)         $           3,803          $    (21,838)

(1) Amounts reclassified from accumulated other comprehensive income to income are included in financing interest expense on long-term borrowings in the condensed consolidated statements of comprehensive income. From September 30, 2021, the Company expects approximately $ 15.0 million be reclassified from accumulated other comprehensive income to income over the next 12 months. The reclassification schedule is based on the payment schedule for interest on long-term loans.

Three months ended September 30, 2020

Amounts recognized Amounts reclassified AOCI Closing (in thousands)

                             AOCI Beginning Balance               in AOCI             from AOCI to income            Balance
Net change in unrealized cash flow
hedges gains (losses)                     $         (36,710)              $         (1,797)         $           1,948          $    (36,559)
Foreign exchange translation
adjustment                                           (2,857)                         4,213                          -                 1,356
Total                                     $         (39,567)              $          2,416          $           1,948          $    (35,203)



                                                                   Nine

Ended months September 30, 2021

                                                                     Amounts                 Amounts
                                           AOCI Beginning            recorded           reclassified from          AOCI Ending
(in thousands)                                 Balance               in AOCI             AOCI to income              Balance
Net change in unrealized cash flow
hedges gains (losses) (1)                 $      (33,444)         $       

(83) $ 10,766 $ (22,761)
Currency translation difference

                                         7,957               (7,034)                        -                   923
Total                                     $      (25,487)         $    (7,117)         $         10,766          $    (21,838)
(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 September 30, 2021, the Company expects approximately $15.0 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.

                                                                   Nine 

Ended months September 30, 2020

                                                                     Amounts                 Amounts
                                           AOCI Beginning            recorded           reclassified from          AOCI Ending
(in thousands)                                 Balance               in AOCI             AOCI to income              Balance
Net change in unrealized cash flow
hedges gains (losses)                     $            -          $   

(42,405) $ 5,846 $ (36,559)
Currency translation difference

                                          (647)               2,003                         -                 1,356
Total                                     $         (647)         $   

(40,402) $ 5,846 $ (35,203)
(1) Amounts reclassified from accumulated other comprehensive income to income are included in financing interest expense on long-term borrowings in the consolidated statements of comprehensive income.

19. Compensation in shares

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.

                                       40
--------------------------------------------------------------------------------
  Table of Contents
The following table summarizes activity related to stock options for the nine
months ended September 30, 2021 and 2020:

                                                              Options Outstanding                                           Options Exercisable
                                                               Weighted Average         Weighted Average                                  Weighted Average
                                                              Exercise Price Per            Remaining                                      Exercise Price
                                     Number of Options              Share               Contractual Life         Number of Options            Per Share

At December 31, 2019                       3,233,779          $         18.74                         5.24             3,233,779          $        18.74
Granted                                            -                        -                      -                           -                       -
Exercised                                   (807,627)                   17.96                      -                    (807,627)                  17.96
Forfeited or expired                               -                        -                      -                           -                       -
At September 30, 2020                      2,426,152          $         19.00                         4.49             2,426,152          $        19.00

At December 31, 2020                       2,324,152          $         19.00                         4.24             2,324,152          $        19.00
Granted                                            -                        -                      -                           -                       -
Exercised                                   (446,997)                   19.00                      -                    (446,997)                  19.00
Forfeited or expired                               -                        -                      -                           -                       -
At September 30, 2021                      1,877,155          $         19.00                         3.49             1,877,155          $        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. The stock options to purchase shares of
Class A Common Stock were fully vested in 2019.

Investment Technology Group, Inc. Modified and Maintained. Omnibus share compensation plan 2007

On the ITG Closing Date, the Company assumed the Amended and Restated ITG 2007
Equity Plan and the Assumed Awards. The Assumed Awards are subject to the same
terms and conditions that were applicable to them under the Amended and Restated
ITG 2007 Equity Plan, except that (i) the Assumed Awards relate to shares of the
Company's Class A Common Stock, (ii) the number of shares of Class A Common
Stock subject to the Assumed Awards was the result of an adjustment based upon
an Exchange Ratio (as defined in the ITG Merger Agreement) and (iii) the
performance share unit awards were converted into service-based vesting
restricted stock unit awards that were no longer subject to any performance
based vesting conditions. As of the ITG Closing Date, the aggregate number of
shares of Class A Common Stock subject to such Assumed Awards was 2,497,028 and
the aggregate number of shares of Class A Common Stock that remained issuable
pursuant to the Amended and Restated ITG 2007 Equity Plan was 1,230,406. The
Company filed a Registration Statement on Form S-8 on the ITG Closing Date to
register such shares of Class A Common Stock.

Class A common shares, restricted share units and restricted share grants

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, RSUs and 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 nine months ended September 30, 2021 and 2020,
respectively, there were 633,938 and 967,526 shares of immediately vested Class
A Common Stock granted as part of year-end compensation. In addition, the
Company accrued compensation expense of $6.3 million for the three months ended
September 30, 2021 and reduced accrued compensation expense by $11.4 million for
the three months ended September 30, 2020, and accrued compensation expense of
$17.7 million and $14.4 million for the nine months ended September 30, 2021 and
2020, 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 Condensed Consolidated Statements
of Comprehensive Income and Accounts payable, accrued expenses and other
liabilities on the Condensed Consolidated Statements of Financial Condition.

                                       41
--------------------------------------------------------------------------------
  Table of Contents
The following table summarizes activity related to RSUs (including the Assumed
Awards) and RSAs for the nine months ended September 30, 2021 and 2020:
                                                                                             Weighted
                                                                  Number of RSUs and       Average Fair
                                                                         RSAs                 Value

At December 31, 2019                                                   2,993,489           $    24.10
Granted                                                                3,300,894                17.15
Forfeited                                                               (391,223)               17.90
Vested                                                                (2,124,843)               20.40
At September 30, 2020                                                  3,778,317           $    20.77

At December 31, 2020                                                   3,393,084           $    21.35
Granted (1)                                                            2,442,953                27.06
Forfeited                                                               (191,296)               22.97
Vested                                                                (2,032,477)               23.27
At September 30, 2021                                                  3,612,264           $    24.05

(1) Excluded from the number of RSU and RSA 350,000 participating RSA whose grant date has not been reached because the performance conditions have not been met.



The Company recognized $6.7 million and $9.0 million for the three months ended
September 30, 2021 and 2020 and $20.5 million and $25.8 million for the nine
months ended September 30, 2021 and 2020, respectively, of compensation expense
in relation to RSUs. As of September 30, 2021 and December 31, 2020, total
unrecognized share-based compensation expense related to unvested RSUs was $51.4
million and $37.1 million, respectively, and this amount is to be recognized
over a weighted average period of 1.1 years and 1.0 year, 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 may also be directed to notional investments in certain
of the employee investment opportunities. No amounts have been recognized as
compensation cost under the DCP as of September 30, 2021.

20. Regulatory requirement

we Subsidiary company

The Company's U.S. broker-dealer subsidiary, VAL, is subject to the SEC Uniform
Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital
as detailed in the table below. 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
September 30, 2021. The required amount is determined under the exchange rules
as the greater of (i) $1 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.

VAL's regulatory capital and regulatory capital requirements as of September 30,
2021 was as follows:
                                                                                                             Excess
                                                           Regulatory          Regulatory Capital          Regulatory
(in thousands)                                               Capital              Requirement               Capital
Virtu Americas LLC                                       $    484,482          $         1,725          $     482,757



As of September 30, 2021, VAL had $60.9 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 $8.8 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 Condensed Consolidated Statements of Financial Condition.

VAL's regulatory capital and regulatory capital requirements as of December 31,
2020 was as follows:
                                                                                                             Excess
                                                           Regulatory          Regulatory Capital          Regulatory
(in thousands)                                               Capital              Requirement               Capital
Virtu Americas LLC                                       $    621,253          $         2,917          $     618,336



                                       42
--------------------------------------------------------------------------------
  Table of Contents
As of December 31, 2020, VAL had $96.2 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 $20.4 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 Investment Industry
Regulatory Organization of Canada ("IIROC"), 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").

The regulatory net capital balances and regulatory capital requirements
applicable to the Company's foreign subsidiaries as of September 30, 2021 were
as follows:
                                                          Regulatory          Regulatory Capital        Excess Regulatory
(in thousands)                                             Capital                Requirement                Capital
Canada
Virtu ITG Canada Corp                                  $      16,911          $            197          $       16,714

Virtu Financial Canada ULC                                       200                       197                       3
Ireland
Virtu ITG Europe Limited (1)                                  78,066                    32,636                  45,430
Virtu Financial Ireland Limited (1)                          109,229                    58,083                  51,146
United Kingdom
Virtu ITG UK Limited                                           1,057                       846                     211
Asia Pacific
Virtu ITG Australia Limited                                   30,717                     8,776                  21,941
Virtu ITG Hong Kong Limited                                    2,902                       513                   2,389
Virtu ITG Singapore Pte Limited                                  845                        74                     771

(1) Preliminary


As of September 30, 2021, Virtu ITG Europe Limited and Virtu ITG Canada Corp had
$0.2 million and $0.4 million, respectively, 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, 2020 were as
follows:
                                                              Regulatory          Regulatory Capital        Excess Regulatory
(in thousands)                                                 Capital                Requirement                Capital
Canada
Virtu ITG Canada Corp                                      $      12,944          $            196          $       12,748
Virtu Financial Canada ULC                                         2,486                       196                   2,290
Ireland
Virtu ITG Europe Limited                                          57,459                    32,106                  25,353
Virtu Financial Ireland Limited                                   94,528                    41,038                  53,490
United Kingdom
Virtu ITG UK Limited                                               1,290                       910                     380
Asia Pacific
Virtu ITG Australia Limited                                       30,606                    12,729                  17,877
Virtu ITG Hong Kong Limited                                        4,290                       625                   3,665
Virtu ITG Singapore Pte Limited                                      796                        76                     720



As of December 31, 2020, Virtu ITG Europe Limited and Virtu ITG Canada Corp had
$0.2 million and $0.4 million, respectively, of 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.

                                       43
--------------------------------------------------------------------------------
  Table of Contents
21. Geographic Information and Business Segments

The Company operates its business in the U.S. and internationally, primarily in
Europe, Asia and Canada. 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 three and nine months ended
September 30, 2021 and 2020:

                                               Three Months Ended September 30,            Nine Months Ended September 30,
(in thousands)                                     2021                2020                   2021                    2020
Revenues:
United States                                  $  433,013          $ 484,594          $       1,678,650          $ 2,045,330
Ireland                                            55,137             61,320                    242,614              233,783
Singapore                                          30,696             26,630                    102,965              140,492
Canada                                             13,955             71,268                     43,924              103,331
Australia                                           9,982             10,107                     31,868               32,186
United Kingdom                                          -                964                      1,745                3,944
Others                                              1,561              1,229                      4,115                3,569
Total revenues                                 $  544,344          $ 656,112          $       2,105,881          $ 2,562,635


The Company has two operating segments: (i) Market Making and (ii) Execution Services; and a 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 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 ATSs. The Company is an active
participant on all major global equity and futures exchanges and also trades on
substantially all domestic electronic options exchanges. As a complement to
electronic market making, the cash trading business handles specialized orders
and also transacts on the OTC 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 and commission equivalents as an agent on behalf of clients as
well as between principals to transactions; in addition, the Company will commit
capital on behalf of clients as needed. 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 act as an agent for issuers in connection with at-the-market
offerings and buyback programs.

The Corporate segment contains the investments of the Company, mainly in strategic business opportunities and maintains the general expenses of the company and all other income and expenses which are not attributable to the other segments of the Company.

Management evaluates the performance of its segments on a pre-tax basis. Segment
assets and liabilities are not used for evaluating segment performance or in
deciding how to allocate resources to segments. The Company's total revenues and
income before income taxes and noncontrolling interest ("Pre-tax earnings") by
segment for the three months ended September 30, 2021 and 2020 and are
summarized in the following table:
                                       44

————————————————– ——————————

Contents

© Edgar online, source Previews

Source link

About Andrew Estofan

Check Also

Camtek announces the price of an oversized private offering of $ 175 million of 0% convertible senior bonds due 2026

MIGDAL HAEMEK, Israel, November 18, 2021 / PRNewswire / – Camtek Ltd. (Nasdaq: CAMT; TASE: …