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•	reduced levels of overall trading activity;

•	dependence upon trading counterparties 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;

•	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;

•	obligation to comply with applicable regulatory capital requirements;

•	litigation or other legal and regulatory‑based liabilities;

•	proposed legislation that would impose taxes on certain financial transactions in the European Union, the U.S. and other jurisdictions;

•	obligation to comply with laws and regulations applicable to our operations in the U.S. and abroad;

•	enhanced media and regulatory scrutiny and its impact upon public perception of us or of companies in our industry;

•	need to maintain and continue developing proprietary technologies;

•	the effect of the Acquisition of KCG (as defined below) on existing business relationships, operating results, and ongoing business operations generally;

•	the significant costs and significant indebtedness that we incurred in connection with the Acquisition of KCG, and the integration of KCG into our business;

•	the risk that we may encounter significant difficulties or delays in integrating KCG and the anticipated benefits, costs savings and synergies or capital release may not be achieved;

•	the assumption of potential liabilities relating to KCG’s business;

•	the effect of the ITG Acquisition (as defined below) on existing business relationships, operating results, and ongoing business operations generally;

•	the significant costs and significant indebtedness that we have incurred in connection with the ITG Transaction;

•	the risk that we may encounter significant difficulties or delays in integrating ITG's business with ours and that the anticipated benefits, cost savings and synergies or capital release may not be achieved;

•	the assumption of potential liabilities and risks relating to ITG’s business;

•	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 or other consequences;

•	risks associated with international operations and expansion, including failed acquisitions or dispositions;

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the effects of and changes in economic conditions (such as volatility in the financial markets, inflation, monetary conditions and foreign currency and exchange rate fluctuations, foreign currency controls and/or government mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets) and political conditions (such as military actions and terrorist activities);

•	risks associated with potential growth and associated corporate actions;

•	inability to, 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; and

•	risks associated with losing access to a significant exchange or other trading venue.

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On Exchange Market Making Strategy Lockdowns. Messages that leave our trading environment must first pass through a series of preset risk controls, or “lockdowns,” which are intended to minimize the likelihood of unintended activities by our market making algorithms. Our preset risk controls are designed to limit both downside and upside risk. Following a lockdown, the applicable trading strategy must be manually reset. While this risk prevention layer adds a degree of latency to our trading infrastructure and can prevent us from earning outsized returns in times of extreme market volatility, we believe that this trade-off is necessary to properly limit our downside risk.

•	Customer Market Making Model Restrictions. All models have limits in place which restrict individual position sizes, sector exposures and imbalanced portfolios with significant directional risks. Strategies are designed to automatically reduce exposures when limits are reached. The models are monitored by the trading team and the risk managers constantly.

•	Aggregate Exposure Monitoring. Pursuant to our risk management policies, our automated management information systems monitor in real‑time and generate report on daily and periodic bases. Exposures monitored include:

◦	Risk Profiles

◦	Statistical Risk Measures including Value at Risk, and Equity Betas

◦	Stress and Scenario analysis

◦	Concentration measures

◦	Profit and Loss analysis

◦	Trading performance reports

•	Our 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 fully automated controls over of 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;

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Our market making system continuously evaluates the listed securities in which we provide bid and offer quotes and changes its bids and offers in such a way as to minimize exposure to directional price movements. The speed of communicating with exchanges and market centers is maximized 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;

◦	Software developed to support our market making systems performs daily profit and loss and position reconciliations; and

◦	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.

•	Liquidity Controls. We seek to minimize liquidity risk by focusing the majority of trading in highly active and liquid instruments. Less liquid securities are identified and restrictions are in place as to the size of positions we hold in such instruments.

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•	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.

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

•	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; or

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

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•	the SEC Uniform Net Capital Rule (Rule 15c3‑1), which requires each of Virtu Financial’s registered broker‑dealer subsidiaries 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 Central Bank of Ireland before Virtu Financial’s regulated Irish subsidiary completes any distribution or dividend.

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•	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.

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•	employee retention, redeployment, relocation or severance;

•	integration of information systems;

•	combination of corporate and administrative functions; and

•	potential or pending litigation or other proceedings related to the ITG Acquisition.

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

•	difficulties in the integration of operations and systems;

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

•	difficulties in the assimilation of employees and the integration of the companies’ different organizational structure;

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

•	challenges in integrating the business culture of each company;

•	challenges in attracting and retaining key personnel; and

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

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(1)

In connection with the Acquisition of KCG, we recognized significant revenue increase in commissions, net and technology services for the years ended December 31, 2017 and 2018. Commissions and fees are primarily affected by changes in our equities, fixed income and futures transaction volumes with institutional clients; 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 soft dollar and commission recapture activity.

(2)

As a result of the 2017 Tax Act (as defined below), we recognized a gain of $86.6 million on the reduction of tax receivable agreement obligation during the year ended December 31, 2017. See Note 6, “Tax Receivable Agreements” in Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. In January 2018, we completed the sale of BondPoint to ICE for total gross proceeds of $400.2 million in cash, and recognized a gain on sale net of transaction fees of $329.0 million. See Note 4 "Sale of BondPoint" in Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

(3)	Payments for order flow are a result of the Acquisition of KGC since the Closing Date in 2017. They primarily represent payments to broker dealer clients, in the normal course of business, for directing their order flow to us.

(4)

In 2017, in connection with the Acquisition of KCG, Virtu Financial entered into the Fourth Amended and Restated Credit Agreement providing for a $1,150.0 million first lien secured term loan facility, and issued senior secured second lien notes of $500.0 million. During the refinancing and termination of the existing credit facility, a portion of certain financing costs that were scheduled to be amortized over the term of the loan, including original issue discount and underwriting and legal fees, were accelerated and recognized at the closing of the transactions. For the years ended December 31, 2018 and 2017, Virtu Financial made $500.0 million and $250.0 million, respectively, principal payments on the credit facility, which resulted in accelerations in the recognition of a portion of certain financing costs that were scheduled to be amortized over the term of the loan. See Note 10 "Borrowings" in Item 8 "Financial Statements and Supplement Data" of this Annual Report on Form 10-K.

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(5)

Initial public offering fees and expenses reflect costs directly attributable to our initial public offering process, which was postponed in April 2014. We accounted for such costs in accordance with ASC 340‑10, Other Assets and Deferred Costs. ASC 340 states that costs directly attributable to a successfully completed offering of equity securities may be deferred and charged against the gross proceeds of the offering as a reduction of additional paid‑in capital, but for an offering postponed for a period greater than 90 days, the offering costs must be charged as an expense in the period the offering process was postponed.

(6)

Transaction advisory fees reflect professional fees incurred by us in connection with (i) the acquisition in a series of transactions, prior to the Reorganization Transactions, by Temasek, acting through two indirectly wholly owned subsidiaries, of direct or indirect ownership of 10,535,891 Class A-1 redeemable interests and 1,828,755 Class A-2 capital interests in Virtu Financial, which acquisition was consummated on December 31, 2014, and (ii) the Acquisition of KCG, which was consummated on July 20, 2017.

(7)

In December 2015, the enforcement committee of the AMF fined the Company’s European subsidiary in the amount of €5.0 million (approximately $5.4 million) based on its allegations that the subsidiary of Madison Tyler Holdings, LLC engaged in price manipulation and violations of the AMF General Regulation and Euronext Market Rules. In accordance with the foregoing, we accrued an estimated loss in relation to the fine imposed by the AMF. In May 2017, the fine was reduced to €3.0 million (approximately $3.5 million), subject to an incremental charge of €0.3 million (approximately $0.4 million), which has been subsequently annulled in 2019.

(8)

Represents non‑cash compensation expenses in respect of the outstanding time vested Class B interests of Virtu Financial (the "VFI Class B Interests") and Class B interests of Virtu East MIP LLC (the "East MIP Class B Interests") recognized at the consummation of the IPO and through the year ended December 31, 2015, net of $9.2 million and $8.5 million in capitalization and amortization, respectively, of the costs attributable to employees incurred in development of software for internal use. We continued to capitalize and amortize the costs related to development on the software for internal use through the first quarter of 2018.

(9)	As a result of the 2017 Tax Act, the U.S. statutory corporate tax rate has been lowered from 35% to 21% and certain deductions have been eliminated. See Note 14, “Income Taxes” in Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

(10)

The Class A‑1 interests of Virtu Financial were convertible by the holders at any time into an equivalent number of Class A‑2 capital interests of Virtu Financial and, in a sale or other specified capital transaction, holders were entitled to receive distributions up to specified preference amounts before holders of Class A‑2 capital interests of Virtu Financial were entitled to receive distributions. In connection with the Reorganization Transactions, all of the existing equity interests in Virtu Financial were reclassified into Virtu Financial Units. See Note 16, “Capital Structure” in Item 8 "Financial Statements and Supplement Data" of this Annual Report on Form 10-K.

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•	reduced levels of overall trading activity;

•	dependence upon trading counterparties 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;

•	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;

•	obligations to comply with applicable regulatory capital requirements;

•	litigation or other legal and regulatory‑based liabilities;

•	proposed legislation that would impose taxes on certain financial transactions in the European Union, the U.S. and other jurisdictions;

•	obligations to comply with laws and regulations applicable to our operations in the U.S. and abroad;

•	enhanced media and regulatory scrutiny and its impact upon public perception of us or of companies in our industry;

•	need to maintain and continue developing proprietary technologies;

•	the effect of the Acquisition of KCG on existing business relationships, operating results, and ongoing business operations generally;

•	the significant costs and significant indebtedness that we incurred in connection with the Acquisition of KCG, and the integration of KCG into our business;

•	the risk that we may encounter significant difficulties or delays in integrating the KCG business with ours and that the anticipated benefits, cost savings and synergies or capital release may not be achieved;

•	the assumption of potential liabilities relating to KCG’s business;

•	the effect of the ITG Acquisition on existing business relationships, operating results, and ongoing business operations generally,

•	the significant costs and significant indebtedness that we have incurred in connection with the ITG Acquisition, and the integration of ITG into our business;

•	the risk that we may encounter significant difficulties or delays in integrating the ITG business with ours and that the anticipated benefits, cost savings and synergies or capital release may not be achieved;

•	the assumption of potential liabilities and risks relating to ITG's business;

•	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;

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•	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 or other consequences;

•	risks associated with international operations and expansion, including failed acquisitions or dispositions;

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the effects of and changes in economic conditions (such as volatility in the financial markets, inflation, monetary conditions and foreign currency and exchange rate fluctuations, foreign currency controls and/or government mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets) and political conditions (such as military actions and terrorist activities);

•	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;

•	loss of key executives and failure to recruit and retain qualified personnel; and

•	risks associated with losing access to a significant exchange or other trading venue.

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

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“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, 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, reserve for legal matters, transaction advisory fees and expenses, termination of office leases, acquisition related retention bonus, connectivity early termination, trading related settlement income, gain on sale of businesses, other, net, write-down of assets, share based compensation, charges related to share based compensation at IPO, Amended and Restated 2015 Management Incentive Plan, and charges related to share based compensation at IPO.

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“Normalized Adjusted Net Income”, “Normalized Adjusted Net Income before income taxes”, “Normalized provision for income taxes”, and “Normalized Adjusted EPS”, which we calculate by adjusting Net Income to exclude certain items including IPO-related adjustments and other non-cash items, assuming that all vested and unvested Virtu Financial Units have been exchanged for Class A Common Stock, and applying a corporate tax rate of 23% for 2018, and 35.5% to 37% for 2017 and 2016.

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

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

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

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

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

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

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

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

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

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(1)	Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 23% for 2018 and 35.5% for 2017.

(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, 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, have exercised their right to exchange such Virtu Financial Units for shares of the Company's Class B Common Stock on a one-for-one basis, and subsequently exercised their right to convert the shares of Class B Common Stock into shares of Class A Common Stock on a one-for-one basis. Includes additional shares from dilutive impact of options and restricted stock units outstanding under the Amended and Restated 2015 Management Incentive Plan during the years ended December 31, 2018, 2017 and 2016.

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at VFH’s option, at either (a) the greatest of (i) the prime rate in effect, (ii) the NYFRB rate plus 0.50%, (iii) an adjusted LIBOR rate for a Eurodollar borrowing with an interest period of one month plus 1.00%, and (iv) 2.00% plus, in each case, 2.75% per annum (reduced to 2.25% per annum after the repricing transaction in January 2018 and reduced to 1.75% after the repricing transaction in September 2018); or (b) the greater of (i) an adjusted LIBOR rate for the interest period in effect and (ii) 1.00% plus, in each case, 3.75% per annum (reduced to 3.25% per annum after the repricing transaction in January 2018 and reduced to 2.75% after the repricing transaction in September 2018).

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

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

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(1)	Balances Consist of principal payments under the Notes, Term Loan Facility and the SBI bonds, which do not include unamortized discount, unamortized commitment fees or utilization fees, and interest accrued.

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(1)	The dilutive impact of unexercised stock options excludes from the computation of EPS 1,740,630 and 743,096 options for the years ended December 31, 2017 and 2016, respectively, because inclusion of the options would have been anti-dilutive.

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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 paid 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 and technology services in the consolidated statements of comprehensive income.

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Technology services. The Company’s technology services revenues consist of technology licensing fees and agency commission fees. Technology licensing fees are earned from third parties for licensing of the Company’s proprietary risk management and trading infrastructure technology and the provision of associated management and hosting services. These fees include both upfront and annual recurring fees as well as, in certain cases, contingent fees based on customer revenues, which represent variable consideration. The services offered under these contracts are delivered as an integrated package and are interdependent and have the same pattern of transfer to the customer; accordingly, the Company measures and recognizes them as a single performance obligation. The performance obligation is satisfied over time, and, therefore, revenue is recognized as time passes. Variable consideration has not been included in the transaction price as the amount of consideration is contingent on factors outside the Company’s control and thus it is not probable that a significant reversal of cumulative revenue recognized will not occur. Recurring fees, which exclude variable consideration, are billed and collected on a quarterly basis and are included within Receivables from broker dealers and clearing organizations.

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•	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.

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1.	Consolidated Financial statements

2.	Financial Statement Schedule

3.	Exhibits

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