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What changed in Tradeweb Markets Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Tradeweb Markets Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+550 added−504 removedSource: 10-K (2024-02-09) vs 10-K (2023-02-24)

Top changes in Tradeweb Markets Inc.'s 2023 10-K

550 paragraphs added · 504 removed · 412 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

132 edited+50 added−19 removed160 unchanged
Biggest changeOur Asset Classes and Products We offer efficient and transparent trading across a diverse range of asset classes: • Rates : We facilitate trading in a broad range of cash and derivatives rates products, including major government securities, such as U.S. treasury securities and European government bonds, mortgage-backed securities, interest rate swaps and agency/supranational securities and other rates products. • Credit : We offer deep pools of liquidity for our clients in cash and derivatives credit products, including U.S. and European high grade and high yield bonds, China bonds, municipal bonds, index, single name and sovereign credit default swaps and other credit products. • Equities : We offer trading in a range of cash and derivatives equities products, including global ETFs, equity derivatives and other equities products. • Money Markets : We offer trading in a broad range of cash money market products, including commercial paper, agency discount notes, repurchase agreements, certificates of deposit and treasury bills and other money markets products. 15 Table of Contents Our Geographies We have a global footprint serving approximately 2,500 clients in over 65 countries across the Americas, EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific) regions and with offices in North America, Europe and Asia.
Biggest changeTreasury securities and European government bonds, mortgage-backed securities, interest rate swaps and agency/supranational securities and other rates products. • Credit : We offer deep pools of liquidity for our clients in cash and derivatives credit products, including U.S. and European high grade and high yield bonds, China bonds, municipal bonds, index, single name and sovereign credit default swaps and other credit products. 16 Table of Contents • Equities : We offer trading in a range of cash and derivatives equities products, including global ETFs, equity derivatives and other equities products. • Money Markets : We offer trading in a broad range of cash money market products, including commercial paper, agency discount notes, repurchase agreements, certificates of deposit and Treasury bills and other money markets products.
These include MarketAxess, Bloomberg, ICE (Bondpoint, TMC Bonds, Creditex), Trumid, TP ICAP (Liquidnet) and others in the credit and municipal markets; Bloomberg, Euronext (MTS), CME Group (NEX Group), BGC Partners (Fenics), MarketAxess (LiquidityEdge) and others in the rates and derivatives markets; and Virtu (RFQ-hub) and Bloomberg in the equities and ETF markets. • Exchanges : In recent years, exchanges have pursued acquisitions that have put them in competition with us.
These include MarketAxess, Bloomberg, ICE (Bondpoint, TMC Bonds, Creditex), Trumid, TP ICAP (Liquidnet) and others in the credit and municipal markets; Bloomberg, Euronext (MTS), CME Group (NEX Group), BGC Partners (Fenics), MarketAxess (LiquidityEdge), GLMX and others in the rates and derivatives markets; and Virtu (RFQ-hub) and Bloomberg in the equities and ETF markets. • Exchanges : In recent years, exchanges have pursued acquisitions that have put them in competition with us.
Billy Hult, who has been at the Company for 20 years and took over as our Chief Executive Officer effective January 1, 2023 and new executives, including Mr. Thomas Pluta, who became our next President effective as of January 1, 2023.
Billy Hult, who has been at the Company for over 20 years and took over as our Chief Executive Officer effective January 1, 2023 and new executives, including Mr. Thomas Pluta, who became our President effective as of January 1, 2023.
Given the breadth of expertise of our sales people and management, we have the ability to focus on new client opportunities and on selling additional solutions to existing clients. 13 Table of Contents In addition, we believe our business model is well suited to serve market participants in other asset classes and geographies where our guiding principles can continue to transform markets and broaden our reach and we expect to grow our emerging markets footprint moving forward.
Given the breadth of expertise of our sales people and management, we have the ability to focus on new client opportunities and on selling additional solutions to existing clients. 14 Table of Contents In addition, we believe our business model is well suited to serve market participants in other asset classes and geographies where our guiding principles can continue to transform markets and broaden our reach and we expect to grow our emerging markets footprint moving forward.
Our marketplaces generate valuable data, processing on average over 90,000 trades and significantly more pre-trade price updates daily, that we collect centrally and use as inputs to our pre-trade indicative pricing and analytics. We maintain a full history of inquiries and transactions, which means, for example, we have over 25 years of U.S. treasury data.
Our marketplaces generate valuable data, processing on average over 130,000 trades and significantly more pre-trade price updates daily, that we collect centrally and use as inputs to our pre-trade indicative pricing and analytics. We maintain a full history of inquiries and transactions, which means, for example, we have over 25 years of U.S. Treasury data.
In addition, we have expanded our product set to include wholesale electronic repurchase agreements, as well as U.S. and European bilateral repurchase agreements, European cash equities and U.S. options for our institutional client sector. We also intend to leverage innovation and technology capabilities to develop new solutions that help our clients trade more effectively and efficiently.
We have also expanded our product set to include wholesale electronic repurchase agreements, as well as U.S. and European bilateral repurchase agreements, European cash equities and U.S. options for our institutional client sector. We also intend to leverage innovation and technology capabilities to develop new solutions that help our clients trade more effectively and efficiently.
As a result, we encourage investors, the media and others interested in Tradeweb to monitor these social media channels in addition to following our investor relations website, press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website. 28 Table of Contents
As a result, we encourage investors, the media and others interested in Tradeweb to monitor these social media channels in addition to following our investor relations website, press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website. 30 Table of Contents
As of December 31, 2022, each of our regulated subsidiaries had maintained sufficient net capital or financial resources to at least satisfy their minimum requirements. See Note 19 – Regulatory Capital Requirements to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
As of December 31, 2023, each of our regulated subsidiaries had maintained sufficient net capital or financial resources to at least satisfy their minimum requirements. See Note 19 – Regulatory Capital Requirements to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For example, ICE acquired BondPoint and TMC Bonds, retail-focused platforms, and Interactive Data Corporation (“IDC”), a provider of fixed income data, in an effort to expand its portfolio of fixed income products and services. CME Group and Nasdaq also operate exchanges that compete with us.
For example, ICE acquired BondPoint and TMC Bonds, retail-focused platforms, and Interactive Data Corporation (“IDC”), a provider of fixed income data, in an effort to expand its portfolio of fixed income products and services. CME Group and CBOE also operate exchanges that compete with us.
Our Solutions We provide clients with solutions across the trade lifecycle including pre-trade data and analytics, intelligent trade execution, straight-through processing and post-trade data, analytics and reporting. • Pre-Trade Data and Analytics : We provide clients with accurate, real-time market data and streaming price updates across more than 40 products. Major financial publications across the globe reference our market data.
Our Solutions We provide clients with solutions across the trade lifecycle including pre-trade data and analytics, intelligent trade execution, straight-through processing and post-trade data, analytics and reporting. • Pre-Trade Data and Analytics : We provide clients with accurate, real-time market data and streaming price updates across more than 50 products. Major financial publications across the globe reference our market data.
Information about Tradeweb, our business and our results of operations may also be announced by posts on Tradeweb’s accounts on the following social media channels: Instagram, LinkedIn and Twitter. The information that we post through these social media channels may be deemed material.
Information about Tradeweb, our business and our results of operations may also be announced by posts on Tradeweb’s accounts on the following social media channels: Instagram, LinkedIn and X (formerly Twitter). The information that we post through these social media channels may be deemed material.
Our focus continues to be on opportunities that we believe can enhance or benefit from our technology platform and client network, provide significant market share and profitability and are consistent with our corporate culture. Our Client Sectors We have a powerful network of approximately 2,500 clients across the institutional, wholesale and retail client sectors.
Our focus continues to be on opportunities that we believe can enhance or benefit from our technology platform and client network, provide significant market share and profitability and are consistent with our corporate culture. Our Client Sectors We have a powerful network of more than 2,500 clients across the institutional, wholesale and retail client sectors.
For example, our swap compression functionality allows clients to reduce their swap positions at the clearinghouse, resulting in significant cost savings. On our institutional U.S. credit platform, our portfolio trading solution allows clients to obtain competitive prices on a full basket of securities and trade on net present value from dealers.
In addition, our swap compression functionality allows clients to reduce their swap positions at the clearinghouse, resulting in significant cost savings. On our institutional U.S. credit platform, our portfolio trading solution allows clients to obtain competitive prices on a full basket of securities and trade on net present value from dealers.
The DNB and the AFM co-operate under the provisions of the FSA and have concluded a covenant on the co-operation and co-ordination of supervision and other related tasks. Much of our derivatives volume continues to be executed by non-U.S. based clients outside the United States and is subject to local regulations.
The DNB and the AFM co-operate under the provisions of the FSA and have concluded a covenant on the co-operation and co-ordination of supervision and other related tasks. 24 Table of Contents Much of our derivatives volume continues to be executed by non-U.S. based clients outside the United States and is subject to local regulations.
We have a powerful network of approximately 2,500 clients across the institutional, wholesale and retail client sectors. Our clients include leading global asset managers, hedge funds, insurance companies, central banks, banks and dealers, proprietary trading firms and retail brokerage and financial advisory firms, as well as regional dealers.
We have a powerful network of more than 2,500 clients across the institutional, wholesale and retail client sectors. Our clients include leading global asset managers, hedge funds, insurance companies, central banks, banks and dealers, proprietary trading firms and retail brokerage and financial advisory firms, as well as regional dealers.
In this matched principal model, clients can connect to a single platform to transact with multiple pools of directed liquidity. 17 Table of Contents ◦ Inventory-based. Our inventory-based protocol allows liquidity-providing clients to submit a range of bids and offers for particular securities that a counterparty can then look to execute on.
In this matched principal model, clients can connect to a single platform to transact with multiple pools of directed liquidity. ◦ Inventory-based. Our inventory-based protocol allows liquidity-providing clients to submit a range of bids and offers for particular securities that a counterparty can then look to execute on.
We then provide our clients with trading platforms that meet regulatory requirements and enable connectivity to pre- and post-trade systems necessary to comply with their regulatory obligations. 11 Table of Contents Platforms and Solutions Empowered by Data and Analytics Our data and analytics enhance the value proposition of our trading venues and improve the trading experience of our clients.
We then provide our clients with trading platforms that meet regulatory requirements and enable connectivity to pre- and post-trade systems necessary to comply with their regulatory obligations. Platforms and Solutions Empowered by Data and Analytics Our data and analytics enhance the value proposition of our trading venues and improve the trading experience of our clients.
Wholesale We provide fully electronic, hybrid and voice trading for the wholesale community on our Dealerweb platform. Our clients include approximately 300 dealers and financial institutions with more than 100 actively trading on our electronic and hybrid markets. Nearly all of our electronic and hybrid dealer clients also trade on the Tradeweb Institutional and Tradeweb Direct platforms.
Wholesale We provide fully electronic, hybrid and voice trading for the wholesale community on our Dealerweb platform. Our clients include more than 300 dealers and financial institutions with more than 190 actively trading on our electronic and hybrid markets. Nearly all of our electronic and hybrid dealer clients also trade on the Tradeweb Institutional and Tradeweb Direct platforms.
Our long-term view encompasses ever more sustainable ways of working and investing as we forge the links between better serving markets and better serving the world. 26 Table of Contents The Environment We are committed to understanding the full extent of our environmental impact and to working toward minimizing our global emissions footprint.
Our long-term view encompasses ever more sustainable ways of working and investing as we forge the links between better serving markets and better serving the world. The Environment We are committed to understanding the full extent of our environmental impact and to working toward minimizing our global emissions footprint.
Through collaborative endeavors like these, we have become deeply integrated into our clients’ workflow and become a partner of choice for new innovations. Scalable and Flexible Technology We consistently use our proprietary technology to find new ways for our clients to trade more effectively and efficiently.
Through collaborative endeavors like these, we have become deeply integrated into our clients’ workflow and become a partner of choice for new innovations. 11 Table of Contents Scalable and Flexible Technology We consistently use our proprietary technology to find new ways for our clients to trade more effectively and efficiently.
It is unknown at this time to what extent new legislation will be passed into law or whether pending or new regulatory proposals will be adopted or modified, or what effect such passage, adoption or modification will have, whether positive or negative, on our industry, our clients or us. Non-U.S.
It is unknown at this time to what extent new legislation will be passed into law or whether pending or new regulatory proposals will be adopted or modified, or what effect such passage, adoption or modification will have, whether positive or negative, on our industry, our clients or us.
As a result of such reviews, we may be required to amend certain internal structures and frameworks, such as our operating procedures, systems and controls. The regulatory environment in which we operate is subject to constant change.
As a result of such reviews, we may be required to amend certain internal structures and frameworks, such as our operating procedures, systems and controls. 22 Table of Contents The regulatory environment in which we operate is subject to constant change.
By region: • We serve approximately 1,500 clients in the Americas across North, Central and South America. • We serve approximately 700 clients in EMEA across Europe, the Middle East and North Africa. • We serve approximately 300 clients in APAC across Asia, the Pacific, Oceania and the Indian sub-continent.
By region: • We serve more than 1,500 clients in the Americas across North, Central and South America. • We serve more than 700 clients in EMEA across Europe, the Middle East and North Africa. • We serve more than 300 clients in APAC across Asia, the Pacific, Oceania and the Indian sub-continent.
In August 2022 we published our second annual Corporate Sustainability Report, which reports on our environmental, social and governance (“ESG”) goals and priorities as well as our progress towards those goals during calendar year 2021. While the reporting structure is relatively new, our strong foundation in ESG principles is not.
In August 2023 we published our third annual Corporate Sustainability Report, which reports on our environmental, social and governance (“ESG”) goals and priorities as well as our progress towards those goals during calendar year 2022. While the reporting structure is relatively new, our strong foundation in ESG principles is not.
Trademarks registered include, but are not limited to, “Tradeweb,” “Dealerweb,” and “Tradeweb Direct.” 20 Table of Contents We also enter into written agreements with third parties, employees, clients, contractors and strategic partners to protect our proprietary technology, processes and other intellectual property, including agreements designed to protect our trade secrets.
Trademarks registered include, but are not limited to, “Tradeweb,” “Dealerweb,” and “Tradeweb Direct.” We also enter into written agreements with third parties, employees, clients, contractors and strategic partners to protect our proprietary technology, processes and other intellectual property, including agreements designed to protect our trade secrets.
Our real-time market data services include major government bonds, corporate bonds, mortgage-backed securities, fixed income derivatives and money markets. For example, data and analytics power our Automated Intelligent Price, or Ai-Price, functionality, which delivers benchmark pricing and insights for approximately 25,000 U.S. corporate bonds.
Our real-time market data services include major government bonds, corporate bonds, mortgage-backed securities, fixed income derivatives and money markets. For example, data and analytics power our Automated Intelligent Price, or Ai-Price, functionality, which delivers benchmark pricing and insights for over 26,000 U.S. corporate bonds.
We provide marketplaces and tools that facilitate trading by our clients and streamline their related workflows. Our market specialists and technology team work closely with our clients to continuously innovate and improve their trading practices. The trading protocols we currently offer on our platforms include: 16 Table of Contents • Request-for-quote.
We provide marketplaces and tools that facilitate trading by our clients and streamline their related workflows. Our market specialists and technology team work closely with our clients to continuously innovate and improve their trading practices. The trading protocols we currently offer on our platforms include: • Request-for-quote.
The Tradeweb compression tool is flexible and versatile in design allowing clients to adapt the tool to their workflow and customize for granular swaps. • Blast all-to-all. Our Blast all-to-all, or A2A, protocol allows clients to send RFQ trade inquiries to all market participants in a given market and receive responses for executions.
The Tradeweb compression tool is flexible and versatile in design allowing clients to adapt the tool to their workflow and customize for non-standard/bespoke swaps. • Blast all-to-all. Our Blast all-to-all, or A2A, protocol allows clients to send RFQ trade inquiries to all market participants in a given market and receive responses for executions.
We plan to continually increase the data available to our clients around Green Bonds, and intend to expand this data set to include other ESG - related securities. Our People and Communities We value and encourage diverse perspectives, and strive to cultivate a team with varied and robust ideas.
We plan to continually increase the data available to our clients around Green Bonds, and intend to expand this data set to include other ESG - related securities including Social Bonds, Sustainability Bonds, and Sustainability-Linked Bonds. Our People and Communities We value and encourage diverse perspectives, and strive to cultivate a team with varied and robust ideas.
This knowledge and expertise not only allows us to address client demand but also to focus on those solutions that can be scaled across client sectors, asset classes and trading protocols. 19 Table of Contents Our systems are built to be scalable, flexible and resilient.
This knowledge and expertise not only allows us to address client demand but also to focus on those solutions that can be scaled across client sectors, asset classes and trading protocols. Our systems are built to be scalable, flexible and resilient.
Through our Diversity, Equity and Inclusion (DE&I) Committee, on which members of our executive team serve, including our Global Head of Human Resources and Head of Investor Relations, FP&A and Treasury, we raise awareness, provide a forum to discuss diversity and inclusion and promote a diverse and inclusive culture.
Through our Diversity, Equity and Inclusion (“DE&I”) Committee, on which members of our executive team serve, including our Global Head of Human Resources and Head of Investor Relations, FP&A and Treasury, we raise awareness, provide a forum to discuss diversity and inclusion and promote a diverse and inclusive culture.
Examples of these written agreements include third-party non-disclosure agreements, employee non-disclosure and inventions assignment agreements, licensing agreements and restricted use agreements. Regulation Many aspects of our business are subject to regulation in a number of jurisdictions, including the United States, the UK, the Netherlands, France, Germany, Japan, Hong Kong, Singapore and Australia.
Examples of these written agreements include third-party non-disclosure agreements, employee non-disclosure and inventions assignment agreements, licensing agreements and restricted use agreements. Regulation Many aspects of our business are subject to regulation in a number of jurisdictions, including the United States, the UK, the Netherlands, France, Germany, Japan, Hong Kong, Singapore, Australia and the Dubai International Financial Centre (“DIFC”).
We use third-party data centers to more flexibly manage our capacity needs and costs, as well as to leverage security, network and service capabilities. • Strong business continuity and disaster recovery planning : During 2022, we have continued to enhance our business continuity plans in place in the event of a significant business disruption or disaster recovery situation to ensure the resilience of critical systems required for normal operations and the safety of all employees.
We use third-party data centers to more flexibly manage our capacity needs and costs, as well as to leverage security, network and service capabilities. • Strong business continuity and disaster recovery planning : We continue to regularly evaluate and enhance our business continuity plans in place in the event of a significant business disruption or disaster recovery situation to ensure the resilience of critical systems required for normal operations and the safety of all employees.
This represents a trading volume increase of 39% from 2021, calculated using CBI-screened Green Bond alignment based on the CBI definition of ‘Green’ as of December 31, 2022 for both the 2022 and 2021 comparative period.
This represents a trading volume increase of 46% from 2022, calculated using CBI-screened Green Bond alignment based on the CBI definition of ‘Green’ as of December 31, 2023 for both the 2023 and 2022 comparative period.
DW SEF LLC is a CFTC-registered SEF. DW SEF LLC is formally exempt from registration in the Canadian province of Ontario and is recognized as a foreign trading venue in Switzerland. Tradeweb Japan KK is regulated by the JFSA and is registered as a Type 1 Financial Instruments Exchange Business Operator (reg.
DW SEF LLC is formally exempt from registration in the Canadian provinces of Ontario and Nova Scotia is recognized as a foreign trading venue in Switzerland. Tradeweb Japan KK is regulated by the JFSA and is registered as a Type 1 Financial Instruments Exchange Business Operator (reg.
In particular, the European Union (“EU”) has enhanced the existing laws and developed new rules and regulations targeted at the financial services industry, including MiFID II and Markets in Financial Instruments Regulation (“MiFIR”), which were implemented in January 2018 and which introduced significant changes to the EU financial markets designed to facilitate more efficient markets and greater transparency for participants.
In particular, the EU has enhanced the existing laws and developed new rules and regulations targeted at the financial services industry, including MiFID II and Markets in Financial Instruments Regulation (“MiFIR”), which were implemented in January 2018 and which introduced significant changes to the EU financial markets, including the fixed income and derivative markets, designed to facilitate more efficient markets and greater transparency for participants.
This protocol leverages our broker relationships, technology, and pricing from the overall Tradeweb network to fill the gap between voice brokering and fully electronic order book trading. • Central Limit Order Book.
This protocol leverages our broker relationships, technology, and pricing from the overall Tradeweb network to fill the gap between voice brokering and fully electronic order book trading. 18 Table of Contents • Central Limit Order Book.
Our data center infrastructure is designed to be resilient and responsive with built-in redundancies. • Ongoing security, system monitoring and alerting : We prioritize security throughout our platforms, operations and software development.
Our data center infrastructure is designed to be resilient and responsive with built-in redundancies. 21 Table of Contents • Ongoing security, system monitoring and alerting : We prioritize security throughout our platforms, operations and software development.
The Tradeweb offshore electronic trading platform is recognized by the People’s Bank of China (PBOC) for the provision of Bond Connect and CIBM Direct. TW SEF LLC is a CFTC-registered SEF.
The Tradeweb offshore electronic trading platform is recognized by the People’s Bank of China (“PBOC”) for the provision of Bond Connect, CIBM Direct RFQ and Swap Connect. TW SEF LLC is a CFTC-registered SEF.
We believe that U.S. treasuries, global interest rate swaps, global ETFs, in particular, institutional block ETFs, U.S. credit products, including corporate high grade and high yield bonds, emerging markets and retail products overall, are key drivers of our potential growth. Our penetration of these markets, and their level of electronification, are at various stages.
We believe that global government bonds, global interest rate swaps, global ETFs, in particular, institutional block ETFs, cash credit products, including corporate high grade and high yield bonds and emerging markets are key drivers of our potential growth. Our penetration of these markets, and their level of electronification, are at various stages.
Our marketplaces facilitate trading across a range of asset classes, including rates, credit, equities and money markets. We are a global company serving clients in over 65 countries with offices in North America, Europe and Asia.
Our marketplaces facilitate trading across a range of asset classes, including rates, credit, equities and money markets. We are a global company serving clients in over 70 countries with offices in North America, Europe, Asia, Australia and the Middle East.
For example, in 2022 we launched Automated Intelligent Pricing (“Ai-Price”), an innovative bond pricing engine that applies data science to help make markets more efficient and delivers reliable reference pricing for U.S. corporate and municipal bonds, regardless of how frequently a bond trades. Clients now leverage the service to power their AiEX auto-trading, portfolio trading, and Transaction Cost Analysis (“TCA”).
Our offerings also include Automated Intelligent Pricing (“Ai-Price”), an innovative bond pricing engine that applies data science to help make markets more efficient and delivers reliable reference pricing for U.S. corporate and municipal bonds, regardless of how frequently a bond trades. Clients leverage the service to power their AiEX auto-trading, portfolio trading, and Transaction Cost Analysis (“TCA”).
Regulatory Status of Tradeweb Entities Our operations span jurisdictions across North America, Europe and Asia, and we operate through various regulated entities. The current regulatory status of our regulated entities is described below. 23 Table of Contents Tradeweb LLC is a SEC-registered broker-dealer and a member of FINRA and MSRB.
Regulatory Status of Tradeweb Entities Our operations span jurisdictions across North America, South America, Europe, Asia, Australia and the Middle East, and we operate through various regulated entities. The current regulatory status of our regulated entities is described below. Tradeweb LLC is a SEC-registered broker-dealer and a member of FINRA and MSRB.
We also have a roster of closing prices partnering with the Financial Times Stock Exchange Group (“FTSE”) for UK Gilts and Intercontinental Exchange (“ICE”) for U.S. treasuries in response to the growing demand for trusted reference price data that enables firms to manage investment portfolios, evaluate the fair value of securities, perform compliance monitoring and satisfy general accounting standards.
We also have a roster of closing prices partnering with the FTSE Russell for UK Gilts and European government bonds and Intercontinental Exchange (“ICE”) for U.S. Treasuries in response to the growing demand for trusted reference price data that enables firms to manage investment portfolios, evaluate the fair value of securities, perform compliance monitoring and satisfy general accounting standards.
For example, in November 2022, we entered into a multi-year partnership with BlackRock with the goal to integrate our credit trading solutions and data into BlackRock’s Aladdin order execution management system and in June 2021, we acquired Nasdaq’s U.S. fixed income electronic trading platform.
We intend to continue to selectively consider opportunities to grow through strategic alliances and acquisitions. For example, in June 2021, we acquired Nasdaq’s U.S. fixed income electronic trading platform and in November 2022, we entered into a multi-year partnership with BlackRock with the goal to integrate our credit trading solutions and data into BlackRock’s Aladdin order execution management system.
CBI has been tracking the green-labeled bond (“Green Bond”) market since 2009. By partnering with CBI, we aim to promote the visibility and accessibility of Green Bond trading activity across a wide range of asset classes, and leverage CBI data to provide transparency and clarity around the Green Bond trading volumes and trends on our platforms.
By partnering with CBI, we aim to promote the visibility and accessibility of Green Bond trading activity across a wide range of asset classes, and leverage CBI data to provide transparency and clarity around the Green Bond trading volumes and trends on our platforms.
Net spotting, which links our institutional U.S. credit and U.S. treasury markets allows clients to reduce the operational stress and financial cost of executing offsetting Treasury hedges for corporate bonds that trade at a spread to the U.S. treasury.
Treasury markets allows clients to reduce the operational stress and financial cost of executing offsetting Treasury hedges for corporate bonds that trade at a spread to the U.S. Treasury.
We also maintain redundant networks, hardware, data centers and alternate operational facilities to address interruptions. We have eight datacenters across the United States, the United Kingdom (“UK”) and Japan.
We also maintain redundant networks, hardware, data centers and alternate operational facilities to address interruptions. We have ten datacenters across the United States, the UK , Japan and Austrialia.
We make architectural, design and implementation choices to structurally address security risks, such as logical and physical access controls, perimeter firewall protection and embedded security processes in our systems development lifecycle. Our cyber security program is based on the National Institute of Standards and Technology Cyber Security Framework (the “Framework”).
We make architectural, design and implementation choices to structurally address security risks, such as logical and physical access controls, perimeter firewall protection and embedded security processes in our systems development lifecycle. Our cyber security program is based on a combination of ISO/ICE 27001 principles, the National Institute of Standards and Technology Cybersecurity Framework and industry best practices.
Tradeweb remains a standalone, publicly-traded company, and the LSEG Transaction did not result in any changes to our stockholder voting rights, and we have not experienced and do not foresee any material impact on our strategy, day-to-day operations or Tradeweb management as a result of the LSEG Transaction. Our existing market data license agreement with Refinitiv remains unchanged.
Tradeweb remained a standalone, publicly-traded company, and the LSEG Transaction did not result in any changes to our stockholder voting rights, and we have not experienced and do not foresee any material impact on our strategy, day-to-day operations or Tradeweb management as a result of the LSEG Transaction.
During the year ended December 31, 2022, the percentage of trades executed by our institutional clients using our AiEX functionality was over 30% of total institutional trades, up from 6% in 2015, and we are seeing demand for AiEX continue to grow across some of our key products, including U.S. treasuries, European government bonds, global swaps, U.S. corporate bonds and global ETFs.
During the year ended December 31, 2023, the percentage of trades executed by our institutional clients using our AiEX functionality was over 35% of total institutional trades, up from 6% in 2015, and we are seeing demand for AiEX continue to grow across some of our key products, including U.S.
We consider our relationships with our employees to be good and have not experienced any interruptions of operations due to labor disagreements.
None of our employees are represented by a labor union. We consider our relationships with our employees to be good and have not experienced any interruptions of operations due to labor disagreements.
Our over 25 year operating history has allowed us to build comprehensive and unique datasets across our markets and, as we add new products to our platforms, we will continue to create new datasets that may be monetized in the future.
Treasuries, European government bonds, global swaps, U.S. corporate bonds and global ETFs. Our over 25 year operating history has allowed us to build comprehensive and unique datasets across our markets and, as we add new products to our platforms, we will continue to create new datasets that may be monetized in the future.
In addition, multi-asset package (MAP) trading allows clients to simultaneously execute interest rate swaps, inflations swaps and government bonds in a single electronic package enabling clients to achieve more competitive pricing, reduce manual booking errors and increase execution speed.
Our multi-asset package (MAP) trading allows clients to simultaneously execute interest rate swaps, inflations swaps and government bonds in a single electronic package enabling clients to achieve more competitive pricing, reduce manual booking errors and increase execution speed. Net spotting, which links our institutional U.S. credit and U.S.
We developed our wholesale platform through the acquisitions of Hilliard Farber & Co. in 2008 and Rafferty Capital Markets in 2011, and developed technology to facilitate the migration of inefficient wholesale voice markets to more efficient and transparent electronic markets. In June 2021, we acquired Nasdaq’s U.S. fixed income electronic trading platform.
We developed our wholesale platform through the acquisitions of Hilliard Farber & Co. in 2008 and Rafferty Capital Markets in 2011, and developed technology to facilitate the migration of inefficient wholesale voice markets to more efficient and transparent electronic markets.
Regulation Outside of the United States, we are currently regulated by: the Financial Conduct Authority (“FCA”) in the UK, the De Nederlandsche Bank (“DNB”) and the Netherlands Authority for the Financial Markets (“AFM”), Autorité Des Marchés Financiers (“AMF”) and Autorité de contrôle prudentiel et de resolution (“ACPR”) in France, Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”) in Germany, the Japan Financial Services Agency (the “JFSA”), the Japan Securities Dealers Association (the “JSDA”), the Securities & Futures Commission (the “SFC”) of Hong Kong, the Monetary Authority of Singapore (the “MAS”), the Australian Securities and Investment Commission (the “ASIC”), the Comisión Nacional Bancaria y de Valores (the “CBNV”) in Mexico, the Swiss Financial Market Supervisory Authority (“FINMA”), the Investment Industry Regulatory Organization of Canada and provincial regulators in Canada. 22 Table of Contents The FCA’s strategic objective is to ensure that the UK’s markets function well and its operational objectives are to protect consumers, to protect and enhance the integrity of the UK financial system and to promote effective competition in the interests of consumers.
Regulation Outside of the United States, we are currently regulated by: the Financial Conduct Authority (“FCA”) in the UK, the De Nederlandsche Bank (“DNB”) and the Netherlands Authority for the Financial Markets (“AFM”), Autorité Des Marchés Financiers (“AMF”) and Autorité de contrôle prudentiel et de resolution (“ACPR”) in France, Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”) in Germany, the Japan Financial Services Agency (the “JFSA”), the Japan Securities Dealers Association (the “JSDA”), the Securities & Futures Commission (the “SFC”) of Hong Kong, the Monetary Authority of Singapore (the “MAS”), the Australian Securities and Investment Commission (the “ASIC”), the Comisión Nacional Bancaria y de Valores (the “CBNV”) in Mexico, the Swiss Financial Market Supervisory Authority (“FINMA”), the Investment Industry Regulatory Organization of Canada and provincial regulators in Canada and the Dubai Financial Services Authority (the “DFSA”) in the DIFC.
While our cornerstone products continue to be some of the first products we launched, including U.S. treasuries, European government bonds and To-Be-Announced mortgage-backed securities (“TBA MBS”), we have continued to solve trading inefficiencies by adding new products across our rates, credit, equities and money markets asset classes.
Treasuries, European government bonds and To-Be-Announced mortgage-backed securities (“TBA MBS”), we have continued to solve trading inefficiencies by adding new products across our rates, credit, equities and money markets asset classes.
Our goal is to continue to reach for greater equality in the gender and ethnic diversity of our employees, to maintain and grow our culture of inclusiveness, education, acceptance and learning, and to ensure employees feel encouraged and equipped to be their genuine selves at work.
Our goal is to continue to strive for greater gender and ethnic diversity across the company, in accordance with applicable equal opportunity laws, to maintain and grow our culture of inclusiveness, education, acceptance and learning, and to ensure employees feel encouraged and equipped to be their genuine selves at work.
In November 2022, Execution Access, LLC merged with and into Dealerweb Inc. with Dealerweb Inc. being the surviving entity. Tradeweb Direct LLC is a SEC-registered broker-dealer, operates an ATS and is a member of FINRA and MSRB. Tradeweb Direct LLC relies on the international dealer exemption in the Canadian provinces of Ontario and Quebec.
In November 2022, Execution Access, LLC merged with and into Dealerweb Inc. with Dealerweb Inc. being the surviving entity. 25 Table of Contents Tradeweb Direct LLC is a SEC registered broker-dealer, operates an ATS and is a member of FINRA and MSRB.
In January 2022, as a result of this review, the SEC proposed rules that will expand Regulation ATS and Regulation SCI to alternative trading systems (ATS) that trade government securities and amend the SEC rule regarding the definition of an “exchange” to include Communication Protocol Systems, such as our RFQ protocols.
In recent years, the SEC proposed rules that would expand Regulation ATS and Regulation SCI to capture alternative trading systems (“ATS”) that trade government securities and amend the SEC rule regarding the definition of an “exchange” to include Communication Protocol Systems, such as our RFQ protocols.
In addition, we entered the retail market through our acquisition of LeverTrade in 2006, scaled our market position through our acquisition of BondDesk in 2013, and have continued to leverage our market and technology expertise to enhance our platform serving that client sector.
We entered the retail market through our acquisition of LeverTrade in 2006, scaled our market position through our acquisition of BondDesk in 2013, and have continued to leverage our market and technology expertise to enhance our platform serving that client sector. In June 2021, we acquired Nasdaq’s U.S. fixed income electronic trading platform.
The Tradeweb Institutional platform serves 90% of the world’s largest 100 asset managers, over 80% of the top 25 insurance companies and over 55 central banks/sovereign entities with more than 150 dealers providing liquidity.
Our clients include leading asset managers, hedge funds, insurance companies, regional dealers and central banks/sovereign entities. The Tradeweb Institutional platform serves 90% of the world’s largest 100 asset managers, over 80% of the top 25 insurance companies and over 60 central banks/sovereign entities with more than 200 dealers providing liquidity.
During 2021, we completed our first Southbound BondConnect transactions for various bonds tradable in the Hong Kong bond market, offering onshore investors enhanced access to oversees liquidity, pre-trade transparency and innovative trading protocols. We continue to focus on these initiatives and on expanding opportunities with clients in the Asia region more broadly.
During 2021, we completed our first Southbound BondConnect transactions for various bonds tradable in the Hong Kong bond market, offering onshore investors enhanced access to oversees liquidity, pre-trade transparency and innovative trading protocols.
Pursue Strategic Acquisitions and Alliances As part of our culture of collaborative innovation, throughout our history we have completed various acquisitions and initiated several formal strategic alliances. These alliances have taken several forms, including distribution partnerships, technological alliances and other financial arrangements. We intend to continue to selectively consider opportunities to grow through strategic alliances and acquisitions.
We will continue to selectively pursue new strategic partnerships to expand our data and analytics offering over time. Pursue Strategic Acquisitions and Alliances As part of our culture of collaborative innovation, throughout our history we have completed various acquisitions and initiated several formal strategic alliances. These alliances have taken several forms, including distribution partnerships, technological alliances and other financial arrangements.
In general, they require that at least a minimum amount of a regulated entity’s 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 the applicable regulatory authorities, and ultimately could require the relevant entity’s liquidation.
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 the applicable regulatory authorities, and ultimately could require the relevant entity’s liquidation.
Since the founding of Tradeweb more than 25 years ago, we have developed trusted relationships with many of our clients and have invested to integrate with their capital markets technology infrastructures. This has facilitated the collaborative approach we employ to solve our clients’ evolving workflow needs.
Since the founding of Tradeweb more than 25 years ago, we have developed trusted relationships with many of our clients and have invested to integrate with their capital markets technology infrastructures.
In 2022, CBI-screened Green Bond trading accounted for $198.4 billion of the total $207.6 billion in global Green Bond trading volume executed on Tradeweb (excluding ETF).
In 2023, CBI-screened Green Bond trading accounted for $292.0 billion of the total $303.6 billion in global Green Bond trading volume executed on Tradeweb (excluding ETF).
Tradeweb EU B.V. passports its permissions under MiFID and accordingly provides services throughout the EU and the EEA. Tradeweb EU B.V. is also regulated by ASIC and holds an Overseas Australian Market Operator License. The Paris branch of Tradeweb EU B.V. is supervised by the ACPR.
Tradeweb EU B.V. passports its permissions under MiFID and accordingly provides services throughout the EU and the European Economic Area (“EEA”). Tradeweb EU B.V. is also regulated by ASIC and holds an Overseas Australian Market Operator License and is a recognized foreign trading venue by FINMA in Switzerland. The Paris branch of Tradeweb EU B.V. is supervised by the ACPR.
By expanding the scope of our platforms and solutions, building scale and integration across marketplaces and benefiting from broader network effects, we have been able to grow both our transaction volume and subscription-based revenues.
By expanding the scope of our platforms and solutions, building scale and integration across marketplaces and benefiting from broader network effects, we have been able to grow both our transaction volume and subscription-based revenues. Our Evolution We were founded in 1996 and set out to solve for inefficiencies in the institutional U.S.
We will seek to further monetize our data over time both through potential expansion of our existing market data license agreement with Refinitiv and through distributing additional datasets and analytics offerings through our own network or through other third-party networks. We are also continuously developing new offerings and solutions to meet the changing needs of our clients.
We will seek to further monetize our data over time both through potential expansion of our existing market data license agreement with LSEG and through distributing additional datasets, derived data and analytics offerings through our own network or through other third-party networks.
We expect to continue to leverage our success to expand into new products, asset classes and geographies, while growing our powerful network of clients.
We expect to continue to leverage our success to expand into new products, asset classes and geographies, while growing our powerful network of clients. While our cornerstone products continue to be some of the first products we launched, including U.S.
Many of our asset manager, hedge fund, insurance, central bank/sovereign entity and regional dealer clients actively trade multiple products on our platforms. In addition, our global dealer clients trade in most asset classes across all three client sectors. We also see a growing appetite for multi-asset trading to reduce cost and duration risk.
Many of our asset manager, hedge fund, insurance, central bank/sovereign entity and regional dealer clients actively trade multiple products on our platforms. In addition, our global dealer clients trade in most asset classes across all three client sectors.
The global rates, credit, equities and money markets asset classes continue to evolve electronically, and we seek to increase our market share by continuing to innovate to electronify workflows.
Growth in Our Market Share Our clients represent most of the largest institutional, wholesale and retail market participants. The global rates, credit, equities and money markets asset classes continue to evolve electronically, and we seek to increase our market share by continuing to innovate to electronify workflows.
Our first electronic marketplace went live in 1998, and for more than 25 years we have leveraged our technology and expertise to expand into additional rates products and other asset classes, including credit, equities and money markets.
Treasury trading workflows, including limited price transparency, weak connectivity among market participants and error-prone manual processes. Our first electronic marketplace went live in 1998, and for more than 25 years we have leveraged our technology and expertise to expand into additional rates products and other asset classes, including credit, equities and money markets.
We have a long track record of working with clients to solve both industry-level challenges and client-specific issues. We have had a philosophy of collaboration since our founding, when we worked with certain clients to improve U.S. treasury trading for the institutional client sector.
We have had a philosophy of collaboration since our founding, when we worked with certain clients to improve U.S. Treasury trading for the institutional client sector.
TW SEF LLC is formally exempt from registration as an exchange in the Canadian provinces of Alberta, Ontario and Quebec and is recognized as a foreign trading venue in Switzerland. TW SEF LLC is approved and regulated by ASIC as an Overseas Australian Market Operator Licensee and is recognized as Foreign Trading Venue in Mexico.
TW SEF LLC is formally exempt from registration as an exchange in the Canadian provinces of Alberta, Ontario, Nova Scotia and Quebec and is recognized as a foreign trading venue in Switzerland.
Our senior executives often provide insight and thought leadership to the industry through conversations with the media, appearances at important industry events, roundtables and forums, submitting authored opinion pieces to media outlets and conducting topical webinars for our clients.
Our senior executives often provide insight and thought leadership to the industry through conversations with the media, appearances at important industry events, roundtables and forums, submitting authored opinion pieces to media outlets and conducting topical webinars for our clients. We believe this provides a valued service for our constituents and enhances our brand awareness and stature within the financial community.
In addition, there are other companies that have the platform breadth and global reach that we provide. We believe that our comprehensive offerings, global reach, culture of collaboration and broad network increasingly differentiate us from other market participants.
We believe that our comprehensive offerings, global reach, culture of collaboration and broad network increasingly differentiate us from other market participants.
As an electronic trading marketplace for key asset classes and products, we benefit from a virtuous cycle of liquidity — trading volumes growing together and re-enforcing each other.
We expand our relationships through our integrated technology and new offerings made available to our growing network of clients. As an electronic trading marketplace for key asset classes and products, we benefit from a virtuous cycle of liquidity — trading volumes growing together and re-enforcing each other.
However, the non-compete period applicable to Refinitiv in their restrictive covenant agreement with us was terminated as of January 29, 2021. Available Information Our internet website address is www.tradeweb.com.
We maintain a market data license agreement with LSEG, which was amended and restated effective as of November 1, 2023. The non-compete period applicable to Refinitiv in their restrictive covenant agreement with us was terminated as of January 29, 2021. Available Information Our internet website address is www.tradeweb.com.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong other things, these provisions: • provide for a multi-class common stock structure with a 10 vote per share feature of our Class B common stock and Class D common stock; • allow us to authorize the issuance of undesignated preferred stock in connection with a stockholder rights plan or otherwise, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of our common stock; • prohibit stockholder action by written consent from and after the date on which Refinitiv ceases to beneficially own at least 50% of the total voting power of all then outstanding shares of our capital stock unless such action is recommended by all directors then in office; • provide that the board of directors is expressly authorized to make, alter or repeal our bylaws and that our stockholders may only amend our bylaws with the approval of 66 2∕3% or more in voting power of all outstanding shares of our capital stock, if Refinitiv beneficially owns less than 50% in voting power of our stock entitled to vote generally in the election of directors; and • establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings. 53 Table of Contents In addition, while we have opted out of Section 203 of the Delaware General Corporation Law (“DGCL”), our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless: • prior to such time, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; • upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or • at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least 66 2∕3% of our outstanding voting stock that is not owned by the interested stockholder.
Biggest changeAmong other things, these provisions: • provide for a multi-class common stock structure with a 10 vote per share feature of our Class B common stock and Class D common stock; • allow us to authorize the issuance of undesignated preferred stock in connection with a stockholder rights plan or otherwise, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of our common stock; • prohibit stockholder action by written consent from and after the date on which Refinitiv ceases to beneficially own at least 50% of the total voting power of all then outstanding shares of our capital stock unless such action is recommended by all directors then in office; • provide that the board of directors is expressly authorized to make, alter or repeal our bylaws and that our stockholders may only amend our bylaws with the approval of 66 2∕3% or more in voting power of all outstanding shares of our capital stock, if Refinitiv beneficially owns less than 50% in voting power of our stock entitled to vote generally in the election of directors; and • establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Among other changes, the CPRA introduced additional obligations such as data minimization and storage limitations; established a dedicated privacy regulator in California, the California Privacy Protection Agency, to implement and enforce the law; and granted additional rights to consumers, such as correction of personal information and additional opt-out rights with respect to a new category of “sensitive information.” The CCPA has marked the beginning of a trend toward more stringent state data privacy legislation in the U.S., which may result in significant costs to our business, damage our reputation, require us to amend our business practices, and could adversely affect our business, especially to the extent the specific requirements vary from those and other existing laws.
Among other changes, the CPRA introduced additional obligations such as data minimization and storage limitations; established a dedicated privacy regulator in California, the California Privacy Protection Agency, to implement and enforce the law; and granted additional rights to consumers, such as correction of personal information and additional opt-out rights with respect to a new category of “sensitive information.” The CCPA marked the beginning of a trend toward more stringent state data privacy legislation in the U.S., which may result in significant costs to our business, damage our reputation, require us to amend our business practices, and could adversely affect our business, especially to the extent the specific requirements vary from those and other existing laws.
Under the Tax Receivable Agreement, we are required to make cash payments to a Continuing LLC Owner equal to 50% of the U.S. federal, state and local income or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and the April 2020 follow-on offerings and any future offerings or (b) redemptions or exchanges by such Continuing LLC Owner of LLC Interests for shares of our Class A common stock or Class B Common Stock or for cash, as applicable, and (ii) certain other tax benefits related to our making payments under the Tax Receivable Agreement.
Under the Tax Receivable Agreement, we are required to make cash payments to a Continuing LLC Owner equal to 50% of the U.S. federal, state and local income or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from a Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and the April 2020 follow-on offerings and any future offerings or (b) redemptions or exchanges by a Continuing LLC Owner of LLC Interests for shares of our Class A common stock or Class B Common Stock or for cash, as applicable, and (ii) certain other tax benefits related to our making payments under the Tax Receivable Agreement.
The Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners provides for the payment by us to the Continuing LLC Owners of 50% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and April 2020 follow-on offerings and any future offerings or (b) redemptions or exchanges by the Continuing LLC Owners of LLC Interests for shares of our Class A common stock or Class B Common Stock or for cash, as applicable, and (ii) certain other tax benefits related to our making payments under the Tax Receivable Agreement.
The Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners provides for the payment by us to a Continuing LLC Owner of 50% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from a Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and April 2020 follow-on offerings and any future offerings or (b) redemptions or exchanges by a Continuing LLC Owner of LLC Interests for shares of our Class A common stock or Class B Common Stock or for cash, as applicable, and (ii) certain other tax benefits related to our making payments under the Tax Receivable Agreement.
Risks Relating to Ownership of our Class A Common Stock • Refinitiv and Continuing LLC Owners may require us to issue additional shares of our Class A common stock. • The market price of our Class A common stock may be highly volatile. • Sales, or the potential for sales, of a substantial number of shares of our Class A common stock in the public market could cause our stock price to drop significantly. • If securities or industry analysts cease publishing research or reports about us, adversely change their recommendations or publish negative reports regarding our business or our Class A common stock, our stock price and stock trading volume could materially decline. • We intend to continue to pay regular dividends, but our ability to do so may be limited. • The timing and amount of any share repurchases are subject to a number of uncertainties. • The requirements of being a public company may strain our resources, increase our costs and divert management’s attention, and we may be unable to comply with these requirements in a timely or cost-effective manner. 30 Table of Contents Risks Relating to Market and Industry Dynamics and Competition Economic, political and market conditions may reduce trading volumes, which could have a material adverse effect on our business, financial condition and results of operations.
Risks Relating to Ownership of our Class A Common Stock • Refinitiv and Continuing LLC Owners may require us to issue additional shares of our Class A common stock. • The market price of our Class A common stock may be highly volatile. • Sales, or the potential for sales, of a substantial number of shares of our Class A common stock in the public market could cause our stock price to drop significantly. • If securities or industry analysts cease publishing research or reports about us, adversely change their recommendations or publish negative reports regarding our business or our Class A common stock, our stock price and stock trading volume could materially decline. • We intend to continue to pay regular dividends, but our ability to do so may be limited. • The timing and amount of any share repurchases are subject to a number of uncertainties. • The requirements of being a public company may strain our resources, increase our costs and divert management’s attention, and we may be unable to comply with these requirements in a timely or cost-effective manner. 32 Table of Contents Risks Relating to Market and Industry Dynamics and Competition Economic, political and market conditions may reduce trading volumes, which could have a material adverse effect on our business, financial condition and results of operations.
Moreover, there is significant competition for acquisition and expansion opportunities in the electronic financial services industry. 40 Table of Contents Acquisitions involve numerous risks, including (i) failing to properly identify appropriate acquisition targets and to negotiate acceptable terms; (ii) incurring the time and expense associated with identifying and evaluating potential acquisition targets and negotiating potential transactions; (iii) diverting management’s attention from the operation of our existing business; (iv) using inaccurate estimates and judgments to evaluate credit, operations, funding, liquidity, business, management and market risks with respect to the acquisition target or assets; (v) litigation relating to an acquisition, particularly in the context of a publicly held acquisition target, that could require us to incur significant expenses, result in or delay or enjoin the transaction; (vi) failing to properly identify an acquisition target’s significant problems, liabilities or risks; (vii) not receiving required regulatory approvals on the terms expected or such approvals being delayed or restrictively conditional; and (viii) failing to obtain financing on favorable terms, or at all.
Moreover, there is significant competition for acquisition and expansion opportunities in the electronic financial services industry. 42 Table of Contents Acquisitions involve numerous risks, including (i) failing to properly identify appropriate acquisition targets and to negotiate acceptable terms; (ii) incurring the time and expense associated with identifying and evaluating potential acquisition targets and negotiating potential transactions; (iii) diverting management’s attention from the operation of our existing business; (iv) using inaccurate estimates and judgments to evaluate credit, operations, funding, liquidity, business, management and market risks with respect to the acquisition target or assets; (v) litigation relating to an acquisition, particularly in the context of a publicly held acquisition target, that could require us to incur significant expenses, result in or delay or enjoin the transaction; (vi) failing to properly identify an acquisition target’s significant problems, liabilities or risks; (vii) not receiving required regulatory approvals on the terms expected or such approvals being delayed or restrictively conditional; and (viii) failing to obtain financing on favorable terms, or at all.
While we have dedicated personnel who are responsible for maintaining our cybersecurity program and training our employees on cybersecurity, and while we utilize third-party technology products and services to help identify, protect and remediate our systems, networks and infrastructure, such measures and security controls may not be adequate or effective to prevent, identify or mitigate a cyber-attack, security breach, data breach, disruption, unauthorized access, interruption, significant delay, failure or malfunction.
While we have dedicated personnel who are responsible for maintaining our cybersecurity program and training our employees on cybersecurity, and while we utilize third-party technology products and services to help identify, protect and remediate our systems, networks and infrastructure, such measures and security controls may not be adequate or effective to prevent, detect or mitigate a cyber-attack, security breach, data breach, disruption, unauthorized access, interruption, significant delay, failure or malfunction.
The lenders would also have the right in these circumstances to terminate any commitments they have to provide further credit extensions. If we are forced to refinance any borrowings under the Revolving Credit Facility on less favorable terms or if we cannot refinance these borrowings, our financial condition and results of operations could be materially adversely affected.
The lenders would also have the right in these circumstances to terminate any commitments they have to provide further credit extensions. If we are forced to refinance any borrowings under the 2023 Revolving Credit Facility on less favorable terms or if we cannot refinance these borrowings, our financial condition and results of operations could be materially adversely affected.
Our disaster recovery and business continuity plans are heavily reliant on the availability of the internet and mobile phone technology, so any disruption of those systems would likely affect our ability to recover promptly from a crisis situation. In addition, recent supply chain disruptions could affect our ability to procure hardware needed to recover from a crisis situation.
Our disaster recovery and business continuity plans are heavily reliant on the availability of the internet and mobile phone technology, so any disruption of those systems would likely affect our ability to recover promptly from a crisis situation. In addition, supply chain disruptions could affect our ability to procure hardware needed to recover from a crisis situation.
If we do not have sufficient funds to pay tax or other liabilities or to fund our operations, we may have to borrow funds, including under the Revolving Credit Facility, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such indebtedness.
If we do not have sufficient funds to pay tax or other liabilities or to fund our operations, we may have to borrow funds, including under the 2023 Revolving Credit Facility, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such indebtedness.
If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after an unforeseen, catastrophic or uncontrollable event, and successfully execute on those plans should such an event occur, our business, financial condition, results of operations and reputation could be materially harmed.
If we are unable to deploy or develop adequate plans to ensure that our business functions continue to operate during and after an unforeseen, catastrophic or uncontrollable event, and successfully execute on those plans should such an event occur, our business, financial condition, results of operations and reputation could be materially harmed.
Factors that may cause fluctuations in our quarterly financial results include, but are not limited to: • fluctuations in overall trading volumes or our market share for our key products; • the addition or loss of clients; • the unpredictability of the financial services industry; • our ability to drive an increase in the use of our trading platforms by new and existing clients; • the mix of products and volumes traded, changes in fee plans and average variable fees per million; • the amount and timing of expenses, including those related to the maintenance and expansion of our business, operations and infrastructure; • network or service outages, internet disruptions, the availability of our platforms, security breaches or perceived security breaches; • general economic, political, social, industry and market conditions; • changes in our business strategies and pricing policies (or those of our competitors); 37 Table of Contents • the timing and success of our entry into new markets or introductions of new or enhanced platforms or solutions by us or our competitors, including disruptive technology, or any other change in the competitive dynamics of our industry, including consolidation or new entrants among competitors, market participants or strategic alliances; • the timing and success of any acquisitions, divestitures or strategic alliances; • the timing of expenses related to the development or acquisition of platforms, solutions, technologies or businesses and potential future charges for impairment of goodwill from acquired companies; • new, or changes to existing, regulations that limit or affect our platforms, solutions and technologies or which increase our regulatory compliance costs; and • the timing and magnitude of any adjustments in our consolidated financial statements driven by changes in the liability under the Tax Receivable Agreement.
Factors that may cause fluctuations in our quarterly financial results include, but are not limited to: • fluctuations in overall trading volumes or our market share for our key products; • the addition or loss of clients; • the unpredictability of the financial services industry; • our ability to drive an increase in the use of our trading platforms by new and existing clients; • the mix of products and volumes traded, changes in fee plans and average variable fees per million; • the amount and timing of expenses, including those related to the maintenance and expansion of our business, operations and infrastructure; 39 Table of Contents • network or service outages, internet disruptions, the availability of our platforms, cyber-attacks, security breaches or perceived security breaches; • general economic, political, social, industry and market conditions; • changes in our business strategies and pricing policies (or those of our competitors); • the timing and success of our entry into new markets or introductions of new or enhanced platforms or solutions by us or our competitors, including disruptive technology, or any other change in the competitive dynamics of our industry, including consolidation or new entrants among competitors, market participants or strategic alliances; • the timing and success of any acquisitions, divestitures or strategic alliances; • the timing of expenses related to the development or acquisition of platforms, solutions, technologies or businesses and potential future charges for impairment of goodwill from acquired companies; • new, or changes to existing, regulations that limit or affect our platforms, solutions and technologies or which increase our regulatory compliance costs; and • the timing and magnitude of any adjustments in our consolidated financial statements driven by changes in the liability under the Tax Receivable Agreement.
In our development of new platforms, platform features and solutions or updates and enhancements to our existing platforms and solutions, we may make a design error that causes the platform or solution to fail or operate incorrectly or less effectively than planned.
In our development of new platforms, platform features and solutions or updates and enhancements to our existing platforms and solutions, we may make a design error that causes the platform feature or solution to fail or operate incorrectly or less effectively than planned.
We expect that, as a result of the increases in the tax basis of the tangible and intangible assets of TWM LLC attributable to the redeemed or exchanged LLC Interests, the payments that we may make to the existing Continuing LLC Owners could be substantial.
We expect that, as a result of the increases in the tax basis of the tangible and intangible assets of TWM LLC attributable to the redeemed or exchanged LLC Interests, the payments that we may make to Continuing LLC Owners could be substantial.
New U.S. tax legislation may materially adversely affect our financial condition, results of operations and cash flows. At any time, the U.S. federal income tax laws or the administrative interpretations of those laws may be amended.
New tax legislation and regulation may materially adversely affect our financial condition, results of operations and cash flows. At any time, the U.S. federal income tax laws or the administrative interpretations of those laws may be amended.
Registration of these shares under the Securities Act, would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates as defined in Rule 144 under the Securities Act. 58 Table of Contents If securities or industry analysts cease publishing research or reports about us, our business, our industry or markets or our competitors, or if they adversely change their recommendations or publish negative reports regarding our business or our Class A common stock, our stock price and trading volume could materially decline.
Registration of these shares under the Securities Act, would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates as defined in Rule 144 under the Securities Act. 60 Table of Contents If securities or industry analysts cease publishing research or reports about us, our business, our industry or markets or our competitors, or if they adversely change their recommendations or publish negative reports regarding our business or our Class A common stock, our stock price and trading volume could materially decline.
Accordingly, if there are adverse movements in exchange rates, we may suffer significant losses, which would materially adversely affect our financial condition and results of operations. 42 Table of Contents Risks Relating to Cybersecurity and Intellectual Property Actual or perceived security vulnerabilities in our systems, networks and infrastructure, breaches of security controls, unauthorized access to confidential or personal information or cyber-attacks could harm our business, reputation and results of operations.
Accordingly, if there are adverse movements in exchange rates, we may suffer significant losses, which would materially adversely affect our financial condition and results of operations. 44 Table of Contents Risks Relating to Cybersecurity and Intellectual Property Actual or perceived security vulnerabilities in our systems, networks and infrastructure, breaches of security controls, unauthorized access to confidential or personal information or cyber-attacks could harm our business, reputation and results of operations.
Ultimately, the risks associated with any negative publicity or actual, alleged or perceived issues regarding our business or any person formerly or currently associated with us cannot be completely eliminated or mitigated and may materially harm our reputation, business, financial condition and results of operations. 38 Table of Contents We may incur impairment charges for our goodwill and other indefinite-lived intangible assets which would negatively impact our operating results.
Ultimately, the risks associated with any negative publicity or actual, alleged or perceived issues regarding our business or any person formerly or currently associated with us cannot be completely eliminated or mitigated and may materially harm our reputation, business, financial condition and results of operations. 40 Table of Contents We may incur impairment charges for our goodwill and other indefinite-lived intangible assets which would negatively impact our operating results.
Operating in a rapidly evolving industry involves a high degree of risk and our future success will depend in part on our ability to: • enhance and improve the responsiveness, functionality, accessibility and reliability of our existing platforms and solutions; • develop, license or acquire new platforms, solutions and technologies that address the increasingly sophisticated and varied needs of our existing and prospective clients, and that allow us to grow within our existing markets and to expand into new markets, asset classes and products; • achieve and maintain market acceptance for our platforms and solutions; • adapt our existing platforms and solutions for new markets, asset classes and products; • respond to competitive pressures, technological advances, including new or disruptive technology, emerging industry standards and practices and regulatory requirements and changes on a cost-effective and timely basis; • attract highly-skilled technology, regulatory, sales and marketing personnel; • operate, support, expand, adapt and develop our operations, systems, networks and infrastructure; • manage cybersecurity threats; • take advantage of acquisitions, strategic alliances and other opportunities; and • obtain any applicable regulatory approval for our platforms and solutions.
Operating in a rapidly evolving industry involves a high degree of risk and our future success will depend in part on our ability to: • enhance and improve the responsiveness, functionality, accessibility and reliability of our existing platforms and solutions; • develop, license or acquire new platforms, solutions and technologies that address the increasingly sophisticated and varied needs of our existing and prospective clients, and that allow us to grow within our existing markets and to expand into new markets, asset classes and products; • achieve and maintain market acceptance for our platforms and solutions; • adapt our existing platforms and solutions for new markets, asset classes and products; • respond to competitive pressures, technological advances, including new or disruptive technology such as artificial intelligence, emerging industry standards and practices and regulatory requirements and changes on a cost-effective and timely basis; • attract highly-skilled technology, regulatory, sales and marketing personnel; • operate, support, expand, adapt and develop our operations, systems, networks and infrastructure; • manage cybersecurity threats; • take advantage of acquisitions, strategic alliances and other opportunities; and • obtain any applicable regulatory approval for our platforms and solutions.
Risks Relating to Cybersecurity and Intellectual Property • We could face actual or perceived security vulnerabilities in our systems, networks and infrastructure, breaches of security controls, unauthorized access to confidential or personal information or cyber-attacks. • We could be subject to systems failures, interruptions, delays in service, catastrophic events and resulting interruptions in the availability of our platforms or solutions. • We may not be able to adequately protect our intellectual property or rely on third-party intellectual property rights. • Third parties may claim that we are infringing or misappropriating their intellectual property rights. • Our use of open source software could result in litigation or impose unanticipated restrictions on our ability to commercialize our platforms and solutions. 29 Table of Contents Risks Relating to Legal, Regulatory and Tax Considerations • Extensive regulation of our industry results in ongoing exposure to significant costs and penalties, enhanced oversight and restrictions and limitations on our business. • Our business, and the businesses of many of our clients, could be materially adversely affected by new laws, rules or regulations or changes in existing laws, rules or regulations. • Our actual or perceived failure to comply with privacy, data protection and information security laws, rules, regulations and obligations could harm our business. • We may face new U.S. tax legislation as well as unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns. • Our compliance and risk management programs might not be effective. • We are exposed to litigation risk, including securities litigation risk.
Risks Relating to Cybersecurity and Intellectual Property • We could face actual or perceived security vulnerabilities in the systems, networks and infrastructure that we own or use, breaches of security controls, unauthorized access to confidential or personal information or cyber-attacks. • We could be subject to systems failures, interruptions, delays in service, catastrophic events and resulting interruptions in the availability of our platforms or solutions. • We may not be able to adequately protect our intellectual property or rely on third-party intellectual property rights. • Third parties may claim that we are infringing or misappropriating their intellectual property rights. • Our use of open source software could result in litigation or impose unanticipated restrictions on our ability to commercialize our platforms and solutions. 31 Table of Contents Risks Relating to Legal, Regulatory and Tax Considerations • Extensive regulation of our industry results in ongoing exposure to significant costs and penalties, enhanced oversight and restrictions and limitations on our business. • Our business, and the businesses of many of our clients, could be materially adversely affected by new laws, rules or regulations or changes in existing laws, rules or regulations. • Our actual or perceived failure to comply with privacy, data protection and information security laws, rules, regulations and obligations could harm our business. • We may face new tax legislation and regulation as well as unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns. • Our compliance and risk management programs might not be effective. • We are exposed to litigation risk, including securities litigation risk.
Since we operate in several different countries outside the United States, most notably the UK, the Netherlands, Japan, as well as China, Singapore, Hong Kong and Canada, among others, significant portions of our revenues, expenses, assets and liabilities are denominated in non-U.S. dollar currencies, most notably the British pound sterling and euros, as well as Japanese Yen, Chinese Yuan Renminbi, Singapore dollars, Hong Kong dollars and Canadian dollars, among others.
Since we operate in several different countries outside the United States, most notably the UK, the Netherlands, Japan, as well as Australia, China, Singapore, Hong Kong and Canada, among others, significant portions of our revenues, expenses, assets and liabilities are denominated in non-U.S. dollar currencies, most notably the British pound sterling and euros, as well as Japanese Yen, Australian dollars, Chinese Yuan Renminbi, Singapore dollars, Hong Kong dollars and Canadian dollars, among others.
Additional considerations that could cause management to limit, suspend or delay future stock repurchases include unfavorable market conditions, the trading price of our Class A common stock, the nature and magnitude of other investment opportunities available to us from time to time and the allocation of available cash. 59 Table of Contents In addition, repurchases of shares of our Class A common stock pursuant to the Share Repurchase Program could affect our stock price and increase its volatility.
Additional considerations that could cause management to limit, suspend or delay future stock repurchases include unfavorable market conditions, the trading price of our Class A common stock, the nature and magnitude of other investment opportunities available to us from time to time and the allocation of available cash. 61 Table of Contents In addition, repurchases of shares of our Class A common stock pursuant to the Share Repurchase Program could affect our stock price and increase its volatility.
In addition, the credit agreement that governs our Revolving Credit Facility requires us to maintain a maximum total net leverage ratio and a minimum cash interest coverage ratio.
In addition, the credit agreement that governs our 2023 Revolving Credit Facility requires us to maintain a maximum total net leverage ratio and a minimum cash interest coverage ratio.
For example, the IRA enacted, among other changes, a 15% corporate minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations.
For example, the IRA enacted, among other changes, a 15% corporate alternative minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations.
Our failure to comply with the covenants and other terms of the Revolving Credit Facility and/or the terms of any future indebtedness could result in an event of default.
Our failure to comply with the covenants and other terms of the 2023 Revolving Credit Facility and/or the terms of any future indebtedness could result in an event of default.
The existence of design defects, errors, failures or delays that are significant, or are perceived to be significant, could also result in rejection or delay in market acceptance of our platforms or solutions, damage to our reputation, loss of clients and related revenues, diversion of resources, product liability claims, regulatory actions or increases in costs, any of which could materially adversely affect our business, financial condition or results of operations. 35 Table of Contents We rely on third parties to perform certain key functions, and their failure to perform those functions could result in the interruption of our operations and systems and could result in significant costs and reputational damage to us.
The existence of design defects, errors, failures or delays that are significant, or are perceived to be significant, could also result in rejection or delay in market acceptance of our platforms, features or solutions, damage to our reputation, loss of clients and related revenues, diversion of resources, product liability claims, regulatory actions or increases in costs, any of which could materially adversely affect our business, financial condition or results of operations. 37 Table of Contents We rely on third parties to perform certain key functions, and their failure to perform those functions could result in the interruption of our operations and systems and could result in significant costs and reputational damage to us.
The occurrence of any of the foregoing may have a material adverse effect on our business, financial condition and results of operations. 34 Table of Contents We do not have long-term contractual arrangements with most of our liquidity taking clients, and our trading volumes and revenues could be reduced if these clients stop using our platforms and solutions.
The occurrence of any of the foregoing may have a material adverse effect on our business, financial condition and results of operations. 36 Table of Contents We do not have long-term contractual arrangements with most of our liquidity taking clients, and our trading volumes and revenues could be reduced if these clients stop using our platforms and solutions.
These risks include: • local economic, political and social conditions, including the possibility of economic slowdowns, hyperinflationary conditions, political instability, social unrest or outbreaks of pandemic or contagious diseases, such as COVID-19 and its variants; • differing legal and regulatory requirements, and the possibility that any required approvals may impose restrictions on the operation of our business; • changes in laws, government policies and regulations, or in how provisions are interpreted or administered and how we are supervised; • the inability to manage and coordinate the various legal and regulatory requirements of multiple jurisdictions that are constantly evolving and subject to change; • varying tax regimes, including with respect to imposition or increase of taxes on financial transactions or withholding and other taxes on remittances and other payments by subsidiaries; • actual or threatened trade war, including between the United States and China, or other governmental action related to tariffs, international trade agreements or trade policies; • currency exchange rate fluctuations, changes in currency policies or practices and restrictions on currency conversion; • limitations or restrictions on the repatriation or other transfer of funds; • potential difficulties in protecting intellectual property; • the inability to enforce agreements, collect payments or seek recourse under or comply with differing commercial laws; • managing the potential conflicts between locally accepted business practices and our obligations to comply with laws and regulations, including anti-corruption and anti-money laundering laws and regulations; • compliance with economic sanctions laws and regulations; • difficulties in staffing and managing foreign operations; • increased costs and difficulties in developing and managing our global operations and our technological infrastructure; and • seasonal fluctuations in business activity.
These risks include: • local economic, political and social conditions, including the possibility of economic slowdowns, hyperinflationary conditions, political instability, social unrest or outbreaks of pandemic or contagious diseases; • differing legal and regulatory requirements, and the possibility that any required approvals may impose restrictions on the operation of our business; • changes in laws, government policies and regulations, or in how provisions are interpreted or administered and how we are supervised; • the inability to manage and coordinate the various legal and regulatory requirements of multiple jurisdictions that are constantly evolving and subject to change; • varying tax regimes, including with respect to imposition or increase of taxes on financial transactions or withholding and other taxes on remittances and other payments by subsidiaries; • actual or threatened trade war, including between the United States and China, or other governmental action related to tariffs, international trade agreements or trade policies; • currency exchange rate fluctuations, changes in currency policies or practices and restrictions on currency conversion; • limitations or restrictions on the repatriation or other transfer of funds; • potential difficulties in protecting intellectual property; • the inability to enforce agreements, collect payments or seek recourse under or comply with differing commercial laws; • managing the potential conflicts between locally accepted business practices and our obligations to comply with laws and regulations, including anti-corruption and anti-money laundering laws and regulations; • compliance with economic sanctions laws and regulations; • difficulties in staffing and managing foreign operations; • increased costs and difficulties in developing and managing our global operations and our technological infrastructure; and • seasonal fluctuations in business activity.
Our operations also include the sale of pre- and post-trade services, analytics and market data (including through a distribution agreement with Refinitiv). There is a high degree of competition among market data and information vendors in solutions for pre- and post-trade data, analytics and reporting, and such businesses may become more competitive in the future as new competitors emerge.
Our operations also include the sale of pre- and post-trade services, analytics and market data (including through a distribution agreement with LSEG). There is a high degree of competition among market data and information vendors in solutions for pre- and post-trade data, analytics and reporting, and such businesses may become more competitive in the future as new competitors emerge.
If any of these factors negatively impact our ability to provide these data-based solutions to our clients, our competitive position could be materially harmed, which could have a material adverse effect on our business, financial condition and results of operations. In addition, pursuant to a market data license agreement, Refinitiv currently distributes a significant portion of our market data.
If any of these factors negatively impact our ability to provide these data-based solutions to our clients, our competitive position could be materially harmed, which could have a material adverse effect on our business, financial condition and results of operations. In addition, pursuant to a market data license agreement, LSEG currently distributes a significant portion of our market data.
If our marketplaces are perceived to be less liquid, we could lose further trading volumes and our business, financial condition and results of operations could be materially adversely affected. 31 Table of Contents There have been significant declines in trading volumes in the financial markets generally in the past and there may be similar declines in trading volumes generally or across our marketplaces in particular in the future.
If our marketplaces are perceived to be less liquid, we could lose further trading volumes and our business, financial condition and results of operations could be materially adversely affected. 33 Table of Contents There have been significant declines in trading volumes in the financial markets generally in the past and there may be similar declines in trading volumes generally or across our marketplaces in particular in the future.
Treasury market, that could limit the ability of market participants to engage in a wider array of trading activities or make certain corporate activities less desirable or more expensive; • actual or threatened trade war, including between the United States and China, or other governmental action related to tariffs, international trade agreements or trade policies; and • the current or anticipated impact of climate change, extreme weather events, natural disasters and other catastrophic events, actual or threatened acts of war, including Russia’s invasion of Ukraine, terrorism or other armed hostilities or outbreaks of pandemic or contagious diseases.
Treasury market, that could limit the ability of market participants to engage in a wider array of trading activities or make certain corporate activities less desirable or more expensive; • actual or threatened trade war, including between the United States and China, or other governmental action related to tariffs, international trade agreements or trade policies; and • the current or anticipated impact of climate change, extreme weather events, natural disasters and other catastrophic events, actual or threatened acts of war, terrorism or other armed hostilities or outbreaks of pandemic or contagious diseases.
If we are not able to compete successfully in this area in the future, our revenues could be adversely impacted and, as a result, our business, financial condition and results of operations would be materially adversely affected. 32 Table of Contents The industry in which we operate is rapidly evolving.
If we are not able to compete successfully in this area in the future, our revenues could be adversely impacted and, as a result, our business, financial condition and results of operations would be materially adversely affected. 34 Table of Contents The industry in which we operate is rapidly evolving.
See Note 10 – Tax Receivable Agreement to our audited consolidated financial statements included in this Annual Report on Form 10-K.
See Note 10 – Tax Receivable Agreement to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We cannot readily predict the timing or size of any future acquisition or divestiture, and there can be no assurance that we will realize any anticipated benefits from any such acquisition or divestiture. If we do not realize any such anticipated benefits, our business, financial condition and results of operations could be materially adversely affected.
We cannot readily predict the timing or size of any future acquisition or divestiture, and there can be no assurance that we will realize any anticipated benefits from any recent or any potential future acquisition or divestiture. If we do not realize any such anticipated benefits, our business, financial condition and results of operations could be materially adversely affected.
Unsuccessful strategic alliances, partnerships or joint ventures could harm our reputation and have a material adverse effect on our business, financial condition and results of operations. 41 Table of Contents Risks Relating to our International Operations Our business, financial condition and results of operations may be materially adversely affected by risks associated with our international operations.
Unsuccessful strategic alliances, partnerships or joint ventures could harm our reputation and have a material adverse effect on our business, financial condition and results of operations. 43 Table of Contents Risks Relating to our International Operations Our business, financial condition and results of operations may be materially adversely affected by risks associated with our international operations.
In particular, we depend on Refinitiv to source certain reference data for products that trade on our platforms. Our data sources and information providers, some of which are our competitors, could increase the price for or withdraw their data or information services for a variety of reasons.
In particular, we depend on LSEG to source certain reference data for products that trade on our platforms. Our data sources and information providers, some of which are our competitors, could increase the price for or withdraw their data or information services for a variety of reasons.
Our ability to pay dividends may also be restricted by the terms of the Revolving Credit Facility, any future credit agreement or any future debt or preferred equity securities of Tradeweb or its subsidiaries. Our dividend policy entails certain risks and limitations, particularly with respect to our liquidity.
Our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of Tradeweb or its subsidiaries. Our dividend policy entails certain risks and limitations, particularly with respect to our liquidity.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • changes in tax laws, regulations or interpretations thereof; or • future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated in countries where we have higher statutory tax rates.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • changes in tax laws, regulations or interpretations thereof; or 51 Table of Contents • future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated in countries where we have higher statutory tax rates.
To effectively manage the expected growth of our operations, we will need to continue to improve our operational, financial and management processes and systems. 39 Table of Contents The success of our growth plan depends, in part, on our ability to implement our business strategies.
To effectively manage the expected growth of our operations, we will need to continue to improve our operational, financial and management processes and systems. 41 Table of Contents The success of our growth plan depends, in part, on our ability to implement our business strategies.
As of December 31, 2022, we had goodwill of $2.8 billion and indefinite-lived intangible assets of $0.3 billion. The carrying value of goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as of the acquisition date.
As of December 31, 2023, we had goodwill of $2.8 billion and indefinite-lived intangible assets of $0.3 billion. The carrying value of goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as of the acquisition date.
The risks associated with such actions are difficult to assess or quantify. In the normal course of our business, we have been, and continue to be from time to time, a party to various legal and regulatory proceedings related to compliance with applicable laws, rules and regulations, including audits, examinations and investigations of our operations and activities.
The risks associated with such actions are difficult to assess or quantify. 48 Table of Contents In the normal course of our business, we have been, and continue to be from time to time, a party to various legal and regulatory proceedings related to compliance with applicable laws, rules and regulations, including audits, examinations and investigations of our operations and activities.
See “— Risks Relating to Ownership of Our Class A Common Stock.” In certain circumstances, TWM LLC will be required to make distributions to us and the other holders of LLC Interests, and the distributions that TWM LLC will be required to make may be substantial and in excess of our tax liabilities and obligations under the Tax Receivable Agreement.
See “— Risks Relating to Ownership of Our Class A Common Stock.” 56 Table of Contents In certain circumstances, TWM LLC will be required to make distributions to us and the other holders of LLC Interests, and the distributions that TWM LLC will be required to make may be substantial and in excess of our tax liabilities and obligations under the Tax Receivable Agreement.
The concentration of voting power could deprive you of an opportunity to receive a premium for your shares of Class A common stock as part of a sale of our company and ultimately might affect the market price of our Class A common stock. 52 Table of Contents Refinitiv engages in a broad spectrum of activities.
The concentration of voting power could deprive you of an opportunity to receive a premium for your shares of Class A common stock as part of a sale of our company and ultimately might affect the market price of our Class A common stock. Refinitiv engages in a broad spectrum of activities.
Any adverse determination in litigation could also subject us to significant liabilities. 50 Table of Contents Risks Relating to our Indebtedness The credit agreement that governs the Revolving Credit Facility imposes significant operating and financial restrictions on us and our restricted subsidiaries, which may prevent us from capitalizing on business opportunities, and we may incur additional debt in the future that may include similar or additional restrictions.
Any adverse determination in litigation could also subject us to significant liabilities. 52 Table of Contents Risks Relating to our Indebtedness The credit agreement that governs the 2023 Revolving Credit Facility imposes certain operating and financial restrictions on us and our restricted subsidiaries, which may prevent us from capitalizing on business opportunities, and we may incur debt in the future that may include similar or additional restrictions.
If system failures in the industry continue to occur, it is possible that confidence in the electronic financial services industry could diminish, leading to materially decreased trading volumes and revenues. We may not be able to adequately protect our intellectual property or rely on third-party intellectual property rights, which, in turn, could materially adversely affect our brand and our business.
If system failures in the industry continue to occur, it is possible that confidence in the electronic financial services industry could diminish, leading to materially decreased trading volumes and revenues. 46 Table of Contents We may not be able to adequately protect our intellectual property or rely on third-party intellectual property rights, which, in turn, could materially adversely affect our brand and our business.
There can be no assurance that TWM LLC and its subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions will permit such distributions. 54 Table of Contents We also incur expenses related to our operations, including payments under the Tax Receivable Agreement, which we expect could be significant.
There can be no assurance that TWM LLC and its subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions will permit such distributions. We also incur expenses related to our operations, including payments under the Tax Receivable Agreement, which we expect could be significant.
The occurrence of, or uncertainty related to, any one of the following factors may cause a substantial decline in the U.S. and/or global financial markets, which could result in reduced trading volumes and profitability for our business: • economic, political and social conditions in the United States, the UK, the EU and/or its member states, China or other major economies around the world, including, among other things, the strength and direction of the U.S. and global economy and the ongoing effects of COVID-19 and its variants; • the impact of foreign exchange fluctuations (see “—Risks Relating to our International Operations -- Fluctuations in foreign currency exchange rates may adversely affect our financial results” for further information); • the effect of Federal Reserve Board and other central banks’ monetary policy, increased capital requirements for banks and other financial institutions and other regulatory requirements; • adverse market conditions, including unforeseen market closures or other disruptions in trading; • broad trends in business and finance, including the number of new issuances and changes in investment patterns and priorities; • concerns over a potential recession (in the United States or globally), inflation and weakening consumer and investor confidence levels; • the level and volatility of interest rates, including actual and anticipated increases in the federal funds rate by the Federal Reserve; • consolidation or contraction in the number, and changes in the financial strength, of market participants; • the availability of capital for borrowings and investments by our clients; • liquidity concerns, including concerns over credit default or bankruptcy of one or more sovereign nations or corporate entities; • legislative, regulatory or government policy changes, including changes to financial industry regulations and tax laws, including the Inflation Reduction Act of 2022 (the “IRA”) and central clearing requirements for the U.S.
The occurrence of, or uncertainty related to, any one of the following factors may cause a substantial decline in the U.S. and/or global financial markets, which could result in reduced trading volumes and profitability for our business: • economic, political and social conditions in the United States, the UK, the EU and/or its member states, China or other major economies around the world, including, among other things, the strength and direction of the U.S. and global economy, the war in Ukraine and the Israel Hamas war; • the impact of foreign exchange fluctuations (see “—Risks Relating to our International Operations — Fluctuations in foreign currency exchange rates may adversely affect our financial results” for further information); • the effect of Federal Reserve Board and other central banks’ monetary policy, increased capital requirements for banks and other financial institutions and other regulatory requirements; • adverse market conditions, including unforeseen market closures or other disruptions in trading; • broad trends in business and finance, including the number of new issuances and changes in investment patterns and priorities; • concerns over a potential recession (in the United States or globally), inflation, the banking industry, including as a result of any bank failures and weakening consumer and investor confidence levels; • the level and volatility of interest rates, including actual and anticipated increases in the federal funds rate by the Federal Reserve; • consolidation or contraction in the number, and changes in the financial strength, of market participants; • the availability of capital for borrowings and investments by our clients; • liquidity concerns, including concerns over credit default or bankruptcy of one or more sovereign nations or corporate entities; • legislative, regulatory or government policy changes, including changes to financial industry regulations and tax laws, including the Inflation Reduction Act of 2022 (the “IRA”) and central clearing requirements for the U.S.
Any failure to remain abreast of changing market conditions and to be responsive to market preferences could cause our market share to decline and materially adversely impact our revenues. Consolidation and concentration in the financial services industry could materially adversely affect our business, financial condition and results of operations.
Any failure to remain abreast of changing market conditions and to be responsive to market preferences could cause our market share to decline and materially adversely impact our revenues. 35 Table of Contents Consolidation and concentration in the financial services industry could materially adversely affect our business, financial condition and results of operations.
Sales or distributions of substantial amounts of our Class A common stock, including shares issued in connection with an acquisition, or the perception that such sales or distributions could occur, may cause the market price of our Class A common stock to decline. The market price of our Class A common stock may be highly volatile.
Sales or distributions of substantial amounts of our Class A common stock, including shares issued in connection with an acquisition, or the perception that such sales or distributions could occur, may cause the market price of our Class A common stock to decline. 59 Table of Contents The market price of our Class A common stock may be highly volatile.
In addition, as regulations are introduced which affect our prudential obligations, the regulatory capital requirements imposed on certain of our subsidiaries may change. It is difficult to know conclusively how future regulatory developments may directly affect our business.
In addition, as regulations are introduced which affect our prudential obligations, the regulatory capital requirements imposed on certain of our subsidiaries may change. 49 Table of Contents It is difficult to know conclusively how future regulatory developments may directly affect our business.
We expect these rules and regulations to continue to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. For example, we expect to incur additional costs in connection with compliance with the SEC’s new climate-related disclosure rules.
We expect these rules and regulations to continue to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. For example, we expect to incur additional costs in connection with compliance with any new climate-related disclosure rules.
As of December 31, 2022, we derived approximately 51% of our revenue from our Rates asset class. Our long-term growth plan includes expanding the number of products we offer across asset classes, by investing in our development efforts and increasing our revenues by growing our market share in our existing markets and entering into new markets.
As of December 31, 2023, we derived approximately 52% of our revenue from our Rates asset class. Our long-term growth plan includes expanding the number of products we offer across asset classes, by investing in our development efforts and increasing our revenues by growing our market share in our existing markets and entering into new markets.
If interest rates rise, as they did throughout 2022, our debt service obligations on any borrowings under the Revolving Credit Facility will increase even though the amount borrowed may remain the same, and our net income and cash flows will correspondingly decrease.
If interest rates rise, as they did throughout most of 2023, our debt service obligations on any borrowings under the 2023 Revolving Credit Facility will increase even though the amount borrowed may remain the same, and our net income and cash flows will correspondingly decrease.
The manner, timing and amount of any purchase will be based on an evaluation of market conditions, stock price and other factors. For example, the IRA imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S. corporations.
The manner, timing and amount of any purchase will be based on an evaluation of market conditions, stock price and other factors. For example, the IRA imposes a 1% excise tax on the repurchase of stock by publicly traded U.S. corporations.
We may incur losses as a result of unforeseen, catastrophic or uncontrollable events, including fire, natural disasters, extreme weather events, global health crises (including COVID-19 and its variants), power loss, telecommunications failure, software or hardware malfunctions, theft, cyber-attacks, acts of war, terrorist attacks or other armed hostilities.
We may incur losses as a result of unforeseen, catastrophic or uncontrollable events, including fire, natural disasters, extreme weather events, global health crises (including COVID-19 and its variants), power loss, telecommunications failure, software or hardware malfunctions, theft, cyber-attacks, acts of war, terrorist attacks or other armed hostilities (including the war in Ukraine and the Israel Hamas war).
The cancellation of, or any adverse change to, our arrangement with Refinitiv or the inability of Refinitiv to effectively distribute our data may materially harm our business and competitive position. 36 Table of Contents We are dependent upon trading counterparties and clearinghouses to perform their obligations.
The cancellation of, or any adverse change to, our arrangement with LSEG or the inability of LSEG to effectively distribute our data may materially harm our business and competitive position. 38 Table of Contents We are dependent upon trading counterparties and clearinghouses to perform their obligations.
For the year ended December 31, 2022, 36% of our revenues derived from our international operations.
For the year ended December 31, 2023, 36% of our revenues derived from our international operations.
As supervisory authorities issue further guidance on personal information export mechanisms, including circumstances where the SCCs cannot be used and/or start taking enforcement action, we could incur substantial costs and/or regulatory investigations or fines. We are also subject to the GDPR as incorporated into United Kingdom law (“UK GDPR”).
As supervisory authorities issue further guidance on personal information export mechanisms, including circumstances where the SCCs cannot be used and/or broaden their enforcement activities, we could incur substantial costs and/or regulatory investigations or fines. We are also subject to the GDPR as incorporated into United Kingdom law (“UK GDPR”).
In addition, although the credit agreement that governs the Revolving Credit Facility contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and we and our subsidiaries may be able to incur substantial additional indebtedness in compliance with these restrictions in the future.
In addition, although the credit agreement that governs the 2023 Revolving Credit Facility contains restrictions on the incurrence of certain indebtedness, these restrictions are subject to a number of qualifications and exceptions, and we and our subsidiaries may be able to incur substantial indebtedness in the future.
If any such event of default occurs and is not waived, the lenders under the Revolving Credit Facility could elect to declare all amounts outstanding and accrued and unpaid interest, if any, under the Revolving Credit Facility to be immediately due and payable, and could foreclose on the assets securing the Revolving Credit Facility.
If any such event of default occurs and is not waived, the lenders under the 2023 Revolving Credit Facility could elect to declare all amounts outstanding and accrued and unpaid interest, if any, under the 2023 Revolving Credit Facility to be immediately due and payable.
For example, our trading platforms face existing and potential competition from large exchanges, which have in recent years developed electronic capabilities in-house or through acquisitions. We also face competition from individual banks that offer their own electronic platforms to their institutional clients.
For example, our trading platforms face existing and potential competition from large exchanges, which have in recent years developed electronic capabilities in-house or through acquisitions. We also face competition from individual banks that offer their own electronic platforms to their institutional clients and from providers of execution management services and order management services.
The GDPR prohibits the transfer of personal data to countries outside of the European Union/EEA (including the U.S.) that are not considered by the European Commission to provide an adequate level of data protection, except if the data controller meets very specific requirements, including use of standard contractual clauses (“SCCs”), issued by the European Commission.
The GDPR prohibits the transfer of personal data to countries outside of the European Union/EEA (including the U.S.) that are not considered by the European Commission to provide an adequate level of data protection, except if the data controller meets very specific requirements, including, for example, use of standard contractual clauses (“SCCs”), issued by the European Commission, or certification under the new EU-U.S.
Due to political uncertainty in certain regions, including military actions associated with Russia’s invasion of Ukraine, we, like other financial services companies, may be subject to a heightened risk of such attacks from nation-state and affiliated actors, including attacks that could materially disrupt our systems, operations and platforms.
Due to political uncertainty in certain regions, we, like other financial services companies, may be subject to a heightened risk of such attacks from nation-state and affiliated actors, including attacks that could materially disrupt our systems, operations and platforms.
The terms of any future indebtedness we may incur could include more restrictive covenants. Any borrowings under the Revolving Credit Facility will subject us to interest rate risk, which could cause our debt service obligations to increase significantly. Any borrowings under the Revolving Credit Facility will be at variable rates of interest and expose us to interest rate risk.
The terms of any future indebtedness we may incur could include more restrictive covenants. Any borrowings under the 2023 Revolving Credit Facility will subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
For example, in the European Economic Area (the “EEA”), the General Data Protection Regulation (“GDPR”) imposes more stringent EU data protection requirements for entities using, processing, and transferring personal data and provides for significant penalties for noncompliance.
For example, in the EEA, the General Data Protection Regulation (“GDPR”) imposes more stringent EU data protection requirements for entities using, processing, and transferring personal data and provides for significant penalties for noncompliance.
These and other factors have led us to scale back our expansion efforts into new markets in the past, and there can be no assurance that we will not experience similar difficulties in the future.
These and other factors have led us to scale back our expansion efforts into new markets in the past, and there can be no assurance that we will not experience similar difficulties in the future. There can be no assurance that we will be able to successfully maintain or grow our operations abroad.
The SCCs impose obligations on companies relating to cross-border personal data transfers, including, for example, depending on a party’s role in the transfer, implementation of additional security measures and to update internal privacy practices.
Data Privacy Framework administered by the U.S. Department of Commerce. . The SCCs impose obligations on companies relating to cross-border personal data transfers, including, for example, depending on a party’s role in the transfer, implementation of additional security measures and to update internal privacy practices.
As of December 31, 2022, Refinitiv controls approximately 91.2% of the combined voting power of our common stock as a result of its ownership of our Class B common stock and Class D common stock, each share of which is entitled to 10 votes on all matters submitted to a vote of our stockholders.
As of December 31, 2023, Refinitiv controls approximately 89.9% of the combined voting power of our common stock as a result of its ownership of our Class B common stock and Class D common stock, each share of which is entitled to 10 votes on all matters submitted to a vote of our stockholders and its ownership of our Class C common stock, each share of which is entitled to 1 vote on all matters submitted to a vote of our stockholders.
Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
Accordingly, if we utilize the exemptions, you would not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 54 Table of Contents Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
The SEC, the CFTC, FINRA, the National Futures Association (“NFA”) and other authorities extensively regulate the U.S. financial services industry, including most of our operations in the United States.
The SEC, the CFTC, FINRA, the NFA and other authorities extensively regulate the U.S. financial services industry, including most of our operations in the United States.
For example, as of December 31, 2022, we recorded a liability of $425.7 million related to our projected obligations under the Tax Receivable Agreement with respect to LLC Interests that were purchased by Tradeweb Markets Inc. using the net proceeds from the IPO and the October 2019 and the April 2020 follow-on offerings and LLC Interests that were exchanged by Continuing LLC Owners during the years ended December 31, 2022, 2021, 2020 and 2019.
For example, as of December 31, 2023, we recorded a liability of $457.5 million related to our projected obligations under the Tax Receivable Agreement with respect to LLC Interests that were purchased by Tradeweb Markets Inc. using the net proceeds from the IPO and the October 2019 and the April 2020 follow-on offerings and LLC Interests that were subsequently exchanged by Continuing LLC Owners.
We are party to a $500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), with a syndicate of banks. The credit agreement that governs the Revolving Credit Facility imposes significant operating and financial restrictions.
We are party to the 2023 Revolving Credit Facility, a $500.0 million senior unsecured revolving credit facility with a syndicate of banks. The credit agreement that governs the 2023 Revolving Credit Facility imposes certain operating and financial restrictions.
See Part II, Item 7. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.” These covenants could materially adversely affect our ability to finance our future operations or capital needs. Furthermore, they may restrict our ability to expand and pursue our business strategies and otherwise conduct our business.
See Part II, Item 7. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.” These covenants could affect our ability to finance our future operations or capital needs and otherwise conduct our business.
We intend to continue to rely on all of the exemptions listed above. If we continue to utilize the exemptions, we will not have a majority of independent directors and our nominating and corporate governance and compensation committees will not consist entirely of independent directors.
We may in the future rely on any or all of the exemptions listed above. If we utilize the exemptions, we will not have a majority of independent directors and our nominating and corporate governance and compensation committees will not consist entirely of independent directors.
The actual increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending on a number of factors, including, but not limited to, the timing of any future redemptions, exchanges or purchases of the LLC Interests held by Continuing LLC Owners, the price of our Class A common stock at the time of the redemption, exchange or purchase, the extent to which redemptions or exchanges are taxable, the amount and timing of the taxable income that we generate in the future, the timing and amount of any earlier payments we make under the Tax Receivable Agreement itself, the tax rates then applicable and the portion of our payments under the Tax Receivable Agreement constituting imputed interest.
Furthermore, our obligation to make payments under the Tax Receivable Agreement could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the Tax Receivable Agreement. 57 Table of Contents The actual increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending on a number of factors, including, but not limited to, the timing of any future redemptions, exchanges or purchases of the LLC Interests held by Continuing LLC Owners, the price of our Class A common stock at the time of the redemption, exchange or purchase, the extent to which redemptions or exchanges are taxable, the amount and timing of the taxable income that we generate in the future, the timing and amount of any earlier payments we make under the Tax Receivable Agreement itself, the tax rates then applicable and the portion of our payments under the Tax Receivable Agreement constituting imputed interest.
If we are unable to execute our disaster recovery and business continuity plans, or if our plans prove insufficient for a particular situation or take longer than expected to implement in a crisis situation, it could have a material adverse effect on our business, financial condition and results of operations, and our business interruption insurance may not adequately compensate us for losses that may occur. 44 Table of Contents In addition, high-profile system failures in the electronic financial services industry, whether or not involving us directly, could negatively impact our business.
If we are unable to execute our disaster recovery and business continuity plans, or if our plans prove insufficient for a particular situation or take longer than expected to implement in a crisis situation, it could have a material adverse effect on our business, financial condition and results of operations, and our business interruption insurance may not adequately compensate us for losses that may occur.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers or other employees.
See Exhibit 4.2 to this Annual Report on Form 10-K for a description of our capital stock. 55 Table of Contents Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers or other employees.
If our clients merge with or are acquired by other companies that are not our clients, or companies that utilize our offerings to a lesser degree, such clients may discontinue or reduce their use of our platforms and solutions.
If our clients merge with or are acquired by other companies that are not our clients, or companies that utilize our offerings to a lesser degree, such clients may discontinue or reduce their use of our platforms and solutions. Any such developments could materially adversely affect our business, financial condition and results of operations.
We have made several acquisitions in the past, including the purchase of the Hilliard Farber & Co. business in 2008, the Rafferty Capital Markets business in 2011, BondDesk in 2013, CodeStreet in 2016 and Nasdaq’s U.S. fixed income electronic trading platform in 2021. We also may consider potential divestitures of businesses from time to time.
We have made several acquisitions in the past, including the purchase of the Hilliard Farber & Co. business in 2008, the Rafferty Capital Markets business in 2011, BondDesk in 2013, CodeStreet in 2016, Nasdaq’s U.S. fixed income electronic trading platform in 2021, Yieldbroker in 2023 and r8fin in 2024.

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Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeAs of December 31, 2022, our principal offices consisted of the following properties: Location Square Feet Lease Expiration Date Use New York, New York 41,062 12/31/2023 Office Space Jersey City, New Jersey 65,242 12/31/2027 Office Space London, United Kingdom 16,259 9/30/2024 Office Space We also lease offices in Boston, Massachusetts, Garden City, New York, Shanghai, China, Paris, France, Hong Kong, Tokyo, Japan, Amsterdam, Netherlands and Singapore.
Biggest changeAs of December 31, 2023, our principal offices consisted of the following properties: Location Square Feet Lease Expiration Date Use New York, New York 41,062 12/31/2024 Office Space Jersey City, New Jersey 65,242 12/31/2027 Office Space London, United Kingdom 16,259 3/1/2030 Office Space We also rent offices in Boston, Massachusetts, Garden City, New York, Shanghai, China, Paris, France, Hong Kong, China, Tokyo, Japan, Amsterdam, Netherlands, Dubai, United Arab Emirates, Singapore, Miami, Florida, Chicago, Illinois and Sydney, Australia.
We believe that our facilities are in good operating condition and adequately meet our current needs, and that additional or alternative space to support future use and expansion will be available on reasonable commercial terms. 60 Table of Contents
We believe that our facilities are in good operating condition and adequately meet our current needs, and that additional or alternative space to support future use and expansion will be available on reasonable commercial terms. 64 Table of Contents
Our infrastructure operates out of third-party data centers in Secaucus, New Jersey, Weehawken, New Jersey, Piscataway, New Jersey and Chicago, Illinois and, outside the United States, in Hounslow, United Kingdom, Slough, United Kingdom, Saitama, Japan and Tokyo, Japan.
Our infrastructure operates out of third-party data centers in Secaucus, New Jersey, Weehawken, New Jersey, Piscataway, New Jersey and Chicago, Illinois and, outside the United States, in Hounslow, United Kingdom, Slough, United Kingdom, Saitama, Japan, Tokyo, Japan and Sydney, Australia.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

4 edited+1 added−2 removed18 unchanged
Biggest changeInterest Rate Swaps Matter In November 2015, Public School Teachers’ Pension and Retirement Fund of Chicago, on behalf of itself and a putative class of other similar purchasers of interest rate swaps (“IRS”), filed a lawsuit in the United States District Court for the Southern District of New York against Tradeweb Markets LLC, ICAP Capital Markets LLC and several investment banks and their affiliates (the “Dealer Defendants”), captioned Public School Teachers’ Pension and Retirement Fund of Chicago v.
Biggest changeOral argument in the appeal was held on October 3, 2023, and by order and opinion issued on February 1, 2024, the Second Circuit affirmed the District Court’s order dismissing all claims against all defendants, including the claims against the Company. 65 Table of Contents Interest Rate Swaps Matter In November 2015, Public School Teachers’ Pension and Retirement Fund of Chicago, on behalf of itself and a putative class of other similar purchasers of interest rate swaps (“IRS”), filed a lawsuit in the United States District Court for the Southern District of New York against Tradeweb Markets LLC, ICAP Capital Markets LLC and several investment banks and their affiliates (the “Dealer Defendants”), captioned Public School Teachers’ Pension and Retirement Fund of Chicago v.
We believe that we have meritorious defenses to any allegations asserted against us in this litigation and, if necessary, intend to vigorously defend our position.
We believe that we have meritorious defenses to any allegations asserted against us in this litigation and, if necessary, intend to vigorously defend our position. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 66 Table of Contents PART II
The Company filed its brief in response on November 17, 2022. Plaintiffs filed their brief in reply in further support of their appeal on December 14, 2022. The parties have requested oral argument on the appeal, which request is currently pending, and no date for oral argument has yet been set.
The Company filed its brief in response on November 17, 2022. Plaintiffs filed their brief in reply in further support of their appeal on December 14, 2022.
Additional plaintiffs, including Tera Group Inc. and Javelin Capital Markets LLC, filed lawsuits and, ultimately, the cases were consolidated under the caption In re Interest Rate Swaps Antitrust Litigation , No. 1:16-md-2704. 61 Table of Contents The plaintiffs allege that defendants conspired to forestall the emergence of exchange style trading for IRS and seek treble damages and declaratory and injunctive relief under federal antitrust laws with respect to Tradeweb Markets LLC.
The plaintiffs allege that defendants conspired to forestall the emergence of exchange style trading for IRS and seek treble damages and declaratory and injunctive relief under federal antitrust laws with respect to Tradeweb Markets LLC.
Removed
We believe that we have meritorious defenses to the claims set forth in the complaint and intend to continue to vigorously defend our position .
Added
Bank of America Corporation , Case No. 15-cv-09219 (S.D.N.Y.). Additional plaintiffs, including Tera Group Inc. and Javelin Capital Markets LLC, filed lawsuits and, ultimately, the cases were consolidated under the caption In re Interest Rate Swaps Antitrust Litigation , No. 1:16-md-2704.
Removed
Bank of America Corporation , Case No. 15-cv-09219 (S.D.N.Y.).

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−9 removed12 unchanged
Biggest changeSee Part I, Item 1A. – “Risk Factors — Risks Relating to our Organizational Structure and Governance — Our principal asset is our equity interest in TWM LLC, and, accordingly, we depend on distributions from TWM LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement ” and Part I, Item 1A. – “Risk Factors — Risks Relating to Ownership of our Class A Common Stock — We intend to continue to pay regular dividends on our Class A common stock and Class B common stock, but our ability to do so may be limited .” During 2022, Tradeweb Markets Inc. paid quarterly cash dividends of $0.08 per share, in an aggregate amount of $66.0 million, to the holders of Class A common stock and Class B common stock. 63 Table of Contents Recent Sales of Unregistered Securities None.
Biggest changeSee Part I, Item 1A. – “Risk Factors — Risks Relating to our Organizational Structure and Governance — Our principal asset is our equity interest in TWM LLC, and, accordingly, we depend on distributions from TWM LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement ” and Part I, Item 1A. – “Risk Factors — Risks Relating to Ownership of our Class A Common Stock — We intend to continue to pay regular dividends on our Class A common stock and Class B common stock, but our ability to do so may be limited .” During 2023, Tradeweb Markets Inc. paid quarterly cash dividends of $0.09 per share, in an aggregate amount of $75.9 million, to the holders of Class A common stock and Class B common stock. 67 Table of Contents Recent Sales of Unregistered Securities On November 16, 2023, we and TWM LLC entered into a definitive agreement for TWM LLC to acquire all the outstanding equity interests of r8fin, which closed on January 19, 2024.
Financials Index. The graph assumes an initial investment of $100 in our Class A common stock and in each index on April 4, 2019, and that all dividends were reinvested. Historical stock price performance should not be relied upon as an indication of future stock price performance .
The graph assumes an initial investment of $100 in our Class A common stock and in each index on April 4, 2019, and that all dividends were reinvested. Historical stock price performance should not be relied upon as an indication of future stock price performance .
Dividend Policy Subject to legally available funds, we intend to pay quarterly cash dividends on our Class A common stock and Class B common stock equal to $0.09 per share.
Dividend Policy Subject to legally available funds, we intend to pay quarterly cash dividends on our Class A common stock and Class B common stock equal to $0.10 per share.
Our ability to pay dividends may also be restricted by the terms of the Revolving Credit Facility or any future credit agreement or any future debt or preferred equity securities of Tradeweb or its subsidiaries.
Our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of Tradeweb or its subsidiaries.
Holders As of December 31, 2022, there are two holders of record of our Class A common stock, one holder of record of our Class B common stock, one holder of record of our Class C common stock and 12 holders of record of our Class D common stock.
Holders As of December 31, 2023, there are two holders of record of our Class A common stock, one holder of record of our Class B common stock, one holder of record of our Class C common stock and 12 holders of record of our Class D common stock.
During the three months ended December 31, 2022, the Company withheld 25,630 shares of common stock from employee stock option, PRSU and/or RSU awards. 64 Table of Contents Stock Performance Graph The following graph shows a comparison from April 4, 2019 (the date our Class A common stock commenced trading on Nasdaq) through December 31, 2022 of the cumulative total return for (i) our Class A common stock, (ii) the S&P 500 Index and (iii) the Dow Jones U.S.
Stock Performance Graph The following graph shows a comparison from April 4, 2019 (the date our Class A common stock commenced trading on Nasdaq) through December 31, 2023 of the cumulative total return for (i) our Class A common stock, (ii) the S&P 500 Index and (iii) the Dow Jones U.S. Financials Index.
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of this Report for information about securities authorized for issuance under our equity compensation plans.
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of this Report for information about securities authorized for issuance under our equity compensation plans. Issuer Purchases of Equity Securities During the three months ended December 31, 2023, we did not repurchase any securities pursuant to share repurchase programs.
Removed
Issuer Purchases of Equity Securities During the three months ended December 31, 2022, we repurchased the following shares of Class A common stock: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) (in thousands) October 1, 2022 – October 31, 2022 167,174 $ 53.84 167,174 $ — November 1, 2022 – November 30, 2022 — — — $ — December 1, 2022 – December 31, 2022 387,198 64.57 387,198 $ 275,000 Total 554,372 $ 61.33 554,372 (1) On February 4, 2021, we announced that our board of directors authorized a share repurchase program (the “2021 Share Repurchase Program”), primarily to offset annual dilution from stock-based compensation plans.
Added
On the closing date, we issued a total of 374,601 shares of Class A common stock as partial consideration for the acquisition. The issuance of the Class A common stock was made in reliance on Section 4(a)(2) of the Securities Act.
Removed
The 2021 Share Repurchase Program authorized the purchase of up to $150.0 million of our Class A common stock at the Company’s discretion through the end of fiscal year 2023. The 2021 Share Repurchase Program was effected through regular open-market purchases (which included repurchase plans designed to comply with Rule 10b5-1).
Added
The Company relied on this exemption from registration based in part on the nature of the transaction and the representations made by the recipients of the Class A common stock, which were former equityholders of r8fin.
Removed
The 2021 Share Repurchase Program did not require the Company to acquire a specific number of shares and was able to be suspended, amended or discontinued at any time. As of October 31, 2022, no shares remained available for repurchase pursuant to the 2021 Share Repurchase Program.
Removed
On December 5, 2022, we announced that our board of directors authorized a new share repurchase program (the “2022 Share Repurchase Program”), to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase our stock.
Removed
The 2022 Share Repurchase Program authorizes the purchase of up to $300.0 million of our Class A common stock at the Company’s discretion and has no termination date.
Removed
The 2022 Share Repurchase Program can be effected through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1), through privately negotiated transactions or through accelerated share repurchases, each in accordance with applicable securities laws and other restrictions.
Removed
The 2022 Share Repurchase Program does not require the Company to acquire a specific number of shares and may be suspended, amended or discontinued at any time.
Removed
Each share of Class A common stock repurchased pursuant to the 2021 and 2022 Share Repurchase Programs was funded with the proceeds, on a dollar-for-dollar basis, from the repurchase by Tradeweb Markets LLC of an LLC Interest from the Corporation in order to maintain the one-to-one ratio between outstanding shares of the Class A common stock and Class B common stock and the LLC Interests owned by the Corporation.
Removed
The table above does not reflect shares surrendered to cover the payroll tax withholding obligations upon the exercise of stock options and vesting of performance-based restricted stock units (“PRSUs”) and restricted stock units (“RSUs”).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

138 edited+59 added−43 removed127 unchanged
Biggest changeOur working capital as of December 31, 2022 and 2021 was as follows: December 31, 2022 2021 (in thousands) Cash and cash equivalents $ 1,257,229 $ 972,048 Restricted cash 1,000 1,000 Receivable from brokers and dealers and clearing organizations 11,632 — Deposits with clearing organizations 23,906 20,523 Accounts receivable 142,676 129,937 Receivable from affiliates 6 3,313 Total current assets 1,436,449 1,126,821 Payable to brokers and dealers and clearing organizations 11,264 — Accrued compensation 150,884 154,824 Deferred revenue 22,827 24,930 Payable to affiliates 1,414 4,860 Current portion of: Accounts payable, accrued expenses and other liabilities 51,917 38,214 Lease liabilities 11,265 7,534 Tax receivable agreement liability 5,791 9,078 Total current liabilities 255,362 239,440 Total working capital $ 1,181,087 $ 887,381 Current Assets Current assets increased to $1.4 billion as of December 31, 2022 from $1.1 billion as of December 31, 2021 primarily due to an increase in cash and cash equivalents (see “— Cash Flows” below) .
Biggest changeOur working capital as of December 31, 2023 and 2022 was as follows: December 31, 2023 2022 (in thousands) Cash and cash equivalents $ 1,706,468 $ 1,257,229 Restricted cash 1,000 1,000 Receivable from brokers and dealers and clearing organizations 381,178 11,632 Deposits with clearing organizations 36,806 23,906 Accounts receivable 168,407 142,676 Receivable and due from affiliates 192 2,728 Total current assets 2,294,051 1,439,171 Securities sold under agreements to repurchase 21,612 — Payable to brokers and dealers and clearing organizations 351,864 11,264 Accrued compensation 164,329 150,884 Deferred revenue 25,746 22,827 Payable and due to affiliates 1,327 7,232 Current portion of: Accounts payable, accrued expenses and other liabilities 56,878 46,099 Lease liabilities 11,347 11,265 Tax receivable agreement liability 26,804 5,791 Total current liabilities 659,907 255,362 Total working capital $ 1,634,144 $ 1,183,809 Current Assets Current assets increased to $2.3 billion as of December 31, 2023 from $1.4 billion as of December 31, 2022 primarily due to an increase in cash and cash equivalents (see “—Cash Flows” below) and receivables from brokers and dealers and clearing organizations resulting from a higher value of fails to deliver as a result of increased unsettled wholesale platform transactions, all of which settled in January 2024. 85 Table of Contents Current Liabilities Current liabilities increased to $659.9 million as of December 31, 2023 from $255.4 million as of December 31, 2022 primarily due to an increase in the payable to brokers and dealers and clearing organizations and securities sold under agreements to repurchase resulting from a higher value of fails to deliver as a result of increased unsettled wholesale platform transactions, all of which settled in January 2024 and an increase in the current portion of the tax receivable agreement liability as a result of an increase in our taxable income.
TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including to us.
TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including to us.
Adjusted EBIT is defined as net income before net interest income/expense and provision for income taxes, adjusted for the impact of certain other items, including merger and acquisition transaction and integration costs, certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, depreciation and amortization related to acquisitions and the Refinitiv Transaction, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and income and loss from investments.
Adjusted EBIT is defined as net income before net interest income/expense and provision for income taxes, adjusted for the impact of certain other items, including merger and acquisition transaction and integration costs, certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, depreciation and amortization related to acquisitions and the Refinitiv Transaction, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and other income and loss.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin Adjusted EBITDA is defined as net income before net interest income/expense, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including merger and acquisition transaction and integration costs, certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and income and loss from investments.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin Adjusted EBITDA is defined as net income before net interest income/expense, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including merger and acquisition transaction and integration costs, certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and other income and loss.
We have elected to treat taxes due on future U.S. inclusions in taxable income of GILTI as a current period expense when incurred. 89 Table of Contents Tax Receivable Agreement Tradeweb Markets Inc. entered into a Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners which provides for the payment by Tradeweb Markets Inc. to a Continuing LLC Owner of 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that Tradeweb Markets Inc. actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and April 2020 follow-on offerings and any future offering or (b) redemptions or exchanges by such Continuing LLC Owner of LLC Interests for shares of Class A common stock or Class B common stock or for cash, as applicable, and (ii) certain other tax benefits related to Tradeweb Markets Inc. making payments under the Tax Receivable Agreement.
We have elected to treat taxes due on future U.S. inclusions in taxable income of GILTI as a current period expense when incurred. 94 Table of Contents Tax Receivable Agreement Tradeweb Markets Inc. entered into a Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners which provides for the payment by Tradeweb Markets Inc. to a Continuing LLC Owner of 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that Tradeweb Markets Inc. actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and April 2020 follow-on offerings and any future offering or (b) redemptions or exchanges by such Continuing LLC Owner of LLC Interests for shares of Class A common stock or Class B common stock or for cash, as applicable, and (ii) certain other tax benefits related to Tradeweb Markets Inc. making payments under the Tax Receivable Agreement.
We believe that our projected cash position, cash flows from operations and, if necessary, borrowings under the Revolving Credit Facility, will be sufficient to fund our liquidity requirements for at least the next 12 months. However, our future liquidity requirements could be higher than we currently expect as a result of various factors.
We believe that our projected cash position, cash flows from operations and, if necessary, borrowings under the 2023 Revolving Credit Facility, will be sufficient to fund our liquidity requirements for at least the next 12 months. However, our future liquidity requirements could be higher than we currently expect as a result of various factors.
Adjusted Diluted EPS is defined as Adjusted Net Income divided by the diluted weighted average number of shares of Class A common stock and Class B common stock outstanding for the applicable period (including the effect of potentially dilutive securities determined using the treasury stock method), plus the weighted average number of other participating securities reflected in earnings per share using the two-class method, plus the assumed full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A common stock or Class B common stock. 84 Table of Contents We use Adjusted Net Income and Adjusted Diluted EPS as supplemental metrics to evaluate our business performance in a way that also considers our ability to generate profit without the impact of certain items.
Adjusted Diluted EPS is defined as Adjusted Net Income divided by the diluted weighted average number of shares of Class A common stock and Class B common stock outstanding for the applicable period (including the effect of potentially dilutive securities determined using the treasury stock method), plus the weighted average number of other participating securities reflected in earnings per share using the two-class method, plus the assumed full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A common stock or Class B common stock. 88 Table of Contents We use Adjusted Net Income and Adjusted Diluted EPS as supplemental metrics to evaluate our business performance in a way that also considers our ability to generate profit without the impact of certain items.
We consider liquidity in terms of cash on hand, cash flows from operations and availability under the Revolving Credit Facility and their sufficiency to fund our operating and investing activities. Historically, we have generated significant cash flows from operations and have funded our business operations through cash on hand and cash flows from operations.
We consider liquidity in terms of cash on hand, cash flows from operations and availability under the 2023 Revolving Credit Facility and their sufficiency to fund our operating and investing activities. Historically, we have generated significant cash flows from operations and have funded our business operations through cash on hand and cash flows from operations.
Adjusted Net Income and Adjusted Diluted EPS Adjusted Net Income is defined as net income attributable to Tradeweb Markets Inc. assuming the full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A common stock or Class B common stock of Tradeweb Markets Inc., adjusted for certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, merger and acquisition transaction and integration costs, depreciation and amortization related to acquisitions and the Refinitiv Transaction, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and income and loss from investments.
Adjusted Net Income and Adjusted Diluted EPS Adjusted Net Income is defined as net income attributable to Tradeweb Markets Inc. assuming the full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A common stock or Class B common stock of Tradeweb Markets Inc., adjusted for certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, merger and acquisition transaction and integration costs, depreciation and amortization related to acquisitions and the Refinitiv Transaction, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and other income and loss.
In addition, we exclude the tax receivable agreement liability adjustments discussed below under “— Critical Accounting Policies and Estimates — Tax Receivable Agreement.” We believe it is useful to exclude the tax receivable agreement liability adjustment because the recognition of income during a period due to changes in the tax receivable agreement liability recorded in our consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact our tax savings, may not directly correlate to the underlying performance of our business and will vary across periods.
In addition, we exclude the tax receivable agreement liability adjustments discussed below under “— Critical Accounting Policies and Estimates — Tax Receivable Agreement.” We believe it is useful to exclude the tax receivable agreement liability adjustment because the recognition of income during a period due to changes in the tax receivable agreement liability recorded in our consolidated statements of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact our tax savings, may not directly correlate to the underlying performance of our business and will vary across periods.
The credit agreement that governs the Revolving Credit Facility also contains certain affirmative covenants and events of default customary for facilities of this type, including relating to a change of control.
The credit agreement that governs the 2023 Revolving Credit Facility also contains certain affirmative covenants and events of default customary for facilities of this type, including relating to a change of control.
We exclude stock-based compensation expense associated with the Special Option Award and the post-IPO option awards in 2019 and payroll taxes associated with exercises of such options, non-cash accelerated stock-based compensation expense associated with our former CFO and related payroll taxes, CEO Retirement Accelerated Stock-Based Compensation Expense and related payroll taxes, tax receivable agreement liability adjustments, merger and acquisition transaction and integration costs and acquisition and Refinitiv Transaction-related depreciation and amortization for the reasons described above.
We exclude stock-based compensation expense associated with the Special Option Award and the post-IPO option awards in 2019 and payroll taxes associated with exercises of such options, non-cash accelerated stock-based compensation expense associated with our former CFO and retired CEO and related payroll taxes, tax receivable agreement liability adjustments, merger and acquisition transaction and integration costs and acquisition and Refinitiv Transaction-related depreciation and amortization for the reasons described above.
Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period. 83 Table of Contents We present Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period. 87 Table of Contents We present Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
In our wholesale client sector, we provide a broad range of electronic, voice and hybrid platforms to more than 300 dealers and financial institutions with more than 100 actively trading on our electronic or hybrid markets with our Dealerweb platform. This platform was launched in 2008 following the acquisition of inter-dealer broker Hilliard Farber & Co., Inc.
In our wholesale client sector, we provide a broad range of electronic, voice and hybrid platforms to more than 300 dealers and financial institutions with more than 190 actively trading on our electronic or hybrid markets with our Dealerweb platform. This platform was launched in 2008 following the acquisition of inter-dealer broker Hilliard Farber & Co., Inc.
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA establishes a 15% corporate minimum tax effective for taxable years beginning after December 31, 2022, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S. corporations.
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA establishes a 15% corporate alternative minimum tax (“CAMT”) effective for taxable years beginning after December 31, 2022, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S. corporations.
A comparison of our results of operations, cash flows and liquidity and capital resources from the years ended December 31, 2021 and December 31, 2020 may be found in Part II, Item 7. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2021.
A comparison of our results of operations, cash flows and liquidity and capital resources from the years ended December 31, 2022 and December 31, 2021 may be found in Part II, Item 7. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2022.
Because the majority of our financial assets are short-term in nature, they are not significantly affected by inflation. However, the rate of inflation may affect our expenses, such as employee compensation and benefits and technology and communication expenses, which may not be readily recoverable in the prices of our services.
Because the majority of our financial assets are short-term in nature, they are not significantly affected by inflation. However, the rate of inflation may affect our expenses, such as employee compensation and benefits, technology and communication expenses and occupancy costs, which may not be readily recoverable in the prices of our services.
Current assets consist of cash and cash equivalents, restricted cash, receivable from brokers and dealers and clearing organizations, deposits with clearing organizations, accounts receivable and receivable from affiliates.
Current assets consist of cash and cash equivalents, restricted cash, receivable from brokers and dealers and clearing organizations, deposits with clearing organizations, accounts receivable and receivable and due from affiliates.
See “Risk Factors — Risks Relating to our Organizational Structure and Governance — Our principal asset is our equity interest in TWM LLC, and, accordingly, we depend on distributions from TWM LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement” and “Risk Factors — Risks Relating to Ownership of our Class A Common Stock — We intend to continue to pay regular dividends on our Class A common stock and Class B common stock, but our ability to do so may be limited.” Cash Dividends On February 2, 2023, the board of directors of Tradeweb Markets Inc. declared a cash dividend of $0.09 per share of Class A common stock and Class B common stock for the first quarter of 2023.
See “Risk Factors — Risks Relating to our Organizational Structure and Governance — Our principal asset is our equity interest in TWM LLC, and, accordingly, we depend on distributions from TWM LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement” and “Risk Factors — Risks Relating to Ownership of our Class A Common Stock — We intend to continue to pay regular dividends on our Class A common stock and Class B common stock, but our ability to do so may be limited.” Cash Dividends On February 2, 2024, the board of directors of Tradeweb Markets Inc. declared a cash dividend of $0.10 per share of Class A common stock and Class B common stock for the first quarter of 2024.
The Revolving Credit Facility contains a financial covenant requiring compliance with a (i) maximum total net leverage ratio tested on the last day of each fiscal quarter not to exceed 3.5 to 1.0 (increasing to 4.0 to 1.0 for the four-quarter period following a material acquisition and the fiscal quarter in which such material acquisition is consummated) and (ii) minimum cash interest coverage ratio tested on the last day of each fiscal quarter not less than 3.0 to 1.0.
The 2023 Revolving Credit Facility contains a financial covenant requiring compliance with a (i) maximum total net leverage ratio tested as of the last day of each fiscal quarter not to exceed 3.5 to 1.0 (increasing to 4.0 to 1.0 for the four-quarter period following a material acquisition and the fiscal quarter in which such material acquisition is consummated) and (ii) minimum cash interest coverage ratio tested as of the last day of each fiscal quarter not less than 3.0 to 1.0.
Our institutional client sector serves institutional investors in over 65 countries around the globe and across over 25 currencies. We connect institutional investors with pools of liquidity using our flexible order and trading systems.
Our institutional client sector serves institutional investors in over 70 countries around the globe and across over 25 currencies. We connect institutional investors with pools of liquidity using our flexible order and trading systems.
Our operating lease obligations are primarily related to rental payments under lease agreements for office space in the United States and the United Kingdom through December 2027. In March 2022, the lease for our New York headquarters was extended for an amended term through December 2023, as we continue to evaluate our office space needs for the future.
Our operating lease obligations are primarily related to rental payments under lease agreements for office space in the United States and the United Kingdom through December 2027. In December 2023, the lease for our New York headquarters was extended for an amended term through December 2024, as we continue to evaluate our office space needs for the future.
The following discussion includes a comparison of our results of operations, cash flows and liquidity and capital resources for the years ended December 31, 2022 and 2021, respectively.
The following discussion includes a comparison of our results of operations, cash flows and liquidity and capital resources for the years ended December 31, 2023 and 2022, respectively.
See Part I, Item 1. – “Business – Competition” for more detail on our competitors. 68 Table of Contents Technology and Cybersecurity Environment Our business and its success are largely impacted by the introduction of increasingly complex and sophisticated technology systems and infrastructures and new business models.
See Part I, Item 1. – “Business – Competition” for more detail on our competitors. Technology and Cybersecurity Environment Our business and its success are largely impacted by the introduction of increasingly complex and sophisticated technology systems and infrastructures and new business models.
The change was primarily driven by the change in fair value of our foreign currency forward contracts used in connection with our foreign currency risk management program, partially offset by a decrease in foreign currency re-measurement losses on transactions in nonfunctional currencies. 75 Table of Contents Professional Fees.
The change was primarily driven by the change in fair value of our foreign currency forward contracts used in connection with our foreign currency risk management program, partially offset by a decrease in foreign currency re-measurement losses on transactions in nonfunctional currencies. Professional Fees.
(5) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
(5) Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
(3) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
(3) Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
We also believe it is useful to exclude merger and acquisition transaction and integration costs as the incremental direct costs related to acquisitions and the related integration are not indicative of our core ongoing operating performance.
We also believe it is useful to exclude merger and acquisition transaction and integration costs as the incremental direct costs related to completed and potential acquisitions and related integrations are not indicative of our core ongoing operating performance.
Our most critical policies and estimates include revenue recognition, current and deferred income taxes and the tax receivable agreement liability. With respect to critical accounting policies and estimates, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations.
Our most critical policies and estimates include business combinations, revenue recognition, stock-based compensation, current and deferred income taxes and the tax receivable agreement liability. With respect to critical accounting policies and estimates, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations.
As of December 31, 2022 and 2021, each of our regulated subsidiaries had maintained sufficient net capital or financial resources to at least satisfy their minimum requirements, which in aggregate were $69.1 million and $66.7 million, respectively.
As of December 31, 2023 and 2022, each of our regulated subsidiaries had maintained sufficient net capital or financial resources to at least satisfy their minimum requirements, which in aggregate were $76.7 million and $69.1 million, respectively.
As of December 31, 2022, there were $0.5 million in letters of credit issued under the Revolving Credit Facility and no borrowings outstanding. As of December 31, 2022, we had availability of $499.5 million.
As of December 31, 2023, there were $0.5 million in letters of credit issued under the 2023 Revolving Credit Facility, respectively and no borrowings outstanding. As of December 31, 2023, we had availability of $499.5 million.
As of December 31, 2022, our operating lease liabilities totaled $27.9 million, with payments pursuant to these obligations due within the next 12 months and thereafter totaling $11.9 million and $17.5 million, respectively. Capital Expenditures Our business also requires continued investment in our technology for product innovation, proprietary technology architecture, operational reliability and cybersecurity.
As of December 31, 2023, our operating lease liabilities totaled $27.5 million, with payments pursuant to these obligations due within the next 12 months and thereafter totaling $12.3 million and $17.6 million, respectively. Capital Expenditures Our business also requires continued investment in our technology for product innovation, proprietary technology architecture, operational reliability and cybersecurity.
As of December 31, 2022, we were in compliance with all the covenants set forth in the Revolving Credit Facility. Operating Lease Obligations We have operating leases for corporate offices and data centers with initial lease terms ranging from one to 10 years.
As of December 31, 2023, we were in compliance with all the covenants set forth in the 2023 Revolving Credit Facility. 83 Table of Contents Operating Lease Obligations We have operating leases for corporate offices and data centers with initial lease terms ranging from one to 10 years.
The increase was primarily due to increased investment in our data strategy and infrastructure and increased data and clearance fees driven primarily by higher trading volumes period over period. General and Administrative.
The increase was primarily due to investment in our data strategy and infrastructure and increased data and clearance fees driven primarily by higher trading volumes period-over-period. 78 Table of Contents General and Administrative.
During the year ended December 31, 2022, this adjustment also includes $15.0 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our retired CEO. During the year ended December 31, 2021, this adjustment also includes $1.7 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our former CFO.
During the year ended December 31, 2021, this adjustment also includes $1.7 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our former CFO.
We are required to make significant judgments for the Refinitiv market data fees.
We are required to make significant judgments for the LSEG market data fees.
As of December 31, 2022 and 2021, we had cash and cash equivalents of approximately $1.3 billion and $972.0 million, respectively. All cash and cash equivalents were held in accounts with financial institutions or money market funds such that the funds are immediately available or in fixed term deposits with a maximum maturity of three months.
As of December 31, 2023 and 2022, we had cash and cash equivalents of approximately $1.7 billion and $1.3 billion, respectively. All cash and cash equivalents were held in accounts with financial institutions or money market funds such that the funds are immediately available or in fixed term deposits or investments with a maximum maturity of three months.
Variable discounts or rebates on transaction fees or commissions are generally earned and applied monthly or quarterly, are resolved within the same reporting period and are recorded as a reduction to revenue in the period the relevant trades occur. 88 Table of Contents We earn fees from Refinitiv relating to the sale of market data to Refinitiv, which redistributes that data.
Variable discounts or rebates on transaction fees or commissions are generally earned and applied monthly or quarterly, are resolved within the same reporting period and are recorded as a reduction to revenue in the period the relevant trades occur. We earn fees from LSEG relating to the sale of market data to LSEG, which distributes that data.
General and Administrative General and administrative expense consists of travel and entertainment, marketing, value-added taxes, state use taxes, foreign currency transaction gains and losses, gains and losses on foreign currency forward contracts entered into for foreign exchange risk management purposes, charitable contributions, other administrative expenses and credit loss expense.
General and Administrative General and administrative expense consists of travel and entertainment, marketing, value-added taxes, state use taxes, foreign currency transaction gains and losses, gains and losses on foreign exchange derivative contracts entered into for foreign exchange risk management purposes relating to operating activities, charitable contributions, other administrative expenses and credit loss expense.
The credit agreement also requires that we pay a commitment fee of 0.25% for available but unborrowed amounts. We are also required to pay customary letter of credit fees and agency fees. We have the option to voluntarily repay outstanding loans at any time without premium or penalty other than customary “breakage” costs with respect to LIBOR loans.
The agreement also includes a commitment fee of 0.25% for available but unborrowed amounts We are also required to pay customary letter of credit fees and agency fees. We have the option to voluntarily repay outstanding loans at any time without premium or penalty other than customary “breakage” costs with respect to Term SOFR, SONIA and EURIBOR loans.
Our marketplaces facilitate trading across a range of asset classes, including rates, credit, equities and money markets. We are a global company serving clients in over 65 countries with offices in North America, Europe and Asia.
Our marketplaces facilitate trading across a range of asset classes, including rates, credit, equities and money markets. We are a global company serving clients in over 70 countries with offices in North America, Europe, Asia, Australia and the Middle East.
On December 5, 2022, we announced that our board of directors authorized a new share repurchase program (the “2022 Share Repurchase Program”), to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase our stock.
On December 5, 2022, the Company announced that the board of directors had authorized a new share repurchase program (the “2022 Share Repurchase Program”). The 2022 Share Repurchase Program was authorized to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase our Class A common stock.
Occupancy Occupancy expense consists of operating lease rent and related costs for office space and data centers leased in North America, Europe and Asia.
Occupancy Occupancy expense consists of operating lease rent and related costs for office space and data centers leased in North America, Europe, Asia, Australia and the Middle East.
The table set forth below presents a reconciliation of our cash flow from operating activities to Free Cash Flow for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 (in thousands) Cash flow from operating activities $ 632,822 $ 578,021 $ 443,234 Less: Capitalization of software development costs (36,882) (34,470) (31,046) Less: Purchases of furniture, equipment and leasehold improvements (23,214) (16,878) (11,490) Free Cash Flow $ 572,726 $ 526,673 $ 400,698 Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS In addition to net income, net income margin and net income attributable to Tradeweb Markets Inc., each presented in accordance with GAAP, we present Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin as non-GAAP measures of our operating performance and Adjusted Net Income and Adjusted Net Income per diluted share (“Adjusted Diluted EPS”) as non-GAAP measures of our profitability.
The table set forth below presents a reconciliation of our cash flow from operating activities to Free Cash Flow for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 (in thousands) Cash flow from operating activities $ 746,089 $ 632,822 $ 578,021 Less: Capitalization of software development costs (43,235) (36,882) (34,470) Less: Purchases of furniture, equipment and leasehold improvements (18,529) (23,214) (16,878) Free Cash Flow $ 684,325 $ 572,726 $ 526,673 Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS In addition to net income, net income margin and net income attributable to Tradeweb Markets Inc., each presented in accordance with GAAP, we present Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin as non-GAAP measures of our operating performance and Adjusted Net Income and Adjusted Net Income per diluted share (“Adjusted Diluted EPS”) as non-GAAP measures of our profitability.
While historically we have generated significant and adequate cash flows from operations, in the case of an unexpected event in the future or otherwise, we may fund our liquidity requirements through borrowings under the Revolving Credit Facility.
We expect to fund our short and long-term liquidity requirements through cash and cash equivalents and cash flows from operations. While historically we have generated significant and adequate cash flows from operations, in the case of an unexpected event in the future or otherwise, we may fund our liquidity requirements through borrowings under the 2023 Revolving Credit Facility.
Beginning on August 30, 2021, we also exclude the non-cash accelerated stock - based compensation expense associated with our former CFO and beginning on February 11, 2022 the incremental non-cash accelerated stock-based compensation expense associated with our retired CEO, the CEO Retirement Accelerated Stock-Based Compensation Expense discussed above under “— Trends and Other Factors Impacting Our Performance — CEO Transition,” and related payroll taxes are also excluded, as we do not consider these expenses indicative of our core ongoing operating performance.
Beginning on August 30, 2021, we also exclude the non-cash accelerated stock - based compensation expense associated with our former CFO and beginning on February 11, 2022 the incremental non-cash accelerated stock-based compensation expense associated with our retired CEO and related payroll taxes are also excluded, as we do not consider these expenses indicative of our core ongoing operating performance.
(7) Represents corporate income taxes at an assumed effective tax rate of 22% applied to Adjusted Net Income before income taxes for each of the years ended December 31, 2022, 2021 and 2020.
(7) Represents corporate income taxes at an assumed effective tax rate of 24.5% applied to Adjusted Net Income before income taxes for the year ended December 31, 2023 and 22% the years ended December 31, 2022 and 2021.
Significant judgments used in accounting for this contract include the following determinations: • The provision of real-time market data feeds and annual historical data sets are distinct performance obligations. • The performance obligations under this contract are recognized over time from the initial delivery of the data feeds or each historical data set until the end of the contract term. • The transaction price for the performance obligations is determined by using a market assessment analysis.
Significant judgments used in accounting for this contract include the following determinations: • The provision of real-time market data feeds and historical data sets are distinct performance obligations. • The performance obligations under this contract are recognized over time from the initial delivery of the data feeds until the end of the contract term or at a point in time upon delivery of each historical data set. • The transaction prices for the performance obligations were determined by using an adjusted market assessment analysis.
For most of our products, clients pay both fixed minimum monthly transaction fees and variable transaction fees on a per transaction basis in excess of the monthly minimum. For certain of our products, clients also pay a subscription fee in addition to the minimum monthly transaction fee.
For certain of our products, clients also pay a subscription fee in addition to the minimum monthly transaction fee. For other products, instead of a minimum monthly transaction fee, clients pay a subscription fee and a fixed transaction fee or variable transaction fees on a per transaction basis.
This dividend will be payable on March 15, 2023 to stockholders of record as of March 1, 2023. The February 2023 dividend declaration of $0.09 represents a 12.5% per share increase from our historical quarterly dividend of $0.08 per share.
This dividend will be payable on March 15, 2024 to stockholders of record as of March 1, 2024. The February 2024 dividend declaration of $0.10 represents a 11.1% per share increase from our historical quarterly dividend of $0.09.
The Revolving Credit Facility was subsequently amended on November 7, 2019. The Revolving Credit Facility provides borrowing capacity to be used to fund our ongoing working capital needs, letters of credit and for general corporate purposes, including potential future acquisitions and expansions. The Revolving Credit Facility permits borrowings of up to $500.0 million by TWM LLC.
The 2023 Revolving Credit Facility provides borrowing capacity to be used to fund ongoing working capital needs, letters of credit and for general corporate purposes, including potential future acquisitions and expansions. The 2023 Revolving Credit Facility permits borrowings of up to $500.0 million by TWM LLC.
Current liabilities consist of payable to brokers and dealers and clearing organizations, accrued compensation, deferred revenue, payable to affiliates, accounts payable, accrued expenses and other liabilities, lease liabilities and tax receivable agreement liability.
Current liabilities consist of securities sold under agreements to repurchase, payable to brokers and dealers and clearing organizations, accrued compensation, deferred revenue, payable and due to affiliates, accounts payable, accrued expenses and other liabilities, lease liabilities and tax receivable agreement liability.
Transaction volume is determined by using either a measure of the notional volume of the products traded or a count of the number of trades. We typically charge higher fees for products that are less actively traded.
For variable transaction fees, we charge clients fees based on the mix of products traded and the volume of transactions executed. Transaction volume is determined by using either a measure of the notional volume of the products traded or a count of the number of trades. We typically charge higher fees for products that are less actively traded.
Revenues from our money markets asset class increased by $5.7 million or 12.8% to $50.0 million for the year ended December 31, 2022 compared to $44.3 million for the year ended December 31, 2021 primarily due to variable transaction fees and commissions on higher trading volumes for certificates of deposit and repurchase agreements . Market Data.
Money Markets. Revenues from our money markets asset class increased by $13.1 million or 26.1% to $63.0 million for the year ended December 31, 2023 compared to $50.0 million for the year ended December 31, 2022 primarily due to higher variable transaction fees and commissions on higher trading volumes for certificates of deposit and repurchase agreements. Market Data.
We believe that providing changes in Adjusted EBITDA margin and Adjusted EBIT margin on a constant currency basis provide useful comparisons of our Adjusted EBITDA margin and Adjusted EBIT margin and trends between periods. 86 Table of Contents The table set forth below presents a reconciliation of net income attributable to Tradeweb Markets Inc. and net income, as applicable, to Adjusted Net Income and Adjusted Diluted EPS for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 (in thousands except per share amounts) Earnings per diluted share $ 1.48 $ 1.09 $ 0.88 Net income attributable to Tradeweb Markets Inc. $ 309,338 $ 226,828 $ 166,296 Net income attributable to non-controlling interests (1) 50,275 46,280 52,094 Net income 359,613 273,108 218,390 Provision for income taxes 77,520 96,875 56,074 Merger and acquisition transaction and integration costs (2) 1,069 5,073 — D&A related to acquisitions and the Refinitiv Transaction (3) 126,659 124,580 110,187 Stock-based compensation expense (4) 20,409 16,509 13,025 Foreign exchange (gains) / losses (5) 4,409 (4,702) 6,279 Tax receivable agreement liability adjustment (6) (13,653) (12,745) (11,425) (Income) loss from investments 1,000 — — Adjusted Net Income before income taxes 577,026 498,698 392,530 Adjusted income taxes (7) (126,946) (109,713) (86,357) Adjusted Net Income $ 450,080 $ 388,985 $ 306,173 Adjusted Diluted EPS (8) $ 1.90 $ 1.63 $ 1.31 (1) Represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock.
We believe that providing changes in Adjusted EBITDA margin and Adjusted EBIT margin on a constant currency basis provide useful comparisons of our Adjusted EBITDA margin and Adjusted EBIT margin and trends between periods. 90 Table of Contents The table set forth below presents a reconciliation of net income attributable to Tradeweb Markets Inc. and net income, as applicable, to Adjusted Net Income and Adjusted Diluted EPS for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 (in thousands except per share amounts) Earnings per diluted share $ 1.71 $ 1.48 $ 1.09 Net income attributable to Tradeweb Markets Inc. $ 364,866 $ 309,338 $ 226,828 Net income attributable to non-controlling interests (1) 54,637 50,275 46,280 Net income 419,503 359,613 273,108 Provision for income taxes 128,477 77,520 96,875 Merger and acquisition transaction and integration costs (2) 8,042 1,069 5,073 D&A related to acquisitions and the Refinitiv Transaction (3) 127,731 126,659 124,580 Stock-based compensation expense (4) 2,947 20,409 16,509 Foreign exchange (gains) / losses (5) (47) 4,409 (4,702) Tax receivable agreement liability adjustment (6) 9,517 (13,653) (12,745) Other (income) loss, net 13,122 1,000 — Adjusted Net Income before income taxes 709,292 577,026 498,698 Adjusted income taxes (7) (173,777) (126,946) (109,713) Adjusted Net Income $ 535,515 $ 450,080 $ 388,985 Adjusted Diluted EPS (8) $ 2.26 $ 1.90 $ 1.63 (1) Represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock.
In addition, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS may not be comparable to similarly titled measures used by other companies in our industry or across different industries. 85 Table of Contents The table set forth below presents a reconciliation of net income and net income margin to Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 (dollars in thousands) Net income $ 359,613 $ 273,108 $ 218,390 Merger and acquisition transaction and integration costs (1) 1,069 5,073 — Net interest (income) expense (11,907) 1,590 316 Depreciation and amortization 178,879 171,308 153,789 Stock-based compensation expense (2) 20,409 16,509 13,025 Provision for income taxes 77,520 96,875 56,074 Foreign exchange (gains) / losses (3) 4,409 (4,702) 6,279 Tax receivable agreement liability adjustment (4) (13,653) (12,745) (11,425) (Income) loss from investments 1,000 — — Adjusted EBITDA $ 617,339 $ 547,016 $ 436,448 Less: Depreciation and amortization (178,879) (171,308) (153,789) Add: D&A related to acquisitions and the Refinitiv Transaction (5) 126,659 124,580 110,187 Adjusted EBIT $ 565,119 $ 500,288 $ 392,846 Net income margin 30.3 % 25.4 % 24.5 % Adjusted EBITDA margin 51.9 % 50.8 % 48.9 % Adjusted EBIT margin 47.5 % 46.5 % 44.0 % (1) Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions.
In addition, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS may not be comparable to similarly titled measures used by other companies in our industry or across different industries. 89 Table of Contents The table set forth below presents a reconciliation of net income and net income margin to Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 (dollars in thousands) Net income $ 419,503 $ 359,613 $ 273,108 Merger and acquisition transaction and integration costs (1) 8,042 1,069 5,073 Net interest (income) expense (65,350) (11,907) 1,590 Depreciation and amortization 185,350 178,879 171,308 Stock-based compensation expense (2) 2,947 20,409 16,509 Provision for income taxes 128,477 77,520 96,875 Foreign exchange (gains) / losses (3) (47) 4,409 (4,702) Tax receivable agreement liability adjustment (4) 9,517 (13,653) (12,745) Other (income) loss, net 13,122 1,000 — Adjusted EBITDA $ 701,561 $ 617,339 $ 547,016 Less: Depreciation and amortization (185,350) (178,879) (171,308) Add: D&A related to acquisitions and the Refinitiv Transaction (5) 127,731 126,659 124,580 Adjusted EBIT $ 643,942 $ 565,119 $ 500,288 Net income margin 31.3 % 30.3 % 25.4 % Adjusted EBITDA margin 52.4 % 51.9 % 50.8 % Adjusted EBIT margin 48.1 % 47.5 % 46.5 % (1) Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions.
(8) For a summary of the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS” below. 87 Table of Contents The following table summarizes the calculation of Adjusted Diluted EPS for the periods presented: Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS Year Ended December 31, 2022 2021 2020 Diluted weighted average shares of Class A and Class B common stock outstanding 208,400,040 207,254,840 188,223,032 Weighted average of other participating securities (1) 193,441 — — Assumed exchange of LLC Interests for shares of Class A or Class B common stock (2) 28,830,686 30,699,577 45,828,289 Adjusted diluted weighted average shares outstanding 237,424,167 237,954,417 234,051,321 Adjusted Net Income (in thousands) $ 450,080 $ 388,985 $ 306,173 Adjusted Diluted EPS $ 1.90 $ 1.63 $ 1.31 (1) Represents weighted average unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired executives that are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock in accordance with the two-class method used for purposes of calculating earnings per share.
(8) For a summary of the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS” below. 91 Table of Contents The following table summarizes the calculation of Adjusted Diluted EPS for the years ended December 31, 2023, 2022 and 2021: Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS Year Ended December 31, 2023 2022 2021 Diluted weighted average shares of Class A and Class B common stock outstanding 212,668,808 208,400,040 207,254,840 Weighted average of other participating securities (1) 270,249 193,441 — Assumed exchange of LLC Interests for shares of Class A or Class B common stock (2) 23,902,379 28,830,686 30,699,577 Adjusted diluted weighted average shares outstanding 236,841,436 237,424,167 237,954,417 Adjusted Net Income (in thousands) $ 535,515 $ 450,080 $ 388,985 Adjusted Diluted EPS $ 2.26 $ 1.90 $ 1.63 (1) Represents weighted average unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired or terminated employees that are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock in accordance with the two-class method used for purposes of calculating earnings per share.
Financing Activities Net cash used in financing activities for the year ended December 31, 2022 was $276.7 million, and was primarily driven by $99.3 million in share repurchases pursuant to our share repurchase programs, $91.5 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from stock-based compensation option exercises and $66.0 million in cash dividends to our Class A and Class B common stockholders.
Net cash used in financing activities for the year ended December 31, 2022 was $276.7 million, and was primarily driven by $99.3 million in share repurchases pursuant to our share repurchase programs, $91.5 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from stock-based compensation option exercises and $66.0 million in cash dividends to our Class A and Class B common stockholders. 86 Table of Contents Non-GAAP Financial Measures Free Cash Flow In addition to cash flow from operating activities presented in accordance with GAAP, we use Free Cash Flow, a non-GAAP measure, to measure liquidity.
The Revolving Credit Facility provides for the issuance of up to $5.0 million of letters of credit as well as borrowings on same-day notice, referred to as swingline loans, in an amount of up to $30.0 million. The Revolving Credit Facility will mature on April 8, 2024.
The 2023 Revolving Credit Facility also provides for the issuance of up to $5.0 million of letters of credit as well as borrowings on same-day notice, referred to as swingline loans, in an amount of up to $50.0 million. The 2023 Revolving Credit Facility will mature on November 21, 2028.
As of December 31, 2022, we had the following obligations expected to be paid pursuant to the Tax Receivable Agreement: Payments due by period Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years (in thousands) Tax receivable agreement liability $ 425,724 $ 5,791 $ 77,677 $ 42,340 $ 299,916 In addition to the above, our tax receivable agreement liability and future payments thereunder are expected to increase as we realize (or are deemed to realize) an increase in tax basis of TWM LLC’s assets resulting from any future purchases, redemptions or exchanges of LLC Interests from Continuing LLC Owners.
As of December 31, 2023, we had the following obligations expected to be paid pursuant to the Tax Receivable Agreement: Payments due by period Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years (in thousands) Tax receivable agreement liability $ 457,523 $ 26,804 $ 101,421 $ 91,400 $ 237,898 In addition to the above, our tax receivable agreement liability and future payments thereunder are expected to increase as we realize (or are deemed to realize) an increase in tax basis of TWM LLC’s assets resulting from any future purchases, redemptions or exchanges of LLC Interests from Continuing LLC Owners.
See Part II, Item 7A. – “Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency and Derivative Risk” elsewhere in this Annual Report on Form 10-K, for the change in revenue and operating income caused by fluctuations in foreign currency rates and realized and unrealized gains/losses from foreign currency during the years ended December 31, 2022, 2021 and 2020.
See Part II, Item 7A. – “Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency and Derivative Risk” elsewhere in this Annual Report on Form 10-K, for the change in revenue and operating income caused by fluctuations in foreign currency rates and realized and unrealized gains/losses from foreign currency during the years ended December 31, 2023, 2022 and 2021. 71 Table of Contents Taxation In connection with the Reorganization Transactions, we became the sole manager of TWM LLC.
Net cash used in financing activities for the year ended December 31, 2021 was $136.1 million, and was primarily driven by $75.7 million in share repurchases pursuant to our 2021 Share Repurchase Program and $64.6 million in cash dividends to our Class A and Class B common stockholders, partially offset by $22.1 million in net proceeds from stock-based compensation option exercises, net of related stock-based compensation payroll tax payments for options, PRSUs and RSUs.
Financing Activities Net cash used in financing activities for the year ended December 31, 2023 was $168.2 million, and was primarily driven by $35.2 million in share repurchases pursuant to our share repurchase programs, $36.1 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from stock-based compensation option exercises and $75.9 million in cash dividends to our Class A and Class B common stockholders.
The effective tax rate for the year ended December 31, 2022 was approximately 17.7%, compared with 26.2% for the year ended December 31, 2021.
The effective tax rate for the year ended December 31, 2023 was approximately 23.4%, compared with 17.7% for the year ended December 31, 2022.
Our primary cash needs are for day to day operations, working capital requirements, clearing margin requirements, capital expenditures primarily for software and equipment, our expected dividend payments and our share repurchase program.
Our primary cash needs are for day to day operations, working capital requirements, clearing margin requirements, capital expenditures primarily for software and equipment, our expected dividend payments and our share repurchase program. In addition, we are obligated to make payments under the Tax Receivable Agreement.
Year Ended December 31, 2022 2021 Basis Point Change Constant Currency Basis Point Change (1) Adjusted EBITDA margin 51.9 % 50.8 % 111 bps 113 bps Adjusted EBIT margin 47.5 % 46.5 % 106 bps 116 bps (1) The changes in Adjusted EBITDA margin and Adjusted EBIT margin, both on a constant currency basis, are non-GAAP financial measures, and are defined as the changes in Adjusted EBITDA margin and Adjusted EBIT margin excluding the effects of foreign currency fluctuations.
Year Ended December 31, 2023 2022 Basis Point Change Constant Currency Basis Point Change (1) Adjusted EBITDA margin 52.4 % 51.9 % +49 bps +100 bps Adjusted EBIT margin 48.1 % 47.5 % +58 bps +107 bps (1) The changes in Adjusted EBITDA margin and Adjusted EBIT margin, both on a constant currency basis, are non-GAAP financial measures, and are defined as the changes in Adjusted EBITDA margin and Adjusted EBIT margin excluding the effects of foreign currency fluctuations.
Tax Receivable Agreement Liability Adjustment The tax receivable agreement liability adjustment increased by $0.9 million to $13.7 million for the year ended December 31, 2022 from $12.7 million for the year ended December 31, 2021, due to changes in the tax receivable agreement liability recorded in our consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.
Tax Receivable Agreement Liability Adjustment The tax receivable agreement liability adjustment decreased by $23.2 million or 169.7% to $9.5 million of expense for the year ended December 31, 2023 from $13.7 million of income for the year ended December 31, 2022, due to changes in the tax receivable agreement liability recorded in our consolidated statements of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions, which impacted our estimated future tax savings.
If an event of default occurs, the lenders under the Revolving Credit Facility will be entitled to take various actions, including the acceleration of amounts due under the Revolving Credit Facility and all actions permitted to be taken by secured creditors under applicable law.
If an event of default occurs, the lenders under the 2023 Revolving Credit Facility will be entitled to take various actions, including the acceleration of amounts due under the 2023 Revolving Credit Facility.
Net Interest Income (Expense) Net interest income increased by $13.5 million to $11.9 million of net interest income for the year ended December 31, 2022 from $1.6 million of net interest expense for the year ended December 31, 2021, primarily due to an increase in interest income earned as a result of an increase in our average invested cash balance and an increase in interest rates period over period.
Net Interest Income (Expense) Net interest income increased by $53.4 million or 448.8% to $65.4 million of net interest income for the year ended December 31, 2023 from $11.9 million of net interest expense for the year ended December 31, 2022, primarily due to an increase in interest income earned relating to an increase in our average invested cash balance and an increase in interest rates period over period.
As of December 31, 2022 and 2021, we established a valuation allowance of none and $0.7 million on gross deferred tax assets totaling $698.1 million and $625.4 million, respectively.
As of December 31, 2023 and 2022, we have no valuation allowance established on gross deferred tax assets totaling $687.4 million and $698.1 million, respectively.
Factors that influence technology and communications expense include trading volumes and our investments in innovation, data strategy and cybersecurity. Professional Fees Professional fees consist primarily of accounting, tax and legal fees and fees paid to technology and software consultants to maintain our trading platforms and infrastructure, as well as costs related to business acquisition transactions.
Professional Fees Professional fees consist primarily of accounting, tax and legal fees and fees paid to technology and software consultants to maintain our trading platforms and infrastructure, as well as costs related to business acquisition transactions.
Credit. Revenues from our credit asset class increased by $39.4 million or 13.5% to $331.8 million for the year ended December 31, 2022 compared to $292.4 million for the year ended December 31, 2021 primarily due to variable transaction fees and commissions on higher trading volumes for municipals, U.S. corporate bonds and credit derivatives products. Equities.
Revenues from our credit asset class increased by $35.6 million or 10.7% to $367.4 million for the year ended December 31, 2023 compared to $331.8 million for the year ended December 31, 2022 primarily due to higher variable transaction fees and commissions on higher trading volumes for U.S. and European corporate bonds, partially offset by lower variable transaction fees and commissions on lower trading volumes for credit derivatives products. 76 Table of Contents Equities.
During the year ended December 31, 2022, the Company acquired a total of 387,198 shares of Class A common stock, at an average price of $64.57, for purchases totaling $25.0 million pursuant to the 2022 Share Repurchase Program. As of December 31, 2022, a total of $275.0 million remained available for repurchase pursuant to the 2022 Share Repurchase Program.
During the year ended December 31, 2023, the Company acquired a total of 485,730 shares of Class A common stock, at an average price of $72.48, for purchases totaling $35.2 million, pursuant to the 2022 Share Repurchase Program. As of December 31, 2023, a total of $239.8 million remained available for repurchase pursuant to the 2022 Share Repurchase Program.
Subject to the satisfaction of certain conditions, we will be able to increase the Revolving Credit Facility by $250.0 million with the consent of lenders participating in the increase.
Subject to the satisfaction of certain conditions, we will be able to increase the 2023 Revolving Credit Facility by $250.0 million with the consent of the lenders participating in the increase. Borrowings under the 2023 Revolving Credit Facility may be, at the option of the Company, in US Dollars, Euros or Sterling.
See “— Other Cash and Liquidity Requirements ” above for a discussion on how capital requirements can impact our working capital. 81 Table of Contents Cash Flows Our cash flows for the years ended December 31, 2022, 2021 and 2020 were as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Net cash provided by operating activities $ 632,822 $ 578,021 $ 443,234 Net cash used in investing activities (60,096) (259,110) (62,536) Net cash used in financing activities (276,703) (136,100) (52,693) Effect of exchange rate changes on cash, cash equivalents and restricted cash (10,842) (2,043) 2,564 Net increase (decrease) in cash, cash equivalents and restricted cash $ 285,181 $ 180,768 $ 330,569 Operating Activities Operating activities consist primarily of net income adjusted for noncash items that primarily include depreciation and amortization, stock-based compensation expense and deferred tax expense.
Cash Flows Our cash flows for the years ended December 31, 2023, 2022 and 2021 were as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 746,089 $ 632,822 $ 578,021 Net cash used in investing activities (132,765) (60,096) (259,110) Net cash used in financing activities (168,174) (276,703) (136,100) Effect of exchange rate changes on cash, cash equivalents and restricted cash 4,089 (10,842) (2,043) Net increase (decrease) in cash, cash equivalents and restricted cash $ 449,239 $ 285,181 $ 180,768 Operating Activities Operating activities consist primarily of net income adjusted for noncash items that primarily include depreciation and amortization, stock-based compensation expense and deferred tax expense.
Factors that influence employee compensation and benefits expense include revenue and earnings growth, hiring new employees and trading activity which generates broker commissions. We expect employee compensation and benefits expense to increase as we hire additional employees to support revenue and earnings growth. As a result, employee compensation and benefits can vary from period to period.
We expect employee compensation and benefits expense to increase as we hire additional employees to support revenue and earnings growth. As a result, employee compensation and benefits can vary from period to period.
During 2022, Tradeweb Markets Inc. paid quarterly cash dividends of $0.08 per share to holders of Class A common stock and Class B common stock, in an aggregate amount totaling $66.0 million. 77 Table of Contents Cash Distributions On February 2, 2023, Tradeweb Markets Inc., as the sole manager, approved a distribution by TWM LLC to its equityholders, including Tradeweb Markets Inc., in an aggregate amount of $20.3 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of March 1, 2023, payable on March 13, 2023.
Cash Distributions On February 2, 2024, Tradeweb Markets Inc., as the sole manager, approved a distribution by TWM LLC to its equityholders, including Tradeweb Markets Inc., in an aggregate amount of $62.1 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of March 1, 2024, payable on March 13, 2024.
Income Taxes Income tax expense decreased by $19.4 million to $77.5 million for the year ended December 31, 2022 from $96.9 million for the year ended December 31, 2021. The provision for income taxes includes U.S. federal, state, local, and foreign taxes.
Income Taxes Income tax expense increased by $51.0 million or 65.7% to $128.5 million for the year ended December 31, 2023 from $77.5 million for the year ended December 31, 2022. The provision for income taxes includes U.S. federal, state, local, and foreign taxes.
More information on all of our significant accounting policies can be found in Note 2 – Significant Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Recent Accounting Pronouncements See Note 2 – Significant Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.
The effective tax rate for the years ended December 31, 2022 and 2021 differed from the U.S. federal statutory rate of 21.0% primarily due to the state and local taxes including the tax impact of state apportionment rates changes on total tax expense as a result of the remeasurement of the Company’s net tax deferred asset, the effect of non-controlling interests and the tax impact of the exercise of equity compensation.
The effective tax rate for the year ended December 31, 2022 differed from the U.S. federal statutory rate of 21.0% primarily due to state and local taxes including the tax impact of state apportionment rates changes on total tax expense as a result of the remeasurement of the Company’s net tax deferred asset, the effect of non-controlling interests and the tax impact of the exercise of equity compensation. 79 Table of Contents Effects of Inflation While inflation may impact our revenues and operating expenses, we believe the effects of inflation, if any, on our results of operations and financial condition have not been significant during the years ended December 31, 2023 and 2022.
We believe that providing constant currency change provides a useful comparison of our total revenue performance and trends between periods. 72 Table of Contents Our diversified offering across products, client sectors and geographies supported sustained growth amidst a complex macroeconomic backdrop, including evolving central bank policy, sustained elevated volatility, economic concerns and a stronger U.S. dollar.
We believe that providing constant currency change provides a useful comparison of our total revenue performance and trends between periods. 75 Table of Contents Our diversified offering across products, client sectors and geographies supported sustained growth amidst a complex macroeconomic backdrop, including historic interest rate moves, geopolitical uncertainty and sustained broader market rate volatility.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeCredit Risk We have credit risk relating to our receivables, which are primarily receivables from financial institutions, including investment managers and brokers and dealers.
Biggest changeTo mitigate this concentration of credit risk, the Company invests through high-credit-quality financial institutions, monitors the concentration of credit exposure of investments with any single obligor and diversifies as determined appropriate. We have credit risk relating to our receivables, which are primarily receivables from financial institutions, including investment managers and brokers and dealers.
Accordingly, increases or decreases in the value of the U.S. dollar against the other currencies will affect our operating revenues, operating income and the value of balance sheet items. 90 Table of Contents Aside from U.S. dollars, a significant portion of our revenues are denominated in euros and a significant portion of our expenses are denominated in British pound sterling.
Accordingly, increases or decreases in the value of the U.S. dollar against the other currencies will affect our operating revenues, operating income and the value of balance sheet items. 95 Table of Contents Aside from U.S. dollars, a significant portion of our revenues are denominated in euros and a significant portion of our expenses are denominated in British pound sterling.
During the year ended December 31, 2022, we also recognized losses totaling $1.0 million, related to the write-off of an investment that was determined to be uncollectible. 92 Table of Contents
During the year ended December 31, 2022, we also recognized losses totaling $1.0 million, related to the write-off of an investment that was determined to be uncollectible. 97 Table of Contents
The following table shows the percentage breakdown of our revenue and operating expenses denominated in currencies other than the U.S. dollar for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 % of revenue denominated in foreign currencies (1) 28% 29% 29% % of operating expenses denominated in foreign currencies (2) 15% 15% 14% (1) Revenue in foreign currencies is primarily denominated in euros.
The following table shows the percentage breakdown of our revenue and operating expenses denominated in currencies other than the U.S. dollar for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 % of revenue denominated in foreign currencies (1) 28% 28% 29% % of operating expenses denominated in foreign currencies (2) 16% 15% 15% (1) Revenue in foreign currencies is primarily denominated in euros.
Realized and unrealized gains/losses from foreign currency re-measurement of transactions in nonfunctional currencies recognized in the consolidated statements of income within general and administrative expense totaled a $2.3 million loss, a $4.0 million loss and a $1.3 million gain for the years ended December 31, 2022, 2021 and 2020, respectively.
Realized and unrealized losses from foreign currency re-measurement of transactions in nonfunctional currencies recognized in the consolidated statements of income within general and administrative expense totaled a loss of $1.6 million, $2.3 million and $4.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, the allowance for credit losses with regard to these receivables totaled $0.1 million and $0.3 million, respectively. 91 Table of Contents In the normal course of our business we, as an agent, execute transactions with, and on behalf of, other brokers and dealers.
As of December 31, 2023 and 2022, the allowance for credit losses with regard to these receivables totaled $0.3 million and $0.1 million, respectively. In the normal course of our business we, as an agent, execute transactions with, and on behalf of, other brokers and dealers.
The following table shows the average foreign currency exchange rates to the U.S. dollar for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 Euros $ 1.05 $ 1.18 $ 1.14 British pound sterling $ 1.24 $ 1.38 $ 1.28 The following table shows the change in revenue and operating income caused by fluctuations in foreign currency rates used in translation during the years ended December 31, 2022, 2021 and 2020: Year Ended Impact of Foreign Currency Rate Fluctuations (amounts in thousands) December 31, 2022 2021 2020 Increase (decrease) in revenue $ (38,300) $ 11,300 $ 4,500 Increase (decrease) in operating income $ (26,200) $ 5,200 $ 4,000 The following table shows the impact a hypothetical 10% increase or decrease in the U.S. dollar against all other currencies and a hypothetical 10% increase or decrease in only euro or only British pound sterling exchange rates would have on the translation of actual revenue and operating income for the years ended December 31, 2022, 2021 and 2020: Year Ended Hypothetical 10% Change in Value of U.S.
The following table shows the average foreign currency exchange rates to the U.S. dollar for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Euros $ 1.08 $ 1.05 $ 1.18 British pound sterling $ 1.24 $ 1.24 $ 1.38 The following table shows the change in revenue and operating income caused by fluctuations in foreign currency rates used in translation during the years ended December 31, 2023, 2022 and 2021: Year Ended Impact of Foreign Currency Rate Fluctuations (amounts in thousands) December 31, 2023 2022 2021 Increase (decrease) in revenue $ 6,300 $ (38,300) $ 11,300 Increase (decrease) in operating income $ 6,100 $ (26,200) $ 5,200 The following table shows the impact a hypothetical 10% increase or decrease in the U.S. dollar against all other currencies and a hypothetical 10% increase or decrease in only euro or only British pound sterling exchange rates would have on the translation of actual revenue and operating income for the years ended December 31, 2023, 2022 and 2021: Year Ended Hypothetical 10% Change in Value of U.S.
As of December 31, 2022 and 2021, the notional amount of our foreign currency forward contracts was $162.8 million and $146.2 million , respectively. Realized and unrealized gains/losses on foreign currency forward contracts totaled a $4.9 million gain, a $9.0 million gain and a $6.3 million loss for the years ended December 31, 2022, 2021 and 2020, respectively.
As of December 31, 2023 and 2022, the notional amount of our foreign currency forward contracts was $192.9 million and $162.8 million , respectively. Realized and unrealized gains on foreign currency forward contracts totaled a gain of $0.8 million, $4.9 million and $9.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Dollar (amounts in thousands) December 31, 2022 2021 2020 All currencies Effect of 10% change on revenue +/- $ 36,400 +/- $ 34,900 +/- $ 28,900 Effect of 10% change on operating income +/- $ 23,800 +/- $ 23,000 +/- $ 18,900 Euros Effect of 10% change on revenue +/- $ 33,300 +/- $ 32,000 +/- $ 26,300 Effect of 10% change on operating income +/- $ 32,100 +/- $ 31,000 +/- $ 25,900 British pound sterling Effect of 10% change on revenue +/- $ 1,400 +/- $ 1,500 +/- $ 1,300 Effect of 10% change on operating income +/- $ 8,500 +/- $ 7,700 +/- $ 7,100 We have derivative risk relating to our foreign currency forward contracts.
Dollar (amounts in thousands) December 31, 2023 2022 2021 All currencies Effect of 10% change on revenue +/- $ 41,800 +/- $ 36,400 +/- $ 34,900 Effect of 10% change on operating income +/- $ 27,000 +/- $ 23,800 +/- $ 23,000 Euros Effect of 10% change on revenue +/- $ 37,500 +/- $ 33,300 +/- $ 32,000 Effect of 10% change on operating income +/- $ 35,600 +/- $ 32,100 +/- $ 31,000 British pound sterling Effect of 10% change on revenue +/- $ 1,700 +/- $ 1,400 +/- $ 1,500 Effect of 10% change on operating income +/- $ 8,700 +/- $ 8,500 +/- $ 7,700 We have derivative risk relating to our foreign exchange derivative contracts.
We enter into foreign currency forward contracts to mitigate our U.S. dollar and British pound sterling versus euro exposure, generally with a duration of not more than 12 months. We do not use derivative instruments for trading or s peculative purposes.
We enter into foreign currency forward contracts to mitigate our U.S. dollar and British pound sterling versus euro exposure, generally with a duration of not more than 12 months.
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In June 2023, we also entered into a foreign currency call option on Australian dollars, in order to partially mitigate the Company’s U.S. dollar versus Australian dollar foreign exchange exposure on the then-anticipated payment of the Australian dollar denominated purchase price for the Yieldbroker Acquisition.
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The out-of-the-money foreign currency call option was unwound in August 2023 and we recognized losses during the year ended December 31, 2023 totaling $1.3 million relating to this option. We do not use derivative instruments for trading or s peculative purposes.
Added
As of December 31, 2023 and 2022 , the counterparty on each of the foreign exchange derivative contracts was an affiliate of LSEG. 96 Table of Contents Credit Risk Cash and cash equivalents includes cash and highly liquid investments held by a limited number of global financial institutions, including cash amounts in excess of federally insured limits.

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