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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024
or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-38860
TRADEWEB MARKETS INC.
(Exact name of registrant as specified in its charter)
___________________________________________

Delaware |  | 83-2456358
(State of other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

1177 Avenue of the Americas New York, New York |  | 10036
(Address of principal executive offices) |  | (Zip Code)

(646) 430-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Class A common stock, par value $0.00001 |  | TW |  | Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ |  | Accelerated filer | ☐ |  | Non-accelerated filer | ☐
Smaller reporting company | ☐ |  | Emerging growth company | ☐ |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Class of Stock |  | Shares Outstanding as of July 18, 2024
Class A Common Stock, par value $0.00001 per share |  | 116,292,668 |
Class B Common Stock, par value $0.00001 per share |  | 96,933,192 |
Class C Common Stock, par value $0.00001 per share |  | 18,000,000 |
Class D Common Stock, par value $0.00001 per share |  | 5,076,973 |

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TRADEWEB MARKETS INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024
TABLE OF CONTENTS

|  | Page
INTRODUCTORY NOTE | 3
USE OF NON-GAAP FINANCIAL MEASURES | 4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 6
PART I — FINANCIAL INFORMATION |
Item 1. | Financial Statements | 8
| Condensed Consolidated Statements of Financial Condition as of June 30, 2024 and December 31, 2023 | 8
| Condensed Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023 | 9
| Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023 | 10
| Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2024 and 2023 | 11
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 | 13
| Notes to Condensed Consolidated Financial Statements | 15
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 46
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 79
Item 4. | Controls and Procedures | 81
PART II — OTHER INFORMATION | 82
Item 1. | Legal Proceedings | 82
Item 1A. | Risk Factors | 82
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 82
Item 3. | Defaults Upon Senior Securities | 82
Item 4. | Mine Safety Disclosures | 82
Item 5. | Other Information | 82
Item 6. | Exhibits | 84
| Signatures | 85

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INTRODUCTORY NOTE
The financial statements and other disclosures contained in this report include those of Tradeweb Markets Inc., which is the registrant, and those of its consolidating subsidiaries, including Tradeweb Markets LLC, which became the principal operating subsidiary of Tradeweb Markets Inc. on April 4, 2019 in a series of reorganization transactions (the “Reorganization Transactions”) that were completed in connection with Tradeweb Markets Inc.’s initial public offering (the “IPO”), which closed on April 8, 2019.
As a result of the Reorganization Transactions completed in connection with the IPO, Tradeweb Markets Inc. became a holding company whose only material assets consist of its equity interest in Tradeweb Markets LLC and related deferred tax assets. As the sole manager of Tradeweb Markets LLC, Tradeweb Markets Inc. operates and controls all of the business and affairs of Tradeweb Markets LLC and, through Tradeweb Markets LLC and its subsidiaries, conducts its business. As a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in Tradeweb Markets LLC, Tradeweb Markets Inc. consolidates the financial results of Tradeweb Markets LLC and its subsidiaries.
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:
•“We,” “us,” “our,” the “Company,” “Tradeweb” and similar references refer: (i) on or prior to the completion of the Reorganization Transactions to Tradeweb Markets LLC, which we refer to as “TWM LLC,” and, unless otherwise stated or the context otherwise requires, all of its subsidiaries and any predecessor entities, and (ii) following the completion of the Reorganization Transactions to Tradeweb Markets Inc., and, unless otherwise stated or the context otherwise requires, its subsidiaries, including TWM LLC and all of its subsidiaries, and any predecessor entities.
•“Bank Stockholders” refer collectively to entities affiliated with the following clients: Barclays Capital Inc., BofA Securities, Inc. (a subsidiary of Bank of America Corporation), Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBS Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC, which, prior to the completion of the IPO, collectively held a 46% ownership interest in Tradeweb. Subsequent to August 2022, there were no LLC Interests (as defined below) held by Bank Stockholders.
•“Continuing LLC Owners” refer collectively to (i) those Original LLC Owners (as defined below), including an indirect subsidiary of Refinitiv (as defined below), certain of the Bank Stockholders and members of management, that continued to own LLC Interests after the completion of the IPO and Reorganization Transactions and that received shares of our Class C common stock, shares of our Class D common stock or a combination of both, as the case may be, in connection with the completion of the Reorganization Transactions, (ii) any subsequent transferee of any Original LLC Owner that has executed a joinder agreement to TWM LLC’s limited liability company agreement (the “TWM LLC Agreement”) and (iii) solely with respect to the Tax Receivable Agreement (as defined below), (x) those Original LLC Owners, including certain of the Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO and (y) any party that has executed a joinder agreement to the Tax Receivable Agreement in accordance with the Tax Receivable Agreement.
•“Investor Group” refer to certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.), an affiliate of Canada Pension Plan Investment Board, an affiliate of GIC Special Investments Pte. Ltd. and certain co-investors, which prior to the LSEG Transaction (as defined below) collectively held indirectly a 55% ownership interest in Refinitiv.
•“LLC Interests” refer to the single class of common mem bership interests of TWM LLC. LLC Interests, other than those held by Tradeweb Markets Inc., are redeemable or exchangeable in accordance with the TWM LLC Agreement for shares of Class A common stock or Class B common stock, as the case may be, on a one-for-one basis.
•“LSEG Transaction” refer to the acquisition of the Refinitiv business by LSEG (as defined below), in an all share transaction, which closed on January 29, 2021. The Refinitiv business was rebranded by LSEG as LSEG Data & Analytics during the fourth quarter of 2023.
•“LSEG” refer to London Stock Exchange Group plc, and unless otherwise stated or the context otherwise requires, all of its direct and indirect subsidiaries, including Refinitiv.
•“Original LLC Owners” refer to the owners of TWM LLC prior to the Reorganization Transactions.
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•“Refinitiv,” prior to the LSEG Transaction, refer to Refinitiv Holdings Limited, and unless otherwise stated or the context otherwise requires, all of its direct and indirect subsidiaries, and subsequent to the LSEG Transaction, refer to Refinitiv Parent Limited, and unless otherwise stated or the context otherwise requires, all of its subsidiaries. Refinitiv owns substantially all of the former financial and risk business of Thomson Reuters (as defined below), including, prior to and following the completion of the Reorganization Transactions, an indirect majority ownership interest in Tradeweb, and was controlled by the Investor Group prior to the LSEG Transaction.
•“Refinitiv Transaction” refer to the transaction pursuant to which Refinitiv indirectly acquired on October 1, 2018 substantially all of the financial and risk business of Thomson Reuters and Thomson Reuters indirectly acquired a 45% ownership interest in Refinitiv.
•“Thomson Reuters” or “TR” refer to Thomson Reuters Corporation, which prior to the LSEG Transaction indirectly held a 45% ownership interest in Refinitiv.
Numerical figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. In addition, we round certain percentages presented in this Quarterly Report on Form 10-Q to the nearest whole number. As a result, figures expressed as percentages in the text may not total 100% or, when aggregated, may not be the arithmetic aggregation of the percentages that precede them.
USE OF NON-GAAP FINANCIAL MEASURES
This Quarterly Report on Form 10-Q contains “non-GAAP financial measures,” which are financial measures that are not calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The Securities and Exchange Commission (“SEC”) has adopted rules to regulate the use of non-GAAP financial measures in filings with the SEC and in other public disclosures. These rules govern the manner in which non-GAAP financial measures are publicly presented and require, among other things:
•a presentation with equal or greater prominence of the most comparable financial measure or measures calculated and presented in accordance with GAAP; and
•a statement disclosing the purposes for which the registrant’s management uses the non-GAAP financial measure.
Specifically, we make use of the non-GAAP financial measures “Free Cash Flow,” “Adjusted EBITDA,” “Adjusted EBITDA margin,” “Adjusted EBIT,” “Adjusted EBIT margin,” “Adjusted Net Income” and “Adjusted Diluted EPS,” as well as the change in revenue, Adjusted EBITDA margin and Adjusted EBIT margin on a constant currency basis, in evaluating our historical results and future prospects. For the definition of Free Cash Flow and a reconciliation to cash flow from operating activities, its most directly comparable financial measure presented in accordance with GAAP, see Part I, Item 2. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.” For the definitions of Adjusted EBITDA, Adjusted EBIT and Adjusted Net Income and reconciliations to net income and net income attributable to Tradeweb Markets Inc., as applicable, their most directly comparable financial measures presented in accordance with GAAP, see Part I, Item 2. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.” For the definition of constant currency revenue change, see Part I, Item 2. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.” Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period. For the definition of constant currency change in Adjusted EBITDA margin and Adjusted EBIT margin, see Part I, Item 2. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.” 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.
We present Free Cash Flow because we believe it is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our core operations after non-acquisition related expenditures for capitalized software development costs and furniture, equipment and leasehold improvements.
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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. Management and our board of directors use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin to assess our financial performance and believe they are helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Further, our executive incentive compensation program is based in part on components of Adjusted EBITDA and Adjusted EBITDA margin.
We use constant currency measures as supplemental metrics to evaluate our underlying performance between periods by removing the impact of foreign currency fluctuations. We believe that providing certain percentage changes on a constant currency basis provide useful comparisons of our performance and trends between periods.
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. Each of the normal recurring adjustments and other adjustments described in the definition of Adjusted Net Income helps to provide management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.
Free Cash Flow, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS and constant currency measures have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations include the following:
•Free Cash Flow, Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Diluted EPS do not reflect every expenditure, future requirements for capital expenditures or contractual commitments;
•Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Diluted EPS do not reflect changes in our working capital needs;
•Adjusted EBITDA and Adjusted EBIT do not reflect any interest expense, or the amounts necessary to service interest or principal payments on any debt obligations;
•Adjusted EBITDA and Adjusted EBIT do not reflect income tax expense, which is a necessary element of our costs and ability to operate;
•although depreciation and amortization are eliminated in the calculation of Adjusted EBITDA, and the depreciation and amortization related to acquisitions and the Refinitiv Transaction are eliminated in the calculation of Adjusted EBIT, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted EBIT do not reflect any costs of such replacements;
•Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Diluted EPS do not reflect the noncash component of certain employee compensation expense or payroll taxes associated with certain option exercises;
•Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Diluted EPS do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative, on a recurring basis, of our ongoing operations;
•constant currency measures do not reflect the impact of foreign currency fluctuations; and
•other companies in our industry may calculate Free Cash Flow, Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Diluted EPS, constant currency measures or similarly titled measures differently than we do, limiting their usefulness as comparative measures.
We compensate for these limitations by relying primarily on our GAAP results and using Free Cash Flow, Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Diluted EPS and constant currency measures only as supplemental information.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “projection,” “seek,” “should,” “will” or “would,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the markets in which we operate, including our expectations about market trends, our market opportunity and the growth of our various markets, our expansion into new markets, any pending or closed acquisitions or other strategic transactions, any potential tax savings we may realize as a result of our organizational structure, our dividend policy, our share repurchase program and our expectations, beliefs, plans, strategies, objectives, prospects or assumptions regarding future events, our performance or otherwise, contained in this Quarterly Report on Form 10-Q are forward-looking statements.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements, or could affect our stock price.
Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:
•changes in economic, political, social and market conditions and the impact of these changes on trading volumes;
•our failure to compete successfully;
•our failure to adapt our business effectively to keep pace with industry changes;
•consolidation and concentration in the financial services industry;
•our dependence on dealer clients;
•design defects, errors, failures or delays with our platforms or solutions;
•our dependence on third parties for certain market data and certain key functions;
•our inability to achieve our environmental, social and governance goals;
•our ability to implement our business strategies profitably;
•our ability to successfully integrate any acquisition or to realize benefits from any strategic alliances, partnerships or joint ventures;
•our inability to maintain and grow the capacity of our trading platforms, systems and infrastructure;
•systems failures, interruptions, delays in services, cybersecurity incidents, catastrophic events and any resulting interruptions;
•inadequate protection of our intellectual property;
•extensive regulation of our industry;
•our ability to retain the services of our senior management team;
•limitations on operating our business and incurring additional indebtedness as a result of covenant restrictions under our $500.0 million senior unsecured revolving credit facility (the “2023 Revolving Credit Facility”) with Citibank, N.A., as administrative agent, and the other lenders party thereto;
•our dependence on distributions from TWM LLC to fund our expected dividend payments and to pay our taxes and expenses, including payments under the tax receivable agreement (the “Tax Receivable Agreement”) entered into in connection with the IPO;
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•our ability to realize any benefit from our organizational structure;
•Refinitiv’s, and indirectly LSEG’s, control of us and our status as a controlled company; and
•other risks and uncertainties, including those listed under Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), filed with the SEC and in other filings we may make from time to time with the SEC.
Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future events or performance and future events, our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if future events, our results of operations, financial condition or liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of events, results or developments in future periods.
Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.
Investors and others should note that we announce material financial and operational information using our investor relations website, press releases, SEC filings and public conference calls and webcasts. 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. 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.
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PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Tradeweb Markets Inc. and Subsidiaries
Condensed Consolidated Statements of Financial Condition
(dollars in thousands, except per share amounts)
(Unaudited)

|  | June 30, |  | December 31,
|  | 2024 |  | 2023
Assets |  |  |  |
Cash and cash equivalents |  | $ | 1,718,230 |  |  | $ | 1,706,468 |
Restricted cash |  | 1,000 |  |  | 1,000 |
Receivable from brokers and dealers and clearing organizations |  | 432,037 |  |  | 381,178 |
Deposits with clearing organizations |  | 62,694 |  |  | 36,806 |
Accounts receivable, net of allowance for credit losses of $158 and $284 at June 30, 2024 and December 31, 2023, respectively |  | 233,084 |  |  | 168,407 |
Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization |  | 32,456 |  |  | 33,559 |
Lease right-of-use assets |  | 25,662 |  |  | 25,206 |
Software development costs, net of accumulated amortization |  | 151,418 |  |  | 131,332 |
Goodwill |  | 2,857,713 |  |  | 2,815,524 |
Intangible assets, net of accumulated amortization |  | 1,004,116 |  |  | 1,004,797 |
Receivable and due from affiliates |  | 2,980 |  |  | 192 |
Deferred tax asset |  | 684,200 |  |  | 684,250 |
Other assets |  | 78,951 |  |  | 70,819 |
Total assets |  | $ | 7,284,541 |  |  | $ | 7,059,538 |
Liabilities and Equity |  |  |  |
Liabilities |  |  |  |
Securities sold under agreements to repurchase |  | $ | — |  |  | $ | 21,612 |
Payable to brokers and dealers and clearing organizations |  | 424,751 |  |  | 351,864 |
Accrued compensation |  | 119,270 |  |  | 164,329 |
Deferred revenue |  | 28,174 |  |  | 25,746 |
Accounts payable, accrued expenses and other liabilities |  | 77,148 |  |  | 57,501 |
Lease liabilities |  | 28,105 |  |  | 27,463 |
Payable and due to affiliates |  | — |  |  | 1,327 |
Deferred tax liability |  | 18,751 |  |  | 20,767 |
Tax receivable agreement liability |  | 380,937 |  |  | 457,523 |
Total liabilities |  | 1,077,136 |  |  | 1,128,132 |
Commitments and contingencies (Note 13) |  |  |  |
Equity |  |  |  |
Preferred stock, $0.00001 par value; 250,000,000 shares authorized; none issued or outstanding |  | — |  |  | — |
Class A common stock, $0.00001 par value; 1,000,000,000 shares authorized; 116,282,605 and 115,090,787 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively |  | 1 |  |  | 1 |
Class B common stock, $0.00001 par value; 450,000,000 shares authorized; 96,933,192 and 96,933,192 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively |  | 1 |  |  | 1 |
Class C common stock, $0.00001 par value; 350,000,000 shares authorized; 18,000,000 and 18,000,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively |  | — |  |  | — |
Class D common stock, $0.00001 par value; 300,000,000 shares authorized; 5,076,973 and 5,077,973 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively |  | — |  |  | — |
Additional paid-in capital |  | 4,795,562 |  |  | 4,738,758 |
Accumulated other comprehensive income (loss) |  | (7,920) |  |  | (5,389) |
Retained earnings |  | 843,158 |  |  | 640,384 |
Total stockholders’ equity attributable to Tradeweb Markets Inc. |  | 5,630,802 |  |  | 5,373,755 |
Non-controlling interests |  | 576,603 |  |  | 557,651 |
Total equity |  | 6,207,405 |  |  | 5,931,406 |
Total liabilities and equity |  | $ | 7,284,541 |  |  | $ | 7,059,538 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Tradeweb Markets Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(dollars in thousands, except per share amounts)
(Unaudited)

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Revenues |  |  |  |  |  |  |  |
Transaction fees and commissions |  | $ | 330,475 |  |  | $ | 246,461 |  |  | $ | 665,926 |  |  | $ | 513,059 |
Subscription fees |  | 50,746 |  |  | 45,748 |  |  | 100,427 |  |  | 90,122 |
LSEG market data fees |  | 20,581 |  |  | 15,461 |  |  | 41,081 |  |  | 31,055 |
Other |  | 3,149 |  |  | 2,943 |  |  | 6,256 |  |  | 5,626 |
Total revenue |  | 404,951 |  |  | 310,613 |  |  | 813,690 |  |  | 639,862 |
Expenses |  |  |  |  |  |  |  |
Employee compensation and benefits |  | 137,236 |  |  | 103,924 |  |  | 280,323 |  |  | 218,417 |
Depreciation and amortization |  | 49,936 |  |  | 45,887 |  |  | 99,273 |  |  | 91,291 |
Technology and communications |  | 24,230 |  |  | 18,701 |  |  | 45,540 |  |  | 36,268 |
General and administrative |  | 12,755 |  |  | 11,072 |  |  | 23,609 |  |  | 24,992 |
Professional fees |  | 13,324 |  |  | 10,666 |  |  | 25,124 |  |  | 21,842 |
Occupancy |  | 4,976 |  |  | 4,028 |  |  | 9,649 |  |  | 8,151 |
Total expenses |  | 242,457 |  |  | 194,278 |  |  | 483,518 |  |  | 400,961 |
Operating income |  | 162,494 |  |  | 116,335 |  |  | 330,172 |  |  | 238,901 |
Interest income |  | 21,511 |  |  | 15,576 |  |  | 42,571 |  |  | 28,516 |
Interest expense |  | (542) |  |  | (467) |  |  | (2,260) |  |  | (916) |
Other income (loss), net |  | — |  |  | (456) |  |  | — |  |  | (115) |
Income before taxes |  | 183,463 |  |  | 130,988 |  |  | 370,483 |  |  | 266,386 |
Provision for income taxes |  | (47,047) |  |  | (29,049) |  |  | (90,685) |  |  | (62,254) |
Net income |  | 136,416 |  |  | 101,939 |  |  | 279,798 |  |  | 204,132 |
Less: Net income attributable to non-controlling interests |  | 17,177 |  |  | 12,857 |  |  | 34,417 |  |  | 27,194 |
Net income attributable to Tradeweb Markets Inc. |  | $ | 119,239 |  |  | $ | 89,082 |  |  | $ | 245,381 |  |  | $ | 176,938 |
Earnings per share attributable to Tradeweb Markets Inc. Class A and B common stockholders:
Basic |  | $ | 0.56 |  |  | $ | 0.42 |  |  | $ | 1.15 |  |  | $ | 0.84 |
Diluted |  | $ | 0.55 |  |  | $ | 0.42 |  |  | $ | 1.14 |  |  | $ | 0.83 |
Weighted average shares outstanding: |  |  |  |  |  |  |  |
Basic |  | 213,162,158 |  | 211,569,728 |  | 212,936,015 |  | 209,847,153
Diluted |  | 214,895,947 |  | 213,156,753 |  | 214,778,342 |  | 211,659,814

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Tradeweb Markets Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(dollars in thousands)
(Unaudited)

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Net income |  | $ | 136,416 |  |  | $ | 101,939 |  |  | $ | 279,798 |  |  | $ | 204,132 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |
Foreign currency translation adjustments, with no tax benefit for each of the three and six months ended June 30, 2024 and 2023 |  | (439) |  |  | 1,184 |  |  | (2,803) |  |  | 3,833 |
Other comprehensive income (loss), net of tax |  | (439) |  |  | 1,184 |  |  | (2,803) |  |  | 3,833 |
Comprehensive income |  | 135,977 |  |  | 103,123 |  |  | 276,995 |  |  | 207,965 |
Less: Net income attributable to non-controlling interests |  | 17,177 |  |  | 12,857 |  |  | 34,417 |  |  | 27,194 |
Less: Foreign currency translation adjustments attributable to non-controlling interests |  | (43) |  |  | 117 |  |  | (275) |  |  | 414 |
Comprehensive income attributable to Tradeweb Markets Inc. |  | $ | 118,843 |  |  | $ | 90,149 |  |  | $ | 242,853 |  |  | $ | 180,357 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Tradeweb Markets Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Equity
(dollars in thousands, except per share amounts)
(Unaudited)

|  | Tradeweb Markets Inc. Stockholders’ Equity |  |  |  |
|  | Par Value |  |  |  |  |  |  |  |  |  |
|  | Class A Common Stock |  | Class B Common Stock |  | Class C Common Stock |  | Class D Common Stock |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Retained Earnings |  | Non- Controlling Interests |  | Total Equity
Balance at December 31, 2023 |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,738,758 |  |  | $ | (5,389) |  |  | $ | 640,384 |  |  | $ | 557,651 |  |  | $ | 5,931,406 |
Issuance of common stock from equity incentive plans |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,807 |  |  | — |  |  | — |  |  | — |  |  | 2,807 |
Issuance of common stock for business acquisition |  | — |  |  | — |  |  | — |  |  | — |  |  | 36,692 |  |  | — |  |  | — |  |  | — |  |  | 36,692 |
Share repurchases pursuant to share repurchase programs |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans |  | — |  |  | — |  |  | — |  |  | — |  |  | 18,358 |  |  | — |  |  | — |  |  | — |  |  | 18,358 |
Adjustments to non-controlling interests |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,333 |  |  | (3) |  |  | — |  |  | (1,330) |  |  | — |
Distributions to non-controlling interests |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (6,095) |  |  | (6,095) |
Dividends ($0.10 per share) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (21,286) |  |  | — |  |  | (21,286) |
Stock-based compensation expense |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,959 |  |  | — |  |  | — |  |  | — |  |  | 16,959 |
Payroll taxes paid for stock-based compensation |  | — |  |  | — |  |  | — |  |  | — |  |  | (43,832) |  |  | — |  |  | — |  |  | — |  |  | (43,832) |
Net income |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 126,142 |  |  | 17,240 |  |  | 143,382 |
Foreign currency translation adjustments |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,132) |  |  | — |  |  | (232) |  |  | (2,364) |
Balance at March 31, 2024 |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,771,075 |  |  | $ | (7,524) |  |  | $ | 745,240 |  |  | $ | 567,234 |  |  | $ | 6,076,027 |
Issuance of common stock from equity incentive plans |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,021 |  |  | — |  |  | — |  |  | — |  |  | 2,021 |
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans |  | — |  |  | — |  |  | — |  |  | — |  |  | 761 |  |  | — |  |  | — |  |  | — |  |  | 761 |
Adjustments to non-controlling interests |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,198) |  |  | — |  |  | — |  |  | 2,198 |  |  | — |
Distributions to non-controlling interests |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (9,963) |  |  | (9,963) |
Dividends ($0.10 per share) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (21,321) |  |  | — |  |  | (21,321) |
Stock-based compensation expense |  | — |  |  | — |  |  | — |  |  | — |  |  | 24,350 |  |  | — |  |  | — |  |  | — |  |  | 24,350 |
Payroll taxes paid for stock-based compensation |  | — |  |  | — |  |  | — |  |  | — |  |  | (447) |  |  | — |  |  | — |  |  | — |  |  | (447) |
Net income |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 119,239 |  |  | 17,177 |  |  | 136,416 |
Foreign currency translation adjustments |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (396) |  |  | — |  |  | (43) |  |  | (439) |
Balance at June 30, 2024 |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,795,562 |  |  | $ | (7,920) |  |  | $ | 843,158 |  |  | $ | 576,603 |  |  | $ | 6,207,405 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Tradeweb Markets Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Equity – (Continued)
(in thousands, except share and per share amounts)
(Unaudited)

|  |  | Tradeweb Markets Inc. Stockholders’ Equity |  |  |  |
|  |  | Par Value |  |  |  |  |  |  |  |  |  |
|  |  | Class A Common Stock |  | Class B Common Stock |  | Class C Common Stock |  | Class D Common Stock |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Retained Earnings |  | Non- Controlling Interests |  | Total Equity
Balance at December 31, 2022 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,577,270 |  |  | $ | (10,113) |  |  | $ | 386,632 |  |  | $ | 592,525 |  |  | $ | 5,546,316 |
Issuance of common stock from equity incentive plans |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 6,320 |  |  | — |  |  | — |  |  | — |  |  | 6,320 |
Share repurchases pursuant to share repurchase programs |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (22,706) |  |  | — |  |  | (22,706) |
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,082 |  |  | — |  |  | — |  |  | — |  |  | 15,082 |
Adjustments to non-controlling interests |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 6,910 |  |  | (4) |  |  | — |  |  | (6,906) |  |  | — |
Distributions to non-controlling interests |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,283) |  |  | (2,283) |
Dividends ($0.09 per share) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (18,733) |  |  | — |  |  | (18,733) |
Stock-based compensation expense |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11,905 |  |  | — |  |  | — |  |  | — |  |  | 11,905 |
Payroll taxes paid for stock-based compensation |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (39,878) |  |  | — |  |  | — |  |  | — |  |  | (39,878) |
Net income |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 87,856 |  |  | 14,337 |  |  | 102,193 |
Foreign currency translation adjustments |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,352 |  |  | — |  |  | 297 |  |  | 2,649 |
Balance at March 31, 2023 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,577,609 |  |  | $ | (7,765) |  |  | $ | 433,049 |  |  | $ | 597,970 |  |  | $ | 5,600,865 |
Issuance of common stock from equity incentive plans |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,262 |  |  | — |  |  | — |  |  | — |  |  | 1,262 |
Share repurchases pursuant to share repurchase programs |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (7,602) |  |  | — |  |  | (7,602) |
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,827 |  |  | — |  |  | — |  |  | — |  |  | 27,827 |
Adjustments to non-controlling interests |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 72,870 |  |  | (120) |  |  | — |  |  | (72,750) |  |  | — |
Distributions to non-controlling interests |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,286) |  |  | (3,286) |
Dividends ($0.09 per share) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (19,048) |  |  | — |  |  | (19,048) |
Stock-based compensation expense |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,097 |  |  | — |  |  | — |  |  | — |  |  | 16,097 |
Payroll taxes paid for stock-based compensation |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,870) |  |  | — |  |  | — |  |  | — |  |  | (1,870) |
Net income |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 89,082 |  |  | 12,857 |  |  | 101,939 |
Foreign currency translation adjustments |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,067 |  |  | — |  |  | 117 |  |  | 1,184 |
Balance at June 30, 2023 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,693,795 |  |  | $ | (6,818) |  |  | $ | 495,481 |  |  | $ | 534,908 |  |  | $ | 5,717,368 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Tradeweb Markets Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)

|  | Six Months Ended
|  | June 30,
|  | 2024 |  | 2023
Cash flows from operating activities |  |  |  |
Net income |  | $ | 279,798 |  |  | $ | 204,132 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |
Depreciation and amortization |  | 99,273 |  |  | 91,291 |
Stock-based compensation expense |  | 40,117 |  |  | 27,323 |
Deferred taxes |  | 17,008 |  |  | 49,264 |
Other (income) loss, net |  | — |  |  | 115 |
(Increase) decrease in operating assets: |  |  |  |
Receivable from/payable to brokers and dealers and clearing organizations, net |  | 22,027 |  |  | 362 |
Deposits with clearing organizations |  | (25,902) |  |  | 50 |
Accounts receivable |  | (64,949) |  |  | (18,239) |
Receivable and due from affiliates/payable and due to affiliates, net |  | (4,356) |  |  | (5,277) |
Other assets |  | 3,554 |  |  | 1,334 |
Increase (decrease) in operating liabilities: |  |  |  |
Securities sold under agreements to repurchase |  | (21,612) |  |  | — |
Accrued compensation |  | (44,448) |  |  | (66,974) |
Deferred revenue |  | 2,226 |  |  | 4,555 |
Accounts payable, accrued expenses and other liabilities |  | 20,848 |  |  | (3,997) |
Net cash provided by operating activities |  | 323,584 |  |  | 283,939 |
Cash flows from investing activities |  |  |  |
Cash paid for acquisitions, net of cash acquired |  | (89,224) |  |  | — |
Cash paid for foreign currency call option |  | — |  |  | (2,389) |
Cash paid for investments |  | (11,585) |  |  | — |
Purchases of furniture, equipment, software and leasehold improvements |  | (11,417) |  |  | (11,166) |
Capitalized software development costs |  | (22,478) |  |  | (20,505) |
Net cash used in investing activities |  | (134,704) |  |  | (34,060) |
Cash flows from financing activities |  |  |  |
Share repurchases pursuant to share repurchase programs |  | — |  |  | (30,056) |
Proceeds from stock-based compensation exercises |  | 4,828 |  |  | 7,582 |
Dividends |  | (42,607) |  |  | (37,781) |
Distributions to non-controlling interests |  | (16,058) |  |  | (5,569) |
Payroll taxes paid for stock-based compensation |  | (44,457) |  |  | (41,748) |
Payments on tax receivable agreement liability |  | (76,586) |  |  | (5,724) |
Net cash used in financing activities |  | (174,880) |  |  | (113,296) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |  | (2,238) |  |  | 2,589 |
Net increase (decrease) in cash, cash equivalents and restricted cash |  | 11,762 |  |  | 139,172 |
Cash, cash equivalents and restricted cash |  |  |  |
Beginning of period |  | 1,707,468 |  |  | 1,258,229 |
End of period |  | $ | 1,719,230 |  |  | $ | 1,397,401 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Tradeweb Markets Inc. and Subsidiaries
Consolidated Statements of Cash Flows - (Continued)
(in thousands)
(Unaudited)

|  | Six Months Ended
|  | June 30,
|  | 2024 |  | 2023
Supplemental disclosure of cash flow information |  |  |  |
Income taxes paid, net of (refunds) |  | $ | 61,414 |  |  | $ | 19,026 |
Cash paid for interest |  | $ | 1,757 |  |  | $ | 413 |
Non-cash investing and financing activities |  |  |  |
Issuance of common stock for business acquisition |  | $ | 36,692 |  |  | $ | — |
Furniture, equipment, software and leasehold improvement additions included in accounts payable |  | $ | 165 |  |  | $ | 1,203 |
Unsettled share repurchases included in other liabilities |  | $ | — |  |  | $ | 252 |
Items arising from LLC Interest ownership changes: |  |  |  |
Establishment of liabilities under tax receivable agreement |  | $ | — |  |  | $ | 27,976 |
Deferred tax asset |  | $ | 19,119 |  |  | $ | 70,886 |
|  | June 30, |  | December 31,
Reconciliation of cash, cash equivalents and restricted cash as shown on the statements of financial condition: |  | 2024 |  | 2023
Cash and cash equivalents |  | $ | 1,718,230 |  |  | $ | 1,706,468 |
Restricted cash |  | 1,000 |  |  | 1,000 |
Cash, cash equivalents and restricted cash shown in the statement of cash flows |  | $ | 1,719,230 |  |  | $ | 1,707,468 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Notes to Condensed Consolidated Financial Statements
(Unaudited)

|  | Page
Note 1 | Organization | 16
Note 2 | Significant Accounting Policies | 18
Note 3 | Restricted Cash | 26
Note 4 | Acquisitions | 26
Note 5 | Revenue | 28
Note 6 | Income Taxes | 29
Note 7 | Tax Receivable Agreement | 30
Note 8 | Non-Controlling Interests | 31
Note 9 | Stockholders’ Equity and Stock-Based Compensation Plans | 31
Note 10 | Related Party Transactions | 35
Note 11 | Fair Value of Financial Instruments | 36
Note 12 | Credit Risk | 39
Note 13 | Commitments and Contingencies | 40
Note 14 | Earnings Per Share | 42
Note 15 | Regulatory Capital Requirements | 43
Note 16 | Business Segment and Geographic Information | 44
Note 17 | Subsequent Events | 45

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Tradeweb Markets Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization
Tradeweb Markets Inc. (the “Corporation”) was incorporated as a Delaware corporation on November 7, 2018 to carry on the business of Tradeweb Markets LLC (“TWM LLC”) following the completion of a series of reorganization transactions on April 4, 2019 (the “Reorganization Transactions”), in connection with Tradeweb Markets Inc.’s initial public offering (the “IPO”), which closed on April 8, 2019. Following the Reorganization Transactions, Refinitiv (as defined below) owned an indirect majority ownership interest in the Company (as defined below).
On January 29, 2021, London Stock Exchange Group plc (“LSEG”) completed its acquisition of the Refinitiv business from a consortium, including certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.) (“Blackstone”) as well as Thomson Reuters Corporation (“TR”), in an all share transaction (the “LSEG Transaction”).
In connection with the LSEG Transaction, the Corporation became a consolidating subsidiary of LSEG. Prior to the LSEG Transaction, the Corporation was a consolidating subsidiary of BCP York Holdings (“BCP”), a company owned by certain investment funds affiliated with Blackstone, through BCP’s previous majority ownership interest in Refinitiv. As used herein, “Refinitiv,” prior to the LSEG Transaction, means Refinitiv Holdings Limited, and unless otherwise stated or the context otherwise requires, all of its direct and indirect subsidiaries, and subsequent to the LSEG Transaction, refers to Refinitiv Parent Limited, and unless otherwise stated or the context otherwise requires, all of its subsidiaries. Refinitiv owns substantially all of the former financial and risk business of Thomson Reuters (as defined below), including, prior to and following the completion of the Reorganization Transactions, an indirect majority ownership interest in the Company. The Refinitiv business was rebranded by LSEG as LSEG Data & Analytics during the fourth quarter of 2023.
The Corporation is a holding company whose principal asset is LLC Interests (as defined below) of TWM LLC. As the sole manager of TWM LLC, the Corporation operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts the Corporation’s business. As a result of this control, and because the Corporation has a substantial financial interest in TWM LLC, the Corporation consolidates the financial results of TWM LLC and reports a non-controlling interest in the Corporation’s condensed consolidated financial statements. As of June 30, 2024, Tradeweb Markets Inc. owned 90.2% of TWM LLC and the non-controlling interest holders owned the remaining 9.8% of TWM LLC. As of December 31, 2023, Tradeweb Markets Inc. owned 90.2% of TWM LLC and the non-controlling interest holders owned the remaining 9.8% of TWM LLC.
Unless the context otherwise requires, references to the “Company” refer to Tradeweb Markets Inc. and its consolidated subsidiaries, including TWM LLC, following the completion of the Reorganization Transactions, and TWM LLC and its consolidated subsidiaries prior to the completion of the Reorganization Transactions.
The Company is a leader in building and operating electronic marketplaces for a global network of clients across the institutional, wholesale and retail client sectors. The Company’s principal subsidiaries include:
•Tradeweb LLC (“TWL”), a registered broker-dealer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), a member of the Financial Industry Regulatory Authority (“FINRA”), a member of the Municipal Securities Rulemaking Board (“MSRB”), a registered independent introducing broker with the Commodities Future Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”).
•Dealerweb Inc. (“DW”) (formerly known as Hilliard Farber & Co., Inc.), a registered broker-dealer under the Exchange Act and a member of FINRA and MSRB. DW is also registered as an introducing broker with the CFTC and a member of the NFA.
•Tradeweb Direct LLC (“TWD”) (formerly known as BondDesk Trading LLC), a registered broker-dealer under the Exchange Act and a member of FINRA and MSRB.
•Tradeweb Europe Limited (“TEL”), a MiFID Investment Firm regulated by the Financial Conduct Authority (the “FCA”) in the UK, and certain other global regulators, that maintains branches in Asia.
•TW SEF LLC (“TW SEF”), a Swap Execution Facility (“SEF”) regulated by the CFTC and certain other global regulators.
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•DW SEF LLC (“DW SEF”), a SEF regulated by the CFTC and certain other global regulators.
•Tradeweb Japan K.K. (“TWJ”), a security house regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”).
•Tradeweb EU B.V. (“TWEU”), a MiFID Investment Firm regulated by the Netherlands Authority for the Financial Markets (“AFM”), the De Nederlandsche Bank (“DNB”) and certain other global regulators and that maintains a branch in France.
•Tradeweb Execution Services Limited (“TESL”), an Investment Firm (“BIPRU Firm”) regulated by the FCA in the UK.
•Tradeweb Information Technology Services (Shanghai) Co., Ltd is a wholly-owned foreign enterprise (WOFE) in China. Its business scope includes information, data and technology related services including development, sales, import and export and consulting. 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.
•Tradeweb Execution Services B.V. (“TESBV”), a MiFID Investment Firm authorized and regulated by the AFM, with permission to trade on a matched principal basis.
•Tradeweb Australia Pty Ltd (formerly Yieldbroker Pty Limited) (“YB” or “Yieldbroker”), acquired in August 2023, a Tier 1 Australian Markets Licensee in Australia, regulated by the Australian Securities & Investments Commission (“ASIC”), that also maintains a branch in Singapore that is regulated by the Monetary Authority of Singapore (“MAS”) as a Regulated Market Operator. Tradeweb Australia Pty Ltd changed its name from Yieldbroker Pty Limited in January 2024.
•Tradeweb (DIFC) Limited (“TDIFC”), an Authorized Firm regulated by the Dubai Financial Services Authority (“DFSA”) with a license for “arranging deals in investments” for users to access the Company’s various trading venues that are also separately recognized by the DFSA.
•TW Technology and Trading Private Limited ("TTTL"), a private limited company incorporated in Mumbai, India.
In November 2023, TWM LLC and the Corporation entered into a definitive agreement for TWM LLC to acquire all of the outstanding equity interests of R8FIN Holdings LP (together with its subsidiaries, “r8fin”). r8fin provides a suite of algorithmic-based tools as well as a thin-client execution management system (EMS) trading application to facilitate futures and cash trades. The solutions complement Tradeweb’s existing Dealerweb Active Streams, Dealerweb Central Limit Order Book (CLOB), Tradeweb Request-for-Quote (RFQ) and Tradeweb AiEX (Automated Intelligent Execution) offerings. The acquisition closed on January 19, 2024, following the satisfaction of closing conditions and regulatory reviews. The total consideration was $125.9 million, consisting of cash and the issuance of shares of Class A common stock of the Corporation (the “r8fin Acquisition”). See Note 4 – Acquisitions for additional details on this acquisition.
In August 2023, the Company acquired Yieldbroker, a leading Australian trading platform for Australian and New Zealand government bonds and interest rate derivatives, covering the institutional and wholesale client sector, for A$123.6 million in cash (the “Yieldbroker Acquisition”). This acquisition combines Australia and New Zealand’s highly attractive, fast-growing markets with Tradeweb’s international reach and scale.
In June 2021, the Company acquired Nasdaq’s U.S. fixed income electronic trading platform, formerly known as eSpeed (the “NFI Acquisition”), which is a fully executable central limit order book (CLOB) for electronic trading in on-the-run (OTR) U.S. government bonds. The NFI Acquisition included the acquisition of Execution Access, LLC, (“EA”), a registered broker-dealer under the Exchange Act and a member of FINRA. In November 2022, EA merged with and into DW with DW being the surviving entity.
A majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 (the “Refinitiv Transaction”) from TR. The Refinitiv Transaction resulted in a new basis of accounting for certain of the Company’s assets and liabilities beginning on October 1, 2018. See Note 2 – Significant Accounting Policies for a description of pushdown accounting applied as a result of the Refinitiv Transaction.
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In connection with the Reorganization Transactions, TWM LLC’s limited liability company agreement (the “TWM LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of common membership interests in TWM LLC (the “LLC Interests”), (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC. LLC Interests, other than those held by the Corporation, are redeemable or exchangeable in accordance with the TWM LLC Agreement for shares of Class A common stock, par value $0.00001 per share, of the Corporation (the “Class A common stock”) or Class B common stock, par value $0.00001 per share, of the Corporation (the “Class B common stock”), as the case may be, on a one-for-one basis.
As used herein, references to “Continuing LLC Owners” refer collectively to (i) those owners of TWM LLC prior to the Reorganization Transactions (the “Original LLC Owners”), including an indirect subsidiary of Refinitiv, certain investment and commercial banks (collectively, the “Bank Stockholders”), and members of management, that continued to own LLC Interests after the completion of the IPO and Reorganization Transactions and that received shares of Class C common stock, par value $0.00001 per share, of the Corporation (the “Class C common stock”), shares of Class D common stock, par value $0.00001 per share, of the Corporation (the “Class D common stock”) or a combination of both, as the case may be, in connection with the completion of the Reorganization Transactions, (ii) any subsequent transferee of any Original LLC Owner that has executed a joinder agreement to the TWM LLC Agreement and (iii) solely with respect to the Tax Receivable Agreement (as defined in Note 7 – Tax Receivable Agreement), (x) those Original LLC Owners, including certain of the Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO and (y) any party that has executed a joinder agreement to the Tax Receivable Agreement in accordance with the Tax Receivable Agreement.
As of June 30, 2024:
•The public investors collectively owned 116,282,605 shares of Class A common stock, representing 10.1% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and indirectly, through Tradeweb Markets Inc., owned 49.2% of the economic interest in TWM LLC;
•Refinitiv collectively owned 96,933,192 shares of Class B common stock, 18,000,000 shares of Class C common stock and 4,988,329 shares of Class D common stock, representing 89.9% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 50.8% of the economic interest in TWM LLC; and
•Other stockholders that continued to own LLC Interests also collectively owned 88,644 shares of Class D common stock, representing less than 0.1% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock. Collectively, these stockholders directly owned less than 0.1% of the economic interest in TWM LLC.
In addition, the Company’s basic and diluted earnings per share calculations for the three and six months ended June 30, 2024 were impacted by 125,012 and 142,484, respectively, of weighted average shares resulting from unvested restricted stock units and unsettled vested performance-based restricted stock units that were considered participating securities for purposes of calculating earnings per share in accordance with the two-class method. The Company’s diluted earnings per share calculations for the three and six months ended June 30, 2024 also include 1,733,789 and 1,842,327, respectively, of weighted average shares resulting from the dilutive effect of its equity incentive plans. See Note 14 – Earnings Per Share for additional details.
2. Significant Accounting Policies
The following is a summary of significant accounting policies:
Basis of Presentation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As discussed in Note 1 – Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and its subsidiaries and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. The condensed consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by Continuing LLC Owners.
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These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The consolidated financial information as of December 31, 2023 has been derived from audited financial statements not included herein. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) with respect to interim financial reporting and Form 10-Q. In accordance with such rules and regulations, certain disclosures that are normally included in annual financial statements have been omitted. These unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the condensed consolidated financial statements.
Business Combinations
Business combinations are accounted for under the purchase method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). The total cost of an acquisition is allocated to the underlying net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. The fair value of assets acquired and liabilities assumed is determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. Determining the fair value of certain assets acquired and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, growth rates, customer attrition rates and asset lives.
Transaction costs incurred to effect a business combination are expensed as incurred and are included as a component of professional fees or general and administrative expenses in the condensed consolidated statements of income.
Pushdown Accounting
In connection with the Refinitiv Transaction, a majority interest of Refinitiv was acquired by BCP on October 1, 2018 from TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to ASC 805, and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting which resulted in a new fair value basis of accounting for certain of the Company’s assets and liabilities beginning on October 1, 2018. Under the pushdown accounting applied, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as of October 1, 2018 was recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of the Company’s long-lived and indefinite-lived intangible assets, including software development costs.
Cash and Cash Equivalents
Cash and cash equivalents consists of cash and highly liquid investments with remaining maturities at the time of purchase of three months or less.
Allowance for Credit Losses
The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of the Company’s counterparties is also performed.
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Additions to the allowance for credit losses are charged to credit loss expense, which is included in general and administrative expenses in the condensed consolidated statements of income. Aged balances that are determined to be uncollectible are written off against the allowance for credit losses. An allowance for credit losses is also recognized for any credit impairment for available-for-sale debt securities. See Note 12 – Credit Risk for additional information.
Receivable from and Payable to Brokers and Dealers and Clearing Organizations
Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions executed on the Company’s wholesale platform which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction.
Deposits with Clearing Organizations
Deposits with clearing organizations are comprised of cash deposits.
Furniture, Equipment, Purchased Software and Leasehold Improvements
Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from three to seven years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the leasehold improvements or the remaining term of the lease for office space.
Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable.
As of June 30, 2024 and December 31, 2023, accumulated depreciation related to furniture, equipment, purchased software and leasehold improvements totaled $105.7 million and $95.8 million, respectively. Depreciation expense for furniture, equipment, purchased software and leasehold improvements was $5.2 million and $5.3 million for the three months ended June 30, 2024 and 2023, respectively, and $10.5 million and $10.5 million for the six months ended June 30, 2024 and 2023, respectively.
Software Development Costs
The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed. The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Software development costs acquired as part of the r8fin Acquisition are amortized over seven years and software development costs acquired as part of the Yieldbroker Acquisition and NFI Acquisition were both amortized over one year. Costs capitalized as part of the Refinitiv Transaction pushdown accounting allocation are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred.
As of June 30, 2024 and December 31, 2023, accumulated amortization related to software development costs totaled $254.0 million and $222.5 million, respectively. Amortization expense for software development costs was $16.0 million and $13.8 million for the three months ended June 30, 2024 and 2023, respectively, and $31.6 million and $27.2 million for the six months ended June 30, 2024 and 2023, respectively.
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Goodwill
Goodwill includes the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as previously applied under pushdown accounting in connection with the Refinitiv Transaction. Goodwill also includes the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date, including the r8fin Acquisition, the Yieldbroker Acquisition and the NFI Acquisition. Goodwill is not amortized, but is tested for impairment annually on October 1 st and between annual tests, whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. The Company consists of one reporting unit for goodwill impairment testing purposes. An impairment loss is recognized if the estimated fair value of a reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value.
Goodwill was last tested for impairment on October 1, 2023 and no impairment of goodwill was identified.
Intangible Assets
Intangible assets with a finite life are amortized over the estimated lives, ranging from four to thirteen years. These intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. Intangible assets with an indefinite useful life are tested for impairment at least annually. An impairment loss is recognized if the sum of the estimated discounted cash flows relating to the asset or asset group is less than the corresponding book value.
As of June 30, 2024 and December 31, 2023, accumulated amortization related to intangible assets totaled $599.6 million and $542.4 million, respectively. Amortization expense for definite-lived intangible assets was $28.7 million and $26.8 million for the three months ended June 30, 2024 and 2023, respectively, and $57.2 million and $53.6 million for the six months ended June 30, 2024 and 2023, respectively.
Investments in Available-for-Sale Debt Securities
Investments in available-for-sale debt securities are carried at fair value with unrealized gains or losses excluded from earnings and reported in accumulated other comprehensive loss in the condensed consolidated statements of financial condition until realized. On a quarterly basis, the Company assesses whether an impairment loss on its available-for-sale debt securities has occurred due to declines in fair value or other market conditions. When the amortized cost basis of an available-for-sale debt security exceeds its fair value, the security is deemed to be impaired. The portion of an impairment related to credit losses is determined by comparing the present value of cash flows expected to be collected from the security with the amortized cost basis of the security and is recorded as a charge in the condensed consolidated statements of operations. The remainder of an impairment is recognized in accumulated other comprehensive loss if the Company does not intend to sell the security and it is more likely than not that the Company will not be required to sell the security prior to recovery. Investments in available-for-sale debt securities are included as a component of other assets on the condensed consolidated statements of financial condition.
Equity Investments Without Readily Determinable Fair Values
Equity investments without a readily determinable fair value are measured at cost, less impairment, plus or minus observable price changes (in orderly transactions) of an identical or similar investment of the same issuer. If the Company determines that the equity investment is impaired on the basis of a qualitative assessment, the Company will recognize an impairment loss equal to the amount by which the investment’s carrying amount exceeds its fair value. Equity investments are included as a component of other assets on the condensed consolidated statements of financial condition.
Securities Sold Under Agreements to Repurchase
From time to time, the Company sells securities under agreements to repurchase in order to facilitate the clearance of securities. Securities sold under agreements to repurchase are treated as collateralized financings and are presented in the condensed consolidated statements of financial condition at the amounts of cash received. Receivables and payables arising from these agreements are not offset in the condensed consolidated statements of financial condition.
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Leases
At lease commencement, a right-of-use asset and a lease liability are recognized for all leases with an initial term in excess of 12 months based on the initial present value of the fixed lease payments over the lease term. The lease right-of-use asset also reflects the present value of any initial direct costs, prepaid lease payments and lease incentives. The Company’s leases do not provide a readily determinable implicit discount rate. Therefore, management estimates the Company’s incremental borrowing rate used to discount the lease payments based on the information available at lease commencement. The Company includes the term covered by an option to extend a lease when the option is reasonably certain to be exercised. The Company has elected not to separate non-lease components from lease components for all leases. Significant assumptions and judgments in calculating the lease right-of-use assets and lease liabilities include the determination of the applicable borrowing rate for each lease. Operating lease expense is recognized on a straight-line basis over the lease term and included as a component of occupancy expense in the condensed consolidated statements of income.
Deferred Offering Costs
Deferred offering costs consist of legal, accounting and other costs directly related to the Company’s efforts to raise cap ital. Th ese costs are recognized as a reduction in additional paid-in capital within the condensed consolidated statements of financial condition when the offering is effective. No offering costs were incurred during the three and six months ended June 30, 2024 and 2023.
Revenue Recognition
The Company’s classification of revenues in the condensed consolidated statements of income represents revenues from contracts with customers disaggregated by type of revenue. See Note 5 – Revenue for additional details regarding revenue types and the Company’s policies regarding revenue recognition.
Translation of Foreign Currency and Foreign Exchange Derivative Contracts
Revenues, expenses, assets and liabilities denominated in non-functional currencies are recorded in the appropriate functional currency for the legal entity at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities that are denominated in non-functional currencies are then remeasured at the end of each reporting period at the exchange rate prevailing at the end of the reporting period. Foreign currency remeasurement gains or losses on monetary assets and liabilities in nonfunctional currencies are recognized in the condensed consolidated statements of income within general and administrative expenses. The realized and unrealized losses totaled $0.8 million and $1.4 million during the three months ended June 30, 2024 and 2023, respectively, and realized and unrealized losses during the six months ended June 30, 2024 and 2023 totaled $2.0 million and $1.8 million, respectively. Since the condensed consolidated financial statements are presented in U.S. dollars, the Company also translates all non-U.S. dollar functional currency revenues, expenses, assets and liabilities into U.S. dollars. All non-U.S. dollar functional currency revenue and expense amounts are translated into U.S. dollars monthly at the average exchange rate for the month. All non-U.S. dollar functional currency assets and liabilities are translated at the rate prevailing at the end of the reporting period. Gains or losses on translation in the financial statements, when the functional currency is other than the U.S. dollar, are included as a component of other comprehensive income.
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The Company enters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus euro exposure, generally with a duration of less than 12 months. In June 2023, the Company also entered into a foreign currency call option on Australian dollars, see Note 11 – Fair Value of Financial Instruments for additional details. The Company’s foreign exchange derivative contracts are not designated as hedges for accounting purposes. Changes in the fair value during the period of foreign currency forward contracts, which were entered into for foreign exchange risk management purposes relating to operating activities, are recognized in the condensed consolidated statements of income within general and administrative expenses and related cash flows are included in cash flows from operating activities, and changes in the fair value during the period of the foreign currency call option on Australian dollars, which was entered into for foreign exchange risk management purposes relating to investing activities, are recognized in the consolidated statements of income within other income/loss and related cash flows are included in cash flows from investing activities. The Company does not use derivative instruments for trading or speculative purposes. Realized and unrealized gains on foreign currency forward contracts during the three months ended June 30, 2024 and 2023 totaled $2.6 million and $2.2 million, respectively and realized and unrealized gains on foreign currency forward contracts during the six months ended June 30, 2024 and 2023 totaled $6.9 million and $1.0 million, respectively. Realized and unrealized gains on the foreign currency call option on Australian dollars during both the three and six months ended June 30, 2023 totaled $0.6 million. As of June 30, 2024 and December 31, 2023, the counterparty on each of the foreign exchange derivative contracts was an affiliate of LSEG and therefore the corresponding assets or liabilities on such contracts were included in receivable and due from affiliates or payable and due to affiliates, respectively, on the accompanying condensed consolidated statements of financial condition. See Note 11 – Fair Value of Financial Instruments for additional details on the Company’s derivative instruments.
Income Tax
The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. 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 the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes.
The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The Company evaluates the need for valuation allowances based on the weight of positive and negative evidence. The Company records valuation allowances wherever management believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the foreseeable future.
The Company records uncertain tax positions on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.
The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the condensed consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition.
The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act of 2017 as a current period expense when incurred.
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. The 1% excise tax did not have an impact to our financial condition, results of operations and cash flows as of and for the three and six months ended June 30, 2024. The Company is subject to the 15% CAMT, however, it is not expected to have a material impact on the Company’s effective tax rate.
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On October 8, 2021, the Organization for Economic Cooperation and Development announced an accord endorsing and providing an implementation plan focused on global profit allocation, and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as the “Two Pillar Plan.” On December 15, 2022, the European Council formally adopted a European Union directive on the implementation of the plan which became effective for the Company beginning on January 1, 2024. The Company falls under the provisions of the Two Pillar Plan and related tax impacts per local country adoption as it is a consolidating subsidiary of LSEG. The Company does not anticipate a material impact to its financial condition, results of operations and cash flows from the Two Pillar Plan.
Stock-Based Compensation
The stock-based payments received by the employees of the Company are accounted for as equity awards. The Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital. The grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. Forfeitures of stock-based compensation awards are recognized as they occur.
For grants made during the post-IPO period, the fair value of the equity instruments is determined based on the price of the Class A common stock on the grant date.
Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). The significant assumptions used to estimate the fair value as of grant date of the options awarded prior to the IPO did not reflect changes that would have occurred to these assumptions as a result of the IPO. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of 2019.
The Company uses the Black-Scholes pricing model to value some of its option awards. Determining the appropriate fair value model and calculating the fair value of the option awards requires the input of highly subjective assumptions, including the expected life of the option awards and the stock price volatility.
For performance-based restricted stock units that vest based on market conditions, the Company recognizes stock-based compensation based on the estimated grant date fair value of the awards computed with the assistance of a valuation specialist using a Monte Carlo simulation on a binomial model. The significant assumptions used to estimate the fair value of the performance-based restricted stock units that vest based on market conditions are years of maturity, annualized volatility and the risk-free interest rate. The maturity period represents the period of time that the award granted was modeled into the future, the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the maturity period of the award and the expected volatility is based upon historical volatility of the Company’s Class A common stock.
Earnings Per Share
Basic and diluted earnings per share are computed in accordance with the two-class method as unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired executives are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common shareholders. Basic earnings per share is computed by dividing the net income attributable to the Company’s outstanding shares of Class A and Class B common stock by the weighted-average number of the Company’s shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if all potentially dilutive securities were converted into or exchanged or exercised for the Company’s Class A or Class B common stock.
The dilutive effect of stock options and other stock-based payment awards is calculated using the treasury stock method, which assumes the proceeds from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of LLC Interests is evaluated under the if-converted method, where the securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted earnings per share calculation for the entire period presented. Performance-based awards are considered contingently issuable shares and their dilutive effect is included in the denominator of the diluted earnings per share calculation for the entire period, if those shares would be issuable as of the end of the reporting period, assuming the end of the reporting period was also the end of the contingency period.
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Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share.
Fair Value Measurement
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs.
The fair value hierarchy under ASC 820, Fair Value Measurement (“ASC 820”), prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below.
Basis of Fair Value Measurement
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
•Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
•Level 2: Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;
•Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures. The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation and income taxes paid. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2025. The guidance may be applied on a prospective or retrospective basis and early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. The ASU also allows, in addition to the measure that is most consistent with U.S. GAAP, the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. The ASU also requires the disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. All disclosure requirements under ASU 2023-07 and existing segment disclosures in ASC 280, Segment Reporting are also required for public entities with a single reportable segment. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2024, and subsequent interim periods, with early adoption permitted. The ASU is to be applied retrospectively to all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value and that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. ASU 2022-03 also requires the disclosure of the fair value, as reflected in the statement of financial condition, of equity securities subject to contractual sale restrictions and the nature and the disclosure of the remaining duration of those restrictions. On January 1, 2024, the Company adopted ASU 2022-03 on a prospective basis, which resulted in additional disclosures regarding contractual sale restrictions on investments, as disclosed in Note 11 – Fair Value of Financial Instruments and did not have a material impact on the Company’s consolidated financial statements.
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Recent SEC Final Rules
In March 2024, the SEC adopted final rules under SEC Release No. 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors (the “Final Climate Rules”), which requires registrants to disclose certain climate-related information in their registration statements and annual reports. The Final Climate Rules require disclosure of, among other things, material climate-related risks and their impact; activities to mitigate or adapt to material climate-related risks; governance and oversight of climate-related risks; material climate-related targets or goals and their financial impact; and material Scope 1 and/or Scope 2 greenhouse gas emissions with an accompanying assurance report required following an initial transition period, at limited assurance level, and then following an additional transition period, at a reasonable assurance level. Additionally, under the Final Climate Rules, the effects of severe weather events and other natural conditions, subject to certain thresholds, and amounts related to carbon offsets and renewable energy credits or certificates are required to be disclosed in the notes to the audited financial statements in certain circumstances.
On April 4, 2024, the SEC voluntarily stayed the implementation of the Final Climate Rules pending completion of judicial review of the consolidated challenges to the Final Climate Rules by the Court of Appeals for the Eighth Circuit. The Final Climate Rules, as originally issued, would be effective for the Company in various fiscal years, starting with its Annual Report on Form 10-K for the year ending December 31, 2025. Disclosures pursuant to the Final Climate Rules, as originally issued, would be required prospectively, with information for prior periods required only to the extent it was previously disclosed in an SEC filing. The Company is currently evaluating the impact of the Final Climate Rules on its consolidated financial statements and disclosures.
3. Restricted Cash
Cash has been segregated in a special reserve bank account for the benefit of brokers and dealers under SEC Rule 15c3-3. The Company computes the proprietary accounts of broker-dealers (“PAB”) reserve, which requires the Company to maintain minimum segregated cash in the amount of excess total credits per the reserve computation. As of both June 30, 2024 and December 31, 2023, cash in the amount of $1.0 million, has been segregated in the PAB reserve account, exceeding the requirements pursuant to SEC Rule 15c3-3.
4. Acquisitions
r8fin
On January 19, 2024, the Company completed its acquisition of all of the outstanding equity interests of R8FIN Holdings LP in exchange for total consideration of $125.9 million, consisting of $89.2 million in cash paid at closing (net of cash acquired) and the issuance of 374,601 shares of Class A common stock of the Corporation valued as of the closing date at $36.7 million.
r8fin provides a suite of algorithmic-based tools as well as a thin-client execution management system (EMS) trading application to facilitate futures and cash trades. The solutions complement Tradeweb’s existing Dealerweb Active Streams, Dealerweb Central Limit Order Book (CLOB), Tradeweb Request-for-Quote (RFQ) and Tradeweb AiEX (Automated Intelligent Execution) offerings.
The acquisition was accounted for as a business combination and the Company utilized the assistance of a third-party valuation specialist to determine the fair value of the assets acquired and liabilities assumed at the date of the closing of the acquisition. The fair values were determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market and primarily included significant unobservable inputs (Level 3).
Customer relationships were valued using the income approach, specifically a multi-period excess earnings method. The excess earnings method examines the economic returns contributed by the identified tangible and intangible assets of a company, and then examines the excess return that is attributable to the intangible asset being valued. The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the customer relationships relative to the overall business. In developing a discount rate for the customer relationships, the Company estimated a weighted-average cost of capital for the overall business and employed an intangible asset risk premium to this rate when discounting the excess earnings related to customer relationships. The resulting discounted cash flows were then tax-affected at the applicable statutory rate.
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The developed technology that was acquired, included in the condensed consolidated balance sheet as software development costs, was valued using the income approach, specifically the relief-from-royalty method (“RFRM”). The RFRM is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. The royalty rate is applied to the projected revenue over the expected remaining life of the intangible asset to estimate royalty savings. The net after-tax royalty savings are calculated for each year in the remaining economic life of the technology and discounted to present value. The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the developed technology relative to the overall business as discussed above relating to the customer relationships.
The final purchase price was allocated as follows:

|  | Purchase Price Allocation
|  | (dollars in thousands)
Cash and cash equivalents |  | $ | 1,397 |
Accounts receivable |  | 153 |
Software development costs |  | 28,000 |
Goodwill |  | 42,189 |
Intangible assets - Customer relationships |  | 56,500 |
Other assets |  | 179 |
Deferred revenue |  | (219) |
Accounts payable, accrued expenses and other liabilities |  | (886) |
Total cash paid and stock issued |  | 127,313 |
Less: Cash acquired |  | (1,397) |
Less: Working capital and other closing adjustments (1) |  | (14) |
Purchase price, net of cash acquired and excluding working capital and other closing adjustments |  | $ | 125,902 |

(1) The net working capital and other closing adjustments receivable of $14,000 as of June 30, 2024 was collected in July 2024.
The acquired software development costs will be amortized over a useful life of seven years and the customer relationships will be amortized over a useful life of 13 years. The goodwill recognized in connection with the r8fin Acquisition is primarily attributable to the acquisition of expected future customers, future technology and synergies from the integration of the operations of r8fin into the Company's operations and its single business segment. All of the goodwill recognized in connection with the r8fin Acquisition is expected to be deductible for income tax purposes.
During the three and six months ended June 30, 2024, the Company recognized $0.1 million and $0.5 million, respectively, in transaction costs incurred to effect the r8fin Acquisition, which are included as a component of professional fees in the accompanying condensed consolidated statements of income. During the three and six months ended June 30, 2024, the Company also recognized $0 and $51,000, respectively, in transaction costs incurred to effect the r8fin Acquisition, which are included as a component of general and administrative expenses in the accompanying condensed consolidated statements of income.
The r8fin Acquisition was not material to the Company's condensed consolidated financial statements and therefore pro forma and current period results of this acquisition have not been presented.
ICD
On April 5, 2024, the Company entered into a definitive agreement for TWM LLC to acquire the Institutional Cash Distributors business (“ICD”) by purchasing all of the outstanding equity interests of each of ICD Intermediate Holdco 1, LLC, SCIC - ICD Blocker 1, Inc. and Parthenon Investors V ICD Blocker, Inc. Pursuant to the terms of the purchase agreement, TWM LLC is required to pay $785 million in cash, subject to customary working capital and other adjustments, for the acquisition. In connection with the acquisition closing, the Corporation will also issue and sell $4.5 million of shares of its Class A common stock in reliance on Section 4(a)(2) of the Securities Act, to an equityholder of the seller, which such shares of Class A common stock will be issued and sold as restricted stock, subject to vesting and forfeiture terms, pursuant to the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan. The acquisition is expected to close in the third quarter of 2024, subject to the satisfaction of customary closing conditions and regulatory reviews.
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ICD is an institutional investment technology provider for corporate treasury organizations trading short-term investments. ICD’s flagship products include ICD Portal and ICD Portfolio Analytics. The portal is a one-stop shop to research, trade, analyze and report on investments across more than 40 available investment providers primarily offering money market funds and access to other short term products including deposits, fixed term funds and separately managed accounts (“SMAs”). Portfolio Analytics is an AI-driven cloud solution for aggregating positions across a corporate treasury’s entire portfolio for analysis and reporting. With the acquisition of ICD and its proprietary technology, Tradeweb will add a new client channel serving corporate treasury professionals, complementing Tradeweb’s existing focus on institutional, wholesale and retail clients.
5. Revenue
Revenue Recognition
The Company enters into contracts with its clients to provide a stand-ready connection to its electronic marketplaces, which facilitates the execution of trades by its clients. The access to the Company’s electronic marketplaces includes market data, continuous pricing data refreshes and the processing of trades thereon. The stand-ready connection to the electronic marketplaces is considered a single performance obligation satisfied over time as the client simultaneously receives and consumes the benefit from the Company’s performance as access is provided (that is, the performance obligation constitutes a series of services that are substantially the same in nature and are provided over time using the same measure of progress). For its services, the Company earns subscription fees for granting access to its electronic marketplaces. Subscription fees, which are generally fixed fees, are recognized as revenue on a monthly basis, in the period that access is provided. The frequency of subscription fee billings varies from monthly to annually, depending on contract terms. Fees received by the Company which are not yet earned are included in deferred revenue on the condensed consolidated statements of financial condition until the revenue recognition criteria have been met. The Company also earns transaction fees and/or commissions from transactions executed on the Company’s electronic marketplaces. The Company earns commission revenue from its electronic and voice brokerage services on a riskless principal basis. Riskless principal revenues are derived on matched principal transactions where revenues are earned on the spread between the buy and sell price of the transacted product. Transaction fees and commissions are generated both on a variable and fixed price basis and vary by geographic region, product type and trade size. Fixed monthly transaction fees or commissions, or monthly transaction fees or commission minimums, are earned on a monthly basis in the period the stand-ready trading services are provided and are generally billed monthly. For variable transaction fees or commissions, the Company charges its clients amounts calculated based on the mix of products traded and the volume of transactions executed. Variable transaction fee or commission revenue is recognized and recorded on a trade-date basis when the individual trade occurs and is generally billed when the trade settles or is billed monthly. Variable discounts or rebates on transaction fees or commissions are earned and applied monthly or quarterly, resolved within the same reporting period and are recorded as a reduction to revenue in the period the relevant trades occur.
The Company earns fees from an affiliate of LSEG (Refinitiv, which was rebranded as LSEG Data & Analytics during the fourth quarter of 2023) relating to the sale of market data to LSEG, which distributes that data. Included in these fees, which are billed quarterly, are real-time market data fees which are recognized monthly on a straight-line basis, as LSEG receives and consumes the benefit evenly over the contract period, as the data is provided. Also included in these fees are fees for historical data sets, which are recognized when the historical data set is provided to LSEG.
Significant judgments used in accounting for the Company’s market data agreement with LSEG 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. Inputs in this analysis included publicly available price lists for data sets provided by other companies, planned internal pricing strategies and other market data points and adjustments obtained through consultations with market data industry experts regarding estimating a standalone selling price for each performance obligation.
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Some revenues earned by the Company have fixed fee components, such as monthly minimums or fixed monthly fees, and variable components, such as transaction-based fees. The breakdown of revenues between fixed and variable revenues for the three and six months ended June 30, 2024 and 2023 is as follows:

|  | Three Months Ended |  | Three Months Ended
|  | June 30, 2024 |  | June 30, 2023
|  | (dollars in thousands) |  | (dollars in thousands)
|  | Variable |  | Fixed |  | Variable |  | Fixed
Revenues |  |  |  |  |  |  |  |
Transaction fees and commissions |  | $ | 294,003 |  |  | $ | 36,472 |  |  | $ | 209,634 |  |  | $ | 36,827 |
Subscription fees |  | 465 |  |  | 50,281 |  |  | 470 |  |  | 45,278 |
LSEG market data fees |  | — |  |  | 20,581 |  |  | — |  |  | 15,461 |
Other |  | 382 |  |  | 2,767 |  |  | 264 |  |  | 2,679 |
Total revenue |  | $ | 294,850 |  |  | $ | 110,101 |  |  | $ | 210,368 |  |  | $ | 100,245 |

|  | Six Months Ended |  | Six Months Ended
|  | June 30, 2024 |  | June 30, 2023
|  | (dollars in thousands) |  | (dollars in thousands)
|  | Variable |  | Fixed |  | Variable |  | Fixed
Revenues |  |  |  |  |  |  |  |
Transaction fees and commissions |  | $ | 592,265 |  |  | $ | 73,661 |  |  | $ | 439,815 |  |  | $ | 73,244 |
Subscription fees |  | 935 |  |  | 99,492 |  |  | 930 |  |  | 89,192 |
LSEG market data fees |  | — |  |  | 41,081 |  |  | — |  |  | 31,055 |
Other |  | 744 |  |  | 5,512 |  |  | 466 |  |  | 5,160 |
Total revenue |  | $ | 593,944 |  |  | $ | 219,746 |  |  | $ | 441,211 |  |  | $ | 198,651 |

Deferred Revenue
The Company records deferred revenue when cash payments are received or due in advance of services to be performed. The revenue recognized and the remaining deferred revenue balances are shown below:

|  | Amount
|  | (dollars in thousands)
Deferred revenue balance - December 31, 2023 |  | $ | 25,746 |
New billings |  | 81,074 |
Revenue recognized |  | (78,882) |
Deferred revenue acquired in connection with the r8fin Acquisition |  | 219 |
Effect of foreign currency exchange rate changes |  | 17 |
Deferred revenue balance - June 30, 2024 |  | $ | 28,174 |

During the six months ended June 30, 2024, the Company recognized into revenue $22.6 million in deferred revenue that was deferred as of December 31, 2023. During the six months ended June 30, 2023, the Company recognized into revenue $19.6 million in deferred revenue that was deferred as of December 31, 2022.
6. Income Taxes
The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. The Company’s actual effective tax rate will be impacted by the Corporation’s ownership share of TWM LLC, which will continue to increase as Continuing LLC Owners that continue to hold LLC Interests redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, or the Corporation purchases LLC Interests from such Continuing LLC Owners. The Company’s consolidated effective tax rate will also vary from period to period depending on changes in the mix of earnings, tax legislation and tax rates in various jurisdictions. The Company’s provision for income taxes includes U.S., federal, state, local and foreign taxes.
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The Company’s effective tax rate for the three months ended June 30, 2024 and 2023 was approximately 25.6% an d 22.2%, respectively. The effective tax rate for the three months ended June 30, 2024 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign taxes and the disallowance of compensation expense tax deductions, partially offset by the effect of non-controlling interests. The effective tax rate for the three months ended June 30, 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to the disallowance of compensation expense tax deductions and state, local and foreign taxes, partially offset by the effect of non-controlling interests.
The Company’s effective tax rate for the six months ended June 30, 2024 and 2023 was approximately 24.5% an d 23.4%, respectively. The effective tax rate for the six months ended June 30, 2024 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign taxes and the disallowance of compensation expense tax deductions, partially offset by the effect of non-controlling interests. The effective tax rate for the six months ended June 30, 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to the disallowance of compensation expense tax deductions and state, local and foreign taxes, partially offset by the effect of non-controlling interests.
The Company has obtained, and expects to obtain, an increase in its share of the tax basis of the assets of TWM LLC when LLC Interests are redeemed or exchanged by Continuing LLC Owners and in connection with certain other qualifying transactions. This increase in tax basis has had, and may in the future have, the effect of reducing the amounts that the Corporation would otherwise pay in the future to various tax authorities. Pursuant to the Tax Receivable Agreement, the Corporation is required to make cash payments to the Continuing LLC Owners equal to 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances are deemed to realize) as a result of certain future tax benefits to which the Corporation may become entitled. The Corporation expects to benefit from the remaining 50% of tax benefits, if any, that the Corporation may actually realize. See Note 7 – Tax Receivable Agreement for further details. The tax benefit has been recognized in deferred tax assets on the condensed consolidated statements of financial condition.
In connection with the Reorganization Transactions, a Refinitiv entity was contributed to the Corporation, pursuant to which the Corporation received 96,933,192 LLC Interests and Refinitiv received 96,933,192 shares of Class B common stock (“Refinitiv Contribution”). As a result of the Refinitiv Contribution, the Company assumed the tax liabilities of the contributed entity and the Company was indemnified by Refinitiv for these tax liabilities assumed. During the second quarter of 2023, the contributed entity reached an audit settlement with the State of New Jersey for the tax years 2008 - 2015 and in the third quarter of 2023 paid $2.0 million in full settlement of the matter and the prior liabilities assumed. In the third quarter of 2023, Refinitiv reimbursed the Company for the $2.0 million paid to the State of New Jersey pursuant to the indemnification agreement. As of June 30, 2024 and December 31, 2023, there were no remaining tax liabilities accrued associated with the Refinitiv Contribution.
7. Tax Receivable Agreement
In connection with the Reorganization Transactions, the Corporation entered into a tax receivable agreement (the “Tax Receivable Agreement”) with TWM LLC and the Continuing LLC Owners, which provides for the payment by the Corporation 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 the Corporation 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 a Continuing LLC Owner, including with the net proceeds from the IPO and any subsequent offerings or (b) redemptions or exchanges by a 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 the Corporation making payments under the Tax Receivable Agreement. Payments under the Tax Receivable Agreement are due within 150 days after the filing of the tax return based on the actual tax savings realized by the Corporation, estimated payments may be made in advance. The first payment of the Tax Receivable Agreement was made in January 2021. Substantially all payments due under the Tax Receivable Agreement are payable over fifteen years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests.
The Corporation accounts for the income tax effects resulting from taxable redemptions or exchanges of LLC Interests by Continuing LLC Owners for shares of Class A common stock or Class B common stock or cash, as the case may be, and purchases by the Corporation of LLC Interests from Continuing LLC Owners by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of each redemption, exchange, or purchase, as the case may be. Further, the Corporation evaluates the likelihood that it will realize the benefit represented by the deferred tax asset, and, to the extent that the Corporation estimates that it is more likely than not that it will not realize the benefit, it reduces the carrying amount of the deferred tax asset with a valuation allowance.
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The impact of any changes in the total projected obligations recorded under the Tax Receivable Agreement as a result of actual changes in the mix of the Company’s earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact the Corporation’s actual tax savings realized, are reflected in income before taxes on the condensed consolidated statements of income in the period in which the change occurs. As of June 30, 2024 and December 31, 2023, the tax receivable agreement liability on the condensed consolidated statements of financial condition totaled $380.9 million and $457.5 million, respectively. During each of the three and six months ended June 30, 2024 and 2023, no tax receivable agreement liability adjustment was recognized in the condensed consolidated statements of income.
8. Non-Controlling Interests
In connection with the Reorganization Transactions, Tradeweb Markets Inc. became the sole manager of TWM LLC and, as a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, consolidates the financial results of TWM LLC into its condensed consolidated financial statements. The non-controlling interests balance reported on the condensed consolidated statements of financial condition represents the economic interests of TWM LLC held by the holders of LLC Interests other than Tradeweb Markets Inc. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by Tradeweb Markets Inc. and the other holders of LLC Interests.
The following table summarizes the ownership interest in Tradeweb Markets LLC:

|  | June 30, 2024 |  | June 30, 2023
|  | LLC Interests |  | Ownership % |  | LLC Interests |  | Ownership %
Number of LLC Interests held by Tradeweb Markets Inc. |  | 213,215,797 |  |  | 90.2 | % |  | 211,601,209 |  |  | 90.2 | %
Number of LLC Interests held by non-controlling interests |  | 23,076,973 |  |  | 9.8 | % |  | 23,080,571 |  |  | 9.8 | %
Total LLC Interests outstanding |  | 236,292,770 |  |  | 100.0 | % |  | 234,681,780 |  |  | 100.0 | %

LLC Interests held by Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement at the election of the members for shares of Class A common stock or Class B common stock, as applicable, on a one-for-one basis or, at the Company’s option, a cash payment in accordance with the terms of the TWM LLC Agreement.
The following table summarizes the impact on Tradeweb Market Inc.’s equity due to changes in the Corporation’s ownership interest in TWM LLC:

Net Income Attributable to Tradeweb Markets Inc. and Transfers (to) from the Non-Controlling Interests |  | Three Months Ended |  | Six Months Ended
| June 30, |  | June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands)
Net income attributable to Tradeweb Markets Inc. |  | $ | 119,239 |  |  | $ | 89,082 |  |  | $ | 245,381 |  |  | $ | 176,938 |
Transfers (to) from non-controlling interests: |  |  |  |  |  |  |  |
Increase/(decrease) in Tradeweb Markets Inc.’s additional paid-in capital as a result of ownership changes in TWM LLC |  | (2,198) |  |  | 72,870 |  |  | (865) |  |  | 79,780 |
Net transfers (to) from non-controlling interests |  | (2,198) |  |  | 72,870 |  |  | (865) |  |  | 79,780 |
Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests |  | $ | 117,041 |  |  | $ | 161,952 |  |  | $ | 244,516 |  |  | $ | 256,718 |

9. Stockholders’ Equity and Stock-Based Compensation Plans
The rights and privileges of the Company’s stockholders’ equity and LLC Interests are described in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and there have been no changes to those rights and privileges during the six months ended June 30, 2024.
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Common Stock
The following table details the movement in the Company’s outstanding shares of common stock during the period:

|  | Class A |  | Class B |  | Class C |  | Class D |  | Total
Balance at December 31, 2023 |  | 115,090,787 |  |  | 96,933,192 |  |  | 18,000,000 |  |  | 5,077,973 |  |  | 235,101,952 |
Issuance of common stock from equity incentive plans |  | 699,840 |  |  | — |  |  | — |  |  | — |  |  | 699,840 |
Issuance of common stock for business acquisition (1) |  | 374,601 |  |  | — |  |  | — |  |  | — |  |  | 374,601 |
Balance at March 31, 2024 |  | 116,165,228 |  |  | 96,933,192 |  |  | 18,000,000 |  |  | 5,077,973 |  |  | 236,176,393 |
Activities related to exchanges of LLC Interests |  | 1,000 |  |  | — |  |  | — |  |  | (1,000) |  |  | — |
Issuance of common stock from equity incentive plans |  | 116,377 |  |  | — |  |  | — |  |  | — |  |  | 116,377 |
Balance at June 30, 2024 |  | 116,282,605 |  |  | 96,933,192 |  |  | 18,000,000 |  |  | 5,076,973 |  |  | 236,292,770 |

(1)On January 19, 2024, the Corporation issued 374,601 unregistered shares of class A common stock as partial consideration for the r8fin Acquisition (the “r8fin Acquisition Shares”), in reliance on Section 4(a)(2) of the Securities Act. The r8fin Acquisition Shares are considered issued and outstanding subsequent to their January 19, 2024 issuance, but remain subject to a lock-up that restricts the sale, transfer or disposal of these shares for the two year period following the January 19, 2024 closing date of the r8fin Acquisition. See Note 4 – Acquisitions for additional details on this acquisition.

|  | Class A |  | Class B |  | Class C |  | Class D |  | Total
Balance at December 31, 2022 |  | 110,746,606 |  |  | 96,933,192 |  |  | 3,251,177 |  |  | 23,092,704 |  |  | 234,023,679 |
Activities related to exchanges of LLC Interests |  | 8,733 |  |  | — |  |  | — |  |  | (8,733) |  |  | — |
Issuance of common stock from equity incentive plans |  | 986,090 |  |  | — |  |  | — |  |  | — |  |  | 986,090 |
Share repurchases pursuant to share repurchase programs |  | (313,311) |  |  | — |  |  | — |  |  | — |  |  | (313,311) |
Balance at March 31, 2023 |  | 111,428,118 |  |  | 96,933,192 |  |  | 3,251,177 |  |  | 23,083,971 |  |  | 234,696,458 |
Activities related to exchanges of LLC Interests |  | 3,254,577 |  |  | — |  |  | (3,251,177) |  |  | (3,400) |  |  | — |
Issuance of common stock from equity incentive plans |  | 92,687 |  |  | — |  |  | — |  |  | — |  |  | 92,687 |
Share repurchases pursuant to share repurchase programs |  | (107,365) |  |  | — |  |  | — |  |  | — |  |  | (107,365) |
Balance at June 30, 2023 |  | 114,668,017 |  |  | 96,933,192 |  |  | — |  |  | 23,080,571 |  |  | 234,681,780 |

Stock-Based Compensation Plans
Under the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan, the Company is authorized to issue up to 8,841,864 new shares of Class A common stock to employees, officers and non-employee directors. Under this plan, the Company may grant awards in respect of shares of Class A common stock, including restricted stock units with only time-based vesting conditions (“RSUs”), performance-based restricted stock units with both time and performance-based vesting conditions, stock options and dividend equivalent rights. The Company refers to performance-based restricted stock units that vest based on the financial performance of the Company as “PRSUs” and performance-based restricted stock units that vest based on market conditions, such as total shareholder return, as “PSUs”. RSUs, PRSUs and PSUs each represent promises to issue actual shares of Class A common stock at the end of a vesting period. Stock options have a maximum contractual term of 10 years.
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In connection with organizational changes, on June 17, 2024, the Company determined that the employment of Thomas Pluta, President of the Company, will terminate effective September 30, 2024. In connection with the termination of his employment, Mr. Pluta will also resign from the Board of Directors of the Company effective September 30, 2024. As of June 17, 2024, there was approximately $4.4 million in total unamortized stock-based compensation associated with equity awards previously granted to Mr. Pluta that will be accelerated and amortized into expense over a revised estimated service period ending on September 30, 2024. Of this amount, $1.7 million represents regularly scheduled amortization that would have been recognized from June 17, 2024 through September 30, 2024 if Mr. Pluta’s employment was not terminated and $2.7 million represents accelerated stock-based compensation expense. During the three months ended June 30, 2024, the Company incurred a total of $0.3 million in accelerated stock-based compensation expense relating to Mr. Pluta’s departure, with the remaining $2.4 million to be recorded during the three months ending September 30, 2024.
During the three months ended June 30, 2024, the Company granted 12,526 RSUs at a weighted-average grant-date fair value of $112.82. No PRSUs or PSUs were granted during the three months ended June 30, 2024. During the six months ended June 30, 2024, the Company granted 457,978 RSUs, 201,546 PRSUs and 86,592 PSUs at a weighted-average grant-date fair value of $104.48, $104.66 and $149.00, respectively.
RSU awards granted to employees will generally vest one-third each year over a three-year period, and RSU awards granted to non-employee directors will vest after one year.
PRSUs generally cliff vest on January 1 of the third calendar year from the calendar year of the date of grant and the number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the financial performance of the Company. For PRSU awards granted during 2024, the financial performance of the Company will be determined based on the compound annual growth rate over a three-year performance period beginning on January 1 in the year of grant. For PRSU awards granted during 2023 and prior, the financial performance of the Company was determined based on the financial performance of the Company in the grant year, and any earned awards that remain outstanding are subject to time-based vesting conditions. The performance modifier for PRSUs can vary between 0% (minimum) and 250% (maximum) of the target (100%) award amount for PRSU awards granted during 2024 and 2023. PRSUs granted during 2022 and prior had a 200% maximum performance modifier.
PSUs cliff vest on January 1 of the third calendar year from the calendar year of the date of grant and the number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the Company’s total shareholder return over a three-year performance period. The performance modifier for PSUs can vary between 0% (minimum) and 250% (maximum) of the target (100%) award amount. The grant date fair value of PSUs granted on March 15, 2024 and 2023 was estimated using the Monte Carlo simulation model and the significant valuation assumptions used in those models were as follows:

|  | March 15, 2024 PSU Grant |  | March 15, 2023 PSU Grant
Maturity (years) |  | 2.8 |  | 2.8
Annualized Volatility |  | 26.63 | % |  | 28.81 | %
Risk-Free Interest Rate |  | 4.44 | % |  | 3.77 | %

A summary of the Company’s total stock-based compensation expense is presented below:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands)
Total stock-based compensation expense |  | $ | 23,715 |  |  | $ | 15,712 |  |  | $ | 40,117 |  |  | $ | 27,323 |

The stock-based compensation expense above excludes $0.6 million and $0.4 million of stock-based compensation expense capitalized to software development costs during the three months ended June 30, 2024 and 2023, respectively, and $1.2 million and $0.6 million during the six months ended June 30, 2024 and 2023, respectively.
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Share Repurchase Program
On December 5, 2022, the Company announced that its board of directors authorized a new share repurchase program (the “2022 Share Repurchase Program”), after completing in October 2022, the $150.0 million of total repurchases of the Company’s Class A common stock previously authorized in February 2021 (the “2021 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 the Company’s Class A common stock. The 2022 Share Repurchase Program authorizes the purchase of up to $300.0 million of the Company’s Class A common stock at the Company’s discretion and has no termination date. 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. The amounts, timing and manner of the repurchases will be subject to general market conditions, the prevailing price and trading volumes of the Company’s Class A common stock and other factors. 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. There were no share repurchases during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2023, the Company acquired a total of 107,365 and 420,676 shares of Class A common stock, at an average price of $70.81 and $72.05, for purchases totaling $7.6 million and $30.3 million, respectively.
Each share of Class A common stock repurchased pursuant to the 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. Subsequent to their repurchase, the shares of Class A common stock and the LLC Interests were all cancelled and retired. As of June 30, 2024, a total of $239.8 million remained available for repurchase pursuant to the 2022 Share Repurchase Program.
For shares repurchased pursuant to share repurchase programs, the excess of the repurchase price paid over the par value of the Class A common stock is be recorded as a reduction to retained earnings.
Other Share Repurchases
During the three months ended June 30, 2024 and 2023, the Company withheld 2,505 and 26,259 shares, respectively, of Class A common stock from employee stock option, PRSU and RSU awards, at an average price per share of $107.57 and $71.23, respectively, and an aggregate value of $0.3 million and $1.9 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred. During the six months ended June 30, 2024 and 2023, the Company withheld 455,326 and 601,083 shares, respectively, of Class A common stock from employee stock option, PRSU and RSU awards, at an average price per share of $97.24 and $69.42, respectively, and an aggregate value of $44.3 million and $41.7 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred. These shares are withheld in order for the Company to cover the employee payroll tax withholding obligations upon the exercise of stock options and settlement of RSUs and PRSUs and such shares were not withheld in connection with the share repurchase programs discussed above.
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10. Related Party Transactions
The Company enters into transactions with its affiliates from time to time which are considered to be related party transactions.
As of June 30, 2024 and December 31, 2023, the following balances with such affiliates were included in the condensed consolidated statements of financial condition in the following line items:

|  | June 30, |  | December 31,
|  | 2024 |  | 2023
|  | (dollars in thousands)
Accounts receivable |  | $ | 751 |  |  | $ | 688 |
Receivable and due from affiliates |  | 2,980 |  |  | 192 |
Other assets |  | 43 |  |  | 17 |
Accounts payable, accrued expenses and other liabilities |  | 1,597 |  |  | 1,044 |
Deferred revenue |  | 6,434 |  |  | 6,508 |
Payable and due to affiliates |  | — |  |  | 1,327 |

The following balances with such affiliates were included in the condensed consolidated statements of income in the following line items:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands)
Revenue: |  |  |  |  |  |  |  |
Subscription fees |  | $ | 271 |  |  | $ | 638 |  |  | $ | 575 |  |  | $ | 1,471 |
LSEG market data fees (1) |  | 20,581 |  |  | 15,461 |  |  | 41,081 |  |  | 31,055 |
Other fees |  | 155 |  |  | 136 |  |  | 360 |  |  | 250 |
Expenses: (2) |  |  |  |  |  |  |  |
Employee compensation and benefits |  | — |  |  | 17 |  |  | — |  |  | 17 |
Technology and communications |  | 1,556 |  |  | 1,487 |  |  | 3,128 |  |  | 2,651 |
General and administrative |  | 2 |  |  | (46) |  |  | 5 |  |  | — |
Professional fees |  | 39 |  |  | — |  |  | 65 |  |  | 1 |
Occupancy |  | 26 |  |  | 20 |  |  | 39 |  |  | 20 |

(1)The Company maintains a market data license agreement with an affiliate of LSEG (Refinitiv, which was rebranded as LSEG Data & Analytics during the fourth quarter of 2023). Under the agreement, the Company delivers to LSEG certain market data feeds which LSEG distributes to its customers. The Company earns license fees and royalties for these feeds.
(2)The Company maintains agreements with LSEG to provide the Company with certain market data, office space, finance, human resources and other administrative services.
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11. Fair Value of Financial Instruments
Financial Instruments Measured at Fair Value
The Company’s financial instruments measured at fair value on the condensed consolidated statements of financial condition as of June 30, 2024 and December 31, 2023 have been categorized based upon the fair value hierarchy as follows:

|  | Quoted Prices in active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
|  | (dollars in thousands)
As of June 30, 2024 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Cash equivalents – Money market funds and other highly liquid investments |  | $ | 1,562,815 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,562,815 |
Receivable and due from affiliates – Foreign exchange derivative contracts |  | — |  |  | 2,626 |  |  | — |  |  | 2,626 |
Other assets – Investment in available for sale debt securities |  | — |  |  | — |  |  | 10,102 |  |  | 10,102 |
Total assets measured at fair value |  | $ | 1,562,815 |  |  | $ | 2,626 |  |  | $ | 10,102 |  |  | $ | 1,575,543 |
As of December 31, 2023 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Cash equivalents – Money market funds and other highly liquid investments |  | $ | 1,543,644 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,543,644 |
Total assets measured at fair value |  | $ | 1,543,644 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,543,644 |
Liabilities |  |  |  |  |  |  |  |
Payable and due to affiliates – Foreign exchange derivative contracts |  | $ | — |  |  | $ | 775 |  |  | $ | — |  |  | $ | 775 |
Total liabilities measured at fair value |  | $ | — |  |  | $ | 775 |  |  | $ | — |  |  | $ | 775 |

The Company’s cash equivalents are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.
In April 2024, the Company made an investment in a convertible note with a principal amount and original amortized cost basis of $10.0 million. The note accrues interest at a rate of 5% per annum, compounded annually, and matures on the earliest to occur of January 19, 2027, an event of default or a change in control as each term is defined in the convertible note. The note and accrued interest will convert to equity securities of the issuer on January 19, 2027, if not previously repaid or converted upon certain defined financing events. The convertible note is accounted for as an available-for-sale debt security and the convertible note and accrued interest is included within other assets on the accompanying condensed consolidated statements of financial condition at a fair value and amortized cost basis of $10.1 million as of June 30, 2024. There were no fair value adjustments or credit losses recorded on the convertible note during the three and six months ended June 30, 2024. The convertible note is classified within level 3 of the fair value hierarchy because the valuation requires assumptions that are both significant and unobservable. The primary methods used to estimate the fair value of the convertible note were a discounted cash flow analysis and a probability-weighted expected return model which incorporated the credit risk of the issuer and scenarios in which the note would convert into equity, the estimated equity value of the issuer and the conversion terms outlined in the convertible note agreement. Significant unobservable inputs included a discount rate of 15%. Significant increases or decreases in the discount rate would have resulted in a significantly lower or higher fair value measurement.
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The Company enters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus euro exposure, generally with a duration of less than 12 months. On June 1, 2023, the Company entered into a foreign currency call option on Australian dollars, giving the Company an option to buy A$120.7 million ($79.9 million U.S. dollars as translated as of June 30, 2023), 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. The valuations for the Company’s foreign currency forward contracts and foreign currency call option are primarily based on the difference between the exchange rate associated with the contract and the exchange rate at the current period end for the tenor of the contract. Foreign currency forward contracts and the foreign currency call option are categorized as Level 2 in the fair value hierarchy. As of June 30, 2024 and December 31, 2023, the counterparty on each of these foreign exchange derivative contracts was an affiliate of LSEG and therefore the corresponding assets or liabilities on such contracts were included in receivable and due from affiliates or payable and due to affiliates, respectively, on the accompanying condensed consolidated statements of financial condition.
The following table summarizes the aggregate U.S. dollar equivalent notional amount of the Company’s foreign exchange derivative contracts not designated as hedges for accounting purposes:

|  | June 30, |  | December 31,
|  | 2024 |  | 2023
|  | (dollars in thousands)
Foreign currency forward contracts – Gross notional amount |  | $ | 229,131 |  |  | $ | 192,877 |

The Company’s foreign exchange derivative contracts are not designated as hedges for accounting purposes and changes in the fair value of these contracts during the period are recognized in the condensed consolidated statements of income. The total realized and unrealized gains (losses) on foreign exchange derivative contracts recorded within the condensed consolidated statements of income are as follows:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
| (dollars in thousands)
Foreign currency forward contracts not designated in accounting hedge relationship – General and administrative (expenses)/income |  | $ | 2,560 |  |  | $ | 2,198 |  |  | $ | 6,911 |  |  | $ | 1,038 |
Foreign currency call option contract not designated in accounting hedge relationship – Other income/(loss) (1) |  | $ | — |  |  | $ | 618 |  |  | $ | — |  |  | $ | 618 |

(1) On June 1, 2023, the Company 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. On August 25, 2023, the Company unwound the out-of-the-money foreign currency call option and received $1.1 million.
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Financial Instruments Not Measured at Fair Value
The Company’s financial instruments not measured at fair value on the condensed consolidated statements of financial condition as of June 30, 2024 and December 31, 2023 have been categorized based upon the fair value hierarchy as follows:

|  | Carrying Value |  | Quoted Prices in active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Fair Value
As of June 30, 2024 |  | (dollars in thousands)
Assets |  |  |  |  |  |  |  |  |  |
Cash and restricted cash |  | $ | 156,415 |  |  | $ | 156,415 |  |  | $ | — |  |  | $ | — |  |  | $ | 156,415 |
Receivable from brokers and dealers and clearing organizations |  | 432,037 |  |  | — |  |  | 432,037 |  |  | — |  |  | 432,037 |
Deposits with clearing organizations |  | 62,694 |  |  | 62,694 |  |  | — |  |  | — |  |  | 62,694 |
Accounts receivable |  | 233,084 |  |  | — |  |  | 233,084 |  |  | — |  |  | 233,084 |
Other assets – Memberships in clearing organizations |  | 2,907 |  |  | — |  |  | — |  |  | 2,907 |  |  | 2,907 |
Total |  | $ | 887,137 |  |  | $ | 219,109 |  |  | $ | 665,121 |  |  | $ | 2,907 |  |  | $ | 887,137 |
Liabilities |  |  |  |  |  |  |  |  |  |
Securities sold under agreements to repurchase |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Payable to brokers and dealers and clearing organizations |  | 424,751 |  |  | — |  |  | 424,751 |  |  | — |  |  | 424,751 |
Total |  | $ | 424,751 |  |  | $ | — |  |  | $ | 424,751 |  |  | $ | — |  |  | $ | 424,751 |
As of December 31, 2023 |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Cash and restricted cash |  | $ | 163,824 |  |  | $ | 163,824 |  |  | $ | — |  |  | $ | — |  |  | $ | 163,824 |
Receivable from brokers and dealers and clearing organizations |  | 381,178 |  |  | — |  |  | 381,178 |  |  | — |  |  | 381,178 |
Deposits with clearing organizations |  | 36,806 |  |  | 36,806 |  |  | — |  |  | — |  |  | 36,806 |
Accounts receivable |  | 168,407 |  |  | — |  |  | 168,407 |  |  | — |  |  | 168,407 |
Other assets – Memberships in clearing organizations |  | 2,426 |  |  | — |  |  | — |  |  | 2,426 |  |  | 2,426 |
Total |  | $ | 752,641 |  |  | $ | 200,630 |  |  | $ | 549,585 |  |  | $ | 2,426 |  |  | $ | 752,641 |
Liabilities |  |  |  |  |  |  |  |  |  |
Securities sold under agreements to repurchase(1) |  | $ | 21,612 |  |  | $ | — |  |  | $ | 21,612 |  |  | $ | — |  |  | $ | 21,612 |
Payable to brokers and dealers and clearing organizations |  | 351,864 |  |  | — |  |  | 351,864 |  |  | — |  |  | 351,864 |
Total |  | $ | 373,476 |  |  | $ | — |  |  | $ | 373,476 |  |  | $ | — |  |  | $ | 373,476 |

(1)As of December 31, 2023, Treasury securities with a fair value of $21.6 million collateralized the securities sold under agreements to repurchase liability. The liability amounts presented represent the gross liability and are not offset on the condensed consolidated statements of financial condition. The securities sold under agreements to repurchase liability were subsequently settled on January 2, 2024.
The carrying value of financial instruments not measured at fair value classified within level 1 or level 2 of the fair value hierarchy approximates fair value because of the relatively short term nature of the underlying assets or liabilities. The memberships in clearing organizations, which are included in other assets on the condensed consolidated statements of financial condition, are classified within level 3 of the fair value hierarchy because the valuation requires assumptions that are both significant and unobservable.
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Non-recurring Fair Value Measurements
The Company measures certain assets and liabilities, such as assets acquired in a business combination, at fair value as of the acquisition date. See Note 4 – Acquisitions for further details regarding these non-recurring fair value measurements.
Financial Instruments Without Readily Determinable Fair Values
Included in other assets on the condensed consolidated statements of financial condition are equity investments without readily determinable fair values of $10.5 million and $8.9 million as of June 30, 2024 and December 31, 2023, respectively. These equity investments are subject to general contractual sale restrictions that prohibit the transfer or sale of the investment without prior consent of the investee.
12. 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. To 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.
In the normal course of business the Company, as agent, executes transactions with, and on behalf of, other brokers and dealers. If the agency transactions do not settle because of failure to perform by either counterparty, the Company will recognize a receivable from (and a matching payable to) brokers and dealers and clearing organizations for the proceeds from the unsettled transaction, until the failed transaction settles. The Company may be obligated to discharge the obligation of the non-performing party and, as a result, may incur a loss if the market value of the security is different from the contract amount of the transaction. However, from time to time, the Company enters into repurchase and/or reverse repurchase agreements to facilitate the clearance of securities relating to fails to deliver or receive. The Company seeks to manage credit exposure related to these agreements to repurchase (or reverse repurchase), including the risk related to a decline in market value of collateral (pledged or received), by entering into agreements to repurchase with overnight or short-term maturity dates and only entering into repurchase transactions with netting members of the Fixed Income Clearing Corporation (“FICC”). The FICC operates a continuous net settlement system, whereby as trades are submitted and compared, the FICC becomes the counterparty.
Historically the Company has used ICBC, a wholly-owned subsidiary of the Industrial and Commercial Bank of China Limited, to clear U.S. Treasury trades executed by non-FICC members on the Company’s wholesale trading platform. Under that arrangement, ICBC submitted the Company’s trades from non-FICC members to the FICC under the ICBC netting account with the FICC. Following the November 2023 ransomware attack on some ICBC operating systems, including those used to clear U.S. Treasury and repurchase agreement financings, the Company has and may continue to self-clear these U.S. Treasury trades. As a result, this increased the number of trades that settle over the fed wire, instead of FICC clearing, and accordingly the Company has experienced and may continue to experience, an increase in the number of U.S. Treasury failed settlement transactions. As of June 30, 2024, the Company recorded a $432.0 million receivable and a $424.8 million payable from/to brokers and dealers and clearing organizations related to failed settlement transactions and the Company self-funded the remaining $7.3 million difference between the fail to deliver and fail to receive. All of the above failed settlement transactions outstanding as of June 30, 2024 were fully settled during July 2024.
Additionally, in the normal course of business, the Company, as an introducing broker, executes transactions on behalf of or with customers of the Company, which are cleared by a clearing broker. As between the Company and the clearing broker, the Company is responsible for losses that may result from the clearing broker’s rejection, reversal or cancellation of a transaction. If there are temporary errors or delays in the processing or settlement of transactions, the clearing broker may require, usually with two business days notice, that the Company provide cash deposits until the errors are resolved.
A substantial number of the Company’s transactions are collateralized and executed with, and on behalf of, a limited number of broker-dealers. The Company’s exposure to credit risk associated with the nonperformance of these clients in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets which may impair the clients’ ability to satisfy their obligations to the Company.
The Company does not expect nonperformance by counterparties in the above situations. However, the Company’s policy is to monitor its market exposure and counterparty risk. In addition, the Company has a policy of reviewing, as considered necessary, the credit standing of each counterparty with which it conducts business.
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Allowance for Credit Losses
The Company may be exposed to credit risk regarding its receivables, which are primarily receivables from financial institutions, including investment managers and broker-dealers. The Company maintains an allowance for credit losses based upon an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of the Company’s counterparties is also performed.
Account balances are pooled based on the following risk characteristics:
1.Geographic location
2.Transaction fee type (billing type)
3.Legal entity
An allowance for credit losses is also recognized for any credit impairment for available-for-sale debt securities.
Write-Offs
Once determined uncollectible, aged balances are written off against the allowance for credit losses. This determination is based on careful analysis of individual receivables and aging schedules, which are disaggregated based on the risk characteristics described above. Based on current policy, this generally occurs when the receivable is 360 days past due.
As of June 30, 2024 and December 31, 2023, the Company maintained an allowance for credit losses with regard to its receivables of $0.2 million and $0.3 million, respectively. For the three months ended June 30, 2024, recoveries resulted in a reversal of credit loss expenses totaling $79,000, and, for the three months ended June 30, 2023, credit loss expense was $21,000. For the six months ended June 30, 2024, recoveries resulted in a reversal of credit loss expenses totaling $71,000, and, for the six months ended June 30, 2023, credit loss expense was $47,000.
13. Commitments and Contingencies
From time to time, the Company is subject to various claims, lawsuits and other legal proceedings, including reviews, investigations and proceedings by governmental and self-regulatory agencies regarding its business. While the ultimate resolution of these matters cannot presently be determined, the Company does not believe that, taking into account any applicable insurance coverage, any of the pending legal proceedings, including the matters set forth below, could reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.
In the normal course of business, the Company enters into agreements with its customers which provide the customers with indemnification rights, including in the event that the electronic marketplaces of the Company infringe upon the intellectual property or other proprietary right of a third party. The Company’s exposure under these agreements is unknown as this would involve estimating future claims against the Company which have not yet occurred. However, based on its experience, the Company expects the risk of a material loss to be remote.
The Company has been named as a defendant, along with other financial institutions, in two consolidated antitrust class actions relating to trading practices in United States Treasury securities auctions. The cases were dismissed in March 2021, with the Court granting the Plaintiffs leave to further amend the complaint by no later than May 14, 2021. The plaintiffs filed an amended complaint on or about May 14, 2021, and the Company moved to dismiss the amended complaint on June 14, 2021. By order dated March 31, 2022, the Court granted the Company’s motion and dismissed all of the claims against it in the amended complaint. The Court also denied the plaintiffs’ request for leave to file a further amended complaint. On April 28, 2022, the Plaintiffs filed a Notice of Appeal of the decision and filed their opening brief on the appeal in the United States Court of Appeals for the Second Circuit on August 18, 2022. 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. Oral 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. All deadlines for any further avenues of appeal have expired and the Company considers the matter closed.
Additionally, the Company was dismissed from a cla ss action relating to an interest rate swaps matter in 2017, but that matter continues against the remaining defendant financial institutions.
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The Company records its best estimate of a loss, including estimated defense costs, when the loss is considered probable and the amount of such loss can be reasonably estimated. Based on its experience, the Company believes that the amount of damages claimed in a legal proceeding is not a meaningful indicator of the potential liability. At this time, the Company cannot reasonably predict the timing or outcomes of, or estimate the amount of loss, or range of loss, if any, related to its pending legal proceedings, including the matters described above, and therefore does not have any contingency reserves established for any of these matters.
Revolving Credit Facility
On November 21, 2023, the Company entered into a five year, $500.0 million unsecured revolving credit facility (the “2023 Revolving Credit Facility”) with a syndicate of banks, which replaced its $500.0 million secured credit facility entered into on April 8, 2019 (the “2019 Revolving Credit Facility”). The 2019 Revolving Credit Facility was scheduled to mature in April 2024, but was terminated on November 21, 2023 in conjunction with entering into the 2023 Revolving Credit Facility. There were no outstanding borrowings under the 2019 Revolving Credit Facility at the time of termination and no penalties were due or owing and no penalties were required to be paid as a result of the termination.
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. Subject to the satisfaction of certain conditions, the Company is 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. 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. On November 21, 2023, the closing date, the $0.5 million letters of credit outstanding under the 2019 Revolving Credit Facility were rolled over under the 2023 Revolving Credit Facility. The 2023 Revolving Credit Facility will mature on November 21, 2028.
Borrowings under the 2023 Revolving Credit Facility bear interest at a rate equal to, at the Company’s option, either (a) a base rate equal to the greatest of (i) the administrative agent’s prime rate, (ii) the federal funds effective rate plus ½ of 1.00% and (iii) one month Term SOFR plus 1.00% plus a credit adjustment spread of 0.10%, in each case plus a margin based on the Company’s consolidated net leverage ratio ranging from 0.25% to 0.75%, or (b) a rate equal to (i) in the case of borrowings in US Dollars, Term SOFR plus a credit adjustment spread of 0.10%, subject to a 0.00% floor, (ii) in the case of borrowings in Sterling, SONIA subject to a 0.00% floor, and (iii) in the case of borrowings in Euros, EURIBOR, subject to a 0.00% floor, in each case plus a margin based on the Company’s consolidated net leverage ratio ranging from 1.25% to 1.75%. The agreement that governs the 2023 Revolving Credit Facility also includes a commitment fee of 0.25% for available but unborrowed amounts and other administrative fees that are payable quarterly. Financial covenant requirements include maintaining minimum ratios related to interest coverage and leverage.
As of both June 30, 2024 and December 31, 2023, there were $0.5 million in letters of credit issued under the 2023 Revolving Credit Facility and no borrowings outstanding.
Leases
The Company has operating leases for corporate offices and data centers with initial lease terms ranging from one to 10 years. The following table presents the future minimum lease payments and the maturity of lease liabilities as of June 30, 2024:

|  | Amount
|  | (dollars in thousands)
Remainder of 2024 |  | $ | 7,114 |
2025 |  | 7,628 |
2026 |  | 6,574 |
2027 |  | 6,133 |
2028 |  | 1,694 |
Thereafter |  | 1,539 |
Total future lease payments |  | 30,682 |
Less imputed interest |  | (2,577) |
Lease liability |  | $ | 28,105 |

The lease payments above exclude $159.2 million of future minimum lease payments for a lease signed but not yet commenced as of June 30, 2024. This lease, for the Company’s New York City corporate office, is expected to commence in mid-2025 and has an expected initial lease term of approximately 16 years.
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14. Earnings Per Share
The following table summarizes the calculations of basic and diluted earnings per share of Class A and Class B common stock for Tradeweb Markets Inc.:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands, except per share amounts)
Numerator: |  |  |  |  |  |  |  |
Net income attributable to Tradeweb Markets Inc. |  | $ | 119,239 |  |  | $ | 89,082 |  |  | $ | 245,381 |  |  | $ | 176,938 |
Less: Distributed and undistributed earnings allocated to unvested RSUs and unsettled vested PRSUs (1) |  | (70) |  |  | (102) |  |  | (164) |  |  | (225) |
Net income attributable to outstanding shares of Class A and Class B common stock - Basic and Diluted |  | $ | 119,169 |  |  | $ | 88,980 |  |  | $ | 245,217 |  |  | $ | 176,713 |
Denominator: |  |  |  |  |  |  |  |
Weighted average shares of Class A and Class B common stock outstanding - Basic |  | 213,162,158 |  |  | 211,569,728 |  |  | 212,936,015 |  |  | 209,847,153 |
Dilutive effect of PRSUs |  | 568,304 |  |  | 350,713 |  |  | 534,583 |  |  | 318,638 |
Dilutive effect of options |  | 449,252 |  |  | 1,143,376 |  |  | 524,413 |  |  | 1,306,297 |
Dilutive effect of RSUs |  | 252,498 |  |  | 92,936 |  |  | 348,282 |  |  | 187,726 |
Dilutive effect of PSUs |  | 463,735 |  |  | — |  |  | 435,049 |  |  | — |
Weighted average shares of Class A and Class B common stock outstanding - Diluted |  | 214,895,947 |  |  | 213,156,753 |  |  | 214,778,342 |  |  | 211,659,814 |
Earnings per share - Basic |  | $ | 0.56 |  |  | $ | 0.42 |  |  | $ | 1.15 |  |  | $ | 0.84 |
Earnings per share - Diluted |  | $ | 0.55 |  |  | $ | 0.42 |  |  | $ | 1.14 |  |  | $ | 0.83 |

(1)During the three months ended June 30, 2024 and 2023, there was a total of 125,012 and 241,963 and during the six months ended June 30, 2024 and 2023, there was a total of 142,484 and 266,790, respectively, weighted average unvested RSUs and unsettled vested PRSUs that were considered a participating security for purposes of calculating earnings per share in accordance with the two-class method.
LLC Interests held by Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for shares of Class A or Class B common stock, as applicable, of Tradeweb Markets Inc. The potential dilutive effect of LLC Interests are evaluated under the if-converted method. The potential dilutive effect of PRSUs, shares underlying options, RSUs and PSUs are evaluated under the treasury stock method.
The following table summarizes the PRSUs, shares underlying options, RSUs, PSUs and weighted-average LLC Interests that were anti-dilutive for the periods indicated. As a result, these shares, which were outstanding, were excluded from the computation of diluted earnings per share for the periods indicated:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Anti-dilutive Shares: |  |  |  |  |  |  |  |
PRSUs |  | — |  |  | — |  |  | — |  |  | — |
Options |  | — |  |  | — |  |  | — |  |  | — |
RSUs |  | 964 |  |  | 113,873 |  |  | 964 |  |  | 113,873 |
PSUs |  | — |  |  | — |  |  | — |  |  | — |
LLC Interests |  | 23,077,698 |  |  | 23,153,250 |  |  | 23,077,836 |  |  | 24,738,197 |

Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share and are not participating securities for purposes of the computation of diluted earnings per share.
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15. Regulatory Capital Requirements
TWL, DW and TWD are subject to the Uniform Net Capital Rule 15c3-1 under the Exchange Act. TEL and TESL are subject to certain financial resource requirements with the FCA in the UK, TWJ is subject to certain financial resource requirements with the FCA in Japan, TWEU and TESBV are subject to certain finance resource requirements with the AFM in the Netherlands, YB is subject to certain financial resource requirements with ASIC in Australia and TDIFC is subject to certain financial resource requirements with DFSA in the Dubai International Financial Centre. At June 30, 2024 and December 31, 2023, the regulatory capital requirements and regulatory capital for these entities are as follows:

|  | June 30, 2024 |  | December 31, 2023
|  | Regulatory Capital |  | Regulatory Capital Requirement |  | Excess Regulatory Capital |  | Regulatory Capital |  | Regulatory Capital Requirement |  | Excess Regulatory Capital
|  | (dollars in thousands)
TWL |  | $ | 72,913 |  |  | $ | 2,348 |  |  | $ | 70,565 |  |  | $ | 50,243 |  |  | $ | 2,856 |  |  | $ | 47,387 |
DW |  | 181,397 |  |  | 2,814 |  |  | 178,583 |  |  | 156,318 |  |  | 3,579 |  |  | 152,739 |
TWD |  | 54,267 |  |  | 752 |  |  | 53,515 |  |  | 46,976 |  |  | 850 |  |  | 46,126 |
TEL |  | 84,326 |  |  | 39,195 |  |  | 45,131 |  |  | 78,127 |  |  | 37,907 |  |  | 40,220 |
TWJ |  | 5,478 |  |  | 2,440 |  |  | 3,038 |  |  | 6,963 |  |  | 2,029 |  |  | 4,934 |
TWEU |  | 14,731 |  |  | 6,532 |  |  | 8,199 |  |  | 11,912 |  |  | 5,447 |  |  | 6,465 |
TESL |  | 5,792 |  |  | 948 |  |  | 4,844 |  |  | 1,813 |  |  | 955 |  |  | 858 |
TESBV |  | 1,636 |  |  | 818 |  |  | 818 |  |  | 1,683 |  |  | 843 |  |  | 840 |
YB |  | 6,382 |  |  | — |  |  | 6,382 |  |  | 5,261 |  |  | 1,070 |  |  | 4,191 |
TDIFC |  | 182 |  |  | 30 |  |  | 152 |  |  | 250 |  |  | 39 |  |  | 211 |

As SEFs, TW SEF and DW SEF are required to maintain adequate financial resources and liquid financial assets in accordance with CFTC regulations. The required and maintained financial resources and liquid financial assets at June 30, 2024 and December 31, 2023 are as follows:

|  | June 30, 2024 |  | December 31, 2023
|  | Financial Resources |  | Required Financial Resources |  | Excess Financial Resources |  | Financial Resources |  | Required Financial Resources |  | Excess Financial Resources
|  | (dollars in thousands)
TW SEF |  | $ | 67,467 |  |  | $ | 13,500 |  |  | $ | 53,967 |  |  | $ | 43,286 |  |  | $ | 12,500 |  |  | $ | 30,786 |
DW SEF |  | 14,432 |  |  | 8,827 |  |  | 5,605 |  |  | 13,309 |  |  | 8,669 |  |  | 4,640 |

|  | June 30, 2024 |  | December 31, 2023
|  | Liquid Financial Assets |  | Required Liquid Financial Assets |  | Excess Liquid Financial Assets |  | Liquid Financial Assets |  | Required Liquid Financial Assets |  | Excess Liquid Financial Assets
|  | (dollars in thousands)
TW SEF |  | $ | 42,556 |  |  | $ | 3,375 |  |  | $ | 39,181 |  |  | $ | 22,068 |  |  | $ | 3,125 |  |  | $ | 18,943 |
DW SEF |  | 8,213 |  |  | 2,207 |  |  | 6,006 |  |  | 7,935 |  |  | 2,167 |  |  | 5,768 |

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16. Business Segment and Geographic Information
The Company operates electronic marketplaces for the trading of products across the rates, credit, equities and money markets asset classes and provides related pre-trade and post-trade services. The Company’s operations constitute a single business segment because of the integrated nature of these marketplaces and services.
Information regarding revenue by client sector is as follows:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands)
Revenues |  |  |  |  |  |  |  |
Institutional |  | $ | 245,581 |  |  | $ | 183,828 |  |  | $ | 492,918 |  |  | $ | 382,680 |
Wholesale |  | 94,272 |  |  | 73,329 |  |  | 191,483 |  |  | 149,429 |
Retail |  | 35,871 |  |  | 30,680 |  |  | 71,040 |  |  | 62,543 |
Market Data |  | 29,227 |  |  | 22,776 |  |  | 58,249 |  |  | 45,210 |
Total revenue |  | 404,951 |  |  | 310,613 |  |  | 813,690 |  |  | 639,862 |
Operating expenses |  | 242,457 |  |  | 194,278 |  |  | 483,518 |  |  | 400,961 |
Operating income |  | $ | 162,494 |  |  | $ | 116,335 |  |  | $ | 330,172 |  |  | $ | 238,901 |

The Company operates in the U.S. and internationally, primarily in the Europe, Asia and Australia regions. Revenues are attributed to geographic area based on the jurisdiction where the underlying transactions take place. The results by geographic region are not meaningful in understanding the Company’s business. Long-lived assets are attributed to the geographic area based on the location of the particular subsidiary.
The following table provides revenue by geographic area:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands)
Revenues |  |  |  |  |  |  |  |
U.S. |  | $ | 252,144 |  |  | $ | 200,919 |  |  | $ | 506,242 |  |  | $ | 409,621 |
International |  | 152,807 |  |  | 109,694 |  |  | 307,448 |  |  | 230,241 |
Total revenue |  | $ | 404,951 |  |  | $ | 310,613 |  |  | $ | 813,690 |  |  | $ | 639,862 |

The following table provides information on the attribution of long-lived assets by geographic area:

|  | June 30, |  | December 31,
|  | 2024 |  | 2023
|  | (dollars in thousands)
Long-lived assets |  |  |  |
U.S. |  | $ | 4,043,795 |  |  | $ | 3,990,070 |
International |  | 27,570 |  |  | 20,348 |
Total |  | $ | 4,071,365 |  |  | $ | 4,010,418 |

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17. Subsequent Events
On July 25, 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 third quarter of 2024. This dividend will be payable on September 16, 2024 to stockholders of record as of September 3, 2024.
On July 25, 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 $89.8 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of September 3, 2024, payable on September 12, 2024.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10‑Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results described in or implied by the forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10‑Q and the section titled “Item 1A. Risk Factors” in Part I of the 2023 Form 10-K.
Overview
We are a leader in building and operating electronic marketplaces for our global network of clients across the financial ecosystem. Our network is comprised of clients across the institutional, wholesale and retail client sectors, including many of the largest 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. 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. We believe our proprietary technology and culture of collaborative innovation allow us to adapt our offerings to enter new markets, create new platforms and solutions and adjust to regulations quickly and efficiently. We support our clients by providing solutions across the trade lifecycle, including pre-trade, execution, post-trade and data.
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 clients trust the integrity of our markets and recognize the value they get by trading electronically: enhanced transparency, competitive pricing, efficient trade execution and regulatory compliance.
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. In 2011, we acquired the brokerage assets of Rafferty Capital Markets and in June 2021, we acquired Nasdaq’s U.S. fixed income electronic trading platform (formerly known as eSpeed) (the “NFI Acquisition”). Today, Dealerweb actively competes across a range of rates, credit, money markets, derivatives and equity markets.
In our retail client sector, we provide advanced trading solutions for financial advisory firms and traders with our Tradeweb Direct platform. We entered the retail sector in 2006 and launched our Tradeweb Direct platform following the 2013 acquisition of BondDesk Group LLC, which was built to bring innovation and efficiency to the wealth management community. Tradeweb Direct has provided financial advisory firms access to live offerings, accurate pricing in the marketplace and fast execution.
Our markets are large and growing. Electronic trading continues to increase across the markets in which we operate as a result of market demand for greater transparency, higher execution quality, operational efficiency and lower costs, as well as regulatory changes. We believe our deep client relationships, asset class breadth, geographic reach, regulatory knowledge and scalable technology position us to continue to be at the forefront of the evolution of electronic trading. Our platforms provide transparent, efficient, cost-effective and compliant trading solutions across multiple products, regions and regulatory regimes. As market participants seek to trade across multiple asset classes, reduce their costs of trading and increase the effectiveness of their trading, including through the use of data and analytics, we believe the demand for our platforms and electronic trading solutions will continue to grow.
Trends and Other Factors Impacting Our Performance
Acquisitions
From time to time, we may evaluate potential acquisitions and engage in discussions and negotiations regarding potential acquisitions. Our revenues and profitability are affected by our acquisition activity, including the speed and cost at which we successfully integrate completed acquisitions into our existing business operations.
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r8fin
On January 19, 2024, we completed our acquisition of r8fin in exchange for total consideration of $125.9 million, consisting of $89.2 million in cash paid at closing (net of cash acquired) and the issuance of 374,601 shares of Class A common stock of the Corporation valued as of the closing date at $36.7 million
r8fin provides a suite of algorithmic-based tools as well as a thin-client execution management system (EMS) trading application to facilitate futures and cash trades. The solutions complement Tradeweb’s existing Dealerweb Active Streams, Dealerweb Central Limit Order Book (CLOB), Tradeweb Request-for-Quote (RFQ) and Tradeweb AiEX (Automated Intelligent Execution) offerings, creating a valuable and broad-based approach to trading U.S. Treasuries and related futures trading. The r8fin acquisition is not material to our consolidated financial statements and did not have a significant impact to our results of operations for the three and six months ended June 30, 2024. See Note 4 – Acquisitions to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details.
ICD
On April 5, 2024, we entered into a definitive agreement for TWM LLC to acquire the Institutional Cash Distributors business (“ICD”) by purchasing all of the outstanding equity interests of each of ICD Intermediate Holdco 1, LLC, SCIC - ICD Blocker 1, Inc. and Parthenon Investors V ICD Blocker, Inc. Pursuant to the terms of the purchase agreement, TWM LLC is required to pay $785 million in cash, subject to customary working capital and other adjustments, for the acquisition. In connection with the acquisition closing, the Corporation will also issue and sell $4.5 million of shares of its Class A common stock in reliance on Section 4(a)(2) of the Securities Act, to an equityholder of the seller, which such shares of Class A common stock will be issued and sold as restricted stock, subject to vesting and forfeiture terms, pursuant to the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan. The acquisition is expected to close in the third quarter of 2024, subject to the satisfaction of customary closing conditions and regulatory reviews.
ICD is an institutional investment technology provider for corporate treasury organizations trading short-term investments. ICD’s flagship products include ICD Portal and ICD Portfolio Analytics. The portal is a one-stop shop to research, trade, analyze and report on investments across more than 40 available investment providers primarily offering money market funds and access to other short term products including deposits, fixed term funds and separately managed accounts (“SMAs”). Portfolio Analytics is an AI-driven cloud solution for aggregating positions across a corporate treasury’s entire portfolio for analysis and reporting. With the acquisition of ICD and its proprietary technology, we will add a new and fast-growing client channel serving corporate treasury professionals, complementing our existing focus on institutional, wholesale and retail clients.
As part of Tradeweb, ICD will provide a comprehensive solution for corporate treasurers and asset managers worldwide to manage short-term liquidity needs and FX risk, as well as optimize yield and duration via our existing suite of products. ICD clients will retain the ability to fully integrate their workflows with leading third-party treasury management and accounting systems and ICD’s portfolio analytics solution. In addition to opportunities to cross-sell our products to ICD’s clients, we will aim to accelerate ICD’s growth and expansion by leveraging our international presence and offering money market funds to our existing network of clients globally.
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Organizational Changes
On June 20, 2024, we announced organizational changes to optimize operations for continued growth. As part of those organizational changes, Amy Clack will join the Company in August 2024 as Chief Administrative Officer and a member of the Executive Committee, overseeing operations, business integration, risk and corporate services. In addition, Thomas Pluta, President of the Company, will leave the Company and the Board of Directors, effective September 30, 2024.
During the three months ended June 30, 2024, we incurred $2.9 million in incremental compensation expense related to a cash severance payment to be paid to Mr. Pluta in accordance with the Company’s Executive Severance Policy with respect to Mr. Pluta’s departure in September 2024. As of June 17, 2024, there was also approximately $4.4 million in total unamortized stock-based compensation associated with equity awards previously granted to Mr. Pluta that will be accelerated and amortized into expense over a revised estimated service period ending on September 30, 2024. Of this amount, $1.7 million represents regularly scheduled amortization that would have been recognized from June 17, 2024 through September 30, 2024 if Mr. Pluta’s employment was not terminated and $2.7 million represents accelerated stock-based compensation expense that will be excluded from our non-GAAP measures of Adjusted EBITDA and Adjusted Net Income when it is recorded as expense. See “—Non-GAAP Financial Measures” below for further details. During the three months ended June 30, 2024, we incurred a total of $0.3 million in accelerated stock-based compensation expense relating to Mr. Pluta’s departure, with the remaining $2.4 million to be recorded during the three months ending September 30, 2024.
Economic Environment
Our business is impacted by the overall market activity and, in particular, trading volumes and market volatility. Lower volatility may result in lower trading volume for our clients and may negatively impact our operating performance and financial condition. Factors that may impact market activity during the remainder of 2024 include, among other things, evolving monetary policies of central banks, economic, political and social conditions, legislative, regulatory or government policy changes and concerns with respect to the banking industry, including as a result of any bank failures.
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. We believe any effects of inflation on our results of operations and financial condition have not been significant during any of the periods presented in this Quarterly Report on Form 10-Q. To the extent inflation, along with other factors, continue to result in rising interest rates and have other adverse effects on the securities markets and the overall economy, they may adversely affect our results of operations and financial condition.
While our business is impacted by the overall activity of the market and market volatility, our revenues consist of a mix of fixed and variable fees that partially mitigates this impact. More importantly, we are actively engaged in the further electronification of trading activities, which will help mitigate this impact as we believe secular growth trends can partially offset market volatility risk.
Regulatory Environment
Our business is subject to extensive regulations in the United States and internationally, which may expose us to significant regulatory risk and cause additional legal costs to ensure compliance. The existing legal framework that governs the financial markets is periodically reviewed and amended, resulting in enforcement of new laws and regulations that apply to our business. The current regulatory environment in the United States and abroad may be subject to future legislative and regulatory changes driven by U.S. and global issues and priorities. The impact of any changes in the legal or regulatory landscape on us and our operations remains uncertain. Compliance with regulations may require us to dedicate additional financial and operational resources, which may adversely affect our profitability. In addition, compliance with regulations may require our clients to dedicate significant financial and operational resources, which may negatively affect their ability to pay our fees and use our platforms and, as a result, our profitability. However, under certain circumstances regulation may increase demand for our platforms and solutions, and we believe we are well positioned to benefit from any potential increased electronification due to regulatory changes as market participants seek platforms that meet regulatory requirements and solutions that help them comply with their regulatory obligations.
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Competitive Environment
We and our competitors compete to introduce innovations in market structure and new electronic trading capabilities. While we endeavor to be a leader in innovation, new trading capabilities of our competitors are also adopted by market participants. On the one hand, this increases liquidity and electronification for all participants, but it also puts pressure on us to further invest in our technology and to innovate to ensure the continued growth of our network of clients and continued improvement of liquidity, electronic processing and pricing on our platforms. Our ability to compete is influenced by key factors such as (i) developments in trading platforms and solutions, (ii) the liquidity we provide on transactions, (iii) the transaction costs we incur in providing our solutions, (iv) the efficiency in execution of transactions on our platforms, (v) our ability to hire and retain talent and (vi) our ability to maintain the security of our platforms and solutions. Our competitive position is also influenced by the familiarity and integration of our clients with our electronic, voice and hybrid systems. When either a client wants to trade in a new product or we want to introduce a new product, trading protocol or other solution, we believe we benefit from our clients’ familiarity with our offerings as well as our integration into their order management systems and back offices.
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. Offering specialized trading venues and solutions through the development of new and enhanced platforms is essential to maintaining our level of competitiveness in the market and attracting new clients seeking platforms that provide advanced automation and better liquidity. We believe we will continue to increase demand for our platforms and solutions and the volume of transactions on our platforms, and thereby enhance our client relationships, by responding to new trading and information requirements through utilizing technological advances and emerging industry standards and practices in an effective and efficient way. We plan to continue to focus on and invest in technology infrastructure initiatives and continually improve and expand our platforms and solutions to further enhance our market position.
We experience cyber-threats and attempted security breaches. If these were successful, these cybersecurity incidents could impact revenue and operating income and increase costs. We therefore continue to make investments to strengthen our cybersecurity infrastructure, which may result in increased costs.
Foreign Currency Exchange Rate Environment
We earn revenues, pay expenses, hold assets and incur liabilities in currencies other than the U.S. dollar. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations from period to period. In particular, fluctuations in exchange rates for non-U.S. dollar currencies may reduce the U.S. dollar value of revenues, earnings and cash flows we receive from non-U.S. markets, increase our operating expenses (as measured in U.S. dollars) in those markets, negatively impact our competitiveness in those markets or otherwise adversely impact our results of operations or financial condition. Future fluctuations of foreign currency exchange rates and their impact on our results of operations and financial condition are inherently uncertain. As we continue to grow the size of our global operations, these fluctuations may be material. See Part I, Item 3. “Quantitative and Qualitative Disclosures About Market Risk — Foreign Currency and Derivative Risk” elsewhere in this Quarterly Report on Form 10-Q.
Taxation
In connection with the Reorganization Transactions, we became the sole manager of TWM LLC. As a result, beginning with the second quarter of 2019, we became subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of TWM LLC and are taxed at prevailing corporate tax rates. Our actual effective tax rate is impacted by our ownership share of TWM LLC, which has increased over time primarily due to Continuing LLC Owners redeeming or exchanging their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, and our purchase of LLC Interests from Continuing LLC Owners. Furthermore, in connection with the IPO, we entered into the Tax Receivable Agreement pursuant to which we began to make payments in January 2021, and we expect future payments to be significant. We intend to continue to cause TWM LLC to make distributions in an amount sufficient to allow us to pay our tax obligations, operating expenses, including payments under the Tax Receivable Agreement, and our quarterly cash dividends, as and when declared by our board of directors.
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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. The 1% excise tax did not have an impact to our financial condition, results of operations and cash flows as of and for the three and six months ended June 30, 2024. The Company is subject to the 15% CAMT, however, it is not expected to have a material impact on the Company’s effective tax rate. The adoption of the IRA will also not have an impact to our non-GAAP adjusted effective tax rate used for purposes of calculating our non-GAAP measure of Adjusted Net Income.
On October 8, 2021, the Organization for Economic Cooperation and Development announced an accord endorsing and providing an implementation plan focused on global profit allocation, and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as the “Two Pillar Plan.” On December 15, 2022, the European Council formally adopted a European Union directive on the implementation of the plan which became effective for the Company beginning on January 1, 2024. The Company falls under the provisions of the Two Pillar Plan and related tax impacts per local country adoption as it is a consolidating subsidiary of LSEG. The Company does not anticipate a material impact to its financial condition, results of operations and cash flows from the Two Pillar Plan.
Components of our Results of Operations
Revenues
Our revenue is derived primarily from transaction fees, commissions, subscription fees and market data fees.
Transaction Fees and Commissions
We earn transaction fees from transactions executed on our trading platforms through various fee plans. Transaction fees are generated on both a variable and fixed price basis and vary by geographic region, product type and trade size. 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 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. 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. In addition, because transaction fees are sometimes subject to fee plans with tiered pricing based on product mix, volume, monthly minimums and monthly maximum fee caps, average transaction fees per million generated for a client may vary each month depending on the mix of products and volume traded. Furthermore, because transaction fees vary by geographic region, product type and trade size, our revenues may not correlate with volume growth.
We earn commission revenue from our electronic and voice brokerage services on a riskless principal basis. Riskless principal revenues are derived on matched principal transactions where revenues are earned on the spread between the buy and sell price of the transacted product. For TBA-MBS, U.S. Treasury and repurchase agreement transactions executed by our wholesale clients, we also generate revenue from fixed commissions that are generally invoiced monthly.
Subscription Fees
We earn subscription fees primarily for granting clients access to our markets for trading and market data. For a limited number of products, we only charge subscription fees and no transaction fees or commissions. Subscription fees are generally generated on a fixed price basis.
For purposes of our discussion of our results of operations, we include LSEG market data fees in subscription fees. We earn fixed license fees from our market data license agreement with LSEG. We also earn a revenue share for certain data services which are provided to LSEG and then sold by LSEG to its customers. Our revenue share revenues may fluctuate from period to period depending on the revenue achieved by LSEG during the applicable fee earning period.
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Operating Expenses
Employee Compensation and Benefits
Employee compensation and benefits expense consists of wages, employee benefits, bonuses, commissions, stock-based compensation cost and related taxes. Factors that influence employee compensation and benefits expense include revenue and earnings growth, hiring or acquiring 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.
Depreciation and Amortization
Depreciation and amortization expense consists of costs relating to the depreciation and amortization of acquired and internally developed software, other intangible assets, leasehold improvements, furniture and equipment.
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. We expect general and administrative expense to increase as we expand the number of our employees and product offerings and grow our operations.
Technology and Communications
Technology and communications expense consists of costs relating to software and hardware maintenance, our internal network connections, data center costs, clearance and other trading platform related transaction costs and data feeds provided by third-party service providers, including LSEG. 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.
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. We expect occupancy expense to increase as our space needs grow inline with our global expansion.
Tax Receivable Agreement Liability Adjustment
The tax receivable agreement liability adjustment reflects changes in the tax receivable agreement liability recorded in our condensed 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. There was no tax receivable agreement liability adjustment during each of the three and six months ended June 30, 2024 and 2023.
Interest Income
Interest income consists of interest earned from our cash deposited with large commercial banks and money market funds.
Interest Expense
Interest expense consists primarily of any interest expense incurred or payable on our tax receivable agreement liability, commitment fees payable on, and, if applicable, interest payable on any borrowings outstanding under our credit facility and amortization of deferred financing costs.
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Other Income (Loss), Net
Other income (loss), net consists of any income or loss earned from investments, any mark-to-market adjustments or impairments recorded on investments, unrealized and realized gain/loss on foreign exchange derivative contracts entered into for foreign exchange risk management purposes relating to investing activities and any other non-operating items.
Income Taxes
We are subject to U.S. federal, state and local income taxes with respect to our taxable income, including our allocable share of any taxable income of TWM LLC, and are taxed at prevailing corporate tax rates. 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. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes.
Net Income Attributable to Non-Controlling Interests
We are the sole manager of TWM LLC. As a result of this control, and because we have a substantial financial interest in TWM LLC, we consolidate the financial results of TWM LLC and report a non-controlling interest in our condensed consolidated financial statements, representing the economic interests of TWM LLC held by Continuing LLC Owners. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by us and any Continuing LLC Owners.
In connection with the Reorganization Transactions, the TWM LLC Agreement was amended and restated to, among other things, (i) provide for LLC Interests and (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests. LLC Interests held by Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for newly issued shares of Class A common stock or Class B common stock, as the case may be, on a one-for-one basis. In the event of such election by a Continuing LLC Owner, we may, at our option, effect a direct exchange of Class A common stock or Class B common stock for such LLC Interests of such Continuing LLC Owner in lieu of such redemption. In connection with any redemption or exchange, we will receive a corresponding number of LLC Interests, increasing our total ownership interest in TWM LLC. Following the completion of the Reorganization Transactions and the IPO, we owned 64.3% of TWM LLC and Continuing LLC Owners owned the remaining 35.7% of TWM LLC. As of June 30, 2024, we owned 90.2% of TWM LLC and Continuing LLC Owners owned the remaining 9.8% of TWM LLC.
Results of Operations
For the Three Months Ended June 30, 2024 and Three Months Ended June 30, 2023
The following table sets forth a summary of our statements of income for the three months ended June 30, 2024 and 2023:

|  | Three Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Total revenue |  | $ | 404,951 |  |  | $ | 310,613 |  |  | $ | 94,338 |  |  | 30.4 | %
Total expenses |  | 242,457 |  |  | 194,278 |  |  | 48,179 |  |  | 24.8 | %
Operating income |  | 162,494 |  |  | 116,335 |  |  | 46,159 |  |  | 39.7 | %
Interest income |  | 21,511 |  |  | 15,576 |  |  | 5,935 |  |  | 38.1 | %
Interest expense |  | (542) |  |  | (467) |  |  | (75) |  |  | 16.1 | %
Other income (loss), net |  | — |  |  | (456) |  |  | 456 |  |  | N/M
Income before taxes |  | 183,463 |  |  | 130,988 |  |  | 52,475 |  |  | 40.1 | %
Provision for income taxes |  | (47,047) |  |  | (29,049) |  |  | (17,998) |  |  | 62.0 | %
Net income |  | 136,416 |  |  | 101,939 |  |  | 34,477 |  |  | 33.8 | %
Less: Net income attributable to non-controlling interests |  | 17,177 |  |  | 12,857 |  |  | 4,320 |  |  | 33.6 | %
Net income attributable to Tradeweb Markets Inc. |  | $ | 119,239 |  |  | $ | 89,082 |  |  | $ | 30,157 |  |  | 33.9 | %

N/M = not meaningful
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Revenues
Our revenues for the three months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Three Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  |  |  |
|  | $ |  | % of Total Revenue |  | $ |  | % of Total Revenue |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Transaction fees and commissions |  | $ | 330,475 |  |  | 81.6 | % |  | $ | 246,461 |  |  | 79.3 | % |  | $ | 84,014 |  |  | 34.1 | %
Subscription fees (1) |  | 71,327 |  |  | 17.6 |  |  | 61,209 |  |  | 19.7 |  |  | 10,118 |  |  | 16.5 | %
Other |  | 3,149 |  |  | 0.8 |  |  | 2,943 |  |  | 0.9 |  |  | 206 |  |  | 7.0 | %
Total revenue |  | $ | 404,951 |  |  | 100.0 | % |  | $ | 310,613 |  |  | 100.0 | % |  | $ | 94,338 |  |  | 30.4 | %
Components of total revenue growth: |  |  |  |  |  |  |  |  |  |
Constant currency change (2) |  |  |  |  |  |  |  |  |  |  |  | 30.8 | %
Foreign currency impact |  |  |  |  |  |  |  |  |  |  |  | (0.4) | %
Total revenue growth |  |  |  |  |  |  |  |  |  |  |  | 30.4 | %

(1)Subscription fees for the three months ended June 30, 2024 and 2023 include $20.6 million and $15.5 million respectively, of LSEG market data fees (formerly referred to as Refinitiv market data fees).
(2)Constant currency revenue change, which is a non-GAAP financial measure, is defined as total revenue change excluding the effects of foreign currency fluctuations. Total revenue excluding the effects of foreign currency fluctuations is calculated by translating the current period and prior period’s total revenue using the annual average exchange rates for the prior period. We use constant currency change as a supplemental metric to evaluate our underlying total revenue performance between periods by removing the impact of foreign currency fluctuations. We believe that providing constant currency change provides a useful comparison of our total revenue performance and trends between periods.
Our diversified offering across products, client sectors and geographies supported sustained growth amidst a continuingly complex macroeconomic backdrop. This environment included ongoing geopolitical uncertainty, increased market volatility and fluctuating interest rates. Despite these challenges, we saw strong volumes and continued market share gains across our global asset classes. The primary driver of the $94.3 million increase in revenue was related to an $84.0 million increase in transaction fees and commissions to $330.5 million for the three months ended June 30, 2024 from $246.5 million for the three months ended June 30, 2023, primarily due to higher revenues for rate derivatives products, U.S. and European corporate bonds and U.S., European and other government bonds.
Our total revenue by asset class for the three months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Three Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Revenues |  |  |  |  |  |  |  |
Rates |  | $ | 217,531 |  |  | $ | 160,354 |  |  | $ | 57,177 |  |  | 35.7 | %
Credit |  | 111,324 |  |  | 84,048 |  |  | 27,276 |  |  | 32.5 | %
Equities |  | 22,871 |  |  | 22,146 |  |  | 725 |  |  | 3.3 | %
Money Markets |  | 18,045 |  |  | 15,834 |  |  | 2,211 |  |  | 14.0 | %
Market Data |  | 29,227 |  |  | 22,776 |  |  | 6,451 |  |  | 28.3 | %
Other |  | 5,953 |  |  | 5,455 |  |  | 498 |  |  | 9.1 | %
Total revenue |  | $ | 404,951 |  |  | $ | 310,613 |  |  | $ | 94,338 |  |  | 30.4 | %

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Our variable and fixed revenues by asset class for the three months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Three Months Ended |  |  |  |  |  |  |  |
|  | June 30, |  |  |  |  |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | Variable |  | Fixed |  | Variable |  | Fixed |  | Variable |  | Fixed |  | Variable |  | Fixed
|  | (dollars in thousands) |  |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rates |  | $ | 157,636 |  |  | $ | 59,895 |  |  | $ | 101,588 |  |  | $ | 58,766 |  |  | $ | 56,048 |  |  | $ | 1,129 |  |  | 55.2 | % |  | 1.9 | %
Credit |  | 102,785 |  |  | 8,539 |  |  | 77,334 |  |  | 6,714 |  |  | 25,451 |  |  | 1,825 |  |  | 32.9 | % |  | 27.2 | %
Equities |  | 20,602 |  |  | 2,269 |  |  | 19,866 |  |  | 2,280 |  |  | 736 |  |  | (11) |  |  | 3.7 | % |  | (0.5) | %
Money Markets |  | 13,695 |  |  | 4,350 |  |  | 11,535 |  |  | 4,299 |  |  | 2,160 |  |  | 51 |  |  | 18.7 | % |  | 1.2 | %
Market Data |  | 132 |  |  | 29,095 |  |  | 45 |  |  | 22,731 |  |  | 87 |  |  | 6,364 |  |  | 193.3 | % |  | 28.0 | %
Other |  | — |  |  | 5,953 |  |  | — |  |  | 5,455 |  |  | — |  |  | 498 |  |  | — |  |  | 9.1 | %
Total revenue |  | $ | 294,850 |  |  | $ | 110,101 |  |  | $ | 210,368 |  |  | $ | 100,245 |  |  | $ | 84,482 |  |  | $ | 9,856 |  |  | 40.2 | % |  | 9.8 | %

A significant percentage of our transaction fees and commissions are tied directly to overall trading volumes in the rates, credit, equities and money markets asset classes. The average daily volumes and total volumes on our trading platforms by asset class for the three months ended June 30, 2024 and 2023, and the resulting percentage changes, are summarized as follows:

|  | Three Months Ended |  |
|  | June 30, |  |
|  | 2024 |  | 2023 |  | ADV
|  | ADV |  | Volume |  | ADV |  | Volume |  | % Change
|  | (dollars in millions) |  |
Rates |  | $ | 1,249,467 |  |  | $ | 78,673,598 |  |  | $ | 773,959 |  |  | $ | 48,261,459 |  |  | 61.4 | %
Rates Cash |  | 462,335 |  |  | 29,121,086 |  |  | 344,674 |  |  | 21,627,623 |  |  | 34.1 | %
Rates Derivatives |  | 787,132 |  |  | 49,552,512 |  |  | 429,285 |  |  | 26,633,837 |  |  | 83.4 | %
Swaps / Swaptions Tenor (greater than 1 year) |  | 466,923 |  |  | 29,396,323 |  |  | 273,533 |  |  | 16,961,570 |  |  | 70.7 | %
Other Rates Derivatives (1) |  | 320,209 |  |  | 20,156,189 |  |  | 155,752 |  |  | 9,672,267 |  |  | 105.6 | %
Credit |  | 29,707 |  |  | 1,857,527 |  |  | 18,989 |  |  | 1,183,071 |  |  | 56.5 | %
Cash Credit (2) |  | 10,208 |  |  | 643,080 |  |  | 6,895 |  |  | 430,359 |  |  | 48.0 | %
Credit Derivatives, China Bonds and U.S. Cash EP |  | 19,499 |  |  | 1,214,448 |  |  | 12,093 |  |  | 752,712 |  |  | 61.2 | %
Equities |  | 21,255 |  |  | 1,339,066 |  |  | 19,356 |  |  | 1,196,755 |  |  | 9.8 | %
Equities Cash |  | 9,937 |  |  | 626,031 |  |  | 9,913 |  |  | 612,227 |  |  | 0.2 | %
Equities Derivatives |  | 11,318 |  |  | 713,035 |  |  | 9,444 |  |  | 584,528 |  |  | 19.9 | %
Money Markets |  | 621,840 |  |  | 39,173,818 |  |  | 484,304 |  |  | 30,339,263 |  |  | 28.4 | %
Total (4) |  | $ | 1,922,270 |  |  | $ | 121,044,010 |  |  | $ | 1,296,607 |  |  | $ | 80,980,548 |  |  | 48.3 | %
Total excluding Other Rates Derivatives (3) |  | $ | 1,602,061 |  |  | $ | 100,887,821 |  |  | $ | 1,140,855 |  |  | $ | 71,308,281 |  |  | 40.4 | %

(1)Includes Swaps/Swaptions of tenor less than 1 year and Rates Futures.
(2)The “Cash Credit” category represents the “Credit” asset class excluding (1) Credit Derivatives (2) China Bonds and (3) U.S. High Grade and High Yield electronically processed (“EP”) activity.
(3)Included to contextualize the impact of short-tenored Swaps/Swaptions and Rates Futures on totals for all periods presented.
(4)We acquired Yieldbroker on August 31, 2023 and acquired r8fin on January 19, 2024. Total volume reported includes volumes from each acquired business subsequent to the closing date of the applicable acquisition.
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The average variable fees per million dollars of volume traded on our trading platforms by asset class for the three months ended June 30, 2024 and 2023 are summarized below. There are four potential drivers of quarterly fluctuations in our average variable fees per million: (1) the mix and duration of cash and derivatives products traded, (2) the mix of protocols underpinning cash and derivatives products, (3) volume discounts and (4) clients moving between fixed and variable pricing structures. Average variable fees per million should be reviewed in conjunction with our trading volumes and total revenue by asset class. Since variable fees are sometimes subject to fee plans with tiered pricing based on product mix and volume, average variable fees per million for a specific asset class may not correlate with volumes or revenue growth.

|  | Three Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
Rates |  | $ | 2.00 |  |  | $ | 2.10 |  |  | $ | (0.10) |  |  | (4.8) | %
Rates Cash |  | $ | 2.54 |  |  | $ | 2.44 |  |  | $ | 0.10 |  |  | 4.1 | %
Rates Derivatives |  | $ | 1.69 |  |  | $ | 1.83 |  |  | $ | (0.14) |  |  | (7.9) | %
Rates Derivatives (greater than 1 year) |  | $ | 2.71 |  |  | $ | 2.75 |  |  | $ | (0.04) |  |  | (1.5) | %
Other Rates Derivatives (1) |  | $ | 0.20 |  |  | $ | 0.23 |  |  | $ | (0.03) |  |  | (11.5) | %
Credit |  | $ | 55.33 |  |  | $ | 65.37 |  |  | $ | (10.04) |  |  | (15.4) | %
Cash Credit (2) |  | $ | 145.18 |  |  | $ | 164.93 |  |  | $ | (19.75) |  |  | (12.0) | %
Credit Derivatives, China Bonds and U.S. Cash EP |  | $ | 7.76 |  |  | $ | 8.52 |  |  | $ | (0.76) |  |  | (8.9) | %
Equities |  | $ | 15.39 |  |  | $ | 16.60 |  |  | $ | (1.21) |  |  | (7.3) | %
Equities Cash |  | $ | 26.51 |  |  | $ | 26.59 |  |  | $ | (0.08) |  |  | (0.3) | %
Equities Derivatives |  | $ | 5.62 |  |  | $ | 6.14 |  |  | $ | (0.52) |  |  | (8.4) | %
Money Markets |  | $ | 0.35 |  |  | $ | 0.38 |  |  | $ | (0.03) |  |  | (8.1) | %
Total |  | $ | 2.43 |  |  | $ | 2.60 |  |  | $ | (0.17) |  |  | (6.3) | %
Total excluding Other Rates Derivatives (3) |  | $ | 2.88 |  |  | $ | 2.92 |  |  | $ | (0.04) |  |  | (1.3) | %

(1)Includes Swaps/Swaptions of tenor less than 1 year and Rates Futures.
(2)The “Cash Credit” category represents the “Credit” asset class excluding (1) Credit Derivatives (2) China Bonds and (3) U.S. High Grade and High Yield electronically processed (“EP”) activity.
(3)Included to contextualize the impact of short-tenored Swaps/Swaptions and Rates Futures on blended fees per million across all periods presented.
The key drivers of the change in total revenue, volumes and variable fees per million by asset class are summarized as follows:
Rates. Revenues from our rates asset class increased by $57.2 million or 35.7% to $217.5 million for the three months ended June 30, 2024 compared to $160.4 million for the three months ended June 30, 2023 primarily due to higher variable transaction fees and commissions on higher trading volumes for rates derivatives products and U.S., European and other government bonds.
Average variable fees per million for rates decreased primarily due to a decrease in average variable fees per million for rates derivatives driven primarily by an increase in compression activity and shifts in the mix and duration of derivative products traded as compared to the prior period. This decrease was partially offset by an increase in average variable fees per million for rates cash products primarily due to an increase in European and Australian government bonds fees per million, which each have a higher variable fee capture compared to overall rates.
Credit. Revenues from our credit asset class increased by $27.3 million or 32.5% to $111.3 million for the three months ended June 30, 2024 compared to $84.0 million for the three months ended June 30, 2023 primarily due to higher variable transaction fees and commissions on higher trading volumes for U.S. and European corporate bonds and an increase in fixed subscription fees. The fixed subscription fee increase was primarily driven by the addition of dealers joining the subscription pricing plan, subscription price increases and the implementation of fee minimums to certain subscription plans.
Average variable fees per million for credit decreased primarily due to a shift in the mix and methods of products traded from cash credit products and electronically processed U.S. corporate bonds to derivatives products, which have a lower variable fee capture compared to overall credit.
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Equities. Revenues from our equities asset class remained relatively flat at $22.9 million for the three months ended June 30, 2024, an increase of $0.7 million or 3.3% from $22.1 million for the three months ended June 30, 2023.
Average variable fees per million for equities decreased primarily due to a shift in the mix of products traded, including higher volumes in equity derivatives, which have a lower variable fee capture compared to overall equities.
Money Markets. Revenues from our money markets asset class increased by $2.2 million or 14.0% to $18.0 million for the three months ended June 30, 2024 compared to $15.8 million for the three months ended June 30, 2023 primarily due to higher variable transaction fees and commissions for repurchase agreements.
Average variable fees per million for money markets decreased primarily due to a shift in the mix of trading away from U.S. certificates of deposit, which have a higher variable fee capture compared to overall money markets.
Market Data. Revenues from our market data asset class increased by $6.5 million or 28.3% to $29.2 million for the three months ended June 30, 2024 compared to $22.8 million for the three months ended June 30, 2023. The increase was derived primarily from increased LSEG market data fees from our market data agreement that was amended effective November 1, 2023 and proprietary third party market data revenue.
Other. Revenues from our other asset class was relatively flat with an increase of $0.5 million or 9.1% to $6.0 million for the three months ended June 30, 2024 compared to $5.5 million for the three months ended June 30, 2023.
We generate revenue from a diverse portfolio of client sectors. Our total revenue by client sector for the three months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Three Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Revenues |  |  |  |  |  |  |  |
Institutional |  | $ | 245,581 |  |  | $ | 183,828 |  |  | $ | 61,753 |  |  | 33.6 | %
Wholesale |  | 94,272 |  |  | 73,329 |  |  | 20,943 |  |  | 28.6 | %
Retail |  | 35,871 |  |  | 30,680 |  |  | 5,191 |  |  | 16.9 | %
Market Data |  | 29,227 |  |  | 22,776 |  |  | 6,451 |  |  | 28.3 | %
Total revenue |  | $ | 404,951 |  |  | $ | 310,613 |  |  | $ | 94,338 |  |  | 30.4 | %

Institutional. Revenues from our institutional client sector increased by $61.8 million or 33.6% to $245.6 million for the three months ended June 30, 2024 from $183.8 million for the three months ended June 30, 2023. The increase was derived primarily from higher revenues for rates derivatives products, U.S. corporate bonds and U.S., European and other government bonds.
Wholesale. Revenues from our wholesale client sector increased by $20.9 million or 28.6% to $94.3 million for the three months ended June 30, 2024 from $73.3 million for the three months ended June 30, 2023. The increase was derived primarily from higher revenues for U.S. government bonds, including positive contributions from the r8fin acquisition, as well as higher revenues for U.S. and European corporate bonds and mortgages.
Retail. Revenues from our retail client sector increased by $5.2 million or 16.9% to $35.9 million for the three months ended June 30, 2024 from $30.7 million for the three months ended June 30, 2023. The increase was derived primarily from higher revenues for municipals and U.S. corporate bonds.
Market Data. Revenues from our market data client sector increased by $6.5 million or 28.3% to $29.2 million for the three months ended June 30, 2024 from $22.8 million for the three months ended June 30, 2023. The increase was derived primarily from increased LSEG market data fees from our market data agreement that was amended effective November 1, 2023 and proprietary third party market data revenue.
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Our revenues and client base are also diversified by geography. Our total revenue by geography (based on client location) for the three months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Three Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Revenues |  |  |  |  |  |  |  |
U.S. |  | $ | 252,144 |  |  | $ | 200,919 |  |  | $ | 51,225 |  |  | 25.5 | %
International |  | 152,807 |  |  | 109,694 |  |  | 43,113 |  |  | 39.3 | %
Total revenue |  | $ | 404,951 |  |  | $ | 310,613 |  |  | $ | 94,338 |  |  | 30.4 | %

U.S. Revenues from U.S. clients increased by $51.2 million or 25.5% to $252.1 million for the three months ended June 30, 2024 from $200.9 million for the three months ended June 30, 2023 primarily due to higher revenues for U.S. corporate bonds, U.S. government bonds, rates derivatives products and market data.
International. Revenues from International clients increased by $43.1 million or 39.3% to $152.8 million for the three months ended June 30, 2024 from $109.7 million for the three months ended June 30, 2023 primarily due to higher revenues for rates derivatives products, European corporate bonds, market data and European and other government bonds.
Operating Expenses
Our expenses for the three months ended June 30, 2024 and 2023 were as follows:

|  | Three Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Employee compensation and benefits |  | $ | 137,236 |  |  | $ | 103,924 |  |  | $ | 33,312 |  |  | 32.1 | %
Depreciation and amortization |  | 49,936 |  |  | 45,887 |  |  | 4,049 |  |  | 8.8 | %
Technology and communications |  | 24,230 |  |  | 18,701 |  |  | 5,529 |  |  | 29.6 | %
General and administrative |  | 12,755 |  |  | 11,072 |  |  | 1,683 |  |  | 15.2 | %
Professional fees |  | 13,324 |  |  | 10,666 |  |  | 2,658 |  |  | 24.9 | %
Occupancy |  | 4,976 |  |  | 4,028 |  |  | 948 |  |  | 23.5 | %
Total expenses |  | $ | 242,457 |  |  | $ | 194,278 |  |  | $ | 48,179 |  |  | 24.8 | %

Employee Compensation and Benefits. Expenses related to employee compensation and benefits increased by $33.3 million or 32.1% to $137.2 million for the three months ended June 30, 2024 from $103.9 million for the three months ended June 30, 2023. The increase was primarily due to an increase in incentive compensation expense tied to our financial performance, as well as an increase in headcount and related salaries and benefits to support our continued growth. As discussed above, the three months ended June 30, 2024 also included $2.9 million in incremental cash compensation expense and $0.3 million in accelerated stock-based compensation expense associated with our departing President. See “—Trends and Other Factors Impacting Our Performance—Organizational Changes,” above for further details.
Depreciation and Amortization. Expenses related to depreciation and amortization increased by $4.0 million or 8.8% to $49.9 million for the three months ended June 30, 2024 from $45.9 million for the three months ended June 30, 2023. The increase was primarily due to increases in amortization of assets acquired in connection with the r8fin and Yieldbroker acquisitions on January 19, 2024 and August 31, 2023, respectively, and an increase in amortization of software development costs driven by increases in investment in our infrastructure.
Technology and Communications. Expenses related to technology and communications increased by $5.5 million or 29.6% to $24.2 million for the three months ended June 30, 2024 from $18.7 million for the three months ended June 30, 2023. The increase was primarily due to increased investment in our data strategy and infrastructure and increased clearance and data fees driven primarily by higher trading volumes period-over-period.
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General and Administrative. Expenses related to general and administrative costs increased by $1.7 million or 15.2% to $12.8 million for the three months ended June 30, 2024 from $11.1 million for the three months ended June 30, 2023. The increase was primarily due to an increase in travel and entertainment costs, partially offset by the result of a $1.0 million increase in foreign exchange gains during the three months ended June 30, 2024. Realized and unrealized foreign currency gains totaled $1.8 million during the three months ended June 30, 2024 as compared to $0.8 million in gains during three months ended June 30, 2023.
Professional Fees. Expenses related to professional fees increased by $2.7 million or 24.9% to $13.3 million for the three months ended June 30, 2024 from $10.7 million for the three months ended June 30, 2023. The increase was primarily due to an increase in professional fees related to acquisitions compared to the prior period.
Occupancy. Expenses related to occupancy costs increased by $0.9 million or 23.5% to $5.0 million for the three months ended June 30, 2024 from $4.0 million for the three months ended June 30, 2023. The increase was primarily due to higher data center and office rent expense associated with our global expansion.
Interest Income
Interest income increased by $5.9 million to $21.5 million for the three months ended June 30, 2024 from $15.6 million for the three months ended June 30, 2023 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.
Interest Expense
Interest expense remained relatively flat at $0.5 million for the three months ended June 30, 2024 and 2023.
Other Income (Loss), Net
There was no other income (loss), net for the three months ended June 30, 2024 compared to a $0.5 million net other loss for the three months ended June 30, 2023, including a $1.1 million loss due to a reduction in the tax indemnification receivables from Refinitiv relating to the settlement of the tax matter for less than the previously estimated amount. See Note 6 – Income Taxes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details. This loss was partially offset by a $0.6 million gain recognized during the three months ended June 30, 2023 from the increase in fair value of the foreign currency call option on Australian dollars entered into, 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 completed in August 2023.
Income Taxes
Income tax expense increased by $18.0 million to $47.0 million for the three months ended June 30, 2024 from $29.0 million for the three months ended June 30, 2023. The provision for income taxes includes U.S. federal, state, local and foreign taxes. The effective tax rate for the three months ended June 30, 2024 was approximately 25.6%, compared with 22.2% for the three months ended June 30, 2023. The effective tax rate for the three months ended June 30, 2024 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign taxes and the disallowance of compensation expense tax deductions, partially offset by the effect of non-controlling interests. The effective tax rate for the three months ended June 30, 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to the disallowance of compensation expense tax deductions and state, local and foreign taxes, partially offset by the effect of non-controlling interests.
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For the Six Months Ended June 30, 2024 and Six Months Ended June 30, 2023
The following table sets forth a summary of our statements of income for the six months ended June 30, 2024 and 2023:

|  | Six Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Total revenue |  | $ | 813,690 |  |  | $ | 639,862 |  |  | $ | 173,828 |  |  | 27.2 | %
Total expenses |  | 483,518 |  |  | 400,961 |  |  | 82,557 |  |  | 20.6 | %
Operating income |  | 330,172 |  |  | 238,901 |  |  | 91,271 |  |  | 38.2 | %
Interest income |  | 42,571 |  |  | 28,516 |  |  | 14,055 |  |  | 49.3 | %
Interest expense |  | (2,260) |  |  | (916) |  |  | (1,344) |  |  | 146.7 | %
Other income (loss), net |  | — |  |  | (115) |  |  | 115 |  |  | N/M
Income before taxes |  | 370,483 |  |  | 266,386 |  |  | 104,097 |  |  | 39.1 | %
Provision for income taxes |  | (90,685) |  |  | (62,254) |  |  | (28,431) |  |  | 45.7 | %
Net income |  | 279,798 |  |  | 204,132 |  |  | 75,666 |  |  | 37.1 | %
Less: Net income attributable to non-controlling interests |  | 34,417 |  |  | 27,194 |  |  | 7,223 |  |  | 26.6 | %
Net income attributable to Tradeweb Markets Inc. |  | $ | 245,381 |  |  | $ | 176,938 |  |  | $ | 68,443 |  |  | 38.7 | %

N/M = not meaningful
Revenues
Our revenues for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Six Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  |  |  |
|  | $ |  | % of Total Revenue |  | $ |  | % of Total Revenue |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Transaction fees and commissions |  | $ | 665,926 |  |  | 81.8 | % |  | $ | 513,059 |  |  | 80.2 | % |  | $ | 152,867 |  |  | 29.8 | %
Subscription fees (1) |  | 141,508 |  |  | 17.4 |  |  | 121,177 |  |  | 18.9 |  |  | 20,331 |  |  | 16.8 | %
Other |  | 6,256 |  |  | 0.8 |  |  | 5,626 |  |  | 0.9 |  |  | 630 |  |  | 11.2 | %
Total revenue |  | $ | 813,690 |  |  | 100.0 | % |  | $ | 639,862 |  |  | 100.0 | % |  | $ | 173,828 |  |  | 27.2 | %
Components of total revenue growth: |  |  |  |  |  |  |  |  |  |
Constant currency change (2) |  |  |  |  |  |  |  |  |  |  |  | 27.2 | %
Foreign currency impact |  |  |  |  |  |  |  |  |  |  |  | — | %
Total revenue growth |  |  |  |  |  |  |  |  |  |  |  | 27.2 | %

(1)Subscription fees for the six months ended June 30, 2024 and 2023 include $41.1 million and $31.1 million respectively, of LSEG market data fees (formerly referred to as Refinitiv market data fees).
(2)Constant currency revenue change, which is a non-GAAP financial measure, is defined as total revenue change excluding the effects of foreign currency fluctuations. Total revenue excluding the effects of foreign currency fluctuations is calculated by translating the current period and prior period’s total revenue using the annual average exchange rates for the prior period. We use constant currency change as a supplemental metric to evaluate our underlying total revenue performance between periods by removing the impact of foreign currency fluctuations. We believe that providing constant currency change provides a useful comparison of our total revenue performance and trends between periods.
The primary driver of the $173.8 million increase in revenue related to a $152.9 million increase in transaction fees and commissions to $665.9 million for the six months ended June 30, 2024 from $513.1 million for the six months ended June 30, 2023, primarily due to higher revenues for rates derivative products, U.S. and European corporate bonds and U.S., European and other government bonds.
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Our total revenue by asset class for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Six Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Revenues |  |  |  |  |  |  |  |
Rates |  | $ | 431,624 |  |  | $ | 330,859 |  |  | $ | 100,765 |  |  | 30.5 | %
Credit |  | 227,163 |  |  | 173,065 |  |  | 54,098 |  |  | 31.3 | %
Equities |  | 49,921 |  |  | 48,349 |  |  | 1,572 |  |  | 3.3 | %
Money Markets |  | 34,836 |  |  | 30,641 |  |  | 4,195 |  |  | 13.7 | %
Market Data |  | 58,249 |  |  | 45,210 |  |  | 13,039 |  |  | 28.8 | %
Other |  | 11,897 |  |  | 11,738 |  |  | 159 |  |  | 1.4 | %
Total revenue |  | $ | 813,690 |  |  | $ | 639,862 |  |  | $ | 173,828 |  |  | 27.2 | %

Our variable and fixed revenues by asset class for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Six Months Ended |  |  |  |  |  |  |  |
|  | June 30, |  |  |  |  |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | Variable |  | Fixed |  | Variable |  | Fixed |  | Variable |  | Fixed |  | Variable |  | Fixed
|  | (dollars in thousands) |  |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rates |  | $ | 311,333 |  |  | $ | 120,291 |  |  | $ | 215,756 |  |  | $ | 115,103 |  |  | $ | 95,577 |  |  | $ | 5,188 |  |  | 44.3 | % |  | 4.5 | %
Credit |  | 210,813 |  |  | 16,350 |  |  | 159,698 |  |  | 13,367 |  |  | 51,115 |  |  | 2,983 |  |  | 32.0 | % |  | 22.3 | %
Equities |  | 45,276 |  |  | 4,645 |  |  | 43,763 |  |  | 4,586 |  |  | 1,513 |  |  | 59 |  |  | 3.5 | % |  | 1.3 | %
Money Markets |  | 26,258 |  |  | 8,578 |  |  | 21,949 |  |  | 8,692 |  |  | 4,309 |  |  | (114) |  |  | 19.6 | % |  | (1.3) | %
Market Data |  | 264 |  |  | 57,985 |  |  | 45 |  |  | 45,165 |  |  | 219 |  |  | 12,820 |  |  | 486.7 | % |  | 28.4 | %
Other |  | — |  |  | 11,897 |  |  | — |  |  | 11,738 |  |  | — |  |  | 159 |  |  | — |  |  | 1.4 | %
Total revenue |  | $ | 593,944 |  |  | $ | 219,746 |  |  | $ | 441,211 |  |  | $ | 198,651 |  |  | $ | 152,733 |  |  | $ | 21,095 |  |  | 34.6 | % |  | 10.6 | %

The key drivers of the change in total revenue by asset class are summarized as follows:
Rates. Revenues from our rates asset class increased by $100.8 million or 30.5% to $431.6 million for the six months ended June 30, 2024 compared to $330.9 million for the six months ended June 30, 2023 primarily due to higher variable transaction fees and commissions on higher trading volumes for rates derivatives products and U.S., European and other government bonds, as well as an increase in fixed subscription fees.
Credit. Revenues from our credit asset class increased by $54.1 million or 31.3% to $227.2 million for the six months ended June 30, 2024 compared to $173.1 million for the six months ended June 30, 2023 primarily due to higher variable transaction fees and commissions on higher trading volumes for U.S. and European corporate bonds and municipals, as well as an increase in fixed subscription fees.
Equities. Revenues from our equities asset class increased by $1.6 million or 3.3% to $49.9 million for the six months ended June 30, 2024 compared to $48.3 million for the six months ended June 30, 2023 primarily due to higher variable transaction fees for European ETFs and equity derivatives products.
Money Markets. Revenues from our money markets asset class increased by $4.2 million or 13.7% to $34.8 million for the six months ended June 30, 2024 compared to $30.6 million for the six months ended June 30, 2023 primarily due to higher variable transaction fees and commissions for repurchase agreements.
Market Data. Revenues from our market data asset class increased by $13.0 million or 28.8% to $58.2 million for the six months ended June 30, 2024 compared to $45.2 million for the six months ended June 30, 2023. The increase was derived primarily from
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increased LSEG market data fees from our market data agreement that was amended effective November 1, 2023 and proprietary third party market data revenue.
Other. Revenues from our other asset class was relatively flat with a increase of $0.2 million or 1.4%, to $11.9 million for the six months ended June 30, 2024 compared to $11.7 million for the six months ended June 30, 2023.
We generate revenue from a diverse portfolio of client sectors. Our total revenue by client sector for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Six Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Revenues |  |  |  |  |  |  |  |
Institutional |  | $ | 492,918 |  |  | $ | 382,680 |  |  | $ | 110,238 |  |  | 28.8 | %
Wholesale |  | 191,483 |  |  | 149,429 |  |  | 42,054 |  |  | 28.1 | %
Retail |  | 71,040 |  |  | 62,543 |  |  | 8,497 |  |  | 13.6 | %
Market Data |  | 58,249 |  |  | 45,210 |  |  | 13,039 |  |  | 28.8 | %
Total revenue |  | $ | 813,690 |  |  | $ | 639,862 |  |  | $ | 173,828 |  |  | 27.2 | %

Institutional. Revenues from our institutional client sector increased by $110.2 million or 28.8% to $492.9 million for the six months ended June 30, 2024 from $382.7 million for the six months ended June 30, 2023. The increase was derived primarily from higher revenues for rates derivatives products, U.S. corporate bonds and U.S., European and other government bonds.
Wholesale. Revenues from our wholesale client sector increased by $42.1 million or 28.1% to $191.5 million for the six months ended June 30, 2024 from $149.4 million for the six months ended June 30, 2023. The increase was derived primarily from higher revenues for U.S. government bonds, including positive contributions from the r8fin acquisition, as well as higher revenues for U.S. and European corporate bonds, rates derivatives products and mortgages.
Retail. Revenues from our retail client sector increased by $8.5 million or 13.6% to $71.0 million for the six months ended June 30, 2024 from $62.5 million for the six months ended June 30, 2023. The increase was derived primarily from higher revenues for U.S. corporate bonds and municipals.
Market Data. Revenues from our market data client sector increased by $13.0 million or 28.8% to $58.2 million for the six months ended June 30, 2024 from $45.2 million for the six months ended June 30, 2023. The increase was derived primarily from increased LSEG market data fees from our market data agreement that was amended effective November 1, 2023 and proprietary third party market data revenue.
Our revenues and client base are also diversified by geography. Our total revenue by geography (based on client location) for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

|  | Six Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Revenues |  |  |  |  |  |  |  |
U.S. |  | $ | 506,242 |  |  | $ | 409,621 |  |  | $ | 96,621 |  |  | 23.6 | %
International |  | 307,448 |  |  | 230,241 |  |  | 77,207 |  |  | 33.5 | %
Total revenue |  | $ | 813,690 |  |  | $ | 639,862 |  |  | $ | 173,828 |  |  | 27.2 | %

U.S. Revenues from U.S. clients increased by $96.6 million or 23.6% to $506.2 million for the six months ended June 30, 2024 from $409.6 million for the six months ended June 30, 2023 primarily due to higher revenues for U.S. corporate bonds, U.S. government bonds, rate derivative products and market data.
International. Revenues from International clients increased by $77.2 million or 33.5% to $307.4 million for the six months ended June 30, 2024 from $230.2 million for the six months ended June 30, 2023 primarily due to higher revenues for rates derivatives products, European corporate bonds, European and other government bonds and market data.
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Operating Expenses
Our expenses for the six months ended June 30, 2024 and 2023 were as follows:

|  | Six Months Ended |  |  |  |
|  | June 30, |  |  |  |
|  | 2024 |  | 2023 |  | $ Change |  | % Change
|  | (dollars in thousands) |  |  |  |
Employee compensation and benefits |  | $ | 280,323 |  |  | $ | 218,417 |  |  | $ | 61,906 |  |  | 28.3 | %
Depreciation and amortization |  | 99,273 |  |  | 91,291 |  |  | 7,982 |  |  | 8.7 | %
Technology and communications |  | 45,540 |  |  | 36,268 |  |  | 9,272 |  |  | 25.6 | %
General and administrative |  | 23,609 |  |  | 24,992 |  |  | (1,383) |  |  | (5.5) | %
Professional fees |  | 25,124 |  |  | 21,842 |  |  | 3,282 |  |  | 15.0 | %
Occupancy |  | 9,649 |  |  | 8,151 |  |  | 1,498 |  |  | 18.4 | %
Total expenses |  | $ | 483,518 |  |  | $ | 400,961 |  |  | $ | 82,557 |  |  | 20.6 | %

Employee Compensation and Benefits. Expenses related to employee compensation and benefits increased by $61.9 million or 28.3% to $280.3 million for the six months ended June 30, 2024 from $218.4 million for the six months ended June 30, 2023. The increase was primarily due to an increase in incentive compensation expense tied to our financial performance, as well as an increase in headcount and related salaries and benefits to support our continued growth.
Depreciation and Amortization. Expenses related to depreciation and amortization increased $8.0 million or 8.7% to $99.3 million for the six months ended June 30, 2024 from $91.3 million for the six months ended June 30, 2023. The increase was primarily due to increases in amortization of assets acquired in connection with the r8fin and Yieldbroker acquisitions on January 19, 2024 and August 31, 2023, respectively, and an increase in amortization of software development costs driven by increases in investment in our infrastructure.
Technology and Communications. Expenses related to technology and communications increased by $9.3 million or 25.6% to $45.5 million for the six months ended June 30, 2024 from $36.3 million for the six months ended June 30, 2023. The increase was primarily due to investment in our data strategy and infrastructure and increased clearance and data fees driven primarily by higher trading volumes period-over-period.
General and Administrative. Expenses related to general and administrative costs decreased by $1.4 million or 5.5% to $23.6 million for the six months ended June 30, 2024 from $25.0 million for the six months ended June 30, 2023. The decrease was primarily due to a $5.7 million increase in foreign exchange gains, partially offset by an increase in travel and entertainment and marketing costs during the six months ended June 30, 2024. Realized and unrealized foreign currency gains totaled $5.0 million during the six months ended June 30, 2024 as compared to $0.7 million in losses during the six months ended June 30, 2023. The change was primarily driven by changes in fair value of our foreign currency forward contracts used in connection with our foreign currency risk management program.
Professional Fees. Expenses related to professional fees increased by $3.3 million or 15.0% to $25.1 million for the six months ended June 30, 2024 from $21.8 million for the six months ended June 30, 2023. The increase was primarily due to increased acquisition costs, partially offset by a decrease in legal costs driven by costs incurred during the first half of 2023 in connection with regulatory compliance matters, including periodic information requests, that did not reoccur at the same rate during 2024.
Occupancy. Expenses related to occupancy costs increased by $1.5 million or 18.4% to $9.6 million for the six months ended June 30, 2024 as compared to $8.2 million for the six months ended June 30, 2023. The increase was primarily due to higher data center and office rent expense associated with our global expansion.
Interest Income
Interest income increased by $14.1 million to $42.6 million for the six months ended June 30, 2024 from $28.5 million for the six months ended June 30, 2023 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.
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Interest Expense
Interest expense increased by $1.3 million to $2.3 million for the six months ended June 30, 2024 from $0.9 million for the six months ended June 30, 2023 primarily due to interest expense incurred on payments due under the Tax Receivable Agreement.
Other Income (Loss), Net
There was no other income (loss), net for the six months ended June 30, 2024. During the six months ended June 30, 2023, we recognized a net other loss of $0.1 million, including a $0.7 million loss due to a net reduction in the tax indemnification receivables from Refinitiv relating to the settlement of the tax matter for less than the previously estimated amount. See Note 6 – Income Taxes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details. This loss was partially offset by a $0.6 million gain recognized during three months ended June 30, 2023 from the increase in fair value of the foreign currency call option on Australian dollars entered into, 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 completed in August 2023.
Income Taxes
Income tax expense increased by $28.4 million to $90.7 million for the six months ended June 30, 2024 from $62.3 million for the six months ended June 30, 2023. The provision for income taxes includes U.S. federal, state, local, and foreign taxes. The effective tax rate for the six months ended June 30, 2024 was approximately 24.5%, compared with 23.4% for the six months ended June 30, 2023. The effective tax rate for the six months ended June 30, 2024 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign taxes and the disallowance of compensation expense tax deductions, partially offset by the effect of non-controlling interests. The effective tax rate for the six months ended June 30, 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to the disallowance of compensation expense tax deductions and state, local and foreign taxes, partially offset by the effect of non-controlling interests.
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 three and six months ended June 30, 2024 and 2023. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future. See “— Trends and Other Factors Impacting Our Performance — Economic Environment” above.
Liquidity and Capital Resources
Overview
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs to meet operating expenses, debt service, acquisitions, other commitments and contractual obligations. We consider liquidity in terms of cash on hand, cash flows from operations and availability under the 2023 Revolving Credit Facility (as defined in “— Factors Influencing Our Liquidity and Capital Resources — Indebtedness” below) 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.
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 and, at closing, to fund the pending acquisition of ICD with cash.
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.
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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, including the pending acquisition of ICD, 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. For example, any future investments, acquisitions, joint ventures or other similar transactions, which we consider from time to time, may reduce our cash balance or require additional capital. In addition, our ability to continue to meet our future liquidity requirements will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to manage costs and working capital successfully, all of which are subject to general economic, financial, competitive and other factors beyond our control. In the event we require any additional capital, it will take the form of equity or debt financing, or both, and there can be no assurance that we will be able to raise any such financing on terms acceptable to us or at all.
As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $1.7 billion and $1.7 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. See Item 3. “Quantitative And Qualitative Disclosures About Market Risks — Credit Risk.”
Factors Influencing Our Liquidity and Capital Resources
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. As discussed below, our ability to pay these quarterly cash dividends on our Class A common stock and Class B common stock will depend on distributions to us from TWM LLC.
The declaration, amount and payment of any dividends will be at the sole discretion of our board of directors and will depend on our and our subsidiaries’ results of operations, capital requirements, financial condition, business prospects, contractual restrictions, restrictions imposed by applicable laws and other factors that our board of directors deem relevant. Because we are a holding company and all of our business is conducted through our subsidiaries, we expect to pay dividends, if any, only from funds we receive from our subsidiaries. Accordingly, our ability to pay dividends to our stockholders is dependent on the earnings and distributions of funds from our subsidiaries. As the sole manager of TWM LLC, we intend to cause, and will rely on, TWM LLC to make distributions in respect of LLC Interests to fund our dividends. If TWM LLC is unable to cause these subsidiaries to make distributions, it may have inadequate funds to distribute to us and we may be unable to fund our dividends. In addition, when TWM LLC makes distributions to us, the other holders of LLC Interests will be entitled to receive proportionate distributions based on their economic interests in TWM LLC at the time of such distributions.
Our board of directors will periodically review the cash generated from our business and the capital expenditures required to finance our growth plans and determine whether to modify the amount of regular dividends and/or declare any periodic special dividends. Any future determination to change the amount of dividends and/or declare special dividends will be at the discretion of our board of directors and will be dependent upon then-existing conditions and other factors that our board of directors considers relevant.
Cash Dividends
On July 25, 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 third quarter of 2024. This dividend will be payable on September 16, 2024 to stockholders of record as of September 3, 2024.
In March and June 2024, Tradeweb Markets Inc. paid quarterly cash dividends to holders of Class A common stock and Class B common stock in an aggregate amount totaling $42.6 million during the six months ended June 30, 2024.
Cash Distributions
On July 25, 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 $89.8 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of September 3, 2024, payable on September 12, 2024.
In March and June 2024, TWM LLC made quarterly cash distributions to its equityholders in an aggregate amount of $164.1 million during the six months ended June 30, 2024, including distributions to Tradeweb Markets Inc. of $148.0 million and distributions to non-controlling interests of $16.1 million. The proceeds of the cash distributions were used by Tradeweb Markets Inc. to fund dividend payments, taxes and expenses.
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Share Repurchase Program
On December 5, 2022, the board of directors authorized a new share repurchase program (the “2022 Share Repurchase Program”), after completing in October 2022, the $150.0 million of total repurchases of the Company’s Class A common stock previously authorized in February 2021 (the “2021 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. 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. 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. The amounts, timing and manner of the repurchases will be subject to general market conditions, the prevailing price and trading volumes of our Class A common stock and other factors. 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. During the six months ended June 30, 2024, the Company did not repurchase any shares pursuant to the 2022 Share Repurchase Program. As of June 30, 2024, a total of $239.8 million remained available for repurchase pursuant to the 2022 Share Repurchase Program.
Other Share Repurchases
In addition to the share repurchase programs discussed above, we may also withhold shares to cover the payroll tax withholding obligations upon the exercise of stock options and vesting of performance-based restricted stock units that vest based on the Company’s financial performance (“PRSUs”), restricted stock units (“RSUs”) and performance-based restricted stock units that vest based on market conditions (“PSUs”).
During the six months ended June 30, 2024, the Company withheld 455,326 shares of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $97.24 and an aggregate value of $44.3 million, based on the price of the Class A common stock on the date the relevant withholding occurred.
Tax Receivable Agreement
We are obligated to make payments under the Tax Receivable Agreement. See Note 7 – Tax Receivable Agreement to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding the requirements for these payments. Although the actual timing and amount of any payments that may be made under the Tax Receivable Agreement will vary, we expect the payments required will be significant. Any payments made by us under the Tax Receivable Agreement will generally reduce the amount of overall cash flows that might have otherwise been available to us or to TWM LLC. These payments will offset some of the tax benefits that we expect to realize as a result of the ownership structure of TWM LLC. To the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us. The first payment of the Tax Receivable Agreement was made in January 2021. As of June 30, 2024, total amounts due to Continuing LLC Owners under the Tax Receivable Agreement were $380.9 million, substantially all due to be paid over 15 years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests. As of June 30, 2024, we expect to make tax receivable agreement liability payments of approximately $7.5 million within the next 12 months and approximately $373.5 million thereafter.
In addition to these amounts 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. We currently expect to fund these future tax receivable agreement liability payments from some of the realized cash tax savings as a result of this increase in tax basis.
Indebtedness
As of June 30, 2024 and December 31, 2023, we had no outstanding indebtedness.
On November 21, 2023, TWM LLC entered into a five year, $500.0 million unsecured revolving credit facility (the “2023 Revolving Credit Facility”) with a syndicate of banks, which replaced its $500.0 million secured credit facility entered into on April 8, 2019 (the “2019 Revolving Credit Facility”). 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 lenders participating in the increase. 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. As of June 30, 2024, there were $0.5 million in letters of credit issued under the 2023 Revolving Credit Facility and no borrowings outstanding. The 2023 Revolving Credit Facility will mature on November 21, 2028.
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The credit agreement that governs the 2023 Revolving Credit Facility contains a number of covenants that, among other things and subject to certain exceptions, restrict the ability of (i) TWM LLC to merge or consolidate with other entities, (ii) the subsidiaries of TWM LLC to incur or guarantee indebtedness and (iii) TWM LLC and its subsidiaries to create or incur liens. As of June 30, 2024, we were in compliance with all the covenants set forth in the 2023 Revolving Credit Facility.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Factors Influencing Our Liquidity and Capital Resources – Indebtedness” in Part II of our 2023 Form 10-K for additional details regarding the terms, restrictions and covenants applicable to the 2023 Revolving Credit Facility.
Operating Lease Obligations
We currently have operating leases for corporate offices and data centers with initial lease terms ranging from one to 10 years. 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 March 2030. In addition, in June 2024, we signed a new lease for our New York headquarters that is expected to commence in mid-2025 and has an expected initial lease term of approximately 16 years.
As of June 30, 2024, our operating lease liabilities totaled $28.1 million, with payments pursuant to these obligations due within the next 12 months and thereafter totaling $11.3 million and $19.4 million, respectively. In addition, we are obligated on long-term future minimum lease payments totaling $159.2 million for a lease signed but not yet commenced as of June 30, 2024.
Capital Expenditures and Acquisitions
Our business also requires continued investment in our technology for product innovation, proprietary technology architecture, operational reliability and cybersecurity. Excluding cash paid at closing for acquisitions, we expect total cash paid for capital expenditures and software development costs for fiscal year 2024 to be between $77 million and $85 million, compared to expenditures of $61.8 million in fiscal year 2023, with the midpoint of our 2024 capital expenditure guidance up 31% versus fiscal year 2023 primarily due to anticipated capitalized integration spend associated with the acquisitions of Yieldbroker, r8fin and ICD. Cash paid for capital expenditures and software development costs during the six months ended June 30, 2024 totaled $33.9 million, excluding cash paid at closing for acquisitions.
In addition, on April 5, 2024, we entered into a definitive agreement for TWM LLC to acquire ICD for $785 million in cash, subject to customary working capital and other adjustments. The acquisition is expected to close in the third quarter of 2024, subject to the satisfaction of customary closing conditions and regulatory reviews and the purchase price is expected to be funded with cash and cash equivalents on hand.
Other Cash and Liquidity Requirements
Certain of our U.S. subsidiaries are registered as broker-dealers, SEFs or introducing brokers and are subject to the applicable rules and regulations of the SEC and CFTC. These rules contain minimum net capital or other financial resource requirements, as defined in the applicable regulations. These rules may also require a significant part of the registrants’ assets be kept in relatively liquid form. Certain of our foreign subsidiaries are regulated by the Financial Conduct Authority in the UK, the Nederlandsche Bank in the Netherlands, the Japanese Financial Services Agency, the Japanese Securities Dealers Association and other foreign regulators, and must maintain financial resources, as defined in the applicable regulations, in excess of the applicable financial resources requirement. As of June 30, 2024 and December 31, 2023, each of our regulated subsidiaries had maintained sufficient net capital or financial resources to at least satisfy their minimum requirements, which in aggregate were $78.2 million and $76.7 million, respectively. We maintain capital balances in these subsidiaries in excess of our minimum requirements in order to satisfy working capital needs and to ensure that we have enough cash on hand to satisfy margin requirements and credit risk, including the excess capital expectations of our clients. The Fixed Income Clearing Corporation (“FICC”) and some of our clearing brokers require us to post collateral on unsettled positions, included within deposits with clearing organizations in our condensed consolidated statements of financial condition. Collateral amounts are marked to market on a daily basis, requiring us to pay or receive margin amounts as part of the daily funds settlement. Margin call requirements can vary significantly across periods based on daily market changes and may represent a significant and unpredictable use of our liquidity.
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At times, transactions executed on our wholesale platform fail to settle due to the inability of a transaction party to deliver or receive the transacted security. Until the failed transaction settles, we will recognize a receivable from (and a matching payable to) brokers and dealers and clearing organizations for the proceeds from the unsettled transaction. The impact on our liquidity and capital resources is minimal as receivables and payables for failed transactions are usually recognized simultaneously and predominantly offset. However, from time to time, we enter into repurchase and/or reverse repurchase agreements to facilitate the clearance of securities relating to fails to deliver or receive. We seek to manage credit exposure related to these agreements to repurchase (or reverse repurchase), including the risk related to a decline in market value of collateral (pledged or received), by entering into agreements to repurchase with overnight or short-term maturity dates and only entering into repurchase transactions with netting members of the FICC. The FICC operates a continuous net settlement system, whereby as trades are submitted and compared, the FICC becomes the counterparty.
Historically we have used ICBC, a wholly-owned subsidiary of the Industrial and Commercial Bank of China Limited, to clear U.S. Treasury trades executed by non-FICC members on our wholesale trading platform. Under that arrangement, ICBC submitted our trades from non-FICC members to the FICC under the ICBC netting account with the FICC. Following the November 2023 ransomware attack on some ICBC operating systems, including those used to clear U.S. Treasury and repurchase agreement financings, we have and may continue to self-clear these U.S. Treasury trades. As a result, this increased the number of trades that settle over the fed wire, instead of FICC clearing, and accordingly we have experienced and may continue to experience, an increase in the number of U.S. Treasury failed settlement transactions. As of June 30, 2024, we recorded a $432.0 million receivable and a $424.8 million payable from/to brokers and dealers and clearing organizations related to failed settlement transactions and we self-funded the remaining $7.3 million difference between the fail to deliver and fail to receive. All of the above failed settlement transactions outstanding as of June 30, 2024 were fully settled during July 2024. See below for further details regarding the changes to working capital as a result of these failed settlement transactions.
Working Capital
Working capital is defined as current assets minus current liabilities. 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. 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. Changes in working capital, which impact our cash flows provided by operating activities, can vary depending on factors such as delays in the collection of receivables, changes in our operating performance, changes in trading patterns, changes in client billing terms and other changes in the demand for our platforms and solutions.
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Our working capital as of June 30, 2024 and December 31, 2023 was as follows:

|  | June 30, |  | December 31,
|  | 2024 |  | 2023
|  | (dollars in thousands)
Cash and cash equivalents |  | $ | 1,718,230 |  |  | $ | 1,706,468 |
Restricted cash |  | 1,000 |  |  | 1,000 |
Receivable from brokers and dealers and clearing organizations |  | 432,037 |  |  | 381,178 |
Deposits with clearing organizations |  | 62,694 |  |  | 36,806 |
Accounts receivable |  | 233,084 |  |  | 168,407 |
Receivable and due from affiliates |  | 2,980 |  |  | 192 |
Total current assets |  | 2,450,025 |  |  | 2,294,051 |
Securities sold under agreements to repurchase |  | — |  |  | 21,612 |
Payable to brokers and dealers and clearing organizations |  | 424,751 |  |  | 351,864 |
Accrued compensation |  | 119,270 |  |  | 164,329 |
Deferred revenue |  | 28,174 |  |  | 25,746 |
Payable and due to affiliates |  | — |  |  | 1,327 |
Current portion of: |  |  |  |
Accounts payable, accrued expenses and other liabilities |  | 76,524 |  |  | 56,878 |
Lease liabilities |  | 10,174 |  |  | 11,347 |
Tax receivable agreement liability |  | 7,475 |  |  | 26,804 |
Total current liabilities |  | 666,368 |  |  | 659,907 |
Total working capital |  | $ | 1,783,657 |  |  | $ | 1,634,144 |

Current Assets
Current assets increased to $2.5 billion as of June 30, 2024 from $2.3 billion as of December 31, 2023 primarily due to an increase in accounts receivable resulting from an increase in revenues and timing of collections, an increase in receivables from brokers and dealers and clearing organizations resulting from a higher value of fails to deliver, all of which settled in July 2024, and an increase in deposits with clearing organizations. The increase in brokers and dealers and clearing organizations and deposits with clearing organizations were both primarily the result of increased unsettled wholesale platforms transactions due to the timing of the settlement of Treasury auctions. See “—Cash Flows” below for a discussion of the remaining decline in cash and cash equivalents.
Current Liabilities
Current liabilities increased to $666.4 million as of June 30, 2024 from $659.9 million as of December 31, 2023 primarily due to an increase in payable to brokers and dealers and clearing organizations resulting from a higher value of fails to receive, all of which settled in July 2024. The increase in fails was the result of increased unsettled wholesale platforms transactions, due to the timing of the settlement of Treasury auctions. This increase was partially offset by a decrease in accrued compensation as a result of annual bonus payments, which occurred during the six months ended June 30, 2024.
See “—Other Cash and Liquidity Requirements” above for a discussion on how capital requirements can impact our working capital.
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Cash Flows
Our cash flows for the six months ended June 30, 2024 and 2023 were as follows:

|  | Six Months Ended
|  | June 30,
|  | 2024 |  | 2023
|  | (dollars in thousands)
Net cash provided by operating activities |  | $ | 323,584 |  |  | $ | 283,939 |
Net cash used in investing activities |  | (134,704) |  |  | (34,060) |
Net cash used in financing activities |  | (174,880) |  |  | (113,296) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |  | (2,238) |  |  | 2,589 |
Net increase (decrease) in cash, cash equivalents and restricted cash |  | $ | 11,762 |  |  | $ | 139,172 |

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 from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for accrued compensation (primarily in the first quarter) and other items impact reported cash flows.
Net cash provided by operating activities for the six months ended June 30, 2024 was $323.6 million, an increase of $39.6 million over the six months ended June 30, 2023, primarily driven by an increase in net income partially offset by an increase in cash paid for income taxes and cash used to fund deposits with clearing organizations and other net changes in working capital.
Investing Activities
Investing activities consist primarily of software development costs, investments in technology hardware, purchases of equipment and other tangible assets, business acquisitions and investments.
Net cash used in investing activities was $134.7 million for the six months ended June 30, 2024, which consisted of $89.2 million of total net cash paid for the r8fin Acquisition (net of cash acquired), $22.5 million of capitalized software development costs, $11.6 million of cash paid for investments and $11.4 million of purchases of furniture, equipment, purchased software and leasehold improvements. Net cash used in investing activities was $34.1 million for the six months ended June 30, 2023, which consisted of $20.5 million of capitalized software development costs, $11.2 million of purchases of furniture, equipment, purchased software and leasehold improvements and $2.4 million of cash paid for a foreign currency call option.
Financing Activities
Net cash used in financing activities for the six months ended June 30, 2024 was $174.9 million, and was primarily driven by $39.6 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from the related stock-based compensation option exercises, $76.6 million in payments due under our Tax Receivable Agreement and $42.6 million in cash dividends to our Class A and Class B common stockholders. Net cash used in financing activities for the six months ended June 30, 2023 was $113.3 million, and was primarily driven by $34.2 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from the related stock-based compensation option exercises, $30.1 million in share repurchases pursuant to the 2022 Share Repurchase Program and $37.8 million in cash dividends to our Class A and Class B common stockholders.
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. Free Cash Flow is defined as cash flow from operating activities less non-acquisition related expenditures for capitalized software development costs and furniture, equipment and leasehold improvements.
We present Free Cash Flow because we believe it is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our core operations after non-acquisition related expenditures for capitalized software development costs and furniture, equipment and leasehold improvements.
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Free Cash Flow has limitations as an analytical tool, and you should not consider Free Cash Flow in isolation or as an alternative to cash flow from operating activities or any other liquidity measure determined in accordance with GAAP. You are encouraged to evaluate each adjustment. In addition, in evaluating Free Cash Flow, you should be aware that in the future, we may incur expenditures similar to the adjustments in the presentation of Free Cash Flow. In addition, Free Cash Flow may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
The table set forth below presents a reconciliation of our cash flow from operating activities to Free Cash Flow for the six months ended June 30, 2024 and 2023:

|  | Six Months Ended
|  | June 30,
|  | 2024 |  | 2023
|  | (dollars in thousands)
Cash flow from operating activities |  | $ | 323,584 |  |  | $ | 283,939 |
Less: Capitalization of software development costs |  | (22,478) |  |  | (20,505) |
Less: Purchases of furniture, equipment and leasehold improvements |  | (11,417) |  |  | (11,166) |
Free Cash Flow |  | $ | 289,689 |  |  | $ | 252,268 |

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.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin
Adjusted EBITDA is defined as net income before interest income, interest 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.
Adjusted EBIT is defined as net income before interest income, interest 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.
Net income margin is defined as net income, divided by revenue for the applicable period. Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period.
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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. For example, we exclude non-cash stock-based compensation expense associated with the Special Option Award as defined in Note 2 – Significant Accounting Policies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and post-IPO options awarded in 2019 to management and other employees as well as payroll taxes associated with exercises of such options during the applicable period. We believe it is useful to exclude this stock-based compensation expense and associated payroll taxes because the amount of expense associated with the Special Option Award and the post-IPO option awards in 2019 may not directly correlate to the underlying performance of our business and will vary across periods. For applicable periods, we also exclude the incremental non-cash accelerated stock-based compensation expense and related payroll taxes associated with former and/or departing executive officers, as we do not consider these expenses indicative of our core ongoing operating performance. The accelerated stock-based compensation expense associated with our departing President will be amortized through September 30, 2024. 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 condensed 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. 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. With respect to Adjusted EBIT and Adjusted EBIT margin, we believe it is useful to exclude the depreciation and amortization of tangible and intangible assets resulting from acquisitions and the application of pushdown accounting to the Refinitiv Transaction in order to facilitate a period-over-period comparison of our financial performance.
Management and our board of directors use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin to assess our financial performance and believe they are helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Further, our executive incentive compensation is based in part on components of Adjusted EBITDA and Adjusted EBITDA margin.
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. Adjusted Net Income also gives effect to certain tax related adjustments to reflect an assumed effective tax rate. 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.
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 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, if any, associated with former and/or departing executive officers 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. Each of the normal recurring adjustments and other adjustments described in the definition of Adjusted Net Income helps to provide management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses. In addition to excluding items that are non-recurring or may not be indicative of our ongoing operating performance, by assuming the full exchange of all outstanding LLC Interests held by non-controlling interests, we believe that Adjusted Net Income and Adjusted Diluted EPS for Tradeweb Markets Inc. facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period, because it eliminates the effect of any changes in net income attributable to Tradeweb Markets Inc. driven by increases in our ownership of TWM LLC, which are unrelated to our operating performance.
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Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS have limitations as analytical tools, and you should not consider these non-GAAP financial measures in isolation or as alternatives to net income attributable to Tradeweb Markets Inc., net income, net income margin, operating income, gross margin, earnings per share or any other financial measure derived in accordance with GAAP. You are encouraged to evaluate each adjustment and, as applicable, the reasons we consider it appropriate for supplemental analysis. In addition, in evaluating Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of these non-GAAP financial measures. Our presentation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. 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.
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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 three and six months ended June 30, 2024 and 2023:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands)
Net income |  | $ | 136,416 |  |  | $ | 101,939 |  |  | $ | 279,798 |  |  | $ | 204,132 |
Merger and acquisition transaction and integration costs (1) |  | 3,650 |  |  | 1,212 |  |  | 7,264 |  |  | 1,797 |
Interest income |  | (21,511) |  |  | (15,576) |  |  | (42,571) |  |  | (28,516) |
Interest expense |  | 542 |  |  | 467 |  |  | 2,260 |  |  | 916 |
Depreciation and amortization |  | 49,936 |  |  | 45,887 |  |  | 99,273 |  |  | 91,291 |
Stock-based compensation expense (2) |  | 531 |  |  | 585 |  |  | 1,714 |  |  | 1,435 |
Provision for income taxes |  | 47,047 |  |  | 29,049 |  |  | 90,685 |  |  | 62,254 |
Foreign exchange (gains) / losses (3) |  | (78) |  |  | (964) |  |  | (2,362) |  |  | 1,834 |
Tax receivable agreement liability adjustment (4) |  | — |  |  | — |  |  | — |  |  | — |
Other (income) loss, net |  | — |  |  | 456 |  |  | — |  |  | 115 |
Adjusted EBITDA |  | $ | 216,533 |  |  | $ | 163,055 |  |  | $ | 436,061 |  |  | $ | 335,258 |
Less: Depreciation and amortization |  | (49,936) |  |  | (45,887) |  |  | (99,273) |  |  | (91,291) |
Add: D&A related to acquisitions and the Refinitiv Transaction (5) |  | 34,715 |  |  | 31,629 |  |  | 69,082 |  |  | 63,246 |
Adjusted EBIT |  | $ | 201,312 |  |  | $ | 148,797 |  |  | $ | 405,870 |  |  | $ | 307,213 |
Net income margin |  | 33.7 | % |  | 32.8 | % |  | 34.4 | % |  | 31.9 | %
Adjusted EBITDA margin |  | 53.5 | % |  | 52.5 | % |  | 53.6 | % |  | 52.4 | %
Adjusted EBIT margin |  | 49.7 | % |  | 47.9 | % |  | 49.9 | % |  | 48.0 | %

(1)Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions. These costs generally include legal, consulting, advisory, due diligence, severance and other third party costs incurred that directly relate to the acquisition transaction or its integration.
(2)Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options. During the three and six months ended June 30, 2024, this adjustment also includes $0.3 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our departing President.
(3)Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.
(4)Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the 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.
(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).

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | Basis Point Change |  | Constant Currency Basis Point Change (1) |  | 2024 |  | 2023 |  | Basis Point Change |  | Constant Currency Basis Point Change (1)
Adjusted EBITDA margin |  | 53.5 | % |  | 52.5 | % |  | +98 bps |  | +70 bps |  | 53.6 | % |  | 52.4 | % |  | +120 bps |  | +126 bps
Adjusted EBIT margin |  | 49.7 | % |  | 47.9 | % |  | +181 bps |  | +154 bps |  | 49.9 | % |  | 48.0 | % |  | +187 bps |  | +193 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. Adjusted EBITDA margin and Adjusted EBIT margin excluding the effects of foreign currency fluctuations are calculated by translating the current period and prior period’s results using the annual average exchange rates for the prior period. We use the changes in Adjusted EBITDA margin and Adjusted EBIT margin on a constant currency basis as supplemental metrics to evaluate our underlying margin performance between periods by removing the impact of foreign currency fluctuations. 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.
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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 three and six months ended June 30, 2024 and 2023:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands except per share amounts)
Earnings per diluted share |  | $ | 0.55 |  |  | $ | 0.42 |  |  | $ | 1.14 |  |  | $ | 0.83 |
Net income attributable to Tradeweb Markets Inc. |  | $ | 119,239 |  |  | $ | 89,082 |  |  | $ | 245,381 |  |  | $ | 176,938 |
Net income attributable to non-controlling interests (1) |  | 17,177 |  |  | 12,857 |  |  | 34,417 |  |  | 27,194 |
Net income |  | 136,416 |  |  | 101,939 |  |  | 279,798 |  |  | 204,132 |
Provision for income taxes |  | 47,047 |  |  | 29,049 |  |  | 90,685 |  |  | 62,254 |
Merger and acquisition transaction and integration costs (2) |  | 3,650 |  |  | 1,212 |  |  | 7,264 |  |  | 1,797 |
D&A related to acquisitions and the Refinitiv Transaction (3) |  | 34,715 |  |  | 31,629 |  |  | 69,082 |  |  | 63,246 |
Stock-based compensation expense (4) |  | 531 |  |  | 585 |  |  | 1,714 |  |  | 1,435 |
Foreign exchange (gains) / losses (5) |  | (78) |  |  | (964) |  |  | (2,362) |  |  | 1,834 |
Tax receivable agreement liability adjustment (6) |  | — |  |  | — |  |  | — |  |  | — |
Other (income) loss, net |  | — |  |  | 456 |  |  | — |  |  | 115 |
Adjusted Net Income before income taxes |  | 222,281 |  |  | 163,906 |  |  | 446,181 |  |  | 334,813 |
Adjusted income taxes (7) |  | (55,570) |  |  | (40,157) |  |  | (111,545) |  |  | (82,029) |
Adjusted Net Income |  | $ | 166,711 |  |  | $ | 123,749 |  |  | $ | 334,636 |  |  | $ | 252,784 |
Adjusted Diluted EPS (8) |  | $ | 0.70 |  |  | $ | 0.52 |  |  | $ | 1.41 |  |  | $ | 1.07 |

(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.
(2)Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions. These costs generally include legal, consulting, advisory, due diligence, severance and other third party costs incurred that directly relate to the acquisition transaction or its integration.
(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).
(4)Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options. During the three and six months ended June 30, 2024, this adjustment also includes $0.3 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our departing President.
(5)Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.
(6)Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the 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.
(7)Represents corporate income taxes at an assumed effective tax rate of 25.0% applied to Adjusted Net Income before income taxes for the three and six months ended June 30, 2024 and 24.5% for the three and six months ended June 30, 2023.
(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.
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The following table summarizes the calculation of Adjusted Diluted EPS for the three and six months ended June 30, 2024 and 2023:

Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS |  | Three Months Ended |  | Six Months Ended
| June 30, |  | June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Diluted weighted average shares of Class A and Class B common stock outstanding |  | 214,895,947 |  |  | 213,156,753 |  |  | 214,778,342 |  |  | 211,659,814 |
Weighted average of other participating securities (1) |  | 125,012 |  |  | 241,963 |  |  | 142,484 |  |  | 266,790 |
Assumed exchange of LLC Interests for shares of Class A or Class B common stock (2) |  | 23,077,698 |  |  | 23,153,250 |  |  | 23,077,836 |  |  | 24,738,197 |
Adjusted diluted weighted average shares outstanding |  | 238,098,657 |  |  | 236,551,966 |  |  | 237,998,662 |  |  | 236,664,801 |
Adjusted Net Income (in thousands) |  | $ | 166,711 |  |  | $ | 123,749 |  |  | $ | 334,636 |  |  | $ | 252,784 |
Adjusted Diluted EPS |  | $ | 0.70 |  |  | $ | 0.52 |  |  | $ | 1.41 |  |  | $ | 1.07 |

(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. See Note 2 – Significant Accounting Policies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of the two-class method.
(2)Assumes the full excha nge of the weighted average of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP which requires us to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. These estimates and assumptions are based on judgment and the best available information at the time. Management bases its estimates on historical experience, observance of trends in particular areas, information available from outside sources and various other assumptions that are believed to be reasonable under the circumstances. Information from these sources form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Therefore, actual results could differ materially from those estimates. Management evaluates its accounting policies, estimates and judgments on an on-going basis.
Management evaluated the development and selection of its critical accounting policies and estimates and believes that the following policies are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties. 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. More information on all of our significant accounting policies can be found in Note 2 – Significant Accounting Policies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Business Combinations
Business combinations are accounted for under the purchase method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). The total cost of an acquisition is allocated to the underlying net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. The fair value of assets acquired and liabilities assumed is determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. Determining the fair value of certain assets acquired and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, growth rates, customer attrition rates and asset lives.
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The most significant accounting estimates associated with the r8fin Acquisition that closed in January 2024 was the valuation of the acquired definite-lived intangible customer relationship asset (the “Customer Relationships”), which was valued at approximately $56.5 million as of the date of the closing of the acquisition and the valuation of the developed technology, which was valued at approximately $28.0 million. The majority of the residual total purchase price of $41.4 million, net of cash acquired, was primarily allocated to goodwill, which was measured at approximately $42.2 million as of the date of the closing of the acquisition. We utilized the assistance of a third-party valuation specialist to determine the fair value of the assets acquired and liabilities assumed at the date of the closing of the acquisition. Management is responsible for these valuations and appraisals.
The valuation of the Customer Relationships and the developed technology primarily included significant unobservable inputs (Level 3), creating a significant level of estimation uncertainty. Customer Relationships were valued using the income approach, specifically a multi-period excess earnings method. The excess earnings method examines the economic returns contributed by the identified tangible and intangible assets of a company, and then examines the excess return that is attributable to the intangible asset being valued. The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the Customer Relationships relative to the overall business. In developing a discount rate for the Customer Relationships, the Company estimated a weighted-average cost of capital for the overall business and employed an intangible asset risk premium to this rate when discounting the excess earnings related to Customer Relationships. The resulting discounted cash flows were then tax-affected at the applicable statutory rate.
The developed technology was valued using the income approach, specifically the relief-from-royalty method (“RFRM”). The RFRM is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. The royalty rate is applied to the projected revenue over the expected remaining life of the intangible asset to estimate royalty savings. The net after-tax royalty savings are calculated for each year in the remaining economic life of the technology and discounted to present value. The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the developed technology relative to the overall business as discussed above relating to the customer relationships.
For GAAP purposes, the C ustomer Relationships will be amortized over a useful life of 13 years and the developed technology acquired will be amortized over a useful life of seven years. Any changes in the discount rate used for valuing the acquired assets or the estimated useful life used for amortization purposes could have a material impact on our c ondensed consolidated statements of financial condition and condensed consolidated statement of income. Any increases or decreases in the allocation of purchase price to Customer Relationships or the developed technology acquired, which are both amortizable assets, would be offset by a corresponding decrease or increase in goodwill, which is an indefinite-lived asset, not subject to amortization and as a result would impact the asset balances recorded on our c ondensed consolidated statements of financial condition as well as the amortization expense recorded on our condensed consolidated statements of income over the life of the asset. Any changes in the estimated useful life of the assets would also impact timing of the reduction of the net balance of intangible assets or software development costs, net of accumulated amortization on our condensed consolidated statements of financial condition and the timing of the recognition of amortization expense on our condensed consolidated statements of income.
Revenue Recognition
We enter into contracts with our clients to provide a stand-ready connection to our electronic marketplaces, which facilitates the execution of trades by our clients. The access to our electronic marketplaces, including market data and continuous pricing data refreshes and the processing of trades thereon are highly interrelated and are considered a single performance obligation satisfied over time as the client simultaneously receives and consumes the benefit from our performance. This performance obligation constitutes a series of services that are substantially the same in nature and are provided over time using the same measure of progress. For our services, we earn subscription fees for granting access to our electronic marketplaces.
We earn transaction fees and/or commissions from transactions executed on our trading platforms, including commission revenue from electronic and voice brokerage transacted on a riskless principal basis. Riskless principal revenues are derived on matched principal transactions where revenues are earned on the spread between the buy and sell price of the transacted product. Fixed monthly transaction fees or commissions or monthly transaction fee or commission minimums are generally earned on a monthly basis in the period the stand-ready trading services are provided. Variable transaction fee or commission revenue is recognized and recorded on a trade-date basis when the individual trade occurs. 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.
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We earn fees from LSEG relating to the sale of market data to LSEG, which distributes that data. Included in these fees are real-time market data fees which are recognized monthly on a straight-line basis as LSEG receives and consumes the benefit evenly, over the contact period, as the data is provided, and fees for historical data sets which are recognized when the historical data set is provided to LSEG.
We are required to make significant judgments for the LSEG market data fees. 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. Inputs in this analysis included publicly available price lists for data sets provided by other companies, planned internal pricing strategies and other market data points and adjustments obtained through consultations with market data industry experts regarding estimating a standalone selling price for each performance obligation.
During each of the three and six months ended June 30, 2024 and 2023, there were no material changes in the methodology or assumptions used to determine LSEG market data fees.
Stock-Based Compensation
The stock-based payments received by the employees of the Company are accounted for as equity awards. The Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date.
For performance-based restricted stock units that vest based on market conditions (“PSUs”), the Company recognizes stock-based compensation based on the estimated grant date fair value of the awards computed with the assistance of a valuation specialist using a Monte Carlo simulation on a binomial model, which represents a significant accounting estimate given the significant level of estimation uncertainty relating to the selection of valuation assumptions required for the valuation. The significant assumptions used to estimate the fair value of the PSUs are years of maturity, annualized volatility and the risk-free interest rate. The maturity period represents the period of time that the award granted was modeled into the future, the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the maturity period of the award and the expected volatility is based upon historical volatility of the Company’s Class A common stock. On March 15, 2024, we granted 86,592 PSUs with a grant date fair value totaling $12.9 million, which will be amortized into expense on a straight-line basis through December 31, 2026. The significant assumptions used in determining the grant date fair value of the award were a maturity of 2.8 years, annualized volatility of 26.63% and a risk-free interest rate of 4.44%. A change in any of the assumptions used to value these awards could materially affect stock-based compensation expense recorded in the current and future periods. During each of the three and six months ended June 30, 2024 and 2023, there were no material changes in the methodology or assumptions used to determine the valuation of our annual PSU grants.
For performance-based restricted stock units that vest based on the financial performance of the Company (“PRSUs”), the Company recognizes stock-based compensation based on the fair market value of our Class A common stock at the grant date and an estimate of the number of shares included in expense each period is based on management’s estimate of the probable final performance modifier for those grants, with such estimate updated each period until the performance modifier is finalized. On March 15, 2024, we granted 201,546 PRSUs at a weighted-average grant-date fair value of $104.66. For these awards, the financial performance of the Company will be determined based on the compound annual growth rate over a three-year performance period beginning on January 1 in the year of grant and the performance modifier can vary between 0% (minimum) and 250% (maximum) of the target (100%) award amount. As of June 30, 2024, a 10% decrease in the expected final share payouts would decrease the expense for the three and six months ended June 30, 2024 by $0.6 million.
Income Taxes
Tradeweb Markets Inc. is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. 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 records taxes for conducting business in certain state, local and foreign jurisdictions and records U.S. federal taxes for subsidiaries that are taxed as corporations for U.S. tax purposes. We currently record deferred tax assets and liabilities for the expected future tax consequences of temporary
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differences between the financial reporting and tax bases of assets and liabilities and measure the deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The measurement of deferred taxes often involves the exercise of significant judgment related to the realization of tax basis. Our deferred tax assets and liabilities reflect our assessment that tax positions taken in filed tax returns and the resulting tax basis are more likely than not to be sustained if they are audited by taxing authorities. Assessing tax rates that we expect to apply and determining the years when the temporary differences are expected to affect taxable income requires judgment about the future apportionment of our income among the jurisdictions in which we operate. Any changes in our practices or judgments involved in the measurement of deferred tax assets and liabilities could materially impact our financial condition or results of operations.
In connection with recording deferred tax assets and liabilities, we record valuation allowances when we believe that it is more likely than not that the Company will not be able to realize its deferred tax assets in the future. We evaluate our deferred tax assets quarterly to determine whether adjustments to our valuation allowance are appropriate in light of changes in facts or circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. In making this evaluation, we rely on our recent history of pre-tax earnings, our forecasts of future earnings and the nature and timing of future deductions and benefits represented by the deferred tax assets, all of which involve the exercise of significant judgment. As of June 30, 2024 and December 31, 2023, we have no valuation allowance established on our deferred tax assets. If forecasts of future earnings and the nature and estimated timing of future deductions and benefits change in the future, we may determine that existing valuation allowances must be revised or new valuation allowances created, any of which could materially impact our financial condition or results of operations. See Note 6 – Income Taxes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes in our condensed consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in our condensed consolidated statements of financial condition. A U.S. shareholder of a controlled foreign corporation (“CFC”) is required to include in income, as a deemed dividend, the global intangible low-taxed income (“GILTI”) of the CFC. We have elected to treat taxes due on future U.S. inclusions in taxable income of GILTI as a current period expense when incurred.
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 a 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 a 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. Substantially all payments due under the Tax Receivable Agreement are payable over the 15 years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests. The timing of the payments over the 15 year period is dependent upon our annual taxable income over the same period. In determining the estimated timing of payments, the current year’s taxable income is used to extrapolate an estimate of future taxable income. This requires significant judgment relating to projecting future earnings, the geographic mix of those earnings and the timing of deferred taxes becoming current.
The impact of any changes in the total projected obligations recorded under the Tax Receivable Agreement as a result of actual changes in the geographic mix of our earnings, changes in tax legislation and tax rates or other factors that may impact our actual tax savings realized will be reflected in income before taxes in the period in which the change occurs.
Recent Accounting Pronouncements and Recent SEC Final Rules
See Note 2 – Significant Accounting Policies to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements and recent SEC final rule activity.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Foreign Currency and Derivative Risk
We have global operations and substantial portions of our revenues, expenses, assets and liabilities are generated and denominated in non-U.S. dollar currencies.
The following table shows the percentage breakdown of our revenue and operating expenses denominated in currencies other than the U.S. dollar for the three and six months ended June 30, 2024 and 2023:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
% of revenue denominated in foreign currencies (1) |  | 29% |  | 27% |  | 29% |  | 28%
% of operating expenses denominated in foreign currencies (2) |  | 15% |  | 17% |  | 16% |  | 15%

(1)Revenue in foreign currencies is primarily denominated in euros.
(2)Operating expenses in foreign currencies are primarily denominated in British pounds sterling.
Revenues, expenses, assets and liabilities denominated in non-functional currencies are recorded in the appropriate functional currency for the legal entity at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities that are denominated in non-functional currencies are then remeasured at the end of each reporting period at the exchange rate prevailing at the end of the reporting period. Foreign currency remeasurement gains or losses on monetary assets and liabilities in nonfunctional currencies are recognized in the condensed consolidated statements of income within general and administrative expenses. Realized and unrealized losses from foreign currency remeasurement of transactions in nonfunctional currencies recognized in the condensed consolidated statements of income within general and administrative expense totaled $0.8 million and $1.4 million during the three months ended June 30, 2024 and 2023, respectively, and realized and unrealized losses totaled $2.0 million and $1.8 million during the six months ended June 30, 2024 and 2023, respectively.
Since our condensed consolidated financial statements are presented in U.S. dollars, we also translate all non-U.S. dollar functional currency revenues, expenses, assets and liabilities into U.S. dollars. All non-U.S. dollar functional currency revenue and expense amounts are translated into U.S. dollars monthly at the average exchange rate for the month. All non-U.S. dollar functional currency assets and liabilities are translated at the rate prevailing at the end of the reporting period. Gains or losses on translation in the financial statements, when the functional currency is other than the U.S. dollar, are included as a component of other comprehensive income. 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.
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. The following table shows the average foreign currency exchange rates to the U.S. dollar for the three and six months ended June 30, 2024 and 2023:

|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Euros |  | $ | 1.08 |  |  | $ | 1.09 |  |  | $ | 1.08 |  |  | $ | 1.08 |
British pound sterling |  | $ | 1.26 |  |  | $ | 1.25 |  |  | $ | 1.27 |  |  | $ | 1.23 |

The following table shows the change in revenue and operating income caused by fluctuations in foreign currency rates used in translation during the three and six months ended June 30, 2024 and 2023:

|  | Three Months Ended |  | Six Months Ended
Impact of Foreign Currency Rate Fluctuations (dollars in thousands) |  | June 30, |  | June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Increase (decrease) in revenue |  | $ | (1,100) |  |  | $ | 1,900 |  |  | $ | (1,000) |  |  | $ | 2,900 |
Increase (decrease) in operating income |  | $ | (1,300) |  |  | $ | 1,600 |  |  | $ | (1,800) |  |  | $ | 3,000 |

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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 three and six months ended June 30, 2024 and 2023:

|  | Three Months Ended |  | Six Months Ended
Hypothetical 10% Change in Value of U.S. Dollar (dollars in thousands) |  | June 30, |  | June 30,
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023
All currencies |  |  |  |  |  |  |  |  |  |  |  |
Effect of 10% change on revenue |  | +/- | $ | 13,100 |  |  | +/- | $ | 9,400 |  |  | +/- | $ | 26,500 |  |  | +/- | $ | 19,700 |
Effect of 10% change on operating income |  | +/- | $ | 9,000 |  |  | +/- | $ | 5,700 |  |  | +/- | $ | 18,000 |  |  | +/- | $ | 12,900 |
Euros |  |  |  |  |  |  |  |  |  |  |  |
Effect of 10% change on revenue |  | +/- | $ | 11,500 |  |  | +/- | $ | 8,500 |  |  | +/- | $ | 23,400 |  |  | +/- | $ | 18,000 |
Effect of 10% change on operating income |  | +/- | $ | 11,200 |  |  | +/- | $ | 8,000 |  |  | +/- | $ | 22,600 |  |  | +/- | $ | 17,200 |
British pound sterling |  |  |  |  |  |  |  |  |  |  |  |
Effect of 10% change on revenue |  | +/- | $ | 500 |  |  | +/- | $ | 400 |  |  | +/- | $ | 1,000 |  |  | +/- | $ | 800 |
Effect of 10% change on operating income |  | +/- | $ | 2,500 |  |  | +/- | $ | 2,300 |  |  | +/- | $ | 5,200 |  |  | +/- | $ | 4,300 |

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. 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 anticipated payment of the Australian dollar denominated purchase price for the expected Yieldbroker acquisition. The out-of-the-money foreign currency call option was unwound in August 2023. We do not use derivative instruments for trading or speculative purposes.
As of June 30, 2024 and December 31, 2023, the notional amount of our foreign currency forward contracts was $229.1 million and $192.9 million, respectively. Realized and unrealized gains on foreign currency forward contracts totaled $2.6 million and $2.2 million during the three months ended June 30, 2024 and 2023, respectively, and realized and unrealized gains on foreign currency forward contracts totaled $6.9 million and $1.0 million during the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2023, the notional amount of our foreign currency call option on Australian dollars was $79.9 million and unrealized gains totaled $0.6 million during both the three and six months ended June 30, 2023.
By using derivative instruments to hedge exposures to foreign currency fluctuations, we are exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, we are not exposed to the counterparty’s credit risk in those circumstances. We attempt to minimize counterparty credit risk in derivative instruments by entering into transactions with high-quality counterparties whose credit rating is at least upper-medium investment grade. As of June 30, 2024 and December 31, 2023, the counterparty on each of the foreign exchange derivative contracts was an affiliate of LSEG.
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. To 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 and our investments in available-for-sale debt securities. As of June 30, 2024 and December 31, 2023, the allowance for credit losses with regard to these receivables totaled $0.2 million and $0.3 million, respectively.
In the normal course of our business we, as an agent, execute transactions with, and on behalf of, other brokers and dealers. If these transactions do not settle because of failure to perform by either counterparty, we may be obligated to discharge the obligation of the non-performing party and, as a result, may incur a loss if the market value of the instrument is different than the contractual amount. This credit risk exposure can be directly impacted by volatile trading markets, as our clients may be unable to satisfy their contractual obligations during volatile trading markets.
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Additionally, in the normal course of business, the Company, as an introducing broker, executes transactions on behalf of or with customers of the Company, which are cleared by a clearing broker. As between the Company and the clearing broker, the Company is responsible for losses that may result from the clearing broker’s rejection, reversal or cancellation of a transaction.
Our policy is to monitor our market exposure and counterparty risk. Counterparties are evaluated for creditworthiness and risk assessment prior to our initiating contract activities. The counterparties’ creditworthiness is then monitored on an ongoing basis, and credit levels are reviewed to ensure that there is not an inappropriate concentration of credit outstanding to any particular counterparty.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the effectiveness of our disclosure controls and procedures, as defined in Rule 13a‑15(e) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10‑Q. Based on that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10‑Q are effective at a reasonable assurance level in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures will prevent or detect all errors and all fraud. While our disclosure controls and procedures are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting during the quarter ended June 30, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as set forth in Note 13 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes from the legal proceedings previously disclosed under the heading “Item 3. Legal Proceedings” in Part I of our 2023 Form 10-K.
ITEM 1A. RISK FACTORS
There have been no material changes to our principal risks that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in “Item 1A. Risk Factors” in Part I of our 2023 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
During the three months ended June 30, 2024, we did not repurchase any securities pursuant to share repurchase programs.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
(a) None.
(b) None.
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(c) Securities Trading Plans of Executive Officers and Director s
The following table describes trading plans intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act, as defined in Item 408 of Regulation S-K (“Rule 10b5-1 trading arrangements”), adopted, modified or terminated by our executive officers and directors during the three months ended June 30, 2024.

Name and Title | Action | Date | Aggregate Number of Securities to be Purchased or Sold |  | Scheduled Expiration Date (1)
Douglas Friedman General Counsel and Secretary | Adoption | May 9, 2024 | Sale of an amount equal to up to: (A) (i) 6,749 shares of Class A common stock to be issued upon the vesting on January 1, 2025 of previously awarded performance-based restricted stock units, plus (ii) the number of shares issued upon vesting on January 1, 2025 in settlement of dividend equivalent rights in respect of the 6,749 shares subject to the performance-based restricted stock units that accrued during the award’s vesting period of March 15, 2022 - January 1, 2025, pursuant to the terms of the award agreement and determined on the vesting date, less (iii) the number of shares withheld for taxes, to be determined on the vesting date, plus (B) (i) 6,246 shares of Class A common stock to be issued upon the vesting on March 15, 2025 of previously awarded restricted stock units, plus (ii) the number of shares issued upon vesting on March 15, 2025 in settlement of dividend equivalent rights in respect of the 6,246 shares subject to the restricted stock units that accrued during the award’s vesting period of March 15, 2022 - March 15, 2025, pursuant to the terms of the award agreement and determined on the vesting date, less (iii) the number of shares withheld for taxes, to be determined on the vesting date. |  | July 31, 2025

(1) In each case, the Rule 10b5-1 trading arrangement may also expire on such earlier date as all such transactions under the trading arrangement are completed or at such time as such trading arrangement is otherwise terminated in accordance with its terms.
During the three months ended June 30, 2024, none of our directors or executive officers adopted, modified or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K).
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ITEM 6. EXHIBITS

Exhibit Number |  | Description of Exhibit
2.1+ |  | Purchase Agreement, dated April 5, 2024, by and between ICD Intermediate Holdco 1, LLC, ICD Holdings, LLC, Stellus Capital Investment Corporation, Parthenon Investors V ICD Holdco AIV, LP, SCIC - ICD Blocker 1, Inc., Parthenon Investors V ICD Blocker, Inc., Tradeweb Markets LLC, ICD Holdings, LLC, in its capacity as the initial Seller Representative thereunder, and Tradeweb Markets Inc., solely for purposes of Section 10.21 thereof (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on April 8, 2024 (File No. 001-38860)).
10.1*† |  | Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan 2024 Director RSU Award Agreement.
10.2*†++ |  | Separation Agreement and Release, dated June 17, 2024 by and between Thomas Pluta and Tradeweb Markets LLC.
31.1* |  | Certification of Chief Executive Officer pursuant to Rule 13a‑14(a) or 15d‑14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* |  | Certification of Chief Financial Officer pursuant to Rule 13a‑14(a) or 15d‑14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1** |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2** |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS* |  | XBRL Instance Document.
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document.
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 |  | Cover page formatted as Inline XBRL and contained in Exhibit 101.

* | Filed herewith.
** | Furnished herewith.
† | Indicates a management contract or compensatory plan or arrangement.
+ | Sched ules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.
++ | Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| TRADEWEB MARKETS INC.
July 25, 2024 | /s/ William Hult
| By: | William Hult
|  | Chief Executive Officer (Principal Executive Officer)
July 25, 2024 | /s/ Sara Furber
| By: | Sara Furber
|  | Chief Financial Officer (Principal Financial Officer)

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