TRADEWEB MARKETS : 10-K/A – 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 the sections titled "Basis of
Presentation" and "Selected Historical Consolidated Financial and Other Data"
and our audited consolidated financial statements and related notes and other
information included elsewhere in this Annual Report on Form 10-K. 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 sections titled "Risk Factors" and
"Cautionary Note Regarding Forward-Looking Statements" included elsewhere in
this Annual Report on 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 65
countries with offices in North America, Europe and Asia. 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 40
markets across 25 currencies, and in over 65 countries around the globe. 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 100 actively trading on our electronic or hybrid markets with our
Dealerweb platform. This platform was launched in 2008 following the acquisition
of inter-dealer broker Hilliard Farber & Co., Inc. In 2011, we acquired the
brokerage assets of Rafferty Capital Markets. Today, Dealerweb actively competes
across a range of rates, credit, 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.

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Trends and Other Factors Impacting Our Performance

Economic Environment


Our business is impacted by the overall market activity and, in particular,
trading volumes and market volatility. Lower volatility is correlated to lower
liquidity, which may result in lower trading volume for our clients and may
negatively impact our operating performance. Factors that may impact market
activity in 2020 include, among other things, economic, political and social
conditions, legislative, regulatory or government policy changes and health
concerns associated with the coronavirus. As a result, our business is sensitive
to slow trading environments and the continuity of conservative monetary
policies of central banks internationally, which tend to lessen volatility.

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. See "Business - Regulation." 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
may be subject to future legislative changes driven by the current
administration and could be further impacted, depending on the results of the
upcoming U.S. 2020 elections. The impact of any reform efforts on us and our
operations remains uncertain. In addition, as a result of the referendum in
favor of the United Kingdom's withdrawal from the European Union ("Brexit") in
June 2016, which occurred on January 31, 2020, we have incurred additional costs
to address the potential effects of Brexit, including costs associated with
establishing a new regulated subsidiary in the Netherlands. 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. For example, our 2018 revenue
increased due in part to higher trading volumes as a result of, and the
introduction of our new APA service in connection with, the implementation of
MiFID II in January 2018.

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.
See "Business - Competition" for more detail on our competitors.

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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 by
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
cyber security incidents could impact revenue and operating income and increase
costs. We therefore continue to make investments, which may result in increased
costs, to strengthen our cybersecurity measures.

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 II, Item 7A - "Quantitative and
Qualitative Disclosures About Market Risk - Foreign Currency and Derivative
Risk" elsewhere in this Annual Report on Form 10-K.

Effect of Pushdown Accounting on our Financial Statements


As a result of the Refinitiv Transaction, and the application of pushdown
accounting, our assets and liabilities were adjusted to their estimated fair
values as of October 1, 2018, the closing date of the Refinitiv Transaction.
These adjusted valuations resulted in an increase in depreciation and
amortization expense, due to the increased carrying value of our assets and the
related increase in depreciation of tangible assets and amortization of our
intangible assets, and a decrease in occupancy expense as a result of the
recognition of a leasehold interest liability. Additionally, the excess of the
portion of the total purchase price of the Refinitiv Transaction attributable to
the purchase of our assets and liabilities over their estimated fair value as of
the closing date of the Refinitiv Transaction was allocated to goodwill.
Goodwill is subject to annual impairment testing. Amounts allocated to
intangible assets with definite lives are subject to amortization over the
estimated useful life of the asset. See "Note 3 - Pushdown Accounting" to our
audited consolidated financial statements included elsewhere in this Annual
Report on Form 10-K and "- Critical Accounting Policies and Estimates - Pushdown
Accounting."

Due to the change in the basis of accounting resulting from the application of
pushdown accounting, the financial information for the period beginning on
October 1, 2018, and through and including December 31, 2019, which we refer to
as the "Successor period," and the financial information for the periods prior
to, and including, September 30, 2018, which we refer to as the "Predecessor
period," are not necessarily comparable. As discussed above, the new basis of
accounting primarily impacted the values of our long-lived and indefinite-lived
intangible assets and resulted in increased depreciation and amortization
expense and decreased occupancy expense. However, the change in basis resulting
from the Refinitiv Transaction and the application of pushdown accounting did
not impact revenues or certain expenses, including employee compensation and
benefits expense, general and administrative expense, technology and
communications expense, professional fees and net interest income (expense),
and, for these metrics, we believe combining the results for the 2018 Successor
and 2018 Predecessor periods provides meaningful information. Accordingly,
certain discussions below for revenues and certain expenses represent the
combined results of the 2018 Successor and 2018 Predecessor periods for the full
year ended December 31, 2018. Such combination was performed by mathematical
addition and is not a presentation made in accordance with GAAP, although we
believe it provides a

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meaningful method of comparison for these metrics. The combined data is being
presented for informational purposes only. The combined results for these
metrics for the full year ended December 31, 2018 (i) have not been prepared on
a pro forma basis, as if the Refinitiv Transaction occurred on the first day of
the period, (ii) may not reflect the actual results we would have achieved
absent the Refinitiv Transaction, (iii) may not be predictive of our future
results of operations and (iv) should not be viewed as a substitute for the
financial results of the Successor and Predecessor periods presented in
accordance with GAAP. For all other metrics, to the extent that the change in
basis had a material impact on our results, we have disclosed such impact under
"- Results of Operations."

Taxation and Public Company Expenses


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 will increase over time as the Continuing LLC Owners
redeem or exchange their LLC Interests for shares of Class A common stock or
Class B common stock, as applicable, or as we purchase LLC Interests from the
Continuing LLC Owners. In addition to tax expenses, we also incur expenses
related to our operations. Furthermore, in connection with the IPO, we entered
into the Tax Receivable Agreement pursuant to which we will be required to make
payments that we expect to be significant. We intend 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.

In addition, as a public company, we have started to implement additional
procedures and processes for the purpose of addressing the standards and
requirements applicable to public companies. In particular, we expect our
accounting, legal and personnel-related expenses and directors' and officers'
insurance costs to continue to increase as we establish more comprehensive
compliance and governance functions, establish, maintain and review internal
control over financial reporting in accordance with the Sarbanes-Oxley Act and
prepare and distribute periodic reports in accordance with SEC rules.

Components of our Results of Operations

Revenues


Our gross revenue is derived primarily from transaction fees, subscription fees,
commissions and market data fees. For the 2018 Predecessor Period and the year
ended December 31, 2017, our gross revenue is offset by contingent consideration
recognized as a contra-revenue adjustment related to the achievement of specific
revenue earnout milestones, as further described below. This contingent
consideration vested on, and has no additional impacts on our results of
operations after, July 31, 2018. We believe that gross revenue is the key driver
of our operating performance and therefore is the revenue measure we utilize to
assess our business on a period by period basis.

Transaction Fees


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
variable or fixed 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

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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.

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. Subscription fees are generally
generated on a fixed price basis.

For purposes of our discussion of our results of operations, we include
Refinitiv (formerly Thomson Reuters) market data fees in subscription fees. We
earn fixed license fees from our market data license agreement with Refinitiv.
We also earn royalties from Refinitiv for referrals of new Eikon (a Refinitiv
data platform) customers based on customer conversion rates. Royalties may
fluctuate from period to period depending on the numbers of customer conversions
achieved by Refinitiv during the applicable royalty fee earning period, which is
typically five years from the date of the initial referral.

Commissions


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.

Contingent Consideration


In 2014, we issued Class A Shares and unvested Class P1-(A) Shares to some of
the Bank Stockholders as a result of a $120.0 million capital contribution to
facilitate our expansion into new credit products. In connection with this
investment, certain employees also invested $5.3 million in us and were issued
Class C Shares and unvested Class P1-(C) Shares. The Class P1-(A) Shares vested
on July 31, 2018 upon the achievement of specific revenue earnout milestones
related to the growth of specified credit products (the "Credit Initiative
Earnout"). Prior to the July 31, 2018 vesting, we recognized contingent
consideration with respect to the Credit Initiative Earnout as a contra-revenue
adjustment, which partially offset gross revenue for the 2018 Predecessor Period
and the year ended December 31, 2017. See "- Critical Accounting Policies and
Estimates - Contingent Consideration" for a discussion of the calculation of
contingent consideration. The value of the contingent consideration of $156.2
million was finalized and contributed to members' capital or employee equity
compensation payable on July 31, 2018 and we therefore no longer recognize any
contra-revenue adjustments from the Credit Initiative Earnout subsequent to that
date. In connection with the Reorganization Transactions, the Class A Shares,
Class P1-(A) Shares, Class C Shares and Class P1-(C) Shares were exchanged for
LLC Interests.

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 new employees and trading activity which generates
broker commissions. We expect employee compensation and benefits expense to
increase as we hire additional employees and as our revenues and earnings grow.
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 other intangible assets, acquired and
internally developed software, leasehold improvements, furniture and equipment.
As


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discussed in "- Effect of Pushdown Accounting on our Financial Statements," we
applied pushdown accounting as a result of the Refinitiv Transaction and
therefore depreciation and amortization expense in Successor reporting periods
will differ from amounts reported in Predecessor periods.

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, charitable contributions, other administrative expenses and
bad debt 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 costs and data feeds provided by third-party service providers,
including Refinitiv pursuant to a shared services agreement. Factors that
influence technology and communications expense include the growth of our client
base and product offerings.

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. Accounting, tax and legal fees are expected to increase as a
result of expanding public company and compliance requirements. Factors that
influence technology and software consulting expense include the growth of our
client base and product offerings.

Occupancy


Occupancy expense consists of operating lease rent and related costs for office
space and data centers leased in North America, Europe and Asia. Fees incurred
by us under a shared services agreement with Refinitiv for office space are also
included in occupancy expense. We expect occupancy expense to increase as we
expand the number of our employees and grow our operations. In addition, we
currently anticipate that in 2020 we will likely enter into a new lease to
increase the size of our corporate headquarters in or near New York, New York,
which may result in increased operating expenses. As discussed in "- Effect of
Pushdown Accounting on our Financial Statements," we applied pushdown accounting
as a result of the Refinitiv Transaction and therefore occupancy expense in
Successor reporting periods will differ from amounts reported in Predecessor
periods.

Net Interest Income (Expense)

Interest income consists of interest earned from our cash deposited with large
commercial banks and money market funds. Beginning with the second quarter of
2019, interest expense consists of commitment fees payable on, and, if
applicable, interest payable on any borrowings outstanding under, the Revolving
Credit Facility. Historically, interest expense consisted of interest payable to
Thomson Reuters under a convertible term note. Thomson Reuters converted all
outstanding borrowings under this note to equity of the Company in May 2017.

Income Taxes


Beginning with the second quarter of 2019, we became 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.

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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 began consolidating the
financial results of TWM LLC and reporting a non-controlling interest on our
consolidated financial statements, representing the economic interests of TWM
LLC held by the 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 the 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 the 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 the Continuing LLC
Owners owned the remaining 35.7% of TWM LLC. As of December 31, 2019, we owned
73.4% of TWM LLC and the Continuing LLC Owners owned the remaining 26.6% of TWM
LLC.

The result of the foregoing is that, during the second quarter of 2019, we began
reporting net income attributable to non-controlling interests. For the year
ended December 31, 2019, net income attributable to non-controlling interests
totaled $46.9 million, which represents the Continuing LLC Owners' pro rata
share of the net income of TWM LLC subsequent to the Reorganization Transactions
and the IPO. For pre-IPO periods, there were no non-controlling interests.

Results of Operations

For the Year Ended December 31, 2019 (Successor), October 1, 2018 to December
31, 2018
(Successor) and January 1, 2018 to September 30, 2018 (Predecessor)


The following table sets forth a summary of our statements of income for the
year ended December 31, 2019, the 2018 Successor Period and the 2018 Predecessor
Period:


                                                     Successor              Successor              Predecessor
                                                    Year Ended         October 1, 2018 to      January 1, 2018 to
                                                 December 31, 2019      December 31, 2018      September 30, 2018
                                                                     (dollars in thousands)
Gross revenue                                  $             775,566   $           178,637     $           505,771
Contingent consideration                                           -                     -                (26,830)
Net revenue                                                  775,566               178,637                 478,941
Total expenses                                               585,747               146,702                 338,607
Operating income                                             189,819                31,935                 140,334
Tax receivable agreement liability
adjustment                                                    33,134                     -                       -
Net interest income                                            2,373                   787                   1,726
Income before taxes                                          225,326                32,722                 142,060
Provision for Income taxes                                  (52,302)               (3,415)                (11,900)
Net income                                     $             173,024   $            29,307     $           130,160
Less: Pre-IPO net income attributable to
Tradeweb Markets LLC                                          42,352
Net income attributable to Tradeweb Markets
Inc. and non-controlling interests                           130,672
Less: Net income attributable to
non-controlling interests                                     46,903
Net income attributable to Tradeweb Markets
Inc.                                           $              83,769




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Overview

During the year ended December 31, 2019, our revenue grew due to a number of
factors. Higher client trading activity drove revenue increases in our rates,
credit, equities and money markets asset classes. Our market data business also
grew due to the expansion of our market data license agreement with Refinitiv in
November 2018. Our expenses were impacted by higher depreciation and
amortization expense as a result of the application of pushdown accounting and
non-cash stock-based compensation expense related to the Special Option Award as
a result of the completion of the IPO during the second quarter of 2019.

Gross revenue increased by $91.2 million or 13.3% to $775.6 million for the year
ended December 31, 2019 from $684.4 million for the combined year ended December
31, 2018. This increase in gross revenue was mainly due to higher trading
volumes, resulting in a $52.7 million increase in transaction fees and a $36.7
million increase in commission revenue. Net revenue increased by $118.0 million
or 17.9% to $775.6 million for the year ended December 31, 2019 from $657.6
million for the combined year ended December 31, 2018. Non-cash contingent
consideration decreased by $26.8 million for the year ended December 31, 2019 as
a result of the vesting of the Credit Initiative Earnout at July 31, 2018.

Total expenses for the year ended December 31, 2019 were $585.7 million. Total
expenses for the 2018 Successor Period and the 2018 Predecessor Period were
$146.7 million and $338.6 million, respectively. Total expenses for the year
ended December 31, 2019 were impacted by higher depreciation and amortization
expense as a result of the application of pushdown accounting and higher
employee compensation and benefits expense, including the impact of non-cash
stock-based compensation expense related to the Special Option Award, which, as
a result of the completion of the IPO, we began to expense during the second
quarter of 2019 (with $18.9 million recognized as compensation expense related
to these options immediately upon the completion of the IPO).

The tax receivable agreement liability adjustment of $33.1 million during the
year ended December 31, 2019 was primarily due to changes in the tax receivable
agreement liability recorded in our consolidated statement of financial
condition as a result of changes in the mix of earnings, tax legislation and tax
rates in various jurisdictions, which impacted our tax savings.

Income before taxes for the year ended December 31, 2019 was $225.3 million.
Income before taxes for the 2018 Successor Period and the 2018 Predecessor
Period was $32.7 million and $142.1 million, respectively. Net income for the
year ended December 31, 2019 was $173.0 million. Net income for the 2018
Successor Period and the 2018 Predecessor Period was $29.3 million and $130.2
million, respectively. Net income attributable to Tradeweb Markets Inc. for the
year ended December 31, 2019 was $83.8 million. Income before taxes, net income
and net income attributable to Tradeweb Markets Inc. for the year ended December
31, 2019 were negatively impacted by higher depreciation and amortization
expense as a result of the application of pushdown accounting, resulting in
acquisition and Refinitiv related depreciation and amortization expense of $97.6
million, and by $24.4 million of stock-based compensation expense related to the
Special Option Award and post-IPO options awarded in the second half of 2019,
partially offset by higher revenue.

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Revenues

Our revenues for the year ended December 31, 2019, the combined year ended
December 31, 2018, the 2018 Successor Period and the 2018 Predecessor Period,
and the resulting dollar and percentage changes, were as follows:




                                 Successor                    Combined(1)                    Successor                  Predecessor
                                Year Ended                     Year Ended               October 1, 2018 to           January 1, 2018 to           Year

Ended December 31, 2019 vs

                             December 31, 2019             December 31, 2018             December 31, 2018           September 30, 2018        

Combined Year Ended December 31, 2018

                                       % of Gross                     % of Gross                   % of Gross                   % of Gross
                              $         Revenue             $          Revenue            $         Revenue           $          Revenue           $ Change                % Change
                                                                        (dollars in thousands)
Revenues
Transaction fees          $ 423,583          54.6 %     $  370,881          54.2 %    $  97,130         54.4%     $  273,751          54.1 %  $            52,702                 14.2 %
Subscription fees(2)        194,366          25.1 %        190,500          27.8 %       46,519         26.0%        143,981          28.5 %                3,866                  2.0 %
Commissions                 149,365          19.3 %        112,670          16.5 %       32,840         18.4%         79,830          15.8 %               36,695                 32.6 %
Other                         8,252           1.1 %         10,357           1.5 %        2,148          1.2%          8,209           1.6 %              (2,105)               (20.3) %
Gross revenue               775,566         100.0 %        684,408         100.0 %      178,637        100.0%        505,771         100.0 %               91,158                 13.3 %
Contingent
consideration                     -                       (26,830)                            -                     (26,830)                               26,830              (100.0) %
Net revenue               $ 775,566$  657,578$ 178,637$  478,941                  $           117,988                 17.9 %
Components of gross
revenue growth:
Constant currency
growth(3)                                                                                                                                                                         15.1 %
Foreign currency
impact                                                                                                                                                                           (1.8) %
Total gross revenue
growth                                                                                                                                                                            13.3 %

——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the year ended December 31, 2019 to the combined year ended December 31,

2018. Revenue accounts were not impacted by the Refinitiv Transaction or the

      application of pushdown accounting.


 (2)  Subscription fees for the year ended December 31, 2019, the combined year

ended December 31, 2018 the 2018 Successor Period and the 2018 Predecessor

      Period, include $55.6 million, $50.3 million, $13.4 million and $36.8
      million, respectively, of Refinitiv (formerly Thomson Reuters) market data
      fees.

(3) Constant currency growth, which is a non-GAAP financial measure, is defined

as gross revenue growth excluding the effects of foreign currency

fluctuations. Gross revenue excluding the effects of foreign currency

fluctuations is calculated by translating the current period and prior

period’s gross revenue using the average exchange rates for 2018. We use

constant currency growth as a supplemental metric to evaluate our underlying

gross revenue performance between periods by removing the impact of foreign

currency fluctuations. We believe that providing constant currency growth

provides a useful comparison of our gross revenue performance and trends

between periods.



Transaction fees.  Transaction fees increased by $52.7 million or 14.2% to
$423.6 million for the year ended December 31, 2019 from $370.9 million for the
combined year ended December 31, 2018 primarily due to higher trading volumes
for rates derivatives, rates cash, credit cash and money markets products and
European ETFs.

Subscription fees.  Subscription fees increased by $3.9 million or 2.0% to
$194.4 million for the year ended December 31, 2019 from $190.5 million for the
combined year ended December 31, 2018 primarily due to higher market data and
Institutional MBS fees, partially offset by lower Retail fees.

Commissions.  Commissions increased by $36.7 million or 32.6% to $149.4 million
for the year ended December 31, 2019 from $112.7 million for the combined year
ended December 31, 2018 primarily due to higher trading volumes for U.S.
corporate bonds and U.S. government bonds.

Other.  Other revenue decreased by $2.1 million or (20.3)% to $8.3 million for
the year ended December 31, 2019 from $10.4 million for the combined year ended
December 31, 2018 primarily as a result of decreased fees from a third party for
certain licensing and development in Canada.

Contingent consideration.  There was no contingent consideration for the year
ended December 31, 2019 due to the vesting of the Credit Initiative Earnout at
July 31, 2018. Contingent consideration for the combined year ended December 31,
2018 was $26.8 million.

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Our gross revenue by client sector for the year ended December 31, 2019, the
combined year ended December 31, 2018, the 2018 Successor Period and the 2018
Predecessor Period, and the resulting dollar and percentage changes, were as
follows:


                                         Successor              Combined (1)              Successor              Predecessor         Year Ended December 31, 2019 vs
                                                                                                                                    Combined Year Ended December 31,
                                        Year Ended               Year Ended          October 1, 2018 to      January 1, 2018 to                   2018
                                     December 31, 2019        December 31, 2018       December 31, 2018      September 30, 2018          $ Change           % Change
                                                                      (dollars in thousands)
Revenues
Institutional                      $             453,379     $           405,889     $           103,971     $           301,918    $           47,490           11.7 %
Wholesale                                        171,096                 137,181                  38,153                  99,028                33,915           24.7 %
Retail                                            80,368                  77,546                  19,780                  57,766                 2,822            3.6 %
Market Data                                       70,723                  63,792                  16,733                  47,059                 6,931           10.9 %
Gross revenue                      $             775,566     $           684,408     $           178,637     $           505,771    $           91,158           13.3 %

——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the year ended December 31, 2019 to the combined year ended December 31,

2018. Revenue accounts were not impacted by the Refinitiv Transaction or the

application of pushdown accounting.



Institutional.  Revenues from our Institutional client sector increased by $47.5
million or 11.7% to $453.4 million for the year ended December 31, 2019 from
$405.9 million for the combined year ended December 31, 2018. The increase was
derived primarily from higher trading volumes for rates derivatives products,
mortgages, credit cash products, ETFs and repurchase agreements, partially
offset by the impact of foreign exchange, mainly the weakening of the euro.

Wholesale.  Revenues from our Wholesale client sector increased by $33.9 million
or 24.7% to $171.1 million for the year ended December 31, 2019 from $137.2
million for the combined year ended December 31, 2018. The increase was derived
primarily from higher trading volumes for U.S. corporates and U.S. government
bonds.

Retail.  Revenues from our Retail client sector increased by $2.8 million or
3.6% to $80.4 million for the year ended December 31, 2019 from $77.6 million
for the combined year ended December 31, 2018. The increase was derived
primarily from higher trading volumes for certificates of deposit, credit cash
products, and U.S. government bonds partially offset by lower revenues from
software development and implementation on behalf of certain clients.

Market Data. Revenues from our Market Data client sector increased by $6.9
million
or 10.9% to $70.7 million for the year ended December 31, 2019 from
$63.8 million for the combined year ended December 31, 2018 primarily as a
result of an increase in the number of market data feeds provided to Refinitiv
(formerly Thomson Reuters) and revenue from our APA reporting service.


Our gross revenue by asset class for the year ended December 31, 2019, the
combined year ended December 31, 2018, the 2018 Successor Period and the 2018
Predecessor Period, and the resulting dollar and percentage changes, were as
follows:


                                                                                                                                          Year Ended December
                                          Successor              Combined (1)               Successor               Predecessor              31, 2019 vs
                                                                                                                                         Combined Year Ended
                                         Year Ended               Year Ended           October 1, 2018 to       January 1, 2018 to        December 31, 2018
                                      December 31, 2019        December 31, 2018        December 31, 2018       September 30, 2018      $ Change      % Change
                                                                        (dollars in thousands)
Revenues
Rates                               $             434,197     $           379,233      $            97,592      $           281,641    $    54,964         14.5 %
Credit                                            162,154                 139,656                   37,204                  102,452         22,498         16.1 %
Equities                                           46,912                  40,939                   12,592                   28,347          5,973         14.6 %
Money Markets                                      40,392                  34,741                    9,493                   25,248          5,651         16.3 %
Market Data                                        70,723                  63,792                   16,733                   47,059          6,931         10.9 %
Other Fees                                         21,188                  26,047                    5,023                   21,024        (4,859)       (18.7) %
Gross revenue                       $             775,566     $           684,408      $           178,637      $           505,771    $    91,158         13.3 %

——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the year ended December 31, 2019 to the combined year ended December 31,

2018. Revenue accounts were not impacted by the Refinitiv Transaction or the

      application of pushdown accounting.


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Our variable and fixed revenues by asset class for the year ended December 31,
2019, the combined year ended December 31, 2018, the 2018 Successor Period and
the 2018 Predecessor Period, and the resulting dollar and percentage changes,
were as follows:


                              Successor                 Combined(1)                 Successor                 Predecessor                   Year Ended December 31, 2019 vs
                              Year Ended                 Year Ended             October 1, 2018 to         January 1, 2018 to            Combined Year Ended December 31, 2018
                          December 31, 2019          December 31, 2018          December 31, 2018          September 30, 2018              $ Change                  % Change
                        Variable       Fixed       Variable       Fixed        Variable      Fixed       Variable       Fixed       Variable        Fixed       Variable    Fixed
                                                                (dollars in thousands)
Revenues
Rates                   $ 232,423$ 201,774$ 181,051$ 198,182

$ 47,868$ 49,724$ 133,183$ 148,458$ 51,372$ 3,592 28.4 % 1.8 %
Credit

                    141,343       20,811       119,217       20,439         31,976       5,228        87,241       15,211        22,126            372        18.6 %     1.8 %
Equities                   38,515        8,397        34,443        6,496   

10,949 1,643 23,494 4,853 4,072 1,901 11.8 % 29.3 %
Money Markets

              25,461       14,931        20,843       13,898          6,040       3,453        14,803       10,445         4,618          1,033        22.2 %     7.4 %
Market Data                     -       70,723             -       63,792              -      16,733             -       47,059             -          6,931           - %    10.9 %
Other                           -       21,188            40       26,007              -       5,023            40       20,984          (40)        (4,819)     (100.0) %  (18.5) %
Gross revenue           $ 437,742$ 337,824$ 355,594$ 328,814

$ 96,833$ 81,804$ 258,761$ 247,010$ 82,148$ 9,010 23.1 % 2.7 %

——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the year ended December 31, 2019 to the combined year ended December 31,

2018. Revenue accounts were not impacted by the Refinitiv Transaction or the

application of pushdown accounting.



Rates.  Revenues from our Rates asset class increased by $55.0 million or 14.5%
to $434.2 million for the year ended December 31, 2019 from $379.2 million for
the combined year ended December 31, 2018 primarily due to higher trading
volumes for derivatives products, U.S. government bonds and mortgages.

Credit.  Revenues from our Credit asset class increased by $22.5 million or
16.1% to $162.2 million for the year ended December 31, 2019 from $139.7 million
for the combined year ended December 31, 2018 primarily due to higher trading
volumes for U.S. corporate bonds and Chinese bonds.

Equities.  Revenues from our Equities asset class increased by $6.0 million or
14.6% to $46.9 million for the year ended December 31, 2019 from $40.9 million
for the combined year ended December 31, 2018 primarily due to higher trading
volumes for European ETFs and derivatives products, as well as higher revenues
from U.S. ETFs.

Money Markets.  Revenues from our Money Markets asset class increased by $5.7
million or 16.3% to $40.4 million for the year ended December 31, 2019 from
$34.7 million for the combined year ended December 31, 2018 primarily due to
higher trading volumes for repurchase agreements and certificates of deposit.

Market Data.  Revenues from Market Data increased by $6.9 million or 10.9% to
$70.7 million for the year ended December 31, 2019 from $63.8 million for the
combined year ended December 31, 2018 as a result of an increase in the number
of market data feeds provided to Refinitiv (formerly Thomson Reuters) and
revenue from our APA reporting service.

Other Fees.  Revenues from Other Fees decreased by $4.9 million or (18.7)% to
$21.2 million for the year ended December 31, 2019 from $26.1 million for the
combined year ended December 31, 2018 primarily due to lower fees from a third
party for certain licensing and development in Canada and lower Retail revenues
from software development and implementation on behalf of certain clients.

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A significant percentage of our revenues 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 years ended December 31, 2019 and 2018 were as follows:


                                        Year Ended
                     December 31, 2019             December 31, 2018           ADV
                    ADV          Volume           ADV          Volume        % Change
                                  (dollars in millions)
Rates            $ 489,645$ 122,871,725$ 354,023$  88,625,615        38.3 %
Credit              14,777        3,721,199       12,658        3,186,209        16.7 %
Equities             7,795        1,972,767        7,798        1,962,566           - %
Money Markets      213,209       53,706,377      173,743       43,462,916        22.7 %
Total            $ 725,426$ 182,272,068$ 548,222$ 137,237,306        32.3 %




We believe the increases in average daily volumes for our rates, credit and
money markets asset classes in the year ended December 31, 2019 can be
attributed to various factors, including further electronification of trading
activities across our asset classes, increase in market share, new products, new
clients and volatility. Rates ADV increased due mainly to higher trading
activity in long and short-tenor interest rate swaps and swaptions, mortgages
and U.S. treasuries. Credit ADV increased due to higher trading activity in U.S.
high-grade and high-yield credit products, derivatives products and Chinese
bonds. Equities ADV was flat, as an increase in European ETFs and derivatives
products was offset by lower U.S. ETF notional volumes. Money Markets ADV
increased mainly due to bilateral electronic trading in repurchase agreements.

The average variable fees per million dollars of volume traded on our trading
platforms by asset class for the years ended December 31, 2019 and 2018 are
summarized below. There are three potential drivers of quarterly fluctuations in
our average variable fees per million: (1) volume discounts, (2) the mix of cash
and derivatives products traded, and (3) the mix of protocols underpinning cash
and derivatives products. Average variable fees per million should be reviewed
in conjunction with our trading volumes and gross 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. For example, average
variable fees per million dollars of volume for our Rates asset class decreased
7.4% for the year ended December 31, 2019 while gross revenue for our Rates
asset class increased 14.5% over the same period.


                                                     Year Ended
                                                   December 31,
                                                  2019       2018      $ Change     % Change
Rates                                            $  1.89$  2.04$  (0.15)       (7.4) %
Rates - excluding short-tenor swaps (less
than 1 year)                                     $  2.21$  2.15$    0.06         2.8 %
Credit                                           $ 37.98$ 37.42$    0.56         1.5 %
Equities                                         $ 19.52$ 17.55$    1.97        11.2 %
Money Markets                                    $  0.47$  0.48$  (0.01)       (2.1) %
Total Fees per Million                           $  2.40$  2.59$  (0.19)       (7.3) %
Total Fees per Million - excluding
short-tenor swaps (less than 1 year)             $  2.66$  2.68$  (0.02)       (0.7) %




Rates average variable fees per million was impacted by the growth in short
tenor swap volumes, a product which has a lower variable fee capture compared to
other rates products. Credit average variable fees per million was impacted by
the growth in credit cash volumes, products which have a higher variable fee
capture compared to credit derivative products. Equities average variable fees
per million was impacted by a mix shift in volumes towards Institutional ETFs
and away from Wholesale products. Money Markets average variable fees per
million was impacted by a mix shift in volumes towards repurchase agreements and
away from other lower variable fee capture Money Markets products.

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Our gross revenue by geography (based on client location) for the year ended
December 31, 2019, the combined year ended December 31, 2018, the 2018 Successor
Period and the 2018 Predecessor Period, and the resulting dollar and percentage
changes, were as follows:


                                                                                                                                        Year Ended December 31,
                                          Successor              Combined (1)              Successor              Predecessor                   2019 vs
                                                                                                                                          Combined Year Ended
                                         Year Ended               Year Ended          October 1, 2018 to      January 1, 2018 to           December 31, 2018
                                      December 31, 2019        December 31, 2018       December 31, 2018      September 30, 2018       $ Change        % Change
                                                                       (dollars in thousands)
Revenues
U.S.                                $             497,316     $           440,211     $           115,907     $           324,304   $     57,105             13.0 %
International                                     278,250                 244,197                  62,730                 181,467         34,053             13.9 %
Gross revenue                       $             775,566     $           684,408     $           178,637     $           505,771   $     91,158             13.3 %

——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the year ended December 31, 2019 to the combined year ended December 31,

2018. Revenue accounts were not impacted by the Refinitiv Transaction or the

application of pushdown accounting.



U.S. Revenues from U.S. clients increased by $57.1 million or 13.0% to $497.3
million for the year ended December 31, 2019 from $440.2 million for the
combined year ended December 31, 2018 primarily due to higher trading volumes
for U.S. credit products, U.S. government bonds, mortgages and rates derivatives
products.

International.  Revenues from International clients increased by $34.1 million
or 13.9% to $278.3 million for the year ended December 31, 2019 from $244.2
million for the combined year ended December 31, 2018 primarily due to higher
trading volumes for rates derivatives products, European equities products,
Chinese bonds and repurchase agreements. Compared to 2018 average rates,
fluctuations in foreign currency rates throughout 2019 decreased our
International gross revenue by $11.8 million.

Operating Expenses

Our expenses for the year ended December 31, 2019, the 2018 Successor Period and
the 2018 Predecessor Period were as follows:


                                                    Successor                Successor              Predecessor
                                                   Year Ended           October 1, 2018 to      January 1, 2018 to
                                                December 31, 2019        December 31, 2018      September 30, 2018
                                                                         (in thousands)
Employee compensation and benefits(1)         $             329,457     $            80,436     $           209,053
Depreciation and amortization                               139,330                  33,020                  48,808
Technology and communications(1)                             39,285                   9,907                  26,598
General and administrative(1)                                34,960                  11,837                  23,056
Professional fees(1)                                         28,029                   8,194                  20,360
Occupancy                                                    14,686                   3,308                  10,732
Total Expenses                                $             585,747     $           146,702     $           338,607

——————————————————————————–

(1) The change in basis resulting from the Refinitiv Transaction and the

application of pushdown accounting did not impact these operating expense

accounts.



Employee Compensation and Benefits. Employee compensation and benefits expense
increased by $40.0 million or 13.8% to $329.5 million for the year ended
December 31, 2019 from $289.5 million for the combined year ended December 31,
2018. The increase was primarily due to $24.4 million of non-cash stock-based
compensation expense related to the Special Option Award, which, as a result of
the completion of the IPO, we began to expense during the second quarter of 2019
(with $18.9 million recognized as compensation expense related to these options
immediately upon the completion of the IPO), and post-IPO options awarded in the
second half of 2019, an increase in commission related expenses of $9.9 million
related to higher Wholesale revenues and an increase in salaries, bonus and
benefits of $3.9 million.

Depreciation and Amortization. Depreciation and amortization expense for the
year ended December 31, 2019 was $139.3 million. Depreciation and amortization
expense for the 2018 Successor Period and the 2018 Predecessor Period was $33.0
million and $48.8 million, respectively. As a result of the Refinitiv
Transaction and the application of

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pushdown accounting, we adjusted our assets and liabilities to their estimated
fair values as of October 1, 2018, which resulted in an increase in depreciation
of tangible assets and amortization of our intangible assets. For the year ended
December 31, 2019, acquisition and Refinitiv related depreciation and
amortization was $97.6 million. For the 2018 Successor Period, and the 2018
Predecessor Period, acquisition and Refinitiv related depreciation and
amortization was $22.4 million and $19.6 million, respectively.

Technology and Communications.  Technology and communications expense increased
by $2.8 million or 7.6% to $39.3 million for the year ended December 31, 2019
from $36.5 million for the combined year ended December 31, 2018. The increase
was primarily due to increased clearance and data fees as a result of higher
trading volumes.

General and Administrative. General and administrative expense increased by $0.1
million or 0.2% to $35.0 million for the year ended December 31, 2019 from $34.9
million for the combined year ended December 31, 2018. The increase was
primarily a result of an increase in insurance costs of $2.2 million associated
with being a public company, and foreign exchange losses of $1.1 million,
partially offset by lower bad debt expenses of $1.5 million associated with an
evaluation of the reserve, sales and use taxes of $1.2 million, and lower
recruiting fees of $0.6 million.

Professional Fees. Professional fees decreased by $0.5 million or (1.8)% to
$28.0 million for the year ended December 31, 2019 from $28.6 million for the
combined year ended December 31, 2018. The decrease was primarily due to lower
legal and consulting fees, as well as lower advisory fees in 2019, as 2018
included higher fees incurred in connection with the IPO, partially offset by
higher audit and tax advisory fees associated with being a public company.

Occupancy. Occupancy expense for the year ended December 31, 2019 was $14.7
million. Occupancy expense for the 2018 Successor Period and the 2018
Predecessor Period was $3.3 million and $10.7 million, respectively. As a result
of the Refinitiv Transaction and the application of pushdown accounting, at
October 1, 2018, we established a leasehold interest liability, which resulted
in contra expense of $0.4 million during the year ended December 31, 2019.
Occupancy expense for the year ended December 31, 2019 also was impacted by an
increase in costs associated with our Europe and Asia offices.

Net Interest Income (Expense)


Net interest income for the year ended December 31, 2019 decreased by $0.1
million, or (5.5)% to $2.4 million from $2.5 million for the combined year ended
December 31, 2018. The decrease was due to higher interest expense associated
with credit facility fees related to the Revolving Credit Facility of $1.3
million, partially offset by higher interest income from cash investments.  The
change in basis resulting from the Refinitiv Transaction and the application of
pushdown accounting did not impact net interest income (expense).

Tax Receivable Agreement Liability Adjustment


The tax receivable agreement liability adjustment for the year ended December
31, 2019 was $33.1 million, which represents income recognized during the year
ended December 31, 2019 primarily due to changes in the tax receivable agreement
liability recorded in our consolidated statement of financial condition as a
result of changes in the mix of earnings, tax legislation and tax rates in
various jurisdictions which impacted our tax savings.

Income Taxes


Provision for income taxes for the year ended December 31, 2019 was $52.3
million. Provision for income taxes for the 2018 Successor Period and the 2018
Predecessor Period was $3.4 million and $11.9 million, respectively. Provision
for income taxes for the year ended December 31, 2019 was impacted by the
Reorganization Transactions and the IPO, which resulted in Tradeweb Markets Inc.
becoming 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 being taxed at prevailing corporate tax rates. Prior to the
Reorganization Transactions, income taxes consisted only of business taxes
incurred by TWM LLC and certain subsidiaries for business conducted in certain
state, local and foreign jurisdictions as well as federal, state and local taxes
for certain subsidiaries that are taxed as corporations for U.S. tax purposes.
The provision for income taxes for the year ended December 31, 2019 was also
impacted by an increase in Tradeweb Market Inc.'s

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ownership interest in TWM LLC following the completion of the October 2019
follow-on offering and the application of the use of proceeds therefrom.

For October 1, 2018 to December 31, 2018 (Successor), January 1, 2018 to
September 30, 2018 (Predecessor) and the Year Ended December 31, 2017
(Predecessor)


The following table sets forth a summary of our statements of income for the
2018 Successor Period, the 2018 Predecessor Period and the year ended
December 31, 2017:


                                                    Successor               Predecessor            Predecessor
                                               October 1, 2018 to       January 1, 2018 to         Year Ended
                                                December 31, 2018       September 30, 2018      December 31, 2017
                                                                     (dollars in thousands)
Gross revenue                                  $           178,637      $           505,771    $           562,968
Contingent consideration                                         -                 (26,830)               (58,520)
Net revenue                                                178,637                  478,941                504,448
Total expenses                                             146,702                  338,607                415,356
Operating income                                            31,935                  140,334                 89,092
Net interest income                                            787                    1,726                    685
Income before taxes                                         32,722                  142,060                 89,777
Provision for Income taxes                                 (3,415)                 (11,900)                (6,129)
Net income                                     $            29,307      $           130,160    $            83,648




Overview



During the combined year ended December 31, 2018, our business was impacted by a
number of factors, including higher client trading activity, driving revenue
increases in rates, credit, equities and money markets trading. Our market data
business also grew due to the expansion of our market data license agreement
with Refinitiv. Our expenses were impacted by higher employee compensation and
benefits expense and higher professional fees, as well as higher depreciation
and amortization expense as a result of the application of pushdown accounting.



Gross revenue increased by $121.4 million or 21.6% to $684.4 million for the
combined year ended December 31, 2018 from $563.0 million for the year ended
December 31, 2017. This increase in gross revenue was mainly due to higher
trading volumes resulting in a $103.9 million increase in transaction fees and a
$15.9 million increase in commissions. Net revenue increased by $153.1 million
or 30.4% to $657.6 million for the combined year ended December 31, 2018 from
$504.4 million for the year ended December 31, 2017. Non-cash contingent
consideration decreased by $31.7 million to $26.8 million for the combined year
ended December 31, 2018 from $58.5 million for the year ended December 31, 2017
as a result of changes in projected and actual revenues related to the Credit
Initiative Earnout during the periods.



Total expenses for the 2018 Successor Period and the 2018 Predecessor Period
were $146.7 million and $338.6 million, respectively. Total expenses for the
year ended December 31, 2017 were $415.4 million. Total expenses for the 2018
Successor Period and the 2018 Predecessor Period were impacted by higher
employee compensation and benefits expense and higher professional fees. The
2018 Successor Period was also impacted by higher depreciation and amortization
expense as a result of the application of pushdown accounting.



Income before taxes for the 2018 Successor Period and the 2018 Predecessor
Period was $32.7 million and $142.1 million, respectively. Income before taxes
for the year ended December 31, 2017 was $89.8 million. Net income for the 2018
Successor Period and the 2018 Predecessor Period was $29.3 million and
$130.2 million, respectively. Net income for the year ended December 31, 2017
was $83.6 million. Income before taxes and net income for the 2018 Successor
Period and the 2018 Predecessor Period were positively impacted by higher
revenues partially offset by higher compensation costs.



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Revenues



Our revenues for the 2018 Successor Period, the 2018 Predecessor Period, the
combined year ended December 31, 2018 and the year ended December 31, 2017, and
the resulting dollar and percentage changes, were as follows:


                                 Successor               Predecessor              Combined(1)                   Predecessor
                                                                                                                                        Combined Year Ended December 31, 2018
                            October 1, 2018 to       January 1, 2018 to            Year Ended                    Year Ended                               vs
                             December 31, 2018       September 30, 2018        December 31, 2018             December 31, 2017               Year Ended December 31, 2017
                                                                                          % of Gross                    % of Gross
                                     $                        $                  $         Revenue             $         Revenue              $ Change              % Change

Revenues
Transaction fees             $           97,130       $          273,751   

370,881 54.2 % $ 267,020 47.4 % $ 103,861

              38.9 %
Subscription fees(2)                     46,519                  143,981       190,500          27.8 %       194,534          34.6 %                 (4,034)             (2.1) %
Commissions                              32,840                   79,830       112,670          16.5 %        96,745          17.2 %                  15,925              16.5 %
Other                                     2,148                    8,209        10,357           1.5 %         4,669           0.8 %                   5,688             121.8 %
Gross revenue                           178,637                  505,771       684,408         100.0 %       562,968         100.0 %                 121,440              21.6 %
Contingent consideration                      -                 (26,830)      (26,830)                      (58,520)                                  31,690            (54.2) %
Net revenue                  $          178,637       $          478,941       657,578                    $  504,448                     $           153,130              30.4 %
Components of gross
revenue growth:
Constant currency
growth(3)                                                                                                                                                                 19.7 %
Foreign currency impact                                                                                                                                                    1.8 %
Total gross revenue
growth                                                                                                                                                                    21.6 %

——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the combined year ended December 31, 2018 to the year ended December 31,

2017. Revenue accounts were not impacted by the Refinitiv Transaction or the

      application of pushdown accounting.


 (2)  Subscription fees for the combined year ended December 31, 2018, the 2018

Successor Period, the 2018 Predecessor Period and the year ended December 31,

2017 include $50.3 million, $13.5 million, $36.8 million and $50.1 million,

respectively, of Refinitiv (formerly Thomson Reuters) market data fees.

(3) Constant currency growth, which is a non-GAAP financial measure, is defined

as gross revenue growth excluding the effects of foreign currency

fluctuations. Gross revenue excluding the effects of foreign currency

fluctuations is calculated by translating the current period and prior

period’s gross revenue using the average exchange rates for 2017. We use

constant currency growth as a supplemental metric to evaluate our underlying

gross revenue performance between periods by removing the impact of foreign

currency fluctuations. We believe that providing constant currency growth

provides a useful comparison of our gross revenue performance and trends

between periods.



Transaction Fees. Transaction fees increased by $103.9 million or 38.9% to
$370.9 million for the combined year ended December 31, 2018 from $267.0 million
for the year ended December 31, 2017 from increased Institutional transactional
volumes for U.S. credit products, derivative products (led by Dollar swaps,
European interest rate swaps and U.S. and European credit default indexes), U.S.
and European ETF, European repurchase agreements and U.S. treasury, as well as
adjustments to contracts as a result of MiFID II pursuant to which annual
subscription fees were replaced with monthly minimum transaction fees and the
product launch of China bonds.



Subscription fees. Subscription fees decreased by $4.0 million or (2.1)% to
$190.5 million for the combined year ended December 31, 2018 from $194.5 million
for the year ended December 31, 2017 due primarily to a $10.3 million decline
from MiFID II contract adjustments where certain annual subscription fees were
replaced with monthly minimum transaction fees, partially offset by a $2.5
million increase in market data fees, a $1.4 million increase in Retail fees and
a $2.6 million increase in Institutional fees.



Commissions. Commissions increased by $15.9 million or 16.5% to $112.7 million
for the combined year ended December 31, 2018 from $96.7 million for the year
ended December 31, 2017 primarily due to higher trading volumes in our Wholesale
client sector for U.S. credit products, repurchase agreements, U.S. ETF and U.S.
treasury. The revenue increase was partially offset by lower municipal bond, ARM
and specified pool trading volumes.



Other. Other revenue increased by $5.7 million or 121.8% to $10.4 million for
the combined year ended December 31, 2018 from $4.7 million for the year ended
December 31, 2017 primarily as a result of revenue from our APA reporting
service launched in January 2018 in response to MiFID II. Other fees also
consisted of fees from a third party for certain licensing and development in
Canada.



Contingent consideration. Contingent consideration decreased by $31.7 million or
(54.2)% to $26.8 million for the combined year ended December 31, 2018 from
$58.5 million for the year ended December 31, 2017. The decrease was a result of
changes in projected and actual revenues related to the Credit Initiative
Earnout during the periods and the vesting of the Credit Initiative Earnout at
July 31, 2018.

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Our gross revenue by client sector for the 2018 Successor Period, the 2018
Predecessor Period, the combined year ended December 31, 2018 and the year ended
December 31, 2017, and the resulting dollar and percentage changes, were as
follows:


                                                                             Combined                                Combined Year Ended
                                   Successor              Predecessor           (1)           Predecessor           December 31, 2018 vs
                                                                                                                   Year Ended December 31,
                              October 1, 2018 to      January 1, 2018 to    Year Ended        Year Ended                    2017
                                                                             December
                               December 31, 2018      September 30, 2018     31, 2018      December 31, 2017       $ Change        % Change
                                                          (dollars in thousands)
Revenues
Institutional                 $           103,971     $           301,918   $   405,889   $           318,038    $      87,851          27.6 %
Wholesale                                  38,153                  99,028       137,181               118,451           18,730          15.8 %
Retail                                     19,780                  57,766        77,546                70,857            6,689           9.4 %
Market Data                                16,733                  47,059        63,792                55,622            8,170          14.7 %
Gross revenue                 $           178,637     $           505,771   $   684,408   $           562,968    $     121,440          21.6 %


——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the combined year ended December 31, 2018 to the year ended December 31,

2017. Revenue accounts were not impacted by the Refinitiv Transaction or the

application of pushdown accounting.



Institutional.  Revenues from our Institutional client sector increased by
$87.9 million or 27.6% to $405.9 million for the combined year ended
December 31, 2018 from $318.0 million for the year ended December 31, 2017. The
increase was derived primarily from increased Institutional transactional
volumes for U.S. and European credit products, derivative products (led by
European interest rate swaps, Dollar swaps and U.S. and European credit default
indexes), U.S. and European ETF, European government bonds, U.S. treasury,
European repurchase agreements and the product launch of China bonds.



Wholesale.  Revenues from our Wholesale client sector increased by $18.7 million
or 15.8% to $137.2 million for the combined year ended December 31, 2018 from
$118.5 million for the year ended December 31, 2017. Revenue increased primarily
due to higher trading volumes in U.S. credit products, repurchase agreements,
U.S. ETF and U.S. treasury. The revenue increase was partially offset by lower
municipal bond, ARM and specified pool trading volumes.



Retail. Revenues from our Retail client sector increased by $6.7 million or
9.4% to $77.5 million for the combined year ended December 31, 2018 from
$70.9 million for the year ended December 31, 2017 primarily due to strong
middle markets trading volumes.




Market Data.  Revenues from our Market Data client sector increased by
$8.2 million or 14.7% to $63.8 million for the combined year ended December 31,
2018 from $55.6 million for the year ended December 31, 2017 as a result of
revenue from our APA reporting service launched in January 2018 in response to
MiFID II, increased Refinitiv (formerly Thomson Reuters) license fees due to an
increase in the number of market data feeds provided to Refinitiv and increased
Gilt closing price revenues.



Our gross revenue by asset class for the 2018 Successor Period, the 2018
Predecessor Period, the combined year ended December 31, 2018 and the year ended
December 31, 2017, and the resulting dollar and percentage changes, were as
follows:




                                                                         Combined                               Combined Year Ended
                               Successor              Predecessor           (1)           Predecessor          December 31, 2018 vs
                                                                                                              Year Ended December 31,
                          October 1, 2018 to      January 1, 2018 to    Year Ended        Year Ended                   2017
                                                                         December
                           December 31, 2018      September 30, 2018     31, 2018      December 31, 2017       $ Change       % Change
                                                      (dollars in thousands)
Revenues
Rates                     $            97,592     $           281,641   $   379,233   $           324,302    $     54,931         16.9 %
Credit                                 37,204                 102,452       139,656               105,336          34,320         32.6 %
Equities                               12,592                  28,347        40,939                23,681          17,258         72.9 %
Money Markets                           9,493                  25,248        34,741                28,633           6,108         21.3 %
Market Data                            16,733                  47,059        63,792                55,622           8,170         14.7 %
Other Fees                              5,023                  21,024        26,047                25,394             653          2.6 %
Gross revenue             $           178,637     $           505,771   $   684,408   $           562,968    $    121,440         21.6 %

——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the combined year ended December 31, 2018 to the year ended December 31,

2017. Revenue accounts were not impacted by the Refinitiv Transaction or the

      application of pushdown accounting.


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Our variable and fixed revenues by asset class for the 2018 Successor Period,
the 2018 Predecessor Period, the combined year ended December 31, 2018 and the
year ended December 31, 2017, and the resulting dollar and percentage changes,
were as follows:




                                 Successor                 Predecessor                Combined(1)                Predecessor                 Combined

Year Ended December 31, 2018 vs

                             October 1, 2018 to         January 1, 2018 to             Year Ended                 Year Ended                       Year Ended December 31, 2017
                             December 31, 2018          September 30, 2018         December 31, 2018          December 31, 2017                $ Change                    % Change
                            Variable      Fixed       Variable       Fixed       Variable       Fixed       Variable       Fixed       Variable        
 Fixed         Variable     Fixed
                                                                   (dollars in thousands)
Revenues
Rates                      $   47,868$ 49,724$ 133,183$ 148,458$ 181,051$ 198,182$ 143,840$ 180,462$    37,211$    17,720           25.9 %    9.8 %
Credit                         31,976       5,228        87,241       15,211       119,217       20,439        90,846       14,490         28,371           5,949           31.2 %   41.1 %
Equities                       10,949       1,643        23,494        4,853        34,443        6,496        19,150        4,531         15,293           1,965           79.9 %   43.4 %
Money Markets                   6,040       3,453        14,803       10,445        20,843       13,898        15,055       13,578          5,788             320           38.4 %    2.4 %
Market Data                         -      16,733             -       47,059             -       63,792             -       55,622              -           8,170              - %   14.7 %
Other                               -       5,023            40       20,984            40       26,007            36       25,358              4             649           11.1 %    2.6 %
Gross revenue              $   96,833$ 81,804$ 258,761$ 247,010$ 355,594$ 328,814$ 268,927$ 294,041$    86,667$    34,773           32.2 %   11.8 %

——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the combined year ended December 31, 2018 to the year ended December 31,

2017. Revenue accounts were not impacted by the Refinitiv Transaction or the

application of pushdown accounting.



Rates.  Revenues from our Rates asset class increased by $54.9 million or 16.9%
to $379.2 million for the combined year ended December 31, 2018 from
$324.3 million for the year ended December 31, 2017 primarily due to increased
Institutional transactional volumes in European interest rate swaps, Dollar
swaps, U.S. treasury and European governments.



Credit.  Revenues from our Credit asset class increased by $34.3 million or
32.6% to $139.7 million for the combined year ended December 31, 2018 from
$105.3 million for the year ended December 31, 2017 primarily due to increased
Institutional and Wholesale transactional volumes for U.S. credit products,
increased Institutional transaction volumes for U.S. and European credit default
indexes, European credit products and the product launch of China bonds. The
revenue increase was partially offset by lower Wholesale municipal bond volumes.



Equities.  Revenues from our Equities asset class increased by $17.3 million or
72.9% to $40.9 million for the combined year ended December 31, 2018 from
$23.7 million for the year ended December 31, 2017 primarily due to increased
Institutional transactional volumes for U.S. and European ETF.



Money Markets.  Revenues from our Money Markets asset class increased by
$6.1 million or 21.3% to $34.7 million for the combined year ended December 31,
2018 from $28.6 million for the year ended December 31, 2017 primarily due to
increased Wholesale transactional volumes for repurchase agreements and higher
Institutional transactional volumes for European repurchase agreements.



Market Data.  Revenues from Market Data increased by $8.2 million or 14.7% to
$63.8 million for the combined year ended December 31, 2018 from $55.6 million
for the year ended December 31, 2017 as a result of revenue from our APA
reporting service launched in January 2018 in response to MiFID II, increased
Refinitiv (formerly Thomson Reuters) license fees due to an increase in the
number of market data feeds provided to Refinitiv and increased Gilt closing
price revenues.



Other Fees.  Revenues from Other Fees increased by $0.7 million or 2.6% to
$26.0 million for the combined year ended December 31, 2018 from $25.4 million
for the year ended December 31, 2017 primarily due to increased Retail fees for
software development and implementation.

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A significant percentage of our revenues are tied directly to overall trading
volumes in the rates, credit, money markets and equities asset classes. The
average daily volumes and total volumes on our trading platforms by asset class
for the years ended December 31, 2018 and 2017 were as follows:




                                       Year Ended
                     December 31, 2018             December 31, 2017          ADV
                    ADV          Volume           ADV          Volume       % Change
                                  (dollars in millions)
Rates            $ 354,023$  88,625,615$ 253,432$ 63,475,383        39.7 %
Credit              12,658        3,186,209        7,554       1,864,700        67.6 %
Equities             7,798        1,962,566        4,817       1,214,081        61.9 %
Money Markets      173,743       43,462,916      132,105      33,060,749        31.5 %
Total            $ 548,222$ 137,237,306$ 397,908$ 99,614,913        37.8 %




We believe the increases in average daily volumes in the year ended December 31,
2018 can be attributed to various factors, including increased volatility,
further electronification of trading activities, increase in market share, new
products and new clients. In addition, we believe that certain trading volumes
increased in the year ended December 31, 2018 as customers adapted to electronic
trading in order to comply with obligations pursuant to MiFID II, which was
implemented by regulatory bodies in Europe in January 2018. Rates ADV increased
due mainly to higher trading activity in interest rate swaps, U.S. treasuries
and mortgages. Credit ADV increased due mainly to higher trading activity in
credit default swaps, U.S. high-grade credit, European credit and Chinese bonds.
Equities ADV increased due mainly to higher trading activity in U.S. and
European ETFs and equity futures. Money Markets ADV increased due to the
continued growth of bilateral electronic trading in repurchase agreements.



The average variable fees per million dollars of volume traded on our trading
platforms by asset class for the years ended December 31, 2018 and 2017 are
summarized below. There are three potential drivers of quarterly fluctuations in
our average variable fees per million: (1) volume discounts, (2) the mix of cash
and derivatives products traded, and (3) the mix of protocols underpinning cash
and derivatives products. Average variable fees per million should be reviewed
in conjunction with our trading volumes and gross 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. For example, average
variable fees per million dollars of volume for our Credit asset class decreased
23.2% for the year ended December 31, 2018 while gross revenue for our Credit
asset class increased 32.6% over the same period.




                                                     Year Ended
                                                   December 31,
                                                  2018       2017      $ Change     % Change
Rates                                            $  2.04$  2.27$  (0.23)      (10.1) %
Rates - excluding short-tenor swaps (less
than 1 year)                                     $  2.15$  2.34$  (0.19)       (8.1) %
Credit                                           $ 37.42$ 48.72$ (11.30)      (23.2) %
Equities                                         $ 17.55$ 15.77$    1.78        11.3 %
Money Markets                                    $  0.48$  0.46$    0.02         4.3 %
Total Fees per Million                           $  2.59$  2.70$  (0.11)       (4.1) %
Total Fees per Million - excluding
short-tenor swaps (less than 1 year)             $  2.68$  2.75$  (0.07)       (2.5) %




Rates average variable fees per million was impacted by volume discounts in both
cash and derivatives products. Credit average variable fees per million was
impacted by a mix shift in volumes towards derivatives products and away from
cash products, as well as a shift in volumes towards electronically processed
institutional cash products. Equities average variable fees per million was
impacted by a mix shift towards institutional derivatives protocols and away
from wholesale derivatives protocols. Money Markets average variable fees per
million was impacted by a mix shift towards repurchase agreements and away from
other lower variable fee capture Money Markets products.



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Our gross revenue by geography (based on client location) for the 2018 Successor
Period, the 2018 Predecessor Period, the combined year ended December 31, 2018
and the year ended December 31, 2017, and the resulting dollar and percentage
changes, were as follows:




                                                                             Combined                                Combined Year Ended
                                   Successor              Predecessor           (1)           Predecessor           December 31, 2018 vs
                                                                                                                   Year Ended December 31,
                              October 1, 2018 to      January 1, 2018 to    Year Ended        Year Ended                    2017
                                                                             December
                               December 31, 2018      September 30, 2018     31, 2018      December 31, 2017       $ Change        % Change
                                                          (dollars in thousands)
Revenues
U.S.                          $           115,907     $           324,304   $   440,211   $           385,176    $      55,035          14.3 %
International                              62,730                 181,467       244,197               177,792           66,405          37.3 %
Gross revenue                 $           178,637     $           505,771   $   684,408   $           562,968    $     121,440          21.6 %


——————————————————————————–

(1) Represents the combined results of the Successor and Predecessor periods for

the full year ended December 31, 2018. This combination was performed by

mathematical addition and is not a presentation made in accordance with GAAP.

However, we believe it provides a meaningful method of comparison of revenues

for the combined year ended December 31, 2018 to the year ended December 31,

2017. Revenue accounts were not impacted by the Refinitiv Transaction or the

application of pushdown accounting.



U.S.  Revenues from U.S. clients increased by $55.0 million or 14.3% to
$440.2 million for the combined year ended December 31, 2018 from $385.2 million
for the year ended December 31, 2017 primarily due to increased transactional
volumes from our Institutional client sector for U.S. credit products, U.S. ETF
and U.S. treasury, higher trading volumes from our Wholesale client sector,
which saw an increase in volumes for U.S. credit, U.S. treasury and repurchase
agreements and higher trading volumes for our Retail client sector, which saw an
increase in middle markets trading volumes.



International.  Revenues from International clients increased by $66.4 million
or 37.3% to $244.2 million for the combined year ended December 31, 2018 from
$177.8 million for the year ended December 31, 2017 primarily due to increased
transactional volumes from our Institutional client sector for European interest
rate swaps, European credit default indexes, European ETF, European governments
and European credit products. Fluctuations in foreign currency rates increased
our International gross revenue by $9.1 million.

Operating Expenses

Our expenses for the 2018 Successor Period, the 2018 Predecessor Period and the
year ended December 31, 2017 were as follows:




                                                    Successor              Predecessor           Predecessor
                                               October 1, 2018 to     

January 1, 2018 to Year Ended

                                                December 31, 2018

September 30, 2018December 31, 2017

                                                                        (in 

thousands)

Employee compensation and benefits(1)          $            80,436     $           209,053   $           248,963
Depreciation and amortization                               33,020                  48,808                68,615
Technology and communications(1)                             9,907                  26,598                30,013
General and administrative(1)                               11,837                  23,056                33,973
Professional fees(1)                                         8,197                  20,360                19,351
Occupancy                                                    3,308                  10,732                14,441
Total Expenses                                 $           146,705     $           338,607   $           415,356

——————————————————————————–

(1) The change in basis resulting from the Refinitiv Transaction and the

application of pushdown accounting did not impact these operating expense

accounts.



Employee Compensation and Benefits.  Employee compensation and benefits expense
for the 2018 Successor Period and the 2018 Predecessor Period was $80.4 million
and $209.1 million, respectively. Employee compensation and benefits expense
increased by $40.5 million or 16.3% to $289.5 million for the combined year
ended December 31, 2018 from $249.0 million for the year ended December 31,
2017. The increase was due to a $14.1 million increase in salaries and benefits,
due to an increase in employee headcount, and an increase in annual incentive
compensation of $26.0 million, which is based on operating performance,
primarily due to our financial results. Total employee headcount increased to
919 as of December 31, 2018 from 857 as of December 31, 2017.



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Depreciation and Amortization.  Depreciation and amortization expense for the
2018 Successor Period and the 2018 Predecessor Period was $33.0 million and
$48.8 million, respectively. Depreciation and amortization expense was
$68.6 million for the year ended December 31, 2017. As a result of the Refinitiv
Transaction and the application of pushdown accounting, we adjusted our assets
and liabilities to their estimated fair market values as of October 1, 2018,
which resulted in an increase in depreciation of tangible assets and
amortization of our intangible assets. The impact of such adjustments increased
depreciation and amortization expense during the 2018 Successor Period by
$15.9 million.



General and Administrative.  General and administrative expense for the 2018
Successor Period and the 2018 Predecessor Period was $11.8 million and
$23.1 million, respectively. General and administrative expense increased by
$0.9 million or 2.7% to $34.9 million for the combined year ended December 31,
2018 from $34.0 million for the year ended December 31, 2017. The increase was
primarily a result of $1.0 million in recruiting and expatriate expense,
$0.9 million increase in marketing expense due to increased marketing efforts
for key growth, client acquisition and regulatory initiatives, $0.5 million
increase in value-added taxes and $0.8 million increase in other administrative
fees, partially offset by a reduction in foreign exchange losses of
$2.4 million.



Technology and Communications.  Technology and communications expense for the
2018 Successor Period and the 2018 Predecessor Period was $9.9 million and
$26.6 million, respectively. Technology and communications expense increased by
$6.5 million or 21.6% to $36.5 million for the combined year ended December 31,
2018 from $30.0 million for the year ended December 31, 2017. The increase was
primarily due to an increase in third-party software and technology maintenance
and support as a result of certain cybersecurity and infrastructure initiatives
and increased clearance fees as a result of higher trading volumes.



Professional Fees.  Professional fees for the 2018 Successor Period and the 2018
Predecessor Period was $8.2 million and $20.4 million, respectively.
Professional fees increased by $9.2 million or 47.6% to $28.6 million for the
combined year ended December 31, 2018 from $19.4 million for the year ended
December 31, 2017. The increase was primarily due to higher investment banking
advisory, legal and audit fees, including fees incurred in connection with the
IPO.



Occupancy.  Occupancy expense for the 2018 Successor Period and the 2018
Predecessor Period was $3.3 million and $10.7 million, respectively. Occupancy
expense for the year ended December 31, 2017 was $14.4 million. As a result of
the Refinitiv Transaction and the application of pushdown accounting, at
October 1, 2018, we established a leasehold interest liability, which resulted
in a $0.1 million decrease in occupancy expense in the 2018 Successor Period.



Net Interest Income (Expense)




Net interest income for the 2018 Successor Period and the 2018 Predecessor
Period was $0.8 million and $1.7 million, respectively. Net interest income for
the year ended December 31, 2017 was $0.7 million. Net interest income for the
2018 Successor Period and the 2018 Predecessor Period was impacted by an
increase in interest rates. Net interest income for the year ended December 31,
2017 was impacted by the conversion of our former convertible notes into equity
in May 2017.



Income Taxes



Provision for income taxes for the 2018 Successor Period and the 2018
Predecessor Period was $3.4 million and $11.9 million, respectively. Provision
for income taxes for the year ended December 31, 2017 was $6.1 million.
Provision for income taxes for the 2018 Successor Period and the 2018
Predecessor Period was impacted by increased earnings which resulted in higher
tax expense in certain jurisdictions. Provision for income taxes for the 2018
Predecessor Period was also impacted by a $3.3 million adjustment related to an
uncertain tax position during the period.



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Quarterly Results of Operations




Our quarterly results have been and will continue to be affected by changes in
trading volumes due to market conditions, changes in the number of trading days
during certain quarters and seasonal effects caused by slow-downs in trading
activity during certain periods. As a result of these and other factors, our
financial results for any single quarter or for periods of less than a year are
not necessarily indicative of the results that may be achieved for a full fiscal
year or any future periods. For our quarterly results of operations for the
years ended December 31, 2019 and 2018, see Note 21-Quarterly Results of
Operations to our audited consolidated financial statements included elsewhere
in this Annual Report on Form 10-K.



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
flows from operations and availability under the Revolving Credit Facility and
their sufficiency to fund our operating and investing activities.

Historically, we have generated significant cash flows from operations and have
funded our business operations through cash on hand and cash flows from
operations.


Our primary cash needs are for day to day operations, working capital
requirements, capital expenditures, primarily for software and equipment, and
our expected dividend payments. In addition, we are obligated to make payments
under the Tax Receivable Agreement. Although the actual timing and amount of any
payments that may be made under the Tax Receivable Agreement will vary, we
expect that the payments that we will be required to make under the Tax
Receivable Agreement 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. Total
amounts due to the Continuing LLC Owners as of December 31, 2019 under the Tax
Receivable Agreement were $240.8 million.

We expect to fund our 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 event of an unexpected event in
the future or otherwise, we may fund our liquidity requirements through
borrowings under the Revolving Credit Facility.

We believe that our projected cash position, cash flows from operations and, if
necessary, borrowings under the Revolving Credit Facility, will be sufficient to
fund our liquidity requirements for at least the next 12 months. However, our
future liquidity requirements could be higher than we currently expect as a
result of various factors. For example, any future investments, acquisitions,
joint ventures or other similar transactions, which we consider from time to
time, may 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 December 31, 2019 and 2018, we had cash and cash equivalents of
approximately $460.7 million and $410.1 million, respectively. All cash and cash
equivalents were held in accounts with banks such that the funds are immediately
available or in fixed term deposits with a maximum maturity of three months.

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Factors Influencing Our Liquidity and Capital Resources

Dividend Policy


Subject to legally available funds, we intend to continue to pay quarterly cash
dividends on our Class A common stock and Class B common stock equal to $0.08
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. Dividends declared and paid to Class A and B
common stockholders during the year ended December 31, 2019 amounted to $35.9
million.

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. See "Risk Factors -
Risks Relating to the Company and Our Organizational Structure - Our principal
asset is our equity interest in TWM LLC, and, accordingly, we depend on
distributions from TWM LLC to pay our taxes and expenses, including payments
under the Tax Receivable Agreement" and "Risk Factors - Risks Relating to
Ownership of our Class A common stock - We intend to pay regular dividends on
our Class A common stock and Class B common stock, but our ability to do so may
be limited."

Cash Distributions

In March and April 2019, TWM LLC made pre-IPO cash distributions to the Original
LLC Owners in aggregate amounts of $20.0 million and $100.0 million,
respectively.

In May, September and December 2019, TWM LLC made quarterly cash distributions
to its equityholders, including Tradeweb Markets Inc., in aggregate amounts
of $33.4 million, $33.0 million and $45.8 million, respectively.

Cash Dividends


In June, September and December 2019, Tradeweb Markets Inc. paid quarterly cash
dividends to the holders of Class A common stock and Class B common stock in
aggregate amounts of $11.4 million, $11.4 million and $13.1 million,
respectively.

On February 11, 2020, our board of directors declared a cash dividend of $0.08
per share of Class A common stock and Class B common stock for the first quarter
of 2020. This dividend will be payable on March 16, 2020 to stockholders of
record as of March 2, 2020.

Indebtedness

As of December 31, 2019 and 2018, we had no outstanding indebtedness.

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Historically, the Company has only issued debt in connection with significant
investment transactions and all debt issued by the Company has been issued to
subsidiaries of Thomson Reuters. In 2013, we issued $29.3 million of convertible
notes to a subsidiary of Thomson Reuters in connection with the acquisition of
BondDesk Group LLC and subsidiaries. During 2017, Thomson Reuters converted all
outstanding convertible notes into equity.

On April 8, 2019, TWM LLC entered into the Revolving Credit Facility with a
syndicate of banks. The Revolving Credit Facility provides borrowing capacity to
be used to fund our ongoing working capital needs, letters of credit and for
general corporate purposes, including potential future acquisitions and
expansions.



On November 7, 2019, TWM LLC entered into an amendment to the Revolving Credit
Facility among TWM LLC and the lenders party thereto, which revised the
Revolving Credit Facility to permit the pending LSEG Transaction. The amendment
did not otherwise impact the terms of the Revolving Credit Facility and did not
impact the amount of borrowings available to TWM LLC under the Revolving Credit
Facility.

TWM LLC is the borrower under the Revolving Credit Facility. The Revolving
Credit Facility permits borrowings of up to $500.0 million by TWM LLC. Subject
to the satisfaction of certain conditions, we will be able to increase the
Revolving Credit Facility by $250.0 million with the consent of lenders
participating in the increase. The Revolving Credit Facility provides for the
issuance of up to $5.0 million of letters of credit as well as borrowings on
same-day notice, referred to as swingline loans, in an amount of up to $30.0
million. The Revolving Credit Facility will mature on April 8, 2024.

As of December 31, 2019, there were no amounts outstanding under the Revolving
Credit Facility and we had availability of $500.0 million.


Under the terms of the credit agreement that governs the Revolving Credit
Facility, borrowings under the Revolving Credit Facility bear interest at a rate
equal to, at our 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 1.0% and (iii) one month LIBOR plus 1.0%, in each case plus 0.75%, or (b)
LIBOR plus 1.75%, subject to a 0.00% floor. The credit agreement also requires
that we pay a commitment fee of 0.25% for available but unborrowed amounts. We
are also required to pay customary letter of credit fees and agency fees.

We have the option to voluntarily repay outstanding loans at any time without
premium or penalty other than customary "breakage" costs with respect to LIBOR
loans.

There will be no scheduled amortization under the Revolving Credit Facility. The
principal amount outstanding will be due and payable in full at maturity.


Obligations under the Revolving Credit Facility are guaranteed by our existing
and future direct and indirect material wholly-owned domestic subsidiaries,
subject to certain exceptions. The Revolving Credit Facility is secured by a
first-priority security interest in substantially all of the assets of TWM LLC
and the guarantors under the facility, subject to certain exceptions.

The credit agreement that governs the Revolving Credit Facility contains a
number of covenants that, among other things and subject to certain exceptions,
restrict the ability of TWM LLC and the ability of its restricted subsidiaries
to:

 ·  incur additional indebtedness and guarantee indebtedness;


 ·  create or incur liens;


 ·  pay dividends and distributions or repurchase capital stock;


 ·  make investments, loans and advances; and


 ·  enter into certain transactions with affiliates.


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The Revolving Credit Facility contains a financial covenant requiring compliance
with a (i) maximum total net leverage ratio tested on the last day of each
fiscal quarter not to exceed 3.5 to 1.0 (increasing to 4.0 to 1.0 for the
four-quarter period following a material acquisition and the fiscal quarter in
which such material acquisition is consummated) and (ii) minimum cash interest
coverage ratio tested on the last day of each fiscal quarter not less than 3.0
to 1.0.

The credit agreement that governs the Revolving Credit Facility also contains
certain affirmative covenants and events of default customary for facilities of
this type, including relating to a change of control. If an event of default
occurs, the lenders under the Revolving Credit Facility will be entitled to take
various actions, including the acceleration of amounts due under the Revolving
Credit Facility and all actions permitted to be taken by secured creditors under
applicable law.

As of December 31, 2019, we were in compliance with all the covenants set forth
in the Revolving Credit Facility.

Capital 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 U.K., 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 December 31, 2019 and 2018, each of our regulated
subsidiaries had maintained sufficient net capital or financial resources to at
least satisfy their minimum requirements which in aggregate were $53.2 million
and $41.7 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.

Fails to Deliver/Fails to Receive


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.

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 from affiliates. Current
liabilities consist of payable to brokers and dealers and clearing
organizations, accrued compensation, deferred revenue, accounts payable, accrued
expenses and other liabilities, employee equity compensation payable, lease
liability, payable to affiliates 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

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patterns, changes in client billing terms and other changes in the demand for
our platforms and solutions. Our working capital was as follows:


                                                                     Successor          Successor
                                                                   December 31,       December 31,
                                                                       2019               2018
                                                                        (dollars in thousands)
Cash and cash equivalents                                         $       460,711$       410,104
Restricted cash                                                             1,000              1,200
Receivable from brokers and dealers and clearing organizations             30,641            174,591
Deposits with clearing organizations                                        9,724             11,427
Accounts receivable                                                        92,814             87,192
Receivable from affiliates                                                  2,525              3,243
Current assets                                                            597,415            687,757
Payable to brokers and dealers and clearing organizations                  30,452            171,214
Accrued compensation                                                      119,415            120,158
Deferred revenue                                                           23,990             27,883
Accounts payable, accrued expenses and other liabilities                   32,834             42,548
Employee equity compensation payable                                        1,048             24,187
Lease liability                                                             8,516                  -
Payable to affiliates                                                       1,506              5,009
Tax receivable agreement liability                                          6,949                  -
Current liabilities                                                       224,710            390,999
Working capital                                                   $       372,705$       296,758




Current assets

Current assets decreased to $597.4 million as of December 31, 2019 from $687.8
million as of December 31, 2018 due to a decrease in receivable from brokers and
dealers and clearing organizations resulting from a lower number of fails to
deliver from unsettled wholesale platform transactions, offset by higher cash
and cash equivalents as a result of an increase in gross revenues.

Current liabilities


Current liabilities decreased to $224.7 million as of December 31, 2019 from
$391.0 million as of December 31, 2018 due to a decrease in payable to brokers
and dealers and clearing organizations resulting from a lower number of fails to
receive from unsettled wholesale platform transactions and a decrease in
employee equity compensation payable as a result of payments of cash-settled
PRSUs.

See “- Liquidity and Capital Resources – Factors Influencing Our Liquidity and
Capital Resources – Capital Requirements.”

Cash Flows


Our cash flows for the year ended December 31, 2019, the 2018 Successor Period,
the 2018 Predecessor Period and the year ended December 31, 2017 were as
follows:


                                          Successor           Successor          Predecessor       Predecessor
                                                                                  January 1,
                                         Year Ended        October 1, 2018           2018          Year Ended
                                        December 31,              To                  to          December 31,
                                                                                September 30,
                                            2019          December 31, 2018          2018             2017
                                                                    (in thousands)
Net cash flows provided by
operating activities                   $       311,003    $          112,556    $      164,828$       224,580
Net cash flows (used in) investing
activities                                    (44,462)              (16,246)          (25,850)          (45,552)
Net cash flows (used in) financing
activities                                   (218,142)              (36,000)         (139,350)         (153,461)
Effect of exchange rate changes on
cash and cash equivalents                        2,008                 (389)           (2,043)             3,157
Net increase (decrease) in cash and
cash equivalents                       $        50,407    $           59,921    $      (2,415)$        28,724




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Operating Activities

Operating activities consist primarily of net income adjusted for noncash items
that include depreciation and amortization, stock-based compensation expense and
contingent consideration. 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 year ended December 31, 2019
was $311.0 million and primarily driven by an increase in gross revenue.


Net cash provided by operating activities for the 2018 Successor Period and the
2018 Predecessor Period was $112.6 million and $164.8 million, respectively,
which was primarily driven by increased gross revenue partially offset in the
2018 Predecessor Period by an increase in accounts receivable due to changes to
the billing process associated with MiFID II resulting in less billings annually
in advance and more billings monthly in arrears.

Net cash provided by operating activities for the year ended December 31, 2017
was $224.6 million, which was primarily driven by an increase in gross revenue
and an improvement in working capital.

Investing Activities

Investing activities consist 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 $44.5 million for the year ended
December 31, 2019, which consisted of $28.7 million of capitalized software
development costs and $15.8 million of purchases of furniture, equipment,
purchased software and leasehold improvements. For the year ending December 31,
2020
, we expect capital expenditures and capitalization of software of $45
million
to $50 million.


Net cash used in investing activities was $16.2 million for the 2018 Successor
Period, which consisted of $7.2 million of capitalized software development
costs and $9.1 million of purchases of furniture, equipment, purchased software
and leasehold improvements. Net cash used in investing activities was $25.9
million for the 2018 Predecessor Period, which consisted of $19.5 million of
capitalized software development costs and $6.3 million of purchases of
furniture, equipment, purchased software and leasehold improvements.

Net cash used in investing activities was $45.6 million for the year ended
December 31, 2017, which consisted of $27.2 million of capitalized software
development costs, $13.5 million of purchase of furniture, equipment, purchased
software and leasehold improvements and $5.0 million of purchase of investments.

Financing Activities


Financing activities consist of purchases of LLC Interests, cash dividends to
our Class A common stockholders and Class B common stockholders during the
post-IPO period and cash distributions from TWM LLC to the Original LLC Owners
during the pre-IPO period.

Net cash used in financing activities for the year ended December 31, 2019 was
$218.1 million, which consisted of purchases of LLC Interests and shares of
Class A common stock of $1,971.2 million from certain of the Bank Stockholders
and members of management using the net proceeds from the IPO and the October
2019 follow-on offering, as applicable, cash dividends to our Class A and
Class B common stockholders of $35.9 million, capital distributions to
non-controlling interests of $38.3 million and pre-IPO capital distributions of
$120.0 million, which includes a one-time distribution of $100.0 million paid to
the Original LLC Owners in connection with the IPO.

Net cash used in financing activities for the 2018 Successor Period and the 2018
Predecessor Period was $36.0 million and $139.4 million, respectively, which
consisted of capital distributions to the Original LLC Owners.

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Net cash used in financing activities was $153.5 million for the year ended
December 31, 2017, which consisted of capital distributions to the Original LLC
Owners.


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 to measure liquidity. Free Cash Flow is defined as
cash flow from operating activities less 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 expenditures for capitalized
software development costs and furniture, equipment and leasehold improvements.

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 year ended December 31, 2019, the
2018 Successor Period, the 2018 Predecessor Period and the year ended December
31, 2017:


                                            Successor             Successor            Predecessor             Predecessor
                                              Year             October 1, 2018       January 1, 2018              Year
                                              Ended                  to                    to                     Ended
                                          December 31,          December 31,          September 30,           December 31,
                                              2019                  2018                  2018                    2017

Cash flow from operating activities $ 311,003$ 112,556 $

           164,828       $   224,580
Less: Capitalization of software
development costs                               (28,681)                (7,156)                   (19,523)          (27,157)
Less: Purchases of furniture,
equipment and leasehold improvements            (15,781)                (9,090)                    (6,327)          (13,461)
Free Cash Flow                           $       266,541       $         96,310        $           138,978       $   183,962

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin,
Adjusted Net Income and Adjusted Diluted EPS


In addition to net income 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 measures of our
operating performance and Adjusted Net Income and Adjusted Diluted EPS as
measures of our profitability.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin


Adjusted EBITDA is defined as net income before contingent consideration, net
interest income, provision for income taxes and depreciation and amortization,
adjusted for the impact of certain other items, including certain stock-based
compensation expense and payroll taxes associated with certain option exercises,
tax receivable agreement liability adjustments and gains and losses from
outstanding foreign exchange forward contracts and the revaluation of foreign
denominated cash. Adjusted EBIT is defined as net income before contingent
consideration, net interest income and provision for income taxes, adjusted for
the impact of certain other items, including certain stock-based compensation
expense and payroll taxes associated with certain option exercises, tax
receivable agreement liability adjustments, acquisition and Refinitiv
Transaction-related depreciation and amortization and gains and losses from
outstanding foreign exchange forward contracts and the revaluation of foreign
denominated cash. Adjusted EBITDA margin and Adjusted EBIT margin are defined as
Adjusted EBITDA and Adjusted EBIT, respectively, divided by gross

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revenue for the applicable period. 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 contingent
consideration because it is equity settled and its balance is based on our value
at a certain time and may not reflect our actual operating performance. We also
exclude non-cash stock-based compensation expense associated with the Special
Option Award discussed below under "- Critical Accounting Policies and Estimates
- Stock-Based Compensation" and options awarded to management and other
employees following the IPO during 2019 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. We do not expect to
exclude any non-cash stock-based compensation expense associated with options
that may be awarded to management and other employees during 2020. In addition,
we exclude the tax receivable agreement liability adjustments discussed below
under "- Critical Accounting Policies and Estimates - Tax Receivable Agreement."
We believe it is useful to exclude the tax receivable agreement liability
adjustment because the recognition of income during a period due to changes in
the tax receivable agreement liability recorded in our consolidated statement of
financial condition as a result of changes in the mix of earnings, tax
legislation and tax rates in various jurisdictions, or other factors that may
impact our tax savings, may not directly correlate to the underlying performance
of our business and will vary across periods. With respect to Adjusted EBIT and
Adjusted EBIT margin, we believe it is useful to exclude the depreciation and
amortization of acquisition related tangible and intangible assets resulting
from certain acquisitions, the Refinitiv Transaction and the application of
pushdown accounting 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 it is 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


We present Adjusted Net Income and Adjusted Diluted EPS for Tradeweb Markets
Inc. for post-IPO periods and Tradeweb Markets LLC for pre-IPO periods. As
discussed below, because Adjusted Net Income and Adjusted Diluted EPS give
effect to certain tax related adjustments to reflect an assumed effective tax
rate for all periods presented and, for post-IPO periods, assumes all LLC
Interests held by non-controlling interests are exchanged for shares of Class A
or Class B common stock, we believe that Adjusted Net Income and Adjusted
Diluted EPS for Tradeweb Markets Inc. and Tradeweb Markets LLC are comparable.

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., for post-IPO periods, and net income, for
pre-IPO periods, in each case adjusted for contingent consideration, certain
stock-based compensation expense and payroll taxes associated with certain
option exercises, tax receivable liability adjustments, acquisition and
Refinitiv Transaction related depreciation and amortization and gains and losses
from outstanding foreign exchange forward contracts and the revaluation of
foreign denominated cash. Adjusted Net Income also gives effect to certain tax
related adjustments to reflect an assumed effective tax rate and, for pre-IPO
periods, assumes TWM LLC was subject to a corporate tax rate for the periods
presented. 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, 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, for post-IPO periods, and the
diluted weighted average number of shares of TWM LLC outstanding for the
applicable period, for pre-IPO periods. The diluted weighted average number of
shares outstanding for the pre-IPO periods and post-IPO periods give effect to
potentially dilutive securities using the treasury stock method.

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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 contingent
consideration, 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, tax receivable liability adjustments 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.

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, 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.



The table set forth below presents a reconciliation of net income to Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin for the
year ended December 31, 2019, the 2018 Successor Period, the 2018 Predecessor
Period and the year ended December 31, 2017:




                                             Successor           Successor         Predecessor                   Predecessor
                                                                 October 1,
                                               Year                 2018           January 1, 2018                         Year
                                               Ended                 to                   to                               Ended
                                                                  December
                                           December 31,              31,            September 30,                      December 31,
                                               2019                 2018                 2018                              2017

Net income                                $       173,024$    29,307    $              130,160             $              83,648
Contingent consideration                                -                  -                    26,830                            58,520
Interest income, net                              (2,373)              (787)                   (1,726)                             (685)
Depreciation and amortization                     139,330             33,020                    48,808                            68,615
Stock-based compensation expense(1)                25,098                  -                         -                                 -
Provision for income taxes                         52,302              3,415                    11,900                             6,129
Unrealized foreign exchange (gains) /
losses                                            (2,310)                263                     (960)                             (364)
(Gain) / loss from revaluation of
foreign denominated cash(2)                         1,225                 90                     (921)                             (678)
Tax receivable agreement liability
adjustment(3)                                    (33,134)                  -                         -                                 -
Adjusted EBITDA                           $       353,162$    65,308    $              214,091             $             215,185
Less: Depreciation and amortization             (139,330)           (33,020)                  (48,808)                          (68,615)
Add: Acquisition and Refinitiv
Transaction related D&A(4)                         97,565             22,413                    19,576                            31,236
Adjusted EBIT                             $       311,397$    54,701    $              184,859             $             177,806
Adjusted EBITDA margin                               45.5 %             36.6 %                    42.3 %                            38.2 %
Adjusted EBIT margin                                 40.2 %             30.6 %                    36.5 %                            31.6 %

——————————————————————————–

(1) 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 exercises of such options during the applicable period.

(2) Represents foreign exchange gain or loss from the revaluation of cash

denominated in a different currency than the entity’s functional currency.



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(3) Represents income recognized during the applicable period due to changes in

the tax receivable agreement liability recorded in the 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.


 (4)  Represents acquisition-related intangibles amortization and increased
      tangible asset and capitalized software depreciation and amortization

resulting from the Refinitiv Transaction and the application of pushdown

accounting (where all assets were marked to fair value as of the closing date

of the Refinitiv Transaction).



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 year ended December 31, 2019, the 2018
Successor Period and the 2018 Predecessor Period:


                                       Successor            Successor             Predecessor          Predecessor
                                                           October 1,
                                         Year                 2018              January 1, 2018            Year
                                         Ended                 to                     to                  Ended
                                                            December
                                     December 31,              31,               September 30,        December 31,
                                         2019                 2018                   2018                  2017

Earnings per diluted share(1)                  0.19 (a)
                                    $          0.54 (b)    $      0.13 (a)     $            0.60 (a)  $         0.39 (a)
Pre-IPO net income attributable
to Tradeweb Markets LLC (1)                  42,352 (a)         29,307 (a)               130,160 (a)          83,648 (a)
Add: Net income attributable to
Tradeweb Markets Inc. (1)                    83,769 (b)              -                         -                   -
Add: Net income attributable to
non-controlling interests (1)(2)             46,903 (b)              -                         -                   -
Net income                          $       173,024 (a)(b) $    29,307 (a)     $         130,160 (a)  $       83,648 (a)
Provision for income taxes                   52,302              3,415                    11,900               6,129
Contingent consideration                          -                  -                    26,830              58,520
Acquisition and Refinitiv
Transaction related D&A(3)                   97,565             22,413                    19,576              31,236
Stock-based compensation
expense(4)                                   25,098                  -                         -                   -
Unrealized foreign exchange
(gains) / losses                            (2,310)                263                     (960)               (364)
(Gain) / loss from revaluation
of foreign denominated cash(5)                1,225                 90                     (921)               (678)
Tax receivable agreement
liability adjustment(6)                    (33,134)                  -                         -                   -
Adjusted Net Income before
income taxes                                313,770             55,488                   186,585             178,491
Adjusted income taxes(7)                   (82,835)           (14,649)                  (49,258)            (47,122)
Adjusted Net Income                 $       230,935$    40,839         $         137,327      $      131,369
Adjusted Diluted EPS (1)(8)         $          0.23 (a)
                                    $          0.77 (b)    $      0.18 (a)     $            0.64 (a)  $         0.62 (a)

--------------------------------------------------------------------------------

(1) In April 2019, we completed the Reorganization Transactions and the

IPO. Therefore, certain earnings information is being presented separately

      for Tradeweb Markets LLC and Tradeweb Markets Inc.


 (a)  Presents information for Tradeweb Markets LLC (pre-IPO period).


 (b)  Presents information for Tradeweb Markets Inc. (post-IPO period).

See “Basis of Presentation” and Note 18 – Earnings Per Share to our audited
consolidated financial statements included elsewhere in this Annual Report on
Form 10-K.

(2) For post-IPO periods, 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.

(3) Represents acquisition-related intangibles amortization and increased

tangible asset and capitalized software depreciation and amortization

resulting from the Refinitiv Transaction and the application of pushdown

accounting (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 exercises of such options during the applicable period.

(5) Represents 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 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 26.4%

for all periods presented applied to Adjusted Net Income before income taxes.

For pre-IPO periods, this adjustment assumes Tradeweb Markets LLC was subject

to a corporate tax rate for the periods presented.

(8) Due to the Reorganization Transactions and the IPO completed in April 2019,

shares outstanding during the year ended December 31, 2019 represent shares

of TWM LLC (pre-IPO period) and shares of Class A and Class B common stock of

      Tradeweb Markets Inc. (post-IPO period).


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The table set forth below summarizes the calculation of Adjusted Diluted EPS for
the periods presented above:


                                                   Pre-IPO Period                              Post-IPO Period                         Successor                     Predecessor                        Predecessor

                                                    Three Months                                 Nine Months                        October 1, 2018January 1, 2018                         Year
                                                        Ended                                       Ended                                 to                            to                                Ended
                                                     March 31,                                  December 31,                         December 31,                  September 30,                      December 31,
                                                        2019                                        2019                                 2018                          2018                               2017
Diluted weighted average TWM LLC shares
outstanding                                                           223,320,457                                        -                222,243,851                            215,365,920                         

212,568,635

Diluted weighted average shares of Class
A and Class B common stock outstanding                                          -                              156,540,246                          -                                      -                                   -
Assumed exchange of LLC interests for
shares of Class A or Class B common
stock (1)                                                                       -                               74,279,741                          -                                      -                                   -
Adjusted diluted weighted average shares
outstanding                                                           223,320,457                              230,819,987                222,243,851                            215,365,920                         

212,568,635

Adjusted Net Income (in thousands)                $                        52,190        $                         178,745        $            40,839     $                          137,327                  $          131,369
Adjusted Diluted EPS                              $                          0.23        $                            0.77        $              0.18     $                             0.64                  $             0.62

——————————————————————————–

(1) Assumes the full exchange 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.

Contractual Obligations

As of December 31, 2019, we had the following contractual obligations:


                                                                            Payments due by period
                                        Total      Less than 1 year      1 to 3 years     3 to 5 years     More than 5 years
                                                                          (in thousands)
Lease obligations                     $  33,752   $         8,516      $         10,089   $       7,514   $             7,633
Tax receivable agreement liability      240,817             6,949                49,000          14,316               170,552
Total                                 $ 274,569   $           15,465   $         59,089   $      21,830   $           178,185

Our operating lease obligations are primarily related to rental payments under
lease agreements for office space in the United States and United Kingdom
through December 2027.


Liabilities under the Tax Receivable Agreement include amounts to be paid to
Continuing LLC Owners, assuming we will have sufficient taxable income over the
term of the Tax Receivable Agreement to utilize the related tax benefits.

In the normal course of business, we enter into user agreements with our dealer
clients which indemnify such clients from third parties in the event that our
network infringes upon the intellectual property or other proprietary right of a
third party. Our exposure under these user agreements is unknown as this would
involve estimating future claims against the Company that have not yet occurred.
However, based on our experience, we expect the risk of a material loss to be
remote.

Off-Balance Sheet Arrangements

As of December 31, 2019, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates


Our 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. 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. With respect to critical
accounting policies, 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 - Summary of Significant
Accounting Policies" to our audited consolidated financial statements included
elsewhere in this Annual Report on Form 10-K.

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Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in our consolidated financial statements and accompanying notes.
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. Such estimates include pushdown
accounting, intangible assets, goodwill, software development costs, stock based
compensation, contingent consideration payable and current and deferred income
taxes.

Pushdown Accounting

The Refinitiv Transaction was accounted for by Refinitiv in accordance with the
acquisition method of accounting pursuant to ASC 805 "Business Combinations" and
pushdown accounting was applied to Refinitiv to record the fair value of the
assets and liabilities of Refinitiv on the date of the Refinitiv Transaction.
We, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv
Transaction using pushdown accounting. Under pushdown accounting, the excess of
our fair value above the fair value accounting basis of our net assets and
liabilities is 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.

In determining the fair value of the assets acquired and the liabilities
assumed, we considered a report of a third-party valuation expert. Management is
responsible for these internal and third-party valuations and appraisals.

Intangible Assets


We amortize our intangible assets over the estimated useful lives and test for
impairment whenever events or changes in circumstances suggest that an asset's
or asset group's carrying value may not be fully recoverable. We test our
intangible assets with an indefinite useful life 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 carrying value. Intangible assets are amortized over their
estimated useful lives of seven to sixteen years.

Goodwill


Goodwill arises out of pushdown accounting and business combinations and is the
cost of acquired companies in excess of the fair value of identifiable net
assets at acquisition date. We test our goodwill at least annually for
impairment and recognize an impairment loss if the estimated fair value of a
reporting unit is less than its net book value. The Company is one reporting
unit for goodwill impairment testing purposes. The fair value of a reporting
unit is calculated based on the fair market value of our Class A common stock
and Class B common stock. We calculate such loss as the difference between the
estimated fair value of goodwill and its carrying value. If future events or
results differ adversely from the estimates and assumptions made at acquisition
or as part of subsequent impairment tests, we may record increased impairment
charges in the future.

Software Development Costs

We capitalize certain 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, including among
other items, 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. Costs capitalized as part of the pushdown
accounting allocation are amortized over nine years. We review 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.

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Due to rapidly changing technology and the uncertainty of the software
development process itself, future results could be affected if management’s
current assessment of its software projects differs from actual performance.

Revenue Recognition


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 variable transaction fees, we charge clients fees based on the mix of
products traded and the volume of transactions executed.

We earn subscription fees primarily for granting clients access to our markets
for trading and market data. Subscription fees are generally generated on a
fixed price basis.


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.

We earn fees from Refinitiv relating to the sale of market data to Refinitiv,
which redistributes that data. Included in these fees are real-time market data
fees which are recognized in the period that the data is provided, generally on
a monthly basis, and fees for historical data sets which are recognized when the
historical data set is provided to Refinitiv.

On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with
Customers, using the modified retrospective approach. The adoption of ASU
2014-09 did not have a material impact on the measurement or timing of
recognition of revenue in any prior reporting periods. However, we are required
to make significant judgements for the Refinitiv market data fees. Significant
judgements used in accounting for this contract include:

· The provision of real-time market data feeds and annual historical data sets

are distinct performance obligations.

· The performance obligations under this contract are recognized over time from

the initial delivery of the data feeds or each historical data set until the

end of the contract term.

· Determining the transaction price for the performance obligations by using a

market assessment analysis. Inputs in this analysis include a consultant study

which determined the overall value of our market data and pricing information

for historical data sets provided by other companies.

Stock-Based Compensation


The stock-based compensation that our employees receive is accounted for as
equity or liability awards. As a stock-based equity award, 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 and members'
capital in our audited consolidated financial statements included elsewhere in
this Annual Report on Form 10-K). As a stock-based liability award, the cost of
the employee services received in exchange for an award of equity instruments is
generally measured based on the grant-date fair value of the award. The fair
value of that award is remeasured subsequently at each reporting date through to
settlement. Changes in the fair value of the equity instrument are recognized as
compensation cost over that period in our consolidated statements of income. For
grants made during the post-IPO period, the fair value of the equity instruments
is determined based on the price of our Class A common stock on the grant date.
For grants made during the pre-IPO period, the fair value of the equity
instruments was determined in accordance with the American Institute of
Certified Public Accountants Practice Aid, Valuation of Privately Held Company
Securities Issued as Compensation. Factors that were considered in determining
the fair value include forecasted future cash flows, the weighted average cost
of capital, and the performance multiples of comparable companies.

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On December 31, 2018, certain PRSUs, which previously were cash-settled, were
converted to equity-settled PRSUs. The conversion was at fair value, using a
unit price consistent with the share price of the Company. As a result of the
modification, an additional $19.1 million was recorded in equity.

Prior to the IPO, we awarded options to management and other employees
(collectively, the "Special Option Award") under the Amended and Restated
Tradeweb Markets Inc. Option Plan. In accounting for the options issued under
this plan, we measure and recognize compensation expense for all awards based on
their estimated fair values measured as of the grant date. Costs related to
these options are recognized as an expense in our consolidated statements of
income over the requisite service period, with an offsetting increase to
additional paid-in capital. We expect the non-cash stock-based compensation
expense associated with the Special Option Award to be between approximately
$33.5 million and $35.7 million, which we started to expense beginning in the
second quarter of 2019, with a charge of $20.4 million during the second quarter
of 2019 ($18.9 million of which was charged immediately upon the completion of
the IPO), and will continue to expense over the following three years.

We use the Black-Scholes pricing model to value some of our stock-based awards.
Determining the appropriate fair value model and calculating the fair value of
the stock-based awards requires the input of highly subjective assumptions,
including the expected life of the stock-based awards, the number of expected
stock-based awards that will be forfeited prior to the completion of the vesting
requirements, and the stock price volatility.

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 us for the post-IPO period. 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 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. We believe that
it is more likely than not that the Company will be able to realize its deferred
tax assets in the future; therefore, no valuation allowance is necessary.

We recognize interest and penalties related to unrecognized tax benefits within
the provision for income taxes in our consolidated statements of income. Accrued
interest and penalties are included within accounts payable, accrued expenses
and other liabilities in our consolidated statements of financial condition.

On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act
("TCJA") effective for tax years ending after December 31, 2017. This
legislation replaces the prior corporate tax rate structure with a flat 21%
rate, effective in 2018. There were many other impacts of the tax reform such as
the repeal of the corporate alternative minimum tax rate, tax loss carryback and
carryforward limitations effective in 2019.

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 such Continuing LLC Owner, including with the net
proceeds from the IPO, the October 2019 follow-on offering and any future
offering or (b) redemptions or exchanges by such Continuing LLC

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Owner of LLC Interests for shares of Class A common stock or Class B common
stock or for cash, as applicable, and (ii) certain other tax benefits related to
Tradeweb Markets Inc. making payments under the Tax Receivable Agreement.


We recorded an initial liability of $171.4 million related to our projected
obligations under the Tax Receivable Agreement with respect to LLC Interests
that were purchased by us using the net proceeds from the IPO. The impact of any
changes in the projected obligations under the Tax Receivable Agreement as a
result of changes in the geographic mix of the our earnings, changes in tax
legislation and tax rates or other factors that may impact our tax savings will
be reflected in income before taxes in the period in which the change occurs.
During 2019, the liability increased to $240.8 million primarily due to the
purchase of additional LLC Interests using the net proceeds from the October
2019 follow-on offering, as well as exchanges of LLC Interests by Continuing LLC
owners during the year ended December 31, 2019, partially offset by changes in
tax rates of $33.1 million recorded in our consolidated income statement as tax
receivable agreement liability adjustment.

Contingent Consideration


In 2014, we issued Class A Shares and unvested Class P-1(A) Shares to some of
the Bank Stockholders as a result of a capital contribution to facilitate our
expansion into new credit products. The proceeds from the issuance of the shares
were included in members' capital. In connection with the investment, certain
employees also invested in the Company and were issued Class C Shares and
unvested Class P-1(C) Shares. The proceeds from the issuance of these shares
were included in members' capital. The Class A Shares and Class C Shares issued
in connection with the investment equally participated in the earnings of the
Company together with the other Class A Shares, Class P(A) Shares, Class C
Shares and Class P(C) Shares of the Company. Most of the holders of Class A
shares had the right to appoint members to the board of managers of the Company.
The Class P-1(A) Shares and Class P-1(C) Shares did not have any earnings
participation rights, nor did any of the Class P-1(A) Shares have the right to
appoint members to the former board of managers, until they vested. The Class
P-1(A) Shares and Class P-1(C) Shares vested in July 2018 upon the achievement
of specific revenue earnout milestones related to the growth of our credit
products, as defined by the agreement, from August 2014 through the vesting date
of July 2018.

Prior to the July 2018 vesting, we recognized contingent consideration with
respect to the potential vesting of Class P-1(A) Shares and Class P-1(C) Shares
as a contra-revenue adjustment in accordance with ASC 605-50-45-2 because the
vesting could be viewed as a sales incentive to participating Bank Stockholders
since they are also customers of the Company. The contingent consideration for
each reporting period was calculated by estimating the final contingent
consideration value using a monte carlo simulation and recognizing that value on
a straightline basis over the 48 month period of the agreement, adjusting at
each reporting period for any changes in the final value estimate. The revenue
milestones provided that shares would vest only if certain credit revenue
milestones would be achieved in the twelve months ended July 2016, 2017 and
2018.

As a result of achieving these milestones, the final earnout amount was
calculated based on the credit revenues during the twelve months ended July 31,
2018. On July 31, 2018, members' capital increased by $150.5 million as a result
of the vesting of the Class P-1(A) Shares and employee equity compensation
payable increased by $5.7 million as a result of the vesting of the Class P-1(C)
Shares. The value of the vested Class P-1(C) Shares was included in employee
equity compensation payable because the Class P-1(C) were owned for less than
six months by employees who had the ability to exercise a put option of those
shares under certain conditions under their control.

Recent Accounting Pronouncements


See "Note 2 - Summary of Significant Accounting Policies" to our audited
consolidated financial statements included elsewhere in this Annual Report on
Form 10-K for a discussion of recent accounting pronouncements (adopted and not
yet adopted).

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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. However, there can be no assurance that our
results of operations and financial condition will not be materially impacted by
inflation in the future.

Jumpstart Our Business Startups Act of 2012


The JOBS Act permits us, as an "emerging growth company," to take advantage of
an extended transition period to comply with new or revised accounting standards
applicable to public companies. We have elected to "opt out" of this provision
and, as a result, we will comply with new or revised accounting standards on the
relevant dates on which adoption of such standards is required for public
companies that are not emerging growth companies. This decision to opt out of
the extended transition period under the JOBS Act is irrevocable.

Internal Control over Financial Reporting


The process of improving our internal controls has required and will continue to
require us to expend resources to design, implement and maintain a system of
internal controls that is adequate to satisfy our reporting obligations as a
public company. There can be no assurance that any actions we take will be
completely successful. We will continue to evaluate the effectiveness of our
disclosure controls and procedures and internal control over financial reporting
on an on-going basis. As part of this process, we may identify specific internal
controls as being deficient.

We continue to evaluate our internal control procedures in order to comply with
the requirements of Section 404 of the Sarbanes-Oxley Act. Section 404 requires
annual management assessments of the effectiveness of our internal control over
financial reporting and a report by our independent auditors addressing these
assessments; however, for so long as we qualify as an emerging growth company,
we will not be required to engage an auditor to report on our internal control
over financial reporting. We will be required to comply with the management
certification requirements of Section 404 in our annual report on Form 10-K for
the year ending December 31, 2020 (subject to any change in applicable SEC
rules).  We will be required to comply with Section 404 in full (including an
auditor attestation on management's internal controls report) in our annual
report on Form 10-K at the later of the year following our first annual report
required to be filed with the SEC or the date on which we are no longer an
emerging growth company (subject to any change in applicable SEC rules).

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