Global Brokerage : Announces Year End 2020 Results

Independent Auditor's Report

Board of Directors

FXCM Group, LLC

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of FXCM Group, LLC and its subsidiaries (the Company), which comprise the consolidated statement of financial condition as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), changes in members' capital and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of FXCM Group, and its subsidiaries as of December 31, 2020 and 2019, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

New York, New York

March 31, 2021

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Global Brokerage, Inc.

Consolidated Statements of Operations

(Amounts in thousands, except share data)

See accompanying notes to the consolidated financial statements.

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Global Brokerage, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands)

See accompanying notes to the consolidated financial statements.

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Global Brokerage, Inc.

Consolidated Statements of Stockholders' Deficit

(Amounts in thousands, except share data)

Amounts in the table above exclude the portions allocated to Redeemable non-controlling interest. See Note 4, "Non-Controlling Interests" in the Notes to Consolidated Financial Statements for a reconciliation of the beginning and ending balance of Redeemable non-controlling interest.

See accompanying notes to the consolidated financial statements.

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Global Brokerage, Inc.

Consolidated Statements of Cash Flows

(Amounts in thousands)

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Global Brokerage, Inc.

Consolidated Statements of Cash Flows - (continued)

(Amounts in thousands)

See accompanying notes to the consolidated financial statements.

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Global Brokerage, Inc.

Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 1. Nature of Business and Organization

Global Brokerage, Inc. ("Global Brokerage" or the "Corporation"), through its managing membership interest in Global Brokerage Holdings, LLC ("Holdings"), a wholly-owned, controlled and consolidated subsidiary of the Corporation, owns a 50.1% membership interest in FXCM Group, LLC ("Group"). Group, through its operating subsidiaries, is an online provider of foreign exchange ("FX") trading, contracts for difference ("CFD") trading, spread betting and related services to retail and institutional customers worldwide. The remaining 49.9% membership interest in Group is held by LUK-FX Holdings, LLC, a wholly-owned subsidiary of Jefferies Financial Group Inc. ("Jefferies") (f/k/a "Leucadia National Corporation"). Group is controlled by and consolidated with Holdings. As used in these notes, the term "Company" collectively refers to Group and the subsidiaries of Group.

As an online provider of FX trading, CFD trading, spread betting and related services, the Company offers its retail and institutional customers access to global over-the-counter FX markets. In an FX trade, a participant buys one currency and simultaneously sells another, a combination known as a "currency pair." The Company's proprietary trading platform presents its FX customers with the price quotations on several currency pairs from a number of global banks, financial institutions and market makers (collectively, "FX market makers").

The Company deploys two types of trade execution models. For positions with aggressive or high-risk trading strategies, the Company hedges the positions externally. Under the external hedge model, when a customer executes a trade on the price quotation presented by the FX market maker, the Company acts as a credit intermediary, or a riskless principal, simultaneously entering into offsetting trades with both the customer and the FX market maker. The external hedge model has the effect of hedging the Company's positions and eliminating market risk exposure. For positions with less risk, the Company employs a dealing desk, or principal, execution model. Under the dealing desk model, the Company maintains its trading position and does not offset the trade with another party on a one-for-one basis. As a result, the Company may incur trading losses under the dealing desk model from changes in the prices of currencies where the Company is not hedged. Additionally, the Company offers its customers the ability to trade CFDs and spread betting through its United Kingdom ("U.K.") subsidiary. CFDs, primarily dealing desk execution, allow for the exchange of the difference in the value of a particular asset such as a stock index or oil or gold contracts, between the time at which a contract is opened and the time at which it is closed. Spread betting allows customers to bet on the price fluctuations of various financial markets such as FX, indices, oil and metals. The Company earns trading fees through commissions or by charging a spread to the price provided by the FX market makers. Revenues earned under the dealing desk execution model also include the Company's realized and unrealized foreign currency trading gains or losses on its positions with customers.

The Company's trading revenue also includes commission income generated by facilitating spot FX trades on behalf of institutional customers. The Company offers FX trading services to retail FX and CFD brokers, small hedge funds and emerging market banks, under its external execution model, through its FXCM Pro offering. The Company also offers Prime of Prime services ("FXCM Prime") where it provides small and medium-sized high frequency trading customers access to prime broker services under the Company's name. These services allow customers to obtain optimal prices offered by external banks and other price providers. The counterparties to these trades are external financial institutions that hold customer account balances and settle the transactions. The Company receives commissions for providing these services without taking any market or credit risk.

On May 29, 2019, the Company and Holdings entered into the Third Amended and Restated Credit Agreement (the "Third Amended Credit Agreement") with Jefferies, which amended and restated the original credit agreement entered into by and among the same parties originally dated January 16, 2015 and subsequently amended and restated thereafter (the "Credit Agreement") (see Note 19). The Third Amended Credit Agreement extends the maturity of the $300.0 million term loan made by Jefferies to Holding and Group (the "Term Loan") to February 15, 2021. Under the Third Amended Credit Agreement, the outstanding Term Loan balance was converted to non-interest bearing. The interest on the Term Loan balance at the original contractual rate of 20.5% will be included in a New Senior Waterfall Tranche (the "Senior Tranche") that is 100% payable to Jefferies first out of any future cash distributions (see Note 19 for additional details). On November 20, 2020 the Company and

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Global Brokerage, Inc.

Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 1. Nature of Business and Organization - (continued)

Holdings amended the Third Amended Credit Agreement to extend the maturity date of the Credit Agreement by one year to February 15, 2022. All other terms of the Credit Agreement remain the same (see Note 19).

Previously, on November 10, 2017, the Corporation entered into a restructuring support agreement to restructure its obligations under its 2.25% senior convertible notes maturing on June 15, 2018 (the "Convertible Notes") pursuant to a prepackaged plan of reorganization (the "Plan") which was filed under Chapter 11 of the United States Bankruptcy Code. On February 8, 2018, the Plan was substantially consummated and became effective. The Convertible Notes were exchanged for a new series of senior secured notes (the "New Secured Notes") due in February 2023. In conjunction with the amendments to the Credit Agreement discussed above, the Corporation and Holdings entered into a forbearance arrangement (the "Forbearance Agreement") with a group of bondholders who hold the New Secured Notes. Group, Holdings, the Corporation and Jefferies also entered into the Second Amended and Restated Limited Liability Company Agreement of FXCM Group, LLC dated May 29, 2019 (the "Second Amended Group Agreement") (see Note 19).

Under the terms of the Second Amended Group Agreement, amended Third Amended Credit Agreement and in accordance with the Forbearance Agreement, the semi-annual cash interest distributions on the Corporation's New Secured Notes, which were previously payable as distributions from Group to Holdings, will not be required through February 9, 2022 and operating expenses of Holdings, which were also payable as distributions from Group to Holdings, will be capped to an annual amount of $1.75 million (see Notes 19).

Financial Condition

The Company and Holdings have substantial obligations related to the principal repayment on the Term Loan, which is set to mature on February 15, 2022, as well as required distributions to Holdings and the Corporation for, but not limited to, operating expenses and the resumption of cash interest payments on the New Secured Notes. As of December 31, 2019, the Term Loan had a principal balance of $71.6 million and is reflected in Liabilities on the consolidated statement of financial condition, excluding deferred costs (see Note 19). Absent a further extension of the maturity of the Term Loan or a capital infusion, the Company does not expect to have the resources to repay the Term Loan in full within the twelve months following the issuance of the consolidated financial statements. Accordingly, the Corporation believes that these factors raised substantial doubt about its ability to continue as a going concern at December 31, 2020.

The amendments in the Third Amended Credit Agreement and the Second Amended Group Agreement noted above are intended to improve the current cash flows of the Company by extending the maturity of the Term Loan and alleviating the requirement to make quarterly interest payments on the Term Loan until maturity and the semi-annual cash interest payment on the New Secured Notes through February 9, 2022. In addition, the Company implemented a cost reduction plan in March 2019, which reduced compensation expenses after severance costs by more than 10.0% annually and reduced other operating costs.

The Term Loan, which was originally set to mature in January 2017, has been extended several times. Jefferies has demonstrated the willingness and ability to extend the maturity of the Term Loan in the interest of maximizing the value of their investment in the Company. The Company believes that Jefferies will continue to offer extensions of the term should the need arise.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recovery of the Company's assets and the satisfaction of liabilities in the normal course of business.

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Global Brokerage, Inc.

Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 1. Nature of Business and Organization - (continued)

Discontinued Operations

In 2015, the Company committed to a plan to sell certain businesses in order to pay down the Term Loan, of which Lucid Markets Trading Limited ("Lucid") was one. On January 31, 2018, the Company made the decision to wind down the operations of Lucid instead and ceased trading. The results of Lucid continue to be reported in discontinued operations. In conjunction with the Company's withdrawal from business in the U.S. in 2017, the results of operations of the Company's U.S. subsidiary, Forex Capital Markets, LLC ("US"), and other U.S. operations are also reported as discontinued operations (see Note 5).

Note 2. Significant Accounting Policies and Estimates

Basis of Presentation

Basis of Consolidation

The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Company consolidates those entities in which it is the primary beneficiary of a variable-interest entity ("VIE") as required by Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic ("ASC") 810, Consolidations ("ASC 810"), or entities where it has a controlling interest. Entities that do not qualify as VIEs are evaluated for consolidation as voting interest entities under the voting interest model. Under the voting interest model, the Company consolidates those entities where it has a controlling financial interest through a majority voting interest. Intercompany accounts and transactions are eliminated in consolidation.

Group is a VIE and Holdings is the primary beneficiary of Group since Holdings has the ability to direct the activities of Group that most significantly impact Group's economic performance and the obligation to absorb losses of Group or the right to receive benefits from Group that could be significant to Group. As a result, Holdings consolidates the financial results of Group. As of December 31, 2020 and 2019, the Corporation owns a 100.0% membership interest in Holdings.

The Corporation's consolidated financial statements include the following significant subsidiaries of Holdings:

Net income or loss attributable to redeemable non-controlling interest in the consolidated statements of operations represents the share of earnings or loss allocated to the non-controlling membership interest in Group held by Jefferies based on the hypothetical liquidation at book value ("HLBV") method (see Notes 4 and 19).

Net income or loss attributable to non-controlling interests in the consolidated statements of operations represents the portion of earnings or loss attributable to the non-controlling interests of Lucid and other consolidated entities based on the economic interests held by the non-controlling members. The non-controlling members of Lucid collectively hold a 49.9% economic interest in Lucid.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

Redeemable non-controlling interest on the consolidated statements of financial condition represents the non- controlling membership interest in Group held by Jefferies. Non-controlling interests on the consolidated statements of financial condition represents the equity attributable to the non-controlling interests of Lucid and other consolidated entities.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenue and expenses during the year. U.S.

GAAP requires management to make estimates and judgments in several areas, including, but not limited to, those related to income taxes, loss contingencies, redeemable non-controlling interest, certain fair value measurements, impairment of long- lived assets and other intangible assets, and revenue recognition. Actual results could differ from those estimates and could have a material impact on the consolidated financial statements.

Discontinued Operations

As discussed in Note 1, management committed to plans to dispose of certain businesses in 2015 and 2017. The Company determined that these businesses represented components pursuant to ASC 205-20,Presentation of Financial Statements - Discontinued Operations ("ASC 205-20") and, when viewed as a whole, the disposal of these components represents a strategic shift as contemplated by ASC 205-20. The results of operations of the businesses sold or otherwise disposed of are reported as discontinued operations for the periods presented (see Note 5).

Cash and Cash Equivalents

Cash and cash equivalents include cash at banks, U.S. Treasury bills and other highly liquid instruments with original maturities of three months or less at the time of purchase and cash on deposit held with FX and CFD market makers related to economic hedging activities. At times, balances held in U.S. bank accounts may exceed federally insured limits. This potentially subjects the Corporation and the Company to concentration risk. The Corporation and the Company have not experienced losses in such accounts. Cash and cash equivalents also include amounts due from third-party financial institutions for credit card transactions that settle within seven business days or less.

Cash and Cash Equivalents, held for customers

Cash and cash equivalents, held for customers represents cash held to fund customer liabilities. At times, balances held in U.S. bank accounts may exceed federally insured limits. This potentially subjects the Company to concentration risk. The Company has not experienced losses in such accounts.

The balance arises primarily from cash deposited by customers and net realized gains from customer trading activity. The Company maintains a corresponding liability in connection with this amount that is included in customer account liabilities in the consolidated statements of financial condition (see Note 11). A portion of the balance is not available for general use due to regulatory restrictions in certain jurisdictions. The restricted balances were $158.4 million and $178.4 million as of December 31, 2020 and 2019, respectively.

Due from/to Brokers

Due from/to brokers represents the amount of the unsettled spot currency trades that the Company has with financial institutions. Also included in due from/to brokers is the fair value of derivative financial instruments discussed below. The Company has master netting agreements with its respective counterparties which allows the Company to present due from/ to brokers on a net-by-counterparty basis in accordance with ASC 815, Derivatives and Hedging ("ASC 815"), and ASC 210, Balance Sheet ("ASC 210").

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

Derivatives

Derivative financial instruments are accounted for in accordance with ASC 815 and are included in Due from/to brokers in the consolidated statements of financial condition. The Company recognizes all derivative financial instruments in the consolidated statements of financial condition as either assets or liabilities at fair value. The Company enters into futures contracts to economically hedge the open customer contracts on its CFD business. Futures contracts are exchange traded contracts to either purchase or sell a specific asset at a specified future date for a specified price. Gains or losses on futures contracts related to the Company's CFD business are included in Trading revenue in the consolidated statements of operations.

Accounts Receivable, net

Accounts receivable, net, as of December 31, 2020 consists primarily of receivables for sublease income, receivables from institutional customers and accrued interest. Accounts receivable, net, as of December 31, 2019 consists primarily of broker balances for settled trades, receivables for sublease income and accrued interest.

Office, Communication and Computer Equipment, net

Office, communication and computer equipment, net, consists of computer equipment, purchased technology hardware and software, internally-developed software, leasehold improvements, furniture and fixtures and other equipment, licenses and communication equipment. Office, communication and computer equipment are recorded at historical cost, net of accumulated depreciation. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred.

Certain costs of software developed or obtained for internal use are capitalized during the application development stage, once the preliminary project stage has been completed. Certain costs related to upgrades and enhancements to existing internal use software that result in additional functionality are also capitalized. Capitalization ceases once the software project is substantially complete and ready for its intended purpose, at which time its useful life is estimated and depreciation begins.

Depreciation is computed using the straight-line method. The Company depreciates these assets using the following useful lives:

Valuation of Other Long-Lived Assets

The Company assesses potential impairments of its other long-lived assets, including office, communication and computer equipment, when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. An impairment loss is recognized when the carrying amount of the long-lived asset exceeds its fair value and is not recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to operating results.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

Other Intangible Assets, net

Other intangible assets, net include indefinite-lived FX trading licenses.

The Company's indefinite-lived FX trading licenses are not amortized but tested for impairment. The Company's policy is to test for impairment at least annually or in interim periods if certain events occur indicating that the fair value of the asset may be less than its carrying amount. An impairment test on the indefinite-lived assets is performed during the fourth quarter of the Company's fiscal year using the October 1st carrying value. Impairment exists if the carrying value of the indefinite-lived intangible assets exceeds their fair value.

Other Assets

Other assets - Current is primarily comprised of prepaid expenses and deposits for credit card and customer payments processing. Other assets - Non-current is primarily comprised of prepaid expenses, deposits for rent security, and deposits for credit card and customer payments processing (see Note 10).

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses include operating expenses payable, broker payables for settled trades, commissions payable, which represents balances owed to referring brokers for trades transacted by customers that were introduced to the Company by such brokers, bonuses payable, income taxes payable and interest due on borrowings (see Note 12).

Leases

The Company determines whether a contract is or contains a lease at contract inception based on the presence of identified assets and right to obtain substantially all of the economic benefit from or to direct the use of such assets. When the Company determines a lease exists, a right-of-use ("ROU") asset and corresponding lease liability are recorded on the consolidated statements of financial condition.

ROU assets represent the right to use an underlying asset for the lease term. Lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets are recognized at commencement date at the value of the lease liability and are adjusted for any prepayments, lease incentives received, and initial direct costs incurred. Lease liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the lease term. As the discount rate implicit in the lease is not readily determinable for most of the leases, the incremental borrowing rate based on the information available at commencement date is used in determining the present value of lease payments. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic environment. The Company considered the lease terms, the locations and currencies of the leases and data related to the credit rating of the Company in determining the incremental borrowing rates used. The lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. No lease contracts with a term of 12 months or less are recorded on the consolidated statements of financial condition. Fixed lease costs are recognized for operating leases on a straight-line basis over the lease term. The lease agreements with non-lease components that relate to the lease components (e.g., common area maintenance such as cleaning or landscaping) and which are fixed under the lease agreement are accounted for with the lease component as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease costs. Some leasing arrangements require variable payments such as insurance and tax payments. Variable lease payments are excluded from lease payments in the measurement of the ROU asset and lease liability and are recognized as expense in the period in which the expense was incurred.

The Company's lease agreements do not include significant restrictions or covenants, and residual value guarantees are generally not included within our operating leases.

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Global Brokerage, Inc.

Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

Litigation

The Corporation and the Company may from time to time be involved in litigation and claims that arise in the ordinary course of business, including employment practices claims. In addition, the business is subject to extensive regulation, which may result in regulatory proceedings against the Company. The Corporation and the Company record a liability when it is both probable that a loss has been incurred and the amount of the loss can be reasonably estimated. When the reasonable estimate of the possible loss is within a range of amounts, the minimum of the range of possible loss is accrued, unless a higher amount within the range is a better estimate than any other amount within the range. Significant judgment is required to determine both probability and the estimated amount. The Corporation and the Company review these provisions at least quarterly and adjusts them accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.

Due to Related Parties Pursuant to Tax Receivable Agreement

Exchanges of Holdings membership units ("Holdings Units") for the Corporation's Class A common stock that were executed by former members of Holdings resulted in transfers of and increases in the tax basis of the tangible and intangible assets of Holdings, primarily attributable to a portion of the goodwill inherent in the business. These transfers and increases in tax basis increase (for tax purposes) amortization and therefore reduce the amount of tax that the Corporation would otherwise be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions of certain capital assets to the extent tax basis was allocated to those capital assets. Holdings entered into a tax receivable agreement with the former members of Holdings whereby the Corporation agreed to pay to the exchanging members 85.0% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax that the Corporation realizes as a result of these increases in tax basis. The Corporation expects to benefit from the remaining 15.0% of cash tax savings, if any, in income tax savings it realizes. Payments under the tax receivable agreement are based on the tax reporting positions that the Corporation and the Company take in preparing their tax returns. The Corporation will not be reimbursed for any payments previously made under the tax receivable agreement if a tax basis increase is successfully challenged by the Internal Revenue Service. As of December 2017, all Holdings Units were exchanged by the former members of Holdings for shares of the Corporation's Class A common stock.

The Corporation recorded an increase in deferred tax assets for the estimated income tax effect of the increase in tax basis based on enacted federal and state tax rates at the date of the exchange and adjusts that balance for estimated changes to its combined federal and state tax rate. To the extent that the Corporation estimates that it will not benefit from the step-up in basis represented by the deferred tax asset, based on an analysis that will consider, among other things, its expectation of future earnings, the Corporation will reduce the deferred tax asset with a valuation allowance. The Corporation records 85.0% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the contingent liability due under the tax receivable agreement. Presently, the liability is a contingent liability based on the estimated future earnings of the Corporation and the expected tax benefit realized by the Corporation, but upon certain events such as a change in control or a material breach of the tax receivable agreement, the liability no longer stays contingent but rather becomes absolute. The remaining 15.0% of the estimated realizable tax benefit is initially recorded as an increase to the Corporation's capital. All of the effects to the deferred tax asset of changes in any of the estimates after the tax year of the exchange will be reflected in the provision for income taxes. Similarly, the effect of subsequent changes in the enacted tax rates will be reflected in the provision for income taxes.

Extinguishment of Debt

In February 2018, the Convertible Notes were exchanged for the New Secured Notes. The exchange of the Convertible Notes for the New Secured Notes was accounted for as an extinguishment of the Convertible Notes under ASC

470. Since the Convertible Notes contained a cash conversion feature, the derecognition of the instrument was considered an extinguishment of the liability component and a reacquisition of the equity component. The New Secured Notes were measured at fair value on the date of the exchange, and that amount was allocated entirely to the liability component of the Convertible Notes as it was equal to the fair value of the Convertible Notes immediately before the extinguishment. A gain on

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Global Brokerage, Inc.

Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

extinguishment was recorded on the date of the exchange equal to the difference between the amount allocated to the liability component of the Convertible Notes and the carrying amount of the liability component of the Convertible Notes plus any unamortized debt discount or issuance costs. No value was allocated to the equity component of the Convertible Notes because the conversion option was significantly out of the money at the date of the exchange.

In accordance with ASC 470, the New Secured Notes were recorded on the date of the exchange at fair value. Since the fair value was less than the face amount, a discount was recorded and is amortized to interest expense over the five- year life of the New Secured Notes using the effective interest method. Costs incurred with third parties in connection with the exchange were capitalized and are amortized to interest expense over the five-year life of the New Secured Notes using the effective interest method in a similar manner to debt issuance costs.

Redeemable Non-controlling Interest

In connection with a restructuring transaction with Jefferies completed on September 1, 2016 (the "Restructuring Transaction") (see Notes 4 and 19), the Company issued a 49.9% non-controlling membership interest in Group to Jefferies. The remaining 50.1% controlling membership interest in Group is owned by Holdings. Following a Change of Control, as defined in the Amended and Restated Limited Liability Company Agreement of FXCM Group, LLC (the "Group Agreement") and described in Note 19, the membership units held by Jefferies are redeemable for cash at an amount equal to the fair market value of Jefferies' economic rights under the Group Agreement. Accordingly, the non-controlling interest held by Jefferies is recorded as Redeemable non-controlling interest and is classified outside of permanent equity on the consolidated statements of financial condition pursuant to ASC 480.

The cash distributions and earnings or loss from Group are allocated among its members based on the contractual provisions in the Second Amended Group Agreement (the "Current Waterfall"), which differ from the members' stated ownership percentages. The Company determined that the Current Waterfall represents a substantive profit sharing arrangement and concluded that the appropriate methodology for allocating profits and losses of Group is the hypothetical liquidation at book value method (the "HLBV method"). The Company applies the HLBV method using a balance sheet approach. Under the HLBV method, a calculation is performed at each balance sheet date to determine the amount each member would hypothetically receive assuming Group were liquidated at its recorded amount determined in accordance with U.S. GAAP and the cash distributed according to the Current Waterfall. The difference between the liquidating distribution amounts calculated at the beginning and end of each period, after adjusting for capital contributions and distributions, is the member's share of the net income or loss from Group.

As indicated above, the membership units held by Jefferies are redeemable for cash following a change of control event (see Note 19), which is not solely within the control of the Company. The Company evaluates the probability of redemption at each reporting date. The Company concluded that the non-controlling interest in Group held by Jefferies is not currently redeemable and it is not probable that it will become redeemable. Accordingly, subsequent adjustment of the Redeemable non-controlling interest to its estimated redemption value is not required pursuant to ASC 480. If the non- controlling interest in Group becomes redeemable, or if redemption becomes probable, an adjustment will be made to record the Redeemable non-controlling interest at its estimated redemption value and the balance will be reclassified to Liabilities on the consolidated statements of financial condition.

Foreign Currency

Foreign denominated assets and liabilities are re-measured into the functional currency at exchange rates in effect at the reporting date through the consolidated statements of operations. Gains or losses resulting from foreign currency transactions are re-measured using the rates on the dates on which those elements are recognized during the period, and are included in Trading revenue in the consolidated statements of operations. The Company recorded loss of $0.4 million and gain of $1.1 million for the years ended December 31, 2020 and 2019, respectively.

Translation gains or losses resulting from translating the Company's subsidiaries' financial statements from the functional currency to the reporting currency, net of tax, are included in Foreign currency translation gain (loss) in the

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Global Brokerage, Inc.

Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

consolidated statements of comprehensive income (loss). Assets and liabilities are translated at the reporting date while revenues and expenses are translated at an applicable average rate.

Revenue Recognition

The Company makes foreign currency markets for customers trading in FX spot markets. FX transactions are recorded on the trade date and positions are marked to market daily with related gains and losses, including gains and losses on open spot transactions, recognized currently in income.

Trading Revenue

Trading revenue includes revenue from contracts with customers as well as revenue from principal transactions (see Note 3). Trading revenue earned from contracts with customers includes commissions revenue. Under the Company's external execution model, a separate commission is charged to the price provided by FX market makers, generating commission revenue based on the volume of transactions, and is recorded on trade date. Commissions also include fees earned from arrangements with other financial institutions to provide platform, back office and other trade execution services. This service is generally referred to as a white label arrangement. The Company earns a commission or a percentage of the markup charged by the financial institutions to their customers. Fees from this service are recorded when earned on a trade date basis. The Company also generates commission revenue by facilitating spot FX trades on behalf of institutional customers through the services provided by FXCM Pro and FXCM Prime, which allow these customers to obtain the best execution price from external banks and routes the trades to outside financial institutions that also hold customer account balances for settlement. The Company receives commission income on these trades without taking any market or credit risk. Commission revenue earned from institutional customers is recorded on a trade date basis.

Trading revenue earned from principal transactions includes spread revenue and the Company's realized and unrealized foreign currency trading gains or losses on its positions with customers under its dealing desk execution model. The Company adds a spread to the price provided by the FX market makers. Under the Company's external execution model, trading revenues earned from spread principally represent the difference between the Company's realized and unrealized foreign currency trading gains or losses on its positions with customers and the systematic hedge gains and losses from the trades entered into with the FX market makers. Under the Company's dealing desk, or principal, execution model, revenues earned include the spread on the FX trade and the Company's realized and unrealized foreign currency trading gains or losses on its positions with customers.

Additionally, the Company earns income from trading in CFDs, rollovers and spread betting, which is included in Trading revenue in the consolidated statements of operations. Income or loss on CFDs represents the difference between the realized and unrealized trading gains or losses on the Company's positions and the hedge gains or losses with the other financial institutions. Income or loss on CFDs is recorded on a trade date basis. Income or loss on rollovers is the interest differential customers earn or pay on overnight currency pair positions held and the markup that the Company receives on interest paid or received on currency pair positions held overnight. Income or loss on rollovers is recorded on a trade date basis. Spread betting is where a customer takes a position against the value of an underlying financial instrument moving either upward or downward in the market. Income on spread betting is recorded as earned on a trade date basis.

Interest Income

Interest income consists of interest earned on cash and cash equivalents and cash and cash equivalents, held for customers and is recognized in the period earned.

Other Income

Other income includes revenue from contracts with customers as well as revenue from other sources (see Note 3). Other income earned from contracts with customers includes fees from the sale of market data, account maintenance fees,

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

inactivity fees, and ancillary fee income. Other income earned from other sources primarily includes miscellaneous settlements and fees generated from post-sale services related to businesses sold.

Communications and Technology

Communications and technology expense consists primarily of costs for network connections to the Company's electronic trading platforms, telecommunications costs, and fees paid for access to external market data. This expense is affected primarily by the growth of electronic trading, the Company's network/platform capacity requirements and by changes in the number of telecommunication hubs and connections which provide customers with direct access to the Company's electronic trading platforms.

Trading Costs, Prime Brokerage and Clearing Fees

Trading costs, prime brokerage and clearing fees primarily represent fees paid to third party clearing banks and prime brokers for clearing foreign exchange spot futures currency and contract transactions, transaction fees paid to exchanges, equity options brokerage activity fees, and fees paid to third party providers for use of their platform for the Company's market making trading business. Clearing fees primarily fluctuate based on changes in volume, rate of clearing fees charged by clearing banks and rate of fees paid to exchanges.

Referring Broker Fees

Referring broker fees represent commissions paid to brokers for introducing trading customers to the Company. Commissions are determined based on the number and size of transactions executed by the customers and are recorded on a trade date basis.

Compensation and Benefits

Compensation and benefits expense represents employee salaries, bonuses, benefits, employer taxes, and stock- based compensation expense.

Stock-Based Compensation

Stock-based compensation is associated with grants of the Corporation's Class A common stock. The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-StockCompensation ("ASC 718"). The Company's stock-based compensation expense is measured at the date of grant, based on the estimated fair value of the award, and recognized on a straight-line basis over the requisite service period of the award, net of estimated forfeitures. The fair value of the Corporation's non-qualified stock options is estimated using the Black-Scholes option pricing model. The fair value of restricted stock units ("RSUs") is based on the fair market value of the Corporation's Class A common stock on the date of grant, adjusted for the present value of dividends expected to be paid on the Corporation's Class A common stock prior to vesting. Stock-based compensation expense is included in Compensation and benefits in the consolidated statements of operations (see Note 15).

Advertising and Marketing

Advertising and marketing costs are charged to operations when incurred.

General and Administrative

General and administrative expenses include bank processing and regulatory fees, professional and outside service fees, occupancy and equipment expense and other administrative costs. Bank processing fees are costs associated with the processing of credit and debit card transactions. Regulatory fees are volume-based costs and annual fees charged by certain

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

regulatory authorities and include fines and restitution imposed by regulators from time to time. General and administrative expense also includes other miscellaneous client debit balances.

Income Taxes

Since December 2017, when the former members of Holdings exchanged their Holdings Units for shares of the Corporation's Class A common stock, Holdings operates in the U.S. as a limited liability company that is treated as a disregarded entity for U.S. federal, state, and local income tax purposes and its results are included in the results of the Corporation. Prior to that time, Holdings was treated as a U.S. partnership for tax purposes. All of Holdings' operations are held by Group, a limited liability company that is treated as a partnership between the Corporation and Jefferies for U.S. federal, state and local income tax purposes. As a result, Group's income from its U.S. operations is not subject to U.S. federal income tax because the income is attributable to its members. Accordingly, the Corporation's U.S. tax provision is solely based on the portion of income attributable to it from the Company and excludes the income attributable to the other members.

Income taxes are accounted for in accordance with ASC 740, Income Taxes ("ASC 740"), which requires that deferred tax assets and liabilities are recognized, using enacted tax rates, for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Deferred tax assets, including net operating losses and income tax credits, are reduced by a valuation allowance if it is "more likely than not" that some portion or all of the deferred tax assets will not be realized (see Note 23).

In addition to U.S. federal and state income taxes, the Company is subject to Unincorporated Business Tax which is attributable to Group's operations apportioned to New York City. The Company's foreign subsidiaries are also subject to taxes in the jurisdictions in which they operate.

In accordance with ASC 740, the Corporation and the Company evaluate a tax position to determine whether it is more likely than not that the tax position will be sustained upon examination, based on the technical merits of the position. If the position does not meet a more likely than not threshold, a tax reserve is established and no income tax benefit is recognized. Interest and penalties on uncertain tax positions are included as a component of the income tax provision on the consolidated statements of operations. The Corporation is audited by U.S. federal and state authorities. The Company is audited by U.S. federal and state, as well as, foreign, tax authorities. In some cases, many years may elapse before a tax return containing tax positions for which an ASC 740 reserve has been established is examined and an audit is completed. As audit settlements are reached, the Corporation and the Company adjust the corresponding reserves, if required, in the period in which the final determination is made. While it is difficult to predict the final outcome or timing of a particular tax matter, the Corporation and the Company believe that its reserves for uncertain tax positions are recorded pursuant to the provisions of ASC 740.

The Company currently does not plan to permanently reinvest the earnings of its foreign subsidiaries and therefore does record U.S. income tax expense for the applicable earnings. This treatment could change in the future.

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework-Changesto the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). Under ASU 2018-13, certain disclosure requirements for fair value measurement were eliminated, modified and added. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of either the entire standard or only the provisions that eliminate or modify requirements is permitted. The Company adopted the new standard on January 1, 2020 which did not have a material impact on its consolidated financial statements.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 2. Significant Accounting Policies and Estimates - (continued)

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13,Financial Instruments - Credit Losses ("ASU 2016-13"). ASU 2016-13 replaces the existing incurred losses methodology for estimating allowances with a current expected credit losses methodology with respect to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity investment securities and off balance sheet commitments. ASU 2016-13 retains many of the disclosure requirements in current GAAP and expands certain disclosure requirements. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). The ASU provides optional expedients and exceptions for applying U.S. GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The ASU is effective as of March 12, 2020 through December 31, 2022. The Company will evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to apply the optional guidance on an ongoing basis. The Company is currently evaluating the impact of the adoption of ASU 2020-04 on its consolidated financial statement.

In December 2019, the FASB issued ASU No. 2019-12,Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in the ASU include removing exceptions to incremental intraperiod tax allocation of losses and gains from different financial statement components, exceptions to the method of recognizing income taxes on interim period losses, and exceptions to deferred tax liability recognition related to foreign subsidiary investments. In addition, the ASU requires that entities recognize franchise tax based on an incremental method and requires an entity to evaluate the accounting for step-ups in the tax basis of Goodwill as inside or outside of a business combination. The amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company has not early adopted this ASU as of December 31, 2020. The Company is currently evaluating the impact of the adoption of ASU 2019-12 on its consolidated financial statement.

Note 3. Revenues from Contracts with Customers

The following table presents Total net revenues as shown in the consolidated statements of operations, separated by revenues from contracts with customers and revenues from other sources, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 3. Revenue from Contracts with Customers - (continued)

Revenues from Contracts with Customers

Revenue from contracts with customers is recognized when, or as, the Company satisfies performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring the progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for those promised goods or services (the "transaction price").

The following provides detailed information on the recognition of the Company's revenues from contracts with customers:

Commissions

Under the Company's external execution model, revenue is earned from charging a separate commission to the price provided by FX market makers, generating commission revenue based on the volume of the transaction. The commission is primarily charged to the customer's account when the trade is executed. Commissions also include fees earned from arrangements with other financial institutions to provide platform, back office and other trade execution services. This service is generally referred to as a white label arrangement. The Company earns a commission from the amount charged by the financial institutions to their customers. The Company generates commissions from institutional customers by facilitating spot FX trades on behalf of the institutional customers through the services provided by FXCM Pro and FXCM Prime, which allow these customers to obtain the best execution price from external banks and routes the trades to outside financial institutions that also hold customer account balances for settlement. The Company receives commissions on these trades without taking any market or credit risk. The customers are invoiced and the accounts are charged in the month following the trades. Commissions are recognized at a point in time on trade-date and are included in Trading revenue in the consolidated statements of operations.

Other - Fees

The Company earns fees from the sale of market data, account maintenance fees, inactivity fees and ancillary fee income for various account services, included in Other income in the consolidated statements of operations. Fees are charged to the customer's account either monthly for market data fees and maintenance fees, or at the time of service for the inactivity and ancillary account fees. Inactivity fees are recorded net of value added tax where appropriate. Fee revenue is recognized over time for monthly services or at a point in time on the activity date for inactivity and ancillary services. Additionally, the Company earns fees for post-sale services provided to a business previously sold, including trading platform and related support services. The related fee revenue, which is included in Other income in the consolidated statements of operations, is recognized monthly as the services are performed.

Economic Factors

The Company's revenue and profitability are driven by trading volumes, which are influenced by currency and market volatility, which are directly impacted by economic conditions. In general, in periods of elevated volatility customer trading volumes tend to increase. However, significant swings in market volatility can also result in increased customer trading losses and reduced trading volume. It is difficult to predict volatility and its effects on the FX market.

Other Sources of Revenue

The following provides detailed information on revenue generated from other sources:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 3. Revenue from Contracts with Customers - (continued)

Principal Transactions

Under the Company's external execution model, when a customer executes a trade on the best price quotation presented by the FX market maker, the Company acts as a credit intermediary, or a riskless principal, simultaneously entering into a trade with the customer and the FX market maker. This external execution model has the effect of hedging the Company's positions and eliminating market risk exposure. The Company earns trading revenue from adding a spread to the price provided by the FX market makers. Trading revenues earned from spread principally represent the difference between the Company's realized and unrealized foreign currency trading gains or losses on its positions with customers and the systematic hedge gains and losses from the trades entered into with the FX market makers. Under the Company's dealing desk, or principal, execution model, revenues earned include the spread on the FX trade and the Company's realized and unrealized foreign currency trading gains or losses on its positions with customers.

Additionally, the Company earns income from trading in CFDs, rollovers and spread betting. Income or loss on CFDs represents the difference between the realized and unrealized trading gains or losses on the Company's positions and the hedge gains or losses with the other financial institutions. Income or loss on CFDs is recorded on a trade date basis. Income or loss on rollovers is the interest differential customers earn or pay on overnight currency pair positions held and the markup that the Company receives on interest paid or received on currency pair positions held overnight. Income or loss on rollovers is recorded on a trade date basis. Spread betting is where a customer takes a position against the value of an underlying financial instrument moving either upward or downward in the market. Income on spread betting is recorded as earned on a trade date basis.

Revenues from principal transactions are included in Trading revenue in the consolidated statements of operations.

Interest Income

Interest income included in Net interest (expense) income in the consolidated statements of operations consists of interest earned on cash and cash equivalents and cash and cash equivalents, held for customers and is recognized in the period earned.

Other

In addition to Other income from fees as described above, Other income includes fees for services provided to the Corporation and other miscellaneous income. Other income not related to contracts with customers is included in Other income in the consolidated statements of operations.

Information on Remaining Performance Obligations and Revenue Recognized from Past Performance

The Company does not have contracts that have remaining performance obligations. The transaction price is allocated to the performance obligation at the time of service.

Contract Balances

The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment, and when the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

Receivables related to revenues from contracts with customers were $0.1 million as of December 31, 2020 and 2019. There were no significant impairments related to these receivables during the years ended December 31, 2020 or 2019. There was no deferred revenue, nor any other contract liabilities, related to revenues from contracts with customers as of December 31, 2020 or 2019.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 3. Revenue from Contracts with Customers - (continued)

Contract Costs

The Company does not incur incremental costs to obtain contracts with customers.

Note 4. Non-Controlling Interests

Redeemable Non-controlling Interest

Jefferies owns a 49.9% non-controlling membership interest in Group. The remaining 50.1% controlling membership interest in Group is owned by Holdings. The non-controlling interest held by Jefferies is redeemable for cash upon a contingent event that is not solely within the control of the Company (see Note 19) and, accordingly, is classified outside of permanent equity on the consolidated statements of financial condition as Redeemable non-controlling interest. As of December 31, 2020, the non-controlling interest in Group is not redeemable and is not probable of becoming redeemable and, consequently, has not been adjusted to its estimated redemption value.

The Company recorded the following activity related to Redeemable non-controlling interest for the years ended December 31, 2020 and 2019, with amounts in thousands:

Non-controlling Interests

Other Non-Controlling Interests

The Company owns controlling interests in Lucid and other entities. The Company consolidates the financial results of these entities and records a non-controlling interest for the economic interests not owned by the Company. Lucid is classified as discontinued operations in the consolidated statements of operations (see Note 5).

Note 5. Dispositions

In 2015, the Company committed to a plan to sell certain retail and institutional businesses in order to pay down the Term Loan with Jefferies and completed the sales of several of those businesses at that time. It had been determined that, when viewed as a whole, the disposal of the components in the plan represented a strategic shift as contemplated by ASC 205-20, and qualified for reporting as discontinued operations. The Lucid institutional business was actively marketed for sale until 2018. On January 31, 2018, the Company made the decision to wind down the operations of Lucid and cease trading. During 2017, the Company completed the sale of its equity interest in FastMatch. Additionally, the Company sold its U.S.-domiciled customer accounts in 2017 in connection with its withdrawal from business in the U.S. These disposals are described in greater detail below.

Lucid

On January 31, 2018, the Company made the decision to cease and wind down the trading operations of Lucid rather than continue to pursue a sale of the business. The change to the plan to sell Lucid was largely influenced by softening market conditions. Notwithstanding the change to the plan of sale, Lucid continued to meet the criteria prescribed in ASC 205-20 for

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 5. Dispositions - (continued)

reporting as a discontinued operation and, accordingly, the results of operations of Lucid through the wind down are reported in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations for the years ended December 31, 2020 and 2019.

FastMatch

On August 14, 2017, the Company completed the sale of its 34.0% equity interest in FastMatch to Euronext US Inc. (the "Purchaser") for a cash purchase price of $59.1 million, of which $46.7 million was paid to the Company at closing, $8.7 million was held in escrow until one year from the date of sale (released to the Company in August 2018), and $3.7 million was paid to another equity seller at closing for its share of a future expected earn-out pursuant to a separate agreement between the Company and the equity seller. The Company was entitled to a share of a $10.0 million earn-out (approximately $7.1 million) if FastMatch met certain performance targets for the twelve-month period from June 1, 2017 to May 31, 2018 (the "Earn-out Period"). The earn-out was payable to the Company only if the performance targets were fully achieved. In July 2018, the Company was notified by the Purchaser that the performance targets were not met for the Earn-out Period. In August 2018, the Company exercised its rights under the stock purchase agreement to dispute certain elements of the earn-out calculation provided by the Purchaser. In November 2018, the matters were submitted to arbitration as part of the dispute resolution process provided for in the stock purchase agreement. In February 2019, the dispute was resolved in favor of the Company. The Company recorded a gain on the sale of FastMatch of nil and $7.1 million for the years ended December 31, 2020 and 2019, respectively, for the earn-out, which is included in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations.

US Operations

Pursuant to regulatory settlements with U.S. regulators in February 2017, the Company withdrew from business in the U.S. during the first quarter of 2017. Accordingly, the results of operations of US are reported in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations for the years ended December 31, 2020 and 2019. As a result of the events impacting US, the Company implemented a restructuring plan during the first quarter of 2017 which included staff reductions and the closure or sublease of office space in the U.S. During the years ended December 31, 2020 and 2019, the Company recognized total restructuring income of $0.1 million and total restructuring charges of

$3.0 million, respectively, consisting of facilities costs to vacate or sublease office space related to the withdrawal of business in the U.S. (see Note 26). The Company also recorded charges of nil and $1.3 million to impair the ROU asset associated with the sublease (see Note 8), for the years ended December 31, 2020 and 2019, respectively, and nil and $0.6 million to write down leasehold improvements associated with the sublease (see Note 7) for the years ended December 31, 2020 and 2019, respectively, both recorded in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations for the year ended December 31, 2020 and 2019.

The following table presents the major classes of line items constituting the pretax and after-tax profit or loss of discontinued operations for the years ended December 31, 2020 and 2019, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 5. Dispositions - (continued)

Note 6. Equity Investments

The Company has a 15% equity interest in a developer of FX analytical software. The 15.0% retained interest held by the Company no longer qualifies for the equity method and is accounted for in accordance with ASC 321, Investments-EquitySecurities ("ASC 321") upon the Company's adoption of ASU 2016-01 on January 1, 2018. The retained interest does not have a readily determinable fair value and does not qualify for the net asset value practical expedient in ASC 820, Fair Value Measurement. Consequently, the Company elected a measurement alternative as permitted under the guidance to measure the investment at cost minus impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for an identical or a similar investment in the same issuer. No observable price changes occurred during the years ended December 31 2020 and 2019. The carrying value of the Company's equity interest in the software developer is nil as of both December 31, 2020 and 2019.

Note 7. Office, Communication and Computer Equipment, Net

Office, communication and computer equipment, net consisted of the following as of December 31, 2020 and 2019, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 7. Office, Communication and Computer Equipment, Net - (continued)

Depreciation is computed on a straight-line basis (see Note 2). Depreciation expense included in the consolidated statements of operations was $10.4 million and $12.2 million for the years ended December 31, 2020 and 2019, respectively. Depreciation expense also includes amortization related to capitalized software development costs of $7.5 million and $9.0 million for the years ended December 31, 2020 and 2019, respectively. Unamortized capitalized software development costs were $17.3 million and $17.4 million as of December 31, 2020 and 2019, respectively.

During 2020 and 2019, the Company disposed of fully depreciated assets of $4.4 million and $3.5 million, respectively. In conjunction with the sublease of the New York office space (see Note 26), the Company recorded an impairment charge of $0.6 million related to Leasehold improvements, included in (Loss) income from discontinued operations, net of tax in the consolidated statement of operations for the year ended December 31, 2019. Impairments of fixed assets for the years ended December 31, 2020 and 2019 were nil.

Note 8. Leases

On January 1, 2019, the Company adopted a new accounting standard that amends the guidance for the accounting and reporting of leases. Certain required disclosures have been made on a prospective basis in accordance with the guidance of the standard. (See Note 2, Summary of Significant Accounting Policies).

The Company leases mainly office facilities, equipment and corporate apartments. Leases with terms of 12 months or less are expensed on a straight-line basis over the term and are not recorded in the consolidated statements of financial condition at December 31, 2020 and 2019.

Most leases include one or more options to renew and the exercise of lease renewal options is at the Company's sole discretion. The Company includes renewal options that are reasonably certain to be exercised as part of the lease term. Additionally, some lease contracts include termination options. The Company's lease agreements neither contain residual value guarantees nor impose significant restrictions or covenants.

The Company subleases certain real estate to third parties. The sublease portfolio consists of operating leases from former office facilities (see Note 26).

The following table summarizes information related to the Company's leases, all of which are classified as operating, as of December 31, 2020 and 2019, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 8. Leases - (continued)

The components of lease costs for the years ended December 31, 2020 and 2019, with amounts in thousands:

Operating lease costs includes $1.7 million of costs which are included as a component of Communication and technology in the consolidated statements of operations for the years ended December 31, 2020 and 2019. Operating lease costs includes $2.4 million and $2.3 million of costs and $2.3 million and $0.5 million of sublease income which are included as a component of (Loss) income from discontinued operations, net of tax in the consolidated statements of operations for the years ended December 31, 2020 and 2019, respectively. Included in this amount is a $1.3 million impairment charge on an ROU asset for the year ended December 31, 2019. The ROU asset was evaluated for impairment under the guidance of ASC 842 in conjunction with a sublease of the office space (see Note 26). Under ASC 842, committing to a sublease may constitute a triggering event for evaluating whether an asset group has been impaired if the lessee will incur a loss on the sublease. ASC

842 requires that an ROU asset be evaluated for impairment under the guidance of ASC 360 - Impairment of Disposal of Long- Lived Assets ("ASC 360"). Under ASC 360, an impairment loss is recognized if the carrying amount of a long-lived asset is not recoverable (step 1) and exceeds its fair value (step 2). Under step 1, the carrying value of the asset group is compared to the undiscounted cash flows expected to result from the use and eventual disposition of the asset. ASC 360 indicates that for purposes of recognizing and measuring an impairment loss, a long-lived asset should be grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company identified the asset group as the ROU asset and the leasehold improvements included in the subleased space. Step 1 of the impairment test indicated that the expected cash flows to be received were less than the carrying value of the asset group. The Company then determined the fair value of the asset group and compared it to the carrying amount. Fair value was determined based on the present value of the sublease payments to be received, which indicated an impairment of the asset group of $1.9 million, of which $1.3 million was allocated to the ROU asset and $0.6 million to the related leasehold improvements (see Note 7) for the year ended December 31, 2019. No impairment was recorded for the year ended December 31, 2020.

Cash flows arising from lease transactions for the years ended December 31, 2020 and 2019, with amounts in thousands:

For the Years Ended December 31,

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 8. Leases - (continued)

Maturities of lease liabilities as of December 31, 2020, were as follows, with amounts in thousands:

1. Includes short-term lease of $0.1 million.
2. Includes future rental commitments for an ROU asset subject to subleases of $15.8 million. Total expected future rental income is $13.9 million related to these noncancelable subleases.

Note 9. Other Intangible Assets, Net

The Company's acquired intangible assets consisted of the following as of December 31, 2020 and 2019, with amounts in thousands:

The indefinite-lived licenses are evaluated annually for impairment. No impairment was recorded for the years ended December 31, 2020 and 2019.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 10. Other Assets

Other assets - Current and Other assets - Non-current comprised the following as of December 31, 2020 and 2019, with amounts in thousands:

Note 11. Customer Account Liabilities

Customer account liabilities represent amounts due to customers related to cash and margin transactions. This includes cash deposits and gains and losses on settled FX, CFDs and spread betting trades as well as unrealized gains and losses on open FX commitments, CFDs and spread betting. Customer account liabilities were $268.6 million and $326.4 million as of December 31, 2020 and 2019, respectively. The Company holds cash to cover its customer account liabilities in Cash and cash equivalents, held for customers on the consolidated statements of financial condition.

Note 12. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses comprised the following as of December 31, 2020 and 2019, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 13. Related Party Transactions

Amounts receivable from, and payable to, related parties as of December 31, 2020 and 2019, with amounts in thousands:

The Company has advanced funds to several employees. The outstanding balance as of December 31, 2020 and 2019, included in the table above, is included in Accounts receivable, net on the consolidated statements of financial condition.

The Company entered into a services agreement with Jefferies in August 2019 for the use of office space for a five year period. Operating lease right-of-use assets on the consolidated statements of financial condition includes an ROU asset related to the services agreement of $2.4 million and $2.9 million at December 31, 2020 and 2019, respectively. Operating lease liabilities - Current and Non-current on the consolidated statements of financial condition at December 31, 2020 and 2019 includes a lease liability related to the service agreement in the amount of $2.4 million and $2.9 million, respectively. For the years ended December 31, 2020 and 2019 the Company recorded operating lease costs of $0.8 million and $0.3 million, respectively, which are included in General and administrative expense in the consolidated statements of operations.

Customer account liabilities in the consolidated statements of financial condition include balances for employees in the amounts noted in the table above.

Several of the Company's subsidiaries entered into trading relationships with Jefferies, LLC, a wholly-owned subsidiary of Jefferies, to provide FX pricing for the Company's clients. For the years ended December 31, 2020 and 2019, the Company recorded trading losses of $68.8 million and $12.2 million, respectively, which are included in Trading revenue in the consolidated statements of operations. The Company also paid Jefferies, LLC prime broker fees of $0.6 million for the years ended December 31, 2020 and 2019, which are included in Trading costs, prime brokerage and clearing fees in the consolidated statements of operations. The Company earned interest income of $0.1 million and $0.7 million for the years ended December 31, 2020 and 2019, respectively, on the balances in the brokerage accounts. As of December 31, 2020 and 2019, Due from brokers on the consolidated statements of financial condition includes $0.01 million and nil, respectively, due from Jefferies, LLC. As of December 31, 2020 and 2019, Due to brokers on the consolidated statements of financial condition includes nil and $0.6 million, respectively, payable to Jefferies, LLC. In September 2019, the Company entered into a custodial

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 13. Related Party Transactions - (continued)

relationship with Jefferies, whereby Jefferies is the custodian for treasury bills held by the Company. As of December 31, 2020 and 2019, the account balance was $2.6 million and is included in Cash and cash equivalents on the consolidated statements of financial condition.

Payments under Tax Receivable Agreement

The Corporation entered into a tax receivable agreement with the former members of Holdings that will provide for the payment by the Corporation to these members as defined therein. Assuming sufficient taxable income is generated such that the Corporation fully realizes the tax benefits of the amortization specified in the tax receivable agreement, the aggregate payments currently estimated that would be due are $137.0 million as of December 31, 2020. During the first quarter of 2015, the Corporation determined that it was not more likely than not that it would benefit from the tax deduction attributable to the tax basis step-up for which a portion of the benefit would be owed to the non-controlling members of Holdings under the tax receivable agreement and reduced the contingent liability under the tax receivable agreement to zero. As of December 31, 2020, the Corporation continues to believe it will not benefit from the tax deduction and the contingent liability remains zero. There were no payments required to be made during the years ended December 31, 2020 and 2019 pursuant to the tax receivable agreement. Additionally, the Corporation does not currently expect to make a payment for the 2019 and 2020 tax years.

Jefferies Transaction

Jefferies maintains a 49.9% equity interest in the Company and has three directors on its board of directors. The Chairman of the board of directors of the Company is a managing director of Jefferies. See Note 19 for amounts related to the financing transaction with Jefferies, including subsequent amendments to the Credit Agreement in February 2017, May 2017, February 2018, May 2019 and November 2020.

Note 14. Earnings per Share

Basic earnings per share ("EPS") measures the performance of an entity over the reporting period. Diluted EPS measures the performance of an entity over the reporting period while giving effect to all potentially dilutive instruments that were outstanding during the period. The Company uses the treasury stock method in accordance with ASC 260, Earnings per Share ("ASC 260"), to determine diluted EPS. Due to the Corporation's loss from continuing operations for the years ended December 31, 2020 and 2019, any potential common shares were not included in the computation of diluted EPS as they would have had an antidilutive effect since the shares would decrease the loss per share. As a result, basic and diluted net loss per share of Class A common stock are equal for this period.

In accordance with ASC 260, all outstanding unvested share-based payments that contain rights to non-forfeitable dividends participate in the undistributed earnings with the common stockholders and are therefore participating securities.

In computing diluted EPS, outstanding stock options and other equity awards granted to certain employees, non- employees and independent directors in the aggregate of 23,791 and 46,301 for the years ended December 31, 2020 and 2019, respectively, were excluded because they were antidilutive under the treasury method.

The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations, with amounts in thousands, except per share data:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 14. Earnings per Share - (continued)

Note 15. Stock-Based Compensation

The Corporation's Amended and Restated 2010 Long-Term Incentive Plan (the "LTIP") permits the grant of various equity-based awards to employees, directors or other service providers of the Company and its subsidiaries. Under the LTIP, the Corporation has granted non-qualified stock options and other equity awards, including shares of the Corporation's Class A common stock ("Shares") and RSUs. The Shares issued may consist, in whole or in part, of unissued Shares or treasury Shares.

In arriving at stock-based compensation expense, the Company estimates the number of equity-based awards that will forfeit due to employee turnover. The Company's forfeiture assumption is based primarily on its turn-over historical experience. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment will be made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in the Company's financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment will be made to lower the estimated forfeiture rate, which will result in an increase to expense recognized in the Company's financial statements. The expense the Company recognizes in future periods will be affected by changes in the estimated forfeiture rate and may differ significantly from amounts recognized in the current period.

Stock Options

Stock options to purchase Shares are granted to employees ("Employee Stock Options") and the independent members of the board of directors ("Independent Directors Options") (collectively, the "Stock Options"). Stock options are granted to employees and independent directors with exercise prices at least equal to the fair market value of a Share on the date the option is granted. The Employee Stock Options have a four-year graded vesting schedule and a contractual term of seven years from the date of grant. The Independent Directors Options vest on the first anniversary after the grant date and have a seven-year contractual term. Under the terms of the LTIP, the Corporation may issue new Shares or treasury shares upon share option exercise. During the years ended December 31, 2020 and 2019, the Corporation did not grant any Employee Stock Options or Independent Directors Options.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 15. Stock-Based Compensation - (continued)

The following table summarizes the Corporation's activity related to the Stock Options as of December 31, 2020 and changes for the year then ended:

There were no options exercised in the years ended December 31, 2020 and 2019. As of December 31, 2020 and 2019, Stock options outstanding were fully vested.

Valuation Assumptions

The fair value of each option awarded to employees is estimated on the date of grant using the Black-Scholes option pricing model, consistent with the provisions of ASC 718. Options granted to the Corporation's independent directors are considered options granted to employees under ASC 718 as defined therein.

Expected term for the Employee Stock Options and Independent Directors Options is based on the simplified method outlined in ASC 718. In accordance with ASC 718, options are considered to be exercised halfway between the average vesting date and the contractual term of each option grant. The simplified method is applicable for "plain-vanilla" stock options, as defined in ASC 718, only if the Corporation does not have sufficient historical share option exercise experience upon which to estimate an expected term. The Corporation's Shares have been publicly traded for approximately eight years, however there is a lack of sufficient exercise history for Employee Stock Options during this period, including the most recent three years. Consequently, the Corporation believes that the simplified method is an applicable methodology to estimate the expected term of the options as of the grant date.

The risk-free interest rate for the Employee Stock Options and Independent Directors Options is based on U.S. Treasury instruments whose terms are commensurate with the expected term of the Stock Options.

Expected volatility is based on a weighing of the historical and implied volatilities of the Corporation and for a set of public guideline companies deemed comparable to it. The guideline companies selected operate in a similar industry, pursue similar market opportunities, and are subject to similar risks of the Corporation. Changes in the subjective assumptions required in the valuation models may significantly affect the estimated value of the Corporation's Stock Options, the related stock-based compensation expense and, consequently, its results of operations and comprehensive income.

Dividend yield is determined based on the Corporation's expected dividend payouts.

Stock-based compensation expense before income taxes for the Employee Stock Options, which is included in Compensation and benefits in the consolidated statements of operations, was nil for each of the years ended December 31, 2020 and 2019. The total compensation cost capitalized and included in Office, communication and computer equipment, net, in the consolidated statements of financial condition for the Employee Stock Options was nil for each of the years ended December 31, 2020 and 2019. There was no stock-based compensation expense recognized nor compensation cost capitalized

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 15. Stock-Based Compensation - (continued)

for Independent Directors Options for the years ended December 31, 2020 and 2019. The Corporation did not recognize any tax benefit related to stock-based compensation expense for each of the years ended December 31, 2020 and 2019.

As of December 31, 2020 and 2019, there were no unvested Stock Options and no related unrecognized compensation

cost.

There were no cash proceeds received nor any income tax benefits realized from the exercise of Stock Options for the years ended December 31, 2020 and 2019.

Note 16. Stockholders' Equity

The Corporation's authorized capital stock consists of 3,000,000,000 shares of Class A common stock, par value $0.01 per share, 1,000,000 shares of Class B common stock, par value $0.01 per share, and 300,000,000 shares of preferred stock, par value $0.01 per share, of which 55,120 shares have been designated as Series A Junior Participating Preferred Stock.

Class A Common Stock

Holders of shares of the Corporation's Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of shares of Class A common stock are entitled to receive dividends when and if declared by the Corporation's board of directors out of funds legally available therefore, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Upon dissolution or liquidation or the sale of all or substantially all of the Corporation's assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of Class A common stock will be entitled to receive pro rata the Corporation's remaining assets available for distribution. Holders of shares of Class A common stock do not have preemptive, subscription, redemption or conversion rights.

Class B Common Stock

Each holder of the Corporation's Class B common stock is entitled, without regard to the number of shares of Class B common stock held by such holder, to one vote for each Holdings Unit in Holdings held by such holder. The unit holders of Holdings collectively have a number of votes in the Corporation that is equal to the aggregate number of Holdings Units that they hold. Holders of Class B common stock do not have any right to receive dividends or to receive a distribution upon a liquidation or dissolution of the Corporation.

There was no change in the Corporation's Class A common stock outstanding during the years ended December 31, 2020 or 2019.

As of December 31, 2020 and 2019, there were no shares of the Corporation's Class B common stock outstanding.

As of December 31, 2020 and 2019, there were no shares of the Series A Junior Participating Preferred Stock outstanding.

Holders of shares of Class A common stock and Class B common stock vote together as a single class on all matters presented to the Corporation's stockholders for their vote or approval, except as otherwise required by applicable law.

Amendment to Stockholder Rights Plan

In January 2016, the Corporation entered into an Amended and Restated Rights Agreement (the "Amended Rights Agreement") which amended the Corporation's original Rights Agreement (the "Original Rights Agreement") dated January 29, 2015. On April 12, 2018, the Corporation entered into the First Amendment to the Amended Rights Agreement (which is included in any reference to the "Amended Rights Agreement"). In connection with the adoption of the Original Rights

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 16. Stockholders' Equity - (continued)

Agreement, the Corporation's Board of Directors declared a dividend distribution of one right on each outstanding share of the Corporation's Class A common stock. The Original Rights Agreement was amended to protect the interests of the Corporation and its stockholders by helping to preserve the value of the Company's net operating loss carryforwards and tax credits.

Under the terms of the Amended Rights Agreement, each right initially entitles stockholders to buy one one- thousandth (1/1000) of a share of the Series A Junior Participating Preferred Stock of the Corporation, at an initial exercise price of $44.12, in the event the rights become exercisable. As amended, the rights generally become exercisable if a person or group becomes the beneficial owner of 4.9% or more of (a) the outstanding Class A common stock of the Corporation or (b) the fair market value of all capital stock of the Corporation. Prior to this amendment, the beneficial ownership percentage threshold to trigger the rights plan was 10.0% of all voting securities, a trigger that, after this amendment, remains in place in addition to the aforementioned 4.9% trigger.

The Amended Rights Agreement extended the expiration date of the rights from January 29, 2018 to January 26, 2019, unless the rights were earlier redeemed or exchanged in accordance with the Amended Rights Agreement or the Amended Rights Agreement was earlier terminated by the Corporation's Board of Directors.

The Corporation is not aware of the occurrence of any events that would have triggered the exercise of the rights under the Amended Rights Agreement.

This amendment was not a taxable event, did not affect the reported financial condition or results of operations, including earnings per share, of the Corporation and did not change the manner in which the Corporation's Class A common stock was traded.

Note 17. Employee Benefit Plan

The Company maintains a defined contribution employee profit-sharing and savings 401(k) plan ("Plan") for all eligible employees. Effective November 1, 2018, a matching contribution feature was added to the plan whereby the Company matches 25.0% of up to 6.0% of the participating employees' eligible contributions. The expense related to matching contributions, which is included in Compensation and benefits in the consolidated statements of operations, was $0.2 million for each of the years ended December 31, 2020 and 2019.

Note 18. Net Capital Requirements

The Company's regulated entities are subject to minimum capital requirements in their respective jurisdictions. The overall capital requirements of the entities below may effectively restrict the payment of cash distributions by the subsidiaries.

The tables below present the capital, as defined by the respective regulatory authority, the minimum capital requirement and the excess capital for the following regulated entities as of December 31, 2020 and 2019, with amounts in millions:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 18. Net Capital Requirements - (continued)

In the UK, the capital requirement represents the minimum capital requirement resulting from a prescriptive calculation provided by the "Financial Conduct Authority" (FCA), which regulates UK LTD. In addition to the minimum capital requirement, firms must hold additional capital for risk not covered within the minimum calculation. Article 128 of the "Capital Requirements Directive IV" (CRD IV) introduced a number of buffers, including the "Capital Conservation Buffer" (CCB) and a "Countercyclical Capital Buffer" (CcyB), which are applicable to UK LTD. The FCA imposes additional buffers for capital planning and winddown scenarios. This requires regulated firms to maintain additional capital above the minimum capital requirement, which may vary at the direction of the FCA.

Note 19. Jefferies Transaction

On January 16, 2015, Holdings and Group entered into the Credit Agreement with Jefferies, as administrative agent and lender, which was subsequently amended on January 24, 2015 and thereafter. In connection with this financing transaction, Holdings formed Group and contributed all of the equity interests owned by Holdings in its subsidiaries to Group. On September 1, 2016, the Company completed a restructuring transaction with Jefferies that, among other changes, amended the Credit Agreement and the parties signed the Group Agreement (the "Restructuring Transaction"). Pursuant to the Group Agreement, Jefferies acquired a 49.9% membership interest in Group, with Holdings owning the remaining 50.1% membership interest in Group.

As discussed in Note 1, the Corporation's Convertible Notes were restructured effective February 8, 2018 (the "Effective Date") and were exchanged for the New Secured Notes due February 8, 2023. The New Secured Notes are not liabilities of Group and only have recourse to the assets of the Corporation and Holdings, including a junior lien (subject to the lien of Jefferies under the Credit Agreement) on the interests of Holdings in its membership interest in Group. On the Effective Date, the Credit Agreement and the Group Agreement were amended largely to provide for certain covenants that will, among other things, permit certain excess cash generated by Group and its affiliates to be distributed to Holdings and, thus, the Corporation under certain conditions that are set forth in the Group Agreement. The amendments are described in further detail below.

Also as discussed in Note 1, the Credit Agreement and the Group Agreement were amended in May 2019 to extend the maturity of the Term Loan under the Credit Agreement, to convert the Term Loan to non-interest bearing, to add a new Senior Tranche to the Current Waterfall and to limit the distributions to Holdings. The Credit Agreement was further amended in November 2020 to extend the maturity of the Term Loan by an additional year to February 15, 2022. These amendments are also described in further detail below.

Amendments to the Credit Agreement

As described above, the original Credit Agreement dated January 24, 2015 has been amended from time to time as

follows:

First Amendment to the Credit Agreement

In connection with the Restructuring Transaction, the Company entered into a first amendment to the Credit Agreement (the "First Amendment"). The First Amendment extended the maturity date of the Credit Agreement by one year to January 16, 2018. Additionally, the First Amendment permitted the Company to defer any three of the remaining interest

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 19. Jefferies Transaction - (continued)

payments by paying interest in kind. Until the Credit Agreement is fully repaid, all distributions and sales proceeds will continue to be used solely to repay the principal plus interest.

The Company concluded that the terms of the First Amendment and the original credit agreement dated January 24, 2015 were not substantially different. Accordingly, the First Amendment was accounted for as a modification on a prospective basis pursuant to ASC 470, Debt ("ASC 470"). The components of interest expense related to the Credit Agreement, which are included in Interest on borrowings in the consolidated statements of operations, including contractual interest, deferred interest and previously unamortized discounts, fees and costs, were amortized as an adjustment to interest expense over the remaining term of the Credit Agreement, as amended by the First Amendment, using the effective interest method.

Second Amendment to the Credit Agreement

In 2017 Jefferies consented to waive compliance with provisions of the Credit Agreement and the Group Agreement regarding restricted payments (as defined in the Credit Agreement) in order to permit the distribution of $3.5 million of funds from Group to Holdings with respect to the payment of a regulatory fine (the "Payment"). Furthermore, the members of Group consented to waive compliance with provisions of the Group Agreement regarding distributions (as defined in the Group Agreement) with respect to the Payment. In consideration for entering into the waiver, the Company agreed to pay a fee to Jefferies in the amount of $3.5 million. On February 22, 2017, Group, Holdings and Jefferies entered into a second amendment to the Credit Agreement (the "Second Amendment"). Pursuant to the Second Amendment, the aggregate principal outstanding balance of the Credit Agreement was increased by $3.5 million.

The Company concluded that the terms of the Second Amendment and the original credit agreement dated January 24, 2015 were not substantially different. Accordingly, the Second Amendment was accounted for as a modification on a prospective basis pursuant to ASC 470. The $3.5 million waiver fee was reflected as additional debt discount and was amortized as an adjustment to interest expense over the remaining term of the Credit Agreement, as amended by the First Amendment, using the effective interest method.

Third Amendment to the Credit Agreement

Jefferies consented to waive compliance with provisions in the Credit Agreement and the Group Agreement regarding restricted payments (as defined in the Credit Agreement) in order to permit the distribution of funds from Group to Holdings on occasion with respect to the payment of certain expenses associated with the restructuring of the Corporation's Convertible Notes (see Note 1), not to exceed $5.0 million in the aggregate. The members of Group also consented to waive compliance with provisions of the Group Agreement regarding distributions (as defined in the Group Agreement) to permit such payments. Additionally, Jefferies consented to waive compliance with the minimum fixed charge coverage ratio (as defined in the Credit Agreement) in order to permit Group to distribute the necessary funds to Holdings to make the interest payments due on the Corporation's Convertible Notes.

The Company concluded that the terms of the Third Amendment and the original credit agreement dated January 24, 2015 were not substantially different. Accordingly, the Third Amendment was accounted for as a modification on a prospective basis pursuant to ASC 470. The $5.0 million waiver fee was reflected as additional debt discount and was amortized as an adjustment to interest expense over the remaining term of the Credit Agreement, as amended by the First Amendment, using the effective interest method.

Second Amended and Restated Credit Agreement

On February 8, 2018, the Company entered into a Second Amended and Restated Credit Agreement (the "Amended Credit Agreement") and an Amended and Restated Limited Liability Company Agreement of FXCM Group, LLC (the "Amended Group Agreement"). The Amended Credit Agreement extended the maturity date of the Credit Agreement by an additional year to January 16, 2019. In addition, Jefferies consented to waive compliance with provisions in the Amended Credit Agreement and the Amended Group Agreement regarding restricted payments (as defined in the Credit Agreement) in order to permit the distribution of funds from Group to Holdings on occasion with respect to the payment of additional expenses

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 19. Jefferies Transaction - (continued)

associated with the restructuring of the Corporation's Convertible Notes and other expenses, not to exceed $6.0 million in the aggregate ("Additional Expense Payments"). Pursuant to the Amended Group Agreement, the members of Group also consented to waive compliance with provisions of the Group Agreement regarding distributions (as defined in the Group Agreement) to permit such payments, which will increase the principal amount of the Term Loan outstanding under the Credit Agreement in an amount equal to the Additional Expense Payment. Further, the fixed charge coverage ratio requirements (as previously defined in the Credit Agreement and Group Agreement) have been eliminated in the Amended Credit Agreement and the Amended Group Agreement. The Company paid nil and $0.3 million of Additional Expense Payments in the years ended December 31, 2020 and 2019, respectively, and the aggregate principal outstanding balance of the Credit Agreement was increased by the same amount.

The Credit Agreement had been modified within the year preceding the date of the Amended Credit Agreement without being deemed to be substantially different. In accordance with ASC 470, the Company considered the terms that existed a year prior to the Amended Credit Agreement, i.e., prior to the Second Amendment, and concluded that the terms of the Amended Credit Agreement were not substantially different. Accordingly, the Amended Credit Agreement was accounted for as a modification on a prospective basis pursuant to ASC 470.

Third Amended and Restated Credit Agreement

The maturity date of the Term Loan outstanding under the Credit Agreement was extended several times from January to May 2019 in order for the Company to negotiate new terms for the Credit Agreement. On May 29, 2019, the Company entered into the Third Amended Credit Agreement and the Second Amended Group Agreement (see below). The Third Amended Credit Agreement extended the maturity date of the Credit Agreement to February 15, 2021 and the Term Loan balance was converted to non-interest bearing. The Third Amended Credit Agreement also added additional events of default.

The Company evaluated whether the changes to the terms of the debt represented a troubled debt restructuring ("TDR") under the guidance of ASC 470. Under the guidance of ASC 470, a debt restructuring is a TDR if the borrower is experiencing financial difficulty and the creditor has granted a concession. The Company determined that there were indicators that the Company was experiencing financial difficulty and that a concession had been granted, as the effective borrowing rate after the restructuring is zero and is therefore lower than the effective borrowing rate of the debt before the restructuring. The Company therefore evaluated the restructuring as a TDR.

Under ASC 470, a TDR involving only modification of terms of the payable (not involving a transfer of assets or grant of an equity interest) shall be accounted for prospectively from the time of restructuring and the carrying amount of the payable is not changed unless the carrying amount exceeds the total future cash payments specified by the new terms.

The Company did not transfer assets in either full or partial settlement of the debt. Although the Group Agreement was modified to add a new senior tranche to the Current Waterfall, which is 100% payable first to Jefferies from cash distributions and which is based on the interest that would have accrued on the Term Loan at the existing rate, the Company determined that this is not the granting of an equity interest, as there was no settlement of any portion of the debt. There are also no indeterminate future cash payments under the Third Amended Credit Agreement. The Company therefore determined that the TDR involved a modification of the terms of the debt and should therefore be accounted for prospectively. The carrying amount of the Term Loan was not adjusted due to the restructuring and no interest on the debt is recorded after the restructuring.

First Amendment to the Third Amended and Restated Credit Agreement

On November 20, 2020, the Company amended the Third Amended Credit Agreement to extend the maturity date of the Credit Agreement to February 15, 2022. The Company evaluated whether the changes to the terms of the debt represented a troubled debt restructuring ("TDR") under the guidance of ASC 470. The Company determined that there were indicators that the Company was experiencing financial difficulty and that a concession had been granted, as the effective borrowing rate after the restructuring is zero and is therefore lower than the effective borrowing rate of the debt before the restructuring done in

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 19. Jefferies Transaction - (continued)

2019 (see Third Amended and Restated Credit Agreement above). The Company therefore evaluated the restructuring as a TDR.

Under ASC 470, a TDR involving only modification of terms of the payable (not involving a transfer of assets or grant of an equity interest) shall be accounted for prospectively from the time of restructuring and the carrying amount of the payable is not changed unless the carrying amount exceeds the total future cash payments specified by the new terms.

The Company did not transfer assets in either full or partial settlement of the debt. The Company determined there was no granting of an equity interest, as there was no settlement of any portion of the debt. There are also no indeterminate future cash payments under the First Amendment to the Third Amended Credit Agreement. The Company therefore determined that the TDR involved a modification of the terms of the debt and should therefore be accounted for prospectively. The carrying amount of the Term Loan was not adjusted due to the restructuring and no interest on the debt is recorded after the restructuring.

During 2020 and 2019, Jefferies consented to waive compliance with certain provisions of the Third Amended Credit Agreement, including those regarding a monthly Cash Amount Requirement (as defined in the Third Amended Credit Agreement) and the remittance of Net Asset Sale Proceeds (as defined in the Third Amended Credit Agreement) from the sale of an equity interest.

Group Agreement

The Group Agreement provides that Group is governed by a six-member board of directors, comprising three directors appointed by Jefferies and three directors appointed by Holdings. The Group Agreement specifies the terms according to which the cash distributions and earnings or loss of Group are to be allocated to its members under the Current Waterfall, which is described below. Distributions from Group, other than certain permitted payments, cannot be made under the Group Agreement until the principal and interest due under the Credit Agreement are repaid. Pursuant to the Group Agreement, Jefferies and the Company each have the right to request the sale of Group after January 16, 2018, subject to both Jefferies and Holdings accepting the highest reasonable sales price.

The Group Agreement was amended on February 8, 2018 in connection with the restructuring of the Corporation's Convertible Notes. The terms of the amendment are described above in connection with the Amended Credit Agreement. Other than these changes, the principal terms of the Group Agreement remain unchanged.

Second Amended Group Agreement

The Group Agreement was amended in May 2019 in conjunction with the amendments to the Credit Agreement described above. The Second Amended Group Agreement established a Leucadia Holders First Priority Distribution (the "First Priority Distribution"). The First Priority Distribution is a Senior Tranche of the Current Waterfall that Jefferies will receive equal to the sum of the following:

• Interest on the Term Loan balance at the original contractual rate of 20.5% per annum
• The amount of distributions made by Group to Holdings or the Corporation under the terms of the Third Amended Credit Agreement to cover operating expenses, which were capped at an annual amount of $1.75 million
• Any additional cash that is invested in Group by Jefferies
• An amount equal to interest on the above items accruing daily at 20.5% and compounded quarterly

Allocations of Group Distributions (Current Waterfall)

The contractual provisions in the Group Agreement specify how certain distributions from Group are to be allocated among Jefferies and the Company. The distributions include the First Priority Distribution described above, net proceeds received in connection with certain transactions, including sales of assets, dividends or other capital distributions, the sale of Group (whether by merger, stock purchase, sale of all or substantially all of Group's assets or otherwise), the issuance of any

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 19. Jefferies Transaction - (continued)

debt or equity securities, and other specified non-ordinary course events, such as certain tax refunds and litigation proceeds. The Current Waterfall results in the following distributions from Group:

Jefferies Membership Interest in Group

As described above, Jefferies owns a 49.9% non-controlling membership interest in Group. The remaining 50.1% controlling membership interest in Group is owned by Holdings and Holdings consolidates the financial results of Group.

Jefferies has designated three directors to the board of directors of Group. The Chairman of the board of directors of Group is a managing director of Jefferies. As such, Jefferies participates in certain management, operational and investment decisions of Group, including, but not limited to, issuance of additional membership units or additional ownership interests in Group's subsidiaries, issuance of debt (subject to certain limited exceptions), sales of assets (subject to certain limited exceptions), merger or consolidation with respect to Group or its subsidiaries, review and approval of the annual summary budget, and entry into or exit from a material line of business.

In addition to the allocations of cash distributions and the net profit and net loss of Group described above, Jefferies and its assignees are entitled to tax distributions under the Group Agreement. If any such tax distributions are made, the amounts of such distributions reduce the payments to be made to Jefferies and its assignees pursuant to the Current Waterfall (other than with respect to the repayment of the Credit Agreement).

The Group Agreement provides that following January 16, 2018 Jefferies and the Company will each have the right to cause the sale of Holdings, Group, and/or any of their respective subsidiaries for cash at the highest reasonably available price, subject to both Jefferies and Holdings reasonably accepting such sales price. Upon the occurrence of such event, Group will distribute the cash to Jefferies and the Company in accordance with the Current Waterfall described above.

In the event of a change of control, at the election of Jefferies or its assignees, Holdings and Group will be required to pay Jefferies and its assignees in cash a one-time payment equal to the fair market value of their economic rights under the Group Agreement. For this purpose, change of control is generally defined as an event or series or events by which (i) a person or group acquires 40% or more of the voting interests of the Corporation, (ii) the Corporation and the existing members of Holdings cease to own 90% of the equity interests of Holdings, (iii) the Corporation ceases to be the sole managing member of Holdings or (iv) subject to certain exceptions, a majority of the members of the board of directors of the Corporation, Holdings or Group cease to be directors during a 12-month period. The Company obtained a consent and waiver from Jefferies on May 15, 2017 in order for the Corporation to reduce the size of its board of directors. Jefferies agreed to waive the change of control condition (iv) described above for a one-year period from the date of the consent and waiver solely to permit the Corporation to restructure and reduce the size of its board of directors.

The Company evaluated the rights that Jefferies has related to its membership interest in Group under the Group Agreement, including board seats, voting rights and participation in key decisions that affect Group, as described above. The Company concluded that the legal form of the membership interest held by Jefferies is equity. The Company then considered the guidance under ASC 815, Derivatives and Hedging ("ASC 815"), and concluded that none of the features of the Group Agreement are required to be bifurcated and accounted for separately as a derivative.

The Company considered the guidance in ASC 480 and determined that the non-controlling interest held by Jefferies falls within the scope of ASC 480 because it is redeemable for cash upon a contingent event that is not solely within the control

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 19. Jefferies Transaction - (continued)

of the Company and, accordingly, is classified outside of permanent equity on the consolidated statement of financial condition as Redeemable non-controlling interest. The Company evaluates the probability of redemption at each reporting date. As of December 31, 2020, the Company concluded that the non-controlling interest in Group is not currently redeemable and it is not probable that it will become redeemable as the likelihood that the redemption feature will be triggered is not considered probable. Accordingly, subsequent adjustment of the redeemable non-controlling interest to its estimated redemption value is not required pursuant to ASC 480. If the non-controlling interest in Group becomes redeemable, or if redemption becomes probable, an adjustment will be made to adjust the redeemable non-controlling interest to its estimated redemption value.

The allocation of the cash distributions and earnings or loss from Group based on the Current Waterfall differs from the controlling and non-controlling members' stated ownership percentages. The Company determined that the Current Waterfall represents a substantive profit sharing arrangement and concluded that the appropriate methodology for calculating the redeemable non-controlling interest at each reporting date is the HLBV method. The Company applies the HLBV method using a balance sheet approach. Under the HLBV method, a calculation is performed at each balance sheet date to determine the amount the controlling and non-controlling member would each hypothetically receive assuming Group were liquidated at its recorded amount determined in accordance with U.S. GAAP and the cash distributed according to the Current Waterfall. The difference between the liquidating distribution amounts calculated at the beginning and end of each period, after adjusting for capital contributions and distributions, is the controlling and non-controlling members' share of the earnings or loss from Group. The non-controlling member's share is reported in Net loss attributable to redeemable non-controlling interest in FXCM Group, LLC in the consolidated statements of operations.

The share of the income or loss and other comprehensive income or loss of Group is allocated to the non-controlling member each reporting period based on the HLBV method. As of December 31, 2020 and 2019, the carrying amount of the Redeemable non-controlling interest on the consolidated statements of financial condition was $25.0 million and $14.0 million, respectively (see Note 4).

Credit Agreement

The Credit Agreement provided for the $300.0 million Term Loan made by Jefferies to Holdings and Group. The net proceeds of the Term Loan were $279.0 million.

The obligations under the Credit Agreement are guaranteed by certain wholly-owned unregulated domestic subsidiaries of the Company and are secured by substantially all of the assets of the Company and certain subsidiaries of the Company, including a pledge of all of the equity interests in certain of the Company's domestic subsidiaries and 65% of the voting equity interests in certain of its foreign subsidiaries.

The Term Loan had an initial interest rate of 10% per annum, increasing by 1.5% per annum each quarter, until it reached a maximum of 20.5% per annum (before giving effect to any applicable default rate). As described above, the Term Loan balance was converted to non-interest bearing in May 2019. As of December 31, 2020, the Company has paid $263.0 million of principal, of which $10.0 million was applied to a deferred financing fee.

The Credit Agreement is subject to various conditions and terms such as requiring mandatory prepayments, including from proceeds of dispositions, condemnation and insurance proceeds, debt issuances, equity issuances, and capital contributions. The loan may be voluntarily prepaid without penalty.

The Credit Agreement includes a variety of restrictive covenants, including, but not limited to: limitations on the ability to merge, dissolve, liquidate, consolidate or sell, lease or otherwise transfer all or substantially all assets; limitations on the incurrence of liens; limitations on the incurrence of debt by subsidiaries; limitations on the ability of Group to make distributions in respect of its equity interests including distributions to pay interest due on the Corporation's New Secured Notes and limitations on transactions with affiliates, without the prior consent of the lender. The Credit Agreement also provides for events of default, including, among others: non-payments of principal; breach of representations and warranties; failure to maintain compliance with the other covenants contained in the Credit Agreement; default under other material debt; the existence of bankruptcy or insolvency proceedings; insolvency; and a change of control.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 19. Jefferies Transaction - (continued)

The Credit Agreement contains mandatory prepayment provisions in the event of certain events described above. The mandatory prepayments may be triggered by events or circumstances that are not considered clearly and closely related to the Credit Agreement, and, as such, represent embedded derivatives in accordance with ASC 815. Beginning in 2016, a decline in the fair value of the Credit Agreement below par resulted in value attributable to the embedded derivatives. The Company assessed the fair value of the embedded derivatives and bifurcated their value from the fair value of the Credit Agreement. At each subsequent reporting date, the fair value of the derivative liability related to the embedded derivatives bifurcated from the Credit Agreement is evaluated. As of December 31, 2020 and 2019, no value was attributed to the derivative liability resulting from the mandatory prepayment provision.

The balance of the Credit Agreement included on the consolidated statements of financial condition was as follows, with amounts in thousands:

Interest expense related to the Credit Agreement included in Interest on borrowings in the consolidated statements of operations consists of the following, with amounts in thousands:

The Company incurred deferred restructuring costs of $10.3 million in total related to the Third Amendment and the Amended Credit Agreement. The deferred restructuring costs are amortized using the effective interest method over the remaining term of the Credit Agreement, as applicable to the amendment to which they relate. Amortization of deferred restructuring costs included in Interest on borrowings was $0.2 million and $0.8 million for the years ended December 31, 2020 and 2019, respectively.

Note 20. Debt

Convertible Notes due 2018

In June 2013, the Corporation issued $172.5 million principal amount of the Convertible Notes maturing on June 15, 2018 and received net proceeds of $166.5 million, after deducting the initial purchasers' discount and offering expenses. The Convertible Notes required the payment of interest semi-annually on June 15 and December 15 at a rate of 2.25% per year, commencing December 15, 2013. The indenture governing the Convertible Notes did not prohibit the Corporation from incurring additional senior debt or secured debt, nor did it prohibit any of its subsidiaries from incurring additional liabilities.

As described in Note 1, on November 10, 2017, the Corporation entered into a restructuring support agreement to restructure the Convertible Notes pursuant to the Plan which was filed under Chapter 11 of the United States Bankruptcy Code. On February 8, 2018, the Plan became effective. The Convertible Notes were exchanged for the New Secured Notes due February 2023, which are described further below.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 20. Debt - (continued)

New Secured Notes due 2023

In February 2018, the Convertible Notes were exchanged for the New Secured Notes. The New Secured Notes have a principal amount of $174.4 million and mature on February 8, 2023. The New Secured Notes require the payment of interest semi-annually on February 8 and August 8 at a rate of 7.0% per year, commencing August 8, 2018. On each interest payment date, a portion of the interest payable is required to be paid in cash at a rate of 2.25% per annum. Any additional interest payable on each interest payment date may be paid as cash interest or paid-in-kind interest at the Corporation's option. Holdings is the guarantor of the Corporation's obligations under the New Secured Notes. The obligations of Holdings under its guaranty are subordinate in right of payment to the prior payment in full of all obligations of Holdings under the Credit Agreement.

The New Secured Notes include a variety of restrictive covenants, including, but not limited to: limitations on the ability to merge, consolidate, sell, lease or otherwise transfer all or substantially all assets; limitations on restricted payments (including, but not limited to, dividends and equity repurchases); limitations on the incurrence of debt and issuance of preferred stock; limitations on the incurrence of liens; and limitations on affiliate transactions. The New Secured Notes also provide for events of default, including, among others: non-payments of principal and interest; failure to maintain compliance with the other covenants and provisions contained in the indenture; default under other material debt; and the existence of bankruptcy or insolvency proceedings.

The indenture for the New Secured Notes includes a provision whereby the amount of all cash and cash equivalents, after giving effect to distributions to Holdings, in excess of a Minimum Cash Reserve (as defined in the indenture) is required to be contributed to a sinking fund ("Sinking Fund"). Holdings and/or the Corporation will use the funds available in the Sinking Fund, subject to a minimum threshold, to run a quarterly modified Dutch auction to repurchase as many notes as possible at a cash price not to exceed 100.0% of the principal amount thereof plus accrued or unpaid interest on the New Secured Notes. The requirements of the Sinking Fund do not apply until the principal and interest on the Credit Agreement have been repaid.

On the date of the exchange, the New Secured Notes were recorded at a fair value of $82.2 million. Since the fair value was less than the face amount, a discount of $92.2 million was recorded and is amortized to interest expense over the five-year life of the New Secured Notes using the effective interest method. Debt issuance costs of $1.1 million were incurred in connection with the exchange, which were capitalized and are amortized to interest expense over the five-year life of the New Secured Notes using the effective interest method.

As described in Note 1, on May 29, 2019 the Company and Holdings entered into the Third Amended Credit Agreement which amended and restated the original Credit Agreement (see Note 19). In conjunction with the amendments to the Credit Agreement, the Corporation and Holdings entered into the Forbearance Agreement with a group of bondholders who hold the New Secured Notes. In accordance with the Forbearance Agreement, the semi-annual cash interest distributions on the Corporation's New Secured Notes, which were previously payable as distributions from Group to Holdings, were not required through February 9, 2021. The semi-annual cash interest distributions for 2020 and 2019 were therefore treated as paid-in-kind interest and added to the principal balance of the New Secured Notes. Also as described in Note 1, on November 20, 2020, the Company and Holdings amended the Third Amended Credit Agreement to extend the maturity date of the Credit Agreement by one year to February 15, 2022. This resulted in the extension of the Forbearance Agreement so that the semi-annual cash interest distributions will not be required through February 9, 2022.

The balance of the New Secured Notes was as follows, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 20. Debt - (continued)

Interest expense related to the New Secured Notes, included in Interest on borrowings in the consolidated statements of operations, consists of the following, with amounts in thousands:

Note 21. Derivative Financial Instruments

Derivative financial instruments are accounted for in accordance with ASC 815 and are recognized as either assets or liabilities at fair value on the consolidated statements of financial condition. The Company has master netting agreements with its respective counterparties under which derivative financial instruments are presented on a net-by-counterparty basis in accordance with ASC 210 and ASC 815. The Company enters into futures contracts and CFD contracts to economically hedge the open customer contracts and positions on its CFD business. Futures contracts are exchange traded contracts to either purchase or sell a specific asset at a specified future date for a specified price. CFD contracts are non-exchange traded contracts between a buyer and seller to exchange the difference in the value of an underlying asset at the beginning and end of a stated period. The Company's derivative assets and liabilities associated with futures contracts and CFD contracts on its CFD business are recorded within Due from brokers and Due to brokers, respectively, on the consolidated statements of financial condition and gains or losses on these transactions are included in Trading revenue in the consolidated statements of operations.

The Company is exposed to risks relating to its derivatives trading positions from the potential inability of counterparties to perform under the terms of the contracts (credit risk) and from changes in the value of the underlying financial instruments (market risk). The Company is subject to credit risk to the extent that any counterparty with which it conducts business is unable to fulfill its contractual obligations. The Company manages its trading positions by monitoring its positions with and the credit quality of the financial institutions that are party to its derivative trading transactions. Additionally, the Company's netting agreements provide the Company with the right, in the event of a default of the counterparty (such as bankruptcy or a failure to perform), to net a counterparty's rights and obligations under the agreement and to liquidate and set off collateral against any net amount owed by the counterparty.

The following tables present the gross and net fair values of the Company's derivative transactions and the related offsetting amount permitted under ASC 210 and ASC 815 as of December 31, 2020 and 2019, with amounts in thousands. Derivative assets and liabilities are net of counterparty and collateral offsets. Collateral offsets include cash margin amounts posted with brokers. Under ASC 210, gross positive fair values are offset against gross negative fair values by counterparty pursuant to enforceable master netting agreements.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 21. Derivative Financial Instruments - (continued)

Gains (losses) on the Company's derivative instruments are recorded on a trade date basis. The following table presents the net gains (losses) on derivative instruments recognized in the consolidated statements of operations, with amounts in thousands:

Note 22. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy are defined as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.

Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Level 3: Unobservable inputs for assets or liabilities.

When Level 1 inputs are available, those inputs are selected for determination of fair value. To value financial assets or liabilities that are characterized as Level 2 and 3, the Company uses observable inputs for similar assets and liabilities that are available from pricing services or broker quotes. These observable inputs may be supplemented with other methods, including internal models that result in the most representative prices for assets and liabilities with similar characteristics. Multiple inputs may be used to measure fair value, however, the fair value measurement for each financial asset or liability is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The following tables present the Company's assets and liabilities that are measured at fair value on a recurring basis and the related hierarchy levels as of December 31, 2020 and 2019, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 22. Fair Value Measurements - (continued)

As of December 31, 2020, the Company's total notional absolute value of open FX and CFD customer assets and liabilities by currency pair or product was $1.0 billion and $1.2 billion, respectively. The Company's total net notional value for open FX and CFD positions was $0.9 billion.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 22. Fair Value Measurements - (continued)

As of December 31, 2019, the Company's total notional absolute value of open FX and CFD customer assets and liabilities by currency pair or product was $1.7 billion and $1.5 billion, respectively. The Company's total net notional value for open FX and CFD positions was $0.5 billion.

U.S. Treasury Bills

U.S. Treasury bills, included in Cash and cash equivalents on the consolidated statements of financial condition, are measured at fair value based on quoted market prices in an active market.

Derivative Assets and Liabilities

Open futures contracts are measured at fair value based on exchange prices. CFD contracts are measured at fair value based on market price quotations (where observable) obtained from independent brokers.

Customer Account Liabilities

Customer account liabilities represent amounts due to customers related to cash and margin transactions, including cash deposits and gains and losses on settled FX, CFDs and spread betting trades as well as unrealized gains and losses on open FX commitments, CFDs and spread betting. Customer account liabilities, included on the consolidated statements of financial condition, are measured at fair value based on the market prices of the underlying products.

The following tables present the carrying value, fair value and fair value hierarchy category of certain financial instruments that are not measured at fair value in the consolidated statements of financial condition, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 22. Fair Value Measurements - (continued)

Due from/to Brokers - Unsettled Spot FX

Unsettled spot FX, included in Due from brokers and Due to brokers on the consolidated statements of financial condition, is carried at contracted amounts which approximate fair value based on market price quotations (where observable) obtained from independent brokers.

Credit Agreement

The Credit Agreement is carried at the contracted amount net of discounts. The fair value of the Credit Agreement is estimated using a risk-neutral valuation model that considers the probability of default and a recovery rate associated with secured loans.

New Secured Notes

The New Secured Notes are carried at the contractual amount net of fair value discount. The fair value of the New Secured Notes is based on a valuation model that allocates the market value of invested capital of the Corporation to the New Secured Notes, Jefferies' secured interest, and the Corporation's Class A common stock. The allocation is incorporated within an option-pricing method that considers volatility based on guideline companies and the contractual distributions to each aforementioned security.

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 22. Fair Value Measurements - (continued)

There were no transfers into or out of Level 1, 2 or 3 of the fair value hierarchy during the years ended December 31, 2020 and 2019.

Note 23. Income Taxes

Holdings operates in the U.S. as a limited liability company that was treated through December 8, 2017 as a partnership for U.S. federal, state, and local income tax purposes. On December 8, 2017, the Corporation acquired the remaining membership units of Holdings it did not own such that Holdings became a wholly-owned subsidiary of the Corporation. From that date forward, Holdings is a disregarded entity for U.S. federal tax purposes and will no longer file separate tax returns. Since January 2015, all of Holdings' operations are held by Group, a limited liability company that is treated as a partnership between the Corporation and Jefferies for U.S. federal, state and local income tax purposes. As a result, the Company's income from its U.S. operations is not subject to U.S. federal income tax because the income is attributable to its members. Accordingly, the Corporation's U.S. tax provision is solely based on the portion of income attributable to the Corporation from the Company.

In addition to U.S. federal and state income taxes, Group is subject to Unincorporated Business Tax which is

attributable to its operations apportioned to New York City. The Company's foreign subsidiaries are also subject to taxes in the jurisdictions in which they operate.

Loss from continuing operations before income taxes, as shown in the consolidated statements of operations, includes the following components, with amounts in thousands:

The provision for income taxes attributable to continuing operations consists of the following, with amounts in thousands:

The following table reconciles the provision for income taxes attributable to continuing operations to the U.S. federal statutory tax rate:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 23. Income Taxes - (continued)

The change in the effective tax rate for the year ended December 31, 2020 compared to the year ended December 31, 2019 is predominantly the result of recording valuation allowance on the deferred tax assets of both the Corporation and the Company to offset the tax benefit associated with the book losses for the period. During 2015, the Corporation determined that, given the losses incurred from the events of January 15, 2015 and due to the Jefferies Transaction, it was not more likely than not that it would benefit from the tax deduction attributable to the tax basis step-up from the conversion of the non-controlling membership units of Holdings, nor would it receive tax benefit from the losses incurred. As a result, a valuation allowance was established on substantially all of the deferred tax assets of both the Corporation and the Company due to their doubtful realizability. This continues to be the primary driver of the tax provision recorded for the years ended December 31, 2020 and 2019. The negative tax rate for the years ended December 31, 2020 and 2019 reflects the recording of a tax provision on the book loss for the period.

Deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A summary of the tax effects of the temporary differences from continuing operations is as follows, with amounts in thousands:

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 23. Income Taxes - (continued)

The Corporation and the Company assess available positive and negative evidence to estimate if it is more-likely-than- not that they will use certain jurisdiction-based deferred tax assets including certain tax credits and net operating loss carryovers. On the basis of this assessment, a valuation allowance of $266.2 million was recorded during the year ended December 31, 2020.

As of December 31, 2020, the Corporation has $303.1 million of domestic net operating loss carryforwards and the Company has $213.3 million of foreign net operating loss carryforwards from all operations. The U.S. and UK net operating loss carryforwards have indefinite carryforward periods.

The tax credit carryforward includes foreign tax credits of $3.5 million and a research and development credit of $1.2 million, each of which may be carried forward for a period of 10 years and begin to expire in 2021. There are also New York City unincorporated business tax credits of $0.1 million that may be carried forward for seven years and begin to expire in 2021.

The Company does provide for deferred taxes on the excess of the financial reporting over the tax basis in its investments in foreign subsidiaries because the amounts are not deemed to be permanent in duration.

Income tax payable as of December 31, 2020 and 2019 was $0.3 million and $0.1 million, respectively, and is included in Accounts payable and accrued expenses on the consolidated statements of financial condition (see Note 12). Tax receivable as of December 31, 2020 and 2019 was $0.2 million and $1.0 million, respectively.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, with amounts in thousands:

The Corporation and the Company recognize interest and penalties related to unrecognized tax benefits within the income tax expense line in the consolidated statements of operations. Any accrued interest and penalties are included within the related tax liability line in the consolidated statements of financial condition. Related to the unrecognized tax benefits noted above, the Corporation and the Company accrued penalties and interest of immaterial amounts during the years ended December 31, 2020 and 2019.

The Corporation and the Company do not believe that there will be a material increase in unrecognized tax benefits during the coming year.

The Corporation is subject to taxation in the U.S. and various states and the Company is subject to taxation in certain states and foreign jurisdictions. As of December 31, 2020, both the Corporation and the Company's tax years for 2017 through 2019 are subject to examination by the tax authorities. Currently, one of the Company's U.K. subsidiaries continues to be under examination for the 2015 tax year. The Company has no other audits underway and no statute of limitation extensions are operative.

Note 24. Foreign Currencies and Concentrations of Credit Risk

Under the external execution model, the Company accepts and clears FX spot contracts for the accounts of its customers (see Notes 1 and 2). These activities may expose the Company to off-balance sheet risk in the event that the customer

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 24. Foreign Currencies and Concentration of Credit Risk - (continued)

or other broker is unable to fulfill its contracted obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss.

In connection with these activities, the Company executes and clears customers' transactions involving the sale of foreign currency not yet purchased, substantially all of which are transacted on a margin basis subject to internal policies. Such transactions may expose the Company to off-balance sheet risk in the event margin deposits are not sufficient to fully cover losses that customers may incur. In the event that a customer fails to satisfy its obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customer's obligation.

The Company controls such risks associated with its customer activities by requiring customers to maintain margin collateral, in the form of cash, in compliance with various internal guidelines. The Company's trading software technology monitors margin levels on a real time basis and, pursuant to such guidelines, requires customers to deposit additional cash collateral, or to reduce positions, if necessary. The system is designed to ensure that any breach in a customer's margin requirement as a result of losses on the trading account will automatically trigger a final liquidation, which will execute the closing of all positions.

Exposure to credit risk is dependent on market liquidity. The Company reduces credit risk from customers by monitoring and increasing margin requirements and not offering currency pairs that are believed to carry significant risk due to overactive manipulation by their respective governments either by a floor, ceiling, peg or band. The losses incurred from customer accounts that had gone negative were $0.2 million and not material for the years ended December 31, 2020 and 2019, respectively.

Institutional customers are permitted credit pursuant to limits set by the Company's prime brokers. The prime brokers incur the credit risk relating to the trading activities of these customers in accordance with the respective agreements between such brokers and the Company.

The Company is engaged in various trading activities with counterparties which include brokers and dealers, futures commission merchants, banks and other financial institutions. In the event that such counterparties do not fulfill their obligations, the Company may be exposed to credit risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the financial instrument. It is the Company's policy to: (i) perform credit reviews and due diligence prior to conducting business with counterparties; (ii) set exposure limits and monitor exposure against such limits; and (iii) periodically review, as necessary, the credit standing of counterparties using multiple sources of information. The Company's total Due from brokers balance included in the consolidated statements of financial condition was $1.0 million and $11.3 million as of December 31, 2020 and 2019, respectively. As of December 31, 2020 96% of the entire balance of the Company's Due from brokers was from three financial institutions. As of December 31, 2019, 99% of the entire balance of the Company's Due from brokers was from one broker. Three banks held more than 10.0% each of the Company's total Cash and cash equivalents and Cash and cash equivalents, held for customers as of December 31, 2020. Three banks held more than 10.0% each of the Company's total Cash and cash equivalents and Cash and cash equivalents, held for customers as of December 31, 2019.

Note 25. Litigation

In the ordinary course of business, the Corporation and the Company and certain of their officers, directors and employees may from time to time be involved in litigation and claims incidental to the conduct of its businesses, including employment practices claims. In addition, the Company's business is also subject to extensive regulation, which may result in administrative claims, investigations and regulatory proceedings against it. The Company has been named in various arbitration and civil litigation cases brought by customers seeking damages for trading losses. Management has investigated these matters and believes that such cases are without merit and is defending them vigorously. However, the arbitrations and litigations are presently in various stages of the judicial process and no judgment can be made regarding the ultimate outcome of the arbitrators' and/or court's decisions.

On December 15, 2015, Brett Kandell, individually and on behalf of nominal defendant, Global Brokerage, Inc., filed a shareholder derivative complaint against the members of Global Brokerage's board of directors (the "Board") in the Delaware

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 25. Litigation - (continued)

Court of Chancery. The case is captioned Brett Kandell v. Dror Niv et al., C.A. No. 11812-VCG. On March 4, 2016, plaintiff filed an amended shareholder derivative complaint, which alleges breach of fiduciary duty, contribution and indemnification, waste of corporate assets, and unjust enrichment and seeks compensatory damages, rescission of certain agreements as well as reasonable costs and expenses. A second amended shareholder derivative complaint was filed on May 31, 2016 and the Board filed a motion to dismiss on July 15, 2016. Subsequently, plaintiff filed a third amended shareholder derivative complaint on September 1, 2016 and the Board filed a motion to dismiss on October 17, 2016. On September 29, 2017, the Delaware Chancery Court issued its ruling granting in part and denying in part the Board's motion to dismiss the third amended complaint. The Court dismissed in their entirety the claims for waste of corporate assets and unjust enrichment. The Court dismissed, in part, the claims for breach of fiduciary duty and contribution and indemnification to the extent they related to the Board's approval of a shareholder rights plan in January 2015 and new severance and executive bonus plans in March 2015 and April 2016. The Court did not, however, dismiss the breach of fiduciary duty and contribution and indemnification claims to the extent they related to the Board's approval of the Term Loan and subsequent Memorandum of Understanding and the Board's approval of the Company's purported "no-debit" policy which the CFTC claimed violated CFTC Regulation 5.16. On February 13, 2019, the parties reached a settlement of this matter, subject to Court approval. The proposed settlement required payment to the Corporation by the individual defendants, through the Corporation's directors and officers liability insurers, in the amount of $1,550,000, less any fee award ordered by the Court to counsel for plaintiff which shall not be more than 30.0% of the settlement amount. The court approved the settlement on June 5, 2019. The Corporation received $1,550,000 on June 24, 2019 and paid out $465,000 in fees. The net settlement of $1,085,000 is recorded in Other income in the consolidated statement of operations.

In response to the Corporation's announcement on February 6, 2017 regarding settlements with the NFA and the CFTC, several putative securities class action lawsuits have been filed against Global Brokerage, Inc., the Board, and certain officers of the Corporation in the U.S. District Court for the Southern District of New York. The complaints in these actions allege that the defendants violated certain provisions of the federal securities laws and seek compensatory damages as well as reasonable costs and expenses. These actions have been consolidated and the court has appointed a lead plaintiff and lead counsel. On June 19, 2017, lead counsel filed a consolidated amended complaint on behalf of the class. On August 3, 2017, the Corporation and individual defendants filed a motion to strike and dismiss the consolidated amended complaint. A hearing on the motion to strike and dismiss was held on March 1, 2018. Ruling from the bench, the Court denied the motion to strike, but granted the motion to dismiss the action without prejudice. On April 6, 2018, plaintiffs filed a second amended consolidated complaint against the Corporation and Dror Niv, William Ahdout and Robert Lande. On May 7, 2018, the Corporation and the individual defendants filed a motion to dismiss the second amended consolidated complaint. The Court held oral argument on the motion on March 6, 2019. On March 28, 2019, the Court granted in part and denied in part defendants' motion to dismiss the consolidated second amended complaint. Mr. Lande has been dismissed as a defendant in the case. Defendants answered the second amended complaint on May 13, 2019. In January 2020 the plaintiffs moved for class certification, which defendants opposed, and an evidentiary hearing was held on October 15, 2020. Decision on class certification is pending. The parties have completed fact discovery and are proceeding into expert discovery. In 2017, two related shareholder derivative actions were filed and were stayed pending dismissal of the aforementioned securities class action.

Also, on April 14, 2017, a customer of US filed a class action on behalf of customers who traded on the No Dealing Desk platform during the 2010-2016 period and alleges that such customers were harmed as a result of the Company's relationship and use of Effex Capital, LLC ("Effex") as a liquidity provider. The class action was filed in the U.S. District Court for the Southern District of New York and alleges, among other things, breach of contract and breach of fiduciary duty by US and other related claims against the Corporation, Holdings, Dror Niv, William Ahdout, and Effex and its principal. On August 3, 2017, the district court entered an order staying the matter with respect to the claims against the Corporation, Holdings, Dror Niv and William Ahdout pending resolution of an individual arbitration proceeding by the customer. A similar class action asserting substantially the same claims was filed by another customer on June 21, 2017. These two actions have been consolidated and are stayed pending resolution of individual arbitration which has not yet been filed. The Corporation and other named Global Brokerage defendants intend to vigorously defend against the claims asserted against them by these customers.

On September 27, 2019, Effex Capital, LLC filed a complaint against Holdings seeking indemnification pursuant to the terms of a services agreement. Holdings filed a motion to dismiss on January 6, 2020, and on February 21, 2020, Effex

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Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 25. Litigation - (continued)

opposed Holdings' motion to dismiss and filed a motion seeking, in the alternative, to amend its complaint. The motions have not been decided and Holdings intends to vigorously defend the claims asserted against it by Effex.

For the outstanding matters referenced above, including ordinary course of business litigation and claims referenced in the first paragraph hereto, for which a loss is more than remote but less than likely, whether in excess of an accrued liability or where there is no accrued liability, we have estimated a range of possible loss. Management believes the estimate of the aggregate range of possible loss in excess of accrued liabilities for such matters is between nil and $0.6 million as of December 31, 2020.

In view of the inherent difficulty of predicting the outcome of litigation and claims, the Corporation cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss related to each pending matter may be. Furthermore, the above-referenced matters represented in the estimated aggregate range of possible loss will change from time to time and actual results may vary significantly from the current estimate. An adverse outcome in one or more of these matters could be material to the Corporation's financial condition, results of operations or cash flows for any particular reporting period.

Note 26. Restructuring Plan

In the first quarter of 2017, the Company implemented a restructuring plan as a result of its withdrawal from business in the U.S. The restructuring plan included the termination of a contract and the sublease or abandonment of certain office spaces in the U.S. The costs associated with the aforementioned activities are included in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations.

During the year ended December 31, 2020, the Company recognized total net restructuring income of $(0.1) million, consisting of facilities costs (described further below). During the year ended December 31, 2019, the Company recorded a net restructuring charge of $3.0 million, consisting of facilities costs (described further below).

In conjunction with the restructuring plan, the Company vacated and/or entered into sublease agreements for certain office spaces in the U.S. In each case, the Company determined that the respective operating lease (or portion thereof) represents a contract with no future benefits. In accordance with ASC 420, the Company determined that a cease-use date was reached when the respective office was ready for occupancy by the subtenant and accordingly recorded a liability at that date for a portion of the remaining lease rentals, adjusted for a portion of the remaining deferred rent, and reduced by sublease rentals. The following office locations were impacted:

• New York - In August 2019, the Company entered into a sublease agreement for the remaining portion of the New York office space. As a result of the adoption of ASC 842 effective January 1, 2019, the ROU asset related to the original lease was evaluated for impairment under ASC 842. ASC 842 provides new guidance for the accounting for the sublease of an ROU asset, which requires that the asset be evaluated for impairment under the guidance of ASC 360 (see Note 8). The non-lease component costs remaining on the original lease were evaluated in accordance with ASC 420 as they are not included in the ROU asset. The Company recorded an impairment reserve for $2.0 million as of the cease use date of November 2019 which is included in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations for the year ended December 31, 2019. The Company also incurred commissions and other costs related to the sublease of $0.8 million, also included in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations for the year ended December 31, 2019. In September 2020, the Company remeasured the non-lease component costs reserve, due to lower costs incurred during the year and recorded income due to change in estimate of $0.2 million which is included in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations for the year ended December 31, 2020.
• Texas - The Company vacated its Texas office in April 2018, at which time the lease had a remaining term of approximately four years. In March 2019 the Company entered into an agreement to early terminate the lease. The Company paid $0.6 million to settle the remaining liability under the lease and recorded additional charges related to the termination of $0.2 million, which is included in (Loss) income from discontinued operations, net of tax in the consolidated statements of operations for the year ended December 31, 2019.

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Global Brokerage, Inc.

Notes to Consolidated Financial Statements

As of and for the Years Ended

December 31, 2020 & 2019

Note 26. Restructuring Plan - (continued)

A summary of the activity associated with the restructuring liability by major type of cost for the years ended December 31, 2020 and 2019 is as follows, with amounts in thousands:

Of the total restructuring liability of $1.5 million as of December 31, 2020, $0.3 million is classified as a current liability within Other liabilities and $1.2 million is classified as a non-current liability within Other liabilities on the consolidated statements of financial condition. Of the total restructuring liability of $2.0 million as of December 31, 2019, $0.3 million is classified as a current liability within Other liabilities and $1.7 million is classified as a non-current liability within Other liabilities on the consolidated statements of financial condition.

Restructuring charges by major type of cost incurred during the years ended December 31, 2020 and 2019, shown separately for discontinued and continuing operations, are as follows, with amounts in thousands:

________________________________________

1. Total restructuring (income) costs related to discontinued operations of $(0.1) million and $3.0 million for the years ended December 31, 2020 and 2019, respectively, are included within (Loss) income from discontinued operations, net of tax in the consolidated statements of operations.

Note 27. Subsequent Events

The Company has evaluated subsequent events through April 28, 2021, which is the date the financial statements were

issued.

In January 2021, the Company purchased all of the issued and outstanding common stock of FXCM Trading Ltd. an affiliated futures and commodities firm based in Israel, for total consideration of $0.9 million. The Company considered the guidance in ASC 805, Business Combinations, and determined that substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset. Consequently, the Company concluded that the assets and activities acquired are not a business. The primary purpose of the acquisition is to provide the Company the ability to conduct business in Israel as a foreign exchange broker which is akin to acquiring a trading license. The Company allocated $0.1 million to a trading license asset, which represents the excess of the cash consideration transferred over the fair value of the net assets acquired, and recorded it as an intangible asset with an indefinite life. The aggregate fair values of the other gross assets acquired were

$0.8 million.

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Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the related notes. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from such forward-looking statements due to a number of factors.

OVERVIEW

On November 10, 2017, the Corporation entered into a restructuring support agreement to restructure its obligations under its 2.25% senior convertible notes maturing on June 15, 2018 (the "Convertible Notes") pursuant to a prepackaged plan of reorganization (the "Plan") which was filed under Chapter 11 of the United States Bankruptcy Code. On February 8, 2018, the Plan was substantially consummated and became effective. The Convertible Notes were exchanged for a new series of senior secured notes (the "New Secured Notes") due five years from the effective date of the Corporation's Chapter 11 Plan. In conjunction with the Plan, the terms of a credit agreement that Holdings and Group entered into with Jefferies on January 16, 2015, which was subsequently amended on January 24, 2015 and thereafter (the "Credit Agreement") were, upon the effective date of the Plan, also amended to extend the maturity of the $300.0 million term loan made by Jefferies to Holdings and Group (the "Term Loan") under the Credit Agreement (see Note 19 "Jefferies Transaction" and Note 20 "Debt" in the Notes to Consolidated Financial Statements for additional information).

On May 29, 2019, the Corporation, Holdings and the Company executed a series of agreements with Jefferies and a group of bondholders who hold the New Secured Notes of the Corporation, including an amended and restated Term Loan and the Forbearance Agreement. On November 20, 2020 the Company and Holdings amended the Third Amended Credit Agreement to extend the maturity date of the Credit Agreement by one year to February 15, 2022.These agreements (see Note 1 "Nature of Business and Organization" in the Notes to Consolidated Financial Statements) are intended to, among other things, improve the current cash flows of the Company by extending the maturity of the Term Loan until maturity and alleviating the need for quarterly interest payments on the Term Loan and the semi-annual cash interest payment on the New Secured Notes through February 9, 2022.

Industry Environment

Economic Environment - Our revenue and profitability are influenced by volatility which is directly impacted by economic conditions. FX volatility in the currency and equity markets in the year ended December 31, 2020 increased significantly when compared to the year ended December 31, 2019 driven by fallout from the effect of the global pandemic. The daily JPMorgan Global FX Volatility Index was up over 1% on average in 2020 compared with 2019, reaching the highest level in the past 4 years. In general, in periods of elevated volatility customer trading volumes tend to increase. However, significant swings in market volatility can also result in increased customer trading losses, higher turnover and reduced trading volume. It is difficult to predict volatility and its effects on the FX market.

Competitive Environment - The retail FX trading market is highly competitive. Our competitors in the retail market can be grouped into several broad categories based on size, business model, product offerings, target customers and geographic scope of operations. These include international multi-product trading firms, other online trading firms, and international banks and other financial institutions with significant FX operations. We expect competition to continue to remain strong for the foreseeable future.

Regulatory Environment - Our business and industry are highly regulated. Our operating subsidiaries are regulated in a number of jurisdictions, including the U.K., Europe, Australia, South Africa and Cyprus. FXCM Group restructured the servicing of its European operations following Brexit and established an entity in Cyprus to handle European Union clients.

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RESULTS OF OPERATIONS

Years Ended December 31, 2020 and 2019

The following table sets forth our consolidated statements of operations for the periods indicated, with amounts in thousands: