Related Parties

The Company interacts with one party which is the beneficial owner of more than 10 percent of KCG’s Class A Common Stock. It also has trading and other activities with certain investees for which KCG accounts for under the equity method of accounting. Each is considered a related party for all applicable periods. See Footnote 11 "Investments" for the carrying value of these investees at December 31, 2015 and 2014 and for the Company's income with respect to its equity earnings from these investees for the years ended December 31, 2015 and 2014.

The Company earns revenues, incurs expenses and maintains balances with these related parties or their affiliates in the ordinary course of business. As of the date and period indicated below, the Company had the following balances and transactions with its related parties or their affiliates (in thousands):



	For the year ended December 31,
Statements of Operations	2015			2014			2013
Revenues
Commissions and fees	$	15,844		$	14,528		$	4,045
Trading revenues, net	6,468			3,862			437
Interest, net	914			651			71
Total revenues from related parties	$	23,226		$	19,041		$	4,553
Expenses
Execution and clearance fees⁽¹⁾	$	(15,472	)	$	(10,261	)	$	(19,491	)
Communications and data processing	6,351			—			—
Payment for order flow	2,685			585			—
Collateralized financing interest	399			529			102
Professional fees	5,507			—			—
Other expense	2,349			1,719			651
Total expenses incurred with respect to related parties	$	1,819		$	(7,428	)	$	(18,738	)

⁽¹⁾ Represents net volume based fees received by KCG from providing liquidity to related trading venues.



Statements of Financial Condition	December 31, 2015		December 31, 2014
Assets
Securities borrowed	$	10,573	$	26,110
Receivable from brokers, dealers and clearing organizations	1,987		20,075
Other assets	67,652		—
Liabilities
Securities loaned	$	3,844	$	7,376
Payable to brokers, dealers and clearing organizations	61		8,509
Accrued expenses and other liabilities	4,159		5,667

In March 2015, the Company completed the sale of KCG Hotspot to BATS, a related party. The Company recorded a gain on sale of $385.0 million which is included as Investment income and other, net on the Consolidated Statements of Operations for the year ended December 31, 2015. The Company and BATS have agreed to share certain tax benefits, which could result in future payments to the Company of up to approximately $70.0 million in the three-year period following the close. The additional potential payments are recorded at their estimated fair value of $64.2 million in Other assets on the December 31, 2015 Consolidated Statement of Financial Condition and in the table above. See Footnote 5 "Discontinued Operations, Assets and Liabilities Held for Sale & Sales of Businesses" for additional information.

Additionally, for the year ended December 31, 2015, the Company paid one of its related parties $16.8 million in fees related to financing and advisory activities associated with the issuance of the 6.875% Senior Secured Notes and the sale of KCG Hotspot to BATS. The $16.8 million comprised $11.3 million that was capitalized as deferred debt costs within Other assets on the Consolidated Statement of Financial Condition and $5.5 million that was recorded as Professional fees in the Consolidated Statement of Operations. While the Professional fees are included in the table above, the capitalized debt fees are not included in the table above. The $11.3 million capitalized as deferred debt costs are being amortized over the life of the debt.

In 2015, the Company paid $31,000 in fees to one of its related parties for acting as broker in connection with the Company's stock buyback program. Such fees are recorded within Treasury stock, at cost in the Consolidated Statement of Financial Condition as of December 31, 2015 and is not included in the above table.

In the third quarter of 2015, the Company contributed microwave communication network assets to the JV, which is considered a related party. These assets were contributed at fair value and resulted in the Company recording a $4.3 million writedown of such assets. This charge is included in Writedown of assets and other real estate related charges on the Consolidated Statements of Operations for the year ended December 31, 2015.

As part of the Company’s Tender Offer, it accepted for purchase validly tendered shares of the KCG Class A Common Stock at $14.00 per share from the following directors and stockholders, or their affiliates, who owned more than 10% of KCG Class A Common Stock (in thousands):



Name	Relationship/ Title	Number of Shares Purchased	Total Purchase Price
Stephen Schuler and related entities⁽¹⁾	Stockholder/Director	1,708	$	23,918
Daniel Tierney and related entities⁽²⁾	Stockholder/Former Director	1,798	25,176
GA-GTCO Interholdco, LLC⁽³⁾	Stockholder	8,285	115,989
Jefferies LLC	Stockholder	6,533	91,458

⁽¹⁾

Includes (i) Stephen Schuler, (ii) Serenity Investments, LLC, a limited liability company organized under the laws of the state of Alaska (“Serenity”), of which Mr. Schuler and his wife separately hold equity interests that together represent a controlling interest and with respect to which Mr. Schuler may be deemed to share voting and dispositive power and (iii) the Schuler Family GST Trust dated June 6, 2003, a trust that holds securities with respect to which Mr. Schuler may be deemed to share voting and dispositive power. Mr. Schuler disclaims beneficial ownership of the securities held by Serenity except to the extent of his pecuniary interest therein.

⁽²⁾

Includes (i) Daniel Tierney and (ii) the Daniel V. Tierney 2011 Trust (the “Tierney Trust”), a trust of which Daniel Tierney is the settlor and beneficiary. Mr. Tierney does not have or share voting or dispositive power over the securities held by the Tierney Trust, but does have the power to revoke the Tierney Trust and acquire beneficial ownership of such securities within 60 days. Mr. Tierney disclaims beneficial ownership of the securities held by the Tierney Trust. In November, 2015, Daniel Tierney resigned from his position as a director of the Company.


⁽³⁾	GA-GTCO Interholdco, LLC, an affiliate of General Atlantic, has appointed two directors to the Company’s board of directors (Rene Kern, an employee of General Atlantic and John C. (Hans) Morris, a former employee of General Atlantic). Neither director participated in the Tender Offer with respect to shares they hold directly.

The purchases from the individuals and entities listed above were on the same terms that were available to all of the Company’s stockholders.

On November 4, 2015, the Company purchased approximately 1.9 million shares of KCG Class A Common Stock from Serenity for $24.5 million or $12.89 per share, the closing stock price of the KCG Class A Common Stock on that date. Stephen Schuler, a director of the Company, and his wife separately hold equity interests that together represent a controlling interest in Serenity.

On November 11, 2015, the Company purchased approximately 2.0 million KCG Warrants from Daniel Tierney for $3.6 million.

On December 29, 2015, Aperture, a related party, redeemed all the Company’s interests in Aperture through a series of transactions, for an aggregate purchase price of $28.5 million. The Company recognized a gain of $10.5 million on the sale.

See Footnote 4 "Tender Offer and Stock Repurchase" for additional information on the Tender Offer and stock repurchases.