8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 18, 2017

KCG Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-54991	38-3898306
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

300 Vesey Street

New York, NY 10282

(Address of principal executive offices)

(646) 682-6000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operation and Financial Condition

See Item 7.01

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(b)

On January 18, 2017, each of Rene Kern and John C. (Hans) Morris, each a member of the board of directors (the “Board”) of KCG Holdings, Inc. (the “Company”), informed the Company that he will not be seeking reelection at the Company’s 2017 Annual Meeting of Stockholders. The decisions by Messrs. Kern and Morris not to seek reelection to the Board did not involve any disagreements with the Company, the Company’s management or the Board.

(d)

On January 18, 2017, the Board increased its size to thirteen directors and elected Peter Fisher, Colin Smith, Heather Tookes and Adrian Weller (together, the “New Directors”) to fill the vacancies on the Board created by the increase in the size of the Board. No decisions have been made regarding committee appointments for the New Directors.

The New Directors will participate in the same compensation policy as each of the Company’s other non-employee directors. Under such policy, upon commencing service on the Board, each New Director was awarded an initial grant of 5,870 restricted stock units (“RSUs”) (having an aggregate grant date fair value of $80,000) and a cash retainer of $24,800, the annual cash retainer of $80,000 prorated for the period from the date of election of the New Directors to the Company’s 2017 Annual Meeting of Stockholders.

A copy of the press release announcing the decisions by Messrs. Kern and Morris not to seek reelection to the Board and the appointment of the New Directors is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure

The following information is furnished under Item 2.02, “Results of Operations and Financial Condition”, Item 7.01, “Regulation FD Disclosure”, and Item 9.01 “Financial Statements and Exhibits.” This information, including Exhibits 99.2 and 99.3, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On January 19, 2017, the Company issued a press release announcing its earnings for the fourth quarter of 2016. The press release did not include certain financial statements, related footnotes and certain other financial information relating to the Company that will be filed with the Securities and Exchange Commission as part of the Company’s Annual Report on Form 10-K. A copy of the press release is attached hereto as Exhibit 99.2.

Executives from KCG will review the earnings via teleconference and live audio webcast at 9:00 a.m. Eastern time on January 19, 2017. A copy of a visual presentation that will be a part of that review is attached as Exhibit 99.3. Exhibits 99.2 and 99.3 are incorporated by reference into this Current Report on Form 8-K.

Item 8.01 Other Events

On January 18, 2017, the Board authorized a program to repurchase up to a total of $150 million in shares of the Company’s outstanding Class A Common Stock (“Common Stock”) and warrants to purchase shares of Common Stock (“Warrants”), subject to compliance with the covenants contained in the Company’s debt indenture. This authority replaces and supersedes all repurchase authority previously granted by the Board. Under the program, the Company may repurchase shares of Common Stock or Warrants from time to time in open market transactions, accelerated stock buyback programs, tender offers, privately-negotiated transactions or by other means. Repurchases of shares may also be made under a Rule 10b5-1 plan. The timing and amount of repurchase transactions will be based on market conditions, share price, legal requirements and other factors. The program has no expiration date and may be suspended, modified or discontinued at any time without prior notice. There are no assurances that any repurchases of shares of Common Stock or Warrants may actually occur. The Company currently has approximately 67.2 million shares of Common Stock outstanding (including restricted stock units convertible into Common Stock) and 5.1 million Warrants outstanding.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Businesses Acquired

Not Applicable

(b) Pro Forma Financial Information

Not Applicable

(c) Shell Company Transactions

Not Applicable

(d) Exhibits

Exhibit 99.1 – Press Release of KCG Holdings, Inc., issued on January 19, 2017, relating to decisions by Messrs. Kern and Morris not to seek reelection to the Board and the appointment of the New Directors.

Exhibit 99.2 – Press Release of KCG Holdings, Inc., issued on January 19, 2017.

Exhibit 99.3 – KCG Holdings, Inc. Earnings Presentation, dated January 19, 2017.

SIGNATURES

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

		KCG Holdings, Inc.
		(Registrant)
Date: January 19, 2017	By:	/s/ John McCarthy
	Name:	John McCarthy
	Title:	General Counsel

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of KCG Holdings, Inc., issued on January 19, 2017, relating to decisions by Messrs. Kern and Morris not to seek reelection to the Board and the appointment of the New Directors.
99.2	Press Release of KCG Holdings, Inc., issued on January 19, 2017.
99.3	KCG Holdings, Inc. Earnings Presentation, dated January 19, 2017.

EX-99.1

Exhibit 99.1

KCG ADDS FOUR NEW INDEPENDENT DIRECTORS TO BOARD

NEW YORK – JANUARY 19, 2017 – KCG Holdings, Inc. (NYSE: KCG) announced today that its Board of Directors has appointed Peter Fisher, Colin Smith, Heather Tookes and Adrian Weller as Directors, effective immediately. KCG also announced that Rene M. Kern and John C. (Hans) Morris have informed the company that they will not be seeking reelection at the 2017 Annual Meeting of Stockholders.

“We are pleased to welcome these highly-qualified and experienced professionals to our Board and look forward to leveraging their relevant expertise and counsel as we continue to execute on our business objectives,” said Charles E. Haldeman, Jr., Non-Executive Chairman of KCG’s Board of Directors. “Collectively, Peter, Colin, Heather and Adrian bring significant expertise in finance, trading and regulation to KCG that will benefit the company as we continue to grow and innovate in today’s evolving global markets.”

The newly appointed Directors provide the KCG Board with unique insights and differentiated backgrounds:

• Mr. Fisher brings significant foreign markets and domestic finance experience to KCG, having served as Head of Fixed Income at BlackRock, Under Secretary of the U.S. Treasury for Domestic Finance, and EVP of the Federal Reserve Bank of New York, where he was responsible for the conduct of domestic monetary and foreign currency operations.

• Mr. Smith is an accomplished investor with more than two decades of alternative asset management and event-driven trading experience.

• A highly-respected faculty member of the Yale School of Management, Professor Tookes has extensive knowledge of the financial services industry and deep expertise in market microstructure and corporate finance.

• Dr. Weller, a Senior Research Fellow at the University of Cambridge, is a leading authority on artificial intelligence and its commercial applications. He has extensive experience in trading and investing, having served in senior roles at Goldman Sachs, Salomon Brothers and Citadel.

Mr. Haldeman, added, “On behalf of KCG and the entire Board, I want to thank Hans and Rene for their dedication and wealth of contributions to KCG throughout their tenures. We wish them continued success in their future endeavors.”

With today’s announcement, it is currently expected that 11 Directors will be nominated for election at KCG’s 2017 Annual Meeting of Stockholders, 10 of whom would be independent.

About Peter Fisher

Peter R. Fisher is Senior Fellow and Senior Lecturer at the Center for Business, Government & Society at the Tuck School of Business at Dartmouth College. Previously, from 2004 to 2013, Mr. Fisher worked at BlackRock, serving most recently as head, and before that co-head, of its Fixed Income Portfolio Management Group. From 2005 to 2007, he served as Chairman of BlackRock Asia.

Prior to BlackRock, Mr. Fisher worked as Under Secretary of the U.S. Treasury for Domestic Finance. From 1985 to 2001, he worked at the Federal Reserve Bank of New York, where he served as an EVP of the Bank and Manager of the System Open Market Account, from 1995 to 2001. In those roles, he was responsible for the conduct of domestic monetary and foreign currency operations, and for the management of the foreign currency reserves of both the Federal Reserve and the Treasury.

Mr. Fisher currently serves as a Director at AIG, Inc., the John F. Kennedy Library Foundation and the Peterson Institute for International Economics, and is on the Investment Advisory Committee of Google as well as the Advisory Committee on Systemic Resolution of the Federal Deposit Insurance Corporation. Previously, he was a part-time Senior Director of the BlackRock Investment, a member of the Strategic Advisory Committee of the Agence France Tresor and a non-executive director of the Financial Services Authority of the United Kingdom.

He received a JD degree from Harvard Law School and a BA in history from Harvard College.

About Colin Smith

Colin Smith is Managing Partner of Silver Mountain Partners, a private investment partnership that he has managed since 2012, focused on investments in alternative strategies including private equity and real estate.

From 2010 to 2012, Mr. Smith served as Chief Executive Officer of Concordance Capital Management, an event-driven asset management firm. Prior to that, he was the Managing Partner, Chief Executive Officer and Chief Investment Officer for Deephaven Capital Management, a global multi-strategy alternative asset manager, which he joined in 1998. Earlier in his career, he held positions at Peter Schoenfeld Asset Management, Schroder Wertheim and Continental Partners.

Mr. Smith holds a BA from Northwestern University.

About Heather Tookes

Heather Tookes is a member of the finance faculty of the Yale School of Management. Since 2004, she has taught Corporate Finance for the full-time MBA and the MBA for Executives programs, and has received teaching awards in both programs.

Professor Tookes also serves as Associate Editor at the Review of Financial Studies and Management Science. She is the author of several journal articles focused on issues in both market microstructure and corporate finance.

She received a PhD in finance from Cornell and a BA in economics from Brown University.

About Adrian Weller

Adrian Weller is a Senior Research Fellow in the Machine Learning Group at the University of Cambridge, a Faculty Fellow at the Alan Turing Institute for data science and an Executive Fellow at the Leverhulme Centre for the Future of Intelligence. He is a leading authority on artificial intelligence, its commercial applications and how it may be used to benefit society.

Previously, Dr. Weller held senior roles in fixed income at Goldman Sachs, Salomon Brothers and Citadel.

He received a PhD in computer science from Columbia University, and BA and MA degrees in mathematics from Trinity College, Cambridge.

About KCG

KCG is a leading independent securities firm offering investors a range of services designed to address trading needs across asset classes, product types and time zones. The firm combines advanced technology with specialized client service across market making, agency execution and venues and also engages in principal trading via exchange-based market making. KCG has multiple access points to trade global equities, fixed income, options, currencies and commodities via voice or automated execution. www.kcg.com

CONTACTS

Sophie Sohn	Jonathan Mairs
Communications & Marketing	Investor Relations
312-931-2299	646-682-6403
media@kcg.com	investors@kcg.com

EX-99.2

Exhibit 99.2

KCG ANNOUNCES CONSOLIDATED EARNINGS OF $2.47

PER DILUTED SHARE FOR THE FOURTH QUARTER OF 2016

During the quarter, KCG repurchased 19.0 million shares and 8.1 million warrants

for $281.7 million, primarily as a result of a share exchange with General Atlantic

KCG’s book value rose to $20.20 per share,

tangible book value increased to $18.71 per share

NEW YORK, New York – January 19, 2017 – KCG Holdings, Inc. (NYSE: KCG) today reported consolidated earnings of $196.2 million, or $2.47 per diluted share, for the fourth quarter of 2016. Included in the fourth quarter pre-tax earnings of $309.9 million is a pre-tax gain of $331.0 million from the sales of substantially all shares of Bats Global Markets, Inc. (“Bats”) owned by KCG.

Select Financial Results

	($ in thousands, except EPS)
	4Q16		3Q16			4Q15
Total Revenues		580,542		208,532			264,036
Trading revenues, net		143,355		113,829			145,959
Commissions and fees		102,516		87,842			94,315
Net Revenues(1)		147,461		111,999			157,686
Pre-tax earnings (loss)		309,872		(27,974	)		(4,471	)
EPS		2.47		(0.13	)		(0.03	)

(1) See Exhibit 4 for a reconciliation of Total revenues to Net revenues. Net revenues is a non-GAAP measure the company uses to measure its performance as well as make certain strategic decisions.

Fourth Quarter Highlights

• KCG recorded a pre-tax gain of $331.0 million from the sales of shares in Bats

• KCG Market Making increased market share of retail SEC Rule 605 U.S. equity share volume 5.0 percent year over year

• KCG Algorithmic Trading grew average daily U.S. equity share volume from the 25 largest U.S. asset managers 49.5 percent year over year

• KCG BondPoint set a new quarterly record for average daily fixed income par value traded with a 39.1 percent rise year over year

• KCG reduced total shares outstanding by 22 percent during the quarter

Daniel Coleman, Chief Executive Officer of KCG, said, “During the fourth quarter, we monetized a longstanding investment in Bats through a swap of substantially all of our stake for all KCG shares and warrants owned by General Atlantic. After the transaction plus additional open market purchases, KCG’s shares outstanding declined to 67.2 million from 86.2 million from the

prior quarter and the number of warrants outstanding decreased to 5.1 million from 13.2 million. Since the merger, KCG has returned a cumulative $835.7 million to equity stakeholders. Our focus on creating value for stockholders enabled KCG to increase tangible book value per share to $18.71 as of the end of 2016. From an operating perspective, revenues in the fourth quarter fell below our expectations reflecting the continuation of a difficult trading environment. However, a rise in revenues on an operating basis from the prior quarter reflects the improved market conditions starting in November.”

Full Year 2016

In 2016, KCG continued to distinguish itself as an emerging, independent, pure-play, technology-driven intermediary in liquid financial instruments. Growth in core segments of market making and agency-based trading outpaced market volumes. The firm undertook an initiative to re-engineer the trading architecture. KCG reduced the ratio of compensation to net revenues year over year to 42.2 percent. In addition, the firm returned $364.7 million to equity stakeholders through repurchases of shares and warrants during the year.

Mr. Coleman commented, “KCG’s long-term growth is aligned with profound, secular changes in technology, regulation and competition. We are concentrating on attaining scale to enable us to grow without creating significant costs. In the past year, we’ve undertaken a re-engineering of the trading architecture while managing revenues in a difficult operating environment. In 2017, we’re focused on returning our revenues to previous levels, changing our infrastructure and returning capital to shareholders when prudent.”

Market Making

The Market Making segment encompasses direct-to-client and non-client, exchange-based market making across multiple asset classes and is an active participant in all major cash, options and futures markets in the U.S., Europe and Asia. During the fourth quarter of 2016, the segment generated total revenues of $168.3 million and a pre-tax loss of $8.5 million.

In the fourth quarter of 2016, investors remained defensive at the outset and continued to reduce exposure to U.S. equities. A period of heightened trading activity around the U.S. election dissipated quickly. For the quarter, consolidated U.S. equity volume remained flat year over year while realized volatility declined and bid-ask spreads tightened. Despite continuing strong competition, KCG Market Making grew market share of retail SEC Rule 605 U.S. equity share volume by 5.0 percent to approximately 32.4 percent.

Mr. Coleman commented, “A predominantly one-way market carried over from the third quarter, which can prove difficult for quantitative trading models. The depressed market volatility, however, was a surprise given events. While the financial results for the quarter disappointed, KCG Market Making’s presence in the retail and broader U.S. equity market is as strong as ever. Additionally, revenue capture per U.S. equity dollar value traded returned to levels slightly above average in November and December.”

In the third quarter of 2016, the segment generated total revenues of $136.1 million and a pre-tax loss of $13.8 million.

In the fourth quarter of 2015, the segment generated total revenues of $168.2 million and a pre-tax loss of $5.1 million, which included charges related to asset writedowns of $14.2 million.

Select Trade Statistics: U.S. Equity Market Making

	4Q16		3Q16		4Q15
Average daily dollar volume traded ($ millions)		28,414		26,352		28,842
Average daily trades (thousands)		3,497		3,288		3,667
Average daily shares traded (millions)		6,472		3,768		4,698
NYSE and NASDAQ shares traded		1,000		949		922
OTC Bulletin Board and OTC Market shares traded		5,472		2,820		3,775
Average revenue capture per U.S. equity dollar value traded (bps)		0.83		0.67		0.77

Global Execution Services

The Global Execution Services segment comprises agency execution services and trading venues. During the fourth quarter of 2016, the segment generated total revenues of $75.5 million and pre-tax income of $4.5 million.

In the fourth quarter of 2016, an upsurge in the major market indexes failed to generate meaningful institutional trading activity. Despite the market conditions, KCG Algorithmic Trading grew U.S. equity share volume among the 25 largest U.S. asset managers by 49.5 percent year over year. KCG MatchIt increased average daily U.S. equity share volume by 30.5 percent year over year. KCG BondPoint grew market share of corporate and municipal bond transactions under 250 bonds by 1.8 percent and 3.1 percent, respectively, year over year.

Mr. Coleman commented, “At the start of the quarter, institutional investors were mainly engaged in de-risking and fence-sitting. Despite flat consolidated U.S. volume year over year, KCG Algorithmic Trading increased share volume from strategic clients. Additionally, KCG BondPoint continued to integrate with institutional order management systems by launching on Bloomberg to provide terminal users with access to the electronic fixed income trading platform.”

In the third quarter of 2016, the segment generated total revenues of $63.7 million and a pre-tax loss of $0.4 million.

In the fourth quarter of 2015, the segment generated total revenues of $70.2 million and a pre-tax loss of $1.1 million, which included a writedown of goodwill of $0.9 million.

Select Trade Statistics: Agency Execution and Trading Venues

	4Q16		3Q16		4Q15
Average daily KCG Institutional Equities U.S. equities shares traded (millions)(1)		228.7		206.4		238.4
Average daily KCG BondPoint fixed income par value traded ($ millions)		209.6		201.5		150.7

(1) KCG Institutional Equities average daily U.S. National Market System (NMS) equity share volume represents trading on behalf of clients covering algorithmic trading and high touch sales trading in single stocks, ETFs and programs. In 2016, KCG modified the reporting of trading volumes within the Global Execution Services segment to remove internal volume generated by KCG trading desks and add volume from sales trading. Prior periods have been recast for this new presentation.

Corporate and Other

The Corporate and Other segment includes strategic investments and corporate overhead expenses. During the fourth quarter of 2016, the segment generated total revenues of $336.7 million and pre-tax income of $313.9 million. This includes a $331.0 million pre-tax gain from the sales of substantially all shares owned of Bats.

In the third quarter of 2016, the segment generated total revenues of $8.7 million and a pre-tax loss of $13.8 million.

In the fourth quarter of 2015, the segment generated total revenues of $25.6 million and pre-tax income of $1.8 million which included gains on sales and writedowns of investments of $19.8 million and $3.2 million, respectively and a $1.0 million writedown of an intangible asset.

Share Exchange

On November 17, 2016, KCG announced that it entered into a strategic transaction with General Atlantic. Under the terms of the transaction, KCG sold 8.9 million shares it owned of Bats in exchange for all of General Atlantic’s 18.7 million shares and 8.1 million warrants of KCG.

Financial Condition

As of December 31, 2016, KCG had $632.2 million in cash and cash equivalents and total outstanding debt of $454.4 million. KCG had $1.36 billion in stockholders’ equity, equivalent to a book value of $20.20 per share and tangible book value of $18.71 per share based on total shares outstanding of 67.2 million, including restricted stock units.

In addition to the transaction with General Atlantic, during the fourth quarter of 2016, KCG repurchased 0.3 million shares for approximately $3.7 million under the Company’s stock repurchase program.

KCG’s headcount was 952 full-time employees at December 31, 2016, compared to 981 at September 30, 2016.

Subsequent Events

Subsequent to the fourth quarter, on January 18, 2017, KCG’s Board of Directors authorized a program to repurchase up to a total of $150 million in shares of the Company’s outstanding Class A Common Stock (“Common Stock”) and warrants to purchase shares of Common Stock (“Warrants”), subject to compliance with the covenants contained in the Company’s debt indenture. This authority replaces and supersedes all previous board-granted authority. Under the program, the Company may repurchase shares or Warrants from time to time in open market transactions, accelerated stock buyback programs, tender offers, privately-negotiated transactions or by other means. Repurchases of shares may also be made under a Rule 10b5-1 plan. The timing and amount of repurchase transactions will be based on market conditions, share price, legal requirements and other factors. The program has no expiration date and may be suspended, modified or discontinued at any time without prior notice. There are no assurances that any repurchases of shares of Common Stock or Warrants may actually occur.

KCG announced today that its Board of Directors has appointed Peter Fisher, Colin Smith, Heather Tookes and Adrian Weller as Directors, effective immediately. KCG also announced that Rene M. Kern and John C. (Hans) Morris have informed the company that they will not be seeking reelection at the 2017 Annual Meeting of Stockholders. It is currently expected that 11 Directors will be nominated for election at KCG’s 2017 Annual Meeting of Stockholders, 10 of whom would be independent.

Conference Call

KCG will hold a conference call to discuss fourth quarter 2016 financial results starting at 9:00 a.m. Eastern Time today, January 19, 2017. To access the call, dial 888-812-8589 (domestic) or 913-312-0949 (international) and enter passcode 3024760. In addition, the call will be webcast at http://edge.media-server.com/m/p/pbtshm7s. Following the conclusion of the call, a replay will be available by selecting a number based on country of origin from a list posted at: https://replaynumbers.conferencinghub.com/index.aspx?confid=3402400&passcode=3402400 and entering passcode 3024760.

Additional information for investors, including a presentation of the fourth quarter financial results, can be found at http://investors.kcg.com.

About KCG

KCG is a leading independent securities firm offering investors a range of services designed to address trading needs across asset classes, product types and time zones. The firm combines advanced technology with specialized client service across market making, agency execution and venues and also engages in principal trading via exchange-based market making. KCG has multiple access points to trade global equities, fixed income, options, currencies and commodities via voice or automated execution. www.kcg.com

Certain statements contained herein and the documents incorporated by reference containing the words “believes,” “intends,” “expects,” “anticipates,” and words of similar meaning, may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These “forward-looking statements” are not historical facts and are based on current expectations, estimates and projections about KCG’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Any forward-looking statement contained herein speaks only as of the date on which it is made. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with: (i) the inability to manage trading strategy performance and sustain revenue and earnings growth; (ii) the receipt of additional payments from the sale of KCG Hotspot that are subject to certain contingencies; (iii) changes in market structure, legislative, regulatory or financial reporting rules, including the increased focus by Congress, federal and state regulators, the SROs and the media on market structure issues, and in particular, the scrutiny of high frequency trading, alternative trading systems, market fragmentation, colocation, access to market data feeds, and remuneration arrangements such as payment for order flow and exchange fee structures; (iv) past or future changes to KCG’s organizational structure and management; (v) KCG’s ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by KCG’s customers and potential customers; (vi) KCG’s ability to keep up with technological changes; (vii) KCG’s ability to effectively identify and manage market risk, operational and technology risk, cybersecurity risk, legal risk, liquidity risk, reputational risk, counterparty and credit risk, international risk, regulatory risk, and compliance risk; (viii) the cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings; (ix) the effects of increased competition and KCG’s ability to maintain and expand market share; (x) the relocation of KCG’s global headquarters from Jersey City, NJ to New York, NY; and (xi) KCG’s ability to complete the sale or disposition of any or all of the assets or businesses that are classified as held for sale. The list above is not exhaustive. Because forward looking statements involve risks and uncertainties, the actual results and performance of KCG may materially differ from the results expressed or implied by such statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, KCG also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made herein. Readers should carefully review the risks and uncertainties disclosed in KCG’s reports with the U.S. Securities and Exchange Commission (“SEC”), including those detailed in “Risk Factors” in Part I, Item 1A of KCG’s Annual Report on Form 10-K for the year ended December 31, 2015 and in Part II, Item 1A of KCG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, “Legal Proceedings” in Part I, Item 3, under “Certain Factors Affecting Results of Operations” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7, in “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time. This information should be read in conjunction with KCG’s Consolidated Financial Statements and the Notes thereto contained in its Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time.

CONTACTS

Sophie Sohn	Jonathan Mairs
Communications & Marketing	Investor Relations
312-931-2299	646-682-6403
media@kcg.com	investors@kcg.com

KCG HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Exhibit 1

	For the three months ended
	December 31, 2016		September 30, 2016			December 31, 2015
	(In thousands, except per share amounts)
Revenues
Trading revenues, net	$	143,355	$	113,829		$	145,959
Commissions and fees		102,516		87,842			94,315
Interest, net		563		677			(429	)
Investment income and other, net		334,108		6,184			24,191
Total revenues		580,542		208,532			264,036
Expenses
Employee compensation and benefits		72,436		49,006			67,823
Execution and clearance fees		75,941		71,995			66,613
Communications and data processing		39,220		36,733			36,003
Depreciation and amortization		22,775		21,876			25,077
Payments for order flow		15,175		13,845			14,464
Collateralized financing interest		10,958		10,693			8,746
Occupancy and equipment rentals		9,781		9,275			7,842
Debt interest expense		9,379		9,153			10,025
Professional fees		4,330		4,139			5,774
Business development		1,252		994			1,751
Writedown of assets and other real estate related charges		—		—			16,154
Other		9,423		8,797			8,235
Total expenses		270,670		236,506			268,507
Income (loss) before income taxes		309,872		(27,974	)		(4,471	)
Income tax expense (benefit)		113,680		(16,760	)		(1,500	)
Net income (loss)	$	196,192	$	(11,214	)	$	(2,971	)
Basic earnings (loss) per share	$	2.51	$	(0.13	)	$	(0.03	)
Diluted earnings (loss) per share	$	2.47	$	(0.13	)	$	(0.03	)
Shares used in computation of basic earnings (loss) per share		78,089		85,009			89,184
Shares used in computation of diluted earnings (loss) per share		79,358		85,009			89,184

	For the years ended
	December 31, 2016		December 31, 2015
	(In thousands, except per share amounts)
Revenues
Trading revenues, net	$	668,003	$	803,181
Commissions and fees		391,419		376,673
Interest, net		1,625		(2,128	)
Investment income and other, net		393,365		421,384
Total revenues		1,454,412		1,599,110
Expenses
Employee compensation and benefits		295,120		405,609
Execution and clearance fees		295,312		265,186
Communications and data processing		147,986		139,263
Depreciation and amortization		88,790		90,231
Payments for order flow		54,765		61,741
Collateralized financing interest		40,423		34,678
Occupancy and equipment rentals		37,875		30,128
Debt interest expense		37,216		40,291
Professional fees		19,827		27,055
Business development		5,324		8,479
Debt extinguishment charges		—		25,006
Writedown of assets and other real estate related charges		—		56,642
Other		35,346		34,839
Total expenses		1,057,984		1,219,148
Income before income taxes		396,428		379,962
Income tax expense		140,731		130,858
Net income	$	255,697	$	249,104
Basic earnings per share	$	3.03	$	2.48
Diluted earnings per share	$	2.97	$	2.42
Shares used in computation of basic earnings per share		84,405		100,437
Shares used in computation of diluted earnings per share		86,160		102,922

KCG HOLDINGS, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands) (Unaudited) Exhibit 2

	December 31, 2016			December 31, 2015
ASSETS
Cash and cash equivalents	$	632,234		$	581,313
Cash and cash equivalents segregated under federal and other regulations		3,000			3,000
Financial instruments owned, at fair value:
Equities		2,343,033			2,129,208
Debt securities		175,502			136,387
Listed options		19,100			178,360
Other financial instruments		30			445
Total financial instruments owned, at fair value		2,537,665			2,444,400
Collateralized agreements:
Securities borrowed		1,688,222			1,636,284
Receivable from brokers, dealers and clearing organizations		834,444			681,211
Fixed assets and leasehold improvements, less accumulated depreciation and amortization		151,664			94,858
Investments		30,979			98,943
Goodwill and Intangible assets, less accumulated amortization		100,319			100,471
Deferred tax asset, net		109,861			151,225
Assets of businesses held for sale		8,194			25,999
Other assets		164,168			222,831
Total assets	$	6,260,750		$	6,040,535
LIABILITIES & EQUITY
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equities	$	1,821,957		$	1,856,171
Debt securities		211,222			105,340
Listed options		12,961			151,893
Total financial instruments sold, not yet purchased, at fair value		2,046,140			2,113,404
Collateralized financings:
Securities loaned		372,631			463,377
Financial instruments sold under agreements to repurchase		1,127,775			954,902
Total collateralized financings		1,500,406			1,418,279
Payable to brokers, dealers and clearing organizations		518,363			273,805
Payable to customers		23,580			17,387
Accrued compensation expense		132,406			154,547
Accrued expenses and other liabilities		156,828			134,026
Income taxes payable		71,391			—
Debt		454,353			484,989
Total liabilities		4,903,467			4,596,437
Equity
Class A Common Stock		903			1,060
Additional paid-in capital		1,439,412			1,436,671
Retained earnings		192,064			192,120
Treasury stock, at cost		(277,343	)		(186,103	)
Accumulated other comprehensive income		2,247			350
Total equity		1,357,283			1,444,098
Total liabilities and equity	$	6,260,750		$	6,040,535

KCG HOLDINGS, INC. PRE-TAX EARNINGS (LOSS) BY BUSINESS SEGMENT (In thousands) (Unaudited) Exhibit 3

	For the three months ended
	December 31, 2016			September 30, 2016			December 31, 2015
Market Making
Revenues	$	168,323		$	136,107		$	168,227
Expenses		176,814			149,883			173,359
Pre-tax loss		(8,491	)		(13,776	)		(5,132	)
Global Execution Services
Revenues		75,510			63,713			70,221
Expenses		71,009			64,152			71,336
Pre-tax earnings (loss)		4,501			(439	)		(1,115	)
Corporate and Other
Revenues		336,709			8,712			25,588
Expenses		22,847			22,471			23,813
Pre-tax earnings (loss)		313,862			(13,759	)		1,775
Consolidated
Revenues		580,542			208,532			264,036
Expenses		270,670			236,506			268,507
Pre-tax earnings (loss)	$	309,872		$	(27,974	)	$	(4,471	)

	For the years ended
	December 31, 2016		December 31, 2015
Market Making
Revenues	$	775,173	$	884,858
Expenses		681,441		760,829
Pre-tax earnings		93,732		124,029
Global Execution Services
Revenues		283,756		667,723
Expenses		271,748		298,766
Pre-tax earnings		12,008		368,957
Corporate and Other
Revenues		395,483		46,529
Expenses		104,795		159,553
Pre-tax earnings (loss)		290,688		(113,023	)
Consolidated
Revenues		1,454,412		1,599,110
Expenses		1,057,984		1,219,148
Pre-tax earnings	$	396,428	$	379,962

KCG HOLDINGS, INC. RECONCILIATION OF TOTAL REVENUES TO NET REVENUES     (In thousands)     (Unaudited)     Exhibit 4

	For the three months ended
	December 31, 2016		September 30, 2016		December 31, 2015
Total revenues per Consolidated Statements of Operations	$	580,542	$	208,532	$	264,036
Less:
Execution and clearance fees		75,941		71,995		66,613
Payments for order flow		15,175		13,845		14,464
Collaterlaized financing interest		10,958		10,693		8,746
Gain from the sale of a portion of the Company’s investment in Bats		331,007		—		—
Gain on sale of investments		—		—		19,751
Writedown of investments		—		—		(3,224	)
Net revenues	$	147,461	$	111,999	$	157,686

	For the years ended
	December 31, 2016		December 31, 2015
Total revenues per Consolidated Statements of Operations	$	1,454,412	$	1,599,110
Less:
Execution and clearance fees		295,312		265,186
Payments for order flow		54,765		61,741
Collaterlaized financing interest		40,423		34,678
Gain from the sale of a portion of the Company’s investment in Bats		364,404		—
Gain on sale of KCG Hotspot		—		385,026
Gain on sale of investments		—		19,751
Writedown of investments		—		(3,224	)
Net revenues	$	699,508	$	835,952

EX-99.3

KCG Holdings, Inc. (KCG) 4th Quarter 2016 Earnings Presentation January 19, 2017 Exhibit 99.3

Safe Harbor Certain statements contained herein and the documents incorporated by reference containing the words "believes," "intends," "expects," "anticipates," and words of similar meaning, may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These "forward-looking statements" are not historical facts and are based on current expectations, estimates and projections about KCG's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Any forward-looking statement contained herein speaks only as of the date on which it is made. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with: (i) the inability to manage trading strategy performance and sustain revenue and earnings growth; (ii) the receipt of additional payments from the sale of KCG Hotspot that are subject to certain contingencies; (iii) changes in market structure, legislative, regulatory or financial reporting rules, including the increased focus by Congress, federal and state regulators, the SROs and the media on market structure issues, and in particular, the scrutiny of high frequency trading, alternative trading systems, market fragmentation, colocation, access to market data feeds, and remuneration arrangements such as payment for order flow and exchange fee structures; (iv) past or future changes to KCG's organizational structure and management; (v) KCG's ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by KCG's customers and potential customers; (vi) KCG's ability to keep up with technological changes; (vii) KCG's ability to effectively identify and manage market risk, operational and technology risk, cybersecurity risk, legal risk, liquidity risk, reputational risk, counterparty and credit risk, international risk, regulatory risk, and compliance risk; (viii) the cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings; (ix) the effects of increased competition and KCG's ability to maintain and expand market share; (x) the relocation of KCG's global headquarters from Jersey City, NJ to New York, NY; and (xi) KCG's ability to complete the sale or disposition of any or all of the assets or businesses that are classified as held for sale. The list above is not exhaustive. Because forward looking statements involve risks and uncertainties, the actual results and performance of KCG may materially differ from the results expressed or implied by such statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, KCG also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made herein. Readers should carefully review the risks and uncertainties disclosed in KCG's reports with the U.S. Securities and Exchange Commission ("SEC"), including those detailed in "Risk Factors" in Part I, Item 1A of KCG's Annual Report on Form 10-K for the year ended December 31, 2015 and in Part II, Item 1A of KCG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, "Legal Proceedings" in Part I, Item 3, under "Certain Factors Affecting Results of Operations" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7, in "Quantitative and Qualitative Disclosures About Market Risk" in Part II, Item 7A, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time. This information should be read in conjunction with KCG's Consolidated Financial Statements and the Notes thereto contained in its Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time. For additional disclosures, please see https://www.kcg.com/legal/global-disclosures.

KCG’s financial results in 4Q16 reflect a pre-tax gain of $331 million from the sales of substantially all shares of Bats Global Markets, Inc. owned by KCG, partially offset by a difficult trading environment KCG Market Making increased market share of retail SEC Rule 605 U.S. equity share volume 5.0 percent year over year KCG Algorithmic Trading grew average daily U.S. equity share volume from the 25 largest U.S. asset managers 49.5 percent year over year KCG BondPoint set a new quarterly record for average daily fixed income par value traded with a 39.1 percent rise year over year KCG reduced total shares outstanding by 22 percent during the quarter 4th Quarter 2016 Summary

KCG Financial Results Pre-Tax Earnings (Loss) By Business Segment (in thousands) (unaudited) For the three months ended December 31, 2015 September 30, 2016 December 31, 2016 Market Making Revenues $     168,227 $ 136,107 $ 168,323 Expenses 173,359 149,883 176,814 Pre-tax (loss) (5,132) (13,776) (8,491) Global Execution Services Revenues 70,221 63,713 75,510 Expenses 71,336 64,152 71,009 Pre-tax earnings (loss) (1,115) (439) 4,501 Corporate and Other Revenues 25,588 8,712 336,709 Expenses 23,813 22,471 22,847 Pre-tax earnings (loss) 1,775 (13,759) 313,862 Consolidated Revenues 264,036 208,532 580,542 Expenses 268,507 236,506 270,670 Pre-tax earnings (loss) $     (4,471) $ (27,974) $ 309,872 Notes: 4th quarter 2016 results include a $331.0 million gain from sales of shares in Bats Global Markets, Inc. 4th quarter 2015 results include a $19.8 million gain from the sales of investments, $16.2 million of writedowns primarily related to assets of businesses held for sale and $3.2 million of writedowns of investments

Market Conditions in U.S. Equities Average daily consolidated U.S. equity dollar volume declined 0.6% and share volume decreased 0.4% year over year Average realized volatility for the S&P 500 was 8.5 – a decline from 14.7 bps in 4Q15 and the lowest quarterly average in KCG’s history Bid-ask spreads for Russell 3,000 stocks tightened year over year Sources: BATS Global Markets, Bloomberg Average daily consolidated U.S. equity share volume Average daily consolidated U.S. equity dollar volume Average realized volatility for the S&P 500 U.S. equity market volume and volatility Avg. daily share volume (in millions) 10,000 2 $400,000 Avg. daily dollar volume (in $ millions) 7,500 $300,000 5,000 $200,000 2,500 $100,000 4Q15 3Q16 4Q16 14.7 9.2 8.5

Market-Wide Retail Investor Flows in 4Q16 KCG’s Individual Investor Insights presents estimated market-wide gross and net retail investor flows based on public and proprietary data derived from monthly SEC Rule 605-eligible U.S. equity share volume.

Market Conditions Across Asset Classes Average daily volume in select securities markets 4Q15 3Q16 4Q16 Consolidated U.S. equity share volume 7,162.4 mn 6,585.1 mn 7,115.9 mn “Retail” SEC Rule 605 U.S. equity share volume1 748.4 mn 782.6 mn 853.9 mn ETF share volume 875.6 mn 779.8 mn 879.8 mn Consolidated U.S. equity dollar volume $277,481.5 mn $249,550.1 mn $276,504.2 mn Gross retail U.S. equity dollar volume2 $17,353.7 mn $18,356.3 mn $20,259.9 mn U.S. equity futures contracts 2.4 mn 2.8 mn 2.5 mn U.S. options contracts 14.7 mn 13.8 mn 14.6 mn European equity notional value traded (USD) $49.3 bn $42.8 bn $46.7 bn Asian equity share volume3 5.6 bn 7.2 bn 7.7 bn U.S. Treasury notional volume $465.4 bn $490.9 bn $542.6 bn U.S. corporate bond notional volume $25.0 bn $27.9 bn $27.5 bn Corporate bond transactions under 250 bonds 13,115 15,165 16,895 FX notional value traded among reporting venues (USD)4 $196.6 bn $194.3 bn $208.9 bn 1 4Q16 SEC Rule 605-eligible U.S. equity share volume includes an estimate of December 2016 total based on public and proprietary data. 2 4Q16 gross retail U.S. equity dollar volume is derived from the dollar value of all SEC Rule 605-eligible buys and sells executed by KCG, scaled up based on KCG’s estimated market share during the month among the leading market makers 3 Represents ADV across select developed markets in the Asia-Pacific region including Australia, Hong Kong, Japan, Singapore and Taiwan 4 FX reporting venues include EBS, Thomson Reuters FX and Hotspot Sources: BATS Global Markets, RegOne Solutions, Autex, CME, ICE, OCC, Bloomberg, SIFMA, TRACE, MSRB, ICAP and Thomson Reuters

Market Making in U.S. Equities Sources: KCG, SEC, RegOne Solutions; 1 Revenue from market making in U.S. equities of $147.5 million in the fourth quarter of 2016, along with total dollar volume during the quarter of nearly $1.8 trillion, resulted in average revenue capture of 0.83 basis points. 2 4Q16 SEC Rule 605 U.S. equity dollar and share volume includes an estimate of December 2016 total based on public and proprietary data. Revenues of approximately $147.5 million for the quarter Results driven by the difficult trading environment for quantitative trading models Results also impacted by the decline in market volatility, partially offset by increased retail trading activity combined with gain in KCG’s market share of retail SEC Rule 605 U.S. equity share volume 1 2 2

Market Making in Non-U.S. Equities Note: Market making in non-U.S. equities includes European and Asian equities, fixed income, currencies and commodities. Revenues of approximately $16.6 million for the quarter Results driven by market volumes of European equities, U.S. Treasuries and Asian equities Non-U.S. equity market making U.S. equity market making 4Q16 revenue distribution

Agency-Based Trading Average daily KCG Institutional Equities U.S. equity share volume of 228.7 million attributable to subdued institutional trading activity Average daily KCG BondPoint par value traded of $209.6 million due to increased market share of corporates and municipals year over year KCG MatchIt average daily U.S. equity share volume of 44.0 million KCG Institutional Equities avg. daily U.S. equity share volume KCG BondPoint avg. daily par value traded Market-wide volumes of corporates1 Market-wide volumes of municipals1 Avg. daily consolidated U.S. equity volume 1 Represents retail-size bond transactions under 250 bonds.

Consolidated Quarterly Non-Transaction-Based Expenses Compensation and benefits rose $23.4 million quarter over quarter due to increased net revenues and discretionary bonus accruals Communications and data processing rose $2.5 million qoq due to added tech expense from Neonet and an increase in high-speed network fees. Total transaction-based expenses rose $5.5 million qoq due primarily to an increase in KCG exchange-listed share volume Compensation and benefits Communications and data processing Depreciation and amortization Debt interest expense Professional fees Occupancy and equipment rentals Business development Other Writedown of assets and other real estate-related charges

Additional Financials Consolidated Statements of Financial Condition (in millions) (unaudited) December 31, 2015 September 30, 2016 December 31, 2016 Cash and cash equivalents $ 581.3 $ 505.5 $ 632.2 Debt 485.0 453.5 454.4 Stockholders’ equity 1,444.1 1,439.6 1.357.3 Debt-to-tangible equity ratio1 0.36 0.34 0.36 Tangible book value per share1 $14.90 $15.54 $18.71 Book value per share $16.02 $16.70 $20.20 Shares outstanding including restricted 90,156 86,213 67,192 stock units (in thousands) 1 Tangible book value is calculated by subtracting goodwill and intangible assets from equity.