KCG Kcg Holdings Class A

You are being asked to elect the 11 nominees named in this Proxy Statement to serve on the Board of Directors of KCG Holdings, Inc. (which we refer to as “we,” “us,” the “Company” or “KCG”) until the 2018 Annual Meeting of Stockholders and until their successors have been duly elected and qualified, or until their earlier death, resignation or removal. Each nominee currently serves on our Board of Directors (which we refer to as the “Board of Directors” or the “Board”), including Peter R. Fisher, Colin Smith, Heather E. Tookes and Adrian Weller, who were elected to the Board on January 18, 2017. Rene M. Kern and John C. (Hans) Morris are not seeking re-election to the Board, and their respective terms will expire upon the election of directors at the Annual Meeting, at which time the Board will be reduced to 11 members. We thank Messrs. Kern and Morris for their many contributions to the Board and to the Company.

We do not know of any reason why any nominee named in this Proxy Statement would be unable to serve as a director if elected. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as may be nominated in accordance with our Second Amended and Restated By-Laws (the “By-Laws”), as described below. Proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement.

The Board unanimously recommends you vote “ FOR ” each of the nominees described below.

Nominees for Election as Directors

Our Nominating and Corporate Governance Committee, which we refer to as the “N&CG Committee,” recommended to the Board the nomination of each nominee named below. Our Board believes that all of the following nominees meet the criteria described below with diversity and depth of experience that enable them to effectively oversee management of the Company. No nominee for director has a family relationship with any nominee for director or executive officer of the Company. Information relating to each nominee for election as director, including his or her period of service as a member of the Board of Directors, principal occupation, specific experience, other biographical material and qualifications is described below:

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Term

Each director elected will hold office until the 2018 Annual Meeting of Stockholders and until the director’s successor is duly elected or qualified, or until the director’s earlier death, resignation or removal. Any director may resign at any time upon written notice to the Company.

Majority Voting Standard for Election of Directors

Under our By-Laws, in an uncontested election of directors, each director will be elected if a majority of the votes cast at any meeting at which a quorum is present are for the election of the director. For these purposes, votes cast include directions to withhold authority and exclude abstentions with respect to the director’s election. In the event of a contested election, in which the number of candidates for election as directors exceeds the number of directors to be elected, each director will be elected by the vote of a plurality of the votes cast at any meeting at which a quorum is present.

If a nominee for director who is an incumbent director is not elected and no successor has been elected at the meeting, the director will promptly tender his or her resignation to the Board. The N&CG Committee will recommend to the Board whether to accept the tendered resignation or whether other action should be taken. The Board will then act on the tendered resignation, taking into account the N&CG Committee recommendation, and publicly disclose its decision within 90 days from the date of certification of election results. The Board and N&CG Committee, in making such a determination and recommendation, may consider any factors or information as they considered appropriate and relevant.

If the director’s resignation is not accepted by the Board, the director will serve until the next annual meeting and until his or her successor is duly elected, or until his or her subsequent voluntary early resignation or removal.

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CORPORATE GOVERNANCE

BOARD LEADERSHIP

Our Board Leadership Structure

Our Board is currently led by an independent director serving as Non-Executive Chairman, Mr. Haldeman. The Board has determined that having an independent director serve as the Non-Executive Chairman of the Board is in the best interests of stockholders because it allows the Chairman to focus on the effectiveness and independence of the Board while the CEO focuses on executing the Company’s strategy and managing the Company’s operations and performance. As the independent, Non-Executive Chairman, Mr. Haldeman presides over meetings of the stockholders and the Board of Directors at which he is present. At this time, the Board believes this structure is an important mechanism for enhancing the governance practices of the Board, ensuring that independent and open discussions occur amongst independent directors and between directors and management and facilitating a leadership position within the Board. The Board maintains the authority at all times to modify this structure if necessary when doing so would be in KCG’s best interests.

Our Board believes that the current leadership structure is efficient and in the best interests of the Company for the following reasons:

DIRECTOR QUALIFICATIONS AND INDEPENDENCE

Director Qualifications

The N&CG Committee’s principal responsibilities are to assist the Board in reviewing and identifying individuals qualified to become Board members, consistent with criteria approved by the Board, and to recommend to the Board nominees for directors for the next annual meeting of stockholders and to fill vacancies on the Board.

Our N&CG Committee has established in its charter criteria to be considered in evaluating an individual for nomination to the Board. Director nominees should:

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We also seek to select a diverse group of directors for nomination to the Board, with diversity reflecting a range of talents, ages, professional skills, background and experience. There is no formal process for implementing this policy, but diversity is considered by the Board in determining overall Board composition.

Additionally, our Corporate Governance Guidelines (a copy of which may be found on our website at www.kcg.com in the “Corporate Governance” section of “Investors”) set forth a list of factors that, absent a waiver by a majority of the Board, will disqualify an individual from service on our Board. These factors require that a director not :

Our N&CG Committee is responsible for determining annually whether each current director is subject to any of the above factors and reporting to the Board on its determinations. If a director is subject to any of the disqualifying factors or experiences a substantial change in occupation or business association, absent a waiver by a majority of the Board (excluding the affected director(s)), he or she will immediately offer his or her resignation, which the Board will accept.

Term Limits

Absent a waiver by a majority of our Board, our Corporate Governance Guidelines limit directors (other than the CEO) to 15 one-year terms on our Board and require that directors resign from the Board effective as of the Board meeting following the date the director reaches 72 years of age.

Director Independence

To be independent under the rules of the New York Stock Exchange (“NYSE”), our Board must make an affirmative determination that a director does not have a “material relationship” with KCG (either directly or as a partner, stockholder or officer of an organization that has a material relationship with KCG). The NYSE has bright-line tests that disqualify a director from being determined to be independent, including if the director is employed by KCG. In addition, the Board must still consider all circumstances surrounding any existing relationship between KCG and a director to determine whether a material relationship exists outside of the bright-line tests.

Our Board has considered the independence of all 13 of our current directors, including through a review of the relationships described under “Our Standards of Independence; Related Party Transactions” below, and has made an affirmative determination that our independent directors are Charles E. Haldeman, Jr., Debra J. Chrapaty, Peter R. Fisher, Rene M. Kern, James T. Milde, John C. (Hans) Morris, Alastair Rampell, Daniel F. Schmitt, Laurie M. Shahon, Colin Smith, Heather E. Tookes and Adrian Weller. As our CEO, Daniel Coleman is not independent.

Our Standards of Independence; Related Party Transactions

Our Corporate Governance Guidelines require that at least a majority of the directors on our Board be “independent” as defined under the NYSE Listing Standards. Directors also are required under our Corporate

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Governance Guidelines to abide by our Code of Business Conduct and Ethics (a copy of which may be found at our website at www.kcg.com in the “Corporate Governance” section of “Investors”), and each director must recuse himself or herself from any discussion or decision affecting his or her personal, business or professional interests unrelated to his or her service on the Board. Unless an exception is granted by a majority vote of our Board and excluding service with non-profit institutions, no director may serve on more than two boards of public companies in addition to our Board, and no director may serve on the board of an entity that has one or more executive officers serving as a member of our Board.

In determining that each of the directors, other than Mr. Coleman, is independent, our Board reviewed these standards, the corporate governance rules of the NYSE and the SEC, and the individual circumstances of each director.

Our Code of Business Conduct and Ethics requires all employees to disclose to KCG any conflicts of interest or personal interests they may have in potential transactions. After full disclosure by an employee, the Company may approve the conduct or transactions at issue in writing. Members of the Board must disclose to the Board any personal interest they may have in a transaction in which the Board is involved and recuse themselves from participation in any decision in which there is a conflict between their personal interests and the interests of the Company.

Additionally, the charter for the Finance and Audit Committee, which we refer to as the “F&A Committee,” includes a requirement for the F&A Committee to review and approve proposed related party transactions or courses of dealings with respect to which executive officers or directors or members of their immediate families have an interest, including all transactions with significant stockholders, executive officers, directors or other persons that are required to be disclosed pursuant to Item 404 of Regulation S-K. A related party transaction under Item 404 of Regulation S-K is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which KCG was, is or will be a participant and the amount involved exceeds $120,000 in any fiscal year, and in which any “related party” (defined below) had, has or will have a direct or indirect material interest. The category of related parties consists generally of KCG’s directors, director nominees, executive officers, any person or entity who is known to be the beneficial owner of more than 5% of any class of KCG voting securities, and immediate family members of any of the foregoing persons.

On April 26, 2016, KCG repurchased approximately 1.9 million shares of KCG’s Class A common stock, par value $0.01 per share (“KCG Common Stock”), from former director Daniel Tierney and one of his affiliated entities for $13.48 per share, the closing stock price of KCG Common Stock on the previous date, which represented an aggregate purchase price of approximately $26.1 million. Mr. Tierney was then a holder of more than five percent of the outstanding KCG Common Stock. On that date, KCG also repurchased (i) approximately 2.7 million warrants to purchase shares of KCG Common Stock (“Warrants”) from an entity affiliated with Mr. Tierney for approximately $5.9 million and (ii) approximately 3.8 million Warrants from entities affiliated with former director Stephen Schuler for approximately $8.3 million. Mr. Schuler’s service on the Board expired upon the election of directors at the 2016 Annual Meeting of Stockholders on May 11, 2016.

On November 17, 2016, KCG entered into a purchase agreement (the “Purchase Agreement”) with GA-GTCO Interholdco, LLC (“GA-GTCO”), an affiliate of General Atlantic, LLC (“General Atlantic”) and, at the time, a holder of approximately 22% of the outstanding shares of KCG Common Stock who, in connection with the closing of the Mergers, appointed two directors to KCG’s Board (Rene M. Kern, a managing director of General Atlantic, and John C. (Hans) Morris, a former employee of General Atlantic). Pursuant to the terms of the Purchase Agreement, KCG exchanged approximately 8.9 million shares of common stock of Bats, par value $0.01 per share (“Bats Common Stock”) held by a subsidiary of KCG, for approximately 18.7 million shares of KCG Common Stock and approximately 8.1 million Warrants held by GA-GTCO, which constituted all of the KCG Common Stock and Warrants held by GA-GTCO (collectively, the “GA-GTCO Transaction”).

Jefferies LLC (together with certain of its affiliates, “Jefferies”), a holder of approximately 24% of the outstanding KCG Common Stock (including restricted stock units), was paid transaction fees of $2.9 million for

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acting as broker and for advisory activities associated with the GA-GTCO Transaction, half of which was payable by KCG and the other half of which was payable by GA-GTCO. KCG paid the entire $2.9 million fee to Jefferies in cash and, pursuant to the terms of the Purchase Agreement, retained 46,495 shares of Bats Common Stock that were otherwise transferable to GA-GTCO pursuant to the Purchase Agreement, which had a fair market value as of the date of the Purchase Agreement equal to the fees payable by GA-GTCO to Jefferies.

On November 18, 2016, KCG sold 2,174,654 shares of Bats Common Stock to Jefferies in a block trade transaction for $30.35 per share.

In 2016, KCG earned revenues of $14,113,447 from Jefferies related to KCG’s ordinary course trading relationships with Jefferies, a significant portion of which related to expenses incurred by KCG in connection with trades executed on behalf of Jefferies, which amounts were initially paid to KCG by Jefferies (and therefore included in revenues earned from Jefferies), but subsequently paid by KCG to third parties in respect of such trading expenses. In addition, in 2016, KCG made payments of $856,530 to Jefferies related to KCG’s ordinary course trading relationships with Jefferies. This ordinary course trading relationship with Jefferies began prior to the time that it became a beneficial owner of more than five percent of the common stock of Knight, a predecessor to KCG.

BOARD OVERSIGHT OF RISK

Successful management of the Company requires identifying, monitoring and managing risk. Risk oversight begins with the Board of Directors and two key Board committees: the Risk & Technology Committee and the F&A Committee.

On July 20, 2016, the Company’s Risk Committee was changed to the Risk & Technology Committee. In addition to identifying, monitoring and assessing the key risks of the Company, the Risk & Technology Committee monitors major technology related strategies, projects and technology architecture of the Company, including those relating to cybersecurity and information security and technology. The Risk & Technology Committee meets at least on a quarterly basis to review and assess our risks, control processes with respect to such risks, and our major technology related strategies and projects. The Risk & Technology Committee meets at least annually with our F&A Committee (and met four times in 2016) to discuss matters relating to the overlap between risk and internal control functions. As set forth in our Risk & Technology Committee’s Charter, our Risk & Technology Committee’s responsibilities include, among others:

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Our Board’s F&A Committee also plays a role in risk oversight. Our F&A Committee has oversight responsibility for the integrity of the Company’s financial statements and its risk and control environment, the relationship with the Company’s independent auditor and the Company’s internal audit function. At the management level, the internal audit function is responsible for providing reliable and timely information to our Board and management regarding the Company’s effectiveness in identifying and appropriately controlling risks. The F&A Committee meets periodically with our Chief Executive Officer, our Chief Financial Officer, our General Counsel, our Chief Risk Officer, our Director of Internal Audit and the Company’s independent auditor in separate private sessions to discuss any matters that may warrant committee attention.

The F&A Committee consists of independent directors who meet the independence, experience and financial literacy requirements of The Sarbanes-Oxley Act of 2002 (the “SOX Act”), the NYSE and applicable rules of the SEC. In addition, at least one member of the F&A Committee must be an audit committee financial expert under SEC rules (or the F&A Committee will advise the Company that none of its members so qualifies). The Board has determined that Mr. Schmitt is an audit committee financial expert.

The Company’s independent auditor reports directly to the F&A Committee, which has the sole authority to appoint or replace the independent auditor and to approve all audit engagement fees and terms and all permitted non-audit engagements. The F&A Committee also has the sole authority to hire and replace the Company’s Director of Internal Audit.

The following responsibilities, among other things, are within the authority of the F&A Committee:

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Our primary risk exposures (including those relating to cybersecurity risk), as well as our risk management framework and methodologies, are discussed in further detail on pages 50 to 54 in our Annual Report on Form 10-K for the year ended December 31, 2016. See “Compensation and Risk” on page 19 below for a discussion of risk assessment as it relates to our compensation program.

BOARD MEETINGS AND BOARD COMMITTEE INFORMATION

Board Meetings

Each member of our current Board of Directors was elected by stockholders at the 2016 Annual Meeting, other than Messrs. Fisher, Smith and Weller and Ms. Tookes, who were elected to the Board of Directors on January 18, 2017. Rene M. Kern and John C. (Hans) Morris, current members of our Board, are not seeking re-election to the Board, and their respective terms will expire upon the election of directors at the Annual Meeting, at which time the Board will be reduced to 11 members. Our Board held nine meetings in 2016. Our Corporate Governance Guidelines provide that our directors are expected to attend all regular and special meetings of our Board and committees on which they sit. For 2016, each director attended at least 75% of the aggregate number of meetings of our Board and of the committees on which he or she was a member during the time that he or she was a director, except for Mr. Kern, who attended less than 75% of the meetings due to being recused from one meeting of our Board concerning matters in which he had an interest as a managing director of General Atlantic.

Committees and Committee Charters

Our Board has established several standing committees, including the F&A Committee, the N&CG Committee, the Compensation Committee and the Risk & Technology Committee. Each of the committees makes recommendations to our Board as appropriate and reports periodically to the entire Board. The charters of each committee are available on our website in the “Corporate Governance” section of “Investors.”

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The following table identifies the individual members of our Board serving on each of the standing committees as of the date of this Proxy Statement. Assuming re-election to the Board, the committee memberships for the 2017 term following our Annual Meeting will be unchanged.

Finance and Audit Committee

Our F&A Committee, which consists entirely of independent directors, held six meetings in 2016. Additionally, the F&A Committee held joint meetings with the Risk & Technology Committee during each of the quarterly Risk & Technology Committee meetings, meeting four times during 2016 to discuss matters relating to the overlap between risk and internal control functions. The F&A Committee also met in private session with the Chief Executive Officer, Chief Financial Officer, General Counsel, Chief Risk Officer, Director of Internal Audit and PwC during various meetings held during 2016. The F&A Committee of the Board of Directors assists the Company’s Board of Directors in fulfilling its oversight of (1) the integrity of the financial statements and its risk and control environment, (2) the qualification and independence of, and relationship with, the independent registered public accounting firm, (3) the Company’s internal audit function, (4) compliance with applicable legal and regulatory requirements and (5) compliance with the Company’s Code of Business Conduct and Ethics. The F&A Committee also reviews and makes recommendations to the Board regarding (1) any proposed material capital formation plans, including planned issuances of equity securities and debt instruments, and stock repurchase programs and (2) certain acquisitions, investments, new business ventures and divestitures by the Company. The F&A Committee annually reviews and approves the Company’s (1) treasury investment policy outlining the general investment objectives of the Company and the specific instruments for which investments are permitted, (2) liquidity risk management policy and (3) contingency funding plan. The F&A Committee also annually prepares a report to the Board of Directors regarding the performance of the F&A Committee’s duties and responsibilities, including its oversight of the independent registered public accounting firm and of management’s preparation of the Company’s financial statements, which is included in the Company’s annual proxy statement. See “Report of the Finance and Audit Committee” beginning on page 51.

Our F&A Committee has direct responsibility for the appointment, compensation, evaluation, retention and oversight of the work of the independent registered public accounting firm, which has been engaged to prepare

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an audit report or to perform other audit, review or attest services for or on behalf of the Company. The F&A Committee is responsible for the pre-approval of all audit and permitted non-audit services performed by our independent registered public accounting firm. The independent registered public accounting firm reports directly to the F&A Committee. The F&A Committee’s function is one of oversight, recognizing that our management is responsible for preparing our financial statements, and our independent registered public accounting firm is responsible for auditing those statements. Annually, the F&A Committee evaluates the independent registered public accounting firm and, as appropriate, recommends that our Board request stockholder ratification of the appointment of the independent registered public accounting firm.

The F&A Committee also acts on behalf of our Board in monitoring and overseeing the performance of our internal audit function. At least annually, the F&A Committee reviews the organizational structure, qualifications, independence and performance of this function and the scope of its planned activities. The F&A Committee also oversees the operation of a comprehensive system of internal controls covering the integrity of our financial statements and reports, compliance with laws, regulations and corporate policies. See “Board Oversight of Risk” beginning on page 10 above for additional discussion of the F&A Committee’s duties and responsibilities.

Our Board of Directors has determined that the F&A Committee consists entirely of directors who meet the independence requirements of the listing standards of the NYSE and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our Board has also determined that all members of its F&A Committee are financially literate and have accounting or related financial management expertise within the meaning of the NYSE listing standards as interpreted by our Board. Our Board has determined in its business judgment that Mr. Schmitt satisfies the definition of “audit committee financial expert” as set out in the rules and regulations under the Exchange Act, based upon his experience actively supervising a principal accounting or financial officer or public accountant. The SEC provides that an “audit committee financial expert” does not have additional duties, obligations or liabilities and is not considered an expert under the Securities Act of 1933, as amended (the “Securities Act”).

Nominating and Corporate Governance Committee

Our N&CG Committee, which consists entirely of independent directors, held one meeting in 2016. Subject to our By-Laws, the N&CG Committee is responsible for identifying individuals qualified to become Board members consistent with the criteria included in the N&CG charter and our Corporate Governance Guidelines, including candidates recommended by stockholders in compliance with procedures set forth in the By-Laws, and to recommend that the Board select these individuals as nominees for election to the Board. Stockholders who wish to nominate directors directly at an annual meeting in accordance with the procedures in our By-Laws should follow the instructions in the section entitled “Stockholder Proposals for 2018 Annual Meeting” on page 63. Other functions of the N&CG Committee include (1) recommending the size of, and directors to serve on, committees of the Board, (2) advising the Board with respect to matters of Board composition and procedures, (3) developing and recommending to the Board a set of corporate governance principles applicable to the Company and overseeing corporate governance matters generally and (4) overseeing the annual evaluation of our management and the Board.

Compensation Committee

Our Compensation Committee, which consists entirely of independent directors, held nine meetings in 2016. The Compensation Committee operates under a written charter adopted by the Board, and pursuant to its charter, the Compensation Committee has responsibility for evaluating and approving annually all compensation awarded to the Company’s executive officers, including the named executive officers (“NEOs”). In addition to administering the Company’s equity-based plans, including reviewing and approving equity grants to executive officers, and the Company’s deferred cash compensation program, the Compensation Committee has general oversight of the incentive compensation plans, policies and programs of the Company and its subsidiaries. The

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Compensation Committee also evaluates the performance of our CEO, and, based on such evaluation, reviews and approves his annual salary, cash incentive bonus and long-term equity incentive bonus. The Compensation Committee is responsible for producing an annual report on executive compensation and assisting management in the preparation of the Compensation Discussion and Analysis included herein. Additionally, the Compensation Committee retains its own independent compensation consultant who from time to time provides advice to the Compensation Committee on executive compensation matters and has the authority to obtain advice and assistance from internal or external legal, accounting and other advisors.

The Compensation Committee also provides assistance to the Board of Directors by setting performance-based compensation criteria for our CEO and other key executives, certifying the results of such performance at the end of the annual performance period and, after evaluating these results as compared to the pre-established performance criteria, determining the amount of such performance-based compensation that is awarded to the CEO and other key executives (including, as noted above, the amount and type of equity awards granted to this population).

Risk & Technology Committee

Our Risk & Technology Committee held five meetings in 2016. Additionally, the Risk & Technology Committee held joint meetings with the F&A Committee during each of the quarterly Risk & Technology Committee meetings, meeting four times during 2016. The primary purpose of the Risk & Technology Committee is to assist the Board in its oversight responsibilities relating to the identification, monitoring and assessment of the key risks of the Company, including the significant policies, procedures and practices employed in risk management (including technology risk management). See “Board Oversight of Risk” beginning on page 10 above for a discussion of the Risk & Technology Committee’s duties and responsibilities.

EXECUTIVE COMPENSATION CONSULTANT

TO THE COMPENSATION COMMITTEE

As mentioned above, the Compensation Committee retains the services of a qualified independent compensation consultant that possesses the necessary skill, experiences and resources to meet the Compensation Committee’s needs, and that provides services solely to the Compensation Committee and not to the Company. Following the closing of the Mergers, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”), to serve as its independent compensation consultant. Prior to being engaged by the Compensation Committee, Pay Governance advised the Compensation Committees of both GETCO and Knight and, consequently, was well positioned to advise the Compensation Committee on executive compensation design following the closing of the Mergers. During this period, Pay Governance assisted the Compensation Committee in collecting and evaluating external data regarding executive compensation and advised the Compensation Committee on developing trends and best practices in executive compensation design. Given the extent of Pay Governance’s involvement with respect to establishing the Company’s executive compensation framework in connection with the Mergers, the Compensation Committee has since retained Pay Governance to continue to counsel the Compensation Committee on an as-needed basis.

The Compensation Committee has determined that Pay Governance had no conflict of interest in providing services to the Compensation Committee and was independent for purposes of the NYSE requirements regarding the independence of compensation consultants. In accordance with SEC and NYSE requirements, the Compensation Committee reached this conclusion based on an evaluation of such factors including, among others, that (1) Pay Governance provides services only to the Compensation Committee and not to the Company, (2) Pay Governance does not have any significant business or personal relationship with any member of the Compensation Committee or any executive officer of the Company and (3) the fees paid by the Compensation Committee to Pay Governance are not material to Pay Governance’s total revenues.

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