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2023
ANNUAL REPORT
“ 2023 WAS A RECORD
SETTING YEAR FOR BGC
WHERE WE ACHIEVED
STRONG GROWTH,
SUCCESSFULLY EXECUTED
OUR CORPORATE
STRATEGY, AND
DELIVERED SIGNIFICANT
SHAREHOLDER VALUE.”
HOWARD W. LUTNICK
Chairman of the Board of Directors and
Chief Executive Officer
2023
TO MY FELLOW
S
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2023: A RECORD YEAR IN REVIEW
We had a record year in 2023 with revenues up by over 13 percent,
surpassing $2 billion for the first time in our history1. Our revenues grew
every month in 2023 and accelerated each quarter throughout the year.
This growth was broad-based, across every asset class and geography,
delivering pre-tax Adjusted Earnings growth of 19 percent, with a record
pre-tax Adjusted Earnings margin of 22 percent2.
The end of manufactured zero interest rates created this strong underlying
macro environment for BGC, which drove our growth in 2023 and through
the first half of 2024. This favorable environment is simply a return to
normalized market conditions that had existed for decades prior to the
implementation of zero interest rate policies and quantitative easing
programs following the Global Financial Crisis in 2008. We expect this
current environment, characterized by meaningful interest rates and healthy
levels of market volatility, to continue for the foreseeable future and
provide strong baseline growth for BGC.
Throughout 2023, we continued to create value for our investors, delivering
an impressive total return of 93 percent to our shareholders. On July 1,
2023, we completed our Corporate Conversion, which also included
changing our company name from BGC Partners to BGC Group, Inc. This
structural change enabled us to successfully attract a broader, more
diversified investor base. In the year following our Corporate Conversion,
BGC’s average daily trading volume increased by 70 percent, while average
daily dollar volume increased by 185 percent3. Our efforts were further
recognized in March 2024, when BGC was added to the widely followed
S&P SmallCap 600 index – a significant milestone and one that has
delivered value to our shareholders.
In 2024, our market capitalization has hit record after record, and the
macro environment is now fundamentally positive for our business.
Meaningful interest rates, substantial global issuance, and healthy levels of
volatility provide the recipe for the growth of our business. Our relentless
pursuit of best-in-class talent, implementation of world-
class technology, and focus on providing clients with the
highest level of service positions BGC for growth well
beyond this strong baseline.
We believe BGC holds a great proprietary set of assets
across the capital markets and that our company is worth
significantly more than its current market capitalization.
This was recently reinforced when ten of the most
important global investment banks and market-making
firms invested in BGC’s exchange business, FMX.
FMX: THE GREATEST OPPORTUNITY IN
BGC’S HISTORY
FMX is the single greatest opportunity in BGC’s history.
Our FMX business includes the world’s fastest growing
U.S. Treasury platform, FMX UST and FMX FX, along
with our fully approved FMX Futures Exchange, which will
offer U.S. interest rate futures (SOFR and U.S. Treasury
futures) trading.
Partnering with the best to drive success
In April 2024, we announced that 10 of the world’s leading
investment banks and market-making firms became
minority equity owners of FMX. Bank of America,
Barclays, Citadel, Citi, Goldman Sachs, J.P. Morgan, Jump
Trading Group, Morgan Stanley, Tower Research Capital,
and Wells Fargo (“Equity Partners”), collectively invested
$172 million of primary capital in FMX, in exchange for a
25.75 percent ownership stake at a $667 million post-
money valuation. These Equity Partners received an
additional 10.3 percent of equity, which is subject to
driving trading volumes and meeting certain volume
targets across the FMX ecosystem. Each of our Equity
Partners signed multi-year, fixed-price subscription
agreements to trade across the entire FMX ecosystem.
To provide the most efficient portfolio-margin clearing
solution, we partnered with the London Clearing House
(“LCH”), the world’s largest clearer of global interest rate
swaps, with approximately 98 percent market share of all
cleared U.S. dollar swaps4. This clearing arrangement
offers FMX clients unparalleled capital savings by portfolio-
margining futures against swap positions, which we expect
to deliver billions of dollars in capital savings in a superior
“one-pot” clearing model.
The FMX offering
FMX will compete directly with the CME, which currently
has a monopoly in the U.S. interest rate futures market
and has a leading position in both cash U.S. Treasuries and
Foreign Exchange. These products collectively support the
CME’s current $73 billion market capitalization, presenting
an enormous opportunity for BGC.
We have an incredible cash U.S. Treasuries offering, FMX
UST, which has grown its market share to 30 percent in
the second quarter of 20245. FMX UST has consistently
increased its market share by one to two points each
sequential quarter – with the vast majority of these gains
coming from the CME.
U.S. interest rate futures, the CME’s most valuable
business, are the most widely traded contracts globally. For
context around the size of this opportunity, U.S. interest
rate futures were a $4.2 trillion per day market in 2023 –
more than five-times larger than the cash U.S. Treasury
BGC Group Annual Report 2023
3
market6. We will be launching our FMX Futures Exchange
in September 2024, initially offering SOFR futures with U.S.
Treasury futures to follow shortly thereafter.
The FMX Futures Exchange will utilize FMX UST’s market
leading technology that is already connected to and used
by the world’s largest trading firms. FMX’s trading system
has been natively developed to trade both treasuries and
futures on the same platform, offering clients seamless
execution at the fastest speeds.
First of its kind
We are the first U.S. interest rate futures competitor to
launch with the two pre-requisites required to challenge
the CME’s incumbent monopoly position: (i) a fully
connected front-end trading system transacting significant
volume, and (ii) superior capital savings on futures clearing.
There have been past challengers to the CME’s dominant
U.S. interest rate futures position. Many have had one of
these two pre-requisites, but never both – until now.
Our FMX FX business has also been one of the fastest
growing Foreign Exchange platforms since its launch, with
volume growth significantly outpacing all of the big Foreign
Exchange marketplaces.
FMX has the potential to be worth far more than BGC’s
current market capitalization. We are focused on the U.S.
interest rate and global Foreign Exchange market today.
However, FMX is a truly unique platform that, together
with our Equity Partners, can challenge other markets that
are ripe for innovation.
FENICS’ INDUSTRY-LEADING GROWTH
Fenics, our high-margin, technology-driven business, had
another outstanding year, outperforming its electronic
marketplace peers with its revenues growing by more
than 16 percent to $522 million. Now representing more
than a quarter of BGC’s total revenues, Fenics has
consistently been the fastest growing part of our business.
We continue to drive innovation in the capital markets
with Fenics offerings being used every day by the world’s
leading banks, market-makers, and financial institutions.
As the world’s largest wholesale electronic marketplace,
leading global banks, market-makers, and financial
institutions rely on Fenics’ innovative offering and look to
us to continue to drive the electronification of the capital
markets. We have been at the forefront of electronifying
the capital markets since our founding. Today, Fenics is the
largest wholesale electronic marketplace in the world and
home to many of the fastest growing capital markets
platforms, including in the U.S. Treasuries, U.S. Credit, and
Foreign Exchange markets.
Fenics’ state-of-the-art technology is used across BGC,
which in addition to driving electronic volumes, also
provides efficiencies to our entire business. Widescale
integration and adoption of Fenics technologies has made
our staff more efficient and drove our average revenue
per front office employee to an all-time high of $958
thousand in 2023.
Increased automation leads to improving profits and profit
margins. We have reported 15 consecutive quarters of
margin expansion through the second quarter of 2024.
We expect our margins to continue to improve, as our
Fenics Growth Platforms scale and electronic revenues
become a larger part of our overall business.
ENERGY, COMMODITIES, AND SHIPPING:
RECORD-SETTING GROWTH DRIVING
BROADER DIVERSIFICATION
Our Energy, Commodities, and Shipping (“ECS”) business
had a record-setting year, growing by over 32 percent to
$386 million. ECS has rapidly grown into our second
largest asset class. Today, ECS represents almost 20
percent of our total revenues and provides additional
diversification to our client base and macro drivers. These
markets are characterized by their “all-to-all” market
structure, with the most active participants being end-users,
energy companies, commodities trading firms and other
financial institutions.
Our ECS business is highly diversified by client, geography,
and product. We maintain a leading position in
environmental products which, along with energy
transition products (e.g. natural gas, LNG, LPG, and
power), represent the largest part of our ECS business.
We are also the leading ship broker for these products,
providing significant operational synergies to our clients.
The global transition towards environmental and cleaner
energy products continues to accelerate, providing strong
tailwinds to the trading volumes for these products. In
2023, we expanded our leading environmental franchise
through the acquisition of Trident Energy Brokers
(“Trident”) – a move that allowed us to bolt-on
world-class talent, further broadening our client and
geographic reach. Our acquisition of Trident has been
highly successful with revenue growth accelerating while
concurrently realizing millions of dollars of cost synergies.
Looking ahead, we expect further growth in ECS,
supported by a strong macro environment, market share
gains, and further potential bolt-on acquisition opportunities.
ECS revenue growth has continued into 2024, where we
saw year-over-year growth of 32 percent in the first
quarter of 2024 and by another 19 percent in the second
quarter of 2024. While we’ve grown this business to over
$430 million in revenues over the trailing twelve months,
we have significant room to continue to grow our market
share in this enormous market.
IN CONCLUSION
2023 was a record setting year for BGC where we
achieved strong growth, successfully executed our
corporate strategy, and delivered significant shareholder
value. We expect strong macro trading conditions to
support our growth for the foreseeable future, which
combined with higher levels of Fenics profitability, will
continue to drive our profits higher.
In 2024, we are continuing to build upon our successes,
with revenues in the first half of the year already growing
by over 10 percent. The FMX Futures Exchange received
CFTC approval in January, and we completed our
transaction with our 10 extraordinary partners in April.
BGC Group Annual Report 2023
5
We have built many of the world’s fastest-growing trading
platforms and we are excited to introduce our newest,
the FMX Futures Exchange, in September 2024.
It is a privilege to lead this exceptional organization and
its profoundly dedicated and motivated people. My
management team and I thank you for your steadfast
commitment and support. We will continue to work
relentlessly to grow our revenues and profits and to
deliver value to our shareholders.
Sincerely,
HOWARD W. LUTNICK
Chairman of the Board of Directors and
Chief Executive Officer
1 The discussion of record results excludes business dispositions or spin-offs, such as BGC’s spinoff of Newmark Group, Inc. and the sale of its Insurance Brokerage Business.
2 On a GAAP basis, income from operations before income taxes decreased by 41 percent in 2023, with a margin of 3 percent. A reconciliation of GAAP income (loss) from operations before income taxes to
Adjusted Earnings is provided in the “Non-GAAP Financial Measures” section at the end of this document.
3 Source: Bloomberg data.
4 Source: Company filings as of 06/30/2024.
5 Source: Coalition Greenwich MarketView; Central Limit Order Book (“CLOB”) market share quoted.
6 Source: CME monthly volumes multiplied by respective reported contract sizes; For Eurodollar and SOFR futures estimated contract size of $1mm.
Note: U.S. Generally Accepted Accounting Principles is referred to as “GAAP”. This document contains non-GAAP financial measures that differ from the most directly comparable measures calculated and
presented in accordance with GAAP. “GAAP income before income taxes and noncontrolling interests” and “Adjusted Earnings before noncontrolling interests and taxes” may be used interchangeably with
“GAAP pre-tax income” and “pre-tax Adjusted Earnings”, respectively.
See the sections of this document including “Non-GAAP Financial Measures”, “Adjusted Earnings Defined”, “Management Rationale for Using Adjusted Earnings”, “Adjusted EBITDA defined”, “Timing of Outlook
for Certain GAAP and Non-GAAP items”, “Liquidity Defined”, “Constant Currency Defined”, “Reconciliation of GAAP Income (Loss) from Operations before Income Taxes to Adjusted Earnings and GAAP Fully
Diluted EPS to Post-Tax Adjusted EPS”, “Fully Diluted Weighted-Average Share Count under GAAP and for Adjusted Earnings”, “Liquidity Analysis”, “Reconciliation of GAAP Net Income (Loss) Available to
Common Stockholders to Adjusted EBITDA”, “Consolidated Revenues in Constant Currency”, and, “Fenics Revenues in Constant Currency” including any footnotes to these sections, for the complete and updated
definitions of these non-GAAP terms and how, when, and why management uses them, as well as for the differences between results under GAAP and non-GAAP for the periods discussed herein.
Note: This letter was finalized on July 17, 2024. Any forward-looking statements made in this document are only as of this date, unless otherwise stated. Please see the section in the enclosed Form 10-K titled
“Special Note on Forward-Looking Information”.
BGC Group Annual Report 2023
7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
FORM 10-K
_______________________________________________
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-35591
_______________________________________________
BGC Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
_______________________________________________
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
499 Park Avenue , New York , NY
(Address of Principal Executive Offices)
86-3748217
(I.R.S. Employer
Identification No.)
10022
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
(212) 610-2200
(Registrant’s telephone number, including area code)
Title of each class
Class A Common Stock, $0.01 par value
Trading
Symbol(s)
BGC
Name of each exchange on which registered
The Nasdaq Stock Market, LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Non-accelerated Filer
Emerging growth company
☒
☐
☐
Accelerated Filer
Smaller Reporting Company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of voting common equity held by non-affiliates of the registrant, based upon the closing price of the Class A common
stock on June 30, 2023 as reported on Nasdaq, was approximately $1,486,449,921.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
On February 27, 2024, the registrant had 384,393,744 shares of Class A common stock, $0.01 par value, and 109,452,953 shares of Class B
common stock, $0.01 par value, outstanding.
_______________________________________________
DOCUMENTS INCORPORATED BY REFERENCE.
Portions of the registrant’s definitive proxy statement for its 2024 annual meeting of stockholders (the “2024 Proxy Statement”) are
incorporated by reference in Part III of this Annual Report on Form 10-K. We anticipate that we will file the 2024 Proxy Statement with the SEC on
or before April 29, 2024.
BGC Group, Inc.
2023 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Glossary of Terms, Abbreviations and Acronyms
Special Note on Forward-Looking Information
Risk Factor Summary
PART I
ITEM 1.
Business
ITEM 1A.
Risk Factors
ITEM 1B.
Unresolved Staff Comments
ITEM 1C.
Cybersecurity
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 5.
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
ITEM 6.
ITEM 7.
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
ITEM 8.
ITEM 9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A.
Controls and Procedures
ITEM 9B.
Other Information
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
ITEM 14.
Principal Accountant Fees and Services
PART IV
ITEM 15.
ITEM 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
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Except as otherwise indicated or the context otherwise requires, as used herein, the terms “BGC,” the “Company,”
“we,” “our,” and “us” refer to: (i) following the closing of the Corporate Conversion, effective July 1, 2023, BGC Group and its
consolidated subsidiaries, including BGC Partners; and (ii) prior to the effective time of the Corporate Conversion, BGC
Partners and its consolidated subsidiaries. See Note 1—“Organization and Basis of Presentation” to the Consolidated Financial
Statements herein for more information regarding the Corporate Conversion, and refer to the “Glossary of Terms,
Abbreviations and Acronyms” for the definitions of terms used above and throughout the remainder of this Annual Report on
Form 10-K.
GLOSSARY OF TERMS, ABBREVIATIONS AND ACRONYMS
The following terms, abbreviations and acronyms are used to identify frequently used terms and phrases that may be
used in this report:
TERM
2019 Form S-4 Registration
Statement
On September 13, 2019, BGC filed a registration statement on Form S-4 with respect to the offer and sale
of up to 20.0 million shares of BGC Class A common stock in connection with business combination
transactions, including acquisition of other businesses, assets, properties or securities
DEFINITION
2023 Deed of Amendment
On July 12, 2023, Mr. Windeatt executed a Deed of Amendment amending his existing Deed of
Adherence with the U.K. Partnership regarding his employment
ACER
Agency for the Cooperation of Energy Regulators
Adjusted Earnings
A non-GAAP financial measure used by the Company to evaluate financial performance, which primarily
excludes (i) certain non-cash items and other expenses that generally do not involve the receipt or outlay
of cash and do not dilute existing stockholders, and (ii) certain gains and charges that management
believes do not best reflect the ordinary results of BGC
ADV
API
Average daily volume
Application Programming Interface
April 2008 distribution rights
shares
Cantor’s deferred stock distribution rights provided to current and former Cantor partners on April 1, 2008
Aqua
ASC
ASU
Aqua Securities L.P., an alternative electronic trading platform, which offers new pools of block liquidity
to the global equities markets and is a 49%-owned equity method investment of the Company and 51%
owned by Cantor
Accounting Standards Codification
Accounting Standards Update
Audit Committee
Audit Committee of the Board
August 2022 Sales Agreement
CEO Program sales agreement, by and between the Company and CF&Co, dated August 12, 2022,
pursuant to which the Company can offer and sell up to an aggregate of $300.0 million of shares of BGC
Class A common stock
Berkeley Point
Berkeley Point Financial LLC, previously a wholly owned subsidiary of the Company acquired on
September 8, 2017 and contributed to Newmark in the Separation
Besso
BGC
Besso Insurance Group Limited, formerly a wholly owned subsidiary of the Company, acquired on
February 28, 2017. Sold to The Ardonagh Group on November 1, 2021 as part of the Insurance Business
Disposition
(i) Following the closing of the Corporate Conversion, BGC Group and, where applicable, its consolidated
subsidiaries, including BGC Partners, and (ii) prior to the closing of the Corporate Conversion, BGC
Partners and, where applicable, its consolidated subsidiaries
BGC Class A common stock or
our Class A common stock
BGC Class B common stock or
our Class B common stock
BGC Credit Agreement
BGC Class A common stock, par value $0.01 per share
BGC Class B common stock, par value $0.01 per share
Agreement between BGC Partners and Cantor, dated March 19, 2018, that provides for each party or its
subsidiaries to borrow up to $250.0 million, as amended on August 6, 2018 to increase the facility to
$400.0 million, and assumed by BGC Group on October 6, 2023
BGC Derivative Markets
BGC Derivative Markets L.P.
2
TERM
BGC Entity Group
BGC Partners, BGC Holdings, BGC U.S. OpCo and their respective subsidiaries (other than, prior to the
Spin-Off, the Newmark Group), collectively, and in each case as such entities existed prior to the
Corporate Conversion
DEFINITION
BGC Financial or BGCF
BGC Financial, L.P.
BGC Global OpCo
BGC Global Holdings, L.P., an operating partnership, which holds the non-U.S. businesses of BGC and
which is indirectly wholly owned, following the closing of the Corporate Conversion, by BGC Group
BGC Group
BGC Group, Inc., and where applicable its consolidated subsidiaries
BGC Group 3.750% Senior
Notes
$255.5 million principal amount of 3.750% senior notes maturing on October 1, 2024 and issued on
October 6, 2023 in connection with the Exchange Offer
BGC Group 4.375% Senior
Notes
$288.2 million principal amount of 4.375% senior notes maturing on December 15, 2025 and issued on
October 6, 2023 in connection with the Exchange Offer
BGC Group 8.000% Senior
Notes
$347.2 million principal amount of 8.000% senior notes maturing on May 25, 2028 and issued on October
6, 2023 in connection with the Exchange Offer
BGC Group Equity Plan
Eighth Amended and Restated BGC Partners Long Term Incentive Plan, as amended and restated and
renamed the “BGC Group, Inc. Long Term Incentive Plan” and assumed by BGC Group in connection
with the Corporate Conversion
BGC Group Incentive Plan
Second Amended and Restated BGC Partners Incentive Bonus Compensation Plan, as amended and
restated and renamed the “BGC Group, Inc. Incentive Bonus Compensation Plan” and assumed by BGC
Group in connection with the Corporate Conversion
BGC Group Notes
BGC Group 3.750% Senior Notes, BGC Group 4.375% Senior Notes and BGC Group 8.000% Senior
Notes issued by BGC Group
BGC Holdings
BGC Holdings, L.P., an entity which, prior to the Corporate Conversion, was owned by Cantor, Founding
Partners, BGC employee partners and, after the Separation, Newmark employee partners
BGC Holdings Distribution
Pro-rata distribution, pursuant to the Separation and Distribution Agreement, by BGC Holdings to its
partners of all of the exchangeable limited partnership interests of Newmark Holdings owned by BGC
Holdings immediately prior to the distribution, completed on the Distribution Date
BGC Holdings Limited
Partnership Agreement
Second Amended and Restated BGC Holdings Limited Partnership Agreement
BGC OpCos
BGC U.S. OpCo and BGC Global OpCo, collectively
BGC Partners
BGC Partners, Inc. and, where applicable, its consolidated subsidiaries
BGC Partners 3.750% Senior
Notes
$300.0 million principal amount of 3.750% senior notes maturing on October 1, 2024 and issued on
September 27, 2019. Following the Exchange Offer on October 6, 2023 $44.5 million aggregate principal
amount of the BGC Partners 3.750% Senior Notes remain outstanding
BGC Partners 4.375% Senior
Notes
$300.0 million principal amount of 4.375% senior notes maturing on December 15, 2025 and issued on
July 10, 2020. Following the Exchange Offer on October 6, 2023 $11.8 million aggregate principal
amount of the BGC Partners 4.375% Senior Notes remain outstanding
BGC Partners 5.375% Senior
Notes
$450.0 million principal amount of 5.375% senior notes which matured on July 24, 2023 and were issued
on July 24, 2018
BGC Partners 8.000% Senior
Notes
$350.0 million principal amount of 8.000% senior notes maturing on May 25, 2028 and issued on May 25,
2023. Following the Exchange Offer on October 6, 2023 $2.8 million aggregate principal amount of the
BGC Partners 8.000% Senior Notes remain outstanding
BGC Partners Equity Plan
Eighth Amended and Restated Long Term Incentive Plan, approved by BGC Partners’ stockholders at the
annual meeting of stockholders on November 22, 2021
BGC Partners Incentive Plan
BGC Partners’ Second Amended and Restated Incentive Bonus Compensation Plan, approved by BGC
Partners’ stockholders at the annual meeting of stockholders on June 6, 2017
3
TERM
BGC Partners Notes
BGC Partners 3.750% Senior Notes, BGC Partners 4.375% Senior Notes, BGC Partners 5.375% Senior
Notes and BGC Partners 8.000% Senior Notes issued by BGC Partners
DEFINITION
BGC U.S. OpCo
BGC Partners, L.P., an operating partnership, which holds the U.S. businesses of BGC and which is
indirectly wholly owned, following the closing of the Corporate Conversion, by BGC Group
Board
Brexit
Cantor
Board of Directors of the Company
Exit of the U.K. from the EU
Cantor Fitzgerald, L.P. and, where applicable, its consolidated subsidiaries
Cantor group
Cantor and its subsidiaries other than BGC, including Newmark
Cantor units
CCRE
CECL
Limited partnership interests, prior to the Corporate Conversion, of BGC Holdings, held by the Cantor
group, which BGC Holdings units were exchangeable into shares of BGC Class A common stock or BGC
Class B common stock, as applicable
Cantor Commercial Real Estate Company, L.P.
Current Expected Credit Losses
CEO Program
Controlled equity offering program
CF&Co
CFGM
CFTC
Cantor Fitzgerald & Co., a wholly owned broker-dealer subsidiary of Cantor
CF Group Management, Inc., the general partner of Cantor
Commodity Futures Trading Commission
Charity Day
BGC’s annual event held on September 11th where employees of the Company raise proceeds for charity
CIO
CISO
Class B Issuance
Chief Information Officer
Chief Information Security Officer
Issuance by BGC Partners of 10,323,366 and 712,907 shares of BGC Class B common stock to Cantor and
CFGM, respectively, in exchange for an aggregate of 11,036,273 shares of BGC Class A common stock
under the Exchange Agreement, completed on November 23, 2018
Clawback Policy
Compensation recovery policy
CME
Company
CME Group Inc. a leading derivatives marketplace, made up of four exchanges: CME, CBOT, NYMEX
and COMEX
Refers to (i) from after the effective time of the Corporate Conversion, BGC Group and its consolidated
subsidiaries, including BGC Partners; and (ii) prior to the effective time of the Corporate Conversion,
BGC Partners and its consolidated subsidiaries
Company Debt Securities
The BGC Group 3.750% Senior Notes, BGC Group 4.375% Senior Notes, BGC Group 8.000% Senior
Notes, the BGC Partners Notes and any future debt securities issued by the Company or its subsidiaries
Company Equity Securities
BGC Group stock or other equity securities
Compensation Committee
Compensation Committee of the Board
ContiCap
ContiCap SA, a wholly owned subsidiary of the Company, acquired on November 1, 2023
Contribution Ratio
Equal to a BGC Holdings limited partnership interest multiplied by one, divided by 2.2 (or 0.4545)
4
TERM
Corporate Conversion
DEFINITION
A series of mergers and related transactions pursuant to which, effective at 12:02 AM Eastern Time on
July 1, 2023, BGC Partners and BGC Holdings became wholly owned subsidiaries of BGC Group,
transforming the organizational structure of the BGC businesses from an “Up-C” structure to a simplified
“Full C-Corporation structure
Corporate Conversion
Agreement
The Corporate Conversion Agreement entered into on November 15, 2022, and as amended on March 29,
2023, by and among BGC Partners, BGC Holdings, BGC Group, Inc. and other affiliated entities, and,
solely for the purposes of certain provisions therein, Cantor, that provides for the Corporate Conversion of
the BGC businesses
Corporate Conversion
Transactions
The Corporation Conversion Transactions refers to the series of mergers described in the Corporate
Conversion Agreement and related transactions
Corporate Conversion Mergers The Holdings Reorganization Merger, the Corporate Merger, and the Holdings Merger, collectively
Corporate Merger
The merger of Merger Sub 1 with and into BGC Partners on July 1, 2023
COVID-19
Coronavirus Disease 2019
Credit Facility
A $150.0 million credit facility between BGC Group and an affiliate of Cantor entered into on April 21,
2017, which was terminated on March 19, 2018
DCM
DCO
Deed
DGCL
Designated Contract Market
Derivatives Clearing Organization
Mr. Windeatt’s Deed of Adherence, as amended, with the U.K. Partnership regarding the terms of
employment
Delaware General Corporation Law
Distribution Date
November 30, 2018, the date that BGC Partners and BGC Holdings completed the Spin-Off and the BGC
Holdings Distribution, respectively
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
DRIP
Dividend Reinvestment and Stock Purchase Plan
DRIP Registration Statement
Registration statement on Form S-3 with respect to the offer and sale of up to 10.0 million shares of BGC
Class A common stock under the DRIP
DTCC
ECB
Ed Broking
EMIR
EPS
Depository Trust & Clearing Corporation
European Central Bank
Ed Broking Group Limited, formerly a wholly owned subsidiary of the Company, acquired on January 31,
2019 and sold to The Ardonagh Group on November 1, 2021 as part of the Insurance Business Disposition
European Market Infrastructure Regulation
Earnings Per Share
Equity Plan Registration
Statement
BGC Group filed Form S-8 on July 3, 2023, registering the offer and sale of up to 600 million shares of
BGC Class A common stock
ESG
eSpeed
ETPs
Environmental, social and governance, including sustainability or similar items
Various assets comprising the Fully Electronic portion of the Company’s former benchmark on-the-run
U.S. Treasury brokerage, market data and co-location service businesses, sold to Nasdaq on June 28, 2013
Exchange-traded products
5
TERM
DEFINITION
ETR
EU
Effective Tax Rate
European Union
Exchange Act
Securities Exchange Act of 1934, as amended
Exchange Agreement
Exchange Offer
A letter agreement by and between BGC Partners, Cantor and CFGM, dated June 5, 2015, that, prior to the
Corporate Conversion, granted Cantor and CFGM the right to exchange shares of BGC Class A common
stock into shares of BGC Class B common stock on a one-to-one basis up to the limits described therein,
which agreement was terminated in connection with the Corporate Conversion
Consent solicitations and offers to exchange the BGC Partners 3.750% Senior Notes, BGC Partners
4.375% Senior Notes and BGC Partners 8.000% Senior Notes issued by BGC Partners for the BGC Group
3.750% Senior Notes, BGC Group 4.375% Senior Notes and BGC Group 8.000% Senior Notes issued by
BGC Group, in each case with substantially similar terms to the corresponding series of BGC Partners
Notes, completed on October 6, 2023
Exchange Ratio
Ratio by which a Newmark Holdings limited partnership interest can be exchanged for shares of Newmark
Class A or Class B common stock
FASB
FCA
FCM
FDIC
Financial Accounting Standards Board
Financial Conduct Authority of the U.K.
Futures Commission Merchant
Federal Deposit Insurance Corporation
February 2012 distribution
rights shares
Cantor’s deferred stock distribution rights provided to current and former Cantor partners on February 14,
2012
Fenics
BGC’s group of electronic brands, offering a number of market infrastructure and connectivity services,
Fully Electronic marketplaces, and the Fully Electronic brokerage of certain products that also may trade
via Voice and Hybrid execution, including market data and related information services, Fully Electronic
brokerage, connectivity software, compression and other post-trade services, analytics related to financial
instruments and markets, and other financial technology solutions; includes Fenics Growth Platforms and
Fenics Markets
Fenics Growth Platforms
Consists of Fenics UST, Fenics GO, Lucera, Fenics FX and other newer standalone platforms
Fenics Integrated
Represents Fenics businesses that utilize sufficient levels of technology such that significant amounts of
their transactions can be, or are, executed without broker intervention and have expected pre-tax margins
of at least 25%
Fenics Markets
Consists of the Fully Electronic portions of BGC’s brokerage businesses, data, network and post-trade
revenues that are unrelated to Fenics Growth Platforms, as well as Fenics Integrated revenues
FICC
FINRA
FMX
Founding Partners
Fixed Income Clearing Corporation
Financial Industry Regulatory Authority
BGC’s combined U.S. Treasury and Futures electronic marketplace
Individuals who became limited partners of BGC Holdings in the mandatory redemption of interests in
Cantor in connection with the 2008 separation and merger of Cantor’s BGC division with eSpeed, Inc.
(provided that members of the Cantor group and Howard W. Lutnick (including any entity directly or
indirectly controlled by Mr. Lutnick or any trust with respect to which he is a grantor, trustee or
beneficiary) are not founding partners) and became limited partners of Newmark Holdings in the
Separation
Founding/Working Partners
Holders of FPUs
FPUs
Founding/Working Partners units, in BGC Holdings, prior to the Corporate Conversion, or Newmark
Holdings, generally redeemed upon termination of employment
Freedom
Freedom International Brokerage Company, a 45%-owned equity method investment of the Company
6
TERM
DEFINITION
FTP
File Transfer Protocol
Fully Electronic
Broking transactions intermediated on a solely electronic basis rather than by Voice or Hybrid broking
Futures Exchange Group
A wholly owned subsidiary of the Company made up of the following entities: CFLP CX Futures
Exchange Holdings, LLC, CFLP CX Futures Exchange Holdings, L.P., CX Futures Exchange Holdings,
LLC, CX Clearinghouse Holdings, LLC, FMX Futures Exchange, L.P. and CX Clearinghouse, L.P.
FX
GDPR
GFI
GILTI
Foreign exchange
General Data Protection Regulation
GFI Group Inc., a wholly owned subsidiary of the Company, acquired on January 12, 2016
Global Intangible Low-Taxed Income
Ginga Petroleum
Ginga Petroleum (Singapore) Pte Ltd, a wholly owned subsidiary of the Company, acquired on March 12,
2019
GUI
HDUs
Graphical User Interface
LPUs with capital accounts, which are liability awards recorded in “Accrued compensation” in the
Company’s Consolidated Statements of Financial Condition
Holdings Merger
The merger of Merger Sub 2 with and into Holdings Merger Sub
Holdings Reorganization
Merger
The reorganization of BGC Holdings from a Delaware limited partnership into a Delaware limited liability
company through a merger with and into Holdings Merger Sub
Holdings Merger Sub
BGC Holdings Merger Sub, LLC, a Delaware limited liability company, wholly owned subsidiary of the
Company, and successor to BGC Holdings
Hybrid
ICAP
ICE
Broking transactions executed by brokers and involving some element of Voice broking and electronic
trading
ICAP plc, a part of TP ICAP group, and a leading markets operator and provider of execution and
information services
Intercontinental Exchange
Incentive-Based Compensation Compensation received by the Company’s executive officers that results from the attainment of a financial
reporting measure based on or derived from financial information
Insurance brokerage business
The insurance brokerage business of BGC, including Corant, Ed Broking, Besso, Piiq Risk Partners,
Junge, Cooper Gay, Global Underwriting and Epsilon, which business was sold to The Ardonagh Group
on November 1, 2021
Insurance Business Disposition The sale of the Insurance brokerage business for $534.9 million in gross cash proceeds after closing
adjustments, subject to limited post-closing adjustments, completed on November 1, 2021
IR Act
Inflation Reduction Act of 2022
July 2023 distribution shares
On July 2, 2023 Cantor distributed an aggregate of 15.8 million shares of BGC Class B common stock in
satisfaction of its remaining deferred share distribution obligations pursuant to the April 2008 distribution
rights shares and the February 2012 distribution rights shares
July 2023 Sales Agreement
CEO Program sales agreement, by and between the Company and CF&Co, dated July 3, 2023, pursuant to
which the Company can offer and sell up to an aggregate of $300.0 million of shares of BGC Class A
common stock
LCH
LGD
London Clearing House
Loss Given Default
7
LIBOR
Liquidity
TERM
DEFINITION
London Interbank Offering Rate
A non-GAAP financial measure, comprised of the sum of Cash and cash equivalents, Reverse Repurchase
Agreements, and Financial instruments owned, at fair value, less Securities loaned and Repurchase
Agreements
LPA Amendment
On March 10, 2023, BGC Holdings entered into the Second Amendment to the BGC Holdings Limited
Partnership Agreement which revised certain restrictive covenants pertaining to the “Partner Obligations”
and “Competitive Activity”
LPUs
LSEG
Lucera
March 2018 Form S-3
Registration Statement
March 2018 Sales Agreement
Certain limited partnership units of BGC Holdings prior to the Corporate Conversion, or Newmark
Holdings, held by certain employees of BGC and Newmark and other persons who have provided services
to BGC or Newmark, which units may include APSIs, APSUs, AREUs, ARPSUs, HDUs, U.K. LPUs, N
Units, PLPUs, PPSIs, PPSUs, PSEs, PSIs, PSUs, REUs, and RPUs, along with future types of limited
partnership units in Newmark Holdings
London Stock Exchange Group
A wholly owned subsidiary of the Company, also known as “LFI Holdings, LLC” or “LFI,” which is a
software defined network offering the trading community direct connectivity
CEO Program shelf Registration Statement on Form S-3 filed on March 9, 2018
CEO Program sales agreement, by and between BGC Partners and CF&Co, dated March 9, 2018, pursuant
to which BGC Partners could offer and sell up to an aggregate of $300.0 million of shares of BGC Class A
common stock, which agreement expired in September 2021
March 2021 Form S-3
Registration Statement
CEO Program shelf Registration Statement on Form S-3 filed on March 8, 2021
MarketAxess
MarketAxess Holdings Inc.
Merger Sub 1
BGC Partners II, Inc., a Delaware corporation and wholly owned subsidiary of BGC Group
Merger Sub 2
BGC Partners II, LLC, a Delaware limited liability company and wholly owned subsidiary of BGC Group
MEA
MiFID II
Middle East and Africa region
Markets in Financial Instruments Directive II, a legislative framework instituted by the EU
to regulate financial markets and improve protections for investors by increasing transparency and
standardizing regulatory disclosures
Mint Brokers
A wholly owned subsidiary of the Company, acquired on August 19, 2010, registered as an FCM with
both the CFTC and the NFA
Nasdaq
NDF
Newmark
Nasdaq, Inc., formerly known as NASDAQ OMX Group, Inc.
Non-deliverable forwards
Newmark Group, Inc. (Nasdaq symbol: NMRK), a publicly traded and former majority-owned subsidiary
of BGC Partners until the Distribution Date, and, where applicable, its consolidated subsidiaries
Newmark Class A common
stock
Newmark Class B common
stock
Newmark Class A common stock, par value $0.01 per share
Newmark Class B common stock, par value $0.01 per share
Newmark Group
Newmark, Newmark Holdings, and Newmark OpCo and their respective consolidated subsidiaries,
collectively
Newmark Holdings
Newmark Holdings, L.P.
8
TERM
Newmark IPO
Initial public offering of 23 million shares of Newmark Class A common stock by Newmark at a price of
$14.00 per share in December 2017
DEFINITION
Newmark OpCo
Newmark Partners, L.P., an operating partnership, which is owned jointly by Newmark and Newmark
Holdings and holds the business of Newmark
NEX
NFA
Non-GAAP
N Units
NEX Group plc, an entity formed in December 2016, formerly known as ICAP and acquired by CME
Group in November 2018
National Futures Association
A financial measure that differs from the most directly comparable measure calculated and presented in
accordance with U.S. GAAP, such as Adjusted Earnings and Liquidity
Non-distributing partnership units of BGC Holdings, prior to the Corporate Conversion, or Newmark
Holdings, that may not be allocated any item of profit or loss, and may not be made exchangeable into
shares of Class A common stock, including NREUs, NPREUs, NLPUs, NPLPUs, NPSUs, and NPPSUs
OCC
Options Clearing Corporation
Open Energy Group
Open Energy Group Inc., a wholly owned subsidiary of the Company, acquired on November 1, 2023
OTC
OTF
PD
Over-the-counter
Organized Trading Facility, a regulated execution venue category introduced by MiFID II
Probability of default
Period Cost Method
Treatment of taxes associated with the GILTI provision as a current period expense when incurred rather
than recording deferred taxes for basis differences
Peer Group
Poten & Partners
BGC’s peer group for purposes of Item 201(e) of Regulation S-K, which consists of Compagnie
Financière Tradition SA and TP ICAP plc
Poten & Partners Group, Inc., a wholly owned subsidiary of the Company, acquired on November 15,
2018
Predecessor
Refers to BGC Partners Inc. being the parent company prior to the Corporate Conversion.
Preferred Distribution
Allocation of net profits of BGC Holdings (prior to the Corporate Conversion) or Newmark Holdings to
holders of Preferred Units, at a rate of either 0.6875% (i.e., 2.75% per calendar year) or such other amount
as set forth in the award documentation
Preferred Return
Preferred Units
The lesser of the two-year treasury bond rate or 2.75% annually, as calculated on the determination
amount applicable to certain RSU Tax Account awards, which may be adjusted or otherwise determined
by management from time to time
Preferred partnership units of BGC Holdings, prior to the Corporate Conversion, or Newmark Holdings,
such as PPSUs, which are settled for cash, rather than made exchangeable into shares of Class A common
stock, are only entitled to a Preferred Distribution, and are not included in BGC’s or Newmark’s fully
diluted share count
Quantile
Quantile Group Limited
Real Estate L.P.
Real GDP
CF Real Estate Finance Holdings, L.P., a commercial real estate-related financial and investment business
controlled and managed by Cantor
Real Gross Domestic Product is a macroeconomic measure of the value of economic output adjusted for
price changes (i.e., inflation or deflation), which transforms the money-value measure, nominal GDP, into
an index for quantity of total output
Record Date
Close of business on November 23, 2018, in connection with the Spin-Off
9
TERM
DEFINITION
REMIT
Regulation on Wholesale Energy Markets Integrity and Transparency
Repurchase Agreements
Securities sold under agreements to repurchase that are recorded at contractual amounts, including interest,
and accounted for as collateralized financing transactions
Reverse Repurchase
Agreements
Agreements to resell securities, with such securities recorded at the contractual amount, including accrued
interest, for which the securities will be resold, and accounted for as collateralized financing transactions
Revolving Credit Agreement
ROU
RSUs
RSU Tax Account
BGC Group’s unsecured senior revolving credit agreement with Bank of America, N.A., as administrative
agent, and a syndicate of lenders, dated as of November 28, 2018, that originally provided for a maximum
revolving loan balance of $350.0 million, bearing interest at either LIBOR or a defined base rate plus
additional margin, amended on December 11, 2019 to extend the maturity date to February 26, 2021 and
further amended on February 26, 2020 to extend the maturity date to February 26, 2023. On March 10,
2022, the agreement was amended and restated to increase the size of the credit facility to $375.0 million,
bearing interest at either SOFR or a defined base rate plus additional margin, and extend the maturity date
to March 10, 2025. On October 6, 2023, the Revolving Credit Agreement was amended to exclude the
BGC Partners Notes from the restrictive covenant in the Revolving Credit Agreement limiting the
indebtedness of subsidiaries, and BGC Group assumed all rights and obligations of BGC Partners under
the Revolving Credit Agreement and became the borrower thereunder
Right-of-use
BGC or Newmark restricted stock units, payable in shares of BGC Class A common stock or Newmark
Class A common stock, respectively, held by certain employees of BGC or Newmark and other persons
who have provided services to BGC or Newmark, or issued in connection with certain acquisitions
RSU Tax Accounts were issued by BGC in connection with the Corporate Conversion in the place of
certain non-exchangeable Preferred Units. The RSU Tax Accounts are settled for cash, rather than vesting
into shares of Class A common stock, may be entitled to a Preferred Return, and are not included in
BGC’s fully diluted share count. The RSU Tax Accounts were issued in connection with RSUs and are to
cover any withholding taxes to be paid when the RSUs vest into shares of BGC Class A common stock
Russia’s Invasion of Ukraine
Russia’s invasion of Ukraine, which led to imposed sanctions by the U.S., U.K., EU, and other countries
on Russian counterparties
SBSEF
SEC
Security-based Swap Execution Facility
U.S. Securities and Exchange Commission
Securities Act
Securities Act of 1933, as amended
SEF
Separation
Swap Execution Facility
Principal corporate transactions pursuant to the Separation and Distribution Agreement, by which BGC
Partners, BGC Holdings and BGC U.S. OpCo and their respective subsidiaries (other than the Newmark
Group) transferred to Newmark, Newmark Holdings and Newmark OpCo and their respective subsidiaries
the assets and liabilities of the BGC Entity Group relating to BGC’s real estate services business, and
related transactions, including the distribution of Newmark Holdings units to holders of units in BGC
Holdings and the assumption and repayment of certain BGC indebtedness by Newmark
Separation and Distribution
Agreement
Separation and Distribution Agreement, by and among the BGC Entity Group, the Newmark Group,
Cantor and BGC Global OpCo, originally entered into on December 13, 2017, as amended on November
8, 2018 and amended and restated on November 23, 2018
SMCR
SOFR
SPAC
Senior Managers Certification Regime
Secured Overnight Financing Rate
Special Purpose Acquisition Company
SPAC Investment Banking
Activities
Aurel’s investment banking activities with respect to SPACs
10
TERM
Spin-Off
Standing Policy
STP
Successor
Tax Act
TDRs
DEFINITION
Pro-rata distribution, pursuant to the Separation and Distribution Agreement, by BGC to its stockholders
of all the shares of common stock of Newmark owned by BGC Partners immediately prior to the
Distribution Date, with shares of Newmark Class A common stock distributed to the holders of shares of
BGC Class A common stock (including directors and executive officers of BGC Partners) of record on the
Record Date, and shares of Newmark Class B common stock distributed to the holders of shares of BGC
Class B common stock (Cantor and CFGM) of record on the Record Date, completed on the Distribution
Date
In December 2010, as amended in 2013 and in 2017 and adopted by BGC Group in connection with the
Corporate Conversion, the Audit Committee and the Compensation Committee approved Mr. Lutnick’s
right, subject to certain conditions, to accept or waive opportunities offered to other executive officers to
monetize or otherwise provide liquidity with respect to some or all of their limited partnership units of
BGC Holdings or to accelerate the lapse of or eliminate any restrictions on equity awards
Straight-Through Processing
Referring to BGC Group, Inc. as the parent company for the period following the Corporate Conversion
Tax Cuts and Jobs Act enacted on December 22, 2017
Troubled Debt Restructurings
The Ardonagh Group
The Ardonagh Group Limited; the U.K.’s largest independent insurance broker and purchaser of BGC’s
Insurance brokerage business completed on November 1, 2021
Tower Bridge
Tower Bridge International Services L.P., a subsidiary of the Company, which is 52%-owned by the
Company and 48%-owned by Cantor
TP ICAP
Tradeweb
Tradition
Trident
Tullett
U.K.
TP ICAP plc, an entity formed in December 2016, formerly known as Tullett
Tradeweb Markets, Inc.
Compagnie Financière Tradition SA, a Swiss based inter-dealer broker
Trident Brokerage Service LLC, a wholly owned subsidiary of the Company, acquired on February 28,
2023
Tullett Prebon plc, a part of TP ICAP group and an interdealer broker, primarily operating as an
intermediary in the wholesale financial and energy sectors
United Kingdom
U.K. Partnership
BGC Services (Holdings) LLP, a wholly owned subsidiary of the Company
U.S. GAAP or GAAP
Generally Accepted Accounting Principles in the United States of America
UBT
VIE
Voice
Unincorporated Business Tax
Variable Interest Entity
Voice-only broking transactions executed by brokers over the telephone
11
SPECIAL NOTE ON FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Such statements are based upon current expectations that involve risks and
uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking
statements. For example, words such as “may,” “will,” “should,” “estimates,” “predicts,” “possible,” “potential,” “continue,”
“strategy,” “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions are intended to identify forward-
looking statements. The information included herein is given as of the filing date of this Annual Report on Form 10-K with the
SEC, and future results or events could differ significantly from these forward-looking statements. Such statements are based
upon current expectations that involve risks and uncertainties. Factors that could cause future results or events to differ from
those expressed in these forward-looking statements include, but are not limited to, the risks and uncertainties described or
referenced in this Form 10-K under the headings “Item 1A—Risk Factors,” “Item 7—Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Forward-Looking Cautionary Statements” and “Item 7A—Quantitative and
Qualitative Disclosures About Market Risk.” Except to the extent required by applicable law or regulation, the Company does
not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future
events, or otherwise.
RISK FACTOR SUMMARY
The following is a summary of material risks that could affect our business, each of which may have a material adverse
effect on our business, financial condition, results of operations and prospects. This summary may not contain all of our
material risks, and it is qualified in its entirety by the more detailed risk factors set forth in Item 1A “Risk Factors.”
•
•
Our business, financial condition, results of operations and prospects have been and may continue to be affected both
positively and negatively by conditions in the global economy and financial markets generally.
Actions taken by governments in response to inflation rates may have a material impact on our business.
• We may pursue opportunities including new business initiatives, strategic alliances, acquisitions, mergers, investments,
dispositions, joint ventures or other growth opportunities or transformational transactions (including hiring new
brokers and salespeople), which could present unforeseen integration obstacles or costs and could dilute our
stockholders. We may also face competition in our acquisition strategy or new business plans, and such competition
may limit such opportunities.
• We are subject to certain risks relating to our indebtedness, including constraints on our ability to raise additional
capital, declines in our credit ratings and limitations on our financial flexibility to react to changes in the economy or
the financial services industry. We may need to incur additional indebtedness to finance our growth strategy, including
in connection with the re-positioning of aspects of our business to adapt to changes in market conditions in the
financial services industry.
• We may not be able to protect our intellectual property rights or may be prevented from using intellectual property
necessary for our business.
• Malicious cyber-attacks and other adverse events affecting our operational systems or infrastructure, or those of third
parties, could disrupt our business, result in the disclosure of confidential information, damage our reputation and
cause losses or regulatory penalties.
• We may use artificial intelligence in our business, and challenges with properly managing its use could result in
competitive harm, regulatory action, legal liability and brand or reputational harm.
•
•
The loss of one or more of our key executives, the development of future talent and the ability of certain key
employees to devote adequate time and attention to us are a key part of the success of our businesses, and failure to
continue to employ and have the benefit of these executives, may adversely affect our businesses and prospects.
If we fail to implement and maintain an effective internal control environment, our operations, reputation, and stock
price could suffer, we may need to restate our financial statements, and we may be delayed or prevented from
accessing the capital markets.
12
•
•
•
The financial services industry in general faces potential regulatory, litigation and/or criminal risks that may result in
damages or fines or other penalties as well as costs, and we may face damage to our professional reputation and legal
liability if our products and services are not regarded as satisfactory, our employees do not adhere to all applicable
legal and professional standards, or for other reasons, all of which could have a material adverse effect on our
businesses, financial condition, results of operations and prospects.
Because competition for the services of brokers, salespeople, managers, technology professionals and other front-
office personnel, in the financial services industry is intense, it could affect our ability to attract and retain a sufficient
number of highly skilled brokers or other professional services personnel, in turn adversely impacting our revenues,
resulting in a material adverse effect on our businesses, financial condition, results of operations and prospects.
Consolidation and concentration of market share in the banking, brokerage, exchange and financial services industries
could materially adversely affect our business, financial condition, results of operations and prospects because we may
not be able to compete successfully.
• We are subject to risks inherent in doing business in international financial markets, international expansion and
international operations, including regulatory risks, political risks, and foreign currency risks.
•
•
Our activities are subject to credit and performance risks, which could result in us incurring significant losses that
could materially adversely affect our business, financial condition, results of operations and prospects.
If we were deemed an “investment company” under the Investment Company Act, the Investment Company Act’s
restrictions could make it impractical for us to continue our business.
• We are a holding company with dual class common stock. Holders of our Class A common stock are subject to certain
risks resulting from our structure, including our dependence upon distributions from the BGC OpCos and the
concentration of our voting control among the holders of our Class B common stock, which may materially adversely
affect the market price of our Class A common stock.
• We are controlled by Cantor and Mr. Lutnick, who have potential conflicts of interest with us and may exercise their
control in a way that favors their interests to our detriment.
•
•
Purchasers, as well as existing stockholders, may experience significant dilution as a result of offerings of shares of
our Class A common stock. Our management will have broad discretion as to the timing and amount of sales of our
Class A common stock, as well as the application of the net proceeds of any such sales.
Ongoing scrutiny and changing expectations from stockholders with respect to the Company’s corporate responsibility
or ESG practices may result in additional costs or risks.
13
PART I
ITEM 1.
BUSINESS
Throughout this document, the terms the “Company,” “BGC,” “we,” “our,” and “us,” refer to: (i) following the
closing of the Corporate Conversion, effective at 12:02 am Eastern Time on July 1, 2023, BGC Group, Inc. and its consolidated
subsidiaries, including BGC Partners, Inc.; and (ii) prior to the closing of the Corporate Conversion, BGC Partners, Inc. and
its consolidated subsidiaries.
Our Business
We are a leading global brokerage and financial technology company servicing the global financial, energy and
commodities markets. BGC, through its affiliates, specializes in the trade execution of a broad range of products, including
fixed income securities such as government bonds, corporate bonds, and other debt instruments, as well as related interest rate
derivatives and credit derivatives. Additionally, we provide brokerage services across FX, Equities, Energy and Commodities,
Shipping, and Futures and Options. Our business also provides connectivity and network solutions, clearing, market data and
network connectivity products, trade compression and other post-trade services, market data and related information services
and other back-office services to a broad assortment of financial and non-financial institutions.
Our integrated platform is designed to provide flexibility to customers with regard to price discovery, trade execution
and transaction processing, as well as accessing liquidity through our platforms, for transactions executed either OTC or
through an exchange. Through our Fenics® group of electronic brands, we offer several trade execution, market infrastructure
and connectivity services, as well as post-trade services. Fenics® brands also operate under the names Fenics®, FMX™, FMX
Futures Exchange™, Fenics Markets Xchange™, Fenics Digital™, Fenics UST™, Fenics FX™, Fenics Repo™, Fenics
Direct™, Fenics MID™, Fenics Market Data™, Fenics GO™, Fenics PortfolioMatch™, BGC®, BGC Trader™, kACE2®, and
Lucera®.
Our customers include many of the world’s largest banks, broker-dealers, investment banks, trading firms, hedge
funds, governments, corporations, and investment firms. BGC is a global operation with offices across all major geographies,
including New York and London, as well as in Bahrain, Beijing, Bogota, Brisbane, Cape Town, Chicago, Copenhagen, Dubai,
Dublin, Frankfurt, Geneva, Hong Kong, Houston, Johannesburg, Madrid, Manila, Melbourne, Mexico City, Miami, Milan,
Monaco, Nyon, Paris, Perth, Rio de Janeiro, Santiago, São Paulo, Seoul, Shanghai, Singapore, Sydney, Tel Aviv, Tokyo,
Toronto, and Zurich.
As of December 31, 2023, we had 2,104 brokers, salespeople, managers, technology professionals and other front-
office personnel across our businesses.
BGC, BGC Group, BGC Partners, BGC Trader, GFI, GFI Ginga, CreditMatch, Fenics, Fenics.com, FMX, Sunrise
Brokers, Poten & Partners, RP Martin, kACE2, Capitalab, Swaptioniser, CBID, Caventor, LumeMarkets, Lucera, and Aurel are
trademarks/service marks, and/or registered trademarks/service marks of BGC Group and/or its affiliates.
Our History
Our business originated from Cantor, one of the oldest and most established inter-dealer and wholesale brokerage
franchises in the financial intermediary industry. Cantor started our wholesale intermediary brokerage operations in 1972. In
1996, Cantor launched its eSpeed system, which revolutionized the way government bonds are traded in the inter-dealer market
by providing a Fully Electronic trading marketplace. eSpeed completed an initial public offering and began trading on Nasdaq
in 1999.
Cantor subsequently continued to operate its inter-dealer Voice and Hybrid brokerage businesses separately from
eSpeed.
Prior to the events of September 11, 2001, our financial brokerage business was widely recognized as one of the
leading full-service wholesale financial brokers in the world, with a rich history of developing innovative technological and
financial solutions.
After September 11, 2001, and the loss of the majority of our U.S. -based employees, our Voice financial brokerage
business operated primarily in Europe.
In August 2004, Cantor announced the reorganization and separation of its inter-dealer Voice and Hybrid brokerage
businesses into a subsidiary called “BGC,” in honor of B. Gerald Cantor, the pioneer in screen brokerage services and fixed
income market data products.
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In April 2008, BGC and certain other Cantor assets merged with and into eSpeed, and the combined company began
operating under the name “BGC Partners, Inc.” In June 2013, we sold certain assets relating to our U.S. Treasury benchmark
business and the name “eSpeed” to Nasdaq. In 2011, we also acquired and built up a commercial real estate services business
called “Newmark,” which we spun-off to BGC’s stockholders in November 2018. In addition, we acquired and built-up an
insurance brokerage business, which we sold in November 2021. We also acquired the Futures Exchange Group from Cantor in
July 2021, which represents our futures exchange and related clearinghouse.
We have substantially rebuilt our U.S. presence and have continued to expand our global footprint through the
acquisition and integration of established brokerage companies and the hiring of experienced brokers. Through these actions,
we have been able to expand our presence in key markets and position our business for sustained growth. Since 2015, our
acquisitions have included GFI, Sunrise Brokers, Poten & Partners, Ginga Petroleum, the Futures Exchange Group, Trident,
Open Energy Group and ContiCap SA.
Since the founding of eSpeed, we have continued to pioneer advances in electronic trading across the wholesale capital
markets. Fenics, BGC’s higher-margin technology-driven business, has grown significantly, supported by our investment in
new trading technologies and platforms, as well as from trends of proliferating electronic execution across the capital markets
and the demand for data services.
Fenics is the foundation for our Fully Electronic and associated Hybrid transactions across all asset classes. For the
purposes of this document and subsequent SEC filings, all of our Fully Electronic businesses may be collectively referred to as
“Fenics.” Fenics’ offerings include Fully Electronic financial brokerage products and services, as well as offerings in data,
network, and post-trade services across the Company.
We currently operate electronic marketplaces in multiple financial markets through Fenics and multi-asset Hybrid
platforms for Voice and Fully Electronic execution. We also operate a number of newer standalone, Fully Electronic platforms
such as Fenics UST, Fenics FX, Fenics GO, and PortfolioMatch, among others. Going forward, we expect Fenics to become an
even more valuable part of BGC as it continues to grow.
On November 3, 2021, we announced FMX, which will combine Fenics’ U.S. Treasury business with a state-of-the-art
U.S. Rates futures platform. On January 22, 2024, FMX received CFTC approval to operate an exchange for U.S. Treasury and
SOFR futures. We intend to launch the FMX Futures Exchange in the summer of 2024 and we plan to discuss our strategic
partners and further details on, or before, our first quarter 2024 earnings call.
Corporate Conversion
On July 1, 2023, BGC Partners completed its conversion to a Full C-Corporation in order to reorganize and simplify
its organizational structure. As a result of the Corporate Conversion, BGC Group became the public holding company for, and
successor to, BGC Partners, and its Class A common stock began trading on Nasdaq under the ticker symbol “BGC” in place of
BGC Partners’ Class A common stock. Upon completion of the Corporate Conversion, the former stockholders of BGC
Partners and the former limited partners of BGC Holdings now participate in the economics of the BGC businesses through
BGC Group. The Corporate Conversion was intended to improve transparency and reduce operational complexity across our
business.
As a result of the Corporate Conversion, BGC Partners became a wholly owned subsidiary of BGC Group and BGC
Holdings reorganized from a Delaware limited partnership into a Delaware limited liability company through a merger with and
into Holdings Merger Sub, with Holdings Merger Sub continuing as a wholly owned subsidiary of BGC Group. Each
outstanding share of BGC Partners Class A common stock and BGC Partners Class B common stock was converted into one
share of BGC Group Class A common stock and BGC Group Class B common stock, respectively. Non-exchangeable limited
partnership units of BGC Holdings were converted into equity awards denominated in cash, restricted stock and/or RSUs of
BGC Group. Exchangeable limited partnership units of BGC Holdings were exchanged for shares of BGC Partners Class A
common stock prior to the Corporate Conversion and were converted into shares of BGC Group Class A common stock at the
closing of the Corporate Conversion. 64.0 million Cantor units were converted into shares of BGC Group Class B common
stock, subject to the terms and conditions of the Corporate Conversion Agreement, provided that a portion of the 64.0 million
shares of BGC Group Class B common stock issued to Cantor will exchange into BGC Group Class A common stock in the
event that BGC Group does not issue at least $75,000,000 in shares of BGC Group Class A common stock or BGC Group Class
B common stock in connection with certain acquisition transactions prior to the seventh anniversary of the Corporate
Conversion. BGC Group assumed all BGC Partners RSUs, RSU Tax Accounts or restricted stock awards outstanding as of June
30, 2023.
In connection with the Corporate Conversion, on July 1, 2023, the BGC Holdings Limited Partnership Agreement was
terminated. There were no limited partnership units of BGC Holdings remaining after the Corporate Conversion was completed.
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Please refer to “Our Organizational Structure” for diagrams of the Company’s organizational structure before and after
the Corporate Conversion, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operation
—Overview and Business Overview—Corporate Conversion” for more information regarding the Corporate Conversion.
Overview of Our Products and Services
Financial Brokerage
While Voice and Hybrid brokerage revenues still represent the majority of BGC’s overall revenues, we continue to
convert our Voice and Hybrid brokerage business to our higher margin, technology-driven Fenics business, which has grown to
represent 25% of total BGC revenues during the fourth quarter and the year ended 2023. Over the past several years, we have
invested in, and developed, new state-of-the-art trading platforms, including Fenics UST, Fenics FX, Fenics GO, and
PortfolioMatch, across Rates, FX, Equities, and Credit, respectively. We have also invested in, and deployed, trading
technology solutions across our entire business, including our Voice and Hybrid brokerage desks, with an aim to increase our
average broker productivity and to accelerate trends of electronic conversion. Underpinning our efforts to automate and
electronify our overall brokerage business are macro trends across the capital markets, where the adoption of electronic trading
has accelerated in recent years.
We categorize our Fenics business as Fenics Markets and Fenics Growth Platforms as follows:
•
•
Fenics Markets includes the Fully Electronic portion of BGC’s brokerage business, data, network and post-
trade revenues that are unrelated to Fenics Growth Platforms, as well as Fenics Integrated revenues. Fenics
Integrated seamlessly integrates hybrid liquidity with customer electronic orders either by GUI and/or API.
Desks are categorized as “Fenics Integrated” if they utilize sufficient levels of technology such that
significant amounts of their transactions can be or are executed without broker intervention and have expected
pre-tax margins of at least 25%.
Fenics Growth Platforms includes Fenics UST, Fenics GO, Lucera, Fenics FX, PortfolioMatch and our other
newer standalone platforms. Revenues generated from data, network and post-trade attributable to Fenics
Growth Platforms are included within their related businesses.
We have leveraged our platforms to provide real-time product and price discovery information and straight-through
processing to our customers for an increasing number of products. Our end-to-end solution includes real-time and auction-based
transaction processing, credit and risk management tools, and back-end processing and billing systems. Customers can access
our trading application through our privately managed global high speed data network, over the Internet, or through third-party
communication networks.
FMX will provide fully electronic trading in cash treasuries, foreign exchange and interest rate futures by combining
our Fenics’ U.S. Treasury business with a state-of-the-art U.S. Rates futures platform. On January 22, 2024, FMX received
CFTC approval to operate an exchange for U.S. Treasury and SOFR futures. We intend to launch the FMX Futures Exchange
in the summer of 2024 and we plan to discuss our strategic partners and further details on, or before, our first quarter 2024
earnings call. For more information about FMX, see “Item 7—Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Overview and Business Environment.”
Energy and Commodities Brokerage
Our Energy and Commodities business provides a comprehensive suite of transaction services across environmental
and emissions products, where we are a market leader, as well as weather derivatives, liquefied natural gas and natural gas, oil,
power, base metals, dry bulk products such as coal and iron ore, and soft and agricultural products.
Over the past few years, we have expanded our Energy and Commodities brokerage business through strategic
acquisitions and hires and organic growth, with a key focus on clean energy and transition fuels. These acquisitions include
Ginga Petroleum, which we acquired in March 2019. Ginga Petroleum complemented our existing energy brokerage businesses
within BGC, GFI, and Poten & Partners. Ginga Petroleum provides a comprehensive range of brokerage services for physical
and derivative energy products including naphtha, liquefied petroleum gas, fuel oil, biofuels, middle distillates, petrochemicals
and gasoline. In February 2023, we acquired Trident, which specializes in environmental products and OTC and exchange
traded energy products. Trident bolsters our leading environmental brokerage business and complements our existing energy
brokerage offerings.
In 2023, we announced the launch of our Weather Derivatives business, expanding BGC’s brokerage business into the
weather and climate space. The Weather Derivatives business helps market participants analyze climate-related risks and
mitigate their financial exposure. We are providing liquidity to these increasingly important markets as the role of weather and
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climate change impacts the way risk is managed. The launch of this business highlights BGC’s commitment to expand and
explore new opportunities across the global energy and commodities space.
We also offer ship brokerage services through Poten & Partners, which we acquired in November 2018. Poten &
Partners is a leading ship brokerage, consulting and business intelligence firm specializing in LNG, tanker and LPG markets.
Founded over 80 years ago and with 170 employees worldwide, Poten & Partners provides its clients with valuable insight into
the international oil, gas and shipping markets.
Brokerage Categories
The following table identifies some of the key products that we broker, inclusive of those discussed above:
Category
Rates
Credit
Product Type
Interest Rate Swaps, Interest Rate Options, Listed Rates Products, U.S. Treasuries,
European Government Bonds, Other Global Government Bonds, Repurchase Agreements,
Money Markets, Agency Fixed Income
Corporate Bonds, High Yield Bonds, Emerging Market Bonds, Index CDS, Single Name
CDS, Exotic Credit Derivatives, Asset-Backed Securities, Loans, Structured Products
Foreign Exchange
Foreign Exchange Options, Spot FX, FX Forward, Non-Deliverable Forwards, Precious
Metals
Energy and Commodities
Environmental/Emission Products, Weather Derivatives, Energy & Petrochemical
Consulting, Ship Brokerage, Power, Liquefied Natural Gas, Natural Gas, Base Metals, Dry
Bulk (Coal & Iron Ore), Oil, Soft & Agricultural Products
Equities
OTC Equity Derivatives, Listed Equity Futures & Options, Delta One Product,
Convertibles, Cash Equities
Certain trades in these key product types settle for clearing purposes with CF&Co, one of our affiliates. CF&Co is a
member of FINRA and the FICC, a subsidiary of the DTCC. In addition, certain affiliated entities are subject to regulation by
the CFTC, including CF&Co and BGC Financial. For certain products, we, CF&Co, BGC Financial and other affiliates act in a
matched principal or principal capacity in markets by posting and/or acting upon quotes for our account. Such activity is
intended, among other things, to assist us, CF&Co and other affiliates in managing proprietary positions (including, but not
limited to, those established as a result of combination of trades and errors), facilitating transactions, framing markets, adding
liquidity, increasing commissions and attracting order flow.
Technology Offerings
Our data, network and post-trade offerings provide a range of trade lifecycle services which include market data and
analytics services, infrastructure and connectivity solutions, and post-trade services, such as trade compression, risk mitigation,
matching, initial margin optimization, and other data, network and post-trade optimization services. These businesses have
highly recurring and compounding revenue bases, which are reported within our Fenics business. We have invested in the
growth of our Fenics businesses, which continue to scale and represent record levels of BGC’s overall revenue.
Fenics Market Data™ is a supplier of real-time, tradable, indicative, end-of-day and historical market data. Our market
data product suite includes fixed income, interest rate derivatives, credit derivatives, foreign exchange and money markets,
energy and commodities, equity derivatives and regulatory solution market data products and services. The data is sourced from
the Voice, Hybrid and Fully Electronic brokerage operations and made available to financial professionals, research analysts,
compliance and surveillance departments, and other market participants via direct data feeds and BGC-hosted FTP
environments, as well as via information platforms such as Bloomberg, LSEG Data & Analytics, ICE Data Services and other
select specialist vendors.
Through our network business, we provide customized screen-based market solutions to both related and unrelated
parties. Our clients are able to develop a marketplace, trade with their customers and access our network and our intellectual
property. We can add advanced functionality to enable our customers to distribute branded products to their customers through
online offerings and auctions, including private and reverse auctions, via our trading platform and global network.
As part of our network business, our Lucera® brand delivers high-performance technology solutions designed to be
secure and scalable and to power demanding financial applications across several offerings: LumeFX® (distributed FX
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platform with managed infrastructure and software stack), LumeMarkets™ (multi-asset class aggregation platform), Connect™
(global SDN for rapid provisioning of connectivity to counter-parties), and Compute™ (on-demand, co-located compute
services in key financial data centers).
Through kACE2, our analytics brand, we offer derivative price discovery, pricing analysis, risk management and
trading software used by approximately 280 client sites in over 30 countries. Our clients include mid-tier banks, financial
institutions and corporate clients. Our Gateway module links our client base with their counterparties, trading venues and
regulators, and provides automated order flow, straight through processing, data distribution and regulatory reporting.
Our post-trade services include post-trade risk mitigation services provided using our Capitalab® brand. Capitalab
provides compression, matching and optimization services that are designed to bring greater capital and operational efficiency
to the global derivatives market. Capitalab assists clients in managing the growing cost of holding derivatives, while helping
them to meet their regulatory mandates and promote sustainable growth and lower systemic risk and to improve resiliency in
the industry.
Industry Recognition
Our businesses have consistently won global industry awards and accolades in recognition of their performance and
achievements. Recent examples include:
•
•
•
•
•
Fenics Market Data named Americas Data and Analytics Vendor of the Year at the GlobalCapital Americas
Derivatives Awards 2023
Fenics Market Data named Best Market Data Provider at FX Markets e-FX Awards 2023
Fenics Market Data named Best Market Data Provider at WatersTechnology Inside Market Data & Inside Reference
Data Awards 2023
Fenics Market Data named Best Provider of Broker Market Data at TradingTech Insight Awards – USA (A-Team)
2023 and TradingTech Insight Awards – Europe (A-Team) 2023
Capitalab named Americas Optimisation Service of the Year at the GlobalCapital Americas Derivatives Awards 2023
Customers and Clients
We primarily serve the wholesale financial and energy and commodity markets, with clients including many of the
world’s largest banks, brokerage houses, investment firms, hedge funds, and investment banks. Customers using our products
and services also include professional trading firms, futures commission merchants, and other professional market participants
and financial institutions. Our market data products and services are available through many platforms and are available to a
wide variety of capital market participants, including banks, investment banks, brokerage firms, asset managers, hedge funds,
investment analysts, compliance and surveillance professionals and financial advisors. We also license our intellectual property
portfolio and offerings to various financial markets participants. For the year ended December 31, 2023, our top ten customers,
collectively, accounted for approximately 30.0% of our total revenue on a consolidated basis, and our largest customer
accounted for approximately 4.8% of our total revenue on a consolidated basis.
Sales and Marketing
Our brokers and salespeople are our primary marketing and sales resources, and utilize a combination of sales,
marketing and co-marketing/co-branding campaigns. Our sales and marketing programs are aimed at enhancing the ability of
our brokers to cross-sell effectively in addition to informing our customers about our product and service offerings. We
leverage our customer relationships through a variety of direct marketing and sales initiatives and build and enhance our brand
image through marketing and communications campaigns targeted at a diverse audience, including traders, potential partners
and the investor and media communities.
Our brokerage product team is composed of product managers who are each responsible for a specific part of our
brokerage business. The product managers seek to ensure that our brokers, across all regions, have access to technical expertise,
support and multiple execution methods in order to grow and market their business. This approach of combining marketing
with our product and service strategy has enabled us to turn innovative ideas into both Fully Electronic and Hybrid deliverable
solutions.
Our team of business development professionals is responsible for growing our global footprint through raising
awareness of our products and services. The business development team markets our products and services to new and existing
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customers. As part of this process, they analyze existing levels of business with these entities in order to identify potential areas
of growth and also to cross-sell our multiple offerings.
Our Trading Technology
Pre-Trade Technology. Our financial brokers use a suite of pricing and analytical tools that have been developed both
in-house and in cooperation with specialist software suppliers. The pre-trade software suite combines proprietary market data,
pricing and calculation libraries, together with those outsourced from external providers. The tools in turn publish to a
normalized, global market data distribution platform, allowing prices and rates to be distributed to our proprietary network, data
vendor pages, secure websites and trading applications as indicative pricing.
Inter-Dealer and Wholesale Trading Technology. We utilize sophisticated proprietary electronic trading platforms to
provide execution and market data services to our customers. The services are available through our proprietary API, FIX and a
multi-asset proprietary trading platforms, operating under brands including BGC Trader™, CreditMatch®, Fenics®, FMX™
GFI ForexMatch®, BGCForex™, BGCCredit™, BGCRates™, FenicsFX™, FenicsUST™, FenicsDirect™, Fenics GO™,
MidFX, GBX™, and Fenics Invitations™. These platforms presently support a wide and constantly expanding range of
products and services, which include U.S. Treasuries and other government bonds, Repos, OTC interest rate derivatives in
multiple currencies, spot FX, NDFs, FX options, corporate bonds, credit derivatives and other products. Every product on the
platforms is supported in either view-only, Hybrid/managed or Fully Electronic mode, and can be transitioned from one mode
to the next in response to market demands. The flexible BGC technology stack is designed to support feature-rich workflows
required by the Hybrid mode as well as delivering high throughput and low transaction latency required by the Fully Electronic
mode. Trades executed by our customers in any mode are, when applicable, eligible for immediate electronic confirmation
through direct STP links as well as STP hubs. The BGC trading platform services are operated out of several globally
distributed data centers and delivered to customers over BGC’s global private network, third-party connectivity providers as
well as the Internet. BGC’s proprietary graphical user interfaces and the API/FIX connectivity are deployed at hundreds of
major banks and institutions and service thousands of users.
Post-Trade Straight Through Processing Technology. Our platform automates transaction processing, confirmation
and other functions, substantially improving and reducing the cost of many of our customers’ back offices and enabling STP. In
addition to our own system, confirmation and trade processing is also available through third-party hubs, including
MarkitWIRE, ICElink, Reuters RTNS, and STP in FIX for various banks.
We have electronic connections to most mainstream clearinghouses, including DTCC, CLS Group, Euroclear,
Clearstream, Monte Titoli, LCH.Clearnet, Eurex Clearing, CME Clearing and the OCC. As more products become centrally
cleared, and as our customers request that we use a particular venue, we expect to expand the number of clearinghouses to
which we connect in the future.
Systems Architecture. Our systems consist of layered components, which provide matching, credit management,
market data distribution, position reporting, customer display and customer integration. The private network currently operates
from six concurrent core data centers (three of which are in the U.K., and one each in Trumbull, Connecticut, Weehawken, New
Jersey and Secaucus, New Jersey) and many hub cities throughout the world acting as distribution points for all private network
customers. The redundant structure of our system provides multiple backup paths and re-routing of data transmission in the
event of failure.
In addition to our own network system, we also receive and distribute secure trading information from customers using
the services of multiple, major Internet service providers throughout the world. These connections enable us to offer our
products and services via the Internet to our global customers.
Software Development
We devote substantial efforts to the development and improvement of our Hybrid and Fully Electronic marketplaces
and licensed software products and services. We work with our customers to identify their specific requirements and make
modifications to our software, network distribution systems and technologies that are responsive to those needs. Our efforts
focus on internal development, strategic partnering, acquisitions and licensing.
Our Intellectual Property
We regard our technology and intellectual property rights, including our brands, as a critical part of our business. We
hold various trademarks, trade dress and trade names and rely on a combination of patent, copyright, trademark, service mark
and trade secret laws, as well as contractual restrictions, to establish and protect our intellectual property rights. We own
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numerous domain names and have registered numerous trademarks and/or service marks in the United States and foreign
countries. Our trademark registrations must be renewed periodically, and, in most jurisdictions, every 10 years.
We have adopted a comprehensive intellectual property program to protect our proprietary technology and
innovations. We currently have licenses covering various patents from related parties. We also have agreements to license
technology that may be covered by several pending and/or issued U.S. patent applications relating to various aspects of our
electronic trading systems, including both functional and design aspects. We have filed a number of patent applications to
further protect our proprietary technology and innovations and have received patents for some of those applications. We will
continue to file additional patent applications on new inventions, as appropriate, demonstrating our commitment to technology
and innovation.
Our patent portfolio continues to grow, and we continue to look for opportunities to license and/or otherwise monetize
the patents in our portfolio.
Competition
We encounter competition in all aspects of our business. Our existing and potential competitors include other
wholesale financial brokerage and inter-dealer brokerage firms, multi-dealer trading companies, financial technology
companies, market data and information vendors, securities and futures exchanges, electronic communications networks,
crossing systems, software companies, financial trading consortia, shipping brokers, business-to-business marketplace
infrastructure companies, as well as niche market energy and other Internet-based commodity trading systems. We compete
primarily with other inter-dealer or wholesale financial brokers for market share, brokers, salespeople and suitable acquisition
candidates.
Inter-Dealer and Wholesale Financial Brokers
We primarily compete with two publicly traded, diversified inter-dealer and wholesale financial brokers, TP ICAP and
Tradition. Other competitors include Dealerweb, an inter-dealer and wholesale financial brokerage business within Tradeweb,
XP Inc.’s fixed income and FX inter-dealer brokerage business, and a number of private firms that tend to specialize in specific
product areas or geographies, such as Marex Spectron Group Limited, which focuses on energy and commodities.
Demand for wholesale brokerage services is directly affected by the overall level of economic activity, international
and domestic economic and political conditions, including central bank policies, broad trends in business and finance, including
employment levels, the level and volatility of interest rates, changes in and uncertainty regarding tax laws and substantial
fluctuations in the volume and price levels of securities transactions. Other significant factors affecting competition in the
brokerage industry are the quality and ability of professional personnel, the depth and pricing efficiency of the markets in which
the brokers transact, the strength of the technology used to service and execute on those markets and the relative prices of
products and services offered by the brokers and by competing markets and trading processes.
Market Data and Information
The majority of our large inter-dealer and wholesale financial broker competitors also sell proprietary market data and
information, which competes with our market data offerings. In addition to direct sales, we resell market data through large
market data and information providers. These companies have established significant presences on the vast majority of trading
desks across our industry. Some of these market data and information providers, such as Bloomberg L.P. and LSEG Data &
Analytics, include in their product mix electronic trading and execution of both OTC and listed products in addition to their
traditional market data offerings.
Growth in new trading venues has led to fragmentation of liquidity across the financial markets. Our network solutions
business helps aggregate liquidity and connect counterparties across these marketplaces. We compete with other market
infrastructure and connectivity providers, such as Pico, ION Group and Bloomberg, which recently acquired Broadway
Technology in this space.
Our post-trade services that offer derivative compression, matching and optimization services operate in an industry
which has benefited from increased regulatory requirements. Competition in this space includes OSSTRA, a joint venture
between CME Group Inc. and IHS Markit Ltd, Parameta Solutions, TP ICAP’s data and analytics business, and Quantile owned
by LSEG and Capitolis.
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Exchanges and Other Trading Platforms
Although our business will often use exchanges to execute transactions brokered in both listed and OTC markets, we
believe that exchanges have sought and will seek to migrate products traditionally traded in OTC markets by inter-dealer and
wholesale financial brokers to exchanges. However, we believe that when a product goes from OTC to exchange-traded, the
underlying or related OTC market often continues to experience growth in line with the growth of the exchange-traded contract.
In addition, ICE operates both regulated exchanges and OTC execution services, and in the latter, it competes directly with
inter-dealer and wholesale financial brokers in energy, commodities, and credit products. ICE entered these OTC markets
primarily by acquiring independent OTC brokers. We also compete with CME across U.S. interest rates products, including our
expected launch of an exchange for U.S. Rates futures in 2024, as well as in foreign exchange products. We believe that it is
likely ICE, CME, or other exchange operators may seek to compete with us in the future by acquiring other such brokers, by
creating listed products designed to mimic OTC products, or through other means.
In addition to exchanges, other electronic trading platforms which primarily operate in the dealer-to-client markets,
including those run by MarketAxess and Tradeweb, now compete with us in the inter-dealer markets. At the same time, we
have begun to offer an increasing number of our products and services to the customers of firms like MarketAxess and
Tradeweb.
Banks and Broker-Dealers
Banks and broker-dealers have in the past created and/or funded consortia to compete with exchanges and inter-dealer
brokers. For example, CME’s wholesale businesses for fully electronic trading of U.S. Treasuries and spot foreign exchange
both began as dealer-owned consortia before being acquired by ICAP plc. An example of a current and similar consortium is
Tradeweb. Several large banks continue to hold public equity stakes in Tradeweb. LSEG Data & Analytics, is Tradeweb’s
single largest shareholder. Although Tradeweb operates primarily as a dealer to customer platform, some of its offerings
include a voice and electronic inter-dealer platform. Tradeweb’s management has previously said that it would like to further
expand into other inter-dealer markets, and in June 2021, it acquired Nasdaq’s U.S. fixed income electronic trading platform,
formerly known as eSpeed. In 2013, BGC sold the eSpeed platform to Nasdaq, and subsequently launched a competing
platform, Fenics UST.
In addition, certain investment management firms that traditionally deal with banks and broker-dealers have expressed
a desire to have direct access to certain parts of the wholesale financial markets via firms such as ours. We believe that over
time, interdealer-brokers will therefore gain a growing percentage of the sales and trading market currently dominated by banks
and broker-dealers. Since their collective revenues are many times those of the global inter-dealer market, we believe that
gaining even a small share of banks and broker-dealers’ revenues could lead to a meaningful increase in our revenues.
Additionally, wholesale financial brokers have aimed to grow their agency brokerage businesses, which typically serve a
broader client set, including banks, broker-dealers, and institutional clients, such as TP ICAP’s acquisition of Liquidnet in
March 2021.
Seasonality
Traditionally, the financial markets around the world generally experience lower volume during the late summer and
toward the end of the year due to a slowdown in the business environment around holiday seasons. Therefore, our revenues tend
to be strongest in the first quarter and lowest in the second half of the year. For the year 2023, we earned approximately 26.4%
of our revenues in the first quarter, while in 2022 we earned 28.2% of our revenues in the first quarter.
Regulation
U.S. Regulation
The financial services industry in the United States is subject to extensive regulation under both federal and state laws.
As registered broker-dealers, introducing brokers and FCMs, and other types of regulated entities as described below, certain of
our subsidiaries are subject to laws and regulations which cover all aspects of financial services, including sales methods, trade
practices, use and safekeeping of customers’ funds and securities, minimum capital requirements, recordkeeping, business
practices, securities lending and financing of securities purchases and the conduct of associated persons. We and our
subsidiaries also are subject to the various anti-fraud provisions of the Securities Act, the Exchange Act, the Commodity
Exchange Act, certain state securities laws and the rules and regulations thereunder. We also may be subject to vicarious and
controlling person liability for the activities of our subsidiaries and our officers, employees and affiliated persons.
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The SEC is the federal agency primarily responsible for the administration of federal securities laws, including
adopting rules and regulations applicable to broker-dealers (other than government securities broker-dealers) and enforcing both
its rules regarding broker-dealers and the Treasury’s rules regarding government securities broker-dealers. In addition, we
operate a number of platforms that are governed pursuant to SEC Regulation ATS. Broker-dealers are also subject to regulation
by state securities administrators in those states in which they conduct business or have registered to do business. In addition,
Treasury rules relating to trading government securities apply to such activities when engaged in by broker-dealers. The CFTC
is the federal agency primarily responsible for the administration of federal commodities future laws and other acts, including
the adoption of rules applicable to FCMs, DCMs and SEFs such as BGC Derivative Markets and GFI Swaps Exchange LLC.
Much of the regulation of broker-dealers’ operations in the United States has been delegated to self-regulatory
organizations. These self-regulatory organizations adopt rules (which are subject to approval by the SEC) that govern the
operations of broker-dealers and government securities broker-dealers and conduct periodic inspections and examinations of
their operations. In the case of our U.S. broker-dealer subsidiaries, the principal self-regulatory organization is FINRA. FINRA
was formed from the consolidation of the NASD’s member regulation operations and the regulatory arm of the NYSE Group to
act as the self-regulatory organization for all broker-dealers doing business within the United States. Accordingly, our U.S.
broker-dealer subsidiaries are subject to both scheduled and unscheduled examinations by the SEC and FINRA. In our futures-
related activities, our subsidiaries are also subject to the rules of the CFTC, futures exchanges of which they are members and
the NFA, a futures self-regulatory organization.
The changing regulatory environment, new laws that may be passed by Congress, and rules that may be promulgated
by the SEC, the Treasury, the Federal Reserve Bank of New York, the CFTC, the NFA, FINRA and other self-regulatory
organizations, or changes in the interpretation or enforcement of existing laws and rules, if adopted, may directly affect our
operations and profitability and those of our competitors and customers and of the securities markets in which we participate in
a way that could adversely affect our business.
The SEC, self-regulatory organizations and state securities administrators conduct informal and formal investigations
of possible improprieties or illegal action by broker-dealers and their “associated persons,” which could be followed by the
institution of administrative, civil and/or criminal proceedings against broker-dealers and/or “associated persons.” Among the
sanctions that may result if administrative, civil or criminal proceedings were ever instituted against us or our “associated
persons” are injunctions, censure, fines, penalties, the issuance of cease-and-desist orders or suspension or expulsion from the
industry and, in rare instances, even imprisonment. The principal purpose of regulating and disciplining broker-dealers is to
protect customers and the securities markets, rather than to protect broker-dealers or their creditors or equity holders. From time
to time, our “associated persons” have been and are subject to routine investigations, none of which to date have had a material
adverse effect on our business, financial condition, results of operations or prospects.
Regulators and legislators in the U.S. and EU continue to craft new laws and regulations for the global OTC
derivatives markets. The Dodd-Frank Act mandates or encourages several reforms regarding derivatives, including new
regulations for swaps markets creating impartiality considerations, additional pre- and post-trade transparency requirements,
and heightened collateral or capital standards, as well as recommendations for the obligatory use of central clearing for most
standardized derivatives. The law also requires that standardized OTC derivatives be traded in an open and non-exclusionary
manner on a DCM or a SEF.
BGC Derivative Markets and GFI Swaps Exchange, our subsidiaries, operate as SEFs. Mandatory Dodd-Frank Act
compliant execution on SEFs by eligible U.S. persons for “made available to trade” products and a wide range of other rules
relating to the execution and clearing of derivative products have been implemented. We also own ELX, which became a
dormant contract market on July 1, 2017 and in July 2021, we completed the purchase of the CX Futures Exchange (now FMX
Futures Exchange) from Cantor, which represents our futures exchange and related clearinghouse. These rules require
authorized execution facilities to maintain robust front-end and back-office IT capabilities and to make large and ongoing
technology investments. These execution facilities may be supported by a variety of voice and auction-based execution
methodologies, and our Hybrid and Fully Electronic trading capability have performed strongly in this regulatory environment.
On June 25, 2020, the CFTC approved a final rule prohibiting post-trade name give-up for swaps executed,
prearranged or prenegotiated anonymously on or pursuant to the rules of a SEF and intended to be cleared. The rule provides
exemptions for package transactions that include a component transaction that is not a swap that is intended to be cleared. The
rule went into effect on November 1, 2020 for swaps subject to the trade execution requirement under the Commodity
Exchange Act Section 2(h)(8) and July 5, 2021 for swaps not subject to the trade execution requirement, but intended to be
cleared.
On November 2, 2023, the SEC adopted Regulation SE under the Exchange Act to create a regime for the registration
and regulation of SBSEFs. The SEC rules regarding the over-the-counter derivatives market seek to harmonize as closely as
practicable with parallel rules of the CFTC that govern SEFs and swap execution generally. Among other things, Regulation SE
under the Exchange Act made changes to implement the Exchange Act’s trade execution requirement for security-based swaps
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and address the cross-border application of that requirement; implement Section 765 of the Dodd-Frank Act to mitigate
conflicts of interest at SBSEFs and national securities exchanges that trade security-based swaps; and promote consistency
between proposed Regulation SE and existing rules under the Exchange Act. Any entity that meets the definition of a SBSEF
must file an application to register with the SEC within 180 days of the effective date of February 13, 2024.
The SEC also adopted final rules on December 13, 2023 regarding central clearing of certain secondary market
repurchase and reverse repurchase transactions and secondary market purchase and sale transactions involving U.S. Treasury
securities. The central clearing mandate will impact certain market participants who do not clear today, and some have
expressed concerns about the potential impact of additional clearing costs that may impact liquidity. The full impact of this
change, and what effect it will have, whether positive or negative, on our industry, our clients or us is unknown at this time.
In addition, several state laws that have recently come into effect, and may come into effect in the future, have created
and will create new compliance obligations in relation to personal data.
U.K. Regulation
The FCA is the relevant statutory regulator for the United Kingdom financial services industry. The FCA’s objectives
are to protect customers and financial markets, protect and enhance the integrity of the United Kingdom financial system and
promote competition between financial services providers. It has broad rule-making, investigative and enforcement powers
derived from the Financial Services and Markets Act 2000 and subsequent and derivative legislation and regulations. The
FCA’s recent focus has been on financial and operational resilience, and promoting market integrity. Currently, we have
subsidiaries regulated by the FCA (some include BGC Brokers L.P., GFI Securities Limited, and GFI Brokers Limited).
From time to time, we have been and are subject to periodic examinations, inspections and investigations, including
periodic risk assessment and related reviews of our U.K. group. As a result of such reviews, we may be required to include or
enhance certain regulatory structures and frameworks in our operating procedures, systems and controls. When acquiring
control of regulated entities, we may be required to obtain the consent of their applicable regulator.
The FCA has in the past developed a practice of requiring senior officers of regulated firms to provide individual
attestations or undertakings as to the status of a firm’s control environment, compliance with specific rules and regulations, or
the completion of required tasks. Officers of BGC Brokers L.P. and GFI Brokers Limited have previously given such
attestations or undertakings and may do so again in the future. Similarly, the FCA can seek a voluntary requirement notice,
which is a voluntary undertaking on behalf of a firm that is made publicly available on the FCA’s website. The SMCR came
into effect in the U.K. on December 9, 2019 for FCA solo-regulated firms. Personal accountability requirements fall on senior
managers, and a wider population of U.K. staff are subject to certification requirements and conduct rules. SMCR has increased
the cost of compliance and will potentially increase financial penalties for non-compliance.
European Regulation
The EMIR Directive on OTC derivatives, central counterparties and trade repositories was adopted in July 2012.
EMIR fulfills several of the EU’s G20 commitments to reform OTC derivatives markets. The reforms are designed to reduce
systemic risk and bring more transparency to both OTC and listed derivatives markets.
Along with the implementation of EMIR reporting requirements, the REMIT Implementation Acts became effective
on January 7, 2015. The REMIT Implementing Acts developed by the European Commission define the details of reporting
under REMIT, drawing up the list of reportable contracts and derivatives; defining details, timing and form of reporting, and
establishing harmonized rules to report that information to the ACER. They enable ACER to collect information in relation to
wholesale energy market transactions and fundamentals through the Agency’s REMIT Information System (ARIS), to analyze
this data to detect market abuse and to report suspicious events to the National Competent Authorities, which are responsible
for investigating these matters further, and if required, imposing sanctions. Market participants and third parties reporting on
their behalf have had to: (i) report transactions executed at organized marketplaces and fundamental data from the central
information transparency platforms; and (ii) report transactions in the remaining wholesale energy contracts (OTC standard and
non-standard supply contracts, transportation contracts) and additional fundamental data.
To achieve a high level of harmonization and convergence in regular supervisory reporting requirements, the
Committee of European Banking Supervisors issued guidelines on prudential reporting with the aim of developing a
supervisory reporting framework based on common formats, known as COREP. COREP has become part of European Banking
Authorities’ implementing technical standards on reporting under Basel III. Basel III (or the Third Basel Accord) is a global
regulatory standard on bank capital adequacy, stress testing and market liquidity risk introduced by bank regulators in most, if
not all, of the world’s major economies. Basel III is designed to strengthen bank capital requirements and introduces new
regulatory requirements on bank liquidity and bank leverage. The ongoing adoption of these rules could restrict the ability of
our large bank and broker-dealer customers to operate proprietary trading businesses and to maintain current capital market
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exposures under the present structure of their balance sheets, and will cause these entities to need to raise additional capital in
order to stay active in our marketplaces. Meanwhile, global “Basel IV” standards are expected be adopted in the years to come.
Much of our global derivatives volumes continue to be executed by non-U.S. based clients outside the United States
and subject to local prudential regulations. As such, we will continue to operate a number of European regulated venues in
accordance with EU or U.K. legislation and licensed by EU-based national supervisors or the FCA. These venues are also
operated for non-derivative instruments for these clients. MiFID II was published by the European Securities and Markets
Authority in September 2015 and implemented in January 2018 and introduced important infrastructural changes.
MiFID II requires a significant part of the market in these instruments to trade on trading venues subject to
transparency regimes, not only in pre- and post-trade prices, but also in fee structures and access. In addition, it has impacted a
number of key areas, including corporate governance, transaction reporting, pre- and post-trade transparency, technology
synchronization, best execution and investor protection.
MiFID II was intended to help improve the functioning of the EU single market by achieving a greater consistency of
regulatory standards. By design, therefore, it was intended that EU member states should have very similar regulatory regimes
in relation to the matters addressed to MiFID. MiFID II has also introduced a new regulated execution venue category called an
OTF that captures much of the voice-and hybrid-oriented trading in the EU. Much of our existing EU derivatives and fixed
income execution business now take place on OTFs. Further to its decision to leave the EU, the U.K. has implemented MIFID
II’s requirements into its own domestic legislation. Brexit may impact future market structures and MiFID II rulemaking and
implementation due to potential changes in mutual passporting and equivalence arrangements between the U.K. and EU
member states. See “— Brexit” below.
Rights in relation to an individual’s personal data in the EU and U.K. are governed respectively by the GDPR in the
EU and the equivalent Data Protection Act 2018 in the U.K. Since May 25, 2018, when these two pieces of legislation came
into effect, we have been subject to new compliance obligations in relation to such personal data and the possibility of
significant financial penalties for non-compliance.
The FCA introduced the “Consumer Duty” in July 2023. The purpose of this regulation is to enhance the protection of
retail consumers in financial markets. Some other relatively minor divergence of U.K. regulation from EU regulation has
occurred since the implementation of Brexit. While we generally believe the net impact of the rules and regulations are positive
for our business, it is possible that unintended consequences of the rules and regulations may materially adversely affect us in
ways yet to be determined.
Brexit
On January 1, 2021, the U.K. formally left the EU and U.K.-EU trade became subject to a new agreement that was
concluded in December of 2020. The exit from the EU is commonly referred to as Brexit. Financial services fall outside of the
scope of this trade agreement. At the time the relationship was expected to be determined by a series of “equivalence
decisions,” each of which would grant mutual market access for a limited subset of financial services where either party finds
the other party has a regulatory regime that achieves similar outcomes to its own. In March 2021, the U.K. and EU agreed a
Memorandum of Understanding on Financial Services Regulatory Cooperation which creates a structure for dialogue but does
not include commitments on equivalence.
In light of ongoing uncertainties, market participants are still adjusting the way in which they conduct business
between the U.K. and EU. The impact of Brexit on the U.K.-EU flow of financial services and economies of the U.K. and the
EU member states continues to evolve.
We implemented plans to ensure continuity of service in Europe and continue to have regulated offices in place in
many of the major European markets. As part of our ongoing Brexit strategy, ownership of BGC Madrid, Copenhagen and
Frankfurt and GFI Paris, Madrid and Dublin branches was transferred to Aurel BGC SAS (a French-based operation and
therefore based in the EU) in July 2020. We have been generally increasing our footprint in the EU which includes the
establishment of a new branch office of Aurel BGC SAS in Milan and a new office in Monaco under a new local Monaco
subsidiary.
Regardless of these and other mitigating measures, our European headquarters and largest operations are in London,
and market access risks and uncertainties have had and could continue to have a material adverse effect on our customers,
counterparties, business, prospects, financial condition and results of operations. Furthermore, in the future the U.K. and EU’s
regulation may diverge, which could disrupt and increase the costs of our operations, and result in a loss of existing levels of
cross-border market access.
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Other Regulation
Our subsidiaries that have foreign operations are subject to regulation by the relevant regulatory authorities and self-
regulatory organizations in the countries in which they do business. The following table sets forth certain jurisdictions, other
than the U.S., in which we do business and the applicable regulatory authority or authorities of each such jurisdiction:
Jurisdiction
Argentina
Australia
Bahrain
Brazil
Canada
Chile
China
Colombia
Denmark
Regulatory Authorities/Self-Regulatory
Organizations
Comisión Nacional de Valores
Australian Securities and Investments Commission and Australian Securities Exchange
The Central Bank of Bahrain
Brazilian Securities and Exchange Commission, the Central Bank of Brazil, BM&F
BOVESPA and Superintendencia de Seguors Privados
Ontario Securities Commission, Autorite des Marches Financiers (Quebec), Investment
Industry Regulatory Organization of Canada (IIROC)
Superintendencia de Valores y Seguros
China Banking Regulatory Commission, State Administration of Foreign Exchange
Superintendencia Financiera de Colombia
Finanstilsynet
Dubai International Financial
Centre
Dubai Financial Supervisory Authority
France
Germany
Hong Kong
Ireland
Italy
Japan
Mexico
Monaco
Peru
Philippines
Russia
Singapore
ACPR (L’Autorité de Contrôle Prudentiel et de Résolution), AMF (Autorité des Marchés
Financiers)
Bundesanstalt für Finanzdienstleistungsaufsicht (BAFIN)
Hong Kong Securities and Futures Commission and The Hong Kong Monetary Authority
Central Bank of Ireland
Commissione Nazionale Per Le Societa E La Borsa (CONSOB)
Japanese Financial Services Agency, Japan Securities Dealers Association and the
Securities and Exchange Surveillance Commission
Banking and Securities National Commission, Comision Nacional Bancaria y de Valores
(CNBV)
Commission for the Control of Financial Affairs (CCAF)
Ministerio de Economica y Finanzas
Securities and Exchange Commission
Federal Service for Financial Markets
Monetary Authority of Singapore
South Africa
Johannesburg Stock Exchange
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South Korea
Spain
Switzerland
Financial Services Commission
Comision Nacional del Mercado de Valores (CNMV)
Financial Markets Supervisory Authority (FINMA), Swiss Federal Banking Commission
United Kingdom
Financial Conduct Authority
While we continue to have a compliance framework in place to comply with both existing and proposed rules and
regulations, it is possible that the existing regulatory framework may be amended, which amendments could have a positive or
negative impact on our business, financial condition, results of operations and prospects.
Capital Requirements
U.S.
Every U.S.-registered broker-dealer is subject to the Uniform Net Capital Requirements. FCMs, such as our
subsidiary, Mint Brokers, are also subject to CFTC capital requirements. These requirements are designed to ensure financial
soundness and liquidity by prohibiting a broker or dealer from engaging in business at a time when it does not satisfy minimum
net capital requirements.
In the United States, net capital is essentially defined as net worth (assets minus liabilities), plus qualifying
subordinated borrowings and less certain mandatory deductions that result from excluding assets that are not readily convertible
into cash and from conservatively valuing certain other assets, such as a firm’s positions in securities. Among these deductions
are adjustments, commonly referred to as “haircuts,” to the market value of securities positions to reflect the market risk of such
positions prior to their liquidation or disposition. The Uniform Net Capital Requirements also impose a minimum ratio of debt
to equity, which may include qualified subordinated borrowings.
Regulations have been adopted by the SEC that prohibit the withdrawal of equity capital of a broker-dealer, restrict the
ability of a broker-dealer to distribute or engage in any transaction with a parent company or an affiliate that results in a
reduction of equity capital or to provide an unsecured loan or advance against equity capital for the direct or indirect benefit of
certain persons related to the broker-dealer (including partners and affiliates) if the broker-dealer’s net capital is, or would be as
a result of such withdrawal, distribution, reductions, loan or advance, below specified thresholds of excess net capital. In
addition, the SEC’s regulations require certain notifications to be provided in advance of such withdrawals, distributions,
reductions, loans and advances that exceed, in the aggregate, 30% of excess net capital within any 30-day period. The SEC has
the authority to restrict, for up to 20 business days, such withdrawal, distribution or reduction of capital if the SEC concludes
that it may be detrimental to the financial integrity of the broker-dealer or may expose its customers or creditors to loss. Notice
is required following any such withdrawal, distribution, reduction, loan or advance that exceeds, in the aggregate, 20% of
excess net capital within any 30-day period. The SEC’s regulations limiting withdrawals of excess net capital do not preclude
the payment to employees of “reasonable compensation.”
Four of our subsidiaries, BGCF, GFI Securities LLC, Fenics Execution, LLC and Mint Brokers, are registered with the
SEC and are subject to the Uniform Net Capital Requirements. As an FCM, Mint Brokers is also subject to CFTC minimum
capital requirements. BGCF, GFI Securities LLC, Fenics Execution, LLC, Amerex Brokers LLC and Trident Brokerage
Services LLC are registered as Introducing Brokers with the NFA. BGCF is also a member of the FICC, which imposes capital
requirements on its members.
In addition, our SEFs, BGC Derivative Markets and GFI Swaps Exchange are required to maintain financial resources
to cover operating costs for at least one year, keeping at least enough cash or highly liquid securities to cover six months’
operating costs. The Company also operates a DCM, FMX Futures Exchange, and DCO, CX Clearinghouse, L.P., through the
Futures Exchange Group, which are required to maintain financial resources to cover operating costs for at least one year,
keeping at least enough cash or highly liquid securities to cover six months’ operating costs. Compliance with the Uniform Net
Capital Requirements may limit the extent and nature of our operations requiring the use of our registered broker-dealer
subsidiaries’ capital, and could also restrict or preclude our ability to withdraw capital from our broker-dealer subsidiaries or
SEFs.
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Non-U.S.
Our international operations are also subject to capital requirements in their local jurisdiction. BGC Brokers L.P., GFI
Brokers Limited, and GFI Securities Limited, which are based in the U.K., are currently subject to solo capital requirements
established by the FCA’s Investment Firm Prudential Regime. In addition, BGC European Holdings LP is subject to the FCA’s
consolidated capital requirements. The capital requirements of our French entities (and their EU branches) are predominantly
set by ACPR and AMF. U.K. and EU authorities apply stringent provisions with respect to capital applicable to the operation of
these brokerage firms, which vary depending upon the nature and extent of their activities.
In addition, the majority of our other foreign subsidiaries are subject to similar regulation by the relevant authorities in
the countries in which they do business. Additionally, certain other of our foreign subsidiaries are required to maintain non-U.S.
net capital requirements. For example, in Hong Kong, BGC Securities (Hong Kong), LLC, GFI (HK) Securities LLC and
Sunrise Brokers (Hong Kong) Limited are regulated by the Securities and Futures Commission. BGC Capital Markets (Hong
Kong) Limited and GFI (HK) Brokers Ltd, are regulated by The Hong Kong Monetary Authority. All are subject to Hong Kong
net capital requirements. In France, Aurel BGC SAS and BGC France Holdings; in Australia, Fixed Income Solutions Pty Ltd
and BGC Partners (Australia) Pty Limited; in Japan, BGC Shoken Kaisha Limited’s Tokyo branch and BGC Capital Markets
Japan LLC’s Tokyo Branch; in Singapore, BGC Partners (Singapore) Limited, GFI Group Pte Ltd and Ginga Global Market Pte
Ltd; in South Korea, BGC Capital Markets & Foreign Exchange Broker (Korea) Limited and GFI Korea Money Brokerage
Limited; in the Philippines, GFI Group (Philippines) Inc., all have net capital requirements imposed upon them by local
regulators. In addition, the LCH (LIFFE/LME) clearing organization, of which BGC Brokers L.P. is a member, also imposes
minimum capital requirements. In Latin America, BGC Liquidez Distribuidora De Titulos E Valores Mobiliarios Ltda. (Brazil)
has net capital requirements imposed upon it by local regulators.
We had net assets in our regulated subsidiaries of $734.1 million and $666.0 million for the years ended December 31,
2023 and 2022, respectively.
Human Capital Management
Unless the context indicates otherwise, references in this Human Capital Management section to our “employees”
include our professionals who are independent contractors.
Our Fundamental Values
BGC is an organization built on strong values, employee engagement and ownership. At our core, we are committed to
our employees by providing an opportunity to participate in our success. We believe that by cultivating a dynamic mix of
people and ideas, we enrich the performance of our business, the experience of our increasingly diverse employee base and the
dynamism of the communities in which we operate. We value hard work, innovation, superior client service, strong ethics and
governance, equal opportunities, and philanthropy. These values are woven into our corporate culture. We believe these values
foster sustainable, profitable growth. We strive to be exemplary corporate citizens and honor high ethical principles in our
interactions with other businesses, our employees and the communities in which we live and work. We take corporate social
responsibility and sustainability seriously: we want to contribute to the common good.
Workforce
As of December 31, 2023, we employed approximately 3,895 employees in 27 countries spread across five continents.
Within this total, 99% of our employee base was comprised of full-time employees. Brokers, salespeople, managers, technology
professionals and other front-office personnel across our business comprise approximately 2,104 employees, representing
54.0% of the total workforce. Approximately 28.0% of our brokers, salespeople, managers, technology professionals and other
front-office personnel were based in the Americas, and approximately 51.0% were based in Europe, the Middle East and Africa,
with the remaining approximately 21.0% based in the Asia-Pacific region. Various of our employees also work for Cantor and
its affiliates and provide services to us pursuant to the Administrative Services Agreement and devote only a portion of their
time to our business, and therefore have not been included in the counts above. Generally, our employees are not subject to any
collective bargaining agreements, except for certain of our employees based in our Latin American and European offices that
are covered by the national, industry-wide collective bargaining agreements relevant to the countries in which they work.
We have invested significantly in our human capital resources through acquisitions, and the hiring of new brokers,
salespeople, managers, technology professionals and other front-office personnel. The business climate for these acquisitions
and recruitment has been competitive, and it is expected that these conditions will persist for the foreseeable future. We have
been able to attract businesses and brokers, salespeople, managers, technology professionals and other front-office personnel to
our platform as we believe they recognize that we have the scale, technology, experience and expertise to succeed.
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Human Capital Measures and Objectives
In operating our business, we focus on certain human capital measures and objectives that are key drivers of our
revenues and margins. We continually work to expand our trading across more products and geographical regions and to grow
our Fully Electronic business while seeking to manage our human capital resources to maximize our profitability in the face of
shifting demands and conditions.
Our key human capital measures and objectives include front-office employee headcount (described above) and
average revenue per front-office employee. As we continue to deepen the integration of Fenics technology solutions into our
workflows, and convert more of our Voice and Hybrid businesses to our Fenics businesses, we expect our average revenue per
front-office employee to continue to improve. As of December 31, 2023, our front-office revenue-generating headcount was
approximately 2,104 brokers and salespeople, managers and technology professionals, up 6.0% from 1,985 a year ago due to
acquisitions and investments made to broaden our existing product offerings. Compared to the prior year period, average
revenue per front-office employee for the year ended December 31, 2023, increased by 11.4% to approximately $958,000.
We invest heavily in developing our technology and new products and services in order to drive increased front-office
productivity and generate higher margins, in particular with respect to our Fenics businesses. For example, converting Voice
and Hybrid trading to Fully Electronic trading generally improves our margins as automated and electronic trading allows the
same number of employees to manage a greater volume of trades resulting in a decrease in the marginal cost of trading. Our
Fully Electronic business has generally grown faster than our overall business, with average front office productivity increasing
by 11.4% for the year ended December 31, 2023 compared to the prior year. We constantly manage our cost-base and may
engage in cost-savings initiatives and restructurings in order to improve our margins.
Retention Measures
To facilitate the retention of our employees, we have maintained our flexible work arrangements, where appropriate,
made compensation adjustments, and provided additional benefits, including a 401(k) match for many of our U.S. support
employees.
We have taken significant measures to develop a safe work environment for all employees, which is conducive to work
in our office locations, particularly for front-office brokers and revenue generating employees, subject to applicable state and
local regulatory requirements. We have established a more flexible hybrid approach in many instances for non-revenue
generating roles or for roles which are not office dependent, where appropriate. We continue to offer employee assistance
programs and additional avenues for mental health consultation and wellness. We continue to take significant steps to protect
our employees and encourage them all to get vaccinated.
Performance-Based and Highly Retentive Compensation Structure
Many of our key brokers, salespeople, managers, technology professionals and other front office professionals have a
substantial amount of their own capital invested in our business, aligning their interests with our stockholders. We believe that
our emphasis on equity-based compensation promotes recruitment, motivation of our brokers and employees and alignment of
interest with shareholders. Virtually all of our executives and front-office employees have equity stakes in the Company and
generally receive grants of deferred equity as part of their compensation. We believe that having investments in us, our
executives and key brokers and other employees feel a sense of responsibility for the health and performance of our business
and have a strong incentive to maximize our revenues and profitability. As of December 31, 2023, our employees, executive
officers and directors individually owned approximately 13% of our equity, on a fully diluted basis.
We currently issue RSUs, and in the case of certain U.K. employees who held partnership units prior to the Corporate
Conversion, restricted stock awards, as well as other forms of equity-based compensation, to provide liquidity to our
employees, to align the interests of our employees and management with those of common stockholders, to help motivate and
retain key employees, and to encourage a collaborative culture that drives cross-selling and revenue growth. These awards
contain extended vesting schedules which we consider to be highly retentive and that vary based upon compensation level and
role (typically three-to-seven-year ratable vesting), which in most cases are largely dependent upon continued service.
Prior to the Corporate Conversion, we issued limited partnership units, as well as other forms of unit-based
compensation, including grants of exchangeability of limited partnership units into shares of BGC Class A common stock and
grants of shares of our restricted stock, to motivate and retain key employees. These limited partnership units, which could be
redeemed at any time for zero, were subject to forfeiture if the non-compete, confidentiality or non-solicit provisions of the
BGC Holdings Limited Partnership Agreement related to these awards were violated, were also extremely retentive. In addition,
prior to the Corporate Conversion, we paid amounts due to a partner upon termination of service over a number of years in
order to ensure compliance with partner obligations.
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We also enter into various agreements with certain of our employees, and prior to the Corporate Conversion, partners
whereby these individuals receive loans which may be either wholly or in part repaid from the distributions that the individuals
receive on some or all of their LPUs in BGC Holdings and Newmark Holdings, prior to the Corporate Conversion, and by
distributions that the individuals receive on some or all of their LPUs in Newmark Holdings and any dividends paid on
participating RSUs and restricted stock awards, subsequent to the Corporate Conversion. Certain of these loans also may be
either wholly or in part repaid from the proceeds of the sale of our employees’ shares of BGC Class A common stock. In
addition, certain loans may be forgiven over a period of time. We believe that these loans incentivize and promote retention of
our employees.
Compensation Recovery/Clawback Policy
The Company has adopted a Clawback Policy for its executive officers effective as of December 1, 2023, with
retroactive applicability to October 2, 2023. The Clawback Policy applies to Incentive-Based Compensation. The Clawback
Policy provides for recovery of Incentive-Based Compensation received by a covered person in the event of an accounting
restatement due to material noncompliance with financial reporting requirements that is in excess of the Incentive-Based
Compensation that such person would have received based upon the restated financial reporting measure. The Clawback Policy
only applies to Incentive-Based Compensation and does not apply to compensation that is purely discretionary or purely based
on subjective goals or goals unrelated to financial reporting measures.
Human Capital and Social Policies and Practices
We are committed to our people, our stockholders and the community as a whole. We have a variety of programs to
incentivize and support our employees, from employee ownership to comprehensive benefits and training. We have a
passionate commitment to charity.
Employee Diversity, Inclusion and Equal Opportunity
We believe that by cultivating a dynamic mix of people and ideas, we improve the performance of our business and
enrich the experience of our employees. We are committed to equal opportunity, diversity and other policies and practices that
seek to further our development of a diverse and inclusive workplace. We consider all qualified applicants for job openings and
promotions without regard to race, color, religion or belief, sex, sexual orientation, gender identity or reassignment, national
origin or ancestry, age, disability, service in the armed forces, pregnancy or maternity, familial status, marriage and civil
partnership, genetic information or any other characteristic that has no bearing on the ability of employees to do their jobs well.
We continue to develop initiatives to support these values.
Attracting and Retaining the Best Talent
Our recruitment, promotion and compensation processes are designed to enable us to treat employees fairly, and our
compensation decisions are differentiated based on performance. Our success depends on our ability to attract and retain
talented, productive and skilled brokers and technologists and other employees to transact with our customers in a challenging
and regulated environment that is experiencing ever-increasing competition for talent. We are investing in creating a diverse,
inclusive and incentivized work environment where our people can deliver their best work every day.
Talent remains at the core of who we are as a company, and we remain committed to having a culture built around
inclusion which we expect will increase the diversity of our workforce. We continue to work to enhance our ability to attract,
develop and retain top talent with an emphasis on increasing opportunities for representation of traditionally underrepresented
groups at all levels of the organization, encompassing people early in their careers and experienced personnel, and hiring,
retention, and development initiatives with a focus on diversity and inclusion. Our goal is to build an even more successful
organization that more closely reflects our clients bases and the population at large.
Employee Resource Groups
In order to incentivize and enable our employees to grow both professionally and personally, we build employee
resource groups. A number of initiatives across our geographic regions are in place to promote our corporate values and foster
greater diversity and inclusion. Examples include a range of early career work experiences and internship programs focusing on
diverse talent, mentorship programs, and initiatives to foster women’s leadership.
The Network of Women – The Network of Women (“NOW”) program supports the recruitment, development and
retention of women across our organization. NOW strives to offer a variety of opportunities and tools to help our employees
make new professional contacts, find mentors, and develop their careers with the goal of advancing our business reputation.
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These events and activities also provide opportunities for our members to support one another through a valuable exchange of
experiences, advice and best practices for career success.
As an organization dedicated to economic growth, opportunity, integrity, and commitment, we seek to empower
women within BGC and within the communities we affect and serve as a business. The work of our long-standing Network of
Women is a key driving force in accomplishing this goal.
The Rising Professionals League – The Rising Professionals League (“RPL”) was introduced to build upon the legacy
of Cantor Fitzgerald by inspiring early career professionals to grow professionally and socially while promoting a cohesive
environment and positively impacting the community. RPL strives to instill a strong sense of inclusion and belonging for early
career professionals through a variety of opportunities that promote professional development and support the community
through acts of thoughtful service.
Employee Engagement, Communication, Management and Leadership Training and Development
We are investing in our employees’ long-term development and engagement by delivering training and development
programs and fostering a culture where our people can thrive and maximize their potential. We require annual regulatory and
mandatory training in anti-money laundering and anti-crime, global sanctions, ethics, cyber-security and harassment prevention,
among other topics. We also provide or support periodic job-specific and other developmental training for our employees so
they can maximize their potential, as well as a tuition reimbursement program for eligible employees.
We provide virtual and in-person leadership training to managers on topics including management effectiveness,
communication skills, interview skills and delivering effective performance evaluations, managing diverse teams and other
topics. This training is supplemented by a library of online training courses that managers and employees have access to on a
number of topics to assist them in their career development and, if applicable, management skills. Our individual business lines
offer ongoing learning and development opportunities tied to deepening the understanding of the subject matter expertise of
their professionals. We also have intern and early career programs throughout the year in various parts of our business.
Our success depends on employees’ understanding of how their work and engagement contribute to our strategy,
culture, values, and regulatory environment. We use various channels to facilitate open and direct communication, including
internal calls and meetings with employees, training and policy updates, employee resource groups such as NOW and RPL, and
social and family outings and events. We have also rolled out organizational Core Values (Integrity, Commitment and
Opportunity), appointed Culture Champions in our London office, and implemented other initiatives which seek to embed these
values and drive an enhanced culture across our workforce.
Succession Planning
From time to time, the Board discusses succession planning, including our consideration of succession strategy, the
impact of any potential absence due to illness or leave of certain key executive officers or employees, as well as competing
demands on the time of certain of our executive officers who also provide services to Cantor, Newmark, and various other
ventures and investments sponsored by Cantor. Our Board also discusses from time to time, as part of its succession planning,
engagement and encouragement of future business leaders and the process of introducing directors to leaders in our business
lines, including discussing business strategies and challenges with our existing senior business leaders. The Board may also
discuss short-term succession in the event that certain of the senior executive officers should, on an interim or unexpected basis,
become temporarily unable to fulfill their duties. The Board also considers hiring and retention of leaders required for the
changing business landscape and to lead future business lines. At the business and departmental levels, managers discuss and
identify potential talent, opportunities for employee growth, successors, and future leaders.
Environmental, Social and Governance (ESG) / Sustainability Information
We believe that our ESG policies and practices will create sustainable long-term value for BGC, our stockholders and
other stakeholders, our clients and our employees while also helping us mitigate risks, reduce costs, protect brand value, and
identify market opportunities.
In April 2021, we established a Board-level ESG Committee to provide oversight with respect to our ESG and
sustainability policies and practices. The ESG Committee charter may be found on our website at www.bgcg.com/esg/
governance under the heading “Independent Environmental, Social and Governance Committee.” With the Board’s and the
ESG Committee’s oversight, we are embedding social and human capital, employment, environmental, sustainability, charitable
and corporate governance policies and practices into our corporate strategy, compensation, disclosure, and goals to maintain
and advance long-term stockholder value.
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For more information about these topics, new and evolving initiatives and specific examples of policies and practices,
see our website at www.bgcg.com/esg.
Our Environmental Focus, Environmental Markets and Sustainable Business Practices
We are focused on the environment and recognize the importance of treating our natural resources with the greatest
respect, so that they are available to future generations. As a responsible business operating within financial services, we are
actively aware of climate change and other major issues affecting the environment. Our philosophy is that long-term change in
the way in which we use energy, and our collective impact on the environment, cannot happen without the involvement of the
world’s capital markets.
Sustainable Business Practices
We aim to be a leading broker for the transition to a green economy, and we believe BGC Environmental Brokerage
Services is a leader in the world’s environmental and green energy markets. Our Environmental Brokerage Services business,
established in 2011, provides expert innovative carbon offset solutions and advice to the world’s green energy markets, from
transactions and financing to technology and consulting. For decades, we have helped clients worldwide navigate complex
financial requirements in order to achieve their environmental initiatives, thereby supporting our clients’ efforts to meet their
emission reduction goals through the provision of brokerage services.
In 2023, we announced the launch of our Weather Derivatives business, expanding BGC’s brokerage business into the
weather and climate space. The Weather Derivatives business helps market participants analyze climate-related risks and
mitigate their financial exposure. We are providing liquidity to these increasingly important markets as the role of weather and
climate change impacts the way risk is managed. The launch of this business highlights BGC’s commitment to expand and
explore new opportunities across the global energy and commodities space.
For more information on BGC Environmental Brokerage Services, please visit www.bgcebs.com.
Workplace Strategies
In our workplaces, we are studying how to make our own contribution to state, national and global environmental
initiatives and require the same of our vendors and suppliers when doing business with us. As part of this, we are considering
how to minimize our future carbon footprint when planning office renovations and will continue to focus our attention in the
near term on methods of reducing our greenhouse gas emissions, increasing use of renewable energy, conserving water, and
reducing waste generation.
BGC supports sustainable business practices and is focused on the steps necessary to establish a sustainability program
internally as we focus on our own energy usage. We believe it is our responsibility to improve energy efficiency and reduce
energy consumption to protect the environment through continuous improvement of our energy use practices and increased
scrutiny on the energy efficiency of the buildings we utilize for our space. We intend to continue to work on these initiatives.
For more information about these initiatives as they evolve, visit our website at www.bgcg.com/esg/environmental.
To learn more about our policies and practices and our continuing efforts related to Human Capital Management, ESG
and sustainability matters, please refer to the ESG and sustainability section of our website at www.bgcg.com/esg and to our
periodic reports filed under the Exchange Act for further information. You may also find our Corporate Governance Guidelines,
Code of Ethics, the charters of the committees of our Board of Directors, Hedging Policy, Environmental Policy, information
about our charitable initiatives and other ESG and sustainability policies and practices on our website. The information
contained on, or that may be accessed through, our websites or other websites referenced herein, is not part of, and not
incorporated into, this document.
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OUR ORGANIZATIONAL STRUCTURE
Dual Class Equity Structure of BGC Group, Inc. We have a dual class equity structure, consisting of shares of BGC
Class A common stock and BGC Class B common stock. We expect to retain and have no plans to change our dual class
structure.
BGC Class A common stock. Each share of BGC Class A common stock is generally entitled to one vote on matters
submitted to a vote of our stockholders. As of December 31, 2023, there were 403.6 million shares of BGC Class A common
stock issued and 390.1 million shares outstanding. On June 21, 2017, Cantor pledged 10.0 million shares of BGC Class A
common stock in connection with a partner loan program. On November 23, 2018, those shares of BGC Class A common stock
were converted into 10.0 million shares of BGC Class B common stock and remain pledged in connection with the partner loan
program, as amended and restated effective as of October 5, 2023 with such modifications thereto as necessary to reflect the
Corporate Conversion.
Prior to the Corporate Conversion, Cantor, CFGM and other Cantor affiliates were entitled to exchange BGC Partners
Class A common stock into shares of BGC Partners Class B common stock from time to time, on a one-to-one basis, subject to
adjustment. See Exchange Agreement with Cantor Prior to the Corporate Conversion” for more information.
From time to time, we may actively continue to repurchase shares of our Class A common stock including from
Cantor, Newmark, our executive officers, other employees, partners and others.
BGC Class B common stock. Each share of BGC Class B common stock is generally entitled to the same rights as a
share of BGC Class A common stock, except that, on matters submitted to a vote of our stockholders, each share of BGC Class
B common stock is entitled to 10 votes. The BGC Class B common stock generally votes together with the BGC Class A
common stock on all matters submitted to a vote of our stockholders. As of December 31, 2023, Cantor and CFGM held an
aggregate of 96.3 million shares of BGC Class B common stock, representing 88.0% of the outstanding shares of BGC Class B
common stock and approximately 64.8% of our total voting power. As of December 31, 2023, Mr. Lutnick and individuals
related to Mr. Lutnick owned 13.1 million shares of our outstanding Class B common stock, representing 12.0% of the
outstanding shares of BGC Class B common stock and approximately 8.9% of our total voting power. Together, Cantor,
CFGM, Mr. Lutnick and individuals related to Mr. Lutnick owned 100.0% of the outstanding shares of BGC Class B common
stock and approximately 73.7% of our total voting power.
Shares of BGC Class B common stock are convertible into shares of BGC Class A common stock at any time in the
discretion of the holder on a one-for-one basis. Accordingly, if Cantor, CFGM, Mr. Lutnick and individuals related to Mr.
Lutnick converted all of their BGC Class B common stock into BGC Class A common stock on December 31, 2023, Cantor
would have held 18.7% of the voting power of our outstanding capital stock, CFGM would have held 0.6% of the voting power,
Mr. Lutnick and individuals related to Mr. Lutnick would have held 6.4% of the voting power, and the public stockholders
would have held 74.3% of the voting power of our outstanding capital stock (and Cantor and CFGM’s indirect economic
interests in BGC U.S. and BGC Global would remain unchanged).
As a result of the Corporate Conversion, 64.0 million Cantor units, including 5.7 million purchased on June 30, 2023,
were converted into shares of BGC Group Class B common stock, subject to the terms and conditions of the Corporate
Conversion Agreement, provided that a portion of the 64.0 million shares of BGC Group Class B common stock issued to
Cantor will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000
in shares of BGC Group Class A or B common stock in connection with certain acquisition transactions prior to July 1, 2030,
the seventh anniversary of the Corporate Conversion.
On July 2, 2023, Cantor distributed an aggregate of 15.8 million shares of Class B common stock held by it in
satisfaction of its remaining deferred share distribution obligations pursuant to the April 2008 distribution rights shares and the
February 2012 distribution rights shares. 14.0 million of the July 2023 distribution shares were distributed to satisfy April 2008
distribution rights shares and 1.8 million of the July 2023 distribution shares were distributed to satisfy February 2012
distribution rights shares. 15.4 million of the July 2023 distribution shares will remain Class B common stock in the hands of
the recipient, and 0.4 million of such shares were converted into an equivalent number of shares of Class A common stock in
the hands of the recipient pursuant to the terms of BGC Group’s Amended and Restated Certificate of Incorporation. Upon
distribution of the July 2023 distribution shares, Cantor satisfied all obligations to deliver shares of common stock to satisfy the
April 2008 distribution rights shares and February 2012 distribution rights shares.
Exchange Agreement with Cantor Prior to the Corporate Conversion
On June 5, 2015, we entered into the Exchange Agreement with Cantor providing Cantor, CFGM and other Cantor
affiliates entitled to hold BGC Partners Class B common stock the right to exchange BGC Partners Class A common stock into
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shares of BGC Partners Class B common stock from time to time, on a one-to-one basis, subject to adjustment. As of December
31, 2023, Cantor and CFGM did not own any shares of BGC Partners Class A common stock. In connection with the Corporate
Conversion on July 1, 2023, the Exchange Agreement with Cantor terminated in accordance with its own terms.
Amendments to the BGC Holdings Partnership Agreement Prior to the Corporate Conversion
On December 13, 2017, the Amended and Restated BGC Holdings Partnership Agreement was amended and restated a
second time to include prior standalone amendments and to make certain other changes related to the Separation.
The BGC Holdings Partnership Agreement also removed certain classes of BGC Holdings units that were no longer
outstanding, and permitted the general partner of BGC Holdings to determine the total number of authorized BGC Holdings
units. The BGC Holdings Limited Partnership Agreement was approved by the Audit Committee of the Board of Directors of
BGC Partners.
On March 10, 2023, BGC Holdings entered into the LPA Amendment. The LPA Amendment revised certain
restrictive covenants pertaining to the “Partner Obligations” and “Competitive Activity” provisions in the BGC Holdings
Partnership Agreement. Specifically, the LPA Amendment (i) reduced the length of the post-termination period during which a
partner must refrain from soliciting or doing business with customers, soliciting employees, engaging in a “Competing
Business,” or otherwise refraining from harming the partnership; and (ii) revised the scope of the non-compete under the
“Partner Obligations” and “Competitive Activity” provisions in the BGC Holdings Limited Partnership Agreement to cover
“Competing Businesses” (as defined therein) for which a partner performed the same or similar services (a) involving a
product, product line or type, or service of a “Protected Affiliate” (as defined therein) within a specific geographic area, (b)
involving a “Client” or a “Client Representative” (each as defined therein) of a Protected Affiliate, or (c) for which the likely
disclosure of confidential information was inevitable. The LPA Amendment was approved by the Board of Directors and Audit
and Compensation Committee of BGC Partners.
Classes of Founding/Working Partner Interests and Limited Partnership Units Prior to the Corporate Conversion
Prior to the Corporate Conversion, our executives and front-office employees held partnership stakes in us and our
subsidiaries and generally received their equity compensation through LPUs. Upon the closing of the Corporate Conversion, the
BGC Holdings Limited Partnership Agreement was terminated, and the former stockholders of BGC Partners and former
limited partners of BGC Holdings now participate in the economics of the BGC businesses through BGC Group. Following the
Corporate Conversion, the equity portion of our compensation structure is no longer based upon the issuance of partnership
units but instead based upon the use of equity awards issued under the Equity Plan in order to incentivize and retain our
employees, executive officers, and directors, such as RSUs.
Prior to the Corporate Conversion, while BGC Holdings limited partnership interests generally entitled our partners to
participate in distributions of income from the operations of our business, upon leaving BGC Holdings (or upon any other
redemption or purchase of such limited partnership interests as described below) any such partners were only entitled to receive
over time, and provided he or she did not violate certain partner obligations, an amount for his or her BGC Holdings limited
partnership interests that reflected such partner’s capital account or compensatory grant awards, excluding any goodwill or
going concern value of our business, unless Cantor, in the case of the founding partners, and we, as the general partner of BGC
Holdings at that time, otherwise determined. We also could have effected redemptions of BGC Holdings LPUs and FPUs and
concurrently granted shares of our Class A common stock, or could have granted our partners the right to exchange their BGC
Holdings limited partnership interests for shares of our Class A common stock (if, in the case of founding partners, Cantor so
determined and, in the case of working partners and limited partnership unit holders, if we, as the BGC Holdings general
partner at that time, with Cantor’s consent, determined otherwise) and thereby allowed them to realize any higher value
associated with our Class A common stock. Similar provisions with respect to Newmark Holdings limited partnership interests
are contained in the Newmark Holdings limited partnership agreement.
Limited partnership interests in BGC Holdings (prior to the Corporate Conversion) and Newmark Holdings (received
in connection with the Spin-Off) consist of: (i) “founding/working partner units” held by limited partners who are employees of
the relevant company; (ii) “limited partnership units,” which consist of a variety of units that are generally held by employees
such as REUs, RPUs, PSUs, PSIs, PSEs, HDUs, U.K. LPUs, APSUs, APSIs, APSEs, AREUs, ARPUs and N Units; (iii)
“Cantor units” which are the exchangeable limited partnership interests held by Cantor entities; and (iv) Preferred Units, which
are working partner units that may be awarded to holders of, or contemporaneous with, the grant of certain limited partnership
units. These Preferred Units carried the same name as the underlying unit, with the insertion of an additional “P” to designate
them as Preferred Units. Such Preferred Units could not be made exchangeable into BGC Class A common stock and
accordingly were not included in the fully diluted share count. Each quarter, the net profits of BGC Holdings were allocated to
such Preferred Units at a rate of either 0.6875% (which is 2.75% per calendar year) of the allocation amount assigned to them
based on their award price, or such other amount as set forth in the award documentation, before calculation and distribution of
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the quarterly BGC Holdings distribution for the remaining BGC Holdings units. The Preferred Units were not entitled to
participate in BGC Holdings distributions other than with respect to the Preferred Distribution.
Non-distributing partnership units, or N Units, carried the same name as the underlying unit with the insertion of an
additional “N” to designate them as the N Unit type and were designated as NREUs, NPREUs, NLPUs, NPLPUs and NPPSUs.
The N Units were not entitled to participate in BGC Holdings distributions, were not allocated any items of profit or loss and
were not made exchangeable into shares of BGC Class A common stock. Subject to the approval of the Compensation
Committee or its designee, certain N Units may have been converted into the underlying unit type (i.e., an NREU could be
converted into an REU) and could then participate in BGC Holdings distributions, subject to terms and conditions determined
by us as the general partner of BGC Holdings, in our sole discretion, including that the recipient continue to provide substantial
services to us and comply with his or her partnership obligations.
Cantor’s Right to Purchase Cantor Units Prior to the Corporate Conversion
Prior to the Corporate Conversion, Cantor had the right to purchase Cantor units from BGC Holdings upon redemption
of non-exchangeable FPUs redeemed by BGC Holdings upon termination or bankruptcy of the Founding/Working Partner. In
addition, where either current, terminating, or terminated partners were permitted by the Company to exchange any portion of
their FPUs and Cantor consented to such exchangeability, the Company would offer to Cantor the opportunity for Cantor to
purchase the same number of Cantor units in BGC Holdings at the price that Cantor would have paid for Cantor units had the
Company redeemed the FPUs. If Cantor acquired any Cantor units as a result of the purchase or redemption by BGC Holdings
of any FPUs, Cantor would be entitled to the benefits (including distributions) of such units it acquired from the date of
termination or bankruptcy of the applicable Founding/Working Partner.
On April 16, 2023, Cantor purchased from BGC Holdings an aggregate of (i) 533,757 Cantor units for aggregate
consideration of $1,051,080 as a result of the redemption of 533,757 FPUs, and (ii) 85,775 Cantor units for aggregate
consideration of $173,154 as a result of the exchange of 85,775 FPUs. On June 30, 2023, Cantor purchased from BGC
Holdings an aggregate 143,885 Cantor units for aggregate consideration of $285,421 as a result of the redemption of 143,885
FPUs.
In connection with the Corporate Conversion, on June 30, 2023, Cantor purchased from BGC Holdings an aggregate
of 5,605,547 Cantor units for aggregate consideration of $10,029,063 as a result of the redemption and exchange of the
remaining 5,605,547 FPUs outstanding at that time. Following such purchases, there were no FPUs remaining in BGC
Holdings.
BGC OpCos Partnership Structures
We are a holding company with no direct operations, and our business is operated through two operating partnerships,
BGC U.S. OpCo, which holds our U.S. businesses, and BGC Global OpCo, which holds our non-U.S. businesses.
Prior to the Corporate Conversion, the limited partnership interests of the two operating partnerships were held by us
and BGC Holdings, and the limited partnership interests of BGC Holdings were held by LPU holders, Founding Partners, and
Cantor. We held the BGC Holdings general partnership interest and the BGC Holdings special voting limited partnership
interest, which entitled us to remove and appoint the general partner of BGC Holdings, and served as the general partner of
BGC Holdings, which entitled us to control BGC Holdings. BGC Holdings, in turn, held the BGC U.S. OpCo general
partnership interest and the BGC U.S. OpCo special voting limited partnership interest, which entitled the holder thereof to
remove and appoint the general partner of BGC U.S. OpCo, and the BGC Global OpCo general partnership interest and the
BGC Global OpCo special voting limited partnership interest, which entitled the holder thereof to remove and appoint the
general partner of BGC Global OpCo, and served as the general partner of BGC U.S. OpCo and BGC Global OpCo, all of
which entitled BGC Holdings (and thereby us) to control each of BGC U.S. OpCo and BGC Global OpCo.
Since BGC Holdings held BGC U.S. OpCo limited partnership interests and BGC Global OpCo limited partnership
interests, LPU holders, Founding Partners, and Cantor indirectly had interests in BGC U.S. OpCo limited partnership interests
and BGC Global OpCo limited partnership interests. Further, in connection with the Separation and Distribution Agreement,
limited partnership interests in Newmark Holdings were distributed to the holders of limited partnership interests in BGC
Holdings, whereby each holder of BGC Holdings limited partnership interests who at that time held a BGC Holdings limited
partnership interest received a corresponding Newmark Holdings limited partnership interest, equal in number to a BGC
Holdings limited partnership interest divided by 2.2 (i.e., 0.4545 of a unit in Newmark Holdings). Accordingly, existing
partners at the time of the Separation in BGC Holdings are also partners in Newmark Holdings and received corresponding
units issued at the applicable ratio. Thus, such partners have an indirect interest in Newmark OpCo.
As a result of a series of transactions prior to and in anticipation of the Corporate Conversion, all BGC Holdings units
held by Newmark employees were redeemed or exchanged, in each case, for shares of BGC Class A common stock or cash.
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Upon the closing of the Corporate Conversion, the BGC Holdings Limited Partnership Agreement was terminated, we became
the owner of all of the limited partnership interests of the two BGC operating partnerships, and the former stockholders of BGC
Partners and former limited partners of BGC Holdings now participate in the economics of the BGC businesses through BGC
Group.
Pre-Corporate Conversion Structure of BGC Partners, Inc. as of June 30, 2023
The diagram below reflects the ownership structure of BGC Partners and BGC Holdings as of June 30, 2023 and prior
to the Corporate Conversion. The diagram does not reflect the various subsidiaries of BGC, BGC U.S. OpCo, BGC Global
OpCo, or Cantor, or the noncontrolling interests in our consolidated subsidiaries that existed on June 30, 2023 other than
Cantor’s units in BGC Holdings. The diagram also does not reflect certain BGC Holdings partnership units and RSUs as
follows, in each case as of June 30, 2023: (a) 29.5 million Preferred Units, including Preferred N Units, granted and outstanding
to BGC Holdings partners; (b) 39.2 million N Units, excluding Preferred N Units, granted and outstanding to BGC Holdings
partners; (c) 22.5 million RSUs issued on June 30, 2023, in exchange for partners’ units in BGC Holdings; (d) 12.3 million
RSUs issued prior to June 30, 2023; (e) RSU Tax Accounts associated with certain RSUs; (f) 1.7 million contingent shares
issued in exchange for former partners’ units in BGC Holdings; and (g) 1.2 million contingent shares related to acquisitions.
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The diagram reflects the following activity of BGC Class A common stock and BGC Holdings partnership unit activity
from January 1, 2023 through June 30, 2023: (a) 16.1 million shares of BGC Class A common stock issued for vested N Units;
(b) 2.4 million shares of BGC Class A common stock issued for vested RSUs; (c) an aggregate of 4.3 million limited
partnership units granted by BGC Holdings; (d) 10.7 million shares of BGC Class A common stock repurchased by BGC
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Partners; (e) 2.8 million shares of Class A common stock issued by BGC Partners under its acquisition shelf Registration
Statement on Form S-4 (Registration No. 333-169232), of which there were no shares remaining available for issuance under
such Registration Statement as of June 30, 2023, and 2.3 million shares of Class A common stock issued by BGC Partners
under the acquisition shelf 2019 Form S-4 Registration Statement (Registration No. 333-233761) but not the 17.7 million of
such shares remaining available for issuance by BGC Partners under such Registration Statement as of June 30, 2023; (f) 0.5
million limited partnership units forfeited; (g) 0.7 million limited partnership units related to prior period adjustments; (h) 0.8
million limited partnership units for vested N Units; and (i) 20 thousand shares issued by BGC Partners under its DRIP
Registration Statement (Registration No. 333-173109), but not the 9.2 million of such shares remaining available for issuance
by BGC Partners under the DRIP Registration Statement as of June 30, 2023.
Current Structure of BGC Group, Inc. as of December 31, 2023 (Following the Corporate Conversion)
The following diagram illustrates our organizational structure as of December 31, 2023. The diagram does not reflect
the various subsidiaries of BGC Partners, BGC U.S. OpCo, BGC Global OpCo, or Cantor, or the noncontrolling interests in our
consolidated subsidiaries. The diagram also does not reflect certain ownership of BGC Group as follows: (a) for purposes of
economic percentages, 22.4 million shares of BGC Group Class A restricted common stock as these are not entitled to receive
any dividends (however, these shares of BGC Group Class restricted common stock are included for voting power of BGC
Group); (b) 11.1 million assumed RSUs; (c) 37.3 million RSUs converted from former partners’ units in BGC Holdings; (d)
16.3 million RSUs issued in relation to employee compensation; (e) 5.9 million contingent shares to be issued to terminated
employees per their respective separation agreements; and (f) 0.8 million contingent shares issued in exchange for acquisition
units.
* Percentage includes restricted shares issued in exchange for former partners’ units in BGC Holdings.
** BGC Partners is a wholly owned subsidiary of BGC Group and consolidated with other wholly and non-wholly owned
subsidiaries.
*** Public stockholders includes unrestricted shares owned by employees, executives, and directors due to an inability to track
such shares once they leave the Company’s transfer agent.
The diagram reflects the following activity of BGC Class A common stock, BGC Class B common stock, and BGC
Holdings partnership unit activity from July 1, 2023 through December 31, 2023 as: (a) 64.0 million shares of BGC Class B
common stock issued to Cantor in exchange for Cantor’s 64.0 million BGC Holdings partnership units; (b) 5.8 million shares of
restricted BGC Class A common stock issued for limited partnership interests; (c) 15.8 million shares of BGC Class B common
stock distributed by Cantor in satisfaction of its remaining deferred share distribution obligations pursuant to distribution rights
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provided to certain current and former partners of Cantor; (d) the restrictions released on 9.3 million shares of BGC Class A
common stock; (e) 0.4 million shares of BGC Class A common stock which were converted from 0.4 million shares of Class B
common stock distributed by Cantor in satisfaction of its remaining deferred share distribution obligations pursuant to
distribution rights provided to certain current and former partners of Cantor; (f) 12.6 million shares of BGC Class A common
stock repurchased by us; and (g) 10.4 million shares of BGC Class A common stock issued for vested RSUs; (h) 0.4 million
shares of BGC Class A common stock issued for contingent shares issued in exchange for acquisition units; and (i) 0.5 million
shares of BGC Class A common stock issued for contingent shares issued in exchange for former partners’ units in BGC
Holdings; (j) 1.2 million shares of BGC Class A restricted common stock forfeited by former partners and employees; (k)
2.5 million shares of BGC Class A common stock issued for compensation. No shares of Class A common stock were issued by
us under our acquisition shelf 2019 Form S-4 Registration Statement (Registration No. 333-233761) between July 1, 2023 and
December 31, 2023; 17.7 million of such shares remain available for issuance by us under such Registration Statement. Also,
an immaterial number of shares of Class A common stock were issued by us under our DRIP Registration Statement
(Registration No. 333-173109) between July 1, 2023 and December 31, 2023; 9.2 million of such shares remain available for
issuance by us under the DRIP Registration Statement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. These filings are
available to the public from the SEC’s website at www.sec.gov.
Our website address is www.bgcg.com. Through our website, we make available, free of charge, the following
documents as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC: our Annual
Reports on Form 10-K; our proxy statements for our annual and special stockholder meetings; our Quarterly Reports on Form
10-Q; our Current Reports on Form 8-K; Forms 3, 4 and 5 and Schedules 13D with respect to our securities filed on behalf of
Cantor, CFGM, our directors and our executive officers; and amendments to those documents. Our website also contains
additional information with respect to our industry and business. The information contained on, or that may be accessed
through, our website is not part of, and is not incorporated into, this Annual Report on Form 10-K.
ITEM 1A.
RISK FACTORS
Any investment in shares of our Class A common stock, the BGC Group Notes, the BGC Partners Notes, or our other
securities or those of BGC Partners involves risks and uncertainties. The following are important risks and uncertainties that
could affect our business, but we do not ascribe any particular likelihood or probability to them unless specifically indicated.
Before making an investment decision to purchase our securities or those of BGC Partners, you should carefully read and
consider all of the risks and uncertainties described below, as well as other information included in this Annual Report on
Form 10-K, including “Item 7–Management’s Discussion and Analysis of Financial Condition and Results of Operations” and
the consolidated financial statements and related notes included herein. The occurrence of any of the following risks or
additional risks and uncertainties that are currently immaterial or unknown could materially and adversely affect our business,
financial condition, liquidity, result of operations, cash flows or prospects.
RISKS RELATED TO OUR BUSINESS
Risks Related to Global Economic and Market Conditions
Our business, financial condition, results of operations and prospects have been and may continue to be affected
both positively and negatively by conditions in the global economy and financial markets generally.
Uncertain market, economic, and geopolitical conditions have in the past adversely affected and may in the future
adversely affect our business. Such conditions and uncertainties include fluctuating levels of economic output, historic
fluctuating interest rates and the impact on trading volumes, recently volatile interest and inflation rates, employment levels,
consumer confidence levels, and fiscal and monetary policy. The economic policies of the current and next administration and
Congress, including potential changes in interest rates and existing tax rates as well as potential changes in these factors as a
result of the upcoming U.S. Presidential election may further change the regulatory and economic landscape. These conditions
may directly and indirectly impact a number of factors in the global markets that may have a positive or negative effect on our
operating results, including the levels of trading, investing, and origination activity in the financial markets, the valuations of
financial instruments, changes in interest rates, changes in benchmarks, changes in and uncertainty regarding laws and
regulations, substantial fluctuations in volume and commissions on securities and derivatives transactions, the absolute and
relative level of currency rates and the actual and the perceived quality of issuers, borrowers and investors. For example, the
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actions of the U.S. Federal Reserve and international central banking authorities directly impact our cost of capital and may
impact the value of financial instruments we hold. In addition, changes in monetary policy may affect the credit quality of our
customers. Changes in domestic and international monetary policy are beyond our control and difficult to predict.
Our revenues and profitability have historically declined and are likely to decline significantly during past and future
periods of low trading volume in the financial markets in which we offer our products and services.
The global financial services markets are, by their nature, risky and volatile and are directly affected by many national
and international factors that are beyond our control. Although we believe that meaningful interest rates may continue to
positively impact trading volumes in many of our product offerings, any one of the following factors have caused and may in
the future cause substantial changes in the U.S. and global financial markets, resulting in positive or negative impacts on
transactional volume and profitability for our business. These factors include:
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volatile global interest rates;
economic and geopolitical conditions and uncertainties in the United States, Europe, Asia and elsewhere in
the world, including government deficits, debt and possible defaults, austerity measures, and changes in
central bank and/or fiscal policies, including the level and timing of government debt issuances, purchases
and outstanding amounts;
possible political turmoil with respect to the U.S. government, the U.K., the EU and/or its member states,
Hong Kong, China, Latin America or other major economies around the world;
the effect of Federal Reserve Board and other central banks’ monetary policies, increased capital
requirements for banks and other financial institutions, and other regulatory requirements;
terrorism, war and other armed hostilities, such as the wars in Ukraine and Israel and other ongoing conflicts
and hostilities in the Middle East, and measures taken in response thereto, including sanctions imposed by
governments and related countersanctions;
the impact of short-term or prolonged U.S. government shutdowns, elections or other political events;
inflation and wavering institutional and consumer confidence levels in the economy;
pandemics and other international health emergencies, including the combined impact of COVID-19 with the
flu and other seasonal illnesses;
the availability of capital for borrowings and investments by our clients and their customers;
the level and volatility of foreign currency exchange rates and trading in certain equity, debt and commodity
markets;
the level and volatility of the difference between the yields on corporate securities and those on related
benchmark securities; and
margin requirements, capital requirements, credit availability, global supply chain issues and other liquidity
concerns.
Low transaction volumes for any of our brokerage asset classes generally result in reduced revenues. Under these
conditions, our profitability is adversely affected. In addition, although less common, some of our transaction revenues are
determined on the basis of the value of transactions or on spreads. For these reasons, substantial decreases in trading volume,
declining prices, and/or reduced spreads could have material adverse effects on our business, financial condition, results of
operations and prospects.
Downgrades of sovereign credit ratings, sovereign debt crises, or a decrease in the integrity of capital markets
may have material adverse effects on the financial markets and general economic conditions, as well as our businesses,
financial condition, cash flows, results of operations and prospects.
Any further downgrades of the U.S. sovereign credit rating by one or more of the major credit rating agencies could
have material adverse effects on financial markets and economic conditions in the U.S. and throughout the world. This in turn
could have a material adverse impact on our business, financial condition, cash flows, results of operations, and prospects. The
ultimate impacts of negative credit rating actions with respect to U.S. government obligations, the ultimate impacts on global
financial markets and our business, financial condition, cash flows, results of operations, and prospects are unpredictable and
may not be immediately apparent. Additionally, the negative impact on economic conditions and global financial markets from
further sovereign debt concerns with respect to the U.K., the EU and/or its member states, Japan, China or other major
economies could further adversely affect our businesses, financial condition, cash flows, results of operations and prospects.
Concerns about the sovereign debt of certain major economies have caused uncertainty and disruption for financial markets
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globally, and continued uncertainties loom over the outcome of various governments’ financial support programs and the
possibility that EU member states or other major economies may experience similar financial troubles. Any further downgrades
of the long-term sovereign credit rating of the U.S. or additional sovereign debt crises in major economies could cause
disruption and volatility of financial markets globally and have material adverse effects on our business, financial condition,
results of operations and prospects.
Actions taken by governments in response to inflation rates may have a material impact on our business.
Both domestic and international markets have recently experienced significant inflationary pressures and inflation rates
in the U.S., as well as in other countries in which we operate, are currently expected to continue at elevated levels for at least
the near-term. In response, the Federal Reserve in the U.S. and other central banks in various countries have raised, and may
again raise, interest rates in response to concerns about inflation, which, coupled with reduced government spending and
volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening related risks.
Interest rate increases or other government actions taken to reduce inflation could also result in recessionary pressures in many
parts of the world. Additionally, these actions have affected FX volumes around the world, causing currency fluctuations and
rapid changes in valuations that may make certain strategies less appealing for FX market participants. While higher interest
rates have had and are expected to continue to have a positive impact on our revenues, currency fluctuations have affected, and
may continue to affect, the reported value of our assets, liabilities, and cash flows.
Risks Related to New Opportunities/Possible Transactions and Hires
If we are unable to identify and successfully exploit new product, service and market opportunities, including
through hiring new brokers, salespeople, managers, technology professionals and other front-office personnel, our
business, financial condition, results of operations, cash flows and prospects could be materially adversely affected.
Because of significant competition in our market, our strategy is to broker more transactions, increase our share of
existing markets and seek out new clients and markets through competitive or innovative new product offerings. We may face
enhanced risks as these efforts to expand our business result in our transacting with a broader array of clients and expose us to
new products and services and markets. Pursuing this strategy may also require significant management attention and hiring
expense and potential costs and liability in any litigation or arbitration that may result. We may not be able to attract new clients
or brokers, salespeople, managers, technology professionals or other front-office personnel or successfully enter new markets.
If we are unable to identify and successfully exploit new product, service and market opportunities, our business, financial
condition, results of operations and prospects could be materially adversely affected.
We may pursue opportunities including new business initiatives, strategic alliances, acquisitions, mergers,
investments, dispositions, joint ventures or other growth opportunities or transformational transactions (including
hiring new brokers and salespeople), which could present unforeseen integration obstacles or costs and could dilute our
stockholders. We may also face competition in our acquisition strategy or new business plans, and such competition may
limit such opportunities.
We have explored and continue to explore a wide range of strategic alliances, new business initiatives, mergers,
investments, acquisitions and joint ventures with other financial services companies that have interests in related businesses or
other strategic opportunities. Such transactions may be necessary in order for us to enter into or develop new products or
services or markets, as well as to strengthen our current ones.
These opportunities and activities involve a number of risks and challenges, including:
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potential disruption of our ongoing businesses and product, service and market development and distraction
of management;
regulatory, financial, and operational risks associated with the launch of new initiatives which could impact
the timeline, launch and operation of such initiatives, or which could require significant capital and significant
efforts by management, including engaging partners on satisfactory terms and long lead times in order to
scale a successful venture;
the expansion of our cybersecurity processes to include new businesses, or the integration of the cybersecurity
processes of acquired businesses, including internationally;
increased focus on our Energy and Commodities business, including regulatory, financial, and operational
risks associated with these initiatives;
hiring, retaining and integrating personnel in the increasingly competitive marketplace for the most talented
producers and managers;
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integrating administrative, operational, financial reporting, internal control, compliance, technology and other
systems;
increased scope, geographic diversity and complexity of our operations and, to the extent that we pursue
opportunities internationally, exposure to political, economic, legal, regulatory, operational and other risks
that are inherent in operating in a foreign country, including risks of possible nationalization and/or foreign
ownership restrictions, expropriation, price controls, capital controls, foreign currency fluctuations, regulatory
and tax requirements, economic and/or political instability, geographic, time zone, language and cultural
differences among personnel in different areas of the world, exchange controls and other restrictive
government actions, as well as the outbreak of hostilities;
integrating accounting and financial systems and accounting policies and the related risk of having to restate
our historical financial statements;
potential dependence upon, and exposure to liability, loss or reputational damage relating to systems, controls
and personnel that are not under our control;
addition of business lines in which we have not previously engaged;
potential unfavorable reactions to our strategy by our customers, counterparties, employees, and investors, or
challenges to our strategy by our competitors;
the upfront costs of building technology and establishing infrastructure to establish new business ventures;
conflicts or disagreements between any strategic alliance or joint venture partner and us;
exposure to potential unknown liabilities of any acquired business, strategic alliance or joint venture that are
significantly larger than we anticipate at the time of acquisition, and unforeseen increased expenses or delays
associated with acquisitions, including costs in excess of the cash transition costs that we estimate at the
outset of a transaction;
reduction in availability of financing due to credit ratings downgrades or defaults by us, in connection with
these activities;
a significant increase in the level of our indebtedness and adverse effects on our Liquidity in order to generate
cash resources that may be required to effect acquisitions;
dilution resulting from any issuances of shares of our Class A common stock in connection with these
activities;
a reduction of the diversification of our business resulting from any dispositions;
the cost of rebranding and the impact on our market awareness of dispositions;
litigation or regulatory scrutiny with respect to any such transactions, including any related party aspects of
any proposed arrangements;
the impact of any reduction in our asset base resulting from dispositions on our ability to obtain financing or
the terms thereof; and
a lag in the realization of financial benefits from these transactions and arrangements.
We face competition for acquisition targets, which may limit our number of acquisition and growth opportunities and
may lead to higher acquisition prices or other less favorable terms. As we grow internationally, we may experience additional
expenses or obstacles. There can be no assurance that we will be able to identify, acquire or profitably manage additional
businesses or integrate successfully any acquired businesses without substantial costs, delays or other operational or financial
difficulties.
In addition, the acquisition of regulated firms generally requires the consent of the home jurisdiction regulator in
which the target and regulated subsidiaries are domiciled. In certain circumstances, one or more of these regulators may
withhold their consent, impose restrictions or make their consent subject to conditions which may result in increased costs or
delays.
Any future growth will be partially dependent upon the continued availability of suitable transactional candidates at
favorable prices and valuations and upon advantageous terms and conditions, which may not be available to us, as well as
sufficient liquidity to fund these transactions. Future transactions and any necessary related financings also may involve
significant transaction-related expenses, which include payment of break-up fees, assumption of liabilities, including
compensation, severance, lease termination, and other restructuring costs, and transaction and deferred financing costs, among
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others. In addition, there can be no assurance that such transactions will be accretive or generate favorable operating margins.
The success of these transactions will also be determined in part by the ongoing performance of the acquired companies and the
acceptance of acquired employees of our equity-based compensation structure and other variables which may be different from
the existing industry standards or practices at the acquired companies.
We will need to successfully manage the integration of recent and future acquisitions and future growth effectively.
Such integration and additional growth may place a significant strain upon our management, administrative, operational,
financial reporting, internal control and compliance infrastructure. Our ability to grow depends upon our ability to successfully
hire, train, supervise and manage additional employees, expand our management, administrative, operational, financial
reporting, compliance and other control systems effectively, allocate our human resources optimally, maintain clear lines of
communication between our transactional and management functions and our finance and accounting functions, and manage the
pressure on our management, administrative, operational, financial reporting, compliance and other control infrastructure.
Additionally, managing future growth may be difficult due to new geographic locations, markets and business lines. We may
not realize, or it may take an extended period of time to realize, the full benefits that we anticipate from strategic alliances,
acquisitions, joint ventures or other growth opportunities. There can be no assurance that we will be able to accurately
anticipate and respond to the changing demands we will face as we integrate recent future acquisitions and continue to expand
our operations, and we may not be able to manage growth effectively or to achieve growth at all.
From time to time, we may also seek to dispose of portions of our businesses, or otherwise reduce our ownership, each
of which could materially affect our cash flows and results of operations. Dispositions involve significant risks and
uncertainties, such as the ability to sell such businesses at satisfactory prices and terms and in a timely manner (including long
and costly sales processes and the possibility of lengthy and potentially unsuccessful attempts by a buyer to receive required
regulatory approvals,) or at all, disruption to other parts of the business and distraction of management, loss of key employees
or customers, and exposure to unanticipated liabilities or ongoing obligations to support the business following such
dispositions. In addition, if such dispositions are not completed for any reason, the market price of our Class A common stock
may reflect a market assumption that such transactions will occur, and a failure to complete such transactions could result in a
decline in the market price of our Class A common stock. Any of these factors could have a material adverse effect on our
business, financial condition, results of operations and prospects.
While we have limited offerings linked to cryptocurrencies, such offerings or any future expansion of such
business could expose us to technology, regulatory and financial risks.
While we currently have limited offerings linked to cryptocurrencies in certain jurisdictions, we may expand the types
of these offerings, the associated types of cryptocurrencies and the jurisdictions in which these offerings are offered.
Specifically, BGC provides its cryptocurrency offerings through Lucera by providing connectivity, hosting and trading
platforms and through kACE2, its analytics, pricing and distribution software.
The technology underlying cryptocurrencies and other similar digital assets is evolving at a rapid pace and may be
vulnerable to cyberattacks or have other inherent weaknesses that are not yet apparent. There is a high degree of fraud, theft,
cyberattacks and other forms of risk in the cryptocurrency space.
In addition, cryptocurrency markets experienced significant price fluctuations in recent years, and may continue to
experience periods of extreme volatility again in the future. Recently, several entities in the digital asset industry have been, and
may continue to be negatively affected, including to the point of insolvency. If such events impact our cryptocurrency offerings,
we may experience material adverse effect on our business, financial condition, results of operations and prospects in the future.
In the U.S. the SEC, CFTC, state and federal agencies are reviewing virtual currency businesses and have and or may
enact regulations that restrict business activities and or require additional licenses to conduct certain businesses. While the SEC
has recently approved the listing and trading of a number of spot bitcoin ETPs, existing and future regulations may negatively
impact our ability to offer different products in different regions and/or negatively impact our ability to deal with certain
customers depending on where they are located. If licenses are required, it may take a considerable amount of time to obtain the
necessary approvals from the respective regimes. Any of these factors could have a material adverse effect on our business,
financial condition, results of operations and prospects in the future.
Risks Related to Liquidity, Funding and Indebtedness
We have debt, which could adversely affect our ability to raise additional capital and obtain or maintain
favorable credit ratings, limit our ability to react to changes in the economy or our business, expose us to interest rate
risk, and prevent us from meeting our obligations under our indebtedness.
Our indebtedness, which at December 31, 2023 was $1,183.5 million, may have important, adverse consequences to us
and our investors, including:
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it may limit our ability to borrow money, dispose of assets or sell equity to fund our working capital, capital
expenditures, dividend payments, debt service, strategic initiatives or other obligations or purposes;
it may limit our flexibility in planning for, or reacting to, changes in the economy, the markets, regulatory
requirements, our operations or business;
our financial leverage may be higher than some of our competitors, which may place us at a competitive
disadvantage;
it may make us more vulnerable to downturns in the economy or our business;
it may require a substantial portion of our cash flow from operations to make interest payments;
it may make it more difficult for us to satisfy other obligations;
it may increase the risk of a future downgrade of our credit ratings or otherwise impact our ability to obtain or
maintain investment-grade credit ratings, which could increase future debt costs and limit the future
availability of debt financing;
we may not be able to borrow additional funds or refinance existing debt as needed or take advantage of
business opportunities as they arise, pay cash dividends or repurchase shares of our Class A common stock;
and
there would be a material adverse effect on our business, financial condition, results of operations and
prospects if we are unable to service our indebtedness or obtain additional financing or refinance our existing
debt on terms acceptable to us.
To the extent that we incur additional indebtedness or seek to refinance our existing debt, the risks described above
could increase. In addition, our actual cash requirements in the future may be greater than expected and may impact the rate at
which we make payments of obligations or incur additional obligations. Our cash flow from operations may not be sufficient to
service our outstanding debt or to repay outstanding debt as it becomes due, and we may not be able to borrow money, dispose
of assets or otherwise raise funds on acceptable terms, or at all, to service or refinance our debt.
Some of our borrowings have variable interest rates. As a result, increases in market interest rates have had and may
continue to have a material adverse effect on our interest expense.
A continued rise in interest rates could further increase our cost of funds, which could reduce our net income. In an
effort to limit our exposure to interest rate fluctuations, we may rely on interest rate hedging or other interest rate risk
management activities. These activities may limit our ability to participate in the benefits of lower interest rates with respect to
the hedged borrowings. Adverse developments resulting from changes in interest rates or hedging transactions could have a
material adverse effect on our business, financial condition, results of operations and prospects.
Some of our borrowings will mature in the near future. The BGC Group 3.750% Senior Notes and BGC Partners
3.750% Senior Notes each mature on October 1, 2024, and collectively have an outstanding aggregate principal amount of
$300.0 million; the BGC Group 4.375% Senior Notes and BGC Partners 4.375% Senior Notes each mature on December 15,
2025, and collectively have an outstanding aggregate principal amount of $300.0 million; and the BGC Group 8.000% Senior
Notes and the BGC Partners 8.000% Senior Notes each mature on May 25, 2028, and collectively have an outstanding
aggregate principal amount of $350.0 million. Our ability to meet our payment and other obligations under our debt depends on
our ability to generate and maintain significant cash flow in the near future or to access alternate sources of liquidity. This, to
some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors
that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that additional
capital will be available to us, in an amount sufficient to enable us to meet our payment obligations under our borrowings and to
fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations and our unable to
refinance our obligations on terms or at interest rates acceptable to us at all, we may need to sell assets, reduce or delay capital
investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, our cash flow
may be significantly reduced, which could have a material adverse effect on our business, financial condition, results of
operations and prospects.
We are dependent upon availability of adequate funding and liquidity to meet our clearing margin requirements,
among other financial needs. Clearing margin is the amount of cash, guarantees or similar collateral that we must provide or
deposit with our third-party clearing organizations in support of our obligations under contractual clearing arrangements with
these organizations. Historically, these needs have been satisfied from internally generated funds and proceeds from debt and
equity financings. We have also relied on arrangements with Cantor to clear certain of our transactions under the clearing
agreement we entered into with Cantor in November 2008, which was amended in June 2020. Although we have historically
been able to raise debt on acceptable terms, deterioration of the world’s credit markets could make it more difficult for us to
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refinance or replace such indebtedness in a timely manner or on acceptable terms. Further, if for any reason we need to raise
additional funds, including in order to meet regulatory capital requirements and/or clearing margin requirements arising from
growth in our brokerage business, to complete acquisitions or otherwise, we may not be able to obtain additional financing
when needed. If we cannot raise additional funds on acceptable terms, we may not be able to develop or enhance our business,
take advantage of future growth opportunities or respond to competitive pressure or unanticipated requirements.
Our Revolving Credit Agreement contains restrictions that may limit our flexibility in operating our business.
Our Revolving Credit Agreement contains covenants that could impose operating and financial restrictions on us,
including restrictions on our ability to, among other things and subject to certain exceptions:
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create liens on certain assets;
incur additional debt;
make significant investments and acquisitions;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
dispose of certain assets;
pay additional dividends on or make additional distributions in respect of our capital stock or make restricted
payments;
repurchase shares of our Class A common stock;
enter into certain transactions with our affiliates; and
place restrictions on certain distributions from subsidiaries.
Indebtedness that we may enter into in the future, if any, could also contain similar or additional covenants or
restrictions. Any of these restrictions could limit our ability to adequately plan for or react to market conditions and could
otherwise restrict certain of our corporate activities. Any material failure to comply with these covenants could result in a
default under the Revolving Credit Agreement as well as instruments governing our future indebtedness. Upon a material
default, unless such default were cured by us or waived by lenders in accordance with the Revolving Credit Agreement, the
lenders under such agreement could elect to invoke various remedies under the agreement, including potentially accelerating the
payment of unpaid principal and interest, terminating their commitments or, however unlikely, potentially forcing us into
bankruptcy or liquidation. In addition, a default or acceleration under such agreement could trigger a cross default under other
agreements, including potential future debt arrangements. Although we believe that our operating results will be more than
sufficient to meet all of these obligations, including potential future indebtedness, no assurance can be given that our operating
results will be sufficient to service our indebtedness or to fund all of our other expenditures or to obtain additional or
replacement financing on a timely basis and on reasonable terms in order to meet these requirements when due.
Credit ratings downgrades could adversely affect our cost of capital and the availability of debt financing.
Our credit ratings and associated outlooks are critical to our reputation and operational and financial success. Our
credit ratings and associated outlooks are influenced by a number of factors, including: operating environment, regulatory
environment, earnings and profitability trends, the rating agencies’ view of our funding and liquidity management practices,
balance sheet size/composition and resulting leverage, cash flow coverage of interest, composition and size of the capital base,
available liquidity, outstanding borrowing levels, our competitive position in the industry, our relationships in the industry, our
relationship with Cantor, acquisitions or dispositions of assets and other matters. A credit rating and/or the associated outlook
can be revised upward or downward at any time by a rating agency if such rating agency decides that circumstances of that
company or related companies warrant such a change. Any adverse ratings change or a downgrade in the credit ratings of BGC,
Cantor or any of their other affiliates, and/or the associated ratings outlooks could adversely affect the availability of debt
financing to us on acceptable terms, as well as the cost and other terms upon which we may obtain any such financing. In
addition, our credit ratings and associated outlooks may be important to clients of ours in certain markets and in certain
transactions. A company’s contractual counterparties may, in certain circumstances, demand collateral in the event of a credit
ratings or outlook downgrade of that company. Further, interest rates payable on our future or our and BGC Partners’ currently
outstanding debt may increase in the event that our ratings decline; for example, under the terms of our and BGC Partners’
outstanding senior notes, a downgrade in our credit ratings by both Fitch Ratings Inc. and Standard & Poor’s would lead to an
increase in the interest rates payable on those notes.
As of December 31, 2023, BGC Group’s public long-term credit ratings were BBB- from Fitch Ratings Inc. and S&P
Global Ratings, BBB from Kroll Bond Rating Agency and BBB+ from Japan Credit Rating Agency, Ltd. and the associated
outlooks on all the ratings were stable. No assurance can be given that the credit ratings will remain unchanged in the future.
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Any negative change to our credit ratings and associated outlooks may restrict our ability to raise additional capital or refinance
debt on favorable terms, and any resulting impacts on our funding access, liquidity or perceived creditworthiness among our
clients, counterparties, lenders, investors, or other market participants could have a material adverse effect on our business,
financial condition, results of operations and prospects. See “—Credit Risk— Credit ratings downgrades or defaults by us,
Cantor or another large financial institution could adversely affect us or financial markets generally.”
Our acquisitions may require significant cash resources and may lead to a significant increase in the level of our
indebtedness.
We may enter into short- or long-term financing arrangements in connection with acquisitions which may occur from
time to time. In addition, we may incur substantial non-recurring transaction costs, including break-up fees, and assume new
liabilities and expenses. The increased level of our consolidated indebtedness in connection with potential acquisitions may
restrict our ability to raise additional capital on favorable terms, and such leverage, and any resulting liquidity or credit issues,
could have a material adverse effect on our business, financial condition, results of operations and prospects.
We may incur substantially more debt or take other actions which would intensify the risks discussed herein.
We may incur substantial additional debt in the future, some of which may be secured debt. We are not restricted
under the terms of our existing debt arrangements and instruments, including the indentures governing the BGC Group 3.750%
Senior Notes, the BGC Group 4.375% Senior Notes, and the BGC Group 8.000% Senior Notes, or the indentures governing the
BGC Partners senior notes, from incurring additional debt, securing existing or future debt (with certain exceptions, including
to the extent already secured), recapitalizing our debt or taking a number of other actions that are not limited by the terms of our
debt instruments that could have the effect of exacerbating the risks described herein.
Risks Related to Our Senior Notes
We may not have the funds necessary to repurchase the BGC Group 3.750% Senior Notes, the BGC Group
4.375% Senior Notes, and the BGC Group 8.000% Senior Notes, or the BGC Partners senior notes upon a change of
control triggering event as required by the indentures governing these notes.
Upon the occurrence of a “change of control triggering event” (as defined in the indentures governing the BGC Group
3.750% Senior Notes, the BGC Group 4.375% Senior Notes, and the BGC Group 8.000% Senior Notes, and the indentures
governing the BGC Partners senior notes), unless we have exercised our right to redeem such notes, holders of the notes will
have the right to require us to repurchase all or any part of their notes at a price in cash equal to 101% of the then-outstanding
aggregate principal amount of the notes repurchased plus accrued and unpaid interest, if any. There can be no assurance that we
would have sufficient, readily available financial resources, or would be able to arrange financing, to repurchase the BGC
Group 3.750% Senior Notes, the BGC Group 4.375% Senior Notes, and the BGC Group 8.000% Senior Notes, or the BGC
Partners senior notes upon a “change of control triggering event.” A failure by us to repurchase the notes when required would
result in an event of default with respect to the notes. In addition, such failure may also constitute an event of default and result
in the effective acceleration of the maturity of our other then-existing indebtedness.
The requirement to offer to repurchase the BGC Group 3.750% Senior Notes, the BGC Group 4.375% Senior
Notes, and the BGC Group 8.000% Senior Notes, or the BGC Partners senior notes upon a “change of control triggering
event” may delay or prevent an otherwise beneficial takeover attempt of us.
The requirement to offer to repurchase the BGC Group 3.750% Senior Notes, the BGC Group 4.375% Senior Notes,
and the BGC Group 8.000% Senior Notes, or the BGC Partners senior notes upon a “change of control triggering event” may in
certain circumstances delay or prevent a takeover of us and/or the removal of incumbent management that might otherwise be
beneficial to investors in our Class A common stock.
Risks Related to the Geographic Locations of Our Business
Our business is geographically concentrated and could be significantly affected by any adverse change in the
regions in which we operate.
Historically, our business operations have been substantially located in the U.S. and the U.K. While we are expanding
our business to new geographic areas, we are still highly concentrated in these areas. Because we derived approximately 35.8%
and approximately 32.0% of our total revenues on a consolidated basis for the year ended December 31, 2023 from our
operations in the U.K. and the U.S., respectively, our business is exposed to adverse regulatory and competitive changes,
economic downturns and changes in political conditions in these countries. If we are unable to identify and successfully manage
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or mitigate these risks, our business, financial condition, results of operations and prospects could be materially adversely
affected.
The U.K. exit from the EU could materially adversely impact our customers, counterparties, business, financial
condition, results of operations and prospects.
On January 1, 2021, the U.K. formally left the EU and U.K.-EU trade became subject to a new agreement that was
concluded in December of 2020. The exit from the EU is commonly referred to as Brexit. Financial services fall outside of the
scope of this trade agreement. Instead, the relationship will largely be determined by a series of “equivalence decisions,” each
of which would grant mutual market access for a limited subset of financial services where either party finds the other party has
a regulatory regime that achieves similar outcomes to its own. It is currently unknown if or when equivalence decisions will be
taken. In March 2021, the U.K. and EU agreed a Memorandum of Understanding on Financial Services Regulatory Cooperation
which creates a structure for dialogue but does not include commitments on equivalence.
We implemented plans to ensure continuity of service in Europe and continue to have regulated offices in place in
many of the major European markets. As part of our ongoing Brexit strategy, ownership of BGC Madrid, Copenhagen and
Frankfurt & GFI Paris, Madrid and Dublin branches was transferred to Aurel BGC SAS (a French-based operation and
therefore based in the EU) in July 2020. We have been generally increasing our footprint in the EU which includes the
establishment of a new branch office of Aurel BGC SAS in Milan and a new office in Monaco under a new local Monaco
subsidiary.
Regardless of these and other mitigating measures, our European headquarters and largest operations are in London,
and market access risks and uncertainties have had and could continue to have a material adverse effect on our customers,
counterparties, business, financial condition, results of operations and prospects. Furthermore, in the future the U.K. and EU’s
regulation may diverge, which could disrupt and increase the costs of our operations, and result in a loss of existing levels of
cross-border market access.
Risks Related to Our Intellectual Property
We may not be able to protect our intellectual property rights or may be prevented from using intellectual
property necessary for our business.
Our success is dependent, in part, upon our intellectual property, including our proprietary technology. We rely
primarily on trade secret, contract, patent, copyright, and trademark law in the U.S. and other jurisdictions as well as
confidentiality procedures and contractual provisions to establish and protect our intellectual property rights to proprietary
technologies, products, services or methods, and our brands. For example, we regularly file patent applications to protect
inventions arising from our research and development, and we are currently pursuing patent applications around the world. We
also control access to our proprietary technology and enter into confidentiality and invention assignment agreements with our
employees and consultants and confidentiality agreements with other third parties. Protecting our intellectual property rights is
costly and time consuming.
Unauthorized use of our intellectual property could make it more expensive to do business and harm our operating
results. We cannot ensure that our intellectual property rights are sufficient to protect our competitive advantages or that any
particular patent, copyright or trademark is valid and enforceable, and all patents ultimately expire. In addition, the laws of
some foreign countries may not protect our intellectual property rights to the same extent as the laws in the U.S., or at all. Any
significant impairment of our intellectual property rights could harm our business or our ability to compete.
Many companies, including those in the computer and financial services industries own large numbers of patents,
copyrights, and trademarks and sometimes file lawsuits based on allegations of infringement or other violations of intellectual
property rights. In addition, there has been a proliferation of patents applicable to these industries and a substantial increase in
the number of such patent applications filed. Under current law, U.S. patent applications typically remain secret for 18 months
or, in some cases, until a patent is issued. Because of technological changes in these industries, patent coverage, and the
issuance of new patents, it is possible certain components of our products and services may unknowingly infringe existing
patents or other intellectual property rights of others. Although we have taken steps to protect ourselves, there can be no
assurance that we will be aware of all patents, copyrights or trademarks that may pose a risk of infringement by our products
and services. Generally, it is not economically practicable to determine in advance whether our products or services may
infringe the present or future rights of others.
Accordingly, we may face claims of infringement or other violations of intellectual property rights that could interfere
with our ability to use intellectual property or technology that is material to our business. In addition, restrictions on the
distribution of some of the market data generated by our brokerage desks could limit the comprehensiveness and quality of the
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data we are able to distribute or sell. The number of such third-party claims may grow. Our technologies may not be able to
withstand such third-party claims or rights against their use.
We may have to rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the
validity and scope of the rights of others or defend against claims of infringement or invalidity. Any such claims or litigation,
whether successful or unsuccessful, could result in substantial costs, and the diversion of resources and the attention of
management, any of which could materially negatively affect our business. Responding to these claims could also require us to
enter into royalty or licensing agreements with the third parties claiming infringement, stop selling or redesign affected products
or services or pay damages on our own behalf or to satisfy indemnification commitments with our customers. Such royalty or
licensing agreements, if available, may not be available on terms acceptable to us, and may negatively affect our business,
financial condition, results of operations and prospects.
If our licenses or services from third parties are terminated or adversely changed or amended or contain
material defects or errors, or if any of these third parties were to cease doing business or if products or services offered
by third parties were to contain material defects or errors, our ability to operate our business may be materially
adversely affected.
We license databases, software and services from third parties, much of which is integral to our systems and our
business. The licenses are terminable if we breach or have been perceived to have breached our obligations under the license
agreements. If any material licenses were terminated or adversely changed or amended, if any of these third parties were to
cease doing business or if any licensed software or databases licensed by these third parties were to contain material defects or
errors, we may be forced to spend significant time and money to replace the licensed software and databases, and our ability to
operate our business may be materially adversely affected. Further, any errors or defects in third-party services or products
(including hardware, software, databases, cloud computing and other platforms and systems) or in services or products that we
develop ourselves, could result in errors in, or a failure of our services or products, which could harm our business. Although
we take steps to locate replacements, there can be no assurance that the necessary replacements will be available on acceptable
terms, if at all. There can be no assurance that we will have an ongoing license to use all intellectual property which our systems
require, the failure of which could have a material adverse effect on our business, financial condition, results of operations and
prospects.
Risks Related to Our IT Systems and Cybersecurity
Defects or disruptions in our technology or services could diminish demand for our products and services and
subject us to liability.
Because our technology, products and services are complex and use or incorporate a variety of computer hardware,
software and databases, both developed in-house and acquired from third party vendors, our technology, products and services
may have errors or defects. Errors and defects could result in unanticipated downtime or failure and could cause financial loss
and harm to our reputation and our business. We have from time to time found defects and errors in our technology, products
and service and defects and errors in our technology, products or services may be detected in the future. In addition, our
customers may use our technology, products and services in unanticipated ways that may cause a disruption for other
customers. As we acquire companies, we may encounter difficulty in integrating the acquired technologies, products and
services, and maintaining the quality standards that are consistent with our technology, products and services. Since our
customers use our technology, products and services for important aspects of their business and for financial transactions, any
errors, defects, or disruptions in such technology, products and services or other performance problems with our technology,
products and services could subject our customers to harm and hurt our reputation.
Malicious cyber-attacks and other adverse events could disrupt our business, result in the disclosure of
confidential information, damage our reputation and cause losses or regulatory penalties.
Our businesses require us to process and monitor, on a daily basis, a very large number of transactions, many of which
are highly complex, across numerous and diverse markets in many currencies. Developing and maintaining our operational
systems and infrastructure are challenging, particularly as a result of us and our clients entering into new businesses,
jurisdictions and regulatory regimes, rapidly evolving legal and regulatory requirements and technological shifts. Our financial,
accounting, data processing or other operating and compliance systems and facilities may fail to operate properly or become
disabled as a result of events that are wholly or partially beyond our control, including malicious cyber-attacks or other adverse
events, which may adversely affect our ability to process these transactions or provide services or products.
In addition, our operations rely on the secure processing, storage and transmission of confidential and other
information on our computer systems and networks. Although we take protective measures, such as software programs,
firewalls and similar technology, to maintain the confidentiality, integrity and availability of our and our customers’
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information, and endeavor to modify these protective measures as circumstances warrant, the nature of cyber threats continues
to evolve. As a result, our computer systems, software and networks may be vulnerable to unauthorized access, loss or
destruction of data (including confidential customer information), account takeovers, unavailability or disruption of service,
computer viruses, acts of vandalism, or other malicious code, ransomware, hacking, phishing and other cyber-attacks and other
adverse events that could have an adverse security impact. Additionally, we may be vulnerable to cybersecurity attacks utilizing
emerging technologies, such as artificial intelligence. Despite the defensive measures we have taken, these threats may come
from external forces, such as governments, nation-state actors, organized crime, hackers, and other third parties, or may
originate internally from within us. Given the high volume of transactions involved in our business, certain errors may be
repeated or compounded before they are discovered and rectified.
We also face the risk of operational disruption, failure, termination or capacity constraints of any of the third parties
that facilitate our business activities, including vendors, customers, counterparties, exchanges, clearing agents, clearinghouses
or other financial intermediaries. Such parties could also be the source of a cyber-attack on or breach of our operational
systems, network, data or infrastructure. Malicious actors may also attempt to compromise or induce our employees, clients or
other users of our systems to disclose sensitive information or provide access to our data, and these types of risks may be
difficult to detect or prevent.
There have been an increasing number of ransomware, hacking, phishing and other cyber-attacks in recent years in
various industries, including ours, and cybersecurity risk management has been the subject of increasing focus by our
regulators. Like other companies, we have on occasion experienced, and may continue to experience, threats to our systems,
including viruses, phishing and other cyber-attacks. The number and complexity of these threats continue to increase over time.
The techniques used in these attacks are increasingly sophisticated, change frequently and are often not recognized until
launched. If one or more cyber-attacks occur, it could potentially jeopardize the confidential, proprietary and other information
processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or
malfunctions in our, as well as our customers’ or other third parties’ operations, which could result in reputational damage,
financial losses, customer dissatisfaction and/or regulatory penalties, which may not in all cases be covered by insurance. If an
actual, threatened or perceived cyber-attack or breach of our security occurs, our clients could lose confidence in our platforms
and solutions, security measures and reliability, which would materially harm our ability to retain existing clients and gain new
clients. As a result of any such attack or breach, we may be required to expend significant resources to repair system, network
or infrastructure damage and to protect against the threat of future cyber-attacks or security breaches. We could also face
litigation or other claims from impacted individuals as well as substantial regulatory sanctions or fines.
The extent of a particular cyber-attack and the steps that we may need to take to investigate the attack may not be
immediately clear, and it may take a significant amount of time before such an investigation can be completed and full and
reliable information about the attack is known. While such an investigation is ongoing, we may not necessarily know the full
extent of the harm caused by the cyber-attack, and any resulting damage may continue to spread. Furthermore, it may not be
clear how best to contain and remediate the harm caused by the cyber-attack, and certain errors or actions could be repeated or
compounded before they are discovered and remediated. Any or all of these factors could further increase the costs and
consequences of a cyber-attack.
Our regulators in recent years have increased their examination and enforcement focus on all matters of our business,
especially matters relating to cybersecurity threats, including the assessment of firms’ vulnerability to cyber-attacks. In
particular, regulatory concerns have been raised about firms establishing effective cybersecurity governance and risk
management policies, practices and procedures that enable the identification of risks, testing and monitoring of the effectiveness
of such procedures and adaptation to address any weaknesses; protecting firm networks and information; data loss prevention,
identifying and addressing risk associated with remote access to client information and fund transfer requests; identifying and
addressing risks associated with customers’ business partners, counterparties, vendors, and other third parties, including
exchanges and clearing organizations; preventing and detecting unauthorized access or activities; adopting effective mitigation
and business continuity plans to timely and effectively address the impact of cybersecurity breaches; and establishing protocols
for reporting cybersecurity incidents. As we enter new jurisdictions or different product area verticals, we may be subject to
new areas of risk or to cyber-attacks in areas in which we have less familiarity and tools. A technological breakdown could also
interfere with our ability to comply with financial reporting requirements. While any insurance that we may have that covers a
specific cybersecurity incident may help to prevent the realization of a significant loss from the incident, it would not protect us
from the effects of adverse regulatory actions that may result from the incident or a finding that we had inadequate
cybersecurity controls, including the reputational harm that could result from such regulatory actions.
Additionally, data privacy is subject to frequently changing rules and regulations in countries where we do business.
Rights in relation to an individual’s personal data in the EU and U.K. are governed respectively by the GDPR in the EU and the
equivalent Data Protection Act 2018 in the U.K. We are subject compliance obligations in relation to such personal data and the
possibility of significant financial penalties for non-compliance. We are also subject to certain U.S. federal and state laws
governing the protection of personal data. These laws and regulations are increasing in complexity and number. In addition to
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the increased cost of compliance, our failure to successfully implement or comply with appropriate processes to adhere to the
GDPR and other laws and regulations relating to personal data could result in substantial financial penalties for non-
compliance, expose us to litigation risk and harm our reputation.
The SEC recently adopted new rules that state that, as a public company, we are required to disclose certain of our
processes that relate to cybersecurity and to disclose information relating to material cyber-attacks or other information security
breaches. While we view cybersecurity as a top priority, developing and maintaining our operational systems and infrastructure
is challenging, particularly as a result of rapidly evolving legal and regulatory requirements and technological shifts. Our
financial, accounting, data processing or other operating and compliance systems and facilities may fail to operate properly or
become disabled as a result of events that are wholly or partially beyond our control, such as a malicious cyber-attack or other
adverse events, which may adversely affect our ability to provide services. Any such cyber incidents involving our computer
systems and networks, or those of third parties important to our business, could have a material adverse effect on our business,
financial condition, results of operations and prospects.
We may use artificial intelligence in our business, and challenges with properly managing its use could result in
competitive harm, regulatory action, legal liability and brand or reputational harm.
We are developing and may use artificial intelligence, including, without limitation, machine learning and generative
artificial intelligence (collectively, “AI”) in our business and integrate AI into our platforms, products, offerings and services.
Such use may present legal, regulatory and other challenges that could subject us to competitive harm, regulatory action, legal
liability and brand or reputational harm. If the output of any AI integrated into our platforms, products, offerings or services are
or alleged to be deficient, inaccurate, infringing, violative of third-party rights or biased, our business, financial condition, and
results of operations may be adversely affected.
Our success and ability to remain competitive in the industry in which we operate requires adapting to technological
developments and evolving industry standards, including in the field of AI. Our competitors or other third parties may
incorporate AI into their products or services more quickly or more successfully than us, which could make our products and
services obsolete, impair our ability to compete effectively and adversely affect our business. Moreover, use of third-party AI
tools could lead to the inadvertent disclosure of confidential and proprietary information, which could put us at a competitive
disadvantage and adversely affect our proprietary rights, business and financial condition.
As AI capabilities improve and are increasingly adopted, we may also become more vulnerable to cybersecurity
attacks that use AI. Such cybersecurity attacks could compromise our intellectual property and other sensitive information, be
costly to remediate and cause significant damage to our business, reputation and operations.
Risks Relating to Our Key Personnel and Employee Turnover
The loss of one or more of our key executives, the development of future talent and the ability of certain key
employees to devote adequate time and attention to us are a key part of the success of our business, and failure to
continue to employ and have the benefit of these executives may adversely affect our business and prospects.
Our people are our most important resource. We must retain the services of our key employees and strategically recruit
and hire new talented employees to attract customer transactions. Further, as we diversify into future business lines or
geographic regions, hiring and engagement of effective management in these areas will impact our future success. See “Item 1-
Business-Human Capital Management.” If our retention efforts are not successful or our turnover rate increases in the future,
our business, results of operations and financial condition could be materially adversely affected.
Effective succession planning is also important to our long-term success. Failure to transition smoothly and effectively
transfer knowledge to future executive officers and key employees could hinder our strategic planning and execution. From
time to time, senior management, outside directors or other key employees may leave our Company or be absent due to illness
or other factors. While we strive to reduce the negative impact of such changes, losing certain key employees could result in
significant disruptions to our operations. Hiring, training, and successfully integrating replacement critical personnel is time
consuming and, if unsuccessful could disrupt our operations, and as a result could materially adversely affect our business,
financial condition, results of operations and prospects.
Howard W. Lutnick, who serves as our Chief Executive Officer and as Chairman of us and Executive Chairman of
Newmark, is also the Chairman of the Board, President and Chief Executive Officer of Cantor and Chairman, Chief Executive
Officer, President, director and sole shareholder of CFGM, the managing general partner of Cantor. Stephen M. Merkel, our
Executive Vice President and General Counsel, is employed as Executive Managing Director, General Counsel and Secretary of
Cantor and Executive Vice President and Chief Legal Officer of Newmark. In addition, Messrs. Lutnick and Merkel also hold
offices at various other affiliates of Cantor. These key employees are not subject to employment agreements with us or any of
our subsidiaries.
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Currently, Mr. Lutnick expects to spend approximately 50% of his working time and Mr. Merkel expects to spend
approximately 35% of his working time on our matters. These percentages may vary depending on business developments,
strategic initiatives or acquisition activity at us or Newmark or Cantor or any of our or their other affiliates, including SPACs.
As a result, these key employees dedicate only a portion of their professional efforts to our business and operations, and there is
no contractual obligation for them to spend a specific amount of their time with us and/or Newmark or Cantor and their
respective affiliates. These key employees may not be able to dedicate adequate time and attention to our business and
operations, and we could experience an adverse effect on our operations due to the demands placed on these members of our
management team by their other professional obligations. In addition, these key employees’ other responsibilities could cause
conflicts of interest with us. Should Mr. Lutnick or our other most senior executives leave or otherwise become unavailable to
render services to us, their loss could disrupt our operations, adversely impact employee retention and morale, and seriously
harm our business.
We may be unable to enforce post-employment restrictive covenants applicable to our employees.
Certain of our key employees and officers are subject to post-employment restrictive covenants, including non-
competition agreements, in connection with their employment agreements. While we have had success in responding to
challenges to certain of our non-compete provisions, there can be no assurance that our non-competition agreements will be
found enforceable if challenged in certain states, including states that generally do not enforce post-employment restrictive
covenants. In 2023, the Federal Trade Commission proposed a rule that would render non-competition clauses unenforceable in
certain situations, and is expected to vote on its proposed rule in April of this year. If such a rule were passed (in any form) and
upheld by the courts, it could have a material adverse impact on any applicable post-employment restrictive covenants currently
in place. Additionally, the Newmark Holdings limited partnership agreements, to the extent that our executive officers and
employees continue to hold Newmark Holdings limited partnership units, which include non-competition and other
arrangements applicable to our key employees who are limited partners of Newmark Holdings, may not prevent our key
employees, including Messrs. Lutnick and Merkel, whose employment by Cantor is not subject to these provisions in the
limited partnership agreements, from resigning or competing against us.
In addition, our success has largely been dependent on the efforts of Mr. Lutnick and other executive officers. Should
Mr. Lutnick or our other most senior executives leave or otherwise become unavailable to render services to us, their loss could
disrupt our operations, adversely impact employee retention and morale, and seriously harm our business.
Should any of our key employees join an existing competitor, form a competing company, offer services to Cantor or
any affiliates that compete with our products, services or otherwise leave us, some of our customers could choose to use the
services of that competitor or another competitor instead of our services, which could adversely affect our revenues and as a
result could materially adversely affect our business, financial condition, results of operations and prospects.
Risks Related to Internal Controls
If we fail to implement and maintain an effective internal control environment, our operations, reputation and
stock price could suffer, we may need to restate our financial statements, and we may be delayed or prevented from
accessing the capital markets.
As a public company, we are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by
management on, among other things, the effectiveness of our internal control over financial reporting. This assessment is
required to include disclosure of any material weaknesses identified by our management in our key internal controls over
financial reporting. A material weakness is a control deficiency or combination of control deficiencies that results in more than
a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. To
ensure compliance with Section 404, we will continue to evaluate our key internal controls over financial reporting, including
with respect to acquisitions.
Internal controls over financial reporting, no matter how well designed, have inherent limitations. Therefore, internal
controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
may not prevent or detect all misstatements. Due to the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people
or by management override of the controls. Moreover, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. As such, we could lose investor confidence in the accuracy and completeness of our
financial reports, which may have a material adverse effect on our reputation and stock price.
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Our ability to identify and remediate any material weaknesses in our internal controls over financial reporting could
affect our ability to prepare financial reports in a timely manner, control our policies, procedures, operations and assets, assess
and manage our operational, regulatory and financial risks, and integrate our acquired businesses. Similarly, we need to
effectively manage any growth that we achieve in such a way as to ensure continuing compliance with all applicable control,
financial reporting and legal and regulatory requirements. Any material failure to ensure full compliance with control and
financial reporting requirements could result in restatement of our financial statements, delay or prevent us from accessing the
capital markets and harm our reputation and/or the market price for our Class A common stock.
Risks Related to Seasonality
The financial markets in which we operate are generally affected by seasonality, which could have a material
adverse effect on our results of operations in a given period.
Traditionally, the financial markets around the world experience lower volume during the summer and at the end of the
year due to a general slowdown in the business environment around holiday seasons, and, therefore, our transaction volume
levels may decrease during those periods. The timing of local holidays also affects transaction volumes. These factors could
have a material effect on our results of operations in any given period.
The seasonality of our business makes it difficult to determine during the course of the year whether planned results
will be achieved and to adjust to changes in expectations. To the extent that we are not able to identify and adjust for changes in
expectations or we are confronted with negative conditions that inordinately impact seasonal norms, our business, financial
condition, results of operations and prospects could be materially adversely affected.
Risks Related to Regulatory and Legal Compliance
The financial services industry in general faces potential regulatory, litigation and/or criminal risks that may
result in damages or fines or other penalties as well as costs, and we may face damage to our professional reputation and
legal liability if our products and services are not regarded as satisfactory, our employees do not adhere to all applicable
legal and professional standards, or for other reasons, all of which could have a material adverse effect on our business,
financial condition, results of operations and prospects.
Many aspects of our current business involve substantial risks of liability. In the normal course of business, we have
been a party to investigations, administrative proceedings, lawsuits, arbitrations, and other actions involving primarily claims
for damages. In certain circumstances, we could also face potential criminal investigations, enforcement actions or liability,
including fines or other penalties. Examinations, inspections, regulatory inquiries and subpoenas or other requests for
information or testimony may cause us to incur significant expenses, including fees for legal representation and other
professional advisors and costs associated with document production and remediation efforts. Such regulatory, legal, or other
actions may also be directed at certain executives or employees who may be critical to our business or to particular brokerage
desks. The risks associated with such matters often may be difficult to assess or quantify, and their existence and magnitude
often remain unknown for substantial periods of time. The expansion of our businesses, including into new areas, imposes
additional risks of liability.
A settlement of, or judgment related to, any such matters could result in regulatory, civil or criminal liability, fines,
penalties, restrictions or limitations on our operations and activities and other sanctions and could otherwise have a material
adverse effect on our business, results of operations, financial condition and prospects. Any such action could also cause us
significant reputational harm, which, in turn, could seriously harm us. In addition, regardless of the outcome of such matters,
we may incur significant legal and other costs, including substantial management time, dealing with such matters, even if we
are not a party to the litigation or a target of the inquiry.
We depend to a large extent on our relationships with our customers and our reputation for integrity and high-caliber
professional services to attract and retain customers. We are subject to the risk of failure of our employees to comply with
applicable laws, rules and regulations or to be adequately supervised by their managers, and to the extent that such individuals
do not meet these requirements, we may be subject to the risk of fines or other penalties as well as reputational risk. It is not
always possible to deter and detect employee misconduct or fraud. While we have various supervisory systems and compliance
processes and procedures in place, and seek to mitigate applicable risks, the precautions we take to deter and detect and prevent
this activity may not be effective in all cases. As a result, if our customers are not satisfied with our products or services, or our
employees do not adhere to all applicable legal and professional standards, such matters may be more damaging to our business
than to other types of businesses. Significant regulatory action or substantial legal liability against us could have a material
adverse effect on our business, financial condition, results of operations and prospects, or cause significant reputational damage
to us, which could seriously harm us.
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We are subject to regulatory capital requirements on our regulated business, and a significant operating loss or
any extraordinary charge against capital could materially adversely affect our ability to expand or, depending upon the
magnitude of the loss or charge, even to maintain the current level of our business.
Many aspects of our business, like those of other financial services firms, are subject to significant capital
requirements. In the U.S., the SEC, FINRA, the CFTC, the NFA and various other regulatory bodies have stringent provisions
with respect to capital applicable to the operation of brokerage firms, which vary depending upon the nature and extent of these
entities’ activities. Four of our subsidiaries, BGCF, GFI Securities LLC, Fenics Execution LLC and Mint Brokers are registered
with the SEC and subject to the Uniform Net Capital Requirements. As an FCM, Mint Brokers is also subject to CFTC capital
requirements. BGCF is also a member of the FICC, which imposes capital requirements on its members. These entities are
subject to SEC, FINRA, CFTC and NFA net capital requirements. In addition, our SEFs, BGC Derivative Markets and GFI
Swaps Exchange, are required to maintain financial resources to cover operating costs for at least one year, keeping at least
enough cash or highly liquid securities to cover six months’ operating costs. On January 22, 2024, FMX received approval from
the CFTC to operate an exchange for U.S. Treasury and SOFR futures. The launch and operation of FMX may continue to
require regulatory approval which could subject us to additional costs or obstacles.
Our international operations are also subject to capital requirements in their local jurisdiction. BGC Brokers L.P., GFI
Brokers Limited, and GFI Securities Limited, which are based in the U.K., are currently subject to solo capital requirements
established by the FCA’s Investment Firm Prudential Regime. In addition, BGC European Holdings L.P.is subject to the FCA’s
consolidated capital requirements. The capital requirements of our French entities (and their EU branches) are predominantly
set by the ACPR and AMF. U.K. and EU authorities apply stringent provisions with respect to capital applicable to the
operation of these brokerage firms, which vary depending upon the nature and extent of their activities.
In addition, the majority of our other foreign subsidiaries are subject to similar regulation by the relevant authorities in
the jurisdictions in which they do business, such as Australia, Hong Kong and Singapore. These regulations often include
minimum capital requirements, which are subject to change. Further, we may become subject to capital requirements in other
foreign jurisdictions in which we currently operate or in which we may enter.
We expect to continue to maintain levels of capital in excess of regulatory minimums. Should we fail to maintain the
required capital, we may be required to reduce or suspend our brokerage operations during the period that we are not in
compliance with capital requirements and may be subject to suspension or revocation of registration or withdrawal of
authorization or other disciplinary action from domestic and international regulators, which would have a material adverse
effect on us. In addition, should we fail to maintain the capital required by clearing organizations of which we are a member,
our ability to clear through those clearing organizations may be impaired, which may materially adversely affect our ability to
process trades.
If the capital rules are changed or expanded, or if there is an unusually large charge against capital, our operations that
require the intensive use of capital would be limited. Our ability to withdraw capital from our regulated subsidiaries is subject to
restrictions, which, in turn, could limit our ability to pay our indebtedness, other expenses, and dividends on our Class A
common stock, to repurchase shares of our Class A common stock or to pursue strategic acquisitions or other growth
opportunities. It is possible that capital requirements may also be relaxed as a result of future changes in U.S. regulation,
although no assurance can be given that such changes will occur. We cannot predict our future capital needs or our ability to
obtain additional financing. No assurance can be given that required capital levels will remain stable or that we will not incur
substantial expenses in connection with maintaining current or increased capital levels or engaging in business restructurings or
other activities in response to these requirements.
In addition, financial services firms such as ours are subject to numerous conflicts of interests or perceived conflicts,
including principal trading and trading to make markets. We have adopted various policies, controls, and procedures to address
or limit actual or perceived conflicts, and we will regularly seek to review and update our policies, controls and procedures.
However, these policies, controls and procedures may result in increased costs and additional operational personnel. Failure to
adhere to these policies, controls and procedures may result in regulatory sanctions or customer claims.
Even after the award of permanent registration status to our SEFs, we will incur significant additional costs,
our revenues may be lower than in the past and our financial condition and results of operations may be materially
adversely affected by future events.
The Dodd-Frank Act mandated that certain cleared swaps (subject to an exemption from the clearing requirement)
trade on either a SEF or DCM. SEF and DCM core principles relate to trading and product requirements, compliance and audit-
trail obligations, governance and disciplinary requirements, operational capabilities, surveillance obligations and financial
information and resource requirements. While these principles may or may not be permanently enforced, we do know that we
will be subject to a more complex regulatory framework going forward, and that there will be significant costs to prepare for
and to comply with these ongoing regulatory requirements and potential amendments. We will incur increased legal fees,
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personnel expenses, and other costs, as we work to analyze and implement the necessary legal structure for full compliance with
all applicable regulations. There will also be significant costs related to the development, operation and enhancement of our
technology relating to trade execution, trade reporting, surveillance, compliance and back-up and disaster recovery plans
designed to meet the requirements of the regulators.
On November 2, 2023, the SEC passed rules for the registration and regulation of security-based swap execution
facilities. New Regulation SE under the Exchange Act creates a regime for the registration and regulation of security-based
SEFs. The new regulatory framework was one of the major reforms required under Title VII of the Dodd-Frank Act relating to
the over-the-counter derivatives market. In developing this proposal, the SEC sought to harmonize as closely as practicable
with parallel rules of the CFTC that govern SEFs and swap execution generally. Regulation SE implements the Exchange Act’s
trade execution requirement for security-based swaps and address the cross-border application of that requirement; implement
Section 765 of the Dodd-Frank Act to mitigate conflicts of interest at security-based SEFs and national securities exchanges
that trade security-based swaps; and promote consistency between proposed Regulation SE and existing rules under the
Exchange Act.
While we continue to have a compliance framework in place to comply with both CFTC and SEC rules and
regulations, it is possible that the existing regulatory framework may be amended, which amendments could have a positive or
negative impact on our business, financial condition, results of operations and prospects.
Certain banks and other institutions may continue to be limited in their conduct of proprietary trading and may be
further limited from trading in certain derivatives. The new rules, including the proprietary trading restrictions for certain banks
and other institutions, could materially impact transaction volumes and liquidity in these markets and our business, financial
condition, results of operations and prospects could be materially adversely impacted as a result.
If we fail to continue to qualify as a SEF under any of these conditions, we may be unable to maintain our position as a
provider of execution and brokerage services in the markets for many of the OTC products for which we have traditionally
acted as an intermediary. This would have a broad impact on us and could have a material adverse effect on our business’
financial condition, results operations, and prospects.
Our energy and commodities activities, including those related to environmental and emission, power, oil, and
natural gas products, subject us to extensive regulation, potential catastrophic events and other risks that may result in
our incurring significant costs and liabilities.
We engage in the brokerage of a wide range of energy and commodities products, including environmental and
emission, power, oil, and natural gas products. These activities subject us and our customers to extensive regulatory oversight,
involving federal, state, and local and foreign commodities, energy, environmental, and other governmental laws, and
regulations and may result in significant costs and liabilities.
We or our clients may incur substantial costs in complying with current or future laws and regulations relating to our
energy and commodities-related activities. New regulation of OTC derivatives markets in the U.S. and similar legislation
proposed or adopted abroad could impose significant costs and new requirements on the commodities derivatives activities of
us and our customers. Therefore, the overall reputation of us or our customers may be adversely affected by the current or
future regulatory environment. Failure to comply with these laws and regulations may result in substantial civil and criminal
penalties and fines for market participants.
The commodities-related activities of us and our customers are also subject to the risk of unforeseen catastrophic
events, many of which are outside of our control, which could result in significant liabilities for us or our customers. We may
not be able to obtain insurance to cover these risks, and the insurance that we have may be inadequate to cover our liabilities.
The occurrence of any of such events may prevent us from performing under our agreements with customers, may impair our
operations, and may result in litigation, regulatory action, negative publicity or other reputational harm, which could have a
material negative effect on our business, financial condition, results of operations and prospects.
Our business, financial condition, results of operations and prospects could be materially adversely affected by
new laws, rules, or regulations or by changes in existing law, rules or regulations or the application thereof.
The financial services industry, in general, is heavily regulated. Proposals for additional legislation further regulating
the financial services industry are periodically introduced in the U.S., the U.K., the EU, and other geographic areas. Moreover,
the agencies regulating the financial services industry also periodically adopt changes to their rules and regulations, particularly
as these agencies have increased the focus and intensity of their regulation of the financial services industry.
Changes in legislation and in the rules and regulations promulgated by the SEC, FINRA, the CFTC, the NFA, the U.S.
Treasury, the FCA, the European Commission, ESMA and other domestic and international regulators and self-regulatory
organizations, as well as changes in the interpretation or enforcement of existing laws and rules, often directly affect the method
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of operation and profitability of brokerages and could result in restrictions in the way we conduct our business. For example,
the U.S. Congress, the U.S. Treasury, the Board of Governors of the Federal Reserve System, the SEC and the CFTC are
continuing to review the nature and scope of their regulation and oversight of the government securities markets and U.S.
securities and derivative markets. Furthermore, in Europe, MiFID II was implemented in January 2018. MiFID II requires a
significant part of the market in these instruments to trade on trading venues subject to pre- and post-trade transparency regimes
and non-discriminatory fee structures and access. In addition, it has had a particularly significant impact in several key areas,
including corporate governance, transaction reporting, technology synchronization, best execution and investor protection.
MiFID II also introduced a new regulated execution venue category to accompany the existing Multilateral Trading Facility
regime. The new venue category is known as an OTF, and it captures much of the voice and hybrid trading in EU. Certain of
our existing EU derivatives and fixed income execution business now take place on OTFs, and we currently operate one OTF
for each of the U.K.-regulated entities, one in France at Aurel BGC and one MTF under GFI Securities Limited.
In the U.S., the SEC has proposed rules to expand Regulation ATS to cover ATS trading government securities. In
addition, the proposed rules extend Regulation SCI to ATSs trading government securities.
Further, the authorities of non-U.S. countries in which we have offices or do business may from time-to-time institute
changes to tax law that, if applicable to us, could have a material adverse effect on our business, financial condition, results of
operations and prospects. Similarly, the U.S. has proposed a series of changes to U.S. tax law, some of which could apply to us.
It is not possible to predict if any of these new provisions will be enacted or, if they are, what form they may take. It is possible
that one or more of such provisions could negatively impact our costs and our effective tax rate, which would affect our after-
tax earnings. If any of such changes to tax law were implemented and/or deemed to apply to us, they could have a material
adverse effect on our business, financial condition, results of operations and prospects, including on our ability to attract,
compensate and retain brokers, salespeople, managers, technology professionals and other front-office personnel.
While we continue to have a compliance framework in place to comply with both existing and proposed rules and
regulations, it is possible that the existing regulatory framework may be amended, which amendments could have a positive or
negative impact on our business, financial condition, results of operations and prospects.
We believe that uncertainty and potential delays around the final form that such new laws and regulations might take
may negatively impact trading volumes in certain markets in which we transact. Increased capital requirements may also
diminish transaction velocity. We believe that it remains premature to know conclusively the specific aspects of the U.S., U.K.
and EU proposals which may directly impact our business as some proposals have not yet been finalized and others which have
been proposed remain subject to further debate. Additionally, unintended consequences of the laws, rules and regulations may
adversely affect us in ways yet to be determined. We are unable to predict how any of these new laws, rules, regulations and
proposals will be implemented or in what form, or whether any additional or similar changes to laws, rules or regulations,
including the interpretation or implementation thereof, will occur in the future. Any such action could affect us in substantial
and unpredictable ways and could have a material adverse effect on our businesses, financial condition, results of operations
and prospects.
In addition, we are subject to tax risks inherent in operating a global business in various jurisdictions, including
increased taxes and levies and future changes in income tax regulations.
Extensive regulation of our business restricts and limits our operations and activities and results in ongoing
exposure to potential significant costs and penalties, including fines, sanctions, enhanced oversight, increased financial
and capital requirements, and additional restrictions or limitations on our ability to conduct or grow our business.
The financial services industry, including our business, is subject to extensive regulation, which is very costly. The
requirements imposed by regulators are designed to ensure the integrity of the financial markets and to protect customers and
other third parties who deal with us and are not designed to protect the holders of our stock, notes or other securities. These
regulations will often serve to restrict or limit our operations and activities, including through capital, customer protection and
market conduct requirements.
Our business is subject to regulation by governmental and self-regulatory organizations in the jurisdictions in which
we operate around the world. Many of these regulators, including U.S. and non-U.S. government agencies and self-regulatory
organizations, as well as state securities commissions in the U.S., are empowered to bring enforcement actions and to conduct
administrative proceedings and examinations, inspections, and investigations, which may result in costs, penalties, fines,
enhanced oversight, increased financial and capital requirements, restrictions or limitations, and censure, suspension, or
expulsion. Self-regulatory organizations such as FINRA and the NFA, along with statutory bodies such as the SEC, the CFTC,
and the FCA, and other international regulators, require strict compliance with their rules and regulations.
Firms in the financial services industry, including us, have experienced increased scrutiny in recent years, and
penalties, fines and other sanctions sought by regulatory authorities, including the SEC, the CFTC, FINRA, the NFA, state
securities commissions and state attorneys general in the U.S., and the FCA in the U.K. and other international regulators, have
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increased accordingly. This trend toward a heightened regulatory and enforcement environment can be expected to continue for
the foreseeable future, and this environment may create uncertainty. From time to time, we have been and are subject to
periodic examinations, inspections, and investigations, including periodic risk assessment and related reviews of our U.K.
group. As a result of such reviews, we have been and may be subject to increased monitoring and be required to include or
enhance certain regulatory structures and frameworks in our operating procedures, systems, and controls.
Increasingly, the FCA has developed a practice of requiring senior officers of regulated firms to provide individual
attestations or undertakings as to the status of the firm’s control environment, compliance with specific rules and regulations, or
the completion of required tasks. Officers of BGC Brokers L.P. and GFI Brokers Limited have given such attestations or
undertakings in the past and may do so again in the future. Similarly, the FCA can seek a voluntary requirement notice, which
is a voluntary undertaking on behalf of a firm that is made publicly available on the FCA’s website. The SMCR came into
effect in the U.K. on December 9, 2019. Accountability requirements now fall on senior managers, and a wider population of
U.K. staff are subject to certification requirements. SMCR has increased the cost of compliance and will potentially increase
financial penalties for non-compliance. Disciplinary actions by the SEC, the CFTC, the FCA, self-regulatory organizations and
state securities administrators have impacted, and may impact in the future, our acquisitions of regulated businesses or entry
into new business lines, and have resulted, and may result in the future, in significant costs and remediation expenses.
Risks Related to Competition
Because competition for the services of brokers, salespeople, managers, technology professionals and other
front-office personnel in the financial services industry is intense, it could affect our ability to attract and retain a
sufficient number of highly skilled brokers or other professional services personnel, in turn adversely impacting our
revenues, resulting in a material adverse effect on our business, financial condition, results of operations and prospects.
Our ability to provide high-quality brokerage and other professional services and maintain long-term relationships with
our customers depends, in large part, upon our brokers, salespeople, managers, technology professionals and other front-office
personnel. As a result, we must attract and retain highly qualified personnel.
Competition for talent is intense, especially for brokers with experience in the specialized businesses in which we
participate or may seek to enter. If we are unable to hire or retain highly qualified professionals, including retaining those
employed by businesses we acquire in the future, we may not be able to enter new brokerage markets or develop new products
or services. If we lose key brokers in a particular market in which we participate, our revenues may decrease, and we may lose
market share.
In addition, recruitment and retention of qualified professionals could result in substantial additional costs, including
costs and management time associated with litigation, arbitration or other claims related to employee hires and/or departures.
If we fail to attract new personnel, or fail to retain and motivate our current personnel, or if we incur increased costs or
restrictions associated with attracting and retaining personnel (such as lawsuits, arbitrations, sign-on or guaranteed bonuses or
forgivable loans), our business, financial condition, results of operations and prospects could be materially adversely affected.
We face strong competition from brokerages, exchanges, and other financial services firms, many of which have
greater market presence, marketing capabilities and financial, technological and personnel resources than we have,
which could lead to pricing pressures that could adversely impact our revenues and as a result could materially
adversely affect our business, financial condition, results of operations and prospects.
The financial services industry is intensely competitive and is expected to remain so. We primarily compete with two
major, diversified inter-dealer brokers and financial intermediaries: TP ICAP and Tradition. TP ICAP and Tradition are
currently publicly traded companies. Other inter-dealer broker and financial intermediary competitors include a number of
smaller, privately held firms that tend to specialize in specific products and services or geographic areas.
We also compete with companies that provide alternative products and services, such as contracts traded on futures
exchanges, and trading processes, such as the direct dealer-to-dealer market for government securities and stock exchange
markets for corporate equities, debt and other securities. We increasingly compete, directly or indirectly, with exchanges for the
execution of trades in certain products, mainly in derivatives such as futures, swaps, options, and options on futures, such as the
platforms operated by the CME Group and we will compete directly with the CME Group following the active launch of our
FMX Futures Exchange. Certain exchanges have made and will likely continue to make attempts to move certain OTC-traded
products to exchange-based execution, or to create listed derivatives products that mimic the qualities of similar OTC-traded
products. We also compete with consortia, which are created or funded from time to time by banks, broker-dealers and other
companies involved in financial services to compete in various markets with exchanges and inter-dealer brokers. We may
compete in OTC-traded products with platforms, such as those owned by MarketAxess Holdings Inc. and Tradeweb Markets, in
fixed income products or various OTC FX platforms owned by exchanges such as CBOE and Deutsche Börse. In addition,
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financial data and information firms such as LSEG Data & Analytics and Bloomberg L.P. operate trading platforms for both
OTC and listed products and may attempt to compete with us for trade execution in the future.
Some of our competitors have greater market presence, marketing capabilities and financial, technological and
personnel resources than we have and, as a result, our competitors may be able to:
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quickly than we can;
adapt more swiftly to new or emerging technologies and changes in customer requirements;
identify and consummate acquisitions and other opportunities more effectively than we can;
hire our brokers, salespeople, managers, technology professionals and other front-office personnel;
devote greater resources to the marketing and sale of their products and services;
more effectively leverage existing relationships with customers and strategic partners or exploit more
recognized brand names to market and sell their products and services;
provide a lower cost structure and lower commissions and fees;
provide access to trading in products or a range of products that at any particular time we do not offer; and
develop services that are preferred by our customers.
In addition, new competitors may emerge, and our product and service lines may be threatened by new technologies or
market trends that reduce the value of our existing product and service lines or we may enter new businesses, including crypto-
currency and similar opportunities for which there are high barriers to entry or for which we may be regulated. If we are not
able to compete successfully in the future, our revenues could be adversely impacted, and as a result our business, financial
condition, results of operations and prospects could be materially adversely affected.
Competition for financial brokerage transactions also has resulted in substantial commission discounting by brokers
that compete with us for business. Further discounting could adversely impact our revenues and margins and as a result could
materially adversely affect our business, financial condition, results of operations and prospects.
Our operations also include the sale of pricing and transactional data and information produced by our brokerage
operations to securities information processors and/or vendors. There is a high degree of competition in pricing and transaction
reporting products and services, and such businesses may become more competitive in the future. Competitors and customers of
our financial brokerage business have together and individually offered market data and information products and services in
competition with those offered and expected to be offered by us.
Consolidation and concentration of market share in the banking, brokerage, exchange and financial services
industries could materially adversely affect our business, financial condition, results of operations and prospects because
we may not be able to compete successfully.
In recent years, there has been substantial consolidation and concentration of market share among companies in the
banking, brokerage, exchange, and financial services industries, resulting in increasingly large existing and potential
competitors, and increased concentration in markets dominated by some of our largest customers. In addition, some of our large
broker-dealer customers have reduced their sales and trading business in fixed income, currency, and commodities.
The combination of this consolidation and concentration of market share and the reduction by large customers of
certain businesses may lead to increased concentration among our brokerage customers, which may reduce our ability to
negotiate pricing and other matters with our customers and lower volumes. Additionally, the sales and trading global revenue
market share has generally become more concentrated over the past five years among five of the top investment banks across
equities, fixed income, currencies, and commodities.
We also face existing and potential competition from large exchanges, which seek or may seek to migrate trading from
the inter-dealer market to their own platform. Consolidation and concentration of market share are occurring in this area as well.
From 2017 to 2021, for example, we saw consolidation and increased competition from several of our competitors, such as
Tradeweb’s acquisition of Nasdaq’s U.S. fixed income trading platform (formerly known as eSpeed and owned by us) and TP
ICAP’s acquisition of Liquidnet. Consolidation among exchanges may increase their financial resources and ability to compete
with us.
Continued consolidation and concentration of market share in the financial services industry and especially among our
customers could lead to the exertion of additional pricing pressure by our customers, impacting the commissions and spreads
we generate from our brokerage services. Further, the consolidation and concentration among exchanges, and expansion by
these exchanges into derivative and other non-equity trading markets, will increase competition for customer trades and place
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additional pricing pressure on commissions and spreads. These developments have increased competition from firms with
potentially greater access to capital resources than we have. Finally, consolidation among our competitors other than exchanges
could result in increased resources and product or service offerings for our competitors. If we are not able to compete
successfully in the future, our business, financial condition, results of operations and prospects could be materially adversely
affected.
Risks Related to Our International Operations
We are subject to various risks inherent in doing business in the international financial markets, in addition to
those unique to the regulated brokerage industry.
We currently provide products and services to customers in many foreign countries, and we may seek to further
expand our operations into additional jurisdictions. On a consolidated basis, revenues from foreign countries were
approximately $1.4 billion, or approximately 68% of total revenues for the year ended December 31, 2023. In many countries,
the laws and rules and regulations applicable to the financial services industry are uncertain and evolving, and it may be
difficult for us to determine the exact requirements of local regulations in every jurisdiction. Our inability to remain in
compliance with local laws and rules and regulations in a particular foreign jurisdiction could have a significant and negative
effect not only on our business in that market but also on our reputation generally. If we are unable to manage any of these risks
effectively, our business, financial condition, results of operations and prospects could be adversely affected.
There are also certain additional political, economic, legal, operational, and other risks inherent in doing business in
international financial markets, particularly in the regulated financial services industry. These risks include:
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less developed automation in exchanges, depositories and national clearing systems;
additional or unexpected changes in regulatory requirements, capital requirements, tariffs and other trade
barriers;
the impact of the laws, rules and regulations of foreign governmental and regulatory authorities of each
country in which we conduct business;
possible nationalization, expropriation and regulatory, political and price controls;
difficulties in staffing and managing international operations;
capital controls, exchange controls and other restrictive governmental actions;
failure to develop effective compliance and reporting systems, which could result in regulatory penalties in
the applicable jurisdiction;
fluctuations in currency exchange rates;
reduced protections for intellectual property rights;
adverse labor and employment laws, including those related to compensation, tax, health insurance and
benefits, and social security;
the outbreak of hostilities, mass demonstrations, pandemics, or other global events; and
potentially adverse tax consequences arising from compliance with foreign laws, rules, and regulations to
which our international businesses are subject and the repatriation of overseas earnings.
Credit Risk
Credit ratings downgrades or defaults by us, Cantor or another large financial institution could adversely affect
us or financial markets generally.
The commercial soundness of many financial institutions may be closely interrelated as a result of interconnectedness
arising from credit, trading, clearing or other relationships between the institutions. A default by one of our customers could
lead to liquidity concerns in our business and, to the extent that Cantor or another entity that clears for us has difficulty meeting
capital requirements or otherwise meeting its obligations, we may need to provide our own liquidity.
As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide
liquidity problems, losses, or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely
affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which we
transact on a regular basis, and therefore could adversely affect us. Similarly, our vendors, including insurance companies and
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other providers, are subject to normal business risks as well as risks related to changes in U.S. and international economic and
market conditions. Failure of any of these vendor institutions could also materially adversely affect us.
Our credit ratings and associated outlooks are critical to our reputation and operational and financial success. Our
credit ratings and associated outlooks are influenced by a number of factors, including: operating environment, regulatory
environment, earnings and profitability trends the rating agencies’ view of our funding and liquidity management practices,
balance sheet size/composition and resulting leverage, cash flow coverage of interest, composition and size of the capital base,
available liquidity, outstanding borrowing levels, our competitive position in the industry, our relationships in the industry,
including with Cantor, acquisitions or dispositions of assets and other matters. Our credit ratings and/or the associated rating
outlooks can be revised upward or downward at any time by a rating agency if such rating agency decides the circumstances of
BGC or related companies warrant such a change. Any negative change or a downgrade in credit ratings and/or the associated
ratings outlooks could adversely affect the availability of debt financing on acceptable terms, as well as the cost and other terms
upon which any such financing can be obtained. See “—Risks Related to Liquidity, Funding and Indebtedness—Credit ratings
downgrades could adversely affect our cost of capital and the availability of debt financing.” In addition, credit ratings and
associated outlooks may be important to customers or counterparties in certain markets and in certain transactions. Additional
collateral may be required in the event of a negative change in credit ratings or rating outlooks.
Our activities are subject to credit and performance risks, which could result in us incurring significant losses
that could materially adversely affect us.
Our activities are subject to credit and performance risks. For example, our customers and counterparties may not
deliver securities to one of our operating subsidiaries which has sold those securities to another customer. If the securities due
to be delivered have increased in value, there is a risk that we may have to expend our own funds in connection with the
purchase of other securities to consummate the transaction. While we will take steps to ensure that our customers and
counterparties have high credit standings and that financing transactions are adequately collateralized, the large dollar amounts
that may be involved in our broker-dealer and financing transactions could subject us to significant losses if, as a result of
customer or counterparty failures to meet commitments, we were to incur significant costs in liquidating or covering our
positions in the open market.
We have adopted policies and procedures to identify, monitor and manage credit and market risks, in both agency and
principal transactions, leveraging risk reporting and control procedures and by monitoring credit standards applicable to our
customers and counterparties. These policies and procedures, however, may not be fully effective, particularly against fraud,
unauthorized trading, and similar incidents. Some of these risk management methods depend upon the evaluation of
information regarding markets, customers, counterparties, or other matters that are publicly available or otherwise accessible by
us. That information may not, in all cases, be accurate, complete, up-to-date, or properly evaluated. If our policies and
procedures are not fully effective or we are not always successful in monitoring or evaluating the risks to which we are, or may
be, exposed, our business, financial condition, results of operations and prospects could be materially adversely affected. In
addition, our insurance policies do not provide coverage for these risks.
Transactions executed on a matched principal basis where the instrument has the same or similar characteristics to the
counterparty may expose us to correlation risk. In this case, the counterparty’s inability to meet its obligations will also result in
the value of the instrument declining. For example, if we were to enter into a transaction to sell to a customer a bond or
structured note where the issuer or credit support provider was such customer’s affiliate, the value of the instrument would
decline in value in tandem with the default. This correlation has the potential effect of magnifying the credit loss.
We are subject to financing risk because, if a transaction does not settle on a timely basis, the resulting unmatched
position may need to be financed, either directly by us or through one of the clearing organizations, at our expense. These
charges may be recoverable from the failing counterparty, but sometimes they are not. In addition, in instances where the
unmatched position or failure to deliver is prolonged or widespread due to rapid or widespread declines in liquidity for an
instrument, there may also be regulatory capital charges required to be taken by us, which, depending on their size and duration,
could limit our business flexibility or even force the curtailment of those portions of our business requiring higher levels of
capital. Credit or settlement losses of this nature could materially adversely affect our business, financial condition, results of
operations and prospects.
Disruptions in the financial markets have also led to the exposure of several cases of financial fraud. If we were to
have trading activity on an agency or principal basis with an entity engaged in defrauding investors or counterparties, we could
bear the risk that the counterparty would not have the financial resources to meet their obligations, resulting in a credit loss.
Similarly, we may engage in financial transactions with third parties that have been victims of financial fraud and, therefore,
may not have the financial resources to meet their obligations to us.
In agency transactions, we charge a commission for connecting buyers and sellers and assisting in the negotiation of
the price and other material terms of the transaction. After all material terms of a transaction are agreed upon, we identify the
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buyer and seller to each other and leave them to settle the trade directly. We are exposed to credit risk for commissions, as we
bill customers for our agency brokerage services. Our customers may default on their obligations to us due to disputes,
bankruptcy, lack of liquidity, operational failure, or other reasons. Any losses arising from such defaults could materially
adversely affect our business, financial condition, results of operations and prospects.
In emerging market countries, we primarily conduct our business on an agency and matched principal basis,
where the risk of counterparty default, inconvertibility events and sovereign default is greater than in more developed
countries.
We enter transactions in cash and derivative instruments primarily on an agency and matched principal basis with
counterparties domiciled in countries in Latin America, Eastern Europe and Asia. Transactions with these counterparties are
generally in instruments or contracts of sovereign or corporate issuers located in the same country as the counterparty. This
exposes us to a higher degree of sovereign or convertibility risk than in more developed countries. In addition, these risks may
entail correlated risks. A correlated risk arises when the counterparty’s inability to meet its obligations also corresponds to a
decline in the value of the instrument traded. In the case of a sovereign convertibility event or outright default, the counterparty
to the trade may be unable to pay or transfer payment of an instrument purchased out of the country when the value of the
instrument has declined due to the default or convertibility event. The global financial crisis of recent years has heightened the
risk of sovereign or convertibility events in emerging markets similar to the events that occurred in previous financial
downturns. Our risk management function monitors the creditworthiness of emerging countries and counterparties on an
ongoing basis and, when the risk of inconvertibility or sovereign default is deemed to be too great, correlated transactions or all
transactions may be restricted or suspended. However, there can be no assurance that these procedures will be effective in
controlling these risks.
Concentration and Market Risk
The rates business is our largest product category, and we could be significantly affected by any downturn in
the rates product market.
We offer our brokerage services in five broad product categories: Rates, Credit, FX, Energy and Commodities, and
Equities. Our brokerage revenues are strongest in our Rates asset class, which accounted for approximately 33.3% of our total
brokerage revenues on a consolidated basis for the year ended December 31, 2023. While we focus on expanding and have
successfully diversified our product offerings, we may currently be exposed to any adverse change or condition affecting the
interest rates market. Accordingly, the concentration of our brokerage business on rates products subjects our results to a greater
market risk than if we had more diversified product offerings.
Due to our current customer concentration, a loss of one or more of our significant customers could materially
harm our business, financial condition, results of operations and prospects.
For the year ended December 31, 2023, on a consolidated basis, our top ten customers, collectively, accounted for
approximately 30.0% of our total revenues. We have limited long-term contracts with certain of these customers. If we were to
lose one or more of these significant customers for any reason, including as a result of further consolidation and concentration
in the financial services industry, and not be compensated for such loss by doing additional business with other customers or by
adding new customers, our revenues would decline significantly and our business, financial condition, results of operations and
prospects would materially suffer.
Our revenues and profitability could be reduced or otherwise materially adversely affected by pricing plans
relating to commissions and fees on our trading platform.
We negotiate from time to time with certain customers (including many of our largest customers) to enter into
customized volume discount pricing plans. While the pricing plans are designed to encourage customers to be more active on
our Fully Electronic trade execution platform, they reduce the amount of commissions and fees payable to us by certain of our
most active customers for certain products, which could reduce our revenues and constrain our profitability. From time to time,
these pricing plans come up for renewal. Failure of a number of our larger customers to enter into renewed agreements, or
agreements on terms as favorable as existing agreements, could have a material adverse effect on volumes on our Fully
Electronic trade execution platform, the commissions payable to us, our revenues and our profitability.
Reduced spreads in pricing, levels of trading activity and trading through market makers and/or specialists
could materially adversely affect our business, financial condition, results of operations and prospects.
Computer-generated buy/sell programs and other technological advances, including AI, and regulatory changes in the
marketplace may continue to tighten securities spreads. In addition, new and enhanced alternative trading systems, such as
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electronic communications networks, have emerged as alternatives for individual and institutional investors, as well as
brokerage firms. As such systems do not direct trades through market makers, their use could result in reduced revenues for us
or for our customers. In addition, reduced trading levels could lead to lower revenues which could materially adversely affect
our businesses, financial condition, results of operations and prospects.
We have market risk exposure from unmatched principal transactions entered into by some of our desks, as
well as holdings of marketable equity securities, which could result in losses and have that could have a material adverse
effect on our business, financial condition, results of operations, and prospects for any particular reporting period. In
addition, financial fraud or unauthorized trading activity could also adversely impact our business, financial condition,
results of operations and prospects.
On a limited basis, our desks enter into unmatched principal transactions in the ordinary course of business to facilitate
transactions, add liquidity, improve customer satisfaction, increase revenue opportunities and attract additional order flow or, in
certain instances, as the result of an error. As a result, we have market risk exposure on these unmatched principal transactions.
Market risk refers to the risk that a change in the level of one or more market prices, rates, indices or other factors will
result in losses for a specified position. We may allow certain of our desks to enter into unmatched principal transactions in the
ordinary course of business and hold long and short inventory positions. These transactions are primarily for the purpose of
managing proprietary positions, facilitating customer execution needs, adding liquidity to a market or attracting additional order
flow. As a result, we may have market risk exposure on these transactions. Our exposure varies based on the size of the overall
position, the terms and liquidity of the instruments brokered and the amount of time the position is held before we dispose of
the position. Although we have limited ability to track our exposure to market risk and unmatched positions on an intra-day
basis, we attempt to mitigate market risk on these positions by strict risk limits, extremely limited holding periods and active
risk management, including hedging our exposure. These positions are intended to be held short term, and generally to facilitate
customer transactions. However, due to a number of factors, including the nature of the position and access to the market on
which it trades, we may not be able to unwind the position and we may be forced to hold the position for a longer period than
anticipated. All positions held longer than intra-day are marked to market.
Certain categories of trades settle for clearing purposes with CF&Co, one of our affiliates. CF&Co is a member of
FINRA and the FICC, a subsidiary of the Depository Trust & Clearing Corporation. In addition, certain affiliated entities are
subject to regulation by the CFTC, including CF&Co and BGC Financial. In certain products we, CF&Co, BGC Financial and
other affiliates act in a matched principal or principal capacity in markets by posting and/or acting upon quotes for our account.
Such activity is intended, among other things, to assist us, CF&Co, and other affiliates in managing proprietary positions
(including, but not limited to, those established as a result of combination trades and errors), facilitating transactions, framing
markets, adding liquidity, increasing commissions and attracting order flow.
From a risk management perspective, we monitor risk daily, on an end-of-day basis, and desk managers generally
monitor such exposure on a continuous basis. Any unmatched positions are intended to be disposed of in the short term.
However, due to a number of factors, including the nature of the position and access to the markets on which we trade, we may
not be able to match the position or effectively hedge its exposure and often may be forced to hold a position overnight that has
not been hedged. To the extent these unmatched positions are not disposed of intra-day, we mark these positions to market.
Adverse movements in the market values of assets or other reference benchmarks underlying these positions or a downturn or
disruption in the markets for these positions could result in a loss. In the event of any unauthorized trading activity or financial
fraud that is not detected by management, it is possible that these unmatched positions could be outstanding for a long period.
At the time of any sales and settlements of these positions, the price we ultimately realize will depend on the demand and
liquidity in the market at that time and may be materially lower than their current fair values. In addition, our estimates or
determinations of the values of our various positions, assets or business are subject to the accuracy of our assumptions and the
valuation models or multiples used. Any principal losses and gains resulting from these positions could on occasion have
disproportionate effects, negative or positive, on our business, financial condition, results of operations and prospects for any
particular reporting period.
In addition, in recent years we have had considerable holdings of marketable securities received by us as consideration
for the sale of certain businesses. We may seek to manage the market risk exposure inherent in such holdings by minimizing the
effect of price changes on a portion of such holdings, including through the use of derivative contracts. There can, however, be
no assurance that our hedging activities will be adequate to protect us against price risks associated with these holdings, or that
the costs of such hedging activities will not be significant. Further, any such hedging activities and other risk management
techniques may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk,
including unpredicted price movements, counterparty defaults or other risks that are unidentified or unanticipated. Any such
events could have a material adverse effect on our business, financial condition, results of operations and prospects.
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We may have equity investments or profit sharing interests in entities whose primary business is proprietary
trading. These investments could expose us to losses that could adversely affect our net income and the value of our
assets.
We may have equity investments or profit sharing interests in entities whose primary business is proprietary trading.
The accounting treatment applied for these investments varies depending on a number of factors, including, but not limited to,
our percentage ownership or profit share and whether we have any influence or control over the relevant entity. Under certain
accounting standards, any losses experienced by these entities on their investment activities could adversely impact our net
income and the value of our assets. In addition, if these entities were to fail and cease operations, we could lose the entire value
of our investment and the stream of any shared profits from trading.
RISKS RELATED TO OUR CORPORATE STRUCTURE
Because our voting control is concentrated among the holders of our Class B common stock, the market price of
our Class A common stock may be materially adversely affected by its disparate voting rights.
The holders of our Class A common stock and Class B common stock have substantially identical rights, except that
holders of Class A common stock are entitled to one vote per share, while holders of Class B common stock are entitled to 10
votes per share on all matters to be voted on by stockholders in general.
As of December 31, 2023, Cantor (including CFGM) beneficially owned 96.3 million shares of our Class B common
stock, representing 88.0% of our outstanding Class B common stock and approximately 64.8% of our total voting power. As of
December 31, 2023, Mr. Lutnick and individuals related to Mr. Lutnick owned 13.1 million shares of our outstanding Class B
common stock, representing 12.0% of the outstanding shares of BGC Class B common stock and approximately 8.9% of our
total voting power. Together, Cantor, CFGM, Mr. Lutnick and individuals related to Mr. Lutnick own 100% of the outstanding
shares of BGC Class B common stock and approximately 73.7% of our total voting power. As long as Cantor beneficially owns
a majority of our total voting power, it will have the ability, without the consent of the public holders of our Class A common
stock, to elect all of the members of our Board and to control our management and affairs. In addition, it will be able to
determine the outcome of matters submitted to a vote of our stockholders for approval and will be able to cause or prevent a
change of control of us. In certain circumstances, such as when transferred to an entity controlled by Cantor or Mr. Lutnick, the
shares of our Class B common stock issued to Cantor may be transferred without conversion to our Class A common stock.
BGC Class B common stock is controlled by Cantor and is not subject to conversion or termination by our Board or
any committee thereof, or any other stockholder or third party. This differential in the voting rights of our Class B common
stock could adversely affect the market price of our Class A common stock.
Delaware law may protect decisions of our Board that have a different effect on holders of our Class A common
stock and Class B common stock.
Stockholders may not be able to challenge decisions that have an adverse effect upon holders of our Class A common
stock compared to holders of our Class B common stock if our Board acts in a disinterested, informed manner with respect to
these decisions, in good faith and in the belief that it is acting in the best interests of our stockholders. Delaware law generally
provides that a Board owes an equal duty to all stockholders, regardless of class or series, and does not have separate or
additional duties to different groups of stockholders, subject to applicable provisions set forth in a corporation’s certificate of
incorporation and general principles of corporate law and fiduciary duties.
Delaware law, our corporate organizational documents and other requirements may impose various
impediments to the ability of a third party to acquire control of us, which could deprive investors in our Class A
common stock of the opportunity to receive a premium for their shares.
We are a Delaware corporation, and the anti-takeover provisions of Delaware law impose various impediments to the
ability of a third party to acquire control of us, even if a change of control would be beneficial to our Class A stockholders.
Some provisions of the DGCL, our restated certificate of incorporation, and our amended and restated bylaws could make the
following more difficult:
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acquisition of us by means of a tender offer;
acquiring control of our Board by means of a proxy contest or otherwise; or
removal of our incumbent officers and directors.
These provisions, summarized below, may discourage coercive takeover practices and inadequate takeover bids. These
provisions may also encourage persons seeking to acquire control of us to first negotiate with our Board. We believe that the
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benefits of increased protection give us the potential ability to negotiate with the initiator of an unfriendly or unsolicited
proposal to acquire or restructure us and outweigh the disadvantages of discouraging those proposals because negotiation of
them could result in an improvement of their terms.
Our bylaws provide that special meetings of stockholders may be called only by the Chairman of our Board, or in the
event the Chairman of our Board is unavailable, by the Chief Executive Officer or by the holders of a majority of the voting
power of our Class B common stock, which is held by Cantor. In addition, our restated certificate of incorporation permits us to
issue “blank check” preferred stock.
Our bylaws require advance written notice prior to a meeting of our stockholders of a proposal or director nomination
which a stockholder desires to present at such a meeting, which generally must be received by our Secretary not later than 120
days prior to the first anniversary of the date of our proxy statement for the preceding year’s annual meeting. In the event that
the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not later than the close of business on the later of the 120th day prior to the date
of such proxy statement or the tenth day following the day on which public announcement of the date of such meeting is first
made by us. Our bylaws provide that all amendments to our bylaws must be approved by either the holders of a majority of the
voting power of all of our outstanding capital stock entitled to vote or by a majority of our Board.
We are subject to Section 203 of the DGCL. In general, Section 203 of the DGCL prohibits a publicly held Delaware
corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following
the date the person became an interested stockholder, unless the “business combination” or the transaction in which the person
became an “interested stockholder” is approved in a prescribed manner. Generally, a “business combination” includes a merger,
asset or stock sale or other transaction resulting in a financial benefit to the “interested stockholder.” An “interested
stockholder” is a person who, together with affiliates and associates, owns 15% or more of a corporation’s outstanding voting
stock, or was the owner of 15% or more of a corporation’s outstanding voting stock at any time within the prior three years,
other than “interested stockholders” prior to the time our Class A common stock was traded on Nasdaq. The existence of this
provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by our Board,
including discouraging takeover attempts that might result in a premium over the market price for shares of our Class A
common stock.
In addition, our brokerage business is heavily regulated and some of our regulators require that they approve
transactions which could result in a change of control, as defined by the then-applicable rules of our regulators. The
requirement that this approval be obtained may prevent or delay transactions that would result in a change of control.
Further, our Equity Plan and certain of the awards under our Equity Plan contain provisions pursuant to which grants
that are unexercisable or unvested may automatically become exercisable or vested as of the date immediately prior to certain
change of control events. Additionally, change in control and employment agreements between us and our named executive
officers also provide for certain grants, payments, and grants of exchangeability, and exercisability in the event of certain
change of control events.
The foregoing factors, as well as the significant common stock ownership by Cantor, including shares of our Class B
common stock, and the provisions of any debt agreements, could impede a merger, takeover or other business combination or
discourage a potential investor from making a tender offer for our Class A common stock that could result in a premium over
the market price for shares of Class A common stock.
The dual class structure of our common stock may adversely affect the trading market for our Class A common
stock.
S&P Dow Jones Indices and FTSE Russell have previously excluded companies with multiple classes of shares of
common stock from being added to their indices or limited their inclusion in them. In addition, several shareholder advisory
firms have announced their opposition to the use of multiple class structures. It is possible that the dual class structure of our
common stock may prevent the inclusion of our Class A common stock in such indices and may cause shareholder advisory
firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our
capital structure. Any such exclusion from indices could result in a less active trading market for our Class A common stock.
Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure
could also adversely affect the value of our Class A common stock.
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We are a holding company, and accordingly we are dependent upon distributions from BGC U.S. OpCo and
BGC Global OpCo to pay dividends, taxes and indebtedness and other expenses and to make repurchases.
We are a holding company with no direct operations and will be able to pay dividends, taxes and other expenses, and
to make repurchases of shares our Class A common stock or other equity interests in us or in our subsidiaries, only from our
available cash on hand and funds received from distributions, loans or other payments, from our operating subsidiaries. As
discussed above, regulatory, tax restrictions or elections, and other legal or contractual restrictions may limit our ability to
transfer funds freely from our subsidiaries. In addition, any unanticipated accounting, tax or other charges against net income
could adversely affect our ability to pay dividends and to make repurchases.
Beginning in the first quarter of 2020, and for all of the quarterly periods following, the Board reduced the quarterly
dividend to $0.01 per share out of an abundance of caution in order to strengthen the Company’s balance sheet as the global
capital markets faced difficult and unprecedented macroeconomic conditions related to the global pandemic. At present, we
plan to prioritize share repurchases over dividends and distributions. The Inflation Reduction Act of 2022 provides for a new
U.S. federal 1% excise tax on stock repurchases, which is effective January 1, 2023. We continue to analyze the impacts of the
IR Act and related regulatory developments.
Any dividends, if and when declared by our Board, will be paid on a quarterly basis. No assurance can be made,
however, that a dividend will be paid each quarter. The declaration, payment, timing, and amount of any future dividends
payable by us will be at the sole discretion of our Board. Our ability to pay dividends may also be limited by regulatory
considerations as well as by covenants contained in financing or other agreements. In addition, under Delaware law, dividends
may be payable only out of surplus, which is our net assets minus our capital (as defined under Delaware law), or, if we have no
surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Accordingly,
any unanticipated accounting, tax, regulatory or other charges against net income may adversely affect our ability to declare and
pay dividends. While we intend to declare and pay dividends quarterly, there can be no assurance that our Board will declare
dividends at all or on a regular basis or that the amount of our dividends will not change.
Our Board and our Audit Committee have authorized repurchases of shares of BGC Class A common stock or other
equity interests in us or in subsidiaries, from Cantor, our executive officers, other employees, and others. On July 3, 2023, the
BGC Group Board and Audit Committee approved our share repurchase authorization in an amount up to $400.0 million, which
may include purchases from Cantor, its partners or employees or other affiliated persons or entities. As of December 31, 2023,
we had approximately $333.1 million remaining under this authorization and may continue to actively make repurchases or
purchases, or cease to make such repurchases or purchases, from time to time. In addition, from time to time, we may reinvest
all or a portion of the distributions we receive from our operating subsidiaries in our business. Accordingly, there can be no
assurance that future dividends will be paid or that dividend amounts will be maintained or that repurchases and purchases will
be made at current or future levels.
If we were deemed an “investment company” under the Investment Company Act, the Investment Company
Act’s restrictions could make it impractical for us to continue our business.
Generally, an entity is deemed an “investment company” under Section 3(a)(1)(A) of the Investment Company Act if
it is primarily engaged in the business of investing, reinvesting, or trading in securities, and is deemed an “investment
company” under Section 3(a)(1)(C) of the Investment Company Act if it owns “investment securities” having a value exceeding
40% of the value of its total assets (exclusive of U.S. Government Securities and cash items) on an unconsolidated basis. We
believe that we should not be deemed an “investment company” as defined under Section 3(a)(1)(A) because we are not
primarily engaged in the business of investing, reinvesting, or trading in securities. Rather, through our operating subsidiaries,
we are primarily engaged in the operation of various types of brokerage businesses as described in this Annual Report on Form
10-K. We are not an “investment company” under Section 3(a)(1)(C) because more than 60% of the value of our total assets on
an unconsolidated basis are interests in majority-owned subsidiaries that are not themselves “investment companies.” In
particular, our brokerage subsidiaries are entitled to rely on, among other things, the broker-dealer/market intermediary
exemption in Section 3(c)(2) of the Investment Company Act.
To ensure that we are not deemed an “investment company” under the Investment Company Act, we need to be
primarily engaged, directly or indirectly, in the non-investment company businesses of our operating subsidiaries. If we were to
cease participation in the management of our operating subsidiaries, that would increase the possibility that we could be deemed
an “investment company.” Further, if we were deemed not to have a majority of the voting power of our operating subsidiaries,
that would increase the possibility that we could be deemed an “investment company,” our interests in our operating
subsidiaries could be deemed “investment securities,” and we could be deemed an “investment company.”
We expect to take all legally permissible action to ensure that we are not deemed an investment company under the
Investment Company Act, but no assurance can be given that this will not occur.
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The Investment Company Act and the rules thereunder contain detailed prescriptions for the organization and
operations of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or
prohibit transactions with affiliates, limit the issuance of debt and equity securities, prohibit the issuance of stock options, and
impose certain governance requirements. If anything were to happen that would cause us to be deemed to be an “investment
company” under the Investment Company Act, the Investment Company Act would limit our or its capital structure, ability to
transact business with affiliates, and ability to compensate key employees. Therefore, if we became subject to the Investment
Company Act, it could make it impractical to continue our business in this structure, impair agreements and arrangements, and
impair the transactions contemplated by those agreements and arrangements, between and among us and our operating
subsidiaries, or any combination thereof, and materially adversely affect our business, financial condition, results of operations,
and prospects.
The expected benefits of the Corporate Conversion may not be obtained.
On July 1, 2023, we completed our Corporate Conversion to a Full C Corporation in order to simplify the corporate
structure of our business. We believe that, following the Corporate Conversion Transactions, the organizational structure of the
BGC businesses has become more comprehensible to the marketplace, which may, in turn, increase demand for our shares and
assist in the goal of maximizing long-term stockholder value. By simplifying the organizational structure, the Corporate
Conversion may improve stockholder value by reducing administrative costs and increasing the efficiency of our regulated
businesses and associated capital requirements. However, it is possible that these expected benefits will not be achieved. There
can be no assurance that our brokers and other employees, the rating agencies, our lenders, our bondholders, our investors, our
counterparties, our clients, or others will view our new structure favorably, or that the new structure will have the expected
impact on our GAAP or non-GAAP results, cash position, cash or non-cash accounting charges, tax rate, or other factors. Any
of these factors or others could negatively affect our business, financial condition, results of operations and prospects.
Changes to our equity-based compensation structure as a result of the Corporate Conversion may adversely
affect our ability to recruit, retain, compensate and motivate some employees.
While we believe that our emphasis on equity-based compensation promotes recruitment, motivation of our brokers
and other employees and alignment of interest with stockholders, such employee may be more attracted to the benefits of
working at a public company with a different compensation structure than our own, which may adversely affect our ability to
recruit, retain, compensate and motivate these persons. Following the Corporate Conversion, our employees now receive
equity-based compensation at BGC Group, the new public entity. In addition, the equity-based compensation structure
following the Corporate Conversion no longer has certain other benefits of BGC Holding’s partnership structure, including
certain duties that were owed by, and post-employment restrictive covenants that were applicable to, the limited partners in
BGC Holdings.
RISKS RELATED TO OUR RELATIONSHIP WITH CANTOR AND ITS AFFILIATES
We are controlled by Cantor and Mr. Lutnick, who have potential conflicts of interest with us and may exercise
their control in a way that favors their interests to our detriment.
Cantor, and Mr. Lutnick, indirectly through his control of Cantor, are each able to exercise control over our
management and affairs and all matters requiring stockholder approval, including the election of our directors and
determinations with respect to acquisitions and dispositions, as well as material expansions or contractions of our business,
entry into new lines of business and borrowings and issuances of our Class A common stock and Class B common stock or
other securities. This control is subject to the approval of our Audit Committee on those matters requiring such approval.
Cantor’s voting power may also have the effect of delaying or preventing a change of control of us.
Following the Corporate Conversion, Cantor’s beneficial ownership increased as a result of the Corporate Conversion
Transactions, including its exchange of its BGC Holdings limited partnership units into our Class B common stock. As of
December 31, 2023, Cantor (including CFGM) beneficially owned 96.3 million shares of our Class B common stock,
representing 88.0% of our outstanding Class B common stock and approximately 64.8% of our total voting power. As of
December 31, 2023, Mr. Lutnick and individuals related to Mr. Lutnick owned 13.1 million shares of our outstanding Class B
common stock, representing 12.0% of the outstanding shares of BGC Class B common stock and approximately 8.9% of our
total voting power. Together, Cantor, CFGM, Mr. Lutnick and individuals related to Mr. Lutnick own 100% of the outstanding
shares of BGC Class B common stock and approximately 73.7% of our total voting power. Cantor’s and Mr. Lutnick’s ability
to exercise control over us could create or appear to create potential conflicts of interest. Conflicts of interest may arise between
us and Cantor in a number of areas relating to our past and ongoing relationships, including:
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potential acquisitions and dispositions of businesses, mergers, joint ventures, investments or similar
transactions;
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the issuance, acquisition or disposition of securities by us;
the election of new or additional directors to our Board;
the payment of dividends by us (if any), and repurchases of shares of our Class A common stock or other
equity interests in our subsidiaries, including from Cantor, our executive officers, other employees, and
others;
any loans to or from us or Cantor, or any financings or credit arrangements that relate to or depend on our
relationship with Cantor or its relationship with us;
business operations or business opportunities of ours and Cantor’s that would compete with the other party’s
business opportunities, including Cantor’s and our brokerage and financial services;
intellectual property matters;
business combinations involving us;
conflicts between our agency trading for primary and secondary bond sales and Cantor’s investment banking
bond origination business;
competition between our and Cantor’s other equity derivatives and cash equity inter-dealer brokerage
businesses;
the nature, quality and pricing of administrative services to be provided to or by Cantor and/or Tower Bridge;
and
provision of clearing capital pursuant to the Clearing Agreement and potential and existing loan
arrangements.
Potential conflicts of interest could also arise if we decide to enter into any new commercial arrangements with Cantor
in the future or in connection with Cantor’s desire to enter into new commercial arrangements with third parties.
We also expect Cantor to manage its ownership of us so that it will not be deemed to be an investment company under
the Investment Company Act, including by maintaining its voting power in us above a majority absent an applicable exemption
from the Investment Company Act. This may result in conflicts with us, including those relating to acquisitions or offerings by
us involving issuances of shares of our Class A common stock, or securities convertible or exchangeable into shares of our
Class A common stock, which would dilute Cantor’s voting power in us. See “–General Risks—If we or Newmark Holdings
were deemed an “investment company” under the Investment Company Act, the Investment Company Act’s restrictions could
make it impractical for us to continue our business.”
In addition, Cantor has from time to time in the past and may in the future consider possible strategic realignments of
its own business and/or of the relationships that exist between and among Cantor and its other affiliates and us. Any related-
party transaction or arrangement between Cantor and its other affiliates and us is subject to the prior approval by our Audit
Committee, but generally does not otherwise require the separate approval of our stockholders, and if such stockholder approval
is required, Cantor may retain sufficient voting power to provide any such requisite approval without the affirmative consent of
the other stockholders. There is no assurance that such consolidation or restructuring would not result in a material expense or
disruption to our business.
Moreover, the service of officers or partners of Cantor as our executive officers and directors, and those persons’
ownership interests in and payments from Cantor and its affiliates, SPACs and similar investments or other entities, could
create conflicts of interest when we and those directors or executive officers are faced with decisions that could have different
implications for us and them. The ability of certain key employees to devote adequate time and attention to us are critical to the
success of our business, and failure to do so may adversely affect our business, financial condition, results of operations and
prospects.
Our agreements and other arrangements with Newmark and Cantor may be amended upon agreement of the parties to
those agreements and approval of our Audit Committee. We may not be able to resolve potential conflicts, and, even if we do,
the resolution may be less favorable to us than if we were dealing with an unaffiliated party.
To address potential conflicts of interest between Cantor and its representatives and us, our restated certificate of
incorporation contains provisions regulating and defining the conduct of our affairs as they may involve Cantor and its
representatives, and our powers, rights, duties and liabilities and those of our representatives in connection with our relationship
with Cantor and its affiliates, officers, directors, general partners or employees. Our restated certificate of incorporation
provides that no Cantor Company, as defined in our restated certificate of incorporation, or any of the representatives, as
defined in our restated certificate of incorporation, of a Cantor Company will owe any fiduciary duty to, nor will any Cantor
Company or any of their respective representatives be liable for breach of fiduciary duty to, us or any of our stockholders,
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including with respect to corporate opportunities. In addition, Cantor and its respective representatives have no duty to refrain
from engaging in the same or similar activities or lines of business as us or doing business with any of our customers. The
corporate opportunity policy that is included in our restated certificate of incorporation is designed to resolve potential conflicts
of interest between us and Cantor and its representatives.
If any Cantor Company or any its representatives acquires knowledge of a potential transaction or matter that may be a
corporate opportunity (as defined in our restated certificate of incorporation) for any such person, on the one hand, and us or
any of our representatives, on the other hand, such person will have no duty to communicate or offer such corporate opportunity
to us or any of our representatives, and will not be liable to us, any of our stockholders or any of our representatives for breach
of any fiduciary duty by reason of the fact that they pursue or acquire such corporate opportunity for themselves, direct such
corporate opportunity to another person or do not present such corporate opportunity to us or any of our representatives, subject
to the requirement described in the following sentence. If a third party presents a corporate opportunity to a person who is both
our representative and a representative of a Cantor Company, expressly and solely in such person’s capacity as our
representative, and such person acts in good faith in a manner consistent with the policy that such corporate opportunity belongs
to us, then such person will be deemed to have fully satisfied and fulfilled any fiduciary duty that such person has to us as our
representative with respect to such corporate opportunity, provided that any Cantor Company or any of its representatives may
pursue such corporate opportunity if we decide not to pursue such corporate opportunity.
This policy, could make it easier for Cantor to compete with us. If Cantor competes with us, it could materially harm
our business, financial condition, results of operations and prospects.
Agreements between us and Cantor and/or its affiliates are between related parties, and the terms of these
agreements may be less favorable to us than those that we could negotiate with third parties and may subject us to
litigation.
Our relationship with Cantor and/or its affiliates may result in agreements with Cantor and/or its affiliates that are
between related parties. For example, we provide to and receive from Cantor an/or its affiliates various administrative services,
including investment banking services. As a result, the prices charged to us or by us for services provided under any agreements
with such entities may be higher or lower than prices that may be charged by third parties, and the terms of these agreements
may be less favorable to us than those that we could have negotiated with third parties. In addition, Cantor has an unlimited
right to internally use market data from us without any cost. Any related-party transactions or arrangements between us and
such parties is subject to the prior approval by our Audit Committee, but generally do not otherwise require the separate
approval of our stockholders, and if such stockholder approval were required, Cantor may retain sufficient voting power to
provide any such requisite approval without the affirmative consent of the other stockholders. These related-party relationships
may from time to time subject us to litigation. For example, on February 16, 2024, an alleged Company shareholder, Martin J.
Siegel, filed a putative class action lawsuit against Cantor Fitzgerald, LP and Howard W. Lutnick in the Delaware Court of
Chancery, asserting that the Corporate Conversion was unfair to Class A shareholders of BGC Partners, Inc. because it
increased Cantor’s percentage voting control over the Company. The suit is captioned Martin J. Siegel v. Cantor Fitzgerald, LP,
C.A. 2024-0146-LWW. While the lawsuit is in its early stages and does not name the Company as a party, the Company
believes the action lacks merit.
RISKS RELATED TO OUR CLASS A COMMON STOCK
Purchasers of our Class A common stock, as well as existing stockholders, may experience significant dilution as
a result of offerings of shares of our Class A common stock by us, and the perception that such sales could occur may
adversely affect prevailing market prices for our stock.
We have an effective registration statement on Form S-3 filed and a Controlled Equity OfferingSM sales agreement
with CF&Co with respect to the offer and sale of up to 300.0 million shares of BGC Class A common stock from time to time
on a delayed or continuous basis pursuant to a CEO program. As of December 31, 2023, we have not issued any shares of BGC
Class A common stock under the current CEO Program.
We also have an effective registration statement on Form S-4 with respect to the offer and sale of up to 20 million
shares of BGC Class A common stock from time to time in connection with business combination transactions, including
acquisitions of other businesses, assets, properties or securities. As of December 31, 2023, we have issued an aggregate of
2.3 million shares of BGC Class A common stock under the 2019 Form S-4 Registration Statement. We also have an effective
shelf Registration Statement on Form S-3 pursuant to which we can offer and sell up to 10 million shares of BGC Class A
common stock under the BGC Group, Inc. DRIP. As of December 31, 2023, we have issued 0.8 million shares of BGC Class A
common stock under the DRIP. We have filed a number of registration statements on Form S-8 pursuant to which we have
registered the shares underlying our Equity Plan. As of December 31, 2023, there were 476.6 million shares remaining for sale
under such registration statements.
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Our management will have broad discretion as to the timing and amount of sales of our Class A common stock in any
offering by us, as well as the application of the net proceeds of any such sale. Accordingly, purchasers in any such offering will
be relying on the judgment of our management with regard to the use of such net proceeds, and purchasers will not have the
opportunity, as part of their investment decision, to assess whether the proceeds are being used appropriately. It is possible that
the proceeds will be invested in a way that does not yield a favorable, or any, return for us and cause the price of our Class A
common stock to decline.
We cannot predict the effect, if any, of future sales of our Class A common stock, or the availability of shares for
future sales, on the market price of our Class A common stock. Sales of substantial amounts of our Class A common stock, or
the perception that such sales could occur, could dilute existing holders of our Class A common stock and may adversely affect
prevailing market prices for our Class A common stock.
Because future sales of our Class A common stock may be made in the markets at prevailing market prices or at prices
related to such prevailing market prices, the prices at which these shares have been sold and may be sold in the future will vary,
and these variations may be significant. Purchasers of these shares may suffer significant dilution if the price they pay is higher
than the price paid by other purchasers of shares of our Class A common stock in any future offerings of shares of our Class A
common stock. In addition, the sale by us of any shares of our Class A common stock will decrease our existing Class A
common stockholders’ proportionate ownership interest in us, reduce the amount of cash available per share for dividends
payable on shares of our Class A common stock and diminish the relative voting strength of each previously outstanding share
of our Class A common stock.
We may use the net proceeds from future offerings of our Class A common stock to repurchase shares from
Cantor, our executive officers, other employees and others, which may render the proceeds unavailable for other
purposes.
Because we may use the net proceeds from future offerings of our Class A common stock, including pursuant to our
CEO program for general corporate purposes, which, among other things, may include repurchases of shares of our Class A
common stock or other equity interests in us or in our subsidiaries from Cantor, our executive officers, other employees, and
others, and/or to replace cash used to effect such repurchases and purchases, investors should be aware that such net proceeds
may not be available for other corporate purposes. Depending upon the timing and prices of such repurchases of shares and of
the sales of our shares in future offerings and the liquidity and depth of our market, we may sell a greater aggregate number of
shares, at a lower average price per share in future offerings than the number of shares repurchased or purchased, thereby
increasing the aggregate number of shares outstanding and potentially decreasing our EPS.
From January 1, 2023 to December 31, 2023, we repurchased an aggregate of 23.3 million shares of our Class A
common stock at an aggregate purchase price of approximately $114.5 million, with a weighted-average repurchase price of
$4.93 per share. From January 1, 2023 to the closing of the Corporate Conversion, we redeemed for cash an aggregate of 0.3
million limited partnership units at a weighted average price of $4.71 per unit and an aggregate of 0.2 million FPUs at a
weighted average price of $5.11 per unit. In the future, we may continue to repurchase shares of our Class A common stock
from Cantor, our executive officers, other employees, and others, and these repurchases may be significant.
While we believe that we can successfully manage our issuance and repurchase strategy, and that our share price may
in fact increase as we increase the amount of cash available for dividends and share repurchases by paying an increasing portion
of the compensation of our employees in the form of restricted stock, gradually lowering our compensation expenses for
purposes of Adjusted Earnings, and lowering our long-term effective tax rate for Adjusted Earnings, there can be no assurance
that our strategy will be successful or that we can achieve any or all of such objectives.
General Risks
Our operations are global and exchange rate fluctuations and international market events could materially
adversely impact our business, financial condition, results of operations and prospects.
Because our operations are global, we are exposed to risks associated with changes in FX rates. Changes in foreign
currency rates create volatility in the U.S. dollar equivalent of revenues and expenses which may result in higher or lower
values than in an otherwise constant currency exchange rate environment, in particular with regard to British Pounds and Euros.
In addition, changes in the remeasurement of our foreign currency denominated net assets are recorded as part of our results of
operations and fluctuate with changes in foreign currency rates. We monitor our net exposure in foreign currencies on a daily
basis and hedge our exposure as deemed appropriate with major financial institutions. However, potential movements in the
U.S. dollar against other currencies in which we earn revenues have in the past and may in the future materially adversely affect
our financial results.
67
Furthermore, our revenues derived from non-U.S. operations are subject to risk of loss from social or political
instability, changes in government policies or policies of central banks, downgrades in the credit ratings of sovereign countries,
expropriation, nationalization, confiscation of assets and unfavorable legislative, political developments, and other events in
such non-U.S. jurisdictions. Revenues from the trading of non-U.S. securities may be subject to negative fluctuations as a result
of the above factors. The impact of these fluctuations on our results could be magnified because non-U.S. trading markets,
particularly in emerging market countries, are smaller, less liquid and more volatile than U.S. trading markets.
Employee error or miscommunication could impair our ability to attract and retain customers and subject us to
significant financial losses, legal liability, regulatory sanctions and penalties and reputational harm; moreover,
misconduct is difficult to detect and deter, and error is difficult to prevent.
Employee errors and miscommunication, including mistakes in executing, recording or processing transactions for
customers, could cause us to suffer liability, loss, sanction and/or reputational harm, which could expose us to the risk of
material losses even if the errors and miscommunication are detected and the transactions are unwound or reversed. If our
customers are not able to settle their transactions on a timely basis, the time in which employee errors and miscommunication
are detected may be increased and our risk of material loss could be increased. The risk of employee error and
miscommunication may be greater for products or services that are new or have non-standardized terms.
Ongoing scrutiny and changing expectations from stockholders with respect to the Company’s corporate
responsibility or ESG practices may result in additional costs or risks.
Companies across our industry are facing continuing scrutiny related to their corporate responsibility or ESG practices
and related demographic disclosures. Investor advocacy groups, certain institutional investors, investment funds and other
influential investors are also focused on such practices and related demographic disclosures and in recent years have placed
increasing importance on the non-financial impacts of their investments. Further, customer bids, requests for proposals and
other customer arrangements or opportunities may require disclosure of or improvements in ESG metrics in order to compete
for business. While we are focused on these efforts and disclosures, if our practices and disclosure of specific metrics do not
meet customer, investor or other industry participant expectations, which continue to evolve, we may not win or may lose
customers, or may incur additional costs and our business, financial condition, results of operations and prospects could be
materially adversely affected.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not Applicable
ITEM 1C.
CYBERSECURITY
We are committed to combating the threat of cyber-attacks and to securing our business through our information
security programs and developing a deep understanding of cybersecurity risks, vulnerabilities, mitigations, and threats. We have
a global cybersecurity process applicable to all subsidiaries and business lines.
Risk Management and Strategy
Our global cybersecurity processes form the comprehensive framework we utilize for planning, performing, managing,
assessing, and improving our security controls as they relate to cybersecurity, and form part of our overall risk management
system. We aim to conduct our cybersecurity program in accordance with current recognized global policies and standards for
cybersecurity and information technology. These processes are managed by our cybersecurity team headed by our CISO and
supported by our business continuity teams.
We conduct periodic internal and external vulnerability audits and assessments and penetration testing and provide
periodic cybersecurity training to employees. These measures include regular phishing simulations, annual general
cybersecurity awareness training and data protection training. We also participate in industry-specific cybersecurity roundtables
and professional groups to ensure we remain abreast of industry-wide cybersecurity developments and best practices and
thereby enhance our threat identification processes and responses as necessary. Additionally, when engaging with and utilizing
third-party vendors and partners for our business, we conduct various oversight assessments, including due diligence and
periodic monitoring to identify potential cybersecurity threats associated with our conducting business with such vendors and
partners and to ensure any corresponding risk exposure aligns with our business requirements and risk tolerances.
We maintain an incident reporting and escalation process in the event of any observed, detected, or suspected events
that we believe may qualify as a cybersecurity incident. Risks are identified based on a four-tier system, and tiers are assigned
based on the service impact, user impact, financial impact, and security impact that a threat may pose. Our processes include
68
steps to recover our systems and information through established and tested system recovery plans and business continuity
plans, each based on the appropriate response associated with the corresponding tier of the identified threat. Our incident
response process includes steps to notify key incident management team members who are responsible for communicating with
regulatory and other governmental authorities about cybersecurity events as applicable and as required by law. We determine
the materiality of such incidents based upon a number of factors including if the incident had or may have a material impact on
our business strategy, results of operations, or financial condition. This process involves a review of the nature of the incident
by our cybersecurity team as well as other members of management and employees with specialized technology or financial
knowledge, including our CISO, CIO, and CFO, as applicable. In the event of a material breach, we have a process for
escalation to appropriate members of our senior management, and, where appropriate, to our Board and Audit Committee.
These groups also collaborate in determining the appropriate response to such events and disclosure of any material breach.
We engage third parties from time to time that assist us in the identification, assessment, and management of
cybersecurity risks. We also engage cybersecurity specialists to complete assessments of our cybersecurity processes, program
and practices, including our data protection practices, as well as to conduct targeted attack simulations. The feedback from these
assessments and guidance from external specialists informs our overall risk management system and the development and
improvement of our processes to mitigate cybersecurity risks throughout the Company.
Board Governance and Management
Our global cybersecurity processes are managed primarily by our CISO, whose experience includes approximately 25
years of service in roles relating to assessing, managing and providing oversight for cybersecurity risks at public and private
entities; our CIO, whose experience includes managing the technology professionals and processes at public and private
financial services companies; and our CFO, whose experience includes risk management and specialized financial knowledge.
Pursuant to the Audit Committee charter, the Audit Committee oversees the management of the Company’s risk
management process, including the identification, prioritization, assessment and management of risks related to cybersecurity.
While our Board and Audit Committee members have broad experience in risk management and in some cases technological
expertise relating to cybersecurity, our CISO and CIO and management teams handle cybersecurity threat management. The
CISO and CIO provide the Board and Audit Committee periodic reports regarding the Company’s cybersecurity risks and
threats, the status of projects to strengthen our information security systems, assessments of our information security program,
and any issues associated with the emerging threat landscape. In addition, the CISO provides periodic reports to our executive
officers, members of the boards of certain of our regulated entities internationally and other members of our senior management
as appropriate. Material events and updates are reported to the full Board and Audit Committee annually and on an ad hoc basis
where warranted based on the level of materiality of any such incidents as determined by the incident reporting and escalation
process led by our CISO and CIO. Our processes are regularly evaluated by internal and external experts, with the results of
those reviews reported to senior management and, where appropriate, the Board and Audit Committee.
Although we believe risks from cybersecurity threats have not materially affected our business strategy, results of
operations, or financial condition to date, they may in the future, and we continue to closely monitor risks from cybersecurity
threats. For additional information on the impact of cybersecurity matters on us, see “Item 1A — Risk Factors — Risks Related
to Our IT Systems and Cybersecurity.”
Disaster Recovery
Our processes address disaster recovery concerns. We operate most of our technology from U.S. and U.K. primary
data centers. Either site alone is typically capable of running all of our essential systems. Replicated instances of this technology
are maintained in our redundant data centers. Our data centers are generally built and equipped to best-practice standards of
physical security with appropriate environmental monitoring and safeguards.
We conduct annual disaster recovery training exercises for each primary data center where failover procedures are
tested against defined Recovery Time Objectives (RTOs).
ITEM 2.
PROPERTIES
We have offices in the United States, Canada, Europe, United Kingdom, Latin America, Asia, Africa and the Middle
East. Our principal executive offices are located at 499 Park Avenue, New York, New York. We also occupy space at 199
Water Street, New York, New York and space at 55 Water Street, New York, New York. Under the Administrative Services
Agreement with Cantor, we are obligated to Cantor for our pro rata portion (based on square footage used) of rental expense
during the terms of the leases for such spaces.
69
Our largest presence outside of the New York metropolitan area is in London, located at Five Churchill Place, London,
E14 5RD.
We currently occupy concurrent computing centers in Weehawken, New Jersey, Secaucus, New Jersey and Trumbull,
Connecticut. In addition, we occupy three data centers in the United Kingdom located in Canary Wharf, Romford and City of
London, and two data centers in Asia located in Hong Kong and Singapore. Our U.S. operations also have office space in Iselin,
New Jersey, Palm Beach Gardens, Florida, Garden City, New York, Sugar Land, Texas, Louisville, Kentucky and Chicago,
Illinois.
ITEM 3.
LEGAL PROCEEDINGS
See Note 19—“Commitments, Contingencies and Guarantees” to the Company’s consolidated financial statements
included in Part II, Item 8 of this Annual Report on Form 10-K and the information under the heading “Legal Proceedings”
included in Part I, Item 7 of this Annual Report on Form 10-K, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” for a description of our legal proceedings, which are incorporated by reference herein.
ITEM 4.
MINE SAFETY DISCLOSURES
Not Applicable.
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PART II
ITEM 5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our Class A common stock is traded on the Nasdaq Global Select Market under the symbol “BGC.” There is no public
trading market for our Class B common stock, which is held by Cantor, CFGM, Mr. Lutnick, and relatives of Mr. Lutnick.
As of February 27, 2024, there were 1,111 holders of record of our Class A common stock and 7 holders of record of
our Class B common stock.
Our Board of Directors and our Audit Committee have authorized repurchases of our Class A common stock and
redemptions of equity interests in our subsidiaries, including from Cantor, our executive officers, other employees, and others,
including Cantor employees and partners. On July 1, 2023, the BGC Group Board approved BGC Group’s repurchase
authorization in an amount up to $400.0 million. As of December 31, 2023 we had approximately $333.1 million remaining
under this authorization and may continue to actively make repurchases or purchases, or cease to make such repurchases or
purchases, from time to time.
The table below sets forth certain information regarding BGC’s purchases of its common stock during the fiscal
quarter ended December 31, 2023;
Period
October 1, 2023—October 31, 20231
November 1, 2023—November 30, 2023
December 1, 2023—December 31, 2023
Total Repurchases
Total Number
of Shares
Repurchased
Weighted-
Average Price
Paid per Share
5.63
6.15
—
5.74
4,269 $
1,204 $
— $
5,473 $
Total Number
of Shares
Repurchased
Under Publicly
Announced
Program2
Approximate
Dollar Value
of Shares That May
Yet Be
Repurchased
Under the Program2
3,300
1,204
—
4,504 $
333,113
1
2
Includes 1.0 million shares withheld to satisfy tax liabilities due upon the vesting of restricted stock. The average price paid per
share for such share withholdings is based on the closing price per share on the vesting date of the restricted stock or, if such date is
not a trading day, the trading day immediately prior to such vesting date. The fair value of restricted shares vested but withheld to
satisfy tax liabilities was $5.0 million at a weighted-average price of $5.21 per share.
Represents shares available under a repurchase program authorized by the Board of Directors on July 1, 2023 up to an amount of
$400.0 million for which there was no expiration date.
Capital Deployment Priorities, Dividend Policy and Repurchase and Redemption Program
BGC’s current capital allocation priorities are to use our liquidity to return capital to stockholders and to continue
investing in its high growth Fenics businesses. BGC plans to prioritize share repurchases over dividends. We have repurchased
or redeemed 24.7 million shares or units during the year ended December 31, 2023.
Any dividends, if and when declared by our Board, will be paid on a quarterly basis. The dividend to our common
stockholders is expected to be calculated based on a number of factors. No assurance can be made, however, that a dividend
will be paid each quarter. The declaration, payment, timing, and amount of any future dividends payable by us will be at the
sole discretion of our Board using the fully diluted share count.
We are a holding company, with no direct operations, and therefore we are able to pay dividends only from our
available cash on hand and funds received from distributions from BGC U.S. OpCo and BGC Global OpCo. Our ability to pay
dividends may also be limited by regulatory considerations as well as by covenants contained in financing or other agreements.
In addition, under Delaware law, dividends may be payable only out of surplus, which is our net assets minus our capital (as
defined under Delaware law), or, if we have no surplus, out of our net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. Accordingly, any unanticipated accounting, tax, regulatory or other charges against
net income may adversely affect our ability to declare and pay dividends. While we intend to declare and pay dividends
quarterly, there can be no assurance that our Board will declare dividends at all or on a regular basis or that the amount of our
dividends will not change.
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Performance Graph
On July 1, 2023, BGC completed its Corporate Conversion to a Full C-Corporation in order to reorganize and simplify
its organizational structure. As a result of the Corporate Conversion, BGC Group became the public holding company for, and
successor to, BGC Partners, and each share of BGC Partners Class A common stock trading on Nasdaq under the ticker
“BGCP” was converted into one share of BGC Group Class A common stock trading on Nasdaq under the ticker “BGC.”
The performance graph below shows a comparison of the cumulative total stockholder return of $100 invested in
shares of the Company (identified as shares of BGC Partners, Inc. prior to July 1, 2023 and BGC Group, Inc. on July 1, 2023
and following) on December 31, 2018, measured on December 31, 2019, December 31, 2020, December 31, 2021, December
31, 2022, and December 31, 2023. The returns of the Peer Group have been weighted at the beginning of the period according
to their U.S. dollar stock market capitalizations for purposes of arriving at a Peer Group average.
Total returns are shown on a “net dividend” basis, which reflects tax effects on dividend reinvestments from
companies operating under certain U.K. and European tax jurisdictions, according to local tax laws.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among BGC Group, Inc., the S&P 500 Index,
Russell 2000 Index, and Peer Group**
$250
$200
$150
$100
$50
$0
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
BGC Group, Inc.
Russell 2000
S&P 500
Peer Group
*
The above chart reflects $100 invested on 12/31/18 in stock or index, including reinvestment of dividends.
**
Peer group indices use beginning of period market capitalization weighting. The above graph was prepared by Zacks Investment Research, Inc. and
used with its permission. All rights reserved. Copyright 1980-2023. Index data provided by Copyright Standard and Poor’s Inc. and Copyright Russell
Investments. Used with permission. All rights reserved.
In addition to the foregoing five-year returns, the 10-year total returns on $100 calculated using the same methodology
described above are as follows:
•
•
The 10-year total return for the Company from December 31, 2013 through December 31, 2023 would have
resulted in approximately $298.
In comparison, the 10-year total return for $100 invested in the Peer Group, Russell 2000 Index, and S&P 500
Index from December 31, 2013 through December 31, 2023 would have resulted in approximately in $119,
$200, and $311, respectively.
72
Table of Contents
ITEM 6.
[RESERVED]
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of our financial condition and results of operations should be read together with our
Consolidated Financial Statements and notes to those statements, as well as the “Special Note on Forward-Looking
Information” relating to forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act included elsewhere in this Annual Report on Form 10-K and the cautionary statements relating to forward-
looking statements below.
The objective of this Management’s Discussion and Analysis is to allow investors to view the Company from
management’s perspective, considering items that have had and could have a material impact on future operations. This
discussion summarizes the significant factors affecting our results of operations and financial condition as of and during the
years ended December 31, 2023, 2022, and 2021. This discussion is provided to increase the understanding of, and should be
read in conjunction with, our Consolidated Financial Statements and the notes thereto included elsewhere in this report.
FORWARD-LOOKING CAUTIONARY STATEMENTS
Our actual results and the outcome and timing of certain events may differ significantly from the expectations
discussed in the forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not
limited to, the factors set forth below:
•
•
•
•
•
•
•
macroeconomic and other challenges and uncertainties, including those resulting from the wars in Ukraine
and Israel and other ongoing or new conflicts in the Middle East or other jurisdictions, downgrades of U.S.
Treasuries, fluctuating global interest rates, inflation and the Federal Reserve’s responses thereto, including
increasing interest rates, fluctuations in the value of global currencies, including the U.S. dollar, liquidity
concerns regarding and changes in capital requirements for banking and financial institutions, changes in the
U.S. and global economies and financial markets, including economic activity, employment levels, supply
chain issues and market liquidity, and increasing energy costs, as well as the various actions taken in response
to these challenges and uncertainties by governments, central banks and others, including consumer and
corporate clients and customers, as well as potential changes in these factors as a result of the upcoming U.S.
Presidential election;
market conditions and volatility, including fluctuations in interest rates and trading volume, the level of
worldwide governmental debt issuances, austerity programs, government stimulus packages, increases and
decreases in the federal funds interest rate and other actions to moderate inflation, increases or decreases in
deficits and the impact of changing government tax rates, repatriation rules, deductibility of interest, and other
changes to monetary policy, and potential political impasses or regulatory requirements, turmoil across
regional banks and certain global investment banks, volatility in the demand for the products and services we
provide, possible disruptions in trading, potential deterioration of equity and debt capital markets and
cryptocurrency markets, and potential economic downturns, including recessions, and similar effects, which
may not be predictable in future periods;
our ability to access the capital markets as needed or on reasonable terms and conditions;
our ability to enter new markets or develop new products, offerings, trade desks, marketplaces, or services for
existing or new clients and, to pursue new operations and business initiatives, including our ability to develop
new Fenics platforms and products, to successfully launch new initiatives which could require significant
capital and significant efforts by management, including engaging partners on satisfactory terms, to manage
long lead times to scale a successful venture, efforts to convert certain existing products to a Fully Electronic
trade execution, to incorporate artificial intelligence into our products and efforts by our competitors to do the
same, and to induce such clients to use these products, trading desks, marketplaces, or services and to secure
and maintain market share, while managing the risks inherent in operating our cryptocurrency business and in
safekeeping cryptocurrency assets;
pricing, commissions and fees, and market position with respect to any of our products and services and those
of our competitors;
the effect of industry concentration and reorganization, reduction of customers, and consolidation;
liquidity, regulatory, cash and clearing capital requirements;
73
•
•
•
•
•
•
•
•
•
•
•
our relationships and transactions with Cantor and its affiliates, including CF&Co, and CCRE, our structure,
the timing and impact of any actual or future changes to our structure, including the Corporate Conversion,
any related transactions, conflicts of interest or litigation, including with respect to executive compensation
matters, any impact of Cantor’s results on our credit ratings and associated outlooks, any loans to or from us
or Cantor, including the balances and interest rates thereof from time to time and any convertible or equity
features of any such loans, CF&Co’s acting as our sales agent or underwriter under our CEO Program or
other offerings, Cantor’s holdings of the Company’s Debt Securities, CF&Co’s acting as a market maker in
the Company’s Debt Securities, CF&Co’s acting as our financial advisor in connection with potential
acquisitions, dispositions, or other transactions, and our participation in various investments, stock loans or
cash management vehicles placed by or recommended by CF&Co;
the integration of acquired businesses and their operations and back office functions with our other
businesses;
the effect on our businesses of any extraordinary transactions, including potential dilution, taxes, costs, and
other impacts;
the rebranding of our current businesses or risks related to any potential dispositions of all or any portion of
our existing or acquired businesses;
pandemics and other international health emergencies, including the combined impact of COVID-19 with the
flu and other seasonal illnesses, and the impact of terrorist acts, acts of war or other violence or political
unrest, as well as natural disasters or weather-related or similar events, including hurricanes and heat waves
as well as power failures, communication and transportation disruptions, and other interruptions of utilities or
other essential services;
risks inherent in doing business in international markets, and any failure to identify and manage those risks,
including economic or geopolitical conditions or uncertainties, the actions of governments or central banks,
including the pursuit of trade, border control or other related policies by the U.S. and/or other countries
(including U.S.-China trade relations), recent economic and political volatility in the U.K., rising political and
other tensions between the U.S. and China, the wars in Israel and Ukraine, new or ongoing conflicts in the
Middle East or other jurisdictions and additional sanctions and regulations imposed by governments and
related counter-sanctions;
the impact of U.S. government shutdowns, elections, political unrest, boycotts, stalemates or other social and
political developments, such as terrorist acts, acts of war or other violence or political unrest, as well as
natural disasters, and potential changes in these factors as result of the upcoming U.S. Presidential election;
the effect on our businesses, our clients, the markets in which we operate and the economy in general of
changes in the U.S. and foreign tax and other laws, including changes in tax rates, repatriation rules, and
deductibility of interest, potential policy and regulatory changes in other countries, sequestrations,
uncertainties regarding the debt ceiling and the federal budget, responses to global inflation rates, and other
potential political policies;
our dependence upon our key employees, our ability to build out successful succession plans, the impact of
absence due to illness or leave of certain key executive officers or employees and our ability to attract, retain,
motivate and integrate new employees, as well as the competing demands on the time of certain of our
executive officers who also provide services to Cantor, Newmark and various other ventures and investments
sponsored by Cantor and the impact of post termination covenants on awards previously granted to key
employees and future awards or otherwise on our employment arrangements;
extensive regulation of our businesses and customers, the timing of regulatory approvals, changes in
regulations relating to financial services companies and other industries, and risks relating to compliance
matters, including regulatory examinations, inspections, investigations and enforcement actions, and any
resulting costs, increased financial and capital requirements, enhanced oversight, remediation, fines, penalties,
sanctions, and changes to or restrictions or limitations on specific activities, including potential delays in
accessing markets, including due to our regulatory status and actions, operations, and compensatory
arrangements, and growth opportunities, including acquisitions, hiring, and new businesses, products, or
services;
factors related to specific transactions or series of transactions, including credit, performance, and principal
risk, trade failures, counterparty failures, and the impact of fraud and unauthorized trading;
74
•
•
•
•
•
•
•
•
•
•
•
•
•
costs and expenses of developing, maintaining, and protecting our intellectual property, as well as
employment, regulatory, and other litigation and proceedings, and their related costs, including judgments,
indemnities, fines, or settlements paid and the impact thereof on our financial results and cash flows in any
given period;
certain financial risks, including the possibility of future losses, indemnification obligations, assumed
liabilities, reduced cash flows from operations, increased leverage, reduced availability under our credit
agreements, and the need for short- or long-term borrowings, including from Cantor, our ability to refinance
our indebtedness on acceptable terms and rates, and changes to interest rates and liquidity or our access to
other sources of cash relating to acquisitions, dispositions, or other matters, potential liquidity and other risks
relating to our ability to maintain continued access to credit and availability of financing necessary to support
our ongoing business needs, on terms acceptable to us, if at all, and risks associated with the resulting
leverage, including potentially causing a reduction in our credit ratings and the associated outlooks and
increased borrowing costs as well as interest rate and foreign currency exchange rate fluctuations;
risks associated with the temporary or longer-term investment of our available cash, including in the BGC
OpCos, defaults or impairments on our investments, joint venture interests, stock loans or cash management
vehicles and collectability of loan balances owed to us by employees, the BGC OpCos or others;
the impact of any restructuring or similar other transformative transactions, on our ability to enter into
marketing and strategic alliances and business combinations, attract investors or partners or engage in other
transactions in the financial services and other industries, including acquisitions, tender offers, dispositions,
reorganizations, partnering opportunities and joint ventures, the failure to realize the anticipated benefits of
any such transactions, relationships or growth, and the future impact of any such transactions, relationships or
growth on our other businesses and our financial results for current or future periods, the integration of any
completed acquisitions and the use of proceeds of any completed dispositions, the impact of amendments and/
or terminations of strategic arrangements, and the value of and any hedging entered into in connection with
consideration received or to be received in connection with such dispositions and any transfers thereof;
our estimates or determinations of potential value with respect to various assets or portions of our businesses,
including Fenics, FMX and other businesses;
our ability to manage turnover and hire, train, integrate and retain personnel, including brokers, salespeople,
managers, technology professionals and other front-office personnel, back-office and support services, and
departures of senior personnel;
our ability to expand the use of technology and maintain access to the intellectual property of others for
Hybrid and Fully Electronic trade execution in our product and service offerings, and otherwise;
the impact of artificial intelligence on the economy, our industry, our business and the businesses of our
clients and vendors;
our ability to effectively manage any growth that may be achieved, including outside the U.S., while ensuring
compliance with all applicable financial reporting, internal control, legal compliance, and regulatory
requirements;
our ability to identify and remediate any material weaknesses or significant deficiencies in our internal
controls which could affect our ability to properly maintain books and records, prepare financial statements
and reports in a timely manner, control our policies, practices and procedures, operations and assets, assess
and manage our operational, regulatory and financial risks, and integrate our acquired businesses and brokers,
salespeople, managers, technology professionals and other front-office personnel;
the impact of unexpected market moves and similar events;
information technology risks, including capacity constraints, failures, or disruptions in our systems or those of
the clients, counterparties, exchanges, clearing facilities, or other parties with which we interact, including
increased demands on such systems and on the telecommunications infrastructure from remote working,
cyber-security risks and incidents, compliance with regulations requiring data minimization and protection
and preservation of records of access and transfers of data, privacy risk and exposure to potential liability and
regulatory focus;
the effectiveness of our governance, risk management, and oversight procedures and impact of any potential
transactions or relationships with related parties;
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•
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the impact of our ESG or “sustainability” ratings on the decisions by clients, investors, ratings agencies,
potential clients and other parties with respect to our businesses, investments in us, our borrowing
opportunities or the market for and trading price of BGC Class A common stock, Company Debt Securities,
or other matters;
the fact that the prices at which shares of our Class A common stock are or may be sold in offerings,
acquisitions, or other transactions may vary significantly, and purchasers of shares in such offerings or other
transactions, as well as existing stockholders, may suffer significant dilution if the price they paid for their
shares is higher than the price paid by other purchasers in such offerings or transactions;
the impact of reductions to our dividends and the timing and amounts of any future dividends, including our
ability to meet expectations with respect to payments of dividends and repurchases of shares of our Class A
common stock, or other equity interests in us or any of our other subsidiaries, including from Cantor, our
executive officers, other employees, and others, and the net proceeds to be realized by us from offerings of
shares of BGC Class A common stock and Company Debt Securities, and our ability to pay any excise tax
that may be imposed on the repurchase of shares; and
the effect on the markets for and trading prices of our Class A common stock and Company Debt Securities
of various offerings and other transactions, including offerings of our Class A common stock and convertible
or exchangeable debt or other securities, our repurchases of shares of our Class A common stock or other
equity interests in us or in our subsidiaries, our payment of dividends on our Class A common stock,
convertible arbitrage, hedging, and other transactions engaged in by us or holders of our outstanding shares,
Company Debt Securities or other securities, share sales and stock pledges, stock loans, and other financing
transactions by holders of our shares (including by Cantor or others), including of shares acquired pursuant to
our employee benefit plans, corporate restructurings, acquisitions, conversions of shares of our Class B
common stock and our other convertible securities into shares of our Class A common stock, and distributions
of our Class A common stock by Cantor to its partners.
The foregoing risks and uncertainties, as well as those risks and uncertainties discussed under the headings “Item 1A—
Risk Factors,” and “Item 7A—Quantitative and Qualitative Disclosures About Market Risk” and elsewhere in this Annual
Report on Form 10-K, may cause actual results and events to differ materially from the forward-looking statements.
OVERVIEW AND BUSINESS ENVIRONMENT
The Company is a leading global brokerage and financial technology company servicing the global financial, energy
and commodities markets.
BGC, through its affiliates, specializes in the trade execution of a broad range of products, including fixed income
securities such as government bonds, corporate bonds, and other debt instruments, as well as related interest rate derivatives and
credit derivatives. Additionally, the Company provides brokerage services across FX, Equities, Energy and Commodities,
Shipping, and Futures and Options. Our business also provides connectivity and network solutions, clearing, market data and
network connectivity products, trade compression and other post-trade services, market data and related information services
and other back-office services to a broad assortment of financial and non-financial institutions.
Our integrated platform is designed to provide flexibility to customers with regard to price discovery, trade execution
and transaction processing, as well as accessing liquidity through our platforms, for transactions executed either OTC or
through an exchange. Through our Fenics® group of electronic brands, the Company offers several trade execution, market
infrastructure and connectivity services, as well as post-trade services. Fenics® brands also operate under the names Fenics®,
FMX™, FMX Futures Exchange™, Fenics Markets Xchange™, Fenics Digital™, Fenics UST™, Fenics FX™, Fenics Repo™,
Fenics Direct™, Fenics MID™, Fenics Market Data™, Fenics GO™, Fenics PortfolioMatch™, BGC®, BGC Trader™,
kACE2®, and Lucera®.
Our customers include many of the world’s largest banks, broker-dealers, investment banks, trading firms, hedge
funds, governments, corporations, and investment firms. BGC is a global operation with offices across all major geographies,
including New York and London, as well as in Bahrain, Beijing, Bogota, Brisbane, Cape Town, Chicago, Copenhagen, Dubai,
Dublin, Frankfurt, Geneva, Hong Kong, Houston, Johannesburg, Madrid, Manila, Melbourne, Mexico City, Miami, Milan,
Monaco, Nyon, Paris, Perth, Rio de Janeiro, Santiago, São Paulo, Seoul, Shanghai, Singapore, Sydney, Tel Aviv, Tokyo,
Toronto, and Zurich.
As of December 31, 2023, the Company had 2,104 brokers, salespeople, managers, technology professionals and other
front-office personnel across our businesses.
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BGC, BGC Group, BGC Partners, BGC Trader, GFI, GFI Ginga, CreditMatch, Fenics, Fenics.com, FMX, Sunrise
Brokers, Poten & Partners, RP Martin, kACE2, Capitalab, Swaptioniser, CBID, Caventor, LumeMarkets, Lucera, and Aurel are
trademarks/service marks, and/or registered trademarks/service marks of BGC Group and/or its affiliates.
Corporate Conversion
On July 1, 2023, the Company completed its Corporate Conversion to a Full C-Corporation in order to reorganize and
simplify its organizational structure. As a result of the Corporate Conversion, BGC Group became the public holding company
for, and successor to, BGC Partners, and its Class A common stock began trading on Nasdaq, in place of BGC Partners’ Class
A common stock, under the ticker symbol “BGC.” Upon completion of the Corporate Conversion, the former stockholders of
BGC Partners and the former limited partners of BGC Holdings now participate in the economics of the BGC businesses
through BGC Group.
Effective as of 12:01 a.m., Eastern Time, on July 1, 2023, BGC Holdings reorganized from a Delaware limited
partnership into a Delaware limited liability company through a merger with and into Holdings Merger Sub, with Holdings
Merger Sub continuing as a direct subsidiary of BGC Partners. Effective as of 12:02 a.m., Eastern Time, on July 1, 2023,
Merger Sub 1 merged with and into BGC Partners, with BGC Partners continuing as a direct subsidiary of BGC Group. At the
same time, Merger Sub 2 merged with and into Holdings Merger Sub, with Holdings Merger Sub continuing as a subsidiary of
BGC Group. As a result of the Corporate Conversion Mergers, BGC Partners and BGC Holdings became wholly owned
subsidiaries of BGC Group.
In the Holdings Reorganization Merger, each unit of BGC Holdings outstanding as of immediately prior to the
Holdings Reorganization Merger was converted into a substantially equivalent equity interest in Holdings Merger Sub.
In the Corporate Merger, each share of Class A common stock, par value $0.01 per share, of BGC Partners and each
share of Class B common stock, par value $0.01 per share, of BGC Partners outstanding was converted into one share of Class
A common stock, par value $0.01 per share, of BGC Group and one share of Class B common stock, par value $0.01 per share,
of BGC Group, respectively.
In connection with, but prior to, the Corporate Conversion, the Company completed various transactions which
included:
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the redemption of certain non-exchangeable limited partnership units in connection with the issuance of shares of BGC
Partners Class A common stock and the accompanying tax payments, which led to an equity-based compensation
charge of $60.9 million;
the exchange of the remaining 1.5 million exchangeable limited partnership units of BGC Holdings held by employees
on June 30, 2023, for 1.0 million shares, after tax withholding, of BGC Partners Class A common stock;
the redemption of certain non-exchangeable limited partnership units of BGC Holdings held by employees and
issuance of 16.9 million BGC Partners RSUs on a one-for-one basis on June 30, 2023;
the redemption of certain non-exchangeable Preferred Units of BGC Holdings held by employees and issuance of
$49.2 million of BGC Partners RSU Tax Accounts on June 30, 2023, based on the fixed cash value of the Preferred
Units redeemed;
the redemption of the remaining 5.6 million non-exchangeable FPUs and issuances of BGC Partners RSUs on a one-
for-one basis on June 30, 2023, which in turn reduced the “Redeemable Partnership Interest” to zero with an offsetting
impact to “Total equity” in the Company’s Consolidated Statements of Financial Condition as of June 30, 2023; and
the purchase on June 30, 2023 by Cantor from BGC Holdings of an aggregate of 5,425,209 Cantor units for an
aggregate consideration of $9,715,772 as a result of the redemption of 5,425,209 FPUs, and 324,223 Cantor units for
an aggregate consideration of $598,712 as a result of the exchange of 324,223 FPUs.
As a result of the Corporate Conversion:
64.0 million Cantor units, including 5.7 million purchased on June 30, 2023, were converted into shares of BGC
Group Class B common stock, subject to the terms and conditions of the Corporate Conversion Agreement, provided
that a portion of the 64.0 million shares of BGC Group Class B common stock issued to Cantor will exchange into
BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in shares of BGC
Group Class A or B common stock in connection with certain acquisition transactions prior to July 1, 2030, the
seventh anniversary of the Corporate Conversion;
BGC Group assumed all BGC Partners RSUs, RSU Tax Accounts or restricted stock awards outstanding as of June 30,
2023; and
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non-exchangeable limited partnership units of BGC Holdings were converted into equity awards denominated in cash,
restricted stock and/or RSUs of BGC Group, each as further set forth in the Corporate Conversion Agreement. BGC
Group granted 38.6 million restricted stock awards, 25.3 million RSUs, and $74.0 million of RSU Tax Accounts upon
the conversion of the non-exchangeable shares of Holdings Merger Sub.
There were no limited partnership units of BGC Holdings remaining after the Corporate Conversion was completed.
In connection with the Corporate Conversion on July 1, 2023, the BGC Group Board and the Board of Directors of
BGC Partners authorized the assumption of all agreements and arrangements between BGC Partners and any executive officer,
director or affiliate of BGC Partners, with such modifications necessary to reflect the Corporate Conversion. Pursuant to the
foregoing authorization, any existing agreements and arrangements between BGC Partners and any executive officer, director
or affiliate of BGC Partners, were generally assumed unchanged other than making BGC Group a party thereto.
In connection with the Corporate Conversion on July 1, 2023, the Board and Audit Committee of BGC Group
approved the authorized repurchases of Company Equity Securities from any holder of Company Equity Securities, including
our directors, officers, and employees, of up to $400.0 million.
In connection with the Corporate Conversion on July 1, 2023, the Board and Audit Committee of BGC Group
approved the authorized repurchases of Company Debt Securities from any holder of Company Debt Securities, including our
directors, officers, and employees, of up to $50.0 million.
In connection with the Corporate Conversion on July 1, 2023, BGC Group assumed and adopted: the Eighth Amended
and Restated BGC Partners, Inc. Long-Term Incentive Plan, as amended and restated as the BGC Group, Inc. Long Term
Incentive Plan; the BGC Partners Second Amended and Restated BGC Partners Incentive Bonus Compensation Plan, as
amended and restated, and renamed the BGC Group, Inc. Incentive Bonus Compensation Plan; and the BGC Partners, Inc.
Deferral Plan for Employees of BGC Partners, Inc., Cantor Fitzgerald, L.P. and their Affiliates, as amended and restated as the
BGC Group, Inc. Deferral Plan for Employees of BGC Group, Inc., Cantor Fitzgerald, L.P. and Their Affiliates. The BGC
Group Equity Plan provides for a maximum of 600 million shares of BGC Class A common stock that may be delivered or cash
settled pursuant to the exercise or settlement of awards granted under the plan.
In connection with the Corporate Conversion on July 1, 2023, the BGC Holdings Limited Partnership Agreement was
terminated, and the BGC Holdings, L.P. Participation Plan was terminated.
In connection with the Corporate Conversion on July 1, 2023, BGC Group amended and restated its certificate of
incorporation to reflect an increase in the authorized shares of BGC Group Class A common stock to 1,500,000,000; an
increase in the authorized shares of BGC Group Class B common stock to 300,000,000; and a provision providing for
exculpation to officers of BGC Group pursuant to Section 102(b)(7) of the Delaware General Corporation Law. Additionally,
BGC Group amended and restated its bylaws to adopt a provision providing that Delaware courts shall be the exclusive forum
for certain matters.
In connection with the Corporate Conversion on July 1, 2023, the Exchange Agreement with Cantor terminated based
on its own terms.
In connection with the Corporate Conversion on July 1, 2023, BGC Group, Cantor and certain affiliates of Cantor
entered into an Amended and Restated U.S. Master Administrative Services Agreement and an Amended and Restated U.K.
Master Administrative Services Agreement.
FMX
FMX, our electronic U.S. Treasury, Rates futures and Spot FX platform, represents the unique opportunity to reshape
the U.S. interest rate cash and futures market. FMX’s U.S. Treasury platform, Fenics UST, grew its market share to 26% for the
fourth quarter of 2023, up from 25% in the third quarter of 2023, and 20% a year ago. In January 2024, FMX received CFTC
approval to operate an exchange for U.S. interest rate futures products, the largest and most widely traded futures contracts in
the world. The Company intends to launch the FMX Futures Exchange in the summer of 2024 and the Company plans to
discuss our strategic partners and further details on, or before, our first quarter 2024 earnings call.
Fenics
For the purposes of this document and subsequent SEC filings, all of our higher margin, technology-driven businesses
are referred to as Fenics. The Company categorizes our Fenics businesses as Fenics Markets and Fenics Growth Platforms.
Fenics Markets includes the fully electronic portion of BGC’s brokerage businesses, data, network and post-trade revenues that
are unrelated to Fenics Growth Platforms, as well as Fenics Integrated revenues. Fenics Growth Platforms includes Fenics UST,
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Fenics GO, Lucera, Fenics FX, Portfolio Match and other newer standalone platforms. Revenue generated from data, network
and post-trade attributable to Fenics Growth Platforms are included within their related businesses.
Historically, technology-based product growth has led to higher margins and greater profits over time for exchanges
and wholesale financial intermediaries alike, even if overall Company revenues remain consistent. This is largely because
automated and electronic trading efficiency allows the same number of employees to manage a greater volume of trades as the
marginal cost of incremental trading activity falls. Over time, the conversion of exchange-traded and OTC markets to fully
electronic trading has also typically led to an increase in volumes which offset lower commissions, and often lead to similar or
higher overall revenues. The Company has been a pioneer in creating and encouraging hybrid and fully electronic execution,
and the Company continually works with our customers to expand such trading across more asset classes and geographies.
These electronic markets for OTC products have grown as a percentage of overall industry volumes over the past
decade as firms like BGC have invested in the kinds of technology favored by our customers. Regulation across banking,
capital markets, and OTC derivatives has accelerated the adoption of fully electronic execution, and the Company expects this
demand to continue. The Company also believes that new clients, beyond our large bank customer base, will primarily transact
electronically across our Fenics platforms.
The combination of wider adoption of hybrid and fully electronic execution and our competitive advantage in terms of
technology and experience has contributed to our strong growth in electronically traded products. The Company continues to
invest in our high-growth, high-margin, technology-driven businesses, including our standalone fully electronic Fenics Growth
Platforms. Fenics has exhibited strong growth over the past several years, and the Company believes that this growth has
outpaced the wholesale brokerage industry. The Company expects this trend to accelerate as the Company continues to convert
more of our Voice/Hybrid execution into higher-margin, technology-driven execution across our Fenics platforms and continue
to grow our Fenics Growth Platforms.
The Company expects to benefit from the trend towards electronic trading, increased demand for market data, and the
need for increased connectivity, automation, and post-trade services. The Company continues to onboard new customers as the
opportunities created by electronic and algorithmic trading continue to transform our industry. The Company continues to roll
out our next-generation Fenics execution platforms across more products and geographies with the goal of seamlessly
integrating the liquidity of voice transactions with customer electronic orders either by a GUI, API, or web-based interface.
Revenues in our Fenics businesses increased 20.1% to $130.8 million in the fourth quarter of 2023 and 16.1% to
$521.7 million for the year ended December 31, 2023, in each case compared to the prior year period.
Within our Fenics businesses, Fenics Markets revenue grew 16.5% to $109.6 million in the fourth quarter of 2023 and
12.6% to $446.6 million for the year ended December 31, 2023, in each case compared to the prior year period.
Fenics Markets growth was driven by higher electronic Rates and Credit volumes, along with strong Fenics Market
Data subscription revenues. Fenics Market Data signed new customer contracts in the fourth quarter of 2023 with an aggregate
contract value 30% higher compared to the same period last year.
Fenics Growth Platforms revenue grew 43.3% to $21.2 million in the fourth quarter of 2023 and 41.9% to $75.1
million for the year ended December 31, 2023, in each case compared to the prior year period. Collectively, our newer Fenics
Growth Platform offerings are not yet fully up to scale, but continue to grow at a leading rate. Over time, the Company expects
these new products and services to become profitable, high-margin businesses as their scale and revenues increase, all else
equal.
The Company continues to invest in our Fenics Growth Platforms, and notable highlights for the fourth quarter of
2023 compared to the prior year period include:
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Fenics UST revenue increased by over 70% on a 38% improvement in average daily volume.
PortfolioMatch grew its U.S. credit volumes more than three-fold year-over-year, achieving record revenues.
PortfolioMatch continues to onboard new accounts and increase its market share in its rapidly growing
segment of the market.
Capitalab, our post-trade business, generated revenue growth of nearly 90%, driven by higher interest rate
compression and foreign exchange matching volumes.
Total revenues from our high-margin Data, network and post-trade business, which is predominately comprised of
recurring revenue, were up 17.9% to $29.6 million in the fourth quarter of 2023 and 15.6% to $111.5 million for the year ended
December 31, 2023, in each case over the prior year period.
Data, network and post-trade revenue growth for the fourth quarter of 2023 was driven by Fenics Market Data and
Lucera, our network business.
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Fenics brokerage revenues increased by 20.8% to $101.2 million in the fourth quarter of 2023 and 16.2% to $410.1
million for the year ended December 31, 2023, in each case over the prior year period.
Fenics’ revenue growth was led by Fenics Rates, Credit and Data, network and post-trade businesses. Fenics
represented 25.3% of BGC’s overall revenue in the fourth quarter of 2023 compared to 25.0% in the fourth quarter of 2022, and
25.8% for the year ended December 31, 2023 compared to 25.0% in the year ended December 31, 2022.
Acquisitions
On November 1, 2023, the Company completed the acquisition of ContiCap, an independent financial product
intermediary specializing in emerging markets.
On November 1, 2023, the Company completed the acquisition of Open Energy Group, a technology-driven
marketplace and brokerage for renewable energy asset sales and project finance.
On February 28, 2023, the Company completed the acquisition of Trident, primarily operating as a commodity
brokerage and research company, offering OTC and exchange traded energy and environmental products.
On July 30, 2021, the Company completed the purchase of the Futures Exchange Group for a purchase price of
$4.9 million at closing, plus the cash held at closing by the Futures Exchange Group, and an earn-out, only payable out of our
portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures Exchange Group
prior to closing.
The Futures Exchange Group acquisition has been determined to be a combination of entities under common control
that resulted in a change in the reporting entity. Accordingly, the financial results of the Company have been recast to include
the financial results of the Futures Exchange Group in the current and prior periods as if the Futures Exchange Group had
always been consolidated. The assets and liabilities of the Futures Exchange Group have been recorded in the Company’s
Consolidated Statements of Financial Condition at the seller’s historical carrying value. The purchase of the Futures Exchange
Group was accounted for as an equity transaction for the period ended September 30, 2021 (the period in which the transaction
occurred).
Divestitures
On November 1, 2021, the Company successfully completed the Insurance Business Disposition and, after closing
adjustments, received $534.9 million in gross cash proceeds, subject to limited post-closing adjustments. The investment in the
Insurance brokerage business generated an internal rate of return of 21.2% for our shareholders. The sale of the business did not
represent a strategic shift that would have a major effect on the Company’s operations and financial results and was, therefore,
not classified as discontinued operations. CF&Co served as advisor to the Company in connection with the transaction, and as a
result, $4.4 million of banking fees was paid to Cantor upon closing of the transaction. For further information regarding the
sale of our Insurance brokerage business, please see our Current Report on Form 8-K filed with the SEC on November 1, 2021,
as well as Note 5—“Divestitures” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form
10-K.
Unvested equity and other awards previously granted by BGC to employees of its Insurance brokerage business were
converted into the right to receive a cash payment from BGC; a significant portion of these awards were 50% vested and paid in
cash at closing, with the remaining 50% vesting and paid in cash two years after closing. The remaining portion of these awards
was 100% vested and paid in cash two years after the closing. The payments after closing were only made if the applicable
employee remained an employee of the Insurance brokerage business.
Other Matters
In February 2022, the U.S., U.K., EU, and other countries imposed sanctions on Russian counterparties, and as a result
BGC has ceased trading with those clients. The Company derived less than one percent of total revenue from its Moscow
branch and sanctioned Russian counterparties. During the years ended December 31, 2023 and 2022, the Company reserved
$9.0 million and $11.4 million, respectively, in connection with unsettled trades and receivables with sanctioned Russian
entities.
Recent Developments / Tax Policy Changes
On August 16, 2022, the IR Act was signed into federal law. The IR Act provides for, among other things, a new
corporate alternative minimum tax based on 15% of adjusted financial statement income for applicable corporations. The IR
Act also provides for a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly
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traded U.S. corporations and certain U.S. subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the
repurchasing corporation itself and not its stockholders from which the shares are repurchased. In addition, certain exceptions
apply to the excise tax. These tax provisions of the IR Act were effective January 1, 2023. The IR Act and related regulatory
developments did not have a material impact on our financial statements nor is it expected to have a material impact in future
periods.
On July 1, 2021, the OECD released a statement on the Two-Pillar Solution to Address the Tax Challenges Arising
From the Digitalization of the Economy, reflecting the agreement of 130 of the member jurisdictions of the Inclusive
Framework on some key parameters with respect to Pillars I and II. The objective is to introduce a global minimum tax rate of
15% applicable to multinational groups with global book revenue in excess of EUR 750 million. The tax has the effect of
increasing the ETR to 15% in jurisdictions where the ETR calculated under the GloBE Rules is under 15%. In December 2022,
the Council of the EU unanimously adopted the EU Minimum Tax Directive, which would require member states to implement
these rules. Due to complexities in applying the legislation and calculating GloBE income, the detailed quantitative impact of
the enacted or substantively enacted legislation is not yet reasonably estimable. Management performed a high-level analysis of
the potential impact of the Pillar Two provisions on its multinational activities. Based on that analysis, management does not
believe that the Pillar Two tax regime will result in a material increase to its tax expense. Management will continue to evaluate
the potential impact the Pillar Two Framework may have on the future results of operations and financial condition.
Financial Services Industry
The financial services industry has grown historically due to several factors. One factor was the increasing use of
derivatives to manage risk or to take advantage of the anticipated direction of a market by allowing users to protect gains and/or
guard against losses in the price of underlying assets without having to buy or sell the underlying assets. Derivatives are often
used to mitigate the risks associated with interest rates, equity ownership, changes in the value of FX, credit defaults by
corporate and sovereign debtors, and changes in the prices of commodity products. Over this same timeframe, demand from
financial institutions, large corporations and other end-users of financial products have increased volumes in the wholesale
derivatives market, thereby increasing the business opportunity for financial intermediaries.
Another key factor in the historical growth of the financial services industry has been the increase in the number of
new financial products. As market participants and their customers strive to mitigate risk, new types of equity and fixed income
securities, futures, options and other financial instruments have been developed. Most of these new securities and derivatives
were not immediately ready for more liquid and standardized electronic markets, and generally increased the need for trading
and required broker-assisted execution.
Due largely to the impacts of the global financial crisis of 2008-2009, our businesses had faced more challenging
market conditions from 2009 until the second half of 2016. Accommodative monetary policies were enacted by several major
central banks, including the Federal Reserve, Bank of England, Bank of Japan and the European Central Bank, in response to
the global financial crises. These policies resulted in historically low levels of volatility and interest rates across many of the
financial markets in which the Company operates. The global credit markets also faced structural issues, such as increased bank
capital requirements under Basel III. Consequently, these factors contributed to lower trading volumes in our Rates and Credit
asset classes across most geographies in which the Company operated.
From mid-2016 until the first quarter of 2020, the overall financial services industry benefited from sustained
economic growth, lower unemployment rates in most major economies, higher consumer spending, the modification or repeal
of certain U.S. regulations, and higher overall corporate profitability. The trend towards digitization and electronification within
the industry contributed to higher overall volumes and transaction count in fully electronic execution. From the second quarter
of 2020 onward, concerns about the future trade relationship between the U.K. and the EU after Brexit, a slowdown in global
growth driven by the outbreak of COVID-19, and an increase in trade protectionism were tempered by monetary and fiscal
stimulus. During 2021, as the global economy recovered from the COVID-19 pandemic, higher inflation across the U.S. and
other G8 countries led many central banks to begin and/or announce tapering and unwinding of asset purchases under
quantitative easing programs, as well as implement multiple interest rate hikes.
Manufactured zero and near-zero interest rates over the last fourteen years caused the breakdown and disappearance of
the historic correlation between issuance and trading volume growth. With meaningful interest rates and issuance that is
multiples above 2008 levels, the Company believes the return of this strong positive correlation will drive our trading volumes
significantly higher. This has set the stage for broad-based growth across BGC’s businesses and asset classes.
The recent change in central bank monetary policies away from zero interest rates, following the highest inflation in
decades, together with rising interest rates set the stage for a resurgence in secondary market trading volumes for rates, credit
and foreign exchange. For more than fourteen years, BGC and the entire financial service industry’s trading volumes had been
constrained by low interest rates and quantitative easing. The Company believes BGC is well positioned to benefit from the
return of interest rates, which the Company expects to drive our trading volumes, revenue and profitability higher for the
foreseeable future.
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Industry Consolidation
Over the past decade, there has been significant consolidation among the interdealer-brokers and wholesale brokers
with which the Company competes. The Company continues to compete with the electronic markets, post-trade and information
businesses of NEX, that are part of CME now, through the various offerings on our Fenics platform. The Company will also
continue to compete with TP ICAP and Tradition across various Voice/Hybrid brokerage marketplaces as well as via Fenics.
Additionally, there have been an increase in acquisitions of OTC trading platforms by exchanges and electronic
marketplaces such as ICE buying BondPoint and TMC Bonds, Deutsche Börse buying 360T, CBOE buying Hotspot,
MarketAxess buying LiquidityEdge, Tradeweb buying Nasdaq’s U.S. Fixed Income Electronic Trading Platform, LSEG
acquiring Quantile, etc. The Company views the recent consolidation in the industry favorably, as the Company expects it to
provide additional operating leverage to our businesses in the future.
Growth Drivers
As a wholesale intermediary in the financial services industry, our businesses are driven primarily by secondary
trading volumes in the markets in which the Company brokers, the size and productivity of our front-office headcount including
brokers, salespeople, managers, technology professionals and other front-office personnel, regulatory issues, and the percentage
of our revenues the Company is able to generate by Fully Electronic means. BGC’s revenues tend to have low correlation in the
short- and medium-term with global bank and broker-dealer sales and trading revenues, which reflect bid-ask spreads and mark-
to-market movements, as well as industry volumes in both the primary and secondary markets.
Below is a brief analysis of the market and industry volumes for some of our products, including our overall Hybrid
and Fully Electronic execution activities.
Overall Market Volumes and Volatility
Volume is driven by a number of factors, including the level of issuance for financial instruments, price volatility of
financial instruments, macro-economic conditions, creation and adoption of new products, regulatory environment, and the
introduction and adoption of new trading technologies. Historically, increased price volatility has often increased the demand
for hedging instruments, including many of the cash and derivative products that the Company brokers.
Rates volumes in particular are influenced by market volumes and, in certain instances, volatility. Historically low and
negative interest rates, as well as central bank quantitative easing programs, across the globe significantly reduced the overall
trading appetite for rates products. Such programs have depressed rates volumes because they entail central banks buying
government securities or other securities in the open market in an effort to promote increased lending and liquidity and bring
down long-term interest rates. When central banks hold these instruments, they tend not to trade or hedge, thus lowering rates
volumes across cash and derivatives markets industry-wide. Following the market dislocation and pandemic, major central
banks such as the U.S. Federal Reserve, ECB, Bank of Japan, Bank of England, and Swiss National Bank restarted quantitative
easing programs in 2020. Beginning in 2022 inflationary concerns have resulted in rising interest rates and tapering and/or
unwinding of central bank asset purchases. The return of interest rates has led to improved macro trading conditions which
BGC has benefited in 2023. Management expects this improved environment to continue throughout 2024. This improved
backdrop is expected to support both BGC’s Fenics and Voice/Hybrid businesses for the foreseeable future.
Additional factors have weighed on market volumes in the products the Company brokers. For example, the Basel III
accord, implemented in late 2010 by the G-20 central banks, is a global regulatory framework on bank capital adequacy, stress
testing and market liquidity risk that was developed with the intention of making banks more stable in the wake of the financial
crisis by increasing bank liquidity and reducing bank leverage. The accord, which took effect on January 1, 2023, requires most
large banks in G-20 nations to hold approximately three times as much Tier 1 capital as was required under the previous set of
rules. These capital rules have made it more expensive for banks to hold non-sovereign debt assets on their balance sheets, and
as a result, analysts say that banks have reduced their proprietary trading activity in corporate and asset-backed fixed income
securities as well as in various other OTC cash and derivative instruments. The Company believes that this has further reduced
overall market exposure and industry volumes in many of the products the Company brokers, particularly in Credit.
During the year ended December 31, 2023, industry volumes were generally higher across Rates and Energy and
Commodities. Secondary trading volumes were mixed across FX and Credit, while volumes were generally lower across
Equities. BGC’s brokerage revenues were up by 16.1% year-on-year in the quarter. This growth was led by a 42.3%
improvement in BGC’s Energy and Commodities business, driven by strong double-digit growth across our energy complex
and our environmental products, including our weather derivatives business. Rates revenues increased by 26.1%, reflecting
broad-based growth across interest rate products. Foreign Exchange revenues improved by 7.5%, driven by higher volumes
across G10 and emerging markets currencies. Credit revenues decreased by 3.6% primarily due to a strong comparable period a
82
year ago, partially offset by higher volumes across emerging markets, U.S. and UK credit products. Equities revenues declined
by 3.8%, reflecting lower cash equity volumes, partially offset by higher equity derivatives activity.
Below is an expanded discussion of the volume and growth drivers of our various brokerage product categories.
Rates Volumes and Volatility
Our Rates business is influenced by a number of factors, including global sovereign issuances, interest rates, central
bank policies, secondary trading and the hedging of these sovereign debt instruments. The amount of global sovereign debt
outstanding remains at historically high levels; the level of secondary trading and related hedging activity was generally higher
during 2023 compared to the prior year period. According to Bloomberg and the Federal Reserve Bank of New York, the
average daily volume of U.S. Government Securities was up 6%. Over the same time period, listed products on CME were up
16%, while interest rate swap volumes traded on SEF were down 5% compared to 2022, according to Clarus. In comparison,
our overall Rates revenues were up 11.1% as compared to a year earlier to $610.5 million.
Our Rates revenues, like the revenues for most of our products, are not fully dependent on market volumes and,
therefore, do not always fluctuate consistently with industry metrics. This is largely because our Voice, Hybrid, and Fully
Electronic Rates desks often have volume discounts built into their price structure, which results in our Rates revenues being
less volatile than the overall industry volumes.
Overall, analysts and economists expect the absolute level of sovereign debt outstanding to remain at elevated levels
for the foreseeable future as governments finance their future deficits and roll over their sizable existing debt. Additionally,
yields on government bonds have steadily increased over the course of 2022 and 2023, which has given rise to increased
volatility and higher demand to hedge interest rate exposure. The tapering and/or unwinding of asset purchases by central banks
and, interest rate hikes, along with elevated levels of government debt issuance, are expected to provide tailwinds to our Rates
business.
FX Volumes and Volatility
Global FX volumes were mixed during 2023. Volumes for CME FX futures and options and CME EBS spot FX were
down 3%, and 14%, respectively, and Cboe FX was up 9%. In comparison, our overall FX revenues increased by 5.0% to
$314.7 million.
Equities Volumes
Global equity volumes were generally lower during 2023. According to the Securities Industry and Financial Markets
Association, or SIFMA, the average daily volume of U.S. cash equities was down 7%, as compared to a year earlier. Over the
same timeframe, Eurex average daily volumes of equity and equity index derivatives were down 7% and Euronext equity
derivative index volumes were down 14%. However, according to the OCC, the average daily volume of U.S. options was up
8%. BGC’s equity business primarily consists of equity derivatives, particularly European equity derivatives. Our overall
revenues from Equities increased by 0.9% to $236.5 million.
Credit Volumes
Our Credit business is impacted by the level of global corporate bond issuance, and interest rates. Credit volumes were
generally mixed during 2023. FINRA TRACE average daily volume for U.S. Investment Grade was up 11% and U.S. High
Yield was down by 1% according to Bloomberg and the Federal Reserve Bank of New York. In comparison, our overall Credit
revenues increased by 4.9% to $284.7 million.
Energy and Commodities Volumes
Energy and Commodities volumes were higher during 2023 compared with the year earlier. CME and ICE energy
futures and options volumes were up 5% and 18%, respectively. In comparison, BGC’s Energy and Commodities revenues
increased by 32.4% to $386.2 million.
FINANCIAL OVERVIEW
Revenues
Our revenues are derived primarily from brokerage commissions charged for either agency or matched principal
transactions, fees charged for data, network and post-trade products, fees from related parties and interest income.
83
Brokerage
We earn revenues from our brokerage services on both an agency and matched principal basis. In agency transactions,
we charge a commission for connecting buyers and sellers and assisting in the negotiation of the price and other material terms
of the transaction. After all material terms of a transaction are agreed upon, we identify the buyer and seller to each other and
leave them to settle the trade directly. Principal transaction revenues are primarily derived from matched principal transactions,
whereby revenues are earned on the spread between the buy and the sell price of the brokered security, commodity or
derivative. Customers either see the buy or sell price on a screen or are given this information over the phone. The brokerage
fee is then added to the buy or sell price, which represents the spread we earn as principal transactions revenues. On a limited
basis, we enter into unmatched principal transactions to facilitate a customer’s execution needs for transactions initiated by such
customers. We also provide market data products for selected financial institutions.
We offer our brokerage services in five broad product categories: Rates, FX, Energy and Commodities, Credit, and
Equities. We previously offered Insurance brokerage services; however, we sold our Insurance brokerage business to The
Ardonagh Group on November 1, 2021. The chart below details brokerage revenues by product category and by Voice/Hybrid
versus Fully Electronic (in thousands):
Brokerage revenue by product:
Rates
FX
Energy and Commodities
Credit
Equities
Insurance
Total brokerage revenues
Brokerage revenue by product (percentage):
Rates
FX
Energy and Commodities
Credit
Equities
Insurance
Total brokerage revenues
Brokerage revenue by type:
Voice/Hybrid
Fully Electronic1
Total brokerage revenues
Brokerage revenue by type (percentage):
Voice/Hybrid
Fully Electronic1
Total brokerage revenues
____________________________
1.
Includes Fenics Integrated.
For the Year Ended December 31,
2023
2022
2021
$
610,451
314,706
386,206
284,744
236,517
—
$ 1,832,624
$
549,503
299,721
291,665
271,419
234,493
—
$ 1,646,801
$
558,507
301,328
296,458
287,608
247,673
178,087
$ 1,869,661
33.3 %
17.2
21.1
15.5
12.9
—
100.0 %
33.4 %
18.2
17.7
16.5
14.2
—
100.0 %
29.9 %
16.1
15.9
15.4
13.2
9.5
100.0 %
$ 1,422,541
410,083
$ 1,832,624
$ 1,293,929
352,872
$ 1,646,801
$ 1,558,503
311,158
$ 1,869,661
77.6 %
22.4
100.0 %
78.6 %
21.4
100.0 %
83.4 %
16.6
100.0 %
Our position as a leading wholesale financial broker is enhanced by our Hybrid brokerage platform. We believe that
the more complex, less liquid markets on which we focus often require significant amounts of personal and attentive service
from our brokers. In more mature markets, we offer Fully Electronic execution capabilities to our customers through our
platforms, including Fenics and BGC Trader. Our Hybrid platform allows our customers to trade on a Voice, Hybrid or, where
available, Fully Electronic basis, regardless of whether the trade is OTC or exchange-based, and to benefit from the experience
and market intelligence of our worldwide brokerage network. Our electronic capabilities include clearing, settlement, post-
trade, and other back-office services as well as straight-through processing for our customers across several products.
Furthermore, we benefit from the operational leverage in our Fully Electronic platform. We believe our Hybrid brokerage
approach provides a competitive advantage over competitors who do not offer this full range of technology.
84
Rates
Our Rates business is focused on government debt, futures and currency, and both listed and OTC interest rate
derivatives, which are among the largest, most global and most actively traded markets. The main drivers of these markets are
global macroeconomic forces such as growth, inflation, government budget policies and new issuances.
FX
The FX market is one of the largest financial markets in the world. FX transactions can either be undertaken in the spot
market, in which one currency is sold and another is bought, or in the derivative market in which future settlement of the
identical underlying currencies are traded. We provide full execution OTC brokerage services in most major currencies,
including all G8 currencies, emerging market, cross and exotic options currencies.
Credit
We provide our brokerage services in a wide range of credit instruments, including asset-backed securities, convertible
bonds, corporate bonds, credit derivatives and high yield bonds.
Energy and Commodities
We provide brokerage services for most widely traded energy and commodities products, including futures and OTC
products covering refined and crude oil, power and electricity, natural gas, liquefied natural gas, environmental and emissions
products, weather derivatives, base metals, coal and soft commodities. We also provide brokerage services associated with the
shipping of certain energy and commodities products.
Equities
We provide brokerage services in a range of markets for equity products, including cash equities, equity derivatives
(both listed and OTC), equity index futures and options on equity products.
Insurance
In prior years, we provided wholesale insurance and reinsurance broking solutions and underwriting services across
the global marketplace, operating through the brands Ed Broking, Besso, Piiq Risk Partners and Junge, as well as the group’s
managing general agents Cooper Gay, Globe Underwriting and Epsilon. We sold our Insurance brokerage business on
November 1, 2021 (see Note 5—“Divestitures” to our consolidated financial statements in Part II, Item 8 of this Annual Report
on Form 10-K for additional information).
Data, network and post-trade
Fenics Market Data is a supplier of real-time, tradable, indicative, end-of-day and historical market data. Our market
data product suite includes fixed income, interest rate derivatives, credit derivatives, FX, FX options, money markets, energy
and equity derivatives and structured market data products and services. The data are sourced from the Voice/Hybrid and fully
electronic broking operations, as well as the market data operations, including BGC, GFI and RP Martin, among others. It is
made available to financial professionals, research analysts and other market participants via direct data feeds and BGC-hosted
FTP environments, as well as via information vendors such as Bloomberg, Thomson Reuters, ICE Data Services, QUICK
Corp., and other select specialist vendors.
Through our network solutions business, we provide customized software to broaden distribution capabilities and
provide electronic solutions to financial market participants. The network solutions business leverages our global infrastructure,
software, systems, portfolio of intellectual property, and electronic trading expertise to provide customers with electronic
marketplaces and exchanges and real-time auctions to enhance debt issuance and to customize trading interfaces. We take
advantage of the scalability, flexibility and functionality of our electronic trading system to enable our customers to distribute
products to their customers through online offerings and auctions, including private and reverse auctions, via our trading
platform and global network. Using screen-based market solutions, customers are able to develop a marketplace, trade with
their customers, issue debt, trade odd lots, access program trading interfaces and access our network and intellectual property.
We provide option pricing and analysis tools that deliver price discovery that is supported with market data sourced from our
BGC, GFI, and Fenics trading systems.
85
Our Capitalab NDF Match business is an advanced matching platform that helps clients offset their fixing risk in non-
deliverable forward portfolios. Additionally, Capitalab provides compression services that are designed to bring greater capital
and operational efficiency to the global derivatives market. It assists clients in managing the growing cost of holding
derivatives, while helping them to meet their regulatory mandates. Through the Swaptioniser service for portfolio compression
of Bilateral and Cleared Interest Rate Swaptions, Interest Rate Swaps, Caps and Floors and FX Products, Capitalab looks to
simplify the complexities of managing large quantities of derivatives, to help promote sustainable growth, lower systemic risk
and improve resiliency in the industry. Furthermore, as an approved compression services provider at LCH, a combined
multiproduct Rates solution is provided across the entire cleared and non-cleared portfolio, increasing the overall efficiency,
where delta offsets can be leveraged across Rates products and desks. Additionally, Capitalab’s Initial Margin Optimization
service allows participants to reduce their bilateral initial margin and central counterparty clearing house initial margin with the
efficiency of automated trade processing.
Other Revenues
We earn other revenues from various sources, including underwriting and advisory fees, and the sources described
below.
Interest Income
We generate interest income primarily from the investment of our daily cash balances, interest earned on securities
owned and Reverse Repurchase Agreements. These investments and transactions are generally short-term in nature. We also
earn interest income from employee loans, and we earn dividend income on certain marketable securities.
Fees from Related Parties
We earn fees from related parties for technology services and software licenses and for certain administrative and
back-office services we provide to affiliates, particularly from Cantor. These administrative and back-office services include
office space, utilization of fixed assets, accounting services, operational support, human resources, legal services and
information technology.
Expenses
Compensation and Employee Benefits
The majority of our operating costs consist of cash and non-cash compensation expenses, which include base salaries,
broker bonuses based on broker production, guaranteed bonuses, other discretionary bonuses, and all related employee benefits
and taxes. Our employees consist of brokers, salespeople, executives and other administrative support. The majority of our
brokers receive a base salary and a formula bonus based primarily on a pool of brokers’ production for a particular product or
sales desk, as well as on the individual broker’s performance. Members of our sales force receive either a base salary or a draw
on commissions. Less experienced salespeople typically receive base salaries and bonuses.
In addition, we currently issue RSUs, and in the case of certain U.K. employees who held partnership units prior to the
Corporate Conversion, restricted stock awards, as well as other forms of equity-based compensation, to provide liquidity to our
employees, to align the interests of our employees and management with those of common stockholders, to help motivate and
retain key employees, and to encourage a collaborative culture that drives cross-selling and revenue growth. These awards
contain extended vesting schedules which we consider to be highly retentive and that vary based upon compensation level and
role (typically three-to-seven-year ratable vesting), which in most cases are largely dependent upon continued service.
Prior to the Corporate Conversion, we issued limited partnership units, as well as other forms of unit-based
compensation, including grants of exchangeability of limited partnership units into shares of BGC Class A common stock and
grants of shares of our restricted stock, to motivate and retain key employees. These limited partnership units, which could be
redeemed at any time for zero, were subject to forfeiture if the non-compete, confidentiality or non-solicit provisions of the
BGC Holdings Limited Partnership Agreement related to these awards were violated, were also extremely retentive. In addition,
prior to the Corporate Conversion, we paid amounts due to a partner upon termination of service over a number of years in
order to ensure compliance with partner obligations
We also enter into various agreements with certain of our employees, and prior to the Corporate Conversion, partners
whereby these individuals receive loans which may be either wholly or in part repaid from the distributions that the individuals
receive on some or all of their LPUs in BGC Holdings and Newmark Holdings, prior to the Corporate Conversion, and by
distributions that the individuals receive on some or all of their LPUs in Newmark Holdings and any dividends paid on
participating RSUs and restricted stock awards, subsequent to the Corporate Conversion. Certain of these loans also may be
86
either wholly or in part repaid from the proceeds of the sale of our employees’ shares of BGC Class A common stock. In
addition, certain loans may be forgiven over a period of time. The forgivable portion of these loans is recognized as
compensation expense over the life of the loan. From time to time, we may also enter into agreements with employees to grant
bonus and salary advances or other types of loans. These advances and loans are repayable in timeframes outlined in the
underlying agreements. We believe that these loans incentivize and promote retention of our employees.
In addition, we also enter into deferred compensation agreements with employees providing services to us. The costs
associated with such plans are generally amortized over the period in which they vest.
See Note 18—“Compensation” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on
Form 10-K for more information.
Other Operating Expenses
We have various other operating expenses. We incur leasing, equipment and maintenance expenses for our businesses
worldwide. We also incur selling and promotion expenses, which include entertainment, marketing and travel-related expenses.
We incur communication expenses for voice and data connections with our clients, clearing agents and general usage;
professional and consulting fees for legal, audit and other special projects; and interest expense related to short-term operational
funding needs, and notes payable and collateralized borrowings.
Primarily in the U.S., we pay fees to Cantor for performing certain administrative and other support services, including
charges for occupancy of office space, utilization of fixed assets and accounting, operations, human resources, legal services
and technology infrastructure support. Management believes that these charges are a reasonable reflection of the utilization of
services rendered. However, the expenses for these services are not necessarily indicative of the expenses that would have been
incurred if we had not obtained these services from Cantor. In addition, these charges may not reflect the costs of services we
may receive from Cantor in the future. We incur commissions and floor brokerage fees for clearing, brokerage and other
transactional expenses for clearing and settlement services. We also incur various other normal operating expenses.
Other Income (Losses), Net
Gain (Loss) on Divestiture and Sale of Investments
Gain (loss) on divestiture and sale of investments represents the gain or loss we recognize for the divestiture or sale of
our investments.
Gains (Losses) on Equity Method Investments
Gains (losses) on equity method investments represent our pro-rata share of the net gains (losses) on investments over
which we have significant influence but which we do not control.
Other Income (Loss)
Other Income (loss) is comprised of gains or losses related to fair value adjustments on investments carried under the
alternative method. Other Income (loss) also includes realized and unrealized gains or losses related to sales and mark-to-
market adjustments on Marketable securities and any related hedging transactions when applicable. Acquisition-related fair
value adjustments of contingent consideration and miscellaneous recoveries are also included in Other Income (loss).
Provision (Benefit) for Income Taxes
We incur income tax expenses or benefit based on the location, legal structure and jurisdictional taxing authorities of
each of our subsidiaries. Certain of the Company’s entities are taxed as U.S. partnerships and are subject to the UBT in New
York City. U.S. federal and state income tax liability or benefit related to the partnership income or loss, with the exception of
UBT, rests with the partners (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” in Part II,
Item 8 of this Annual Report on Form 10-K for discussion of partnership interests), rather than the partnership entity. The
Company’s consolidated financial statements include U.S. federal, state and local income taxes on the Company’s allocable
share of the U.S. results of operations. Outside of the U.S., we operate principally through subsidiary corporations subject to
local income taxes.
87
REGULATORY ENVIRONMENT
See “Regulation” in Part I, Item 1 of this Annual Report on Form 10-K for additional information related to our
regulatory environment.
LIQUIDITY
See “Liquidity and Capital Resources” herein for information related to our Liquidity and capital resources.
HIRING
Key drivers of our revenue are front-office producer headcount and average revenue per producer. We believe that our
strong technology platform and unique compensation structure have enabled us to use both acquisitions and recruiting to
profitably grow at a faster rate than our largest competitors since our formation in 2004.
We have invested significantly through acquisitions and the hiring of new brokers, salespeople, managers, technology
professionals and other front-office personnel. The business climate for these acquisitions has been competitive, and it is
expected that these conditions will persist for the foreseeable future. We have been able to attract businesses and brokers,
salespeople, managers, technology professionals and other front-office personnel to our platform as we believe they recognize
that we have the scale, technology, experience and expertise to succeed.
As of December 31, 2023, our front-office headcount was 2,104 brokers, salespeople, managers, technology
professionals and other front-office personnel, up 6.0% from 1,985 a year ago. Compared to the prior year, average revenue per
front-office employee for the year ended December 31, 2023 increased by 11.4% to $958,000 from $861,000.
The laws and regulations passed or proposed on both sides of the Atlantic concerning OTC trading seem likely to
favor increased use of technology by all market participants, and are likely to accelerate the adoption of both Hybrid and Fully
Electronic execution. We believe these developments will favor the larger inter-dealer brokers over smaller, non-public local
competitors, as the smaller players generally do not have the financial resources to invest the necessary amounts in technology.
We believe this will lead to further consolidation across the wholesale financial brokerage industry, and thus allow us to grow
profitably.
FINANCIAL HIGHLIGHTS
Full year 2023 compared to full year 2022:
Income from operations before income taxes was $57.7 million compared to $97.5 million in the prior year period.
Total revenues increased $230.1 million, or 12.8%, to $2,025.4 million, largely due to overall growth of 11.3% in our
brokerage revenues:
•
•
•
•
•
Energy and Commodities increased $94.5 million, or 32.4%,
Rates increased $60.9 million, or 11.1%;
Credit increased $13.3 million, or 4.9%;
FX increased $15.0 million, or 5.0%; and
Equities increased $2.0 million, or 0.9%.
In addition, there was an increase of $24.4 million in Interest and dividend income, primarily driven by income earned
on bank deposits and money market funds. Further, there was an increase of $15.1 million in Data, network and post-trade
revenues, primarily driven by strong revenue growth across Lucera, Fenics Market Data, and our Capitalab post-trade business,
as a result of expanding both our client base and our offerings.
Total expenses increased $275.7 million, or 16.1%, to $1,992.8 million compared to the prior year period, primarily
driven by an increase in total compensation expenses of $243.7 million. The increase in equity-based compensation included a
$60.9 million charge for the redemption of certain non-exchangeable limited partnership units in connection with the issuance
of shares of BGC Group Class A common stock and the accompanying tax payments related to the Corporate Conversion, in
the year ended December 31, 2023. In addition, higher commission revenues on variable compensation contributed to the
increase in compensation expenses. The $32.0 million increase in non-compensation expenses was primarily driven by an
increase in Interest expense related to the Company’s 8.000% Senior Notes issued on May 24, 2023 and borrowings on the
Revolving Credit Agreement. These higher interest expenses were partially offset by lower interest due to the repayment in full
of the BGC Partners 5.375% Senior Notes on July 24, 2023.
88
RESULTS OF OPERATIONS
The following table sets forth our Consolidated Statements of Operations data expressed as a percentage of total
revenues for the periods indicated (in thousands):
Year Ended December 31,
2023
2022
2021
Actual
Results
Percentage
of Total
Revenues
Actual
Results
Percentage
of Total
Revenues
Actual
Results
Percentage
of Total
Revenues
$
1,464,524
72.3 % $
1,281,294
71.4 % $
1,541,900
368,100
1,832,624
15,968
111,470
45,422
19,917
18.2
90.5
0.8
5.5
2.2
1.0
365,507
1,646,801
14,734
96,389
21,007
16,371
20.3
91.7
0.8
5.4
1.2
0.9
327,761
1,869,661
14,856
89,963
21,977
18,907
76.5 %
16.3
92.8
0.7
4.5
1.1
0.9
2,025,401
100.0
1,795,302
100.0
2,015,364
100.0
Revenues:
Commissions
Principal transactions
Total brokerage revenues
Fees from related parties
Data, network and post-trade
Interest and dividend income
Other revenues
Total revenues
Expenses:
Compensation and employee benefits
Equity-based compensation and allocations of
net income to limited partnership units and
FPUs¹
Total compensation and employee benefits
Occupancy and equipment
Fees to related parties
Professional and consulting fees
Communications
Selling and promotion
Commissions and floor brokerage
Interest expense
Other expenses
Total expenses
Other income (losses), net:
Gains (losses) on divestitures and
sale of investments
Gains (losses) on equity method investments
Other income (loss)
Total other income (losses), net
Income (loss) from operations before income
taxes
Provision (benefit) for income taxes
Consolidated net income (loss)
$
992,603
49.1
853,165
47.5
1,271,340
63.1
355,378
1,347,981
162,743
32,649
60,398
114,143
61,884
61,523
77,231
74,278
17.5
66.6
8.0
1.6
3.0
5.6
3.1
3.0
3.8
3.7
251,071
1,104,236
157,491
25,662
68,775
108,096
49,215
58,277
57,932
87,431
14.0
61.5
8.8
1.4
3.8
6.0
2.7
3.3
3.2
4.9
256,164
1,527,504
188,322
24,030
67,884
117,502
38,048
64,708
69,329
80,888
12.7
75.8
9.3
1.2
3.4
5.8
1.9
3.2
3.5
4.0
1,992,830
98.4
1,717,115
95.6
2,178,215
108.1
—
9,152
15,986
25,138
57,709
18,934
38,775
—
0.5
0.7
1.2
2.8
0.9
1.9 % $
(1,029)
10,920
9,373
19,264
97,451
38,584
58,867
(0.1)
0.7
0.5
1.1
5.5
2.2
312,941
6,706
19,705
339,352
176,501
23,013
3.3 % $
153,488
Less: Net income (loss) from operations
attributable to noncontrolling interest in
subsidiaries
Net income (loss) available to common
stockholders
2,510
0.1
10,155
0.6
29,481
$
36,265
1.8 % $
48,712
2.7 % $
124,007
________________________
1
The components of Equity-based compensation and allocations of net income to limited partnership units and FPUs are as follows
(in thousands):
89
15.5
0.3
1.0
16.8
8.7
1.1
7.6 %
1.4
6.2 %
Year Ended December 31,
2023
2022
2021
Actual
Results
Percentage
of Total
Revenues
Actual
Results
Percentage
of Total
Revenues
Actual
Results
Percentage
of Total
Revenues
$
171,646
8.5 % $
147,480
8.2 % $
128,107
6.4 %
6,302
40,878
136,552
0.3
2.0
6.7
13,298
73,734
16,559
0.8
4.1
0.9
34,335
78,596
15,126
1.7
3.9
0.7
$
355,378
17.5 % $
251,071
14.0 % $
256,164
12.7 %
Issuance of common stock and grants of
exchangeability
Allocations of net income and dividend
equivalents
LPU amortization
RSU, RSU Tax Account, and restricted
stock amortization
Equity-based compensation and
allocations of net income to limited
partnership units and FPUs
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Revenues
Brokerage Revenues
Total brokerage revenues increased by $185.8 million, or 11.3%, to $1,832.6 million for the year ended December 31,
2023 as compared to the year ended December 31, 2022. Commission revenues increased by $183.2 million, or 14.3%, to
$1,464.5 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. Principal
transactions revenues increased by $2.6 million, or 0.7%, to $368.1 million for the year ended December 31, 2023 as compared
to the year ended December 31, 2022.
Our brokerage revenues from Energy and Commodities increased by $94.5 million, or 32.4%, to $386.2 million for the
year ended December 31, 2023, as compared to the year ended December 31, 2022, which was primarily driven by strong
double-digit growth across our energy complex and our environmental products, as well as our ship broking business.
Our brokerage revenues from Rates increased by $60.9 million, or 11.1%, to $610.5 million for the year ended
December 31, 2023, as compared to the year ended December 31, 2022, reflecting broad-based growth across interest rate
derivative and cash products.
Our FX revenues increased by $15.0 million, or 5.0%, to $314.7 million for the year ended December 31, 2023, as
compared to the year ended December 31, 2022, which was primarily driven by higher volumes across emerging markets
currencies.
Our Credit revenues increased by $13.3 million, or 4.9%, to $284.7 million for the year ended December 31, 2023, as
compared to the year ended December 31, 2022, which was primarily driven by higher volumes across emerging market and
European credit products, as well as credit derivatives.
Our brokerage revenues from Equities increased by $2.0 million, or 0.9%, to $236.5 million for the year ended
December 31, 2023, as compared to the year ended December 31, 2022, primarily driven by higher volumes across U.S. equity
derivatives.
Fees from Related Parties
Fees from related parties increased by $1.2 million, or 8.4% to $16.0 million for the year ended December 31, 2023 as
compared to the year ended December 31, 2022, which was primarily driven by an increase in revenues in connection with
services provided to Cantor.
Data, Network and Post-Trade
Data, network and post-trade revenues increased by $15.1 million, or 15.6%, to $111.5 million for the year ended
December 31, 2023 as compared to the year ended December 31, 2022. This increase was primarily driven by strong double-
digit revenue growth across Lucera, Fenics Market Data, and our Capitalab post-trade business, as a result of expanding both
our client base and our offerings.
90
Interest and Dividend Income
Interest and dividend income increased by $24.4 million, or 116.2%, to $45.4 million for the year ended December 31,
2023 as compared to the year ended December 31, 2022. This was primarily driven by an increase interest income on bank
deposits and money market funds, which were primarily driven by changing interest rates and larger balances.
Other Revenues
Other revenues increased by $3.5 million, or 21.7% to $19.9 million for the year ended December 31, 2023 as
compared to the year ended December 31, 2022, primarily driven by an increase in dividend income on investments and
consulting income.
Expenses
Compensation and Employee Benefits
Compensation and employee benefits expense increased by $139.4 million, or 16.3%, to $992.6 million for the
year ended December 31, 2023 as compared to the year ended December 31, 2022. The primary driver of the increase was
higher commission revenues on variable compensation.
Equity-Based Compensation and Allocations of Net Income to Limited Partnership Units and FPUs
Equity-based compensation and allocations of net income to limited partnership units and FPUs increased by
$104.3 million, or 41.5%, to $355.4 million for the year ended December 31, 2023 as compared to the year ended December 31,
2022. This was primarily driven by an increase in issuance of common stock and grants of exchangeability, which included a
$60.9 million charge for the redemption of certain non-exchangeable limited partnership units in connection with the issuance
of shares of BGC Class A common stock and the accompanying tax payments related to the Corporate Conversion. The
increase was also due to an increase in RSU, RSU Tax Account, and restricted stock amortization expenses, partially offset by a
cessation of LPU amortization expense, related to the Corporate Conversion.
Occupancy and Equipment
Occupancy and equipment expense increased by $5.3 million, or 3.3%, to $162.7 million for the year ended
December 31, 2023 as compared to the year ended December 31, 2022. This increase was primarily driven by an increase in
amortization expense on developed software and other rent and occupancy expenses, partially offset by a decrease in fixed asset
impairment.
Fees to Related Parties
Fees to related parties increased by $7.0 million, or 27.2%, to $32.6 million for the year ended December 31, 2023 as
compared to the year ended December 31, 2022. Fees to related parties are allocations paid to Cantor for administrative and
support services, such as accounting, occupancy, and legal.
Professional and Consulting Fees
Professional and consulting fees decreased by $8.4 million, or 12.2%, to $60.4 million for the year ended
December 31, 2023 as compared to the year ended December 31, 2022, primarily driven by a decrease in consulting and other
professional fees.
Communications
Communications expense increased by $6.0 million, or 5.6%, to $114.1 million for the year ended December 31, 2023
as compared to the year ended December 31, 2022, which was primarily driven by increases in various terminal and line service
costs across market data and communications.
Selling and Promotion
Selling and promotion expense increased by $12.7 million, or 25.7%, to $61.9 million for the year ended
December 31, 2023 as compared to the year ended December 31, 2022, which was primarily driven by an increase in business
91
related travel and client entertainment as COVID-19 restrictions have relaxed across many of the major geographies in which
BGC operates.
Commissions and Floor Brokerage
Commissions and floor brokerage expense increased by $3.2 million, or 5.6%, to $61.5 million for the year ended
December 31, 2023 as compared to the year ended December 31, 2022, primarily driven by a higher number of trades in the
year ended December 31, 2023 and an increase in commission expense.
Interest Expense
Interest expense increased by $19.3 million, or 33.3%, to $77.2 million for the year ended December 31, 2023 as
compared to the year ended December 31, 2022, primarily driven by interest expense related to the Company’s 8.000% Senior
Notes issued on May 24, 2023 and higher interest expense related to the borrowings on the Revolving Credit Agreement,
partially offset by a decrease in interest expense related to the BGC Partners 5.375% Senior Notes due to repayment in full on
July 24, 2023.
Other Expenses
Other expenses decreased by $13.2 million, or 15.0%, to $74.3 million for the year ended December 31, 2023 as
compared to the year ended December 31, 2022, which was primarily due to a decrease in litigation settlements and reserves,
and a decrease in reserves related to potential losses associated with Russia’s Invasion of Ukraine, partially offset by an
increase in other provisions.
Other Income (Losses), Net
Gains (Losses) on Equity Method Investments
Gains (losses) on equity method investments decreased by $1.8 million, to a gain of $9.2 million, for the year ended
December 31, 2023 as compared to a gain of $10.9 million for the year ended December 31, 2022.
Other Income (Loss)
Other income (loss) increased by $6.6 million, or 70.6%, to $16.0 million for the year ended December 31, 2023 as
compared to the year ended December 31, 2022, primarily driven by an increase related to mark-to-market movements on other
assets and an increase in other recoveries.
Provision (Benefit) for Income Taxes
Provision (benefit) for income taxes decreased by $19.7 million, or 50.9%, to $18.9 million for the year ended
December 31, 2023 as compared to the year ended December 31, 2022. The decrease was primarily driven by a decrease in
pretax earnings, a one-time benefit in revaluation of deferred tax balances due to ownership interest change, as a result of the
Corporate Conversion, and a change in the geographical and business mix of earnings, which can impact our consolidated
effective tax rate from period-to-period.
Net Income (Loss) Attributable to Noncontrolling Interest in Subsidiaries
Net income (loss) attributable to noncontrolling interest in subsidiaries decreased by $7.6 million, or 75.3%, to
$2.5 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, which was primarily
driven by a decrease in earnings and no longer reflecting net income (loss) attributable to noncontrolling interest in subsidiaries
related to BGC Holdings as a result of the Corporate Conversion.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Revenues
Brokerage Revenues
Total brokerage revenues decreased by $222.9 million, or 11.9%, to $1,646.8 million for the year ended December 31,
2022 as compared to the year ended December 31, 2021, primarily due to the sale of the Insurance brokerage business during
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the fourth quarter of 2021, and FX headwinds. Commission revenues decreased by $260.6 million, or 16.9%, to
$1,281.3 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Principal
transactions revenues increased by $37.7 million, or 11.5%, to $365.5 million for the year ended December 31, 2022 as
compared to the year ended December 31, 2021.
We had no brokerage revenues from Insurance in the year ended December 31, 2022 as a result of the sale during the
fourth quarter of 2021, compared to $178.1 million for the year ended December 31, 2021.
Our Credit revenues decreased by $16.2 million, or 5.6%, to $271.4 million for the year ended December 31, 2022, as
compared to the year ended December 31, 2021. This was primarily driven by lower activity across structured products and FX
headwinds.
Our brokerage revenues from Equities decreased by $13.2 million, or 5.3%, to $234.5 million for the year ended
December 31, 2022, as compared to the year ended December 31, 2021, primarily driven by FX headwinds and lower volumes
due to market volatility in the year ended December 31, 2022.
Our brokerage revenues from Rates decreased by $9.0 million, or 1.6%, to $549.5 million for the year ended
December 31, 2022, as compared to the year ended December 31, 2021. The decrease in Rates revenue was primarily driven by
FX headwinds, challenging market conditions across medium-term Rates products and lower market volumes.
Our brokerage revenues from Energy and Commodities decreased by $4.8 million, or 1.6%, to $291.7 million for the
year ended December 31, 2022, as compared to the year ended December 31, 2021, which was primarily led by lower volumes
across global oil trading as higher prices and volatility weighed on certain energy products, such as gas, oil, and base metals.
Our FX revenues decreased by $1.6 million, or 0.5%, to $299.7 million for the year ended December 31, 2022, as
compared to the year ended December 31, 2021.
Fees from Related Parties
Fees from related parties decreased by $0.1 million, or 0.8% to $14.7 million for the year ended December 31, 2022 as
compared to the year ended December 31, 2021.
Data, Network and Post-Trade
Data, network and post-trade revenues increased by $6.4 million, or 7.1%, to $96.4 million for the year ended
December 31, 2022 as compared to the year ended December 31, 2021. This increase was primarily driven by new business
contracts in Fenics Market Data and Lucera expanding its client base, partially offset by a decrease in revenues from post-trade
services.
Interest and Dividend Income
Interest and dividend income decreased by $1.0 million, or 4.4%, to $21.0 million for the year ended December 31,
2022 as compared to the year ended December 31, 2021. This decrease was primarily driven by a decrease in dividend income
and lower interest income earned on employee loans, partially offset by an increase in interest income on government bonds
and bank deposits driven by higher interest rates.
Other Revenues
Other revenues decreased by $2.5 million, or 13.4% to $16.4 million for the year ended December 31, 2022 as
compared to the year ended December 31, 2021. This was primarily driven by a decrease in revenues from underwriting fees
and placement fees, partially offset by an increase in consulting income for Poten & Partners.
Expenses
Compensation and Employee Benefits
Compensation and employee benefits expense decreased by $418.2 million, or 32.9%, to $853.2 million for the
year ended December 31, 2022 as compared to the year ended December 31, 2021. The primary driver of the decrease was due
to the sale of the Insurance brokerage business during the fourth quarter of 2021, which included one-off compensation charges
and sale-related expenses totaling $168.6 million, as well as lower commission revenues on variable compensation, increased
automation related to the transition to Fully Electronic brokerage services, and the positive FX impact on our U.K. and
European operations.
93
Equity-Based Compensation and Allocations of Net Income to Limited Partnership Units and FPUs
Equity-based compensation and allocations of net income to limited partnership units and FPUs decreased by
$5.1 million, or 2.0%, to $251.1 million for the year ended December 31, 2022 as compared to the year ended December 31,
2021. This was driven by a decrease in allocations of net income to limited partnership units and FPUs and a decrease in LPU
amortization expense, partially offset by an increase in grants of exchangeability and issuance of Class A common stock.
Occupancy and Equipment
Occupancy and equipment expense decreased by $30.8 million, or 16.4%, to $157.5 million for the year ended
December 31, 2022 as compared to the year ended December 31, 2021. This decrease was primarily due to the sale of the
Insurance brokerage business during the fourth quarter of 2021, as well as a decrease in other rent and occupancy expenses.
Fees to Related Parties
Fees to related parties increased by $1.6 million, or 6.8%, to $25.7 million for the year ended December 31, 2022 as
compared to the year ended December 31, 2021. Fees to related parties are allocations paid to Cantor for administrative and
support services, such as accounting, occupancy, and legal.
Professional and Consulting Fees
Professional and consulting fees increased by $0.9 million, or 1.3%, to $68.8 million for the year ended December 31,
2022 as compared to the year ended December 31, 2021, primarily driven by an increase in legal and consulting fees, partially
offset by a decrease related to the sale of the Insurance brokerage business during the fourth quarter of 2021.
Communications
Communications expense decreased by $9.4 million, or 8.0%, to $108.1 million for the year ended December 31, 2022
as compared to the year ended December 31, 2021, which was primarily driven by decreases in various terminal and line
service costs across market data and communications.
Selling and Promotion
Selling and promotion expense increased by $11.2 million, or 29.3%, to $49.2 million for the year ended December
31, 2022 as compared to the year ended December 31, 2021, as COVID-19 restrictions have relaxed across many of the major
geographies in which BGC operates.
Commissions and Floor Brokerage
Commissions and floor brokerage expense decreased by $6.4 million, or 9.9%, to $58.3 million for the year ended
December 31, 2022 as compared to the year ended December 31, 2021. Commissions and floor brokerage expense tends to
move in line with brokerage revenues.
Interest Expense
Interest expense decreased by $11.4 million, or 16.4%, to $57.9 million for the year ended December 31, 2022 as
compared to the year ended December 31, 2021, primarily driven by the fact that the BGC Partners 5.125% Senior Notes were
repaid in May 2021, a decrease in interest expense related to the borrowings on the Revolving Credit Agreement, and a
decrease in interest expense due to the sale of the Insurance brokerage business during the fourth quarter of 2021.
Other Expenses
Other expenses increased by $6.5 million, or 8.1%, to $87.4 million for the year ended December 31, 2022 as
compared to the year ended December 31, 2021, which was primarily related to an increase in legal settlements, reserves
recorded in the year ended December 31, 2022 for potential losses associated with Russia’s Invasion of Ukraine, an increase in
other provisions, and an increase in revaluation expense. This was partially offset by a decrease in expenses related to the sale
of the Insurance brokerage business during the fourth quarter of 2021, a decrease in amortization expense on intangible assets
and a decrease in Charity Day contributions expense.
94
Other Income (Losses), Net
Gains (Losses) on Divestitures and Sale of Investments
For the year ended December 31, 2022 we had a loss of $1.0 million on divestitures. For the year ended December 31,
2021, we had a gain of $312.9 million as a result of the sale of the Insurance brokerage business.
Gains (Losses) on Equity Method Investments
Gains (losses) on equity method investments increased by $4.2 million, to a gain of $10.9 million, for the year ended
December 31, 2022 as compared to a gain of $6.7 million for the year ended December 31, 2021.
Other Income (Loss)
Other income (loss) decreased by $10.3 million, or 52.4%, to $9.4 million for the year ended December 31, 2022 as
compared to the year ended December 31, 2021, primarily driven by a decrease related to mark-to-market movements on other
assets and investments, and no income for the year ended December 31, 2022 related to the Insurance brokerage business due to
the sale in the fourth quarter of 2021, partially offset by an increase related to fair value adjustments on acquisition earn-outs.
Provision (Benefit) for Income Taxes
Provision (benefit) for income taxes increased by $15.6 million, or 67.7%, to $38.6 million for the year ended
December 31, 2022 as compared to the year ended December 31, 2021. The increase was primarily driven by: (i) the non-
recurring nontaxable gain on the 2021 disposition of the Insurance brokerage business; (ii) a benefit in the prior year from the
revaluation of deferred taxes due to enacted rate changes in the U.K. and the ownership interest change in the operating
partnership; and (iii) a change in the geographical and business mix of earnings, which can impact our consolidated effective
tax rate from period-to-period.
Net Income (Loss) Attributable to Noncontrolling Interest in Subsidiaries
Net income (loss) attributable to noncontrolling interest in subsidiaries decreased by $19.3 million, or 65.6%, to
$10.2 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
95
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth our unaudited quarterly results of operations for the indicated periods (in thousands).
Results of any period are not necessarily indicative of results for a full year and may, in certain periods, be affected by seasonal
fluctuations in our business. Certain reclassifications have been made to prior period amounts to conform to the current period’s
presentation.
December
31, 2023
September
30, 2023
June 30,
2023
March 31,
2023
December
31, 2022
September
30, 2022
June 30,
2021
March 31,
2022
Revenues:
Commissions
Principal transactions
Fees from related parties
Data, network and post-trade
Interest and dividend income
Other revenues
Total revenues
Expenses:
Compensation and employee
benefits
Equity-based compensation and
allocations of net income to
limited partnership units and
FPUs
Total compensation and
employee benefits
Occupancy and equipment
Fees to related parties
Professional and consulting fees
Communications
Selling and promotion
Commissions and floor
brokerage
Interest expense
Other expenses
Total expenses
Other income (losses), net:
Gain (loss) on divestiture and
sale of investments
Gains (losses) on equity method
investments
Other income (loss)
Total other income (losses),
net
$ 388,211 $ 350,305 $ 348,720 $ 377,288 $ 315,658 $ 299,430 $ 309,542 $ 356,664
115,601
114,929
88,169
79,568
84,725
73,563
82,169
94,883
4,226
29,551
16,586
4,623
3,723
27,797
10,150
5,994
4,062
27,000
13,371
5,044
3,957
27,122
5,315
4,256
3,896
25,063
5,501
4,228
3,896
23,808
4,110
5,755
3,625
23,391
8,961
2,068
3,317
24,127
2,435
4,320
516,760
482,694
493,080
532,867
436,515
416,567
435,756
506,464
248,915
233,087
243,387
267,214
181,671
202,353
211,873
257,268
78,093
69,268
126,644
81,373
89,332
57,730
46,133
57,876
327,008
41,062
302,355
40,028
370,031
40,488
348,587
41,165
271,003
40,197
260,083
38,710
258,006
39,921
315,144
38,663
9,172
16,144
29,169
17,009
15,342
20,795
26,519
502,220
7,046
13,734
29,222
14,939
14,755
20,780
22,030
464,889
7,991
14,819
27,813
15,320
16,161
19,914
13,221
525,758
8,440
15,701
27,939
14,616
15,265
15,742
12,508
499,963
7,377
24,286
26,237
14,461
13,591
14,788
26,695
438,635
6,551
15,048
26,802
11,373
13,104
14,499
19,951
406,121
6,009
13,810
27,166
12,443
14,239
14,342
23,010
408,946
5,725
15,631
27,891
10,938
17,343
14,303
17,775
463,413
—
—
—
—
(846)
(183)
—
—
2,584
14,765
2,094
3,967
2,412
(1,011)
2,062
(1,735)
2,158
2,415
3,230
5,545
2,729
1,909
2,803
(496)
17,349
6,061
1,401
327
3,727
8,592
4,638
2,307
Income (loss) from operations
before income taxes
Provision (benefit) for income
taxes
Consolidated net income (loss) $ 21,263 $ 18,552 $ (22,210) $ 21,170 $
(31,277)
(9,067)
12,061
33,231
10,626
23,866
31,889
5,314
1,607
19,038
31,448
45,358
(1,991)
3,598 $
10,813
14,657
15,105
8,225 $ 16,343 $ 30,701
Less: Net income (loss)
attributable to noncontrolling
interest in subsidiaries
Net income (loss) available to
common stockholders
1,318
1,506
(2,506)
2,192
1,382
2,463
1,581
4,729
$ 19,945 $ 17,046 $ (19,704) $ 18,978 $
2,216 $
5,762 $ 14,762 $ 25,972
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The table below details our brokerage revenues by product category for the indicated periods (in thousands):
December
31, 2023
September
30, 2023
June 30,
2023
March 31,
2023
December
31, 2022
September
30, 2022
June 30,
2021
March 31,
2022
Brokerage revenue by
product:
Rates
FX
Energy and commodities
Credit
Equities
$ 155,802
$ 145,703
$ 144,209
$ 164,737
$ 123,594
$ 129,971
$ 137,129
$ 158,809
77,226
104,739
65,642
58,365
79,795
93,120
63,747
52,665
77,527
98,688
65,806
57,373
80,158
89,659
89,549
68,114
71,868
73,608
68,067
60,690
73,481
68,975
58,187
48,384
74,347
66,687
61,257
58,291
80,025
82,395
83,908
67,128
Total brokerage revenues
$ 461,774
$ 435,030
$ 443,603
$ 492,217
$ 397,827
$ 378,998
$ 397,711
$ 472,265
Brokerage revenue by
product (percentage):
Rates
FX
Energy and commodities
Credit
Equities
Total brokerage
revenues
Brokerage revenue by
type:
Voice/Hybrid
Fully Electronic1
Total brokerage
revenues
Brokerage revenue by
type (percentage):
Voice/Hybrid
Fully Electronic1
Total brokerage
revenues
33.8 %
33.5 %
32.5 %
33.5 %
31.0 %
34.3 %
34.5 %
33.6 %
16.7
22.7
14.2
12.6
18.3
21.4
14.7
12.1
17.5
22.2
14.8
13.0
16.3
18.2
18.2
13.8
18.1
18.5
17.1
15.3
19.4
18.2
15.3
12.8
18.7
16.8
15.4
14.6
17.0
17.4
17.8
14.2
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
$ 360,536
101,238
$ 337,522
97,508
$ 345,478
98,125
$ 379,005
113,212
$ 313,994
83,833
$ 297,316
81,682
$ 311,541
86,170
$ 371,078
101,187
$ 461,774
$ 435,030
$ 443,603
$ 492,217
$ 397,827
$ 378,998
$ 397,711
$ 472,265
78.1 %
21.9
77.6 %
22.4
77.9 %
22.1
77.0 %
23.0
78.9 %
21.1
78.4 %
21.6
78.3 %
21.7
78.6 %
21.4
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
____________________________
1.
Includes Fenics Integrated.
LIQUIDITY AND CAPITAL RESOURCES
Balance Sheet
Our balance sheet and business model are not capital intensive. Our assets consist largely of Cash and cash
equivalents, collateralized and uncollateralized short-dated receivables and less liquid assets needed to support our business.
Longer-term capital (equity and notes payable) is held to support the less liquid assets and potential capital investment
opportunities. Total assets as of December 31, 2023 were $3.2 billion, an increase of 3.3% as compared to December 31, 2022.
The increase in total assets was driven primarily by an increase in Cash and cash equivalents, Loans, forgivable loans and other
receivables from employees and partners, net, Goodwill, Other intangible assets, net and Accrued commissions and other
receivables, net. We maintain a significant portion of our assets in Cash and cash equivalents and Financial instruments owned,
at fair value, with Cash and cash equivalents as of December 31, 2023 of $655.6 million, and our Liquidity as of December 31,
2023 of $701.4 million. See “Liquidity Analysis” below for a further discussion of our Liquidity and a reconciliation to the
most comparable GAAP financial measure. Our Financial instruments owned, at fair value, were $45.8 million as of
December 31, 2023, compared to $39.3 million as of December 31, 2022.
As part of our cash management process, we may enter into tri-party Reverse Repurchase Agreements and other short-
term investments, some of which may be with Cantor. As of both December 31, 2023 and 2022, there were no Reverse
Repurchase Agreements outstanding. Further, we had no Repurchase agreements or Securities loaned as of both December 31,
2023 and 2022.
Additionally, in August 2013, the Audit Committee authorized us to invest up to $350.0 million in an asset-backed
commercial paper program for which certain Cantor entities serve as placement agent and referral agent. The program issues
short-term notes to money market investors and is expected to be used from time to time as a liquidity management vehicle.
The notes are backed by assets of highly rated banks. We are entitled to invest in the program so long as the program meets
investment policy guidelines, including policies relating to ratings. Cantor will earn a spread between the rate it receives from
the short-term note issuer and the rate it pays to us on any investments in this program. This spread will be no greater than the
97
spread earned by Cantor for placement of any other commercial paper note in the program. As of both December 31, 2023 and
2022, we did not have any investments in the program.
Funding
Our funding base consists of longer-term capital (equity and notes payable), collateralized financings and shorter-term
liabilities incurred through the normal course of business. We have limited need for short-term unsecured funding in our
regulated entities for their brokerage business. Contingent liquidity needs are largely limited to potential cash collateral that
may be needed to meet clearing bank, clearinghouse, and exchange margins and/or to fund fails. Current cash and cash
equivalent balances exceed our potential normal course contingent liquidity needs. We believe that cash and cash equivalents in
and available to our largest regulated entities, inclusive of financing provided by clearing banks and cash segregated under
regulatory requirements, is adequate for potential cash demands of normal operations, such as margin or financing of fails. We
expect our operating activities going forward to generate adequate cash flows to fund normal operations, share repurchases, and
any dividends paid pursuant to our dividend policy. However, we continually evaluate opportunities for growth and to further
enhance our strategic position, including, among other things, acquisitions, strategic alliances and joint ventures potentially
involving all types and combinations of equity, debt and acquisition alternatives. As a result, we may need to raise additional
funds to:
•
•
•
•
•
increase the regulatory net capital necessary to support operations;
support continued growth in our businesses;
effect acquisitions, strategic alliances, joint ventures and other transactions;
develop new or enhanced products, services and markets; and
respond to competitive pressures.
Acquisitions and financial reporting obligations related thereto may impact our ability to access longer term capital
markets funding on a timely basis and may necessitate greater short-term borrowings in the interim. This may impact our credit
rating or our costs of borrowing. We may need to access short-term capital sources to meet business needs from time to time,
including, but not limited to, conducting operations; hiring or retaining brokers, salespeople, managers, technology
professionals and other front-office personnel; financing acquisitions; and providing liquidity, including in situations where we
may not be able to access the capital markets in a timely manner when desired by us. Accordingly, we cannot guarantee that we
will be able to obtain additional financing when needed on terms that are acceptable to us, if at all.
As discussed below, our Liquidity remained strong at $701.4 million as of December 31, 2023, which can be used for
share repurchases, dividends, new hires, tax payments, ordinary movements in working capital, and our continued investment in
Fenics Growth Platforms. During the twelve months ended December 31, 2023, we repurchased 23.3 million shares of BGC
Class A common stock for aggregate consideration of $114.5 million, representing a weighted-average price per share of $4.93.
As of February 27, 2024, we have repurchased an additional 6.7 million shares of BGC Class A common stock during
the first quarter for aggregate consideration of $47.4 million, representing a weighted-average price per share of $7.03.
On November 1, 2021, BGC closed the sale of its Insurance brokerage business to the Ardonagh Group for gross
proceeds of $534.9 million, subject to limited post-closing adjustments. The investment in the Insurance brokerage business
generated an internal rate of return of 21.2% for our shareholders. The proceeds from the Insurance Business Disposition
provided us with significant resources to continue repurchasing shares and to accelerate Fenics growth. Since the announced
sale of the Insurance brokerage business in May 2021, BGC has repurchased and redeemed 123.5 million shares of BGC Class
A common stock and LPUs as of December 31, 2023. In addition, a portion of these proceeds was used to fully repay the
$300.0 million outstanding borrowings under the Company’s Revolving Credit Agreement on November 1, 2021, which had
been borrowed earlier in 2021. This repayment along with the maturity of the BGC Partners 5.125% Senior Notes, which were
paid in full on May 27, 2021, reduced our outstanding Notes payable and other borrowings.
On February 13, 2024, our Board declared a $0.01 dividend for the fourth quarter of 2023.
Our current capital allocation priorities are to return capital to stockholders and to continue investing in our high
growth Fenics businesses. Historically, we were deeply dividend-centric; going forward, we plan to prioritize share repurchases
over dividends.
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Notes Payable, Other and Short-term Borrowings
Unsecured Senior Revolving Credit Agreement
On November 28, 2018, BGC Partners entered into the Revolving Credit Agreement with Bank of America, N.A., as
administrative agent, and a syndicate of lenders, which replaced the existing committed unsecured senior revolving credit
agreement. The maturity date of the Revolving Credit Agreement was November 28, 2020 and the maximum revolving loan
balance was $350.0 million. Borrowings under this Revolving Credit Agreement bore interest at either LIBOR or a defined base
rate plus additional margin. On December 11, 2019, BGC Partners entered into an amendment to the Revolving Credit
Agreement. Pursuant to the amendment, the maturity date was extended to February 26, 2021. On February 26, 2020, BGC
Partners entered into a second amendment to the Revolving Credit Agreement, pursuant to which the maturity date was
extended by two years to February 26, 2023. On March 10, 2022, BGC Partners entered into an amendment and restatement of
the senior unsecured revolving credit agreement, pursuant to which the maturity date was extended to March 10, 2025, the size
of the credit facility was increased to $375.0 million, and borrowings under this agreement will bear interest based on either
SOFR or a defined base rate plus additional margin. On October 6, 2023, the Revolving Credit Agreement was amended to
exclude the BGC Partners Notes from the restrictive covenant in the Revolving Credit Agreement limiting the indebtedness of
subsidiaries, and BGC Group assumed all rights and obligations of BGC Partners under the Revolving Credit Agreement and
became the borrower thereunder.
As of December 31, 2023, there were $239.2 million borrowings outstanding, net of deferred financing costs of $0.8
million under the Revolving Credit Agreement. As of December 31, 2022, there were no borrowings outstanding under the
Revolving Credit Agreement. Our Liquidity remains strong and was $701.4 million as of December 31, 2023, as discussed
below.
BGC Partners 5.375% Senior Notes
On July 24, 2018, BGC Partners issued an aggregate of $450.0 million principal amount of BGC Partners 5.375%
Senior Notes due July 24, 2023. The BGC Partners 5.375% Senior Notes were general senior unsecured obligations of BGC
Partners. The BGC Partners 5.375% Senior Notes bore interest at a rate of 5.375% per year, payable in cash on January 24 and
July 24 of each year, commencing January 24, 2019.
On July 24, 2023, BGC Partners repaid the $450.0 million principal amount plus accrued interest on the BGC Partners
5.375% Senior Notes using the proceeds from the issuance of the BGC Partners 8.000% Senior Notes, cash on hand and
borrowings under the Revolving Credit Agreement.
Exchange Offer and Market-Making Registration Statement
On October 6, 2023, BGC Group completed the Exchange Offer, in which BGC Group offered to exchange the BGC
Partners Notes for new notes to be issued by BGC Group with the same respective interest rates, maturity dates and
substantially identical terms as the tendered notes, and cash. In connection with the Exchange Offer, and on behalf of BGC
Partners, BGC Group also solicited consents from (i) holders of the BGC Partners Notes to certain proposed amendments to the
indenture and supplemental indentures pursuant to which such BGC Partners Notes were issued to, among other things,
eliminate certain affirmative and restrictive covenants and events of default, including the “Change of Control” provisions
described below, which had applied to each series of the BGC Partners Notes, and (ii) from holders of the BGC Partners
8.000% Senior Notes to amend the registration rights agreement relating thereto to terminate such agreement. As of September
19, 2023, the requisite note holder consents were received to adopt the proposed indenture amendments and terminate the
registration rights agreement relating to the BGC Partners 8.000% Senior Notes. In connection with the October 6, 2023 closing
of the Exchange Offer, (i) $255.5 million aggregate principal amount of BGC Partners 3.750% Senior Notes were exchanged
for BGC Group 3.750% Senior Notes and subsequently canceled, $288.2 million aggregate principal amount of BGC Partners
4.375% Senior Notes were exchanged for BGC Group 4.375% Senior Notes and subsequently cancelled, $347.2 million
aggregate principal amount of BGC Partners 8.000% Senior Notes were exchanged for BGC Group 8.000% Senior Notes and
subsequently cancelled, and equivalent aggregate principal amounts of BGC Group 3.750% Senior Notes, BGC Group 4.375%
Senior Notes and BGC Group 8.000% Senior Notes, respectively, were issued; (ii) the indenture and supplemental indentures
relating to the BGC Partners 3.750% Senior Notes, the BGC Partners 4.375% Senior Notes and the BGC Partners 8.000%
Senior Notes were amended as proposed; and (iii) the registration rights agreement relating to the BGC Partners 8.000% Senior
Notes was terminated.
On October 19, 2023, we filed a resale registration statement on Form S-3 pursuant to which CF&Co may make offers
and sales of the BGC Group 3.750% Senior Notes, the BGC Group 4.375% Senior Notes and the BGC Group 8.000% Senior
Notes in connection with ongoing market-making transactions which may occur from time to time. Such market-making
transactions in these securities may occur in the open market or may be privately negotiated at prevailing market prices at a
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time of resale or at related or negotiated prices. Neither CF&Co, nor any other of our affiliates, has any obligation to make a
market in our securities, and CF&Co or any such other affiliate may discontinue market-making activities at any time without
notice.
3.750% Senior Notes
On September 27, 2019, BGC Partners issued an aggregate of $300.0 million principal amount of BGC Partners
3.750% Senior Notes. The BGC Partners 3.750% Senior Notes are general unsecured obligations of BGC Partners. The BGC
Partners 3.750% Senior Notes bear interest at a rate of 3.750% per year, payable in cash on April 1 and October 1 of each year,
commencing April 1, 2020. The BGC Partners 3.750% Senior Notes will mature on October 1, 2024. BGC Partners may
redeem some or all of the BGC Partners 3.750% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture related to the BGC Partners 3.750% Senior Notes). The initial
carrying value of the BGC Partners 3.750% Senior Notes was $296.1 million, net of discount and debt issuance costs of $3.9
million, of which $0.2 million were underwriting fees payable to CF&Co. The issuance costs are amortized as interest expense
and the carrying value of the BGC Partners 3.750% Senior Notes will accrete up to the face amount over the term of the notes.
On October 11, 2019, BGC Partners filed a Registration Statement on Form S-4, which was declared effective by the
SEC on October 24, 2019. On October 28, 2019, BGC Partners launched an exchange offer in which holders of the BGC
Partners 3.750% Senior Notes, issued in a private placement on September 27, 2019, could exchange such notes for new
registered notes with substantially identical terms. The exchange offer closed on December 9, 2019, at which point the initial
BGC Partners 3.750% Senior Notes were exchanged for new registered notes with substantially identical terms.
As discussed above, on October 6, 2023, pursuant to the Exchange Offer, $255.5 million aggregate principal amount
of BGC Partners 3.750% Senior Notes were exchanged for BGC Group 3.750% Senior Notes and subsequently cancelled, and
certain amendments to the indenture and supplemental indenture governing the BGC Partners 3.750% Senior Notes became
effective. The BGC Group 3.750% Senior Notes will mature on October 1, 2024 and bear interest at a rate of 3.750% per year,
payable in cash on April 1 and October 1 of each year, commencing April 1, 2024. BGC Group may redeem some or all of the
BGC Group 3.750% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set
forth in the supplemental indenture related to the BGC Group 3.750% Senior Notes). If a “Change of Control Triggering
Event” (as defined in the supplemental indenture related to the BGC Group 3.750% Senior Notes) occurs, holders may require
BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal amount of the notes to
be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following the closing of the Exchange Offer, $44.5 million aggregate principal amount of BGC Partners 3.750%
Senior Notes remained outstanding.
The carrying value of the BGC Group 3.750% Senior Notes was $254.8 million as of December 31, 2023. The
carrying value of the BGC Partners 3.750% Senior Notes was $44.4 million as of December 31, 2023.
4.375% Senior Notes
On July 10, 2020, BGC Partners issued an aggregate of $300.0 million principal amount of BGC Partners 4.375%
Senior Notes. The BGC Partners 4.375% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners
4.375% Senior Notes bear interest at a rate of 4.375% per year, payable in cash on June 15 and December 15 of each year,
commencing December 15, 2020. The BGC Partners 4.375% Senior Notes will mature on December 15, 2025. BGC Partners
may redeem some or all of the BGC Partners 4.375% Senior Notes at any time or from time to time for cash at certain “make-
whole” redemption prices (as set forth in the supplemental indenture related to the BGC Partners 4.375% Senior Notes). Cantor
purchased $14.5 million of such senior notes. The initial carrying value of the BGC Partners 4.375% Senior Notes was $296.8
million, net of discount and debt issuance costs of $3.2 million, of which $0.2 million were underwriting fees payable to
CF&Co.
On August 28, 2020, BGC Partners filed a Registration Statement on Form S-4, which was declared effective by the
SEC on September 8, 2020. On September 9, 2020, BGC Partners launched an exchange offer in which holders of the BGC
Partners 4.375% Senior Notes, issued in a private placement on July 10, 2020, could exchange such notes for new registered
notes with substantially identical terms. The exchange offer closed on October 14, 2020, at which point the initial BGC Partners
4.375% Senior Notes were exchanged for new registered notes with substantially identical terms.
As discussed above, on October 6, 2023, pursuant to the Exchange Offer, $288.2 million aggregate principal amount
of BGC Partners 4.375% Senior Notes were exchanged for BGC Group 4.375% Senior Notes and subsequently cancelled, and
certain amendments to the indenture and supplemental indenture governing the BGC Partners 4.375% Senior Notes became
effective. The BGC Group 4.375% Senior Notes will mature on December 15, 2025 and bear interest at a rate of 4.375% per
year, payable in cash on June 15 and December 15 of each year, commencing December 15, 2023. BGC Group may redeem
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some or all of the BGC Group 4.375% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture related to the BGC Group 4.375% Senior Notes). If a “Change of
Control Triggering Event” (as defined in the supplemental indenture related to the BGC Group 4.375% Senior Notes) occurs,
holders may require BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal
amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following the closing of the Exchange Offer, $11.8 million aggregate principal amount of BGC Partners 4.375%
Senior Notes remained outstanding. Cantor participated in the Exchange Offer, and currently holds $14.5 million aggregate
principal amount of BGC Group 4.375% Senior Notes.
The carrying value of the BGC Group 4.375% Senior Notes was $286.7 million as of December 31, 2023. The
carrying value of the BGC Partners 4.375% Senior Notes was $11.8 million as of December 31, 2023.
8.000% Senior Notes
On May 25, 2023, BGC Partners issued an aggregate of $350.0 million principal amount of BGC Partners 8.000%
Senior Notes. The BGC Partners 8.000% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners
8.000% Senior Notes bear interest at a rate of 8.000% per year, payable in cash on May 25 and November 25 of each year,
commencing November 25, 2023. The BGC Partners 8.000% Senior Notes will mature on May 25, 2028. BGC Partners may
redeem some or all of the BGC Partners 8.000% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture related to the BGC Partners 8.000% Senior Notes). The initial
carrying value of the BGC Partners 8.000% Senior Notes was $346.6 million, net of debt issuance costs of $3.4 million. The
issuance costs are amortized as interest expense and the carrying value of the BGC Partners 8.000% Senior Notes will accrete
up to the face amount over the term of the notes.
On October 6, 2023, pursuant to the Exchange Offer, $347.2 million aggregate principal amount of BGC Partners
8.000% Senior Notes were exchanged for BGC Group 8.000% Senior Notes and subsequently cancelled, and certain
amendments to the indenture and supplemental indenture governing the BGC Partners 8.000% Senior Notes became effective.
The BGC Group 8.000% Senior Notes will mature on May 25, 2028 and bear interest at a rate of 8.000% per year, payable in
cash on May 25 and November 25 of each year, commencing November 25, 2023. BGC Group may redeem some or all of the
BGC Group 8.000% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set
forth in the supplemental indenture related to the BGC Group 8.000% Senior Notes). If a “Change of Control Triggering
Event” (as defined in the supplemental indenture related to the BGC Group 8.000% Senior Notes) occurs, holders may require
BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal amount of the notes to
be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following closing of the Exchange Offer, $2.8 million aggregate principal amount of the BGC Partners 8.000% Senior
Notes remained outstanding. In connection with the issuance of the BGC Partners 8.000% Senior Notes, BGC Partners entered
into a registration rights agreement providing for a future registered exchange offer by May 25, 2024 in which holders of the
BGC Partners 8.000% Senior Notes, issued in a private placement on May 25, 2023, could exchange such notes for new
registered notes with substantially identical terms. Such registration rights agreement was terminated in connection with the
closing of the Exchange Offer.
The carrying value of the BGC Group 8.000% Senior Notes was $343.9 million as of December 31, 2023. The
carrying value of the BGC Partners 8.000% Senior Notes was $2.7 million as of December 31, 2023.
Collateralized Borrowings
On April 8, 2019, we entered into a secured loan arrangement of $15.0 million, under which we pledged certain fixed
assets as security for a loan. This arrangement incurred interest at a fixed rate of 3.77% and matured on April 8, 2023, at which
point the balance was paid in full; therefore, there were no borrowings as of December 31, 2023. As of December 31, 2022, we
had $2.0 million outstanding related to this secured loan arrangement. The book value of the fixed assets pledged as of
December 31, 2022 was nil. We recorded interest expense related to this secured loan arrangement of nil, $0.1 million and $0.3
million for the years ended December 31, 2023, 2022 and 2021, respectively.
On April 19, 2019, we entered into a $10.0 million secured loan arrangement, under which we pledged certain fixed
assets as security for a loan. This arrangement incurred interest at a fixed rate of 3.89% and matured on April 19, 2023, at
which point the loan was repaid in full; therefore, there were no borrowings as of December 31, 2023. As of December 31,
2022, we had $1.3 million outstanding related to this secured loan arrangement. The book value of the fixed assets pledged as
of December 31, 2022 was $0.3 million. We recorded interest expense related to this secured loan arrangement of nil, $0.1
million and $0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.
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Weighted-average Interest Rate
For the years ended December 31, 2023 and 2022, the weighted-average interest rate of BGC Partners’ total Notes
payable and other borrowings, which include BGC Partners’ Revolving Credit Agreement, Company Debt Securities, and
collateralized borrowings, was 5.82% and 4.62%, respectively.
Short-term Borrowings
On August 22, 2017, we entered into a committed unsecured loan agreement with Itau Unibanco S.A. The agreement
provided for short-term loans of up to $4.0 million (BRL 20.0 million). Borrowings under this agreement bore interest at the
Brazilian Interbank offering rate plus 3.20%. During June 2023, the borrowings under this agreement were repaid in full, and
the loan was terminated; therefore, as of December 31, 2023, there were no borrowings outstanding under the agreement. As of
December 31, 2022, there were $2.0 million (BRL10.0 million) of borrowings outstanding under this agreement. As of
December 31, 2022, the interest rate was 17.0%.
On August 23, 2017, we entered into a committed unsecured credit agreement with Itau Unibanco S.A. The agreement
provided for an intra-day overdraft credit line up to $10.4 million (BRL 50.0 million). On August 20, 2021, the agreement was
renegotiated, increasing the credit line to $12.4 million (BRL 60.0 million). On May 22, 2023 the agreement was renegotiated,
increasing the credit line to $14.5 million (BRL 70.0 million). The maturity date of the agreement is February 17, 2024. This
agreement bears a fee of 1.35% per year. As of December 31, 2023 and December 31, 2022, there were no borrowings
outstanding under this agreement.
On January 25, 2021, we entered into a committed unsecured loan agreement with Banco Daycoval S.A., which
provided for short-term loans of up to $2.0 million (BRL 10.0 million) and was renegotiated on June 1, 2021. The amended
agreement provided for short-term loans of up to $4.0 million (BRL 20.0 million). During September 2022, the borrowings
under this agreement were repaid in full, and the loan was terminated on September 27, 2022.
BGC Credit Agreement with Cantor
On March 19, 2018, BGC Partners entered into the BGC Credit Agreement with Cantor. The BGC Credit Agreement
provides for each party and certain of its subsidiaries to issue loans to the other party or any of its subsidiaries in the lender’s
discretion in an aggregate principal amount up to $250.0 million outstanding at any time. The BGC Credit Agreement replaced
the previous Credit Facility between BGC Partners and an affiliate of Cantor, and was approved by the Audit Committee of
BGC Partners. On August 6, 2018, BGC Partners entered into an amendment to the BGC Credit Agreement, which increased
the aggregate principal amount that can be loaned to the other party or any of its subsidiaries from $250.0 million to $400.0
million that can be outstanding at any time. On October 6, 2023, BGC Group assumed all rights and obligations of BGC
Partners under the BGC Credit Agreement. The BGC Credit Agreement will mature on the earlier to occur of (a) March 19,
2024, after which the maturity date of the BGC Credit Agreement will continue to be extended for successive one-year periods
unless prior written notice of non-extension is given by a lending party to a borrowing party at least six months in advance of
such renewal date and (b) the termination of the BGC Credit Agreement by either party pursuant to its terms. The outstanding
amounts under the BGC Credit Agreement will bear interest for any rate period at a per annum rate equal to the higher of
BGC’s or Cantor’s short-term borrowing rate in effect at such time plus 1.00%. As of both December 31, 2023 and 2022, there
were no borrowings by the Company or Cantor outstanding under this Agreement.
DEBT REPURCHASE PROGRAM
See Note 13—“Related Party Transactions” to our Consolidated Financial Statements in Part II, Item 8 of this Annual
Report on Form 10-K under the heading “CEO Program and Other Transactions with CF&Co” for information about our
Board-authorized debt repurchase program.
LIQUIDITY ANALYSIS
We consider our Liquidity, a non-GAAP financial measure, to be comprised of the sum of Cash and cash equivalents,
Reverse Repurchase Agreements, and Financial instruments owned, at fair value, less Securities loaned and Repurchase
agreements. We consider liquidity to be an important metric for determining the amount of cash that is available or that could
be readily available to the Company on short notice. The discussion below describes the key components of our Liquidity
analysis. We believe our cash, cash flows, and financing arrangements are sufficient to support our cash requirements for the
next twelve months and beyond.
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We consider the following in analyzing changes in our Liquidity:
• Our Liquidity analysis includes a comparison of our Consolidated net income (loss) adjusted for certain non-
cash items (e.g., Equity-based compensation) as presented on the cash flow statement. Dividends are
payments made to our holders of common shares and are related to earnings from prior periods. These timing
differences will impact our cash flows in a given period;
• Our investing and funding activities represent a combination of our capital raising activities, including short-
term borrowings and repayments, BGC Class A common stock repurchases and, previously, partnership unit
redemptions, purchases and sales of securities, dispositions, and other investments (e.g., acquisitions,
forgivable loans to new brokers and capital expenditures—all net of depreciation and amortization);
• Our securities settlement activities primarily represent deposits with clearing organizations;
• Other changes in working capital represent changes primarily in receivables and payables and accrued
liabilities that impact our Liquidity; and
• Changes in Reverse Repurchase Agreements and Financial instruments owned, at fair value may result from
additional cash investments or sales, which will be offset by a corresponding change in Cash and cash
equivalents and, accordingly, will not result in a change in our Liquidity. Conversely, changes in the market
value of such securities are reflected in our earnings or other comprehensive income (loss) and will result in
changes in our Liquidity.
At December 31, 2019, the Company completed the calculation of the one-time transition tax on the deemed
repatriation of foreign subsidiaries’ earnings pursuant to the Tax Act and previously recorded a net cumulative tax expense of
$28.6 million, net of foreign tax credits. An installment election can be made to pay the taxes over eight years with 40% paid in
equal installments over the first five years and the remaining 60% to be paid in installments of 15%, 20% and 25% in years six,
seven and eight, respectively. The cumulative remaining balance as of December 31, 2023 was $18.8 million.
As of December 31, 2023, the Company and its consolidated subsidiaries had $655.6 million of Cash and cash
equivalents. In addition, the Company and its consolidated subsidiaries also held securities of $45.8 million within their
Liquidity position as of December 31, 2023.
Discussion of the year ended December 31, 2023
The table below presents our Liquidity Analysis as of December 31, 2023 and December 31, 2022:
(in thousands)
Cash and cash equivalents
Financial instruments owned, at fair value
Total
December 31, 2023
December 31, 2022
$
$
655,641 $
45,792
701,433 $
484,989
39,319
524,308
The $177.1 million increase in our Liquidity position from $524.3 million as of December 31, 2022 to $701.4 million
as of December 31, 2023 was primarily related to the issuance of $350.0 million principal amount of BGC Partners 8.000%
Senior Notes, $240.0 million of borrowings from the Revolving Credit Agreement, and cash flow from operations, partially
offset by the repayment of the $450.0 million principal amount of, plus accrued interest on, the BGC Partners 5.375% Senior
Notes, ordinary movements in working capital, the acquisitions of Trident, ContiCap, as well as Open Energy Group, tax
payments, dividends and distributions, share repurchases, and our continued investments in Fenics Growth Platforms.
Discussion of the year ended December 31, 2022
The table below presents our Liquidity Analysis as of December 31, 2022 and December 31, 2021:
(in thousands)
Cash and cash equivalents
Financial instruments owned, at fair value
Total
December 31, 2022
December 31, 2021
$
$
484,989 $
39,319
524,308 $
553,598
41,244
594,842
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The $70.5 million decrease in our Liquidity position from $594.8 million as of December 31, 2021 to $524.3 million
as of December 31, 2022 was primarily related to share and unit repurchases and redemptions, dividends and distributions, tax
payments, our continued investment in Fenics Growth Platforms and ordinary movements in working capital.
CREDIT RATINGS
As of December 31, 2023, our public long-term credit ratings and associated outlooks were as follows:
Fitch Ratings Inc.
Standard & Poor’s
Japan Credit Rating Agency, Ltd.
Kroll Bond Rating Agency
Rating
BBB-
BBB-
BBB+
BBB
Outlook
Stable
Stable
Stable
Stable
Credit ratings and associated outlooks are influenced by a number of factors, including, but not limited to: operating
environment, earnings and profitability trends, the prudence of funding and liquidity management practices, balance sheet size/
composition and resulting leverage, cash flow coverage of interest, composition and size of the capital base, available liquidity,
outstanding borrowing levels and the firm’s competitive position in the industry. A credit rating and/or the associated outlook
can be revised upward or downward at any time by a rating agency if such rating agency decides that circumstances warrant
such a change. Any downgrade in our credit ratings and/or the associated outlooks could adversely affect the availability of debt
financing on terms acceptable to us, as well as the cost and other terms upon which we are able to obtain any such financing. In
addition, credit ratings and associated outlooks may be important to customers or counterparties when we compete in certain
markets and when we seek to engage in certain transactions. In connection with certain agreements, we may be required to
provide additional collateral in the event of a credit ratings downgrade.
CLEARING CAPITAL
In November 2008, we entered into a clearing capital agreement with Cantor to clear U.S. Treasury and U.S.
government agency securities transactions on our behalf. In June 2020, this clearing capital agreement was amended to cover
Cantor providing clearing services in all eligible financial products to us and not just U.S. Treasury and U.S. government
agency securities. Pursuant to the terms of this agreement, so long as Cantor is providing clearing services to us, Cantor shall be
entitled to request from us cash or other collateral acceptable to Cantor in the amount reasonably requested by Cantor under the
clearing capital agreement or Cantor will post cash or other collateral on our behalf for a commercially reasonable charge.
During the years ended December 31, 2023, 2022 and 2021, the Company was charged $2.2 million, $0.8 million and
$0.7 million, respectively, by Cantor for the cash or other collateral posted by Cantor on BGC’s behalf. Cantor had not
requested any cash or other property from us as collateral as of December 31, 2023.
REGULATORY REQUIREMENTS
Our Liquidity and available cash resources are restricted by regulatory requirements applicable to our operating
subsidiaries. Many of these regulators, including U.S. and non-U.S. government agencies and self-regulatory organizations, as
well as state securities commissions in the U.S., are empowered to conduct administrative proceedings that can result in civil
and criminal judgments, settlements, fines, penalties, injunctions, enhanced oversight, remediation, or other relief.
In addition, self-regulatory organizations such as FINRA and the NFA, along with statutory bodies such as the FCA,
the SEC, and the CFTC, require strict compliance with their rules and regulations. The requirements imposed by regulators are
designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with broker-
dealers and are not designed to specifically protect stockholders. These regulations often serve to limit our activities, including
through net capital, customer protection and market conduct requirements.
The final phase of Basel III (unofficially called “Basel IV”) is a global prudential regulatory standard designed to
make banks more resilient and increase confidence in the banking system. Its wide scope includes reviewing market, credit and
operational risk along with targeted changes to leverage ratios. Basel IV includes updates to the calculation of bank capital
requirements with the aim of making outcomes more comparable across banks globally.
The FCA is the relevant statutory regulator in the U.K. The FCA’s objectives are to protect customers, maintain the
stability of the financial services industry and promote competition between financial services providers. It has broad rule-
making, investigative and enforcement powers derived from the Financial Services and Markets Act 2000 and subsequent and
derivative legislation and regulations.
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In January 2022, the FCA introduced a new Internal Capital and Risk Assessment (ICARA) process as a replacement
for the Internal Capital Adequacy Assessment Process (ICAAP). The ICARA process incorporates business model assessment,
forecasting and stress testing, recovery planning and wind-down planning. All firms were required to submit their proposed
ICARA documentation by March 31, 2023, after which the FCA will provide feedback that may require further documentation
and may lead to a change in capital requirements. The adoption of these proposed rules could restrict the ability of our large
bank and broker-dealer customers to operate trading businesses and to maintain current capital market exposures under the
present structure of their balance sheets, and will cause these entities to need to raise additional capital in order to stay active in
our marketplaces.
In July 2023, the FCA further ensured that Consumer Duty is at the heart of every financial institution by rolling out
Principle 12 specifically related to Consumer Duty, where a firm must act to deliver good outcomes for retail customers. This
initiative is poised to redefine the relationship between consumers and financial institutions, where the FCA has demanded
financial institutions foster a culture of trust, transparency, and accountability. Under Consumer Duty, the onus has shifted to
financial institutions to prioritize their customers’ best interest in every consideration made by the financial institution (the
entire customer life cycle) including demonstration and evidence that the product/service/action is in the best interest of the
customer. Although not immediately applicable to our business as we do not conduct business directly with the retail sector, we
are conscious of the impact that this will have on underlying clients who have obligations to fulfil. In so doing, they may
require our firm to provide additional reporting in order to help them evidence their obligations.
In addition, the majority of our other foreign subsidiaries are subject to similar regulation by the relevant authorities in
the countries in which they do business. Certain other of our foreign subsidiaries are required to maintain non-U.S. net capital
requirements. For example, in Hong Kong, BGC Securities (Hong Kong), LLC, GFI (HK) Securities LLC and Sunrise Brokers
(Hong Kong) Limited are regulated by the Securities and Futures Commission. BGC Capital Markets (Hong Kong), Limited
and GFI (HK) Brokers Ltd are regulated by The Hong Kong Monetary Authority. All are subject to Hong Kong net capital
requirements. In France, Aurel BGC and BGC France Holdings; in Australia, BGC Partners (Australia) Pty Limited and Fixed
Income Solutions Pty Limited; in Japan, BGC Shoken Kaisha Limited’s Tokyo branch; in Singapore, BGC Partners (Singapore)
Limited, GFI Group Pte Ltd and Ginga Global Markets Pte Ltd; in Korea, BGC Capital Markets & Foreign Exchange Broker
(Korea) Limited and GFI Korea Money Brokerage Limited; in Philippines, GFI Group (Philippines) Inc. and in Brazil, BGC
Liquidez Distribuidora De Titulos E Valores Mobiliarios Ltda., all have net capital requirements imposed upon them by local
regulators.
These subsidiaries may also be prohibited from repaying the borrowings of their parents or affiliates, paying cash
dividends, making loans to their parent or affiliates or otherwise entering into transactions, in each case, which may result in a
significant reduction in their regulatory capital position without prior notification or approval from their principal regulator. See
Note 21—“Regulatory Requirements” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on
Form 10-K for further details on our regulatory requirements.
As of December 31, 2023, $734.1 million of net assets were held by regulated subsidiaries. As of December 31, 2023,
these subsidiaries had aggregate regulatory net capital, as defined, in excess of the aggregate regulatory requirements, as
defined, of $391.7 million.
In April 2013, the Board and Audit Committee authorized management to enter into indemnification agreements with
Cantor and its affiliates with respect to the provision of any guarantees provided by Cantor and its affiliates from time to time as
required by regulators. These services may be provided from time to time at a reasonable and customary fee. In 2020, the
introducing broker guarantees were moved from CF&Co to Mint Brokers for the firm’s stand alone and foreign NFA registered
introducing brokers.
BGC Derivative Markets and GFI Swaps Exchange, our subsidiaries, operate as SEFs. Mandatory Dodd-Frank Act
compliant execution on SEFs by eligible U.S. persons for “made available to trade” products, and a wide range of other rules
relating to the execution and clearing of derivative products have been implemented. We also own ELX, which became a
dormant contract market on July 1, 2017 and in July 2021, we completed the purchase of the CX Futures Exchange (now FMX
Futures Exchange) from Cantor, which represents our futures exchange and related clearinghouse. These rules require
authorized execution facilities to maintain robust front-end and back-office IT capabilities and to make large and ongoing
technology investments. These execution facilities may be supported by a variety of voice and auction-based execution
methodologies, and our Hybrid and Fully Electronic trading capability have performed strongly in this regulatory environment.
Much of our global derivatives volumes continue to be executed by non-U.S. based clients outside the U.S. and subject
to local prudential regulations. As such, we will continue to operate a number of European regulated venues in accordance with
EU or U.K. legislation and licensed by the FCA or EU-based national supervisors. These venues are also operated for non-
derivative instruments for these clients. MiFID II was published by the European Securities and Markets Authority in
September 2015, and implemented in January 2018 and introduced important infrastructural changes.
105
MiFID II requires a significant part of the market in these instruments to trade on trading venues subject to
transparency regimes, not only in pre- and post-trade prices, but also in fee structures and access. In addition, it has impacted a
number of key areas, including corporate governance, transaction reporting, pre- and post-trade transparency, technology
synchronization, best execution and investor protection.
MiFID II was intended to help improve the functioning of the EU single market by achieving a greater consistency of
regulatory standards. By design, therefore, it was intended that EU member states should have very similar regulatory regimes
in relation to the matters addressed to MiFID. MiFID II has also introduced a new regulated execution venue category called an
OTF that captures much of the Voice-and Hybrid-oriented trading in the EU. Much of our EU derivatives and fixed income
execution business now takes place on OTFs. Further to its decision to leave the EU, the U.K. has implemented MIFID II’s
requirements into its own domestic legislation. Brexit may impact future market structures and MiFID II rulemaking and
implementation due to potential changes in mutual passporting and equivalence arrangements between the U.K. and EU
member states (for further information see “Overview and Business Environment—Brexit” herein).
In addition, the GDPR came into effect in the EU on May 25, 2018 (with the equivalent in the U.K.) and creates new
compliance obligations in relation to personal data. The GDPR may affect our practices, and will increase financial penalties for
non-compliance significantly.
Apart from some minor non-material changes, at this time there has not been any legislation from the EU Commission
or the U.K. Government that has materially changed how the U.K. and EU approach financial regulation since MiFID II and the
implementation of Brexit. Although divergence of U.K. regulation from EU regulation may occur, there has been no firm
legislative change signaled or published by the FCA or the U.K. Government. While we generally believe the net impact of the
rules and regulations are positive for our business, it is possible that unintended consequences of the rules and regulations may
materially adversely affect us in ways yet to be determined.
See “Regulation” included in Part I, Item 1 of this Annual Report on Form 10-K for additional information related to
our regulatory environment.
EQUITY
As of December 31, 2023, we have 390.1 million shares of BGC Class A common stock and 109.5 million shares of
BGC Class B common stock outstanding. Additional disclosures regarding our accounting for stock transactions and unit
redemptions are provided in Note 7—“Stock Transactions and Unit Redemptions” to the Company’s consolidated financial
statements included in Part II, Item 8 of this Annual Report on Form 10-K.
The weighted-average share counts, including securities that were anti-dilutive for our earnings per share calculations,
for the three months and year ended December 31, 2023 were as follows (in thousands):
Common stock outstanding1
Partnership units2
RSUs and restricted stock (Treasury stock method)3
Other
Total
Three Months Ended
December 31, 2023
Year Ended
December 31, 2023
468,747
—
13,565
7,705
490,017
426,436
57,239
15,687
4,908
504,270
__________________________
1
Common stock consisted of shares of BGC Class A common stock, shares of BGC Class B common stock and contingent shares of
our Class A common stock for which all necessary conditions have been satisfied except for the passage of time. For the quarter
ended December 31, 2023, the weighted-average number of shares of BGC Class A common stock was 358.4 million and Class B
shares was 109.5 million. For the year ended December 31, 2023, the weighted-average number of shares of BGC Class A common
stock was 347.4 million and Class B shares was 77.9 million.
2
3
Partnership units collectively include FPUs, LPUs, including contingent units of BGC Holdings for which all necessary conditions
have been satisfied except for the passage of time, and Cantor units (see Note 2—“Limited Partnership Interests in BGC Holdings
and Newmark Holdings” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for more
information).
For the quarter ended December 31, 2023, 13.6 million potentially dilutive securities were not included in the computation of fully
diluted EPS because their effect would have been anti-dilutive. Anti-dilutive securities for the quarter ended December 31, 2023,
included 11.9 million participating RSUs and 1.7 million participating restricted shares of BGC Class A common stock. For the
year ended December 31, 2023, 14.3 million potentially dilutive securities were not included in the computation of fully diluted
EPS because their effect would have been anti-dilutive. Anti-dilutive securities for the year ended December 31, 2023, included
12.7 million participating RSUs and 1.6 million participating restricted shares of BGC Class A common stock. As of December 31,
106
2023, 63.3 million shares of contingent BGC Class A common stock, non-participating RSUs, and non-participating restricted
shares of BGC Class A common stock were excluded from fully diluted EPS computations because the conditions for issuance had
not been met by the end of the period. The contingent BGC Class A common stock is recorded as a liability and included in
“Accounts payable, accrued and other liabilities” in our Consolidated Statement of Financial Condition as of December 31, 2023.
Registration Statements
We have the effective March 2021 Form S-3 Registration Statement, which was filed on March 8, 2021, with respect
to the issuance and sale of up to an aggregate of $300.0 million shares of BGC Class A common stock from time to time on a
delayed or continuous basis. We also entered into the July 2023 Sales Agreement, under which, we agreed to pay CF&Co 2%
of the gross proceeds from the sale of shares. CF&Co is a wholly owned subsidiary of Cantor and an affiliate of BGC. For
additional information on our CEO Program sales agreement, see Note 13—“Related Party Transactions” to the Consolidated
Financial Statements of this Annual Report on Form 10-K. We intend to use the net proceeds of any shares of BGC Class A
common stock sold under our CEO Program for general corporate purposes, including for potential acquisitions, repurchases of
shares of BGC Class A common stock from executive officers and other employees of ours or our subsidiaries and of Cantor
and its affiliates. Prior to the Corporate Conversion, we also used the net proceeds for redemption of LPUs and FPUs in BGC
Holdings. Certain of such executive officers and other employees of ours or our subsidiaries and of Cantor and its affiliates will
be expected to use the proceeds from such sales to repay outstanding loans issued by, or credit enhanced by, Cantor or BGC.
We have the effective 2019 Form S-4 Registration Statement, which was filed on September 13, 2019, with respect to
the offer and sale of up to 20 million shares of BGC Class A common stock from time to time in connection with business
combination transactions, including acquisitions of other businesses, assets, properties or securities. As of December 31, 2023,
the Company had issued an aggregate of 2.3 million shares of BGC Class A common stock under the 2019 Form S-4
Registration Statement.
We have the effective DRIP Registration Statement, which was filed on June 24, 2011, with respect to the offer and
sale of up to 10 million shares of BGC Class A common stock under the DRIP. As of December 31, 2023, the Company had
issued 0.8 million shares of BGC Class A common stock under the DRIP.
We have the effective Equity Plan Registration Statement, which was filed on July 3, 2023, for the BGC Group Equity
Plan, registering the offer and sale of up to 600 million shares of BGC Class A common stock. The BGC Group Equity Plan
provides for a maximum of 600 million shares of BGC Class A common stock that may be delivered or cash settled pursuant to
the exercise or settlement of awards granted under the BGC Group Equity Plan. As of December 31, 2023, the limit on the
aggregate number of shares authorized to be delivered under the BGC Group Equity Plan allowed for the grant of future awards
relating to 477.1 million shares of BGC Class A common stock.
CONTINGENT PAYMENTS RELATED TO ACQUISITIONS
Since 2016, the Company has completed acquisitions whose purchase price included an aggregate of approximately
3.3 million shares of the BGC Class A common stock (with an acquisition date fair value of approximately $13.5 million),
0.1 million LPUs (with an acquisition date fair value of approximately $0.2 million), 0.2 million RSUs (with an acquisition date
fair value of approximately $1.2 million) and $43.1 million in cash that may be issued contingent on certain targets being met
through 2023.
As of December 31, 2023, the Company has issued 1.4 million shares of BGC Class A common stock, 0.2 million
RSUs and paid $53.4 million in cash related to such contingent payments.
As of December 31, 2023, there are 0.8 million shares of BGC Class A common stock, including contingent shares for
which all necessary conditions have been satisfied except for the passage of time and which are included in our computation of
basic EPS, as well as 0.9 million shares of BGC Class A common stock which will be issued if related targets are met and
$4.2 million in cash which will be issued if related targets are met, net of forfeitures and other adjustments.
LEGAL PROCEEDINGS
On August 10, 2023, the shareholder derivative suit concerning our 2017 acquisition of Berkeley Point (as described
below) was fully and finally decided in favor of the defendants, with the Delaware Chancery Court issuing a post-trial decision
denying the plaintiffs’ causes of action and finding that the transaction was entirely fair to our shareholders and the Delaware
Supreme Court affirming that result.
On October 5, 2018 Roofers Local 149 Pension Fund filed a putative derivative complaint in the Delaware Chancery
Court, captioned Roofers Local 149 Pension Fund vs. Howard Lutnick, et al. (Case No. 2018-0722), alleging breaches of
fiduciary duty against (i) the members of the Board, (ii) Howard Lutnick, CFGM, and Cantor as controlling stockholders of
107
BGC, and (iii) Howard Lutnick as an officer of BGC. The complaint challenges the transactions by which BGC (i) completed
the Berkeley Point acquisition from CCRE for $875 million and (ii) committed to invest $100 million for a 27% interest in Real
Estate, L.P. Among other things, the complaint alleges that (i) the prices BGC paid in connection with the transactions were
unfair, (ii) the process leading up to the transaction was unfair, and (iii) the members of the special committee of the Board
were not independent. It seeks to recover for the Company unquantified damages, as well as attorneys’ fees.
A month later, on November 5, 2018, the same plaintiffs’ firm filed an identical putative derivative complaint against
the same defendants seeking the same relief on behalf of a second client, Northern California Pipe Trades Trust Funds. The
cases were consolidated into a single action, captioned In re BGC Partners, Inc. Derivative Litigation (Consolidated C.A. No.
2018-0722-AGB), and the complaint filed by Roofers Local 149 Pension Fund on October 5, 2018 was designated as the
operative complaint.
A trial was held before Vice Chancellor Lori Will on October 11, 2021, which concluded on October 15, 2021.
Following the close of the hearing, the parties submitted post-trial briefing and presented oral argument on March 2, 2022. On
April 14, 2022, the Court requested limited additional briefing, which the parties submitted on May 13, 2022.
On August 19, 2022, the Court issued a post-trial memorandum opinion in favor of BGC, its directors, and controlling
shareholders, ruling that the transactions were entirely fair to BGC’s shareholders with respect to both process and price. The
Court found that “Berkeley Point was, by all accounts, a unique asset particularly appealing to BGC” and that the price
negotiated by BGC’s Special Committee and agreed to by Cantor was at the “lower end” of a range of reasonable prices. The
Court further found the Special Committee was “independent, fully empowered, and well-functioning.” Final judgment in the
case was entered for the defendants and against the plaintiffs on September 27, 2022. The same day, the plaintiffs filed a notice
of appeal, seeking reversal of the memorandum opinion and final judgment. Following briefing, oral argument took place
before the Delaware Supreme Court on May 24, 2023.
On August 10, 2023, the Delaware Supreme Court issued an Order affirming the trial court’s decision “on the basis of
and for the reasons stated” in the August 19, 2022 opinion, concluding the litigation.
On March 9, 2023, a purported class action complaint was filed against Cantor, BGC Holdings, and Newmark
Holdings in the U.S. District Court for the District of Delaware (Civil Action No. 1:23-cv-00265). The collective action, which
was filed by seven former limited partners of the defendants on their own behalf and on behalf of other similarly situated
limited partners, alleges a claim for breach of contract against all defendants on the basis that the defendants failed to make
payments due under the relevant partnership agreements. Specifically, the plaintiffs allege that the non-compete and economic
forfeiture provisions upon which the defendants relied to deny payment are unenforceable under Delaware law. The plaintiffs
allege a second claim against Cantor and BGC Holdings for antitrust violations under the Sherman Act on the basis that the
Cantor and BGC Holdings partnership agreements constitute unreasonable restraints of trade. In that regard, the plaintiffs allege
that the non-compete and economic forfeiture provisions of the Cantor and BGC Holdings partnership agreements, as well as
restrictive covenants included in partner separation agreements, cause anticompetitive effects in the labor market, insulate
Cantor and BGC Holdings from competition, and limit innovation. The plaintiffs seek a determination that the case may be
maintained as a class action, an injunction prohibiting the allegedly anticompetitive conduct, and monetary damages of at least
$5.0 million. The Company believes the lawsuit has no merit. However, as with any litigation, the outcome cannot be
determined with certainty.
Other legal proceedings
On February 16, 2024, an alleged Company shareholder, Martin J. Siegel, filed a putative class action lawsuit against
Cantor Fitzgerald, LP and Howard W. Lutnick in the Delaware Court of Chancery, asserting that the Corporate Conversion was
unfair to Class A shareholders of BGC Partners, Inc. because it increased Cantor’s percentage voting control over the
Company. The suit is captioned Martin J. Siegel v. Cantor Fitzgerald, LP, C.A. 2024-0146-LWW. While the lawsuit is in its
early stages and does not name the Company as a party, the Company believes the action lacks merit.
CANTOR PURCHASE OF LIMITED PARTNERSHIP INTERESTS
Cantor had the right to purchase Cantor units from BGC Holdings upon redemption of non-exchangeable FPUs
redeemed by BGC Holdings upon termination or bankruptcy of the Founding/Working Partner. In addition, where current,
terminating, or terminated partners were permitted by the Company to exchange any portion of their FPUs and Cantor
consented to such exchangeability, the Company would offer to Cantor the opportunity for Cantor to purchase the same number
of Cantor units in BGC Holdings at the price that Cantor would have paid for Cantor units had the Company redeemed the
FPUs. If Cantor acquired any Cantor units as a result of the purchase or redemption by BGC Holdings of any FPUs, Cantor
would be entitled to the benefits (including distributions) of such units it acquired from the date of termination or bankruptcy of
the applicable Founding/Working Partner.
108
On May 17, 2022, Cantor purchased from BGC Holdings an aggregate 427,494 Cantor units for aggregate
consideration of $841,010 as a result of the redemption of 427,494 FPUs, and 52,681 Cantor units for aggregate consideration
of $105,867 as a result of the exchange of 52,681 FPUs.
On October 25, 2022, Cantor purchased from BGC Holdings an aggregate of 275,833 Cantor units for an aggregate
consideration of $397,196 as a result of the redemption of 275,833 FPUs, and 77,507 Cantor units for aggregate consideration
of $142,613 as a result of the exchange of 77,507 FPUs.
On April 16, 2023, Cantor purchased from BGC Holdings an aggregate of 533,757 Cantor units for an aggregate
consideration of $1,051,080 as a result of the redemption of 533,757 FPUs, and 85,775 Cantor units for aggregate consideration
of $173,154 as a result of the exchange of 85,775 FPUs.
On June 30, 2023, Cantor purchased from BGC Holdings an aggregate of 5,425,209 Cantor units for an aggregate
consideration of $9,715,772 as a result of the redemption of 5,425,209 FPUs, and 324,223 Cantor units for an aggregate
consideration of $598,712 as a result of the exchange of 324,223 FPUs.
As of December 31, 2023, there were no FPUs in BGC Holdings remaining.
EQUITY METHOD INVESTMENTS
The Company was authorized to enter into loans, investments or other credit support arrangements for Aqua; such
arrangements are proportionally and on the same terms as similar arrangements between Aqua and Cantor. On February 15,
2022 and February 25, 2021, the Company’s Board and Audit Committee increased the authorized amount by an additional
$1.0 million and $1.0 million respectively, to an aggregate of $21.2 million. The Company has been further authorized to
provide counterparty or similar guarantees on behalf of Aqua from time to time, provided that liability for any such guarantees,
as well as similar guarantees provided by Cantor, would be shared proportionally with Cantor (see Note 13—“Related Party
Transactions” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more
information).
UNIT REDEMPTIONS AND EXCHANGES—EXECUTIVE OFFICERS
On January 2, 2024, Mr. Merkel sold 136,891 shares of Class A common stock to the Company in an exempt
transaction made pursuant to Rule 16b-3 under the Exchange Act. The sale price per share of $6.98 was the closing price of a
share of Class A common stock on January 2, 2024. The transaction was approved by the Audit and Compensation Committees
of the Board and was made pursuant to the Company’s stock buyback authorization.
On September 21, 2023, Mr. Windeatt sold 474,808 shares of Class A common stock to the Company in an exempt
transaction made pursuant to Rule 16b-3 under the Exchange Act. The sale price per share of $5.29 was the closing price of a
share of Class A common stock on September 21, 2023. The transaction was approved by the Audit Committee and the
Compensation Committee of the Board and was made pursuant to the Company’s stock buyback authorization.
In connection and in consideration for Mr. Windeatt’s execution of the 2023 Deed of Amendment, on July 10, 2023
the Company approved accelerating the vesting of 720,509 of the Company’s RSUs held by Mr. Windeatt (calculated based
upon the closing price of the Company’s Class A common stock on July 10, 2023 which was $4.45) and the vesting of
$780,333 of the RSU Tax Account held by Mr. Windeatt. Such RSUs and RSU Tax Account amount vested on July 12, 2023,
and the total value of this transaction was approximately $3,986,600.
On June 8, 2023, the Company repurchased 128,279 exchangeable limited partnership interests held by Mr. Windeatt
at a price of $4.79, the closing price of a share of Class A common stock on June 8, 2023. This repurchase was approved by the
Compensation Committee of BGC Partners. These exchangeable limited partnership interests in BGC Holdings were granted to
Mr. Windeatt on April 1, 2021 by the Compensation Committee as non-exchangeable limited partnership interests which
became exchangeable on a one-to-one basis for BGC Class A common stock on April 1, 2023.
In connection with the Corporate Conversion, on June 2, 2023 Mr. Merkel sold 150,000 shares of Class A common
stock to BGC Partners at $4.21 per share, the closing price of a share of Class A common stock on June 2, 2023. The
transaction was approved by the Audit and Compensation Committees of the Board of BGC Partners and was made pursuant to
BGC Partners’ stock buyback authorization.
In connection with the Corporate Conversion, on May 18, 2023, the BGC Partners Compensation Committee approved
the redemption of all of the non-exchangeable BGC Holdings units held by Mr. Merkel at that time. On May 18, 2023, Mr.
Merkel’s 148,146 NPSU-CVs, 33,585 PSU-CVs, and 74,896 PSUs were redeemed for zero and an aggregate of 256,627 shares
of Class A common stock were granted to Mr. Merkel, and 148,146 NPPSU-CVs with a total determination amount of
$681,250 and 33,585 PPSU-CVs with a total determination amount of $162,500 were redeemed for an aggregate cash payment
109
of $843,750. After deduction of shares of BGC Class A common stock to satisfy applicable tax withholding through the
surrender of shares of BGC Class A common stock valued at $4.61 per share, Mr. Merkel received 196,525 net shares of Class
A common stock.
Since Mr. Lutnick had previously repeatedly waived his rights under the Standing Policy, as of May 18, 2023 his
rights had accumulated for 7,879,736 non-exchangeable PSUs, and 103,763 non-exchangeable PPSUs with a determination
amount of $474,195. Due to the May 18, 2023 monetization of all of Mr. Merkel’s then-remaining non-exchangeable BGC
Holdings units, on such date Mr. Lutnick received additional incremental monetization rights for his then-remaining 3,452,991
non-exchangeable PSUs, and 1,348,042 non-exchangeable PPSUs with a determination amount of $6,175,805.
In connection with the Corporate Conversion and as a result of the monetization event for Mr. Merkel, on May 18,
2023 Mr. Lutnick elected to exercise in full his monetization rights under the Standing Policy, which he had previously waived
in prior years. All of the non-exchangeable BGC Holdings units that Mr. Lutnick held at that time were monetized as follows:
11,332,727 PSUs were redeemed for zero and 11,332,727 shares of Class A common stock were granted to Mr. Lutnick, and
1,451,805 PPSUs with an aggregate determination amount of $6,650,000 were redeemed for an aggregate cash payment of
$6,650,000. After deduction of applicable tax withholding through the surrender of shares of BGC Class A common stock
valued at $4.61 per share, Mr. Lutnick received 5,710,534 net shares of Class A common stock.
On May 18, 2023, Mr. Lutnick also exchanged his then-remaining 520,380 exchangeable PSUs for 520,380 shares of
Class A common stock. After deduction of applicable tax withholding through the surrender of shares of BGC Class A common
stock valued at $4.61 per share, Mr. Lutnick received 232,610 net shares of Class A common stock. In addition, on May 18,
2023, Mr. Lutnick’s then-remaining 1,474,930 non-exchangeable HDUs were redeemed for a cash capital account payment of
$9,148,000, $2.1 million of which was paid by BGC with the remainder paid by Newmark. As a result of the various
transactions on May 18, 2023 described above, on May 18, 2023, Mr. Lutnick no longer held any limited partnership units of
BGC Holdings.
On April 18, 2023, the Dr. Bell sold 21,786 shares of Class A common stock to the Company. The sale price per share
of $4.59 was the closing price of a share of Class A common stock on April 18, 2023. The transaction was approved by the
Audit Committee and the Compensation Committee of the Board and was made pursuant to the Company’s stock buyback
authorization.
On March 14, 2022, the Compensation Committee approved the grant of exchange rights to Mr. Windeatt with respect
to 135,514 non-exchangeable BGC Holdings LPU-NEWs and 27,826 non-exchangeable PLPU-NEWs (at the average
determination price of $4.84 per unit). On August 11, 2022, the Company repurchased 135,514 exchangeable BGC Holdings
LPU-NEWs held by Mr. Windeatt at the price of $4.08 per unit, which was the closing price of the BGC Class A common stock
on August 11, 2022, and redeemed 27,826 exchangeable PLPU-NEWs held by Mr. Windeatt for $134,678, less applicable taxes
and withholdings.
On December 21, 2021, the Compensation Committee approved a monetization opportunity for Mr. Lutnick. Effective
December 21, 2021, 1,939,896 of Mr. Lutnick’s non-exchangeable BGC Holding PPSUs were redeemed for a payment of
$10,851,803. Mr. Lutnick also elected to redeem all of his 425,766 exchangeable BGC Holdings PPSUs for a payment of
$1,525,706. In connection with the foregoing, Mr. Lutnick’s 2,011,731 non-exchangeable BGC Holdings PSUs were redeemed
for zero and 2,011,731 shares of BGC Class A common stock were issued to Mr. Lutnick. In addition, 376,651 H Units held by
Mr. Lutnick were redeemed for 376,651 HDUs with a capital account of $2,339,003, and in connection with the redemption of
these 376,651 H Units, 463,969 Preferred H Units were redeemed for $2,661,000 for taxes.
On June 28, 2021, (i) the Company exchanged 520,380 exchangeable LPUs held by Mr. Lutnick at the price of $5.86,
which was the closing price of the BGC Class A common stock on June 28, 2021, for 520,380 shares of BGC Class A common
stock, less applicable taxes and withholdings, resulting in the delivery of 365,229 net shares of BGC Class A common stock to
Mr. Lutnick, and in connection with the exchange of these 520,380 exchangeable LPUs, 425,765 exchangeable PLPUs were
redeemed for a cash payment of $1,525,705 towards taxes; (ii) 88,636 non-exchangeable LPUs were redeemed for zero, and in
connection therewith the Company issued Mr. Lutnick 88,636 shares of BGC Class A common stock, less applicable taxes and
withholdings, resulting in the delivery of 41,464 net shares of BGC Class A common stock to Mr. Lutnick; and (iii) 1,131,774
H Units held by Mr. Lutnick were redeemed for 1,131,774 HDUs with a capital account of $7,017,000, and in connection with
the redemption of these 1,131,774 H Units, 1,018,390 Preferred H Units were redeemed for $7,983,000 for taxes.
110
MARKET SUMMARY
The following table provides certain volume and transaction count information for the quarterly periods indicated:
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
$
$
Notional Volume (in billions)
Total Fully Electronic volume1
Total Hybrid volume
Total Fully Electronic and Hybrid
volume
Transaction Count (in thousands,
except for days)
Total Fully Electronic transactions1
Total Hybrid transactions
Total Fully Electronic and Hybrid
transactions
Trading days
____________________________
1.
Includes Fenics Integrated.
14,157 $
14,051 $
13,736 $
13,571 $
78,272
67,965
73,109
74,498
10,626
58,022
92,429 $
82,016 $
86,845 $
88,069 $
68,648
4,316
1,473
5,789
63
4,385
1,401
5,786
63
4,351
1,409
5,760
63
4,550
1,731
6,281
63
3,913
1,431
5,344
64
Note: Certain information may have been recast with current estimates to reflect changes in reporting methodology. Such revisions have
no impact on the Company’s revenues or earnings.
Fully Electronic volume, including new products, was $55.5 trillion for the year ended December 31, 2023, compared
to $45.9 trillion for the year ended December 31, 2022. Our Hybrid volume for the year ended December 31, 2023 was $293.8
trillion, compared to $246.9 trillion for the year ended December 31, 2022.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The following table summarizes certain of our contractual obligations at December 31, 2023 (in thousands):
$
Debt and collateralized borrowings1
Operating leases2
Finance leases2
Interest on debt and collateralized
borrowings3
Interest on Short-term borrowings
One-time transition tax4
Other5
Total contractual obligations
$
Total
1,190,000 $
189,186
5,077
157,560
71
18,831
12,744
1,573,469 $
Less Than
1 Year
1-3 Years
3-5 Years
More Than
5 Years
540,000 $
31,594
1,712
49,815
71
8,694
12,744
644,630 $
300,000 $
48,028
2,738
68,467
—
10,137
—
429,370 $
350,000 $
32,624
627
39,278
—
—
—
422,529 $
—
76,940
—
—
—
—
—
76,940
_________________________________
1
Debt and collateralized borrowings reflects $255.5 million of BGC Group 3.750% Senior Notes (the $255.5 million represents the
principal amount of the debt; the carrying value of the BGC Group 3.750% Senior Notes as of December 31, 2023 was
approximately $254.8 million), $288.2 million of BGC Group 4.375% Senior Notes (the $288.2 million represents the principal
amount of the debt; the carrying value of the BGC Group 4.375% Senior Notes as of December 31, 2023 was approximately
$286.7 million) and $347.2 million of BGC Group 8.000% Senior Notes (the $347.2 million represents the principal amount of the
debt; the carrying value of the BGC Group 8.000% Senior Notes as of December 31, 2023 was approximately $343.9 million). Debt
and collateralized borrowings reflects $44.5 million of BGC Partners 3.750% Senior Notes (the $44.5 million represents the
principal amount of the debt; the carrying value of the BGC Partners 3.750% Senior Notes as of December 31, 2023 was
approximately $44.4 million), $11.8 million of BGC Partners 4.375% Senior Notes (the $11.8 million represents the principal
amount of the debt; the carrying value of the BGC Partners 4.375% Senior Notes as of December 31, 2023 was approximately
$11.8 million) and $2.8 million of BGC Partners 8.000% Senior Notes (the $2.8 million represents the principal amount of the debt;
the carrying value of the BGC Partners 8.000% Senior Notes as of December 31, 2023 was approximately $2.7 million). See Note
17—“Notes Payable, Other and Short-Term Borrowings” in Part II, Item 8 of this Annual Report on Form 10-K for more
information regarding these obligations, including timing of payments and compliance with debt covenants.
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2
3
4
5
Operating leases and finance leases are related to rental payments under various non-cancelable leases, principally for office space,
data centers and office equipment are presented net of sublease payments to be received. As of December 31, 2023, there were no
sublease payments to be received over the life of the agreements.
Interest on debt and collateralized borrowings reflects a total of $7.1 million of interest expense associated with the BGC Group
3.750% Senior Notes, $1.2 million of interest expense associated with the BGC Partners 3.750% Senior Notes, $24.5 million of
interest expense associated with the BGC Group 4.375% Senior Notes, $1.0 million of interest expense associated with the BGC
Partners 4.375% Senior Notes, $122.3 million of interest expense associated with the BGC Group 8.000% Senior Notes, and $1.0
million of interest expense associated with the BGC Partners 8.000% Senior Notes. Interest on debt and collateralized borrowings
also includes interest on the undrawn portion of the committed unsecured senior Revolving Credit Agreement which was calculated
through the maturity date of the facility, which is March 10, 2025. As of December 31, 2023, the undrawn portion of the committed
unsecured Revolving Credit Agreement was $135.0 million.
The Company completed the calculation of the one-time transition tax on the deemed repatriation of foreign subsidiaries’ earnings
pursuant to the Tax Act and previously recorded a net cumulative tax expense of $28.6 million, net of foreign tax credits, with an
election to pay the taxes over eight years with 40% to be paid in equal installments over the first five years and the remaining 60%
to be paid in installments of 15%, 20% and 25% in years six, seven and eight, respectively. The cumulative remaining balance as of
December 31, 2023 is $18.8 million.
Other contractual obligations reflect commitments of $12.7 million to make charitable contributions, which are recorded as part of
“Accounts payable, accrued and other liabilities” in the Company’s Consolidated Statements of Financial Condition. The amount
payable each year reflects an estimate of future Charity Day obligations.
OFF-BALANCE SHEET ARRANGEMENTS
In the ordinary course of business, we enter into arrangements with unconsolidated entities, including variable interest
entities. See Note 14—“Investments” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form
10-K for additional information related to our investments in unconsolidated entities.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our Consolidated Financial Statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of the assets and liabilities, revenues and expenses, and the
disclosure of contingent assets and liabilities in our Consolidated Financial Statements. These accounting estimates require the
use of assumptions about matters, some of which are highly uncertain at the time of estimation. Management bases its estimates
on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of
which form the basis for making judgments, and we evaluate these estimates on an ongoing basis. To the extent actual
experience differs from the assumptions used, our Consolidated Statements of Financial Condition, Consolidated Statements of
Operations and Consolidated Statements of Cash Flows could be materially affected. We believe that the following accounting
policies involve a higher degree of judgment and complexity.
Revenue Recognition
We derive our revenues primarily through commissions from brokerage services, the spread between the buy and sell
prices on matched principal transactions, fees from related parties, data, network and post-trade services, and other revenues.
See Note 3—“Summary of Significant Accounting Policies” to our consolidated financial statements in Part II, Item 8 of this
Annual Report on Form 10-K for further information regarding revenue recognition.
Equity-Based and Other Compensation
Discretionary Bonus: A portion of our compensation and employee benefits expense is comprised of discretionary
bonuses, which may be paid in cash, equity, partnership awards or a combination thereof. We accrue expense in a period based
on revenues in that period and on the expected combination of cash, equity and, prior to the Corporate Conversion, partnership
units. Given the assumptions used in estimating discretionary bonuses, actual results may differ.
Restricted Stock Units: We account for equity-based compensation awards using the guidance in ASC 718,
Compensation—Stock Compensation. RSUs provided to certain employees are accounted for as equity awards, and in
accordance with U.S. GAAP, we are required to record an expense for the portion of the RSUs that is ultimately expected to
vest. Further, forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates. Because assumptions are used in estimating employee turnover and associated forfeiture rates,
actual results may differ from our estimates under different assumptions or conditions.
The fair value of RSU awards to employees is based on the market value of the BGC Class A common stock on the
grant date. As part of employee compensation, we have granted both participating RSUs, which receive dividends, or non-
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participating RSUs. For non-participating RSUs, which do not receive dividend equivalents, we adjust the fair value of the
RSUs for the present value of expected forgone dividends, which requires us to include an estimate of expected dividends as a
valuation input. This grant-date fair value is amortized to expense ratably over the awards’ vesting periods.
For participating RSUs where dividends are paid during the vesting period or accumulated and paid to the employee
upon vesting, the grant-date fair value of the award should not be reduced. As such, we do not adjust the fair value of the RSUs
for the present value of expected forgone dividends. This grant-date fair value is amortized to expense ratably over the awards’
vesting periods.
For RSUs with graded vesting features, we have made an accounting policy election to recognize compensation cost
on a straight-line basis. The amortization is reflected as part of “Equity-based compensation and allocations of net income to
limited partnership units and FPUs” in our Consolidated Statements of Operations.
Restricted Stock: Restricted stock provided to certain employees is accounted for as an equity award, and as per U.S.
GAAP guidance, we are required to record an expense for the portion of the restricted stock that is ultimately expected to vest.
We have granted restricted stock, prior to the Corporate Conversion, that is not subject to continued employment or service;
however, transferability is subject to compliance with our and our affiliates’ customary noncompete obligations. Such shares of
restricted stock are generally salable by partners in five to ten years. Because the restricted stock is not subject to continued
employment or service, the grant-date fair value of the restricted stock is expensed on the date of grant. The non-cash equity
based compensation expense is reflected as part of “Equity-based compensation and allocations of net income to limited
partnership units and FPUs” in our Consolidated Statements of Operations.
As a result of the Corporate Conversion, the Company has also granted shares of unvested restricted stock, which are
subject to continued employment or service with the Company or any affiliate or subsidiary of the company. The fair value of
these restricted stock awards held by BGC employees is based on the market value of BGC Class A common stock on the grant
date, adjusted as appropriate based upon the award’s ineligibility to receive dividends, as not all of these awards participate in
receiving dividends, similar to the RSUs above. The grant-date fair value of the restricted stock is amortized to expense ratably
over the awards’ expected vesting periods. The non-cash equity-based amortization expense is reflected as a component of
“Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our Consolidated
Statements of Operations.
Limited Partnership Units: Certain BGC employees held LPUs in BGC Holdings and hold LPUs in Newmark
Holdings. Generally, such units received quarterly allocations of net income, which were cash distributed on a quarterly basis
and generally contingent upon services being provided by the unit holders. In addition, Preferred Units were granted in
connection with the grant of certain LPUs, such as PSUs, which may be granted exchangeability or redeemed in connection
with the grant of shares of common stock to cover the withholding taxes owed by the unit holder upon such exchange or grant.
This was an acceptable alternative to the common practice among public companies of issuing the gross amount of shares to
employees, subject to cashless withholding of shares to pay applicable withholding taxes. Preferred Units were not entitled to
participate in partnership distributions other than with respect to the Preferred Distribution. There were none of these LPUs or
Preferred Units in BGC Holdings remaining after the Corporate Conversion was completed, while these LPUs and Preferred
Units in Newmark Holdings held by BGC employees were not impacted by the Corporate Conversion. The quarterly allocations
of net income on BGC Holdings LPUs held by BGC employees were reflected as a component of compensation expense under
“Equity-based compensation and allocations of net income to limited partnership units and FPUs” in the Company’s
Consolidated Statements of Operations prior to the Corporate Conversion, and quarterly allocations of net income on Newmark
Holdings LPUs held by BGC employees, which were not impacted by the Corporate Conversion, are reflected as a component
of compensation expense under “Equity-based compensation and allocations of net income to limited partnership units and
FPUs” in our Consolidated Statements of Operations.
Certain of these LPUs entitle the holders to receive post-termination payments equal to the notional amount, generally
in four equal yearly installments after the holder’s termination. There were none of these LPUs in BGC Holdings remaining
after the Corporate Conversion was completed, while these LPUs in Newmark Holdings held by BGC employees were not
impacted by the Corporate Conversion. These LPUs are accounted for as post-termination liability awards under U.S. GAAP.
Accordingly, we recognize a liability for these units on our Consolidated Statements of Financial Condition as part of “Accrued
compensation” for the amortized portion of the post-termination payment amount, based on the current fair value of the
expected future cash payout. We amortize the post-termination payment amount, less an expected forfeiture rate, over the
vesting period, and record an expense for such awards based on the change in value at each reporting period in our
Consolidated Statements of Operations as part of “Equity-based compensation and allocations of net income to limited
partnership units and FPUs.”
Certain LPUs were granted exchangeability into shares of BGC or Newmark Class A common stock or were redeemed
in connection with the grant of BGC or Newmark Class A common stock issued; BGC Class A common stock was issued on a
one-for-one basis, and Newmark Class A common stock is issued based on the number of LPUs exchanged or redeemed
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multiplied by the then-current Exchange Ratio. At the time exchangeability was granted or shares of BGC or Newmark Class A
common stock were issued, we recognized an expense based on the fair value of the award on that grant date, which was
included in “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our
Consolidated Statements of Operations. There were no LPUs in BGC Holdings remaining after the Corporate Conversion was
completed, while LPUs in Newmark Holdings held by BGC employees were not impacted by the Corporate Conversion.
During the years ended December 31, 2023, 2022 and 2021, we incurred equity-based compensation expense of $171.6 million,
$147.5 million and $128.1 million, respectively, related to LPUs and issuance of common stock.
Prior to the Corporate Conversion, certain LPUs had a stated vesting schedule and did not receive quarterly allocations
of net income. Compensation expense related to these LPUs was recognized over the stated service period, and these units
generally vest between two and five years. During the years ended December 31, 2023, 2022 and 2021, we incurred equity-
based compensation expense related to these LPUs of $40.9 million, $73.7 million, and $78.6 million, respectively. This
expense is included in “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our
Consolidated Statements of Operations.
Employee Loans: We have entered into various agreements with certain employees, and prior to the Corporate
Conversion, partners whereby these individuals receive loans which may be either wholly or in part repaid from the
distributions that the individuals receive on some or all of their LPUs in BGC Holdings and Newmark Holdings, prior to the
Corporate Conversion, and by distributions that the individuals receive on some or all of their LPUs in Newmark Holdings and
any dividends paid on participating RSUs and restricted stock awards, subsequent to the Corporate Conversion. Certain of these
loans also may be either wholly or in part repaid from the proceeds of the sale of the BGC employees’ shares of BGC Class A
common stock. In addition, certain loans may be forgiven over a period of time. The forgivable portion of these loans is
recognized as compensation expense over the life of the loan. From time to time, we may also enter into agreements with
employees to grant bonus and salary advances or other types of loans. These advances and loans are repayable in timeframes
outlined in the underlying agreements. We review the loan balances each reporting period for collectability. If we determine
that the collectability of a portion of the loan balances is not expected, we recognize a reserve against the loan balances. Actual
collectability of loan balances may differ from our estimates.
As of December 31, 2023 and 2022, the aggregate balance of employee loans, net of reserve, was $367.8 million and
$319.6 million, respectively, and is included as “Loans, forgivable loans and other receivables from employees and partners,
net” in our Consolidated Statements of Financial Condition. Compensation expense (benefit) for the above-mentioned
employee loans for the years ended December 31, 2023, 2022 and 2021 was $51.3 million, $49.5 million and $217.7 million,
respectively. The compensation expense related to these loans was included as part of “Compensation and employee benefits”
in our Consolidated Statements of Operations.
Goodwill
Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in a business
combination. As prescribed in U.S. GAAP guidance, Intangibles – Goodwill and Other, goodwill is not amortized, but instead
is periodically tested for impairment. We review goodwill for impairment on an annual basis during the fourth quarter of each
fiscal year or whenever an event occurs or circumstances change that could reduce the fair value of a reporting unit below its
carrying amount.
When reviewing goodwill for impairment, we first assess qualitative factors to determine whether it is more likely than
not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the results of the qualitative
assessment indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we
choose to bypass the qualitative assessment, we perform a quantitative goodwill impairment analysis as follows.
The quantitative goodwill impairment test, used to identify both the existence of impairment and the amount of
impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying
amount of a reporting unit exceeds its fair value, an impairment loss should be recognized in an amount equal to that excess,
limited to the total amount of goodwill allocated to that reporting unit. If the estimated fair value of a reporting unit exceeds its
carrying value, goodwill is deemed not to be impaired. To estimate the fair value of the reporting unit, we use a discounted cash
flow model and data regarding market comparables. The valuation process requires significant judgment and involves the use of
significant estimates and assumptions. These assumptions include cash flow projections, estimated cost of capital and the
selection of peer companies and relevant multiples. Because assumptions and estimates are used in projecting future cash flows,
choosing peer companies and selecting relevant multiples, actual results may differ from our estimates under different
assumptions or conditions; and changes to these estimates and assumptions, as a result of changing economic and competitive
conditions, could materially affect the determination of fair value and/or impairment.
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CECL
We present financial assets that are measured at amortized cost net of an allowance for credit losses, which represents
the amount expected to be collected over their estimated life. Expected credit losses for newly recognized financial assets
carried at amortized cost, as well as changes to expected lifetime credit losses during the period, are recognized in earnings. In
accordance with the U.S. GAAP guidance, Financial Instruments—Credit Losses, the CECL methodology’s impact on
expected credit losses, among other things, reflects the Company’s view of the current state of the economy, forecasted
macroeconomic conditions and BGC’s portfolios. The amount of the allowance is based on significant estimates and the
ultimate losses may vary from such estimates as more information becomes available or conditions change. Additional
disclosures regarding our accounting for CECL are provided in Note 25—“Current Expected Credit Losses” to our consolidated
financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Income Taxes
We account for income taxes using the asset and liability method as prescribed in U.S. GAAP guidance, Income Taxes.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to basis differences between the
Consolidated Financial Statement carrying amounts of existing assets and liabilities and their respective tax basis. Certain of
our entities are taxed as U.S. partnerships and are subject to UBT in the City of New York. Therefore, the tax liability or benefit
related to the partnership income or loss except for UBT rests with the partners (see Note 2—“Limited Partnership Interests in
BGC Holdings and Newmark Holdings” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on
Form 10-K for a discussion of partnership interests), rather than the partnership entity. As such, the partners’ tax liability or
benefit is not reflected in our Consolidated Financial Statements. The tax-related assets, liabilities, provisions or benefits
included in our consolidated financial statements also reflect the results of the entities that are taxed as corporations, either in
the U.S. or in foreign jurisdictions.
We provide for uncertain tax positions based upon management’s assessment of whether a tax benefit is more likely
than not to be sustained upon examination by tax authorities. Management is required to determine whether a tax position is
more likely than not to be sustained upon examination by tax authorities, including resolution of any related appeals or
litigation processes, based on the technical merits of the position. Because significant assumptions are used in determining
whether a tax benefit is more likely than not to be sustained upon examination by tax authorities, actual results may differ from
our estimates under different assumptions or conditions. We recognize interest and penalties related to income tax matters in
“Provision for income taxes” in our Consolidated Statements of Operations.
A valuation allowance is recorded against deferred tax assets if it is deemed more likely than not that those assets will
not be realized. In assessing the need for a valuation allowance, we consider all available evidence, including past operating
results, the existence of cumulative losses in the most recent fiscal years, estimates of future taxable income and the feasibility
of tax planning strategies.
The measurement of current and deferred income tax assets and liabilities is based on provisions of enacted tax laws
and involves uncertainties in the application of tax regulations in the U.S. and other tax jurisdictions. Because our interpretation
of complex tax law may impact the measurement of current and deferred income taxes, actual results may differ from these
estimates under different assumptions regarding the application of tax law.
The Tax Act includes the global intangible low-taxed income, GILTI, provision. This provision requires inclusion in
the Company’s U.S. income tax return the earnings of certain foreign subsidiaries. The Company has elected to treat taxes
associated with the GILTI provision using the Period Cost Method and thus has not recorded deferred taxes for basis
differences under this regime.
Additional disclosures regarding our accounting for income taxes are provided in Note 20—“Income Taxes” to our
consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
See Note 3—“Summary of Significant Accounting Policies” to our consolidated financial statements in Part II, Item 8
of this Annual Report on Form 10-K for additional information regarding these critical accounting policies and other significant
accounting policies.
Other than changes due to the Corporate Conversion, there have been no other significant changes to the Company’s
critical accounting policies and estimates during fiscal year 2023.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1—“Organization and Basis of Presentation” to our Consolidated Financial Statements in Part II, Item 8 of
this Annual Report on Form 10-K for information regarding recent accounting pronouncements.
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ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Credit Risk
Credit risk arises from potential non-performance by counterparties and customers. BGC has established policies and
procedures to manage its exposure to credit risk. BGC maintains a thorough credit approval process to limit exposure to
counterparty risk and employs stringent monitoring to control the counterparty risk from its matched principal and agency
businesses. BGC’s account opening and counterparty approval process includes verification of key customer identification,
anti-money laundering verification checks and a credit review of financial and operating data. The credit review process
includes establishing an internal credit rating and any other information deemed necessary to make an informed credit decision,
which may include correspondence, due diligence calls and a visit to the entity’s premises, as necessary.
Credit approval is granted subject to certain trading limits and may be subject to additional conditions, such as the
receipt of collateral or other credit support. Ongoing credit monitoring procedures include reviewing periodic financial
statements and publicly available information on the client and collecting data from credit rating agencies, where available, to
assess the ongoing financial condition of the client.
In addition, BGC incurs limited credit risk related to certain brokerage activities. The counterparty risk relates to the
collectability of the outstanding brokerage fee receivables. The review process includes monitoring both the clients and the
related brokerage receivables. The review includes an evaluation of the ongoing collection process and an aging analysis of the
brokerage receivables.
Principal Transaction Risk
Through its subsidiaries, BGC executes matched principal transactions in which it acts as a “middleman” by serving as
counterparty to both a buyer and a seller in matching back-to-back trades. These transactions are then settled through a
recognized settlement system or third-party clearing organization. Settlement typically occurs within one to three business days
after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was
traded. BGC generally avoids settlement of principal transactions on a free-of-payment basis or by physical delivery of the
underlying instrument. However, free-of-payment transactions may occur on a very limited basis.
The number of matched principal trades BGC executes has continued to grow as compared to prior years. Receivables
from broker-dealers, clearing organizations, customers and related broker-dealers and Payables to broker-dealers, clearing
organizations, customers and related broker-dealers on the Company’s Consolidated Statements of Financial Condition
primarily represent the simultaneous purchase and sale of the securities associated with those matched principal transactions
that have not settled as of their stated settlement dates. BGC’s experience has been that substantially all of these transactions
ultimately settle at the contracted amounts, however, the ability to settle has the potential to be impacted by unforeseen
circumstances.
Market Risk
Market risk refers to the risk that a change in the level of one or more market prices, rates, indices or other factors will
result in losses for a specified position. BGC may allow certain of its desks to enter into unmatched principal transactions in the
ordinary course of business and hold long and short inventory positions. These transactions are primarily for the purpose of
facilitating clients’ execution needs, adding liquidity to a market or attracting additional order flow. As a result, BGC may have
market risk exposure on these transactions. BGC’s exposure varies based on the size of its overall positions, the risk
characteristics of the instruments held and the amount of time the positions are held before they are disposed of. BGC has
limited ability to track its exposure to market risk and unmatched positions on an intra-day basis; however, it attempts to
mitigate its market risk on these positions by strict risk limits, extremely limited holding periods and hedging its exposure.
These positions are intended to be held short term to facilitate customer transactions. However, due to a number of factors,
including the nature of the position and access to the market on which it trades, BGC may not be able to unwind the position
and it may be forced to hold the position for a longer period than anticipated. All positions held longer than intra-day are
marked to market.
We also had Financial instruments owned, at fair value, of $45.8 million as of December 31, 2023. These include
investments in equity securities, which are publicly-traded. Investments in equity securities carry a degree of risk, as there can
be no assurance that the equity securities will not lose value and, in general, securities markets can be volatile and
unpredictable. As a result of these different market risks, our holdings of equity securities could be materially and adversely
affected. We may seek to minimize the effect of price changes on a portion of our investments in equity securities through the
use of derivative contracts. However, there can be no assurance that our hedging activities will be adequate to protect us against
price risks associated with our investments in equity securities. See Note 11—“Derivatives” and Note 12—“Fair Value of
116
Financial Assets and Liabilities” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form
10-K for further information regarding these investments and related hedging activities.
Our risk management procedures and strict limits are designed to monitor and limit the risk of unintended loss and
have been effective in the past. However, there is no assurance that these procedures and limits will be effective at limiting
unanticipated losses in the future. Adverse movements in the securities positions or a downturn or disruption in the markets for
these positions could result in a substantial loss. In addition, principal gains and losses resulting from these positions could on
occasion have a disproportionate effect, positive or negative, on BGC’s consolidated financial condition and results of
operations for any particular reporting period.
Operational Risk
Our businesses are highly dependent on our ability to process a large number of transactions across numerous and
diverse markets in many currencies on a daily basis. If any of our data processing systems do not operate properly or are
disabled or if there are other shortcomings or failures in our internal processes, people or systems, we could suffer impairment
to our liquidity, financial loss, a disruption of our businesses, liability to clients, regulatory intervention or reputational damage.
These systems may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our
control, including cybersecurity incidents, a disruption of electrical or communications services or our inability to occupy one
or more of our buildings. The inability of our systems to accommodate an increasing volume of transactions could also
constrain our ability to expand our businesses.
In addition, despite our contingency plans, our ability to conduct business may be adversely impacted by a disruption
in the infrastructure that supports our businesses and the communities in which they are located. This may include a disruption
involving electrical, communications, transportation or other services used by us or third parties with whom we conduct
business.
Further, our operations rely on the secure processing, storage and transmission of confidential and other information
on our computer systems and networks. Although we take protective measures such as software programs, firewalls and similar
technology to maintain the confidentiality, integrity and availability of our and our clients’ information, the nature of the threats
continue to evolve. As a result, our computer systems, software and networks may be vulnerable to unauthorized access, loss or
destruction of data (including confidential client information), account takeovers, unavailability or disruption of service,
computer viruses, acts of vandalism, or other malicious code, cyber-attacks and other events that could have an adverse security
impact. There have also been an increasing number of malicious cyber incidents in recent years in various industries, including
ours. Any such cyber incidents involving our computer systems and networks, or those of third parties important to our
businesses, could present risks to our operations.
Foreign Currency Risk
BGC is exposed to risks associated with changes in FX rates. Changes in FX rates create volatility in the U.S. dollar
equivalent of the Company’s revenues and expenses. In addition, changes in the remeasurement of BGC’s foreign currency
denominated financial assets and liabilities are recorded as part of its results of operations and fluctuate with changes in foreign
currency rates. BGC monitors the net exposure in foreign currencies on a daily basis and hedges its exposure as deemed
appropriate with highly rated major financial institutions.
The majority of the Company’s foreign currency exposure is related to the U.S. dollar versus the pound sterling and
the euro. For the financial assets and liabilities denominated in the pound sterling and euro, including foreign currency hedge
positions related to these currencies, we evaluated the effects of a 10% shift in exchange rates between those currencies and the
U.S. dollar, holding all other assumptions constant. The analysis used the stress-tested scenario as the U.S. dollar strengthening
against both the euro and against the pound sterling. If as of December 31, 2023, the U.S. dollar had strengthened against both
the euro and the pound sterling by 10%, the currency movements would have had an aggregate negative impact on our net
income of approximately $10.9 million.
Interest Rate Risk
BGC had $1,183.5 million in fixed-rate debt outstanding as of December 31, 2023. These debt obligations are not
currently subject to fluctuations in interest rates, although in the event of refinancing or issuance of new debt, such debt could
be subject to changes in interest rates. In addition, as of December 31, 2023, BGC had $240.0 million borrowings outstanding
under its Revolving Credit Agreement. The Revolving Credit Agreement interest rate on borrowings is based on SOFR or a
defined base rate plus additional margin. To assess exposure to interest rate risk, we evaluated the effect of a 1% shift in interest
rates, holding all other assumptions constant. The analysis indicated that our consolidated net earnings in fiscal year 2023
would have declined by $2.4 million if interest rates increased by an additional 1%.
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BGC Group, Inc. and Subsidiaries
Consolidated Financial Statements for the years ended December 31, 2023, 2022 and 2021
Reports of Independent Registered Public Accounting Firm (PCAOB ID 42)
Consolidated Financial Statements—
Consolidated Statements of Financial Condition
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
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123
124
125
127
131
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of BGC Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of BGC Group, Inc. (the Company) as of
December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), cash flows and
changes in equity for each of the three years in the period ended December 31, 2023, and the related notes and the financial
statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In
our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
119
Accounting for Income Taxes
Description of the Matter As discussed in Notes 3 and 20 to the consolidated financial statements, the Company is subject to
income taxes in the U.S. and numerous foreign jurisdictions, which affect the Company’s
provision for income taxes. The provision for income taxes is an estimate based on management’s
understanding of current enacted tax laws and tax rates of each tax jurisdiction. For the year-ended
December 31, 2023, the Company recognized a consolidated provision for income taxes of $18.9
million.
Auditing management’s calculation of the provision for income taxes was complex because the
Company’s global structure required an assessment of the Company’s application of tax laws in
multiple jurisdictions including the income tax impact of the legal entity ownership structure. The
assessment of tax positions involves the evaluation and application of complex statutes and
regulations which are subject to legal and factual interpretation. Our audit procedures required
significant audit effort including the use of our tax professionals to assist in evaluating the
provision for income taxes.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
Company’s controls related to the Company’s global tax structure. For example, we tested
management’s controls over the completeness and accuracy of the data utilized, the effective tax
rate reconciliation and the evaluation of permanent and temporary differences within various
jurisdictions.
To test the Company’s provision for income taxes and to address the risks associated with the
complexity of the Company’s global tax structure, we performed audit procedures that included,
among others, evaluating the income tax impact of the Company’s structure and operations and
considered the impact of any changes in the current year. We used our tax professionals with
specialized skill and knowledge to assist in evaluating the provision for income taxes including the
application of relevant local and foreign tax laws to management’s calculation methodologies and
tax positions. Additionally, we tested the related effective tax rate reconciliation, evaluated the tax
impact of permanent and temporary differences, and tested the application of authoritative
guidance.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2008.
New York, New York
February 29, 2024
120
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of BGC Group, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited BGC Group, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, BGC Group, Inc. (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of Trident Brokerage Services, LLC, ContiCap SA and Open Energy Group Inc., which are included in the 2023
consolidated financial statements of the Company and constituted 0.6%, 1.6%, and 0.0% of total assets, 1.4%, 4.6%, and 0.1%
of net assets, respectively, as of December 31, 2023, and 1.6%, 0.2%, and 0.0% of revenues, respectively, for the year then
ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal
control over financial reporting of Trident Brokerage Services, LLC and ContiCap SA and Open Energy Group Inc.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated statements of financial condition of the Company as of December 31, 2023 and 2022, the related
consolidated statements of operations, comprehensive income (loss), cash flows and changes in equity for each of the three
years in the period ended December 31, 2023, and the related notes and the financial statement schedule listed in the Index at
Item 15(a)(2) and our report dated February 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New York, New York
February 29, 2024
121
BGC GROUP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except per share data and numbers of shares)
Assets
Cash and cash equivalents
Cash segregated under regulatory requirements
Financial instruments owned, at fair value
Receivables from broker-dealers, clearing organizations, customers and related broker-dealers
Accrued commissions and other receivables, net
Loans, forgivable loans and other receivables from employees and partners, net
Fixed assets, net
Investments
Goodwill
Other intangible assets, net
Receivables from related parties
Other assets
Total assets
Liabilities, Redeemable Partnership Interest, and Equity
Short-term borrowings
Accrued compensation
Payables to broker-dealers, clearing organizations, customers and related broker-dealers
Payables to related parties
Accounts payable, accrued and other liabilities
Notes payable and other borrowings
Total liabilities
Commitments, contingencies and guarantees (Note 19)
Redeemable partnership interest
Equity
December 31,
2023
December 31,
2022
$
$
$
655,641 $
17,255
45,792
350,036
305,793
367,805
178,300
38,314
506,344
211,285
2,717
496,655
3,175,937 $
— $
206,364
202,266
17,456
668,189
1,183,506
2,277,781
484,989
17,021
39,319
559,680
288,471
319,612
183,478
38,575
486,585
192,783
1,444
463,014
3,074,971
1,917
176,781
404,675
10,550
683,104
1,049,217
2,326,244
—
15,519
Stockholders’ equity:
Class A common stock, par value $0.01 per share; 1,500,000,000 and 750,000,000 shares
authorized at December 31, 2023 and December 31, 2022, respectively; 403,574,835 and
471,933,933 shares issued at December 31, 2023 and December 31, 2022, respectively; and
390,094,988 and 325,857,710 shares outstanding at December 31, 2023 and December 31, 2022,
respectively
Class B common stock, par value $0.01 per share; 300,000,000 and 150,000,000 shares
authorized at December 31, 2023 and December 31, 2022, respectively; 109,452,953 shares and
45,884,380 issued and outstanding at December 31, 2023 and December 31, 2022, respectively,
convertible into Class A common stock
Additional paid-in capital
Treasury stock, at cost: 13,479,847 and 146,076,223 shares of Class A common stock at
December 31, 2023 and December 31, 2022, respectively
Retained deficit
Accumulated other comprehensive income (loss)
Total stockholders’ equity
Noncontrolling interest in subsidiaries
Total equity
Total liabilities, redeemable partnership interest, and equity
$
4,036
4,719
1,095
2,105,130
459
2,559,418
(67,414)
(1,119,182)
(38,582)
885,083
13,073
898,156
3,175,937 $
(711,454)
(1,138,066)
(45,431)
669,645
63,563
733,208
3,074,971
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements.
122
BGC GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Revenues:
Commissions
Principal transactions
Fees from related parties
Data, network and post-trade
Interest and dividend income
Other revenues
Total revenues
Expenses:
Compensation and employee benefits
Equity-based compensation and allocations of net income to limited partnership
units and FPUs
Total compensation and employee benefits
Occupancy and equipment
Fees to related parties
Professional and consulting fees
Communications
Selling and promotion
Commissions and floor brokerage
Interest expense
Other expenses
Total expenses
Other income (losses), net:
Gains (losses) on divestitures and sale of investments
Gains (losses) on equity method investments
Other income (loss)
Total other income (losses), net
Income (loss) from operations before income taxes
Provision (benefit) for income taxes
Consolidated net income (loss)
Less: Net income (loss) attributable to noncontrolling interest in subsidiaries
Net income (loss) available to common stockholders
Per share data (Note 6):
Basic earnings (loss) per share
Net income (loss) attributable to common stockholders
Basic earnings (loss) per share
Basic weighted-average shares of common stock outstanding
Fully diluted earnings (loss) per share
Net income (loss) for fully diluted shares
Fully diluted earnings (loss) per share
Fully diluted weighted-average shares of common stock outstanding
Year Ended December 31,
2022
2021
2023
$
1,464,524 $
368,100
15,968
111,470
45,422
19,917
2,025,401
1,281,294 $
365,507
14,734
96,389
21,007
16,371
1,795,302
1,541,900
327,761
14,856
89,963
21,977
18,907
2,015,364
992,603
853,165
1,271,340
355,378
1,347,981
162,743
32,649
60,398
114,143
61,884
61,523
77,231
74,278
1,992,830
—
9,152
15,986
25,138
57,709
18,934
251,071
1,104,236
157,491
25,662
68,775
108,096
49,215
58,277
57,932
87,431
1,717,115
(1,029)
10,920
9,373
19,264
97,451
38,584
$
$
$
$
$
$
38,775 $
2,510
36,265 $
58,867 $
10,155
48,712 $
34,070 $
0.08 $
48,712 $
0.13 $
426,436
371,561
33,943 $
0.07 $
63,479 $
0.13 $
489,989
499,414
256,164
1,527,504
188,322
24,030
67,884
117,502
38,048
64,708
69,329
80,888
2,178,215
312,941
6,706
19,705
339,352
176,501
23,013
153,488
29,481
124,007
124,007
0.33
379,215
173,995
0.32
540,020
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements.
123
BGC GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
Consolidated net income (loss)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
Benefit plans
Total other comprehensive income (loss), net of tax
Comprehensive income (loss)
Less: Comprehensive income (loss) attributable to noncontrolling interest
in subsidiaries, net of tax
Year Ended December 31,
2023
2022
2021
$
38,775 $
58,867 $
153,488
7,607
—
7,607
46,382
(5,668)
(13,747)
—
(5,668)
53,199
301
(13,446)
140,042
3,268
9,370
27,653
Comprehensive income (loss) attributable to common stockholders
$
43,114 $
43,829 $
112,389
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements.
124
BGC GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used
in) operating activities:
Gain on Insurance Business Disposition
Fixed asset depreciation and intangible asset amortization
Employee loan amortization and reserves on employee loans
Equity-based compensation and allocations of net income to limited partnership units
and FPUs
Deferred compensation expense
Losses (gains) on equity method investments
Unrealized/realized losses (gains) on financial instruments owned, at fair value and
other investments
Amortization of discount (premium) on notes payable
Impairment of fixed assets, intangible assets and investments
Deferred tax provision (benefit)
Change in estimated acquisition earn-out payables
Forfeitures of Class A common stock
Loss (gain) on divestiture
Other
Consolidated net income (loss), adjusted for non-cash and non-operating
items
Decrease (increase) in operating assets:
Financial instruments owned, at fair value
Receivables from broker-dealers, clearing organizations, customers and related
broker-dealers
Accrued commissions receivable, net
Loans, forgivable loans and other receivables from employees and partners, net
Receivables from related parties
Other assets
Increase (decrease) in operating liabilities:
Accrued compensation
Payables to broker-dealers, clearing organizations, customers and related broker-
dealers
Payables to related parties
Accounts payable, accrued and other liabilities
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Gross proceeds from Insurance Business Disposition
Cash and restricted cash transferred as part of Insurance Business Disposition
Proceeds from disposal of subsidiary
Purchases of fixed assets
Capitalization of software development costs
Purchase of equity method investments
Proceeds from equity method investments
Payments for acquisitions, net of cash acquired
Purchase of other assets
Year Ended December 31,
2023
2022
2021
$
38,775 $
58,867 $
153,488
—
80,417
51,313
355,378
54
(9,152)
(4,406)
3,662
3,144
(60,556)
1,442
(1,190)
—
—
—
75,054
49,533
251,071
(542)
(10,920)
1,208
2,801
6,139
(14,628)
1,034
(263)
1,029
(1,914)
(312,941)
81,874
217,655
256,164
347
(6,706)
17
3,592
11,246
(11,947)
4,285
(553)
—
(4,915)
458,881
418,469
391,606
(5,475)
2,383
17,626
212,490
(5,750)
(77,464)
(1,380)
19,803
222,567
6,287
(61,205)
3,621
(8,469)
(482,669)
(101,314)
(38,571)
8,377
1,543
18,450
(25,178)
17,989
(203,902)
24,145
(34,595)
(252,490)
(43,782)
(37,841)
405,203 $
224,362 $
— $
— $
$
$
—
—
(14,924)
(44,974)
—
9,421
(39,755)
(475)
—
512
(10,591)
(48,169)
(588)
6,118
—
(612)
477,083
18,596
106,919
417,185
534,916
(369,407)
—
(10,112)
(43,178)
(1,115)
10,029
—
—
Net cash provided by (used in) investing activities
$
(90,707) $
(53,330) $
121,133
125
BGC GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
(in thousands)
Year Ended December 31,
2023
2022
2021
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt and collateralized borrowings
Issuance of long-term debt and collateralized borrowings, net of deferred issuance costs
Earnings distributions to limited partnership interests and other noncontrolling interests
Redemption and repurchase of equity awards
Dividends to stockholders
Repurchase of Class A common stock
Proceeds from sale of Cantor units in BGC Holdings
Pre-acquisition cash capital contribution to Futures Exchange Group
Acquisition of Futures Exchange Group
Short term borrowings, net of repayments
Payments on acquisition earn-outs
$
(623,251) $
(6,391) $
754,321
(19,041)
(117,867)
(17,381)
(114,580)
11,539
—
—
(1,917)
(18,703)
(75)
(28,877)
(76,219)
(14,859)
(103,888)
1,487
—
—
—
(4,384)
Net cash provided by (used in) financing activities
$
(146,880) $
(233,206) $
(566,244)
298,419
(52,169)
(110,565)
(15,098)
(365,398)
7,894
3,845
(9,022)
—
(11,199)
(819,537)
Effect of exchange rate changes on Cash and cash equivalents, and Cash segregated
under regulatory requirements
Net increase (decrease) in Cash and cash equivalents, and Cash segregated under
regulatory requirements
Cash and cash equivalents, and Cash segregated under regulatory requirements at
beginning of period
Cash and cash equivalents, and Cash segregated under regulatory requirements at
end of period
Supplemental cash information:
Cash paid during the period for taxes
Cash paid during the period for interest
Supplemental non-cash information:
Issuance of Class A common stock upon exchange of limited partnership interests
Issuance of Class A and contingent Class A common stock and limited partnership
interests for acquisitions
ROU assets and liabilities
3,270
(2,615)
(5,388)
170,886
(64,789)
(286,607)
502,010
566,799
853,406
672,896 $
502,010 $
566,799
70,718 $
35,782 $
80,664
53,655
43,357
66,450
45,868 $
34,889 $
157,547
7,275
27,201
2,710
44,123
1,160
7,367
$
$
$
The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements.
126
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3
1
BGC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Note 25
Note 26
Note 27
Organization and Basis of Presentation
Limited Partnership Interests in BGC Holdings and Newmark Holdings
Summary of Significant Accounting Policies
Acquisitions
Divestitures
Earnings Per Share
Stock Transactions and Unit Redemptions
Financial Instruments Owned, at Fair Value
Collateralized Transactions
Receivables from and Payables to Broker-Dealers, Clearing Organizations, Customers and Related
Broker-Dealers
Derivatives
Fair Value of Financial Assets and Liabilities
Related Party Transactions
Investments
Fixed Assets, Net
Goodwill and Other Intangible Assets, Net
Notes Payable, Other and Short-Term Borrowings
Compensation
Commitments, Contingencies and Guarantees
Income Taxes
Regulatory Requirements
Segment, Geographic and Product Information
Revenues from Contracts with Customers
Leases
Current Expected Credit Losses
Supplemental Balance Sheet Information
Subsequent Events
Page
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180
183
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186
188
188
190
191
192
131
1.
Organization and Basis of Presentation
Business Overview
On July 1, 2023, the Company completed its Corporate Conversion to a Full C-Corporation in order to reorganize and
simplify its organizational structure. As a result of the Corporate Conversion, BGC Group became the public holding company
for, and successor to, BGC Partners, and its Class A common stock began trading on Nasdaq, in place of BGC Partners’ Class
A common stock, under the ticker symbol “BGC.” Upon completion of the Corporate Conversion, the former stockholders of
BGC Partners and the former limited partners of BGC Holdings now participate in the economics of the BGC businesses
through BGC Group.
BGC is a leading global brokerage and financial technology company servicing the global financial, energy and
commodities markets. BGC, through its affiliates, specializes in the trade execution of a broad range of products, including
fixed income securities such as government bonds, corporate bonds, and other debt instruments, as well as related interest rate
derivatives and credit derivatives. Additionally, the Company provides brokerage services across FX, Equities, Energy and
Commodities, Shipping, and Futures and Options. Our business also provides connectivity and network solutions, clearing,
market data and network connectivity products, trade compression and other post-trade services, market data and related
information services and other back-office services to a broad assortment of financial and non-financial institutions.
BGC’s integrated platform is designed to provide flexibility to customers with regard to price discovery, trade
execution and transaction processing, as well as accessing liquidity through our platforms, for transactions executed either OTC
or through an exchange. Through the Company’s Fenics® group of electronic brands, BGC Group offers several trade
execution, market infrastructure and connectivity services, as well as post-trade services. Fenics® brands also operate under the
names Fenics®, FMX™, FMX Futures Exchange™, Fenics Markets Xchange™, Fenics Digital™, Fenics UST™, Fenics
FX™, Fenics Repo™, Fenics Direct™, Fenics MID™, Fenics Market Data™, Fenics GO™, Fenics PortfolioMatch™, BGC®,
BGC Trader™, kACE2®, and Lucera®.
Our customers include many of the world’s largest banks, broker-dealers, investment banks, trading firms, hedge
funds, governments, corporations, and investment firms. BGC is a global operation with offices across all major geographies,
including New York and London, as well as in Bahrain, Beijing, Bogota, Brisbane, Cape Town, Chicago, Copenhagen, Dubai,
Dublin, Frankfurt, Geneva, Hong Kong, Houston, Johannesburg, Madrid, Manila, Melbourne, Mexico City, Miami, Milan,
Monaco, Nyon, Paris, Perth, Rio de Janeiro, Santiago, São Paulo, Seoul, Shanghai, Singapore, Sydney, Tel Aviv, Tokyo,
Toronto, and Zurich.
BGC, BGC Group, BGC Partners, BGC Trader, GFI, GFI Ginga, CreditMatch, Fenics, Fenics.com, FMX, Sunrise
Brokers, Poten & Partners, RP Martin, kACE2, Capitalab, Swaptioniser, CBID, Caventor, LumeMarkets, Lucera, and Aurel are
trademarks/service marks, and/or registered trademarks/service marks of BGC Group and/or its affiliates.
Corporate Conversion
Effective as of 12:01 a.m., Eastern Time, on July 1, 2023, BGC Holdings reorganized from a Delaware limited
partnership into a Delaware limited liability company through a merger with and into Holdings Merger Sub, with Holdings
Merger Sub continuing as a direct subsidiary of BGC Partners. Effective as of 12:02 a.m., Eastern Time, on July 1, 2023,
Merger Sub 1 merged with and into BGC Partners, with BGC Partners continuing as a direct subsidiary of BGC Group. At the
same time, Merger Sub 2 merged with and into Holdings Merger Sub, with Holdings Merger Sub continuing as a subsidiary of
BGC Group. As a result of the Corporate Conversion Mergers, BGC Partners and BGC Holdings became wholly owned
subsidiaries of BGC Group.
In the Holdings Reorganization Merger, each unit of BGC Holdings outstanding as of immediately prior to the
Holdings Reorganization Merger was converted into a substantially equivalent equity interest in Holdings Merger Sub.
In the Corporate Merger, each share of Class A common stock, par value $0.01 per share, of BGC Partners and each
share of Class B common stock, par value $0.01 per share, of BGC Partners outstanding was converted into one share of Class
A common stock, par value $0.01 per share, of BGC Group and one share of Class B common stock, par value $0.01 per share,
of BGC Group, respectively.
In connection with, but prior to, the Corporate Conversion, the Company completed various transactions which
included:
•
the redemption of certain non-exchangeable limited partnership units in connection with the issuance of shares of BGC
Partners Class A common stock and the accompanying tax payments, which led to an equity-based compensation
charge of $60.9 million;
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•
•
•
•
•
•
•
•
the exchange of the remaining 1.5 million exchangeable limited partnership units of BGC Holdings held by employees
on June 30, 2023, for 1.0 million shares, after tax withholding, of BGC Partners Class A common stock;
the redemption of certain non-exchangeable limited partnership units of BGC Holdings held by employees and
issuance of 16.9 million BGC Partners RSUs on a one-for-one basis on June 30, 2023;
the redemption of certain non-exchangeable Preferred Units of BGC Holdings held by employees and issuance of
$49.2 million of BGC Partners RSU Tax Accounts on June 30, 2023, based on the fixed cash value of the Preferred
Units redeemed;
the redemption of the remaining 5.6 million non-exchangeable FPUs and issuances of BGC Partners RSUs on a one-
for-one basis on June 30, 2023, which in turn reduced the “Redeemable Partnership Interest” to zero with an offsetting
impact to “Total equity” in the Company’s Consolidated Statements of Financial Condition as of June 30, 2023; and
the purchase on June 30, 2023 by Cantor from BGC Holdings of an aggregate of 5,425,209 Cantor units for an
aggregate consideration of $9,715,772 as a result of the redemption of 5,425,209 FPUs, and 324,223 Cantor units for
an aggregate consideration of $598,712 as a result of the exchange of 324,223 FPUs.
As a result of the Corporate Conversion:
64.0 million Cantor units, including 5.7 million purchased on June 30, 2023, were converted into shares of BGC
Group Class B common stock, subject to the terms and conditions of the Corporate Conversion Agreement, provided
that a portion of the 64.0 million shares of BGC Group Class B common stock issued to Cantor will exchange into
BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in shares of BGC
Group Class A or B common stock in connection with certain acquisition transactions prior to July 1, 2030, the
seventh anniversary of the Corporate Conversion;
BGC Group assumed all BGC Partners RSUs, RSU Tax Accounts or restricted stock awards outstanding as of June 30,
2023; and
non-exchangeable limited partnership units of BGC Holdings were converted into equity awards denominated in cash,
restricted stock and/or RSUs of BGC Group, each as further set forth in the Corporate Conversion Agreement. BGC
Group granted 38.6 million restricted stock awards, 25.3 million RSUs, and $74.0 million of RSU Tax Accounts upon
the conversion of the non-exchangeable shares of Holdings Merger Sub.
There were no limited partnership units of BGC Holdings remaining after the Corporate Conversion was completed.
In connection with the Corporate Conversion on July 1, 2023, BGC Group assumed and adopted: the Eighth Amended
and Restated BGC Partners, Inc. Long-Term Incentive Plan, as amended and restated as the BGC Group, Inc. Long Term
Incentive Plan; the BGC Partners Second Amended and Restated BGC Partners Incentive Bonus Compensation Plan, as
amended and restated, and renamed the BGC Group, Inc. Incentive Bonus Compensation Plan; and the BGC Partners, Inc.
Deferral Plan for Employees of BGC Partners, Inc., Cantor Fitzgerald, L.P. and their Affiliates, as amended and restated as the
BGC Group, Inc. Deferral Plan for Employees of BGC Group, Inc., Cantor Fitzgerald, L.P. and Their Affiliates. The BGC
Group Equity Plan provides for a maximum of 600 million shares of BGC Class A common stock that may be delivered or cash
settled pursuant to the exercise or settlement of awards granted under the plan.
In connection with the Corporate Conversion on July 1, 2023, the BGC Holdings Limited Partnership Agreement was
terminated, and the BGC Holdings, L.P. Participation Plan was terminated.
In connection with the Corporate Conversion on July 1, 2023, BGC Group amended and restated its certificate of
incorporation to reflect an increase in the authorized shares of BGC Group Class A common stock to 1,500,000,000; an
increase in the authorized shares of BGC Group Class B common stock to 300,000,000; and a provision providing for
exculpation to officers of BGC Group pursuant to Section 102(b)(7) of the Delaware General Corporation Law. Additionally,
BGC Group amended and restated its bylaws to adopt a provision providing that Delaware courts shall be the exclusive forum
for certain matters.
Basis of Presentation
The Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements have been
prepared pursuant to the rules and regulations of the SEC and in conformity with U.S. GAAP. The Company’s Consolidated
Financial Statements include the Company’s accounts and all subsidiaries in which the Company has a controlling interest.
Intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to
previously reported amounts to conform to the current presentation.
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On November 1, 2021, the Company completed the Insurance Business Disposition (see Note 5—“Divestitures” for
additional information).
On July 30, 2021, the Company completed the purchase of the Futures Exchange Group for a purchase price of
$4.9 million at closing, plus the cash held at closing by the Futures Exchange Group, and an earn-out, only payable out of the
Company’s portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures
Exchange Group prior to closing.
The Futures Exchange Group acquisition has been determined to be a combination of entities under common control
that resulted in a change in the reporting entity. Accordingly, the financial results of the Company have been recast to include
the financial results of the Futures Exchange Group in the current and prior periods as if the Futures Exchange Group had
always been consolidated. The assets and liabilities of the Futures Exchange Group have been recorded in the Company’s
Consolidated Statements of Financial Condition at the seller’s historical carrying value. The purchase of the Futures Exchange
Group was accounted for as an equity transaction for the period ended September 30, 2021 (the period in which the transaction
occurred).
During the first quarter of 2022, the Company changed the name of the brokerage product line formerly labeled as
“Equity derivatives and cash equity” to “Equities” to better align the caption with the underlying activity. The change did not
result in any reclassification of revenues and had no impact on the Company’s Total brokerage revenues.
During the second quarter of 2022, the Company combined “Realized losses (gains) on marketable securities,”
“Unrealized losses (gains) on marketable securities,” and “Losses (gains) on other investments” on the unaudited Condensed
Consolidated Statements of Cash Flows into “Losses (gains) on marketable securities and other investments.” The recognition
of gains and losses related to these investments are similar in nature and immaterial to the financial statements in 2022 and
2021.
During the third quarter of 2022, the Company renamed “Securities owned” as “Financial instruments owned, at fair
value” and combined it with “Marketable securities” on the unaudited Condensed Consolidated Statements of Financial
Condition. In addition, “Losses (gains) on marketable securities and other investments” was renamed as “Unrealized/realized
losses (gains) on financial instruments owned, at fair value and other investments” on the unaudited Condensed Consolidated
Statements of Cash Flows.
During the second quarter of 2023, the Company renamed “Data, software and post-trade” as “Data, network and post-
trade” on the unaudited Condensed Consolidated Statements of Operations.
During the third quarter of 2023, the Company renamed “Net income (loss) available to common stockholders” as
“Net income (loss) attributable to common stockholders” under the Basic earnings (loss) per share calculation on the unaudited
Condensed Consolidated Statements of Operations.
The Consolidated Financial Statements contain all adjustments (consisting only of normal and recurring adjustments)
that, in the opinion of management, are necessary for a fair presentation of the Consolidated Statements of Financial Condition,
the Consolidated Statements of Operations, the Consolidated Statements of Comprehensive Income (Loss), the Consolidated
Statements of Cash Flows and the Consolidated Statements of Changes in Equity of the Company for the periods presented.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible
Instruments and Contracts in an Entity’s Own Equity. The standard is expected to reduce complexity and improve
comparability of financial reporting associated with accounting for convertible instruments and contracts in an entity’s own
equity. The ASU also enhances information transparency by making targeted improvements to the related disclosures guidance.
Additionally, the amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for
convertible instruments. BGC adopted the standard on the required effective date beginning January 1, 2022, and it was applied
using a modified retrospective method of transition. The adoption of this guidance did not have a material impact on the
Company’s Consolidated Financial Statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting. The guidance is designed to provide relief from the accounting analysis and
impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, and
borrowings) necessitated by reference rate reform as entities transition away from LIBOR and other interbank offered rates to
alternative reference rates. This ASU also provides optional expedients to enable companies to continue to apply hedge
accounting to certain hedging relationships impacted by reference rate reform. Application of the guidance is optional and only
available in certain situations. The ASU is effective upon issuance and generally can be applied through December 31, 2022. In
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January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this
standard are elective and principally apply to entities that have derivative instruments that use an interest rate for margining,
discounting, or contract price alignment that is modified as a result of reference rate reform (referred to as the “discounting
transition”). The standard expands the scope of ASC 848, Reference Rate Reform and allows entities to elect optional
expedients to derivative contracts impacted by the discounting transition. Similar to ASU No. 2020-04, provisions of this ASU
are effective upon issuance and generally can be applied through December 31, 2022. During the first quarter of 2022, the
Company elected to apply the practical expedients to modifications of qualifying contracts as continuation of the existing
contract rather than as a new contract. The adoption of the new guidance did not have an impact on the Company’s
Consolidated Financial Statements.
In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business
Entities about Government Assistance. The standard requires business entities to make annual disclosures about transactions
with a government they account for by analogizing to a grant or contribution accounting model. The guidance is aimed at
increasing transparency about government assistance transactions that are not in the scope of other U.S. GAAP guidance. The
ASU requires disclosure of the nature and significant terms and considerations of the transactions, the accounting policies used
and the effects of those transactions on an entity’s financial statements. The new standard became effective for the Company’s
financial statements issued for annual reporting periods beginning on January 1, 2022, and it will be applied prospectively. The
adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract
Assets and Contract Liabilities from Contracts with Customers. The standard improves the accounting for acquired revenue
contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the
recognition of an acquired contract liability, as well as payment terms and their effect on subsequent revenue recognized by the
acquirer. The ASU requires companies to apply guidance in ASC 606, Revenue from Contracts with Customers, to recognize
and measure contract assets and contract liabilities from contracts with customers acquired in a business combination, and, thus,
creates an exception to the general recognition and measurement principle in ASC 805, Business Combinations. BGC adopted
the standard on the required effective date beginning January 1, 2023 using a prospective transition method for business
combinations occurring on or after the effective date. The adoption of this guidance did not have a material impact on the
Company’s Consolidated Financial Statements.
In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled
Debt Restructurings and Vintage Disclosures. The guidance is intended to improve the decision usefulness of information
provided to investors about certain loan refinancings, restructurings, and write-offs. The standard eliminates the recognition and
measurement guidance on TDRs for creditors that have adopted ASC 326, Financial Instruments—Credit Losses and requires
them to make enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. The new guidance
also requires public business entities to present current-period gross write-offs (on a current year-to-date basis for interim-
period disclosures) by year of origination in their vintage disclosures. BGC adopted the standard on the required effective date
beginning January 1, 2023. The guidance for recognition and measurement of TDRs was applied using a prospective transition
method, and the amendments related to disclosures will be applied prospectively. The adoption of this guidance did not have a
material impact on the Company’s Consolidated Financial Statements.
In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):
Debt Restructurings Disclosure of Supplier Finance Program Obligations. The guidance requires entities to disclose the key
terms of supplier finance programs they use in connection with the purchase of goods and services along with information
about their obligations under these programs, including a rollforward of those obligations. BGC adopted the standard on the
required effective date beginning on January 1, 2023, except for the rollforward requirement, which became effective for the
Company beginning on January 1, 2024. The guidance was adopted using a retrospective application to all periods in which a
balance sheet is presented, and the rollforward disclosure requirement, when effective, will be applied prospectively. The
adoption of the guidance that was effective beginning January 1, 2023 did not have a material impact on the Company’s
Consolidated Financial Statements. The rollforward disclosure requirement is not expected to have a material impact on the
Company’s Consolidated Financial statements.
New Accounting Pronouncements
In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset
Date of Topic 848. ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform
on Financial Reporting provided optional guidance to ease the potential burden in accounting for (or recognizing the effects of)
reference rate reform on financial reporting. The ASU was effective upon issuance and generally could be applied through
December 31, 2022. Because the current relief in ASC 848, Reference Rate Reform may not cover a period of time during
which a significant number of modifications may take place, the amendments in ASU No. 2022-06 defer the sunset date from
December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in ASC 848. The
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ASU is effective upon issuance. Management is currently evaluating the impact of the new standard on the Company’s
Consolidated Financial Statements.
In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements—Codification Amendments in
Response to the SEC’s Disclosure Update and Simplification Initiative. The standard is expected to clarify or improve
disclosure and presentation requirements of a variety of ASC topics, allow users to more easily compare entities subject to the
SEC’s existing disclosure requirements with those entities that were not previously subject to the requirements, and align the
requirements in the Codification with the SEC’s regulations. The effective date for the guidance will be the date on which the
SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027 the
SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K, the pending content of the related
amendment will be removed from the Codification and will not become effective for any entity. Management is currently
evaluating the impact of the new standard on the Company’s Consolidated Financial Statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures. The guidance was issued in response to requests from investors for companies to disclose more
information about their financial performance at the segment level. The ASU does not change how a public entity identifies its
operating segments, aggregates them or applies the quantitative thresholds to determine its reportable segments. The standard
will require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis,
and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required
annually. Public entities with a single reportable segment will be required to provide the new disclosures and all the disclosures
currently required under ASC 280. The new guidance will become effective for the Company’s financial statements issued for
annual reporting periods beginning on January 1, 2024 and for the interim periods beginning on January 1, 2025, will require
retrospective presentation, and early adoption is permitted. Management is currently evaluating the impact of the new standard
on the Company’s Consolidated Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax
Disclosures. The standard improves the transparency of income tax disclosures by requiring consistent categories and greater
disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The ASU also
includes certain other amendments to improve the effectiveness of income tax disclosures. The new guidance will become
effective for the Company’s financial statements issued for annual reporting periods beginning on January 1, 2025, will require
prospective presentation with an option for entities to apply it retrospectively for each period presented, and early adoption is
permitted. Management is currently evaluating the impact of the new standard on the Company’s Consolidated Financial
Statements.
2.
Limited Partnership Interests in BGC Holdings and Newmark Holdings
Prior to the Corporate Conversion, BGC Partners was a holding company with no direct operations which conducted
substantially all of its operations through its operating subsidiaries. Virtually all of BGC Partners’ consolidated assets and net
income were those of consolidated variable interest entities. BGC Holdings was a consolidated subsidiary of BGC Partners for
which BGC Partners was the general partner. BGC Partners and BGC Holdings jointly owned BGC U.S. OpCo and BGC
Global OpCo, the two operating partnerships of the Company. In addition, Newmark Holdings is a consolidated subsidiary of
Newmark for which Newmark is the general partner. Newmark and Newmark Holdings jointly own Newmark OpCo, the
operating partnership. Listed below are the limited partnership interests in BGC Holdings, prior to the Corporate Conversion,
and Newmark Holdings. The FPUs, LPUs and limited partnership interests held by Cantor, each as described below,
collectively represent all of the limited partnership interests in BGC Holdings, prior to the Corporate Conversion, and Newmark
Holdings. The Corporate Conversion had no impact on Newmark and its organizational structure, nor any limited partnership
interests, described below, held by BGC employees in Newmark Holdings.
As a result of the Separation, limited partnership interests in Newmark Holdings were distributed to the holders of
limited partnership interests in BGC Holdings, whereby each holder of BGC Holdings limited partnership interests at that time
who held a BGC Holdings limited partnership interest received a corresponding Newmark Holdings limited partnership interest,
determined by the Contribution Ratio, which was equal to a BGC Holdings limited partnership interest multiplied by one
divided by 2.2, divided by the Exchange Ratio. Initially, the Exchange Ratio equaled one, so that each Newmark Holdings
limited partnership interest was exchangeable for one share of Newmark Class A common stock. For reinvestment, acquisition
or other purposes, Newmark may determine on a quarterly basis to distribute to its stockholders a smaller percentage than
Newmark Holdings distributes to its equity holders (excluding tax distributions from Newmark Holdings) of cash that it
received from Newmark OpCo. In such circumstances, the Separation and Distribution Agreement provides that the Exchange
Ratio will be reduced to reflect the amount of additional cash retained by Newmark as a result of the distribution of such
smaller percentage, after the payment of taxes. The Exchange Ratio as of December 31, 2023 equaled 0.9231.
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Founding/Working Partner Units
Founding/Working Partners had FPUs in BGC Holdings and have FPUs in Newmark Holdings. As of June 30, 2023,
in connection with the Corporate Conversion, all FPUs in BGC Holdings were redeemed or exchanged. The Corporate
Conversion had no impact on FPUs held by partners of Newmark Holdings. Prior to the Corporate Conversion, BGC Partners
accounted for FPUs outside of permanent capital, as “Redeemable partnership interest,” in the Company’s Consolidated
Statements of Financial Condition. This classification was applicable to Founding/Working Partner units because these units
were redeemable upon termination of a partner, including a termination of employment, which could be at the option of the
partner and not within the control of the issuer. The BGC RSUs issued for the redemption of non-exchangeable FPUs in BGC
Holdings, in connection with the Corporate Conversion, are now accounted for as a part of permanent capital.
FPUs were held by limited partners who were employees and generally received quarterly allocations of net income.
Upon termination of employment or otherwise ceasing to provide substantive services, the FPUs were generally redeemed, and
the unit holders were no longer entitled to participate in the quarterly allocations of net income. Since these allocations of net
income were cash distributed on a quarterly basis and were contingent upon services being provided by the unit holder, they
were reflected as a component of compensation expense under “Equity-based compensation and allocations of net income to
limited partnership units and FPUs” in the Company’s Consolidated Statements of Operations.
Limited Partnership Units
Certain BGC employees held LPUs in BGC Holdings and hold LPUs in Newmark Holdings (e.g., REUs, RPUs, PSUs,
and PSIs). Prior to the Separation, certain employees of both BGC and Newmark received LPUs in BGC Holdings. As a result
of the Separation, these employees were distributed LPUs in Newmark Holdings equal to a BGC Holdings LPU multiplied by
the Contribution Ratio. Subsequent to the Separation, BGC employees were only granted LPUs in BGC Holdings, and
Newmark employees are only granted LPUs in Newmark Holdings. In connection with, or as a result of, the Corporate
Conversion, certain LPUs in BGC Holdings were redeemed/converted into BGC restricted stock awards or RSUs, and upon
completion of the Corporate Conversion, there were no LPUs of BGC Holdings remaining. The Corporate Conversion had no
impact on the LPUs in Newmark Holdings held by BGC employees.
Generally, LPUs received quarterly allocations of net income, which were cash distributed and generally were
contingent upon services being provided by the unit holder. As prescribed in U.S. GAAP guidance, following the Spin-Off, the
quarterly allocations of net income on BGC Holdings LPUs held by BGC employees were reflected as a component of
compensation expense under “Equity-based compensation and allocations of net income to limited partnership units and FPUs”
in the Company’s Consolidated Statements of Operations prior to the Corporate Conversion, and quarterly allocations of net
income on Newmark Holdings LPUs held by BGC employees, which were not impacted by the Corporate Conversion, are
reflected as a component of compensation expense under “Equity-based compensation and allocations of net income to limited
partnership units and FPUs” in the Company’s Consolidated Statements of Operations. Quarterly allocations of net income on
BGC Holdings LPUs held by Newmark employees were reflected as a component of “Net income (loss) attributable to
noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Operations, prior to the Corporate
Conversion. From time to time, the Company also issued BGC LPUs as part of the consideration for acquisitions.
Certain of these LPUs in BGC Holdings and Newmark Holdings, such as REUs, entitle the holders to receive post-
termination payments equal to the notional amount of the units in four equal yearly installments after the holder’s termination.
There were none of these LPUs in BGC Holdings remaining after the Corporate Conversion was completed while these LPUs
in Newmark Holdings held by BGC employees were not impacted by the Corporate Conversion. These LPUs held by BGC
employees are accounted for as post-termination liability awards, and in accordance with U.S. GAAP guidance, the Company
records compensation expense for the awards based on the change in value at each reporting date in the Company’s
Consolidated Statements of Operations as part of “Equity-based compensation and allocations of net income to limited
partnership units and FPUs.”
Certain BGC employees held Preferred Units in BGC Holdings and hold Preferred Units in Newmark Holdings. In
connection with, or as a result of, the Corporate Conversion, certain Preferred Units in BGC Holdings were redeemed/converted
into BGC restricted stock awards or RSU Tax Accounts, and upon completion of the Corporate Conversion, there were no
Preferred Units of BGC Holdings remaining. The Corporate Conversion had no impact on Preferred Units in Newmark
Holdings held by BGC employees. The following description of LPUs and Preferred Units in BGC Holdings is only applicable
for the period prior to the Corporate Conversion, and for LPUs and Preferred Units held by BGC employees in Newmark
Holdings is applicable to before and after the Corporate Conversion. Each quarter, the net profits of BGC Holdings and
Newmark Holdings are allocated to such units at a rate of either 0.6875% (which is 2.75% per calendar year) or such other
amount as set forth in the award documentation. These allocations are deducted before the calculation and distribution of the
quarterly partnership distribution for the remaining partnership interests and are generally contingent upon services being
provided by the unit holder. The Preferred Units are not entitled to participate in partnership distributions other than with
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respect to the Preferred Distribution. Preferred Units may not be made exchangeable into Class A common stock, and are only
entitled to the Preferred Distribution; accordingly, they are not included in the fully diluted share count. The quarterly
allocations of net income on Preferred Units are reflected the same as those of the LPUs described above in the Company’s
Consolidated Statements of Operations. After deduction of the Preferred Distribution, the remaining partnership units generally
received quarterly allocations of net income based on their weighted-average pro rata share of economic ownership of the
operating subsidiaries. Preferred Units are granted in connection with the grant of certain LPUs, such as PSUs, which may be
granted exchangeability or redeemed in connection with the issuance of shares of common stock to cover the withholding taxes
owed by the unit holder, rather than issuing the gross amount of shares to employees, subject to cashless withholding of shares
to pay applicable withholding taxes.
Cantor Units
Prior to the Corporate Conversion, Cantor held limited partnership interests in BGC Holdings. Cantor units were
reflected as a component of “Noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Financial
Condition. Cantor received allocations of net income (loss), which were cash distributed on a quarterly basis and were reflected
as a component of “Net income (loss) attributable to noncontrolling interest in subsidiaries” in the Company’s Consolidated
Statements of Operations. As a result of the Corporate Conversion, 64.0 million Cantor units were converted into shares of
BGC Group Class B common stock, subject to the terms and conditions of the Corporate Conversion Agreement, provided that
a portion of the 64.0 million shares of BGC Group Class B common stock issued to Cantor will exchange into BGC Group
Class A common stock in the event that BGC Group does not issue at least $75,000,000 in shares of BGC Group Class A or B
common stock in connection with certain acquisition transactions prior to the seventh anniversary of the Corporate Conversion.
General
Certain of the limited partnership interests, described above, were granted exchangeability into shares of BGC Class A
common stock, prior to the Corporate Conversion, or shares of Newmark Class A common stock, and additional limited
partnership interests could become exchangeable into shares of Newmark Class A common stock. In addition, prior to the
Corporate Conversion, certain limited partnership interests were granted the right to exchange into or were exchanged into a
partnership unit with a capital account, such as HDUs. HDUs had a stated capital account which was initially based on the
closing trading price of Class A common stock at the time the HDU was granted. HDUs participated in quarterly partnership
distributions and were generally not exchangeable into shares of Class A common stock.
Subsequent to the Spin-Off and prior to the Corporate Conversion, limited partnership interests in BGC Holdings held
by a partner or Cantor could become exchangeable for BGC Class A or BGC Class B common stock on a one-for-one basis. In
addition, subsequent to the Spin-Off, limited partnership interests in Newmark Holdings held by a partner or Cantor may
become exchangeable for a number of shares of Newmark Class A or Newmark Class B common stock equal to the number of
limited partnership interests multiplied by the then-current Exchange Ratio. Because limited partnership interests were included
in the Company’s fully diluted share count, if dilutive, prior to the Corporate Conversion, any previous exchanges of limited
partnership interests into shares of BGC Class A or BGC Class B common stock did not impact the fully diluted number of
shares and units outstanding. Because these limited partnership interests generally received quarterly allocations of net income,
such exchanges had no significant impact on the cash flows or equity of BGC Partners, prior to the Corporate Conversion.
Prior to the Corporate Conversion, each quarter, net income (loss) was allocated between the limited partnership
interests and BGC Partners’ common stockholders. In quarterly periods in which BGC Partners had a net loss, the loss
allocation for FPUs, LPUs and Cantor units in BGC Holdings was allocated to Cantor and reflected as a component of “Net
income (loss) attributable to noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Operations.
In subsequent quarters in which BGC Partners had net income, the initial allocation of income to the limited partnership
interests in BGC Holdings was to Cantor and was recorded as “Net income (loss) attributable to noncontrolling interests in
subsidiaries,” to recover any losses taken in earlier quarters, with the remaining income allocated to the limited partnership
interests. This income (loss) allocation process had no impact on the net income (loss) allocated to common stockholders.
3.
Summary of Significant Accounting Policies
Use of Estimates:
The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of the assets and liabilities, revenues and
expenses, and the disclosure of contingent assets and liabilities in these consolidated financial statements. Management believes
that the estimates utilized in preparing these consolidated financial statements are reasonable. Estimates, by their nature, are
based on judgment and available information. Actual results could differ materially from the estimates included in the
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Company’s consolidated financial statements. Certain reclassifications have been made to previously reported amounts to
conform to the current period presentation.
Revenue Recognition:
BGC derives its revenues primarily through commissions from brokerage services, the spread between the buy and sell
prices on matched principal transactions, fees from related parties, data, network and post-trade services, and other revenues.
Commissions:
The Company derives its commission revenues from securities, commodities and insurance-related transactions,
whereby the Company connects buyers and sellers in the OTC and exchange markets and assists in the negotiation of the price
and other material terms. These transactions result from the provision of service related to executing, settling and clearing
transactions for customers. Trade execution and clearing services, when provided together, represent a single performance
obligation as the services are not separately identifiable in the context of the contract. Commission revenues are recognized at a
point in time on the trade-date, when the customer obtains control of the service and can direct the use of, and obtain
substantially all of the remaining benefits from the asset. The Company records a receivable between the trade-date and
settlement date when payment is received.
Principal Transactions:
Principal transaction revenues are primarily derived from matched principal transactions, whereby the Company
simultaneously agrees to buy securities from one customer and sell them to another customer. A very limited number of trading
businesses are allowed to enter into unmatched principal transactions to facilitate a customer’s execution needs for transactions
initiated by such customers. Revenues earned from principal transactions represent the spread between the buy and sell price of
the brokered security, commodity or derivative. Principal transaction revenues and related expenses are recognized on a trade-
date basis. Positions held as part of a principal transaction are marked-to-market on a daily basis.
Fees from Related Parties:
Fees from related parties consist of charges for back-office services provided to Cantor and its affiliates, including
occupancy of office space, utilization of fixed assets, accounting, operations, human resources and legal services, and
information technology. The services are satisfied over time and measured using a time-elapsed measure of progress as the
customer receives the benefits of the services evenly throughout the term of the contract. The transaction price is considered
variable consideration as the level and type of services fluctuate from period to period and revenues are recognized only to the
extent it is probable that a significant reversal in the amount of cumulative revenues recognized will not occur when the
uncertainty is resolved. Fees from related parties are determined based on the cost incurred by the Company to perform or
provide the service as evidenced by an allocation of employee expenses or a third-party invoice. Net cash settlements between
affiliates are generally performed on a monthly basis.
Data, Network and Post-trade:
Data revenues primarily consist of subscription fees and fees from customized one-time sales provided to customers
either directly or through third-party vendors. Regarding this revenue stream, the Company determined that software
implementation, license usage, and related support services represent a single-performance obligation because the combination
of these deliverables is necessary for the customer to derive benefit from the data. As such, once implementation is complete,
monthly subscription fees are billed in advance and recognized on a straight-line basis over the life of the license period.
The Company also provides software customization services contracted through work orders that each represent a
separate performance obligation. Revenue is recognized over time using an output method as a measure of progress. As
circumstances change over time, the Company updates its measure of progress to reflect any changes in the outcome of the
performance obligation. Such updates are accounted for as a change in accounting estimate. As a practical expedient, when the
work-order period is less than 12 months, the Company recognizes revenue upon acceptance from the customer after work is
completed. The contract price is fixed and billed to the customer as combination of an upfront fee, progress fees, and a post-
delivery fee.
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Other Revenues:
Other revenues are earned from various sources, including consulting income for Poten & Partners, underwriting and
advisory fees.
Other Income (Losses), Net:
Gains (Losses) on Divestitures and Sale of Investments:
Gains (losses) on divestitures and sale of investments is comprised of gains and losses recorded in connection with the
divestiture of certain businesses or sale of investments (see Note 5—“Divestitures”).
Gains (Losses) on Equity Method Investments:
Gains (losses) on equity method investments represent the Company’s pro-rata share of the net gains and losses on
investments over which the Company has significant influence but which it does not control.
Other Income (Loss):
Other income (loss) is primarily comprised of miscellaneous recoveries and gains and losses associated with the
movements related to the changes in fair value and/or hedges of Financial instruments owned, at fair value equity securities and
investments carried under the measurement alternative (see Note 8—“Financial Instruments Owned, at Fair Value” and Note 14
—“Investments).
Segments:
The Company has one reportable segment (see Note 22—“Segment, Geographic and Product Information”).
Cash and Cash Equivalents:
The Company considers all highly liquid investments with maturities of 90 days or less at the date of acquisition that
are not segregated under regulatory requirements, other than those used for trading purposes, to be cash equivalents. Cash and
cash equivalents include money market funds, deposits with banks, certificates of deposit, commercial paper, and U.S. Treasury
securities.
Cash Segregated Under Regulatory Requirements:
Cash segregated under regulatory requirements represents funds received in connection with customer activities that
the Company is obligated to segregate or set aside to comply with regulations mandated by authorities such as the SEC and
FINRA in the U.S. and the FCA in the U.K. that have been promulgated to protect customer assets.
Financial Instruments Owned, at Fair Value:
Financial instruments owned, at fair value primarily consist of unencumbered U.S. Treasury bills held for liquidity
purposes as well as equity securities with readily determinable fair value, foreign government bonds, and corporate bonds. Debt
securities presented within Financial instruments owned, at fair value are classified as trading and marked-to-market daily based
on current listed market prices (or, when applicable, broker or dealer quotes), with the resulting gains and losses included in
operating income in the current period. Unrealized and realized gains and losses from changes in fair value of these debt
securities are included as part of “Principal transactions” in the Company’s Consolidated Statements of Operations. In
accordance with the guidance on recognition and measurement of equity investments with readily determinable fair value, the
Company carries these equity securities at fair value and recognizes any changes in fair value currently within “Other income
(loss)” in the Company’s Consolidated Statements of Operations. See Note 8—“Financial Instruments Owned, at Fair Value”
for additional information.
Fair Value:
U.S. GAAP defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date and further expands disclosures about such fair value
measurements.
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The guidance establishes a fair value hierarchy that prioritizes the inputs to 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
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair
value hierarchy are as follows:
Level 1 measurements – Unadjusted quoted prices in active markets that are accessible at the measurement date for
identical assets or liabilities.
Level 2 measurements – Quoted prices in markets that are not active or financial instruments for which all significant
inputs are observable, either directly or indirectly.
Level 3 measurements – Prices or valuations that require inputs that are both significant to the fair value measurement
and unobservable.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant
to the fair value measurement.
In determining fair value, the Company separates financial instruments owned and financial instruments sold, but not
yet purchased into two categories: cash instruments and derivative contracts.
Cash Instruments – Cash instruments are generally classified within Level 1 or Level 2. The types of instruments
generally classified within Level 1 include most U.S. government securities, certain sovereign government obligations, and
actively traded listed equities. The Company does not adjust the quoted price for such instruments. The types of instruments
generally classified within Level 2 include agency securities, most investment-grade and high-yield corporate bonds, certain
sovereign government obligations, money market securities, and less liquid listed equities, and state, municipal and provincial
obligations.
Derivative Contracts – Derivative contracts can be exchange-traded or OTC. Exchange-traded derivatives typically fall
within Level 1 or Level 2 of the fair value hierarchy depending on whether they are deemed to be actively traded or not. The
Company generally values exchange-traded derivatives using the closing price of the exchange-traded derivatives. OTC
derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs
to models, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. For OTC
derivatives that trade in liquid markets, such as generic forwards, swaps and options, model inputs can generally be verified and
model selection does not involve significant management judgment. Such instruments are typically classified within Level 2 of
the fair value hierarchy.
See Note 12—“Fair Value of Financial Assets and Liabilities” for more information on the fair value of financial
assets and liabilities.
Receivables from and Payables to Broker-Dealers, Clearing Organizations, Customers and Related Broker-Dealers:
Receivables from and payables to broker-dealers, clearing organizations, customers and related broker-dealers
primarily represent principal transactions for which the stated settlement dates have not yet been reached and principal
transactions which have not settled as of their stated settlement dates, cash held at clearing organizations and exchanges to
facilitate settlement and clearance of matched principal transactions, and spreads on matched principal transactions that have
not yet been remitted from/to clearing organizations and exchanges. Also included are amounts related to open derivative
contracts, which are generally executed on behalf of the Company’s customers. A portion of the unsettled principal transactions
and open derivative contracts that constitute receivables from and payables to broker-dealers, clearing organizations, customers
and related broker-dealers are with related parties (see Note 13—“Related Party Transactions” for more information regarding
these receivables and payables).
Current Expected Credit Losses:
In accordance with U.S. GAAP guidance, Financial Instruments—Credit Losses, the Company presents its financial
assets that are measured at amortized cost, net of an allowance for credit losses, which represents the amount expected to be
collected over their estimated life. Expected credit losses for newly recognized financial assets carried at amortized cost, as well
as changes to expected lifetime credit losses during the period, are recognized in earnings. The CECL methodology’s impact on
expected credit losses, among other things, reflects the Company’s view of the current state of the economy, forecasted
macroeconomic conditions and the Company’s portfolios. Refer to Note 25—“Current Expected Credit Losses” for additional
information.
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Accrued Commissions and Other Receivables, Net:
The Company has accrued commissions receivable from securities and commodities transactions. Accrued
commissions receivable are presented net of allowance for credit losses of approximately $20.9 million and $16.3 million as of
December 31, 2023 and 2022, respectively. The allowance is based on management’s estimate and reviewed periodically based
on the facts and circumstances of each outstanding receivable.
The Company’s CECL methodology for Accrued commissions receivable follows a PD/LGD framework with
adjustments for the macroeconomic outlook, with the calculation performed at a counterparty level. The receivable balance for
each counterparty is the outstanding receivable amount adjusted for any volume discounts. Accrued commissions receivable are
not subject to an interest income accrual. The Company writes off a receivable in the period in which such balance is deemed
uncollectible.
The PD rate is sourced from Moody’s Annual Default Study for Corporates and it corresponds to the 1983-2022
average 1-year default rate by rating. The Moody’s quarterly updated data is used as well, if deemed appropriate. A significant
number of the Company’s counterparties are publicly rated, and, therefore, the Moody’s PD rate is used as a proxy based on the
counterparty’s external rating. In addition, the Company maintains internal obligor ratings that map to Moody’s long-term
ratings.
The LGD rate is derived from the Basel Committee’s June 2004 Second Basel Accord on international banking laws
and regulations. The Company understands that the LGD assumption is a well-known industry benchmark for unsecured
credits, which aligns with the unsecured nature of these receivables. Management considered that historically the Company has
collected on substantially all its receivables, and, therefore, the LGD assumption is a reasonable benchmark in absence of
internal data from which to develop an LGD measure.
The macroeconomic adjustment is based on an average of the outlook scenarios for changes in the Real GDP growth
rate for advanced economies over the next year. Historical and forecast data for this metric is obtained from the International
Monetary Fund’s World Economic Outlook database. The Company believes that changes in expected credit losses for its
counterparties are impacted by changes in broad economic activity and, therefore, determined that the Real GDP growth rate
was a reasonable metric to evaluate for macroeconomic adjustments. Further, given that the Company’s receivables are related
to counterparties with global operations, management sourced the data for this metric as applicable to advanced economies. The
Company notes that, given the short-term nature of these receivables, a forecast beyond 1 year is neither required nor
appropriate, and, therefore, the adjustment also covers the approximated life of these assets with no need for reversion.
Loans, Forgivable Loans, and Other Receivables from Employees and Partners, Net:
The Company has entered into various agreements with certain employees and, prior to the Corporate Conversion,
partners whereby these individuals receive loans which may be either wholly or in part repaid from the distributions that the
individuals receive on some or all of their LPUs in BGC Holdings and Newmark Holdings, prior to the Corporate Conversion,
and by distributions that the individuals receive on some or all of their LPUs in Newmark Holdings and any dividends paid on
participating RSUs and restricted stock awards, subsequent to the Corporate Conversion. Certain of these loans also may be
either wholly or in part repaid from the proceeds of the sale of the BGC employees’ shares of BGC Class A common stock. In
addition, certain loans may be forgiven over a period of time. The forgivable portion of these loans is not included in the
Company’s estimate of expected credit losses when employees meet the conditions for forgiveness through their continued
employment over the specified time period, and is recognized as compensation expense over the life of the loan. The amounts
due from terminated employees that the Company does not expect to collect are included in the allowance for credit losses.
From time to time, the Company may also enter into agreements with employees to grant bonus and salary advances or
other types of loans. These advances and loans are repayable in timeframes outlined in the underlying agreements. The
Company reviews loan balances each reporting period for collectability. If the Company determines that the collectability of a
portion of the loan balances is not expected, the Company recognizes a reserve against the loan balances as compensation
expense.
Fixed Assets, Net:
Fixed assets are carried at cost net of accumulated depreciation and amortization. Depreciation is calculated on a
straight-line basis over the estimated useful lives of the assets. Internal and external direct costs of developing applications and
obtaining software for internal use are capitalized and amortized over three years on a straight-line basis. Computer equipment
is depreciated over three to five years. Leasehold improvements are depreciated over the shorter of their estimated economic
useful lives or the remaining lease term. Routine repairs and maintenance are expensed as incurred. When fixed assets are
retired or otherwise disposed of, the related gain or loss is included in operating income. The Company has asset retirement
obligations related to certain of its leasehold improvements, which it accounts for in accordance with U.S. GAAP guidance,
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Asset Retirement Obligations. The guidance requires that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset
retirement cost is capitalized as part of the carrying amount of the long-lived asset. The liability is discounted and accretion
expense is recognized using the credit-adjusted risk-free interest rate in effect when the liability was initially recognized.
Investments:
The Company’s investments in which it has a significant influence but not a controlling financial interest and of which
it is not the primary beneficiary are accounted for under the equity method.
In accordance with the guidance on recognition and measurement of equity investments, the Company has elected to
use a measurement alternative for its equity investments without a readily determinable fair value, pursuant to which these
investments are initially recognized at cost and remeasured through earnings when there is an observable transaction involving
the same or similar investment of the same issuer, or due to an impairment. The Company evaluates potential impairment of
equity method investments when a change in circumstances occurs, by applying U.S. GAAP guidance, Equity Method and Joint
Ventures, and assessing whether the carrying amount can be recovered. See Note 12—“Fair Value of Financial Assets and
Liabilities” and Note 14—“Investments” for additional information.
The Company’s consolidated financial statements include the accounts of the Company and its wholly owned and
majority-owned subsidiaries. The Company’s policy is to consolidate all entities of which it owns more than 50% unless it does
not have control over the entity. In accordance with U.S. GAAP guidance, Consolidation of Variable Interest Entities, the
Company also consolidates any VIE of which it is the primary beneficiary.
Long-Lived Assets:
The Company periodically evaluates potential impairment of long-lived assets and amortizable intangibles, when a
change in circumstances occurs, by applying U.S. GAAP guidance, Impairment or Disposal of Long-Lived Assets, and
assessing whether the unamortized carrying amount can be recovered over the remaining life through undiscounted future
expected cash flows generated by the underlying assets. If the undiscounted future cash flows were less than the carrying value
of the asset, an impairment charge would be recorded. The impairment charge would be measured as the excess of the carrying
value of the asset over the present value of estimated expected future cash flows using a discount rate commensurate with the
risks involved.
Leases:
The Company enters into leasing arrangements in the ordinary course of business as a lessee of office space, data
centers and office equipment.
BGC determines whether an arrangement is a lease at inception. ROU lease assets represent the Company’s right to
use an underlying asset for the lease term, and lease liabilities represent BGC’s obligation to make lease payments arising from
the lease. Other than for leases with an initial term of twelve months or less, ROU lease assets and liabilities are recognized at
commencement date based on the present value of lease payments over the lease term. As most leases do not provide an
implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in
determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes
lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the
Company will exercise those options. Lease expense pertaining to leases is recognized on a straight-line basis over the lease
term. Interest expense on finance leases is recognized using the effective interest method over the lease term. Refer to Note 24
—“Leases” for additional information.
Goodwill and Other Intangible Assets, Net:
Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in a business
combination. As prescribed in U.S. GAAP guidance, Intangibles—Goodwill and Other, goodwill and other indefinite-lived
intangible assets are not amortized, but instead are periodically tested for impairment. The Company reviews goodwill and
other indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter of each fiscal year or
whenever an event occurs or circumstances change that could reduce the fair value of a reporting unit below its carrying
amount. When reviewing goodwill for impairment, BGC first assesses qualitative factors to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.
Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives. Definite-
lived intangible assets arising from business combinations include customer relationships, internally developed software, and
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covenants not to compete. Also included in the definite-lived intangible assets are purchased patents. The costs of acquired
patents are amortized over a period not to exceed the legal life or the remaining useful life of the patent, whichever is shorter,
using the straight-line method.
Income Taxes:
The Company accounts for income taxes using the asset and liability method as prescribed in U.S. GAAP guidance,
Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis.
Certain of the Company’s entities are taxed as U.S. partnerships and are subject to the UBT in New York City. Therefore, the
tax liability or benefit related to the partnership income or loss except for UBT rests with the partners (see Note 2—“Limited
Partnership Interests in BGC Holdings and Newmark Holdings” for a discussion of partnership interests), rather than the
partnership entity. As such, the partners’ tax liability or benefit is not reflected in the Company’s consolidated financial
statements. The tax-related assets, liabilities, provisions or benefits included in the Company’s consolidated financial statements
also reflect the results of the entities that are taxed as corporations, either in the U.S. or in foreign jurisdictions. The Company
provides for uncertain tax positions based upon management’s assessment of whether a tax benefit is more likely than not to be
sustained upon examination by tax authorities. The Company recognizes interest and penalties related to income tax matters in
“Provision (benefit) for income taxes” in the Company’s Consolidated Statements of Operations.
The Company files income tax returns in the United States federal jurisdiction and various states, local and foreign
jurisdictions. The Company is currently open to examination by tax authorities in United States federal, state and local
jurisdictions and certain non-U.S. jurisdictions for tax years beginning 2017, 2011, and 2016, respectively.
The Company has finalized its accounting policy with respect to taxes on Global Intangible Low-Taxed Income
(GILTI) and has elected to treat taxes associated with the GILTI provision using the Period Cost Method and thus has not
recorded deferred taxes for basis differences under this regime.
Discretionary Bonus:
A portion of our compensation and employee benefits expense is comprised of discretionary bonuses, which may be
paid in cash, equity or a combination thereof. We accrue expense in a period based on revenues in that period and on the
expected combination of cash, equity and, prior to the Corporate Conversion, partnership units. Given the assumptions used in
estimating discretionary bonuses, actual results may differ.
Equity-Based Compensation:
The Company accounts for equity-based compensation awards using the guidance in ASC 718, Compensation—Stock
Compensation. Equity-based compensation expense recognized during the period, for equity-based awards with a stated vesting
schedule, is based on the value of the portion of equity-based payment awards that is ultimately expected to vest. The grant-date
fair value of equity-based awards with a stated vesting schedule is amortized to expense ratably over the awards’ vesting
periods. As this equity-based compensation expense recognized in the Company’s Consolidated Statements of Operations is
based on awards ultimately expected to vest, it has been reviewed for estimated forfeitures. Further, forfeitures are estimated at
the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In addition,
equity-based compensation for LPU awards with no stated vesting schedule is recognized at fair value on the date the award is
granted exchangeability or is redeemed in connection with the issuance of shares of common stock.
Restricted Stock Units:
RSUs provided to certain employees are accounted for as equity awards, and in accordance with U.S. GAAP, the
Company is required to record an expense for the portion of the RSUs that is ultimately expected to vest. Further, forfeitures are
estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Because assumptions are used in estimating employee turnover and associated forfeiture rates, actual results may differ from
our estimates under different assumptions or conditions.
The fair value of RSU awards to employees is based on the market value of the BGC Class A common stock on the
grant date. As part of employee compensation, the Company has granted both participating RSUs, which receive dividends, or
nonparticipating RSUs. For non-participating RSUs, which do not receive dividend equivalents, the Company adjusts the fair
value of the RSUs for the present value of expected forgone dividends, which requires the Company to include an estimate of
expected dividends as a valuation input. This grant-date fair value is amortized to expense ratably over the awards’ vesting
periods.
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For participating RSUs where dividends are paid during the vesting period or accumulated and paid to the employee
upon vesting, the grant-date fair value of the award should not be reduced. As such, the Company does not adjust the fair value
of the RSUs for the present value of expected forgone dividends. This grant-date fair value is amortized to expense ratably over
the awards’ vesting periods. For RSUs with graded vesting features, the Company has made an accounting policy election to
recognize compensation cost on a straight-line basis. The amortization is reflected as part of “Equity-based compensation and
allocations of net income to limited partnership units and FPUs” in the Company’s Consolidated Statements of Operations.
Restricted Stock:
Restricted stock provided to certain employees is accounted for as an equity award, and as per U.S. GAAP guidance,
the Company is required to record an expense for the portion of the restricted stock that is ultimately expected to vest.
The Company has granted restricted stock, prior to the Corporate Conversion, that is not subject to continued
employment or service; however, transferability is subject to compliance with BGC’s and its affiliates’ customary noncompete
obligations. Such shares of restricted stock are generally salable by their holders in five to ten years. Because the restricted
stock is not subject to continued employment or service, the grant-date fair value of the restricted stock is expensed on the date
of grant. The non-cash equity-based compensation expense is reflected as part of “Equity-based compensation and allocations
of net income to limited partnership units and FPUs” in the Company’s Consolidated Statements of Operations.
As a result of the Corporate Conversion, the Company has also granted shares of unvested restricted stock, which are
subject to continued employment or service with the Company or any affiliate or subsidiary of the Company. The fair value of
these restricted stock awards held by BGC employees is based on the market value of BGC Class A common stock on the grant
date, adjusted as appropriate based upon the award’s ineligibility to receive dividends, as not all of these awards participate in
receiving dividends, similar to the RSUs discussed above. The grant-date fair value of the restricted stock is amortized to
expense ratably over the awards’ expected vesting periods. The non-cash equity-based amortization compensation expense is
reflected as a component of “Equity-based compensation and allocations of net income to limited partnership units and FPUs”
in the Company’s Consolidated Statements of Operations.
Limited Partnership Units:
Certain BGC employees held LPUs in BGC Holdings and hold LPUs in Newmark Holdings. Generally, such units
received quarterly allocations of net income, which were cash distributed on a quarterly basis and generally contingent upon
services being provided by the unit holders. In addition, Preferred Units were granted in connection with the grant of certain
LPUs, such as PSUs, which may be granted exchangeability or redeemed in connection with the grant of shares of common
stock, to cover the withholding taxes owed by the unit holder upon such exchange or grant. This was an acceptable alternative
to the common practice among public companies of issuing the gross amount of shares to employees, subject to cashless
withholding of shares to pay applicable withholding taxes. Preferred Units were not entitled to participate in partnership
distributions other than with respect to a distribution at a rate of either 0.6875% (which is 2.75% per calendar year) or such
other amount as set forth in the award documentation.
There were none of these LPUs or Preferred Units in BGC Holdings remaining after the Corporate Conversion was
completed, while these LPUs and Preferred Units in Newmark Holdings held by BGC employees were not impacted by the
Corporate Conversion. The quarterly allocations of net income on BGC Holdings LPUs held by BGC employees were reflected
as a component of compensation expense under “Equity-based compensation and allocations of net income to limited
partnership units and FPUs” in the Company’s Consolidated Statements of Operations prior to the Corporate Conversion, and
quarterly allocations of net income on Newmark Holdings LPUs held by BGC employees, which were not impacted by the
Corporate Conversion, are reflected as a component of compensation expense under “Equity-based compensation and
allocations of net income to limited partnership units and FPUs” in the Company’s Consolidated Statements of Operations.
Certain of these LPUs entitle the holders to receive post-termination payments equal to the notional amount, generally
in four equal yearly installments after the holder’s termination. There were none of these LPUs in BGC Holdings remaining
after the Corporate Conversion was completed, while these LPUs in Newmark Holdings held by BGC employees were not
impacted by the Corporate Conversion. These LPUs are accounted for as post-termination liability awards under U.S. GAAP.
Accordingly, we recognize a liability for these units on our Consolidated Statements of Financial Condition as part of “Accrued
compensation” for the amortized portion of the post-termination payment amount, based on the current fair value of the
expected future cash payout. The Company amortizes the post-termination payment amount, less an expected forfeiture rate,
over the vesting period, and record an expense for such awards based on the change in value at each reporting period in the
Company’s Consolidated Statements of Operations as part of “Equity-based compensation and allocations of net income to
limited partnership units and FPUs.”
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Certain LPUs were granted exchangeability into shares of BGC or Newmark Class A common stock or were redeemed
in connection with the grant of BGC or Newmark Class A common stock; BGC Class A common stock was issued on a one-
for-one basis, and Newmark Class A common stock is issued based on the number of LPUs exchanged or redeemed multiplied
by the then-current Exchange Ratio. At the time exchangeability was granted or shares of BGC or Newmark Class A common
stock were issued, we recognized an expense based on the fair value of the award on the grant date, which was included in
“Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our Consolidated
Statements of Operations. There were no LPUs in BGC Holdings remaining after the Corporate Conversion was completed,
while LPUs in Newmark Holdings held by BGC employees were not impacted by the Corporate Conversion.
Prior to the Corporate Conversion, certain LPUs had a stated vesting schedule and did not receive quarterly allocations
of net income. Compensation expense related to these LPUs was recognized over the stated service period, and these units
generally vested between two and five years from the grant date. This expense is included in “Equity-based compensation and
allocations of net income to limited partnership units and FPUs” in our Consolidated Statements of Operations.
For additional information, see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings.”
Redeemable Partnership Interest:
Prior to the Corporate Conversion, redeemable partnership interest represented limited partnership interests in BGC
Holdings held by Founding/Working Partners. See Note 2—“Limited Partnership Interests in BGC Holdings and Newmark
Holdings” for additional information related to the FPUs.
Contingent Class A Common Stock:
In connection with certain acquisitions, the Company committed to issue shares of the Company’s Class A common
stock upon the achievement of certain performance targets. The contingent shares met the criteria for liability classification, are
measured at fair value on a recurring basis and presented in “Accounts payable, accrued and other liabilities” in the Company’s
Consolidated Statements of Financial Condition. Realized and unrealized gains (losses) resulting from changes in fair value are
reported in “Other income (loss)” in the Company’s Consolidated Statements of Operations.
Noncontrolling Interest in Subsidiaries:
Noncontrolling interest in subsidiaries represents equity interests in consolidated subsidiaries that are not attributable
to the Company, such as the noncontrolling interest holders’ proportionate share of the profit or loss associated with joint
ownership of the Company’s administrative services company in the U.K. (Tower Bridge).
Foreign Currency Transactions and Translation:
Assets and liabilities denominated in nonfunctional currencies are converted at rates of exchange prevailing on the date
of the Company’s Consolidated Statements of Financial Condition, and revenues and expenses are converted at average rates of
exchange for the period. Gains and losses on remeasurement of foreign currency transactions denominated in nonfunctional
currencies are recognized within “Other expenses” in the Company’s Consolidated Statements of Operations. Gains and losses
on translation of the financial statements of non-U.S. operations into U.S. dollar reporting currency of the Company are
presented as foreign currency translation adjustments within “Other comprehensive income (loss), net of tax” in the Company’s
Consolidated Statements of Comprehensive Income and as part of “Accumulated other comprehensive income (loss)” in the
Company’s Consolidated Statements of Financial Condition.
Derivative Financial Instruments:
Derivative contracts are instruments, such as futures, forwards, options or swaps contracts, which derive their value
from underlying assets, indices, reference rates or a combination of these factors. Derivative instruments may be listed and
traded on an exchange, or they may be privately negotiated contracts, which are often referred to as OTC derivatives.
Derivatives may involve future commitments to purchase or sell financial instruments or commodities, or to exchange currency
or interest payment streams. The amounts exchanged are based on the specific terms of the contract with reference to specified
rates, securities, commodities, currencies or indices.
The Company does not designate any derivative contracts as hedges for accounting purposes. U.S. GAAP requires that
an entity recognize all derivative contracts as either assets or liabilities in the Consolidated Statements of Financial Condition
and measure those instruments at fair value. The fair value of all derivative contracts is recorded on a net-by-counterparty basis
where a legal right of offset exists under an enforceable netting agreement. Derivative contracts are recorded as part of
146
receivables from or payables to broker-dealers, clearing organizations, customers and related broker-dealers in the Company’s
Consolidated Statements of Financial Condition.
Earnings Per Share:
The Company computes basic and fully diluted EPS in accordance with ASC 260, Earnings Per Share, utilizing the
two-class method, “if-converted” method, or treasury stock method, as applicable. For additional information, see Note 6
—“Earnings Per Share.”
4.
Acquisitions
Trident
On February 28, 2023, the Company completed the acquisition of Trident, primarily operating as a commodity
brokerage and research company, offering OTC and exchange traded energy and environmental products.
ContiCap
On November 1, 2023, the Company completed the acquisition of ContiCap, an independent financial product
intermediary specializing in emerging markets.
Open Energy Group
On November 1, 2023, the Company completed the acquisition of Open Energy Group, a technology-driven
marketplace and brokerage for renewable energy asset sales and project finance.
Total Consideration
The total consideration for all acquisitions during the year ended December 31, 2023 was approximately $71.0 million,
subject to post-closing adjustments, which includes cash, restricted shares of BGC Class A common stock, and an earn-out
payable in cash and restricted shares of BGC Class A common stock. The excess of the consideration over the fair value of the
net assets acquired has been recorded as goodwill totaling $18.4 million.
Except where otherwise noted, the results of operations of the Company’s acquisitions have been included in the
Company’s consolidated financial statements subsequent to their respective dates of acquisition. The Company has made
preliminary allocations of the consideration to the assets acquired and liabilities assumed as of the acquisition dates, and expects
to finalize its analysis with respect to acquisitions within the first year after the completion of the respective transaction.
Therefore, adjustments to preliminary allocations may occur.
There were no acquisitions completed by the Company during the year ended December 31, 2022.
Futures Exchange Group
On July 30, 2021, the Company completed the purchase of the Futures Exchange Group for a purchase price of
$4.9 million at closing, plus the cash held at closing by the Futures Exchange Group, and an earn-out, only payable out of the
Company’s portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures
Exchange Group prior to closing. For additional information, see Note 1—“Organization and Basis of Presentation.”
Total Consideration
The total consideration for all acquisitions during the year ended December 31, 2021 was approximately $4.9 million
in cash, plus the cash held at closing, for the Futures Exchange Group acquisition, and an earn-out payable out of the
Company’s portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures
Exchange Group prior to closing. There was no other consideration paid during the year ended December 31, 2021.
5.
Divestitures
On November 1, 2021, the Company successfully completed the Insurance Business Disposition and, after closing
adjustments, received $534.9 million in gross cash proceeds, subject to limited post-closing adjustments. As a result of this sale,
the Company recognized a $312.9 million gain, net of banking fees, other professional fees, and compensation expenses, which
was included in “Gains (losses) on divestitures and sale of investments” in the Company’s Consolidated Statements of
147
Operations for the year ended December 31, 2021. CF&Co served as advisor to the Company in connection with the
transaction, and as a result, the banking fees included $4.4 million paid to Cantor upon closing of the transaction.
The Company had no gains or losses from divestitures or sale of investments during both the years ended
December 31, 2023 and 2022.
6.
Earnings Per Share
Basic Earnings Per Share:
The following is the calculation of the Company’s basic EPS (in thousands, except per share data):
Basic earnings (loss) per share:
Net income (loss) available to common stockholders
Less: Dividends declared and allocation of undistributed earnings to
participating securities
Net income (loss) attributable to common stockholders
Basic weighted-average shares of common stock outstanding
Basic earnings (loss) per share
Year Ended December 31,
2023
2022
2021
$
36,265 $
48,712 $
124,007
(2,195)
34,070
426,436
—
48,712
371,561
$
0.08 $
0.13 $
—
124,007
379,215
0.33
Fully Diluted Earnings Per Share:
The following is the calculation of the Company’s fully diluted EPS (in thousands, except per share data):
Year Ended December 31,
2023
2022
2021
Fully diluted earnings (loss) per share:
Net income (loss) from continuing operations attributable to common
stockholders
Add back: Allocations of net income (loss) to limited partnership interests,
net of tax
Add back: Allocations of undistributed earnings to participating securities
Less: Reallocation of undistributed earnings to participating securities
Net income (loss) for fully diluted shares
Weighted-average shares:
Common stock outstanding
Partnership units¹
Non-participating RSUs
Other2
Fully diluted weighted-average shares of common stock outstanding
Fully diluted earnings (loss) per share from continuing operations
$
34,070 $
48,712 $
124,007
(156)
1,731
(1,702)
33,943 $
14,767
—
—
63,479 $
$
426,436
57,239
1,406
4,908
489,989
371,561
124,738
1,913
1,202
499,414
$
0.07 $
0.13 $
49,988
—
—
173,995
379,215
155,356
4,074
1,375
540,020
0.32
____________________________________
1
Partnership units collectively include FPUs, LPUs, and Cantor units (see Note 2—“Limited Partnership Interests in BGC Holdings
and Newmark Holdings” for more information).
2
Primarily consists of other contracts to issue shares of BGC common stock.
For the years ended December 31, 2023, 2022 and 2021, approximately 14.3 million, 0.5 million and 0.1 million of
potentially dilutive securities, respectively, were excluded from the computation of fully diluted EPS because their effect would
have been anti-dilutive. Anti-dilutive securities for the year ended December 31, 2023, included 12.7 million participating
RSUs and 1.6 million participating restricted stock awards. Anti-dilutive securities for the year ended December 31, 2022
included 0.5 million RSUs. Anti-dilutive securities for the year ended December 31, 2021 included 0.1 million RSUs.
148
As of December 31, 2023, approximately 63.3 million shares of contingent shares of BGC Class A common stock,
non-participating RSUs, and non-participating restricted stock awards were excluded from the fully diluted EPS computations
because the conditions for issuance had not been met by the end of the period. As of December 31, 2022 and 2021,
approximately 50.2 million and 36.4 million shares, respectively, of contingent shares of BGC Class A common stock, N units,
RSUs, and LPUs were excluded from the fully diluted EPS computations because the conditions for issuance had not been met
by the end of the respective periods.
Contingent shares excluded from the calculation of EPS included: shares promised in connection with acquisition
earnout consideration whereby the acquired entity or entities are required to achieve a stated performance target defined in their
respective acquisition agreements; other contingent share obligations include agreements with terminated employees to deliver
shares BGC Class A common stock over a set period of time post-termination in accordance with their respective partnership
separation agreements; and non-participating RSUs and non-participating restricted stock awards which contain service
conditions and/or performance conditions which have not been met during the period. When the service condition and/or
performance condition has been met in the period, the securities are included in diluted EPS on the first day of the quarter in
which the contingency was met.
7.
Stock Transactions and Unit Redemptions
Class A Common Stock
Changes in shares of BGC Class A common stock outstanding for the years ended December 31, 2023 and 2022 were
as follows (in thousands):
Shares outstanding at beginning of period
Share issuances:
Redemptions/exchanges of limited partnership interests and contingent share obligations¹
Vesting of RSUs
Acquisitions
Other issuances of BGC Class A common stock
Restricted stock awards2
Restricted stock forfeitures
Treasury stock repurchases
Shares outstanding at end of period
Year Ended December 31,
2023
325,858
2022
317,023
30,754
13,009
4,566
2,946
38,610
(1,428)
(24,220)
390,095
30,998
3,284
1,206
501
—
(67)
(27,087)
325,858
____________________________________
1.
Contingent share obligations includes shares of BGC Class A common stock issued to terminated employees per their respective
separation agreements. Included in redemptions/exchanges of limited partnership interests and contingent share obligations for the
year ended December 31, 2023 are 20.5 million shares of BGC Class A common stock granted in connection with the cancellation
of 26.4 million LPUs and settlement of 0.4 million contingent share obligations. Included in redemption/exchanges of limited
partnership interests and contingent share obligations for the year ended December 31, 2022, are 20.9 million shares of BGC Class
A common stock granted in connection with the cancellation of 21.4 million LPUs. Because LPUs are included in the Company’s
fully diluted share count, if dilutive, redemptions/exchanges in connection with the issuance of BGC Class A common stock would
not impact the fully diluted number of shares outstanding.
2.
Included in restricted stock awards for the year ended December 31, 2023, are 22.4 million shares of restricted stock that do not
receive dividends until their respective vesting and contingent conditions are met. These restricted stock awards do have voting
rights.
Class B Common Stock
The Company issued 64.0 million shares of BGC Class B common stock during the year ended December 31, 2023
due to the Corporate Conversion. Following the Corporate Conversion, Cantor satisfied its obligation to its holders of April
2008 distribution rights shares and February 2012 distribution rights shares through the distribution of 15.8 million shares of
BGC Class B common stock to such shareholders. 0.4 million shares of BGC Class B common stock were distributed by Cantor
to recipients in whose hands the shares converted into shares of BGC Class A common stock pursuant to the terms of the
Company’s Amended and Restated Certificate of Incorporation, which resulted in an increase of 0.4 million shares of BGC
Class A common stock outstanding and a decrease of 0.4 million shares of BGC Class B common stock outstanding. The
149
Company did not issue any shares of BGC Class B common stock during 2022. As of December 31, 2023 and 2022, there were
109.5 million and 45.9 million shares of BGC Class B common stock outstanding, respectively.
CEO Program
On March 9, 2018, the Company filed the March 2018 Form S-3 Registration Statement and entered into the March
2018 Sales Agreement, pursuant to which the Company could offer and sell up to an aggregate of $300.0 million of shares of
BGC Class A common stock under the CEO Program. CF&Co is a wholly-owned subsidiary of Cantor and an affiliate of the
Company. Under the March 2018 Sales Agreement, the Company agreed to pay CF&Co 2% of the gross proceeds from the sale
of shares. The Company did not sell any shares under the March 2018 Sales Agreement during the year ended December 31,
2021. The March 2018 Form S-3 Registration Statement and the March 2018 Sales Agreement expired in September 2021. As
of the date of expiration, the Company had sold 17.6 million shares of BGC Class A common stock (or $210.8 million) under
the March 2018 Sales Agreement. For additional information on the Company’s CEO Program sales agreements, see Note 13
—“Related Party Transactions.” On March 8, 2021, the Company filed a new CEO Program Shelf Registration Statement on
Form S-3 with respect to the issuance and sale of up to an aggregate of $300.0 million of shares of BGC Class A common stock
from time to time on a delayed or continuous basis. On July 8, 2022, the Company filed an amendment to the March 2021 Form
S-3 Registration Statement. On August 3, 2022, the March 2021 Form S-3 Registration Statement was declared effective by the
SEC, and the Company entered into the August 2022 Sales Agreement on August 12, 2022. The Company did not sell any
shares under the August 2022 Sales Agreement. On July 3, 2023, in connection with the Corporate Conversion, BGC Group
filed a post-effective amendment to the March 2021 Form S-3 Registration Statement, pursuant to which it adopted the March
2021 Form S-3 Registration Statement as its own registration statement. Also on July 3, 2023, BGC Group assumed the August
2022 Sales Agreement, as amended and restated to replace references to BGC Partners with references to BGC Group and to
make other ministerial changes. BGC Group may sell up to an aggregate of $300.0 million of shares of BGC Class A common
stock pursuant to the terms of the July 2023 Sales Agreement. Under the July 2023 Sales Agreement, the Company agreed to
pay CF&Co 2% of the gross proceeds from the sale of shares. As of December 31, 2023 the Company had not sold any shares
of BGC Class A common stock or paid any commission to CF&Co under the July 2023 Sales Agreement. For additional
information on the Company’s CEO Program sales agreements, see Note 13—“Related Party Transactions.”
Unit Redemptions and Share Repurchase Program
The Company’s Board and Audit Committee have authorized repurchases of BGC Class A common stock and
redemptions of limited partnership interests or other equity interests in the Company’s subsidiaries. On August 3, 2021, the
Company’s Board and Audit Committee increased the BGC Partners share repurchase and unit redemption authorization to
$400.0 million, which could have included purchases from Cantor, its partners or employees or other affiliated persons or
entities. Again, on November 4, 2022, the Board and Audit Committee increased the BGC Partners share repurchase and unit
redemption authorization to $400.0 million, which could have included purchases from Cantor, its partners or employees or
other affiliated persons or entities. On July 1, 2023, the BGC Group Board approved BGC Group’s share repurchase
authorization in an amount up to $400.0 million, which may include purchases from Cantor, its partners or employees or other
affiliated persons or entities. As of December 31, 2023, the Company had $333.1 million remaining from its share repurchase
authorization. From time to time, the Company may actively continue to repurchase shares.
The table below represents the units redeemed and/or shares repurchased for cash and does not include units redeemed/
cancelled in connection with the grant of shares of BGC Class A common stock nor the limited partnership interests exchanged
for shares of BGC Class A common stock. The gross unit redemptions and share repurchases of BGC Class A common stock
during the year ended December 31, 2023 were as follows (in thousands, except for weighted-average price data):
150
Period
Redemptions1
January 1, 2023—March 31, 2023
April 1, 2023—June 30, 2023
July 1, 2023—September 30, 2023
October 1, 2023—December 31, 2023
Total Redemptions
Repurchases2
January 1, 2023—March 31, 2023
April 1, 2023—June 30, 2023
July 1, 2023—September 30, 2023
October 1, 2023—October 31, 20233
November 1, 2023—November 30, 2023
December 1, 2023—December 31, 2023
Total Repurchases
Total Redemptions and Repurchases
____________________________________
Total Number
of Units
Redeemed
or Shares
Repurchased
Weighted-
Average Price
Paid per Unit
or Share
Approximate
Dollar Value
of
Shares That Could Be
Repurchased
Under the Program at
December 31, 2023
23 $
422
—
—
445 $
846 $
9,814
8,087
4,269
1,204
—
24,220
24,665 $
3.90
4.91
—
—
4.85
4.97
4.44
4.99
5.63
6.15
—
4.94
4.93 $
333,113
1.
2.
3.
During the year ended December 31, 2023, the Company redeemed 0.3 million LPUs at an aggregate redemption price of $1.4
million for a weighted-average price of $4.71 per unit, and 0.2 million FPUs at an aggregate redemption price of $0.8 million for a
weighted-average price of $5.11 per unit. The table above does not include units redeemed/cancelled in connection with the grant of
20.5 million shares of BGC Class A common stock during the year ended December 31, 2023, nor the limited partnership interests
exchanged for 13.6 million shares of BGC Class A common stock during the year ended December 31, 2023.
During the year ended December 31, 2023, the Company repurchased 24.2 million shares of BGC Class A common stock at an
aggregate price of $119.6 million for a weighted-average price of $4.94 per share. These repurchases includes 1.0 million restricted
shares vested but withheld described in the following footnote.
Includes 1.0 million shares withheld to satisfy tax liabilities due upon the vesting of restricted stock. The average price paid per
share for such share withholdings is based on the closing price per share on the vesting date of the restricted stock or, if such date is
not a trading day, the trading day immediately prior to such vesting date. The fair value of restricted shares vested, withheld to
satisfy tax liabilities was $5.0 million at a weighted-average price of $5.21 per share.
The gross unit redemptions and share repurchases of BGC Class A common stock during the year ended December 31,
2022 were as follows (in thousands, except for weighted-average price data):
151
Period
Redemptions1
January 1, 2022—March 31, 2022
April 1, 2022—June 30, 2022
July 1, 2022—September 30, 2022
October 1, 2022—December 31, 2022
Total Redemptions
Repurchases2
January 1, 2022—March 31, 2022
April 1, 2022—June 30, 2022
July 1, 2022—September 30, 2022
October 1, 2022—December 31, 2022
Total Repurchases
Total Redemptions and Repurchases
____________________________________
Total Number
of Units
Redeemed
or Shares
Repurchased
Weighted-
Average Price
Paid per Unit
or Share
Approximate
Dollar Value
of
Units and Shares
That Could Be
Redeemed/
Repurchased
Under the Program at
December 31, 2022
43 $
1,010
214
99
1,366 $
— $
8,745
12,397
5,945 $
27,087
4.01
3.81
3.91
3.88
3.84
—
3.36
4.03
4.14
3.84
28,453 $
3.84 $
376,413
1.
2.
During the year ended December 31, 2022, the Company redeemed 1.3 million LPUs at an aggregate redemption price of $4.9
million for a weighted-average price of $3.87 per unit and 0.1 million FPUs at an aggregate redemption price of $0.4 million for a
weighted-average price of $3.41 per unit. The table above does not include units redeemed/cancelled in connection with the grant of
20.9 million shares of BGC Class A common stock during the year ended December 31, 2022, nor the limited partnership interests
exchanged for 10.8 million shares of BGC Class A common stock during the year ended December 31, 2022.
During the year ended December 31, 2022, the Company repurchased 27.1 million shares of BGC Class A common stock at an
aggregate price of $103.9 million for a weighted-average price of $3.84 per share.
Redeemable Partnership Interest
The changes in the carrying amount of FPUs for the years ended December 31, 2023 and 2022 were as follows (in
thousands):
Balance at beginning of period
Consolidated net income allocated to FPUs
Earnings distributions
FPUs exchanged
FPUs redeemed
Corporate conversion
Balance at end of period
Year Ended December 31,
2023
2022
$
$
15,519 $
236
(236)
(1,301)
288
(14,506)
— $
18,761
968
(2,041)
(1,339)
(830)
—
15,519
8.
Financial Instruments Owned, at Fair Value
Financial instruments owned, at fair value primarily consist of unencumbered U.S. Treasury bills held for liquidity
purposes. Total Financial instruments owned, at fair value were $45.8 million and $39.3 million as of December 31, 2023 and
2022, respectively. For additional information, see Note 12—“Fair Value of Financial Assets and Liabilities.”
These instruments are measured at fair value, with any changes in fair value recognized in earnings in the Company’s
Consolidated Statements of Operations. The Company recognized unrealized net gains of $0.1 million, unrealized net losses of
$0.1 million, and nil as of December 31, 2023, 2022, and 2021 respectively, related to the mark-to-market adjustments on such
instruments.
152
9.
Collateralized Transactions
Repurchase Agreements
Securities sold under Repurchase Agreements are accounted for as collateralized financing transactions and are
recorded at the contractual amount for which the securities will be repurchased, including accrued interest. As of both
December 31, 2023, and 2022, the Company had no Repurchase Agreements.
Reverse Repurchase Agreements
Securities purchased under Reverse Repurchase Agreements are accounted for as collateralized financing transactions
and are recorded at the contractual amount for which the securities will be resold, including accrued interest.
For Reverse Repurchase Agreements, it is the Company’s policy to obtain possession of collateral with a market value
equal to or in excess of the principal amount loaned under Reverse Repurchase Agreements. Collateral is valued daily and the
Company may require counterparties to deposit additional collateral or return collateral pledged when appropriate.
As of both December 31, 2023 and 2022, the Company had no Reverse Repurchase Agreements.
10.
Dealers
Receivables from and Payables to Broker-Dealers, Clearing Organizations, Customers and Related Broker-
Receivables from and payables to broker-dealers, clearing organizations, customers and related broker-dealers
primarily represent amounts due for undelivered securities, cash held at clearing organizations and exchanges to facilitate
settlement and clearance of matched principal transactions, spreads on matched principal transactions that have not yet been
remitted from/to clearing organizations and exchanges and amounts related to open derivative contracts (see Note 11
—“Derivatives”). As of December 31, 2023 and December 31, 2022, Receivables from and payables to broker-dealers, clearing
organizations, customers and related broker-dealers consisted of the following (in thousands):
Receivables from broker-dealers, clearing organizations, customers and related broker-
dealers1
Contract values of fails to deliver
Receivables from clearing organizations
Other receivables from broker-dealers and customers
Open derivative contracts
Total
Payables to broker-dealers, clearing organizations, customers and related broker-dealers1
Contract values of fails to receive
Payables to clearing organizations
Other payables to broker-dealers and customers
Net pending trades
Open derivative contracts
Total
December 31,
2023
December 31,
2022
$
$
$
$
182,094 $
135,789
28,546
3,607
350,036 $
172,231 $
10,846
13,357
76
5,756
202,266 $
404,076
132,149
19,693
3,762
559,680
362,682
16,855
15,871
1,634
7,633
404,675
____________________________
1.
Includes receivables and payables with Cantor. See Note 13—“Related Party Transactions” for additional information.
Excluding unsettled trades impacted by Russia’s Invasion of Ukraine, substantially all open fails to deliver, open fails
to receive and pending trade transactions as of December 31, 2023 have subsequently settled at the contracted amounts. See
Note 19—“Commitments, Contingencies and Guarantees” for additional information related to the potential loss associated
with Russia’s Invasion of Ukraine.
11.
Derivatives
In the normal course of operations, the Company enters into derivative contracts to facilitate client transactions, hedge
principal positions and facilitate hedging activities of affiliated companies. These derivative contracts primarily consist of FX
swaps, FX/commodities options, futures and forwards.
153
The fair value of derivative contracts, presented in accordance with the Company’s netting policy, is set forth below
(in thousands):
Derivative contract
FX swaps
Forwards
Interest rate swaps
Futures
Total
December 31, 2023
December 31, 2022
Assets
Liabilities
Notional
Amounts1
Assets
Liabilities
Notional
Amounts1
$
2,674 $
5,119 $
545,669 $
3,134 $
5,796 $
586,020
805
128
—
609
—
28
310,880
34,272,592
6,703,624
603
25
—
569
—
197,278
2,114,412
1,268
4,253,088
$
3,607 $
5,756 $ 41,832,765 $
3,762 $
7,633 $ 7,150,798
____________________________________
1.
Notional amounts represent the sum of gross long and short derivative contracts, an indication of the volume of the Company’s
derivative activity, and do not represent anticipated losses.
Certain of the Company’s FX swaps are with Cantor. See Note 13—“Related Party Transactions” for additional
information related to these transactions.
The replacement costs of contracts in a gain position were $3.6 million and $3.8 million, as of December 31, 2023 and
2022, respectively.
The following tables present information about the offsetting of derivative instruments as of December 31, 2023 and
2022 (in thousands):
Assets
FX swaps
Forwards
Interest rate swaps
Futures
Total derivative assets
Liabilities
FX swaps
Forwards
Futures
Interest rate swaps
Total derivative liabilities
December 31, 2023
Gross Amounts
Gross Amounts
Offset
Net Amounts
Presented in the
Statements of
Financial
Condition
$
$
$
$
3,467 $
855
12,310
62,693
79,325 $
5,912 $
659
62,721
12,182
81,474 $
(793) $
(50)
(12,182)
(62,693)
(75,718) $
(793) $
(50)
(62,693)
(12,182)
(75,718) $
2,674
805
128
—
3,607
5,119
609
28
—
5,756
154
Assets
FX swaps
Forwards
Interest rate swaps
Futures
Total derivative assets
Liabilities
FX swaps
Futures
Forwards
Interest rate swaps
Total derivative liabilities
December 31, 2022
Gross Amounts
Gross Amounts
Offset
Net Amounts
Presented in the
Statements of
Financial
Condition
$
$
$
$
3,623 $
746
895
64,769
70,033 $
6,285 $
66,037
712
870
73,904 $
(489) $
(143)
(870)
(64,769)
(66,271) $
(489) $
(64,769)
(143)
(870)
(66,271) $
3,134
603
25
—
3,762
5,796
1,268
569
—
7,633
There were no additional balances in gross amounts not offset as of either December 31, 2023 or 2022.
The change in fair value of derivative contracts is reported as part of “Principal transactions” in the Company’s
Consolidated Statements of Operations.
The table below summarizes gains and (losses) on derivative contracts for the years ended December 31, 2023, 2022
and 2021 (in thousands):
Derivative contract
Futures
Interest rate swaps
FX swaps
FX/commodities options
Forwards
Gains, net
Year Ended December 31, 2023
2023
2022
2021
$
$
13,139 $
3,454
2,619
230
—
19,442 $
16,388 $
25
2,466
331
—
19,210 $
10,902
—
182
225
(43)
11,266
12.
Fair Value of Financial Assets and Liabilities
Fair Value Measurements on a Recurring Basis
The following tables set forth by level within the fair value hierarchy financial assets and liabilities accounted for at
fair value under U.S. GAAP guidance (in thousands):
Financial instruments owned, at fair value -
Domestic government debt
Financial instruments owned, at fair value -
Foreign government debt
Financial instruments owned, at fair value -
Equities
FX swaps
Forwards
Interest rate swaps
Futures
Total
Assets at Fair Value at December 31, 2023
Level 1
Level 2
Level 3
Netting and
Collateral
Total
$
31,141 $
— $
— $
— $
31,141
—
487
—
—
—
—
14,164
—
3,467
855
12,310
62,693
—
—
—
—
—
—
—
14,164
—
(793)
(50)
(12,182)
(62,693)
487
2,674
805
128
—
$
31,628 $
93,489 $
— $
(75,718) $
49,399
155
FX swaps
Forwards
Futures
Interest rate swaps
Contingent consideration
Total
Financial instruments owned, at fair value -
Domestic government debt
Financial instruments owned, at fair value -
Foreign government debt
Financial instruments owned, at fair value -
Equities
FX swaps
Forwards
Interest rate swaps
Futures
Total
FX swaps
Futures
Forwards
Interest rate swaps
Contingent consideration
Total
Level 3 Financial Liabilities
Liabilities at Fair Value at December 31, 2023
Level 1
Level 2
Level 3
Netting and
Collateral
Total
$
— $
5,912 $
— $
(793) $
—
—
—
—
659
62,721
12,182
—
—
—
—
11,929
(50)
(62,693)
(12,182)
—
$
— $
81,474 $
11,929 $
(75,718) $
5,119
609
28
—
11,929
17,685
Assets at Fair Value at December 31, 2022
Level 1
Level 2
Level 3
Netting and
Collateral
Total
$
31,175 $
— $
— $
— $
31,175
—
7,678
—
—
7,678
466
—
—
—
—
31,641 $
—
3,623
746
895
64,769
77,711 $
—
—
—
—
—
— $
—
(489)
(143)
(870)
(64,769)
(66,271) $
466
3,134
603
25
—
43,081
Liabilities at Fair Value at December 31, 2022
Level 1
Level 2
Level 3
Netting and
Collateral
Total
— $
—
—
—
—
— $
6,285 $
66,037
712
870
—
73,904 $
— $
—
—
—
24,279
24,279 $
(489) $
(64,769)
(143)
(870)
—
(66,271) $
5,796
1,268
569
—
24,279
31,912
$
$
$
Changes in Level 3 liabilities measured at fair value on a recurring basis for the year ended December 31, 2023 were
as follows (in thousands):
Total
realized and
unrealized
(gains) losses
included in
Net income
(loss)1
Unrealized
(gains) losses
included in
Other
comprehensive
income (loss)2
Opening
Balance as of
January 1,
2023
Purchases/
Issuances3
Sales/
Settlements
Closing
Balance at
December
31, 2023
Unrealized (gains) losses for the
period included in:
Net income
(loss) on Level
3 Assets /
Liabilities
Outstanding at
December 31,
2023
Other
comprehensive
income (loss)
on Level 3
Assets /
Liabilities
Outstanding at
December 31,
2023
Liabilities
Accounts payable, accrued and
other liabilities:
Contingent consideration
$ 24,279 $
1,442 $
— $ 7,710 $ (21,502) $ 11,929 $
835 $
—
_______________________________________
1.
Realized and unrealized gains (losses) are reported in “Other income (loss),” in the Company’s Consolidated Statements of
Operations.
156
2.
3.
Unrealized gains (losses) are reported in “Foreign currency translation adjustments,” in the Company’s Consolidated Statements of
Comprehensive Income (Loss).
“Purchases/Issuances” includes a $2.2 million measurement period adjustment relating to the Trident Acquisition (see Note 16
—“Goodwill and Other Intangible Assets, Net” for additional information).
Changes in Level 3 liabilities measured at fair value on a recurring basis for the year ended December 31, 2022 were
as follows (in thousands):
Total
realized and
unrealized
(gains) losses
included in
Net income
(loss)1
Unrealized
(gains) losses
included in
Other
comprehensive
income (loss)2
Opening
Balance as of
January 1,
2022
Purchases/
Issuances
Sales/
Settlements
Closing
Balance at
December
31, 2022
Unrealized (gains) Losses for the
period included in:
Net income
(loss) on Level
3 Assets /
Liabilities
Outstanding at
December 31,
2022
Other
comprehensive
income (loss)
on Level 3
Assets /
Liabilities
Outstanding
at December
31, 2022
Liabilities
Accounts payable, accrued and
other liabilities:
Contingent consideration
$ 29,756 $
1,034 $
— $ — $ (6,511) $ 24,279 $
1,034 $
—
_______________________________________
1.
2.
Realized and unrealized gains (losses) are reported in “Other expenses” and “Other income (loss),” as applicable, in the Company’s
Consolidated Statements of Operations.
Unrealized gains (losses) are reported in “Foreign currency translation adjustments,” in the Company’s Consolidated Statements of
Comprehensive Income (Loss).
Quantitative Information About Level 3 Fair Value Measurements on a Recurring Basis
The following tables present quantitative information about the significant unobservable inputs utilized by the
Company in the fair value measurement of Level 3 liabilities measured at fair value on a recurring basis (in thousands):
Fair Value as of December 31,
2023
Assets
Liabilities
Valuation
Technique
Unobservable Inputs
Discount rate1
Range
Weighted
Average
7.2%-9.2%
8.6%
Contingent consideration
$
— $
11,929
Present value
of expected
payments
Probability of meeting
earnout and
contingencies
20%-100%
86.5%2
_______________________________________
1.
The discount rate is based on the Company’s calculated weighted-average cost of capital.
The probability of meeting the earnout targets was based on the acquirees’ projected future financial performance, including
revenues.
Fair Value as of December 31,
2022
Assets
Liabilities
Valuation
Technique
Unobservable Inputs
Discount rate1
Range
Weighted
Average
6.8%-10.2%
9.9%
Contingent consideration
$
— $
24,279
Present value
of expected
payments
Probability of meeting
earnout and
contingencies
5%-100%
71.2%2
_______________________________________
1.
The discount rate is based on the Company’s calculated weighted-average cost of capital.
The probability of meeting the earnout targets was based on the acquirees’ projected future financial performance, including
revenues.
2.
2.
Information About Uncertainty of Level 3 Fair Value Measurements
The significant unobservable inputs used in the fair value of the Company’s contingent consideration are the discount
rate and forecasted financial information. Significant increases (decreases) in the discount rate would have resulted in a
significantly lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information
157
would have resulted in a significantly higher (lower) fair value measurement. As of December 31, 2023 and 2022, the present
value of expected payments related to the Company’s contingent consideration was $11.9 million and $24.3 million,
respectively. The undiscounted value of the payments, assuming that all contingencies are met, would be $18.6 million and
$34.7 million as of December 31, 2023 and 2022, respectively.
Fair Value Measurements on a Non-Recurring Basis
Pursuant to the recognition and measurement guidance for equity investments, equity investments carried under the
measurement alternative are remeasured at fair value on a non-recurring basis to reflect observable transactions which occurred
during the period. The Company applied the measurement alternative to equity securities with the fair value of approximately
$85.8 million and $83.8 million, which were included in “Other assets” in the Company’s Consolidated Statements of Financial
Condition as of December 31, 2023 and 2022, respectively. These investments are classified within Level 2 in the fair value
hierarchy, because their estimated fair value is based on valuation methods using the observable transaction price at the
transaction date.
13.
Related Party Transactions
In connection with the Corporate Conversion on July 1, 2023, the BGC Group Board and the Board of Directors of
BGC Partners authorized the assumption of all agreements and arrangements between BGC Partners and any executive officer,
director or affiliate of BGC Partners, with such modifications necessary to reflect the Corporate Conversion. Pursuant to the
foregoing authorization, any existing agreements and arrangements between BGC Partners and any executive officer, director
or affiliate of BGC Partners, were generally assumed unchanged other than making BGC Group a party thereto.
Service Agreements
Throughout Europe and Asia, the Company provides Cantor with administrative services, technology services and
other support, for which it charges Cantor based on the cost of providing such services plus a mark-up, generally 7.5%. In the
U.K., the Company provides these services to Cantor through Tower Bridge. The Company owns 52% of Tower Bridge and
consolidates it, and Cantor owns 48%. Cantor’s interest in Tower Bridge is reflected as a component of “Noncontrolling interest
in subsidiaries” in the Company’s Consolidated Statements of Financial Condition, and the portion of Tower Bridge’s income
attributable to Cantor is included as part of “Net income (loss) attributable to noncontrolling interest in subsidiaries” in the
Company’s Consolidated Statements of Operations. In the U.S., the Company provides Cantor with technology services, for
which it charges Cantor based on the cost of providing such services.
The administrative services agreement provides that direct costs incurred are charged back to the service recipient.
Additionally, the service recipient generally indemnifies the service provider for liabilities that it incurs arising from the
provision of services, other than liabilities arising from fraud or willful misconduct of the service provider. In accordance with
the administrative service agreement, the Company has not recognized any liabilities related to services provided to affiliates.
For the years ended December 31, 2023, 2022 and 2021, Cantor’s share of the net profit (loss) in Tower Bridge was
$2.8 million, $0.7 million and $2.5 million, respectively. This net profit is included as part of “Net income (loss) attributable to
noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Operations.
On September 21, 2018, the Company entered into agreements to provide a guarantee and related obligation to Tower
Bridge in connection with an office lease for the Company’s headquarters in London. The Company is obligated to guarantee
the obligations of Tower Bridge in the event of certain defaults under the applicable lease and ancillary arrangements. In July
2018, the Audit Committee also authorized management of the Company to enter into similar guarantees or provide other forms
of credit support to Tower Bridge or other affiliates of the Company from time to time in the future in similar circumstances
and on similar terms and conditions.
For the years ended December 31, 2023, 2022 and 2021, the Company recognized related party revenues of $16.0
million, $14.7 million and $14.9 million, respectively, for the services provided to Cantor. These revenues are included as part
of “Fees from related parties” in the Company’s Consolidated Statements of Operations.
In the U.S., Cantor and its affiliates provide the Company with administrative services and other support for which
Cantor charges the Company based on the cost of providing such services. In connection with the services Cantor provides, the
Company and Cantor entered into an administrative services agreement whereby certain employees of Cantor are deemed
leased employees of the Company. For the years ended December 31, 2023, 2022 and 2021, the Company was charged $97.4
million, $84.9 million and $81.9 million, respectively, for the services provided by Cantor and its affiliates, of which $64.7
million, $59.2 million and $57.9 million, respectively, were to cover compensation to leased employees for the years ended
December 31, 2023, 2022 and 2021. The fees charged by Cantor for administrative and support services, other than those to
158
cover the compensation costs of leased employees, are included as part of “Fees to related parties” in the Company’s
Consolidated Statements of Operations. The fees charged by Cantor to cover the compensation costs of leased employees are
included as part of “Compensation and employee benefits” in the Company’s Consolidated Statements of Operations.
In connection with the Corporate Conversion on July 1, 2023, BGC Group, Cantor and certain affiliates of Cantor
entered into an Amended and Restated U.S. Master Administrative Services Agreement and an Amended and Restated U.K.
Master Administrative Services Agreement.
Clearing Agreement with Cantor
The Company receives certain clearing services from Cantor pursuant to its clearing agreement. These clearing
services are provided in exchange for payment by the Company of third-party clearing costs and allocated costs. The costs
associated with these payments are included as part of “Fees to related parties” in the Company’s Consolidated Statements of
Operations. The costs for these services are included as part of the charges to BGC for services provided by Cantor and its
affiliates as discussed in “Service Agreements” above.
Purchase of Futures Exchange Group
On July 30, 2021, the Company completed the purchase of the Futures Exchange Group for a purchase price of
$4.9 million at closing, plus the cash held at closing by the Futures Exchange Group, and an earn-out, only payable out of the
Company’s portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures
Exchange Group prior to closing. The transaction has been accounted for as a transaction between entities under common
control.
As part of the purchase of the Futures Exchange Group, Cantor has agreed to indemnify the Company for certain
expenses arising at the Futures Exchange Group up to a maximum of $1.0 million. As of December 31, 2023 and 2022, the
Company had recorded assets of $1.0 million and $1.0 million, respectively, in the Company’s Consolidated Statements of
Financial Condition for this indemnity.
Newmark Spin-Off
The Separation and Distribution Agreement sets forth certain agreements among BGC, Cantor, Newmark and their
respective subsidiaries.
As a result of the Separation, the limited partnership interests in Newmark Holdings were distributed to the holders of
limited partnership interests in BGC Holdings, including Cantor, whereby each holder of BGC Holdings limited partnership
interests at that time held a BGC Holdings limited partnership interest and a corresponding Newmark Holdings limited
partnership interest, which is equal to a BGC Holdings limited partnership interest multiplied by the Contribution Ratio, divided
by the Exchange Ratio. For additional information, see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark
Holdings.”
Subsequent to the Spin-Off, there were remaining partners who held limited partnership interests in BGC Holdings
who are Newmark employees, and there are remaining partners who hold limited partnership interests in Newmark Holdings
who are BGC employees. These limited partnership interests represent interests that were held prior to the Newmark IPO or
were distributed in connection with the Separation. Following the Newmark IPO, employees of BGC and Newmark only
receive limited partnership interests in BGC Holdings and Newmark Holdings, respectively. As a result of the Spin-Off, as the
previous limited partnership interests in BGC Holdings held by Newmark employees and the existing limited partnership
interests in Newmark Holdings held by BGC employees were/are exchanged/redeemed, the related capital is contributed to and
from Cantor, respectively.
On November 30, 2018, BGC Partners caused its subsidiary, BGC Holdings, to distribute in the BGC Holdings
Distribution pro rata all of the 1.5 million exchangeable interests of Newmark Holdings held by BGC Holdings immediately
prior to the effective time of the BGC Holdings Distribution Date to its limited partners entitled to receive distributions on their
BGC Holdings units who were holders of record of such units as of the Record Date (including Cantor and executive officers of
BGC). The Newmark Holdings interests distributed to BGC Holdings partners in the BGC Holdings Distribution are
exchangeable for shares of Newmark Class A common stock, and, in the case of the 0.4 million Newmark Holdings interests
received by Cantor, also into shares of Newmark Class B common stock, at the current Exchange Ratio of 0.9231 shares of
Newmark common stock per Newmark Holdings interest (subject to adjustment).
Prior to the Corporate Conversion, all BGC Holdings units held by employees of Newmark were redeemed or
exchanged, in each case, for shares of BGC Class A common stock.
159
Clearing Capital Agreement with Cantor
In November 2008, the Company entered into a clearing capital agreement with Cantor to clear U.S. Treasury and U.S.
government agency securities transactions on the Company’s behalf. In June 2020, this clearing capital agreement was amended
to cover Cantor providing clearing services in all eligible financial products to the Company and not just U.S. Treasury and
U.S. government agency securities. Pursuant to the terms of this agreement, so long as Cantor is providing clearing services to
BGC, Cantor shall be entitled to request from the Company cash or other collateral acceptable to Cantor in the amount
reasonably requested by Cantor under the clearing capital agreement or Cantor will post cash or other collateral on BGC’s
behalf for a commercially reasonable charge. During the years ended December 31, 2023, 2022 and 2021, the Company was
charged $2.2 million, $0.8 million and $0.7 million, respectively, by Cantor for the cash or other collateral posted by Cantor on
BGC’s behalf. Cantor had not requested any cash or other property from the Company as collateral as of December 31, 2023.
Other Agreements with Cantor
The Company is authorized to enter into short-term arrangements with Cantor to cover any delivery failures in
connection with U.S. Treasury securities transactions and to share equally in any net income resulting from such transactions,
as well as any similar clearing and settlement issues. As of both December 31, 2023 and December 31, 2022, there were no
Repurchase Agreements between the Company and Cantor.
As part of the Company’s cash management process, the Company may enter into tri-party Reverse Repurchase
Agreements and other short-term investments, some of which may be with Cantor. As of December 31, 2023 and 2022, the
Company had no Reverse Repurchase Agreements outstanding.
To more effectively manage the Company’s exposure to changes in FX rates, the Company and Cantor have agreed to
jointly manage the exposure. As a result, the Company is authorized to divide the quarterly allocation of any profit or loss
relating to FX currency hedging between the Company and Cantor. The amount allocated to each party is based on the total net
exposure for the Company and Cantor. The ratio of gross exposures of the Company and Cantor is utilized to determine the
shares of profit or loss allocated to each for the period. During the years ended December 31, 2023, 2022 and 2021, the
Company recognized its share of FX gain of $1.6 million, loss of $0.1 million and gain of $0.5 million, respectively. These
gains and losses are included as part of “Other expenses” in the Company’s Consolidated Statements of Operations.
Pursuant to the separation agreement relating to the Company’s acquisition of certain BGC businesses from Cantor in
2008, Cantor has a right, subject to certain conditions, to be the Company’s customer and to pay the lowest commissions paid
by any other customer, whether by volume, dollar or other applicable measure. In addition, Cantor has an unlimited right to
internally use market data from the Company without any cost. Any future related party transactions or arrangements between
the Company and Cantor are subject to the prior approval by the Audit Committee. During the years ended December 31, 2023,
2022 and 2021, the Company recorded revenues from Cantor entities of $0.3 million, $0.3 million and $0.1 million,
respectively, related to commissions paid to the Company by Cantor. These revenues are included as part of “Commissions” in
the Company’s Consolidated Statements of Operations.
The Company and Cantor are authorized to utilize each other’s brokers to provide brokerage services for securities not
brokered by such entity, so long as, unless otherwise agreed, such brokerage services were provided in the ordinary course and
on terms no less favorable to the receiving party than such services are provided to typical third-party customers.
In August 2013, the Audit Committee authorized the Company to invest up to $350.0 million in an asset-backed
commercial paper program for which certain Cantor entities serve as placement agent and referral agent. The program issues
short-term notes to money market investors and is expected to be used by the Company from time to time as a liquidity
management vehicle. The notes are backed by assets of highly rated banks. The Company is entitled to invest in the program so
long as the program meets investment policy guidelines, including policies related to ratings. Cantor will earn a spread between
the rate it receives from the short-term note issuer and the rate it pays to the Company on any investments in this program. This
spread will be no greater than the spread earned by Cantor for placement of any other commercial paper note in the program. As
of both December 31, 2023 and December 31, 2022, the Company did not have any investments in the program.
On June 5, 2015, BGC Partners entered into the Exchange Agreement with Cantor providing Cantor, CFGM and other
Cantor affiliates entitled to hold BGC Class B common stock the right to exchange from time to time, on a one-to-one basis,
subject to adjustment, up to an aggregate of 34.6 million shares of BGC Class A common stock then owned or subsequently
acquired by such Cantor entities for up to an aggregate of 34.6 million shares of BGC Class B common stock. The Exchange
Agreement enabled the Cantor entities to acquire the same number of shares of BGC Class B common stock that they were
entitled to acquire, prior to the Corporate Conversion, without having to exchange Cantor units in BGC Holdings. In connection
with the Corporate Conversion on July 1, 2023, the Exchange Agreement with Cantor terminated based on its own terms.
On July 1, 2023 as a result of the Corporate Conversion, the total outstanding 64.0 million Cantor units were converted
into shares of BGC Class B common stock, subject to the terms and conditions of the Corporate Conversion Agreement,
160
provided that a portion of the 64.0 million shares of BGC Class B common stock issued to Cantor will convert into BGC Class
A common stock in the event that BGC Group does not issue at least $75.0 million in shares of BGC Class A or B common
stock in connection with certain acquisition transactions prior to the seventh anniversary of the Corporate Conversion.
As of December 31, 2023, Cantor and CFGM did not own any shares of BGC Class A common stock. As of
December 31, 2023, Cantor and CFGM owned 93.3 million and 3.0 million shares of BGC Class B common stock,
respectively.
On March 19, 2018, BGC Partners entered into the BGC Credit Agreement with Cantor. The BGC Credit Agreement
provides for each party and certain of its subsidiaries to issue loans to the other party or any of its subsidiaries in the lender’s
discretion in an aggregate principal amount up to $250.0 million outstanding at any time. The BGC Credit Agreement replaced
the previous Credit Facility between BGC Partners and an affiliate of Cantor. On August 6, 2018, BGC Partners entered into an
amendment to the BGC Credit Agreement, which increased the aggregate principal amount that could be loaned to the other
party or any of its subsidiaries from $250.0 million to $400.0 million that can be outstanding at any time. On October 6, 2023,
BGC Group assumed all rights and obligations of BGC Partners under the BGC Credit Agreement. The BGC Credit Agreement
will mature on the earlier to occur of (a) March 19, 2024, after which the maturity date of the BGC Credit Agreement will
continue to be extended for successive one-year periods unless prior written notice of non-extension is given by a lending party
to a borrowing party at least six months in advance of such renewal date and (b) the termination of the BGC Credit Agreement
by either party pursuant to its terms. The outstanding amounts under the BGC Credit Agreement will bear interest for any rate
period at a per annum rate equal to the higher of BGC’s or Cantor’s short-term borrowing rate in effect at such time plus 1.00%.
As of both December 31, 2023 and 2022, there were no borrowings by BGC or Cantor outstanding under this agreement. The
Company did not record any interest expense related to the agreement for the years ended December 31, 2023, 2022, and 2021.
Receivables from and Payables to Related Broker-Dealers
Amounts due to or from Cantor and Freedom, one of the Company’s equity method investments, are for transactional
revenues under a technology and services agreement with Freedom, as well as for open derivative contracts. These are included
as part of “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” or “Payables to
broker-dealers, clearing organizations, customers and related broker-dealers” in the Company’s Consolidated Statements of
Financial Condition. As of both December 31, 2023 and 2022, the Company had receivables from Freedom of $1.4 million. As
of December 31, 2023 and 2022, the Company had $2.7 million and $3.1 million, respectively, in receivables from Cantor
related to open derivative contracts. As of December 31, 2023 and 2022, the Company had $4.9 million and $5.8 million,
respectively, in payables to Cantor related to open derivative contracts. As of December 31, 2023, the Company had
$0.8 million receivables from and payables to Cantor related to fails and pending trades. As of December 31, 2022, the
Company did not have any receivables from and payables to Cantor related to fails and pending trades.
Loans, Forgivable Loans and Other Receivables from Employees and Partners, Net
The Company has entered into various agreements with certain BGC employees and, prior to the Corporate
Conversion, partners whereby these individuals receive loans which may be either wholly or in part repaid from the
distributions that the individuals receive on some or all of their LPUs in BGC Holdings and Newmark Holdings, prior to the
Corporate Conversion, and by distributions that the individuals receive on some or all of their LPUs in Newmark Holdings and
any dividends paid on participating RSUs and restricted stock awards, subsequent to the Corporate Conversion. Certain of these
loans also may be either wholly or in part repaid from the proceeds of the sale of the BGC employees’ shares of BGC Class A
common stock. In addition, certain loans may be forgiven over a period of time. The forgivable portion of these loans is
recognized as compensation expense over the life of the loan. From time to time, the Company may also enter into agreements
with employees to grant bonus and salary advances or other types of loans. These advances and loans are repayable in the
timeframes outlined in the underlying agreements.
As of December 31, 2023 and 2022, the aggregate balance of employee loans, net, was $367.8 million and $319.6
million, respectively, and is included as “Loans, forgivable loans and other receivables from employees and partners, net” in the
Company’s Consolidated Statements of Financial Condition. Compensation expense for the above-mentioned employee loans
for the years ended December 31, 2023, 2022 and 2021 was $51.3 million, $49.5 million and $217.7 million, respectively. The
compensation expense related to these employee loans is included as part of “Compensation and employee benefits” in the
Company’s Consolidated Statements of Operations.
Interest income on the above-mentioned employee loans for the years ended December 31, 2023, 2022 and 2021 was
$15.1 million, $7.5 million and $10.0 million, respectively. The interest income related to these employee loans is included as
part of “Interest and dividend income” in the Company’s Consolidated Statements of Operations.
161
CEO Program and Other Transactions with CF&Co
As discussed in Note 7—“Stock Transactions and Unit Redemptions,” BGC Partners entered into the August 2022
Sales Agreement, and after the Corporate Conversion, BGC Group entered into the July 2023 Sales Agreement with CF&Co as
the Company’s sales agent under the CEO Program. During both the years ended December 31, 2023 and 2022, the Company
did not sell any shares of Class A common stock under its CEO Program. For the years ended December 31, 2023, 2022 and
2021, the Company was not charged for services provided by CF&Co related to the CEO Program with CF&Co. The net
proceeds of any shares sold would be included as part of “Additional paid-in capital” in the Company’s Consolidated
Statements of Financial Condition.
The Company has engaged CF&Co and its affiliates to act as financial advisors in connection with one or more third-
party business combination transactions as requested by the Company on behalf of its affiliates from time to time on specified
terms, conditions and fees. The Company may pay finders’, investment banking or financial advisory fees to broker-dealers,
including, but not limited to, CF&Co and its affiliates, from time to time in connection with certain business combination
transactions, and, in some cases, the Company may issue shares of BGC Class A common stock in full or partial payment of
such fees.
On October 3, 2014, management was granted approval by the Board and Audit Committee to enter into stock loan
transactions with CF&Co utilizing equities securities. Such stock loan transactions will bear market terms and rates. As of
December 31, 2023 and 2022, the Company did not have any Securities loaned transactions with CF&Co. Any securities loaned
transactions would be included in “Securities loaned” in the Company’s Consolidated Statements of Financial Condition.
On July 24, 2018, the Company issued an aggregate of $450.0 million principal amount of BGC Partners 5.375%
Senior Notes. The BGC Partners 5.375% Senior Notes were general senior unsecured obligations of the Company. In
connection with this issuance of the BGC Partners 5.375% Senior Notes, the Company recorded approximately $0.3 million in
underwriting fees payable to CF&Co. The Company also paid CF&Co an advisory fee of $0.2 million in connection with the
issuance. These fees were recorded as a deduction from the carrying amount of the debt liability, which was amortized as
interest expense over the term of the notes. The BGC Partners 5.375% Senior Notes matured on July 24, 2023.
On September 27, 2019, the Company issued an aggregate of $300.0 million principal amount of BGC Partners
3.750% Senior Notes. In connection with this issuance of BGC Partners 3.750% Senior Notes, the Company recorded $0.2
million in underwriting fees payable to CF&Co. These fees were recorded as a deduction from the carrying amount of the debt
liability, which is amortized as interest expense over the term of the notes.
On June 11, 2020, BGC Partners’ Board of Directors and its Audit Committee authorized a debt repurchase program
for the repurchase by the Company of up to $50.0 million of Company Debt Securities, and on July 1, 2023, BGC Group’s
Board of Directors and its Audit Committee authorized a debt repurchase program for the repurchase by the Company of up to
$50.0 million of Company Debt Securities. Repurchases of Company Debt Securities, if any, are expected to reduce future cash
interest payments, as well as future amounts due at maturity or upon redemption. Under the authorization, the Company may
make repurchases of Company Debt Securities for cash from time to time in the open market or in privately negotiated
transactions upon such terms and at such prices as management may determine. Additionally, the Company is authorized to
make any such repurchases of Company Debt Securities through CF&Co (or its affiliates), in its capacity as agent or principal,
or such other broker-dealers as management shall determine to utilize from time to time, and such repurchases shall be subject
to brokerage commissions which are no higher than standard market commission rates. As of December 31, 2023, the Company
had $50.0 million remaining under its debt repurchase authorization.
On July 10, 2020, the Company issued an aggregate of $300.0 million principal amount of BGC Partners 4.375%
Senior Notes. In connection with this issuance of BGC Partners 4.375% Senior Notes, the Company recorded $0.2 million in
underwriting fees payable to CF&Co. These fees were recorded as a deduction from the carrying amount of the debt liability,
which is amortized as interest expense over the term of the notes. Cantor purchased $14.5 million of such senior notes and
tendered such notes in the Exchange Offer in exchange for an equivalent amount of BGC Group 4.375% Senior Notes. Cantor
holds such BGC Group 4.375% Senior Notes as of December 31, 2023.
On May 25, 2023, the Company issued an aggregate of $350.0 million principal amount of the BGC Partners 8.000%
Senior Notes. In connection with this issuance of BGC Partners 8.000% Senior Notes, the Company paid $0.2 million in
underwriting fees to CF&Co. These fees were recorded as a deduction from the carrying amount of the debt liability, which is
amortized as interest expense over the term of the notes.
Cantor Rights to Purchase Cantor Units from BGC Holdings
Prior to the Corporate Conversion, Cantor had the right to purchase Cantor units from BGC Holdings upon redemption
of non-exchangeable FPUs redeemed by BGC Holdings upon termination or bankruptcy of the Founding/Working Partner. In
addition, where current, terminating, or terminated partners were permitted by the Company to exchange any portion of their
162
FPUs and Cantor consented to such exchangeability, the Company would offer to Cantor the opportunity for Cantor to purchase
the same number of Cantor units in BGC Holdings at the price that Cantor would have paid for Cantor units had the Company
redeemed the FPUs. If Cantor acquired any Cantor units as a result of the purchase or redemption by BGC Holdings of any
FPUs, Cantor would be entitled to the benefits (including distributions) of such units it acquired from the date of termination or
bankruptcy of the applicable Founding/Working Partner.
On March 31, 2021, Cantor purchased from BGC Holdings an aggregate of 1,149,684 Cantor units for aggregate
consideration of $2,104,433 as a result of the redemption of 1,149,684 FPUs, and 1,618,376 Cantor units for aggregate
consideration of $3,040,411 as a result of the exchange of 1,618,376 FPUs.
On October 28, 2021, Cantor purchased from BGC Holdings an aggregate of 460,929 Cantor units for an aggregate
consideration of $715,605 as a result of the redemption of 460,929 FPUs, and 1,179,942 Cantor units for aggregate
consideration of $2,033,838 as a result of the exchange of 1,179,942 FPUs.
On May 17, 2022, Cantor purchased from BGC Holdings an aggregate of 427,494 Cantor units for an aggregate
consideration of $841,010 as a result of the redemption of 427,494 FPUs, and 52,681 Cantor units for an aggregate
consideration of $105,867 as a result of the exchange of 52,681 FPUs.
On October 25, 2022, Cantor purchased from BGC Holdings an aggregate of 275,833 Cantor units for an aggregate
consideration of $397,196 as a result of the redemption of 275,833 FPUs, and 77,507 Cantor units for aggregate consideration
of $142,613 as a result of the exchange of 77,507 FPUs.
On April 16, 2023, Cantor purchased from BGC Holdings an aggregate of 533,757 Cantor units for an aggregate
consideration of $1,051,080 as a result of the redemption of 533,757 FPUs, and 85,775 Cantor units for an aggregate
consideration of $173,154 as a result of the exchange of 85,775 FPUs.
On June 30, 2023, Cantor purchased from BGC Holdings an aggregate of 5,425,209 Cantor units for an aggregate
consideration of $9,715,772 as a result of the redemption of 5,425,209 FPUs, and 324,223 Cantor units for an aggregate
consideration of $598,712 as a result of the exchange of 324,223 FPUs.
As of December 31, 2023, there were no FPUs in BGC Holdings remaining.
Cantor Aurel Revenue Sharing Agreement
On June 24, 2021, the Board and Audit Committee authorized the Company’s French subsidiary, Aurel BGC SAS, to
enter into a revenue sharing agreement pursuant to which Cantor shall provide services to Aurel to support Aurel’s investment
banking activities with respect to special purpose acquisition companies. The services provided by Cantor to Aurel in support of
such SPAC Investment Banking Activities shall include referral of clients, structuring advice, financial advisory services,
referral of investors, deal execution services, and other advisory services in support of Aurel’s SPAC Investment Banking
Activities pursuant to its French investment services license. As compensation, Cantor shall receive a revenue share of 80% of
Aurel’s net revenue attributable to SPAC Investment Banking Activities. The term of the revenue sharing agreement was for an
initial period of 12 months, which automatically renews each year unless either party provides notice of termination at least
three months prior to the anniversary. Aurel is also authorized to serve as bookrunner, underwriter or advisor in connection with
French SPACs which are sponsored by Cantor at market rates for such services. For the years ended December 31, 2023 and
2022, Aurel had no revenue or fees payable to Cantor attributable to SPAC Investment Banking Activities. Any revenue or fees
payable to Cantor attributable to SPAC Investment Banking Activities would be included as part of “Other revenues” and “Fees
to related parties,” respectively, in the Company’s Consolidated Statements of Operations.
Transactions with Executive Officers and Directors
On September 21, 2023, Mr. Windeatt sold 136,891 shares of BGC Class A common stock to the Company. The sale
price per share of $6.98 was the closing price of a share of BGC Class A common stock on September 21, 2023. The
transaction was approved by the Audit Committee and the Compensation Committee of the Board and was made pursuant to
the Company’s stock buyback authorization.
In connection with the Corporate Conversion, on June 2, 2023 Mr. Merkel sold 150,000 shares of Class A common
stock to BGC Partners at $4.21 per share, the closing price of a share of Class A common stock on June 2, 2023. The
transaction was approved by the Audit and Compensation Committees of the Board of BGC Partners and was made pursuant to
BGC Partners’ stock buyback authorization.
In connection with the Corporate Conversion, on May 18, 2023, the BGC Partners Compensation Committee approved
the redemption of all of the non-exchangeable BGC Holdings units held by Mr. Merkel at that time. On May 18, 2023, Mr.
Merkel’s 148,146 NPSU-CVs, 33,585 PSU-CVs, and 74,896 PSUs were redeemed for zero and an aggregate of 256,627 shares
163
of Class A common stock were granted to Mr. Merkel, and 148,146 NPPSU-CVs with a total determination amount of
$681,250 and 33,585 PPSU-CVs with a total determination amount of $162,500 were redeemed for an aggregate cash payment
of $843,750. After deduction of shares of BGC Class A common stock to satisfy applicable tax withholding through the
surrender of shares of BGC Class A common stock valued at $4.61 per share, Mr. Merkel received 196,525 net shares of Class
A common stock.
Since Mr. Lutnick had previously repeatedly waived his rights under the Standing Policy, as of May 18, 2023 his
rights had accumulated for 7,879,736 non-exchangeable PSUs, and 103,763 non-exchangeable PPSUs with a determination
amount of $474,195. Due to the May 18, 2023 monetization of all of Mr. Merkel’s then-remaining non-exchangeable BGC
Holdings units, on such date Mr. Lutnick received additional incremental monetization rights for his then-remaining 3,452,991
non-exchangeable PSUs, and 1,348,042 non-exchangeable PPSUs with a determination amount of $6,175,805.
In connection with the Corporate Conversion and as a result of the monetization event for Mr. Merkel, on May 18,
2023 Mr. Lutnick elected to exercise in full his monetization rights under the Standing Policy, which he had previously waived
in prior years. All of the non-exchangeable BGC Holdings units that Mr. Lutnick held at that time were monetized as follows:
11,332,727 PSUs were redeemed for zero and 11,332,727 shares of Class A common stock were granted to Mr. Lutnick, and
1,451,805 PPSUs with an aggregate determination amount of $6,650,000 were redeemed for an aggregate cash payment of
$6,650,000. After deduction of applicable tax withholding through the surrender of shares of BGC Class A common stock
valued at $4.61 per share, Mr. Lutnick received 5,710,534 net shares of Class A common stock.
On May 18, 2023, Mr. Lutnick also exchanged his then-remaining 520,380 exchangeable PSUs for 520,380 shares of
Class A common stock. After deduction of applicable tax withholding through the surrender of shares of Class A common stock
valued at $4.61 per share, Mr. Lutnick received 232,610 net shares of Class A common stock. In addition, on May 18, 2023,
Mr. Lutnick’s then-remaining 1,474,930 non-exchangeable HDUs were redeemed for a cash capital account payment of
$9,148,000, $2.1 million of which was paid by BGC Partners with the remainder paid by Newmark. As a result of the various
transactions on May 18, 2023 described above, on May 18, 2023, Mr. Lutnick no longer held any limited partnership units of
BGC Holdings.
On April 18, 2023, Dr. Bell sold 21,786 shares of Class A common stock to the Company. The sale price per share of
$4.59 was the closing price of a share of Class A common stock on April 18, 2023. The transaction was approved by the Audit
Committee and the Compensation Committee of the Board and was made pursuant to the Company’s stock buyback
authorization.
On March 14, 2022, the Compensation Committee of BGC Partners approved the grant of exchange rights to Mr.
Windeatt with respect to 135,514 non-exchangeable BGC Holdings LPU-NEWs and 27,826 non-exchangeable PLPU-NEWs
(at the average determination price of $4.84 per unit). On August 11, 2022, the Company repurchased 135,514 exchangeable
BGC Holdings LPU-NEWs held by Mr. Windeatt at the price of $4.08 per unit, which was the closing price of the BGC Class
A common stock on August 11, 2022, and redeemed 27,826 exchangeable PLPU-NEWs held by Mr. Windeatt for $134,678,
less applicable taxes and withholdings.
On December 21, 2021, the Compensation Committee approved a monetization opportunity for Mr. Merkel. Effective
December 21, 2021, 90,366 non-exchangeable BGC Holdings PSUs were redeemed for zero, 149,301 of Mr. Merkel’s non-
exchangeable BGC Holdings PPSUs were redeemed for a cash payment of $555,990, and 90,366 shares of BGC Class A
common stock were issued to Mr. Merkel.
On December 21, 2021, the Compensation Committee approved a monetization opportunity for Mr. Lutnick. Effective
December 21, 2021, 1,939,896 of Mr. Lutnick’s non-exchangeable BGC Holdings PPSUs were redeemed for a payment of
$10,851,803. Mr. Lutnick also elected to redeem all of his 425,766 exchangeable BGC Holdings PPSUs for a payment of
$1,525,706. In connection with the foregoing, Mr. Lutnick’s 2,011,731 non-exchangeable BGC Holdings PSUs were redeemed
for zero and 2,011,731 shares of BGC Class A common stock were issued to Mr. Lutnick, In addition, 376,651 H Units held by
Mr. Lutnick were redeemed for 376,651 HDUs with a capital account of $2,339,003, and in connection with the redemption of
these 376,651 H Units, 463,969 Preferred H Units were redeemed for $2,661,000 for taxes.
On June 28, 2021, (i) the Company exchanged 520,380 exchangeable LPUs held by Mr. Lutnick at the price of $5.86,
which was the closing price of BGC Class A common stock on June 28, 2021, for 520,380 shares of BGC Class A common
stock, less applicable taxes and withholdings, resulting in the delivery of 365,229 net shares of BGC Class A common stock to
Mr. Lutnick, and in connection with the exchange of these 520,380 exchangeable LPUs, 425,765 exchangeable PLPUs were
redeemed for a cash payment of $1,525,705 towards taxes; (ii) 88,636 non-exchangeable LPUs were redeemed for zero, and in
connection therewith the Company issued Mr. Lutnick 88,636 shares of BGC Class A common stock, less applicable taxes and
withholdings, resulting in the delivery of 41,464 net shares of BGC Class A common stock to Mr. Lutnick; and (iii) 1,131,774
H Units held by Mr. Lutnick were redeemed for 1,131,774 HDUs with a capital account of $7,017,000, and in connection with
the redemption of these 1,131,774 H Units, 1,018,390 Preferred H Units were redeemed for $7,983,000 for taxes.
164
On April 28, 2021, the Compensation Committee approved an additional monetization opportunity for Mr. Merkel.
Effective April 29, 2021, 108,350 of Mr. Merkel’s 273,612 non-exchangeable BGC Holdings PSUs were redeemed for zero,
101,358 of Mr. Merkel’s 250,659 non- exchangeable BGC Holdings PPSUs were redeemed for a cash payment of $575,687,
and 108,350 shares of BGC Class A common stock were issued to Mr. Merkel. On April 29, 2021, the 108,350 shares of BGC
Class A common stock were repurchased from Mr. Merkel at the closing price of BGC Class A common stock on that date,
under the Company’s stock buyback program.
On April 8, 2021, the Compensation Committee approved the repurchase by the Company of the remaining 62,211
exchangeable BGC Holdings LPUs held by Mr. Windeatt that were granted exchangeability on March 2, 2020 at the price of
$5.38, the closing price of BGC Class A common stock on April 8, 2020.
On April 8, 2021, the Compensation Committee approved the repurchase by the Company on April 23, 2021 of
123,713 exchangeable BGC Holdings LPU-NEWs held by Mr. Windeatt at the price of $5.65, which was the closing price of
BGC Class A common stock on April 23, 2021, and the redemption of 28,477 exchangeable BGC Holdings PLPU-NEWs held
by Mr. Windeatt for $178,266, less applicable taxes and withholdings.
On February 22, 2021, the Company granted Mr. Windeatt 123,713 exchange rights with respect to 123,713 non-
exchangeable LPUs that were previously granted to Mr. Windeatt on February 22, 2019. The resulting 123,713 exchangeable
LPUs were immediately exchangeable by Mr. Windeatt for an aggregate of 123,713 shares of BGC Class A common stock. The
grant was approved by the Compensation Committee. Additionally, the Compensation Committee approved the right to
exchange for cash 28,477 non-exchangeable PLPUs held by Mr. Windeatt, for a payment of $178,266 for taxes when the LPU
units were exchanged.
Mr. Windeatt 2023 Deed of Amendment
On July 12, 2023, Mr. Windeatt executed the 2023 Deed of Amendment with the U.K. Partnership which amends his
prior executed Deed of Adherence with the U.K. Partnership regarding the terms of his employment. Under the 2023 Deed of
Amendment, the initial period of Mr. Windeatt’s membership in the U.K. Partnership was extended from September 30, 2025
to December 31, 2028. In addition, under the 2023 Deed of Amendment, commencing January 1, 2027, either party may
terminate the Deed by giving written notice to the other party at least 24 months prior to the expiration of the initial period. Mr.
Windeatt’s membership, unless terminated earlier in accordance with the terms of the Deed, will continue following December
31, 2028 on the same terms and conditions set forth in the Deed until written notice to terminate is provided and the 24 month
notice period expires.
Pursuant to the 2023 Deed of Amendment, Mr. Windeatt is also entitled to an increase in drawings from an aggregate
amount of £600,000 per year to an aggregate amount of £700,000 per year effective January 1, 2023, which shall be reviewed
by the Compensation Committee annually. Mr. Windeatt is also eligible for additional allocations of the U.K. Partnership’s
profits, subject to the approval of the Compensation Committee.
In connection and in consideration for Mr. Windeatt’s execution of the 2023 Deed of Amendment, on July 10, 2023
the Company approved accelerating the vesting of 720,509 of the Company’s RSUs held by Mr. Windeatt (calculated based
upon the closing price of the Company’s Class A common stock on July 10, 2023 which was $4.45) and the vesting of
$780,333 of the RSU Tax Account held by Mr. Windeatt. Such RSUs and RSU Tax Account amount vested on July 12, 2023,
and the total value of this transaction was approximately $3,986,600.
Transactions with the Relief Fund
During the year ended December 31, 2015, the Company committed to make charitable contributions to the Cantor
Fitzgerald Relief Fund in the amount of $40.0 million, which was included in “Other expenses” in the Company’s Consolidated
Statements of Operations for the year ended December 31, 2015 and “Accounts payable, accrued and other liabilities” in the
Company’s Consolidated Statements of Financial Condition. The Company fully paid the $40.0 million commitment during the
third quarter of 2022.
As of December 31, 2023 and 2022, the Company had an additional liability to the Cantor Fitzgerald Relief Fund and
The Cantor Foundation (UK) for $12.7 million and $9.2 million, respectively, which included $6.7 million and $6.4 million of
additional expense taken in September 2023 and 2022, respectively, above the original $40.0 million commitment.
Other Transactions
As of December 31, 2021, BGC recognized $8.3 million payable to Newmark, which was included as part of
“Payables to related parties” and “Accounts payable, accrued and other liabilities,” in the Company’s Consolidated Statements
of Financial Condition. The payable was a result of taxes paid by Newmark on its share of taxable income which were included
165
as part of the Company’s consolidated tax return in the periods prior to the Spin-Off. BGC repaid the $8.3 million tax payment
to Newmark during the first three months ended March 31, 2022.
The Company was authorized to enter into loans, investments or other credit support arrangements for Aqua, an
alternative electronic trading platform that offered new pools of block liquidity to the global equities markets; such
arrangements were proportionally and on the same terms as similar arrangements between Aqua and Cantor. On February 15,
2022 and February 25, 2021, the Board and Audit Committee increased the authorized amount by an additional $1.0 million
and $1.0 million, respectively, to an aggregate of $21.2 million. The Company had been further authorized to provide
counterparty or similar guarantees on behalf of Aqua from time to time, provided that liability for any such guarantees, as well
as similar guarantees provided by Cantor, would be shared proportionally with Cantor. Aqua was 51% owned by Cantor and
49% owned by the Company. Aqua was accounted for under the equity method. The Company did not make any contributions
to Aqua during the year ended December 31, 2023. During the year ended December 31, 2022, the Company made $0.6 million
in contributions to Aqua. These contributions are recorded as part of “Investments” in the Company’s Consolidated Statements
of Financial Condition.
The Company had also entered into a subordinated loan agreement with Aqua, whereby the Company loaned Aqua the
principal sum of $1.0 million. The scheduled maturity date on the subordinated loan was September 1, 2024. The loan to Aqua
was recorded as part of “Receivables from related parties” in the Company’s Consolidated Statements of Financial Condition.
The Company did not recognize any interest income on the subordinated loan subsequent to it being designated as a non-
accrual loan in November 2022. As of December 31, 2022, the Company wrote off $0.6 million of the subordinated loan, which
was recorded as part of “Other expenses” on the Company’s Consolidated Statements of Operations. During the fourth quarter
of 2023, the Company received cash payment fully satisfying the remaining subordinated loan receivable of $0.4 million.
On October 25, 2016, the Board and Audit Committee authorized the purchase of 9,000 Class B Units of Lucera,
representing all of the issued and outstanding Class B Units of Lucera not already owned by the Company. On November 4,
2016, the Company completed this transaction. As a result of this transaction, the Company owns 100% of the ownership
interests in Lucera.
In the purchase agreement by which the Company acquired Cantor’s remaining interest in Lucera, Cantor agreed,
subject to certain exceptions, not to solicit certain senior executives of Lucera’s business and was granted the right to be a
customer of Lucera’s businesses on the best terms made available to any other customer.
The aggregate purchase price paid by the Company to Cantor consisted of approximately $24.2 million in cash plus a
$4.8 million post-closing adjustment determined after closing based on netting Lucera’s expenses paid by Cantor after May 1,
2016 against accounts receivable owed to Lucera by Cantor for access to Lucera’s business from May 1, 2016 through the
closing date. The Company previously had a 20% ownership interest in Lucera and accounted for its investment using the
equity method. The purchase has been accounted for as a transaction between entities under common control. During the years
ended December 31, 2023, 2022 and 2021, Lucera recognized nil, nil and $0.2 million in related party revenues from Cantor,
respectively. These revenues are included in “Data, network and post-trade” in the Company’s Consolidated Statements of
Operations.
The Company periodically acts as an intermediary to administer payments on behalf of related parties.
BGC Sublease From Newmark
In May 2020, BGC U.S. OpCo entered into an arrangement to sublease excess space from RKF Retail Holdings LLC,
a subsidiary of Newmark, which sublease was approved by the Audit Committee. The deal was a one-year sublease of
approximately 21,000 rentable square feet in New York City. Under the terms of the sublease, BGC U.S. OpCo paid a fixed
rent amount of $1.1 million in addition to all operating and tax expenses attributable to the lease. In May 2021, the sublease was
amended to provide for a rate of $15 thousand per month based on the size of utilized space, with terms extending on a month-
to-month basis, and expiring on December 31, 2021. In connection with the sublease, BGC U.S. OpCo paid $0.5 million for the
year ended December 31, 2021.
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14.
Investments
Equity Method Investments and Investments Carried Under the Measurement Alternative
(in thousands)
Advanced Markets Holdings
China Credit BGC Money Broking Company Limited
Freedom International Brokerage
Other
Equity method investments
Investments carried under measurement alternative
Total equity method and investments carried under measurement
alternative
Percent
Ownership1
25%
33%
45%
December 31,
2023
December 31,
2022
$
$
$
4,481 $
21,277
9,507
2,857
38,122 $
192
5,090
21,104
9,659
2,530
38,383
192
38,314 $
38,575
_______________________________________
1
Represents the Company’s voting interest in the equity method investment as of December 31, 2023 and 2022.
The carrying value of the Company’s equity method investments was $38.1 million and $38.4 million as of
December 31, 2023 and 2022, respectively, and is included in “Investments” in the Company’s Consolidated Statements of
Financial Condition.
The Company recognized gains of $9.2 million, $10.9 million and $6.7 million related to its equity method
investments for the years ended December 31, 2023, 2022 and 2021, respectively. The Company’s share of the net gains or
losses is reflected in “Gains (losses) on equity method investments” in the Company’s Consolidated Statements of Operations.
For the years ended December 31, 2023, 2022 and 2021, the Company did not recognize impairment charges of
existing equity method investments, however, it wrote off a portion of a subordinated loan to an equity method investee in the
year of 2022 (see “Investments in VIEs” within this note for more information). During the years ended December 31, 2023 and
2022, the Company did not sell any equity method investments. The Company sold part of an equity method investment with a
fair value of $3.8 million during the year ended December 31, 2021.
Summarized financial information for the Company’s equity method investments is as follows (in thousands):
Statements of operations:
Total revenues
Total expenses
Income before income taxes
Statements of financial condition:
Cash and cash equivalents
Fixed assets, net
Other assets
Total assets
Payables to related parties
Other liabilities
Total partners’ capital
Total liabilities and partners’ capital
Year Ended December 31,
2023
2022
2021
$
$
111,242 $
84,216
27,026 $
125,405 $
88,050
37,355 $
108,458
82,581
25,877
December 31,
2023
2022
$
$
$
79,440 $
1,900
51,336
132,676 $
—
81,898
50,779
132,677 $
82,725
1,848
54,744
139,317
—
78,740
60,577
139,317
See Note 13—“Related Party Transactions” for information regarding related party transactions with unconsolidated
entities included in the Company’s Consolidated Financial Statements.
167
Investments Carried Under Measurement Alternative
The Company has acquired equity investments for which it did not have the ability to exert significant influence over
operating and financial policies of the investees. These investments are accounted for using the measurement alternative in
accordance with the guidance on recognition and measurement.
The carrying value of these investments as of both December 31, 2023 and 2022 was $0.2 million, and they are
included in “Investments” in the Company’s Consolidated Statements of Financial Condition. The Company did not recognize
any gains, losses, or impairments relating to investments carried under the measurement alternative for the years ended
December 31, 2023, 2022 and 2021.
In addition, as of December 31, 2023 and 2022, the Company owns membership shares, which are included in “Other
assets” in the Company’s Consolidated Statements of Financial Condition. These equity investments are accounted for using
the measurement alternative in accordance with the guidance on recognition and measurement. The Company recognized $1.9
million of unrealized gains, $1.8 million of unrealized gains, and $0.1 million of unrealized losses to reflect observable
transactions for these shares during the years ended December 31, 2023, 2022, and 2021, respectively.
Investments in VIEs
Certain of the Company’s equity method investments are considered VIEs, as defined under the accounting guidance
for consolidation. The Company is not considered the primary beneficiary of and therefore does not consolidate these VIEs.
The Company’s involvement with such entities is in the form of direct equity interests and related agreements. The Company’s
maximum exposure to loss with respect to the VIEs is its investment in such entities as well as a credit facility and a
subordinated loan.
The following table sets forth the Company’s investment in its unconsolidated VIEs and the maximum exposure to
loss with respect to such entities (in thousands).
Variable interest entities1
December 31, 2023
December 31, 2022
Investment
Maximum
Exposure to Loss
Investment
Maximum
Exposure to Loss
$
2,857 $
2,857 $
2,530 $
2,959
__________________
1
The Company’s maximum exposure to loss with respect to its unconsolidated VIEs includes the sum of its equity investments. The
Company has entered into a subordinated loan agreement with Aqua, whereby the Company agreed to lend the principal sum of
$1.0 million. The Company did not recognize any interest income on the subordinated loan subsequent to being designated as a
non-accrual loan in November 2022. As of December 31, 2022, the Company had written off $0.6 million of the subordinated loan,
which was recorded as part of “Other expenses” on the Company’s Consolidated Statements of Operations. As of December 31,
2023, the Company had received cash payment fully satisfying the remaining subordinated loan receivable of $0.4 million.
Consolidated VIE
The Company invested in a limited liability company that is focused on developing a proprietary trading technology.
The limited liability company is a VIE, and it was determined that the Company is the primary beneficiary of this VIE because
the Company was the provider of the majority of this VIE’s start-up capital and has the power to direct the activities of this VIE
that most significantly impact its economic performance, primarily through its voting percentage and consent rights on the
activities that would most significantly influence the entity. The consolidated VIE had total assets of $9.5 million and $9.2
million as of December 31, 2023 and 2022, respectively, which primarily consisted of clearing margin. There were no material
restrictions on the consolidated VIE’s assets. The consolidated VIE had total liabilities of $1.2 million and $1.4 million as of
December 31, 2023 and 2022, respectively. The Company’s exposure to economic loss on this VIE was $5.7 million and $5.5
million as of December 31, 2023 and 2022, respectively.
168
15.
Fixed Assets, Net
Fixed assets, net consisted of the following (in thousands):
Computer and communications equipment
Software, including software development costs
Leasehold improvements and other fixed assets
Less: accumulated depreciation and amortization
Fixed assets, net
December 31,
2023
103,621 $
360,047
99,034
562,702
(384,402)
178,300 $
$
$
December 31,
2022
95,730
320,275
94,875
510,880
(327,402)
183,478
Depreciation expense was $21.0 million, $22.3 million and $23.7 million for the years ended December 31, 2023,
2022 and 2021, respectively. Depreciation is included as part of “Occupancy and equipment” in the Company’s Consolidated
Statements of Operations.
The Company has approximately $5.9 million and $5.8 million of asset retirement obligations related to certain of its
leasehold improvements as of December 31, 2023 and 2022, respectively. The associated asset retirement cost is capitalized as
part of the carrying amount of the long-lived asset. The liability is discounted and accretion expense is recognized using the
credit adjusted risk-free interest rate in effect when the liability was initially recognized.
For the years ended December 31, 2023, 2022 and 2021 software development costs totaling $45.0 million, $48.2
million, and $43.2 million, respectively, were capitalized. Amortization of software development costs totaled $43.3 million,
$37.1 million and $34.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. Amortization of software
development costs is included as part of “Occupancy and equipment” in the Company’s Consolidated Statements of Operations.
Impairment charges of $3.1 million, $6.1 million and $11.1 million were recorded for the years ended December 31,
2023, 2022 and 2021, respectively, related to the evaluation of capitalized software projects for future benefit and for fixed
assets no longer in service. Impairment charges related to capitalized software and fixed assets are reflected in “Occupancy and
equipment” in the Company’s Consolidated Statements of Operations.
16.
Goodwill and Other Intangible Assets, Net
The changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 were as follows (in
thousands):
Balance at December 31, 2021
Disposal of Business
Cumulative translation adjustment
Balance at December 31, 2022
Acquisitions
Measurement period adjustments
Cumulative translation adjustment
Balance at December 31, 2023
Goodwill
486,919
(842)
508
486,585
19,901
(1,493)
1,351
506,344
$
$
$
For additional information on Goodwill, see Note 4—“Acquisitions.”
The Company completed its annual goodwill impairment testing during the fourth quarters of 2023 and 2022,
respectively, which did not result in any goodwill impairment. See Note 3—“Summary of Significant Accounting Policies” for
more information.
169
Other intangible assets consisted of the following (in thousands, except weighted-average remaining life):
Definite life intangible assets:
Customer-related
Technology
Noncompete agreements
Patents
All other
Total definite life intangible assets
Indefinite life intangible assets:
Trade names
Licenses
Domain name
Total indefinite life intangible assets
Total
Definite life intangible assets:
Customer-related
Technology
Noncompete agreements
Patents
All other
Total definite life intangible assets
Indefinite life intangible assets:
Trade names
Licenses
Domain name
Total indefinite life intangible assets
Total
December 31, 2023
Gross Amount
Accumulated
Amortization
Net Carrying
Amount
Weighted-
Average
Remaining Life
(Years)
$
210,655 $
97,401 $
113,254
23,997
20,892
11,950
20,325
23,997
19,322
10,703
7,364
287,819
158,787
79,570
2,229
454
82,253
—
—
—
—
—
1,570
1,247
12,961
129,032
79,570
2,229
454
82,253
$
370,072 $
158,787 $
211,285
9.7
N/A
2.2
2.9
10.3
9.6
N/A
N/A
N/A
N/A
December 31, 2022
Gross Amount
Accumulated
Amortization
Net Carrying
Amount
Weighted-
Average
Remaining Life
(Years)
$
$
173,436 $
23,997
19,818
11,473
17,035
245,759
79,570
2,284
454
82,308
328,067 $
74,337 $
23,997
19,078
10,430
7,442
135,284
—
—
—
—
135,284 $
99,099
—
740
1,043
9,593
110,475
79,570
2,284
454
82,308
192,783
9.3
N/A
3.9
3.1
8.7
9.2
N/A
N/A
N/A
N/A
Intangible amortization expense was $16.0 million, $15.7 million and $23.3 million for the years ended December 31,
2023, 2022 and 2021, respectively. Intangible amortization is included as part of “Other expenses” in the Company’s
Consolidated Statements of Operations.
The Company completed its annual intangible impairment testing during the fourth quarter of 2023. There were no
impairment charges for the Company’s definite and indefinite life intangibles for the years ended December 31, 2023, 2022 and
2021. See Note 3—“Summary of Significant Accounting Policies” for more information.
170
The estimated future amortization expense of definite life intangible assets as of December 31, 2023 is as follows (in
millions):
2024
2025
2026
2027
2028
2029 and thereafter
Total
$
$
18.1
17.4
16.9
12.7
12.0
51.9
129.0
17.
Notes Payable, Other and Short-Term Borrowings
Notes payable, other and short-term borrowings consisted of the following (in thousands):
Unsecured senior revolving credit agreement
BGC Partners 5.375% Senior Notes due July 24, 2023
BGC Group 3.750% Senior Notes due October 1, 2024
BGC Partners 3.750% Senior Notes due October 1, 2024
BGC Group 4.375% Senior Notes due December 15, 2025
BGC Partners 4.375% Senior Notes due December 15, 2025
BGC Group 8.000% Senior Notes due May 25, 2028
BGC Partners 8.000% Senior Notes due May 25, 2028
Collateralized borrowings
Total Notes payable and other borrowings1
Short-term borrowings
December 31,
2023
December 31,
2022
$
239,180 $
—
—
449,243
254,814
44,383
286,729
11,800
343,852
2,748
—
1,183,506
—
—
298,558
—
298,165
—
—
3,251
1,049,217
1,917
Total Notes payable, other and short-term borrowings
$
1,183,506 $
1,051,134
______________________________________
1
The Company was in compliance with all debt covenants, as applicable, as of December 31, 2023.
Exchange Offer and Market-Making Registration Statement
On October 6, 2023, BGC Group completed the Exchange Offer, in which BGC Group offered to exchange the BGC
Partners Notes for new notes to be issued by BGC Group with the same respective interest rates, maturity dates and
substantially identical terms as the tendered notes, and cash. In connection with the Exchange Offer, and on behalf of BGC
Partners, BGC Group also solicited consents from (i) holders of the BGC Partners Notes to certain proposed amendments to the
indenture and supplemental indentures pursuant to which such BGC Partners Notes were issued to, among other things,
eliminate certain affirmative and restrictive covenants and events of default, including the “Change of Control” provisions
described below, which had applied to each series of the BGC Partners Notes, and (ii) from holders of the BGC Partners
8.000% Senior Notes to amend the registration rights agreement relating thereto to terminate such agreement. As of September
19, 2023, the requisite note holder consents were received to adopt the proposed indenture amendments and terminate the
registration rights agreement relating to the BGC Partners 8.000% Senior Notes. In connection with the October 6, 2023 closing
of the Exchange Offer, (i) $255.5 million aggregate principal amount of BGC Partners 3.750% Senior Notes were exchanged
for BGC Group 3.750% Senior Notes and subsequently canceled, $288.2 million aggregate principal amount of BGC Partners
4.375% Senior Notes were exchanged for BGC Group 4.375% Senior Notes and subsequently cancelled, $347.2 million
aggregate principal amount of BGC Partners 8.000% Senior Notes were exchanged for BGC Group 8.000% Senior Notes and
subsequently cancelled, and equivalent aggregate principal amounts of BGC Group 3.750% Senior Notes, BGC Group 4.375%
Senior Notes and BGC Group 8.000% Senior Notes, respectively, were issued; (ii) the indenture and supplemental indentures
relating to the BGC Partners 3.750% Senior Notes, the BGC Partners 4.375% Senior Notes and the BGC Partners 8.000%
Senior Notes were amended as proposed; and (iii) the registration rights agreement relating to the BGC Partners 8.000% Senior
Notes was terminated. Issuance costs related to the Exchange Offer of $0.9 million are amortized as interest expense and the
carrying value of the BGC Group 3.750% Senior Notes, the BGC Group 4.375% Senior Notes, and the BGC Group 8.000%
Senior Notes will accrete up to the face amount over the term of the notes.
171
On October 19, 2023, the Company filed a resale registration statement on Form S-3 pursuant to which CF&Co may
make offers and sales of the BGC Group 3.750% Senior Notes, the BGC Group 4.375% Senior Notes and the BGC Group
8.000% Senior Notes in connection with ongoing market-making transactions which may occur from time to time. Such
market-making transactions in these securities may occur in the open market or may be privately negotiated at prevailing
market prices at a time of resale or at related or negotiated prices. Neither CF&Co, nor any other of the Company’s affiliates,
has any obligation to make a market for the Company’s securities, and CF&Co or any such other affiliate may discontinue
market-making activities at any time without notice.
Unsecured Senior Revolving Credit Agreement
On November 28, 2018, BGC Partners entered into the Revolving Credit Agreement with Bank of America, N.A., as
administrative agent, and a syndicate of lenders, which replaced the previously existing committed unsecured senior revolving
credit agreement. The maturity date of the Revolving Credit Agreement was November 28, 2020, and the maximum revolving
loan balance was $350.0 million. Borrowings under this Revolving Credit Agreement bore interest at either LIBOR or a defined
base rate plus additional margin. On December 11, 2019, BGC Partners entered into an amendment to the Revolving Credit
Agreement. Pursuant to the amendment, the maturity date was extended to February 26, 2021. On February 26, 2020, BGC
Partners entered into a second amendment to the Revolving Credit Agreement, pursuant to which, the maturity date was
extended by two years to February 26, 2023. There was no change to the interest rate or the maximum revolving loan balance.
On March 10, 2022, BGC Partners entered into an amendment and restatement of the senior unsecured revolving credit
agreement, pursuant to which the maturity date was extended to March 10, 2025, the size of the credit facility was increased to
$375.0 million, and borrowings under this agreement bear interest based on either SOFR or a defined base rate plus additional
margin. On October 6, 2023, the Revolving Credit Agreement was amended to exclude the BGC Partners Notes from the
restrictive covenant in the Revolving Credit Agreement limiting the indebtedness of subsidiaries, and BGC Group assumed all
of the rights and obligations of BGC Partners under the Revolving Credit Agreement and has become the borrower thereunder.
As of December 31, 2023, there were $239.2 million borrowings outstanding, net of deferred financing costs of $0.8
million under the Revolving Credit Agreement. As of December 31, 2022, there were no borrowings outstanding under the
Revolving Credit Agreement. BGC Group recorded interest expense related to the Revolving Credit Agreement of $4.4 million
for the year ended December 31, 2023. BGC Group did not record any interest expense related to the Revolving Credit
Agreement for the years ended December 31, 2022 and 2021. BGC Partners recorded interest expense related to the Revolving
Credit Agreement of $6.9 million, $2.3 million and $3.6 million for the years ended December 31, 2023, 2022 and 2021,
respectively.
Senior Notes
The BGC Group Notes and BGC Partners Notes are recorded at amortized cost. The carrying amounts and estimated
fair values of the BGC Group Notes and BGC Partners Notes were as follows (in thousands):
December 31, 2023
December 31, 2022
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
BGC Partners 5.375% Senior Notes due July 24, 2023
BGC Group 3.750% Senior Notes due October 1, 2024
BGC Partners 3.750% Senior Notes due October 1, 2024
BGC Group 4.375% Senior Notes due December 15, 2025
BGC Partners 4.375% Senior Notes due December 15, 2025
BGC Group 8.000% Senior Notes due May 25, 2028
BGC Partners 8.000% Senior Notes due May 25, 2028
Total
$
— $
254,814
44,383
286,729
11,800
343,852
2,748
944,326 $
$
— $
449,007
—
286,894
—
281,114
—
—
947,301 $ 1,045,966 $ 1,017,015
449,243 $
—
298,558
—
298,165
—
—
249,722
43,464
276,569
11,371
363,274
2,901
The fair values of the BGC Group Notes and BGC Partners Notes were determined using observable market prices as
these securities are traded, and based on whether they are deemed to be actively traded, the BGC Partners 5.375% Senior Notes,
the BGC Group 3.750% Senior Notes, the BGC Partners 3.750% Senior Notes, the BGC Group 4.375% Senior Notes, the BGC
Partners 4.375% Senior Notes, the BGC Group 8.000% Senior Notes, and the BGC Partners 8.000% Senior Notes are
considered Level 2 within the fair value hierarchy.
172
5.375% Senior Notes
On July 24, 2018, BGC Partners issued an aggregate of $450.0 million principal amount of BGC Partners 5.375%
Senior Notes. The BGC Partners 5.375% Senior Notes were general senior unsecured obligations of BGC Partners. The BGC
Partners 5.375% Senior Notes bore interest at a rate of 5.375% per year, payable in cash on January 24 and July 24 of each
year, commencing January 24, 2019. The BGC Partners 5.375% Senior Notes matured on July 24, 2023. Prior to maturity, BGC
Partners was able to redeem some or all of the BGC Partners 5.375% Senior Notes at any time or from time to time for cash at
certain “make-whole” redemption prices (as set forth in the supplemental indenture related to the BGC Partners 5.375% Senior
Notes). If a “Change of Control Triggering Event” (as defined in the supplemental indenture governing the BGC Partners
5.375% Senior Notes) occurred, holders could have required BGC Partners to purchase all or a portion of their notes for cash at
a price equal to 101% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but
excluding, the purchase date. The initial carrying value of the BGC Partners 5.375% Senior Notes was $444.2 million, net of
the discount and debt issuance costs of $5.8 million. The issuance costs were amortized as interest expense and the carrying
value of the BGC Partners 5.375% Senior Notes accreted up to the face amount over the term of the notes. On July 24, 2023,
BGC Partners repaid the principal plus accrued interest on the BGC Partners 5.375% Senior Notes. BGC Partners recorded
interest expense related to the BGC Partners 5.375% Senior Notes of $14.5 million, $25.5 million and $25.5 million for the
years ended December 31, 2023, 2022 and 2021, respectively.
3.750% Senior Notes
On September 27, 2019, BGC Partners issued an aggregate of $300.0 million principal amount of BGC Partners
3.750% Senior Notes. The BGC Partners 3.750% Senior Notes are general unsecured obligations of BGC Partners. The BGC
Partners 3.750% Senior Notes bear interest at a rate of 3.750% per year, payable in cash on April 1 and October 1 of each year,
commencing April 1, 2020. The BGC Partners 3.750% Senior Notes will mature on October 1, 2024. BGC Partners may
redeem some or all of the BGC Partners 3.750% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture governing the BGC Partners 3.750% Senior Notes). The initial
carrying value of the BGC Partners 3.750% Senior Notes was $296.1 million, net of discount and debt issuance costs of $3.9
million. The issuance costs are amortized as interest expense and the carrying value of the BGC Partners 3.750% Senior Notes
will accrete up to the face amount over the term of the notes.
As discussed above, on October 6, 2023, pursuant to the Exchange Offer, $255.5 million aggregate principal amount
of BGC Partners 3.750% Senior Notes were exchanged for BGC Group 3.750% Senior Notes and subsequently cancelled, and
certain amendments to the indenture and supplemental indenture governing the BGC Partners 3.750% Senior Notes became
effective. The BGC Group 3.750% Senior Notes will mature on October 1, 2024 and bear interest at a rate of 3.750% per year,
payable in cash on April 1 and October 1 of each year, commencing April 1, 2024. BGC Group may redeem some or all of the
BGC Group 3.750% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set
forth in the supplemental indenture related to the BGC Group 3.750% Senior Notes). If a “Change of Control Triggering
Event” (as defined in the supplemental indenture related to the BGC Group 3.750% Senior Notes) occurs, holders may require
BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal amount of the notes to
be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following the closing of the Exchange Offer, $44.5 million aggregate principal amount of BGC Partners 3.750%
Senior Notes remained outstanding.
The carrying value of the BGC Group 3.750% Senior Notes was $254.8 million as of December 31, 2023. BGC Group
recorded interest expense related to the BGC Group 3.750% Senior Notes of $2.6 million for the year ended December 31,
2023. BGC Group did not record interest expense related to the BGC Group 3.750% Senior Notes for the years ended
December 31, 2022 and 2021. The carrying value of the BGC Partners 3.750% Senior Notes was $44.4 million as of
December 31, 2023. BGC Partners recorded interest expense related to the BGC Partners 3.750% Senior Notes of $9.5 million
for the year ended December 31, 2023, and $12.1 million for each of the years ended December 31, 2022, and 2021.
4.375% Senior Notes
On July 10, 2020, BGC Partners issued an aggregate of $300.0 million principal amount of BGC Partners 4.375%
Senior Notes. The BGC Partners 4.375% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners
4.375% Senior Notes bear interest at a rate of 4.375% per year, payable in cash on June 15 and December 15 of each year,
commencing December 15, 2020. The BGC Partners 4.375% Senior Notes will mature on December 15, 2025. BGC Partners
may redeem some or all of the BGC Partners 4.375% Senior Notes at any time or from time to time for cash at certain “make-
whole” redemption prices (as set forth in the supplemental indenture governing the BGC Partners 4.375% Senior Notes). The
initial carrying value of the BGC Partners 4.375% Senior Notes was $296.8 million, net of discount and debt issuance costs of
173
$3.2 million. The issuance costs are amortized as interest expense and the carrying value of the BGC Partners 4.375% Senior
Notes will accrete up to the face amount over the term of the notes.
As discussed above, on October 6, 2023, pursuant to the Exchange Offer, $288.2 million aggregate principal amount
of BGC Partners 4.375% Senior Notes were exchanged for BGC Group 4.375% Senior Notes and subsequently cancelled, and
certain amendments to the indenture and supplemental indenture governing the BGC Partners 4.375% Senior Notes became
effective. The BGC Group 4.375% Senior Notes will mature on December 15, 2025 and bear interest at a rate of 4.375% per
year, payable in cash on June 15 and December 15 of each year, commencing December 15, 2023. BGC Group may redeem
some or all of the BGC Group 4.375% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture related to the BGC Group 4.375% Senior Notes). If a “Change of
Control Triggering Event” (as defined in the supplemental indenture related to the BGC Group 4.375% Senior Notes) occurs,
holders may require BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal
amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following the closing of the Exchange Offer, $11.8 million aggregate principal amount of BGC Partners 4.375%
Senior Notes remained outstanding. Cantor participated in the Exchange Offer, and currently holds $14.5 million aggregate
principal amount of BGC Group 4.375% Senior Notes.
The carrying value of the BGC Group 4.375% Senior Notes was $286.7 million as of December 31, 2023. BGC Group
recorded interest expense related to the BGC Group 4.375% Senior Notes of $3.3 million for the year ended December 31,
2023. BGC Group did not record interest expense related to the BGC Group 4.375% Senior Notes for the years ended
December 31, 2022 and 2021. The carrying value of the BGC Partners 4.375% Senior Notes was $11.8 million as
of December 31, 2023. BGC Partners recorded interest expense related to the BGC Partners 4.375% Senior Notes of
$10.5 million for the year ended December 31, 2023, and $13.8 million for each of the years ended December 31, 2022 and
2021.
8.000% Senior Notes
On May 25, 2023, BGC Partners issued an aggregate of $350.0 million principal amount of BGC Partners 8.000%
Senior Notes. The BGC Partners 8.000% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners
8.000% Senior Notes bear interest at a rate of 8.000% per year, payable in cash on May 25 and November 25 of each year,
commencing November 25, 2023. The BGC Partners 8.000% Senior Notes will mature on May 25, 2028. BGC Partners may
redeem some or all of the BGC Partners 8.000% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture governing the BGC Partners 8.000% Senior Notes). The initial
carrying value of the BGC Partners 8.000% Senior Notes was $346.6 million, net of debt issuance costs of $3.4 million. The
issuance costs are amortized as interest expense and the carrying value of the BGC Partners 8.000% Senior Notes will accrete
up to the face amount over the term of the notes.
On October 6, 2023, pursuant to the Exchange Offer, $347.2 million aggregate principal amount of BGC Partners
8.000% Senior Notes were exchanged for BGC Group 8.000% Senior Notes and subsequently cancelled, and certain
amendments to the indenture and supplemental indenture governing the BGC Partners 8.000% Senior Notes became effective.
The BGC Group 8.000% Senior Notes will mature on May 25, 2028 and bear interest at a rate of 8.000% per year, payable in
cash on May 25 and November 25 of each year, commencing November 25, 2023. BGC Group may redeem some or all of the
BGC Group 8.000% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set
forth in the supplemental indenture related to the BGC Group 8.000% Senior Notes). If a “Change of Control Triggering
Event” (as defined in the supplemental indenture related to the BGC Group 8.000% Senior Notes) occurs, holders may require
BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal amount of the notes to
be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following closing of the Exchange Offer, $2.8 million aggregate principal amount of the BGC Partners 8.000% Senior
Notes remained outstanding. In connection with the issuance of the BGC Partners 8.000% Senior Notes, BGC Partners entered
into a registration rights agreement providing for a future registered exchange offer by May 25, 2024 in which holders of the
BGC Partners 8.000% Senior Notes, issued in a private placement on May 25, 2023, could exchange such notes for new
registered notes with substantially identical terms. Such registration rights agreement was terminated in connection with the
closing of the Exchange Offer.
The carrying value of the BGC Group 8.000% Senior Notes was $343.9 million as of December 31, 2023. BGC Group
recorded interest expense related to the BGC Group 8.000% Senior Notes of $7.1 million for the year ended December 31,
2023. The carrying value of the BGC Partners 8.000% Senior Notes was $2.7 million as of December 31, 2023. BGC Partners
recorded interest expense related to the BGC Partners 8.000% Senior Notes of $10.0 million for the year ended December 31,
2023.
174
Collateralized Borrowings
On April 8, 2019, BGC Partners entered into a $15.0 million secured loan arrangement, under which it pledged certain
fixed assets as security for a loan. This arrangement incurred interest at a fixed rate of 3.77% and matured on April 8, 2023, at
which point the loan was repaid in full; therefore, there were no borrowings as of December 31, 2023. As of December 31,
2022, BGC Partners had $2.0 million outstanding related to this secured loan arrangement. The book value of the fixed assets
pledged as of December 31, 2022 was nil. BGC Partners recorded interest expense related to this secured loan arrangement of
nil, $0.1 million and $0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.
On April 19, 2019, BGC Partners entered into a $10.0 million secured loan arrangement, under which it pledged
certain fixed assets as security for a loan. This arrangement incurred interest at a fixed rate of 3.89% and matured on April 19,
2023, at which point the loan was repaid in full; therefore, there were no borrowings as of December 31, 2023. As of
December 31, 2022, BGC Partners had $1.3 million outstanding related to this secured loan arrangement. The book value of the
fixed assets pledged as of December 31, 2022 was $0.3 million. BGC Partners recorded interest expense related to this secured
loan arrangement of nil, $0.1 million and $0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Short-Term Borrowings
On August 22, 2017, BGC Partners entered into a committed unsecured loan agreement with Itau Unibanco S.A. The
agreement provided for short-term loans of up to $4.0 million (BRL 20.0 million). Borrowings under this agreement bore
interest at the Brazilian Interbank offering rate plus 3.20%. During June 2023, the borrowings under this agreement were repaid
in full, and the loan was terminated; therefore, as of December 31, 2023, there were no borrowings outstanding under the
agreement. As of December 31, 2022, there were $2.0 million (BRL10.0 million) of borrowings outstanding under this
agreement. As of December 31, 2022, the interest rate was 17.0%. BGC Partners recorded interest expense related to the
agreement of $0.2 million, $0.3 million and $0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.
On August 23, 2017, BGC Partners entered into a committed unsecured credit agreement with Itau Unibanco S.A. The
agreement provided for an intra-day overdraft credit line up to $10.4 million (BRL 50.0 million). On August 20, 2021, the
agreement was renegotiated, increasing the credit line to $12.4 million (BRL 60.0 million). On May 22, 2023 the agreement
was renegotiated, increasing the credit line to $14.5 million (BRL 70.0 million). The maturity date of the agreement is February
17, 2024. This agreement bears a fee of 1.35% per year. As of December 31, 2023 and 2022, there were no borrowings
outstanding under this agreement. BGC Partners recorded bank fees related to the agreement of $0.2 million, $0.2 million, and
$0.1 million for each of the years ended December 31, 2023, 2022 and 2021, respectively.
On January 25, 2021, BGC Partners entered into a committed unsecured loan agreement with Banco Daycoval S.A.,
which provided for short-term loans of up to $2.0 million (BRL 10.0 million) and was renegotiated on June 1, 2021. The
amended agreement provided for short-term loans of up to $4.0 million (BRL 20.0 million). During September 2022, the
borrowings under this agreement were repaid in full, and the loan was terminated on September 27, 2022. As of December 31,
2023 and 2022, there were no borrowings outstanding under the agreement. Borrowings under this agreement bore interest at
the Brazilian Interbank offering rate plus 3.66%. BGC Partners recorded interest expense related to the agreement of
$0.2 million for each of the years ended December 31, 2022 and 2021.
18.
Compensation
The Compensation Committee may grant various equity-based awards, including RSUs, restricted stock, stock options,
LPUs and shares of BGC Class A common stock. Upon vesting of RSUs, issuance of restricted stock, exercise of stock options
and redemption/exchange of LPUs, the Company generally issues new shares of BGC Class A common stock.
On November 22, 2021, at the annual meeting of stockholders, the stockholders approved amendments to the BGC
Partners Equity Plan to increase from 400.0 million to 500.0 million the aggregate number of shares of BGC Class A common
stock that may be delivered or cash-settled pursuant to awards granted during the life of the Equity Plan.
In connection with the Corporate Conversion on July 1, 2023, BGC Group assumed and adopted the BGC Partners
Equity Plan, as amended and restated as the BGC Group Equity Plan. The BGC Group Equity Plan provides for a maximum of
600.0 million shares of BGC Class A common stock that may be delivered or cash settled pursuant to the exercise or settlement
of awards granted under the plan. As of December 31, 2023, the limit on the aggregate number of shares authorized to be
delivered allowed for the grant of future awards relating to 477.1 million shares.
In connection with the Corporate Conversion, on June 30, 2023, the Company issued 22.5 million RSUs for the
redemption of 16.9 million non-exchangeable LPUs and 5.6 million non-exchangeable FPUs in BGC Holdings, and issued
$49.2 million of RSU Tax Accounts for the redemption of 10.6 million non-exchangeable Preferred Units in BGC Holdings,
based on their fixed cash value. As a result of the Corporate Conversion, on July 1, 2023, the Company issued 38.6 million
175
restricted stock awards and 25.3 million RSUs for the redemption of 54.0 million non-exchangeable LPUs and 9.9 million non-
exchangeable Preferred Units in BGC Holdings, and granted $74.0 million of RSU Tax Accounts for the redemption of
16.3 million non-exchangeable Preferred Units in BGC Holdings, based on their fixed cash value.
The Company incurred compensation expense related to Class A common stock, LPUs (prior to the Corporate
Conversion) and RSUs held by BGC employees as follows (in thousands):
Issuance of common stock and grants of exchangeability
Allocations of net income and dividend equivalents1
LPU amortization
RSU, RSU Tax Account, and restricted stock amortization
Year Ended December 31,
2023
171,646 $
2022
147,480 $
2021
128,107
$
6,302
40,878
136,552
13,298
73,734
16,559
34,335
78,596
15,126
Equity-based compensation and allocations of net income to limited
partnership units and FPUs
$
355,378 $
251,071 $
256,164
_______________________________________
1
Prior to the Corporate Conversion, certain LPUs generally received quarterly allocations of net income, including the Preferred
Distribution, and were generally contingent upon services being provided by the unit holders. Subsequent to the Corporate
Conversion, this includes dividend equivalents on participating securities, the Preferred Return on certain RSU Tax Accounts, and
quarterly allocations of net income, including the Preferred distribution to LPUs held by BGC employees in Newmark Holdings.
Limited Partnership Units
A summary of the activity associated with LPUs held by BGC employees is as follows (in thousands):
Balance at December 31, 2020
Granted
Redeemed/exchanged units
Forfeited units
Balance at December 31, 2021
Granted
Redeemed/exchanged units
Forfeited units
Balance at December 31, 2022
Granted
Redeemed/exchanged units
Forfeited units
Balance at December 31, 2023
BGC
LPUs
Newmark
LPUs
137,652
34,093
(58,832)
(798)
112,115
27,968
(24,623)
(5,112)
110,348
9,688
(119,812)
(224)
—
13,202
—
(1,881)
(270)
11,051
—
(1,636)
(64)
9,351
—
(572)
—
8,779
The LPUs table above includes both regular and Preferred Units. Preferred Units are not entitled to participate in
partnership distributions other than with respect to the Preferred Distribution (see Note 2—“Limited Partnership Interests in
BGC Holdings and Newmark Holdings” for further information on Preferred Units). Subsequent to the Corporate Conversion,
there are still BGC employees who hold limited partnership interests in Newmark Holdings. These limited partnership interests
represent interests that were held prior to the Newmark IPO and were distributed in connection with the Separation. Following
the Newmark IPO, employees of BGC and Newmark only received limited partnership interests in BGC Holdings and
Newmark Holdings, respectively. As a result of the Spin-Off, as the previous limited partnership interests in BGC Holdings
held by Newmark employees and the existing limited partnership interests in Newmark Holdings held by BGC employees
were/are exchanged/redeemed, the related capital was contributed to and from Cantor, respectively. The compensation expenses
under GAAP related to the limited partnership interests are based on the company where the partner is employed. Therefore,
compensation expenses related to the limited partnership interests of both BGC Holdings and Newmark Holdings that are held
by BGC employees are recognized by BGC. The BGC Holdings limited partnership interests held by Newmark employees were
included in the BGC share count and the Newmark Holdings limited partnership interests held by BGC employees are included
in the Newmark share count. There were no limited partnership interests in BGC Holdings remaining upon the completion of
the Corporate Conversion, and therefore, there was no compensation expense related to limited partnership interest in BGC
Holdings recognized by BGC subsequent to the Corporate Conversion.
176
A summary of the BGC Holdings and Newmark Holdings LPUs held by BGC employees is as follows (in thousands):
Regular Units
Preferred Units
Balance at December 31, 2023
BGC
LPUs
Newmark
LPUs
—
—
—
6,742
2,037
8,779
Issuance of Common Stock and Grants of Exchangeability
Compensation expense related to the issuance of BGC or Newmark Class A common stock and grants of
exchangeability on BGC Holdings (prior to the Corporate Conversion) and Newmark Holdings LPUs held by BGC employees
is as follows (in thousands):
Issuance of common stock and grants of exchangeability
Year Ended December 31,
2023
171,646 $
2022
147,480 $
2021
128,107
$
Prior to the Corporate Conversion, BGC LPUs held by BGC employees had become exchangeable or were redeemed
for BGC Class A common stock on a one-for-one basis.
Newmark LPUs held by BGC employees may become exchangeable or redeemed for a number of shares of Newmark
Class A common stock equal to the number of limited partnership interests multiplied by the current Exchange Ratio. As of
December 31, 2023, the Exchange Ratio was 0.9231.
A summary of the LPUs redeemed in connection with the issuance of BGC Class A common stock or Newmark Class
A common stock (at the then-current Exchange Ratio) or granted exchangeability for BGC Class A common stock or Newmark
Class A common stock (at the then-current Exchange Ratio) held by BGC employees is as follows (in thousands):
BGC Holdings LPUs
Newmark Holdings LPUs
Total
Year Ended December 31,
2023
2022
2021
25,711
301
26,012
29,363
596
29,959
23,001
1,078
24,079
As of December 31, 2023, there were no BGC Holdings LPUs remaining as a result of the Corporate Conversion. As
of December 31, 2022, the number of share-equivalent BGC Holdings LPUs exchangeable for shares of BGC Class A common
stock at the discretion of the unit holder held by BGC employees was 1.2 million. As of December 31, 2023 and 2022, the
number of Newmark Holdings LPUs exchangeable into shares of Newmark Class A common stock at the discretion of the unit
holder held by BGC employees (at the then-current Exchange Ratio) was 0.2 million.
LPU Amortization
Compensation expense related to the amortization of LPUs held by BGC is as follows (in thousands):
Stated vesting schedule
Post-termination payout
LPU amortization
Year Ended December 31,
2023
2022
2021
$
$
40,848 $
30
40,878 $
74,561 $
(827)
73,734 $
78,535
61
78,596
Prior to the Corporate Conversion, there were certain LPUs that had a stated vesting schedule and did not receive
quarterly allocations of net income. These LPUs generally vested between two and five years from the date of grant. The fair
value was based on the market value of an equivalent share of BGC or Newmark Class A common stock (adjusted if
appropriate based upon the award’s eligibility to receive quarterly allocations of net income) on the grant date, and is
recognized as compensation expense, net of the effect of estimated forfeitures, ratably over the vesting period.
177
A summary of the outstanding LPUs held by BGC employees with a stated vesting schedule that do not receive
quarterly allocations of net income is as follows (in thousands):
BGC Holdings LPUs
Newmark Holdings LPUs
December 31,
2023
December 31,
2022
—
—
47,222
98
Aggregate estimated grant date fair value of BGC and Newmark Holdings LPUs
$
— $
194,951
Compensation expense related to LPUs held by BGC employees with a post-termination pay-out amount, such as
REUs, and/or a stated vesting schedule was recognized over the stated service period. These LPUs generally vested between
two and five years from the date of grant. As of December 31, 2023, there were no outstanding BGC Holdings LPUs with a
post-termination payout, and there were 0.1 million outstanding Newmark Holdings LPUs with a post-termination payout held
by BGC employees with a notional value of approximately $0.7 million and an aggregate estimated fair value of $0.3 million.
As of December 31, 2022, there were 0.8 million outstanding BGC Holdings LPUs with a post-termination payout, with a
notional value of approximately $8.6 million and an aggregate estimated fair value of $3.9 million, and 0.1 million outstanding
Newmark Holdings LPUs with a post-termination payout held by BGC employees, with a notional value of approximately $0.7
million and an aggregate estimated fair value of $0.3 million.
Restricted Stock Units
Compensation expense related to RSUs held by BGC employees is as follows (in thousands):
RSU amortization
Year Ended December 31,
2023
2022
2021
$
79,960 $
16,559 $
15,126
A summary of the activity associated with RSUs held by BGC employees and directors is as follows (RSUs and
dollars in thousands):
Balance at December 31, 2020
Granted
Delivered
Forfeited
Balance at December 31, 2021
Granted
Delivered
Forfeited
Balance at December 31, 2022
Granted
Delivered
Forfeited
Weighted-
Average Grant
Date Fair Value
Fair Value
Amount
RSUs
8,960 $
3.75 $
6,319
(3,135)
(1,110)
4.23
4.08
4.28
11,034 $
3.87 $
7,125
(4,858)
(1,255)
4.27
3.86
3.93
12,046 $
4.11 $
68,732
(15,078)
(758)
4.12
4.14
4.48
33,582
26,716
(12,792)
(4,750)
42,756
30,406
(18,743)
(4,933)
49,486
283,418
(62,494)
(3,395)
Weighted-
Average
Remaining
Contractual
Term (Years)
2.46
2.27
2.42
Balance at December 31, 2023
64,942 $
4.11 $
267,015
5.96
The fair value of RSUs held by BGC employees and directors is based on the market value of BGC Class A common
stock on the grant date and adjusted as appropriate based upon the award’s ineligibility to receive dividends. As of
December 31, 2023, 26.3 million RSUs of the total outstanding were eligible to receive dividends. The compensation expense is
recognized ratably over the vesting period, taking into effect estimated forfeitures or accelerations of vestings. The Company
uses historical data, including historical forfeitures and turnover rates, to estimate expected forfeiture rates for both employee
and director RSUs. Each RSU is settled in one share of Class A common stock upon completion of the vesting period and
conditions.
178
For the RSUs that vested during the years ended December 31, 2023 and 2022, the Company withheld shares of BGC
Class A common stock valued at $11.5 million and $6.6 million to pay taxes due at the time of vesting. As of December 31,
2023, there was approximately $161.0 million of total unrecognized compensation expense related to unvested RSUs held by
BGC employees and directors that is expected to be recognized over a weighted-average period of 5.96 years.
In relation to the Corporate Conversion, the Company granted in total $123.1 million of RSU Tax Accounts. During
2023, $27.7 million RSU Tax Accounts vested to pay taxes due at the time for certain related RSU vestings. As of
December 31, 2023, there was approximately $92.7 million of total unrecognized compensation expense related to unvested
RSU Tax Accounts held by BGC employees that is expected to be recognized over a weighted-average period of 8.82 years.
The compensation expense related to the RSU Tax Accounts amortization held by BGC employees was $31.9 million for the
year ended December 31, 2023.
Acquisitions
In connection with certain of its acquisitions, the Company has granted certain LPUs (prior to the Corporate
Conversion), and RSUs, and other deferred compensation awards. As of December 31, 2023 and 2022, the aggregate estimated
fair value of acquisition-related LPUs and RSUs was $7.4 million and $5.9 million, respectively. As of December 31, 2023 and
2022, the aggregate estimated fair value of the deferred compensation awards was $0.6 million and $23.9 million, respectively.
The liability for such acquisition-related LPUs and RSUs is included in “Accounts payable, accrued and other liabilities” on the
Company’s Consolidated Statements of Financial Condition.
Restricted Stock
BGC employees hold shares of BGC and Newmark restricted stock. Such restricted shares are generally salable by
partners in five to ten years. Transferability of the restricted shares of stock issued prior to the Corporate Conversion, is not
subject to continued employment or service with the Company or any affiliate or subsidiary of the Company; however,
transferability is subject to compliance with BGC and its affiliates’ customary noncompete obligations.
During the years ended December 31, 2023 and 2022, approximately 1.4 million and 0.1 million, respectively, BGC or
Newmark restricted shares held by BGC employees were forfeited in connection with this provision. During the years ended
December 31, 2023 and 2022, the Company released the restrictions with respect to 2.3 million and 0.3 million, respectively, of
such BGC shares held by BGC employees. As of December 31, 2023 and 2022, there were 0.1 million and 2.3 million,
respectively, of such restricted BGC shares held by BGC employees outstanding, respectively. Additionally, during the years
ended December 31, 2023 and 2022, Newmark released the restrictions with respect to 1.0 million and 0.1 million, respectively,
of restricted Newmark shares held by BGC employees. As of December 31, 2023 and 2022, there were nil and 1.1 million,
respectively, of restricted Newmark shares held by BGC employees outstanding.
In addition, as a result of the Corporate Conversion, on July 1, 2023, the Company granted 38.6 million restricted
stock awards, which are subject to continued employment or service with the Company or any affiliate or subsidiary of the
Company.
The fair value of these restricted stock awards held by BGC employees is based on the market value of BGC Class A
common stock on the grant date and adjusted as appropriate based upon the award’s ineligibility to receive dividends. As of
December 31, 2023, 5.8 million of the total 28.0 million restricted stock awards outstanding were eligible to receive dividends.
The compensation expense is recognized ratably over the vesting period, taking into effect estimated forfeitures or accelerations
of vestings. The Company uses historical data, including historical forfeitures and turnover rates, to estimate expected forfeiture
rates for employee restricted stock awards. Each restricted stock award is settled in one share of Class A common stock upon
completion of the vesting period and conditions. The compensation expense related to the restricted stock amortization on these
awards held by BGC employees was $24.7 million for the year ended 2023.
For the restricted stock awards that vested during the year ended December 31, 2023, the Company withheld
1.0 million shares of BGC Class A common stock to pay taxes due at the time of vesting. As of December 31, 2023, there was
approximately $49.9 million of total unrecognized compensation expense related to unvested restricted stock awards held by
BGC employees that is expected to be recognized over a weighted-average period of 2.55 years.
A summary of the activity associated with these restricted stock awards held by BGC employees is as follows
(restricted stock and dollars in thousands):
179
Balance at December 31, 2022
Granted
Delivered
Forfeited
Weighted-
Average
Grant
Date Fair
Value
Restricted Stock
— $
— $
38,610
(9,329)
(1,328)
4.37
5.12
2.62
Fair Value
Amount
—
168,716
(47,763)
(3,485)
Weighted-
Average
Remaining
Contractual
Term (Years)
N/A
Balance at December 31, 2023
27,953 $
4.20 $
117,468
2.55
19.
Commitments, Contingencies and Guarantees
Contractual Obligations and Commitments
The following table summarizes certain of the Company’s contractual obligations at December 31, 2023 (in
thousands):
Debt and collateralized borrowings1
Operating leases2
Finance leases2
Interest on debt and collateralized borrowings3
Interest on Short-term borrowings
One-time transition tax4
Other5
Total contractual obligations
Total
Less Than 1
Year
1-3 Years
3-5 Years
More Than 5
Years
$ 1,190,000 $ 540,000 $ 300,000 $ 350,000 $
—
189,186
5,077
157,560
71
18,831
12,744
31,594
1,712
49,815
71
8,694
12,744
48,028
2,738
68,467
—
10,137
—
32,624
627
39,278
—
—
—
76,940
—
—
—
—
—
$ 1,573,469 $ 644,630 $ 429,370 $ 422,529 $
76,940
_______________________________________
1
Debt and collateralized borrowings reflects $255.5 million of BGC Group 3.750% Senior Notes (the $255.5 million represents the
principal amount of the debt; the carrying value of the BGC Group 3.750% Senior Notes as of December 31, 2023 was
approximately $254.8 million), $288.2 million of BGC Group 4.375% Senior Notes (the $288.2 million represents the principal
amount of the debt; the carrying value of the BGC Group 4.375% Senior Notes as of December 31, 2023 was approximately
$286.7 million) and $347.2 million of BGC Group 8.000% Senior Notes (the $347.2 million represents the principal amount of the
debt; the carrying value of the BGC Group 8.000% Senior Notes as of December 31, 2023 was approximately $343.9 million). Debt
and collateralized borrowings reflects $44.5 million of BGC Partners 3.750% Senior Notes (the $44.5 million represents the
principal amount of the debt; the carrying value of the BGC Partners 3.750% Senior Notes as of December 31, 2023 was
approximately $44.4 million), $11.8 million of BGC Partners 4.375% Senior Notes (the $11.8 million represents the principal
amount of the debt; the carrying value of the BGC Partners 4.375% Senior Notes as of December 31, 2023 was approximately
$11.8 million) and $2.8 million of BGC Partners 8.000% Senior Notes (the $2.8 million represents the principal amount of the debt;
the carrying value of the BGC Partners 8.000% Senior Notes as of December 31, 2023 was approximately $2.7 million). See Note
17—“Notes Payable, Other and Short-Term Borrowings” for more information regarding these obligations, including timing of
payments and compliance with debt covenants.
2
3
4
Operating leases and finance leases are related to rental payments under various non-cancelable leases, principally for office space,
data centers and office equipment and are presented net of sublease payments to be received. As of December 31, 2023, there were
no sublease payments to be received over the life of the agreements.
Interest on debt and collateralized borrowings reflects a total of $7.1 million of interest expense associated with the BGC Group
3.750% Senior Notes, $1.2 million of interest expense associated with the BGC Partners 3.750% Senior Notes, $24.5 million of
interest expense associated with the BGC Group 4.375% Senior Notes, $1.0 million of interest expense associated with the BGC
Partners 4.375% Senior Notes, $122.3 million of interest expense associated with the BGC Group 8.000% Senior Notes, and
$1.0 million of interest expense associated with the BGC Partners 8.000% Senior Notes. Interest on debt and collateralized
borrowings also includes interest on the undrawn portion of the committed unsecured senior Revolving Credit Agreement which
was calculated through the maturity date of the facility, which is March 10, 2025. As of December 31, 2023, the undrawn portion of
the committed unsecured Revolving Credit Agreement was $135.0 million.
The Company completed the calculation of the one-time transition tax on the deemed repatriation of foreign subsidiaries’ earnings
pursuant to the Tax Act and previously recorded a net cumulative tax expense of $28.6 million, net of foreign tax credits, with an
election to pay the taxes over eight years with 40% to be paid in equal installments over the first five years and the remaining 60%
to be paid in installments of 15%, 20% and 25% in years six, seven and eight, respectively. The cumulative remaining balance as of
December 31, 2023 is $18.8 million.
180
5
Other contractual obligations reflect commitments of $12.7 million to make charitable contributions, which are recorded as part of
“Accounts payable, accrued and other liabilities” in the Company’s Consolidated Statements of Financial Condition. The amount
payable each year reflects an estimate of future Charity Day obligations.
The Company is obligated for minimum rental payments under various non-cancelable operating leases, principally for
office space, expiring at various dates through 2039. Certain of the leases contain escalation clauses that require payment of
additional rent to the extent of increases in certain operating or other costs.
As of December 31, 2023, minimum lease payments under these arrangements are as follows (in thousands):
Net Lease Commitment
2024
2025
2026
2027
2028
2029 and thereafter
Total
Operating leases
$
Finance leases
31,594 $
27,075
20,953
19,231
13,393
76,940
189,186 $
$
1,712
1,448
1,290
627
—
—
5,077
The lease obligations shown above are presented net of payments to be received under a non-cancelable sublease.
There are no sublease payments to be received over the life of the agreement.
In addition to the above obligations under non-cancelable operating leases, the Company is also obligated to Cantor for
rental payments under Cantor’s various non-cancelable leases with third parties, principally for office space and computer
equipment, expiring at various dates through 2039. Certain of these leases have renewal terms at the Company’s option and/or
escalation clauses (primarily based on the Consumer Price Index). Cantor allocates a portion of the rental payments to the
Company based on square footage used.
The Company also allocates a portion of the rental payments for which it is obligated under non-cancelable operating
leases to Cantor and its affiliates. These allocations are based on square footage used (see Note 13—“Related Party
Transactions” for more information).
Rent expense for the years ended December 31, 2023, 2022 and 2021 was $41.5 million, $40.2 million and $49.4
million, respectively. Rent expense is included as part of “Occupancy and equipment” in the Company’s Consolidated
Statements of Operations.
In the event the Company anticipates incurring costs under any of its leases that exceed anticipated sublease revenues,
it recognizes a loss and records a liability for the present value of the excess lease obligations over the estimated sublease rental
income. There was no liability for future lease payments associated with vacant space as of December 31, 2023, 2022 and 2021.
Contingent Payments Related to Acquisitions
Since 2016, the Company has completed acquisitions whose purchase price included an aggregate of approximately
3.3 million shares of the Company’s Class A common stock (with an acquisition date fair value of approximately
$13.5 million), 0.1 million LPUs (with an acquisition date fair value of approximately $0.2 million), 0.2 million RSUs (with an
acquisition date fair value of approximately $1.2 million) and $43.1 million in cash that may be issued contingent on certain
targets being met through 2027.
The Company issued 1.2 million contingent shares of BGC Class A common stock and $8.0 million for acquisitions
during 2023. The Company did not issue any contingent shares of BGC Class A common stock, LPUs, RSUs or cash for
acquisitions during 2022.
During the year ended December 31, 2023, the contingent cash consideration increased by approximately $0.6 million
to $15.1 million in cash that may be paid due to an increase in probability of payout. During the year ended December 31, 2022,
the contingent cash consideration increased by approximately $2.6 million to $14.5 million in cash that may be paid due to an
increase in probability of payout.
As of December 31, 2023, the Company has issued 1.4 million shares of its Class A common stock, 0.2 million RSUs
and paid $53.4 million in cash related to contingent payments for acquisitions completed since 2016.
As of December 31, 2023, 0.9 million shares of the Company’s Class A common stock remain to be issued, and
$4.2 million in cash remains to be paid, net of forfeitures and other adjustments, if the targets are met.
181
The Company’s contingent considerations are classified as Level 3 liabilities. See Note 12—“Fair Value of Financial
Assets and Liabilities” for additional information.
Contingencies
In the ordinary course of business, various legal actions are brought and are pending against the Company and its
subsidiaries in the U.S. and internationally. In some of these actions, substantial amounts are claimed. The Company is also
involved, from time to time, in reviews, examinations, investigations and proceedings by governmental and self-regulatory
agencies (both formal and informal) regarding the Company’s businesses, operations, reporting or other matters, which may
result in regulatory, civil and criminal judgments, settlements, fines, penalties, injunctions, enhanced oversight, remediation, or
other relief. The following generally does not include matters that the Company has pending against other parties which, if
successful, would result in awards in favor of the Company or its subsidiaries.
Employment, Competitor-Related and Other Litigation
From time to time, the Company and its subsidiaries are involved in litigation, claims and arbitrations in the U.S. and
internationally, relating to, inter alia, various employment matters, including with respect to termination of employment, hiring
of employees currently or previously employed by competitors, terms and conditions of employment and other matters. In light
of the competitive nature of the brokerage industry, litigation, claims and arbitration between competitors regarding employee
hiring are not uncommon. The Company is also involved, from time to time, in other reviews, investigations and proceedings
by governmental and self-regulatory agencies (both formal and informal) regarding the Company’s businesses. Any such
actions may result in regulatory, civil or criminal judgments, settlements, fines, penalties, injunctions, enhanced oversight,
remediation, or other relief.
Legal reserves are established in accordance with U.S. GAAP guidance on Accounting for Contingencies when a
material legal liability is both probable and reasonably estimable. Once established, reserves are adjusted when there is more
information available or when an event occurs requiring a change. The outcome of such items cannot be determined with
certainty. The Company is unable to estimate a possible loss or range of loss in connection with specific matters beyond its
current accruals and any other amounts disclosed. Management believes that, based on currently available information, the final
outcome of these current pending matters will not have a material adverse effect on the Company’s financial condition, results
of operations, or cash flows.
Letter of Credit Agreements
The Company has irrevocable uncollateralized letters of credit with various banks, where the beneficiaries are clearing
organizations through which it transacts, that are used in lieu of margin and deposits with those clearing organizations. As of
December 31, 2023 and 2022, the Company was contingently liable for $1.4 million and $1.6 million, respectively, under these
letters of credit.
Risk and Uncertainties
The Company generates revenues by providing financial intermediary and brokerage activities to institutional
customers and by executing and, in some cases, clearing transactions for institutional counterparties. Revenues for these
services are transaction-based. As a result, revenues could vary based on the transaction volume of global financial markets.
Additionally, financing is sensitive to interest rate fluctuations, which could have an impact on the Company’s overall
profitability.
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a
financial institution which, at times, may exceed the FDIC maximum coverage limit of $250,000. Any loss incurred or a lack of
access to such funds could have a significant adverse impact on the Company’s Consolidated Financial Statements. For the year
ended December 31, 2023 and 2022, the Company did not incur losses on any FDIC insured cash accounts.
During the years ended December 31, 2023 and 2022, the Company reserved $9.0 million and $11.4 million,
respectively, in connection with potential losses associated with Russia’s Invasion of Ukraine, which is included in “Other
expenses” in the Company’s Consolidated Statements of Operations, and which was recorded as part of the CECL reserve (see
Note 25—“Current Expected Credit Losses” for additional information).
182
Insurance
The Company is self-insured for health care claims, up to a stop-loss amount for eligible participating employees and
qualified dependents in the U.S., subject to deductibles and limitations. The Company’s liability for claims incurred but not
reported is determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated
from actual claim rates and adjusted periodically as necessary. The Company has accrued $3.7 million and $2.4 million in
health care claims as of December 31, 2023 and 2022, respectively. The Company does not expect health care claims to have a
material impact on its financial condition, results of operations, or cash flows.
Guarantees
The Company provides guarantees to securities clearinghouses and exchanges which meet the definition of a guarantee
under FASB interpretations. Under these standard securities clearinghouse and exchange membership agreements, members are
required to guarantee, collectively, the performance of other members and, accordingly, if another member becomes unable to
satisfy its obligations to the clearinghouse or exchange, all other members would be required to meet the shortfall. In the
opinion of management, the Company’s liability under these agreements is not quantifiable and could exceed the cash and
securities it has posted as collateral. However, the potential of being required to make payments under these arrangements is
remote. Accordingly, no contingent liability has been recorded in the Company’s Consolidated Statements of Financial
Condition for these agreements.
20.
Income Taxes
The Company’s Consolidated Financial Statements include U.S. federal, state and local income taxes on the
Company’s allocable share of the U.S. results of operations, as well as taxes payable to jurisdictions outside the U.S. In
addition, certain of the Company’s entities are taxed as U.S. partnerships and are subject to the UBT in New York City.
Therefore, the tax liability or benefit related to the partnership income or loss, except for UBT, rests with the partners (see Note
2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” for discussion of partnership interests), rather
than the partnership entity.
The provision for income taxes consisted of the following (in thousands):
Current:
U.S. federal
U.S. state and local
Foreign
UBT
Deferred:
U.S. federal
U.S. state and local
Foreign
UBT
Year Ended December 31,
2023
2022
2021
$
19,297 $
12,949 $
(7,267)
5,033
54,787
373
79,490
(41,491)
(14,989)
(5,914)
1,838
(60,556)
6,147
34,506
(390)
53,212
(17,083)
(1,596)
3,971
80
(14,628)
4,940
36,699
588
34,960
(1,000)
(1,515)
(12,098)
2,666
(11,947)
Provision for income taxes
$
18,934 $
38,584 $
23,013
The Company had pre-tax income (loss) of $57.7 million, $97.5 million and $176.5 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
The Company had pre-tax income (loss) from domestic operations of $(383.9) million, $(286.8) million and $(642.4)
million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company had pre-tax income (loss) from
foreign operations of $441.6 million, $384.3 million and $818.9 million for the years ended December 31, 2023, 2022 and
2021, respectively.
183
Differences between the Company’s actual income tax expense and the amount calculated utilizing the U.S. federal
statutory rates were as follows (in thousands):
Tax expense at federal statutory rate
Non-controlling interest
Incremental impact of foreign taxes compared to federal tax rate
Other permanent differences
U.S. state and local taxes, net of U.S. federal benefit
New York City UBT
Other rate changes
Impact of Corporate Conversion
Nontaxable gain on insurance disposition
Uncertain tax positions
U.S. tax on foreign earnings, net of tax credits
Prior year adjustments
Valuation allowance
Other
Provision for income taxes
Year Ended December 31,
2023
2022
2021
$
$
12,207 $
1,982
3,838
7,536
(4,778)
—
(862)
(12,446)
—
(797)
12,388
4,078
(4,190)
(23)
18,934 $
20,584 $
2,366
8,122
2,287
(876)
(1,071)
153
—
—
3,496
4,808
4,189
(4,670)
(804)
38,584 $
37,065
2,440
5,009
11,797
2,737
2,929
(7,007)
—
(65,231)
(6,936)
31,299
(714)
11,532
(1,907)
23,013
As of December 31, 2023, the Company’s intention is to permanently reinvest undistributed foreign pre-tax earnings in
the Company’s foreign operations. While the one-time transition tax eliminated most of the income tax effects of repatriating
the undistributed earnings, there could still be foreign and state and local tax effects on the distribution. Accordingly, no
provision has been recorded on foreign and state and local taxes that would be applicable upon distribution of such earnings to
the U.S. Further, determination of an estimate of deferred tax liability associated with the distribution of foreign earnings is not
practicable. However, this policy will be further re-evaluated and assessed based on the Company’s overall business needs and
requirements.
The Company has finalized its accounting policy with respect to taxes on Global Intangible Low-Taxed Income
(GILTI) and has elected to treat taxes associated with the GILTI provision using the Period Cost Method and thus has not
recorded deferred taxes for basis differences under this regime as of December 31, 2023.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded against deferred
tax assets if it is deemed more likely than not that those assets will not be realized.
184
Significant components of the Company’s deferred tax asset and liability consisted of the following (in thousands):
Deferred tax asset
Basis difference of investments
Deferred compensation
Excess interest expense
Other deferred and accrued expenses
Net operating loss and credit carry-forwards
Total deferred tax asset1
Valuation allowance
Deferred tax asset, net of valuation allowance
Deferred tax liability
Depreciation and amortization
Total deferred tax liability1
Net deferred tax asset
_______________________________________
1
Before netting within tax jurisdictions.
Year Ended December 31,
2023
2022
$
23,522 $
90,270
55,040
17,625
43,426
229,883
(27,813)
202,070
10,618
10,618
15,857
70,361
39,645
10,693
45,592
182,148
(31,362)
150,786
19,675
19,675
$
191,452 $
131,111
The Company has deferred tax assets associated with net operating losses in U.S. federal, state and local, and non-U.S.
jurisdictions of $1.1 million, $3.2 million and $28.4 million, respectively. These losses will begin to expire for Federal, state
and local, and non-U.S. jurisdictions in 2038, 2025 and 2024, respectively. The Company has deferred tax assets associated
with tax credits in the U.S. of $16.7 million, which will begin to expire in 2030. The Company’s deferred tax asset and liability
are included in the Company’s Consolidated Statements of Financial Condition as components of “Other assets” and “Accounts
payable, accrued and other liabilities,” respectively.
Pursuant to U.S. GAAP guidance, Accounting for Uncertainty in Income Taxes, the Company provides for uncertain
tax positions as a component of income tax expense based upon management’s assessment of whether a tax benefit is more
likely than not to be sustained upon examination by tax authorities.
A reconciliation of the beginning to the ending amounts of gross unrecognized tax benefits for the years ended
December 31, 2023 and 2022 is as follows (in thousands):
Balance, December 31, 2021
Increases for prior year tax positions
Decreases for prior year tax positions
Increases for current year tax positions
Decreases related to settlements with taxing authorities
Decreases related to a lapse of applicable statute of limitations
Balance, December 31, 2022
Increases for prior year tax positions
Decreases for prior year tax positions
Increases for current year tax positions
Decreases related to settlements with taxing authorities
Decreases related to a lapse of applicable statute of limitations
Balance, December 31, 2023
$
$
4,394
3,159
—
—
—
—
7,553
—
(884)
—
—
—
$
6,669
As of December 31, 2023, the Company’s unrecognized tax benefits, excluding related interest and penalties, were
$6.7 million, of which $6.7 million, if recognized, would affect the effective tax rate. The Company is currently open to
examination by tax authorities in U.S. federal, state and local jurisdictions and certain non-U.S. jurisdictions for tax years
beginning 2017, 2011 and 2013, respectively. The Company is currently under examination by tax authorities in the U.S.
federal and certain state, local and foreign jurisdictions. The Company does not believe that the amounts of unrecognized tax
benefits will materially change over the next 12 months.
185
The Company recognizes interest and penalties related to unrecognized tax benefits in “Provision (benefit) for income
taxes” in the Company’s Consolidated Statements of Operations. As of December 31, 2023, the Company had accrued $3.4
million for income tax-related interest and penalties of which $0.6 million was accrued during 2023.
21.
Regulatory Requirements
Many of the Company’s businesses are subject to regulatory restrictions and minimum capital requirements. These
regulatory restrictions and capital requirements may restrict the Company’s ability to withdraw capital from its subsidiaries.
Certain U.S. subsidiaries of the Company are registered as U.S. broker-dealers or FCMs subject to Rule 15c3-1 of the
SEC and Rule 1.17 of the CFTC, which specify uniform minimum net capital requirements, as defined, for their registrants, and
also require a significant part of the registrants’ assets be kept in relatively liquid form. As of December 31, 2023, the
Company’s U.S. subsidiaries had net capital in excess of their minimum capital requirements.
Certain U.K. and European subsidiaries of the Company are regulated by their national regulator, which include the
FCA and L’Autorité des Marchés Financiers and must maintain financial resources (as defined by their national regulator) in
excess of the total financial requirement (as defined by their national regulator). As of December 31, 2023, the U.K. and
European subsidiaries had financial resources in excess of their requirements.
Certain other subsidiaries of the Company are subject to regulatory and other requirements of the jurisdictions in
which they operate.
Certain BGC subsidiaries also operate as a DCM and DCO which are required to maintain financial resources to cover
operating costs for at least one year, keeping at least enough cash or highly liquid securities to cover six months’ operating
costs. In addition, BGC subsidiaries operate as SEFs which are required to maintain financial resources to cover operating costs
for at least one year, keeping at least enough cash or highly liquid securities to cover the greater of three months of projected
operating costs, or the projected costs needed to wind down the swap execution facility’s operations.
The regulatory requirements referred to above may restrict the Company’s ability to withdraw capital from its
regulated subsidiaries. As of December 31, 2023, the Company’s regulated subsidiaries held $734.1 million of net capital.
These subsidiaries had aggregate regulatory net capital, as defined, in excess of the aggregate regulatory requirements, as
defined, of $391.7 million.
22.
Segment, Geographic and Product Information
Segment Information
The Company currently operates in one reportable segment, brokerage services. BGC provides or has provided
brokerage services to the financial markets, through integrated Voice, Hybrid and Fully Electronic brokerage in a broad range
of products, including fixed income securities (Rates and Credit), FX, Energy and Commodities, Equities, and Futures and
Options. BGC also provides a wide range of services, including trade execution, brokerage, clearing, trade compression, post-
trade, information, consulting, and other back-office services to a broad range of financial and non-financial institutions. On
November 1, 2021, the Company sold its Insurance brokerage business to The Ardonagh Group (see Note 5— “Divestitures”).
Geographic Information
The Company offers products and services in the U.K., U.S., Asia (including Australia), Other Europe, MEA, France,
and Other Americas. Information regarding revenues is as follows (in thousands):
Revenues:
U.K.
U.S.
Asia
Other Europe/MEA
France
Other Americas
Total revenues
Year Ended December 31,
2023
2022
2021
$
$
730,753 $
652,898
275,209
201,461
90,774
74,306
2,025,401 $
647,916 $
542,744
271,678
172,376
92,649
67,939
1,795,302 $
835,371
517,269
301,489
200,409
99,933
60,893
2,015,364
186
Information regarding long-lived assets (defined as loans, forgivable loans and other receivables from employees and
partners, net; fixed assets, net; ROU assets; certain other investments; goodwill; other intangible assets, net of accumulated
amortization; and rent and other deposits) in the geographic areas is as follows (in thousands):
Year Ended December 31,
2023
2022
Long-lived assets:
U.S.
U.K.
Asia
Other Europe/MEA
France
Other Americas
Total long-lived assets
Product Information
$
792,923 $
411,631
91,643
66,259
22,647
19,182
787,321
401,823
76,870
46,413
13,019
17,736
$ 1,404,285 $ 1,343,182
The Company’s business is based on the products and services provided and reflects the manner in which financial
information is evaluated by management.
The Company specializes in the brokerage of a broad range of products, including fixed income securities (Rates and
Credit), FX, Energy and Commodities, Equities, and Futures and Options. The Company also provides a wide range of services,
including trade execution, broker-dealer services, clearing, trade compression, post trade, information, consulting, and other
back-office services to a broad range of financial and non-financial institutions. On November 1, 2021, the Company sold its
Insurance brokerage business to The Ardonagh Group (see Note 5—“Divestitures”).
Product information regarding revenues is as follows (in thousands):
Revenues:
Rates
Energy and Commodities
FX
Credit
Equities
Insurance1
Total brokerage revenues
All other revenues
Total revenues
Year Ended December 31,
2023
2022
2021
$
610,451 $
386,206
314,706
284,744
236,517
—
549,503 $
291,665
299,721
271,419
234,493
—
$
$
1,832,624 $
192,777
2,025,401 $
1,646,801 $
148,501
1,795,302 $
558,507
296,458
301,328
287,608
247,673
178,087
1,869,661
145,703
2,015,364
_______________________________________
1
On November 1, 2021, the Company sold its Insurance Brokerage business to The Ardonagh Group (see Note 5—“Divestitures”).
187
23.
Revenues from Contracts with Customers
The following table presents the Company’s total revenues separated between revenues from contracts with customers
and other sources of revenues (in thousands):
Revenues from contracts with customers:
Commissions
Data, network, and post-trade
Fees from related parties
Other revenues
Total revenues from contracts with customers
Other sources of revenues:
Principal transactions
Interest and dividend income
Other revenues
Total revenues
Year Ended December 31,
2023
2022
2021
$
$
1,464,524 $
111,470
15,968
15,417
1,607,379
368,100
45,422
4,500
2,025,401 $
1,281,294 $
96,389
14,734
14,275
1,406,692
365,507
21,007
2,096
1,795,302 $
1,541,900
89,963
14,856
16,818
1,663,537
327,761
21,977
2,089
2,015,364
See Note 3—“Summary of Significant Accounting Policies” for detailed information on the recognition of the
Company’s revenues from contracts with customers.
Disaggregation of Revenue
See Note 22—“Segment, Geographic and Product Information” for a further discussion on the allocation of revenues
to geographic regions.
Contract Balances
The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. The
Company records a receivable when revenue is recognized prior to payment and 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.
The Company had receivables related to revenues from contracts with customers of $314.8 million and $288.5 million
at December 31, 2023 and December 31, 2022, respectively. The Company had no impairments related to these receivables
during the years ended December 31, 2023 and 2022.
The Company’s deferred revenue primarily relates to customers paying in advance or billed in advance where the
performance obligation has not yet been satisfied. Deferred revenue at December 31, 2023 and 2022 was $14.7 million and
$12.5 million, respectively. During the years ended December 31, 2023 and 2022, the Company recognized revenue of $11.0
million and $9.1 million, respectively, that was recorded as deferred revenue at the beginning of the period.
Contract Costs
The Company capitalizes costs to fulfill contracts associated with different lines of its business where the revenue is
recognized at a point in time and the costs are determined to be recoverable. Capitalized costs to fulfill a contract are recognized
at the point in time that the related revenue is recognized. The Company did not have any capitalized costs to fulfill a contract
as of December 31, 2023 and 2022.
24.
Leases
The Company, acting as a lessee, has operating leases and finance leases primarily relating to office space, data centers
and office equipment. The leases have remaining lease terms of 0.1 years to 15.6 years, some of which include options to
extend the leases in 0.1 to 10 year increments for up to 15 years. Renewal periods are included in the lease term only when
renewal is reasonably certain, which is a high threshold and requires management to apply judgment to determine the
appropriate lease term. Certain leases also include periods covered by an option to terminate the lease if the Company is
reasonably certain not to exercise the termination option. The Company measures its lease payments by including fixed rental
188
payments and, where relevant, variable rental payments tied to an index, such as the Consumer Price Index. Payments for leases
in place before the date of adoption of ASC 842, Leases were determined based on previous leases guidance. The Company
recognizes lease expense for its operating leases on a straight-line basis over the lease term and variable lease expense not
included in the lease payment measurement is recognized as incurred. Interest expense on finance leases is recognized using the
effective interest method over the lease term.
Pursuant to the accounting policy election, leases with an initial term of twelve months or less are not recognized on
the balance sheet. The short-term lease expense over the period reasonably reflects the Company’s short-term lease
commitments.
ASC 842, Leases requires the Company to make certain assumptions and judgments in applying the guidance,
including determining whether an arrangement includes a lease, determining the term of a lease when the contract has renewal
or cancelation provisions, and determining the discount rate.
The Company determines whether an arrangement is a lease or includes a lease at the contract inception by evaluating
whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. If the Company has the right to obtain substantially all of the economic benefits from, and can direct the use of,
the identified asset for a period of time, the Company accounts for the identified asset as a lease. The Company has elected the
practical expedient to not separate lease and non-lease components for all leases other than real estate leases. The primary non-
lease component that is combined with a lease component represents operating expenses, such as utilities, maintenance or
management fees.
As the rate implicit in the lease is not usually available, the Company used an incremental borrowing rate based on the
information available at the adoption date of the new Leases standard in determining the present value of lease payments for
existing leases. The Company has elected to use a portfolio approach for the incremental borrowing rate, applying corporate
bond rates to the leases. The Company calculated the appropriate rates with reference to the lease term and lease currency. The
Company uses information available at the lease commencement date to determine the discount rate for any new leases.
The Company subleases certain real estate to its affiliates and to third parties. The value of these commitments is not material to
the Company’s Consolidated Financial Statements.
As of December 31, 2023, the Company did not have any leases that have not yet commenced but that create
significant rights and obligations.
Supplemental information related to the Company’s operating and financing leases is as follows (in thousands):
Assets
Operating lease ROU assets
Finance lease ROU assets
Liabilities
Operating lease liabilities
Finance lease liabilities
Classification in Consolidated Statements
of Financial Condition
December 31, 2023 December 31, 2022
Other assets
Fixed assets, net
$
$
124,165 $
129,786
4,264 $
5,685
Accounts payable, accrued and other liabilities $
149,640 $
156,105
Accounts payable, accrued and other liabilities $
4,721 $
6,039
Weighted-average remaining lease term
Operating leases (years)
Finance leases (years)
Weighted-average discount rate
Operating leases
Finance leases
December 31, 2023 December 31, 2022
7.3
3.4
5.0 %
4.3 %
7.7
4.1
4.5 %
4.3 %
189
The components of lease expense are as follows (in thousands):
Operating lease cost1, 2
Finance lease cost
Classification in Consolidated Statements
of Operations
Occupancy and equipment
Amortization on ROU assets
Interest on lease liabilities
Occupancy and equipment
Interest expense
Year Ended December 31,
2023
2022
2021
35,894 $
36,894 $ 41,442
1,305 $
219 $
753 $
116 $
146
21
$
$
$
____________________________________
1
The Company recorded operating lease costs related to the Insurance brokerage business of $3.5 million for the year ended
December 31, 2021.
2
Short-term lease expense was not material for the years ended December 31, 2023, 2022 and 2021.
The following table shows the Company’s maturity analysis of its lease liabilities as of December 31, 2023 (in
thousands):
2024
2025
2026
2027
2028
2029 and thereafter
Total
Interest
Total
December 31, 2023
Operating leases
$
Finance leases
31,594 $
27,075
20,953
19,231
13,393
76,940
189,186 $
(39,546)
149,640 $
$
$
1,712
1,448
1,290
627
—
—
5,077
(356)
4,721
The following table shows cash flow information related to lease liabilities (in thousands):
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating lease liabilities
Operating cash flows from finance lease liabilities
Financing cash flows from finance lease liabilities
Year Ended December 31,
2023
2022
$
$
$
37,008 $
219 $
1,228 $
38,113
116
704
25.
Current Expected Credit Losses
The CECL reserve reflects management’s current estimate of potential credit losses related to the receivable balances
included in the Company’s Consolidated Statements of Financial Condition. See Note 3—“Summary of Significant Accounting
Policies” for further discussion of the CECL reserve methodology.
As required, any subsequent changes to the CECL reserve are recognized in “Net income (loss) available to common
stockholders” in the Company’s Consolidated Statements of Operations. During the years ended December 31, 2023, 2022 and
2021, the Company recorded changes in the CECL reserve as follows (in millions):
190
Beginning balance, January 1, 2021
Current-period provision for expected credit losses
Ending balance, December 31, 2021
Current-period provision for expected credit losses
Ending balance, December 31, 2022
Current-period provision for expected credit losses
Ending balance, December 31, 2023
Loans, forgivable
loans and other
receivables from
employees and
partners, net
Receivables from
broker-dealers,
clearing
organizations,
customers and
related broker-
dealers
1.6 $
0.1
1.7
0.8
2.5
(0.2)
2.3 $
— $
—
—
7.0
7.0
11.9
18.9 $
Total
2.6
(0.2)
2.4
12.5
14.9
11.3
26.2
Accrued
commissions
and other
receivables, net
$
1.0 $
(0.3)
0.7
4.7
5.4
(0.4)
5.0 $
$
For the year ended December 31, 2023, there was a decrease of $0.4 million in the CECL reserve against “Accrued
commissions and other receivables, net” due to the updated macroeconomic assumptions, bringing the CECL reserve recorded
pertaining to “Accrued commissions and other receivables, net” to $5.0 million as of December 31, 2023. For the year ended
December 31, 2022, there was an increase of $4.7 million in the CECL reserve against “Accrued commissions and other
receivables, net,” which included a $4.5 million reserve related to Russia’s Invasion of Ukraine. For the year ended
December 31, 2021, there was a decrease of $0.3 million in the CECL reserve against “Accrued commissions and other
receivables, net.”
For the year ended December 31, 2023, there was a decrease of $0.2 million in the CECL reserve pertaining to “Loans,
forgivable loans and other receivables from employees and partners, net” as a result of employee collections, bringing the
CECL reserve recorded pertaining to “Loans, forgivable loans and other receivables from employees and partners, net” to $2.3
million as of December 31, 2023. For the years ended December 31, 2022 and 2021, there were increases of $0.8 million and
$0.1 million, respectively, in the CECL reserve pertaining to “Loans, forgivable loans and other receivables from employees
and partners, net” as a result of employee terminations.
For the year ended December 31, 2023, there was an increase of $11.9 million in the CECL reserve against
“Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” which mainly reflected the
downward credit rating migration of certain unsettled trades related to Russia’s Invasion of Ukraine, bringing the CECL reserve
recorded pertaining to “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” to
$18.9 million as of December 31, 2023. For the year ended December 31, 2022, there was an increase of $7.0 million in the
CECL reserve against “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” which
reflected the downward credit rating migration of certain unsettled trades related to Russia’s Invasion of Ukraine. There was no
change in the CECL reserve recorded pertaining to “Receivables from broker-dealers, clearing organizations, customers and
related broker-dealers” for the year ended December 31, 2021.
26.
Supplemental Balance Sheet Information
The components of certain balance sheet accounts are as follows (in thousands):
Other assets:
Deferred tax asset
Operating lease ROU assets
Equity securities carried under measurement alternative
Other taxes
Prepaid expenses
Rent and other deposits
Other
Total other assets
191
Year Ended December 31,
2023
2022
$
$
215,537 $
124,165
85,561
20,969
17,003
13,395
20,025
496,655 $
152,393
129,786
83,633
42,922
20,132
14,530
19,618
463,014
Accounts payable, accrued and other liabilities:
Taxes payable
Accrued expenses and other liabilities
Lease liabilities
Deferred tax liability
Charitable contribution liability
Total accounts payable, accrued and other liabilities
27.
Subsequent Events
Fourth Quarter 2023 Dividend
Year Ended December 31,
2023
2022
$
$
293,525 $
182,388
154,361
25,171
12,744
668,189 $
290,578
199,964
162,144
21,258
9,160
683,104
On February 13, 2024, the Company’s Board declared a quarterly cash dividend of $0.01 per share for the fourth
quarter of 2023, payable on March 19, 2024 to BGC Class A and Class B common stockholders of record as of March 5, 2024.
CFTC Approval for FMX Futures Exchange
On January 22, 2024, FMX Futures Exchange received approval from the CFTC to operate an exchange for U.S.
Treasury and SOFR futures.
Transactions with Executive Officers and Directors
On January 2, 2024, Mr. Merkel sold 136,891 shares of BGC Class A common stock to the Company. The sale price
per share of $6.98 was the closing price of a share of BGC Class A common stock on January 2, 2024. The transaction was
approved by the Audit Committee and the Compensation Committee of the Board and was made pursuant to the Company’s
stock buyback authorization.
192
ITEM 9.
FINANCIAL DISCLOSURE
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
None
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
BGC Group maintains disclosure controls and procedures that are designed to ensure that information required to be
disclosed by BGC Group is recorded, processed, accumulated, summarized and communicated to its management, including its
Chairman of the Board and Chief Executive Officer and its Chief Financial Officer, to allow timely decisions regarding
required disclosures, and reported within the time periods specified in the SEC’s rules and forms. The Chairman of the Board
and Chief Executive Officer and the Chief Financial Officer have performed an evaluation of the effectiveness of the design and
operation of BGC Group’s disclosure controls and procedures as of December 31, 2023. Based on that evaluation, the Chairman
of the Board and Chief Executive Officer and the Chief Financial Officer concluded that BGC Group’s disclosure controls and
procedures were effective as of December 31, 2023.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our
management, including our Chairman and Chief Executive Officer, and our Chief Financial Officer, we conducted an
evaluation of the effectiveness of our internal controls over financial reporting as of December 31, 2023 based upon criteria set
forth in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (COSO). Our internal controls over financial reporting include policies and procedures that are
intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external reporting purposes in accordance with U.S. GAAP.
Based on the results of our 2023 evaluation, our management concluded that our internal controls over financial
reporting were effective as of December 31, 2023. We reviewed the results of management’s assessment with our Audit
Committee.
Management has excluded BGC Group’s acquisitions of Trident, ContiCap, and Open Energy Group as these
acquisitions were completed in fiscal year 2023, and did not have a material effect on our financial condition, results of
operations or cash flows in 2023. However, we do anticipate that these acquisitions will be included in management’s
assessment of internal control over financial reporting and our audit of internal controls over financial reporting for 2024.
Trident, ContiCap, and Open Energy Group are included in our 2023 consolidated financial statements and constituted 0.6%,
1.6%, and 0.0% of total assets, 1.4%, 4.6%, and 0.1% of net assets, respectively, as of December 31, 2023, and 1.6%, 0.2%, and
0.0% of revenues, respectively, for the year then ended.
The effectiveness of our internal controls over financial reporting as of December 31, 2023 has been audited by Ernst
& Young LLP, an independent registered public accounting firm, as stated in their report, which is included in this Annual
Report on Form 10-K. Such report expresses an unqualified opinion on the effectiveness of the Company’s internal controls
over financial reporting as of December 31, 2023.
Changes in Internal Control over Financial Reporting
During the year ended December 31, 2023, there were no changes in our internal controls over financial reporting that
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
10b5-1 Trading Arrangements
During the quarter ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f)
of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,”
as those terms are defined in Item 408 of Regulation S-K.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable
193
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information appearing under “Election of Directors,” “Information about our Executive Officers,” “Delinquent
Section 16(a) Reports,” and “Code of Ethics and Whistleblower Procedures” in the 2024 Proxy Statement is hereby
incorporated by reference in response to this Item 10.
ITEM 11.
EXECUTIVE COMPENSATION
The information appearing under “Compensation Discussion and Analysis,” “Compensation Committee Report,”
“Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” in the 2024 Proxy Statement is
hereby incorporated by reference in response to this Item 11.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information appearing under “Security Ownership of Certain Beneficial Owners and Management” and “Equity
Compensation Plan Information as of December 31, 2023” in the 2024 Proxy Statement is hereby incorporated by reference in
response to this Item 12.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information appearing under “Certain Relationships and Related Transactions and Director Independence” and
“Election of Directors—Independence of Directors” in the 2024 Proxy Statement is hereby incorporated by reference in
response to this Item 13.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information appearing under “Independent Registered Public Accounting Firm Fees” and “Audit Committee Pre-
Approval Policies and Procedures” in the 2024 Proxy Statement is hereby incorporated by reference in response to this Item 14.
194
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements. The consolidated financial statements required to be filed in this Annual Report on Form
10-K are included in Part II, Item 8 hereof.
(a) (2) Schedule I, Parent Company Only Financial Statements. All other schedules are omitted because they are not
applicable or not required, or the required information is in the financial statements or the notes thereto.
(a) (3) The Exhibit Index set forth below is incorporated by reference in response to this Item 15.
The following exhibits are filed as part of this Annual Report on Form 10-K as required by Regulation S-K. The
exhibits designated by a dagger (†) are management contracts and compensation plans and arrangements required to be filed as
exhibits to this Annual Report on Form 10-K. Certain schedules and exhibits designated by one asterisk (*) have been omitted
pursuant to Item 601(a)(5) of Regulation S-K promulgated by the SEC. Certain schedules and exhibits designated by two
asterisks (**) have been omitted pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC. The Company agrees
to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
Exhibit
Number
1.1
2.1
2.2
2.3
2.4**
2.5**
2.6**
2.7
2.8**
EXHIBIT INDEX
Exhibit Title
Amended and Restated Controlled Equity OfferingSM Sales Agreement, dated as of July 3, 2023, between BGC
Group, Inc. and Cantor Fitzgerald & Co. (incorporated by reference to Exhibit 1.1 to BGC Group, Inc.’s Post-
Effective Amendment No. 1 to BGC Partners, Inc.’s Registration Statement on Form S-3 filed with the SEC on
July 3, 2023)
Agreement and Plan of Merger, dated as of May 29, 2007, by and among eSpeed, Inc., BGC Partners, Inc.,
Cantor Fitzgerald, L.P., BGC Partners, L.P., BGC Global Holdings, L.P. and BGC Holdings, L.P. (incorporated
by reference to BGC Partners, Inc.’s. Definitive Proxy Statement on Schedule 14A filed with the SEC on
February 11, 2008)
Amendment No. 1, dated as of November 5, 2007, to the Agreement and Plan of Merger, dated as of May 29,
2007, by and among eSpeed, Inc., BGC Partners, Inc., Cantor Fitzgerald, L.P., BGC Partners, L.P., BGC Global
Holdings, L.P. and BGC Holdings, L.P. (incorporated by reference to BGC Partners, Inc.’s. Definitive Proxy
Statement on Schedule 14A filed with the SEC on February 11, 2008)
Amendment No. 2, dated as of February 1, 2008, to the Agreement and Plan of Merger, dated as of May 29,
2007, by and among eSpeed, Inc., BGC Partners, Inc., Cantor Fitzgerald, L.P., BGC Partners, L.P., BGC Global
Holdings, L.P. and BGC Holdings, L.P. (incorporated by reference to BGC Partners, Inc.’s. Definitive Proxy
Statement on Schedule 14A filed with the SEC on February 11, 2008)
Separation Agreement, dated as of March 31, 2008, by and among Cantor Fitzgerald, L.P., BGC Partners, LLC,
BGC Partners, L.P., BGC Global Holdings, L.P. and BGC Holdings, L.P. (incorporated by reference to Exhibit
2.4 to BGC Partners, Inc.’s. Current Report on Form 8-K filed with the SEC on April 7, 2008)
Purchase Agreement, dated as of April 1, 2013, by and among BGC Partners, Inc., BGC Partners, L.P., The
NASDAQ OMX Group, Inc., and for certain limited purposes, Cantor Fitzgerald, L.P. (incorporated by
reference to Exhibit 2.1 to BGC Partners, Inc.’s. Quarterly Report on Form 10-Q filed with the SEC on
August 8, 2013)
Tender Offer Agreement executed by BGC Partners, Inc., BGC Partners, L.P. and GFI Group Inc., dated
February 19, 2015 (incorporated by reference to Exhibit 2.1 to BGC Partners, Inc.’s. Current Report on Form 8-
K filed with the SEC on February 25, 2015)
Stock Purchase Agreement by and among GFINet, Inc., GFI TP Holdings Pte Ltd, Intercontinental Exchange,
Inc., and, solely for the purposes set forth therein, GFI Group Inc. and BGC Partners, Inc. (incorporated by
reference to Exhibit 10.1 to BGC Partners, Inc.’s. Current Report on Form 8-K filed with the SEC on
November 18, 2015)
Agreement and Plan of Merger, dated December 22, 2015, by and among BGC Partners, Inc., JPI Merger Sub 1,
Inc., JPI Merger Sub 2, LLC, Jersey Partners Inc., New JP Inc., Michael Gooch and Colin Heffron (incorporated
by reference to Exhibit 2.1 to BGC Partners, Inc.’s. Current Report on Form 8-K filed with the SEC on
December 23, 2015)
195
Exhibit
Number
2.9**
2.10**
2.11
2.12
2.13
2.14*
2.15
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
Exhibit Title
Transaction Agreement, dated as of July 17, 2017, by and among BGC Partners, Inc. BGC Partners, L.P., Cantor
Fitzgerald, L.P., Cantor Commercial Real Estate Company, L.P., Cantor Sponsor, L.P., CF Real Estate Finance
Holdings, L.P. and CF Real Estate Finance Holdings GP, LLC (incorporated by reference to Exhibit 2.1 to BGC
Partners, Inc.’s. Current Report on Form 8-K filed with the SEC on July 21, 2017)
Amended and Restated Separation and Distribution Agreement, dated as of November 23, 2018, by and among
Cantor Fitzgerald, L.P., BGC Partners, Inc., BGC Holdings, L.P., BGC Partners, L.P., BGC Global Holdings,
L.P., Newmark Group, Inc., Newmark Holdings, L.P. and Newmark Partners, L.P. (incorporated by reference to
Exhibit 2.1 to BGC Partners, Inc.’s Current Report on Form 8-K filed on November 27, 2018)
Agreement for the Sale and Purchase of the Share Capital of Ed Broking Group Limited and Besso Insurance
Group Limited, Dated May 26, 2021, by and Among Tower Bridge (One) Limited, Ardonagh Specialty
Holdings 2 Limited, The Ardonagh Group Limited and BGC Partners, Inc. (incorporated by reference to Exhibit
2.1 to BGC Partners, Inc.’s. Quarterly Report on Form 10-Q filed with the SEC on August 6, 2021)
Deed of Variation in Respect of the Agreement for the Sale and Purchase of the Share Capital of Ed Broking
Group Limited and Besso Insurance Group Limited, dated August 25, 2021, by and among Tower Bridge (One)
Limited, Ardonagh Specialty Holdings 2 Limited, The Ardonagh Group Limited and BGC Partners, Inc.
(incorporated by reference to Exhibit 2.2 to BGC Partners, Inc. Quarterly Report on Form 10-Q filed with the
SEC on November 8, 2021)
Deed of Variation in Respect of the Agreement for the Sale and Purchase of the Share Capital of Ed Broking
Group Limited and Besso Insurance Group Limited, dated October 31, 2021, by and among Tower Bridge (One)
Limited, Ardonagh Specialty Holdings 2 Limited, The Ardonagh Group Limited and BGC Partners, Inc.
(incorporated by reference to Exhibit 2.3 to BGC Partners, Inc.’s. Quarterly Report on Form 10-Q filed with the
SEC on November 8, 2021)
Corporate Conversion Agreement, dated as of November 15, 2022, by and among BGC Partners, Inc., BGC
Group, Inc., BGC Holdings, L.P., BGC GP, LLC, BGC Partners II, Inc., BGC Partners II, LLC, BGC Holdings
Merger Sub, LLC and, solely for the purposes of certain provisions therein, Cantor Fitzgerald, L.P. (incorporated
by reference to Exhibit 2.1 to BGC Partners, Inc.’s Current Report on Form 8-K filed with the SEC on
November 16, 2022)
Amendment to the Corporate Conversion Agreement, dated as of March 29, 2023, by and among BGC Partners,
Inc., BGC Group, Inc., BGC Holdings, L.P., BGC GP, LLC, BGC Partners II, Inc., BGC Partners II, LLC, BGC
Holdings Merger Sub, LLC and, solely for the purposes of certain provisions therein, Cantor Fitzgerald, L.P.
(incorporated by reference to Exhibit 2.15 to BGC Partners, Inc.’s Annual Report on Form 10-K/A filed with the
SEC on April 28, 2023)
Amended and Restated Certificate of Incorporation of BGC Group, Inc. (incorporated by reference to Exhibit 3.1
to BGC Group, Inc.’s. Current Report on Form 8-K12B filed with the SEC on July 3, 2023)
Amended and Restated Bylaws of BGC Group, Inc. (incorporated by reference to Exhibit 3.2 to BGC Group,
Inc.’s Current Report on Form 8-K12B filed with the SEC on July 3, 2023)
Description of BGC Group, Inc.’s Securities Registered under Section 12 of the Securities Exchange Act of
1934, as amended
Indenture, dated as of September 27, 2019, between BGC Partners, Inc. and Wells Fargo Bank, National
Association, as trustee (incorporated by reference to Exhibit 4.1 to BGC Partners, Inc.’s Form 8-K filed with the
SEC on September 30, 2019)
First Supplemental Indenture, dated as of September 27, 2019, between BGC Partners, Inc. and Wells Fargo
Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to BGC Partners, Inc.’s Form 8-
K filed with the SEC on September 30, 2019)
Form of BGC Partners, Inc. 3.750% Senior Notes due 2024 (incorporated by reference to Exhibit 4.2 to BGC
Partners, Inc.’s Form 8-K filed with the SEC on September 30, 2019)
Second Supplemental Indenture, dated as of July 10, 2020, between BGC Partners, Inc. and Wells Fargo Bank,
National Association, as trustee (incorporated by reference to Exhibit 4.2 to BGC Partners, Inc.’s Current Report
on Form 8-K filed with the SEC on July 14, 2020)
Form of BGC Partners, Inc. 4.375% Senior Notes due 2025 (incorporated by reference to Exhibit 4.2 to BGC
Partners, Inc.’s Current Report on Form 8-K filed with the SEC on July 14, 2020)
196
Exhibit
Number
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Exhibit Title
Third Supplemental Indenture, dated as of May 25, 2023, between BGC Partners, Inc. and Computershare Trust
Company, N.A. as successor to Wells Fargo Bank, National Association, as trustee (incorporated by reference to
Exhibit 4.2 to BGC Partners, Inc.’s Current Report on Form 8-K filed with the SEC on May 25, 2023)
Form of BGC Partners, Inc. 8.000% Senior Notes due 2028 (incorporated by reference to Exhibit 4.3 to BGC
Partners, Inc.’s Current Report on Form 8-K filed with the SEC on May 25, 2023)
Fourth Supplemental Indenture, dated as of September 19, 2023, between BGC Partners, Inc. and
Computershare Trust Company, National Association, as successor to Wells Fargo Bank, National Association,
as trustee (incorporated by reference to Exhibit 4.1 of BGC Group, Inc.’s Current Report on Form 8-K filed with
the SEC on October 6, 2023)
Indenture, dated as of October 6, 2023, between BGC Group, Inc. and UMB Bank, N.A., as trustee (incorporated
by reference to Exhibit 4.2 of BGC Group, Inc.’s Current Report on Form 8-K filed with the SEC on October 6,
2023)
First Supplemental Indenture, dated as of October 6, 2023, between BGC Group, Inc. and UMB Bank, N.A., as
trustee (incorporated by reference to Exhibit 4.3 of BGC Group, Inc.’s Current Report on Form 8-K filed with
the SEC on October 6, 2023)
Form of BGC Group, Inc.’s 3.750% Senior Notes due 2024 (incorporated by reference to Exhibit 4.3 of BGC
Group, Inc.’s Current Report on Form 8-K filed with the SEC on October 6, 2023)
Second Supplemental Indenture, dated as of October 6, 2023, between BGC Group, Inc. and UMB Bank, N.A.,
as trustee (incorporated by reference to Exhibit 4.4 of BGC Group, Inc.’s Current Report on Form 8-K filed with
the SEC on October 6, 2023)
Form of BGC Group, Inc.’s 4.375% Senior Notes due 2025 (incorporated by reference to Exhibit 4.4 of BGC
Group, Inc.’s Current Report on Form 8-K filed with the SEC on October 6, 2023)
Third Supplemental Indenture, dated as of October 6, 2023, between BGC Group, Inc. and UMB Bank, N.A., as
trustee (incorporated by reference to Exhibit 4.5 of BGC Group, Inc.’s Current Report on Form 8-K filed with
the SEC on October 6, 2023)
Form of BGC Group, Inc.’s 8.000% Senior Notes due 2028 (incorporated by reference to Exhibit 4.5 of BGC
Group, Inc.’s Current Report on Form 8-K filed with the SEC on October 6, 2023)
Amended, Restated and Consolidated Registration Rights Agreement, dated as of July 1, 2023, by and between
BGC Group, Inc. and Cantor Fitzgerald, L.P. (incorporated by reference to Exhibit 10.3 to BGC Group, Inc.’s
Current Report on Form 8-K12B filed with the SEC on July 3, 2023)
Amended and Restated Administrative Services Agreement, dated as of July 1, 2023, by and between Cantor
Fitzgerald, L.P. and BGC Group, Inc. (incorporated by reference to Exhibit 10.4 to BGC Group, Inc.’s Current
Report on Form 8-K12B filed with the SEC on July 3, 2023)
Amended and Restated Administrative Services Agreement, dated as of July 1, 2023, by and among Tower
Bridge International Services L.P. and BGC Group, Inc. (incorporated by reference to Exhibit 10.5 to BGC
Group, Inc.’s Current Report on Form 8-K12B filed with the SEC on July 3, 2023)
Form of Regulated Entity Administrative Services Agreement (incorporated by reference to Exhibit 10.6 to BGC
Group, Inc.’s Current Report on Form 8-K12B filed with the SEC on July 3, 2023)
License Agreement, dated as of April 1, 2008, by and between BGC Partners, Inc. and Cantor Fitzgerald, L.P.
(incorporated by reference to Exhibit 10.10 to BGC Partners, Inc.’s Current Report on Form 8-K filed with the
SEC on April 7, 2008)
Clearing Services Agreement, dated May 9, 2006, between Cantor Fitzgerald & Co. and BGC Financial, Inc.
(incorporated by reference to Exhibit 10.1 to BGC Partners Inc.’s Quarterly Report on Form 10-Q filed with the
SEC on November 10, 2008)
Amendment to Clearing Services Agreement, dated November 7, 2008, between Cantor Fitzgerald & Co. and
BGC Financial, Inc. (incorporated by reference to Exhibit 10.2 to BGC Partners, Inc.’s Quarterly Report on
Form 10-Q filed with the SEC on November 10, 2008)
Second Amendment, dated August 16, 2010, to the Clearing Services Agreement, dated May 9, 2006, between
Cantor Fitzgerald & Co. and BGC Financial, Inc. (incorporated by reference to Exhibit 10.3 to BGC Partners,
Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 7, 2020)
197
Exhibit
Number
10.9
10.10
10.11
10.12†
10.13†
10.14†
10.15†
10.16†
10.17†
10.18†
10.19†
10.20
10.21†
10.22†
10.23
Exhibit Title
Third Amendment , dated June 16, 2020, to the Clearing Services Agreement, dated May 9, 2006, between
Cantor Fitzgerald & Co. and BGC Financial, Inc. (incorporated by reference to Exhibit 10.4 to BGC Partners,
Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 7, 2020)
Agreement dated November 5, 2008 between BGC Partners, Inc. and Cantor Fitzgerald, L.P. regarding clearing
capital (incorporated by reference to Exhibit 10.3 to BGC Partners, Inc.’s Quarterly Report on Form 10-Q filed
with the SEC on November 10, 2008)
First Amendment, dated June 16, 2020, to the Agreement between BGC Partners, Inc. and Cantor Fitzgerald,
L.P. regarding clearing capital, dated November 5, 2008 (incorporated by reference to Exhibit 10.5 to BGC
Partners, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 7, 2020)
Amended and Restated Change in Control Agreement dated August 3, 2011 between Howard W. Lutnick and
BGC Partners, Inc. (incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s Quarterly Report on Form
10-Q filed with the SEC on August 8, 2011)
Amended and Restated Change in Control Agreement dated August 3, 2011 between Stephen M. Merkel and
BGC Partners, Inc. (incorporated by reference to Exhibit 10.2 to BGC Partners, Inc.’s Quarterly Report on Form
10-Q filed with the SEC on August 8, 2011)
Amended and Restated Deed of Adherence, dated as of January 22, 2014, between Sean Windeatt and BGC
Services (Holdings) LLP (incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s Current Report on
Form 8-K filed with the SEC on January 28, 2014)
Deed of Amendment, dated February 24, 2017, to the Amended and Restated Deed of Adherence, between Sean
A. Windeatt and BGC Services (Holdings) LLP (incorporated by reference to Exhibit 10.86 to BGC Partners,
Inc.’s Annual Report on Form 10-K filed with the SEC on February 28, 2017)
Deed of Amendment, dated November 5, 2020, to the Amended and Restated Deed of Adherence, between Sean
A. Windeatt and BGC Services (Holdings) LLP (incorporated by reference to Exhibit 10.2 to BGC Partners,
Inc.’s Quarterly Report on Form 10-Q filed with the SEC on November 6, 2020)
Consultancy Agreement, dated February 24, 2017, between Sean A. Windeatt and BGC Services (Holdings)
LLP (incorporated by reference to Exhibit 10.87 to BGC Partners, Inc.’s Annual Report on Form 10-K filed with
the SEC on February 28, 2017)
Amendment, dated November 5, 2020, to the Consultancy Agreement, dated February 24, 2017, between Sean
A. Windeatt and BGC Services (Holdings) LLP (incorporated by reference to Exhibit 10.3 to BGC Partners,
Inc.’s Quarterly Report on Form 10-Q filed with the SEC on November 6, 2020)
Deed of Amendment, dated July 12, 2023, to the Amended and Restated Deed of Adherence, between Sean A.
Windeatt and BGC Services (Holdings) LLP (incorporated by reference to Exhibit 10.1 to BGC Group, Inc.’s
Current Report on Form 8-K filed with the SEC on July 13, 2023)
Letter Agreement, dated as of August 24, 2015, among BGC Partners, Inc., BGC Partners, L.P. and GFI Group
Inc., relating to shareholder litigation and the Tender Offer Agreement (incorporated by reference to Exhibit 10.1
to BGC Partners, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on November 9, 2015)
BGC Group, Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to BGC Group, Inc.’s
Current Report on Form 8-K12B filed with the SEC on July 3, 2023)
BGC Group, Inc. Incentive Bonus Compensation Plan (incorporated by reference to Exhibit 10.2 to BGC Group,
Inc.’s Current Report on Form 8-K12B filed with the SEC on July 3, 2023)
Amended and Restated Agreement of Limited Partnership of CF Real Estate Finance Holdings, L.P., dated as of
September 8, 2017 (incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s Current Report on Form 8-
K filed with the SEC on September 8, 2017)
10.24** Second Amended and Restated Agreement of Limited Partnership of BGC Holdings, L.P., dated as of December
13, 2017 (incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s Current Report on Form 8-K filed
with the SEC on December 19, 2017)
10.25
Amendment No. 1, dated November 8, 2018, to the Second Amended and Restated Agreement of Limited
Partnership of BGC Holdings, L.P. (incorporated by reference to Exhibit 10.6 to BGC Partners, Inc.’s Quarterly
Report on Form 10-Q filed with the SEC on November 8, 2018)
10.26** Second Amended and Restated Agreement of Limited Partnership of BGC Partners, L.P., dated as of December
13, 2017 (incorporated by reference to Exhibit 10.4 to BGC Partners, Inc.’s Current Report on Form 8-K filed
with the SEC on December 19, 2017)
198
Exhibit
Number
Exhibit Title
10.27** Second Amended and Restated Agreement of Limited Partnership of BGC Global Holdings, L.P., dated as of
December 13, 2017 (incorporated by reference to Exhibit 10.5 to BGC Partners, Inc.’s Current Report on Form
8-K filed with the SEC on December 19, 2017)
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
Second Amendment, dated as of March 10, 2023, to the Second Amended and Restated Agreement of Limited
Partnership of BGC Holdings, L.P., dated as of December 13, 2017 (incorporated by reference to Exhibit 10.1 to
BGC Partners, Inc.’s Current Report on Form 8-K filed with the SEC on March 14, 2023)
Tax Matters Agreement, dated as of December 13, 2017, by and among BGC Partners, Inc., BGC Holdings,
L.P., BGC Partners, L.P., Newmark Group, Inc., Newmark Holdings, L.P. and Newmark Partners, L.P.
(incorporated by reference to Exhibit 10.8 to BGC Partners, Inc.’s Current Report on Form 8-K filed with the
SEC on December 19, 2017)
Registration Rights Agreement, dated as of July 10, 2020, between BGC Partners, Inc. and the parties named
therein (incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s Current Report on Form 8-K filed with
the SEC on July 14, 2020)
Credit Agreement, dated as of March 19, 2018, by and between BGC Partners, Inc. and Cantor Fitzgerald, L.P.
(incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s Current Report on Form 8-K filed with the
SEC on March 23, 2018)
Amendment, dated August 6, 2018, to the Credit Agreement, dated as of March 19, 2018, by and between BGC
Partners, Inc. and Cantor Fitzgerald, L.P. (incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s
Current Report on Form 8-K filed with the SEC on August 7, 2018)
Amended and Restated Credit Agreement, dated as of March 19, 2018, by and between BGC Partners, Inc. and
Newmark Group, Inc. (incorporated by reference to Exhibit 10.2 to BGC Partners, Inc.’s Current Report on
Form 8-K filed with the SEC on March 23, 2018)
Credit Agreement, dated as of November 28, 2018, by and among BGC Partners, Inc., as the Borrower, certain
subsidiaries of the Borrower, as Guarantors, the several financial institutions from time to time as parties thereto,
as Lenders, and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to
BGC Partners, Inc.’s Current Report on Form 8-K filed with the SEC on November 30, 2018)
First Amendment, dated December 11, 2019, to the Credit Agreement, dated as of November 28, 2018, by and
among BGC Partners, Inc., as the Borrower, certain subsidiaries of the Borrower, as Guarantors, the several
financial institutions from time to time as parties thereto, as Lenders, and Bank of America, N.A., as
Administrative Agent (incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s Current Report on Form
8-K filed with the SEC on December 13, 2019)
Second Amendment, dated February 26, 2020, to the Credit Agreement, dated as of November 28, 2018, by and
among BGC Partners, Inc., as the Borrower, certain subsidiaries of the Borrower, as Guarantors, the several
financial institutions from time to time as parties thereto, as Lenders, and Bank of America, N.A., as the
Administrative Agent. (incorporated by reference to Exhibit 10.47 to BGC Partners, Inc.’s Annual Report on
Form 10-K filed with the SEC on March 1, 2021)
Amended and Restated Credit Agreement, dated as of March 10, 2022, by and among BGC Partners, Inc., as the
Borrower, certain subsidiaries of the Borrower, as Guarantors, the several financial institutions from time to time
as parties thereto, as Lenders, and Bank of America, N.A., as Administrative Agent (incorporated by reference to
Exhibit 10.1 to BGC Partners, Inc.’s Current Report on Form 8-K filed with the SEC on March 14, 2022)
First Amendment to Amended and Restated Credit Agreement, dated as of October 6, 2023, to the Amended and
Restated Credit Agreement, dated as of March 10, 2022, by and among BGC Partners, Inc., as the Borrower,
certain subsidiaries of the Borrower, as Guarantors, the several financial institutions from time to time as parties
thereto, as Lenders, and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit
10.1 to BGC Group, Inc.’s Current Report on Form 8-K filed with the SEC on October 6, 2023)
Assignment and Assumption Agreement, dated as of October 6, 2023, by and between BGC Group, Inc., as the
New Borrower, and BGC Partners, Inc., as the Current Borrower, relating to the Amended and Restated Credit
Agreement, dated as of March 10, 2022, by and among BGC Partners, Inc., as the Borrower, certain subsidiaries
of the Borrower, as Guarantors, the several financial institutions from time to time as parties thereto, as Lenders,
and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated by reference to Exhibit 10.2
to BGC Group, Inc.’s Current Report on Form 8-K filed with the SEC on October 6, 2023)
Assignment and Assumption Agreement, dated as of October 6, 2023, by and between BGC Group, Inc., BGC
Partners, Inc., and Cantor Fitzgerald, L.P., relating to the Credit Agreement, dated as of March 19, 2018, as
amended as of August 6, 2018, by and between BGC Partners, Inc. and Cantor Fitzgerald, L.P. (incorporated by
reference to Exhibit 10.3 to BGC Group, Inc.’s Current Report on Form 8-K filed with the SEC on October 6,
2023)
199
Exhibit
Number
10.41*
21.1
23.1
31.1
31.2
32.1
97.1
101
Exhibit Title
Support Agreement, dated as of November 15, 2022, by and among BGC Partners, Inc. and Cantor Fitzgerald,
L.P. (incorporated by reference to Exhibit 10.1 to BGC Partners, Inc.’s Current Report on Form 8-K filed with
the SEC on November 16, 2022)
List of subsidiaries of BGC Group, Inc.
Consent of Ernst & Young LLP
Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification by the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification by the Chief Executive Officer and Principal Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
BGC Group, Inc. Compensation Recovery Policy
The following materials from BGC Group, Inc.’s Annual Report on Form 10-K for the period ended
December 31, 2023 are formatted in inline eXtensible Business Reporting Language (iXBRL): (i) the
Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the
Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Cash Flows,
(v) the Consolidated Statements of Changes in Equity, (vi) Notes to the Consolidated Financial Statements, and
(vii) Schedule I, Parent Company Only Financial Statements. The XBRL Instance document does not appear in
the Interactive Data File because its XBRL tags are embedded within the iXBRL document
104
The cover page from this Annual Report on Form 10-K, formatted in inline XBRL (included in Exhibit 101)
ITEM 16.
FORM 10-K SUMMARY
Not Applicable
200
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this Annual Report on Form 10-K for the fiscal year ended December 31, 2023 to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 29th day of February, 2024.
BGC Group, Inc.
By:
Name:
/S/ HOWARD W. LUTNICK
Howard W. Lutnick
Title: Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been
signed below by the following persons on behalf of the registrant, BGC Group, Inc., in the capacities and on the date indicated.
Signature
Capacity in Which Signed
Date
/S/ HOWARD W. LUTNICK
Chairman of the Board and Chief Executive Officer
February 29, 2024
Howard W. Lutnick
(Principal Executive Officer)
/S/ JASON W. HAUF
Chief Financial Officer
February 29, 2024
Jason W. Hauf
(Principal Financial and Accounting Officer)
/S/ LINDA A. BELL
Linda A. Bell
/S/ WILLIAM D. ADDAS
William D. Addas
/S/ DAVID P. RICHARDS
David P. Richards
/S/ ARTHUR U. MBANEFO
Arthur U. Mbanefo
Director
Director
Director
Director
February 29, 2024
February 29, 2024
February 29, 2024
February 29, 2024
[Signature page to the Annual Report on Form 10-K for the period ended December 31, 2023 dated February 29, 2024.]
201
BGC GROUP, INC.
(Parent Company Only)
STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share and per share data)
Assets
Cash and cash equivalents
Investments in subsidiaries
Receivables from related parties
Notes receivable from related parties
Other assets
Total assets
Liabilities and Stockholders’ Equity
Accounts payable, accrued and other liabilities
Notes payable and other borrowings
Total liabilities
Commitments and contingencies (Note 2)
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying Notes to Financial Statements.
Successor
Predecessor
December 31, 2023
December 31, 2022
$
$
$
29
$
753,357
12,744
1,124,589
139,140
49
592,571
9,160
1,045,966
91,654
2,029,859
$
1,739,400
20,187
$
23,789
1,124,589
1,144,776
1,045,966
1,069,755
885,083
669,645
$
2,029,859
$
1,739,400
202
BGC GROUP, INC.
(Parent Company Only)
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Revenues:
Other revenues
Interest and dividend income
Total revenue
Expenses:
Interest expense
Total expenses
Income from operations before income taxes
Equity income (loss) of subsidiaries
Provision (benefit) for income taxes
Net income available to common stockholders
Per share data:
Basic earnings (loss) per share
Successor
Six Months
Ended December
31, 2023
Six Months
Ended June 30,
2023
Predecessor
Year Ended
December 31,
2022
Year Ended
December 31,
2021
$
394
$
797 $
263 $
17,528
17,922
17,528
17,528
394
(6,397)
(42,994)
30,700
31,497
30,700
30,700
797
(9,767)
(8,244)
53,652
53,915
53,652
53,652
263
42,207
(6,242)
552
60,772
61,324
60,772
60,772
552
114,971
(8,484)
$
36,991
$
(726) $
48,712 $
124,007
Net income attributable to common stockholders
Basic earnings (loss) per share
Basic weighted-average shares of common stock
outstanding
Fully diluted earnings (loss) per share
Net income (loss) for fully diluted shares
Fully diluted earnings (loss) per share
Fully diluted weighted-average shares of common
stock outstanding
$
$
$
$
34,796
0.08
$
$
(726) $
0.00 $
48,712 $
124,007
0.13 $
0.33
426,436
383,528
371,561
379,215
34,669
0.07
$
$
(726) $
0.00 $
63,479 $
173,995
0.13 $
0.32
489,989
383,528
499,414
540,020
See accompanying Notes to Financial Statements.
203
BGC GROUP, INC.
(Parent Company Only)
STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Successor
Six Months
Ended December
31, 2023
Six Months
Ended June 30,
2023
Predecessor
Year Ended
December 31,
2022
$
36,991
$
(726) $
48,712 $
Year Ended
December 31,
2021
124,007
Net income available to common stockholders
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments
Benefit plans
Total other comprehensive (loss) income, net of tax
Comprehensive income attributable to common
stockholders
2,546
—
2,546
4,303
—
4,303
(4,883)
—
(4,883)
(11,853)
235
(11,618)
$
39,537
$
3,577 $
43,829 $
112,389
See accompanying Notes to Financial Statements.
204
BGC GROUP, INC.
(Parent Company Only)
STATEMENTS OF CASH FLOWS
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income available to common stockholders
Adjustments to reconcile net income to net cash used in
operating activities:
Amortization of deferred financing costs
Equity (income) loss of subsidiaries
Deferred tax (benefit) expense
Decrease (increase) in operating assets:
Investments in subsidiaries
Receivables from related parties
Notes receivable from related party
Other assets
(Decrease) increase in operating liabilities:
Accounts payable, accrued and other liabilities
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholders
Repurchase of Class A common stock
Issuance of senior notes, net of deferred issuance costs
Redemption of equity awards
Repayments of senior notes
Unsecured revolving credit agreement borrows
Unsecured revolving credit agreement repayments
Distributions from subsidiaries
Proceeds from dividend reinvestment plan
Net cash provided by financing activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental cash information:
Cash paid (refund) during the period for taxes
Cash paid during the period for interest
Supplemental non-cash information:
Issuance of Class A common stock upon exchange of
limited partnership interests
Issuance of Class A and contingent Class A common
stock and limited partnership interests for acquisitions
$
$
$
Successor
Six Months
Ended December
31, 2023
Six Months
Ended June 30,
2023
Predecessor
Year Ended
December 31,
2022
Year Ended
December 31,
2021
$
36,991
$
(726) $
48,712 $
124,007
774
(36,991)
(51,527)
207,931
(12,744)
(1,124,589)
(87,613)
20,191
(1,047,577)
1,461
726
—
(552)
253
(348,040)
3,836
3,568
(339,474)
2,801
(48,712)
(20,341)
55,706
878
(2,801)
(1,052)
(5,750)
29,441
3,592
(114,971)
(6,404)
335,295
(7,280)
251,312
1,769
(21,459)
565,861
—
—
—
—
(9,360)
(66,778)
884,781
(155)
—
239,033
—
—
85
1,047,606
(7,558)
(46,481)
346,579
(1,043)
—
—
—
47,861
84
339,442
(14,859)
(103,888)
—
—
—
—
—
89,234
90
(29,423)
(15,098)
(365,398)
—
—
(256,032)
300,000
(300,000)
70,602
72
(565,854)
29
—
29
—
10,702
$
$
(32)
49
17 $
18
31
49 $
7
24
31
9,581 $
26,404
5,269 $
49,375
(157)
59,018
—
$
45,868 $
34,889 $
157,547
4,514
2,761
2,710
1,160
See accompanying Notes to Financial Statements.
205
BGC GROUP, INC.
(Parent Company Only)
NOTES TO FINANCIAL STATEMENTS
1.
Organization and Basis of Presentation
On July 1, 2023, the Company completed its Corporate Conversion to a Full C-Corporation in order to reorganize and
simplify its organizational structure. As a result of the Corporate Conversion, BGC Group, Inc.(Successor) became the public
holding company for, and successor to, BGC Partners (Predecessor), and its Class A common stock began trading on Nasdaq,
in place of BGC Partners’ Class A common stock, under the ticker symbol “BGC.” The accompanying Parent Company Only
Financial Statements of BGC Group, Inc. should be read in conjunction with the Consolidated Financial Statements of BGC
Group, Inc. and subsidiaries and the notes thereto.
For the year ended December 31, 2023, the Company declared and paid cash dividends of $0.04 per share to BGC
Class A and Class B common stockholders. For both years ended December 31, 2022 and 2021, the comparable cash dividend
amounts were $0.04 per share.
2.
Commitments, Contingencies and Guarantees
On April 8, 2019, the Company entered into a $15.0 million secured loan arrangement, under which it pledged certain
fixed assets as security for a loan. This arrangement was guaranteed by the Parent Company and incurred interest at a fixed rate
of 3.77% and matured on April 8, 2023, at which point the loan was repaid in full; therefore, there were no borrowings as of
December 31, 2023. As of December 31, 2022, BGC Partners had $2.0 million outstanding related to this secured loan
arrangement. The book value of the fixed assets pledged as of December 31, 2022 was nil. BGC Partners recorded interest
expense related to this secured loan arrangement of nil, $0.1 million and $0.3 million for the years ended December 31, 2023,
2022 and 2021, respectively.
On April 19, 2019, the Company entered into a $10.0 million secured loan arrangement, under which it pledged certain
fixed assets as security for a loan. This arrangement was guaranteed by the Parent Company and incurred interest at a fixed rate
of 3.89% and matured on April 19, 2023, at which point the loan was repaid in full; therefore, there were no borrowings as of
December 31, 2023. As of December 31, 2022, BGC Partners had $1.3 million outstanding related to this secured loan
arrangement. The book value of the fixed assets pledged as of December 31, 2022 was $0.3 million. BGC Partners recorded
interest expense related to this secured loan arrangement of nil, $0.1 million and $0.2 million for the years ended December 31,
2023, 2022 and 2021, respectively.
3.
Notes Payable and Other Borrowings
Exchange Offer and Market-Making Registration Statement
On October 6, 2023, BGC Group completed the Exchange Offer, in which BGC Group offered to exchange the BGC
Partners Notes for new notes to be issued by BGC Group with the same respective interest rates, maturity dates and
substantially identical terms as the tendered notes, and cash. In connection with the Exchange Offer, and on behalf of BGC
Partners, BGC Group also solicited consents from (i) holders of the BGC Partners Notes to certain proposed amendments to the
indenture and supplemental indentures pursuant to which such BGC Partners Notes were issued to, among other things,
eliminate certain affirmative and restrictive covenants and events of default, including the “Change of Control” provisions
described below, which had applied to each series of the BGC Partners Notes, and (ii) from holders of the BGC Partners
8.000% Senior Notes to amend the registration rights agreement relating thereto to terminate such agreement. As of September
19, 2023, the requisite note holder consents were received to adopt the proposed indenture amendments and terminate the
registration rights agreement relating to the BGC Partners 8.000% Senior Notes. In connection with the October 6, 2023 closing
of the Exchange Offer, (i) $255.5 million aggregate principal amount of BGC Partners 3.750% Senior Notes were exchanged
for BGC Group 3.750% Senior Notes and subsequently canceled, $288.2 million aggregate principal amount of BGC Partners
4.375% Senior Notes were exchanged for BGC Group 4.375% Senior Notes and subsequently cancelled, $347.2 million
aggregate principal amount of BGC Partners 8.000% Senior Notes were exchanged for BGC Group 8.000% Senior Notes and
subsequently cancelled, and equivalent aggregate principal amounts of BGC Group 3.750% Senior Notes, BGC Group 4.375%
Senior Notes and BGC Group 8.000% Senior Notes, respectively, were issued; (ii) the indenture and supplemental indentures
relating to the BGC Partners 3.750% Senior Notes, the BGC Partners 4.375% Senior Notes and the BGC Partners 8.000%
Senior Notes were amended as proposed; and (iii) the registration rights agreement relating to the BGC Partners 8.000% Senior
Notes was terminated. Issuance costs related to the Exchange Offer of $0.9 million are amortized as interest expense and the
206
carrying value of the BGC Group 3.750% Senior Notes, the BGC Group 4.375% Senior Notes, and the BGC Group 8.000%
Senior Notes will accrete up to the face amount over the term of the notes.
On October 19, 2023, the Company filed a resale registration statement on Form S-3 pursuant to which CF&Co may
make offers and sales of the BGC Group 3.750% Senior Notes, the BGC Group 4.375% Senior Notes and the BGC Group
8.000% Senior Notes in connection with ongoing market-making transactions which may occur from time to time. Such
market-making transactions in these securities may occur in the open market or may be privately negotiated at prevailing
market prices at a time of resale or at related or negotiated prices. Neither CF&Co, nor any other of the Company’s affiliates,
has any obligation to make a market for the Company’s securities, and CF&Co or any such other affiliate may discontinue
market-making activities at any time without notice.
Unsecured Senior Revolving Credit Agreement
On November 28, 2018, BGC Partners entered into the Revolving Credit Agreement with Bank of America, N.A., as
administrative agent, and a syndicate of lenders, which replaced the existing committed unsecured senior revolving credit
agreement. The maturity date of the Revolving Credit Agreement was November 28, 2020, and the maximum revolving loan
balance was $350.0 million. Borrowings under this Revolving Credit Agreement bore interest at either LIBOR or a defined base
rate plus additional margin. On December 11, 2019, BGC Partners entered into an amendment to the Revolving Credit
Agreement. Pursuant to the amendment, the maturity date was extended to February 26, 2021. On February 26, 2020, BGC
Partners entered into a second amendment to the Revolving Credit Agreement, pursuant to which, the maturity date was
extended by two years to February 26, 2023. There was no change to the interest rate or the maximum revolving loan balance.
On March 10, 2022, BGC Partners entered into an amendment and restatement of the senior unsecured revolving credit
agreement, pursuant to which the maturity date was extended to March 10, 2025, the size of the credit facility was increased to
$375.0 million, and borrowings under this agreement bear interest based on either SOFR or a defined base rate plus additional
margin. On October 6, 2023, the Revolving Credit Agreement was amended to exclude the BGC Partners Notes from the
restrictive covenant in the Revolving Credit Agreement limiting the indebtedness of subsidiaries, and BGC Group assumed all
of the rights and obligations of BGC Partners under the Revolving Credit Agreement and has become the borrower thereunder.
As of December 31, 2023, there were $239.2 million borrowings outstanding, net of deferred financing costs of $0.8
million under the Revolving Credit Agreement. As of December 31, 2022, there were no borrowings outstanding under the
Revolving Credit Agreement. BGC Group recorded interest expense related to the Revolving Credit Agreement of $4.4 million
for the year ended December 31, 2023. BGC Group did not record any interest expense related to the Revolving Credit
Agreement for the years ended December 31, 2022 and 2021. BGC Partners recorded interest expense related to the Revolving
Credit Agreement of $6.9 million, $2.3 million and $3.6 million for the years ended December 31, 2023, 2022 and 2021,
respectively.
5.375% Senior Notes
On July 24, 2018, BGC Partners issued an aggregate of $450.0 million principal amount of BGC Partners 5.375%
Senior Notes. The BGC Partners 5.375% Senior Notes were general senior unsecured obligations of BGC Partners. The BGC
Partners 5.375% Senior Notes bore interest at a rate of 5.375% per year, payable in cash on January 24 and July 24 of each
year, commencing January 24, 2019. The BGC Partners 5.375% Senior Notes matured on July 24, 2023. Prior to maturity, BGC
Partners was able to redeem some or all of the BGC Partners 5.375% Senior Notes at any time or from time to time for cash at
certain “make-whole” redemption prices (as set forth in the supplemental indenture related to the BGC Partners 5.375% Senior
Notes). If a “Change of Control Triggering Event” (as defined in the supplemental indenture governing the BGC Partners
5.375% Senior Notes) occurred, holders could have required BGC Partners to purchase all or a portion of their notes for cash at
a price equal to 101% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but
excluding, the purchase date. The initial carrying value of the BGC Partners 5.375% Senior Notes was $444.2 million, net of
the discount and debt issuance costs of $5.8 million. The issuance costs were amortized as interest expense and the carrying
value of the BGC Partners 5.375% Senior Notes accreted up to the face amount over the term of the notes. On July 24, 2023,
BGC Partners repaid the principal plus accrued interest on the BGC Partners 5.375% Senior Notes. BGC Partners recorded
interest expense related to the BGC Partners 5.375% Senior Notes of $14.5 million, $25.5 million and $25.5 million for the
years ended December 31, 2023, 2022 and 2021, respectively.
3.750% Senior Notes
On September 27, 2019, BGC Partners issued an aggregate of $300.0 million principal amount of BGC Partners
3.750% Senior Notes. The BGC Partners 3.750% Senior Notes are general unsecured obligations of BGC Partners. The BGC
Partners 3.750% Senior Notes bear interest at a rate of 3.750% per year, payable in cash on April 1 and October 1 of each year,
commencing April 1, 2020. The BGC Partners 3.750% Senior Notes will mature on October 1, 2024. BGC Partners may
207
redeem some or all of the BGC Partners 3.750% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture governing the BGC Partners 3.750% Senior Notes). The initial
carrying value of the BGC Partners 3.750% Senior Notes was $296.1 million, net of discount and debt issuance costs of $3.9
million. The issuance costs are amortized as interest expense and the carrying value of the BGC Partners 3.750% Senior Notes
will accrete up to the face amount over the term of the notes.
As discussed above, on October 6, 2023, pursuant to the Exchange Offer, $255.5 million aggregate principal amount
of BGC Partners 3.750% Senior Notes were exchanged for BGC Group 3.750% Senior Notes and subsequently cancelled, and
certain amendments to the indenture and supplemental indenture governing the BGC Partners 3.750% Senior Notes became
effective. The BGC Group 3.750% Senior Notes will mature on October 1, 2024 and bear interest at a rate of 3.750% per year,
payable in cash on April 1 and October 1 of each year, commencing April 1, 2024. BGC Group may redeem some or all of the
BGC Group 3.750% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set
forth in the supplemental indenture related to the BGC Group 3.750% Senior Notes). If a “Change of Control Triggering
Event” (as defined in the supplemental indenture related to the BGC Group 3.750% Senior Notes) occurs, holders may require
BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal amount of the notes to
be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following the closing of the Exchange Offer, $44.5 million aggregate principal amount of BGC Partners 3.750%
Senior Notes remained outstanding.
The carrying value of the BGC Group 3.750% Senior Notes was $254.8 million as of December 31, 2023. BGC Group
recorded interest expense related to the BGC Group 3.750% Senior Notes of $2.6 million for the year ended December 31,
2023. BGC Group did not record interest expense related to the BGC Group 3.750% Senior Notes for the years ended
December 31, 2022 and 2021. The carrying value of the BGC Partners 3.750% Senior Notes was $44.4 million as of
December 31, 2023. BGC Partners recorded interest expense related to the BGC Partners 3.750% Senior Notes of $9.5 million
for the year ended December 31, 2023, and $12.1 million for each of the years ended December 31, 2022, and 2021.
4.375% Senior Notes
On July 10, 2020, BGC Partners issued an aggregate of $300.0 million principal amount of BGC Partners 4.375%
Senior Notes. The BGC Partners 4.375% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners
4.375% Senior Notes bear interest at a rate of 4.375% per year, payable in cash on June 15 and December 15 of each year,
commencing December 15, 2020. The BGC Partners 4.375% Senior Notes will mature on December 15, 2025. BGC Partners
may redeem some or all of the BGC Partners 4.375% Senior Notes at any time or from time to time for cash at certain “make-
whole” redemption prices (as set forth in the supplemental indenture governing the BGC Partners 4.375% Senior Notes). The
initial carrying value of the BGC Partners 4.375% Senior Notes was $296.8 million, net of discount and debt issuance costs of
$3.2 million. The issuance costs are amortized as interest expense and the carrying value of the BGC Partners 4.375% Senior
Notes will accrete up to the face amount over the term of the notes.
As discussed above, on October 6, 2023, pursuant to the Exchange Offer, $288.2 million aggregate principal amount
of BGC Partners 4.375% Senior Notes were exchanged for BGC Group 4.375% Senior Notes and subsequently cancelled, and
certain amendments to the indenture and supplemental indenture governing the BGC Partners 4.375% Senior Notes became
effective. The BGC Group 4.375% Senior Notes will mature on December 15, 2025 and bear interest at a rate of 4.375% per
year, payable in cash on June 15 and December 15 of each year, commencing December 15, 2023. BGC Group may redeem
some or all of the BGC Group 4.375% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture related to the BGC Group 4.375% Senior Notes). If a “Change of
Control Triggering Event” (as defined in the supplemental indenture related to the BGC Group 4.375% Senior Notes) occurs,
holders may require BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal
amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following the closing of the Exchange Offer, $11.8 million aggregate principal amount of BGC Partners 4.375%
Senior Notes remained outstanding. Cantor participated in the Exchange Offer, and currently holds $14.5 million aggregate
principal amount of BGC Group 4.375% Senior Notes.
The carrying value of the BGC Group 4.375% Senior Notes was $286.7 million as of December 31, 2023. BGC Group
recorded interest expense related to the BGC Group 4.375% Senior Notes of $3.3 million for the year ended December 31,
2023. BGC Group did not record interest expense related to the BGC Group 4.375% Senior Notes for the years ended
December 31, 2022 and 2021. The carrying value of the BGC Partners 4.375% Senior Notes was $11.8 million as
of December 31, 2023. BGC Partners recorded interest expense related to the BGC Partners 4.375% Senior Notes of
$10.5 million for the year ended December 31, 2023, and $13.8 million for each of the years ended December 31, 2022 and
2021.
208
8.000% Senior Notes
On May 25, 2023, BGC Partners issued an aggregate of $350.0 million principal amount of BGC Partners 8.000%
Senior Notes. The BGC Partners 8.000% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners
8.000% Senior Notes bear interest at a rate of 8.000% per year, payable in cash on May 25 and November 25 of each year,
commencing November 25, 2023. The BGC Partners 8.000% Senior Notes will mature on May 25, 2028. BGC Partners may
redeem some or all of the BGC Partners 8.000% Senior Notes at any time or from time to time for cash at certain “make-whole”
redemption prices (as set forth in the supplemental indenture governing the BGC Partners 8.000% Senior Notes). The initial
carrying value of the BGC Partners 8.000% Senior Notes was $346.6 million, net of debt issuance costs of $3.4 million. The
issuance costs are amortized as interest expense and the carrying value of the BGC Partners 8.000% Senior Notes will accrete
up to the face amount over the term of the notes.
On October 6, 2023, pursuant to the Exchange Offer, $347.2 million aggregate principal amount of BGC Partners
8.000% Senior Notes were exchanged for BGC Group 8.000% Senior Notes and subsequently cancelled, and certain
amendments to the indenture and supplemental indenture governing the BGC Partners 8.000% Senior Notes became effective.
The BGC Group 8.000% Senior Notes will mature on May 25, 2028 and bear interest at a rate of 8.000% per year, payable in
cash on May 25 and November 25 of each year, commencing November 25, 2023. BGC Group may redeem some or all of the
BGC Group 8.000% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set
forth in the supplemental indenture related to the BGC Group 8.000% Senior Notes). If a “Change of Control Triggering
Event” (as defined in the supplemental indenture related to the BGC Group 8.000% Senior Notes) occurs, holders may require
BGC Group to purchase all or a portion of their notes for cash at a price equal to 101% of the principal amount of the notes to
be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.
Following closing of the Exchange Offer, $2.8 million aggregate principal amount of the BGC Partners 8.000% Senior
Notes remained outstanding. In connection with the issuance of the BGC Partners 8.000% Senior Notes, BGC Partners entered
into a registration rights agreement providing for a future registered exchange offer by May 25, 2024 in which holders of the
BGC Partners 8.000% Senior Notes, issued in a private placement on May 25, 2023, could exchange such notes for new
registered notes with substantially identical terms. Such registration rights agreement was terminated in connection with the
closing of the Exchange Offer.
The carrying value of the BGC Group 8.000% Senior Notes was $343.9 million as of December 31, 2023. BGC Group
recorded interest expense related to the BGC Group 8.000% Senior Notes of $7.1 million for the year ended December 31,
2023. The carrying value of the BGC Partners 8.000% Senior Notes was $2.7 million as of December 31, 2023. BGC Partners
recorded interest expense related to the BGC Partners 8.000% Senior Notes of $10.0 million for the year ended December 31,
2023.
209
THE EXHIBITS LISTED UNDER “ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES” ARE
AVAILABLE IN BGC’S STAND-ALONE FORM 10-K, WHICH IS AVAILABLE ON OUR WEBSITE.
210
Non-GAAP Financial Measures
The non-GAAP definitions below include references to certain equity-based compensation instruments, such as restricted stock
awards and/or restricted stock units (“RSUs”), that the Company has issued and outstanding following its corporate conversion
on July 1, 2023. Although BGC is retaining certain defined terms and references, including references to partnerships or
partnership units, for purposes of comparability before and after the corporate conversion, such references may not be
applicable following the period ended June 30, 2023.
The Company has clarified its practice in an updated definition of its “Calculation of Non-Compensation Adjustments for
Adjusted Earnings”. BGC has not modified any prior period non-GAAP measures related to this clarification.
This document contains non-GAAP financial measures that differ from the most directly comparable measures calculated and
presented in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). Non-GAAP financial
measures used by the Company include “Adjusted Earnings before noncontrolling interests and taxes”, which is used
interchangeably with “pre-tax Adjusted Earnings”; “Post-tax Adjusted Earnings to fully diluted shareholders”, which is used
interchangeably with “post-tax Adjusted Earnings”; “Adjusted EBITDA”; “Liquidity”; and "Constant Currency". The
definitions of these terms are below.
Adjusted Earnings Defined
BGC uses non-GAAP financial measures, including “Adjusted Earnings before noncontrolling interests and taxes” and “Post-
tax Adjusted Earnings to fully diluted shareholders”, which are supplemental measures of operating results used by
management to evaluate the financial performance of the Company and its consolidated subsidiaries. BGC believes that
Adjusted Earnings best reflect the operating earnings generated by the Company on a consolidated basis and are the earnings
which management considers when managing its business.
As compared with “Income (loss) from operations before income taxes” and “Net income (loss) for fully diluted shares”, both
prepared in accordance with GAAP, Adjusted Earnings calculations primarily exclude certain non-cash items and other
expenses that generally do not involve the receipt or outlay of cash by the Company and/or which do not dilute existing
stockholders. In addition, Adjusted Earnings calculations exclude certain gains and charges that management believes do not
best reflect the underlying operating performance of BGC. Adjusted Earnings is calculated by taking the most comparable
GAAP measures and adjusting for certain items with respect to compensation expenses, non-compensation expenses, and other
income, as discussed below.
Calculations of Compensation Adjustments for Adjusted Earnings and Adjusted EBITDA
Treatment of Equity-Based Compensation Line Item for Adjusted Earnings and Adjusted EBITDA
The Company’s Adjusted Earnings and Adjusted EBITDA measures exclude all GAAP charges included in the line item
“Equity-based compensation and allocations of net income to limited partnership units and FPUs” (or “equity-based
compensation” for purposes of defining the Company’s non-GAAP results) as recorded on the Company’s GAAP
Consolidated Statements of Operations and GAAP Consolidated Statements of Cash Flows. These GAAP equity-based
compensation charges reflect the following items:
• Charges related to amortization of RSUs, restricted stock awards, other equity-based awards, and limited partnership
units;
• Charges with respect to grants of exchangeability, which reflect the right of holders of limited partnership units with no
capital accounts, such as LPUs and PSUs, to exchange these units into shares of common stock, or into partnership
units with capital accounts, such as HDUs, as well as cash paid with respect to taxes withheld or expected to be owed
by the unit holder upon such exchange. The withholding taxes related to the exchange of certain non-exchangeable
units without a capital account into either common shares or units with a capital account may be funded by the
redemption of preferred units such as PPSUs;
• Charges with respect to preferred units and RSU tax accounts. Any preferred units and RSU tax accounts would not be
included in the Company’s fully diluted share count because they cannot be made exchangeable into shares of
common stock and are entitled only to a fixed distribution or dividend. Preferred units are granted in connection with
the grant of certain limited partnership units that may be granted exchangeability or redeemed in connection with the
211
grant of shares of common stock, and RSU tax accounts are granted in connection with the grant of RSUs. The
preferred units and RSU tax accounts are granted at ratios designed to cover any withholding taxes expected to be
paid. This is an alternative to the common practice among public companies of issuing the gross amount of shares to
employees, subject to cashless withholding of shares, to pay applicable withholding taxes;
• GAAP equity-based compensation charges with respect to the grant of an offsetting amount of common stock or
partnership units with capital accounts in connection with the redemption of non-exchangeable units, including PSUs
and LPUs;
• Charges related to grants of equity awards, including common stock, RSUs, restricted stock awards or partnership
units with capital accounts;
• Allocations of net income to limited partnership units and FPUs. Such allocations represent the pro-rata portion of
post-tax GAAP earnings available to such unit holders; and
• Charges related to dividend equivalents earned on RSUs and any preferred returns on RSU tax accounts.
The amounts of certain quarterly equity-based compensation charges are based upon the Company’s estimate of such
expected charges during the annual period, as described further below under “Methodology for Calculating Adjusted
Earnings Taxes.”
Virtually all of BGC’s key executives and producers have equity stakes in the Company and its subsidiaries and generally
receive deferred equity as part of their compensation. A significant percentage of BGC’s fully diluted shares are owned by
its executives, partners and employees. The Company issues RSUs, restricted stock, limited partnership units (prior to July
1, 2023) as well as other forms of equity-based compensation, including grants of exchangeability into shares of common
stock (prior to July 1, 2023), to provide liquidity to its employees, to align the interests of its employees and management
with those of common stockholders, to help motivate and retain key employees, and to encourage a collaborative culture
that drives cross-selling and revenue growth.
All share equivalents that are part of the Company’s equity-based compensation program, including REUs, PSUs, LPUs,
HDUs, and other units that may be made exchangeable into common stock, as well as RSUs (which are recorded using the
treasury stock method), are included in the fully diluted share count when issued or at the beginning of the subsequent
quarter after the date of grant.
Compensation charges are also adjusted for certain other cash and non-cash items.
Certain Other Compensation-Related Adjustments for Adjusted Earnings
BGC also excludes various other GAAP items that management views as not reflective of the Company’s underlying
performance in a given period from its calculation of Adjusted Earnings. These may include compensation-related items
with respect to cost-saving initiatives, such as severance charges incurred in connection with headcount reductions as part of
broad restructuring and/or cost savings plans.
Calculation of Non-Compensation Adjustments for Adjusted Earnings
Adjusted Earnings calculations may also exclude items such as:
• Non-cash GAAP charges related to the amortization of intangibles with respect to acquisitions;
• Acquisition related costs;
• Non-cash GAAP asset impairment charges;
• Resolutions of litigation, disputes, investigations, or enforcement matters that are generally non-recurring, exceptional,
or unusual, or similar items that management believes do not best reflect BGC’s underlying operating performance,
including related unaffiliated third-party professional fees and expenses; and
• Various other GAAP items that management views as not reflective of the Company’s underlying performance in a
given period, including non-compensation-related charges incurred as part of broad restructuring and/or cost savings
plans. Such GAAP items may include charges for professional fees and expenses, exiting leases and/or other long-term
212
contracts as part of cost-saving initiatives, as well as non-cash impairment charges related to assets, goodwill and/or
intangible assets created from acquisitions.
Calculation of Adjustments for Other (income) losses for Adjusted Earnings
Adjusted Earnings calculations also exclude gains from litigation resolution and certain other non-cash, non-dilutive, and/or
non-economic items, which may, in some periods, include:
• Gains or losses on divestitures;
•
Fair value adjustment of investments;
• Certain other GAAP items, including gains or losses related to BGC's investments accounted for under the equity
method; and
• Any unusual, non-ordinary, or non-recurring gains or losses.
Methodology for Calculating Adjusted Earnings Taxes
Although Adjusted Earnings are calculated on a pre-tax basis, BGC also reports post-tax Adjusted Earnings to fully diluted
shareholders. The Company defines post-tax Adjusted Earnings to fully diluted shareholders as pre-tax Adjusted Earnings
reduced by the non-GAAP tax provision described below and net income (loss) attributable to noncontrolling interest for
Adjusted Earnings.
The Company calculates its tax provision for post-tax Adjusted Earnings using an annual estimate similar to how it accounts for
its income tax provision under GAAP. To calculate the quarterly tax provision under GAAP, BGC estimates its full fiscal year
GAAP income (loss) from operations before income taxes and noncontrolling interests in subsidiaries and the expected
inclusions and deductions for income tax purposes, including expected equity-based compensation during the annual period.
The resulting annualized tax rate is applied to BGC’s quarterly GAAP income (loss) from operations before income taxes and
noncontrolling interests in subsidiaries. At the end of the annual period, the Company updates its estimate to reflect the actual
tax amounts owed for the period.
To determine the non-GAAP tax provision, BGC first adjusts pre-tax Adjusted Earnings by recognizing any, and only, amounts
for which a tax deduction applies under applicable law. The amounts include charges with respect to equity-based
compensation; certain charges related to employee loan forgiveness; certain net operating loss carryforwards when taken for
statutory purposes; and certain charges related to tax goodwill amortization. These adjustments may also reflect timing and
measurement differences, including treatment of employee loans; changes in the value of units between the dates of grants of
exchangeability and the date of actual unit exchange; changes in the value of RSUs and/or restricted stock awards between the
date of grant and the date the award vests; variations in the value of certain deferred tax assets; and liabilities and the different
timing of permitted deductions for tax under GAAP and statutory tax requirements.
After application of these adjustments, the result is the Company’s taxable income for its pre-tax Adjusted Earnings, to which
BGC then applies the statutory tax rates to determine its non-GAAP tax provision. BGC views the effective tax rate on pre-tax
Adjusted Earnings as equal to the amount of its non-GAAP tax provision divided by the amount of pre-tax Adjusted Earnings.
Generally, the most significant factor affecting this non-GAAP tax provision is the amount of charges relating to equity-based
compensation. Because the charges relating to equity-based compensation are deductible in accordance with applicable tax
laws, increases in such charges have the effect of lowering the Company’s non-GAAP effective tax rate and thereby increasing
its post-tax Adjusted Earnings.
BGC incurs income tax expenses based on the location, legal structure and jurisdictional taxing authorities of each of its
subsidiaries. Certain of the Company’s entities are taxed as U.S. partnerships and are subject to the Unincorporated Business
Tax (“UBT”) in New York City. Any U.S. federal and state income tax liability or benefit related to the partnership income or
loss, with the exception of UBT, rests with the unit holders rather than with the partnership entity. The Company’s consolidated
financial statements include U.S. federal, state, and local income taxes on the Company’s allocable share of the U.S. results of
operations. Outside of the U.S., BGC operates principally through subsidiary corporations subject to local income taxes. For
these reasons, taxes for Adjusted Earnings are expected to be presented to show the tax provision the consolidated Company
would expect to pay if 100% of earnings were taxed at global corporate rates.
213
Calculations of Pre- and Post-Tax Adjusted Earnings per Share
BGC’s pre- and post-tax Adjusted Earnings per share calculations assume either that:
• The fully diluted share count includes the shares related to any dilutive instruments, but excludes the associated
expense, net of tax, when the impact would be dilutive; or
• The fully diluted share count excludes the shares related to these instruments, but includes the associated expense, net
of tax, when the impact would be anti-dilutive.
The share count for Adjusted Earnings excludes certain shares and share equivalents expected to be issued in future periods but
not yet eligible to receive dividends and/or distributions. Each quarter, the dividend payable to BGC’s stockholders, if any, is
expected to be determined by the Company’s Board of Directors with reference to a number of factors. The declaration,
payment, timing, and amount of any future dividends payable by the Company will be at the discretion of its Board of Directors
using the fully diluted share count. For more information on any share count adjustments, see the table titled “Fully Diluted
Weighted-Average Share Count under GAAP and for Adjusted Earnings” in the Company’s most recent financial results press
release.
Management Rationale for Using Adjusted Earnings
BGC’s calculation of Adjusted Earnings excludes the items discussed above because they are either non-cash in nature, because
the anticipated benefits from the expenditures are not expected to be fully realized until future periods, or because the Company
views results excluding these items as a better reflection of the underlying performance of BGC’s ongoing operations.
Management uses Adjusted Earnings in part to help it evaluate, among other things, the overall performance of the Company’s
business and to make decisions with respect to the Company’s operations.
The term “Adjusted Earnings” should not be considered in isolation or as an alternative to GAAP net income (loss). The
Company views Adjusted Earnings as a metric that is not indicative of liquidity, or the cash available to fund its operations, but
rather as a performance measure. Pre- and post-tax Adjusted Earnings, as well as related measures, are not intended to replace
the Company’s presentation of its GAAP financial results. However, management believes that these measures help provide
investors with a clearer understanding of BGC’s financial performance and offer useful information to both management and
investors regarding certain financial and business trends related to the Company’s financial condition and results of operations.
Management believes that the GAAP and Adjusted Earnings measures of financial performance should be considered together.
For more information regarding Adjusted Earnings, see the sections of this document and/or in the Company’s most recent
financial results press release titled “Reconciliation of GAAP Income (Loss) from Operations before Income Taxes to Adjusted
Earnings and GAAP Fully Diluted EPS to Post-Tax Adjusted EPS”, including the related footnotes, for details about how
BGC’s non-GAAP results are reconciled to those under GAAP.
Adjusted EBITDA Defined
BGC also provides an additional non-GAAP financial performance measure, “Adjusted EBITDA”, which it defines as GAAP
“Net income (loss) available to common stockholders”, adjusted to add back the following items:
•
Provision (benefit) for income taxes;
• Net income (loss) attributable to noncontrolling interest in subsidiaries;
•
•
Interest expense;
Fixed asset depreciation and intangible asset amortization;
• Equity-based compensation, dividend equivalents and allocations of net income to limited partnership units and FPUs;
•
•
Impairment of long-lived assets;
(Gains) losses on equity method investments; and
• Certain other non-cash GAAP items, such as non-cash charges of amortized rents.
The Company’s management believes that its Adjusted EBITDA measure is useful in evaluating BGC’s operating performance,
because the calculation of this measure generally eliminates the effects of financing and income taxes and the accounting
214
effects of capital spending and acquisitions, which would include impairment charges of goodwill and intangibles created from
acquisitions. Such items may vary for different companies for reasons unrelated to overall operating performance. As a result,
the Company’s management uses this measure to evaluate operating performance and for other discretionary purposes. BGC
believes that Adjusted EBITDA is useful to investors to assist them in getting a more complete picture of the Company’s
financial results and operations.
Since BGC’s Adjusted EBITDA is not a recognized measurement under GAAP, investors should use this measure in addition to
GAAP measures of net income when analyzing BGC’s operating performance. Because not all companies use identical
EBITDA calculations, the Company’s presentation of Adjusted EBITDA may not be comparable to similarly titled measures of
other companies. Furthermore, Adjusted EBITDA is not intended to be a measure of free cash flow or GAAP cash flow from
operations because the Company’s Adjusted EBITDA does not consider certain cash requirements, such as tax and debt service
payments.
For more information regarding Adjusted EBITDA, see the section of this document and/or in the Company’s most recent
financial results press release titled “Reconciliation of GAAP Net Income (Loss) Available to Common Stockholders to
Adjusted EBITDA”, including the footnotes to the same, for details about how BGC’s non-GAAP results are reconciled to
those under GAAP.
Timing of Outlook for Certain GAAP and Non-GAAP Items
BGC anticipates providing forward-looking guidance for GAAP revenues and for certain non-GAAP measures from time to
time. However, the Company does not anticipate providing an outlook for other GAAP results. This is because certain GAAP
items, which are excluded from Adjusted Earnings and/or Adjusted EBITDA, are difficult to forecast with precision before the
end of each period. The Company therefore believes that it is not possible for it to have the required information necessary to
forecast GAAP results or to quantitatively reconcile GAAP forecasts to non-GAAP forecasts with sufficient precision without
unreasonable efforts. For the same reasons, the Company is unable to address the probable significance of the unavailable
information. The relevant items that are difficult to predict on a quarterly and/or annual basis with precision and may materially
impact the Company’s GAAP results include, but are not limited, to the following:
• Certain equity-based compensation charges that may be determined at the discretion of management throughout and
up to the period-end;
• Unusual, non-ordinary, or non-recurring items;
• The impact of gains or losses on certain marketable securities, as well as any gains or losses related to associated
mark-to- market movements and/or hedging. These items are calculated using period-end closing prices;
• Non-cash asset impairment charges, which are calculated and analyzed based on the period-end values of the
underlying assets. These amounts may not be known until after period-end; and
• Acquisitions, dispositions, and/or resolutions of litigation, disputes, investigations, or enforcement matters, or similar
items, which are fluid and unpredictable in nature.
Liquidity Defined
BGC may also use a non-GAAP measure called “liquidity”. The Company considers liquidity to be comprised of the sum of
cash and cash equivalents, reverse repurchase agreements (if any), financial instruments owned, at fair value, less securities lent
out in securities loaned transactions and repurchase agreements (if any). The Company considers liquidity to be an important
metric for determining the amount of cash that is available or that could be readily available to the Company on short notice.
For more information regarding Liquidity, see the section of this document and/or in the Company’s most recent financial
results press release titled “Liquidity Analysis”, including any footnotes to the same, for details about how BGC’s non-GAAP
results are reconciled to those under GAAP.
Constant Currency Defined
BGC generates a significant amount of its revenues in non-U.S. dollar denominated currencies, particularly in the euro and
pound sterling. In order to present a better comparison of the Company's revenues during the period, which exhibited highly
volatile foreign exchange movements, BGC provides revenues year-over-year comparisons on a "Constant Currency" basis.
BGC uses a Constant Currency financial metric to provide a better comparison of the Company's underlying operating
215
performance by eliminating the impacts of foreign currency fluctuations between comparative periods. Since BGC's
consolidated financial statements are presented in U.S. dollars, fluctuations in non-U.S. dollar denominated currencies have an
impact on the Company's GAAP results. The Company's Constant Currency metric, which is a non-GAAP financial measure,
assumes the foreign exchange rates used to determine the Company's comparative prior period revenues, apply to the current
period revenues. Constant Currency revenue percentage change is calculated by determining the change in current quarter non-
GAAP Constant Currency revenues over prior period revenues. Non-GAAP Constant Currency revenues are total revenues
excluding the effect of foreign exchange rate movements and are calculated by remeasuring and/or translating current quarter
revenues using prior period exchange rates. BGC presents certain non-GAAP Constant Currency percentage changes in
Constant Currency revenues as a supplementary measure because it facilitates the comparison of the Company's core operating
results. This information should be considered in addition to, and not as a substitute for, results reported in accordance with
GAAP.
216
BGC GROUP, INC.
RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES TO ADJUSTED
EARNINGS AND GAAP FULLY DILUTED EPS TO POST-TAX ADJUSTED EPS
(in thousands, except per share data)
(unaudited)
GAAP income (loss) from operations before income taxes
Pre-tax adjustments:
Compensation adjustments:
Equity-based compensation and allocations of net income to limited partnership units
and FPUs (1)
Other Compensation charges (2)
Total Compensation adjustments
Non-Compensation adjustments:
Amortization of intangibles (3)
Impairment charges
Other (4)
Total Non-Compensation adjustments
Other income (losses), net adjustments:
Losses (gains) on divestitures
Fair value adjustment of investments (5)
Other net (gains) losses (6)
Total other income (losses), net adjustments
Total pre-tax adjustments
Adjusted Earnings before noncontrolling interest in subsidiaries and taxes
GAAP net income (loss) available to common stockholders
Allocation of net income (loss) to noncontrolling interest in subsidiaries (7)
Total pre-tax adjustments (from above)
Income tax adjustment to reflect adjusted earnings taxes (8)
Post-tax adjusted earnings
Per Share Data
GAAP fully diluted earnings (loss) per share
Less: Allocations of net income (loss) to limited partnership units, FPUs, and
noncontrolling interest in subsidiaries, net of tax
Total pre-tax adjustments (from above)
Income tax adjustment to reflect adjusted earnings taxes
Post-tax adjusted earnings per share
Fully diluted weighted-average shares of common stock outstanding
Dividends declared per share of common stock
Dividends declared and paid per share of common stock
Please see footnotes to this table on the next page.
FY 2023
FY 2022
$
57,709
$
97,451
355,378
251,071
3,004
358,382
(19,323)
231,748
16,037
3,144
30,254
49,435
—
(1,928)
(20,726)
(22,654)
15,728
4,224
45,923
65,875
1,029
(1,816)
(21,172)
(21,959)
385,163
275,664
442,872
36,265
(565)
385,163
(9,853)
411,010
$
$
$
373,115
48,712
8,118
275,664
11,347
343,841
0.07
$
0.13
0.01
0.76
(0.02)
0.82
$
(0.01)
0.55
0.02
0.69
503,842
499,414
0.04
0.04
$
$
0.04
0.04
$
$
$
$
$
$
$
217
(1) The components of equity-based compensation and allocations of net income to limited partnership units and FPUs are as
follows (in thousands):
Issuance of common stock and grants of exchangeability
Allocations of net income and dividend equivalents
LPU amortization
RSU, RSU Tax Account, and restricted stock amortization
$
Equity-based compensation and allocations of net income to limited partnership units
and FPUs
$
171,646
6,302
40,878
136,552
355,378
$
147,480
13,298
73,734
16,559
$
251,071
FY 2023
FY 2022
(2) GAAP Expenses in the full year 2023 included certain loan impairments and other compensation related adjustments.
GAAP Expenses in the full year 2022 included $2.9 million of certain acquisition-related compensation expenses, and ($23.8)
million of other compensation related adjustments. GAAP Expenses in the full year 2022 also included $1.6 million of
employee loan forgiveness.
(3) Includes non-cash GAAP charges related to the amortization of intangibles with respect to acquisitions.
(4) GAAP expenses in the full year 2023 and 2022 included resolutions of litigation and other matters, including their related
professional fees, as well as certain other professional fees, of $9.3 million and $28.6 million, respectively, as well as various
other GAAP items. GAAP expenses in the full year 2023 and 2022, included $9.0 million and $11.4 million, respectively, of
reserves in connection with unsettled trades and receivables with sanctioned Russian entities. GAAP expenses for the full year
2023 and 2022 also included Charity Day Contributions of $6.7 million and $6.4 million, respectively. The above-referenced
items are consistent with BGC’s normal practice of excluding certain GAAP gains and charges from Adjusted Earnings that
management believes do not best reflect the ordinary results of the Company, including with respect to non-recurring or unusual
gains or losses, as well as resolutions of litigation.
(5) Includes a non-cash gain of $1.9 million and a non-cash gain of $1.8 million related to fair value adjustments of investments
held by BGC in the full year 2023 and 2022, respectively.
(6) For the full years 2023 and 2022, includes non-cash gains of $9.2 million and $10.9 million, respectively, related to BGC's
investments accounted for under the equity method. The full year 2023 and 2022 also included net gains of $11.6 million and
$10.3 million, respectively, related to other recoveries and various other GAAP items.
(7) Primarily represents Cantor's pro-rata portion of net income.
(8) BGC's GAAP provision (benefit) for income taxes is calculated based on an annualized methodology. The Company's
GAAP provision (benefit) for income taxes was $18.9 million and $38.6 million for the full years 2023 and 2022, respectively.
The Company includes additional tax-deductible items when calculating the provision for taxes with respect to Adjusted
Earnings using an annualized methodology. These include tax-deductions related to equity-based compensation with respect to
limited partnership unit exchange, employee loan amortization, and certain net-operating loss carryforwards. The non-GAAP
provision for income taxes was adjusted by ($9.9) million and $11.3 million for the full years 2023 and 2022, respectively. As a
result, the provision (benefit) for income taxes with respect to Adjusted Earnings was $28.8 million and $27.2 million for the
full years 2023 and 2022, respectively.
Note: Certain numbers may not add due to rounding.
218
BGC GROUP, INC.
FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT
UNDER GAAP AND FOR ADJUSTED EARNINGS
(in thousands)
(unaudited)
Common stock outstanding
Limited partnership units
Cantor units
Founding partner units
RSUs
Other
Fully diluted weighted-average share count under GAAP
Non-GAAP Adjustments:
RSUs
Restricted Stock
Fully diluted weighted-average share count for Adjusted Earnings
FY 2023
FY 2022
426,436
25,111
28,711
3,417
1,406
4,908
489,989
12,337
1,516
503,842
371,561
59,891
57,139
7,708
1,913
1,202
499,414
—
—
499,414
Note: BGC’s fully diluted weighted-average share count under GAAP may differ from the fully diluted weighted-average share
count for Adjusted Earnings in order to avoid anti-dilution in certain periods.
BGC GROUP, INC.
LIQUIDITY ANALYSIS
(in thousands)
(unaudited)
Cash and cash equivalents
Financial instruments owned, at fair value
Total Liquidity
December 31,
2023
December 31,
2022
$
$
655,641
45,792
701,433
$
$
484,989
39,319
524,308
219
BGC GROUP, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS TO
ADJUSTED EBITDA
(in thousands)
(unaudited)
GAAP net income (loss) available to common stockholders
Add back:
FY 2023
FY 2022
$
36,265
$
48,712
Provision (benefit) for income taxes
18,934
38,584
Net income (loss) attributable to noncontrolling interest in subsidiaries (1)
2,510
10,155
Interest expense
77,231
57,932
Fixed asset depreciation and intangible asset amortization
80,417
75,054
Impairment of long-lived assets
3,144
4,224
Equity-based compensation and allocations of net income to limited partnership
355,378
251,071
(Gains) losses on equity method investments (3)
Other non-cash GAAP expenses (4)
(9,152)
(10,920)
9,000
11,364
Adjusted EBITDA
$
573,727
$
486,176
(1) Primarily represents Cantor's pro-rata portion of net income.
(2) Represents BGC employees' pro-rata portion of net income and non-cash and non-dilutive charges relating to equity-based
compensation. See Footnote 1 to the table titled “Reconciliation of GAAP Income (Loss) from Operations before Income Taxes
to Adjusted Earnings and GAAP Fully Diluted EPS to Post-Tax Adjusted EPS” for more information.
(3) For the full years 2023 and 2022, includes non-cash gains of $9.2 million and $10.9 million, respectively, related to BGC's
investments accounted for under the equity method.
(4) The full year 2023 and 2022 includes $9.0 million and $11.4 million, respectively, of non-cash reserves in connection with
unsettled trades and receivables with sanctioned Russian entities.
220
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ABOUT BGC GROUP, INC.
BGC Group, Inc. (Nasdaq: BGC) is a
leading global marketplace, data, and
financial technology services company
for a broad range of products, including
fixed income, foreign exchange, energy,
commodities, shipping, equities, and now
includes the FMX Futures Exchange.
BGC’s clients are many of the world’s
largest banks, broker-dealers, investment
banks, trading firms, hedge funds,
governments, corporations, and
investment firms.
BGC and leading global investment banks
and market making firms have partnered
to create FMX, part of the BGC Group of
companies, which includes a U.S. interest
rate Futures Exchange, spot foreign
exchange platform and the world’s fastest
growing U.S. cash treasuries platform.
For more information about BGC, please
visit www.bgcg.com.
CORPORATE INFORMATION
BGC GROUP, INC.
BOARD OF DIRECTORS
Howard W. Lutnick
Chairman of the Board of Directors
and Chief Executive Officer
William D. Addas
Director
Linda A. Bell
Director
Arthur U. Mbanefo
Director
David P. Richards
Director
BGC GROUP, INC.
MANAGEMENT
Howard W. Lutnick
Chairman of the Board of Directors
and Chief Executive Officer
Stephen M. Merkel
Executive Vice President and
General Counsel
Sean A. Windeatt
Chief Operating Officer and
Executive Vice President
Jason W. Hauf
Chief Financial Officer and
Executive Vice President
Caroline A. Koster
Senior Managing Director,
General Counsel, ESG, Chief Counsel for
Securities & Corporate Governance, and
Corporate Secretary
CORPORATE HEADQUARTERS
499 Park Avenue
New York, NY 10022
T: +1 646 346 7000
INTERNATIONAL HEADQUARTERS
Five Churchill Place
Canary Wharf
London E14 5HU
United Kingdom
T: +44 20 7894 7700
INVESTOR RELATIONS &
REQUESTS FOR ANNUAL REPORT
ON FORM 10-K
Jason Chryssicas
Head of Investor Relations
Copies of the Company’s Annual Report
on Form 10-K, along with news releases,
other recent SEC filings, and general stock
information are available without charge
by going to ir.bgcg.com, or by calling
Investor Relations at +1 212 610 2426, or
by writing to Investor Relations at BGC
Group’s corporate headquarters.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178-0060
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
One Manhattan West
New York, NY 10001
STOCK LISTING
NASDAQ: BGC
TRANSFER AGENT
Equiniti Trust Company
6201 15th Avenue
Brooklyn, NY 11219
T: +1 800 468 9716
www.equiniti.com
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