Q3 2021 BGC Partners Inc Earnings Call
Ladies and gentlemen, thank you for joining today's BGC partners Conference call.
I'll begin here momentarily with you. Thank you for joining once again, if you do need assistance, while you're waiting please press star and zero to signal an operator.
Once again the call will begin momentarily. Thank you.
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Good day, everyone and welcome to the BGC partners third quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session.
Please be advised that today's conference call is being recorded at.
At this time I'd like to turn the conference call over to the head of Investor Relations, Jason Christy Good. Thank you and please go ahead.
Thank you and good morning.
We should BDC third quarter 2021 financial results press release and presentation earlier. This morning, you can find these at IR Dot BGC partners Dot com.
Please you can find additional details on our quarterly results in today's press release and Investor presentation.
Unless otherwise stated the results provided on today's call compare only the third quarter of 2021 with the year earlier period.
We will be referring to our results on this call on an adjusted earnings basis, unless otherwise stated.
We may also refer to adjusted EBITA, we may refer to our liquidity, which we define as cash and cash equivalents plus marketable securities that have not been financed reverse repurchase agreements and securities owned less securities loaned and repurchase agreements by total capital is reasonable partnership interest total stockholders' equity and Noncontrolling interest in subsidiaries.
See today's press release for results under generally accepted accounting principles. Please.
Please also see the relevant sections in the back of today's press release for the complete and updated definitions of any non-GAAP terms reconciliations of these items to corresponding GAAP results and how when and why management uses such terms.
Additional information with respect to our GAAP and non-GAAP results on today's call is also available on our website at IR Dot BGC partners Dot com.
I also remind you that the information regarding our business on today's call that are not historical are forward. Looking statements. These include statements about the effects of COVID-19 pandemic on the company's business results financial position liquidity and outlook any forward looking statements involve risks and uncertainties.
And except as required by law BGC undertakes no obligation to update any forward looking statements any outlook and targets discussed on today's call assume no material acquisitions buybacks extraordinary transactions or meaningful changes to the company's stock price for discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in forward looking statements see BGC.
SEC filings, including but not limited to the risk factors and special note on forward looking information set forth in these filings and any updates to such risk factors and special note on forward looking information contained in the subsequent reports on forms 10-K forms 10-Q and 8-K.
I'm now happy to turn the call over to Howard Lutnick Chairman of the board and CEO of BGC partners.
Thanks, Jason Good morning, and thank you all for joining us for our third quarter 2021 Conference call. Joining me for today's call are Bgc's, Chief Financial Officer, Steve <unk>, and our Chief operating Officer, Sean Wendy yet.
Earlier today, we announced the launch of M. A X.
Our combined U S treasuries and futures electronic marketplace, along with a clear agreement with the L. C H.
Leveraging the success of our proven state of the art Fedex U S. T platform, our Fms future solution will challenge the status quo of the current U S futures market.
Our executed clearing agreement with LCA, which provides a unique cross margining clearance solution for U S futures and interest rate swaps.
<unk> was created in response to its customers need for an integrated trading and clearing solutions.
<unk> is the world's largest IRS clearing pool at L. C H to provide significant cross margin efficiencies.
We believe <unk> will offer a more optimal clearing solutions for futures.
Then the CME.
With respect to value creation, we expect key strategic partners to invest in after next.
Our expectation is that after next we'll open futures trading in the middle of 2022.
Monday, we announced the closing of the sale of our insurance brokerage business, which delivered gross proceeds of $535 million, providing significant resources to continue repurchasing our shares and youre accelerating Fedex growth.
Since announcing the transaction in May we repurchased redeemed 45 million shares and units.
Fedex businesses continue to grow at a strong double digit pace and provided record revenue contribution at approximately 23% of Bgc's total financial services revenues.
Versus 19, 5% a year ago.
This record Fedex contribution and significantly improved front office productivity drove adjusted earnings higher during the quarter.
I'm happy now to turn the call over to Steve <unk>.
Thank you Howard and Hello, everyone.
As reported in today's earnings release, BGC generated total revenue of $473 7 million an improvement of four 1% from a year ago.
<unk> trading conditions were mixed during the third quarter with solid activity across rates and energy and commodities with credit volumes were challenged on tighter credit spreads and muted volatility.
By geography, we saw.
Saw Europe Middle East and Africa revenue increased by four 2%.
The Americas increased by 7%, while Asia Pacific revenues decreased by one 1%.
By asset class rates energy and commodities.
Equity derivatives, and cash equities and insurance increased by $7 712, $815, four and 19% respectively.
Credit and FX decreased by $13, two and 0.4% respectively.
Beginning last year, we selectively reduced less productive front office head count.
As a result front office personnel was eight 6% lower this quarter versus a year ago.
These reductions were made alongside increased migration towards <unk> technology solutions, which helped drive average productivity, 14.2% higher and pre tax adjusted earnings up 15 points 15, 7% compared to a year ago.
As we continue to automate more of our overall business, both profitability and productivity or increase it.
Moving on to Salix.
This quarter finished generated net revenue of $95 $3 million, an improvement of 18, 7%.
The next growth platform has generated revenue of $10 $6 million, an improvement of 23, 6%.
Dennis Martin it's recorded revenue of $84 $7 million, an increase of 18, 1% and had a pre tax adjusted earnings margin of 29, 5% in the third quarter.
Insurance brokerage generated revenue of $51 $5 million growing by 19%.
Now moving on to expenses.
Our compensation and employee benefits expense under GAAP and adjusted earnings increased in the third quarter of 2021 due to higher revenues compared to a year ago.
Equity based compensation and allocations of net income to limited partnership units and S. P use increased 137, 8%.
Primarily due to our volume weighted average share price more than doubling compared to the year ago period.
Our non compensation expenses under adjusted earnings decreased 0.9%.
Primarily due to lower interest expense fees to related parties and other expenses.
These expense reductions were partially offset by higher selling and promotion charges as COVID-19 restrictions have relaxed across many of the geographies in which we operate.
Moving on to adjusted earnings.
Our pre tax income was $79 $1 million, an increase of 15, 7% and represents a 167 basis point margin expansion from last year.
We recorded post tax adjusted earnings of $74 $5 million, an increase of 21, 7% and a 228 basis point margin expansion.
We generated adjusted EBITDA of $93 $6 million, an improvement of three 3%.
Turning to share count.
Our fully diluted weighted average share count decreased by five 9% sequentially to $534 million under adjusted earnings in the third quarter of 2021 due to our share repurchases.
As of September 32021, our spot share count was $517 2 million a decrease of four 1% sequentially.
This reflected $24 4 million class a common share repurchases during the quarter.
Since the sale announcement of our insurance brokerage business on May 26.
We have repurchased or redeemed $45 2 million shares and units.
Due to the sale, which closed subsequent to the end of the third quarter.
The assets and liabilities associated with this business are presented as held for sale on the balance sheet for the period ending September 32021.
As such balance sheet line items, including cash and cash equivalents are not fully comparable to prior periods. For example, there was $37 million of insurance related cash and cash equivalents included in liquidity at December 31, 2020, whereas all insurance related cash and cash equivalents are excluded from liquidity as of Sept.
Remember 32021, and instead presented within the line item assets held for sale.
With that said.
As of September 32021, our liquidity was $485 $6 million compared with $655 $2 million as of year end 2020.
Cash and cash equivalents were $458 million versus $596 $3 million as of December 31, 2020.
Notes payable and other borrowings were 1 billion $352 $5 million compared with 1 billion $315 $9 million.
Total capital was $703 8 million compared with $832 million.
Obviously next quarter, our liquidity will be higher and our debt will be lower as we have already fully repaid our revolver using a portion of the $535 million of gross proceeds received on November one 2021.
The company continues to explore a possible conversion into a simpler corporate structure.
Bgc's Board committees have hired advisors and are reviewing the potential structure and details of such conversion.
And with that I'm happy to turn the call over to Sean.
Thanks, Steve and good day, everyone.
Authentic businesses generated strong net revenue growth of 18, 7% and represented 22, 6% of our total financial services revenue up from 19, 5% a year ago.
Looking at Fedex in more detail authentic growth platforms revenue improved 23, 6% from a year ago, driven by growth across Phoenix U S. Treasuries Phenix FX Phenix go and Lee Sarah.
Fedex U S. Treasury revenues increased over sevenfold, driven by market, leading adv growth optimization of commercial agreements new product offerings and onboarding of new clients.
During the third quarter Phoenix U S T hat ADB growth of over 64% outpacing the overall market.
Turning to U S. T club market share increased from 12% a year ago to over 19% in the third quarter. Additionally.
Additionally, Phenix U S Treasury launch U S repo on the platform in August which continues to scale.
We've continued to see strong volume growth into the fourth quarter, where October volumes have increased by 78% year over year versus 33% at the CME.
Turning to FX are ultra low latency electronic FX trading platform generated strong double digit revenue growth against a challenging trading environment with tempered FX volatility.
Fedex FX growth was driven by new clients and improve pre capture.
It's new Mds offering which launched in the first quarter of 2021 continued to gain traction with third quarter volumes, improving by over 175% versus the first quarter of 2021 and over 45% sequentially.
<unk> infrastructure and software business made significant progress on boarding new institutional and bank clients during the quarter.
Winning new clients and expanding existing relationships, absolutely Sarah is highly recurring and compounding subscription revenue base.
Additionally, <unk> started offering clients access to <unk>.
I think we've.
Mr. Wendy ads sound.
So.
But he was saying.
This is this is the conference operator, I would open up the back line. Its the backup line in case that needs to be opened as well.
Sure.
Yes.
That everybody.
Right.
Thanks Kurt.
Alright, well ill just continue on as Steve This Guy why don't you continue on his.
These lines okay.
He was just just go back over to Sarah our infrastructure software business Steve.
Please Sarah our infrastructure and software business made significant progress onboarding, new institutional and bank clients during the quarter.
Winning new clients and expanding existing relationships as to Lucerne is highly recurring and compounding subscription revenue base. Additionally.
<unk> started offering clients access to trade cryptocurrencies.
Leveraging its leading connectivity to exchanges trading platforms and custodians.
Who service crypto currency solution is focused on providing clients with world class infrastructure that office fully compliant workflows.
That exco, our global options electronic trading platform more than doubled its revenue from a year ago driven.
Driven by the integration of Phoenix existing electronic equities platform Matchbox isn't this offering.
Matchbox is an online platform that automates, the trading booking and lifestyle management of global equity derivatives contracts.
The integration of these two electronic platforms provide stenting scope clients with a comprehensive electronic equity derivatives trading solution.
Cynics credit offering portfolio match, our recently deployed session based matching matching platform continued to gain traction during the quarter with U S investment grade credit volumes nearly doubling sequentially from the second quarter of 2021.
Portfolio matched currently supports us and European investment grade credit and European high yield credit.
It was high yield credit sessions are expected to launch during the fourth quarter.
Looking at our Phoenix markets.
Revenues improved by 18, 1% driven by strong growth across rates FX and market data.
Finished mid FX grew its revenue by approximately 44% versus last year, driven by higher activity across its spot FX and its newer Asian NDS offerings, which has continued to gain traction throughout the year.
Yeah.
The next market data signed 43, new contracts during the third quarter.
With total contracted value increasing by over 200% compared to last year.
Thanks, Margaret data is highly recurring and compounding subscription revenue.
Capital Labs, and yet match business, our advanced web based match matching platform that helps clients reduce foreign exchange exposure grew its volumes by 30% driving double digit revenue growth compared to a year ago.
Since its launch in 2017, and yes match has grown its market share to become a leading solution for post trade risk reduction.
Our voice hybrid business generated revenues of $326 8 million down one 4% from last year due to the continued conversion of voice hybrid <unk> revenue.
Our rates business grew seven 7% with particular strength across U S government bonds inflation products, Mr rates and emerging market rates.
Equity derivatives and cash equities had strong growth of 15, 4%.
Driven by U S and European equity derivatives.
Our environmental business also saw revenue growth of 87% as we support the reduction of global carbon emissions and promote clean and renewable energy through the facilitation of marketplaces for environmental credits and renewables.
This along with heightened volatility across the energy complex helped drive growth of 12, 8% in our energy and commodities business compared to a year ago.
During the quarter.
Our insurance brokerage business generated revenue of $51 $5 million growing 19%.
As Howard previously mentioned, we closed the sale of this business on November 1st, resulting an internal rate of return of 21, 2% for our shareholders.
No Im sorry, you were out of that.
Thanks, David.
Turning back to outlook.
I look for the fourth quarter of two days on 'twenty one is as follows.
<unk> revenues, excluding insurance brokerage were approximately 9% higher for the first 21 trading days of the fourth quarter when compared to the same period last year.
We therefore expect to generate total revenue of between $445 and $495 million as compared to $479 $4 million.
As a reminder, the fourth quarter of 2020 included $49 $1 million of insurance brokerage revenues.
We anticipate pretax adjusted earnings to be in the range of $80 million to $100 million versus $79 $3 million.
We anticipate our full year 2021, adjusted tax rate to be in the range of 9% to 11% versus 10, 8% for full year 2020.
And with that I'd like to turn the back over to Howard.
Thank you Sean.
Thank you Steve.
Previously said, we would grow Fedex U S T market share Bill.
Build and establish our model for FY Max Futures complete the sale of insurance and buyback a significant number of our shares have you heard on today's call. We are executing on all fronts.
Turning to a more personal note.
As you May know I was recently diagnosed with non Hodgkin's lymphoma.
Doctors, telling me is highly treatable and shareable.
<unk> got two videos to our employees over the past couple of weeks and you can view those on our website under the in the news section on Youtube. If you type in my name.
And these videos explain things in just much more detail if you'd like to know.
I am still working and running the company every day and supported by my incredible capable and deep management team and with the exception of every third Monday, which means my second treatment is November eight when I receive treatment I expect to my work schedule to remain the same which for example ended last night.
When I hung up the phone at 11 o'clock at night and I picked up the phone and started talking this morning at seven a M. So it seems that I spend a lot of time, because frankly I love it.
With that operator, I would like to open the call for questions.
Ladies and gentlemen at this time well begin the question and answer session.
Ask a question you May press Star and then one using a touchtone telephone.
You are using a speaker phone, we do ask that you. Please pick up your handset before pressing the keys to ensure that that sound quality.
To withdraw your question you May press Star two.
Once again that is star and then one to ask a question.
At this time, we will pause momentarily to assemble the roster.
Our first question today comes from Rich Repetto from Piper Sandler. Please go ahead with your question.
Yes good.
Good morning, Howard and Steve and Sean and first how it best wishes on on the treatments and your health.
We've been doing this quite a quite a while now and hope to.
For a long time too.
With that so the F M ex U.
You've mentioned in the I think in the prepared remarks that you thought it would be more cross margin efficiencies then.
Then.
The CME the established incumbents and I guess could you explain that why.
Good.
Futures and the <unk> clearing of interest rate swaps.
What it could create more efficiencies and say.
The treasuries cash treasuries and futures at CME.
They've said in a test that they've gotten close to I think 70 or 75% cross margin efficiencies.
So I.
I mean that says it as well as you can when you can get to 70 or 75% cross margin efficiencies.
Best you can do in two different parts.
<unk> holds collateral with CMA holds collateral the only way cash and futures can come together is maybe they can get to 70% historically, they've only gotten below 50%, whereas if you do it together with the <unk> will be the clearer for bulk.
You would expect to get in the high nines.
Of margin efficiency, so, it's basically more efficient to hold the collateral together and therefore, we expect that when we start doing futures. It is either as good a cross margin efficiency or better and over time, we expect that to mean that.
Our clients can trade freely on the CME platform on the SMS platform without regard to worrying about how the collateral and cross margining will play out it will play out at least as well on <unk> from the first day, all the way to the last but I think thats really really.
<unk> and a first for us.
Okay, and one quick follow up to that how it like we are that's the.
Efficiencies in the percentage and I get it.
I get what you're saying, there, but how about the where is their overall more efficiencies between futures and swaps versus cash and futures.
So sure short term interest rates Euro dollars. However, those changes those are a derivatives or swaps. So that is one to one on swaps that is a derivative of our swaps and then when you get to long dated which would bring you in.
Call U S Treasury futures, we would normally consider them long David.
I forget the first maturity is two years or five years, whereas eurodollars. So short term interest rates are really series three months contracts that you put together to mimic a swap contract.
Those also naturally lean against the Treasury futures at the FCC or long dated interest rate swaps. So those two just worked really well together and you do the math they are really good.
Actual.
Yes, complements so you will see efficiency across eurodollars.
And in Europe, where short term interest rates. However, the change we want to be better than doing it with the LCA as glaring pool.
IRS and with respect to treasuries it will be really really good and I think there will be as good if not better and what that means is that people walk in in the morning, and they want to trade their big Bang that collateral everywhere and they want to trade they can be in different too.
Whether they trade at the CMA or they traded in Fms and that in different moments will be the first time ever you have a gigantic electronic trading system wide Fedex USG holding futures on a totally connected to everybody that can do business toe to toe with the collateral.
Clearing and margin efficiency as the CMA, it's one of the great things that the CME.
And this will be the first time.
Our competitor will stand with all of the pieces to the puzzle standing next to it and I think it is really really exciting for us is really exciting for our clients just would like some competition in the space and I think we are going to be the great contender.
We are going to be the great concern I would tell you that far we start we said that we had 19% market share and the quad last quarter I will tell you within the last week, we touched 25% market share gain just last week. So.
Treasury system.
Extraordinary and I think that match has come in.
Kevin.
Got it thank you Howard I'll get back in the queue. Thank you.
Once again, if you would like to ask a question. Please press star and then one.
So it's all of your questions you May press star and <unk>.
Again that is star and then wanted to join the question queue.
Okay.
And once again, if you would like to ask a question. Please press star and one our next question comes from Patrick O'shaughnessy from Raymond James. Please go ahead with your question.
Hey, good morning, and Howard I'd like to add my best wishes for a speedy and totaled your fight and also add that I think the shaved head look looks good on you.
Thank you. Thank you.
Yes.
A question on furniture, so as we look at the Fedex growth platforms revenue, it's been $10 6 million each of the last three quarters can you remind me how much of that revenue is subscription based versus volume based and I'm asking just because I'm surprised by how steady it's been of late.
Yes.
Gary I would say a different on any on a any given given quarter.
But it's.
At moment is probably a little bit more volume based and I think as <unk> described before that will become far more subscription base, but at the moment is more volume based.
Yeah.
Got it thank you.
And then sticking with Phoenix, the data software and post trade revenue.
The external revenue.
Believe I'm getting a 3% year over year growth rate in the third quarter and Thats down from a 7% growth rate in the second in the 13% growth rate in the first can you talk about maybe why we're seeing that slowdown in that revenue line.
Yes, there are really two pieces.
Our compression business was a little slower in the third quarter, the post trade and that will bounce back in the fourth quarter and our market data business continues to grow at a rapid pace. So the market data business I think has the most growth in it.
It still is got a long long runway even to catch up to.
Two other to our peer group. So I think it has lots of growth out of it and that was just a wrinkle for the quarter, but I think you will see next quarter. The post trade will bounce back up in those numbers will go back to the growth rates that we bought.
Got it thank you.
In past quarters in your slide presentation. The Phenix overview slide there was a breakdown of the allocation of the Fedex revenue by asset class rates credit parts et cetera.
See that this quarter on your slide six are you able to provide that.
Sure sure sure.
But if it wasn't out will go put it out.
Sure.
Okay.
Just helpful to be able to attract that so I appreciate that.
<unk> brokerage head count keeps declining roughly 50 folks or so per quarter.
You spoke on the prepared remarks about.
<unk> taken some actions too.
To eliminate less productive positions are you still kind of taken ongoing actions or at this point is it kind of attrition that you're just not replacing.
Yes.
I think I think the way I think about it is is as we said in the prepared remarks.
Key to our profitability.
But what you also see is that.
The move the move from.
As I mentioned from the brokerage side into into the into Phoenix markets.
And the adaptation of the usage the uptake and usage of the electronic platform that we have is why our overall revenue per head is higher you should expect us as part of our normal business.
To continue.
Continue to to manage our business on a daily basis for four hours.
Less productive brokers, but equally there remain opportunities in hiring as well.
What you'll also see what you will see as well if you will see that in this quarter. We also did take a $5 1 million restructuring charge linked to exactly what we're talking about.
Got it. Thank you pointed it out, but it's a natural but its a natural process.
But more and more Fedex is going to make us.
More efficient so as you've heard us say over time, our best brokers.
Become more and more efficient and more important and we just those who fall away or just.
Not that important for the business.
Once in a while they become less productive as the business automates, but the best brokers with the best relationships.
All are important to us they remain with us and there'll be more efficient and do more business and they will make more money. So I think we really like the model and you're just seeing its work its way through and Thats going to continue over time.
And to follow up on that as you're reducing your brokerage head count by roughly 10% or so on an annualized basis.
How does that impact the morale of the folks who are still there like are they looking over the shoulder, saying, hey, I'm not going to get tapped. This next quarter is it my turn or do they kind of know like how do you manage that.
Yes.
So there is no secrets to match the.
The best the best brokers, the top brokers know that the best brokers. The brokers they are the most productive.
Those who support them, let's say there was a great broker and there were three support staff.
And then there were two support staff eventually there's going to be one supports that against.
Know that and everybody knows that there is that no one's looking over their shoulder and saying I only did 350000, a reduction this year and wondering looking over their shoulder.
I know, it's the math about how they're doing so we are focused on keeping our best brokers, they're making more money and they are embracing automation and that's a process that we've been talking about right with you guys and with them for a long time so.
Everybody knows that they are becoming less productive they might move to a different product they might move to a different area, but they nonetheless.
It's not there's no tier in the company everybody understands it's the math of the world and win.
Alright Thats helpful. Thank you.
What's your expected tax rate and the proceeds from your sales current.
Yes.
We expect it's going to be pretty low actually overall, so without giving a specific number we.
We do believe that we have a number of appropriate.
<unk> and offsets to minimize taxation on the cell itself, so we're expecting to be rather low.
Is that consistent probably above its probably above the amount for the company overall, but still comparatively low.
The structure, which is the complex structure that we have.
We suffer with its complexity, but when it comes to these kind of things.
It's tremendously batches.
So you see the the amount of money, we can drive to the bottom line to buy back and to use to buyback our shares.
Is enhanced because of the structure that we have.
Got it and then last one for me.
What is the I guess one month the October revenue contribution from corn, that's embedded within your fourth quarter revenue outlook.
It's circa $20 million circa $20 million.
Think about it it's not an exact science, the midpoint, but circa $20 million.
Alright, perfect. Thank you for taking all my questions.
Yeah.
Our next question comes from Steven Eisman from Neuberger Berman. Please go ahead with your question Hi.
Thank you for taking my question.
I just wanted to understand what the what's your thinking when this launches in six months or so is the idea eventually to spin this off to keep it internal or is it just too early to say.
Well I think we we plan to partner with.
Our key strategic players.
And we said that and once we do that I think our objective is to build.
Our U S rates futures business into a a significant company.
My guess would be eventually it will be spotty.
But no timeframe on that obviously too early.
If that is a rocket ship I'd be delighted for that to be quicker, but to make it a rocket ship first.
At the beginning is to open in the middle of 2022, and then build significant market share, but this is the challenger to the CMA.
Okay. This is this is we have all the pieces in place no one's ever had all of the pieces in place before.
So I think this is just exciting for us we're going to go build it we're going to have a good buildup in partnership with <unk>.
If any of the great strategic players and I think we're going to build a great competitor to the CMA and.
And we will produce tremendous value for our company and we'll go from there and try to execute it but is that a likely scenario eventually sure but no I can't give you attack.
Okay. Thank you.
Okay.
And our next question is a follow up from rich Repetto from Piper Sandler.
Hey, Howard.
On FX could you try and I think you've hinted at this but I'll still ask the question.
Who are the potential partners in what who and why would they joined.
So we've gotten.
We've got an incoming from obviously lots of people exchanges would like to be partners in.
The world's exchanges who are not.
We're not the CMA.
Banks large trading firms.
Clients.
We use trade trading client people use futures that is the lift from whom we're going to talk to interest.
Understood, Okay, and then can.
Can you talk about the expected expenses that you will incur as you are.
Put this together.
Actually they are already in our numbers. So we started building this we weren't waiting for now.
To do it in fact part of why the <unk>.
Wanted to do business with US was because we had already.
We're already hard at building it and integrating it. So you can kind of start from scratch today and get this done in nine months of launch.
Practically yes.
For quite some time and that's in our numbers. So I don't think you will see our numbers materially.
Materially change we are hard at it we've already employed lots of people, where we're going to continue to employ lots more but we're hard at it.
Out of our numbers.
Got it and last one for me.
Interest rate sensitive or Steve on interest rate sensitivity.
We see the <unk> guidance and I suspect that.
A lot because of the volatility of the rates volatility at the beginning in October but could you just in general talk about interest rate sensitivity and I guess you use the CME rates as a proxy.
But how do you look at BGC piece interest rate sensitivity.
As it relates to our own balance sheet rich we have very little.
Very little exposure as it relates to volatility of interest rates with the the one the one point of sensitivity you might've been our revolver, which is fully paid down now at this point, but that was indexed to LIBOR, but as I said, it's fully pay down other than that our outstanding obligations are all set.
But but BGC loans interest rate volatility on our business.
Without a rates franchise, China enjoy volatility of rates more so we are rooting for volatility in rates, we have a giant range franchise.
And we love volatility in rates, so economically very little to no cost and great opportunity if it moves around a bit.
That's what I thought thanks.
So the one thing we didn't shout about.
Yes.
As Sean mentioned crypto currency.
Think about <unk> for a minute.
Lasalle connects all the banks.
Yes.
Exchanges trading firms so they can trade with each other over our rails and now closer I can think of crypto, how many exchanges either where they are.
Everywhere in the world how many venues are there there's so many and they're everywhere in the world how many traders.
Everywhere in the world. They are just more decentralized and the opportunities Jordan Sarah to connect them to each other in an efficient way.
Time, low latency tradable fashion is great and we are seeing lots of demand and lots of incoming from people, who want to work with us to connect and to be able to trade with each other using our rail so I think that is.
An area of an <unk> business that people Havent thought up.
I think it will grow quickly it is a serious business for a broad range of clients around the world.
I think it's just a lot of fun for us.
And it's a vast and analysts chain of more people to connect and so we pointed that out but I think over time I think that's starting to become a material and significant business for Lucerne and much quicker than people think.
Yes.
And ladies and gentlemen, with that we'll be we'll end today's question and answer session I'd like to turn the floor back over to Mr. Lutnick for any closing remarks.
Well. Thank you all for joining me today as I said, if you want to learn more about particular.
Details of non Hodgkin's lymphoma. Please just go to our website or you can see it on Youtube, but I appreciate all of your support.
And the notes that I've received it's been really really uplifting in time and I look forward to speaking to you now.
Next quarter and giving you.
So thanks, everyone have a great day.
And ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.