Q2 2024 BGC Group Inc Earnings Call

Thank you for joining us today. We will be beginning in just a few moments, and thank you for your patience. Once again, we will be beginning in just a few moments.

Operator: and thank you for your patience.

Operator: Thank you for your patience. Once again, we will be beginning in just a few moments.

Operator: Once again, we will be beginning in just a few moments. Thank you for your patience.

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Speaker Change: www.globalonenessproject.org www.globalonenessproject.org

Operator: Greetings. Welcome to BGC Group Incorporated's second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Jason Chryssicas, Head of Investor Relations. Thank you. You may begin.

Speaker Change: Greetings. Welcome to BGC Group Incorporated second quarter 2024 earnings call.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Jason Chryssicas, Head of Investor Relations. Thank you. You may begin.

Jason Chryssicas: Thank you and good morning. We issued BGC's second quarter 2024 financial results press release and the presentation summarizing these results this morning prior to the market opening. You can find these at ir.bgcg.com.

Operator: Thank you and good morning.

Jason Chryssicas: Except as otherwise specified, any historical results provided on today's call compare only the second quarter of 2024 with the prior year period, and we will be referring to our results only on a non-GAAP basis, which includes the terms adjusted earnings and adjusted EBIT. Please refer to today's press release, investor presentation, supplemental tables, and our website for additional details on our quarterly results and for complete updated definitions of any non-GAAP terms or reconciliations The outlook discussed today assumes no material acquisitions or meaningful changes in our stock price. Our expectations are subject to change and based on various macroeconomic, social, political, and other factors. None of our targets or goals beyond 2024 should be considered formal guidance.

Jason Hauf: We should BGC's second quarter, 2024 financial results, press release, and the presentation summarizing these results this morning prior to the market open. You can find these at ir.bgcg.com. Except it's otherwise specified, any historical results provided on today's call compared only the second quarter of 2024 with the prior period, and we will be referring to our results only on a non-GAAP basis which include the terms, adjusted earnings and adjusted EBITDA. Please refer to today's press release, investor presentation, supplemental tables, and our website for additional details on our quarterly results and for complete updated definitions of any non-GAAP terms, recommendations of these items to the corresponding GAAP results.

Jason Chryssicas: Thank you and good morning. We issued BGC's second quarter 2024 financial results press release and the presentation summarizing these results this morning prior to the market open. You can find these at ir.bgcg.com.

Speaker Change: Except as otherwise specified, any historical results provided on today's call compare only the second quarter of 2024 with the prior year period, and we will be referring to our results only on a non-GAAP basis, which include the terms Adjusted Earnings and Adjusted EBITDA.

Speaker Change: Please refer to today's press release, investor presentation, supplemental tables, and our website for additional details on our quarterly results and for complete updated definitions of any non-GAAP terms or reconciliations of these items to the corresponding GAAP results.

Jason Hauf: And how went and why management uses them as well as relevant industry or economics statistics. The outlook discussed today assumes no material acquisitions or meaningful changes in our stock price. Our expectations are subject to change and based on various macroeconomic, social, political, and other factors. None of our targets or goals beyond 2024 should be considered formal guidance. Also, I remind you that information on this call contains forward-looking statements, including, without limitation, statements concerning our economic outlook and business. Such statements are subject to risks and uncertainties, which could cause our actual results to differ from expectations.

Speaker Change: and how, when, and why management uses them, as well as relevant industry or economic statistics.

Speaker Change: The outlook discussed today assumes no material acquisitions or meaningful changes in our stock price.

Speaker Change: Our expectations are subject to change and based on various macroeconomic, social, political, and other factors.

Speaker Change: None of our targets or goals beyond 2024 should be considered formal guidance.

Jason Chryssicas: Also, I remind you that the information on this call contains forward-looking statements, including, without limitation, statements concerning our economic outlook and business. Such statements are subject to risks and uncertainties which could cause our actual results to differ from expectations. Except as required by law, we undertake no obligation to update any forward-looking statements. For a complete discussion of the risks and other factors that may impact these forward-looking statements, see our SEC filings, including but not limited to the risk factors and disclosures regarding forward-looking information in our most recent SEC filings, which are incorporated by reference.

Speaker Change: Also, I remind you that information on this call contains forward-looking statements, including without limitation statements concerning our economic outlook and business.

Speaker Change: Such statements are subject to risks and uncertainties which could cause our actual results to differ from expectations.

Jason Hauf: Except as required by law, we undertake no obligation to update any forward-looking statements.

Jason Hauf: For a complete discussion of the risks and other factors that may impact these forward-looking statements, CRCC filings, including but not limited to the risk factors and disclosures regarding forward-looking information in our most recent SEC filings, which are incorporated by reference.

Speaker Change: Except as required by law, we undertake no obligation to update any forward-looking statements.

Speaker Change: For a complete discussion of the risks and other factors that may impact these forward-looking statements, see our SEC filings including but not limited to the risk factors and disclosures regarding forward-looking information in our most recent SEC filings which are incorporated by reference.

Jason Chryssicas: Now, before opening the call, I would like to address some recent inaccurate statements made by FMX by the CMS. Mr. Duffy, the CEO of the CME, mistakenly spoke of FMEC seeking to clear U.S. Treasuries in the U.K. We are not. FMX UST, identically like the CME's broker tech, clears U.S. Treasuries at the FICC in the United States. The LCHs are a fully approved CFTC derivatives clearing organization and hold $225 billion of interest rate swap margin, which is available for cross-margin efficiencies against future...

Jason Hauf: Now, before I open the call, I would like to address some recent inaccurate statements made by FMX by the CME. Mr. Duffy, the CEO of the CME, was stakingly spoke of FMX seeking to clear US Treasuries in the UK. We are not. FMX UST, identically like the CME's broker tech, clears US Treasuries at the FICC in the United States. The LCHs are fully approved CFTC derivatives clearing organization and holds $225 billion of interest rate swap margin, which is available for cross-margin efficiencies against futures. This is considerably more than the approximately $37 billion CME holds. Silver futures are near perfect offsets for interest rate swaps and FMX.

Speaker Change: Now, before opening the call, I would like to address some recent inaccurate statements made by FMX by the CME.

Speaker Change: Mr. Duffy, the CEO of the CME, mistakenly spoke of FMEC seeking to clear U.S. Treasuries in the U.K. We are not.

Speaker Change: FMX UST, identically like the CME's broker tech, clears US treasuries at the FICC in the United States.

Speaker Change: The LCHs are a fully approved CFTC derivatives clearing organization and holds $225 billion of interest rate swap margin.

Speaker Change: which is available for cross-margin efficiencies against futures.

Speaker Change: This is considerably more than the approximately $37 billion that the CME holds.

Jason Hauf: Silver futures will produce enormous cross-margin efficiencies against the much larger LCH collateral pool to which the CME does not have access. Over time, we expect our cross-margin efficiencies to be many multiples of theirs.

Speaker Change: SOFR features are near-perfect offsets for interest rate swaps and FMX SOFR features will produce enormous cross-margin efficiencies against the much larger LCH collateral pool to which the CME does not have access.

Speaker Change: Over time, we expect our cross-margin efficiencies to be many multiples of theirs.

Jason Chryssicas: This is considerably more than the approximately $37 billion that the CME holds. SOFR futures are near-perfect counterparts for interest rate swaps and FMX. SOFR futures will produce enormous cross-margin efficiencies against the much larger LCH collateral pool to which the CME does not have access. Over time, we expect our cross-margin efficiencies to be many multiples of theirs. With that said, I'm happy to turn the call over to Howard Lutnick, Chairman of the Board and CEO of BGC Group.

Howard Lutnick: With that, I'm happy to turn the call over to Howard Lutnik, Chairman of the Board and CEO of BDC Group. Thank you, Jason. Good morning and welcome to our second quarter of 2024 conference call. With me today is Sean Windiat, our Chief Operating Officer, and Jason Hopp, our Chief Financial Officer. BGC delivered record second quarter revenues and adjusted earnings with continued growth across our business and geographies. Our revenue growth of 12% delivered earnings growth of over 19%, demonstrating BGC's operating leverage. Higher revenues, along with improved profitability in our FMX and Phoenix businesses, contributed significantly to our profit growth and margin expansion in the second quarter.

Speaker Change: With that, I'm happy to turn the call over to Howard Lutnick, Chairman of the Board and CEO of BGC Group.

Howard W. Lutnick: Thank you, Jason. Good morning, and welcome to our second quarter 2024 conference call. With me today is Sean Windeatt, our Chief Operating Officer, and Jason Hauf, our Chief Financial Officer. BGC delivered record second quarter revenues and adjusted earnings with continued growth across our business and geography. Our revenue growth of 12% delivered earnings growth of over 19%, demonstrating BGC's operating leverage. Higher revenues, along with improved profitability in our FMX and Fenex businesses, contributed significantly to our profit growth and margin expansion in the second quarter.

Howard W. Lutnick: Thank you, Jason. Good morning and welcome to our second quarter 2024 conference call. With me today is Sean Windeatt, our Chief Operating Officer, and Jason Hauf, our Chief Financial Officer.

Howard W. Lutnick: BGC delivered record second quarter revenues and adjusted earnings with continued growth across our business and geographies.

Speaker Change: Our revenue growth of 12% delivered earnings growth of over 19% demonstrating BGC's operating leverage. Higher revenues along with improved profitability in our FMX and Fenex businesses contributed significantly to our profit growth and margin expansion in the second quarter.

Howard Lutnick: We are excited about FMX, which continues to outperform its peer. FMX UFT volumes were 37% and FMX FX was up 30%. FMX, together with its clearing partner, LCH, has full CFTC approval to open our futures exchange.

Howard W. Lutnick: We are excited about FMX, which continues to outperform its peers. FMX UFT volumes were up 37 percent, and FMX FX was up 30 percent. FMX, together with its clearing partner LCH, has full CFTC approval to open our futures exchange. Together with our 10 partners, Bank of America, Barclays, Citadel, Citi, Goldman Sachs, JPMorgan, Jump Trading, Morgan Stanley, Tower Research, and Wells Fargo, we look forward to the launch of SOFR Futures, the largest notional futures contract in the world, in September. With that said, I would like to turn the call over to Sean. Thanks.

Speaker Change: We are excited about FMX, which continues to outperform its peer.

Speaker Change: FMX UFT volumes were up 37% and FMX FX was up 30%.

Speaker Change: FMX, together with its clearing partner LCH, has full CFTC approval to open our futures exchange.

Howard Lutnick: Together with our ten partners, Bank of America, Barclays, Citadel, City, Goldman Sachs, JP Morgan, Jump Trading, Morgan Stanley, Tower Research, and Wells Fargo, we look forward to the launch of SOFR futures, the largest emotional futures contract in the world in September, next month.

Speaker Change: Together with our 10 partners, Bank of America, Barclays,

Speaker Change: Citadel, Citi, Goldman Sachs, J.P. Morgan, Jump Trading, Morgan Stanley , Tower Research, and Wells Fargo, we look forward to the launch of SOFR Futures, the largest notional futures contract in the world, in September .

Sean Windeatt: With that, I would like to turn the call over to Sean. Thanks and good day everyone. Our second quarter revenues grew by 11.7%, to $550.8 million, representing record second quarter revenues, and reflecting broad-based growth across all geographies. BGC generated strong double-digit revenue across its three largest businesses: rates, ECS, and foreign exchange. Total brokerage revenues grew by 11.3%, to $493.5 million. Rates revenues increased by 15.1% to $166 million, reflecting higher volumes across interest rate derivatives, including our Euro, US dollar, and New Yen Rates businesses. ECS revenues grew by 19.3% to $117.7 million, driven by strong organic growth across the business.

Speaker Change: next month. With that I would like to turn the call over to Sean.

Sean A. Windeatt: Thanks and good day, everyone. Our second quarter revenues grew by 11.7% to $550.8 million, representing record second quarter revenues and reflecting broad-based growth across all job markets. BGC generated strong double-digit revenue growth across its three largest businesses, Rates, ECS, and Foreign Exchange. Total brokerage revenues grew by 11.3% to $493.5 million.

Sean: Thanks and good day everyone. Our second quarter revenues grew by 11.7 percent to 550.8 million dollars representing record second quarter revenues and reflecting broad-based growth across all geographies.

Speaker Change: BGC generated strong double-digit revenue growth across its three largest businesses Rates, ECF and Foreign Exchange

Speaker Change: Total brokerage revenues grew by 11.3% to $493.5 million.

Sean A. Windeatt: Rates revenues increased by 15.1% to $166 million, reflecting higher volumes across interest rate derivatives, including our Euro, US Dollar, and New Yen rates businesses. ECS revenues grew by 19.3% to $117.7 million, driven by strong organic growth across the business; foreign exchange revenues improved by 14.7% to $88.9 million. Driven by Emerging Markets Products and G10 Options Volunteers, credit revenues increased by 5.4% to $69.4 million on higher trading volumes across European, emerging markets, and US credit products, partially offset by lower Asian credit activity. Equity revenues decreased by 10.4% to $51.4 million due to lower equity derivative trading volumes, partially offset by higher cash equity.

Speaker Change: Rates revenues increased by 15.1% to $166 million, reflecting higher volumes across interest rate derivatives, including our Euro, US Dollar and New Yen rates businesses.

Speaker Change: ECS revenues grew by 19.3% to $117.7 million, driven by strong organic growth across the business.

Sean Windeatt: Foreign exchange revenues improved by 14.7% to $88.9 million, driven by emerging markets products and G10 options volumes. Credit revenues increased by 5.4% to $69.4 million on higher trading volumes across European emerging markets and US credit products, partially offset by lower Asian credit activity. Equities revenues decreased by 10.4% to $51.4 million due to lower equity derivative trading volumes, partially offset by higher cash equity derivative. Data, network, and post-grade revenues improved by 14.1% to $30.8 million, driven by broad-based revenue growth across Phoenix market data, Lucera, and Capital Act. Turning to Phoenix, in the second quarter, Phoenix revenues grew by 9.7% to $137.3 million, driven by higher electronic trading activity, as well as strong improvement in data, network, and post-grade subscription revenues.

Speaker Change: Foreign exchange revenues improved by 14.7% to $88.9 million, driven by emerging markets products and G10 options volumes.

Speaker Change: Credit revenues increased by 5.4% to $69.4 million on higher trading volumes across European, emerging market and US credit products, partially offset by lower Asian credit activity.

Speaker Change: Equity revenues decreased by 10.4% to $51.4 million due to lower equity derivative trading volumes, partially offset by higher cash equity derivative.

Sean A. Windeatt: Data, network, and post-trade revenues improved by 14.1% to $30.8 million, driven by broad-based revenue growth across Fenix Market Data, Lucera, and Capital Act. Turning to Spanish, in the second quarter, Fenex revenues grew by 9.7% to $137.3 million, driven by higher electronic trading activity as well as strong improvement in data, network, and post-trade subscription revenue. Then, its markets produced revenue of $115.1 million in the second quarter, an increase of 7.5%. This growth was driven by strong electronic foreign exchange, credit, and rates volumes along with higher Fenex market data revenue.

Speaker Change: Data, network, and post-trade revenues improved by 14.1% to $30.8 million, driven by broad-based revenue growth across Phoenix Market Data, Lucera, and Capital App.

Speaker Change: [inaudible]

Speaker Change: In the second quarter, Fenex revenues grew by 9.7% to $137.3 million.

Speaker Change: driven by higher electronic trading activity as well as strong improvement in data, network, and post-raise subscription revenues.

Sean Windeatt: Phoenix Markets produced revenue of $115.1 million in the second quarter, an increase of 7.5%. This growth was driven by strong, electronic, foreign exchange, credit and rates volumes, along with higher phoenix market data revenues. We're excited about our ECS business, which will provide future electronic growth opportunities for our Phoenix market business. Our phoenix growth platforms generated second quarter revenues of $22.2 million, up 22.4% driven by Portfolio Match, Lucera, and FFX. Portfolio Match more than doubled its US credit volumes versus a year ago and increased its European volumes by nearly fivefold. Lucera revenues grew by 16%. It's 18th consecutive quarter of double digit year-over-year revenue growth.

Speaker Change: Then its markets produced revenue of $115.1 million in the second quarter, an increase of 7.5%.

Speaker Change: This growth was driven by strong electronic foreign exchange, credit and rates volumes, along with higher Fenex market data revenues.

Sean A. Windeatt: We're excited about our ECS business, which will provide future electronic growth opportunities for our Fenex Markets business. Our Fenix growth platforms generated second quarter revenues of $22.2 million, up 22.4%, driven by PortfolioMatch, Lucera, and FFX. PortfolioMatch more than doubled its U.S. credit volumes versus a year ago and increased its European volumes by nearly fivefold. Lucera revenues grew by 16%, its 18th consecutive quarter of double-digit year-over-year revenue growth. Lucera continues to expand its customer base and deepen its existing customer agreements, adding to its recurring revenue base.

Speaker Change: We're excited about our ECS business, which will provide future electronic growth opportunities for our Phoenix Markets business.

Speaker Change: PortfolioMatch more than doubled its US credit volumes versus a year ago and increased its European volumes by nearly fivefold.

Speaker Change: Lucera revenues grew by 16%, its 18th consecutive quarter of double-digit year-over-year revenue growth.

Sean Windeatt: Lucera continues to expand its customer base and deepen its existing customer agreements, adding to its recurring revenue base. FFX includes the world's fastest growing cash US Treasuries marketplace and its spot foreign exchange platform, along with its fully approved US futures exchange. FFX is challenging the CME's monopoly in US interest rate futures and its leading position in cash US Treasuries and spot foreign exchange. FFX UST produced record market share of 30% for the second quarter, up from 28% last quarter and 23% a year ago. FFX UST average daily volumes improved by 37% versus the prior year period, achieving new record ADV of $47 billion for the second quarter.

Speaker Change: Lucera continues to expand its customer base and deepen its existing customer agreements, adding to its recurring revenue base.

Sean A. Windeatt: FMX includes the world's fastest-growing cash U.S. Treasuries marketplace and its spot foreign exchange platform, along with its fully approved U.S. futures exchange. FMX is challenging the CME's monopoly in U.S. interest rate futures and its leading position in cash U.S. Treasuries and spot foreign exchange. FMEX UST produced a record market share of 30% for the second quarter, up from 28% last quarter and 23% a year ago. FMX-UST averaged daily volumes improved by 37% versus the prior year period, achieving a new record ADV of $47 billion for the second quarter.

Speaker Change: FMX includes the world's fastest-growing cash U.S. Treasuries marketplace and its spot foreign exchange platform, along with its fully approved U.S. Futures Exchange.

Speaker Change: FMX is challenging the CME's monopoly in U.S. interest rate futures and its leading position in cash U.S. Treasuries and spot foreign exchange.

Speaker Change: FMXUST produced record market share of 30% for the second quarter, up from 28% last quarter and 23% a year ago.

Sean Windeatt: This translated to revenue growth of 34%. FFX average daily volumes improved by over 30% versus the prior year period on record ADV of $8.1 billion. FFX continues to grow faster than the overall market and is expected to significantly grow its market share in the enormous global foreign exchange market.

Sean A. Windeatt: This translates into revenue growth of 34%. FMXFX average daily volumes improved by over 30% versus the prior year period. On a record ADV of $8.1 billion, FMXFX continues to grow faster than the overall market and is expected to significantly grow its market share in the enormous global foreign exchange market. Turning to our outlook, I'm pleased to provide the following guidance for the third quarter of 2024. We expect to generate total revenue of between $505 and $555 million as compared to $482.7 million in the third quarter of 2023. We anticipate pre-tax adjusted earnings to be in the range of $110 million to $127 million versus $101.9 million last year. With that, I'd like to turn the call over to Jason. Thank you, Sean.

Speaker Change: This translates into revenue growth of 34%.

Speaker Change: FMXFX average daily volumes improved by over 30% versus the prior year period on record ADV of $8.1 billion.

Speaker Change: FMXFX continues to grow faster than the overall market and is expected to significantly grow its market share in the enormous global foreign exchange market.

Sean Windeatt: Turning to our outlook, I'm pleased to provide the following guidance for the third quarter of 2024. We expect to generate total revenue between $505 and $555 million as compared to $482.7 million in the third quarter of 2023. We anticipate pre-tax adjusted earnings to be in the range of $110 to $127 million versus $101.9 million last year.

Speaker Change: Turning to our Outlook, I'm pleased to provide the following guidance for the third quarter of 2024.

Speaker Change: We expect to generate total revenue of between $505 and $555 million, as compared to $482.7 million in the third quarter of 2023.

Speaker Change: We anticipate pre-tax adjusted earnings to be in the range of $110 million to $127 million versus $101.9 million last year.

Jason Hauf: With that, I'd like to send a call over to Jason. Thank you, Sean, and a little bit of one. FGC generated total second quarter revenue of $550.8 million, reflecting growth across all geographies. Europe, Middle East, and Africa revenues increased by 14.4%. America's revenues increased by 9.5%, and Asia-Pacific revenues increased by 7.9%.

Jason Williams Hauf: Thank you, Sean, and hello, everyone. BGC generated total second quarter revenue of $550.8 million, reflecting growth across all geographies. Europe, Middle East, and Africa revenues increased by 14.4%; America's revenues increased by 9.5%, and Asia-Pacific revenues increased by 7.9%. Turning to expenses.

Speaker Change: With that, I'd like to turn the call over to Jason. Thank you, Sean, and hello, everyone.

Speaker Change: BGC generated total second quarter revenue of 550.8 million dollars reflecting growth across all geographies.

Jason Chryssicas: Europe , Middle East and Africa revenues increased by 14.4 percent.

Jason Chryssicas: America's revenues increased by 9.5 percent and Asia-Pacific revenues increased by 7.9 percent.

Jason Hauf: Turning to expense... Our compensation and employee benefits under adjusted earnings increased by 13.1%, driven by higher revenues as well as an increase in newly hired brokers and new business ones. Non-compensation expenses under adjusted earnings increased by 5.1%, driven by higher selling and promotion, communications, and interest expense.

Jason Williams Hauf: Our compensation and employee benefits under Adjusted Earnings increased by 13.1%, driven by higher revenues, as well as an increase in newly hired brokers and new business owners. Non-compensation expenses under adjusted earnings increased by 5.1 percent, driven by higher selenium promotion, communications, and interest. Moving on to Ernst.

Jason Chryssicas: Turning to expenses.

Jason Chryssicas: Our compensation and employee benefits under Adjusted Earnings increased by 13.1%, driven by higher revenues, as well as an increase in newly hired brokers and new business lines.

Jason Chryssicas: Non-compensation expenses under adjusted earnings increased by 5.1%, driven by higher selling and promotion, communications, and interest expense.

Jason Hauf: Moving on to earnings, our profitability increased across all earnings metrics during the quarter. Our pre-tax adjusted earnings grew by 19.2% to 125.8 million dollars, with a margin of 22.8%. This is our 15th consecutive quarter of year-over-year margin expansion. Post-tax adjusted earnings increased by 14.7% to 14.7 million dollars, and post-tax adjusted earnings per share increased by 15% to 23 cents per share. Our second quarter of adjusted EBITDA was 162.4 million dollars, a 20.2% improvement, turning the share count. Our fully diluted weighted average share count for adjusted earnings was 496.8 million during the second quarter, a 1.7% decrease compared to the second quarter of 2023.

Jason Williams Hauf: Our profitability increased across all earnings metrics during the quarter. Our pre-tax adjusted earnings grew by 19.2% to $125.8 million, with a margin of 22.8%. This is our 15th consecutive quarter of year-over-year margin. Post-tax adjusted earnings increased by 14.7% to $114.7 million, and post-tax adjusted earnings per share improved by 15% to $0.23 per share. Our second quarter adjusted EBITDA was $162.4 million, a 20.2% increase. Turning the ship.

Jason Chryssicas: Moving on to earnings, our profitability increased across all earnings metrics during the quarter.

Jason Chryssicas: Our pre-tax adjusted earnings grew by 19.2% to $125.8 million with a margin of 22.8%.

Jason Chryssicas: This is our 15th consecutive quarter of year-over-year margin expansion.

Jason Chryssicas: Post-tax adjusted earnings increased by 14.7% to $114.7 million, and post-tax adjusted earnings per share increased by 15% to $0.23 per share.

Jason Chryssicas: Our second quarter adjusted EBITDA was $162.4 million, a 20.2% improvement.

Jason Chryssicas: Turning the check count.

Jason Chryssicas: Our fully diluted weighted average share count for adjusted earnings was $496.8 million during the second quarter, a 1.7% decrease compared to the second quarter of 2023.

Jason Hauf: BGC continues to expect its fully diluted weighted average share count to remain approximately flat for the full year 2024, excluding acquisitions or extraordinary transactions. As of June 30th, our liquidity was 759.1 million dollars compared with 701.4 million dollars as of the year-end 2023.

Jason Chryssicas: BGC continues to expect its fully diluted weighted average share count to remain approximately flat for the full year 2024, excluding acquisitions or extraordinary transactions.

Jason Chryssicas: As of June 30th, our liquidity was $759.1 million, compared with $701.4 million as of the year-end 2023.

Operator: With that, operator, we would like to open the call for questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue, and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, it is star 1 on your telephone keypad to ask a question.

Jason Williams Hauf: Our fully diluted weighted average share count for adjusted earnings was $496.8 million during the second quarter, a 1.7% decrease compared to the second quarter of 2020. BGC continues to expect its fully diluted weighted average share count to remain approximately flat for the full year 2024, excluding acquisitions or extraordinary transactions. As of June 30th, our liquidity was $759.1 million compared with $701.4 million as of year-end 2020. With that, Operator, we would like to open the call to questions.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, it is star 1 on your telephone keypad to ask a question. Our first question comes from Patrick Moley with Piper Sandler. Please proceed.

Speaker Change: With that, Operator, we would like to open the call for questions.

Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, it is star 1 on your telephone keypad to ask a question. Our first question comes from Patrick Moley with Piper Sandler. Please proceed.

Patrick Moley: Our first question comes from Patrick Molly with Piper Sandler. Please proceed. Yes, good morning. Thank you for taking the question.

Patrick Malcolm Moley: Yes, good morning. Thanks for taking the time to ask the question. So starting off, maybe Howard, you could just elaborate on Jason's remarks and where you saw the inaccuracies in the comments made by the CME. And then when it comes to, you know, FMX or LCH potentially looking to clear U.S. Treasuries, I don't know if that was ever in the cards that you would look to do it in-house. I know that you'd mentioned potentially looking to strike a similar partnership as the CME has with the DTCC if you were gonna offer margin offsets with treasuries, but maybe just update us on your thoughts and any future plans that FMX could have for offering treasury offsets.

Howard Lutnick: So starting off, maybe Howard, you could just elaborate on Jason's remarks and where you viewed the inaccuracies in the comments made by the CME. And then when it comes to FMX or LCH potentially looking to clear U.S. Treasuries, I don't know if that was ever in the cards that you would look to do it in-house. I know that you mentioned potentially looking to strike a similar partnership as the CME has with the DTCC if you were going to offer margin offsets with Treasuries, but maybe just update us on your thoughts on any future plans that FMX could have in offering treasury offsets.

Patrick Malcolm Moley: Yes, good morning. Thanks for taking the question.

Patrick Malcolm Moley: So, starting off, maybe, Howard, you could just elaborate on Jason's remarks and where you viewed the inaccuracies in the comments made by the CME. And then when it comes to, you know, FMX or LCH potentially looking to clear U.S. Treasuries,

Speaker Change: I don't know if that was ever in the cards that you would look to do it in-house, I know that you'd mentioned...

Speaker Change: potentially looking to strike a similar partnership that as like the CME has with the DTCC if you were going to offer margin offsets with Treasuries but maybe just update us on you know your thoughts and any future plans that that FMX could have in offering Treasury offsets.

Howard Lutnick: Okay, so let's start at the beginning. FMX and the LCH have all approvals necessary for us to open in September with SOFA futures that will clear with the LCH, which is a fully approved CFTC derivative clearing organization. Fully approved, we don't know, and if so, but our expectation is we're opening in September. They clear. Interest Rate Swaps as well, and they will be doing cross-margining between futures contracts transacted on the FMX, cleared with the LCH, and Interest Rate Swap collateral, of which they have 97.8% of all dollar-based swaps are collateral in the LCH. So that cross-margin efficiency is $225 billion of collateral.

Howard W. Lutnick: Okay, so let's start at the beginning. FMX and the LCH have all the approvals necessary for us to open in September. So for Futures, that will clear with the LCH, which is a fully approved CFTC, Derivatives Clearing Organization. Fully approved, we are done, no ands, ifs, or buts, and our expectation is that we're opening in September.

Howard W. Lutnick: Stay clear, interest rate swaps as well, and they will be doing cross-margining between futures contracts transacted on the FMX, cleared with the LCH, and interest rate swap collateral, of which they have 97.8% of all dollar-based swaps, is collateral in the LCH. So that cross-margin efficiency is $225 billion of collateral. CME has $37 billion of collateral. So, sort of, the LCH is six and a half times more, and that's dollar-based as well. So they have even more than that because some of the 37 billion by the CME is non-dollar-based. So it's even more.

Speaker Change: Okay, so let's start at the beginning. FMX and the LCH have all approvals necessary for us to open in September

Speaker Change: with So For Futures that will clear with the LCH, which is a fully approved CFTC, derivatives clearing organization. Fully approved. We done.

Speaker Change: No ands, ifs, or buts, and our expectation is we're opening in September . They clear.

Speaker Change: interest rate swaps as well and they will be doing cross-margining between futures contracts transacted on the FMX

Speaker Change: cleared with the LCH and Interest Rate Swap Collateral of which they have 97.8% of all dollar-based swaps are

Speaker Change: collateral in the LCH.

Speaker Change: So, that cross-margin efficiency is $225 billion of collateral.

Howard Lutnick: The CME has $37 billion of collateral. So, sort of the LCH is 6.5 times more, and that dollar-based as well. So they have even more than that because some of the $37 billion by the CME is non-dollar-based. So it's ever more. So we think that will create enormous efficiencies.

Speaker Change: The

Speaker Change: CME has 37 billion dollars of collateral so sort of

Speaker Change: The LCH is six and a half times more, and that's dollar-based as well. So they have even more than that, because some of the $37 billion by the CME is non-dollar-based. So it's ever more. So we think that will create enormous efficiencies.

Howard W. Lutnick: So we think that will create enormous. Efficient. So that has nothing to do with clearing U.S. Treasury, at all. That was not in the cards. That is nothing we have pursued. That is not a discussion.

Howard Lutnick: So there was nothing to do with clearing U.S. Treasuries at all. That was not in the cards. That is nothing we pursued. That is not a discussion. Obviously, FMX U.S. Treasuries, which announced it has 30% market share today, clears those U.S. Treasuries exactly the same way as broker tech at the FICC in America.

Speaker Change: So, that has nothing to do with clearing U.S. Treasuries.

Speaker Change: at all. That was not in the cards, that is nothing we pursued, that is not a discussion. Obviously FMX

Howard W. Lutnick: Obviously, FMX, U.S. Treasuries, which announced it has 30% market share today, clears those U.S. Treasuries exactly the same way as Brokertech at the FICC in America. So I couldn't figure out whether it was just a complete misunderstanding or just a confusing sort of set of statements to try to baffle people as we open, because we got lots of phone calls about it, but it makes no sense FMX and the LCH have all the approvals to open in September, which is kind of like, you know, it's almost August. So it's in the quarter we're in, and the month that is after August is September. There's nothing in our way.

Speaker Change: U.S. Treasuries, which announced it has 30% market share today, clears those U.S. Treasuries exactly the same way as Brokertech at the FICC in America. So, I couldn't figure out whether it was just...

Howard Lutnick: So I couldn't figure out whether it was just a completeness understanding or just a confusing sort of set of statements to try to baffle people as we open. Because we got lots of phone calls about it. But it makes no sense. So again, FMX and the LCH have all the approvals to open in September, which is kind of like, you know, it's almost August. So it's in the quarter end. And the month that is after August is September; there's nothing in our way. We are fully approved and ready to go to open SOFA futures, which will have wonderful cross-margin efficiencies against the LCH and a one-pack clearing model, which we have discussed.

Speaker Change: a complete misunderstanding or just a confusing sort of set of statements to try to baffle people as we open because we got lots of phone calls

Speaker Change: about it, but it makes no sense. So, again...

Speaker Change: FMX, and the LCH.

Speaker Change: have all approvals to open in September , which is kind of like, you know...

Speaker Change: It's almost August , so it's in the quarter end and the month that is after August is September . There's nothing in our way. We are fully approved and ready to go to open SOFR Futures, which will have wonderful cross-margin efficiencies.

Howard W. Lutnick: We are fully approved and ready to go to open SOFR futures, which will have wonderful cross-margin efficiencies against the LCH in a one-pot clearing model, which we have discussed. It will bring beautiful efficiency, taking nothing away from the CME's $20 billion of efficiency. But think about it, they have $37 billion in collateral, and they offer $20 billion of efficiency. Let's call that just above $50. When LCH has $225 billion, we have all sorts of numbers. So almost any way you compare it, you will see that LCH has the opportunity to offer vast amounts of capital efficiencies and cross-margin. Any way you slice it,

Howard Lutnick: It will bring beautiful efficiencies, taking nothing away from the savings of $20 billion of efficiencies. But think about it. They have $37 billion in collateral, and they offer $20 billion of efficiencies. Let's call that just above 50%. When LCH has 225 billion, you know, you have all sorts of numbers. So almost any way you compare it, you will see that the LCH has the opportunity to offer vast amounts of capital efficiencies in cross-margined, any way is slice.

Speaker Change: against the LCH in a one-pot clearing model, which we have discussed. It will bring beautiful efficiencies, taking nothing away from the CME's $20 billion of efficiencies.

Speaker Change: But think about it, they have $37 billion in collateral, and they offer $20 billion of efficiencies. Let's call that just above 50%.

Speaker Change: When LCH has $225 billion, you know, you have all sorts, we have all sorts of numbers. So almost any way you compare it, you will see that the LCH has the opportunity to offer vast amounts of capital efficiencies and cross-margin.

Patrick Moley: So I hope that helps. No, definitely thanks for clearing that up. But don't back to FMX and some of the comments you just made about nothing being in your way, launching in September. I'm assuming that's kind of a done deal. Have you set a date yet? And are there any, you know, potential bogies that all they could push that out? And then, you know, once you launch, what kind of KPIs are you looking to disclose?

Speaker Change: Any way you slice, so.

Patrick Malcolm Moley: No, definitely. Thanks for clearing that up.

Speaker Change: I hope that helps.

Speaker Change: No, definitely. Thanks for clearing that up.

Speaker Change: But going back to FMX and some of the comments you just made about nothing being...

Speaker Change: Thank you all for being in your way, launching in September . I'm assuming that's kind of a done deal. Have you set a date yet? And are there any, you know, potential bogeys at all that could push that out? And then, you know, once you launch, what...

Patrick Malcolm Moley: But going back to FMX and some of the comments you just made about nothing being in your way, launching in September, I'm assuming that's kind of a done deal. Have you set a date yet? And are there any potential bogeymen at all that could push that out? And then, you know, once you launch, what What kind of KPIs are you looking to disclose, and could you share any updated milestones that investors should be looking out for, whether it's volumes or open interest or market share that you're expecting to get to?

Howard Lutnick: And could you share any updated, you know, milestones that investors should be looking out for, whether it's volumes or open interest or market share that you're well, as I've said in the past, this is a marathon, not a sprint. Okay, when we open for business, there's nothing about the Tuesday we open or the Thursday that is fundamental. This is the first year. Is the objectives for the exchange to get all players on the field? Right? There are 50 or so FCMs in the world. We have to onboard them all, get them all up and running.

Speaker Change: What kind of KPIs are you looking to disclose, and could you share any updated milestones that investors should be looking out for, whether it's volumes or open interest or market share that you're expecting to get to?

Howard W. Lutnick: Well, as I've said in the past, this is a marathon, not a sprint. When we open for business, there's nothing about the Tuesday we open or the Thursday.

Speaker Change: Well, as I've said in the past, this is a marathon, not a sprint.

Speaker Change: When we open for business, there's nothing about the Tuesday we open or the Thursday. That is fundamental. This is the first year is the objectives for the exchange to get all players on the field.

Howard W. Lutnick: That is fundamental. This is the first year of the objectives for the exchange are to get all players on the exchange. There are 50 or so FCMs in the world. We have to onboard them all, get them all up and running. We have to speak to all the clients. Of course, will our partners be ready to trade? Sure.

Speaker Change: Right? There are 50 or so FCMs in the world. We have to onboard them all.

Howard Lutnick: We have to speak to all the clients. Of course, will our partners be ready to trade? Sure. Well, the rest of the client base of the whole wide world, I think that will take some time. So, let's say our objectives are, at the end of the first year, to have all players on the field. Right? All lines open, all accounts open, and we will. It's our expectation that we will have record open interest for a new exchange ever. So that's our objective. To have record open interest at the end of the year, one of any new exchange ever.

Speaker Change: Get them all up and running. We have to speak to all the clients. Of course, will our partners be ready to trade? Sure. Will the rest of the client base of the whole wide world? I think that will take some time. So, let's say our objectives are at the end of the first year.

Howard W. Lutnick: Will the rest of the client base of the whole wide world? I think that will take some time. So let's say our objectives are at the end of the first to have all players on the field.

Howard W. Lutnick: All lines open, all accounts open, and it's our expectation that we will have record open interest for a new exchange, ever. So that's our objective, to have record open interest at the end of year one for any new exchange, ever. In year two, we're going to build volume. We're going to build connectivity. We're going to make sure every client is trading. All volumes are there.

Speaker Change: to have all players on the field.

Speaker Change: All lines open, all accounts open, and it's our expectation that we will have record open interest for a new exchange.

Speaker Change: ever. So that's our objective, to have record open interest at the end of year one of any new exchange.

Howard Lutnick: Then year two, we're going to build volume. We're going to build connectivity. We're going to make sure every client is trading or volumes are there. We're going to then build and build. And then year three is going to be full on, full boat, everybody ready, everybody connected. All things go, and we would expect full on a competitive position of FMX and the CMIN in year three. So that is a process. It is a steady process. So it doesn't really, it is not fundamental to us in our coordination with LCH, which day we open in September.

Speaker Change: ever. In year two, we're going to build volume, we're going to build connectivity, we're going to make sure every client is trading, all volumes are there, we're going to then build and build.

Howard W. Lutnick: We're going to then build and build. And then year three is going to be full on, full boat, everybody ready, everybody connected. All things go, and we would expect a full on competitive position for FMX and the CME in year three. So that is a process. It is a steady process. So it doesn't really, it is not fundamental to us in our coordination with LCH, which day we open in September. That's not really a thing. Could there possibly be something that pushes it out?

Speaker Change: And then year three is going to be.

Speaker Change: Full on, full boat, everybody ready, everybody connected, all things go.

Speaker Change: And we would expect full-on competitive...

Speaker Change: position of FMX and the CME.

Speaker Change: in year three. So that is a process.

Speaker Change: It is a steady process.

Speaker Change: So, it doesn't really, it is not fundamental to us.

Howard Lutnick: That's not really a thing.

Speaker Change: in our coordination with LCH, which day we open in September , that's not really...

Howard Lutnick: Could there possibly be something that pushes it out? I'm not the kind of person that would say everything is impossible, but I wouldn't be saying September if it wasn't completely our expectation that will be opening in September. And I think we're ready. LCH is ready. We're ready. I'm sure there are my technology people, and everybody are hustling around, dotting eyes and crossing keys. So I can't say right now every single bow is tied and shoelaces ready to go, but you know, they all know September is not that far away. And I think we are confident with the right answer that we will have a wonderful opening with more prices than people imagine.

Howard W. Lutnick: I'm not the kind of person that would say everything is impossible, but I wouldn't be saying September if it wasn't completely our expectation that we'll be opening in September. And I think we're ready. LCH is ready, we're ready. I'm sure there are my technology people, and everybody is hustling around, dotting I's and crossing T's.

Speaker Change: Could there possibly be something that pushes it out? I'm not the kind of person that would say everything is impossible, but I wouldn't be saying September if it wasn't completely our expectation that we'll be opening in September .

Speaker Change: And I think we're ready. LCH is ready, we're ready, I'm sure there are, you know, my technology people and everybody are hustling around, dotting I's and crossing T's, so I can't say right now every single bow is tied and

Howard W. Lutnick: So I can't say right now every single bow is tied, and every shoelace is ready to go, but they all know September is not that far away. And I think we are confident would be the right answer that we will have a wonderful opening with more prices than people imagine. But I do want to temper people's expectations.

Speaker Change: Shoelace is ready to go, but you know, they all know September is not that far away.

Speaker Change: And I think we are...

Speaker Change: Consonant would be the right answer, that we will have a wonderful opening.

Howard Lutnick: But I do want to temper people's expectations. Our objective is not to say Tuesday of our opening week is like the most important day. It is not. It is the beginning of a process of bringing fundamental competition to a market that is 100% at the CMIN today.

Speaker Change: with more prices than people imagine.

Howard W. Lutnick: Our objective is not to say Tuesday of our opening week is the most important day; it is the beginning of a process of bringing fundamental competition to a market that is 100% at the CME today, right? If you look at an interview I gave to the Financial Times in 2007, when the CME and the CBOT announced their merger, right? I said, well, that creates two monopolies because you have the CME's monopoly on SOFR futures and the Chicago Board of Trade's monopoly on Treasury futures, and that would combine them into two monopolies under one roof.

Speaker Change: But I do want to temper people's expectations. Our objective is not, is not to say Tuesday of our opening week is like the most important day. It is not. It is the beginning of a process of bringing fundamental competition.

Howard Lutnick: If you look at an interview I gave to the Financial Times in 2007 when the CME and the CBOT had announced their merger. I said, well, that creates two monopolies because you had the CME's monopoly on sofa futures and the Chicago Board of Trade's monopoly on treasury futures. Both of those are going to now have competition coming from FMX, and we think with the efficiencies of our partner in the LCH and the extraordinary backing by these 10 enormous, successful, and wonderful partners of the best banks and trading firms in the world. I think you're going to see extraordinary competition, but that is delivered over the next three years, not on any particular Tuesday or Thursday.

Speaker Change: to a market that is 100% at the CME today, all right? If you look at an interview I gave to the Financial Times in 2007 when the CME and the CBOT had announced their merger,

Speaker Change: Right, I said well that creates two monopolies because you had the CMEs monopoly on SOFR futures and The Chicago Board of Trades monopoly on Treasury futures and that would combine them into two monopolies under one roof

Howard W. Lutnick: Both of those are going to now have competition coming from FMX, and we think with the efficiencies of our partner in the LCH and the extraordinary backing by these 10 enormous, successful, and wonderful partners of the best banks and trading firms in the world, I think you're going to see extraordinary competition. But that is delivered over the next three weeks, not on any particular Tuesday or Thursday.

Speaker Change: Both of those are going to now have competition.

Speaker Change: coming from FMX, and we think with the efficiencies of our partner in the LCH.

Speaker Change: and the extraordinary backing by these ten enormous successful and wonderful partners of the best banks and trading firms in the world. I think you're going to see extraordinary competition but that is delivered over next three years.

Speaker Change: Not on any particular Tuesday or Thursday.

Patrick Moley: Okay.

Patrick Malcolm Moley: Okay. All right.

Patrick Moley: Alright, so maybe if we switch to 2Q, and I'm just going to keep asking questions. I've been flying solo on the call here for the last couple quarters, so if there's anyone else in the queue that's going to ask a question, just kick me off after this one, and I'll back in the queue. But on the quarter, you mentioned in the deck that FMX-UST revenues were up 34% year over year. I think last quarter you said that you'd expected to see a step up in revenues just from the partners switching over from variable fee plans to subscription plans, which I believe occurred on May 1st.

Speaker Change: Okay.

Speaker Change: All right, so maybe if we switch to 2Q, and I'm just going to keep asking questions, I know I've been flying solo on the call here for the last couple of quarters, so if there's anyone else in the queue that's going to ask a question, just kick me off after this one, and I'll hop back in the queue.

Patrick Malcolm Moley: So maybe we switch to 2Q, and I'm just going to keep asking questions. I know I've been flying solo on the call here for the last couple quarters. So if there's anyone else in the queue that's going to ask a question, just kick me off after this one, and I'll hop back in the queue.

Patrick Malcolm Moley: But on the quarter, you mentioned in the deck that Athenx UST revenues were up 34% year over year. I think last quarter you said that you'd expected to see a step up in revenues just from the partners switching over from variable fee plans to subscription plans, which I believe occurred on May 1st. So, just curious if you have any sense of how much of that growth in UST revenues that fee plan change contributed.

Speaker Change: On the quarter...

Speaker Change: You mentioned in the deck that Authentic's UFT revenues were up 34%.

Speaker Change: year over year. I think last quarter you said that you'd expected to see a step up in revenues just from the partners switching over from variable fee plans to subscription plans, which I believe occurred on on May 1st. So just curious if you have any sense of how much of that growth in UST revenues

Howard Lutnick: So just curious if you have any sense of how much of that growth in UST revenues that fee plan change contributed and then broadly speaking prior to the formation of FMX, I think you were tens of millions away from break even just curious on where FMX is today in terms of the break even point and if not today, when do you think you'd expected FMX would be a break even? So remember FMX is US Treasury's cash, foreign exchange, both growing wonderfully and futures which is yet to open. And all of the expenses of a full bore futures exchange that's going to open in September, which means every person who needs to work at the exchange is standing there, all the computers are standing there, everything is ready, turned on and looking. And it's been that way since we had our CFTC approval because obviously when the CFTC approves you, you are then allowed to open the next day, so you're not that everything ready.

Speaker Change: that fee plan change contributed, and then broadly speaking...

Patrick Malcolm Moley: And then broadly speaking, prior to the formation of FMX, I think you were tens of millions away from breakeven. Just curious where FMX is today in terms of the breakeven point. And if not today, when do you think you'd expect FMX to be breakeven?

Speaker Change: Prior to the formation of FMX, you know, I think you were tens of millions away from breakeven just curious on you know, where FMX is today in terms of the breakeven point and You know, if not today, when do you think you'd expect that FMX would be a breakeven?

Speaker Change: So remember, FMX is U.S. Treasury's cash.

Speaker Change: Foreign Exchange, both growing wonderfully.

Howard W. Lutnick: So remember, FMX is U.S. Treasury's cash. Foreign Exchange, both growing wonderfully, and Futures, which is yet to open at all the expenses of a full-bore Futures Exchange that's going to open in September, which means every person who needs to work at the Exchange is standing there, all the computers are standing there, everything is ready, turned on, and looking, and it's been that way since we had our CFTC approval, because obviously, when the CFTC approves you, you are then allowed to open the next day, so you'd have to have everything ready.

Speaker Change: and Futures, which is yet to open.

Speaker Change: and all of the expenses of a full-bore futures exchange that's going to open in September , which means every person who needs to work at the exchange is standing there, all the computers are standing there, everything is ready, turned on and looking, and it's been that way.

Speaker Change: Since we had our CFTC approval, because obviously when the CFTC approves you, you are then allowed to open the next day. So you have to have everything ready. So we are...

Howard W. Lutnick: So we are suffering those expenses until we open, right? And then when we open, you know, our objectives are to bring in volume; we're not going to charge a lot of money; that's not the kind of thing.

Howard Lutnick: So we are suffering those expenses until we open, right? And then when we open, our objectives are to bring in volume; we're not going to charge a lot of money, and that's not the kind of thing. So I would expect FMX will be in the black at the end of the year. I would expect that we had a partial period in the second quarter, so that will improve obviously in the third quarter, but the economics of their bump initially was not designed to have a big bump in our profitability. It was designed for us to have a bump in volume, which will then be a magnet for growth.

Speaker Change: suffering those expenses until we open.

Speaker Change: And then when we open, our objectives are to bring in volume, we're not going to charge a lot of money, that's not the kind of thing. So I would expect FMX will be in the black at the end of the year.

Howard W. Lutnick: So I would expect FMX to be in the black at the end of the year. I would expect that we had a partial period in the second quarter, so that will improve, obviously, in the third quarter, but the economics of their bump initially was not designed to have a big bump in our profitability; it was designed for us to have a bump in volume, which will then be a magnet for growth.

Speaker Change: I would expect that we had a partial period in the second quarter, so that will improve.

Speaker Change: Obviously in the third quarter, but the economics of their bump initially was not designed to have a big bump in our profitability.

Speaker Change: It was designed for us to have a bump in volume, which will then be a magnet for growth. So we have not seen that yet. You can see our market share growth was consistent with how it has been, right? We went from 23 to 30 percent.

Howard Lutnick: So we have not seen that yet; you could see our market share growth was consistent with how it has been, right? We went from 23 to 30 percent as seven points market share in the whole year, so we've averaged just under two points, and we've had two points market each of the last couple of quarters, so that remains consistent. We're happy with that, but we think there may well be a step transaction coming over the next couple of quarters, even when the banks start to put a little pedal to the metal on a company that they have a substantial stake in.

Howard W. Lutnick: So we have not seen that yet; you could see our market share growth was consistent with how it has been, right? We went from 23% to 30%, seven points of market share in the whole year, so we've averaged just under two points, and we've had two points of market share each of the last couple of quarters, so that remains consistent.

Speaker Change: Seven points market share in the whole year, so we've averaged just under two points.

Speaker Change: And we've had two points market share each of the last couple of quarters, so that remains consistent.

Howard W. Lutnick: We're happy with that, but we think there may well be a step transaction coming over the next couple of quarters, even when the banks start to put a little pedal to the metal on a company that they have a substantial stake in. So I think a benefit is coming, but we expect FMX to have nice growth in revenues, bringing the whole thing to breakeven, even though we're not really going to be charging very much at all for futures.

Speaker Change: We're happy with that, but we think there may well be a step transaction coming over the next couple of quarters as in when the banks...

Speaker Change: start to put a little pedal to the metal on a company that they have a substantial stake in. So I think a benefit is coming, but we expect FMX to have nice growth in profits, nice growth, sorry, in revenues.

Howard Lutnick: So I think a benefit is coming, but we expect FMX to have nice growth in profits, nice growth in revenues, bringing the whole thing to break even, though we're not really going to be charging very much at all for future. So I think it bodes extremely well for the profits.

Speaker Change: Bringing the whole thing to break even even though we're not really going to be charging very much at all for futures So I think it bodes extremely well for the profits

Howard W. Lutnick: So I think it bodes extremely well for profit. But it's important to realize that FMX is competing with a $70 billion organization. Our market cap is between $4 and $5 billion, and we bring such an incredible type of competition, the likes of which, obviously, the CME has never seen, in that it actually has caused them to comment, both on their own conference call and on television, basically to talk about FMX almost the whole time. So I mean, I think that's just incredibly telling about what is coming.

Howard Lutnick: You know it's important to realize that FMX is competing with a $70 billion organization. Our market cap is between four and five billion dollars, and we bring such an incredible type of competition, the likes of which obviously the CME has never seen in that it actually has caused them to comment both on their own conference call and on television, you know basically to talk about FMX almost the whole time. So, I mean, I think that's just incredibly telling about what is coming. The LCH is $225 billion of cross margin efficiency. Together with FMX and its connectivity to all the banks and all those banks participating, really brings enormous, enormous opportunity.

Speaker Change: You know, it's important to realize that FMX, you know, is competing with a 70 billion dollar organization.

Speaker Change: Our market cap.

Speaker Change: is between four and five billion dollars.

Speaker Change: and we bring such an incredible type of...

Speaker Change: competition, the likes of which obviously...

Speaker Change: The CME has never seen in that it actually has caused them to comment, both on their own conference call and on television, basically to talk about FMX almost the whole time. So I mean, I think that's just incredibly.

Howard W. Lutnick: The LCH's $225 billion of cross-margin efficiency, together with FMX and its connectivity to all the banks and all those banks participating, really brings enormous, enormous opportunities. So we're really excited about things and where they're going. You know, the near-term profits are going to be attractive for the company, right? 11.7% revenues and 19.2% profit growth. We said we would expose how well the company is doing going forward, and we are doing it this quarter. We expect these kinds of gearing and margins to continue, and we feel very, very confident and very positive about our future. And the value of FMX, you ain't seen nothing yet.

Speaker Change: telling about what is coming. The LCH is 225 billion dollars of cross-margin efficiency.

Speaker Change: together with FMX and its connectivity to all the banks.

Speaker Change: and all those banks.

Speaker Change: Participating really brings enormous enormous opportunity. So we're really really excited about things and where they're going but

Howard Lutnick: So we're really, really excited about things and where they're going, but you know, the near term profits are going to be attracted for the company, right?

Howard Lutnick: 11.7% revenues and 19.2% profit growth. We said, we will expose how well the company is doing going forward. We are doing it this quarter. We expect these kinds of gearing and margins to continue.

Speaker Change: You know, the near-term profits are going to be attractive for the company, right? 11.7% revenues and 19.2% profit growth.

Speaker Change: We said...

Speaker Change: We will expose how well the company is doing going forward. We are doing it this quarter. We expect these kind of gearing and margins to continue and we feel very, very confident and very positive about our future and the value of FMX. You ain't seen nothing yet.

Patrick Moley: And we feel very, very confident and very positive about our future and the value of FMX; you haven't seen nothing yet. Okay, and then looking at the back half of this year, of revenues in the first half of the year, we're up just, I think, right at 10%. You said that you expected revenues to finish the year with about 10% growth. You got a pretty tough comp in the fourth quarter. Revenues were up, I think, 18% year over year. And it was a record fourth quarter. So just curious if you could, you know, is that 10% plus growth in revenue this year?

Patrick Malcolm Moley: Okay, great. And looking at the back half of this year... The revenues in the first half of the year were up just, I think, right at 10%. You said that you expected revenues to finish the year with about 10% growth. You got a pretty tough comp in the fourth quarter. Revenues were up, I think, 18% year over year. And it was a record fourth quarter. So just curious if you could, you know, is that 10% plus growth in revenue this year still what you're expecting? And on a go-forward basis, do you think that is still achievable?

Speaker Change: Okay, great. And looking at the back half of this year...

Speaker Change: revenues in the first half of the year were up

Speaker Change: Just I think right at 10% you said that you expected revenues to finish the year with about 10% growth You got a pretty tough comp in the fourth quarter Revenues were up. I think 18% year over year and it was a it was a record fourth quarter So just curious if you could

Patrick Moley: Is that still what you're expecting? Is that on a go-forward basis? Do you think that is still achievable?

Speaker Change: So, you know, is that 10% plus growth in revenue this year, is that still what you're expecting? And on a go-forward basis, do you think that is still achievable?

Howard Lutnick: Yeah, I mean Patrick, as you've seen in Q3, you know, Q3 mid-guidance, 9.8%, you know, with a 16.3% mid-guidance for profit. So that's Q3. You know, Q4, yeah, it's quite rightly said. It's a more challenging comp, but the marketplace is changing. The marketplace continues with all you see. Look at the growth that we had in our main products in ECS at 19% at rates at 15%. So, and then, you know, we guided mid-point, 9.8%, Q3, and therefore we feel confident in and around those levels at 10%, as we've said, as we said at the end of Q1, as we're saying again now.

Sean A. Windeatt: Look, Patrick, Sean, as you've seen in Q3, Q3 mid-guidance, 9.8%, with 16.3% at mid-guidance for profit. So that's Q3. Q4, yeah, you quite rightly say it's a more challenging competition.

Sean A. Windeatt: You know, look, I mean, Patrick, Sean, as you've seen in Q3, you know, Q3 mid guidance, 9.8%, you know, with a

Speaker Change: 16.3% at mid guidance for you know

Speaker Change: Profit. So.

Speaker Change: That's Q3. You know, Q4, yeah, it's, you quite rightly say, it's a more challenging competition. The marketplace is changing. The marketplace continues to evolve. You've seen, look at the growth that we had in our main products in ECS at 19%, at rates at 15%.

Sean A. Windeatt: The marketplace is changing. The marketplace continues to evolve. You've seen look at the growth that we had in our main products in ECS at 19%, at rates of 15%. So, and then we guided mid-point 9.8 to Q3, and therefore we feel confident in and around those levels at 10%, as we said at the end of Q1, as we're saying again now. So, in and around those levels.

Speaker Change: So, and then, you know, we guided mid-point 9.83, and therefore, you know, we feel confident in and around those levels at 10%, as we said at the end of Q1, as we're saying again now. So in and around those levels, for sure.

Howard Lutnick: So, in and around those levels, for sure.

Patrick Moley: All right. Thanks, guys.

Patrick Malcolm Moley: All right. Thanks, guys. That's it for me.

Patrick Moley: That's it from me.

Operator: As a reminder, just star one on your telephone keypad.

Speaker Change: All right. Thanks, guys. That's it for me.

Operator: As a reminder, just press 1 on your telephone keypad if you would like to ask a question. We will just pause for a brief moment to see if there are any final questions. With no further questions at this time, I would like to turn the conference back over to Mr. Lutnick for closing remarks.

Operator: If you would like to ask the question, we will just pause for a brief moment to see if there are any final questions.

Speaker Change: As a reminder, just star 1 on your telephone keypad if you would like to ask a question. We will just pause for a brief moment to see if there's any final questions.

Operator: Let's know further questions at this time.

Howard Lutnick: I would like to turn the conference back over to Mr. Lutton for closing remarks. The one comment I'll sort of make is when I look at our stock, that obviously the stock has performed admirably over the last, you know, almost a year and a half. But the fact is, we are performing at, you know, the top 20% of the S&P 600, right? And that's an index we're in. And the other companies that perform consistent to where we are, you know, with revenue growth of 10 or 11% and product growth, something like 19%, and that kind of thing, those companies traded 30 times earnings.

Speaker Change: With no further questions at this time, I would like to turn the conference back over to Mr. Lutnick for closing remarks.

Howard W. Lutnick: The one comment I'll sort of make is when I look at our stock, obviously, the stock has performed admirably over the last, you know, almost a year and a half, but the fact is we are performing in the top 20% of the S&P 600. Right, and that's an index we're in, and the other companies that perform consistent with where we are, you know, with revenue growth of 10 or 11 percent, product growth of something like 19 percent, that kind of thing, those companies traded 30 times, and we trade at 10 times.

Speaker Change: [inaudible]

Howard W. Lutnick: The one comment I'll...

Howard W. Lutnick: is when I look at our stock, obviously the stock has performed admirably over the last

Howard W. Lutnick: you know almost a year and a half, but the fact is we are performing at, you know, the top 20% of the S&P 600.

Howard W. Lutnick: Right, and that's an index we're in. And the other companies that perform consistent to where we are, you know, with revenue growth of 10 or 11 percent, product growth something like 19 percent, that kind of thing, those companies traded 30 times earnings.

Howard Lutnick: And we trade at 10 times earnings. Now, if you go and look, we're at the, we're about 30% off the bottom. So we trade about 30% off the bottom of the S&P 600. The other companies who trade at about 9 or 10 times earnings, they have a revenue growth of a negative one. 1%. So if you're trading priced like companies that traded negative 1%, right? Which I think is just a very attractive price for entry for people to buy our stock, which may be why you see the company buying back its shares swiftly. So just giving a sense of the way we think about things, and that's why we're buying back stock, because it just seems the comparisons of who both our performance is at a much higher level than where we're trading.

Howard W. Lutnick: Now, if you go and look, we're at the we're about 30% off the bottom. So we trade about 30% off the bottom of the S&P 600. The other companies who trade at about 9 or 10, 10 times earnings, they have revenue growth of negative 1%. So we are trading priced like companies that trade negative 1%, right, which I think is just a very attractive price for entry for people to buy our stock, which may be why you see the company buying back its shares swiftly. So just giving you a sense of the way we think about things.

Howard W. Lutnick: And we trade at 10 times earnings.

Howard W. Lutnick: Now, if you go and look, we're about 30% off the bottom. So we trade about 30% off the bottom of the S&P 600.

Howard W. Lutnick: The other companies who traded at about 9 or 10, 10 times earnings, they have revenue growth of negative 1%.

Howard W. Lutnick: So, we are trading priced like companies that traded negative 1%.

Howard W. Lutnick: right, which I think is just a very attractive price for entry for people to buy our stock, which may be why you see the company buying back its shares.

Howard W. Lutnick: And that's why we're buying back stock because it just seems the comparison of our performance is at a much higher level than where we're trading. And I think that's just a great opportunity for people who are thinking about buying our stock to enter now because that doesn't even count FMX, which is just an extraordinary opportunity on the horizon. So we look forward to, we had a great performance last year. We've had excellent performances so far this year.

Howard W. Lutnick: Swiftly, so just giving a sense of the way we think about things and and that's why we're buying back stock because it just seems the comparisons

Howard W. Lutnick: of who both our performance is at a much higher level than where we're trading. And I think that's just a great opportunity for people who are thinking about buying our stock to enter now because that doesn't even count FMX, which is just an extraordinary opportunity.

Howard Lutnick: And I think that's just a great opportunity for people who are thinking about buying our stock to enter now because that doesn't even count FMX, which is just an extraordinary opportunity on the horizon. So we look forward to; we had great performance last year. We've had excellent performance so far this year. I expect that the company is going to continue to perform good forward, and those who own our stock, including all of our employees and our management, will have a wonderful experience in stock.

Howard W. Lutnick: on the horizon.

Howard W. Lutnick: We look forward to, we had great performance last year, we've had excellent performance so far this year, I expect that the company is going to continue to perform going forward and those who own our stock, including all of our employees and our management.

Howard W. Lutnick: I expect that the company is going to continue to perform going forward. And those who own our stock, including all of our employees in our management, will have a wonderful experience with the stock. But thank you all for joining us for this quarter. And we look forward to updating you along the way. Thanks everybody. And we'll see you at the opening of FMX in September.

Operator: But thank you all for joining us for this quarter, and we look forward to updating you along the way. Thanks, everybody, and we'll see you for the opening of FMX in September. Thanks every mess. Thank you.

Howard W. Lutnick: We'll have a wonderful experience in the stock. But thank you all for joining us for this quarter, and we look forward to updating you along the way. Thanks, everybody, and we'll see you for the opening of FMX in September . Thanks, everybody.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Operator: This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.