BGC Partners, Inc.

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BGC Partners, Inc.
BGC Logo on white.png
Founded 2004
Headquarters New York
Key People Howard Lutnick, Shaun D. Lynn, Stephen Merkel, Mark Benfield, James Cawley,
Employees 1,200 +
Products Inter-dealer brokerage
Website bcgpartners.com

BGC Partners, Inc. (NASDAQ: BGCP) is a global inter-dealer broker that provides integrated voice and electronic brokerage services including price discovery, trade execution, straight-through processing, and clearing and settlement to wholesale market participants worldwide. BGC is active in the global fixed income, rates, foreign exchange, equity derivatives, credit derivatives, futures and structured product markets.

BGC Partners also owns 25 percent of ELX Futures, L.P. and provides the technology for the exchange, which was based on BGC’s former eSpeed platform. BGC sold eSpeed to NASDAQ OMX in 2013.

NASDAQ OMX Group Inc. acquired the eSpeed platform from BGC in April of 2013, in a cash-and-stock deal worth about $1.23 billion. BGC said the one-time gain from the $750 million upfront payment was expected to increase its per-share earnings, but would not be included in its results for distributable earnings.[1]

The deal prohibited BGC from competing in the space for three years. In November of 2016, with the non-compete period over, the Financial Times reported that BGC plans to launch a new platform to trade U.S. Treasuries in the first quarter of 2017. [2]

As part of a plan to separate its real estate services business into a separate public company, in February of 2017 BGC Partners submitted a draft registration statement to the SEC relating to a proposed initial public offering of a new subsidiary, operating as Newmark Grubb Knight Frank (NGKF), that will hold its real estate services business.[3]

History

BGC’s origins date back to 1945 when B. Gerald Cantor founded what became Cantor Fitzgerald, a brokerage service for inter-dealer fixed income markets.

BGC was separated from Cantor Fitzgerald in 2004 and has since expanded to 18 offices worldwide with approximately 1300 brokers and over 2100 employees. In 2005, BGC merged with Maxcor Financial Group. This was followed by the acquisitions of ETC Pollak and Aurel in Paris.

On Apr. 1, 2008, BGC merged with eSpeed to form a provider of voice and electronic brokerage services in the global marketplace. The combined company is BGC Partners, Inc. (NASDAQ: BGCP). Cantor remains the largest and controlling shareholder in BGC. In 2008 BGC acquired Radix Energy in Singapore, and in June 2009 completed its acquisition of Brazilian inter-dealer broker Liquidez DTVM Ltda.

In May 2014 BGC acquired Remate Lince, S.A.P.I. de C.V. ("Remate"), one of Mexico's leading inter-dealer brokers.[4]

In July of 2016 BGC Partners agreed to buy the UK-based Sunrise Brokers, best known for offering bespoke equity derivatives intended to manage market risk.[5]

BGC acquired Besso Insurance Group Limited, an independent Lloyd's of London insurance broker, on February 28, 2017.

GFI Acquisition and Trayport Sale

In October 2014 BGC Partners launched a hostile $675 million takeover bid for GFI Group, a rival broker that had earlier agreed to be acquired by CME Group. BGC had acted after becoming frustrated with delays to the deal it was attempting to negotiate with GFI. BGC offered to buy the 86.5 per cent of shares in GFI it did not own in a deal that valued the interdealer broker at a tender offer of $5.25 a share. The main goal for both bidders was to gain ownership of GFI’s electronic energy and foreign exchange businesses, Trayport and Fenics.[6] On Nov. 19, 2014, BGC received approval from the FCA to acquire control of GFI after having "resolved matters" with the FCA regarding exceeding a 10% stake in GFI Group Inc. without first informing and seeking the FCA's approval.[7]

BGC's interest in the deal first came to light in September 2014. BGC had made overtures to GFI in past years that had not been accepted, including one around the same time as the CME Group deal.[8] BGC currently owns about 13.5 percent of GFI.[9]

In December 2014 the CME Group increased its offer to buy GFI Group to $5.25 per share from $4.55 per share of CME stock.[10] BGC urged GFI shareholders to reject CME Group's offer and accept BGC's cash offer of $5.45 a share.[11] Days later CME raised its offer again, to $5.85 a share in cash and stock, and BGC raised its all-cash offer to $6.10 a share.[12]

On January 30, 2015 GFI shareholders rejected the CME's offer, leaving BGC as the sole bidder, [13] and in February GFI’s board of directors agreed to accept BGC’s tender offer of $6.10 a share in cash. Based on 127.5 million shares outstanding, the transaction valued GFI at about $778 million.[14]

In November 2015, IntercontinentalExchange agreed to acquire Trayport from BGC Partners for about $650m (£427m) in stock.[15]

On January 12, 2016, BGC announced it had completed its merger with GFI Group.[16]

Products and Services

  • BGC Partners offers fixed income securities, interest rate swaps, foreign exchange, equities, equity derivatives, credit derivatives, commercial real estate, commodities, futures, and structured products.
  • BGC's services include trade execution, broker-dealer services, clearing, processing, information, and other back-office services.
  • BGCTrader, launched in 2006, is a multi-asset front-end for the inter-bank and broker community to support products including fixed income, European corporate cash, FX options, and credit default swaps (both single name and i-Traxx).
  • BGCantor Market Data is a source of real-time, indicative, end-of-day and historical fixed income, foreign exchange, and derivative pricing from eSpeed and BGC Partners. In April 2008, when eSpeed merged with BGC to form BGC Partners, Inc., Cantor Market Data became BGCantor Market Data as part of the combined firm. BGCantor Market Data provides data based on over $400 billion of daily fixed income transactions.[17]
  • On July 22 2009, BGC Partners announced the addition of a precious metals desk to work alongside its existing base metals desk and to provide broking services in options, forwards, IRS, EFP, and NYMEX Clearport products.[18]
  • In September of 2013 BGC filed an application with the CFTC to become a Swap Execution Facility (SEF).[19] Its registration was granted temporary approval as of September 19, 2013, operating under the name BGC Derivative Markets. In October 2014, ex-Javelin CEO James Cawley was named CEO. Angelo Toglia, who had been the interim CEO of BGC Derivative Markets, assumed the role of chief operating officer.[20]
  • In February 2015 BGC launched BGC Trader for Yen Interest Rate Swaps ("IRS"), becoming the first interdealer broker to launch a fully electronic platform for the Yen IRS market.[21]

Vendor Connectivity

BGC Partners launched its preferred vendor program in 2008, for the first time allowing independent software vendors (ISVs) to connect directly to BGC’s electronic trading platform, eSpeed, for U.S. Treasuries. Current ‘preferred vendors’ include: RTS Realtime Systems, CQG, Ullink, Broadway Technology, First Derivatives, Orc Software, Trading Screen, List Group and Progress Apama.

Key People

References

  1. Nasdaq OMX to Acquire eSpeed Platform for Up to $1.23 Billion. The Wall Street Journal.
  2. BGC Partners eyes new platform to trade US Treasuries. The Financial Times.
  3. BGC Partners planning IPO of real estate services business. Property Funds World.
  4. BGC Partners Announces Close Of Acquisition Of Mexican Inter-Dealer Broker Remate Lince, S.A.P.I. de C.V.. Digital Journal.
  5. BGC Partners set to snap up UK's Sunrise Brokers. The Financial Times.
  6. BGC launches hostile $675m offer for rival GFI. The Financial Times.
  7. BGC Announces It Has Resolved Matters with the FCA. BGC Partners.
  8. BGC Partners to Make Bid For Rival Broker GFI. The Wall Street Journal.
  9. GFI Rallied Before BGC Revealed Hostile Takeover Offer. Bloomberg.
  10. CME Boosts Offer for GFI Group. The Wall Street Journal.
  11. BGC Urges Shareholders to Spurn Competing CME Takeover Bid. Bloomberg.
  12. CME Group, BGC Again Raise Bids for Broker-Dealer GFI. The Wall Street Journal.
  13. CME Group and GFI Group Terminate Merger Agreement. CME Group.
  14. Howard Lutnick's BGC Wins Fight to Acquire Broker GFI. Bloomberg News.
  15. ICE beats CME to Trayport with $640m deal. The Financial Times.
  16. BGC Partners Completes Full Merger With GFI Group. BGC press release via PR Newswire.
  17. BGCantor Market Data. Trinity Exchange.
  18. BGC Partners Expands Commodities. BGC Partners.
  19. BGC Partners Files Swap Execution Facility with the CFTC. BGC Partners.
  20. BGC appoints James Cawley CEO of swap execution facility unit. Reuters.
  21. BGC Becomes The First Interdealer Broker to Launch an Electronic Platform For the Yen IRS Market. PR Newswire.