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MarketScreener Homepage  >  Equities  >  Nasdaq  >  BGC Partners, Inc.    BGCP

BGC PARTNERS, INC.

(BGCP)
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BGC PARTNERS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/10/2020 | 06:28am EST
The following discussion of BGC Partners' financial condition and results of
operations should be read together with BGC Partners, Inc.'s unaudited condensed
consolidated financial statements and notes to those statements, as well as the
cautionary statements relating to forward-looking statements within the meaning
of Section 27A of the Securities Act, and Section 21E of the Exchange Act,
included in this report. When used herein, the terms "BGC Partners," "BGC," the
"Company," "we," "us" and "our" refer to BGC Partners, Inc., including
consolidated subsidiaries.

This discussion summarizes the significant factors affecting our results of operations and financial condition as of and during the three and six months ended June 30, 2020 and 2019. This discussion is provided to increase the understanding of, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this report.

OVERVIEW AND BUSINESS ENVIRONMENT

We are a leading global brokerage and financial technology company servicing the global financial markets.


Through brands including BGC®, GFI®, Sunrise™, Besso™, Ed Broking®, Poten &
Partners™ and RP Martin™, among others, our businesses specialize in the
brokerage of a broad range of products, including fixed income such as
government bonds, corporate bonds, and other debt instruments, as well as
related interest rate derivatives and credit derivatives. We also broker
products across FX, equities, energy and commodities, shipping, insurance, and
futures. Our businesses also provide a wide variety of services, including trade
execution, brokerage services, clearing, trade compression, post-trade,
information, and other back-office services to a broad assortment of financial
and non-financial institutions. Our integrated platform is designed to provide
flexibility to customers with regard to price discovery, execution and
processing of transactions, and enables them to use Voice, Hybrid, or in many
markets, Fully Electronic brokerage services in connection with transactions
executed either OTC or through an exchange. Through our Fenics® group of
electronic brands, we offer a number of market infrastructure and connectivity
services, Fully Electronic marketplaces, and the Fully Electronic brokerage of
certain products that also may trade via Voice and Hybrid execution. The full
suite of Fenics® offerings include Fully Electronic brokerage, market data and
related information services, compression and other post-trade services,
analytics related to financial instruments and markets, and other financial
technology solutions. Fenics® brands operate under the names Fenics®, BGC
Trader™, CreditMatch®, Fenics MD™, BGC Market Data™, kACE2®, EMBonds®,
Capitalab®, Swaptioniser®, CBID® and Lucera®.

We previously offered real estate services through our publicly traded subsidiary, Newmark (NASDAQ: NMRK). On November 30, 2018, we completed the Spin-Off of Newmark.


BGC, BGC Partners, BGC Trader, GFI, GFI Ginga, CreditMatch, Fenics, Fenics.com,
Sunrise Brokers, Besso, Ed Broking, Poten & Partners, RP Martin, kACE2, EMBonds,
Capitalab, Swaptioniser, CBID, and Lucera are trademarks/service marks, and/or
registered trademarks/service marks of BGC Partners, Inc. and/or its affiliates.

Our customers include many of the world's largest banks, broker-dealers,
investment banks, trading firms, hedge funds, governments, corporations, and
investment firms. We have dozens of offices globally in major markets including
New York and London, as well as in Bahrain, Beijing, Bermuda, Bogotá, Brisbane,
Buenos Aires, Chicago, Copenhagen, Dubai, Dublin, Frankfurt, Geneva, Hong Kong,
Houston, Istanbul, Johannesburg, Madrid, Melbourne, Mexico City, Moscow, Nyon,
Paris, Rio de Janeiro, Santiago, São Paulo, Seoul, Shanghai, Singapore, Sydney,
Tel Aviv, Tokyo and Toronto.

As of June 30, 2020, we had over 2,800 brokers, salespeople, managers and other front-office personnel across our businesses.

Newmark IPO, Separation and Spin-Off


On November 30, 2018, we completed the Spin-Off of the shares of Newmark Class A
and Class B common stock held by us to our stockholders as of the close of
business on the Record Date through a special pro-rata stock dividend pursuant
to which shares of Newmark Class A common stock held by BGC were distributed to
holders of BGC Class A common stock and shares of Newmark Class B common stock
held by BGC were distributed to holders of BGC Class B common stock (which
holders of BGC Class B common stock were Cantor and another entity controlled by
our CEO, Howard W. Lutnick). Following the Spin-Off, BGC no longer holds any
interest in Newmark. See Note 1-"Organization and Basis of Presentation" to our
consolidated financial statements in Part II, Item 8 of our Annual Report on
Form 10-K for the year ended December 31, 2019, for further information
regarding the transactions related to the Newmark IPO, Separation and Spin-Off.

GFI Merger


On January 12, 2016, we completed our acquisition of GFI, a leading intermediary
and provider of trading technologies and support services to the global OTC and
listed markets, via the GFI Merger. GFI serves institutional clients in
operating electronic and hybrid markets for cash and derivative products across
multiple asset classes.

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Nasdaq Transaction


On June 28, 2013, we completed the sale of certain assets to Nasdaq, which
purchased certain assets and assumed certain liabilities from us and our
affiliates, including the eSpeed brand name and various assets comprising the
Fully Electronic portion of our benchmark on-the-run U.S.Treasury brokerage,
market data and co-location service businesses. Refer to "Nasdaq Transaction"
under "Overview and Business Environment" in Item 7 of our Annual Report on Form
10-K for the year ended December 31, 2019 for further information.

Fully Electronic (Fenics) and Hybrid Execution


For the purposes of this document and subsequent SEC filings, all of our Fully
Electronic businesses are referred to as Fenics. The Fenics business includes
our group of electronic brands offering a number of Fully Electronic
marketplaces, market infrastructure and connectivity services, and the Fully
Electronic brokerage of certain products that also may trade via Voice and
Hybrid execution. In addition, our Fenics offerings include market data and
related information services, compression and other post-trade services,
analytics related to financial instruments and markets, and other financial
technology solutions.

Historically, our technology-based product growth has led to higher margins and
greater profits over time for exchanges and wholesale financial intermediaries
alike, even if overall Company revenues remain consistent. This is largely
because automated and electronic trading efficiency allows the same number of
employees to manage a greater volume of trades as the marginal cost of
incremental trading activity falls. Over time, the conversion of exchange-traded
and OTC markets to Fully Electronic trading has also led, on average, to an
increase in volumes which offset commission declines, and thus often to similar
or higher overall revenues. We have been a pioneer in creating and encouraging
Hybrid and Fully Electronic execution, and we continually work with our
customers to expand such trading across more asset classes and geographies.

Outside of U.S. Treasuries and spot FX, the banks and financial firms that
dominate the OTC markets had, until recent years, generally been hesitant in
adopting electronically traded products. However, the banks, broker-dealers, and
other professional trading firms are now much more active in Hybrid and Fully
Electronically traded markets across various OTC products, including credit
derivative indices, FX derivatives, non-U.S. sovereign bonds, corporate bonds,
and interest rate derivatives. These electronic markets have grown as a
percentage of overall industry volumes for the past few years as firms like BGC
have invested in the kinds of technology favored by our customers. Regulation in
Asia, Europe and the U.S. regarding banking, capital markets, and OTC
derivatives has accelerated the adoption of Fully Electronic execution, and we
expect this to continue. We also believe that new clients, beyond our large bank
customer base, will primarily transact electronically across our Fenics
platforms.

The combination of more market acceptance of Hybrid and Fully Electronic
execution and our competitive advantage in terms of technology and experience
has contributed to our strong gains in electronically traded products. We
continue to invest in Hybrid and Fully Electronic technology broadly across our
product categories, not only expanding existing product pools but also launching
new platforms with market leading protocols and functionality, which we believe
will be game changing in the sector. Fenics has exhibited strong growth over the
past several years, and we believe that this growth has outpaced the wholesale
brokerage industry as a whole. We expect this trend to accelerate as we convert
more of our Voice and Hybrid execution into Fully Electronic execution across
our Fenics platforms.

We expect to benefit from the secular trend towards electronic trading,
increased demand for market data, and the need for increased automation and
post-trade services. We continue to onboard new customers as the opportunities
created by electronic and algorithmic trading continue to transform our
industry. We continue to roll out our next-gen Fenics brokerage platforms across
more products and geographies with the goal of seamlessly integrating Voice
liquidity with customer electronic orders either by a graphical user interface
or application programming interface, and we expect to have continued success
converting Voice/Hybrid desks over time as we roll out these platforms across
more products and geographies.

We have continued to invest in our newer Fenics stand-alone Fully Electronic offerings, which currently include:

• Fenics GO, our new electronic trading platform, which provides live,

real-time and tradeable two-way electronic liquidity for exchange-listed

futures and options, such as Eurex EURO STOXX 50 Index Options, NIKKEI

225, and related Delta One strategies. In January of this year, Fenics GO

added Citadel Securities, who joined IMC, Maven Securities, and Optiver as

electronic liquidity providers. During the second quarter of 2020, our

        Fenics GO fully electronic options trading platform doubled its volumes;


    •   Fenics UST, which generated notional volume growth of more than 70%

year-on-year in the second quarter of 2020. This compares with an increase

of 10% for overall primary dealer U.S.Treasury volumes. Primary dealer

volumes are based on data from the Securities Industry and Financial

Markets Association. Fenics UST is now the second largest CLOB platform

        for U.S. Treasuries. CLOB market share is based on BGC's estimates and
        data from Greenwich Associates for the U.S.Treasury volumes of Fenics
        UST, CME BrokerTec, Nasdaq Fixed Income, and Tradeweb's Dealerweb
        platform. Including these CLOB platforms as well as the volumes of

platforms using other fully electronic U.S.Treasury trading protocols,

Fenics UST increased its market share from 2.8% to 4.9% year-on-year in

June 2020, per Greenwich Associates. We are rolling out significant

technological innovations to our system this quarter, which we expect to

result in increased volumes and an expansion of our client base for Fenics

UST;

• Our expanded Fenics FX platforms, including MidFX, Spot, FX Options, and

non-deliverable and FX forwards;

• Lucera, which is our software-defined network, offering the trading

        community direct connectivity to each other;


    •   Capitalab's Nikkei 225 options compression service, which is in
        partnership with the Singapore Exchange; and


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Algomi, acquired in March 2020, which provides technology aggregating

buy-side clients' access to venues, trading counterparties and exchanges.

This subscription SaaS improves their workflow and liquidity through data

aggregation, pre-trade information analysis, and execution facilitation.

We are integrating this business with our existing Lucera SaaS

connectivity subscription service in order to provide both data and

execution capabilities directly between banks/dealers and their buy-side

customers.



Collectively, our newer Fenics offerings, such as those listed above, are not
yet fully up to scale, and are not yet generating significant revenues. BGC
continues to expect the 2020 net investment cost associated with its newer
standalone Fenics businesses to be under $40 million and continues to expect
these businesses will breakeven in 2021. Over time, we expect these new products
and services to become profitable, high-margin businesses as their scale and
revenues increase, all else equal.

During the second quarter of 2020, we introduced Fenics Integrated, which
seamlessly integrates hybrid liquidity with customer electronic orders either by
GUI and/or API. Desks are categorized as "Fenics Integrated" if they utilize
sufficient levels of technology such that significant amounts of their
transactions can be or are executed without broker intervention and have
expected pre-tax margins meaningfully higher than other broking desks. Fenics
brokerage revenues include revenues from Fenics Integrated from the second
quarter of 2020 onward. We believe that Fenics Integrated will enhance profit
margins by further incentivizing our brokers and clients to automate execution
and create superior real-time information and improve the robustness and value
of Fenics Market Data, which will accelerate our growth rate.

Net revenues in our Fully Electronic businesses across brokerage, data,
software, and post-trade increased 9.4% to $78.5 million and 3.7% to $154.0
million for the three and six months ended June 30, 2020, respectively, compared
to the prior year periods. Within our Fenics business, total revenues from our
high-margin data, software, and post-trade business were up 7.5% and 7.9% for
the three and six months ended June 30, 2020, respectively, over the prior year
periods, primarily driven by predictable and recurring revenue streams. Going
forward, we expect Fenics to become an even more valuable part of BGC as it
continues to grow. We continue to analyze how to optimally configure our
Voice/Hybrid and Fully Electronic businesses.

Possible Corporation Conversion


The Company continues to explore a possible conversion into a simpler corporate
structure. An important factor will be any significant change in taxation policy
in any of the major jurisdictions in which the Company operates and its
stakeholders reside, particularly the United States whose tax policies are
likely to be affected by the outcome of the elections this November. This
quarter, the Company will begin to work with regulators, lenders, and rating
agencies regarding any possible conversion. BGC's board committees will review
potential transaction arrangements.

Cost Reduction Program


The Company is continuing to examine how best to operate our business with the
goal of reducing expenses. During the first quarter of 2020, we implemented a
cost reduction program to reduce our compensation-related cost base and
streamline our operations, which resulted in $6.8 million and $29.5 million of
U.S. GAAP compensation charges recorded in the three and six months ended June
30, 2020, respectively. This program is expected to reduce the Company's
compensation expenses by over $35.0 million in 2020. U.S. GAAP items recorded
may include:

• Certain severance charges incurred in connection with headcount reductions

as part of a broad cost reduction program; and

• Certain compensation and non-compensation-related charges incurred as part

        of a broad cost reduction program. Such U.S. GAAP items may include
        charges for exiting leases and/or other long-term contracts as part of
        cost-saving initiatives.

Financial Services Industry


The financial services industry has grown historically due to several factors.
One factor was the increasing use of derivatives to manage risk or to take
advantage of the anticipated direction of a market by allowing users to protect
gains and/or guard against losses in the price of underlying assets without
having to buy or sell the underlying assets. Derivatives are often used to
mitigate the risks associated with interest rates, equity ownership, changes in
the value of FX, credit defaults by corporate and sovereign debtors, and changes
in the prices of commodity products. Over this same timeframe, demand from
financial institutions, financial services intermediaries and large corporations
have increased volumes in the wholesale derivatives market, thereby increasing
the business opportunity for financial intermediaries.

Another key factor in the historical growth of the financial services industry
has been the increase in the number of new financial products. As market
participants and their customers strive to mitigate risk, new types of equity
and fixed income securities, futures, options and other financial instruments
have been developed. Most of these new securities and derivatives were not
immediately ready for more liquid and standardized electronic markets, and
generally increased the need for trading and required broker-assisted execution.

Due largely to the impacts of the global financial crises of 2008-2009, our
businesses had faced more challenging market conditions from 2009 until the
second half of 2016. Accommodative monetary policies were enacted by several
major central banks, including the Federal Reserve, Bank of England, Bank of
Japan and the European Central Bank, in response to the global financial crises.
These policies have resulted in historically low levels of volatility and
interest rates across many of the financial markets in which we operate. The
global

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credit markets also faced structural issues, such as increased bank capital
requirements under Basel III. Consequently, these factors contributed to lower
trading volumes in our rates and credit asset classes across most geographies in
which we operated.

From mid-2016 until the first quarter of 2020, the overall financial services
industry benefited from sustained economic growth, a lower unemployment rate in
most major economies, higher consumer spending, the modification or repeal of
certain U.S. regulations, and higher investment income. In addition, the secular
trend towards digitalization and electronification within the industry
contributed to higher overall volumes and transaction count in Fully Electronic
execution. From the second quarter of 2020 onward, concerns about the future
trade relationship between the U.K. and the EU after Brexit, a slowdown in
global growth driven by the outbreak of COVID-19, and an increase in trade
protectionism are tempered by expectations of monetary and fiscal stimulus.

COVID-19

Impact of COVID-19 on Employees


As a global intermediary to financial markets, BGC has been considered an
essential business in many of its various global locations where key employees
are thus able to operate out of its primary offices around the world. The
Company has nonetheless taken proactive measures intended to protect its
employees and clients during this global pandemic. These policies and practices
seek to protect the health, safety and welfare of the Company's workforce while
enabling employees to maintain a high level of performance. Certain of these
items are summarized below:

• The Company activated its Business Continuity Plan in the first quarter of

      2020. While a majority of the front office personnel are working in a firm
      office currently, a majority of BGC staff members continue to work from

home, or other remote locations and disaster recovery venues. In all cases,

the Company has mandated appropriate social distancing measures.

• The Company provides ongoing informational COVID-19 related messages and

notices.

• Where applicable, BGC is applying more frequent and vigorous cleaning and

      sanitation measures and providing personal protective equipment (PPE).


   •  Internal and external meetings are generally conducted virtually or via

phone calls.

• Non-essential business travel, has been restricted since the beginning of

      March this year, particularly to areas most affected by the pandemic.


   •  BGC has deferred and is continuing to defer corporate events and
      participation in industry conferences.

• BGC is deploying clinical staff internally to support its employees and

requiring self-quarantine.

• The Company's medical plans have waived applicable member cost sharing for

      all diagnostic testing related to COVID-19.


   •  BGC continues to pay medical, dental, vision, and life insurance
      contributions for furloughed employees.

• The Company also introduced zero co-pay telemedicine visits for general

medicine for participants in the U.S. medical plans and their dependents.

BGC has encouraged the use of telemedicine during the pandemic.

• The Company has reminded employees about its Employee Assistance Program and

the ways it can assist them during this challenging time.

• BGC provides paid leave in accordance with its policies and applicable

COVID-19-related laws and regulations.



We continue to take significant steps to protect our employees. Even as
re-opening continues for some workers and in some locations, changes in state
work orders and virus spread may impact work arrangements of our employees,
vendors and clients for the foreseeable future. While we have taken significant
precautions to protect employees who work in our offices, no assurance can be
given that measures will contain the spread of the virus.

Impact of COVID-19 on the Company's Results

Revenues

Voice/Hybrid and/or Fully Electronic Brokerage

Our revenues were adversely impacted in the second quarter of 2020 by the continued dislocations faced by BGC and our clients due to COVID-19 and lower industry volumes in rates and foreign exchange, which reflected the massive quantitative easing undertaken by several major central banks and uniformly lower global interest rates.


In the second quarter of 2020, certain of the Company's rates, FX, and credit
businesses were adversely impacted by a global decline in activity across
emerging market products, while historically low prices reduced demand for
hedging and increased risk aversion across energy and commodities. In addition,
global activity across rates and foreign exchange were broadly lower
year-on-year during the quarter. BGC's equities business is mainly focused on
European equity derivatives, where it outperformed in its core markets and
gained share, despite a decline in certain relevant industry-wide European
volumes.

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Certain key items are summarized below:

• Revenues across rates, credit, FX, equities, energy, and commodities are

generally correlated with corresponding industry volumes.

• The elevated levels of government and corporate debt issuance currently

      underway are expected to benefit BGC's rates and credit businesses in the
      long-term.

• Conversely, additional quantitative easing measures taken by central banks

around the world have lowered and may continue to lower market volumes.

• Uniformly low or negative interest rates in many major economies have

negatively impacted and may continue to negatively impact global rates and

FX volumes.

• An extended period of historically low oil prices and demand for commodities

has led and may continue to lead to lower demand for hedging and increased

risk aversion, which has lowered and may continue to lower market volumes

across energy and commodities.



Although we have been challenged by the pandemic, we believe that the massive
issuance of global debt in the world will eventually be a tailwind driving our
voice business for the long term.

Overall Fenics

• BGC's stand-alone Fenics technology platforms maintained their strong

momentum in the second quarter of 2020.

Fenics has benefited and is expected to continue to benefit from secular

trend towards electronic execution and opportunities created by algorithmic

trading and automation.

• BGC's clients have indicated that the dislocations caused by COVID-19 has

resulted in an even greater demand for the Company's electronic execution.

      The driver of this demand is the best-in-class market liquidity that only
      integrated global firms like BGC can provide.

• This benefit may be tempered by temporary shifts by traders toward Voice

execution in certain markets during periods of extreme market turbulence.

• The pace of adoption of certain financial technology offerings may slow in

the short-term due to physical dislocations experienced by BGC's employees

      and clients. The Company's medium-to longer-term overall strategy with
      respect to Fenics is not expected to be impacted.

• BGC's data, software, connectivity, and post-trade business includes a large

percentage of predictable and recurring revenues.

Insurance Brokerage

• The insurance brokerage industry typically generates significant amounts of

predictable revenues at specific times of the year as different categories

of clients sign or renew policies.

• Although certain clients may be facing financial hardship or dislocation due

to the pandemic, the insurance brokerage industry has generally performed

well during past economic downturns.

• BGC expects certain insurance market participants to have an even greater

demand for the types of policies it brokers.

• BGC's insurance brokerage business generated organic growth in the second

      quarter of 2020 as previously hired brokers and salespeople ramped up
      production and the business benefited from favorable pricing trends for
      insurance renewals.


Expenses

BGC's compensation expenses declined in the second quarter of 2020 primarily due
to the impact of lower revenues on variable compensation. BGC's non-compensation
expenses declined largely due to lower selling and promotion expenses and
commissions and floor brokerage, which tend to move in line with commission
revenues. Selling and promotion expenses were much lower due to a significant
decrease in travel and entertainment expenses as a result of the pandemic.

BGC has recorded or may potentially record amounts for certain expenses that are higher than they otherwise would have been due to the overall impact of the pandemic. Some of these items include:

   •  Non-cash asset impairment charges with respect to goodwill or other
      intangible assets;


  • Non-cash mark-to-market adjustments for non-marketable investments;

• Certain severance charges incurred in connection with headcount reductions

as part of a broad cost reduction program;

• Certain compensation and non-compensation-related charges incurred as part

of a broad cost reduction program. Such U.S. GAAP items may include charges

for exiting leases and/or other long-term contracts as part of cost-saving

initiatives;

• Expenses relating to setting up and maintaining remote and/or back-up

locations; and

• Communication expenses related to additional voice and data connections.



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Some of the above items may be partially offset by certain tax benefits. It is
difficult to predict the amounts of any these items or when they might be
recorded because they may depend on the duration, severity, and overall impact
of the pandemic.

Capital and Liquidity

With the outbreak of COVID-19, we reduced our dividend and focused on
strengthening our balance sheet. Effective with the first quarter dividend, the
Board took the step of reducing the quarterly dividend out of an abundance of
caution in order to strengthen the Company's balance sheet as the global capital
markets face difficult and unprecedented macroeconomic conditions. On July 29,
2020, our Board declared a 1 cent dividend for the second quarter. Additionally,
BGC Holdings reduced its distributions to or on behalf of its partners. The
distributions to or on behalf of partners will at least cover their related tax
payments. Whether any given post-tax amount is equivalent to the amount received
by a stockholder also on an after-tax basis depends upon stockholders' and
partners' domiciles and tax status. BGC believes that these steps will allow the
Company to prioritize its financial strength. Early next year we expect to
announce our capital return policy, focused on increasing our dividend and
detailing our share repurchase plan. Previously we were deeply dividend-centric,
going forward we plan to consider both share buybacks and dividends.

The balance sheet as of June 30, 2020 reflects the paydown of $75.0 million of
the revolving credit facility, ordinary movements in working capital, cash paid
with respect to annual employee bonuses, taxes, and our continued investment in
stand-alone Fenics products and our insurance brokerage businesses.  In
addition, on July 10, 2020, we issued an aggregate of $300.0 million principal
amount of 4.375% Senior Notes, and intend to use the net proceeds from the
4.375% Senior Notes is to redeem and/or repay at maturity the 5.125% Senior
Notes due 2021. We continue to manage our business with a focus on its
investment grade ratings.

Brexit


On June 23, 2016, the U.K. held a referendum regarding continued membership in
the EU. The exit from the EU is commonly referred to as Brexit. The Brexit vote
passed by 51.9% to 48.1%. The U.K. subsequently formally left the EU on January
31, 2020, but its relationship with the bloc will remain in a transition period
until December 31, 2020. During this period, the U.K. will, with some
exceptions, remain subject to EU law. It will also maintain access to the EU's
single market.

The U.K. and EU are currently negotiating a trade deal which, if concluded,
should determine the new bilateral trade relationship going forward. In case no
new trade deal (or one incorporating financial services) is in place by the end
of the transition period, absent mitigating legislative measures, this could
hinder current levels of mutual market access. While other trade deals are being
considered, for example between the U.K. and the U.S., these may also prove
challenging to negotiate and may not replace or compensate for a reduction, if
any, in U.K. and EU trade at least in the short term. Further, the terms of a
U.K. and EU trade deal may adversely impact the negotiation and terms of such
other deals and vice versa.

Given the current uncertainty around the future trade relationship, the
consequences for the economies of the U.K. and the EU member states as a result
of the U.K.'s withdrawal from the EU are unknown and unpredictable. Given the
lack of comparable precedent, it is unclear what the broader macro-economic and
financial implications the U.K. leaving the EU with no agreements in place would
have.

This uncertainty could adversely impact investor confidence which could result
in additional market volatility. Historically, elevated volatility has often led
to increased volumes in the financial services markets in which we broker, which
could be beneficial for our businesses. At other times, increased volatility has
led to many market participants curtailing trading activity. Furthermore, any
future trade deal might lead to a fragmented regulatory environment, which could
disrupt our operations, increase the costs of our operations, and result in a
loss of existing levels of cross-border market access. We have implemented plans
to ensure continuity of service in Europe and continue to have regulated
entities and offices in place in many of the major European markets. As part of
our Brexit strategy, ownership of BGC Madrid, Copenhagen and Frankfurt & GFI
Paris, Madrid and Dublin branches were transferred to Aurel BGC SAS in July
2020. Regardless of these and other mitigating measures, our European
headquarters and largest operations are in London, and these and other risks and
uncertainties could have a material adverse effect on our customers,
counterparties, businesses, prospects, financial condition and results of
operations.

Regulation


Regulators in the U.S. have finalized most of the new rules across a range of
financial marketplaces, including OTC derivatives, as mandated by the Dodd-Frank
Wall Street Reform and Consumer Protection Act. Many of these rules became
effective in prior years, while ongoing phase-ins are anticipated over coming
years. We believe that the November 2016 U.S. Presidential election results make
it possible that parts of the Dodd-Frank Act rules may be modified or repealed,
which could be a net positive for our business and its largest customers. Along
these lines, the U.S.Treasury, in a report released in June 2017, called for
streamlining of rules and easing regulatory burdens on banks. However, there can
be no assurance that these rules will be amended, and we continue to expect the
industry to be more heavily regulated than it was prior to the financial crisis
of 2008-2009, and we are prepared to operate under a variety of regulatory
regimes.

In addition to regulations in the U.S., legislators and regulators in Europe
have crafted similar rules; MiFID II, which made sweeping changes to market
infrastructure, European Market Infrastructure Regulation, which focused
specifically on derivatives, and Capital Requirements Directive IV for
prudential standards. Over the past years, European policymakers have launched
various reviews of post-crisis legislation, leading to legislative updates such
as EMIR Regulatory Fitness and Performance and CRD V. Furthermore, they
introduced a

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new prudential regime tailored specifically to investment firms such as our firm
-the Investment Firm Review. As all these rules take effect, they will continue
to alter the environment in which we operate. We note that various internal and
external factors have made the EU more rigid in its approach to non-EU countries
which could impact the ease with which the global financial system is connected.

In 2019, a new European Commission took office which may over the course of its
five-year mandate or introduce new legislative proposals for the Financial
Services Sector. We are unable to predict how any of these new laws and proposed
rules and regulations in the U.S. or the U.K. will be implemented or in what
form, or whether any additional or similar changes to statutes or rules and
regulations, including the interpretation or implementation thereof or a
relaxation or other amendment of existing rules and regulations, will occur in
the future. Any such action could affect us in substantial and unpredictable
ways, including important changes in market infrastructure, increased reporting
costs and a potential rearrangement in the sources of available revenue in a
more transparent market. Certain enhanced regulations could subject us to the
risk of fines, sanctions, enhanced oversight, increased financial and capital
requirements and additional restrictions or limitations on our ability to
conduct or grow our businesses, and could otherwise have an adverse effect on
our businesses, financial condition, results of operations and prospects. We
believe that uncertainty and potential delays around the final form of such new
rules and regulations may negatively impact our customers and trading volumes in
certain markets in which we transact, although a relaxation of existing rules
and requirements could potentially have a positive impact in certain markets.
Increased capital requirements may also diminish transaction velocity.

BGC Derivative Markets and GFI Swaps Exchange, our subsidiaries, began operating
as SEFs on October 2, 2013. Both BGC Derivative Markets and GFI Swaps Exchange
received permanent registration approval from the CFTC as SEFs on January 22,
2016. Mandatory Dodd-Frank Act compliant execution on SEFs by eligible U.S.
persons commenced in February 2014 for "made available to trade" products, and a
wide range of other rules relating to the execution and clearing of derivative
products were finalized with implementation periods in 2016 and beyond. We also
own ELX, which became a dormant contract market on July 1, 2017. As these rules
require authorized execution facilities to maintain robust front-end and
back-office IT capabilities and to make large and ongoing technology
investments, and because these execution facilities may be supported by a
variety of voice and auction-based execution methodologies, we expect our Hybrid
and Fully Electronic trading capability to perform strongly in such an
environment.

In November 2018, the CFTC issued proposed rules that would significantly revise
CFTC Rule Part 37, which relates to SEFs. The proposed rules would significantly
affect the trading of swaps and the facilities offering swaps trading by
allowing for trading through "any means of interstate commerce" rather than the
two (central limit order book and request for quote) methods prescribed under
the current rules. The proposed rules may also expand the number and type of
swaps required to be executed on SEFs. If these rules are passed, our SEFs will
need to make numerous changes to facilitate trading under a new regulatory
framework. A new CFTC Chairman was sworn in on July 15, 2019, and this change in
leadership could impact these proposals.

On June 25, 2020, the CFTC approved a final rule prohibiting post-trade name
give-up for swaps executed, prearranged or prenegotiated anonymously on or
pursuant to the rules of a SEF and intended to be cleared. The rule provides
exemptions for package transactions that include a component transaction that is
not a swap that is intended to be cleared. The rule will go into effect on
November 1, 2020 for swaps subject to the trade execution requirement under the
Commodity Exchange Act Section 2(h)(8) and July 5, 2021 for swaps not subject to
the trade execution requirement, but intended to be cleared.

See "Regulation" included in Part I, Item 1 of our Annual Report on Form 10-K
for the year ended December 31, 2019 for additional information related to our
regulatory environment.

Industry Consolidation

In recent years, there has been significant consolidation among the
interdealer-brokers and wholesale brokers with which we compete. We expect to
continue to compete with the electronic markets, post-trade and information
businesses of NEX, that are part of CME now, through the various offerings on
our Fenics platform. We will also continue to compete with TP ICAP across
various Voice/Hybrid brokerage marketplaces as well as via Fenics. There has
also been significant consolidation among smaller non-public wholesale brokers,
including our acquisitions of RP Martin, Heat Energy Group, Remate Lince and
Sunrise Brokers Group. We view the recent consolidation in the industry
favorably, as we expect it to provide additional operating leverage to our
businesses in the future.

Growth Drivers


As a wholesale intermediary in the financial services industry, our businesses
are driven primarily by secondary trading volumes in the markets in which we
broker, the size and productivity of our front-office headcount including
brokers, salespeople, managers and other front-office personnel, regulatory
issues, and the percentage of our revenues we are able to generate by Fully
Electronic means. BGC's revenues tend to have low correlation in the short and
medium-term with global bank and broker-dealer sales and trading revenues, which
reflect bid-ask spreads and mark-to-market movements, as well as industry
volumes in both the primary and secondary markets.

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Below is a brief analysis of the market and industry volumes for some of our products, including our overall Hybrid and Fully Electronic execution activities.

Overall Market Volumes and Volatility


Volume is driven by a number of factors, including the level of issuance for
financial instruments, price volatility of financial instruments, macro-economic
conditions, creation and adoption of new products, regulatory environment, and
the introduction and adoption of new trading technologies. Historically,
increased price volatility has often increased the demand for hedging
instruments, including many of the cash and derivative products that we broker.

Rates volumes in particular are influenced by market volumes and, in certain
instances, volatility. Historically low and negative interest rates across the
globe have significantly reduced the overall trading appetite for rates
products. As a result of central bank policies and actions, as well as continued
expectations of low inflation rates, many sovereign bonds continue to trade at
or close to negative yields, especially in real terms. In addition, also
weighing on yields and rates volumes are global central bank quantitative easing
programs. The programs depress rates volumes because they entail central banks
buying government securities or other securities in the open market -
particularly longer-dated instruments - in an effort to promote increased
lending and liquidity and bring down long-term interest rates. When central
banks hold these instruments, they tend not to trade or hedge, thus lowering
rates volumes across cash and derivatives markets industry-wide. Following the
market dislocation and ongoing pandemic, major central banks such as the U.S.Federal Reserve, ECB, Bank of Japan, Bank of England, and Swiss National Bank
have or are expected to restart quantitative easing programs, and continue to
maintain historically low interest rates, keep key short-term interest rates
low, or a combination of both. The overall dollar value of balance sheets of the
G-4 (the U.S., Eurozone, Japan, and U.K.) is expected to go up and remain high
as a percentage of G-4 GDP over the medium-to-long-term. Largely as a result of
quantitative easing and expectations of continued low inflation, the yield on
Germany's 10-year bond was (0.456%) and the yield on Japan's 10-year bond was
0.020% as of the end of the second quarter of 2020.

Additional factors have weighed down market volumes in the products we broker.
For example, the Basel III accord, implemented in late 2010 by the G-20 central
banks, is a global regulatory framework on bank capital adequacy, stress testing
and market liquidity risk that was developed with the intention of making banks
more stable in the wake of the financial crisis by increasing bank liquidity and
reducing bank leverage. The accord, which is expected to be fully phased in as
of January 1, 2022, has already required most large banks in G-20 nations to
hold approximately three times as much Tier 1 capital as was required under the
previous set of rules. These capital rules have made it more expensive for banks
to hold non-sovereign debt assets on their balance sheets, and as a result,
analysts say that banks have reduced their proprietary trading activity in
corporate and asset-backed fixed income securities as well as in various other
OTC cash and derivative instruments. We believe that this has further reduced
overall market exposure and industry volumes in many of the products we broker,
particularly in credit.

During the three months ended June 30, 2020, industry volumes were higher
year-over-year across credit and commodities, generally lower across rates and
FX, and mixed across equities. BGC's brokerage revenues, excluding insurance,
were down by 8% year-on-year in the quarter. Below is an expanded discussion of
the volume and growth drivers of our various brokerage product categories.

Rates Volumes and Volatility


Our rates business is influenced by a number of factors, including global
sovereign issuances, secondary trading and the hedging of these sovereign debt
instruments. The amount of global sovereign debt outstanding remains high by
historical standards, and the level of secondary trading and related hedging
activity was lower during the second quarter of 2020. In addition, according to
Bloomberg and the Federal Reserve Bank of New York, the average daily volume of
various U.S. Treasuries, excluding Treasury bills, among primary dealers was 4%
lower in the second quarter of 2020 as compared to a year earlier. Additionally,
interest rate derivative volumes were down 17% and 41% at ICE and the CME,
respectively, all according to company press releases. In comparison, our
overall rates revenues were down 13.0% as compared to a year earlier to $133.0
million.

Our rates revenues, like the revenues for most of our products, are not fully
dependent on market volumes and, therefore, do not always fluctuate consistently
with industry metrics. This is largely because our Voice, Hybrid, and Fully
Electronic desks in rates often have volume discounts built into their price
structure, which results in our rates revenues being less volatile than the
overall industry volumes.

Overall, analysts and economists expect the absolute level of sovereign debt
outstanding to remain at elevated levels for the foreseeable future as
governments finance their future deficits and roll over their sizable existing
debt. Meanwhile, economists expect that the effects of various forms of
quantitative easing previously and currently being undertaken by the various
major central banks over the past several years will continue to negatively
impact financial market volumes, as economic growth remains weak in most OECD
countries. As a result, we expect long-term tailwinds in our rates business from
continuing high levels of government debt, but continued near-term headwinds due
to the current low interest rate environment and continued accommodative
monetary policies globally.

FX Volumes and Volatility


Global FX volumes were generally lower during the second quarter of 2020.
Volumes for CME FX futures and options and Refinitiv (formerly the Financial &
Risk business of Thomson Reuters), and EBS spot FX were down 17%, 5%, and 20%,
respectively, during the quarter. In comparison, our overall FX revenues
decreased by 27.0% to $74.4 million.

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Insurance


Our overall insurance brokerage business now includes Ed Broking, as well as our
newly established aviation and space insurance brokerage business, whose
producers are not yet generating meaningful revenue. Therefore, these newer
insurance businesses are not yet up to scale. The pre-tax loss relating to our
insurance brokerage business was $7.3 million and $15.8 million for the three
and six months ended June 30, 2020 and 2019, respectively. We expect reduced
insurance near-term earnings because of the scale of recent new hires. Over
time, we expect our expenses to decline as a percentage of revenues as the
insurance brokerage business improves its top line and we maintain our expense
discipline. We expect our insurance brokerage to operate profitably in 2021.

We believe that our insurance brokerage platform is worth materially more than
our investment in it. Our goal is to maximize value for our investors, and we
are exploring ways to do so with respect to this business.

Equities


Global equity volumes were mixed to up during the second quarter of 2020.
Research from Raymond James indicated that the average daily volumes of U.S.
cash equities and U.S. options were up 79% and 47%, respectively, as compared to
a year earlier, while average daily volume of European cash equities shares were
down 2% (in notional value). Over the same timeframe, Eurex average daily
volumes of equity derivatives were down 16% while Euronext equity derivative
index volumes declined by 19%. BGC's equities business is mainly focused on
European equity derivatives, where it outperformed in its core markets and
gained share, despite a decline in certain relevant industry-wide European
volumes. Our overall revenues from equities decreased by 5.1% to $61.8 million.

Credit Volumes


The cash portion of our credit business is impacted by the level of global
corporate bond issuance, while both the cash and credit derivatives sides of
this business are impacted by sovereign and corporate issuance. The global
credit derivative market turnover has declined over the last few years due to
the introduction of rules and regulations around the clearing of credit
derivatives in the U.S. and elsewhere, along with non-uniform regulation across
different geographies. In addition, many of our large bank customers continue to
reduce their inventory of bonds and other credit products in order to comply
with Basel III and other international financial regulations. During the second
quarter of 2020, primary dealer average daily volume for corporate bonds
(excluding commercial paper) was up by 63% according to Bloomberg and the
Federal Reserve Bank of New York. Total notional traded credit derivatives as
reported by the International Swaps and Derivatives Association - a reflection
of the OTC derivatives market - were up by 8%, from a year earlier. In
comparison, our overall credit revenues were increased by 22.5% to $95.8
million.

Energy and Commodities


Energy and commodities volumes were generally higher during the second quarter
of 2020 compared with the year earlier. According to the Futures Industry
Association, the total contracts traded in energy and commodities futures and
options were up 27% and down 1%, respectively, year-on-year in the quarter.
Historically low oil prices reduced demand for hedging and increased risk
aversion across energy and commodities. In comparison, BGC's energy and
commodities revenues decreased by 3.5% to $71.3 million.

Summary of Results of Operations


During the three and six months ended June 30, 2020, our revenues decreased
$32.1 million, or 5.8%, to $519.1 million and increased $26.3 million, or 2.4%,
to $1,122.3 million, respectively, compared to the same periods in 2019. These
results were largely due to our brokerage revenues, which were down by $31.3
million, or 6.1%, to $482.1 million and up $23.4 million, or 2.3%, to $1,051.3
million, respectively, for the three and six months ended June 30, 2020 compared
to the same periods in 2019. In addition, our revenues decreased $84.1 million,
or 13.9%, during the three months ended June 30, 2020 as compared to the three
months ended March 31, 2020, driven by a decrease in brokerage revenues of $87.1
million, or 15.3%, during the three months ended June 30, 2020 as compared to
the three months ended March 31, 2020. Our results for the three months ended
June 30, 2020 were adversely impacted by the continued dislocations faced by us
and our clients due to COVID-19 and lower industry volumes in rates and foreign
exchange, which reflected massive quantitative easing undertaken by several
major central banks and uniformly lower global interest rates, and the impact of
the relative strengthening of the U.S. dollar. Further, our data, software, and
post-trade revenues increased by 7.5% to $20.1 million and 7.9% to $39.5 million
for the three and six months ended June 30, 2020, respectively, compared to the
same periods in 2019, which was driven by predictable and recurring revenue
streams.

For the three months ended June 30, 2020, income from operations before income
taxes increased by $11.4 million, or 31.1%, to $48.2 million compared to the
same period in 2019, primarily due to a decrease of $40.6 million, or 7.9%, in
our expenses more than offsetting the decline in revenues. This was led by a
$15.9 million decrease in Equity-based compensation and allocations of net
income to limited partnership units and FPUs, a decrease of $6.6 million in
Compensation and employee benefits primarily driven by the impact of lower
commission revenues on variable compensation, and a decrease of $14.9 million in
Selling and promotion expenses driven by significantly lower travel and
entertainment expenses as a result of the pandemic, as compared to the same
period in the prior year.

For the six months ended June 30, 2020, income from operations before income
taxes decreased by $75.9 million, or 49.3%, to $77.9 million compared to the
same period in 2019, primarily due to a $44.1 million decrease in Other income
(losses), net driven by a $18.4

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million gain on the divestiture of CSC Commodities and gains of $20.4 million
related to fair value adjustments on investments during the 2019 period, and a
$50.1 million increase in Compensation and employee benefits, primarily driven
by $29.5 million of charges taken in the 2020 period associated with our cost
reduction program as well as the impact of higher commission revenues on
variable compensation compared to the same period in the prior year. These
reductions to income from operations before income taxes for the six months
ended June 30, 2020, compared to the prior year period, were partially offset by
a decrease of $14.6 million in Selling and promotion expenses primarily due to
the impact of the pandemic.

For the three months ended June 30, 2020, income from operations before income
taxes increased by $18.5 million, or 62.1%, to $48.2 million compared to the
three months ended March 31, 2020, primarily due to a decrease of $95.3 million,
or 16.8%, in our expenses more than offsetting the decline in revenues. This was
principally a result of a $61.3 million decrease in Compensation and employee
benefits, primarily driven by the impact of lower commission revenues on
variable compensation, which reflected lower industry volumes and the continued
dislocations faced by us and our clients due to COVID-19, as well as our
initiative in reducing the Company's cost base to improve margins which was in
effect prior to the pandemic, and a $14.4 million decrease in Equity-based
compensation and allocations of net income to limited partnership units and FPUs
due to lower grants of exchangeability and issuance of Class A common stock. In
addition, Selling and promotion expenses decreased $12.1 million for the three
months ended June 30, 2020 compared to the three months ended March 31, 2020,
due to significantly lower travel and entertainment expenses as a result of the
pandemic.

REGULATORY ENVIRONMENT

See "Regulation" in Part I, Item 1 of our Annual Report on Form 10-K for additional information related to our regulatory environment.

LIQUIDITY

See "Liquidity and Capital Resources" herein for information related to our liquidity and capital resources.

HIRING AND ACQUISITIONS


Key drivers of our revenue are front-office producer headcount and average
revenue per producer. We believe that our strong technology platform and unique
compensation structure have enabled us to use both acquisitions and recruiting
to profitably increase our front-office staff at a faster rate than our largest
competitors since our formation in 2004.

We have invested significantly to capitalize on the current business environment
through acquisitions, technology spending and the hiring of new brokers,
salespeople, managers and other front-office personnel. The business climate for
these acquisitions has been competitive, and it is expected that these
conditions will persist for the foreseeable future. We have been able to attract
businesses and brokers, salespeople, managers and other front-office personnel
to our platform as we believe they recognize that we have the scale, technology,
experience and expertise to succeed in the current business environment.

Our average revenue per front-office employee has historically declined
year-over-year for the period immediately following significant headcount
increases, and the additional brokers and salespeople generally achieve
significantly higher productivity levels in their second or third year with the
Company. Excluding our insurance brokerage business, as of June 30, 2020, our
front-office headcount was 2,388 brokers, salespeople, managers and other
front-office personnel, down 6% from 2,548 a year ago. Compared to the prior
year period, average revenue per front-office employee for the three and six
months ended June 30, 2020, decreased by 3% to approximately $187 thousand and
increased 4% to approximately $402 thousand, respectively. On a stand-alone
basis, our total insurance brokerage headcount increased by 15% to 435 from 379
a year ago.

The laws and regulations passed or proposed on both sides of the Atlantic
concerning OTC trading seem likely to favor increased use of technology by all
market participants, and are likely to accelerate the adoption of both Hybrid
and Fully Electronic execution. We believe these developments will favor the
larger inter-dealer brokers over smaller, non-public local competitors, as the
smaller players generally do not have the financial resources to invest the
necessary amounts in technology. We believe this will lead to further
consolidation across the wholesale financial brokerage industry, and thus allow
us to profitably grow our front-office headcount.

Since 2018, our acquisitions have included Poten & Partners, Ed Broking, Ginga Petroleum, Algomi and several smaller acquisitions.


On November 15, 2018, we acquired Poten & Partners, a leading ship brokerage,
consulting and business intelligence firm specializing in LNG, tanker and LPG
markets. Founded over 80 years ago and with 170 employees worldwide, Poten &
Partners provides its clients with valuable insight into the international oil,
gas and shipping markets.

On January 31, 2019, we completed the acquisition of Ed Broking, an independent
Lloyd's of London insurance broker with a strong reputation across accident and
health, aerospace, cargo, energy, financial and political risks, marine,
professional and executive risks, property and casualty, specialty and
reinsurance. Ed Broking has become part of the Company's overall insurance
brokerage business.

On March 12, 2019, we completed the acquisition of Ginga Petroleum. Ginga
Petroleum provides a comprehensive range of broking services for physical and
derivative energy products, including naphtha, liquefied petroleum gas, fuel
oil, biofuels, middle distillates, petrochemicals and gasoline.

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On March 6, 2020, we completed the acquisition of Algomi, a software company
that provides technology to bond market participants to improve their workflow
and liquidity by data aggregation, pre-trade information analysis and execution
facilitation.

FINANCIAL HIGHLIGHTS

For the three months ended June 30, 2020, we had income (loss) from operations
before income taxes of $48.2 million compared to $36.8 million in the year
earlier period. This increase was largely a result of a decrease in both
compensation and non-compensation expenses in the three months ended June 30,
2020. Total revenues for the three months ended June 30, 2020 decreased $32.1
million, or 5.8%, to $519.1 million. While we benefited from strong organic
growth in our credit and insurance businesses, this was partially offset by the
dislocation faced by BGC's employees and clients due to COVID-19. But for these
disruptions, we believe that our revenues would have been higher.

Brokerage revenues for the three months ended June 30, 2020 decreased by $31.3
million, or 6.1% from the same period in 2019. We generated 22.5% growth in our
credit business while we increased our insurance brokerage revenues by 10.5%.
The Company's credit business produced strong organic revenue growth due to
improved industry volumes. BGC's insurance brokerage business also generated
organic growth as previously hired brokers and salespeople ramped up production
and as it benefited from favorable pricing trends for insurance renewals.
Certain of the Company's rates, FX, and credit businesses were adversely
impacted by a global decline in activity across emerging market products, while
historically low prices reduced demand for hedging and increased risk aversion
across energy and commodities. In addition, global activity across rates and FX
were broadly lower year-on-year during the quarter. BGC's equities business is
mainly focused on European equity derivatives, where it outperformed in its core
markets and gained share, despite a decline in certain relevant industry-wide
European volumes. Net revenues in our Fully Electronic businesses across
brokerage, data, software, and post-trade increased 9.4% to $78.5 million for
the three months ended June 30, 2020, compared to the prior year period. Within
our Fenics business, total revenues from our high-margin data, software, and
post-trade business were up 7.5% over the prior year period. During the second
quarter of 2020, we introduced Fenics Integrated, which seamlessly integrates
hybrid liquidity with customer electronic orders. We believe that Fenics
Integrated will enhance profit margins by further incentivizing the Company's
brokers and clients to automate execution. We believe that Fenics Integrated
will create superior real-time information, improving the robustness and value
of Fenics Market Data, which will accelerate our growth. As more business lines
are added to Fenics Integrated, and as our stand-alone Fully Electronic
platforms such as Fenics UST, Fenics GO, Lucera, and Fenics FX gain further
traction, the Company expects its revenues and profits to grow.

Total expenses decreased $40.6 million to $473.1 million, primarily due to a
$22.6 million decrease in compensation expenses as the Company focused on
reducing its cost base to improve margins, as well as due to lower
commissionable revenues. The $18.0 million decrease in non-compensation expenses
was primarily driven by lower selling and promotion expenses as a result of the
disruption caused by COVID-19, as well as a decrease in commissions and floor
brokerage expenses, which tend to move in line with commissionable revenues.
This was partially offset by an increase in interest expense related to the
3.750% Senior Notes, which were issued in September 2019.

On July 29, 2020, our Board declared a 1 cent dividend for the second quarter.
Effective with the first quarter dividend, the Board took the step of reducing
the quarterly dividend out of an abundance of caution in order to strengthen the
Company's balance sheet as the global capital markets face difficult and
unprecedented macroeconomic conditions. Additionally, BGC Holdings reduced its
distributions to or on behalf of its partners. The distributions to or on behalf
of partners will at least cover their related tax payments. Whether any given
post-tax amount is equivalent to the amount received by a stockholder also on an
after-tax basis depends upon stockholders' and partners' domiciles and tax
status. BGC believes that these steps will allow the Company to prioritize its
financial strength. Early next year we expect to announce our capital return
policy, focused on increasing our dividend and detailing our share repurchase
plan. Previously we were deeply dividend-centric, going forward we plan to
consider both share buybacks and dividends.

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RESULTS OF OPERATIONS


The following table sets forth our unaudited condensed consolidated statements
of operations data expressed as a percentage of total revenues for the periods
indicated (in thousands):



                                                        Three Months Ended June 30,                                      Six Months Ended June 30,
                                                    2020                           2019                            2020                             2019
                                                        Percentage                     Percentage                       Percentage                       Percentage
                                          Actual         of Total        Actual         of Total         Actual          of Total         Actual          of Total
                                          Results        Revenues        Results        Revenues         Results         Revenues         Results         Revenues
Revenues:
Commissions                              $ 382,640             73.7 %   $ 422,974             76.7 %   $   838,495             74.7 %   $   853,156             77.9 %
Principal transactions                      99,453             19.2        90,432             16.4         212,764             19.0         174,662             15.9
Total brokerage revenues                   482,093             92.9       513,406             93.1       1,051,259             93.7       1,027,818             93.8
Fees from related parties                    6,562              1.3         7,221              1.3          12,083              1.1          13,016              1.2
Data, software and post-trade               20,139              3.9        18,741              3.4          39,537              3.5          36,651    

3.3

Interest and dividend income                 6,536              1.3         7,813              1.4          10,697              1.0          11,478              1.0
Other revenues                               3,758              0.6         4,006              0.8           8,679              0.7           6,975              0.7
Total revenues                             519,088            100.0       551,187            100.0       1,122,255            100.0       1,095,938            100.0
Expenses:
Compensation and employee
  benefits                                 283,437             54.6       290,071             52.7         628,186             56.0         578,071             52.7
Equity-based compensation and
allocations
  of net income to limited partnership
units
  and FPUs (1)                              27,819              5.4        43,752              7.9          70,023              6.2          55,893    

5.1

Total compensation and employee
benefits                                   311,256             60.0       333,823             60.6         698,209             62.2         633,964             57.8
Occupancy and equipment                     47,247              9.1        45,109              8.2          98,321              8.8          91,111              8.3
Fees to related parties                      5,194              1.0         6,457              1.2          10,629              1.0           9,384              0.9
Professional and consulting fees            19,805              3.8        23,347              4.2          39,761              3.6          43,352              4.0
Communications                              30,524              5.8        29,974              5.4          61,045              5.4          60,385              5.5
Selling and promotion                        6,634              1.3        21,491              3.9          25,333              2.3          39,893              3.6
Commissions and floor brokerage             13,520              2.6        16,791              3.0          32,797              2.9          31,409              2.9
Interest expense                            17,457              3.4        14,985              2.7          34,791              3.1          28,183              2.6
Other expenses                              21,499              4.1        21,765              4.0          40,687              3.6          45,780              4.1
Total expenses                             473,136             91.1       513,742             93.2       1,041,573             92.9         983,461             89.7
Other income (losses), net:
Gains (losses) on divestitures and
sale of investments                              -                -        (1,619 )           (0.3 )             -                -          18,435    

1.7

Gains (losses) on equity method
investments                                  1,119              0.2           738              0.1           2,142              0.2           1,521              0.1
Other income (loss)                          1,129              0.2           194              0.1          (4,886 )           (0.4 )        21,396              2.0
Total other income (losses), net             2,248              0.4          (687 )           (0.1 )        (2,744 )           (0.2 )        41,352     

3.8

Income (loss) from operations

  before income taxes                       48,200              9.3        36,758              6.7          77,938              6.9         153,829    

14.1

Provision (benefit) for income taxes         8,641              1.7        14,993              2.7          17,347              1.5          44,890    

4.1

Consolidated net income (loss)              39,559              7.6        21,765              4.0          60,591              5.4         108,939    

10.0

Less: Net income (loss) operations
attributable to
  noncontrolling interest in
subsidiaries                                11,460              2.2         8,154              1.5          18,178              1.6          33,460              3.1

Net income (loss) available to

  common stockholders                    $  28,099              5.4 %   $  13,611              2.5 %   $    42,413              3.8 %   $    75,479              6.9 %



(1) The components of Equity-based compensation and allocations of net income

       to limited partnership units and FPUs are as follows (in thousands):


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                                            Three Months Ended June 30,                                  Six Months Ended June 30,
                                        2020                          2019                          2020                          2019
                                            Percentage                    Percentage                    Percentage                    Percentage
                               Actual        of Total        Actual        of Total        Actual        of Total        Actual        of Total
                              Results        Revenues       Results        Revenues       Results        Revenues       Results        Revenues
Issuance of common stock
and grants of
exchangeability               $  2,362              0.5 %   $ 25,587              4.6 %   $ 25,396              2.3 %   $ 29,123              2.7 %
Allocations of net income        2,660              0.5        4,780              0.9        3,939              0.3        9,326              0.9
LPU amortization                19,524              3.8       10,689              1.9       35,833              3.2       13,734              1.2
RSU amortization                 3,273              0.6        2,696              0.5        4,855              0.4        3,710              0.3
    Equity-based
compensation and
    allocations of net
income to
    limited partnership
units and FPUs                $ 27,819              5.4 %   $ 43,752              7.9 %   $ 70,023              6.2 %   $ 55,893              5.1 %



Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019


Revenues

Brokerage Revenues

Total brokerage revenues decreased by $31.3 million, or 6.1%, to $482.1 million
for the three months ended June 30, 2020 as compared to the three months ended
June 30, 2019. Commission revenues decreased by $40.3 million, or 9.5%, to
$382.6 million for the three months ended June 30, 2020 as compared to the three
months ended June 30, 2019. Principal transactions revenues increased by
$9.0 million, or 10.0%, to $99.5 million for the three months ended June 30,
2020 as compared to the three months ended June 30, 2019.

The decrease in total brokerage revenues was primarily driven by decreases in
revenues from foreign exchange, rates, equities, and energy and commodities,
partially offset by an increase in revenues from credit and insurance.

Our FX revenues decreased by $27.5 million, or 27.0%, to $74.4 million for the
three months ended June 30, 2020 as compared to the three months ended June 30,
2019. This decrease was primarily driven by lower industry volumes due to
quantitative easing undertaken by several major central banks and uniformly
lower global interest rates.

Our brokerage revenues from rates decreased by $19.9 million, or 13.0%, to $133.0 million for the three months ended June 30, 2020. The decrease in rates revenues was primarily driven by lower industry volumes due to quantitative easing undertaken by several major central banks and uniformly lower global interest rates during the quarter.

Our brokerage revenues from equities decreased by $3.3 million, or 5.1%, to $61.8 million for the three months ended June 30, 2020. This decrease was mainly driven by lower trading volumes.


Our brokerage revenues from energy and commodities decreased by $2.6 million, or
3.5%, to $71.3 million for the three months ended June 30, 2020. This decrease
was primarily driven by historically low prices which reduced demand for hedging
and increased risk aversion across energy and commodities.

Our credit revenues increased by $17.6 million, or 22.5%, to $95.8 million for
the three months ended June 30, 2020. This increase was mainly due to organic
growth and improved industry volumes.

Our brokerage revenues from insurance increased by $4.4 million, or 10.5% to
$45.8 million for the three months ended June 30, 2020. This increase was
primarily due to organic growth, as previously hired brokers and salespeople
ramped up production and benefited from favorable pricing trends for insurance
renewals.

Fees from Related Parties

Fees from related parties decreased by $0.7 million, or 9.1% to $6.6 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019.

Data, Software and Post-Trade


Data, software and post-trade revenues increased by $1.4 million, or 7.5%, to
$20.1 million for the three months ended June 30, 2020 as compared to the three
months ended June 30, 2019. This increase was primarily driven by the
acquisition of Algomi and new business contracts for three months ended June 30,
2020 as compared to the three months ended June 30, 2019.

Interest and Dividend Income


Interest and dividend income decreased by $1.3 million, or 16.3%, to
$6.5 million for the three months ended June 30, 2020 as compared to the three
months ended June 30, 2019. This decrease was primarily due to lower interest
earned on deposits.

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Other Revenues


Other revenues decreased by $0.2 million, or 6.2% to $3.8 million for the three
months ended June 30, 2020 as compared to the three months ended June 30, 2019.
This was primarily driven by a decrease in consulting income for Poten &
Partners.

Expenses

Compensation and Employee Benefits


Compensation and employee benefits expense decreased by $6.6 million, or 2.3%,
to $283.4 million for the three months ended June 30, 2020 as compared to the
three months ended June 30, 2019. The main driver of this decrease was the
impact of lower brokerage revenues on variable compensation as well as savings
resulting from a cost reduction program that commenced in the first quarter of
2020.

Equity-Based Compensation and Allocations of Net Income to Limited Partnership Units and FPUs


Equity-based compensation and allocations of net income to limited partnership
units and FPUs decreased by $15.9 million, or 36.4%, to $27.8 million for the
three months ended June 30, 2020 as compared to the three months ended June 30,
2019. This was primarily driven by a decrease in grants of exchangeability and
issuance of Class A common stock.

Occupancy and Equipment


Occupancy and equipment expense increased by $2.1 million, or 4.7%, to
$47.2 million for the three months ended June 30, 2020 as compared to the three
months ended June 30, 2019. This increase was primarily driven by an increase in
amortization expense on developed software and an increase in software licenses
and maintenance costs, partially offset by lower rent expense.

Fees to Related Parties

Fees to related parties decreased by $1.3 million, or 19.6%, to $5.2 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. Fees to related parties are allocations paid to Cantor for administrative and support services (such as accounting, occupancy, and legal).

Professional and Consulting Fees


Professional and consulting fees decreased by $3.5 million, or 15.2%, to
$19.8 million for the three months ended June 30, 2020 as compared to the three
months ended June 30, 2019. The decrease was primarily driven by a decrease in
consulting and legal fees in the three months ended June 30, 2020.

Communications

Communications expense increased by $0.6 million, or 1.8%, to $30.5 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. As a percentage of total revenues, communications expense slightly increased from the prior year period.

Selling and Promotion


Selling and promotion expense decreased by $14.9 million, or 69.1%, to
$6.6 million for the three months ended June 30, 2020 as compared to the three
months ended June 30, 2019. This decrease was a result of a reduction in travel
and entertainment expenses due to the pandemic.

Commissions and Floor Brokerage


Commissions and floor brokerage expense decreased by $3.3 million, or 19.5%, to
$13.5 million for the three months ended June 30, 2020 as compared to the three
months ended June 30, 2019. This line item tends to move in line with brokerage
revenues as lower volumes result in decreased commissions and floor brokerage
costs.

Interest Expense

Interest expense increased by $2.5 million, or 16.5%, to $17.5 million for the
three months ended June 30, 2020 as compared to the three months ended June 30,
2019. This increase was primarily driven by interest expense related to the
3.750% Senior Notes issued in September 2019.

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Other Expenses


Other expenses decreased by $0.3 million, or 1.2% to $21.5 million for the three
months ended June 30, 2020 as compared to the three months ended June 30, 2019,
which was primarily due to a decrease in settlements.

Other Income (Losses), net

Gains (Losses) on Divestitures and Sale of Investments


We had no gains or losses from divestitures or sale of investments during the
three months ended June 30, 2020, compared to a loss of $1.6 million from the
sale of investments during the three months ended June 30, 2019.

Gains (Losses) on Equity Method Investments


Gains (losses) on equity method investments increased by $0.4 million, to a gain
of $1.1 million, for the three months ended June 30, 2020 as compared to a gain
of $0.7 million for the three months ended June 30, 2019. Gains (losses) on
equity method investments represent our pro-rata share of the net gains or
losses on investments over which we have significant influence, but which we do
not control.

Other Income (Loss)

Other income (loss) increased by $0.9 million, to $1.1 million for the three
months ended June 30, 2020 as compared to the three months ended June 30, 2019.
This was primarily driven by an increase in other recoveries and partially
offset by a decrease related to the mark-to-market on marketable securities.

Provision (Benefit) for Income Taxes


Provision (benefit) for income taxes decreased by $6.4 million, or 42.4%, to
$8.6 million for the three months ended June 30, 2020 as compared to the three
months ended June 30, 2019. This decrease was primarily driven by the change in
the geographical and business mix of earnings, which can have an impact on our
consolidated effective tax rate from period-to-period.

Net Income (Loss) Attributable to Noncontrolling Interest in Subsidiaries

Net income (loss) attributable to noncontrolling interest in subsidiaries increased by $3.3 million, or 40.5%, to $11.5 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Revenues

Brokerage Revenues


Total brokerage revenues increased by $23.4 million, or 2.3%, to $1,051.3
million for the six months ended June 30, 2020 as compared to the six months
ended June 30, 2019. Commission revenues decreased by $14.7 million, or 1.7%, to
$838.5 million for the six months ended June 30, 2020 as compared to the six
months ended June 30, 2019. Principal transactions revenues increased by $38.1
million, or 21.8%, to $212.8 million for the six months ended June 30, 2020 as
compared to the six months ended June 30, 2019.

The increase in total brokerage revenues was primarily driven by increases in
credit, insurance, energy and commodities and equities, partially offset by a
decrease in revenues from foreign exchange and rates.

Our credit revenues increased by $29.1 million, or 17.7%, to $193.0 million for the six months ended June 30, 2020. This increase was mainly due to organic growth and higher global volumes.


Our brokerage revenues from insurance increased by $17.8 million, or 24.4% to
$90.6 million for the six months ended June 30, 2020. This increase was
primarily due to organic growth, as the insurance brokerage business benefitted
as previously hired brokers and salespeople ramped up production and benefited
from favorable pricing trends for insurance renewals.

Our brokerage revenues from energy and commodities increased by $10.8 million,
or 7.5%, to $155.1 million for the six months ended June 30, 2020. This increase
was primarily driven by organic growth.

Our brokerage revenues from equities increased by $8.7 million, or 6.5%, to
$143.6 million for the six months ended June 30, 2020. The increase was mainly
driven by organic growth. BGC's equities business is mainly focused on European
equity derivatives, where it outperformed in its core markets and gained share,
despite a decline in certain relevant industry-wide European volumes.

Our FX revenues decreased by $34.7 million, or 17.1%, to $168.8 million for the
six months ended June 30, 2020. This decrease was primarily driven by lower
industry volumes due to quantitative easing undertaken by several major central
banks and uniformly lower global interest rates.

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Our rates revenues decreased by $8.3 million, or 2.7%, to $300.3 million for the
six months ended June 30, 2020. The decrease in rates revenues was primarily
driven by lower industry volumes due to quantitative easing undertaken by
several major central banks and uniformly lower global interest rates.

Fees from Related Parties

Fees from related parties decreased by $0.9 million, or 7.2% to $12.1 million for the six months ended June 30, 2020 as compared to the prior year.

Data, Software and Post-Trade


Data, software and post-trade revenues increased by $2.9 million, or 7.9%, to
$39.5 million for the six months ended June 30, 2020 as compared to the same
period in prior year. This increase was primarily driven by the acquisition of
Algomi and new business contracts.

Interest and Dividend Income

Interest and dividend income decreased by $0.8 million, or 6.8%, to $10.7 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. This decrease was primarily due to lower interest earned on deposits.


Other Revenues

Other revenues increased by $1.7 million, or 24.4% to $8.7 million for the six
months ended June 30, 2020 as compared to the six months ended June 30, 2019.
This was primarily driven by an increase in consulting income for Poten &
Partners.

Expenses

Compensation and Employee Benefits


Compensation and employee benefits expense increased by $50.1 million, or 8.7%,
to $628.2 million for the six months ended June 30, 2020 as compared to the six
months ended June 30, 2019. The main drivers of this increase were the impact of
higher brokerage revenues on variable compensation, cost associated with the
implementation of a cost reduction program designed to reduce future expenses
and streamline operations, as well as the impact of acquisitions and hires.

Equity-Based Compensation and Allocations of Net Income to Limited Partnership Units and FPUs


Equity-based compensation and allocations of net income to limited partnership
units and FPUs increased by $14.1 million, or 25.3%, to $70.0 million for the
six months ended June 30, 2020 as compared to the six months ended June 30,
2019. This was primarily driven by an increase in charges related to
equity-based compensation due to higher grants of Class A common stock, and
increased equity award amortization.

Occupancy and Equipment


Occupancy and equipment expense increased by $7.2 million, or 7.9%, to
$98.3 million for the six months ended June 30, 2020 as compared to the six
months ended June 30, 2019. This increase was primarily driven by higher fixed
asset impairments, software license costs and amortization expense on developed
software. This was partially offset by a decrease in rent expense related to the
build-out phase of BGC's new U.K. based headquarters.

Fees to Related Parties

Fees to related parties increased by $1.2 million, or 13.3%, to $10.6 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. Fees to related parties are allocations paid to Cantor for administrative and support services.

Professional and Consulting Fees

Professional and consulting fees decreased by $3.6 million, or 8.3%, to $39.8 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. This decrease was primarily driven by a decrease in legal and consulting fees.


Communications

Communications expense increased by $0.7 million, or 1.1%, to $61.0 million for
the six months ended June 30, 2020 as compared to the six months ended June 30,
2019. As a percentage of total revenues, communications expense remained
relatively unchanged from the prior year period.

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Selling and Promotion

Selling and promotion expense decreased by $14.6 million, or 36.5%, to $25.3 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The decrease was primarily due to reduction in travel and entertainment expenses due to pandemic.

Commissions and Floor Brokerage


Commissions and floor brokerage expense increased by $1.4 million, or 4.4%, to
$32.8 million for the six months ended June 30, 2020 as compared to the six
months ended June 30, 2019. Commissions and floor brokerage expense tends to
move in line with brokerage revenues.

Interest Expense

Interest expense increased by $6.6 million, or 23.4%, to $34.8 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. This increase was primarily driven by interest expense related to the 3.750% Senior Notes issued in September 2019.

Other Expenses


Other expenses decreased by $5.1 million, or 11.1%, to $40.7 million for the six
months ended June 30, 2020 as compared to the six months ended June 30, 2019,
which was primarily related to a decrease in settlements, and partially offset
by an increase in other provisions.

Other Income (Losses), net

Gains (Losses) on Divestitures and Sale of Investments

For the six months ended June 30, 2020, we had no gains or losses from divestitures or the sale of investments. We had a gain of $18.4 million for the six months ended June 30, 2019, as a result of the sale of CSC Commodities.

Gains (Losses) on Equity Method Investments


Gains (losses) on equity method investments increased by $0.6 million, to a gain
of $2.1 million, for the six months ended June 30, 2020 as compared to a gain of
$1.5 million for the six months ended June 30, 2019. Gains (losses) on equity
method investments represent our pro rata share of the net gains or losses on
investments over which we have significant influence but which we do not
control.

Other Income (Loss)


Other income (loss) decreased by $26.3 million, or 122.8%, to a loss of
$4.9 million for the six months ended June 30, 2020 as compared to the six
months ended June 30, 2019. This was primarily driven by a decrease related to
fair value adjustments on investments carried under the measurement alternative.
There was also a decrease related to the mark-to-market and/or hedging on the
Nasdaq shares and a decrease in other recoveries. This was partially offset by
an increase in acquisition-related fair value adjustments of contingent
consideration.

Provision (Benefit) for Income Taxes


Provision (benefit) for income taxes decreased by $27.5 million, or 61.4%, to
$17.3 million for the six months ended June 30, 2020 as compared to the six
months ended June 30, 2019. This decrease was primarily driven by lower pre-tax
earnings as well as a change in the geographical and business mix of earnings.
In general, our consolidated effective tax rate can vary from period-to-period
depending on, among other factors, the geographic and business mix of our
earnings.

Net Income (Loss) Attributable to Noncontrolling Interest in Subsidiaries

Net income (loss) attributable to noncontrolling interest in subsidiaries decreased by $15.3 million, or 45.7%, to $18.2 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, which was primarily driven by a decrease in earnings.

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QUARTERLY RESULTS OF OPERATIONS


The following table sets forth our unaudited quarterly results of operations for
the indicated periods (in thousands). Results of any period are not necessarily
indicative of results for a full year and may, in certain periods, be affected
by seasonal fluctuations in our business. Certain reclassifications have been
made to prior period amounts to conform to the current period's presentation.



                          June 30,      March 31,      December      September      June 30,      March 31,       December 31,       September 30,
                            2020           2020        31, 2019       30, 2019        2019           2019            20181               20181
Revenues:
Commissions               $ 382,640$  455,855$ 382,897$  409,765$ 422,974$  430,182$      372,370$       352,292
Principal transactions       99,453        113,311        71,725         75,536        90,432         84,230             62,787              73,360
Fees from related
parties                       6,562          5,521         8,218          8,208         7,221          5,795              5,022               6,821
Data, software and
post-trade                   20,139         19,398        18,151         18,364        18,741         17,910             18,169              16,547
Interest and dividend
income                        6,536          4,161         2,865          3,976         7,813          3,665              3,919               2,870
Other revenues                3,758          4,921         3,300          5,288         4,006          2,969              4,084               3,752
Total revenues              519,088        603,167       487,156        521,137       551,187        544,751            466,351             455,642
Expenses:
Compensation and
employee
  benefits                  283,437        344,749       271,296        278,544       290,071        288,000            249,951             221,575
Equity-based
compensation and
  allocations of net
income to
  limited partnership
units and
  FPUs                       27,819         42,204        69,389         40,330        43,752         12,141             85,178              34,901
Total compensation and
  employee benefits         311,256        386,953       340,685        318,874       333,823        300,141            335,129             256,476
Occupancy and equipment      47,247         51,074        48,987         44,709        45,109         46,002             38,934              39,148
Fees to related parties       5,194          5,435         2,858          7,123         6,457          2,927              4,586               5,644
Professional and
consulting fees              19,805         19,956        27,553         21,262        23,347         20,005             23,865              22,329
Communications               30,524         30,521        29,715         29,882        29,974         30,411             26,808              29,078
Selling and promotion         6,634         18,699        21,432         20,320        21,491         18,402             19,112              16,146
Commissions and floor
  brokerage                  13,520         19,277        16,377         15,831        16,791         14,618             17,549              15,082
Interest expense             17,457         17,334        15,636         15,258        14,985         13,198             11,615              10,722
Other expenses               21,499         19,188        18,886         42,757        21,765         24,015             17,541              14,882
Total expenses              473,136        568,437       522,129        516,016       513,742        469,719            495,139             409,507
Other income (losses),
net:
Gain (loss) on
divestiture and
  sale of investments             -              -           (14 )            -        (1,619 )       20,054                  -                   -
Gains (losses) on
equity method
  investments                 1,119          1,023         1,064          1,530           738            783              2,415               1,327
Other income (loss)           1,129         (6,015 )       9,462          2,095           194         21,202              2,453              15,123
Total other income
(losses), net                 2,248         (4,992 )      10,512          3,625          (687 )       42,039              4,868              16,450
Income (loss) from
operations
  before income taxes        48,200         29,738       (24,461 )        8,746        36,758        117,071            (23,920 )            62,585
Provision (benefit) for
income
  taxes                       8,641          8,706         2,095          6,186        14,993         29,897             16,980              23,019
Consolidated net income
(loss)
  from continuing
operations                   39,559         21,032       (26,556 )        2,560        21,765         87,174            (40,900 )            39,566
Consolidated net income
(loss)
  from discontinued
operations,
  net of tax                      -              -             -              -             -              -             11,041             122,738
Consolidated net income
(loss)                       39,559         21,032       (26,556 )        2,560        21,765         87,174            (29,859 )           162,304
Less: Net income (loss)
from
  continuing operations
  attributable to
noncontrolling
  interest in
subsidiaries                 11,460          6,718       (10,313 )        6,089         8,154         25,306            (18,995 )             7,956
Less: Net income (loss)
  from discontinued
operations
  attributable to
noncontrolling
  interest in
subsidiaries                      -              -             -              -             -              -              5,879              34,062
Net income (loss)
available to
  common stockholders     $  28,099$   14,314$ (16,243 )$   (3,529 )$  13,611$   61,868$      (16,743 )$       120,286




1   Financial results have been retrospectively adjusted as a result of the
    Spin-Off to reflect Newmark through November 30, 2018 as discontinued
    operations.


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The table below details our brokerage revenues by product category for the indicated periods (in thousands):



                           June 30,      March 31,       December 31,       September 30,      June 30,      March 31,       December 31,       September 30,
                             2020           2020             2019               2019             2019           2019             2018               2018
Brokerage revenue by
  product:
Rates                      $ 133,034$  167,240$      129,549$       156,765$ 152,959$  155,611$      128,874$       121,984
FX                            74,393         94,366             80,369              86,492       101,899        101,558             94,706              96,988
Credit                        95,780         97,189             70,438              72,382        78,166         85,727             67,484              67,111
Energy and commodities        71,326         83,738             71,456              73,012        73,887         70,342             54,048              58,213
Insurance                     45,783         44,836             43,277              39,692        41,417         31,404             15,155              19,211
Equities                      61,777         81,797             59,533              56,958        65,078         69,770             74,890              62,145

Total brokerage revenues $ 482,093$ 569,166$ 454,622$ 485,301$ 513,406$ 514,412$ 435,157$ 425,652 Brokerage revenue by

  product (percentage):
Rates                           27.6 %         29.4 %             28.5 %              32.3 %        29.8 %         30.2 %             29.6 %              28.6 %
FX                              15.4           16.6               17.7                17.8          19.8           19.7               21.8                22.8
Credit                          19.9           17.1               15.5                14.9          15.2           16.7               15.5                15.8
Energy and commodities          14.8           14.6               15.7                15.0          14.4           13.7               12.4                13.7
Insurance                        9.5            7.9                9.5                 8.2           8.1            6.1                3.5                 4.5
Equities                        12.8           14.4               13.1                11.8          12.7           13.6               17.2                14.6
Total brokerage revenues       100.0 %        100.0 %            100.0 %             100.0 %       100.0 %        100.0 %            100.0 %             100.0 %
Brokerage revenue by type:
Voice/Hybrid               $ 423,697$  513,101$      410,332$       436,841$ 460,359$  455,582$      389,203$       382,272
Fully Electronic              58,396         56,065             44,290              48,460        53,047         58,830             45,954              43,380

Total brokerage revenues $ 482,093$ 569,166$ 454,622$ 485,301$ 513,406$ 514,412$ 435,157$ 425,652 Brokerage revenue by type

  (percentage):
Voice/Hybrid                    87.9 %         90.1 %             90.3 %              90.0 %        89.7 %         88.6 %             89.4 %              89.8 %
Fully Electronic                12.1            9.9                9.7                10.0          10.3           11.4               10.6                10.2
Total brokerage revenues       100.0 %        100.0 %            100.0 %             100.0 %       100.0 %        100.0 %            100.0 %             100.0 %



LIQUIDITY AND CAPITAL RESOURCES

Balance Sheet


Our balance sheet and business model are not capital intensive. Our assets
consist largely of cash and cash equivalents, collateralized and
uncollateralized short-dated receivables and less liquid assets needed to
support our business. Longer-term capital (equity and notes payable) is held to
support the less liquid assets and potential capital investment opportunities.
Total assets as of June 30, 2020 were $4.5 billion, an increase of 15.0% as
compared to December 31, 2019. The increase in total assets was driven primarily
by increases in Receivables from broker-dealers, clearing organizations,
customers and related broker-dealers as well as Cash and cash equivalents. We
maintain a significant portion of our assets in Cash and cash equivalents and
Securities owned, with our liquidity (which we define as Cash and cash
equivalents, Reverse repurchase agreements, Marketable securities and Securities
owned, less Securities loaned and Repurchase Agreements) as of June 30, 2020 of
$522.5 million. See "Liquidity Analysis" below for a further discussion of our
liquidity. Our Securities owned were $58.7 million as of June 30, 2020 and
December 31, 2019. Our Marketable securities decreased to $0.3 million as of
June 30, 2020, compared to $14.2 million as of December 31, 2019. We did not
have any Repurchase Agreements or Reverse repurchase agreements as of June 30,
2020 and December 31, 2019. We had no Securities loaned as of June 30, 2020. As
of December 31, 2019, we had Securities loaned of $13.9 million.

On March 19, 2018, we entered into the BGC Credit Agreement with Cantor. The BGC
Credit Agreement provides for each party and certain of its subsidiaries to
issue loans to the other party or any of its subsidiaries in the lender's
discretion in an aggregate principal amount up to $250.0 million outstanding at
any time. The BGC Credit Agreement replaced the previous credit facility between
BGC and an affiliate of Cantor, and was approved by the Audit Committee of BGC.
On August 6, 2018, the Company entered into an amendment to the BGC Credit
Agreement, which increased the aggregate principal amount that can be loaned to
the other party or any of its subsidiaries from $250.0 million to $400.0 million
that can be outstanding at any time. The BGC Credit Agreement will mature on the
earlier to occur of (a) March 19, 2021, after which the maturity date of the BGC
Credit Agreement will continue to be extended for successive one-year periods
unless prior written notice of non-extension is given by a lending party to a
borrowing party at least six months in advance of such renewal date and (b) the
termination of the BGC Credit Agreement by either party pursuant to its terms.
The outstanding amounts under the BGC Credit Agreement will bear interest for
any rate period at a per annum rate equal to the higher of BGC's or Cantor's
short-term borrowing rate in effect at such time plus 1.00%. As of June 30,
2020, there were no borrowings by BGC or Cantor outstanding under this
agreement.

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As part of our cash management process, we may enter into tri-party reverse
repurchase agreements and other short-term investments, some of which may be
with Cantor. As of June 30, 2020 and December 31, 2019, there were no reverse
repurchase agreements outstanding.

Additionally, in August 2013, the Audit Committee authorized us to invest up to
$350 million in an asset-backed commercial paper program for which certain
Cantor entities serve as placement agent and referral agent. The program issues
short-term notes to money market investors and is expected to be used from time
to time as a liquidity management vehicle. The notes are backed by assets of
highly rated banks. We are entitled to invest in the program so long as the
program meets investment policy guidelines, including policies relating to
ratings. Cantor will earn a spread between the rate it receives from the
short-term note issuer and the rate it pays to us on any investments in this
program. This spread will be no greater than the spread earned by Cantor for
placement of any other commercial paper note in the program. As of June 30, 2020
and December 31, 2019, we had no investments in the program.

Funding


Our funding base consists of longer-term capital (equity and notes payable),
collateralized financings, shorter-term liabilities and accruals that are a
natural outgrowth of specific assets and/or our business model, such as matched
fails and accrued compensation. We have limited need for short-term unsecured
funding in our regulated entities for their brokerage business. Contingent
liquidity needs are largely limited to potential cash collateral that may be
needed to meet clearing bank, clearinghouse, and exchange margins and/or to fund
fails. Capital expenditures tend to be cash neutral and approximately in line
with depreciation. Current cash and cash equivalent balances exceed our
potential normal course contingent liquidity needs. We believe that cash and
cash equivalents in and available to our largest regulated entities, inclusive
of financing provided by clearing banks and cash segregated under regulatory
requirements, is adequate for potential cash demands of normal operations, such
as margin or fail financing. We expect our operating activities going forward to
generate adequate cash flows to fund normal operations, including any dividends
paid pursuant to our dividend policy. However, we continually evaluate
opportunities for us to maximize our growth and further enhance our strategic
position, including, among other things, acquisitions, strategic alliances and
joint ventures potentially involving all types and combinations of equity, debt
and acquisition alternatives. As a result, we may need to raise additional funds
to:

  • increase the regulatory net capital necessary to support operations;


  • support continued growth in our businesses;

• effect acquisitions, strategic alliances, joint ventures and other

        transactions;


  • develop new or enhanced products, services and markets; and


  • respond to competitive pressures.


Acquisitions and financial reporting obligations related thereto may impact our
ability to access longer term capital markets funding on a timely basis and may
necessitate greater short-term borrowings in the interim. This may impact our
credit rating or the interest rates on our debt. We may need to access
short-term capital sources to meet business needs from time to time, including,
but not limited to, conducting operations; hiring or retaining brokers,
salespeople, managers and other front-office personnel; financing acquisitions;
and providing liquidity, including in situations where we may not be able to
access the capital markets in a timely manner when desired by us. Accordingly,
we cannot guarantee that we will be able to obtain additional financing when
needed on terms that are acceptable to us, if at all.

As described earlier in this document, on November 30, 2018, we completed the
Spin-Off of Newmark. As set forth in the Separation and Distribution Agreement,
Newmark assumed certain BGC indebtedness and repaid such indebtedness.

As discussed above, our liquidity was $522.5 million as of June 30, 2020. Our
liquidity remains strong and the steps taken during the first quarter of 2020
were intended to prevent unwarranted financial stress during this extraordinary
COVID-19 period. Our decision to reduce our dividend and draw down additional
funds on the Revolving Credit Agreement, in the first quarter of 2020, was a
result of preparing for the unknown in the current extraordinary
macroeconomic/social environment and was not taken to meet an external demand
for liquidity, but rather to strengthen our balance sheet. We continue to
operate soundly without stress and do not have any Company-specific financial
issues. The reduction of the dividend was an internally driven, precautionary
step to ensure the financial security of the company in uncertain times. We have
no meaningful debt maturities due until May 2021. The proceeds from the
Revolving Credit Agreement may be used for general corporate purposes.

On July 10, 2020, the Company issued $300.0 million aggregate principal amount
of 4.375% Senior Notes. The Company intends to use the net proceeds to
repurchase, redeem and/or repay at maturity all $300.0 million outstanding
aggregate principal amount of its 5.125% Senior Notes due 2021, including to pay
the applicable redemption premium. See "Notes Payable, Other and Short-term
Borrowings" below for further information on the 4.375% Senior Notes.

Notes Payable, Other and Short-term Borrowings

Unsecured Senior Revolving Credit Agreement


On November 28, 2018, we entered into a new Revolving Credit Agreement with Bank
of America, N.A., as administrative agent, and a syndicate of lenders, which
replaced the existing committed unsecured senior revolving credit agreement. The
maturity date of the new Revolving Credit Agreement was November 28, 2020 and
the maximum revolving loan balance is $350.0 million. Borrowings under this

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agreement bear interest at either LIBOR or a defined base rate plus additional
margin. On December 11, 2019, we entered into an amendment to the new unsecured
Revolving Credit Agreement. Pursuant to the amendment, the maturity date was
extended to February 26, 2021. On February 26, 2020, the Company entered into a
second amendment to the unsecured revolving credit agreement, pursuant to which,
the maturity date was extended by two years to February 26, 2023. The size of
the Revolving Credit Agreement, along with the interest rate on the borrowings
therefrom, remained unchanged. As of June 30, 2020, there was $222.6 million of
borrowings outstanding, net of deferred financing costs of $2.4 million, under
the new unsecured Revolving Credit Agreement. As of December 31, 2019, there was
$68.9 million of borrowings outstanding, net of deferred financing costs of $1.1
million, under the new unsecured Revolving Credit Agreement. The average
interest rate on the outstanding borrowings was 2.53% and 2.92% for the three
and six months ended June 30, 2020. On July 14, 2020, the Company repaid in full
the $225.0 million borrowings outstanding under the Revolving Credit Agreement.
We may draw down on the Revolving Credit Agreement to provide flexibility in the
current extraordinary macroeconomic/social environment as a result of the
COVID-19 pandemic, including as necessary, based on the response to the tender
offer of our 5.125% Senior Notes described below. Our liquidity remains strong,
and was $522.5 million as of June 30, 2020, as discussed below.

5.125% Senior Notes


On May 27, 2016, we issued an aggregate of $300.0 million principal amount of
5.125% Senior Notes. The 5.125% Senior Notes are general senior unsecured
obligations of the Company. The 5.125% Senior Notes bear interest at a rate of
5.125% per year, payable in cash on May 27 and November 27 of each year,
commencing November 27, 2016. The 5.125% Senior Notes will mature on May 27,
2021. The Company may redeem some or all of the notes at any time or from time
to time for cash at certain "make-whole" redemption prices (as set forth in the
Indenture). If a "Change of Control Triggering Event" (as defined in the
Indenture) occurs, holders may require the Company to purchase all or a portion
of its notes for cash at a price equal to 101% of the principal amount of the
notes to be purchased plus any accrued and unpaid interest to, but excluding,
the purchase date. Cantor purchased $15.0 million of such senior notes and still
holds such notes as of June 30, 2020. The initial carrying value of the 5.125%
Senior Notes was $295.8 million, net of the discount and debt issuance costs of
$4.2 million, of which $0.5 million were underwriting fees payable to CF&Co and
$18 thousand were underwriting fees payable to CastleOak Securities, L.P. The
carrying value of the 5.125% Senior Notes as of June 30, 2020 was $299.1
million.

On August 16, 2016, we filed a Registration Statement on Form S-4 which was
declared effective by the SEC on September 13, 2016. On September 15, 2016, BGC
launched an exchange offer in which holders of the 5.125% Senior Notes, issued
in a private placement on May 27, 2016 could exchange such notes for new
registered notes with substantially identical terms. The exchange offer closed
on October 12, 2016 at which point the initial 5.125% Senior Notes were
exchanged for new registered notes with substantially identical terms.

Tender Offer for 5.125% Senior Notes


On August 5, 2020, the Company commenced a cash tender offer for any and all
$300 million outstanding aggregate principal amount of its 5.125% Senior Notes.
The tender offer will expire at 5:00 p.m., New York City time, on August 11,
2020, unless extended or earlier terminated by the Company. The Company has
retained CF&Co as one of the dealer managers for the tender offer. Depending on
the dollar amount tendered in the tender offer by the holders of the 5.125%
Senior Notes, the Company may draw down on the Revolving Credit Agreement as
necessary.

5.375% Senior Notes

On July 24, 2018, we issued an aggregate of $450.0 million principal amount of
5.375% Senior Notes. The 5.375% Senior Notes are general senior unsecured
obligations of the Company. The 5.375% Senior Notes bear interest at a rate of
5.375% per year, payable in cash on January 24 and July 24 of each year,
commencing January 24, 2019. The 5.375% Senior Notes will mature on July 24,
2023. We may redeem some or all of the 5.375% Senior Notes at any time or from
time to time for cash at certain "make-whole" redemption prices (as set forth in
the indenture related to the 5.375% Senior Notes). If a "Change of Control
Triggering Event" (as defined in the indenture related to the 5.375% Senior
Notes) occurs, holders may require the Company to purchase all or a portion of
their notes for cash at a price equal to 101% of the principal amount of the
notes to be purchased plus any accrued and unpaid interest to, but excluding,
the purchase date. The initial carrying value of the 5.375% Senior Notes was
$444.2 million, net of the discount and debt issuance costs of $5.8 million, of
which $0.3 million were underwriting fees paid to CF&Co and $41 thousand were
underwriting fees paid to CastleOak Securities, L.P. We also paid CF&Co an
advisory fee of $0.2 million in connection with the issuance. The issuance costs
are amortized as interest expense and the carrying value of the 5.375% Senior
Notes will accrete up to the face amount over the term of the notes. The
carrying value of the 5.375% Senior Notes as of June 30, 2020 was $445.9
million.

On July 31, 2018, we filed a Registration Statement on Form S-4 which was
declared effective by the SEC on August 10, 2018. On August 10, 2018, BGC
launched an exchange offer in which holders of the 5.375% Senior Notes, issued
in a private placement on July 24, 2018 could exchange such notes for new
registered notes with substantially identical terms. The exchange offer closed
on September 17, 2018 at which point the initial 5.375% Senior Notes were
exchanged for new registered notes with substantially identical terms.

3.750% Senior Notes


On September 27, 2019, we issued an aggregate of $300.0 million principal amount
of 3.750% Senior Notes. The 3.750% Senior Notes are general unsecured
obligations of the Company. The 3.750% Senior Notes bear interest at a rate of
3.750% per annum, payable in cash on each April 1 and October 1, commencing
April 1, 2020. The 3.750% Senior Notes will mature on October 1, 2024. We may
redeem some or all of the 3.750% Senior Notes at any time or from time to time
for cash at certain "make-whole" redemption prices (as set forth in the
indenture related to the 3.750% Senior Notes). If a "Change of Control
Triggering Event" (as defined in the indenture related to the 3.750%

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Senior Notes) occurs, holders may require the Company to purchase all or a
portion of their notes for cash at a price equal to 101% of the principal amount
of the notes to be purchased plus any accrued and unpaid interest to, but
excluding, the purchase date. The initial carrying value of the 3.750% Senior
Notes was $296.1 million, net of discount and debt issuance costs of $3.9
million, of which $0.2 million were underwriting fees payable to CF&Co and $36
thousand were underwriting fees payable to CastleOak Securities, L.P. The
issuance costs will be amortized as interest expense and the carrying value of
the 3.750% Senior Notes will accrete up to the face amount over the term of the
notes. The carrying value of the 3.750% Senior Notes was $296.5 million as of
June 30, 2020.

On October 11, 2019, we filed a Registration Statement on Form S-4, which was
declared effective by the SEC on October 24, 2019. On October 28, 2019, BGC
launched an exchange offer in which holders of the 3.750% Senior Notes, issued
in a private placement on September 27, 2019 may exchange such notes for new
registered notes with substantially identical terms. The exchange offer closed
on December 9, 2019 at which point the initial 3.750% Senior Notes were
exchanged for new registered notes with substantially identical terms.

4.375% Senior Notes


On July 10, 2020, we issued an aggregate of $300.0 million principal amount of
4.375% Senior Notes. The 4.375% Senior Notes are general unsecured obligations
of the Company. The 4.375% Senior Notes bear interest at a rate of 4.375% per
year, payable in cash on June 15 and December 15, commencing December 15, 2020.
The 4.375% Senior Notes will mature on December 15, 2025. We may redeem some or
all of the notes at any time or from time to time for cash at certain
"make-whole" redemption prices (as set forth in the indenture related to the
4.375% Senior Notes). If a "Change of Control Triggering Event" (as defined in
the indenture related to the 4.375% Senior Notes) occurs, holders may require
the Company to purchase all or a portion of their notes for cash at a price
equal to 101% of the principal amount of the notes to be purchased plus any
accrued and unpaid interest to, but excluding, the purchase date. The initial
carrying value of the 4.375% Senior Notes was $296.8 million, net of discount
and debt issuance costs of $3.2 million, of which $0.2 million were underwriting
fees payable to CF&Co and $36 thousand were underwriting fees payable to
CastleOak Securities, L.P. BGC intends to use the net proceeds to repurchase,
redeem and/or repay at maturity all $300 million outstanding aggregate principal
amount of its 5.125% Senior Notes due 2021, including to pay any applicable
redemption premium.

Collateralized Borrowings


On March 13, 2015, we entered into a secured loan arrangement of $28.2 million
under which it pledged certain fixed assets as security for a loan. This
arrangement incurred interest at a fixed rate of 3.70% per year and matured on
March 13, 2019, therefore there were no borrowings outstanding as of December
31, 2019 or June 30, 2020.

On May 31, 2017, we entered into a secured loan arrangement of $29.9 million
under which it pledged certain fixed assets as security for a loan. This
arrangement incurs interest at a fixed rate of 3.44% per year and matures on May
31, 2021. As of June 30, 2020 and December 31, 2019, we had $7.9 million and
$11.7 million, respectively, outstanding related to this secured loan
arrangement. The book value of the fixed assets pledged as of June 30, 2020 was
$1.4 million. The book value of the fixed assets pledged as of December 31, 2019
was $2.3 million.

On April 8, 2019, we entered into a secured loan arrangement of $15.0 million,
under which we pledged certain fixed assets as security for a loan. This
arrangement incurs interest at a fixed rate of 3.77% and matures on April 8,
2023. As of June 30, 2020, we had $11.5 million outstanding related to this
secured loan arrangement. The book value of the fixed assets pledged as of
June 30, 2020 was $4.1 million. As of December 31, 2019, we had $13.2 million
outstanding related to this secured loan arrangement. The net book value of the
fixed assets pledged as of December 31, 2019, was $8.1 million. Also, on April
19, 2019, we entered into a secured loan arrangement of $10.0 million, under
which we pledged certain fixed assets as security for a loan. This arrangement
incurs interest at a fixed rate of 3.89% and matures on April 19, 2023. As of
June 30, 2020, we had $7.5 million outstanding related to this secured loan
arrangement. The book value of the fixed assets pledged as of June 30, 2020 was
$4.1 million. As of December 31, 2019, we had $8.8 million outstanding related
to this secured loan arrangement. The book value of the fixed assets pledged as
of December 31, 2019, was $5.7 million.

Weighted-average Interest Rate


For the three months ended June 30, 2020 and 2019, the weighted-average interest
rate of our total Notes payable and other borrowings, which include our
Unsecured Senior Revolving Credit Agreement, Senior Notes, and Collateralized
Borrowings, was 4.42% and 5.00%, respectively. For the six months ended June 30,
2020 and 2019, the weighted-average interest rate of our total Notes payable and
other borrowings, was also 4.42% and 5.00%, respectively.

Short-term Borrowings


On August 22, 2017, we entered into a committed unsecured loan agreement with
Itau Unibanco S.A. The credit agreement provides for short-term loans of up to
$3.6 million (BRL 20.0 million). The maturity date of the agreement is August
20, 2020. Borrowings under this facility bear interest at the Brazilian
Interbank offering rate plus 3.30%. As of June 30, 2020, there were $3.6 million
(BRL 20.0 million) of borrowings outstanding under the facility. As of December
31, 2019, there were $5.0 million (BRL 20.0 million) of borrowings outstanding
under the facility. As of June 30, 2020, the interest rate was 5.60%.

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On August 23, 2017, we entered into a committed unsecured credit agreement with
Itau Unibanco S.A. The credit agreement provides for an intra-day overdraft
credit line up to $9.1 million (BRL 50.0 million). The maturity date of the
agreement is September 20, 2020. This facility bears a fee of 1.50% per year. As
of June 30, 2020 and December 31, 2019, there were no borrowings outstanding
under this facility.

CREDIT RATINGS

As of June 30, 2020, our public long-term credit ratings and associated outlooks
are as follows:



                                    Rating   Outlook
Fitch Ratings Inc.                   BBB-    Stable
Standard & Poor's                    BBB-    Stable

Japan Credit Rating Agency, Ltd.1 BBB+ Stable Kroll Bond Rating Agency2

            BBB     Stable




1 Rating and outlooks were assigned on June 3, 2020

2 Rating and outlooks were assigned on June 17, 2020



Credit ratings and associated outlooks are influenced by a number of factors,
including but not limited to: operating environment, earnings and profitability
trends, the prudence of funding and liquidity management practices, balance
sheet size/composition and resulting leverage, cash flow coverage of interest,
composition and size of the capital base, available liquidity, outstanding
borrowing levels and the firm's competitive position in the industry. A credit
rating and/or the associated outlook can be revised upward or downward at any
time by a rating agency if such rating agency decides that circumstances warrant
such a change. Any reduction in our credit ratings and/or the associated
outlooks could adversely affect the availability of debt financing on terms
acceptable to us, as well as the cost and other terms upon which we are able to
obtain any such financing. In addition, credit ratings and associated outlooks
may be important to customers or counterparties when we compete in certain
markets and when we seek to engage in certain transactions. In connection with
certain agreements, we may be required to provide additional collateral in the
event of a credit ratings downgrade.

LIQUIDITY ANALYSIS

We consider our liquidity to be comprised of the sum of Cash and cash equivalents, Reverse repurchase agreements, Marketable securities, and Securities owned, less Securities loaned and Repurchase agreements. The discussion below describes the key components of our liquidity analysis, including earnings, dividends and distributions, net investing and funding activities, including repurchases and redemptions of BGC Class A common stock and partnership units, security settlements, changes in securities held and marketable securities, and changes in our working capital.

We consider the following in analyzing changes in our liquidity.


Our liquidity analysis includes a comparison of our Consolidated net income
(loss) adjusted for certain non-cash items (e.g., Equity-based compensation) as
presented on the cash flow statement. Dividends and distributions are payments
made to our holders of common shares and limited partnership interests and are
related to earnings from prior periods. These timing differences will impact our
cash flows in a given period.

Our investing and funding activities represent a combination of our capital
raising activities, including short-term borrowings and repayments, issuances of
shares under our CEO Program (net), BGC Class A common stock repurchases and
partnership unit redemptions, purchases and sales of securities, dispositions,
and other investments (e.g. acquisitions, forgivable loans to new brokers and
capital expenditures-all net of depreciation and amortization).

Our securities settlement activities primarily represent deposits with clearing
organizations. In addition, when advantageous, we may elect to facilitate the
settlement of matched principal transactions by funding failed trades, which
results in a temporary secured use of cash and is economically beneficial to us.

Other changes in working capital represent changes primarily in receivables and payables and accrued liabilities that impact our liquidity.


Changes in Reverse repurchase agreements, Securities owned, and Marketable
securities may result from additional cash investments or sales, which will be
offset by a corresponding change in Cash and cash equivalents and, accordingly,
will not result in a change in our liquidity. Conversely, changes in the market
value of such securities are reflected in our earnings or other comprehensive
income (loss) and will result in changes in our liquidity.

At December 31, 2019, the Company completed the calculation of the one-time
transition tax on the deemed repatriation of foreign subsidiaries' earnings
pursuant to the Tax Act and previously recorded a net cumulative tax expense of
$25.0 million, net of foreign tax credits. An installment election can be made
to pay the taxes over eight years with 40% paid in equal installments over the
first five years and the remaining 60% to be paid in installments of 15%, 20%
and 25% in years six, seven and eight, respectively. The cumulative remaining
balance as of June 30, 2020 is $15.8 million.

As of June 30, 2020, the Company had $463.6 million of Cash and cash equivalents, and included in this amount was $317.7 million of Cash and cash equivalents held by foreign subsidiaries.

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Discussion of the six months ended June 30, 2020

The table below presents our Liquidity Analysis:



                             June 30, 2020       December 31, 2019
(in thousands)
Cash and cash equivalents   $       463,554     $           415,379
Securities owned                     58,685                  57,525
Marketable securities 1                 278                     326
Total                       $       522,517     $           473,230



1 As of December 31, 2019$13.9 million of Marketable securities on our balance

sheet had been lent in a Securities loaned transaction and, therefore, are

    not included in this Liquidity Analysis.




The $49.3 million increase in our liquidity position from $473.2 million as of
December 31, 2019 to $522.5 million as of June 30, 2020, was primarily related
to the $155.0 million net draw down on the Revolving Credit Agreement, partially
offset by ordinary movements in working capital (including settlement of
payables to related parties), cash paid with respect to annual employee bonuses
and associated tax and compensation expenses, cost reduction charges, year-end
taxes, acquisitions and our continued investment in new revenue generating
hires.

Discussion of the six months ended June 30, 2019

The table below presents our Liquidity Analysis:



                             June 30, 2019       December 31, 2018
(in thousands)
Cash and cash equivalents   $       399,429     $           336,535
Securities owned                     62,085                  58,408
Marketable securities 1                 482                  16,924
Repurchase Agreements                (1,100 )                  (986 )
Total                       $       460,896     $           410,881



1 As of June 30, 2019 and December 31, 2018, $12.3 million and $15.1 million,

respectively, of Marketable securities on our balance sheet had been lent in

a Securities loaned transaction and therefore are not included in this

Liquidity Analysis.



The $50.0 million increase in our liquidity position from $410.9 million as of
December 31, 2018 to $460.9 million as of June 30, 2019 was primarily related to
the Company drawing $280.0 million from its $350.0 million revolving credit
facility and new collateralized borrowings in the amount of $25.0 million
partially offset by the financing of acquisitions, cash paid with respect to
annual employee bonuses, ordinary movements in working capital, and the Company
continuing to invest in new revenue generating hires.

CLEARING CAPITAL


In November 2008, we entered into a clearing capital agreement with Cantor to
clear U.S.Treasury and U.S. government agency securities transactions on our
behalf. In June 2020, this clearing capital agreement was amended to cover
Cantor providing clearing services in all eligible financial products to us and
not just U.S.Treasury and U.S. government agency securities. Pursuant to the
terms of this agreement, so long as Cantor is providing clearing services to us,
Cantor shall be entitled to request from us cash or other property acceptable to
Cantor in the amount reasonably requested by Cantor under the clearing capital
agreement or Cantor will post cash or other property on our behalf for a
commercially reasonable charge. Cantor had not requested any cash or other
property from us as collateral as of June 30, 2020.

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REGULATORY REQUIREMENTS


Our liquidity and available cash resources are restricted by regulatory
requirements of our operating subsidiaries. Many of these regulators, including
U.S. and non-U.S. government agencies and self-regulatory organizations, as well
as state securities commissions in the U.S., are empowered to conduct
administrative proceedings that can result in civil and criminal judgments,
settlements, fines, penalties, injunctions, enhanced oversight, remediation, or
other relief.

In addition, self-regulatory organizations, such as the FINRA and the NFA, along
with statutory bodies such as the FCA, the SEC, and the CFTC require strict
compliance with their rules and regulations. The requirements imposed by
regulators are designed to ensure the integrity of the financial markets and to
protect customers and other third parties who deal with broker-dealers and are
not designed to specifically protect stockholders. These regulations often serve
to limit our activities, including through net capital, customer protection and
market conduct requirements.

The final phase of Basel III (unofficially called "Basel IV") is a global
prudential regulatory standard designed to make banks more resilient and
increase confidence in the banking system. Its wide scope includes reviewing
market, credit and operational risk along with targeted changes to leverage
ratios. Basel IV includes updates to the calculation of bank capital
requirements with the aim of making outcomes more comparable across banks
globally. Most of the requirements are expected to be implemented by national
and regional authorities by around 2023. The adoption of these proposed rules
could restrict the ability of our large bank and broker-dealer customers to
operate trading businesses and to maintain current capital market exposures
under the present structure of their balance sheets, and will cause these
entities to need to raise additional capital in order to stay active in our
marketplaces.

The FCA is the relevant statutory regulator in the U.K. The FCA's objectives are
to protect customers, maintain the stability of the financial services industry
and promote competition between financial services providers. It has broad
rule-making, investigative and enforcement powers derived from the Financial
Services and Markets Act 2000 and subsequent and derivative legislation and
regulations.

In addition, the majority of our other foreign subsidiaries are subject to
similar regulation by the relevant authorities in the countries in which they do
business. Certain other of our foreign subsidiaries are required to maintain
non-U.S. net capital requirements. For example, in Hong Kong, BGC Securities
(Hong Kong), LLC, GFI (HK) Securities LLC and Sunrise Broker (Hong Kong) Limited
are regulated by the Securities and Futures Commission. BGC Capital Markets
(Hong Kong), Limited and GFI (HK) Brokers Ltd are regulated by The Hong Kong
Monetary Authority. All are subject to Hong Kong net capital requirements. In
France, Aurel BGC and BGC France Holdings; in Australia, BGC Partners
(Australia) Pty Limited, BGC (Securities) Pty Limited and GFI Australia Pty
Ltd.; in Japan, BGC Shoken Kaisha Limited'sTokyo branch and BGC Capital Markets
Japan LLC'sTokyo Branch; in Singapore, BGC Partners (Singapore) Limited, and
GFI Group Pte Ltd; in Korea, BGC Capital Markets & Foreign Exchange Broker
(Korea) Limited and GFI Korea Money Brokerage Limited; and in Turkey, BGC
Partners Menkul Degerler AS, all have net capital requirements imposed upon them
by local regulators. In addition, BGC is a member of clearing houses such as The
London Metal Exchange, which may impose minimum capital requirements. In Latin
America, BGC Liquidez Distribuidora De Titulos E Valores Mobiliarios Ltda.
(Brazil) has net capital requirements imposed upon it by local regulators.

These subsidiaries may also be prohibited from repaying the borrowings of their
parents or affiliates, paying cash dividends, making loans to their parent or
affiliates or otherwise entering into transactions, in each case, that result in
a significant reduction in their regulatory capital position without prior
notification or approval from their principal regulator. See Note 22-"Regulatory
Requirements" to our unaudited condensed consolidated financial statements for
further details on our regulatory requirements.

As of June 30, 2020, $706.5 million of net assets were held by regulated
subsidiaries. As of June 30, 2020, these subsidiaries had aggregate regulatory
net capital, as defined, in excess of the aggregate regulatory requirements, as
defined, of $412.7 million.

In April 2013, the Board and Audit Committee authorized management to enter into
indemnification agreements with Cantor and its affiliates with respect to the
provision of any guarantees provided by Cantor and its affiliates from time to
time as required by regulators. These services may be provided from time to time
at a reasonable and customary fee.

BGC Derivative Markets and GFI Swaps Exchange, our subsidiaries, began operating
as SEFs on October 2, 2013. Both BGC Derivative Markets and GFI Swaps Exchange
received permanent registration approval from the CFTC as SEFs on January 22,
2016. Mandatory Dodd-Frank Act compliant execution on SEFs by eligible U.S.
persons commenced in February 2014 for "made available to trade" products, and a
wide range of other rules relating to the execution and clearing of derivative
products have been finalized with implementation periods in 2016 and beyond. We
also own ELX, which became a dormant contract market on July 1, 2017.

Much of our global derivatives volumes continue to be executed by non-U.S. based
clients outside the U.S. and subject to local prudential regulations. As such,
we will continue to operate a number of European regulated venues in accordance
with EU or U.K. legislation and licensed by the FCA or EU-based national
supervisors. These venues are also operated for non-derivative instruments for
these clients. MiFID II was published by the European Securities and Markets
Authority in September 2015, and implemented in January 2018 and introduced
important infrastructural changes.

MiFID II requires a significant part of the market in these instruments to trade
on trading venues subject to transparency regimes, not only in pre- and
post-trade prices, but also in fee structures and access. In addition, it has
impacted a number of key areas, including corporate governance, transaction
reporting, pre- and post-trade transparency, technology synchronization, best
execution and investor protection.

MiFID II is intended to help improve the functioning of the EU single market by
achieving a greater consistency of regulatory standards. By design, therefore,
it is intended that EU member states should have very similar regulatory regimes
in relation to the matters addressed to MiFID. MiFID II has also introduced a
new regulated execution venue category known as an OTF that captures much of the

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Voice-and Hybrid-oriented trading in EU. Much of our existing EU derivatives and
fixed income execution business now take place on OTFs. Further to its decision
to leave the EU, the U.K. has implemented MIFID II's requirements into its own
domestic legislation. Brexit may impact future market structures and MiFID II
rulemaking and implementation due to potential changes in mutual passporting
between the U.K. and EU member states.

In addition, the GDPR came into effect in the EU on May 25, 2018 and creates new
compliance obligations in relation to personal data. The GDPR may affect our
practices, and will increase financial penalties for non-compliance
significantly.

See "Regulation" in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2019 for additional information related to our regulatory environment.


EQUITY

Class A Common Stock

Changes in shares of BGC Class A common stock outstanding were as follows (in
thousands):



                                             Three Months Ended June 30,           Six Months Ended June 30,
                                              2020                 2019              2020               2019
Shares outstanding at beginning of
period                                          311,059              293,382           307,915          291,475
Share issuances:
Redemptions/exchanges of limited
partnership interests1                            1,969                3,880             4,074            5,700
Vesting of RSUs                                     103                   81               800              322
Acquisitions                                         15                  481               285              499
Other issuances of BGC Class A common
stock                                               177                   47               249              108
Treasury stock repurchases                            -                    -                 -             (233 )
Shares outstanding at end of period             313,323              297,871           313,323          297,871



1 Included in redemption/exchanges of limited partnership interests for the

       three months ended June 30, 2020 and 2019, are 0.7 million shares of BGC
       Class A common stock granted in connection with the cancellation of 0.6

million LPUs, and 2.3 million shares of BGC Class A common stock granted in

connection with the cancellation of 2.5 million LPUs, respectively.

Included in redemption/exchanges of limited partnership interests for the

       six months ended June 30, 2020 and 2019, are 2.1 million shares of BGC
       Class A common stock granted in connection with the cancellation of 2.1

million LPUs, and 2.4 million shares of BGC Class A common stock granted in

connection with the cancellation of 2.6 million LPUs, respectively. Because

LPUs are included in the Company's fully diluted share count, if dilutive,

redemptions/exchanges in connection with the issuance of BGC Class A common

stock would not impact the fully diluted number of shares and units

       outstanding.


Class B Common Stock

The Company did not issue any shares of BGC Class B common stock during the three and six months ended June 30, 2020. As of June 30, 2020 and December 31, 2019, there were 45,884,380 shares of BGC Class B common stock outstanding.

Unit Redemptions and Share Repurchase Program


The Board and Audit Committee have authorized repurchases of BGC Class A common
stock and redemptions of limited partnership interests or other equity interests
in our subsidiaries. On August 1, 2018, the Company's Board and Audit Committee
increased the Company's share repurchase and unit redemption authorization to
$300.0 million, which may include purchases from Cantor, its partners or
employees or other affiliated persons or entities. As of June 30, 2020, the
Company had $255.4 million remaining from its share repurchase and unit
redemption authorization. From time to time, the Company may actively continue
to repurchase shares and/or redeem units.

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The table below represents the units redeemed and/or shares repurchased for cash
and does not include units redeemed/cancelled in connection with the grant of
shares of BGC Class A common stock nor the limited partnership interests
exchanged for shares of BGC Class A common stock. The gross unit redemptions and
share repurchases of BGC Class A common stock during the three and six months
ended June 30, 2020 were as follows (in thousands, except for weighted-average
price data):



                                                                                                   Approximate
                                                                                                  Dollar Value
                                                Total Number                                      of Units and
                                                  of Units                                       Shares That May
                                                  Redeemed         Weighted-Average Price       Yet Be Redeemed/
                                                  or Shares            Paid per Unit                Purchased
Period                                           Repurchased              or Share              Under the Program
Redemptions1,2
January 1, 2020-March 31, 2020                            235     $                   4.30
April 1, 2020-June 30, 2020                               103                         3.05
Total Redemptions                                         338     $                   3.92
Repurchases3,4
January 1, 2020-March 31, 2020                              -     $                      -
April 1, 2020-June 30, 2020                                 -                            -
Total Repurchases                                           -                            -
Total Redemptions and Repurchases                         338     $                   3.92     $           255,365



1 During the three months ended June 30, 2020, the Company redeemed 0.1 million

LPUs at an aggregate redemption price of $0.3 million for an average price of

$3.05 per unit. During the three months ended June 30, 2020, the Company

redeemed 1 thousand FPUs at an aggregate redemption price of $4 thousand for

an average price of $3.07 per unit. During the three months ended June 30,

2019, the Company redeemed 0.1 million LPUs at an aggregate redemption price

of $0.5 million for a weighted-average price of $5.44 per unit and 2.8

thousand FPUs at an aggregate redemption price of $16.0 thousand for a

weighted-average price of $5.79 per unit. The table above does not include

units redeemed/cancelled in connection with the grant of 0.7 million and 2.3

million shares of BGC Class A common stock during the three months ended

June 30, 2020 and 2019, respectively, nor the limited partnership interests

exchanged for 1.3 million and 1.6 million shares of BGC Class A common stock

during the three months ended June 30, 2020 and 2019, respectively.

2 During the six months ended June 30, 2020, the Company redeemed 0.3 million

LPUs at an aggregate redemption price of $1.3 million for an average price of

$3.92 per unit. During the six months ended June 30, 2020, the Company

redeemed 1 thousand FPUs at an aggregate redemption price of $4 thousand for

an average price of $3.07 per unit. During the six months ended June 30,

2019, the Company redeemed 1.3 million LPUs at an aggregate redemption price

of $7.7 million for a weighted-average price of $5.96 per unit and 5.1

thousand FPUs at an aggregate redemption price of $30.0 thousand for a

weighted-average price of $5.94 per unit. The table above does not include

units redeemed/cancelled in connection with the grant of 2.1 million and 2.4

million shares of BGC Class A common stock during the six months ended

June 30, 2020 and 2019, respectively, nor the limited partnership interests

exchanged for 1.8 million and 2.5 million shares of BGC Class A common stock

during the six months ended June 30, 2020 and 2019, respectively.

3 The Company did not repurchase any shares of BGC Class A common stock during

the three and six months ended June 30, 2020.

4 The Company did not repurchase any shares of BGC Class A common stock during

the three months ended June 30, 2019. During the six months ended June 30,

2019, the Company repurchased 0.2 million shares of BGC Class A common stock

at an aggregate price of $1.2 million for a weighted-average price of $5.30

per share.

The weighted-average share count, including securities that were anti-dilutive for our earnings per share calculation was as follows (in thousands):


                               Three Months Ended June 30, 2020
Common stock outstanding1                                360,614
Partnership units2                                       184,122
RSUs (Treasury stock method)                                 174
Other                                                      1,213
Total3                                                   546,123



1 Common stock consisted of shares of BGC Class A common stock, shares of BGC

Class B common stock and contingent shares for which all necessary

conditions have been satisfied except for the passage of time. For the

quarter ended June 30, 2020, the weighted-average number of shares of BGC

Class A common stock was 314.7 million and shares of BGC Class B common

       stock was 45.9 million.


   2   Partnership units collectively include FPUs, LPUs, and Cantor units (see
       Note 2-"Limited Partnership Interests in BGC Holdings and Newmark

Holdings," to our unaudited condensed consolidated financial statements in

Part I, Item 1 of this Quarterly Report on Form 10-Q for more information).

3 For the three months ended June 30, 2020, 2.6 million potentially dilutive

securities were not included in the computation of fully diluted EPS

because their effect would have been anti-dilutive. Also as of June 30,

2020, 26.7 million shares of contingent BGC Class A common stock, N units,

RSUs, and LPUs were excluded from fully diluted EPS computations because

       the


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conditions for issuance had not been met by the end of the period. The

contingent BGC Class A common stock is recorded as a liability and included

in "Accounts payable, accrued and other liabilities" in our unaudited

       condensed consolidated statement of financial condition as of June 30,
       2020.


The fully diluted period-end spot share count was as follows (in thousands):



                                As of June 30, 2020
Common stock outstanding                     359,207
Partnership units                            182,665
RSUs (Treasury stock method)                     174
Other                                          4,140
Total                                        546,186




On June 5, 2015, we entered into the Exchange Agreement with Cantor providing
Cantor, CFGM and other Cantor affiliates entitled to hold BGC Class B common
stock the right to exchange from time to time, on a one-to-one basis, subject to
adjustment, up to an aggregate of 34,649,693 shares of BGC Class A common stock
now owned or subsequently acquired by such Cantor entities for up to an
aggregate of 34,649,693 shares of BGC Class B common stock. Such shares of BGC
Class B common stock, which currently can be acquired upon the exchange of
Cantor units owned in BGC Holdings, are already included in our fully diluted
share count and will not increase Cantor's current maximum potential voting
power in the common equity. The Exchange Agreement enabled the Cantor entities
to acquire the same number of shares of BGC Class B common stock that they were
already entitled to acquire without having to exchange its Cantor units in BGC
Holdings. The Audit Committee and Board have determined that it was in the best
interests of us and our stockholders to approve the Exchange Agreement because
it will help ensure that Cantor retains its Cantor units in BGC Holdings, which
is the same partnership in which our partner employees participate, thus
continuing to align the interests of Cantor with those of the partner employees.
On November 23, 2018, in the Class B Issuance, BGC issued 10,323,366 shares of
BGC Class B common stock to Cantor and 712,907 shares of BGC Class B common
stock to CFGM, an affiliate of Cantor, in each case in exchange for shares of
BGC Class A common stock from Cantor and CFGM, respectively, on a one-to-one
basis pursuant to the Exchange Agreement. Pursuant to the Exchange Agreement, no
additional consideration was paid to BGC by Cantor or CFGM for the Class B
Issuance. Following this exchange, Cantor and its affiliates only have the right
to exchange under the Exchange Agreement up to an aggregate of 23,613,420 shares
of BGC Class A common stock, now owned or subsequently acquired, or its Cantor
units in BGC Holdings, into shares of BGC Class B common stock. As of June 30,
2020, Cantor and CFGM do not own any shares of BGC Class A common stock.

We and Cantor have agreed that any shares of BGC Class B common stock issued in
connection with the Exchange Agreement would be deducted from the aggregate
number of shares of BGC Class B common stock that may be issued to the Cantor
entities upon exchange of Cantor units in BGC Holdings. Accordingly, the Cantor
entities will not be entitled to receive any more shares of BGC Class B Stock
under this agreement than they were previously eligible to receive upon exchange
of Cantor units.

On November 4, 2015, partners of BGC Holdings created five new classes of
non-distributing partnership units (collectively with the NPSUs, "N Units").
These new N Units carry the same name as the underlying unit with the insertion
of an additional "N" to designate them as the N Unit type and are designated as
NREUs, NPREUs, NLPUs, NPLPUs and NPPSUs. The N Units are not entitled to
participate in partnership distributions, will not be allocated any items of
profit or loss and may not be made exchangeable into shares of BGC Class A
common stock. The Eleventh Amendment was approved by the Audit Committee and by
the Board.

Subject to the approval of the Compensation Committee or its designee, certain N
Units may be converted into the underlying unit type (i.e. an NREU will be
converted into an REU) and will then participate in partnership distributions,
subject to terms and conditions determined by the general partner of BGC
Holdings in its sole discretion, including that the recipient continue to
provide substantial services to the Company and comply with his or her
partnership obligations. Such N Units are not included in the fully diluted
share count.

On December 14, 2016, partners of BGC Holdings amended certain terms and
conditions of the partnership's N Units in order to provide flexibility to the
Company and the Partnership in using such N Units in connection with
compensation arrangements and practices. The amendment provides for a minimum
$5 million gross revenue requirement in a given quarter as a condition for an N
Unit to be replaced by another type of partnership unit in accordance with the
Partnership Agreement and the grant documentation. The amendment was approved by
the Audit Committee.

On December 13, 2017, the Amended and Restated BGC Holdings Partnership
Agreement was amended and restated a second time to include prior standalone
amendments and to make certain other changes related to the Separation. The
Second Amended and Restated BGC Holdings Partnership Agreement, among other
things, reflects changes resulting from the division in the Separation of BGC
Holdings into BGC Holdings and Newmark Holdings, including:



• an apportionment of the existing economic attributes (including, among

others, capital accounts and post-termination payments) of each BGC

Holdings limited partnership interests outstanding immediately prior to

the Separation between such Legacy BGC Holdings Unit and the fraction of a

Newmark Holdings LPU issued in the Separation in respect of such Legacy

BGC Holdings Unit, based on the relative value of BGC and Newmark as of

        after the Newmark IPO;




    •   an adjustment of the exchange mechanism between the Newmark IPO and the

Distribution so that one exchangeable BGC Holdings unit together with a

number of exchangeable Newmark Holdings units equal to 0.4545 divided by

the Newmark Holdings Exchange Ratio as of such time, must be exchanged in

        order to receive one share of BGC Class A common stock; and




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• a right of the employer of a partner (whether it be Newmark or BGC) to

determine whether to grant exchangeability with respect to Legacy BGC

Holdings Units or Legacy Newmark Holdings Units held by such partner.



The Second Amended and Restated BGC Holdings Partnership Agreement also removes
certain classes of BGC Holdings units that are no longer outstanding, and
permits the general partner of BGC Holdings to determine the total number of
authorized BGC Holdings units. The Second Amended and Restated BGC Holdings
Limited Partnership Agreement was approved by the Audit Committee.

Registration Statements


We currently have in place an effective equity shelf registration statement on
Form S-3 filed on March 9, 2018 with respect to the issuance and sale of up to
an aggregate of $300.0 million of shares of BGC Class A common stock from time
to time on a delayed or continuous basis. On March 9, 2018, we entered into the
March 2018 Sales Agreement, pursuant to which we may offer and sell up to an
aggregate of $300.0 million of shares of BGC Class A common stock. Proceeds from
shares of BGC Class A common stock sold under this CEO Program Sales Agreement
may be used for redemptions of limited partnership interests in BGC Holdings, as
well as for general corporate purposes, including acquisitions and the repayment
of debt. CF&Co is a wholly owned subsidiary of Cantor and an affiliate of us.
Under this Sales Agreement, we have agreed to pay CF&Co up to 2% of the gross
proceeds from the sale of shares. For additional information on the Company's
CEO Program sales agreements, see Note 14-"Related Party Transactions" to our
unaudited condensed consolidated financial statements in Part I, Item 1 of this
Quarterly Report on Form 10-Q.

As of June 30, 2020, we have issued and sold 17.6 million shares of BGC Class A
common stock (or $210.6 million) under the March 2018 Sales Agreement. We intend
to use the net proceeds of any shares of BGC Class A common stock sold for
general corporate purposes for potential acquisitions, redemptions of LPUs and
FPUs in BGC Holdings and repurchases of shares of BGC Class A common stock from
partners, executive officers and other employees of ours or our subsidiaries and
of Cantor and its affiliates. Certain of such partners will be expected to use
the proceeds from such sales to repay outstanding loans issued by, or credit
enhanced by, Cantor, or BGC Holdings. In addition to general corporate purposes,
these sales along with our share repurchase authorization are designed as a
planning device in order to facilitate the redemption process. Going forward, we
may redeem units and reduce our fully diluted share count under our repurchase
authorization or later sell shares of BGC Class A common stock under the March
2018 Sales Agreement.

Further, we have an effective registration statement on Form S-4 filed on
September 3, 2010, with respect to the offer and sale of up to 20 million shares
of BGC Class A common stock from time to time in connection with business
combination transactions, including acquisitions of other businesses, assets,
properties or securities. As of June 30, 2020, we have issued an aggregate of
14.1 million shares of BGC Class A common stock under this Form S-4 registration
statement. Additionally, on September 13, 2019, we filed a registration
statement on Form S-4, with respect to the offer and sale of up to 20 million
shares of Class A common stock from time to time in connection with business
combination transactions, including acquisitions of other businesses, assets,
properties or securities. As of June 30, 2020, we have not issued any shares of
BGC Class A common stock under this Form S-4 registration statement. We also
have an effective shelf registration statement on Form S-3 pursuant to which we
can offer and sell up to 10 million shares of BGC Class A common stock under the
BGC Partners, Inc. Dividend Reinvestment and Stock Purchase Plan. As of June 30,
2020, we have issued 0.7 million shares of BGC Class A common stock under the
Dividend Reinvestment and Stock Purchase Plan.

The Compensation Committee may grant stock options, stock appreciation rights,
deferred stock such as RSUs, bonus stock, performance awards, dividend
equivalents and other equity-based awards, including to provide exchange rights
for shares of BGC Class A common stock upon exchange of LPUs. On June 22, 2016,
at our Annual Meeting of Stockholders, our stockholders approved our Equity Plan
to increase from 350 million to 400 million the aggregate number of shares of
BGC Class A common stock that may be delivered or cash-settled pursuant to
awards granted during the life of the Equity Plan. As of June 30, 2020, the
limit on the aggregate number of shares authorized to be delivered allowed for
the grant of future awards relating to 129.6 million shares of BGC Class A
common stock.

On December 16, 2019, we filed a registration statement on Form S-3 pursuant to
which CF&Co may make offers and sales of our 5.125% Senior Notes, 5.375% Senior
Notes and 3.750% Senior Notes in connection with ongoing market-making
transactions which may occur from time to time. Such market-making transactions
in these securities may occur in the open market or may be privately negotiated
at prevailing market prices at a time of resale or at related or negotiated
prices. Neither CF&Co, nor any other of our affiliates, has any obligation to
make a market in our securities, and CF&Co or any such other affiliate may
discontinue market-making activities at any time without notice.

CONTINGENT PAYMENTS RELATED TO ACQUISITIONS


Since 2016, the Company has completed acquisitions whose purchase price included
an aggregate of approximately 2.2 million shares of the Company's Class A common
stock (with an acquisition date fair value of approximately $9.2 million),
0.1 million LPUs (with an acquisition date fair value of approximately $0.2
million), 0.2 million RSUs (with an acquisition date fair value of approximately
$1.2 million) and $37.5 million in cash that may be issued contingent on certain
targets being met through 2023.

As of June 30, 2020, the Company has issued 0.4 million shares of BGC Class A common stock and paid $19.0 million in cash related to such contingent payments.


As of June 30, 2020, 2.6 million shares of BGC Class A common stock, 0.2 million
RSUs and $22.8 million in cash remain to be issued if the targets are met, net
of forfeitures and other adjustments.

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DERIVATIVE SUIT


On October 5, 2018, Roofers Local 149 Pension Fund filed a putative derivative
complaint in the Delaware Chancery Court, captioned Roofers Local 149 Pension
Fund vs. Howard Lutnick, et al. (Case No. 2018-0722), alleging breaches of
fiduciary duty against (i) the members of the Board, (ii) Howard Lutnick, CFGM,
and Cantor as controlling stockholders of BGC, and (iii) Howard Lutnick as an
officer of BGC. The complaint challenges the transactions by which BGC (i)
completed the Berkeley Point acquisition from CCRE for $875 million and (ii)
committed to invest $100 million for a 27% interest in Real Estate, L.P.
(collectively, the "Transaction"). Among other things, the complaint alleges
that (i) the price BGC paid in connection with the Transaction was unfair, (ii)
the process leading up to the Transaction was unfair, and (iii) the members of
the special committee of the Board were not independent. It seeks to recover for
the Company unquantified damages, disgorgement of any payments received by
defendants, and attorneys' fees.

A month later, on November 5, 2018, the same plaintiffs' firm filed an identical
putative derivative complaint against the same defendants seeking the same
relief on behalf of a second client, Northern California Pipe Trades Trust
Funds. The cases have been consolidated into a single action, captioned In re
BGC Partners, Inc. Derivative Litigation (Consolidated C.A. No. 2018-0722-AGB),
and the complaint filed by Roofers Local 149 Pension Fund on October 5, 2018 was
designated as the operative complaint.

In response to motions to dismiss filed by all defendants in December 2018,
Plaintiffs filed a motion for leave to amend the operative complaint in February
2019, requesting that the Court allow them to supplement their allegations,
which the Court granted. The amended complaint alleges the same purported
breaches of fiduciary duty as the operative complaint, raises no new claims, and
seeks identical relief, but includes additional allegations, including alleged
reasons for plaintiffs' failure to make a demand on the Board, which was the
basis of defendants' motion to dismiss. On March 19, 2019, all defendants filed
motions to dismiss the amended complaints, again on demand grounds. On September
30, 2019, the Court denied defendants' motions to dismiss, permitting the case
to move forward into discovery. In its ruling, the Court determined that the
amended complaint sufficiently pled that plaintiffs were not required to make
demand on the Board in order to file a derivative suit, but did not make
findings of fact with respect to the underlying merits of plaintiffs'
allegations concerning the Transaction.

The Company continues to believe that the allegations pled against the defendants in the amended complaint are without merit and intends to defend against them vigorously as the case moves forward. However, as in any litigated matter, the outcome cannot be determined with certainty.

PURCHASE OF LIMITED PARTNERSHIP INTERESTS


Cantor has the right to purchase limited partnership interests (Cantor units)
from BGC Holdings upon redemption of non-exchangeable FPUs redeemed by BGC
Holdings upon termination or bankruptcy of the Founding/Working Partner. In
addition, pursuant to Article Eight, Section 8.08, of the Second Amended and
Restated BGC Holdings Limited Partnership Agreement (previously the sixth
amendment) and Article Eight, Section 8.08, of the Newmark Holdings Limited
Partnership Agreement, where either current, terminating, or terminated partners
are permitted by the Company to exchange any portion of their FPUs and Cantor
consents to such exchangeability, the Company shall offer to Cantor the
opportunity for Cantor to purchase the same number of new exchangeable limited
partnership interests (Cantor units) in BGC Holdings at the price that Cantor
would have paid for the FPUs had the Company redeemed them. Any such Cantor
units purchased by Cantor are currently exchangeable for up to 23,613,420 shares
of BGC Class B common stock or, at Cantor's election or if there are no such
additional shares of BGC Class B common stock, shares of BGC Class A common
stock, in each case on a one-for-one basis (subject to customary anti-dilution
adjustments).

As of June 30, 2020, there were 2,129,969 FPUs in BGC Holdings remaining, which
the partnerships had the right to redeem or exchange and with respect to which
Cantor had the right to purchase an equivalent number of Cantor units.

JOINT SERVICES AGREEMENT WITH CANTOR


In February 2019, the Audit Committee authorized us to enter into a short-term
services agreement with Cantor pursuant to which Cantor would be responsible for
clearing, settling and processing certain transactions executed on behalf of
customers in exchange for a 33% revenue share based on net transaction revenue
and the payment by BGC of the fully allocated cost of certain salespersons
related thereto. In May 2020, the Audit Committee authorized us to extend the
initial term of the short-term services agreement for an additional nine months.

GUARANTEE AGREEMENT FROM MINT BROKERS


Under rules adopted by the CFTC, all foreign introducing brokers engaging in
transactions with U.S. persons are required to register with the NFA and either
meet financial reporting and net capital requirements on an individual basis or
obtain a guarantee agreement from a registered Futures Commission Merchant. Our
European-based brokers engage from time to time in interest rate swap
transactions with U.S.-based counterparties, and therefore we are subject to the
CFTC requirements. Mint Brokers has entered into guarantees on our behalf (and
on behalf of GFI), and we are required to indemnify Mint Brokers for the
amounts, if any, paid by Mint Brokers on our behalf pursuant to this
arrangement. Effective April 1, 2020, these guarantees were transferred to Mint
Brokers from CF&Co. During the three and six months ended June 30, 2020, the
Company recorded expenses of $31 thousand and $63 thousand with respect to these
guarantees.

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NEWMARK SUBLEASE TO BGC


 In May 2020, BGC U.S. OpCo entered into an arrangement to sublease excess space
from RKF Retail Holdings LLC, a subsidiary of Newmark, which sublease was
approved by the Audit Committee. The deal is a one-year sublease of
approximately 21,000 rentable square feet in New York City. Under the terms of
the lease, BGC U.S. OpCo will pay a fixed rent amount of $1.1 million. In
connection with this agreement, BGC U.S. OpCo paid $0.1 million for the three
and six months ended June 30, 2020.

DEBT REPURCHASE PROGRAM


On June 11, 2020, the Company's Board of Directors and its Audit Committee
authorized a debt repurchase program for the repurchase by the Company of up to
$50.0 million of Company Debt Securities. Repurchases of Company Debt
Securities, if any, are expected to reduce future cash interest payments, as
well as future amounts due at maturity or upon redemption.

Under the authorization, the Company may make repurchases of Company Debt
Securities for cash from time to time in the open market or in privately
negotiated transactions upon such terms and at such prices as management may
determine. Additionally, the Company is authorized to make any such repurchases
of Company Debt Securities through CF&Co (or its affiliates), in its capacity as
agent or principal, or such other broker-dealers as management shall determine
to utilize from time to time, and such repurchases shall be subject to brokerage
commissions which are no higher than standard market commission rates.

As of June 30, 2020, the Company had $50.0 million remaining from its debt repurchase authorization.

EQUITY METHOD INVESTMENTS


The Company was authorized to enter into loans, investments or other credit
support arrangements for Aqua (see Note 14- "Related Party Transactions," to our
unaudited condensed consolidated financial statements in Part I, Item 1 of this
Quarterly Report on Form 10-Q); such arrangements are proportionally and on the
same terms as similar arrangements between Aqua and Cantor. On February 5, 2020,
the Company's Board and Audit Committee increased the authorized amount by an
additional $2.0 million. The Company has been further authorized to provide
counterparty or similar guarantees on behalf of Aqua from time to time, provided
that liability for any such guarantees, as well as similar guarantees provided
by Cantor, would be shared proportionally with Cantor.

UNIT REDEMPTIONS AND EXCHANGES-EXECUTIVE OFFICERS


On March 2, 2020, the Company granted Stephen M. Merkel 360,065 exchange rights
with respect to 360,065 non-exchangeable LPUs that were previously granted to
Mr. Merkel. The resulting 360,065 exchangeable LPUs were immediately
exchangeable by Mr. Merkel for an aggregate of 360,065 shares of BGC Class A
common stock. The grant was approved by the Compensation Committee.
Additionally, the Compensation Committee approved the right to exchange for cash
265,568 non-exchangeable PLPUs held by Mr. Merkel, for a payment of $1,507,285
for taxes when the LPU units were exchanged. On March 20, 2020, the Company
redeemed 185,300 of such 360,065 exchangeable LPUs held by Mr. Merkel at the
average price of shares of BGC Class A common stock sold under BGC's CEO Program
from March 10, 2020 to March 13, 2020 less 1% (approximately $4.0024 per LPU,
for an aggregate redemption price of approximately $741,644). This transaction
was approved by the Compensation Committee. On July 30, 2020, the Company
redeemed the remaining 174,765 exchangeable LPUs held by Mr. Merkel at the price
of $2.76, the closing price of our Class A Common Stock on July 30, 2020. This
transaction was approved by the Compensation Committee. In connection with the
redemption of the 185,300 exchangeable LPUs on March 20, 2020, 122,579 PLPUs
were redeemed for $661,303 for taxes. In connection with the redemption of the
174,765 LPUs on July 30, 2020, 142,989 PLPUs were redeemed for $846,182 for
taxes.

On March 2, 2020, the Company granted Shaun D. Lynn 883,348 exchange rights with
respect to 883,348 non-exchangeable LPUs that were previously granted to Mr.
Lynn. The resulting 883,348 exchangeable LPUs were immediately exchangeable by
Mr. Lynn for an aggregate of 883,348 shares of BGC Class A common stock. The
grant was approved by the Compensation Committee. Additionally, the Compensation
Committee approved the right to exchange for cash 245,140 non-exchangeable PLPUs
held by Mr. Lynn, for a payment of $ 1,099,599 for taxes when the LPU units are
exchanged. On July 30, 2020, the Company redeemed 797,222 exchangeable LPUs held
by Mr. Lynn at the price of $2.76, the closing price of our Class A Common Stock
on July 30, 2020. This transaction was approved by the Compensation Committee.
In connection with the redemption of the 797,222 exchangeable LPUs, 221,239
exchangeable PLPUs were redeemed for $992,388 for taxes. In connection with the
redemption, Mr. Lynn's remaining 86,126 exchangeable LPUs and 23,901
exchangeable PLPUs were redeemed for zero upon exchange in connection with his
LLP status.

On March 2, 2020, the Company granted Sean A. Windeatt 519,725 exchange rights
with respect to 519,725 non-exchangeable LPUs that were previously granted to
Mr. Windeatt. The resulting 519,725 exchangeable LPUs were immediately
exchangeable by Mr. Windeatt for an aggregate of 519,725 shares of BGC Class A
common stock. The grant was approved by the Compensation Committee.
Additionally, the Compensation Committee approved the right to exchange for cash
97,656 non-exchangeable PLPUs held by Mr. Windeatt, for a payment of $645,779
for taxes when the LPU units are exchanged. On August 5, 2020, the Company
redeemed 436,665 exchangeable LPUs held by Mr. Windeatt at the price of $2.90,
the closing price of our Class A common stock on August 5, 2020. This
transaction was approved by the Compensation Committee. In connection with the
redemption of the 436,665 exchangeable LPUs, 96,216 exchangeable PLPUs were
redeemed for $637,865 for taxes. In connection

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with the redemption, 20,849 exchangeable LPUs and 1,440 exchangeable PLPUs were redeemed for zero upon exchange in connection with Mr. Windeatt's LLP status.


Additionally, on August 5, 2020, the Company granted Mr. Windeatt 40,437
exchange rights with respect to 40,437 non-exchangeable LPUs that were
previously granted to Mr. Windeatt. The resulting 40,437 exchangeable LPUs were
immediately exchangeable by Mr. Windeatt for an aggregate of 40,437 shares of
BGC Class A common stock. The grant was approved by the Compensation Committee.
Additionally, the Compensation Committee approved the right to exchange for cash
21,774 non-exchangeable PLPUs held by Mr. Windeatt. On August 5, 2020 the
Company redeemed these 40,437 exchangeable LPUs held by Mr. Windeatt at the
price of $2.90, the closing price of our Class A common  stock on August 5,
2020. This transaction was approved by the Compensation Committee. In connection
with the redemption of these 40,437 exchangeable LPUs, the 21,774 exchangeable
PLPUs were redeemed for $136,305 for taxes.

In addition to the foregoing, on August 6, 2020, Mr. Windeatt was granted
exchange rights with respect to 43,890 non-exchangeable Newmark Holding LPUs
that were previously granted to Mr. Windeatt. Additionally, Mr. Windeatt was
granted the right to exchange for cash 17,068 non-exchangeable Newmark Holdings
PLPUs held by Mr. Windeatt. As these Newmark Holdings LPUs and PLPUs were
previously non-exchangeable, the Company took a transaction charge of $381,961
upon grant of exchangeability. On August 6, 2020, Newmark redeemed the 40,209
Newmark Holdings exchangeable LPUs held by Mr. Windeatt for an amount equal to
the closing price of Newmark's Class A Common  Stock on August 6, 2020 ($4.16)
multiplied by 37,660 (the amount of shares of Newmark's Class A Common Stock
 the 40,209 Newmark Holdings LPUs were exchangeable into based on the Exchange
Ratio at August 6, 2020). In connection with the redemption of these 40,209
exchangeable Newmark Holdings LPUs, 15,637 exchangeable Newmark Holdings PLPUs
were redeemed for $194,086 for taxes. In connection with the redemption, 3,681
exchangeable Newmark Holding LPUs and 1,431 exchangeable Newmark Holdings PLPUs
were redeemed for zero upon exchange in connection with Mr. Windeatt's LLP
status.

On March 27, 2019, the Audit and Compensation Committees authorized the purchase
by the Company from Mr. Merkel of up to 250,000 shares of BGC Class A common
stock at the closing price on March 26, 2019. Pursuant to this authorization,
233,172 shares of BGC Class A common stock were purchased by the Company on
March 27, 2019 at $5.30 per share, the closing price on March 26, 2019.

On February 27, 2019, the Audit Committee authorized the purchase by Mr.
Lutnick's retirement plan of up to $56,038 of BGC Class A common stock at the
closing price on March 4, 2019. Pursuant to this authorization, 8,980 shares of
BGC Class A common stock were purchased by the plan on March 5, 2019 at $6.24
per share, the closing price on March 4, 2019.





MARKET SUMMARY

The following table provides certain volume and transaction count information for the quarterly periods indicated:




                                      June 30,       March 31,       December 31,       September 30,      June 30,
                                        2020           2020              2019               2019             2019
Notional Volume (in billions)
Total Fully Electronic volume         $   7,103$     8,048$        5,975     $         6,448     $   5,825
Total Hybrid volume                      63,874          85,290             66,996              73,485        66,619
Total Fully Electronic and Hybrid
volume                                $  70,977$    93,338$       72,971$        79,933$  72,444
Transaction Count (in thousands,
except for days)
Total Fully Electronic transactions       3,207           4,229              3,108               3,176         2,856
Total Hybrid transactions                 1,333           1,513              1,165               1,265         1,283
Total Fully Electronic and Hybrid
transactions                              4,540           5,742              4,273               4,441         4,139
Trading days                                 63              62                 64                  64            63




Note: Certain information may have been recast with current estimates to reflect
changes in reporting methodology. Such revisions have no impact on the Company's
revenues or earnings.

Fully Electronic volume, including new products, was $7.1 trillion for the three
months ended June 30, 2020, compared to $5.8 trillion for the three months ended
June 30, 2019. Our Hybrid volume for the three months ended June 30, 2020 was
$63.9 trillion, compared to $66.6 trillion for the three months ended June 30,
2019.


OFF-BALANCE SHEET ARRANGEMENTS


In the ordinary course of business, we enter into arrangements with
unconsolidated entities, including variable interest entities. See Note
15-"Investments" to our unaudited condensed consolidated financial statements in
Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information
related to our investments in unconsolidated entities.

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CRITICAL ACCOUNTING POLICIES and estimates


The preparation of our unaudited condensed consolidated financial statements in
conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of the assets and liabilities, revenues and
expenses, and the disclosure of contingent assets and liabilities in our
unaudited condensed consolidated financial statements. These accounting
estimates require the use of assumptions about matters, some of which are highly
uncertain at the time of estimation. To the extent actual experience differs
from the assumptions used, our unaudited condensed consolidated statements of
financial condition, unaudited condensed consolidated statements of operations
and unaudited condensed consolidated statements of cash flows could be
materially affected. We believe that the following accounting policies involve a
higher degree of judgment and complexity.

Revenue Recognition


We derive our revenues primarily through commissions from brokerage services,
the spread between the buy and sell prices on matched principal transactions,
fees from related parties, data, software and post-trade services, and other
revenues. See Note 3-"Summary of Significant Accounting Policies" to our
consolidated financial statements in Part II, Item 8 of our Annual Report on
Form 10-K for the year ended December 31, 2019, for further information
regarding revenue recognition.

Equity-Based and Other Compensation


Discretionary Bonus: A portion of our compensation and employee benefits expense
is comprised of discretionary bonuses, which may be paid in cash, equity,
partnership awards or a combination thereof. We accrue expense in a period based
on revenues in that period and on the expected combination of cash, equity and
partnership units. Given the assumptions used in estimating discretionary
bonuses, actual results may differ.

Restricted Stock Units: We account for equity-based compensation under the fair
value recognition provisions of the U.S. GAAP guidance. RSUs provided to certain
employees are accounted for as equity awards, and in accordance with the U.S.
GAAP, we are required to record an expense for the portion of the RSUs that is
ultimately expected to vest. Further, forfeitures are estimated at the time of
grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates. Because assumptions are used in estimating employee
turnover and associated forfeiture rates, actual results may differ from our
estimates under different assumptions or conditions.

The fair value of RSU awards to employees is determined on the date of grant,
based on the fair value of BGC Class A common stock. Generally, RSUs granted by
us as employee compensation do not receive dividend equivalents; as such, we
adjust the fair value of the RSUs for the present value of expected forgone
dividends, which requires us to include an estimate of expected dividends as a
valuation input. This grant-date fair value is amortized to expense ratably over
the awards' vesting periods. For RSUs with graded vesting features, we have made
an accounting policy election to recognize compensation cost on a straight-line
basis. The amortization is reflected as part of "Equity-based compensation and
allocations of net income to limited partnership units and FPUs" in our
unaudited condensed consolidated statements of operations.

Restricted Stock: Restricted stock provided to certain employees is accounted
for as an equity award, and as per the U.S. GAAP guidance, we are required to
record an expense for the portion of the restricted stock that is ultimately
expected to vest. We have granted restricted stock that is not subject to
continued employment or service; however, transferability is subject to
compliance with our and our affiliates' customary noncompete obligations. Such
shares of restricted stock are generally saleable by partners in five to ten
years. Because the restricted stock is not subject to continued employment or
service, the grant-date fair value of the restricted stock is expensed on the
date of grant. The expense is reflected as non-cash equity-based compensation
expense in our unaudited condensed consolidated statements of operations.

Limited Partnership Units: LPUs in BGC Holdings and Newmark Holdings are
generally held by employees. Generally, such units receive quarterly allocations
of net income, which are cash distributed on a quarterly basis and generally
contingent upon services being provided by the unit holders. In addition,
Preferred Units are granted in connection with the grant of certain LPUs, such
as PSUs, that may be granted exchangeability or redeemed in connection with the
grant of shares of common stock to cover the withholding taxes owed by the unit
holder upon such exchange or grant. This is an acceptable alternative to the
common practice among public companies of issuing the gross amount of shares to
employees, subject to cashless withholding of shares to pay applicable
withholding taxes. Our Preferred Units are not entitled to participate in
partnership distributions other than with respect to a distribution at a rate of
either 0.6875% (which is 2.75% per calendar year) or such other amount as set
forth in the award documentation. The quarterly allocations of net income to
such LPUs are reflected as a component of compensation expense under
"Equity-based compensation and allocations of net income to limited partnership
units and FPUs" in our unaudited condensed consolidated statements of
operations.

Certain of these LPUs entitle the holders to receive post-termination payments
equal to the notional amount, generally in four equal yearly installments after
the holder's termination. These LPUs are accounted for as post-termination
liability awards under the U.S. GAAP. Accordingly, we recognize a liability for
these units on our consolidated statements of financial condition as part of
"Accrued compensation" for the amortized portion of the post-termination payment
amount, based on the current fair value of the expected future cash payout. We
amortize the post-termination payment amount, less an expected forfeiture rate,
over the vesting period, and record an expense for such awards based on the
change in value at each reporting period in our unaudited condensed consolidated
statements of operations as part of "Equity-based compensation and allocations
of net income to limited partnership units and FPUs."

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Certain LPUs are granted exchangeability into shares of BGC or Newmark Class A
common stock or are redeemed in connection with the grant of BGC or Newmark
Class A common stock issued; BGC Class A common stock is issued on a one-for-one
basis, and Newmark Class A common stock is issued based on the number of LPUs
exchanged or redeemed multiplied by the then Exchange Ratio. At the time
exchangeability is granted or shares of BGC or Newmark Class A common stock are
issued, we recognize an expense based on the fair value of the award on that
date, which is included in "Equity-based compensation and allocations of net
income to limited partnership units and FPUs" in our unaudited condensed
consolidated statements of operations. During the three months ended June 30,
2020 and 2019, we incurred equity-based compensation expense of $2.4 million and
$25.6 million, respectively. During the six months ended June 30, 2020 and 2019,
we incurred compensation expense of $25.4 million and $29.1 million,
respectively, related to LPUs and issuance of common stock.

Certain LPUs have a stated vesting schedule and do not receive quarterly
allocations of net income. Compensation expense related to these LPUs is
recognized over the stated service period, and these units generally vest
between two and five years. During the three months ended June 30, 2020 and
2019, we incurred compensation expense related to these LPUs of $19.5 million
and $10.7 million, respectively. During the six months ended June 30, 2020 and
2019, we incurred compensation expense related to these LPUs of $35.8 million
and $13.7 million, respectively. This expense is included in "Equity-based
compensation and allocations of net income to limited partnership units and
FPUs" in our unaudited condensed consolidated statements of operations.

Employee Loans: We have entered into various agreements with certain employees
and partners, whereby these individuals receive loans that may be either wholly
or in part repaid from distributions that the individuals receive on some or all
of their limited partnership interests or may be forgiven over a period of time.
Cash advance distribution loans are documented in formal agreements and are
repayable in timeframes outlined in the underlying agreements. We intend for
these advances to be repaid in full from the future distributions on existing
and future awards granted. The distributions are treated as compensation expense
when made and the proceeds are used to repay the loan. The forgivable portion of
any loans is recognized as compensation expense in our unaudited condensed
consolidated statements of operations over the life of the loan. We review the
loan balances each reporting period for collectability. If we determine that the
collectability of a portion of the loan balances is not expected, we recognize a
reserve against the loan balances. Actual collectability of loan balances may
differ from our estimates.

As of June 30, 2020 and December 31, 2019, the aggregate balance of employee
loans, net of reserve, was $370.8 million and $315.6 million, respectively, and
is included as "Loans, forgivable loans and other receivables from employees and
partners, net" in our unaudited condensed consolidated statements of financial
condition. Compensation expense (benefit) for the above-mentioned employee loans
for the three months ended June 30, 2020 and 2019, was $17.1 million and $7.4
million, respectively. Compensation expense (benefit) for the above-mentioned
employee loans for the six months ended June 30, 2020 and 2019, was $31.6
million and $14.0 million, respectively. The compensation expense related to
these loans was included as part of "Compensation and employee benefits" in our
unaudited condensed consolidated statements of operations.

Goodwill


Goodwill is the excess of the purchase price over the fair value of identifiable
net assets acquired in a business combination. As prescribed in the U.S. GAAP
guidance, Intangibles - Goodwill and Other, goodwill is not amortized, but
instead is periodically tested for impairment. We review goodwill for impairment
on an annual basis during the fourth quarter of each fiscal year or whenever an
event occurs or circumstances change that could reduce the fair value of a
reporting unit below its carrying amount.

When reviewing goodwill for impairment, we first assess qualitative factors to
determine whether it is more likely than not that the fair value of a reporting
unit is less than its carrying amount, including goodwill. If the results of the
qualitative assessment are not conclusive, or if we choose to bypass the
qualitative assessment, we perform a goodwill impairment analysis using a
two-step process as follows.

The first step involves comparing each reporting unit's estimated fair value to
its carrying value, including goodwill. To estimate the fair value of the
reporting units, we use a discounted cash flow model and data regarding market
comparables. The valuation process requires significant judgment and involves
the use of significant estimates and assumptions. These assumptions include cash
flow projections, estimated cost of capital and the selection of peer companies
and relevant multiples. Because assumptions and estimates are used in projecting
future cash flows, choosing peer companies and selecting relevant multiples,
actual results may differ from our estimates under different assumptions or
conditions. If the estimated fair value of a reporting unit exceeds its carrying
value, goodwill is deemed not to be impaired. If the carrying value exceeds
estimated fair value, there is an indication of potential impairment and the
second step is performed to measure the amount of potential impairment.

The second step of the process involves the calculation of an implied fair value
of goodwill for each reporting unit for which step one indicated a potential
impairment may exist. The implied fair value of goodwill is determined by
measuring the excess of the estimated fair value of the reporting unit, as
calculated in step one, over the estimated fair values of the individual assets,
liabilities and identified intangibles. Events such as economic weakness,
significant declines in operating results of reporting units, or significant
changes to critical inputs of the goodwill impairment test (e.g., estimates of
cash flows or cost of capital) could cause the estimated fair value of our
reporting units to decline, which could result in an impairment of goodwill in
the future.

CECL

We present financial assets that are measured at amortized cost net of an
allowance for credit losses, which represents the amount expected to be
collected over their estimated life. Expected credit losses for newly recognized
financial assets carried at amortized cost, as well as changes to expected
lifetime credit losses during the period, are recognized in earnings. The CECL
methodology, which became

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effective for the Company on January 1, 2020, represents a significant change
from prior U.S. GAAP and replaced the prior multiple impairment methods, which
generally required that a loss be incurred before it was recognized. Within the
life cycle of a loan or other financial asset in scope, the methodology
generally results in the earlier recognition of the provision for credit losses
and the related allowance for credit losses than under prior U.S. GAAP. The CECL
methodology's impact on expected credit losses, among other things, reflects the
Company's view of the current state of the economy, forecasted macroeconomic
conditions and BGC's portfolios.

Income Taxes


We account for income taxes using the asset and liability method as prescribed
in the U.S. GAAP guidance, Income Taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to basis differences
between the consolidated financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Certain of our entities are
taxed as U.S. partnerships and are subject to UBT in the City of New York.
Therefore, the tax liability or benefit related to the partnership income or
loss except for UBT rests with the partners (see Note 2-"Limited Partnership
Interests in BGC Holdings and Newmark Holdings" for a discussion of partnership
interests), rather than the partnership entity. As such, the partners' tax
liability or benefit is not reflected in our unaudited condensed consolidated
financial statements. The tax-related assets, liabilities, provisions or
benefits included in our unaudited condensed consolidated financial statements
also reflect the results of the entities that are taxed as corporations, either
in the U.S. or in foreign jurisdictions.

We provide for uncertain tax positions based upon management's assessment of
whether a tax benefit is more likely than not to be sustained upon examination
by tax authorities. Management is required to determine whether a tax position
is more likely than not to be sustained upon examination by tax authorities,
including resolution of any related appeals or litigation processes, based on
the technical merits of the position. Because significant assumptions are used
in determining whether a tax benefit is more likely than not to be sustained
upon examination by tax authorities, actual results may differ from our
estimates under different assumptions or conditions. We recognize interest and
penalties related to income tax matters in "Provision for income taxes" in our
unaudited condensed consolidated statements of operations.

A valuation allowance is recorded against deferred tax assets if it is deemed
more likely than not that those assets will not be realized. In assessing the
need for a valuation allowance, we consider all available evidence, including
past operating results, the existence of cumulative losses in the most recent
fiscal years, estimates of future taxable income and the feasibility of tax
planning strategies.

The measurement of current and deferred income tax assets and liabilities is
based on provisions of enacted tax laws and involves uncertainties in the
application of tax regulations in the U.S. and other tax jurisdictions. Because
our interpretation of complex tax law may impact the measurement of current and
deferred income taxes, actual results may differ from these estimates under
different assumptions regarding the application of tax law.

The Tax Act was enacted on December 22, 2017, which includes the global
intangible low-taxed income, GILTI, provision. This provision requires inclusion
in the Company's U.S. income tax return the earnings of certain foreign
subsidiaries. The Company has elected to treat taxes associated with the GILTI
provision using the Period Cost Method and thus has not recorded deferred taxes
for basis differences under this regime.

See Note 3-"Summary of Significant Accounting Policies" to our consolidated
financial statements in Part II, Item 8 of our Annual Report on Form 10-K as of
December 31, 2019 and Note 3-"Summary of Significant Accounting Policies" to our
unaudited condensed consolidated financial statements for additional information
regarding these critical accounting policies and other significant accounting
policies.

RECENT ACCOUNTING PRONOUNCEMENTS


See Note 1-"Organization and Basis of Presentation" to our unaudited condensed
consolidated financial statements in Part I, Item 1 of this Quarterly Report on
Form 10-Q for information regarding recent accounting pronouncements.

DIVIDEND POLICY


Our Board has authorized a dividend policy which provides that we expect to pay
a quarterly cash dividend to our common stockholders based on our post-tax
Adjusted Earnings per fully diluted share. In the first quarter of 2020, the
Board took the step of reducing the quarterly dividend out of an abundance of
caution in order to strengthen the Company's balance sheet as the global capital
markets face difficult and unprecedented macroeconomic conditions. Our Board
declared a dividend of $0.01 per share for the second quarter of 2020.
Additionally, BGC Holdings, L.P. has reduced its distributions to or on behalf
of its partners. The distributions to or on behalf of partners will at least
cover their related tax payments. Whether any given post-tax amount is
equivalent to the amount received by a stockholder also on an after tax basis
depends upon stockholders' and partners' domiciles and tax status. BGC believes
that these steps will allow the Company to prioritize its financial strength.
The Company expects to regularly review its capital return policy.

We expect to pay such dividends, if and when declared by our Board, on a
quarterly basis. The dividend to our common stockholders is expected to be
calculated based on post-tax Adjusted Earnings allocated to us and generated
over the fiscal quarter ending prior to the record date for the dividend. No
assurance can be made, however, that a dividend will be paid each quarter.

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The declaration, payment, timing, and amount of any future dividends payable by
us will be at the sole discretion of our Board. We are a holding company, with
no direct operations, and therefore we are able to pay dividends only from our
available cash on hand and funds received from distributions from BGC U.S. OpCo
and BGC Global OpCo. Our ability to pay dividends may also be limited by
regulatory considerations as well as by covenants contained in financing or
other agreements. In addition, under Delaware law, dividends may be payable only
out of surplus, which is our net assets minus our capital (as defined under
Delaware law), or, if we have no surplus, out of our net profits for the fiscal
year in which the dividend is declared and/or the preceding fiscal year.
Accordingly, any unanticipated accounting, tax, regulatory or other charges
against net income may adversely affect our ability to declare and pay
dividends. While we intend to declare and pay dividends quarterly, there can be
no assurance that our Board will declare dividends at all or on a regular basis
or that the amount of our dividends will not change.

Non-GAAP Financial Measures


We use non-GAAP financial measures that differ from the most directly comparable
measures calculated and presented in accordance with U.S. GAAP. Non-GAAP
financial measures used by the Company include "Adjusted Earnings before
noncontrolling interests and taxes", which is used interchangeably with "pre-tax
Adjusted Earnings"; "Post-tax Adjusted Earnings to fully diluted shareholders",
which is used interchangeably with "post-tax Adjusted Earnings"; and "Adjusted
EBITDA". The definitions of these terms are below.

Adjusted Earnings Defined


BGC uses non-GAAP financial measures, including "Adjusted Earnings before
noncontrolling interests and taxes" and "Post-tax Adjusted Earnings to fully
diluted shareholders", which are supplemental measures of operating results used
by management to evaluate the financial performance of the Company and its
consolidated subsidiaries. BGC believes that Adjusted Earnings best reflect the
operating earnings generated by the Company on a consolidated basis and are the
earnings which management considers when managing its business.

As compared with "Income (loss) from operations before income taxes" and "Net
income (loss) for fully diluted shares", both prepared in accordance with U.S.
GAAP, Adjusted Earnings calculations primarily exclude certain non-cash items
and other expenses that generally do not involve the receipt or outlay of cash
by the Company and/or which do not dilute existing stockholders. In addition,
Adjusted Earnings calculations exclude certain gains and charges that management
believes do not best reflect the ordinary results of BGC. Adjusted Earnings is
calculated by taking the most comparable U.S. GAAP measures and adjusting for
certain items with respect to compensation expenses, non-compensation expenses,
and other income, as discussed below.

Calculations of Compensation Adjustments for Adjusted Earnings and Adjusted EBITDA

Treatment of Equity-Based Compensation Line Item for Adjusted Earnings and Adjusted EBITDA


The Company's Adjusted Earnings and Adjusted EBITDA measures exclude all U.S.
GAAP charges included in the line item "Equity-based compensation and
allocations of net income to limited partnership units and FPUs" (or
"equity-based compensation" for purposes of defining the Company's non-GAAP
results) as recorded on the Company's U.S. GAAP Consolidated Statements of
Operations and U.S. GAAP Consolidated Statements of Cash Flows. These U.S. GAAP
equity-based compensation charges reflect the following items:



* Charges with respect to grants of exchangeability, which reflect the

            right of holders of LPUs with no capital accounts, such as LPUs and
            PSUs, to exchange these units into shares of common stock, or into
            partnership units with capital accounts, such as HDUs, as well

as cash

            paid with respect to taxes withheld or expected to be owed by 

the unit

            holder upon such exchange. The withholding taxes related to the
            exchange of certain non-exchangeable units without a capital 

account

            into either common shares or units with a capital account may be
            funded by the redemption of preferred units such as PPSUs.

* Charges with respect to preferred units. Any preferred units would not

            be included in the Company's fully diluted share count because 

they

            cannot be made exchangeable into shares of common stock and are
            entitled only to a fixed distribution. Preferred units are 

granted in

            connection with the grant of certain LPUs that may be granted
            exchangeability or redeemed in connection with the grant of 

shares of

            common stock at ratios designed to cover any withholding taxes
            expected to be paid. This is an alternative to the common

practice

            among public companies of issuing the gross amount of shares to
            employees, subject to cashless withholding of shares, to pay
            applicable withholding taxes.

* U.S. GAAP equity-based compensation charges with respect to the grant

            of an offsetting amount of common stock or partnership units 

with

            capital accounts in connection with the redemption of 

non-exchangeable

            units, including PSUs and LPUs.


  * Charges related to amortization of RSUs and LPUs.


      *     Charges related to grants of equity awards, including common stock or
            partnership units with capital accounts.


      *     Allocations of net income to LPUs and FPUs. Such allocations represent
            the pro-rata portion of post-tax U.S. GAAP earnings available to such
            unit holders.


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The amounts of certain quarterly equity-based compensation charges are based
upon the Company's estimate of such expected charges during the annual period,
as described further below under "Methodology for Calculating Adjusted Earnings
Taxes."

Virtually all of BGC's key executives and producers have equity or partnership
stakes in the Company and its subsidiaries and generally receive deferred equity
or LPUs as part of their compensation. A significant percentage of BGC's fully
diluted shares are owned by its executives, partners and employees. The Company
issues LPUs as well as other forms of equity-based compensation, including
grants of exchangeability into shares of common stock, to provide liquidity to
its employees, to align the interests of its employees and management with those
of common stockholders, to help motivate and retain key employees, and to
encourage a collaborative culture that drives cross-selling and revenue growth.

All share equivalents that are part of the Company's equity-based compensation
program, including REUs, PSUs, LPUs, HDUs, and other units that may be made
exchangeable into common stock, as well as RSUs (which are recorded using the
treasury stock method), are included in the fully diluted share count when
issued or at the beginning of the subsequent quarter after the date of grant.
Generally, LPUs other than Preferred Units are expected to be paid a pro-rata
distribution based on BGC's calculation of Adjusted Earnings per fully diluted
share. However, out of an abundance of caution and in order to strengthen the
Company's balance sheet due the uncertain macroeconomic conditions with respect
to the COVID-19 pandemic, BGC Holdings, L.P. has reduced its distributions of
income from the operations of BGC's businesses to its partners.

Compensation charges are also adjusted for certain other cash and non-cash
items, including those related to the amortization of GFI employee forgivable
loans granted prior to the closing of the January 11, 2016 back-end merger with
GFI.

Certain Other Compensation-Related Adjustments for Adjusted Earnings


BGC also excludes various other U.S. GAAP items that management views as not
reflective of the Company's underlying performance in a given period from its
calculation of Adjusted Earnings. These may include compensation-related items
with respect to cost-saving initiatives, such as severance charges incurred in
connection with headcount reductions as part of broad restructuring and/or cost
savings plans.

Calculation of Non-Compensation Adjustments for Adjusted Earnings

Adjusted Earnings calculations may also exclude items such as:

* Non-cash U.S. GAAP charges related to the amortization of intangibles

            with respect to acquisitions;


  * Acquisition related costs;


  * Certain rent charges;


  * Non-cash U.S. GAAP asset impairment charges; and


      *     Various other U.S. GAAP items that management views as not reflective
            of the Company's underlying performance in a given period, including
            non-compensation-related charges incurred as part of broad
            restructuring and/or cost savings plans. Such U.S. GAAP items may
            include charges for exiting leases and/or other long-term

contracts as

            part of cost-saving initiatives, as well as non-cash impairment
            charges related to assets, goodwill and/or intangibles created from
            acquisitions.

Calculation of Adjustments for Other (income) losses for Adjusted Earnings

Adjusted Earnings calculations also exclude certain other non-cash, non-dilutive, and/or non-economic items, which may, in some periods, include:




  * Gains or losses on divestitures;


  * Fair value adjustment of investments;


      *     Certain other U.S. GAAP items, including gains or losses related to
            BGC's investments accounted for under the equity method; and


  * Any unusual, one-time, non-ordinary, or non-recurring gains or losses.


Methodology for Calculating Adjusted Earnings Taxes


Although Adjusted Earnings are calculated on a pre-tax basis, BGC also reports
post-tax Adjusted Earnings to fully diluted shareholders. The Company defines
post-tax Adjusted Earnings to fully diluted shareholders as pre-tax Adjusted
Earnings reduced by the non-GAAP tax provision described below and net income
(loss) attributable to noncontrolling interest for Adjusted Earnings.

The Company calculates its tax provision for post-tax Adjusted Earnings using an
annual estimate similar to how it accounts for its income tax provision under
U.S. GAAP. To calculate the quarterly tax provision under U.S. GAAP, BGC
estimates its full fiscal year U.S. GAAP income (loss) from operations before
income taxes and noncontrolling interests in subsidiaries and the expected
inclusions and

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deductions for income tax purposes, including expected equity-based compensation
during the annual period. The resulting annualized tax rate is applied to BGC's
quarterly U.S. GAAP income (loss) from operations before income taxes and
noncontrolling interests in subsidiaries. At the end of the annual period, the
Company updates its estimate to reflect the actual tax amounts owed for the
period.

To determine the non-GAAP tax provision, BGC first adjusts pre-tax Adjusted
Earnings by recognizing any, and only, amounts for which a tax deduction applies
under applicable law. The amounts include charges with respect to equity-based
compensation; certain charges related to employee loan forgiveness; certain net
operating loss carryforwards when taken for statutory purposes; and certain
charges related to tax goodwill amortization. These adjustments may also reflect
timing and measurement differences, including treatment of employee loans;
changes in the value of units between the dates of grants of exchangeability and
the date of actual unit exchange; variations in the value of certain deferred
tax assets; and liabilities and the different timing of permitted deductions for
tax under U.S. GAAP and statutory tax requirements.

After application of these adjustments, the result is the Company's taxable income for its pre-tax Adjusted Earnings, to which BGC then applies the statutory tax rates to determine its non-GAAP tax provision. BGC views the effective tax rate on pre-tax Adjusted Earnings as equal to the amount of its non-GAAP tax provision divided by the amount of pre-tax Adjusted Earnings.


Generally, the most significant factor affecting this non-GAAP tax provision is
the amount of charges relating to equity-based compensation. Because the charges
relating to equity-based compensation are deductible in accordance with
applicable tax laws, increases in such charges have the effect of lowering the
Company's non-GAAP effective tax rate and thereby increasing its post-tax
Adjusted Earnings.

BGC incurs income tax expenses based on the location, legal structure and
jurisdictional taxing authorities of each of its subsidiaries. Certain of the
Company's entities are taxed as U.S. partnerships and are subject to the
Unincorporated Business Tax ("UBT") in New York City. Any U.S. federal and state
income tax liability or benefit related to the partnership income or loss, with
the exception of UBT, rests with the unit holders rather than with the
partnership entity. The Company's unaudited condensed consolidated financial
statements include U.S. federal, state and local income taxes on the Company's
allocable share of the U.S. results of operations. Outside of the U.S., BGC is
expected to operate principally through subsidiary corporations subject to local
income taxes. For these reasons, taxes for Adjusted Earnings are expected to be
presented to show the tax provision the consolidated Company would expect to pay
if 100 percent of earnings were taxed at global corporate rates.

Calculations of Pre- and Post-Tax Adjusted Earnings per Share


BGC's Pre- and Post-tax Adjusted Earnings per share calculations assume either
that:



      *     The fully diluted share count includes the shares related to any
            dilutive instruments, but excludes the associated expense, net of tax,
            when the impact would be dilutive; or


      *     The fully diluted share count excludes the shares related to these
            instruments, but includes the associated expense, net of tax.


The share count for Adjusted Earnings excludes certain shares and share
equivalents expected to be issued in future periods but not yet eligible to
receive dividends and/or distributions. Each quarter, the dividend payable to
BGC's stockholders, if any, is expected to be determined by the Company's Board
of Directors with reference to a number of factors, including post-tax Adjusted
Earnings per share. BGC may also pay a pro-rata distribution of net income to
LPUs, as well as to Cantor for its noncontrolling interest. The amount of this
net income, and therefore of these payments per unit, would be determined using
the above definition of Adjusted Earnings per share on a pre-tax basis.

The declaration, payment, timing and amount of any future dividends payable by
the Company will be at the discretion of its Board of Directors using the fully
diluted share count. For more information on any share count adjustments, see
the table titled "Fully Diluted Weighted-Average Share Count under U.S. GAAP and
for Adjusted Earnings" in the Company's most recent financial results press
release.

Management Rationale for Using Adjusted Earnings


BGC's calculation of Adjusted Earnings excludes the items discussed above
because they are either non-cash in nature, because the anticipated benefits
from the expenditures are not expected to be fully realized until future
periods, or because the Company views results excluding these items as a better
reflection of the underlying performance of BGC's ongoing operations. Management
uses Adjusted Earnings in part to help it evaluate, among other things, the
overall performance of the Company's business, to make decisions with respect to
the Company's operations, and to determine the amount of dividends payable to
common stockholders and distributions payable to holders of LPUs. Dividends
payable to common stockholders and distributions payable to holders of LPUs are
included within "Dividends to stockholders" and "Earnings distributions to
limited partnership interests and noncontrolling interests," respectively, in
our unaudited, condensed, consolidated statements of cash flows.

The term "Adjusted Earnings" should not be considered in isolation or as an
alternative to U.S. GAAP net income (loss). The Company views Adjusted Earnings
as a metric that is not indicative of liquidity, or the cash available to fund
its operations, but rather as a performance measure. Pre- and post-tax Adjusted
Earnings, as well as related measures, are not intended to replace the Company's

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presentation of its U.S. GAAP financial results. However, management believes
that these measures help provide investors with a clearer understanding of BGC's
financial performance and offer useful information to both management and
investors regarding certain financial and business trends related to the
Company's financial condition and results of operations. Management believes
that the U.S. GAAP and Adjusted Earnings measures of financial performance
should be considered together.

For more information regarding Adjusted Earnings, see the section in the
Company's most recent financial results press release titled "Reconciliation of
U.S. GAAP Income (Loss) from Operations before Income Taxes to Adjusted Earnings
and U.S. GAAP Fully Diluted EPS to Post-Tax Adjusted EPS", including the related
footnotes, for details about how BGC's non-GAAP results are reconciled to those
under U.S. GAAP.

Adjusted EBITDA Defined

BGC also provides an additional non-GAAP financial performance measure, "Adjusted EBITDA", which it defines as GAAP "Net income (loss) available to common stockholders", adjusted to add back the following items:



  * Provision (benefit) for income taxes;

* Net income (loss) attributable to noncontrolling interest in subsidiaries;



  * Interest expense;


  * Fixed asset depreciation and intangible asset amortization;


      *     Equity-based compensation and allocations of net income to limited
            partnership units and FPUs;


  * Impairment of long-lived assets;


  * (Gains) losses on equity method investments; and


      *     Certain other non-cash GAAP items, such as non-cash charges of
            amortized rents incurred by the Company for its new U.K. based
            headquarters.


The Company's management believes that its Adjusted EBITDA measure is useful in
evaluating BGC's operating performance, because the calculation of this measure
generally eliminates the effects of financing and income taxes and the
accounting effects of capital spending and acquisitions, which would include
impairment charges of goodwill and intangibles created from acquisitions. Such
items may vary for different companies for reasons unrelated to overall
operating performance. As a result, the Company's management uses this measure
to evaluate operating performance and for other discretionary purposes. BGC
believes that Adjusted EBITDA is useful to investors to assist them in getting a
more complete picture of the Company's financial results and operations.

Since BGC's Adjusted EBITDA is not a recognized measurement under GAAP,
investors should use this measure in addition to GAAP measures of net income
when analyzing BGC's operating performance. Because not all companies use
identical EBITDA calculations, the Company's presentation of Adjusted EBITDA may
not be comparable to similarly titled measures of other companies. Furthermore,
Adjusted EBITDA is not intended to be a measure of free cash flow or GAAP cash
flow from operations because the Company's Adjusted EBITDA does not consider
certain cash requirements, such as tax and debt service payments.

For more information regarding Adjusted EBITDA, see the section in the Company's
most recent financial results press release titled "Reconciliation of GAAP Net
Income (Loss) Available to Common Stockholders to Adjusted EBITDA", including
the footnotes to the same, for details about how BGC's non-GAAP results are
reconciled to those under GAAP.

OUR ORGANIZATIONAL STRUCTURE

Stock Ownership


As of June 30, 2020, there were 313,322,719 shares of BGC Class A common stock
outstanding. On June 21, 2017, Cantor pledged 10,000,000 shares of BGC Class A
common stock in connection with a partner loan program. On November 23, 2018,
those shares of BGC Class A common stock were converted into 10,000,000 shares
of BGC Class B common stock and remain pledged in connection with the partner
loan program. On November 23, 2018, BGC Partners issued 10,323,366 shares of BGC
Class B common stock to Cantor and 712,907 shares of BGC Class B common stock to
CFGM, an affiliate of Cantor, in each case in exchange for shares of BGC Class A
common stock from Cantor and CFGM, respectively, on a one-to-one basis pursuant
to Cantor's and CFGM's right to exchange such shares under the letter agreement,
dated as of June 5, 2015, by and between BGC Partners and Cantor. Pursuant to
the Exchange Agreement, no additional consideration was paid to BGC Partners by
Cantor or CFGM for the Class B Issuance. The Class B Issuance was exempt from
registration pursuant to Section 3(a)(9) of the Securities Act. As of June 30,
2020, Cantor and CFGM did not own any shares of BGC Class A common stock. Each
share of BGC Class A common stock is entitled to one vote on matters submitted
to a vote of our stockholders.

In addition, as of June 30, 2020, Cantor and CFGM held 45,884,380 shares of BGC
Class B common stock (which represents all of the outstanding shares of BGC
Class B common stock), representing approximately 59.4% of our voting power on
such date. Each share of BGC Class B common stock is generally entitled to the
same rights as a share of BGC Class A common stock, except that, on matters
submitted to

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a vote of our stockholders, each share of Class B common stock is entitled to
ten votes. The BGC Class B common stock generally votes together with the BGC
Class A common stock on all matters submitted to a vote of our stockholders.

Through June 30, 2020, Cantor has distributed to its current and former partners
an aggregate of 20,850,346 shares of BGC Class A common stock, consisting of
(i) 19,372,639 April 2008 distribution rights shares, and (ii) 1,477,707
February 2012 distribution rights shares. As of June 30, 2020, Cantor is still
obligated to distribute to its current and former partners an aggregate of
15,756,625 shares of BGC Class A common stock, consisting of 13,999,105 April
2008 distribution rights shares and 1,757,520 February 2012 distribution rights
shares.

We received shares of Newmark in connection with the Separation, and Newmark
completed the Newmark IPO on December 19, 2017. However, on the Distribution
Date, we completed our previously announced Spin-Off to our stockholders of all
of the shares of common stock of Newmark owned by us as of immediately prior to
the effective time of the Spin-Off. Following the Spin-Off, we ceased to be
Newmark's controlling stockholder, and we and our subsidiaries no longer held
any shares of Newmark's common stock or other equity interests in Newmark or its
subsidiaries. For more information on the Spin-Off of Newmark, see Note
1-"Organization and Basis of Presentation" to our unaudited condensed
consolidated financial statements in Part I, Item 1 of this Quarterly Report on
Form 10-Q, and "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Overview and Business Environment -Newmark
IPO, Separation and Spin-Off."

From time to time, we may actively continue to repurchase shares of our Class A common stock including from Cantor, Newmark, our executive officers, other employees, partners and others.

BGC Partners, Inc. Partnership Structure


We are a holding company with no direct operations, and our business is operated
through two operating partnerships, BGC U.S. OpCo, which holds our U.S.
businesses, and BGC Global OpCo, which holds our non-U.S. businesses. The
limited partnership interests of the two operating partnerships are held by us
and BGC Holdings, and the limited partnership interests of BGC Holdings are
currently held by LPU holders, Founding Partners, and Cantor. We hold the BGC
Holdings general partnership interest and the BGC Holdings special voting
limited partnership interest, which entitle us to remove and appoint the general
partner of BGC Holdings, and serve as the general partner of BGC Holdings, which
entitles us to control BGC Holdings. BGC Holdings, in turn, holds the BGC U.S.
OpCo general partnership interest and the BGC U.S. OpCo special voting limited
partnership interest, which entitle the holder thereof to remove and appoint the
general partner of BGC U.S. OpCo, and the BGC Global OpCo general partnership
interest and the BGC Global OpCo special voting limited partnership interest,
which entitle the holder thereof to remove and appoint the general partner of
BGC Global OpCo, and serves as the general partner of BGC U.S. OpCo and BGC
Global OpCo, all of which entitle BGC Holdings (and thereby us) to control each
of BGC U.S. OpCo and BGC Global OpCo. BGC Holdings holds its BGC Global OpCo
general partnership interest through a company incorporated in the Cayman
Islands, BGC Global Holdings GP Limited.

As of June 30, 2020, we held directly and indirectly, through wholly-owned
subsidiaries, 359,207,099 BGC U.S. OpCo limited partnership units and
359,207,099 BGC Global OpCo limited partnership units, representing
approximately 67.7% of the outstanding limited partnership units in both BGC
U.S. OpCo and BGC Global OpCo. As of that date, BGC Holdings held 171,682,949
BGC U.S. OpCo limited partnership units and 171,682,949 BGC Global OpCo limited
partnership units, representing approximately 32.3% of the outstanding limited
partnership units in both BGC U.S. OpCo and BGC Global OpCo.

LPU holders, Founding Partners, and Cantor directly hold BGC Holdings limited
partnership interests. Since BGC Holdings in turn holds BGC U.S. OpCo limited
partnership interests and BGC Global OpCo limited partnership interests, LPU
holders, Founding Partners, and Cantor indirectly have interests in BGC U.S.
OpCo limited partnership interests and BGC Global OpCo limited partnership
interests. Further, in connection with the Separation and Distribution
Agreement, limited partnership interests in Newmark Holdings were distributed to
the holders of limited partnership interests in BGC Holdings, whereby each
holder of BGC Holdings limited partnership interests who at that time held a BGC
Holdings limited partnership interest received a corresponding Newmark Holdings
limited partnership interest, equal in number to a BGC Holdings limited
partnership interest divided by 2.2 (i.e., 0.4545 of a unit in Newmark
Holdings). Accordingly, existing partners at the time of the Separation in BGC
Holdings are also partners in Newmark Holdings and hold corresponding units
issued at the applicable ratio. Thus, such partners now also have an indirect
interest in Newmark OpCo.

As of June 30, 2020, excluding Preferred Units and NPSUs described below, outstanding BGC Holdings partnership interests included 118,099,781 LPUs, 12,202,262 FPUs and 52,362,964 Cantor units.


We may in the future effect additional redemptions of BGC Holdings LPUs and
FPUs, and concurrently grant shares of BGC Class A common stock. We may also
continue our earlier partnership restructuring programs, whereby we redeemed or
repurchased certain LPUs and FPUs in exchange for new units, grants of
exchangeability for BGC Class A common stock or cash and, in many cases,
obtained modifications or extensions of partners' employment arrangements. We
also generally expect to continue to grant exchange rights with respect to
outstanding non-exchangeable LPUs and FPUs, and to repurchase BGC Holdings
partnership interests from time to time, including from Cantor, our executive
officers, and other employees and partners, unrelated to our partnership
restructuring programs.

Cantor units in BGC Holdings are generally exchangeable under the Exchange
Agreement for up to 23,613,420 shares of BGC Class B common stock (or, at
Cantor's option or if there are no such additional authorized but unissued
shares of our Class B common stock, BGC Class A common stock) on a one-for-one
basis (subject to adjustments). Upon certain circumstances, Cantor may have the
right to acquire additional Cantor units in connection with the redemption of or
grant of exchangeability to certain non-exchangeable BGC Holdings FPUs owned by
persons who were previously Cantor partners prior to our 2008 acquisition of the
BGC business from Cantor. Cantor has exercised this right from time to time.

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As of June 30, 2020, there were 2,129,969 FPUs remaining which BGC Holdings, had
the right to redeem or exchange and with respect to which Cantor had the right
to purchase an equivalent number of Cantor units.

In order to facilitate partner compensation and for other corporate purposes,
the BGC Holdings limited partnership agreement provides for Preferred Units,
which are Working Partner units that may be awarded to holders of, or
contemporaneous with the grant of, PSUs, PSIs, PSEs, LPUs, APSUs, APSIs, APSEs,
REUs, RPUs, AREUs, and ARPUs. These Preferred Units carry the same name as the
underlying unit, with the insertion of an additional "P" to designate them as
Preferred Units.

Such Preferred Units may not be made exchangeable into BGC Class A common stock
and accordingly will not be included in the fully diluted share count. Each
quarter, the net profits of BGC Holdings are allocated to such Units at a rate
of either 0.6875% (which is 2.75% per calendar year) of the allocation amount
assigned to them based on their award price, or such other amount as set forth
in the award documentation, before calculation and distribution of the quarterly
Partnership distribution for the remaining Partnership units. The Preferred
Units will not be entitled to participate in Partnership distributions other
than with respect to the Preferred Distribution. As of June 30, 2020, there were
31,389,204 such units granted and outstanding in BGC Holdings.

On June 5, 2015, we entered into an agreement with Cantor providing Cantor, CFGM
and other Cantor affiliates entitled to hold BGC Class B common stock the right
to exchange from time to time, on a one-to-one basis, subject to adjustment, up
to an aggregate of 34,649,693 shares of BGC Class A common stock now owned or
subsequently acquired by such Cantor entities for up to an aggregate of
34,649,693 shares of BGC Class B common stock. Such shares of BGC Class B common
stock, which currently can be acquired upon the exchange of exchangeable LPUs
owned in our Holdings, are already included in the Company's fully diluted share
count and will not increase Cantor's current maximum potential voting power in
the common equity. The Exchange Agreement will enable the Cantor entities to
acquire the same number of shares of BGC Class B common stock that they were
already entitled to acquire without having to exchange their exchangeable LPUs
in our Holdings.

Under the Exchange Agreement, Cantor and CFGM have the right to exchange shares
of BGC Class A common stock owned by them for the same number of shares of BGC
Class B common stock. As of June 30, 2020, Cantor and CFGM do not own any shares
of BGC Class A common stock. Cantor and CFGM would also have the right to
exchange any shares of BGC Class A common stock subsequently acquired by either
of them for shares of BGC Class B common stock, up to 23,613,420 shares of BGC
Class B common stock.

We and Cantor have agreed that any shares of BGC Class B common stock issued in
connection with the Exchange Agreement would be deducted from the aggregate
number of shares of BGC Class B common stock that may be issued to the Cantor
entities upon exchange of exchangeable LPUs in BGC Holdings. Accordingly, the
Cantor entities will not be entitled to receive any more shares of BGC Class B
common stock under this agreement than they were previously eligible to receive
upon exchange of exchangeable LPUs.

Non-distributing partnership units, or N Units, carry the same name as the
underlying unit with the insertion of an additional "N" to designate them as the
N Unit type and are designated as NREUs, NPREUs, NLPUs, NPLPUs and NPPSUs. The N
Units are not entitled to participate in Partnership distributions, will not be
allocated any items of profit or loss and may not be made exchangeable into
shares of BGC Class A common stock. Subject to the approval of the Compensation
Committee or its designee, certain N Units may be converted into the underlying
unit type (i.e. an NREU will be converted into an REU) and will then participate
in Partnership distributions, subject to terms and conditions determined by the
general partner of BGC Holdings, in its sole discretion, including that the
recipient continue to provide substantial services to the Company and comply
with his or her partnership obligations.

On December 13, 2017, the Amended and Restated BGC Holdings Partnership
Agreement was amended and restated a second time to include prior standalone
amendments and to make certain other changes related to the Separation. The
Second Amended and Restated BGC Holdings Partnership Agreement, among other
things, reflects changes resulting from the division in the Separation of BGC
Holdings into BGC Holdings and Newmark Holdings, including:

• an apportionment of the existing economic attributes (including, among

others, capital accounts and post-termination payments) of each BGC

Holdings LPU outstanding immediately prior to the Separation between such

Legacy BGC Holdings Unit and the 0.4545 of a Newmark Holdings LPU issued

in the Separation in respect of each such Legacy BGC Holdings Unit, based

        on the relative value of BGC and Newmark as of after the Newmark IPO; and




    •   a right of the employer of a partner to determine whether to grant
        exchangeability with respect to Legacy BGC Holdings Units held by such
        partner.


The Second Amended and Restated BGC Holdings Partnership Agreement also removes
certain classes of BGC Holdings units that are no longer outstanding, and
permits the general partner of BGC Holdings to determine the total number of
authorized BGC Holdings units. The Second Amended and Restated BGC Holdings
Limited Partnership Agreement was approved by the Audit Committee of the Board
of Directors of the Company.

The following diagram illustrates our organizational structure as of June 30,
2020. The diagram does not reflect the various subsidiaries of BGC, BGC U.S.
OpCo, BGC Global OpCo, or Cantor, or the noncontrolling interests in our
consolidated subsidiaries other than Cantor's units in BGC Holdings.*

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              STRUCTURE OF BGC PARTNERS, INC. AS OF JUNE 30, 2020

                               [[Image Removed]]



* Shares of BGC Class B common stock are convertible into shares of BGC Class A
common stock at any time in the discretion of the holder on a one-for-one basis.
Accordingly, if Cantor and CFGM converted all of their BGC Class B common stock
into BGC Class A common stock, Cantor would hold 12.6% of the voting power, CFGM
would hold 0.2% of the voting power, and the public stockholders would hold
87.2% of the voting power (and Cantor and CFGM's indirect economic interests in
BGC U.S. and BGC Global would remain unchanged). The diagram does not reflect
certain BGC Class A common stock and BGC Holdings partnership units as follows:
(a) any shares of BGC Class A common stock that may become issuable upon the
conversion or exchange of any convertible or exchangeable debt securities that
may in the future be sold under our shelf Registration Statement on Form S-3
(Registration No. 333-180331); (b) 31,389,204 Preferred Units granted and
outstanding to BGC Holdings partners (see "BGC Partners, Inc. Partnership
Structure" herein); and (c) 46,219,566 N Units granted and outstanding to BGC
Holdings partners.

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The diagram reflects BGC Class A common stock and BGC Holdings partnership unit
activity from January 1, 2020 through June 30, 2020 as follows: (a) an aggregate
of 14,974,765 LPUs granted by BGC Holdings; (b) 185,300 shares of BGC Class A
common stock sold by us under the March 2018 Sales Agreement pursuant to our
Registration Statement on Form S-3 (Registration No. 333-223550), but not the
remaining $89.4 million of stock remaining for sale by us under such sales
agreement; (c) 799,674 shares of BGC Class A common stock issued for vested
restricted stock units; (d) 285,435 shares of Class A common stock issued by us
under our acquisition shelf Registration Statement on Form S-4 (Registration
No. 333-169232), but not the 5,883,440 of such shares remaining available for
issuance by us under such Registration Statement; (e) 89,343 shares issued by us
under our Dividend Reinvestment and Stock Purchase Plan shelf Registration
Statement on Form S-3 (Registration No. 333-173109), but not the 9,278,979 of
such shares remaining available for issuance by us under shelf Registration
Statement on Form S-3 (Registration No. 333-196999); (f) 35,742 shares sold by
selling stockholders under our resale shelf Registration Statement on Form S-3
(Registration No. 333-175034), but not the 433,049 of such shares remaining
available for sale by selling stockholders under such Registration Statement;
(g) 8,421 shares sold by selling stockholders under our resale shelf
Registration Statement on Form S-3 (Registration No. 333-167953), but not the
136,975 shares remaining available for sale by selling stockholders under such
Registration Statement. As June 30, 2020, we have not issued any shares of BGC
Class A common stock under our 2019 Form S-4 Registration Statement
(Registration No. 333-233761).

Possible Corporation Conversion


The Company continues to explore a possible conversion into a simpler corporate
structure. An important factor will be any significant change in taxation policy
in any of the major jurisdictions in which the Company operates and its
stakeholders reside, particularly the United States whose tax policies are
likely to be affected by the outcome of the elections this November. This
quarter, the Company will begin to work with regulators, lenders, and rating
agencies regarding any possible conversion. BGC's board committees will review
potential transaction arrangements.

© Edgar Online, source Glimpses

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