BGC Partners, Inc.

Good day, everyone, and welcome to the BGC Partners Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. At this time, I'd like to turn the conference call over to the Head of Investor Relations, Jason Krasickis. Thank you, and please go ahead.

Thank you, and good morning. We issued BGC third quarter 2021 financial results press release and presentation earlier this morning. You can find these at ir.bgcpartners.com. Please note you can find additional details on our quarterly results in today's press release and investor presentation. Unless otherwise stated, the results provided on today's call compare only the third quarter of 2021 with the year earlier period. We will be referring to our results on this call on an adjusted earnings basis unless otherwise stated. We may also refer to adjusted EBITDA. We may refer to our liquidity, which we define as cash and cash equivalents, plus marketable securities that have not been financed, reverse repurchase agreements and securities owned, less securities loaned, and repurchase agreements. We define total capital as reasonable partnership interest, total stockholders' equity, and non-controlling interest in subsidiaries. Please see today's press release for results under generally accepted accounting principles. Please also see the relevant sections in the back of today's press release for the complete and updated definitions of any non-GAAP terms. reconciliations of these items to corresponding GAAP results, and how, when, and why management uses such terms. Additional information with respect to our GAAP and non-GAAP results on today's call is also available on our website at ir.bgcpartners.com. I also remind you that the information regarding our business on today's call that are not historical are forward-looking statements, and these include statements about the effects of COVID-19 pandemic on the company's business results, financial position, liquidity, and outlook. Any forward-looking statements involve risks and uncertainties. And except as required by law, BGC undertakes no obligation to update any forward-looking statements. Any outlook and targets discussed on today's call assume no material acquisitions, buybacks, extraordinary transactions, or meaningful changes to the company's stock price. For discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in forward-looking statements, see BGC's SEC filings, including but not limited to the risk factors and special note on forward-looking information set forth in these filings and any updates to such risk factors, and special note on forward-looking information contained in the subsequent reports on Forms 10-K, Forms 10-Q, and 8-K. With that, I am now happy to turn the call over to Howard Lutnick, Chairman of the Board and CEO of BGC Partners.

Thanks, Jason. Good morning, and thank you all for joining us for our third quarter 2021 conference call. Joining me for today's call are BGC's Chief Financial Officer, Steve Biscay, and our Chief Operating Officer, Sean Windyatt. Earlier today, we announced the launch of FMX, our combined U.S. Treasury and futures electronic marketplace, along with a clearing agreement with the LCH. Leveraging the success of our proven state-of-the-art FedEx UST platform, our FMX futures solution will challenge the status quo of the current U.S. futures markets. Our executed clearing agreement with LCH provides a unique cross-margining clearance solution for U.S. futures and interest rate swaps. FMX was created in response to its customers' need for an integrated trading and clearance solution that leverages the world's largest IRS clearing pool at LCH to provide significant cross-margin efficiencies. We believe FMX will offer a more optimal clearance solution for futures than the CME. With respect to value creation, we expect key strategic partners to invest in FMX, and our expectation is that FMX will open for futures trading in the middle of 2022. On Monday, we announced the closing of the sale of our insurance brokerage business, which delivered gross proceeds of $535 million, providing significant resources to continue repurchasing our shares and to accelerate FedEx growth. Since announcing the transaction in May, we repurchased and redeemed over 45 million shares and units. Our FedEx businesses continue to grow at a strong double-digit pace and provided record revenue contribution at approximately 23% of BGC's total financial services revenues versus 19.5% a year ago. This record FedEx contribution and significantly improved front office productivity drove adjusted earnings higher during the quarter. I'm happy now to turn the call over to Steve Biscay.

Steve Biscay Thank you, Howard, and hello, everyone. As reported in today's earnings release, BGC generated total revenue of $473.7 million, an improvement of 4.1 percent from a year ago. Industry-wide trading conditions were mixed during the third quarter, with solid activity across rates and energy and commodities, with credit volumes were challenged on tighter credit spreads and muted volatility. By geography, we saw Europe, Middle East, and Africa revenue increased by 4.2%. The Americas increased by 7%, while Asia Pacific revenues decreased by 1.1%. By asset class, rates, energy and commodities, equity derivatives and cash equities, and insurance increased by 7.7, 12.8, 15.4, and 19% respectively. Credit and FX decreased by 13.3% and 0.4% respectively. Beginning last year, we selectively reduced less productive front office headcount. As a result, front office personnel was 8.6% lower this quarter versus a year ago. These reductions were made alongside increased migration towards FEMIX technology solutions, which helped drive average productivity 14.2% higher and pre-tax adjusted earnings up 15.7% compared to a year ago. As we continue to automate more of our overall business, both profitability and productivity are increasing. Moving on to Fenix. This quarter, Fenix generated net revenue of $95.3 million, an improvement of 18.7%. Fenix growth platforms generated revenue of $10.6 million, and improvement of 23.6%. Fenix markets recorded revenue of $84.7 million, an increase of 18.1%, and had a pre-tax adjusted earnings margin of 29.5% in the third quarter. Insurance brokerage generated revenue of $51.5 million, growing by 19%. Now, moving on to expenses. Our compensation and employee benefits expense under GAAP and adjusted earnings increased in the third quarter of 2021 due to higher revenues compared to a year ago. Equity-based compensation and allocations of net income to limited partnership units and FPUs increased 137.8%, primarily due to our volume-weighted average share price more than doubling compared to the year-ago period. Our non-compensation expenses under adjusted earnings decreased 0.9%, primarily due to lower interest expense fees to related parties, and other expenses. These expense reductions were partially offset by higher selling and promotion charges as COVID-19 restrictions have relaxed across many of the major geographies in which we operate. Moving on to adjusted earnings. Our pre-tax income was $79.1 million, an increase of 15.7% and represents a 167 basis point margin expansion from last year. we recorded post-tax adjusted earnings of $74.5 million, an increase of 21.7% and a 228 basis point margin expansion. We generated adjusted EBITDA of $93.6 million and improvement of 3.3%. Turning to share count, our fully diluted weighted average share count decreased by 5.9% sequential to 530.4 million under adjusted earnings in the third quarter of 2021 due to our share repurchases. As of September 30, 2021, our spot share count was 517.2 million, a decrease of 4.1% sequential, which reflected 24.4 million Class A common share repurchases during the quarter. Since the sale announcement of our insurance brokerage business on May 26, we have repurchased and redeemed 45.2 million shares and units. Due to the sale, which closed subsequent to the end of the third quarter, the assets and liabilities associated with this business are presented as held for sale on the balance sheet for the period ending September 30, 2021. As such, balance sheet line items, including cash and cash equivalents, are not fully comparable to prior periods. For example, there was $37 million of insurance-related cash and cash equivalents included in liquidity at December 31, 2020, whereas all insurance-related cash and cash equivalents are excluded from liquidity as of September 30, 2021, and instead presented within the line item assets held for sale. With that said, as of September 30, 2021, our liquidity was $485.6 million, compared with $655.2 million as of year end 2020. Cash and cash equivalents were $450.8 million, versus $596.3 million as of December 31, 2020. Notes payable and other borrowing for $1,352.5 million compared with $1,315.9 million. Total capital was $703.8 million compared with $832 million. Obviously, next quarter, our liquidity will be higher and our debt will be lower as we have already fully repaid our revolving. using a portion of the $535 million of gross proceeds received on November 1st, 2021. The company continues to explore a possible conversion into a simpler corporate structure. BGC's board and committees have hired advisors and are reviewing the potential structure and details of such conversion. And with that, I'm happy to turn the call over to Sean.

Thanks, Steve, and good day, everyone. Our Fenix businesses generated strong net revenue growth of 18.7% and represented 22.6% of our total financial services revenue, up from 19.5% a year ago. Looking at Fenix in more detail, our Fenix growth platforms revenue improved 23.6% from a year ago, driven by growth across Fenix US Treasuries, Fenix FX, Fenix Go, and Lucera. Fenix US Treasury revenues increased over sevenfold, driven by market-leading ADV growth, optimization of commercial agreements, new product offerings, and onboarding of new clients. During the third quarter, Fenix UST had ADV growth of over 64%, outpacing the overall market. Fenix UST club market share increased from 12% a year ago to over 19% in the third quarter. Additionally, Fenix US Treasury launched US Repo on the platform in August, which continues to scale. We've continued to see strong volume growth into the fourth quarter, where October volumes have increased by 78% year-over-year versus 33% at the CME. Fenix FX, our ultra-low latency electronic FX trading platform, generated strong double-digit revenue growth, against a challenging trading environment with tempered FX volatility. Fenix FX growth was driven by new clients and improved free capture. Its new NDF offering, which launched in the first quarter of 2021, continued to gain traction, with third quarter volumes improving by over 175% versus the first quarter of 2021, and over 45% sequentially. Lucera, our infrastructure and software business, made significant progress onboarding new institutional and bank clients during the quarter, winning new clients and expanding existing relationships as to Lucera's highly recurring and compounding subscription revenue base. Additionally, Lucera started offering clients access to...

I think we've lost Mr. Windiat's sound.

But he was saying... This is the conference operator. I've opened up the back line, the backup line, in case that needs to be opened as well.

You can't hear Mr. Windiat, right?

That is correct. You cannot hear Mr. Windiat, right? That is correct. Bob, I'm just... All right, I'll just continue on his, so Steve Biscay, why don't you continue on his lines, okay? He was just, just go back over Lucera, our infrastructure and software business, Steve.

Lucera, our infrastructure and software business, made significant progress onboarding new institutional and bank clients during the quarter. Winning new clients and expanding existing relationships adds to Lucera's highly recurring and compounding subscription revenue base. Lucero started offering clients access to trade cryptocurrencies, leveraging its leading connectivity to exchanges, trading platforms, and custodians. Lucero's cryptocurrency solution is focused on providing clients with world-class infrastructure that offers fully compliant workflows. Fenix Go, our global options electronic trading platform, more than doubled its revenue from a year ago, driven by the integration of Fenix's existing electronic equities platform, Matchbox, into its offering. Matchbox is an online platform that automates the trading, booking, and lifestyle management of global equity derivatives contracts. The integration of these two electronic platforms provides Fenix Go clients with a comprehensive electronic equity derivatives trading solution. Fenix's credit offering, Portfolio Match, our recently deployed session-based matching platform, can continue to gain traction during the quarter, with U.S. investment-grade credit volumes nearly doubling sequentially from the second quarter of 2021. PortfolioMatch currently supports U.S. and European investment-grade credit and European high-yield credit. U.S. high-yield credit sessions are expected to launch during the fourth quarter. Looking at our FedEx markets, revenues improved by 18.1%, driven by strong growth across rates, FX, and market data. MidFX grew its revenue by approximately 44% versus last year, driven by higher activity across its SpotFX and its newer Asian NDFs offering, which has continued to gain traction throughout the year. Fenix Market Data signed 43 new contracts during the third quarter, with total contracted value increasing by over 200% compared to last year. Fenix Market Data has highly recurring and compounding subscription revenue. Capital Labs' NDF Match business, our advanced web-based matching platform that helps clients reduce foreign exchange exposure, grew its volumes by 30%, driving double-digit revenue growth compared to a year ago. Since its launch in 2017, NDF Match has grown its market share to become a leading solution for post-trade risk reduction. Our voice hybrid business generated revenues of 326.8 million dollars, down 1.4% from last year due to the continued conversion of voice hybrid to Fenix revenue. Our rates business grew 7.7% with particular strength across U.S. government bonds, inflation products, listed rates, and emerging market rates. Equity derivatives and cash equities had strong growth of 15.4% driven by U.S. and European equity derivatives. Our environmental business also saw revenue growth of 87% as we support the reduction of global carbon emissions and promote clean and renewable energy through the facilitation of marketplaces for environmental credits and renewables. This, along with heightened volatility across the energy complex, helped drive growth of 12.8% in our energy and commodities business compared to a year ago. During the quarter, Our insurance brokerage business generated revenue of $51.5 million, growing 19%. As Howard previously mentioned, we closed the sale of this business on November 1st, resulting in an internal rate of return of 21.2% for our shareholders.

Thanks, David. And now turning back to Outlook, Outlook for the fourth quarter of 2021 is as follows. BGC's revenues, excluding insurance brokerage, were approximately 9% higher for the first 21 trading days of the fourth quarter when compared to the same period last year. We therefore expect to generate total revenue of between $445 and $495 million as compared to $479.4 million. As a reminder, the fourth quarter of 2020 included $49.1 million of insurance brokerage revenues. We anticipate pre-tax adjusted earnings to be in the range of $80 to $100 million versus $79.3 million. And we anticipate our full year 2021 adjusted tax rate to be in the range of 9% to 11% versus 10.8% for full year 2020. And with that, I'd like to turn it back over to Howard.

Thank you, Sean, and thank you, Steve. We previously said we would grow FedEx UST market share, build and establish our model for FMX futures, complete the sale of insurance, and buy back a significant number of our shares. As you heard on today's call, we are executing on all fronts. Turning to a more personal note, as you may know, I was recently diagnosed with non-Hodgkin's lymphoma which my doctors tell me is highly treatable and curable. I sent out two videos to our employees over the past couple of weeks, and you can view those on our website under the In the News section or on YouTube if you type in my name. And these videos explain things in just much more detail if you'd like to know. I'm still working and running the company every day. I'm supported by my incredible team capable, and deep management team. And with the exception of every third Monday, which means my second treatment is November 8th, when I receive treatment, I expect my work schedule to remain the same, which, for example, ended last night when I hung up the phone at 11 o'clock at night, and I picked up the phone and started talking this morning at 7 a.m. So it seems that I spend a lot of time because, frankly, I love it. With that, operator, I would like to open the call for questions.

Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one using a touchstone telephone. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your question, you may press star and two. Once again, that is star and then one to ask a question. At this time, we'll pause momentarily to assemble the roster. Our first question today comes from Rich Rapeto from Piper Sandler. Please go ahead with your question.

Good morning, Howard and Steve and Sean. And first, Howard, best wishes on the treatments and your health. We've been doing this quite a while now and hope to continue for a long time too. With that, so the FMX... You mentioned, I think, in the prepared remarks that you thought there'd be more cross-margin efficiencies than the CME, the established incumbent. I guess, could you explain that? Why would futures and the LCH clearing of interest rate swaps create more efficiencies than, say, the treasuries, cash treasuries and futures at the CME level? And they've said in a test that they've gotten close to, I think, 70% or 75% cross-margin efficiencies.

So, I mean, that says it as well as you can. When you can get to 70% or 75% cross-margin efficiencies, that's the best you can do in two different pots. You know, if the FICC holds collateral and CME holds collateral, the only way cash and futures can come together is is maybe they can get to 70%. Historically, they've only gotten below 50%. Whereas if you do it together with the LCH, and the LCH will be the clearer for both, you would expect to get in the high 90s of margin efficiency. So it's basically more efficient to hold the collateral together. And therefore, we expect that when we start doing futures, it is either as good a cross-margin efficiency or better. And over time, we expect that to mean that our clients can trade freely on the CME platform or on the FMX platform without regard to worrying about how the collateral and cross-margining will play out. It will play out at least as well on FMX from the first day all the way to the last. And I think that's really, really exciting and a first for U.S. risk.

Okay, and one quick follow-up to that. That's the efficiencies and the percentage, and I get what you're saying there. But how about where is there overall more efficiencies between futures and swaps versus cash and futures?

So short-term interest rates, euro dollars and however those changes, those are a derivative for swaps. So that is one-to-one on swaps. That is a derivative of swaps. And then when you get to long-dated, which you would call US Treasury futures, we would normally consider them long-dated, because the first maturity is two years or five years, whereas Eurodollars or short-term interest rates are really series of three-month contracts that you put together to mimic a swap contract. Those also naturally lean against either Treasury futures at the FICC, or long-dated interest rate swaps. So those two just work really well together. And if you do the math, they are really good and natural, you know, complements. So you will see efficiency across Eurodollars, and Eurodollars are short-term interest rates, however they change, can't be better than doing it with the LCH's clearing pool of IRS. And with respect to Treasury, it will be really, really good. And I think they will be as good, if not better. And what that means is that people who walk in in the morning and they want to trade, they're a big bank, they have collateral everywhere, and they want to trade, they can be indifferent to whether they trade at the CME or they trade at FMX. And that in different moments will be the first time ever you have a gigantic electronic trading system like FedEx UST holding futures on it, totally connected to everybody that can do business toe to toe with the collateral and the clearing and margin efficiency as the CME. It's one of the great things that the CME has had, and this will be the first time a competitor will stand with all of the pieces to the puzzle standing next to it. I think it is really, really exciting for us. It is really exciting for our clients. They just would like some competition in the space. And I think we are going to be the great contender. You know, we are going to be the great contender. I would tell you that far enough. You know, we said that we had 19% market share in the club last quarter. I will tell you, within the last week, we touched 25% market share on the day this last week. So our treasury system is extraordinary, and I think FMX is coming. It's coming.

Got it. Thank you, Howard. I'll get back in the queue. Thank you.

Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two.

Again, that is star and then one to join the question queue. And once again, if you would like to ask a question, please press star and one.

Our next question comes from Patrick O'Shaughnessy from Raymond James. Please go ahead with your question.

Hey, good morning. And Howard, I'd like to add my best wishes for a speedy and total victory in your fight. And also add that I think the shaved head looks good on you. Thank you. Thank you. Question on FENIX. So as we look at the FENIX growth platform's revenue, it's been 10.6 million each of the last three quarters. Can you remind me how much of that revenue is subscription-based versus volume-based? And I'm asking just because I'm surprised by how steady it's been of late.

Yeah, I would say it's different on any given quarter. But at the moment, it's probably a little bit more volume-based. And I think, as I described before, that will become far more subscription-based. But at the moment, it's more volume-based.

Got it. Thank you. And then sticking with Fenix, the data software and post-trade revenue, the external revenue, I believe I'm getting a 3% year-over-year growth rate in the third quarter. And that's down from a 7% growth rate in the second and a 13% growth rate in the first. Can you talk about maybe why we're seeing that slowdown in that revenue line?

Yeah, there were really two pieces. Our compression business was a little slower in the third quarter, the post-trade, and that will bounce back in the fourth quarter. And our market data business continues to grow at a rapid pace. So the market data business, I think, has the most growth in it. You know, it still has got a long, long runway even to catch up to our peer groups. So I think it has lots of growth ahead of it. And that was just a wrinkle for the quarter, but I think you'll see next quarter, the post-trade will bounce back up and those numbers will go back to the growth rates that we both expect.

Got it. Thank you. In past quarters in your slide presentation, the FedEx overview slide, there was a breakdown of the allocation of the FedEx revenue by asset class, rates, credit, ports, et cetera. I don't see that this quarter on your slide six. Are you able to provide that

Sure. If it wasn't out, we'll go put it out. No problem.

It's just helpful to be able to track that, so I appreciate that. Your brokerage headcount keeps declining, roughly 50 folks or so per quarter. You spoke on the prepared remarks about taking some actions to to eliminate less productive positions, are you still kind of taking ongoing actions? Or at this point, is it kind of attrition that you're just not replacing?

I think the way I think about it is, as we said in the prepared remarks, it's key to our profitability. But what you also see is that the move from... As I mentioned, from the brokerage side into Phenix markets and the adaptation and the usage, the uptake and usage of the electronic freight platform that we have is why our overall revenue per head is higher. You should expect us as part of our normal business to continue to manage our business on a daily basis for our less productive brokers. But equally, there remain opportunities in hiring as well. What you'll also see, and what you will see as well, is you'll see that in this quarter, we also did take a $5.1 million restructuring charge linked to exactly what we're talking about.

Got it.

Thank you for pointing that out. But it's a natural process. The more and more Senate is going to make us... more efficient. So as you've heard us say over time, our best brokers become more and more efficient and more important. And just those who fall away, who are just not that important for the business, every once in a while they become less productive as the business automates. But the best brokers with the best relationships are important to us. They remain with us. And they'll be more efficient and do more business, and they'll make more money. So I think we really like the model. And you're just seeing it work its way through, and that's going to continue over time.

And to follow up on that, as you're reducing your brokerage headcount by roughly 10% or so on an annualized basis, how does that impact the morale of the folks who are still there? Like, are they looking over the shoulder saying, hey, am I going to get tapped, you know, this next quarter? Is it my turn? Or, you know, do they kind of know, like, how do you manage that?

It's a math thing, so there's no secrets to math. The best brokers, the top brokers know they're the best brokers, they're the top brokers, they're the most productive. Those who support them, let's say there was a great broker and there were three support staff, and then there were two support staff. Eventually, there's just going to be one support step. But they know that, and everybody knows that. No one's looking over their shoulder and saying, I only did $350,000 in production this year, and wondering, looking over their shoulder. They know. It's the math of how they're doing. So we are focused on keeping our best brokers. They're making more money, and they are embracing automation. And that's a process that we've been talking about, right, with you guys and with them for a long time. So... You know, everybody knows that they're becoming less productive. They might move to a different product. They might move to a different area, right? But they know the math, and there's no fear in the company. Everybody understands it's the math of the world and winning.

All right, that's helpful. Thank you. What's your expected tax rate on the proceeds from your sales quarantine?

We expect it's going to be pretty low, actually, overall. So without giving a specific number, we do believe that we have a number of appropriate deductions and offsets to minimize taxation on the sale itself. So we're expecting to be rather low.

Is it consistent? It's probably above the amount for the company overall, but still comparatively low. The structure, which is the complex structure that we have, You know, we suffer with its complexity, but when it comes to these kind of things, it's tremendously beneficial. You know, and so you see the amount of money we can drive to the bottom line to buy back and to use to buy back our shares is enhanced because of the structure that we have.

Got it. And then last one from me. What is the, I guess, one month to October revenue contribution from Corinth that's embedded within your fourth quarter revenue outlook?

it's circa 20 million. Circa 20 million. Think about it. It's not the exact science at midpoint, but circa 20 million.

All right. Perfect. Thank you for taking all my questions.

Our next question comes from Steven Eisman from Neuberger Berman. Please go ahead with your question.

Hi. Thank you for taking my question. I just want to understand what the what you're thinking when this launches in six months or so, is the idea eventually to spin this off, to keep it internal, or is it just too early to say?

Well, I think we plan to partner with our key strategic players, and we said that, and once we do that, I think our objective is to build our U.S. rates futures business into a significant company And my guess would be eventually it will be spun off. But no time frame on that, obviously. Too early. If that were a rocket ship, I'd be delighted for that to be quicker. But I think we have to make it a rocket ship first. And the beginning is to open in the middle of 2022 and then build significant market share. This is the challenger to the CME. We have all the pieces in place. No one's ever had all of the pieces in place before. And so I think this is just exciting for us. We're going to go build it. We're going to go build it in partnership with many of the great strategic players. And I think we're going to build a great competitor to the CMA. And we'll produce tremendous value for our company. And we'll go from there and try to execute it. But is that a likely scenario? Eventually, sure. But no, I can't give you a time. Okay. Thank you.

And our next question is a follow-up from Rich Rapetto from Piper Sandler.

Hey, Howard. So on FMX, and I think you've hit it at this, but I'll still ask the question, who are the potential partners and why would they join?

So we've gotten incoming from obviously lots of people, exchanges would like to be partners in this, the world's exchanges who are not – you know, who are not the CME. Banks, large trading firms, clients. We use, you know, trading clients, people who use futures. That is the list from whom we're going to talk to and choose from.

Understood. Okay. And then can you talk about the expected expenses that you'll incur as you, you know, put this together?

Actually, they're already in our numbers. So we started building this. We weren't waiting for now to do it. In fact, part of why the LCH wanted to do business with us was because we were already hard at it building it and integrating it. So you couldn't start from scratch today and get this done in nine months and launch. That's just not practical. You have to have built it for quite some time. And that's in our numbers. So I don't think you will see our numbers

uh materially change we are we are hard at it we've already employed lots of people we're we're going to continue to employ lots more but we're hard at it and they're part of our members got it and and last one uh for me uh howard on interest rate since our steve on interest rate sensitivity you know uh we see the 4q guidance and i suspect that a lot because of the volatility of the rates volatility at the beginning you know in october but could you in general, talk about interest rate sensitivity, and I guess you use the CME rates as a proxy, but how do you look at BGCP's interest rate sensitivity?

Well, as it relates to our own balance sheet, Rich, we have very little exposure as it relates to volatility of our interest rates. The one point of sensitivity might have been our revolver, which is fully paid down now at this point, but that was indexed to LIBORP. But as I said, it's fully paid down. Other than that, our outstanding obligations are all set.

But BGC loves interest rate volatility as a business. A rates franchise cannot enjoy volatility of rates more, so we are rooting for volatility of rates. We have a giant rates franchise and we love volatility of rates. So economically, very little to no cost and great opportunity if it moves around a bit.

That's what I thought.

Thanks. So the one thing we didn't chat about was, you know, Sean mentioned cryptocurrency. If you think about Lucera for a minute, Lucera connects all the banks, exchanges, trading firms, so they can trade with each other over our rails. And now close your eyes and think of crypto. How many exchanges are there? Where are they? They are everywhere in the world. How many venues are there? There's so many and they're everywhere in the world. How many traders are there? There's so many and they're everywhere in the world. They are just more decentralized. And the opportunity for Lucera to connect them to each other in an efficient and real-time, low-latency, tradable fashion is great. And we are seeing lots of demand and lots of incomings from people who want to work with us to connect and to be able to trade with each other using our rail. So I think that is an area of Lucera's business that people haven't thought of. I think it will grow quickly. It is a serious business for a broad range of clients around the world. I think it's just a lot of fun for us. And it's a vast and endless sea of more people to connect. And so, you know, we pointed that out. But I think over time, I think that's going to become a material and significant business for Lucera and much quicker than people think.

And ladies and gentlemen, with that, we'll end today's question and answer session. I'd like to turn the floor back over to Mr. Lutnick for any closing remarks.

Thank you all for joining me today. As I said, if you want to learn more about my particular details of non-Hodgkin's lymphoma, please just go to our website or you can see it on YouTube. But I appreciate all of your support and the notes that I've received. It's been really, really uplifting and kind. And I look forward to speaking to you next quarter and giving you an update. So thanks, everyone. Have a great day.

And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.