BGC Partners keeps looking at simpler corporate structure

Maria Nikolova

This quarter, the company will begin to work with regulators, lenders, and rating agencies regarding any possible conversion.

International brokerage and fintech company BGC Partners (NASDAQ:BGCP) keeps exploring a possible shift to a simpler corporate structure. This becomes clear from BGC Partners’ financial report for the second quarter of 2020.

The company explains that 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.

In terms of results, let’s note that, 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.

Revenues for the second quarter of 2020 totalled $519.1 million, down 5.8% from a year earlier. GAAP net income for fully diluted shares rose 92.5% from a year earlier to $40.4 million. Adjusted EBITDA amounted to $112.7 million, down 3.4% from a year earlier.

Howard W. Lutnick, Chairman and Chief Executive Officer of BGC, commented:

“Our overall second quarter 2020 revenues would have been over $7 million higher, but for the relative strengthening of the U.S. dollar. Over time, we expect the significant increases in global debt issuance to overcome the effects of quantitative easing and to be a long-term tailwind for our rates and credit businesses”.

Shaun D. Lynn, President of BGC, said: “Our stand-alone Fenics2 technology platforms maintained their strong momentum. Fenics UST generated substantial growth year-over-year, with notional volumes up more than 70 percent in the second quarter compared to a 10 percent increase in overall primary dealer treasury volumes. Fenics UST continued to gain considerable market share and expanded its position as the clear number two among central limit order book trading platforms.3 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”.

On July 29, 2020, BGC Partners’ Board of Directors declared a quarterly qualified cash dividend of $0.01 per share payable on September 2, 2020 to Class A and Class B common stockholders of record as of August 19, 2020. The ex-dividend date will be August 18, 2020.

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