BGC Group, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA BGC Partners, Inc. and Subsidiaries Consolidated Financial Statements for the years ended December 31, 2022, 2021 and 2020 Reports of Independent Registered Public Accounting Firm (PCAOB ID 42 ) 133 Consolidated Financial Statements— Consolidated Statements of Financial Condition 136 Consolidated Statements of Operations 137 Consolidated Statements of Comprehensive Income (Loss) 138 Consolidated Statements of Cash Flows 139 Consolidated Statements of Changes in Equity 141 Notes to Consolidated Financial Statements 144 132 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of BGC Partners, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of BGC Partners, Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), cash flows and changes in equity for each of the three years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2023 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 133 Table of Contents Accounting for Income Taxes Description of the Matter As discussed in Notes 3 and 20 to the consolidated financial statements, the Company is subject to income taxes in the U.S. and numerous foreign jurisdictions, which affect the Company’s provision for income taxes. The provision for income taxes is an estimate based on management’s understanding of current enacted tax laws and tax rates of each tax jurisdiction. For the year-ended December 31, 2022, the Company recognized a consolidated provision for income taxes of $38.6 million. Auditing management’s calculation of the provision for income taxes was complex because the Company’s global structure required an assessment of the Company’s application of tax laws in multiple jurisdictions including the income tax impact of the legal entity ownership structure. The assessment of tax positions involves the evaluation and application of complex statutes and regulations which are subject to legal and factual interpretation. Our audit procedures required significant audit effort including the use of our tax professionals to assist in evaluating the provision for income taxes. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls related to the Company’s global tax structure. For example, we tested management’s controls over the completeness and accuracy of the data utilized, the effective tax rate reconciliation and the evaluation of permanent and temporary differences within various jurisdictions. To test the Company’s provision for income taxes and to address the risks associated with the complexity of the Company’s global tax structure, we performed audit procedures that included, among others, evaluating the income tax impact of the Company’s structure and operations and considered the impact of any changes in the current year. We used our tax professionals with specialized skill and knowledge to assist in evaluating the provision for income taxes including the application of relevant local and foreign tax laws to management’s calculation methodologies and tax positions. Additionally, we tested the related effective tax rate reconciliation, evaluated the tax impact of permanent and temporary differences, and tested the application of new regulations and other authoritative guidance. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2008. New York, New York March 1, 2023 134 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of BGC Partners, Inc. Opinion on Internal Control Over Financial Reporting We have audited BGC Partners, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, BGC Partners, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial condition of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), cash flows and changes in equity for each of the three years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) and our report dated March 1, 2023 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying management’s report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, New York March 1, 2023 135 Table of Contents BGC PARTNERS, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (in thousands, except per share data) December 31, 2022 December 31, 2021 Assets Cash and cash equivalents $ 484,989 $ 553,598 Cash segregated under regulatory requirements 17,021 13,201 Financial instruments owned, at fair value 39,319 41,244 Receivables from broker-dealers, clearing organizations, customers and related broker-dealers 559,680 782,446 Accrued commissions and other receivables, net 288,471 296,423 Loans, forgivable loans and other receivables from employees and partners, net 319,612 286,967 Fixed assets, net 183,478 190,112 Investments 38,575 33,039 Goodwill 486,585 486,919 Other intangible assets, net 192,783 207,747 Receivables from related parties 1,444 5,237 Other assets 463,014 445,233 Total assets $ 3,074,971 $ 3,342,166 Liabilities, Redeemable Partnership Interest, and Equity Short-term borrowings $ 1,917 $ 3,584 Accrued compensation 176,781 214,379 Payables to broker-dealers, clearing organizations, customers and related broker-dealers 404,675 656,278 Payables to related parties 10,550 53,764 Accounts payable, accrued and other liabilities 683,104 679,254 Notes payable and other borrowings 1,049,217 1,052,831 Total liabilities 2,326,244 2,660,090 Commitments, contingencies and guarantees (Note 19) Redeemable partnership interest 15,519 18,761 Equity Stockholders’ equity: Class A common stock, par value $ 0.01 per share; 750,000 shares authorized; 471,934 and 435,944 shares issued at December 31, 2022 and December 31, 2021, respectively; and 325,858 and 317,023 shares outstanding at December 31, 2022 and December 31, 2021, respectively 4,719 4,359 Class B common stock, par value $ 0.01 per share; 150,000 shares authorized; 45,884 shares issued and outstanding at each of December 31, 2022 and December 31, 2021, convertible into Class A common stock 459 459 Additional paid-in capital 2,559,418 2,451,135 Treasury stock, at cost: 146,076 and 118,921 shares of Class A common stock at December 31, 2022 and December 31, 2021, respectively ( 711,454 ) ( 623,734 ) Retained deficit ( 1,138,066 ) ( 1,171,919 ) Accumulated other comprehensive income (loss) ( 45,431 ) ( 40,548 ) Total stockholders’ equity 669,645 619,752 Noncontrolling interest in subsidiaries 63,563 43,563 Total equity 733,208 663,315 Total liabilities, redeemable partnership interest, and equity $ 3,074,971 $ 3,342,166 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 136 Table of Contents BGC PARTNERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended December 31, 2022 2021 2020 Revenues: Commissions $ 1,281,294 $ 1,541,900 $ 1,567,668 Principal transactions 365,507 327,761 351,633 Fees from related parties 14,734 14,856 25,754 Data, software and post-trade 96,389 89,963 81,920 Interest and dividend income 21,007 21,977 12,332 Other revenues 16,371 18,907 17,454 Total revenues 1,795,302 2,015,364 2,056,761 Expenses: Compensation and employee benefits 853,165 1,271,340 1,132,557 Equity-based compensation and allocations of net income to limited partnership units and FPUs 251,071 256,164 183,545 Total compensation and employee benefits 1,104,236 1,527,504 1,316,102 Occupancy and equipment 157,491 188,322 192,837 Fees to related parties 25,662 24,030 23,618 Professional and consulting fees 68,775 67,884 74,072 Communications 108,096 117,502 121,646 Selling and promotion 49,215 38,048 38,234 Commissions and floor brokerage 58,277 64,708 59,376 Interest expense 57,932 69,329 76,607 Other expenses 87,431 80,888 89,045 Total expenses 1,717,115 2,178,215 1,991,537 Other income (losses), net: Gains (losses) on divestitures and sale of investments ( 1,029 ) 312,941 394 Gains (losses) on equity method investments 10,920 6,706 5,023 Other income (loss) 9,373 19,705 1,580 Total other income (losses), net 19,264 339,352 6,997 Income (loss) from operations before income taxes 97,451 176,501 72,221 Provision (benefit) for income taxes 38,584 23,013 21,303 Consolidated net income (loss) $ 58,867 $ 153,488 $ 50,918 Less: Net income (loss) attributable to noncontrolling interest in subsidiaries 10,155 29,481 5,856 Net income (loss) available to common stockholders $ 48,712 $ 124,007 $ 45,062 Per share data: Basic earnings (loss) per share Net income (loss) available to common stockholders $ 48,712 $ 124,007 $ 45,062 Basic earnings (loss) per share $ 0.13 $ 0.33 $ 0.12 Basic weighted-average shares of common stock outstanding 371,561 379,215 361,736 Fully diluted earnings (loss) per share Net income (loss) for fully diluted shares $ 63,479 $ 173,995 $ 64,787 Fully diluted earnings (loss) per share $ 0.13 $ 0.32 $ 0.12 Fully diluted weighted-average shares of common stock outstanding 499,414 540,020 546,848 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 137 Table of Contents BGC PARTNERS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2022 2021 2020 Consolidated net income (loss) $ 58,867 $ 153,488 $ 50,918 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ( 5,668 ) ( 13,747 ) 6,457 Benefit plans — 301 ( 1,840 ) Total other comprehensive income (loss), net of tax ( 5,668 ) ( 13,446 ) 4,617 Comprehensive income (loss) 53,199 140,042 55,535 Less: Comprehensive income (loss) attributable to noncontrolling interest in subsidiaries, net of tax 9,370 27,653 6,301 Comprehensive income (loss) attributable to common stockholders $ 43,829 $ 112,389 $ 49,234 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 138 Table of Contents BGC PARTNERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Consolidated net income (loss) $ 58,867 $ 153,488 $ 50,918 Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities: Gain on Insurance Business Disposition — ( 312,941 ) — Fixed asset depreciation and intangible asset amortization 75,054 81,874 85,422 Employee loan amortization and reserves on employee loans 49,533 217,655 67,032 Equity-based compensation and allocations of net income to limited partnership units and FPUs 251,071 256,164 183,545 Deferred compensation expense ( 542 ) 347 630 Losses (gains) on equity method investments ( 10,920 ) ( 6,706 ) ( 1,126 ) Unrealized/realized losses (gains) on financial instruments owned, at fair value and other investments 1,208 17 73 Amortization of discount (premium) on notes payable 2,801 3,592 4,187 Impairment of fixed assets, intangible assets and investments 6,139 11,246 11,431 Deferred tax provision (benefit) ( 14,628 ) ( 11,947 ) ( 16,549 ) Change in estimated acquisition earn-out payables 1,034 4,285 4,661 Forfeitures of Class A common stock ( 263 ) ( 553 ) — Loss (gain) on divestiture 1,029 — — Other ( 1,914 ) ( 4,915 ) 2,730 Consolidated net income (loss), adjusted for non-cash and non-operating items 418,469 391,606 392,954 Decrease (increase) in operating assets: Financial instruments owned, at fair value 2,383 17,626 ( 1,346 ) Receivables from broker-dealers, clearing organizations, customers and related broker-dealers 222,567 ( 482,669 ) 246,498 Accrued commissions receivable, net 6,287 ( 101,314 ) 44,389 Loans, forgivable loans and other receivables from employees and partners, net ( 61,205 ) ( 38,571 ) ( 149,145 ) Receivables from related parties 3,621 8,377 5,465 Other assets ( 8,469 ) 1,543 ( 20,074 ) Increase (decrease) in operating liabilities: Financial instruments loaned, at fair value — — ( 13,902 ) Accrued compensation ( 25,178 ) 17,989 13,752 Payables to broker-dealers, clearing organizations, customers and related broker-dealers ( 252,490 ) 477,083 ( 236,314 ) Payables to related parties ( 43,782 ) 18,596 ( 37,613 ) Accounts payable, accrued and other liabilities ( 37,841 ) 106,919 57,949 Net cash provided by (used in) operating activities $ 224,362 $ 417,185 $ 302,613 CASH FLOWS FROM INVESTING ACTIVITIES: Gross proceeds from Insurance Business Disposition $ — $ 534,916 $ — Cash and restricted cash transferred as part of Insurance Business Disposition — ( 369,407 ) — Proceeds from disposal of subsidiary 512 — — Purchases of fixed assets ( 10,591 ) ( 10,112 ) ( 30,829 ) Capitalization of software development costs ( 48,169 ) ( 43,178 ) ( 54,342 ) Purchase of equity method investments ( 588 ) ( 1,115 ) ( 1,458 ) Proceeds from equity method investments 6,118 10,029 4,326 Payments for acquisitions, net of cash acquired — — ( 7,871 ) Proceeds from sale of financial instruments owned, at fair value — — 14,237 Purchase of other assets ( 612 ) — ( 2,000 ) Net cash provided by (used in) investing activities $ ( 53,330 ) $ 121,133 $ ( 77,937 ) 139 Table of Contents BGC PARTNERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued) (in thousands) Year Ended December 31, 2022 2021 2020 CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of debt and collateralized borrowings $ ( 6,391 ) $ ( 566,244 ) $ ( 357,789 ) Issuance of debt and collateralized borrowings, net of deferred issuance costs ( 75 ) 298,419 524,396 Earnings distributions to limited partnership interests and other noncontrolling interests ( 28,877 ) ( 52,169 ) ( 63,109 ) Redemption and repurchase of limited partnership interests ( 76,219 ) ( 110,565 ) ( 47,613 ) Dividends to stockholders ( 14,859 ) ( 15,098 ) ( 60,440 ) Repurchase of Class A common stock ( 103,888 ) ( 365,398 ) ( 6 ) Proceeds from sale of Cantor Units in BGC Holdings 1,487 7,894 — Pre-acquisition cash capital contribution to Futures Exchange Group — 3,845 — Acquisition of Futures Exchange Group — ( 9,022 ) — Payments on acquisition earn-outs ( 4,384 ) ( 11,199 ) ( 8,540 ) Net cash provided by (used in) financing activities $ ( 233,206 ) $ ( 819,537 ) $ ( 13,101 ) Effect of exchange rate changes on Cash and cash equivalents, and Cash segregated under regulatory requirements ( 2,615 ) ( 5,388 ) 993 Net increase (decrease) in Cash and cash equivalents, and Cash segregated under regulatory requirements ( 64,789 ) ( 286,607 ) 212,568 Cash and cash equivalents, and Cash segregated under regulatory requirements at beginning of period 566,799 853,406 640,838 Cash and cash equivalents, and Cash segregated under regulatory requirements at end of period $ 502,010 $ 566,799 $ 853,406 Supplemental cash information: Cash paid during the period for taxes $ 35,782 $ 43,357 $ 41,910 Cash paid during the period for interest 53,655 66,450 69,572 Supplemental non-cash information: Issuance of Class A common stock upon exchange of limited partnership interests $ 34,889 $ 157,547 $ 11,388 Issuance of Class A and contingent Class A common stock and limited partnership interests for acquisitions 2,710 1,160 1,578 ROU assets and liabilities 44,123 7,367 34,456 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 140 Table of Contents BGC PARTNERS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Year Ended December 31, 2020 (in thousands, except share amounts) BGC Partners, Inc. Stockholders Class A Common Stock Class B Common Stock Additional Paid-in Capital Treasury Stock Retained Deficit Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Subsidiaries Total Balance, January 1, 2020 $ 3,584 $ 459 $ 2,289,064 $ ( 315,308 ) $ ( 1,264,567 ) $ ( 33,102 ) $ 48,976 $ 729,106 Consolidated net income (loss) — — — — 45,062 — 5,856 50,918 Other comprehensive gain, net of tax — — — — — 4,172 445 4,617 Equity-based compensation, 1,133,725 shares 11 — 8,565 — — — 4,096 12,672 Dividends to common stockholders — — — — ( 60,440 ) — — ( 60,440 ) Earnings distributions to limited partnership interests and other noncontrolling interests — — — — — — ( 36,569 ) ( 36,569 ) Grant of exchangeability and redemption of limited partnership interests, issuance of 13,190,311 shares 132 — 61,766 — — — 31,895 93,793 Issuance of Class A common stock (net of costs), 390,570 shares 4 — 5,381 — — — 120 5,505 Redemption of FPUs, 730,141 units — — — — — — ( 102 ) ( 102 ) Repurchase of Class A common stock, 2,259 shares — — — ( 5 ) — — ( 1 ) ( 6 ) Contributions of capital to and from Cantor for equity-based compensation — — 3,613 — — — 1,906 5,519 Issuance of Class A common stock and RSUs for acquisitions, 390,775 shares 4 — 1,664 — — — ( 90 ) 1,578 Cumulative effect of CECL standard adoption — — — — ( 883 ) — ( 417 ) ( 1,300 ) Other — — 5,060 — — — 946 6,006 Balance, December 31, 2020 $ 3,735 $ 459 $ 2,375,113 $ ( 315,313 ) $ ( 1,280,828 ) $ ( 28,930 ) $ 57,061 $ 811,297 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 141 Table of Contents BGC PARTNERS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Year Ended December 31, 2021 (in thousands, except share amounts) BGC Partners, Inc. Stockholders Class A Common Stock Class B Common Stock Additional Paid-in Capital Treasury Stock Retained Deficit Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Subsidiaries Total Balance, January 1, 2021 $ 3,735 $ 459 $ 2,375,113 $ ( 315,313 ) $ ( 1,280,828 ) $ ( 28,930 ) $ 57,061 $ 811,297 Consolidated net income (loss) — — — — 124,007 — 29,481 153,488 Other comprehensive income (loss), net of tax — — — — — ( 11,618 ) ( 1,828 ) ( 13,446 ) Equity-based compensation, 2,167,170 shares 22 — 13,015 — — — 4,887 17,924 Dividends to common stockholders — — — — ( 15,098 ) — — ( 15,098 ) Earnings distributions to limited partnership interests and other noncontrolling interests — — — — — — ( 22,658 ) ( 22,658 ) Grant of exchangeability and redemption of limited partnership interests, issuance of 58,024,858 shares 580 — 69,855 — — — 49,524 119,959 Issuance of Class A common stock (net of costs), 417,247 shares 4 — 1,492 — — — 14 1,510 Redemption of FPUs, 1,198,131 units — — — — — — ( 408 ) ( 408 ) Repurchase of Class A common stock, 68,253,498 shares — — — ( 307,773 ) — — ( 57,625 ) ( 365,398 ) Forfeiture of Class A common stock, 140,188 shares — — 181 ( 648 ) — — ( 86 ) ( 553 ) Contributions of capital to and from Cantor for equity-based compensation — — ( 15,429 ) — — — ( 12,582 ) ( 28,011 ) Grant of exchangeability, redemption of limited partnership interests and issuance of Class A common stock and RSUs for acquisitions, 1,789,018 shares 18 — 9,825 — — — ( 8,683 ) 1,160 Cantor purchase of Cantor units from BGC Holdings upon redemption of FPUs, 4,408,931 units — — — — — — 7,894 7,894 Acquisition of Futures Exchange Group — — ( 7,616 ) — — — ( 1,406 ) ( 9,022 ) Other — — 4,699 — — — ( 22 ) 4,677 Balance, December 31, 2021 $ 4,359 $ 459 $ 2,451,135 $ ( 623,734 ) $ ( 1,171,919 ) $ ( 40,548 ) $ 43,563 $ 663,315 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 142 Table of Contents BGC PARTNERS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Year Ended December 31, 2022 (in thousands, except share amounts) BGC Partners, Inc. Stockholders Class A Common Stock Class B Common Stock Additional Paid-in Capital Treasury Stock Retained Deficit Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Subsidiaries Total Balance, January 1, 2022 $ 4,359 $ 459 $ 2,451,135 $ ( 623,734 ) $ ( 1,171,919 ) $ ( 40,548 ) $ 43,563 $ 663,315 Consolidated net income (loss) — — — — 48,712 — 10,155 58,867 Other comprehensive income (loss), net of tax — — — — — ( 4,883 ) ( 785 ) ( 5,668 ) Equity-based compensation, 3,284,120 shares 33 — 10,599 — — — 3,314 13,946 Dividends to common stockholders — — — — ( 14,859 ) — — ( 14,859 ) Earnings distributions to limited partnership interests and other noncontrolling interests — — — — — — ( 7,598 ) ( 7,598 ) Grant of exchangeability and redemption of limited partnership interests, issuance of 30,998,136 shares 310 — 92,245 — — — 30,286 122,841 Issuance of Class A common stock (net of costs), 500,697 shares 5 — 3,780 — — — 17 3,802 Redemption of FPUs, 113,203 units — — — — — — ( 249 ) ( 249 ) Repurchase of Class A common stock, 27,086,884 shares — — — ( 87,507 ) — — ( 16,381 ) ( 103,888 ) Forfeiture of Class A common stock, 66,693 shares — — ( 8 ) ( 213 ) — — ( 41 ) ( 262 ) Contributions of capital to and from Cantor for equity-based compensation — — ( 1,946 ) — — — ( 624 ) ( 2,570 ) Grant of exchangeability, redemption of limited partnership interests and issuance of Class A common stock and RSUs for acquisitions, 1,205,767 shares 12 — 2,279 — — — 419 2,710 Cantor purchase of Cantor units from BGC Holdings upon redemption of FPUs, 833,515 units — — — — — — 1,487 1,487 Other — — 1,334 — — — — 1,334 Balance, December 31, 2022 $ 4,719 $ 459 $ 2,559,418 $ ( 711,454 ) $ ( 1,138,066 ) $ ( 45,431 ) $ 63,563 $ 733,208 For the Year Ended December 31, 2022 2021 2020 Dividends declared per share of common stock $ 0.04 $ 0.04 $ 0.17 Dividends declared and paid per share of common stock $ 0.04 $ 0.04 $ 0.17 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 143 Table of Contents BGC PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Page Note 1 Organization and Basis of Presentation 144 Note 2 Limited Partnership Interests in BGC Holdings and Newmark Holdings 147 Note 3 Summary of Significant Accounting Policies 149 Note 4 Acquisitions 157 Note 5 Divestitures 157 Note 6 Earnings Per Share 158 Note 7 Stock Transactions and Unit Redemptions 159 Note 8 Financial Instruments Owned, at Fair Value 162 Note 9 Collateralized Transactions 162 Note 10 Receivables from and Payables to Broker-Dealers, Clearing Organizations, Customers and Related Broker-Dealers 162 Note 11 Derivatives 163 Note 12 Fair Value of Financial Assets and Liabilities 165 Note 13 Related Party Transactions 168 Note 14 Investments 177 Note 15 Fixed Assets, Net 179 Note 16 Goodwill and Other Intangible Assets, Net 179 Note 17 Notes Payable, Other and Short-Term Borrowings 181 Note 18 Compensation 183 Note 19 Commitments, Contingencies and Guarantees 188 Note 20 Income Taxes 191 Note 21 Regulatory Requirements 194 Note 22 Segment, Geographic and Product Information 194 Note 23 Revenues from Contracts with Customers 196 Note 24 Leases 196 Note 25 Current Expected Credit Losses (CECL) 198 Note 26 Supplemental Balance Sheet Information 199 Note 27 Subsequent Events 200 1. Organization and Basis of Presentation Business Overview BGC Partners, Inc. is a leading global financial brokerage and technology company servicing the global financial markets. Through brands including BGC®, Fenics®, GFI®, Sunrise Brokers™, Poten & Partners®, and RP Martin®, among others, the Company's 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. Additionally, the Company provides brokerage products across FX, Equities, Energy and Commodities, Shipping, and Futures and Options. The Company's businesses also provide a wide variety of services, including trade execution, connectivity solutions, brokerage services, clearing, trade compression, and other post-trade services, information, and other back-office services to a broad assortment of financial and non-financial institutions. BGC Partners’ integrated platform is designed to provide flexibility to customers with regard to price discovery, execution and processing of transactions, and enables them to use the Company's Voice, Hybrid, or in many markets, Fully Electronic brokerage services in connection with transactions executed either OTC or through an exchange. Through the Company's Fenics® group of electronic brands, BGC Partners offers a number of market infrastructure and connectivity services, including the Company's Fully Electronic marketplaces, and the Fully Electronic brokerage of certain products that also may trade via the Company's Voice and Hybrid execution platforms. The full suite of Fenics® offerings includes the Company's Fully Electronic and Hybrid brokerage, market data and related information services, trade compression and other post-trade services, analytics related to financial instruments and markets, and other financial technology solutions. Fenics® brands also operate under the names Fenics®, FMX™, FMX Futures Exchange™, Fenics Markets Xchange™, Fenics Futures 144 Table of Contents Exchange™, Fenics UST™, Fenics FX™, Fenics Repo™, Fenics Direct™, Fenics MID™, Fenics Market Data™, Fenics GO™, Fenics PortfolioMatch™, kACE2®, and Lucera®. BGC, BGC Partners, BGC Trader, GFI, GFI Ginga, CreditMatch, Fenics, Fenics.com, FMX, Sunrise Brokers, Poten & Partners, RP Martin, kACE2, Capitalab, Swaptioniser, CBID, and Lucera are trademarks/service marks, and/or registered trademarks/service marks of BGC Partners, Inc. and/or its affiliates. The Company’s customers include many of the world’s largest banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, and investment firms. BGC Partners has dozens of offices globally in major markets including New York and London, as well as in Bahrain, Beijing, Bogotá, Brisbane, Cape Town, Chicago, Copenhagen, Dubai, Dublin, Frankfurt, Geneva, Hong Kong, Houston, Johannesburg, Madrid, Manila, Melbourne, Mexico City, Miami, Milan, Monaco, Nyon, Paris, Perth, Rio de Janeiro, Santiago, São Paulo, Seoul, Shanghai, Singapore, Sydney, Tel Aviv, Tokyo, Toronto, and Zurich. Basis of Presentation The Company’s Consolidated Financial Statements and Notes to the Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC and in conformity with U.S. GAAP. The Company’s Consolidated Financial Statements include the Company’s accounts and all subsidiaries in which the Company has a controlling interest. Intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to previously reported amounts to conform to the current presentation. On November 1, 2021, the Company completed the Insurance Business Disposition (see Note 5—"Divestitures" for additional information). On July 30, 2021, the Company completed the purchase of the Futures Exchange Group for a purchase price of $ 4.9 million at closing, plus the cash held at closing by the Futures Exchange Group, and an earn-out, only payable out of the Company's portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures Exchange Group prior to closing. The Futures Exchange Group acquisition has been determined to be a combination of entities under common control that resulted in a change in the reporting entity. Accordingly, the financial results of the Company have been recast to include the financial results of the Futures Exchange Group in the current and prior periods as if the Futures Exchange Group had always been consolidated. The assets and liabilities of the Futures Exchange Group have been recorded in the Company's Consolidated Statements of Financial Condition at the seller's historical carrying value. The purchase of the Futures Exchange Group was accounted for as an equity transaction for the period ended September 30, 2021 (the period in which the transaction occurred). During the first quarter of 2022, the Company changed the name of the brokerage product line formerly labeled as “Equity derivatives and cash equity” to “Equities” to better align the caption with the underlying activity. The change did not result in any reclassification of revenues and had no impact on the Company’s Total brokerage revenues. During the second quarter of 2022, the Company combined "Realized losses (gains) on marketable securities", "Unrealized losses (gains) on marketable securities", and "Losses (gains) on other investments" on the unaudited Condensed Consolidated Statements of Cash Flows into "Losses (gains) on marketable securities and other investments". The recognition of gains and losses related to these investments are similar in nature and immaterial to the financial statements in 2022 and 2021. During the third quarter of 2022, the Company renamed "Securities owned" as "Financial instruments owned, at fair value" and combined it with "Marketable securities" on the unaudited Condensed Consolidated Statements of Financial Condition. In addition, "Losses (gains) on marketable securities and other investments" was renamed as "Unrealized/realized losses (gains) on financial instruments owned, at fair value and other investments" on the unaudited Condensed Consolidated Statements of Cash Flows. The Consolidated Financial Statements contain all normal and recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the Consolidated Statements of Financial Condition, the Consolidated Statements of Operations, the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Cash Flows and the Consolidated Statements of Changes in Equity of the Company for the periods presented. Spin-Off of Newmark On November 30, 2018, the Company completed the Spin-Off. See Note 2—"Limited Partnership Interests in BGC Holdings and Newmark Holdings," and Note 13—"Related Party Transactions" for more information. 145 Table of Contents Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . The ASU is part of the FASB’s simplification initiative, and it is expected to reduce cost and complexity related to accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. BGC adopted the standard on the required effective date beginning January 1, 2021 on a prospective basis. The adoption of the standard did not have a material impact on the Company’s Consolidated Financial Statements. In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321) , Investments—Equity Method and Joint Ventures (Topic 323) , and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force) . These amendments improve previous guidance by reducing diversity in practice and increasing comparability of the accounting for the interactions between these codification topics as they pertain to certain equity securities, investments under the equity method of accounting and forward contracts or purchased options to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option. BGC adopted the standard on the required effective date beginning January 1, 2021 on a prospective basis. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements . The standard amends the Codification by moving existing disclosure requirements to (or adding appropriate references in) the relevant disclosure sections. The ASU also clarifies various provisions of the Codification by amending and adding new headings, cross-referencing, and refining or correcting terminology. BGC adopted the standard on the required effective date beginning January 1, 2021 and it was applied using a modified retrospective method of transition. The adoption of this guidance did not have an impact on the Company’s Consolidated Financial Statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, and borrowings) necessitated by reference rate reform as entities transition away from LIBOR and other interbank offered rates to alternative reference rates. This ASU also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. Application of the guidance is optional and only available in certain situations. The ASU is effective upon issuance and generally can be applied through December 31, 2022. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope . The amendments in this standard are elective and principally apply to entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform (referred to as the “discounting transition”). The standard expands the scope of ASC 848, Reference Rate Reform and allows entities to elect optional expedients to derivative contracts impacted by the discounting transition. Similar to ASU No. 2020-04, provisions of this ASU are effective upon issuance and generally can be applied through December 31, 2022. During the first quarter of 2022, the Company elected to apply the practical expedients to modifications of qualifying contracts as continuation of the existing contract rather than as a new contract. The adoption of the new guidance did not have an impact on the Company's Consolidated Financial Statements. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . The standard is expected to reduce complexity and improve comparability of financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. The ASU also enhances information transparency by making targeted improvements to the related disclosures guidance. Additionally, the amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. BGC adopted the standard on the required effective date beginning January 1, 2022, and it was applied using a modified retrospective method of transition. The adoption of this guidance did not have a material impact on the Company's Consolidated Financial Statements. In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance . The standard requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model. The guidance is aimed at increasing transparency about government assistance transactions that are not in the scope of other U.S. GAAP guidance. The ASU requires disclosure of the nature and significant terms and considerations of the transactions, the accounting policies used and the effects of those transactions on an entity’s financial statements. The new standard became effective for the Company’s 146 Table of Contents financial statements issued for annual reporting periods beginning on January 1, 2022, and it will be applied prospectively. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. New Accounting Pronouncements In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . The standard improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability, as well as payment terms and their effect on subsequent revenue recognized by the acquirer. The ASU requires companies to apply guidance in ASC 606, Revenue from Contracts with Customers , to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination, and, thus, creates an exception to the general recognition and measurement principle in ASC 805, Business Combinations . The new standard became effective for the Company beginning January 1, 2023, and will be applied prospectively for business combinations occurring on or after the effective date. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures . The guidance is intended to improve the decision usefulness of information provided to investors about certain loan refinancings, restructurings, and write-offs. The standard eliminates the recognition and measurement guidance on TDRs for creditors that have adopted ASC 326, Financial Instruments — Credit Losses and requires them to make enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. The new guidance also requires public business entities to present current-period gross write-offs (on a current year-to-date basis for interim-period disclosures) by year of origination in their vintage disclosures. The new standard became effective for the Company beginning January 1, 2023. The guidance for recognition and measurement of TDRs will be applied using a prospective transition method, and the amendments related to disclosures will be applied prospectively. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Debt Restructurings Disclosure of Supplier Finance Program Obligations . The guidance requires entities to disclose the key terms of supplier finance programs they use in connection with the purchase of goods and services along with information about their obligations under these programs, including a rollforward of those obligations. The new standard became effective for the Company beginning on January 1, 2023, except for the rollforward requirement, which is effective beginning January 1, 2024. The guidance requires retrospective application to all periods in which a balance sheet is presented, except for the rollforward requirement, which will be applied prospectively. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting provided optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The ASU was effective upon issuance and generally could be applied through December 31, 2022. Because the current relief in ASC 848, Reference Rate Reform may not cover a period of time during which a significant number of modifications may take place, the amendments in ASU No. 2022-06 defer the sunset date from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in ASC 848. The ASU is effective upon issuance. Management is currently evaluating the impact of the new standard on the Company’s consolidated financial statements. 2. Limited Partnership Interests in BGC Holdings and Newmark Holdings BGC Partners is a holding company with no direct operations and conducts substantially all of its operations through its operating subsidiaries. Virtually all of the Company’s consolidated net assets and net income are those of consolidated variable interest entities. BGC Holdings is a consolidated subsidiary of the Company for which the Company is the general partner. The Company and BGC Holdings jointly own BGC U.S. OpCo and BGC Global OpCo, the two operating partnerships. In addition, Newmark Holdings is a consolidated subsidiary of Newmark for which Newmark is the general partner. Newmark and Newmark Holdings jointly own Newmark OpCo, the operating partnership. Listed below are the limited partnership interests in BGC Holdings and Newmark Holdings. The FPUs, LPUs and limited partnership interests held by Cantor, each as described below, collectively represent all of the limited partnership interests in BGC Holdings and Newmark Holdings. As a result of the Separation, 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 at that time who held a BGC Holdings limited partnership interest received a corresponding Newmark Holdings limited partnership interest, determined by the Contribution Ratio, which was equal to a BGC Holdings limited partnership interest multiplied by one 147 Table of Contents divided by 2.2 , divided by the Exchange Ratio. Initially, the Exchange Ratio equaled one , so that each Newmark Holdings limited partnership interest was exchangeable for one share of Newmark Class A common stock. For reinvestment, acquisition or other purposes, Newmark may determine on a quarterly basis to distribute to its stockholders a smaller percentage than Newmark Holdings distributes to its equity holders (excluding tax distributions from Newmark Holdings) of cash that it received from Newmark OpCo. In such circumstances, the Separation and Distribution Agreement provides that the Exchange Ratio will be reduced to reflect the amount of additional cash retained by Newmark as a result of the distribution of such smaller percentage, after the payment of taxes. The Exchange Ratio as of December 31, 2022 equaled 0.9303 . Founding/Working Partner Units Founding/Working Partners have FPUs in BGC Holdings and Newmark Holdings. The Company accounts for FPUs outside of permanent capital, as “Redeemable partnership interest,” in the Company’s Consolidated Statements of Financial Condition. This classification is applicable to Founding/Working Partner units because these units are redeemable upon termination of a partner, including a termination of employment, which can be at the option of the partner and not within the control of the issuer. FPUs are held by limited partners who are employees and generally receive quarterly allocations of net income. Upon termination of employment or otherwise ceasing to provide substantive services, the FPUs are generally redeemed, and the unit holders are no longer entitled to participate in the quarterly allocations of net income. Since these allocations of net income are cash distributed on a quarterly basis and are contingent upon services being provided by the unit holder, they are reflected as a component of compensation expense under “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in the Company’s Consolidated Statements of Operations. Limited Partnership Units Certain BGC employees hold LPUs in BGC Holdings and Newmark Holdings (e.g., REUs, RPUs, PSUs, and PSIs). Prior to the Separation, certain employees of both BGC and Newmark received LPUs in BGC Holdings. As a result of the Separation, these employees were distributed LPUs in Newmark Holdings equal to a BGC Holdings LPU multiplied by the Contribution Ratio. Subsequent to the Separation, BGC employees are only granted LPUs in BGC Holdings, and Newmark employees are only granted LPUs in Newmark Holdings. Generally, LPUs receive quarterly allocations of net income, which are cash distributed and generally are contingent upon services being provided by the unit holder. As prescribed in U.S. GAAP guidance, following the Spin-Off, the quarterly allocations of net income on BGC Holdings and Newmark Holdings LPUs held by BGC employees are reflected as a component of compensation expense under “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in the Company’s Consolidated Statements of Operations, and the quarterly allocations of net income on BGC Holdings LPUs held by Newmark employees are reflected as a component of “Net income (loss) attributable to noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Operations. From time to time, the Company also issues BGC LPUs as part of the consideration for acquisitions. Certain of these LPUs in BGC Holdings and Newmark Holdings, such as REUs, entitle the holders to receive post-termination payments equal to the notional amount of the units in four equal yearly installments after the holder’s termination. These LPUs held by BGC employees are accounted for as post-termination liability awards, and in accordance with U.S. GAAP guidance, the Company records compensation expense for the awards based on the change in value at each reporting date in the Company’s Consolidated Statements of Operations as part of “Equity-based compensation and allocations of net income to limited partnership units and FPUs”. The Company has also awarded certain Preferred Units. Each quarter, the net profits of BGC Holdings and Newmark Holdings are allocated to such units 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. These allocations are deducted before the calculation and distribution of the quarterly partnership distribution for the remaining partnership interests and are generally contingent upon services being provided by the unit holder. The Preferred Units are not entitled to participate in partnership distributions other than with respect to the Preferred Distribution. Preferred Units may not be made exchangeable into Class A common stock, and are only entitled to the Preferred Distribution; accordingly, they are not included in the fully diluted share count. The quarterly allocations of net income on Preferred Units are reflected the same as those of the LPUs described above in the Company’s Consolidated Statements of Operations. After deduction of the Preferred Distribution, the remaining partnership units generally receive quarterly allocations of net income based on their weighted-average pro rata share of economic ownership of the operating subsidiaries. Preferred Units are granted in connection with the grant of certain LPUs, such as PSUs, which may be granted exchangeability or redeemed in connection with the issuance of shares of common stock to cover the withholding taxes owed by the unit holder, rather than issuing the gross amount of shares to employees, subject to cashless withholding of shares to pay applicable withholding taxes. 148 Table of Contents Cantor Units Cantor holds limited partnership interests in BGC Holdings. Cantor units are reflected as a component of “Noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Financial Condition. Cantor receives allocations of net income (loss), which are cash distributed on a quarterly basis and are reflected as a component of “Net income (loss) attributable to noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Operations. Cantor units in BGC Holdings are generally exchangeable for up to 23.6 million shares of BGC Class B common stock. General Certain of the limited partnership interests, described above, have been granted exchangeability into shares of BGC or Newmark Class A common stock, and additional limited partnership interests may become exchangeable into shares of BGC or Newmark Class A common stock. In addition, certain limited partnership interests have been granted the right to exchange into or have been exchanged into a partnership unit with a capital account, such as HDUs. HDUs have a stated capital account which is initially based on the closing trading price of Class A common stock at the time the HDU is granted. HDUs participate in quarterly partnership distributions and are generally not exchangeable into shares of Class A common stock. Subsequent to the Spin-Off, limited partnership interests in BGC Holdings held by a partner or Cantor may become exchangeable for BGC Class A or BGC Class B common stock on a one -for-one basis, and limited partnership interests in Newmark Holdings held by a partner or Cantor may become exchangeable for a number of shares of Newmark Class A or Newmark Class B common stock equal to the number of limited partnership interests multiplied by the then-current Exchange Ratio. Because limited partnership interests are included in the Company’s fully diluted share count, if dilutive, any exchange of limited partnership interests into shares of BGC Class A or BGC Class B common stock would not impact the fully diluted number of shares and units outstanding. Because these limited partnership interests generally receive quarterly allocations of net income, such exchange would have no significant impact on the cash flows or equity of the Company. Each quarter, net income (loss) is allocated between the limited partnership interests and the Company’s common stockholders. In quarterly periods in which the Company has a net loss, the loss allocation for FPUs, LPUs and Cantor units in BGC Holdings is allocated to Cantor and reflected as a component of “Net income (loss) attributable to noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Operations. In subsequent quarters in which the Company has net income, the initial allocation of income to the limited partnership interests in BGC Holdings is to Cantor and is recorded as “Net income (loss) attributable to noncontrolling interests in subsidiaries,” to recover any losses taken in earlier quarters, with the remaining income allocated to the limited partnership interests. This income (loss) allocation process has no impact on the net income (loss) allocated to common stockholders. 3. Summary of Significant Accounting Policies Use of Estimates: The preparation of the Company’s 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 these consolidated financial statements. Management believes that the estimates utilized in preparing these consolidated financial statements are reasonable. Estimates, by their nature, are based on judgment and available information. Actual results could differ materially from the estimates included in the Company’s consolidated financial statements. Certain reclassifications have been made to previously reported amounts to conform to the current period presentation. Revenue Recognition: BGC derives its 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. Commissions: The Company derives its commission revenues from securities, commodities and insurance-related transactions, whereby the Company connects buyers and sellers in the OTC and exchange markets and assists in the negotiation of the price and other material terms. These transactions result from the provision of service related to executing, settling and clearing transactions for customers. Trade execution and clearing services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenues are recognized at a point in time on the trade-date, when the customer obtains control of the service and can direct the use of, and obtain 149 Table of Contents substantially all of the remaining benefits from the asset. The Company records a receivable between the trade-date and settlement date when payment is received. Principal Transactions: Principal transaction revenues are primarily derived from matched principal transactions, whereby the Company simultaneously agrees to buy securities from one customer and sell them to another customer. A very limited number of trading businesses are allowed to enter into unmatched principal transactions to facilitate a customer’s execution needs for transactions initiated by such customers. Revenues earned from principal transactions represent the spread between the buy and sell price of the brokered security, commodity or derivative. Principal transaction revenues and related expenses are recognized on a trade-date basis. Positions held as part of a principal transaction are marked-to-market on a daily basis. Fees from Related Parties: Fees from related parties consist of charges for back-office services provided to Cantor and its affiliates, including occupancy of office space, utilization of fixed assets, accounting, operations, human resources and legal services, and information technology. The services are satisfied over time and measured using a time-elapsed measure of progress as the customer receives the benefits of the services evenly throughout the term of the contract. The transaction price is considered variable consideration as the level and type of services fluctuate from period to period and revenues are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenues recognized will not occur when the uncertainty is resolved. Fees from related parties are determined based on the cost incurred by the Company to perform or provide the service as evidenced by an allocation of employee expenses or a third-party invoice. Net cash settlements between affiliates are generally performed on a monthly basis. Data, Software and Post-trade: Data revenues primarily consist of subscription fees and fees from customized one-time sales provided to customers either directly or through third-party vendors. Regarding this revenue stream, the Company determined that software implementation, license usage, and related support services represent a single-performance obligation because the combination of these deliverables is necessary for the customer to derive benefit from the data. As such, once implementation is complete, monthly subscription fees are billed in advance and recognized on a straight-line basis over the life of the license period. The Company also provides software customization services contracted through work orders that each represent a separate performance obligation. Revenue is recognized over time using an output method as a measure of progress. As circumstances change over time, the Company updates its measure of progress to reflect any changes in the outcome of the performance obligation. Such updates are accounted for as a change in accounting estimate. As a practical expedient, when the work-order period is less than 12 months, the Company recognizes revenue upon acceptance from the customer after work is completed. The contract price is fixed and billed to the customer as combination of an upfront fee, progress fees, and a post-delivery fee. Other Revenues: Other revenues are earned from various sources, including underwriting and advisory fees. Other Income (Losses), Net: Gains (Losses) on Divestitures and Sale of Investments: Gains (losses) on divestitures and sale of investments is comprised of gains and losses recorded in connection with the divestiture of certain businesses or sale of investments (see Note 5—“Divestitures”). Gains (Losses) on Equity Method Investments: Gains (losses) on equity method investments represent the Company’s pro-rata share of the net gains and losses on investments over which the Company has significant influence but which it does not control. 150 Table of Contents Other Income (Loss): Other income (loss) is primarily comprised of gains and losses associated with the movements related to the changes in fair value and/or hedges of Financial instruments owned, at fair value equity securities and investments carried under the measurement alternative (see Note 8—“Financial Instruments Owned, at Fair Value” and Note 14—“Investments”). Segments: The Company has one reportable segment (see Note 22—“Segment, Geographic and Product Information”). Cash and Cash Equivalents: The Company considers all highly liquid investments with maturities of 90 days or less at the date of acquisition that are not segregated under regulatory requirements, other than those used for trading purposes, to be cash equivalents. Cash and cash equivalents include money market funds, deposits with banks, certificates of deposit, commercial paper, and U.S. Treasury securities. Cash Segregated Under Regulatory Requirements: Cash segregated under regulatory requirements represents funds received in connection with customer activities that the Company is obligated to segregate or set aside to comply with regulations mandated by authorities such as the SEC and FINRA in the U.S. and the FCA in the U.K. that have been promulgated to protect customer assets. Financial Instruments Owned, at Fair Value: Financial instruments owned, at fair value primarily consist of unencumbered U.S. Treasury bills held for liquidity purposes as well as equity securities with readily determinable fair value, foreign government bonds, and corporate bonds. Debt securities presented within Financial instruments owned, at fair value are classified as trading and marked-to-market daily based on current listed market prices (or, when applicable, broker or dealer quotes), with the resulting gains and losses included in operating income in the current period. Unrealized and realized gains and losses from changes in fair value of these debt securities are included as part of “Principal transactions” in the Company’s Consolidated Statements of Operations. In accordance with the guidance on recognition and measurement of equity investments with readily determinable fair value, the Company carries these equity securities at fair value and recognizes any changes in fair value currently within “Other income (loss)” in the Company’s Consolidated Statements of Operations. See Note 8—“Financial Instruments Owned, at Fair Value” for additional information. Fair Value: U.S. GAAP defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and further expands disclosures about such fair value measurements. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 measurements – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 measurements – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Level 3 measurements – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining fair value, the Company separates financial instruments owned and financial instruments sold, but not yet purchased into two categories: cash instruments and derivative contracts. 151 Table of Contents Cash Instruments – Cash instruments are generally classified within Level 1 or Level 2. The types of instruments generally classified within Level 1 include most U.S. government securities, certain sovereign government obligations, and actively traded listed equities. The Company does not adjust the quoted price for such instruments. The types of instruments generally classified within Level 2 include agency securities, most investment-grade and high-yield corporate bonds, certain sovereign government obligations, money market securities, and less liquid listed equities, and state, municipal and provincial obligations. Derivative Contracts – Derivative contracts can be exchange-traded or OTC. Exchange-traded derivatives typically fall within Level 1 or Level 2 of the fair value hierarchy depending on whether they are deemed to be actively traded or not. The Company generally values exchange-traded derivatives using the closing price of the exchange-traded derivatives. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. For OTC derivatives that trade in liquid markets, such as generic forwards, swaps and options, model inputs can generally be verified and model selection does not involve significant management judgment. Such instruments are typically classified within Level 2 of the fair value hierarchy. See Note 12—“Fair Value of Financial Assets and Liabilities” for more information on the fair value of financial assets and liabilities. Receivables from and Payables to Broker-Dealers, Clearing Organizations, Customers and Related Broker-Dealers: Receivables from and payables to broker-dealers, clearing organizations, customers and related broker-dealers primarily represent principal transactions for which the stated settlement dates have not yet been reached and principal transactions which have not settled as of their stated settlement dates, cash held at clearing organizations and exchanges to facilitate settlement and clearance of matched principal transactions, and spreads on matched principal transactions that have not yet been remitted from/to clearing organizations and exchanges. Also included are amounts related to open derivative contracts, which are generally executed on behalf of the Company’s customers. A portion of the unsettled principal transactions and open derivative contracts that constitute receivables from and payables to broker-dealers, clearing organizations, customers and related broker-dealers are with related parties (see Note 13—“Related Party Transactions” for more information regarding these receivables and payables). Current Expected Credit Losses (CECL) In accordance with the U.S. GAAP guidance, Financial Instruments—Credit Losses , the Company presents its 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’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 the Company’s portfolios. Refer to Note 25—“Current Expected Credit Losses (CECL)” for additional information. Accrued Commissions and Other Receivables, Net: The Company has accrued commissions receivable from securities and commodities transactions. Accrued commissions receivable are presented net of allowance for doubtful accounts of approximately $ 16.3 million and $ 9.9 million as of December 31, 2022 and 2021, respectively. The allowance is based on management’s estimate and reviewed periodically based on the facts and circumstances of each outstanding receivable. The Company’s CECL methodology for Accrued commissions receivable follows a PD/LGD framework with adjustments for the macroeconomic outlook, with the calculation performed at a counterparty level. The receivable balance for each counterparty is the outstanding receivable amount adjusted for any volume discounts. Accrued commissions receivable are not subject to an interest income accrual. The Company writes off a receivable in the period in which such balance is deemed uncollectible. The PD rate is sourced from Moody’s Annual Default Study for Corporates and it corresponds to the 1983-2022 average 1-year default rate by rating. The Moody’s quarterly updated data is used as well, if deemed appropriate. A significant number of the Company’s counterparties are publicly rated, and, therefore, the Moody’s PD rate is used as a proxy based on the counterparty’s external rating. In addition, the Company maintains internal obligor ratings that map to Moody’s long-term ratings. 152 Table of Contents The LGD rate is derived from the Basel Committee’s June 2004 Second Basel Accord on international banking laws and regulations. The Company understands that the LGD assumption is a well-known industry benchmark for unsecured credits, which aligns with the unsecured nature of these receivables. Management considered that historically the Company has collected on substantially all its receivables, and, therefore, the LGD assumption is a reasonable benchmark in absence of internal data from which to develop an LGD measure. The macroeconomic adjustment is based on an average of the outlook scenarios for changes in the Real GDP growth rate for advanced economies over the next year. Historical and forecast data for this metric is obtained from the International Monetary Fund’s World Economic Outlook database. The Company believes that changes in expected credit losses for its counterparties are impacted by changes in broad economic activity and, therefore, determined that the Real GDP growth rate was a reasonable metric to evaluate for macroeconomic adjustments. Further, given that the Company’s receivables are related to counterparties with global operations, management sourced the data for this metric as applicable to advanced economies. The Company notes that, given the short-term nature of these receivables, a forecast beyond 1 year is neither required nor appropriate, and, therefore, the adjustment also covers the approximated life of these assets with no need for reversion. In the Company’s capacity as an insurance agent and broker, BGC collected premiums from insureds and, after deducting its commission, remitted the premiums to the respective insurers. BGC also collected claims or refunds from insurers on behalf of insureds. Uncollected premiums from insureds and uncollected claims or refunds from insurers were recorded as “Accrued commissions and other receivables, net”, and the corresponding unremitted insurance premiums and claims held in a fiduciary capacity were recorded as “Accounts payable, accrued and other liabilities” in the Company’s consolidated statements of financial condition. The Company sold its Insurance brokerage business on November 1, 2021 (see Note 5—"Divestitures" for additional information). Loans, Forgivable Loans, and Other Receivables from Employees and Partners, Net: The Company has entered into various agreements with certain employees and partners whereby these individuals receive loans which may be either wholly or in part repaid from the distributions that the individuals receive on some or all of their LPUs and from proceeds of the sale of the employees' shares of BGC Class A common stock, or may be forgiven over a period of time. The forgivable portion of these loans is not included in the Company’s estimate of expected credit losses when employees meet the conditions for forgiveness through their continued employment over the specified time period, and is recognized as compensation expense over the life of the loan. The amounts due from terminated employees that the Company does not expect to collect are included in the allowance for credit losses. From time to time, the Company may also enter into agreements with employees and partners to grant bonus and salary advances or other types of loans. These advances and loans are repayable in the timeframes outlined in the underlying agreements. The Company reviews loan balances each reporting period for collectability. If the Company determines that the collectability of a portion of the loan balances is not expected, the Company recognizes a reserve against the loan balances as compensation expense. Fixed Assets, Net: Fixed assets are carried at cost net of accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Internal and external direct costs of developing applications and obtaining software for internal use are capitalized and amortized over three years on a straight-line basis. Computer equipment is depreciated over three to five years . Leasehold improvements are depreciated over the shorter of their estimated economic useful lives or the remaining lease term. Routine repairs and maintenance are expensed as incurred. When fixed assets are retired or otherwise disposed of, the related gain or loss is included in operating income. The Company has asset retirement obligations related to certain of its leasehold improvements, which it accounts for in accordance with U.S. GAAP guidance, Asset Retirement Obligations . The guidance requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement cost is capitalized as part of the carrying amount of the long-lived asset. The liability is discounted and accretion expense is recognized using the credit-adjusted risk-free interest rate in effect when the liability was initially recognized. Investments: The Company’s investments in which it has a significant influence but not a controlling financial interest and of which it is not the primary beneficiary are accounted for under the equity method. In accordance with the guidance on recognition and measurement of equity investments, the Company has elected to use a measurement alternative for its equity investments without a readily determinable fair value, pursuant to which these investments are initially recognized at cost and remeasured through earnings when there is an observable transaction involving 153 Table of Contents the same or similar investment of the same issuer, or due to an impairment. The Company evaluates potential impairment of equity method investments when a change in circumstances occurs, by applying the U.S. GAAP guidance, under investments - Equity Method and Joint Ventures, and assessing whether the carrying amount can be recovered. See Note 12—“Fair Value of Financial Assets and Liabilities” and Note 14—“Investments” for additional information. The Company’s consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. The Company’s policy is to consolidate all entities of which it owns more than 50% unless it does not have control over the entity. In accordance with the U.S. GAAP guidance, Consolidation of Variable Interest Entities , the Company also consolidates any VIE of which it is the primary beneficiary. Long-Lived Assets: The Company periodically evaluates potential impairment of long-lived assets and amortizable intangibles, when a change in circumstances occurs, by applying the U.S. GAAP guidance, Impairment or Disposal of Long-Lived Assets , and assessing whether the unamortized carrying amount can be recovered over the remaining life through undiscounted future expected cash flows generated by the underlying assets. If the undiscounted future cash flows were less than the carrying value of the asset, an impairment charge would be recorded. The impairment charge would be measured as the excess of the carrying value of the asset over the present value of estimated expected future cash flows using a discount rate commensurate with the risks involved. Leases: The Company enters into leasing arrangements in the ordinary course of business as a lessee of office space, data centers and office equipment. BGC determines whether an arrangement is a lease at inception. ROU lease assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent BGC’s obligation to make lease payments arising from the lease. Other than for leases with an initial term of twelve months or less, ROU lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. Lease expense pertaining to leases is recognized on a straight-line basis over the lease term. Interest expense on finance leases is recognized using the effective interest method over the lease term. Refer to Note 24—“Leases” for additional information. Goodwill and Other Intangible Assets, Net: 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 and other indefinite-lived intangible assets are not amortized, but instead are periodically tested for impairment. The Company reviews goodwill and other indefinite-lived intangible assets 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, BGC first assesses 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. Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives. Definite-lived intangible assets arising from business combinations include customer relationships, internally developed software, and covenants not to compete. Also included in the definite-lived intangible assets are purchased patents. The costs of acquired patents are amortized over a period not to exceed the legal life or the remaining useful life of the patent, whichever is shorter, using the straight-line method. Income Taxes: The Company accounts 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 differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Certain of the Company’s entities are taxed as U.S. partnerships and are subject to the UBT in New York City. 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 154 Table of Contents than the partnership entity. As such, the partners’ tax liability or benefit is not reflected in the Company’s consolidated financial statements. The tax-related assets, liabilities, provisions or benefits included in the Company’s consolidated financial statements also reflect the results of the entities that are taxed as corporations, either in the U.S. or in foreign jurisdictions. The Company provides 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. The Company recognizes interest and penalties related to income tax matters in “Provision (benefit) for income taxes” in the Company’s consolidated statements of operations. The Company files income tax returns in the United States federal jurisdiction and various states, local and foreign jurisdictions. The Company is currently open to examination by tax authorities in United States federal, state and local jurisdictions and certain non-U.S. jurisdictions for tax years beginning 2017, 2009 and 2016, respectively. The Company has finalized its accounting policy with respect to taxes on Global Intangible Low-Taxed Income (GILTI) and 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. Equity-Based Compensation: The Company accounts for equity-based compensation awards using the guidance in ASC 718, Compensation - Stock Compensation . Equity-based compensation expense recognized during the period, for equity-based awards with a stated vesting schedule, is based on the value of the portion of equity-based payment awards that is ultimately expected to vest. The grant-date fair value of equity-based awards with a stated vesting schedule is amortized to expense ratably over the awards’ vesting periods. As this equity-based compensation expense recognized in the Company’s consolidated statements of operations is based on awards ultimately expected to vest, it has been reviewed for estimated forfeitures. Further, forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In addition, equity-based compensation for LPU awards with no stated vesting schedule, is recognized at fair value on the date the award is granted exchangeability or is redeemed in connection with the issuance of shares of common stock. Restricted Stock Units: RSUs held by certain employees of the Company are accounted for as equity awards, and in accordance with U.S. GAAP, the Company is required to record an expense for the portion of the RSUs that is ultimately expected to vest. The grant-date fair value of RSUs is amortized to expense ratably over the awards’ expected vesting periods. The non-cash equity-based amortization expense is reflected as a component of “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in the Company’s consolidated statements of operations. Restricted Stock: Restricted stock provided to certain employees by the Company is accounted for as an equity award, and as per the U.S. GAAP guidance, the Company is required to record an expense for the portion of the restricted stock that is ultimately expected to vest. The Company has granted restricted stock that is fully vested and not subject to continued employment or service with the Company or any affiliate or subsidiary of the Company; however, transferability is subject to compliance with BGC Partners’ and its affiliates’ customary noncompete obligations. Such shares of restricted stock are generally salable 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 non-cash equity-based expense is reflected as a component of “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in the Company’s consolidated statements of operations. Limited Partnership Units: LPUs in BGC Holdings and Newmark Holdings generally are held by employees of both BGC and Newmark and 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. Following the Spin-Off, the quarterly allocations of net income on BGC Holdings and Newmark Holdings LPUs held by BGC employees are reflected as a component of compensation expense under “Equity-based compensation and allocations of net income to limited partnership units and FPUs,” and the quarterly allocations of net income on BGC Holdings LPUs held by Newmark employees are reflected as a component of “Net income (loss) attributable to noncontrolling interest in subsidiaries” in the Company’s consolidated statements of operations. Certain of these LPUs in BGC Holdings and Newmark Holdings, such as REUs, entitle the holders to receive post-termination payments equal to the notional amount in four equal yearly installments after the holder’s termination. These limited partnership units held by BGC employees are accounted for as post-termination liability awards under the U.S. GAAP guidance, which requires that the Company record an expense for such awards based on the change in value at each reporting 155 Table of Contents period and include the expense in the Company’s consolidated statements of operations as part of “Equity-based compensation and allocations of net income to limited partnership units and FPUs.” The liability for these limited partnership units held by BGC employees with a post-termination payout amount is included in “Accrued compensation” on the Company’s consolidated statements of financial condition. Following the Spin-Off, certain limited partnership units in BGC Holdings are granted exchangeability or redeemed in connection with the grant of shares of BGC Class A common stock on a one -for-one basis (subject to adjustment), and certain limited partnership units in Newmark Holdings are granted exchangeability or redeemed in connection with the grant of shares of Newmark Class A common stock based on the exchange ratio at the time. At the time exchangeability or redemption is granted for BGC employees, the Company recognizes 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 the Company’s consolidated statements of operations. Further, certain LPUs in BGC Holdings and Newmark Holdings have a stated vesting schedule and do not receive quarterly allocations of net income. The grant-date fair value of these LPUs is amortized to expense ratably over the awards’ expected vesting periods. The non-cash equity-based amortization expense is reflected as a component of “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in the Company’s consolidated statements of operations. In addition, Preferred Units are granted in connection with the grant of certain LPUs, such as PSUs, which 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, rather than issuing the gross amount of shares to employees, subject to cashless withholding of shares to pay applicable withholding taxes. Each quarter, the net profits of BGC Holdings and Newmark Holdings are allocated to Preferred Units 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 “Preferred Distribution”). These allocations are deducted before the calculation and distribution of the quarterly partnership distribution for the remaining partnership interests and are generally contingent upon services being provided by the unit holder. The Preferred Units are not entitled to participate in partnership distributions other than with respect to the Preferred Distribution. Preferred Units may not be made exchangeable into common stock and are only entitled to the Preferred Distribution, and accordingly they are not included in the fully diluted share count. The quarterly allocations of net income on Preferred Units are reflected the same as those of the LPUs described above in the Company’s consolidated statements of operations. After deduction of the Preferred Distribution, the remaining partnership interests generally receive quarterly allocations of net income based on their weighted-average pro-rata share of economic ownership of the operating subsidiaries . For additional information, see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings.” Redeemable Partnership Interest: Redeemable partnership interest represents limited partnership interests in BGC Holdings held by Founding/Working Partners. See Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” for additional information related to the FPUs. Contingent Class A Common Stock: In connection with certain acquisitions, the Company committed to issue shares of the Company’s Class A common stock upon the achievement of certain performance targets. The contingent shares met the criteria for liability classification, are measured at fair value on a recurring basis and presented in “Accounts payable, accrued and other liabilities” in the Company’s consolidated statements of financial condition. Realized and unrealized gains (losses) resulting from changes in fair value are reported in “Other income (loss)” in the Company’s consolidated statements of operations. Noncontrolling Interest in Subsidiaries: Noncontrolling interest in subsidiaries represents equity interests in consolidated subsidiaries that are not attributable to the Company, such as Cantor units and the noncontrolling interest holders’ proportionate share of the profit or loss associated with joint ownership of the Company’s administrative services company in the U.K. (Tower Bridge). Foreign Currency Transactions and Translation: Assets and liabilities denominated in nonfunctional currencies are converted at rates of exchange prevailing on the date of the Company’s consolidated statements of financial condition, and revenues and expenses are converted at average rates of exchange for the period. Gains and losses on remeasurement of foreign currency transactions denominated in nonfunctional 156 Table of Contents currencies are recognized within “Other expenses” in the Company’s consolidated statements of operations. Gains and losses on translation of the financial statements of non-U.S. operations into U.S. dollar reporting currency of the Company are presented as foreign currency translation adjustments within “Other comprehensive income (loss), net of tax” in the Company’s consolidated statements of comprehensive income and as part of “Accumulated other comprehensive income (loss)” in the Company’s consolidated statements of financial condition. Derivative Financial Instruments: Derivative contracts are instruments, such as futures, forwards, options or swaps contracts, which derive their value from underlying assets, indices, reference rates or a combination of these factors. Derivative instruments may be listed and traded on an exchange, or they may be privately negotiated contracts, which are often referred to as OTC derivatives. Derivatives may involve future commitments to purchase or sell financial instruments or commodities, or to exchange currency or interest payment streams. The amounts exchanged are based on the specific terms of the contract with reference to specified rates, securities, commodities, currencies or indices. The Company does not designate any derivative contracts as hedges for accounting purposes. U.S. GAAP requires that an entity recognize all derivative contracts as either assets or liabilities in the consolidated statements of financial condition and measure those instruments at fair value. The fair value of all derivative contracts is recorded on a net-by-counterparty basis where a legal right of offset exists under an enforceable netting agreement. Derivative contracts are recorded as part of receivables from or payables to broker-dealers, clearing organizations, customers and related broker-dealers in the Company’s consolidated statements of financial condition . 4. Acquisitions There were no acquisitions completed by the Company for the year ended December 31, 2022. Futures Exchange Group On July 30, 2021, the Company completed the purchase of the Futures Exchange Group for a purchase price of $ 4.9 million at closing, plus the cash held at closing by the Futures Exchange Group, and an earn-out, only payable out of the Company's portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures Exchange Group prior to closing. For additional information, see Note 1—“Organization and Basis of Presentation.” Total Consideration The total consideration for all acquisitions during the year ended December 31, 2021 was approximately $ 4.9 million in cash, plus the cash held at closing, for the Futures Exchange Group acquisition, and an earn-out payable out of the Company's portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures Exchange Group prior to closing. There was no other consideration paid during the year ended December 31, 2021. Except where otherwise noted, the results of operations of the Company’s acquisitions have been included in the Company’s consolidated financial statements subsequent to their respective dates of acquisition. The Company has made preliminary allocations of the consideration to the assets acquired and liabilities assumed as of the acquisition dates, and expects to finalize its analysis with respect to acquisitions within the first year after the completion of the respective transaction. Therefore, adjustments to preliminary allocations may occur. 5. Divestitures On November 1, 2021, the Company successfully completed the Insurance Business Disposition and, after closing adjustments, received $ 534.9 million in gross cash proceeds, subject to limited post-closing adjustments. As a result of this sale, the Company recognized a $ 312.9 million gain, net of banking fees, other professional fees, and compensation expenses, which was included in “Gains (losses) on divestitures and sale of investments” in the Company's Consolidated Statements of Operations for the year ended December 31, 2021. CF&Co served as advisor to the Company in connection with the transaction, and as a result, the banking fees included $ 4.4 million paid to Cantor upon closing of the transaction. 157 Table of Contents 6. Earnings Per Share U.S. GAAP guidance establishes standards for computing and presenting EPS. Basic EPS excludes dilution and is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding and contingent shares for which all necessary conditions have been satisfied except for the passage of time. Net income (loss) is allocated to the Company’s outstanding common stock, FPUs, LPUs and Cantor units (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings”). Basic Earnings Per Share: The following is the calculation of the Company’s basic EPS (in thousands, except per share data): Year Ended December 31, 2022 2021 2020 Basic earnings (loss) per share: Net income (loss) available to common stockholders $ 48,712 $ 124,007 $ 45,062 Basic weighted-average shares of common stock outstanding 371,561 379,215 361,736 Basic earnings (loss) per share $ 0.13 $ 0.33 $ 0.12 Fully Diluted Earnings Per Share: Fully diluted EPS is calculated utilizing net income (loss) available to common stockholders plus net income allocations to the limited partnership interests as the numerator. The denominator comprises the Company’s weighted-average number of outstanding shares of BGC common stock, including contingent shares of BGC common stock, and, if dilutive, the weighted-average number of limited partnership interests, including contingent units of BGC Holdings, and other contracts to issue shares of BGC common stock, including RSUs. The limited partnership interests generally are potentially exchangeable into shares of BGC Class A common stock (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings”) and are entitled to their pro-rata share of earnings after the deduction for the Preferred Distribution; as a result, they are included in the fully diluted EPS computation to the extent that the effect would be dilutive. 158 Table of Contents The following is the calculation of the Company’s fully diluted EPS (in thousands, except per share data): Year Ended December 31, 2022 2021 2020 Fully diluted earnings (loss) per share: Net income (loss) available to common stockholders $ 48,712 $ 124,007 $ 45,062 Allocations of net income (loss) to limited partnership interests, net of tax 14,767 49,988 19,725 Net income (loss) for fully diluted shares $ 63,479 $ 173,995 $ 64,787 Weighted-average shares: Common stock outstanding 371,561 379,215 361,736 Partnership units ¹ 124,738 155,356 183,130 RSUs (Treasury stock method) 1,913 4,074 737 Other 1,202 1,375 1,245 Fully diluted weighted-average shares of common stock outstanding 499,414 540,020 546,848 Fully diluted earnings (loss) per share $ 0.13 $ 0.32 $ 0.12 ____________________________________ 1 Partnership units collectively include FPUs, LPUs, and Cantor units (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” for more information). For the years ended December 31, 2022, 2021 and 2020, approximately 0.5 million, 0.1 million and 0.7 million of potentially dilutive securities, respectively, were excluded from the computation of fully diluted EPS because their effect would have been anti-dilutive. Anti-dilutive securities for the year ended December 31, 2022 included 0.5 million RSUs. Anti-dilutive securities for the year ended December 31, 2021 included 0.1 million RSUs. Anti-dilutive securities for the year ended December 31, 2020 included 0.7 million RSUs. As of December 31, 2022, 2021 and 2020, approximately 50.2 million, 36.4 million and 27.7 million shares, respectively, of contingent shares of BGC Class A common stock, N units, RSUs, and LPUs were excluded from the fully diluted EPS computations because the conditions for issuance had not been met by the end of the respective periods. 7. Stock Transactions and Unit Redemptions Class A Common Stock Changes in shares of BGC Class A common stock outstanding for the years ended December 31, 2022 and 2021 were as follows (in thousands): Year Ended December 31, 2022 2021 Shares outstanding at beginning of period 317,023 323,018 Share issuances: Redemptions/exchanges of limited partnership interests ¹ 30,998 58,025 Vesting of RSUs 3,284 2,167 Acquisitions 1,206 1,789 Other issuances of BGC Class A common stock 501 417 Treasury stock repurchases ( 27,087 ) ( 68,253 ) Forfeitures of restricted BGC Class A common stock ( 67 ) ( 140 ) Shares outstanding at end of period 325,858 317,023 ____________________________________ 1. Included in redemptions/exchanges of limited partnership interests for the year ended December 31, 2022 are 20.9 million shares of BGC Class A common stock granted in connection with the cancellation of 21.4 million LPUs. Included in redemption/exchanges of limited partnership interests for the year ended December 31, 2021, are 27.5 million shares of BGC Class A common stock granted in connection with the cancellation of 29.7 million LPUs. 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 outstanding. 159 Table of Contents Class B Common Stock The Company did not issue any shares of BGC Class B common stock during the years ended December 31, 2022 and 2021. As of December 31, 2022 and 2021, there were 45.9 million shares of BGC Class B common stock outstanding. CEO Program On March 9, 2018, the Company filed the March 2018 Form S-3 and entered into the March 2018 Sales Agreement, pursuant to which the Company could offer and sell up to an aggregate of $ 300.0 million of shares of BGC Class A common stock under the CEO Program. CF&Co is a wholly-owned subsidiary of Cantor and an affiliate of the Company. Under the March 2018 Sales Agreement, the Company agreed to pay CF&Co 2 % of the gross proceeds from the sale of shares. The Company did no t sell any shares under the March 2018 Sales Agreement during the year ended December 31, 2021. The March 2018 Form S-3 and the March 2018 Sales Agreement expired in September 2021. As of the date of expiration, the Company had sold 17.6 million shares of BGC Class A common stock (or $ 210.8 million) under the March 2018 Sales Agreement. For additional information on the Company’s CEO Program sales agreements, see Note 13—“Related Party Transactions.” On March 8, 2021, the Company filed a new CEO Program shelf registration statement on Form S-3 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 (the "March 2021 Form S-3"). On July 8, 2022, the Company filed an amendment to the March 2021 Form S-3. On August 3, 2022, the March 2021 Form S-3 was declared effective by the SEC, and the Company entered into the August 2022 Sales Agreement on August 12, 2022. Unit Redemptions and Share Repurchase Program The Company’s Board and Audit Committee have authorized repurchases of BGC Class A common stock and redemptions of limited partnership interests or other equity interests in the Company’s subsidiaries. On August 3, 2021, the Company’s Board and Audit Committee increased the BGC Partners share repurchase and unit redemption authorization to $ 400.0 million, which may include purchases from Cantor, its partners or employees or other affiliated persons or entities. Again, on November 4, 2022, the Board and Audit Committee increased the BGC Partners share repurchase and unit redemption authorization to $ 400.0 million, which may include purchases from Cantor, its partners or employees or other affiliated persons or entities. As of December 31, 2022, the Company had $ 376.4 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. The tables below represent 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 year ended December 31, 2022 were as follows (in thousands, except for weighted-average price data): 160 Table of Contents Period Total Number of Units Redeemed or Shares Repurchased Weighted- Average Price Paid per Unit or Share Approximate Dollar Value of Units and Shares That Could Be Redeemed/ Purchased Under the Program at December 31, 2022 Redemptions 1 January 1, 2022—March 31, 2022 43 $ 4.01 April 1, 2022—June 30, 2022 1,010 3.81 July 1, 2022—September 30, 2022 214 3.91 October 1, 2022—December 31, 2022 99 3.88 Total Redemptions 1,366 $ 3.84 Repurchases 2 January 1, 2022—March 31, 2022 — $ — April 1, 2022—June 30, 2022 8,745 3.36 July 1, 2022—September 30, 2022 12,397 4.03 October 1, 2022—October 31, 2022 307 3.93 November 1, 2022—November 30, 2022 3,834 3.99 December 1, 2022—December 31, 2022 1,804 4.48 Total Repurchases 27,087 3.84 Total Redemptions and Repurchases 28,453 $ 3.84 $ 376,413 ____________________________________ 1. During the year ended December 31, 2022, the Company redeemed 1.3 million LPUs at an aggregate redemption price of $ 4.9 million for a weighted-average price of $ 3.87 per unit and 0.1 million FPUs at an aggregate redemption price of $ 0.4 million for a weighted-average price of $ 3.41 per unit. The table above does not include units redeemed/cancelled in connection with the grant of 20.9 million shares of BGC Class A common stock during the year ended December 31, 2022, nor the limited partnership interests exchanged for 10.8 million shares of BGC Class A common stock during the year ended December 31, 2022. 2. During the year ended December 31, 2022, the Company repurchased 27.1 million shares of BGC Class A common stock at an aggregate price of $ 103.9 million for a weighted-average price of $ 3.84 per share. The gross unit redemptions and share repurchases of BGC Class A common stock during the year ended December 31, 2021 were as follows (in thousands, except for weighted-average price data): Period Total Number of Units Redeemed or Shares Repurchased Weighted- Average Price Paid per Unit or Share Approximate Dollar Value of Units and Shares That Could Be Redeemed/ Purchased Under the Program at December 31, 2021 Redemptions 1 January 1, 2021—March 31, 2021 20 $ 4.40 April 1, 2021—June 30, 2021 4,715 5.82 July 1, 2021—September 30, 2021 73 5.14 October 1, 2021—December 31, 2021 38 5.37 Total Redemptions 4,846 $ 5.80 Repurchases 2 January 1, 2021—March 31, 2021 965 $ 4.56 April 1, 2021—June 30, 2021 16,542 6.25 July 1, 2021—September 30, 2021 24,433 5.19 October 1, 2021—December 31, 2021 26,313 4.97 Total Repurchases 68,253 5.35 Total Redemptions and Repurchases 73,099 $ 5.38 $ 191,809 ____________________________________ 161 Table of Contents 1. During the year ended December 31, 2021, the Company redeemed 4.7 million LPUs at an aggregate redemption price of $ 27.5 million for a weighted-average price of $ 5.83 per unit and 0.1 million FPUs at an aggregate redemption price of $ 0.6 million for a weighted-average price of $ 4.86 per unit. The table above does not include units redeemed/cancelled in connection with the grant of 27.5 million shares of BGC Class A common stock during the year ended December 31, 2021, nor the limited partnership interests exchanged for 32.2 million shares of BGC Class A common stock during the year ended December 31, 2021. 2. During the year ended December 31, 2021, the Company repurchased 68.3 million shares of BGC Class A common stock at an aggregate price of $ 365.4 million for a weighted-average price of $ 5.35 per share. Redeemable Partnership Interest The changes in the carrying amount of FPUs for the years ended December 31, 2022 and 2021 were as follows (in thousands): Year Ended December 31, 2022 2021 Balance at beginning of period $ 18,761 $ 20,674 Consolidated net income allocated to FPUs 968 2,031 Earnings distributions ( 2,041 ) ( 957 ) FPUs exchanged ( 1,339 ) ( 1,129 ) FPUs redeemed ( 830 ) ( 1,858 ) Balance at end of period $ 15,519 $ 18,761 8. Financial Instruments Owned, at Fair Value Financial instruments owned, at fair value primarily consist of unencumbered U.S. Treasury bills held for liquidity purposes. Total Financial instruments owned, at fair value were $ 39.3 million and $ 41.2 million as of December 31, 2022 and 2021, respectively. For additional information, see Note 12—“Fair Value of Financial Assets and Liabilities.” These instruments are measured at fair value, with any changes in fair value recognized in earnings in the Company's Consolidated Statements of Operations. The Company recognized unrealized net losses of $ 97.8 thousand and unrealized net gains of $ 41.3 thousand as of December 31, 2022 and 2021, respectively, related to the mark-to-market adjustments on such instruments. 9. Collateralized Transactions Repurchase Agreements Securities sold under Repurchase Agreements are accounted for as collateralized financing transactions and are recorded at the contractual amount for which the securities will be repurchased, including accrued interest. As of both December 31, 2022, and 2021, the Company had not facilitated any Repurchase Agreements for the purpose of financing fails. 10. Receivables from and Payables to Broker-Dealers, Clearing Organizations, Customers and Related Broker-Dealers Receivables from and payables to broker-dealers, clearing organizations, customers and related broker-dealers primarily represent amounts due for undelivered securities, cash held at clearing organizations and exchanges to facilitate settlement and clearance of matched principal transactions, spreads on matched principal transactions that have not yet been remitted from/to clearing organizations and exchanges and amounts related to open derivative contracts (see Note 11—“Derivatives”). As of December 31, 2022 and December 31, 2021, Receivables from and payables to broker-dealers, clearing organizations, customers and related broker-dealers consisted of the following (in thousands): 162 Table of Contents December 31, 2022 December 31, 2021 Receivables from broker-dealers, clearing organizations, customers and related broker-dealers 1 : Contract values of fails to deliver $ 404,076 $ 640,696 Receivables from clearing organizations 132,149 118,979 Other receivables from broker-dealers and customers 19,693 14,386 Net pending trades — 5,506 Open derivative contracts 3,762 2,879 Total $ 559,680 $ 782,446 Payables to broker-dealers, clearing organizations, customers and related broker-dealers 1 : Contract values of fails to receive $ 362,682 $ 617,018 Payables to clearing organizations 16,855 22,679 Other payables to broker-dealers and customers 15,871 13,732 Net pending trades 1,634 — Open derivative contracts 7,633 2,849 Total $ 404,675 $ 656,278 ____________________________ 1. Includes receivables and payables with Cantor. See Note 13—“Related Party Transactions” for additional information. Excluding unsettled trades impacted by Russia's Invasion of Ukraine, substantially all open fails to deliver, open fails to receive and pending trade transactions as of December 31, 2022 have subsequently settled at the contracted amounts. See Note 19 — "Commitments, Contingencies and Guarantees" for additional information related to the potential loss associated with Russia's Invasion of Ukraine. 11. Derivatives In the normal course of operations, the Company enters into derivative contracts to facilitate client transactions, hedge principal positions and facilitate hedging activities of affiliated companies. These derivative contracts primarily consist of FX swaps, FX/commodities options, futures and forwards. Derivative contracts can be exchange-traded or OTC. Exchange-traded derivatives typically fall within Level 1 or Level 2 of the fair value hierarchy depending on whether they are deemed to be actively traded or not. The Company generally values exchange-traded derivatives using their closing prices. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. For OTC derivatives that trade in liquid markets, such as forwards, swaps and options, model inputs can generally be verified and model selection does not involve significant management judgment. Such instruments are typically classified within Level 2 of the fair value hierarchy. The Company does not designate any derivative contracts as hedges for accounting purposes. U.S. GAAP guidance requires that an entity recognize all derivative contracts as either assets or liabilities in the Consolidated Statements of Financial Condition and measure those instruments at fair value. The fair value of all derivative contracts is recorded on a net-by-counterparty basis where a legal right to offset exists under an enforceable netting agreement. Derivative contracts are recorded as part of “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” and “Payables to broker-dealers, clearing organizations, customers and related broker-dealers” in the Company’s Consolidated Statements of Financial Condition. 163 Table of Contents The fair value of derivative contracts, computed in accordance with the Company’s netting policy, is set forth below (in thousands): December 31, 2022 December 31, 2021 Derivative contract Assets Liabilities Notional Amounts 1 Assets Liabilities Notional Amounts 1 FX swaps $ 3,134 $ 5,796 $ 586,020 $ 2,487 $ 1,490 $ 571,280 Forwards 603 569 197,278 392 419 207,966 Interest rate swaps 25 — 2,114,412 — — — Futures — 1,268 4,253,088 — 940 3,914,813 Total $ 3,762 $ 7,633 $ 7,150,798 $ 2,879 $ 2,849 $ 4,694,059 ____________________________________ 1. Notional amounts represent the sum of gross long and short derivative contracts, an indication of the volume of the Company’s derivative activity, and do not represent anticipated losses. Certain of the Company’s FX swaps are with Cantor. See Note 13—“Related Party Transactions” for additional information related to these transactions. The replacement costs of contracts in a gain position were $ 3.8 million and $ 2.9 million, as of December 31, 2022 and 2021, respectively. The following tables present information about the offsetting of derivative instruments as of December 31, 2022 and 2021 (in thousands): December 31, 2022 Gross Amounts Gross Amounts Offset Net Amounts Presented in the Statements of Financial Condition Assets FX swaps $ 3,623 $ ( 489 ) $ 3,134 Forwards 746 ( 143 ) 603 Interest rate swaps 895 ( 870 ) 25 Futures 64,769 ( 64,769 ) — Total derivative assets $ 70,033 $ ( 66,271 ) $ 3,762 Liabilities FX swaps $ 6,285 $ ( 489 ) $ 5,796 Futures 66,037 ( 64,769 ) 1,268 Forwards 712 ( 143 ) 569 Interest rate swaps 870 ( 870 ) — Total derivative liabilities $ 73,904 $ ( 66,271 ) $ 7,633 164 Table of Contents December 31, 2021 Gross Amounts Gross Amounts Offset Net Amounts Presented in the Statements of Financial Condition Assets Forwards $ 452 $ ( 60 ) $ 392 FX swaps 3,025 ( 538 ) 2,487 Futures 70,497 ( 70,497 ) — Total derivative assets $ 73,974 $ ( 71,095 ) $ 2,879 Liabilities FX swaps $ 2,028 $ ( 538 ) $ 1,490 Forwards 479 ( 60 ) 419 Futures 71,437 ( 70,497 ) 940 Total derivative liabilities $ 73,944 $ ( 71,095 ) $ 2,849 There were no additional balances in gross amounts not offset as of December 31, 2022 and 2021, respectively. The change in fair value of derivative contracts is reported as part of “Principal transactions” in the Company’s Consolidated Statements of Operations. The table below summarizes gains and (losses) on derivative contracts for the years ended December 31, 2022, 2021 and 2020 (in thousands): Year Ended December 31, 2022 Derivative contract 2022 2021 2020 Futures $ 16,388 $ 10,902 $ 10,100 FX swaps 2,466 182 381 FX/commodities options 331 225 293 Interest rate swaps 25 — — Forwards — ( 43 ) 97 Gains, net $ 19,210 $ 11,266 $ 10,871 12. Fair Value of Financial Assets and Liabilities Fair Value Measurements on a Recurring Basis U.S. GAAP guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 measurements—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 measurements—Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Level 3 measurements—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. As required by U.S. GAAP guidance, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 165 Table of Contents The following tables set forth by level within the fair value hierarchy financial assets and liabilities accounted for at fair value under U.S. GAAP guidance (in thousands): Assets at Fair Value at December 31, 2022 Level 1 Level 2 Level 3 Netting and Collateral Total Financial instruments owned, at fair value - Domestic Government debt $ 31,175 $ — $ — $ — $ 31,175 Financial instruments owned, at fair value - Foreign government debt — 7,678 — — 7,678 Financial instruments owned, at fair value - Equities 466 — — — 466 FX swaps — 3,623 — ( 489 ) 3,134 Forwards — 746 — ( 143 ) 603 Interest rate swaps — 895 — ( 870 ) 25 Futures — 64,769 — ( 64,769 ) — Total $ 31,641 $ 77,711 $ — $ ( 66,271 ) $ 43,081 Liabilities at Fair Value at December 31, 2022 Level 1 Level 2 Level 3 Netting and Collateral Total FX swaps $ — $ 6,285 $ — $ ( 489 ) $ 5,796 Futures — 66,037 — ( 64,769 ) 1,268 Forwards — 712 — ( 143 ) 569 Interest rate swaps — 870 — ( 870 ) — Contingent consideration — — 24,279 — 24,279 Total $ — $ 73,904 $ 24,279 $ ( 66,271 ) $ 31,912 Assets at Fair Value at December 31, 2021 Level 1 Level 2 Level 3 Netting and Collateral Total Financial instruments owned, at fair value - Domestic Government debt $ 30,956 $ — $ — $ — $ 30,956 Financial instruments owned, at fair value - Foreign government debt — 9,646 — — 9,646 Financial instruments owned, at fair value - Equities 641 — — — 641 Financial instruments owned, at fair value - Corporate bonds — 1 — — 1 Forwards — 452 — ( 60 ) 392 FX swaps — 3,025 — ( 538 ) 2,487 Futures — 70,497 — ( 70,497 ) — Total $ 31,597 $ 83,621 $ — $ ( 71,095 ) $ 44,123 Liabilities at Fair Value at December 31, 2021 Level 1 Level 2 Level 3 Netting and Collateral Total Futures $ — $ 71,437 $ — $ ( 70,497 ) $ 940 FX swaps — 2,028 — ( 538 ) 1,490 Forwards — 479 — ( 60 ) 419 Contingent consideration — — 29,756 — 29,756 Total $ — $ 73,944 $ 29,756 $ ( 71,095 ) $ 32,605 166 Table of Contents Level 3 Financial Liabilities Changes in Level 3 liabilities measured at fair value on a recurring basis for the year ended December 31, 2022 were as follows (in thousands): Unrealized (gains) Losses for the period included in: Opening Balance as of January 1, 2022 Total realized and unrealized (gains) losses included in Net income (loss) 1 Unrealized (gains) losses included in Other comprehensive income (loss) 2 Purchases/ Issuances Sales/ Settlements Closing Balance at December 31, 2022 Net income (loss) on Level 3 Assets / Liabilities Outstanding at December 31, 2022 Other comprehensive income (loss) on Level 3 Assets / Liabilities Outstanding at December 31, 2022 Liabilities Accounts payable, accrued and other liabilities: Contingent consideration $ 29,756 $ 1,034 $ — $ — $ ( 6,511 ) $ 24,279 $ 1,034 $ — _______________________________________ 1. Realized and unrealized gains (losses) are reported in "Other income (loss)," in the Company’s Consolidated Statements of Operations. 2. Unrealized gains (losses) are reported in “Foreign currency translation adjustments,” in the Company’s Consolidated Statements of Comprehensive Income (Loss). Changes in Level 3 liabilities measured at fair value on a recurring basis for the year ended December 31, 2021 were as follows (in thousands): Unrealized (gains) Losses for the period included in: Opening Balance as of January 1, 2021 Total realized and unrealized (gains) losses included in Net income (loss) 1 Unrealized (gains) losses included in Other comprehensive income (loss) 2 Purchases/ Issuances Sales/ Settlements Closing Balance at December 31, 2021 Net income (loss) on Level 3 Assets / Liabilities Outstanding at December 31, 2021 Other comprehensive income (loss) on Level 3 Assets / Liabilities Outstanding at December 31, 2021 Liabilities Accounts payable, accrued and other liabilities: Contingent consideration $ 39,791 $ 4,285 $ — $ — $ ( 14,320 ) $ 29,756 $ 4,285 $ — _______________________________________ 1. Realized and unrealized gains (losses) are reported in “Other expenses” and "Other income (loss)," as applicable, in the Company’s Consolidated Statements of Operations. 2. Unrealized gains (losses) are reported in “ Foreign currency translation adjustments ,” in the Company’s Consolidated Statements of Comprehensive Income (Loss). Quantitative Information About Level 3 Fair Value Measurements on a Recurring Basis The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 liabilities measured at fair value on a recurring basis (in thousands): Fair Value as of December 31, 2022 Assets Liabilities Valuation Technique Unobservable Inputs Range Weighted Average Discount rate 1 6.8 %- 10.2 % 9.9 % Contingent consideration $ — $ 24,279 Present value of expected payments Probability of meeting earnout and contingencies 5 %- 100 % 71.2 % 2 _______________________________________ 1. The discount rate is based on the Company’s calculated weighted-average cost of capital. 2. The probability of meeting the earnout targets was based on the acquirees’ projected future financial performance, including revenues. 167 Table of Contents Fair Value as of December 31, 2021 Assets Liabilities Valuation Technique Unobservable Inputs Range Weighted Average Discount rate 1 6.8 %- 10.3 % 9.8 % Contingent consideration $ — $ 29,756 Present value of expected payments Probability of meeting earnout and contingencies 11 %- 100 % 71.8 % 2 _______________________________________ 1. The discount rate is based on the Company’s calculated weighted-average cost of capital. 2. The probability of meeting the earnout targets was based on the acquirees’ projected future financial performance, including revenues. Information About Uncertainty of Level 3 Fair Value Measurements The significant unobservable inputs used in the fair value of the Company’s contingent consideration are the discount rate and forecasted financial information. Significant increases (decreases) in the discount rate would have resulted in a significantly lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a significantly higher (lower) fair value measurement. As of December 31, 2022 and 2021, the present value of expected payments related to the Company’s contingent consideration was $ 24.3 million and $ 29.8 million, respectively. The undiscounted value of the payments, assuming that all contingencies are met, would be $ 34.7 million and $ 40.6 million as of December 31, 2022 and 2021, respectively. Fair Value Measurements on a Non-Recurring Basis Pursuant to the recognition and measurement guidance for equity investments, equity investments carried under the measurement alternative are remeasured at fair value on a non-recurring basis to reflect observable transactions which occurred during the period. The Company applied the measurement alternative to equity securities with the fair value of approximately $ 83.8 million and $ 82.0 million, which were included in “Other assets” in the Company’s Consolidated Statements of Financial Condition as of December 31, 2022 and 2021, respectively. These investments are classified within Level 2 in the fair value hierarchy, because their estimated fair value is based on valuation methods using the observable transaction price at the transaction date. 13. Related Party Transactions Service Agreements Throughout Europe and Asia, the Company provides Cantor with administrative services, tec hnology services and other support, for which it charges Cantor based on the cost of providing such services plus a mark-up, generally 7.5 %. In the U.K., the Company provides these services to Cantor through Tower Bridge. The Company owns 52 % of Tower Bridge and consolidates it, and Cantor owns 48 %. Cantor’s interest in Tower Bridge is reflected as a component of “Noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Financial Condition, and the portion of Tower Bridge’s income attributable to Cantor is included as part of “Net income (loss) attributable to noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Operations. In the U.S., the Company provides Cantor with technology services, for which it charges Cantor based on the cost of providing such services. The administrative services agreement provides that direct costs incurred are charged back to the service recipient. Additionally, the service recipient generally indemnifies the service provider for liabilities that it incurs arising from the provision of services, other than liabilities arising from fraud or willful misconduct of the service provider. In accordance with the administrative service agreement, the Company has not recognized any liabilities related to services provided to affiliates. For the years ended December 31, 2022, 2021 and 2020, Cantor’s share of the net profit (loss) in Tower Bridge was $ 0.7 million, $ 2.5 million and $ 0.8 million, respectively. This net profit is included as part of “Net income (loss) attributable to noncontrolling interest in subsidiaries” in the Company’s Consolidated Statements of Operations. On September 21, 2018, the Company entered into agreements to provide a guarantee and related obligation to Tower Bridge in connection with an office lease for the Company’s headquarters in London. The Company is obligated to guarantee the obligations of Tower Bridge in the event of certain defaults under the applicable lease and ancillary arrangements. In July 2018, the Audit Committee also authorized management of the Company to enter into similar guarantees or provide other forms of credit support to Tower Bridge or other affiliates of the Company from time to time in the future in similar circumstances and on similar terms and conditions. 168 Table of Contents For the years ended December 31, 2022, 2021 and 2020, the Company recognized related party revenues of $ 14.7 million, $ 14.9 million and $ 25.8 million, respectively, for the services provided to Cantor. These revenues are included as part of “Fees from related parties” in the Company’s Consolidated Statements of Operations. In the U.S., Cantor and its affiliates provide the Company with administrative services and other support for which Cantor charges the Company based on the cost of providing such services. In connection with the services Cantor provides, the Company and Cantor entered into an administrative services agreement whereby certain employees of Cantor are deemed leased employees of the Company. For the years ended December 31, 2022, 2021 and 2020, the Company was charged $ 84.9 million, $ 81.9 million and $ 62.6 million, respectively, for the services provided by Cantor and its affiliates, of which $ 59.2 million, $ 57.9 million and $ 39.4 million, respectively, were to cover compensation to leased employees for the years ended December 31, 2022, 2021 and 2020. The fees charged by Cantor for administrative and support services, other than those to cover the compensation costs of leased employees, are included as part of “Fees to related parties” in the Company’s Consolidated Statements of Operations. The fees charged by Cantor to cover the compensation costs of leased employees are included as part of “Compensation and employee benefits” in the Company’s Consolidated Statements of Operati ons. Purchase of Futures Exchange Group On July 30, 2021, the Company completed the purchase of the Futures Exchange Group for a purchase price of $ 4.9 million at closing, plus the cash held at closing by the Futures Exchange Group, and an earn-out, only payable out of the Company's portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures Exchange Group prior to closing. The transaction has been accounted for as a transaction between entities under common control. As part of the purchase of the Futures Exchange Group, Cantor has agreed to indemnify the Company for certain expenses arising at the Futures Exchange Group up to a maximum of $ 1.0 million. As of December 31, 2022 and 2021, the Company had recorded assets of $ 1.0 million and $ 0.4 million, respectively, in the Company’s Consolidated Statements of Financial Condition for this indemnity. In addition, the Futures Exchange Group received capital contributions from Cantor of $ 5.3 million and $ 4.6 million, for the years ended December 31, 2021 and 2020, respectively. These capital contributions were made prior to BGC's acquisition of the Futures Exchange Group. There were no capital contributions received from Cantor by the Futures Exchange Group for the year ended December 31, 2022. Newmark Spin-Off The Separation and Distribution Agreement sets forth the agreements among BGC, Cantor, Newmark and their respective subsidiaries. As a result of the Separation, the limited partnership interests in Newmark Holdings were distributed to the holders of limited partnership interests in BGC Holdings, including Cantor, whereby each holder of BGC Holdings limited partnership interests at that time held a BGC Holdings limited partnership interest and a corresponding Newmark Holdings limited partnership interest, which is equal to a BGC Holdings limited partnership interest multiplied by the Contribution Ratio, divided by the Exchange Ratio. For additional information, see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings.” Subsequent to the Spin-Off, there are remaining partners who hold limited partnership interests in BGC Holdings who are Newmark employees, and there are remaining partners who hold limited partnership interests in Newmark Holdings who are BGC employees. These limited partnership interests represent interests that were held prior to the Newmark IPO or were distributed in connection with the Separation. Following the Newmark IPO, employees of BGC and Newmark only receive limited partnership interests in BGC Holdings and Newmark Holdings, respectively. As a result of the Spin-Off, as the existing limited partnership interests in BGC Holdings held by Newmark employees and the existing limited partnership interests in Newmark Holdings held by BGC employees are exchanged/redeemed, the related capital can be contributed to and from Cantor, respectively. On November 30, 2018, BGC Partners caused its subsidiary, BGC Holdings, to distribute in the BGC Holdings Distribution pro rata all of the 1.5 million exchangeable interests of Newmark Holdings held by BGC Holdings immediately prior to the effective time of the BGC Holdings Distribution Date to its limited partners entitled to receive distributions on their BGC Holdings units who were holders of record of such units as of the Record Date (including Cantor and executive officers of BGC). The Newmark Holdings interests distributed to BGC Holdings partners in the BGC Holdings Distribution are exchangeable for shares of Newmark Class A common stock, and, in the case of the 0.4 million Newmark Holdings interests received by Cantor, also into shares of Newmark Class B common stock, at the current Exchange Ratio of 0.9303 shares of Newmark common stock per Newmark Holdings interest (subject to adjustment). 169 Table of Contents Clearing Agreement with Cantor The Company receives certain clearing services from Cantor pursuant to its clearing agreement. These clearing services are provided in exchange for payment by the Company of third-party clearing costs and allocated costs. The costs associated with these payments are included as part of “Fees to related parties” in the Company’s Consolidated Statements of Operations. The costs for these services are included as part of the charges to BGC for services provided by Cantor and its affiliates as discussed in “Service Agreements” above. Other Agreements with Cantor The Company is authorized to enter into short-term arrangements with Cantor to cover any delivery failures in connection with U.S. Treasury securities transactions and to share equally in any net income resulting from such transactions, as well as any similar clearing and settlement issues. As of December 31, 2022, and December 31, 2021, the Company had not facilitated any Repurchase Agreements with Cantor. To more effectively manage the Company’s exposure to changes in FX rates, the Company and Cantor have agreed to jointly manage the exposure. As a result, the Company is authorized to divide the quarterly allocation of any profit or loss relating to FX currency hedging between the Company and Cantor. The amount allocated to each party is based on the total net exposure for the Company and Cantor. The ratio of gross exposures of the Company and Cantor is utilized to determine the shares of profit or loss allocated to each for the period. During the year ended December 31, 2022, the Company recognized its share of FX losses of $ 0.1 million. During the years ended December 31, 2021 and 2020, the Company recognized its share of FX gains of $ 0.5 million and $ 1.5 million, respectively. These gains and losses are included as part of “Other expenses” in the Company’s Consolidated Statements of Operations. Pursuant to the separation agreement relating to the Company’s acquisition of certain BGC businesses from Cantor in 2008, Cantor has a right, subject to certain conditions, to be the Company’s customer and to pay the lowest commissions paid by any other customer, whether by volume, dollar or other applicable measure. In addition, Cantor has an unlimited right to internally use market data from the Company without any cost. Any future related party transactions or arrangements between the Company and Cantor are subject to the prior approval by the Audit Committee. During the years ended December 31, 2022, 2021 and 2020, the Company recorded revenues from Cantor entities of $ 0.3 million, $ 0.1 million and $ 0.1 million, respectively, related to commissions paid to the Company by Cantor. These revenues are included as part of “Commissions” in the Company’s Consolidated Statements of Operations. The Company and Cantor are authorized to utilize each other’s brokers to provide brokerage services for securities not brokered by such entity, so long as, unless otherwise agreed, such brokerage services were provided in the ordinary course and on terms no less favorable to the receiving party than such services are provided to typical third-party customers. In August 2013, the Audit Committee authorized the Company to invest up to $ 350.0 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 by the Company from time to time as a liquidity management vehicle. The notes are backed by assets of highly rated banks. The Company is entitled to invest in the program so long as the program meets investment policy guidelines, including policies related to ratings. Cantor will earn a spread between the rate it receives from the short-term note issuer and the rate it pays to the Company 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 December 31, 2022 and December 31, 2021, the Company did not have any investments in the program. On June 5, 2015, the Company 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 34.6 million shares of BGC Class A common stock now owned or subsequently acquired by such Cantor entities for up to an aggregate of 34.6 million 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 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 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 determined that it was in the best interests of the Company and its stockholders to approve the Exchange Agreement because it will help ensure that Cantor retains its units in BGC Holdings, which is the same partnership in which the Company’s 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 Partners issued 10.3 million shares of BGC Partners Class B common stock to Cantor and 0.7 million shares of BGC Partners Class B common stock to CFGM, in each case in exchange for shares of BGC Class A common stock owned by Cantor and CFGM, respectively, on a one -to-one basis pursuant to the 170 Table of Contents Exchange Agreement. Pursuant to the Exchange Agreement, no additional consideration was paid to BGC Partners by Cantor or CFGM for the Class B Issuance. Following this exchange, Cantor and its affiliates have the right to exchange under the Exchange Agreement up to an aggregate of 23.6 million 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 December 31, 2022, Cantor and CFGM did not own any shares of BGC Class A common stock. The Company 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 common stock under this agreement than they were previously eligible to receive upon exchange of exchangeable limited partnership units. On March 19, 2018, the Company 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. On August 6, 2018, the Company entered into an amendment to the BGC Credit Agreement, which increased the aggregate principal amount that could 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, 2023, 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 December 31, 2022 and 2021, there were no borrowings by BGC or Cantor outstanding under this Agreement. The Company did no t record any interest expense related to the agreement for the years ended December 31, 2022 and 2021. The Company recorded interest expense related to the Agreement of $ 0.4 million for the year ended December 31, 2020. As part of the Company’s cash management process, the Company may enter into tri-party reverse repurchase agreements and other short-term investments, some of which may be with Cantor. As of December 31, 2022 and 2021, the Company ha d no reverse repurchase agreements outstanding. Receivables from and Payables to Related Broker-Dealers Amounts due to or from Cantor and Freedom, one of the Company’s equity method investments, are for transactional revenues under a technology and services agreement with Freedom, as well as for open derivative contracts. These are included as part of “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” or “Payables to broker-dealers, clearing organizations, customers and related broker-dealers” in the Company’s Consolidated Statements of Financial Condition. As of both December 31, 2022 and 2021, the Company had receivables from Freedom of $ 1.4 million. As of December 31, 2022 and 2021, the Company had $ 3.1 million and $ 2.5 million, respectively, in receivables from Cantor related to open derivative contracts. As of December 31, 2022 and 2021, the Company had $ 5.8 million and $ 1.5 million, respectively, in payables to Cantor related to open derivative contracts. As of both December 31, 2022 and 2021, the Company did not have any receivables from and payables to Cantor related to fails and pending trades. Loans, Forgivable Loans and Other Receivables from Employees and Partners, Net The Company has entered into various agreements with certain employees and partners whereby these individuals receive loans which may be either wholly or in part repaid from the distributions that the individuals receive on some or all of their LPUs and from proceeds of the sale of the employees' shares of BGC Class A common stock or may be forgiven over a period of time. The forgivable portion of these loans is recognized as compensation expense over the life of the loan. From time to time, the Company may also enter into agreements with employees and partners to grant bonus and salary advances or other types of loans. These advances and loans are repayable in the timeframes outlined in the underlying agreements. As of December 31, 2022 and 2021, the aggregate balance of employee loans, net, was $ 319.6 million and $ 287.0 million, respectively, and is included as “Loans, forgivable loans and other receivables from employees and partners, net” in the Company’s Consolidated Statements of Financial Condition. Compensation expense for the above-mentioned employee loans for the years ended December 31, 2022, 2021 and 2020 was $ 49.5 million, $ 217.7 million and $ 67.0 million, respectively. The compensation expense related to these employee loans is included as part of “Compensation and employee benefits” in the Company’s Consolidated Statements of Operations. 171 Table of Contents Interest income on the above-mentioned employee loans for the years ended December 31, 2022, 2021 and 2020 was $ 7.5 million, $ 10.0 million and $ 8.8 million, respectively. The interest income related to these employee loans is included as part of “Interest and dividend income” in the Company’s Consolidated Statements of Operations. CEO Program and Other Transactions with CF&Co As discussed in Note 7—“Stock Transactions and Unit Redemptions,” the Company entered into both the March 2018 Sales Agreement and the August 2022 Sales Agreement with CF&Co, as the Company’s sales agent under the CEO Program. During the years ended December 31, 2022 and 2021, the Company did no t sell any shares of Class A common stock under the March 2018 Sales Agreement or the August 2022 Sales Agreement. The March 2018 Sales Agreement expired in September 2021. For the years ended December 31, 2022 and 2021, the Company was no t charged for services provided by CF&Co related to the CEO program with CF&Co. For the year ended December 31, 2020, the Company was charged approximately $ 9 thousand, for services provided by CF&Co related to the Company's Sales Agreements with CF&Co. The net proceeds of the shares sold are included as part of “Additional paid-in capital” in the Company’s Consolidated Statements of Financial Condition. The Company has engaged CF&Co and its affiliates to act as financial advisors in connection with one or more third-party business combination transactions as requested by the Company on behalf of its affiliates from time to time on specified terms, conditions and fees. The Company may pay finders’, investment banking or financial advisory fees to broker-dealers, including, but not limited to, CF&Co and its affiliates, from time to time in connection with certain business combination transactions, and, in some cases, the Company may issue shares of BGC Class A common stock in full or partial payment of such fees. On October 3, 2014, management was granted approval by the Board and Audit Committee to enter into stock loan transactions with CF&Co utilizing equities securities. Such stock loan transactions will bear market terms and rates. As of December 31, 2022 and 2021, the Company did not have any Securities loaned transactions with CF&Co. Securities loaned transactions are included in “Securities loaned” in the Company’s Consolidated Statements of Financial Condition. On May 27, 2016, the Company issued an aggregate of $ 300.0 million principal amount of 5.125 % Senior Notes. In connection with this issuance of the 5.125 % Senior Notes, the Company recorded $ 0.5 million in underwriting fees payable to CF&Co. These fees were recorded as a deduction from the carrying amount of the debt liability, which was amortized as interest expense over the term of the notes. Cantor tendered $ 15.0 million of such senior notes in the tender offer for the 5.125 % Senior Notes completed on August 14, 2020. The 5.125 % Senior Notes matured on May 27, 2021. On July 24, 2018, the Company 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. In connection with this issuance of the 5.375 % Senior Notes, the Company recorded approximately $ 0.3 million in underwriting fees payable to CF&Co. The Company also paid CF&Co an advisory fee of $ 0.2 million in connection with the issuance. These fees were recorded as a deduction from the carrying amount of the debt liability, which is amortized as interest expense over the term of the notes. On September 27, 2019, the Company issued an aggregate of $ 300.0 million principal amount of 3.750 % Senior Notes. In connection with this issuance of the 3.750 % Senior Notes, the Company recorded $ 0.2 million in underwriting fees payable to CF&Co. These fees were recorded as a deduction from the carrying amount of the debt liability, which is amortized as interest expense over the term of the notes. 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 December 31, 2022, the Company had $ 50.0 million remaining under its debt repurchase authorization. On July 10, 2020, the Company issued an aggregate of $ 300.0 million principal amount of 4.375 % Senior Notes. In connection with this issuance of the 4.375 % Senior Notes, the Company recorded $ 0.2 million in underwriting fees payable to CF&Co. These fees were recorded as a deduction from the carrying amount of the debt liability, which is amortized as interest expense over the term of the notes. Cantor purchased $ 14.5 million of such senior notes and still held such notes as of December 31, 2022. 172 Table of Contents 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 FCM. From time to time, the Company’s foreign-based brokers engage in interest rate swap transactions with U.S.-based counterparties, and, therefore, the Company is subject to the CFTC requirements. Mint Brokers has entered into guarantees on behalf of the Company, and the Company is required to indemnify Mint Brokers for the amounts, if any, paid by Mint Brokers on behalf of the Company pursuant to this arrangement. Effective April 1, 2020, these guarantees were transferred to Mint Brokers from CF&Co. During the years ended December 31, 2022, 2021 and 2020, the Company recorded fees of $ 0.1 million with respect to these guarantees, respectively. These fees were included in “Fees to related parties” in the Company’s Consolidated Statements of Operations. Cantor Rights to Purchase Cantor Units from BGC Holdings Cantor has the right to purchase 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), 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 Cantor units in BGC Holdings at the price that Cantor would have paid for Cantor units had the Company redeemed the FPUs. If Cantor acquires any Cantor units as a result of the purchase or redemption by BGC Holdings of any FPUs, Cantor will be entitled to the benefits (including distributions) of such units it acquires from the date of termination or bankruptcy of the applicable Founding/Working Partner. In addition, any such Cantor units purchased by Cantor are currently exchangeable for up to 23.6 million 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). On March 31, 2021, Cantor purchased from BGC Holdings an aggregate of 1,149,684 Cantor units for aggregate consideration of $ 2,104,433 as a result of the redemption of 1,149,684 FPUs, and 1,618,376 Cantor units for aggregate consideration of $ 3,040,411 as a result of the exchange of 1,618,376 FPUs. On October 28, 2021, Cantor purchased from BGC Holdings an aggregate of 460,929 Cantor units for an aggregate consideration of $ 715,605 as a result of the redemption of 460,929 FPUs, and 1,179,942 Cantor units for aggregate consideration of $ 2,033,838 as a result of the exchange of 1,179,942 FPUs. On May 17, 2022, Cantor purchased from BGC Holdings an aggregate 427,494 Cantor units for aggregate consideration of $ 841,010 as a result of the redemption of 427,494 FPUs, and 52,681 Cantor units for aggregate consideration of $ 105,867 as a result of the exchange of 52,681 FPUs. On October 25, 2022, Cantor purchased from BGC Holdings an aggregate of 275,833 Cantor units for an aggregate consideration of $ 397,196 as a result of the redemption of 275,833 FPUs, and 77,507 Cantor units for aggregate consideration of $ 142,613 as a result of the exchange of 77,507 FPUs. Each Cantor unit in BGC Holdings held by Cantor is exchangeable by Cantor at any time on a one -for-one basis (subject to adjustment) for shares of BGC Class A common stock. As of December 31, 2022, there were 0.3 million FPUs in BGC Holdings remaining, which BGC Holdings had the right to redeem or exchange and with respect to which Cantor will have the right to purchase an equivalent number of Cantor units following such redemption or exchange. Cantor Aurel Revenue Sharing Agreement On June 24, 2021, the Board and Audit Committee authorized the Company's French subsidiary, Aurel BGC SAS, to enter into a revenue sharing agreement pursuant to which Cantor shall provide services to Aurel to support Aurel’s investment banking activities with respect to special purpose acquisition companies. The services provided by Cantor to Aurel in support of such SPAC Investment Banking Activities shall include referral of clients, structuring advice, financial advisory services, referral of investors, deal execution services, and other advisory services in support of Aurel’s SPAC Investment Banking Activities pursuant to its French investment services license. As compensation, Cantor shall receive a revenue share of 80 % of Aurel’s net revenue attributable to SPAC Investment Banking Activities. The term of the revenue sharing agreement was for an initial period of 12 months, which automatically renews each year unless either party provides notice of termination at least three months prior to the anniversary. Aurel is also authorized to serve as bookrunner, underwriter or advisor in connection with French SPACs which are sponsored by Cantor at market rates for such services. For the year ended December 31, 2022, Aurel had no revenue or fees payable to Cantor attributable to SPAC Investment Banking Activities. For the year ended December 31, 2021, Aurel had $ 2.5 million of revenue and $ 1.7 million of fees payable to Cantor, respectively, attributable to SPAC 173 Table of Contents Investment Banking Activities, which were included as part of “Other revenues” and “Fees to related parties”, respectively, in the Company's Consolidated Statements of Operations. Transactions with Executive Officers and Directors On March 14, 2022, the Compensation Committee approved the grant of exchange rights to Mr. Windeatt with respect to 135,514 non-exchangeable BGC Holdings LPU-NEWs and 27,826 non-exchangeable PLPU-NEWs (at the average determination price of $ 4.84 per unit). On August 11, 2022, the Company repurchased 135,514 exchangeable BGC Holdings LPU-NEWs held by Mr. Windeatt at the price of $ 4.08 per unit, which was the closing price of BGC Class A common stock on August 11, 2022, and redeemed 27,826 exchangeable PLPU-NEWs held by Mr. Windeatt for $ 134,678 , less applicable taxes and withholdings. On February 22, 2021, the Company granted Sean A. Windeatt 123,713 exchange rights with respect to 123,713 non-exchangeable LPUs that were previously granted to Mr. Windeatt on February 22, 2019. The resulting 123,713 exchangeable LPUs are immediately exchangeable by Mr. Windeatt for an aggregate of 123,713 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 28,477 non-exchangeable PLPUs held by Mr. Windeatt, for a payment of $ 178,266 for taxes when the LPU units are exchanged. On April 8, 2021, the Compensation Committee approved the repurchase by the Company on April 23, 2021 of 123,713 exchangeable BGC Holdings LPU-NEWs held by Mr. Windeatt at the price of $ 5.65 , which was the closing price of BGC Class A common stock on April 23, 2021, and the redemption of 28,477 exchangeable BGC Holdings PLPU-NEWs held by Mr. Windeatt for $ 178,266 , less applicable taxes and withholdings. On April 8, 2021, the Compensation Committee approved the repurchase by the Company of the remaining 62,211 exchangeable BGC Holdings LPUs held by Mr. Windeatt that were granted exchangeability on March 2, 2020 at the price of $ 5.38 , the closing price of BGC Class A common stock on April 8, 2020. On April 28, 2021, the Compensation Committee approved an additional monetization opportunity for Mr. Merkel. Effective April 29, 2021, 108,350 of Mr. Merkel’s 273,612 non-exchangeable BGC Holdings PSUs were redeemed for zero , 101,358 of Mr. Merkel’s 250,659 non- exchangeable BGC Holdings PPSUs were redeemed for a cash payment of $ 575,687 , and 108,350 shares of BGC Class A common stock were issued to Mr. Merkel. On April 29, 2021, the 108,350 shares of BGC Class A common stock were repurchased from Mr. Merkel at the closing price of BGC Class A common stock on that date, under the Company's stock buyback program. On June 28, 2021, (i) the Company exchanged 520,380 exchangeable LPUs held by Mr. Lutnick at the price of $ 5.86 , which was the closing price of BGC Class A common stock on June 28, 2021, for 520,380 shares of BGC Class A common stock, less applicable taxes and withholdings, resulting in the delivery of 365,229 net shares of BGC Class A common stock to Mr. Lutnick, and in connection with the exchange of these 520,380 exchangeable LPUs, 425,765 exchangeable PLPUs were redeemed for a cash payment of $ 1,525,705 towards taxes; (ii) 88,636 non-exchangeable LPUs were redeemed for zero , and in connection therewith the Company issued Mr. Lutnick 88,636 shares of BGC Class A common stock, less applicable taxes and withholdings, resulting in the delivery of 41,464 net shares of BGC Class A common stock to Mr. Lutnick; and (iii) 1,131,774 H Units held by Mr. Lutnick were redeemed for 1,131,774 HDUs with a capital account of $ 7,017,000 , and in connection with the redemption of these 1,131,774 H Units, 1,018,390 Preferred H Units were redeemed for $ 7,983,000 for taxes. On December 21, 2021, the Compensation Committee approved a monetization opportunity for Mr. Lutnick. Effective December 21, 2021, 1,939,896 of Mr. Lutnick's non-exchangeable BGC Holdings PPSUs were redeemed for a payment of $ 10,851,803 . Mr. Lutnick also elected to redeem all of his 425,766 exchangeable BGC Holdings PPSUs for a payment of $ 1,525,706 . In connection with the foregoing, Mr. Lutnick's 2,011,731 non-exchangeable BGC Holdings PSUs were redeemed for zero and 2,011,731 shares of BGC Class A common stock were issued to Mr. Lutnick, In addition, 376,651 H Units held by Mr. Lutnick were redeemed for 376,651 HDUs with a capital account of $ 2,339,003 , and in connection with the redemption of these 376,651 H Units, 463,969 Preferred H Units were redeemed for $ 2,661,000 for taxes. On December 21, 2021, the Compensation Committee approved a monetization opportunity for Mr. Merkel. Effective December 21, 2021, 90,366 non-exchangeable BGC Holdings PSUs were redeemed for zero , 149,301 of Mr. Merkel's non-exchangeable BGC Holdings PPSUs were redeemed for a cash payment of $ 555,990 , and 90,366 shares of BGC Class A common stock were issued to Mr. Merkel. On March 2, 2020, the Company granted Stephen M. Merkel 360,065 exchange rights with respect to 360,065 non-exchangeable PSUs that were previously granted to Mr. Merkel. The resulting 360,065 exchangeable PSUs 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. On March 20, 2020, the Company redeemed 185,300 of such 360,065 exchangeable PSUs 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 PSU, for an aggregate redemption price of approximately $ 741,644 ). The transaction was approved by the Compensation Committee. Additionally, the Compensation Committee 174 Table of Contents approved the right to exchange for cash 265,568 non-exchangeable PPSUs held by Mr. Merkel, for a payment of $ 1,507,285 for taxes when the PSU units are exchanged. In connection with the redemption of the 185,300 PSUs, 122,579 PPSUs were redeemed for $ 661,303 for taxes. On July 30, 2020, the Company redeemed the remaining 174,765 exchangeable PSUs held by Mr. Merkel at the price of $ 2.76 , the closing price of BGC's Class A Common Stock on July 30, 2020. This transaction was approved by the Compensation Committee. In connection with the redemption of the 174,765 PSUs on July 30, 2020, 142,989 PPSUs 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 BGC's 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 BGC's 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 $ 637,866 for taxes. In connection 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 BGC's 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. Transactions with the Relief Fund During the year ended December 31, 2015, the Company committed to make charitable contributions to the Cantor Fitzgerald Relief Fund in the amount of $ 40.0 million, which was included in “Other expenses” in the Company’s Consolidated Statements of Operations for the year ended December 31, 2015 and "Accounts payable, accrued and other liabilities" in the Company's Consolidated Statements of Financial Condition. As of December 31, 2022, the Company did no t have any remaining liability associated with this commitment, and as of December 31, 2021, the remaining liability associated with this commitment was $ 1.7 million. 175 Table of Contents As of December 31, 2022 and 2021, the Company had an additional liability to the Cantor Fitzgerald Relief Fund and The Cantor Foundation (UK) for $ 9.2 million and $ 8.3 million, respectively, which included $ 6.4 million and $ 7.2 million of additional expense taken in September 2022 and 2021, respectively, above the original $ 40.0 million commitment. Other Transactions As of December 31, 2021, BGC recognized $ 8.3 million payable to Newmark, which is included as part of “Payables to related parties” and “Accounts payable, accrued and other liabilities”, respectively, in the Company's Consolidated Statements of Financial Condition. The payable was a result of taxes paid by Newmark on its share of taxable income which were included as part of the Company's consolidated tax return in the periods prior to the Spin-Off. BGC repaid the $ 8.3 million tax payment to Newmark during the first three months ended March 31, 2022. There was no outstanding payable to Newmark as of December 31, 2022. The Company is authorized to enter into loans, investments or other credit support arrangements for Aqua, an alternative electronic trading platform that offers new pools of block liquidity to the global equities markets; such arrangements are proportionally and on the same terms as similar arrangements between Aqua and Cantor. On February 15, 2022 and February 25, 2021, the Board and Audit Committee increased the authorized amount by an additional $ 1.0 million and $ 1.0 million, respectively, to an aggregate of $ 21.2 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. Aqua is 51 % owned by Cantor and 49 % owned by the Company. Aqua is accounted for under the equity method. During the years ended December 31, 2022 and 2021, the Company made $ 0.6 million and $ 1.1 million, respectively, in contributions to Aqua. These contributions are recorded as part of “Investments” in the Company’s Consolidated Statements of Financial Condition. The Company has also entered into a subordinated loan agreement with Aqua, whereby the Company loaned Aqua the principal sum of $ 980 thousand. The scheduled maturity date on the subordinated loan is September 1, 2024, and the current rate of interest on the loan is three-month LIBOR plus 600 basis points. The loan to Aqua is recorded as part of “Receivables from related parties” in the Company’s Consolidated Statements of Financial Condition. The Company did not recognize any interest income on the subordinated loan subsequent to being designated as a non-accrual loan in November 2022. As of December 31, 2022, the Company wrote off $ 550 thousand of the subordinated loan, which was recorded as part of "Other expenses" on the Company's Consolidated Statements of Operations. On October 25, 2016, the Board and Audit Committee authorized the purchase of 9,000 Class B Units of Lucera, representing all of the issued and outstanding Class B Units of Lucera not already owned by the Company. On November 4, 2016, the Company completed this transaction. As a result of this transaction, the Company owns 100 % of the ownership interests in Lucera. In the purchase agreement, by which the Company acquired Cantor’s remaining interest in Lucera, Cantor agreed, subject to certain exceptions, not to solicit certain senior executives of Lucera’s business and was granted the right to be a customer of Lucera’s businesses on the best terms made available to any other customer. The aggregate purchase price paid by the Company to Cantor consisted of approximately $ 24.2 million in cash plus a $ 4.8 million post-closing adjustment determined after closing based on netting Lucera’s expenses paid by Cantor after May 1, 2016 against accounts receivable owed to Lucera by Cantor for access to Lucera’s business from May 1, 2016 through the closing date. The Company previously had a 20 % ownership interest in Lucera and accounted for its investment using the equity method. The purchase has been accounted for as a transaction between entities under common control. During the years ended December 31, 2022, 2021 and 2020, respectively, Lucera recognized $ 23.2 thousand, $ 0.2 million and $ 0.7 million in related party revenues from Cantor. These revenues are included in “Data, software and post-trade” in the Company’s Consolidated Statements of Operations. BGC Sublease From Newmark 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 was a one-year sublease of approximately 21,000 rentable square feet in New York City. Under the terms of the sublease, BGC U.S. OpCo paid a fixed rent amount of $ 1.1 million in addition to all operating and tax expenses attributable to the lease. In May 2021, the sublease was amended to provide for a rate of $ 15 thousand per month based on the size of utilized space, with terms extending on a month-to-month basis, and expiring on December 31, 2021. In connection with the sublease, BGC U.S. OpCo paid $ 0.5 million for the year ended December 31, 2021. 176 Table of Contents 14. Investments Equity Method Investments and Investments Carried Under the Measurement Alternative (in thousands) Percent Ownership 1 December 31, 2022 December 31, 2021 Advanced Markets Holdings 25 % $ 5,090 $ 5,110 China Credit BGC Money Broking Company Limited 33 % 21,104 16,784 Freedom International Brokerage 45 % 9,659 9,794 Other 2,530 1,159 Equity method investments $ 38,383 $ 32,847 Investments carried under measurement alternative 192 192 Total equity method and investments carried under measurement alternative $ 38,575 $ 33,039 _______________________________________ 1 Represents the Company’s voting interest in the equity method investment as of December 31, 2022 and 2021. The carrying value of the Company’s equity method investments was $ 38.4 million and $ 32.8 million as of December 31, 2022 and 2021, respectively, and is included in “Investments” in the Company’s Consolidated Statements of Financial Condition. The Company recognized gains of $ 10.9 million, $ 6.7 million and $ 5.0 million related to its equity method investments for the years ended December 31, 2022, 2021 and 2020, respectively. The Company’s share of the net gains or losses is reflected in “Gains (losses) on equity method investments” in the Company’s Consolidated Statements of Operations. For the years ended December 31, 2022 and 2021, the Company did no t recognize impairment charges of existing equity method investments, however, wrote off a portion of a subordinated loan to an equity method investee in the current year (see "Investments in VIEs" within this note for more information). For the year ended December 31, 2020, the Company recorded impairment charges of $ 3.9 million relating to existing equity method investments. The impairment was recorded in “Other income (loss)” in the Company’s Consolidated Statements of Operations. During the year ended December 31, 2022, the Company did no t sell any equity method investments. The Company sold part of an equity method investment with a fair value of $ 3.8 million during the year ended December 31, 2021. During the year ended December 31, 2020, the Company did no t sell any equity method investments. Summarized financial information for the Company’s equity method investments is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Statements of operations: Total revenues $ 125,405 $ 108,458 $ 94,744 Total expenses 88,050 82,581 71,241 Income before income taxes $ 37,355 $ 25,877 $ 23,503 December 31, 2022 2021 Statements of financial condition: Cash and cash equivalents $ 82,725 $ 104,855 Fixed assets, net 1,848 2,603 Other assets 54,744 42,640 Total assets $ 139,317 $ 150,098 Payables to related parties — 2,000 Other liabilities 78,740 92,114 Total partners’ capital 60,577 55,984 Total liabilities and partners’ capital $ 139,317 $ 150,098 See Note 13—“Related Party Transactions” for information regarding related party transactions with unconsolidated entities included in the Company’s Consolidated Financial Statements. 177 Table of Contents Investments Carried Under Measurement Alternative The Company has acquired equity investments for which it did not have the ability to exert significant influence over operating and financial policies of the investees. These investments are accounted for using the measurement alternative in accordance with the guidance on recognition and measurement. The carrying value of these investments as of December 31, 2022 and 2021was $ 0.2 million, respectively, and they are included in “Investments” in the Company’s Consolidated Statements of Financial Condition. The Company did no t recognize any gains, losses, or impairments relating to investments carried under the measurement alternative for the years ended December 31, 2022, 2021 and 2020. In addition, as of December 31, 2022 and 2021, the Company owns membership shares, which are included in “Other assets” in the Company’s Consolidated Statements of Financial Condition. These equity investments are accounted for using the measurement alternative in accordance with the guidance on recognition and measurement. The Company recognized $ 1.8 million of unrealized gains, $ 0.1 million of unrealized losses, and $ 0.4 million of unrealized gains to reflect observable transactions for these shares during the years ended December 31, 2022, 2021, and 2020, respectively. Investments in VIEs Certain of the Company’s equity method investments included in the tables above are considered VIEs, as defined under the accounting guidance for consolidation. The Company is not considered the primary beneficiary of and therefore does not consolidate these VIEs. The Company’s involvement with such entities is in the form of direct equity interests and related agreements. The Company’s maximum exposure to loss with respect to the VIEs is its investment in such entities as well as a credit facility and a subordinated loan. The following table sets forth the Company’s investment in its unconsolidated VIEs and the maximum exposure to loss with respect to such entities (in thousands). December 31, 2022 December 31, 2021 Investment Maximum Exposure to Loss Investment Maximum Exposure to Loss Variable interest entities 1 $ 2,530 $ 2,959 $ 1,159 $ 2,139 __________________ 1 The Company has entered into a subordinated loan agreement with Aqua, whereby the Company agreed to lend the principal sum of $ 980 thousand. The Company’s maximum exposure to loss with respect to its unconsolidated VIEs includes the sum of its equity investments in its unconsolidated VIEs and the $ 430 thousand and $ 980 thousand subordinated loan to Aqua as of December 31, 2022 and 2021, respectively. The Company did not recognize any interest income on the subordinated loan subsequent to being designated as a non-accrual loan in November 2022. As of December 31, 2022, the Company wrote off $ 550 thousand of the subordinated loan, which was recorded as part of "Other expenses" on the Company's Consolidated Statements of Operations. Consolidated VIE The Company invested in a limited liability company that is focused on developing a proprietary trading technology. The limited liability company is a VIE, and it was determined that the Company is the primary beneficiary of this VIE because the Company was the provider of the majority of this VIE’s start-up capital and has the power to direct the activities of this VIE that most significantly impact its economic performance, primarily through its voting percentage and consent rights on the activities that would most significantly influence the entity. The consolidated VIE had total assets of $ 9.2 million and $ 6.8 million as of December 31, 2022 and 2021, respectively, which primarily consisted of clearing margin. There were no material restrictions on the consolidated VIE’s assets. The consolidated VIE had total liabilities of $ 1.4 million and $ 1.3 million as of December 31, 2022 and 2021, respectively. The Company’s exposure to economic loss on this VIE was $ 5.5 million and $ 4.5 million as of December 31, 2022 and 2021, respectively. 178 Table of Contents 15. Fixed Assets, Net Fixed assets, net consisted of the following (in thousands): December 31, 2022 December 31, 2021 Computer and communications equipment $ 95,730 $ 96,472 Software, including software development costs 320,275 280,540 Leasehold improvements and other fixed assets 94,875 105,362 510,880 482,374 Less: accumulated depreciation and amortization ( 327,402 ) ( 292,262 ) Fixed assets, net $ 183,478 $ 190,112 Depreciation expense was $ 22.3 million, $ 23.7 million and $ 24.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. Depreciation is included as part of “Occupancy and equipment” in the Company’s Consolidated Statements of Operations. The Company has approximately $ 5.8 million and $ 6.2 million of asset retirement obligations related to certain of its leasehold improvements as of December 31, 2022 and 2021, respectively. The associated asset retirement cost is capitalized as part of the carrying amount of the long-lived asset. The liability is discounted and accretion expense is recognized using the credit adjusted risk-free interest rate in effect when the liability was initially recognized. For the years ended December 31, 2022, 2021 and 2020 software development costs totaling $ 48.2 million, $ 43.2 million, and $ 54.3 million, respectively, were capitalized. Amortization of software development costs totaled $ 37.1 million, $ 34.9 million and $ 33.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. Amortization of software development costs is included as part of “Occupancy and equipment” in the Company’s Consolidated Statements of Operations. Impairment charges of $ 6.1 million, $ 11.1 million and $ 9.0 million were recorded for the years ended December 31, 2022, 2021 and 2020, respectively, related to the evaluation of capitalized software projects for future benefit and for fixed assets no longer in service. Impairment charges related to capitalized software and fixed assets are reflected in “Occupancy and equipment” in the Company’s Consolidated Statements of Operations. 16. Goodwill and Other Intangible Assets, Net The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 were as follows (in thousands): Goodwill Balance at December 31, 2020 $ 556,211 Sale of Insurance Business ( 68,978 ) Cumulative translation adjustment ( 314 ) Balance at December 31, 2021 $ 486,919 Disposal of Business ( 842 ) Cumulative translation adjustment 508 Balance at December 31, 2022 $ 486,585 For additional information on Goodwill, see Note 4—“Acquisitions.” Goodwill is not amortized and is reviewed annually for impairment or more frequently if impairment indicators arise, in accordance with U.S. GAAP guidance on Goodwill and Other Intangible Assets. The Company completed its annual goodwill impairment testing during the fourth quarters of 2022 and 2021, respectively, which did not result in any goodwill impairment. See Note 3—“Summary of Significant Accounting Policies” for more information. 179 Table of Contents Other intangible assets consisted of the following (in thousands, except weighted-average remaining life): December 31, 2022 Gross Amount Accumulated Amortization Net Carrying Amount Weighted- Average Remaining Life (Years) Definite life intangible assets: Customer-related $ 173,436 $ 74,337 $ 99,099 9.3 Technology 23,997 23,997 — N/A Noncompete agreements 19,818 19,078 740 3.9 Patents 11,473 10,430 1,043 3.1 All other 17,035 7,442 9,593 8.7 Total definite life intangible assets 245,759 135,284 110,475 9.2 Indefinite life intangible assets: Trade names 79,570 — 79,570 N/A Licenses 2,284 — 2,284 N/A Domain name 454 — 454 N/A Total indefinite life intangible assets 82,308 — 82,308 N/A Total $ 328,067 $ 135,284 $ 192,783 9.2 December 31, 2021 Gross Amount Accumulated Amortization Net Carrying Amount Weighted- Average Remaining Life (Years) Definite life intangible assets: Customer-related $ 173,786 $ 61,571 $ 112,215 10.1 Technology 23,997 23,427 570 0.2 Noncompete agreements 19,820 18,891 929 4.9 Patents 10,861 10,265 596 2.6 All other 17,269 5,738 11,531 9.0 Total definite life intangible assets 245,733 119,892 125,841 9.9 Indefinite life intangible assets: Trade names 79,570 — 79,570 N/A Licenses 2,336 — 2,336 N/A Total indefinite life intangible assets 81,906 — 81,906 N/A Total $ 327,639 $ 119,892 $ 207,747 9.9 Intangible amortization expense was $ 15.7 million, $ 23.3 million and $ 28.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. Intangible amortization is included as part of “Other expenses” in the Company’s Consolidated Statements of Operations. The Company completed its annual intangible impairment testing during the fourth quarter of 2022. There were no impairment charges for the Company’s definite and indefinite life intangibles for the years ended December 31, 2022, 2021 and 2020. See Note 3—“Summary of Significant Accounting Policies” for more information. 180 Table of Contents The estimated future amortization expense of definite life intangible assets as of December 31, 2022 is as follows (in millions): 2023 $ 14.6 2024 14.6 2025 14.6 2026 14.2 2027 9.9 2028 and thereafter 42.6 Total $ 110.5 17. Notes Payable, Other and Short-term Borrowings Notes payable, other and short-term borrowings consisted of the following (in thousands): December 31, 2022 December 31, 2021 5.375 % Senior Notes due July 24, 2023 $ 449,243 $ 447,911 3.750 % Senior Notes due October 1, 2024 298,558 297,731 4.375 % Senior Notes due December 15, 2025 298,165 297,547 Collateralized borrowings 3,251 9,642 Total Notes payable and other borrowings 1,049,217 1,052,831 Short-term borrowings 1,917 3,584 Total Notes payable, other and short-term borrowings $ 1,051,134 $ 1,056,415 Unsecured Senior Revolving Credit Agreement On November 28, 2018, the Company entered into the 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 Revolving Credit Agreement was November 28, 2020, and the maximum revolving loan balance was $ 350.0 million. Borrowings under this Revolving Credit Agreement bore interest at either LIBOR or a defined base rate plus additional margin. On December 11, 2019, the Company entered into an amendment to the 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 Revolving Credit Agreement, pursuant to which, the maturity date was extended by two years to February 26, 2023. There was no change to the interest rate or the maximum revolving loan balance. On March 10, 2022, the Company entered into an amendment and restatement of the senior unsecured revolving credit agreement, pursuant to which, the maturity date was extended to March 10, 2025, the size of the credit facility was increased to $ 375.0 million, and borrowings under this agreement will bear interest based on either SOFR or a defined base rate plus additional margin. As of both December 31, 2022 and 2021, there were no borrowings outstanding under the Revolving Credit Agreement. The rate on the outstanding borrowings was 2.09 % for the year ended December 31, 2021. The Company recorded interest expense related to the Revolving Credit Agreement of $ 2.3 million, $ 3.6 million and $ 5.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. Senior Notes The Company’s Senior Notes are recorded at amortized cost. The carrying amounts and estimated fair values of the Company’s Senior Notes were as follows (in thousands): December 31, 2022 December 31, 2021 Carrying Amount Fair Value Carrying Amount Fair Value 5.375 % Senior Notes due July 24, 2023 449,243 449,007 447,911 475,857 3.750 % Senior Notes due October 1, 2024 298,558 286,894 297,731 312,105 4.375 % Senior Notes due December 15, 2025 298,165 281,114 297,547 320,490 Total $ 1,045,966 $ 1,017,015 $ 1,043,189 $ 1,108,452 181 Table of Contents The fair values of the Senior Notes were determined using observable market prices as these securities are traded, and based on whether they are deemed to be actively traded, the 5.375 % Senior Notes, the 3.750 % Senior Notes, and the 4.375 % Senior Notes are considered Level 2 within the fair value hierarchy. 5.125 % Senior Notes On May 27, 2016, the Company issued an aggregate of $ 300.0 million principal amount of 5.125 % Senior Notes, which matured on May 27, 2021. The 5.125 % Senior Notes were general senior unsecured obligations of the Company. The 5.125 % Senior Notes bore 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 and ending on the maturity date. Prior to maturity, on August 5, 2020, the Company commenced a cash tender offer for any and all $ 300.0 million outstanding aggregate principal amount of its 5.125 % Senior Notes. On August 11, 2020, the Company’s cash tender offer expired at 5:00 p.m., New York City time. As of the expiration time, $ 44.0 million aggregate principal amount of the 5.125 % Senior Notes were validly tendered. These notes were redeemed on the settlement date of August 14, 2020. On May 27, 2021, BGC repaid the remaining $ 256.0 million principal plus accrued interest on its 5.125 % Senior Notes. The Company did not record any interest expense related to the 5.125 % Senior Notes for the year ended December 31, 2022. The Company recorded interest expense related to the 5.125 % Senior Notes of $ 5.8 million and $ 16.3 million for the years ended December 31, 2021 and 2020, respectively. 5.375 % Senior Notes On July 24, 2018, the Company 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. The Company 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) 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. 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 December 31, 2022 was $ 449.2 million. The Company recorded interest expense related to the 5.375 % Senior Notes of $ 25.5 million for each of the years ended December 31, 2022, 2021 and 2020. 3.750 % Senior Notes On September 27, 2019, the Company 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 year, payable in cash on April 1 and October 1 of each year, commencing April 1, 2020. The 3.750 % Senior Notes will mature on October 1, 2024. The Company 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). 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 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. The issuance costs are 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 $ 298.6 million as of December 31, 2022. The Company recorded interest expense related to the 3.750 % Senior Notes of $ 12.1 million for each of the years ended December 31, 2022, 2021, and 2020. 4.375 % Senior Notes On July 10, 2020, the Company 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 of each year, commencing December 15, 2020. The 4.375 % Senior Notes will mature on December 15, 2025. The Company may redeem some or all of the 4.375 % Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices. If a “Change of Control Triggering Event” 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. The issuance costs are amortized as interest expense, and the carrying value of the 4.375 % Senior Notes will accrete up to the 182 Table of Contents face amount over the term of the notes. The carrying value of the 4.375 % Senior Notes was $ 298.2 million as of December 31, 2022. The Company recorded interest expense related to the 4.375 % Senior Notes of $ 13.8 million, $ 13.8 million, and $ 6.5 million for the years ended December 31, 2022, 2021, and 2020, respectively. Collateralized Borrowings On May 31, 2017, the Company entered into a $ 29.9 million secured loan arrangement, under which it pledged certain fixed assets as security for a loan. This arrangement incurred interest at a fixed rate of 3.44 % per year and matured on May 31, 2021; therefore, there were no borrowings outstanding as of December 31, 2022 and 2021. The Company did not record any interest expense related to this arrangement for the year ended December 31, 2022. The Company recorded interest expense related to this secured loan arrangement of $ 40 thousand and $ 0.3 million for the years ended December 31, 2021 and 2020, respectively. On April 8, 2019, the Company entered into a $ 15.0 million secured loan arrangement, under which it 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 December 31, 2022 and December 31, 2021, the Company had $ 2.0 million and $ 5.9 million, respectively, outstanding related to this secured loan arrangement. The book value of the fixed assets pledged as of December 31, 2022 and 2021 was $ 10 thousand and $ 0.1 million, respectively. The Company recorded interest expense related to this secured loan arrangement of $ 0.1 million, $ 0.3 million and $ 0.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. On April 19, 2019, the Company entered into a $ 10.0 million secured loan arrangement, under which it 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 December 31, 2022 and December 31, 2021, the Company had $ 1.3 million and $ 3.8 million, respectively, outstanding related to this secured loan arrangement. The book value of the fixed assets pledged as of December 31, 2022 and 2021 was $ 0.3 million and $ 1.0 million, respectively. The Company recorded interest expense related to this secured loan arrangement of $ 0.1 million, $ 0.2 million and $ 0.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. Short-term Borrowings On August 22, 2017, the Company entered into a committed unsecured loan agreement with Itau Unibanco S.A. The agreement provides for short-term loans of up to $ 3.8 million (BRL 20.0 million). The maturity date of this agreement is March 8, 2023. Borrowings under this agreement bear interest at the Brazilian Interbank offering rate plus 3.20 %. As of December 31, 2022, there were $ 1.9 million (BRL 10.0 million) of borrowings outstanding under the agreement. As of December 31, 2021, there were no borrowings outstanding under this agreement. As of December 31, 2022, the interest rate was 17.0 %. The Company recorded interest expense related to the agreement of $ 0.3 million, $ 0.2 million and $ 0.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. On August 23, 2017, the Company entered into a committed unsecured credit agreement with Itau Unibanco S.A. The agreement provided for an intra-day overdraft credit line up to $ 9.6 million (BRL 50.0 million). On August 20, 2021, the agreement was renegotiated, increasing the credit line to $ 11.5 million (BRL 60.0 million). The maturity date of the agreement is May 21, 2023. This agreement bears a fee of 1.35 % per year. As of December 31, 2022 and December 31, 2021, there were no borrowings outstanding under this agreement. The Company recorded bank fees related to the agreement of $ 0.2 million, $ 0.1 million, and $ 0.1 million for each of the years ended December 31, 2022, 2021 and 2020, respectively. On January 25, 2021, the Company entered into a committed unsecured loan agreement with Banco Daycoval S.A., which provided for short-term loans of up to $ 1.9 million (BRL 10.0 million) and was renegotiated on June 1, 2021. The amended agreement provided for short-term loans of up to $ 3.8 million (BRL 20.0 million). Borrowings under this agreement bore interest at the Brazilian Interbank offering rate plus 3.66 %. During September 2022, the borrowings under this agreement were repaid in full, and the loan was terminated on September 27, 2022. As of December 31, 2022, there were no borrowings outstanding under the agreement. As of December 31, 2021, there were $ 3.6 million (BRL 20.0 million) of borrowings outstanding under the agreement. As of December 31, 2021, the interest rate was 12.90 %. The Company recorded interest expense related to the agreement of $ 0.2 million for each of the years ended December 31, 2022 and 2021. The Company did not record any interest expense related to the agreement for the year ended December 31, 2020. 18. Compensation The Compensation Committee may grant various equity-based awards, including RSUs, restricted stock, stock options, LPUs and shares of BGC Class A common stock. Upon vesting of RSUs, issuance of restricted stock, exercise of stock options and redemption/exchange of LPUs, the Company generally issues new shares of BGC Class A common stock. 183 Table of Contents On November 22, 2021, at the annual meeting of stockholders, the stockholders approved amendments to the Equity Plan to increase from 400 million to 500 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 December 31, 2022, the limit on the aggregate number of shares authorized to be delivered allowed for the grant of future awards relating to 128.0 million shares. The Company incurred compensation expense related to Class A common stock, LPUs and RSUs held by BGC employees as follows (in thousands): Year Ended December 31, 2022 2021 2020 Issuance of common stock and grants of exchangeability $ 147,480 $ 128,107 $ 84,966 Allocations of net income 1 13,298 34,335 14,006 LPU amortization 73,734 78,596 74,282 RSU amortization 16,559 15,126 10,291 Equity-based compensation and allocations of net income to limited partnership units and FPUs $ 251,071 $ 256,164 $ 183,545 _______________________________________ 1 Certain LPUs generally receive quarterly allocations of net income, including the Preferred Distribution, and are generally contingent upon services being provided by the unit holders. Limited Partnership Units A summary of the activity associated with LPUs held by BGC employees is as follows (in thousands): BGC LPUs Newmark LPUs Balance at December 31, 2019 102,407 14,607 Granted 50,269 — Redeemed/exchanged units ( 14,642 ) ( 1,300 ) Forfeited units ( 382 ) ( 105 ) Balance at December 31, 2020 137,652 13,202 Granted 34,093 — Redeemed/exchanged units ( 58,832 ) ( 1,881 ) Forfeited units ( 798 ) ( 270 ) Balance at December 31, 2021 112,115 11,051 Granted 27,968 — Redeemed/exchanged units ( 24,623 ) ( 1,636 ) Forfeited units ( 5,112 ) ( 64 ) Balance at December 31, 2022 110,348 9,351 The LPUs table above includes both regular and Preferred Units. The Preferred Units are not entitled to participate in partnership distributions other than with respect to the Preferred Distribution (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” for further information on Preferred Units). Subsequent to the Spin-Off, there are remaining partners who hold limited partnership interests in BGC Holdings who are Newmark employees, and there are remaining partners who hold limited partnership interests in Newmark Holdings who are BGC employees. These limited partnership interests represent interests that were held prior to the Newmark IPO or were distributed in connection with the Separation. Following the Newmark IPO, employees of BGC and Newmark only receive limited partnership interests in BGC Holdings and Newmark Holdings, respectively. As a result of the Spin-Off, as the existing limited partnership interests in BGC Holdings held by Newmark employees and the existing limited partnership interests in Newmark Holdings held by BGC employees are exchanged/redeemed, the related capital can be contributed to and from Cantor, respectively. The compensation expenses under GAAP related to the limited partnership interests are based on the company where the partner is employed. Therefore, compensation expenses related to the limited partnership interests of both BGC and Newmark but held by a BGC employee are recognized by BGC. However, the BGC Holdings limited partnership interests held by Newmark employees are included in the BGC share count and the Newmark Holdings limited partnership interests held by BGC employees are included in the Newmark share count. 184 Table of Contents A summary of the BGC Holdings and Newmark Holdings LPUs held by BGC employees is as follows (in thousands): BGC LPUs Newmark LPUs Regular Units 77,777 7,153 Preferred Units 32,571 2,198 Balance at December 31, 2022 110,348 9,351 Issuance of Common Stock and Grants of Exchangeability Compensation expense related to the issuance of BGC or Newmark Class A common stock and grants of exchangeability on BGC Holdings and Newmark Holdings LPUs held by BGC employees is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Issuance of common stock and grants of exchangeability $ 147,480 $ 128,107 $ 84,966 BGC LPUs held by BGC employees may become exchangeable or redeemed for BGC Class A common stock on a one -for-one basis, and Newmark LPUs held by BGC employees may become exchangeable or redeemed for a number of shares of Newmark Class A common stock equal to the number of limited partnership interests multiplied by the then-current Exchange Ratio. As of December 31, 2022, the Exchange Ratio was 0.9303 . A summary of the LPUs redeemed in connection with the issuance of BGC Class A common stock or Newmark Class A common stock (at the then-current Exchange Ratio) or granted exchangeability for BGC Class A common stock or Newmark Class A common stock (at the then-current Exchange Ratio) held by BGC employees is as follows (in thousands): Year Ended December 31, 2022 2021 2020 BGC Holdings LPUs 29,363 23,001 16,618 Newmark Holdings LPUs 596 1,078 1,164 Total 29,959 24,079 17,782 As of December 31, 2022 and 2021, the number of share-equivalent BGC LPUs exchangeable for shares of BGC Class A common stock at the discretion of the unit holder held by BGC employees was 1.2 million and 1.3 million, respectively. As of December 31, 2022 and 2021, the number of Newmark LPUs exchangeable into shares of Newmark Class A common stock at the discretion of the unit holder held by BGC employees (at the then-current Exchange Ratio) was 0.2 million and 0.4 million, respectively. LPU Amortization Compensation expense related to the amortization of LPUs held by BGC employees is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Stated vesting schedule $ 74,561 $ 78,535 $ 73,034 Post-termination payout ( 827 ) 61 1,248 LPU amortization $ 73,734 $ 78,596 $ 74,282 There are certain LPUs that have a stated vesting schedule and do not receive quarterly allocations of net income. These LPUs generally vest between two and five years from the date of grant. The fair value is determined on the date of grant based on the market value of an equivalent share of BGC or Newmark Class A common stock (adjusted if appropriate based upon the award’s eligibility to receive quarterly allocations of net income), and is recognized as compensation expense, net of the effect of estimated forfeitures, ratably over the vesting period. 185 Table of Contents A summary of the outstanding LPUs held by BGC employees with a stated vesting schedule that do not receive quarterly allocations of net income is as follows (in thousands): December 31, 2022 December 31, 2021 BGC Holdings LPUs 47,222 42,754 Newmark Holdings LPUs 98 235 Aggregate estimated grant date fair value of BGC and Newmark Holdings LPUs $ 194,951 $ 178,873 As of December 31, 2022, there was approximately $ 93.1 million of total unrecognized compensation expense related to unvested BGC and Newmark LPUs held by BGC employees with a stated vesting schedule that do not receive quarterly allocations of net income that is expected to be recognized over a weighted average period of 1.97 years. Compensation expense related to LPUs held by BGC employees with a post-termination pay-out amount, such as REUs, and/or a stated vesting schedule is recognized over the stated service period. These LPUs generally vest between two and five years from the date of grant. As of December 31, 2022, there were 0.8 million outstanding BGC LPUs with a post-termination payout, with a notional value of approximately $ 8.6 million and an aggregate estimated fair value of $ 3.9 million, and 0.1 million outstanding Newmark LPUs with a post-termination payout, with a notional value of approximately $ 0.7 million and an aggregate estimated fair value of $ 0.3 million. As of December 31, 2021, there were 1.3 million outstanding BGC LPUs with a post-termination payout, with a notional value of approximately $ 12.4 million and an aggregate estimated fair value of $ 7.4 million, and 0.1 million outstanding Newmark LPUs with a post-termination payout, with a notional value of approximately $ 0.8 million and an aggregate estimated fair value of $ 0.4 million. Restricted Stock Units Compensation expense related to RSUs held by BGC employees is as follows (in thousands): Year Ended December 31, 2022 2021 2020 RSU amortization $ 16,559 $ 15,126 $ 10,291 A summary of the activity associated with RSUs held by BGC employees and directors is as follows (RSUs and dollars in thousands): RSUs Weighted- Average Grant Date Fair Value Fair Value Amount Weighted- Average Remaining Contractual Term (Years) Balance at December 31, 2019 4,478 $ 5.25 $ 23,516 2.50 Granted 6,618 3.25 21,506 Delivered ( 1,579 ) 5.79 ( 9,148 ) Forfeited ( 557 ) 4.11 ( 2,292 ) Balance at December 31, 2020 8,960 $ 3.75 $ 33,582 2.46 Granted 6,319 4.23 26,716 Delivered ( 3,135 ) 4.08 ( 12,792 ) Forfeited ( 1,110 ) 4.28 ( 4,750 ) Balance at December 31, 2021 11,034 $ 3.87 $ 42,756 2.27 Granted 7,125 4.27 30,406 Delivered ( 4,858 ) 3.86 ( 18,743 ) Forfeited ( 1,255 ) 3.93 ( 4,933 ) Balance at December 31, 2022 12,046 $ 4.11 $ 49,486 2.42 The fair value of RSUs held by BGC employees and directors is determined on the date of grant based on the market value of BGC Class A common stock adjusted as appropriate based upon the award’s ineligibility to receive dividends. The compensation expense is recognized ratably over the vesting period, taking into effect estimated forfeitures. The Company uses historical data, including historical forfeitures and turnover rates, to estimate expected forfeiture rates for both employee and director RSUs. Each RSU is settled in one share of Class A common stock upon completion of the vesting period. 186 Table of Contents For the RSUs that vested during the years ended December 31, 2022 and 2021, the Company withheld shares of BGC Class A common stock valued at $ 6.6 million and $ 4.4 million to pay taxes due at the time of vesting. As of December 31, 2022, there was approximately $ 42.0 million of total unrecognized compensation expense related to unvested RSUs held by BGC employees and directors that is expected to be recognized over a weighted-average period of 2.42 years. Acquisitions In connection with certain of its acquisitions, the Company has granted certain LPUs, RSUs, and other deferred compensation awards. As of December 31, 2022 and 2021, the aggregate estimated fair value of these acquisition-related LPUs and RSUs was $ 5.9 million and $ 8.9 million, respectively. As of December 31, 2022 and 2021, the aggregate estimated fair value of the deferred compensation awards was $ 23.9 million and $ 21.7 million, respectively. The liability for such acquisition-related LPUs and RSUs is included in “Accounts payable, accrued and other liabilities” on the Company’s Consolidated Statements of Financial Condition. Restricted Stock BGC employees hold shares of BGC and Newmark restricted stock. Such restricted shares are generally salable by partners in five to ten years . Partners who agree to extend the length of their employment agreements and/or other contractual modifications sought by the Company are expected to be able to sell their restricted shares over a shorter time period. Transferability of the restricted shares of stock is not subject to continued employment or service with the Company or any affiliate or subsidiary of the Company; however, transferability is subject to compliance with BGC and its affiliates’ customary non-compete obligations. During the years ended December 31, 2022 and 2021, approximately 66 thousand and 140 thousand, respectively, BGC or Newmark restricted shares held by BGC employees were forfeited in connection with this provision. During the years ended December 31, 2022 and 2021, the Company released the restrictions with respect to 0.3 million and 1.1 million, respectively, BGC shares held by BGC employees. As of December 31, 2022 and 2021, there were 2.3 million and 2.6 million restricted BGC shares held by BGC employees outstanding, respectively. Additionally, during the years ended December 31, 2022 and 2021, Newmark released the restrictions with respect to 0.1 million and 0.5 million, respectively, restricted Newmark shares held by BGC employees. As of December 31, 2022 and 2021, there were 1.1 million and 1.2 million restricted Newmark shares held by BGC employees outstanding, respectively. Deferred Compensation The Company maintains a deferred cash award program, which provides for the grant of deferred cash incentive compensation to eligible employees. The Company may pay certain bonuses in the form of deferred cash compensation awards, which generally vest over a future service period. The total compensation expense recognized in relation to the deferred cash compensation awards for the years ended December 31, 2022, 2021 and 2020 was $( 0.5 ) million, $ 0.3 million and $ 0.8 million respectively. As of December 31, 2022 and 2021, the total liability for the deferred cash compensation awards was $ 0.1 million and $ 0.8 million, respectively, which is included in “Accrued compensation” on the Company’s Consolidated Statements of Financial Condition. As of December 31, 2022, total unrecognized compensation cost related to deferred cash compensation, prior to the consideration of forfeitures, was approximately $ 0.1 million and is expected to be recognized over a weighted-average period of 2.3 years. 187 Table of Contents 19. Commitments, Contingencies and Guarantees Contractual Obligations and Commitments The following table summarizes certain of the Company’s contractual obligations at December 31, 2022 (in thousands): Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Debt and collateralized borrowings 1 $ 1,053,251 $ 453,251 $ 600,000 $ — $ — Operating leases 2 221,363 35,483 57,145 39,517 89,218 Finance leases 2 6,615 1,802 2,896 1,917 — Interest on debt and collateralized borrowings 3 73,877 38,980 34,897 — — Short-term borrowings 4 1,917 1,917 — — — Interest on Short-term borrowings 107 86 21 — — One-time transition tax 5 20,231 5,308 10,965 3,958 — Other 6 17,657 9,160 8,497 — — Total contractual obligations $ 1,395,018 $ 545,987 $ 714,421 $ 45,392 $ 89,218 _______________________________________ 1 Debt and collateralized borrowings reflects $ 450.0 million of 5.375 % Senior Notes (the $ 450.0 million represents the principal amount of the debt; the carrying value of the 5.375 % Senior Notes as of December 31, 2022 was $ 449.2 million), $ 300.0 million of 3.750 % Senior Notes (the $ 300.0 million represents the principal amount of the debt; the carrying value of the 3.750 % Senior Notes as of December 31, 2022 was approximately $ 298.6 million), $ 300.0 million of 4.375 % Senior Notes (the $ 300.0 million represents the principal amount of the debt; the carrying value of the 4.375 % Senior Notes as of December 31, 2022 was approximately $ 298.2 million), $ 2.0 million of collateralized borrowings due April 8, 2023, and $ 1.3 million of collateralized borrowings due April 19, 2023. See Note 17—“Notes Payable, Other and Short-term Borrowings” for more information regarding these obligations, including timing of payments and compliance with debt covenants. 2 Operating leases and finance leases are related to rental payments under various non-cancelable leases, principally for office space, data centers and office equipment, and are presented net of sublease payments to be received. As of December 31, 2022, there were no sublease payments to be received over the life of the agreements. 3 Interest on debt and collateralized borrowings also includes interest on the undrawn portion of the committed unsecured senior Revolving Credit Agreement which was calculated through the maturity date of the facility, which is March 10, 2025. As of December 31, 2022, the undrawn portion of the committed unsecured Revolving Credit Agreement was $ 375.0 million. 4 Short-term borrowings reflect approximately $ 1.9 million (BRL 20.0 million) of borrowing under the Company’s committed unsecured loan agreement. See Note 17—“Notes Payable, Other and Short-term Borrowings” for more information regarding this obligation. 5 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 $ 28.6 million, net of foreign tax credits, with an election to pay the taxes over eight years with 40 % to be 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 December 31, 2022 is $ 20.2 million. 6 Other contractual obligations reflect commitments of $ 9.2 million to make charitable contributions, which are recorded as part of “Accounts payable, accrued and other liabilities” in the Company’s Consolidated Statements of Financial Condition. The amount payable each year reflects an estimate of future Charity Day obligations. In addition, as part of the Insurance Business Disposition, unvested equity and other awards previously granted by BGC to employees of its Insurance brokerage business were converted into the right to receive a cash payment from BGC; a significant portion of these awards was 50 % vested and paid in cash at closing, with the remaining 50 % vesting and to be paid in cash two years after closing. The remaining portion of these awards will have been 100 % vested and paid in cash by two years after the closing. The payments after closing are only made if the applicable employee remains an employee of the Insurance brokerage business. The remaining portion of these awards is reflected as other contractual obligations, and is recorded as part of “Accounts payable, accrued and other liabilities” in the Company’s Consolidated Statements of Financial Condition. The Company is obligated for minimum rental payments under various non-cancelable operating leases, principally for office space, expiring at various dates through 2039. Certain of the leases contain escalation clauses that require payment of additional rent to the extent of increases in certain operating or other costs. 188 Table of Contents As of December 31, 2022, minimum lease payments under these arrangements are as follows (in thousands): Net Lease Commitment Operating leases Finance leases 2023 $ 35,483 $ 1,802 2024 30,844 1,448 2025 26,301 1,448 2026 20,861 1,290 2027 18,656 627 2028 and thereafter 89,218 — Total $ 221,363 $ 6,615 The lease obligations shown above are presented net of payments to be received under a non-cancelable sublease. There are no sublease payments to be received over the life of the agreement. In addition to the above obligations under non-cancelable operating leases, the Company is also obligated to Cantor for rental payments under Cantor’s various non-cancelable leases with third parties, principally for office space and computer equipment, expiring at various dates through 2039. Certain of these leases have renewal terms at the Company’s option and/or escalation clauses (primarily based on the Consumer Price Index). Cantor allocates a portion of the rental payments to the Company based on square footage used. The Company also allocates a portion of the rental payments for which it is obligated under non-cancelable operating leases to Cantor and its affiliates. These allocations are based on square footage used (see Note 13—“Related Party Transactions” for more information). Rent expense for the years ended December 31, 2022, 2021 and 2020 was $ 40.2 million, $ 49.4 million and $ 51.1 million, respectively. Rent expense is included as part of “Occupancy and equipment” in the Company’s Consolidated Statements of Operations. In the event the Company anticipates incurring costs under any of its leases that exceed anticipated sublease revenues, it recognizes a loss and records a liability for the present value of the excess lease obligations over the estimated sublease rental income. There was no liability for future lease payments associated with vacant space as of December 31, 2022, 2021 and 2020. 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. The Company did not issue any contingent shares of BGC Class A common stock, LPUs, RSUs or cash for acquisitions during the years ended December 31, 2022 and 2021. During the year ended December 31, 2022, the contingent cash consideration increased by approximately $ 2.6 million to $ 14.5 million in cash that may be paid due to an increase in probability of payout. During the year ended December 31, 2021, the contingent cash consideration increased by approximately $ 3.7 million to $ 11.8 million in cash that may be paid due to an increase in probability of payout. As of December 31, 2022, the Company has issued 1.0 million shares of its Class A common stock, 0.2 million RSUs and paid $ 34.7 million in cash related to contingent payments for acquisitions completed since 2016. As of December 31, 2022, 1.3 million shares of the Company’s Class A common stock and 0.1 million RSUs remain to be issued, and $ 18.4 million in cash remains to be paid, net of forfeitures and other adjustments, if the targets are met. The Company’s contingent considerations are classified as Level 3 liabilities. See Note 12—“Fair Value of Financial Assets and Liabilities” for additional information. Contingencies In the ordinary course of business, various legal actions are brought and are pending against the Company and its subsidiaries in the U.S. and internationally. In some of these actions, substantial amounts are claimed. The Company is also 189 Table of Contents involved, from time to time, in reviews, examinations, investigations and proceedings by governmental and self-regulatory agencies (both formal and informal) regarding the Company’s businesses, operations, reporting or other matters, which may result in regulatory, civil and criminal judgments, settlements, fines, penalties, injunctions, enhanced oversight, remediation, or other relief. The following generally does not include matters that the Company has pending against other parties which, if successful, would result in awards in favor of the Company or its subsidiaries. Employment, Competitor-Related and Other Litigation From time to time, the Company and its subsidiaries are involved in litigation, claims and arbitrations in the U.S. and internationally, relating to, inter alia, various employment matters, including with respect to termination of employment, hiring of employees currently or previously employed by competitors, terms and conditions of employment and other matters. In light of the competitive nature of the brokerage industry, litigation, claims and arbitration between competitors regarding employee hiring are not uncommon. The Company is also involved, from time to time, in other reviews, investigations and proceedings by governmental and self-regulatory agencies (both formal and informal) regarding the Company’s businesses. Any such actions may result in regulatory, civil or criminal judgments, settlements, fines, penalties, injunctions, enhanced oversight, remediation, or other relief. Legal reserves are established in accordance with U.S. GAAP guidance on Accounting for Contingencies when a material legal liability is both probable and reasonably estimable. Once established, reserves are adjusted when there is more information available or when an event occurs requiring a change. The outcome of such items cannot be determined with certainty. The Company is unable to estimate a possible loss or range of loss in connection with specific matters beyond its current accruals and any other amounts disclosed. Management believes that, based on currently available information, the final outcome of these current pending matters will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Letter of Credit Agreements The Company has irrevocable uncollateralized letters of credit with various banks, where the beneficiaries are clearing organizations through which it transacts, that are used in lieu of margin and deposits with those clearing organizations. As of December 31, 2022 and 2021, the Company was contingently liable for $ 1.6 million and $ 1.8 million, respectively, under these letters of credit. Risk and Uncertainties The Company generates revenues by providing financial intermediary and brokerage activities to institutional customers and by executing and, in some cases, clearing transactions for institutional counterparties. Revenues for these services are transaction-based. As a result, revenues could vary based on the transaction volume of global financial markets. Additionally, financing is sensitive to interest rate fluctuations, which could have an impact on the Company’s overall profitability. During the year ended December 31, 2022, the Company recorded a $ 11.4 million reserve for a potential loss associated with Russia's Invasion of Ukraine, which is included in "Other expenses" in the Company's Consolidated Statements of Operations, and which was recorded as part of the CECL reserve (see Note 25—“Current Expected Credit Losses (CECL)” for additional information). Insurance The Company is self-insured for health care claims, up to a stop-loss amount for eligible participating employees and qualified dependents in the U.S., subject to deductibles and limitations. The Company’s liability for claims incurred but not reported is determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated from actual claim rates and adjusted periodically as necessary. The Company has accrued $ 2.4 million and $ 0.4 million in health care claims as of December 31, 2022 and 2021, respectively. The Company does not expect health care claims to have a material impact on its financial condition, results of operations, or cash flows. Guarantees The Company provides guarantees to securities clearinghouses and exchanges which meet the definition of a guarantee under FASB interpretations. Under these standard securities clearinghouse and exchange membership agreements, members are required to guarantee, collectively, the performance of other members and, accordingly, if another member becomes unable to satisfy its obligations to the clearinghouse or exchange, all other members would be required to meet the shortfall. In the 190 Table of Contents opinion of management, the Company’s liability under these agreements is not quantifiable and could exceed the cash and securities it has posted as collateral. However, the potential of being required to make payments under these arrangements is remote. Accordingly, no contingent liability has been recorded in the Company’s Consolidated Statements of Financial Condition for these agreements. 20. Income Taxes The Company’s 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, as well as taxes payable to jurisdictions outside the U.S. In addition, certain of the Company’s entities are taxed as U.S. partnerships and are subject to the UBT in New York City. 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 discussion of partnership interests), rather than the partnership entity. The provision for income taxes consisted of the following (in thousands): Year Ended December 31, 2022 2021 2020 Current: U.S. federal $ 12,949 $ ( 7,267 ) $ 239 U.S. state and local 6,147 4,940 6,828 Foreign 34,506 36,699 30,788 UBT ( 390 ) 588 ( 3 ) 53,212 34,960 37,852 Deferred: U.S. federal ( 17,083 ) ( 1,000 ) ( 11,050 ) U.S. state and local ( 1,596 ) ( 1,515 ) ( 5,848 ) Foreign 3,971 ( 12,098 ) 3,602 UBT 80 2,666 ( 3,253 ) ( 14,628 ) ( 11,947 ) ( 16,549 ) Provision for income taxes $ 38,584 $ 23,013 $ 21,303 The Company had pre-tax income (loss) of $ 97.5 million, $ 176.5 million and $ 72.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company had pre-tax income (loss) from domestic operations of $( 286.8 ) million, $( 642.4 ) million and $( 212.0 ) million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company had pre-tax income (loss) from foreign operations of $ 384.3 million, $ 818.9 million and $ 284.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. 191 Table of Contents Differences between the Company’s actual income tax expense and the amount calculated utilizing the U.S. federal statutory rates were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Tax expense at federal statutory rate $ 20,584 $ 37,065 $ 15,166 Non-controlling interest 2,366 2,440 73 Incremental impact of foreign taxes compared to federal tax rate 8,122 5,009 ( 476 ) Other permanent differences 2,287 11,797 6,531 U.S. state and local taxes, net of U.S. federal benefit ( 876 ) 2,737 ( 321 ) New York City UBT ( 1,071 ) 2,929 ( 3,256 ) Other rate changes 153 ( 7,007 ) ( 12,783 ) Nontaxable gain on insurance disposition — ( 65,231 ) — Uncertain tax positions 3,496 ( 6,936 ) 1,475 U.S. tax on foreign earnings, net of tax credits 4,808 31,299 2,643 Prior year adjustments 4,189 ( 714 ) 1,076 Valuation allowance ( 4,670 ) 11,532 11,966 Other ( 804 ) ( 1,907 ) ( 791 ) Provision for income taxes $ 38,584 $ 23,013 $ 21,303 As of December 31, 2022, the Company’s intention is to permanently reinvest undistributed foreign pre-tax earnings in the Company’s foreign operations. While the one-time transition tax eliminated most of the income tax effects of repatriating the undistributed earnings, there could still be foreign and state and local tax effects on the distribution. Accordingly, no provision has been recorded on foreign and state and local taxes that would be applicable upon distribution of such earnings to the U.S. Further, determination of an estimate of deferred tax liability associated with the distribution of foreign earnings is not practicable. However, this policy will be further re-evaluated and assessed based on the Company’s overall business needs and requirements. The Company has finalized its accounting policy with respect to taxes on Global Intangible Low-Taxed Income (GILTI) and has elected to treat taxes associated with the GILTI provision using the Period Cost Method and thus have not recorded deferred taxes for basis differences under this regime as of December 31, 2022. Accordingly, the Company recorded a tax expense of $ 5.6 million, net of foreign tax credits, for the impact of the GILTI provision on its foreign subsidiaries. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded against deferred tax assets if it is deemed more likely than not that those assets will not be realized. 192 Table of Contents Significant components of the Company’s deferred tax asset and liability consisted of the following (in thousands): Year Ended December 31, 2022 2021 Deferred tax asset Basis difference of investments $ 15,857 $ 15,906 Deferred compensation 70,361 70,635 Excess interest expense 39,645 31,319 Other deferred and accrued expenses 10,693 12,157 Net operating loss and credit carry-forwards 45,592 60,160 Total deferred tax asset 1 182,148 190,177 Valuation allowance ( 31,362 ) ( 48,623 ) Deferred tax asset, net of valuation allowance 150,786 141,554 Deferred tax liability Depreciation and amortization 19,675 24,331 Total deferred tax liability 1 19,675 24,331 Net deferred tax asset $ 131,111 $ 117,223 _______________________________________ 1 Before netting within tax jurisdictions. The Company has deferred tax assets associated with net operating losses in U.S. federal, state and local, and non-U.S. jurisdictions of $ 1.4 million, $ 4.2 million and $ 30.6 million, respectively. These losses will begin to expire in 2027, 2025 and 2023, respectively. The Company has deferred tax assets associated with tax credits in the U.S. of $ 9.4 million, which will begin to expire in 2030. The Company’s deferred tax asset and liability are included in the Company’s Consolidated Statements of Financial Condition as components of “Other assets” and “Accounts payable, accrued and other liabilities,” respectively. Pursuant to the U.S. GAAP guidance, Accounting for Uncertainty in Income Taxes , the Company provides for uncertain tax positions as a component of income tax expense based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. A reconciliation of the beginning to the ending amounts of gross unrecognized tax benefits for the years ended December 31, 2022 and 2021 is as follows (in thousands): Balance, December 31, 2020 $ 12,187 Increases for prior year tax positions 884 Decreases for prior year tax positions ( 999 ) Increases for current year tax positions — Decreases related to settlements with taxing authorities — Decreases related to a lapse of applicable statute of limitations ( 7,678 ) Balance, December 31, 2021 $ 4,394 Increases for prior year tax positions 3,159 Decreases for prior year tax positions — Increases for current year tax positions — Decreases related to settlements with taxing authorities — Decreases related to a lapse of applicable statute of limitations — Balance, December 31, 2022 $ 7,553 As of December 31, 2022, the Company’s unrecognized tax benefits, excluding related interest and penalties, were $ 7.6 million, of which $ 7.6 million, if recognized, would affect the effective tax rate. The Company is currently open to examination by tax authorities in U.S. federal, state and local jurisdictions and certain non-U.S. jurisdictions for tax years beginning 2019, 2009 and 2016, respectively. The Company is currently under examination by tax authorities in the U.S. federal and certain state, local and foreign jurisdictions. The Company does not believe that the amounts of unrecognized tax benefits will materially change over the next 12 months. 193 Table of Contents The Company recognizes interest and penalties related to unrecognized tax benefits in “Provision (benefit) for income taxes” in the Company’s Consolidated Statements of Operations. As of December 31, 2022, the Company had accrued $ 2.7 million for income tax-related interest and penalties of which $ 1.0 million was accrued during 2022. 21. Regulatory Requirements Many of the Company’s businesses are subject to regulatory restrictions and minimum capital requirements. These regulatory restrictions and capital requirements may restrict the Company’s ability to withdraw capital from its subsidiaries. Certain U.S. subsidiaries of the Company are registered as U.S. broker-dealers or FCMs subject to Rule 15c3-1 of the SEC and Rule 1.17 of the CFTC, which specify uniform minimum net capital requirements, as defined, for their registrants, and also require a significant part of the registrants’ assets be kept in relatively liquid form. As of December 31, 2022, the Company’s U.S. subsidiaries had net capital in excess of their minimum capital requirements. Certain U.K. and European subsidiaries of the Company are regulated by their national regulator, which include the FCA and L'Autorité des Marchés Financiers and must maintain financial resources (as defined by their national regulator) in excess of the total financial requirement (as defined by their national regulator). As of December 31, 2022, the U.K. and European subsidiaries had financial resources in excess of their requirements. Certain other subsidiaries of the Company are subject to regulatory and other requirements of the jurisdictions in which they operate. In addition, the Company’s SEFs, BGC Derivative Markets and GFI Swaps Exchange are required to maintain financial resources to cover operating costs for at least one year , keeping at least enough cash or highly liquid securities to cover six months ’ operating costs. The Company also operates a DCM and DCO through the Futures Exchange Group, which are required to maintain financial resources to cover operating costs for at least one year, keeping at least enough cash or highly liquid securities to cover six months’ operating costs. The regulatory requirements referred to above may restrict the Company’s ability to withdraw capital from its regulated subsidiaries. As of December 31, 2022, the Company’s regulated subsidiaries held $ 666.0 million of net assets. These subsidiaries had aggregate regulatory net capital, as defined, in excess of the aggregate regulatory requirements, as defined, of $ 342.2 million. 22. Segment, Geographic and Product Information Segment Information The Company currently operates in one reportable segment, brokerage services. BGC provides or has provided brokerage services to the financial markets, integrated Voice, Hybrid and Fully Electronic brokerage in a broad range of products, including fixed income (Rates and Credit), FX, Equities, Energy and Commodities, and Futures and Options. BGC also provides a wide range of services, including trade execution, brokerage, clearing, trade compression, post-trade, information, consulting, and other back-office services to a broad range of financial and non-financial institutions. On November 1, 2021, the Company sold its Insurance brokerage business to The Ardonagh Group (see Note 5— "Divestitures"). Geographic Information The Company offers products and services in the U.K., U.S., Asia (including Australia), Other Europe, MEA, France, and Other Americas. Information regarding revenues is as follows (in thousands): 194 Table of Contents Year Ended December 31, 2022 2021 2020 Revenues: U.K. $ 647,916 $ 835,371 $ 867,066 U.S. 542,744 517,269 518,811 Asia 271,678 301,489 311,190 Other Europe/MEA 172,376 200,409 192,852 France 92,649 99,933 107,679 Other Americas 67,939 60,893 59,163 Total revenues $ 1,795,302 $ 2,015,364 $ 2,056,761 Information regarding long-lived assets (defined as loans, forgivable loans and other receivables from employees and partners, net; fixed assets, net; ROU assets; certain other investments; goodwill; other intangible assets, net of accumulated amortization; and rent and other deposits) in the geographic areas is as follows (in thousands): Year Ended December 31, 2022 2021 Long-lived assets: U.S. $ 787,321 $ 771,696 U.K. 401,823 412,767 Asia 76,870 73,779 Other Europe/MEA 46,413 47,888 Other Americas 17,736 16,032 France 13,019 16,996 Total long-lived assets $ 1,343,182 $ 1,339,158 Product Information The Company’s business is based on the products and services provided and reflect the manner in which financial information is evaluated by management. The Company specializes in the brokerage of a broad range of products, including fixed income (Rates and Credit), FX, Equities, Energy and Commodities, and Futures and Options. The Company also provides a wide range of services, including trade execution, broker-dealer services, clearing, trade compression, post trade, information, consulting, and other back-office services to a broad range of financial and non-financial institutions. On November 1, 2021, the Company sold its Insurance brokerage business to The Ardonagh Group (see Note 5—"Divestitures"). Product information regarding revenues is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Revenues: Rates $ 549,503 $ 558,507 $ 544,094 FX 299,721 301,328 315,253 Energy and commodities 291,665 296,458 292,641 Credit 271,419 287,608 329,904 Equities 234,493 247,673 254,702 Insurance 1 — 178,087 182,707 Total brokerage revenues $ 1,646,801 $ 1,869,661 $ 1,919,301 All other revenues 148,501 145,703 137,460 Total revenues $ 1,795,302 $ 2,015,364 $ 2,056,761 _______________________________________ 1 On November 1, 2021, the Company sold its Insurance Brokerage business to The Ardonagh Group (see Note 5—“Divestitures”). 195 Table of Contents 23. Revenues from Contracts with Customers The following table presents the Company’s total revenues separated between revenues from contracts with customers and other sources of revenues (in thousands): Year Ended December 31, 2022 2021 2020 Revenues from contracts with customers: Commissions $ 1,281,294 $ 1,541,900 $ 1,567,668 Data, software, and post-trade 96,389 89,963 81,920 Fees from related parties 14,734 14,856 25,754 Other revenues 14,275 16,818 14,948 Total revenues from contracts with customers 1,406,692 1,663,537 1,690,290 Other sources of revenues: Principal transactions 365,507 327,761 351,633 Interest and dividend income 21,007 21,977 12,332 Other revenues 2,096 2,089 2,506 Total revenues $ 1,795,302 $ 2,015,364 $ 2,056,761 See Note 3—“Summary of Significant Accounting Policies” for detailed information on the recognition of the Company’s revenues from contracts with customers. Disaggregation of Revenue See Note 22—“Segment, Geographic and Product Information” for a further discussion on the allocation of revenues to geographic regions. Contract Balances The timing of the Company's revenue recognition may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had receivables related to revenues from contracts with customers of $ 288.5 million and $ 296.4 million at December 31, 2022 and December 31, 2021, respectively. The Company had no impairments related to these receivables during the years ended December 31, 2022 and 2021. The Company’s deferred revenue primarily relates to customers paying in advance or billed in advance where the performance obligation has not yet been satisfied. Deferred revenue at December 31, 2022 and 2021 was $ 12.5 million and $ 9.2 million, respectively. During the years ended December 31, 2022 and 2021, the Company recognized revenue of $ 9.1 million and $ 9.0 million, respectively, that was recorded as deferred revenue at the beginning of the period. Contract Costs The Company capitalizes costs to fulfill contracts associated with different lines of its business where the revenue is recognized at a point in time and the costs are determined to be recoverable. Capitalized costs to fulfill a contract are recognized at the point in time that the related revenue is recognized. The Company did no t have any capitalized costs to fulfill a contract as of December 31, 2022 and 2021. 24. Leases The Company, acting as a lessee, has operating leases and finance leases primarily relating to office space, data centers and office equipment. The leases have remaining lease terms of 0.1 years to 16.6 years, some of which include options to extend the leases in 1 to 10 year increments for up to 15 years. Renewal periods are included in the lease term only when renewal is reasonably certain, which is a high threshold and requires management to apply judgment to determine the appropriate lease term. Certain leases also include periods covered by an option to terminate the lease if the Company is 196 Table of Contents reasonably certain not to exercise the termination option. The Company measures its lease payments by including fixed rental payments and, where relevant, variable rental payments tied to an index, such as the Consumer Price Index. Payments for leases in place before the date of adoption of ASC 842, Leases were determined based on previous leases guidance. The Company recognizes lease expense for its operating leases on a straight-line basis over the lease term and variable lease expense not included in the lease payment measurement is recognized as incurred. Pursuant to the accounting policy election, leases with an initial term of twelve months or less are not recognized on the balance sheet. The short-term lease expense over the period reasonably reflects the Company’s short-term lease commitments. ASC 842, Leases requires the Company to make certain assumptions and judgments in applying the guidance, including determining whether an arrangement includes a lease, determining the term of a lease when the contract has renewal or cancelation provisions, and determining the discount rate. The Company determines whether an arrangement is a lease or includes a lease at the contract inception by evaluating whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If the Company has the right to obtain substantially all of the economic benefits from, and can direct the use of, the identified asset for a period of time, the Company accounts for the identified asset as a lease. The Company has elected the practical expedient to not separate lease and non-lease components for all leases other than real estate leases. The primary non-lease component that is combined with a lease component represents operating expenses, such as utilities, maintenance or management fees. As the rate implicit in the lease is not usually available, the Company used an incremental borrowing rate based on the information available at the adoption date of the new Leases standard in determining the present value of lease payments for existing leases. The Company has elected to use a portfolio approach for the incremental borrowing rate, applying corporate bond rates to the leases. The Company calculated the appropriate rates with reference to the lease term and lease currency. The Company uses information available at the lease commencement date to determine the discount rate for any new leases. The Company subleases certain real estate to its affiliates and to third parties. The value of these commitments is not material to the Company’s Consolidated Financial Statements. As of December 31, 2022, the Company did not have any leases that have not yet commenced but that create significant rights and obligations. Supplemental information related to the Company’s operating leases is as follows (in thousands): Classification in Consolidated Statements of Financial Condition December 31, 2022 December 31, 2021 Assets Operating lease ROU assets Other assets $ 129,786 $ 136,252 Finance lease ROU assets Fixed assets, net $ 5,685 $ 2,893 Liabilities Operating lease liabilities Accounts payable, accrued and other liabilities $ 156,105 $ 166,220 Finance lease liabilities Accounts payable, accrued and other liabilities $ 6,039 $ 2,985 December 31, 2022 December 31, 2021 Weighted-average remaining lease term Operating leases (years) 7.7 10.8 Finance leases (years) 4.1 4.7 Weighted-average discount rate Operating leases 4.5 % 4.9 % Finance leases 4.3 % 3.1 % 197 Table of Contents The components of lease expense are as follows (in thousands): Year Ended December 31, Classification in Consolidated Statements of Operations 2022 2021 2020 Operating lease cost 1, 2 Occupancy and equipment $ 36,894 $ 41,442 $ 43,726 Finance lease cost Amortization on ROU assets Occupancy and equipment $ 753 $ 146 $ — Interest on lease liabilities Interest expense $ 116 $ 21 $ — ____________________________________ 1 The Company recorded operating lease costs related to the Insurance brokerage business of $ 3.5 million for the year ended December 31, 2021. 2 Short-term lease expense was not material for the years ended December 31, 2022 and 2021. The following table shows the Company’s maturity analysis of its operating lease liabilities as of December 31, 2022 (in thousands): December 31, 2022 Operating leases Finance leases 2023 $ 35,483 $ 1,802 2024 30,844 1,448 2025 26,301 1,448 2026 20,861 1,290 2027 18,656 627 Thereafter 89,218 — Total $ 221,363 $ 6,615 Interest ( 65,258 ) ( 576 ) Total $ 156,105 $ 6,039 The following table shows cash flow information related to lease liabilities (in thousands): Year Ended December 31, Cash paid for amounts included in the measurement of lease liabilities 2022 2021 Operating cash flows from operating lease liabilities 1 $ 38,113 $ 37,085 Operating cash flows from finance lease liabilities $ 116 $ 21 Financing cash flows from finance lease liabilities $ 704 $ 136 _______________________________________ 1 The Company made payments for operating lease liabilities related to the Insurance brokerage business of $ 3.6 million for the year ended December 31, 2021. 25. Current Expected Credit Losses (CECL) The CECL reserve reflects management’s current estimate of potential credit losses related to the receivable balances included in the Company’s Consolidated Statements of Financial Condition. See Note 3—“Summary of Significant Accounting Policies” for further discussion of the CECL reserve methodology. As required, any subsequent changes to the CECL reserve are recognized in “Net income (loss) available to common stockholders” in the Company’s Consolidated Statements of Operations. During the years ended December 31, 2022, 2021 and 2020, the Company recorded changes in the CECL reserve as follows (in millions): 198 Table of Contents Accrued commissions and other receivables, net Loans, forgivable loans and other receivables from employees and partners, net Receivables from broker-dealers, clearing organizations, customers and related broker-dealers Total Beginning balance, January 1, 2020 $ 0.8 $ 1.1 $ — $ 1.9 Current-period provision for expected credit losses 0.2 0.5 — 0.7 Ending balance, December 31, 2020 1.0 1.6 — 2.6 Current-period provision for expected credit losses ( 0.3 ) 0.1 — ( 0.2 ) Ending balance, December 31, 2021 0.7 1.7 — 2.4 Current-period provision for expected credit losses 4.7 0.8 7.0 12.5 Ending balance, December 31, 2022 $ 5.4 $ 2.5 $ 7.0 $ 14.9 For the year ended December 31, 2022, there was an increase of $ 4.7 million in the CECL reserve against “Accrued commissions and other receivables, net” due to the updated macroeconomic assumptions resulting from a decrease in the GDP growth rate, which included a $ 4.5 million reserve related to Russia's Invasion of Ukraine, bringing the CECL reserve recorded pertaining to “Accrued commissions and other receivables, net” to $ 5.4 million as of December 31, 2022. For the years ended December 31, 2021 and 2020, there was a decrease of $ 0.3 million and an increase of $ 0.2 million, respectively, in the CECL reserve against “Accrued commissions and other receivables, net.” For the years ended December 31, 2022, 2021, and 2020, there were increases of $ 0.8 million, $ 0.1 million, and $ 0.5 million, respectively, in the CECL reserve pertaining to "Loans, forgivable loans and other receivables from employees and partners, net" as a result of employee terminations, bringing the CECL reserve recorded pertaining to “Loans, forgivable loans and other receivables from employees and partners, net” to $ 2.5 million as of December 31, 2022. For the year ended December 31, 2022, there was an increase of $ 7.0 million in the CECL reserve against “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” which reflected the downward credit rating migration of certain unsettled trades related to Russia's Invasion of Ukraine, bringing the CECL reserve recorded pertaining to “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” to $ 7.0 million as of December 31, 2022. There was no change in the CECL reserve recorded pertaining to “Receivables from broker-dealers, clearing organizations, customers and related broker-dealers” for the years ended December 31, 2021 and 2020. 26. Supplemental Balance Sheet Information The components of certain balance sheet accounts are as follows (in thousands): Year Ended December 31, 2022 2021 Other assets: Operating lease ROU assets $ 129,786 $ 136,252 Deferred tax asset 152,393 135,365 Equity securities carried under measurement alternative 83,633 82,093 Other taxes 42,922 37,011 Prepaid expenses 20,132 16,715 Rent and other deposits 14,530 15,849 Other 19,618 21,948 Total other assets $ 463,014 $ 445,233 199 Table of Contents Year Ended December 31, 2022 2021 Accounts payable, accrued and other liabilities: Taxes payable $ 290,578 $ 277,932 Accrued expenses and other liabilities 199,964 203,937 Lease liabilities 162,144 169,205 Deferred tax liability 21,258 18,142 Charitable contribution liability 9,160 10,038 Total accounts payable, accrued and other liabilities $ 683,104 $ 679,254 27. Subsequent Events Fourth Quarter 2022 Dividend On February 24, 2023, the Company’s Board declared a quarterly cash dividend of $ 0.01 per share for the fourth quarter of 2022, payable on March 31, 2023 to BGC Class A and Class B common stockholders of record as of March 17, 2023. Drawdown of Revolving Credit Agreement From January 1, 2023 through March 1, 2023, the Company drew down $ 70.0 million from its Revolving Credit Agreement. This amount currently carries an interest rate of 6.4 %. 200 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None