BGC Group, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read together with our Consolidated Financial Statements and notes to those statements, as well as the “Special Note on Forward-Looking Information” relating to forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act included elsewhere in this Annual Report on Form 10-K and the cautionary statements relating to forward-looking statements below. The objective of this Management’s Discussion and Analysis is to allow investors to view the Company from management’s perspective, considering items that have had and could have a material impact on future operations. This discussion summarizes the significant factors affecting our results of operations and financial condition as of and during the years ended December 31, 2023, 2022, and 2021. This discussion is provided to increase the understanding of, and should be read in conjunction with, our Consolidated Financial Statements and the notes thereto included elsewhere in this report. FORWARD-LOOKING CAUTIONARY STATEMENTS Our actual results and the outcome and timing of certain events may differ significantly from the expectations discussed in the forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, the factors set forth below: • macroeconomic and other challenges and uncertainties, including those resulting from the wars in Ukraine and Israel and other ongoing or new conflicts in the Middle East or other jurisdictions, downgrades of U.S. Treasuries, fluctuating global interest rates, inflation and the Federal Reserve’s responses thereto, including increasing interest rates, fluctuations in the value of global currencies, including the U.S. dollar, liquidity concerns regarding and changes in capital requirements for banking and financial institutions, changes in the U.S. and global economies and financial markets, including economic activity, employment levels, supply chain issues and market liquidity, and increasing energy costs, as well as the various actions taken in response to these challenges and uncertainties by governments, central banks and others, including consumer and corporate clients and customers, as well as potential changes in these factors as a result of the upcoming U.S. Presidential election; • market conditions and volatility, including fluctuations in interest rates and trading volume, the level of worldwide governmental debt issuances, austerity programs, government stimulus packages, increases and decreases in the federal funds interest rate and other actions to moderate inflation, increases or decreases in deficits and the impact of changing government tax rates, repatriation rules, deductibility of interest, and other changes to monetary policy, and potential political impasses or regulatory requirements, turmoil across regional banks and certain global investment banks, volatility in the demand for the products and services we provide, possible disruptions in trading, potential deterioration of equity and debt capital markets and cryptocurrency markets, and potential economic downturns, including recessions, and similar effects, which may not be predictable in future periods; • our ability to access the capital markets as needed or on reasonable terms and conditions; • our ability to enter new markets or develop new products, offerings, trade desks, marketplaces, or services for existing or new clients and, to pursue new operations and business initiatives, including our ability to develop new Fenics platforms and products, to successfully launch new initiatives which could require significant capital and significant efforts by management, including engaging partners on satisfactory terms, to manage long lead times to scale a successful venture, efforts to convert certain existing products to a Fully Electronic trade execution, to incorporate artificial intelligence into our products and efforts by our competitors to do the same, and to induce such clients to use these products, trading desks, marketplaces, or services and to secure and maintain market share, while managing the risks inherent in operating our cryptocurrency business and in safekeeping cryptocurrency assets; • pricing, commissions and fees, and market position with respect to any of our products and services and those of our competitors; • the effect of industry concentration and reorganization, reduction of customers, and consolidation; • liquidity, regulatory, cash and clearing capital requirements; 73 Table of Contents • our relationships and transactions with Cantor and its affiliates, including CF&Co, and CCRE, our structure, the timing and impact of any actual or future changes to our structure, including the Corporate Conversion, any related transactions, conflicts of interest or litigation, including with respect to executive compensation matters, any impact of Cantor’s results on our credit ratings and associated outlooks, any loans to or from us or Cantor, including the balances and interest rates thereof from time to time and any convertible or equity features of any such loans, CF&Co’s acting as our sales agent or underwriter under our CEO Program or other offerings, Cantor’s holdings of the Company’s Debt Securities, CF&Co’s acting as a market maker in the Company’s Debt Securities, CF&Co’s acting as our financial advisor in connection with potential acquisitions, dispositions, or other transactions, and our participation in various investments, stock loans or cash management vehicles placed by or recommended by CF&Co; • the integration of acquired businesses and their operations and back office functions with our other businesses; • the effect on our businesses of any extraordinary transactions, including potential dilution, taxes, costs, and other impacts; • the rebranding of our current businesses or risks related to any potential dispositions of all or any portion of our existing or acquired businesses; • pandemics and other international health emergencies, including the combined impact of COVID-19 with the flu and other seasonal illnesses, and the impact of terrorist acts, acts of war or other violence or political unrest, as well as natural disasters or weather-related or similar events, including hurricanes and heat waves as well as power failures, communication and transportation disruptions, and other interruptions of utilities or other essential services; • risks inherent in doing business in international markets, and any failure to identify and manage those risks, including economic or geopolitical conditions or uncertainties, the actions of governments or central banks, including the pursuit of trade, border control or other related policies by the U.S. and/or other countries (including U.S.-China trade relations), recent economic and political volatility in the U.K., rising political and other tensions between the U.S. and China, the wars in Israel and Ukraine, new or ongoing conflicts in the Middle East or other jurisdictions and additional sanctions and regulations imposed by governments and related counter-sanctions; • the impact of U.S. government shutdowns, elections, political unrest, boycotts, stalemates or other social and political developments, such as terrorist acts, acts of war or other violence or political unrest, as well as natural disasters, and potential changes in these factors as result of the upcoming U.S. Presidential election; • the effect on our businesses, our clients, the markets in which we operate and the economy in general of changes in the U.S. and foreign tax and other laws, including changes in tax rates, repatriation rules, and deductibility of interest, potential policy and regulatory changes in other countries, sequestrations, uncertainties regarding the debt ceiling and the federal budget, responses to global inflation rates, and other potential political policies; • our dependence upon our key employees, our ability to build out successful succession plans, the impact of absence due to illness or leave of certain key executive officers or employees and our ability to attract, retain, motivate and integrate new employees, as well as the competing demands on the time of certain of our executive officers who also provide services to Cantor, Newmark and various other ventures and investments sponsored by Cantor and the impact of post termination covenants on awards previously granted to key employees and future awards or otherwise on our employment arrangements; • extensive regulation of our businesses and customers, the timing of regulatory approvals, changes in regulations relating to financial services companies and other industries, and risks relating to compliance matters, including regulatory examinations, inspections, investigations and enforcement actions, and any resulting costs, increased financial and capital requirements, enhanced oversight, remediation, fines, penalties, sanctions, and changes to or restrictions or limitations on specific activities, including potential delays in accessing markets, including due to our regulatory status and actions, operations, and compensatory arrangements, and growth opportunities, including acquisitions, hiring, and new businesses, products, or services; • factors related to specific transactions or series of transactions, including credit, performance, and principal risk, trade failures, counterparty failures, and the impact of fraud and unauthorized trading; 74 Table of Contents • costs and expenses of developing, maintaining, and protecting our intellectual property, as well as employment, regulatory, and other litigation and proceedings, and their related costs, including judgments, indemnities, fines, or settlements paid and the impact thereof on our financial results and cash flows in any given period; • certain financial risks, including the possibility of future losses, indemnification obligations, assumed liabilities, reduced cash flows from operations, increased leverage, reduced availability under our credit agreements, and the need for short- or long-term borrowings, including from Cantor, our ability to refinance our indebtedness on acceptable terms and rates, and changes to interest rates and liquidity or our access to other sources of cash relating to acquisitions, dispositions, or other matters, potential liquidity and other risks relating to our ability to maintain continued access to credit and availability of financing necessary to support our ongoing business needs, on terms acceptable to us, if at all, and risks associated with the resulting leverage, including potentially causing a reduction in our credit ratings and the associated outlooks and increased borrowing costs as well as interest rate and foreign currency exchange rate fluctuations; • risks associated with the temporary or longer-term investment of our available cash, including in the BGC OpCos, defaults or impairments on our investments, joint venture interests, stock loans or cash management vehicles and collectability of loan balances owed to us by employees, the BGC OpCos or others; • the impact of any restructuring or similar other transformative transactions, on our ability to enter into marketing and strategic alliances and business combinations, attract investors or partners or engage in other transactions in the financial services and other industries, including acquisitions, tender offers, dispositions, reorganizations, partnering opportunities and joint ventures, the failure to realize the anticipated benefits of any such transactions, relationships or growth, and the future impact of any such transactions, relationships or growth on our other businesses and our financial results for current or future periods, the integration of any completed acquisitions and the use of proceeds of any completed dispositions, the impact of amendments and/or terminations of strategic arrangements, and the value of and any hedging entered into in connection with consideration received or to be received in connection with such dispositions and any transfers thereof; • our estimates or determinations of potential value with respect to various assets or portions of our businesses, including Fenics, FMX and other businesses; • our ability to manage turnover and hire, train, integrate and retain personnel, including brokers, salespeople, managers, technology professionals and other front-office personnel, back-office and support services, and departures of senior personnel; • our ability to expand the use of technology and maintain access to the intellectual property of others for Hybrid and Fully Electronic trade execution in our product and service offerings, and otherwise; • the impact of artificial intelligence on the economy, our industry, our business and the businesses of our clients and vendors; • our ability to effectively manage any growth that may be achieved, including outside the U.S., while ensuring compliance with all applicable financial reporting, internal control, legal compliance, and regulatory requirements; • our ability to identify and remediate any material weaknesses or significant deficiencies in our internal controls which could affect our ability to properly maintain books and records, prepare financial statements and reports in a timely manner, control our policies, practices and procedures, operations and assets, assess and manage our operational, regulatory and financial risks, and integrate our acquired businesses and brokers, salespeople, managers, technology professionals and other front-office personnel; • the impact of unexpected market moves and similar events; • information technology risks, including capacity constraints, failures, or disruptions in our systems or those of the clients, counterparties, exchanges, clearing facilities, or other parties with which we interact, including increased demands on such systems and on the telecommunications infrastructure from remote working, cyber-security risks and incidents, compliance with regulations requiring data minimization and protection and preservation of records of access and transfers of data, privacy risk and exposure to potential liability and regulatory focus; • the effectiveness of our governance, risk management, and oversight procedures and impact of any potential transactions or relationships with related parties; 75 Table of Contents • the impact of our ESG or “sustainability” ratings on the decisions by clients, investors, ratings agencies, potential clients and other parties with respect to our businesses, investments in us, our borrowing opportunities or the market for and trading price of BGC Class A common stock, Company Debt Securities, or other matters; • the fact that the prices at which shares of our Class A common stock are or may be sold in offerings, acquisitions, or other transactions may vary significantly, and purchasers of shares in such offerings or other transactions, as well as existing stockholders, may suffer significant dilution if the price they paid for their shares is higher than the price paid by other purchasers in such offerings or transactions; • the impact of reductions to our dividends and the timing and amounts of any future dividends, including our ability to meet expectations with respect to payments of dividends and repurchases of shares of our Class A common stock, or other equity interests in us or any of our other subsidiaries, including from Cantor, our executive officers, other employees, and others, and the net proceeds to be realized by us from offerings of shares of BGC Class A common stock and Company Debt Securities, and our ability to pay any excise tax that may be imposed on the repurchase of shares; and • the effect on the markets for and trading prices of our Class A common stock and Company Debt Securities of various offerings and other transactions, including offerings of our Class A common stock and convertible or exchangeable debt or other securities, our repurchases of shares of our Class A common stock or other equity interests in us or in our subsidiaries, our payment of dividends on our Class A common stock, convertible arbitrage, hedging, and other transactions engaged in by us or holders of our outstanding shares, Company Debt Securities or other securities, share sales and stock pledges, stock loans, and other financing transactions by holders of our shares (including by Cantor or others), including of shares acquired pursuant to our employee benefit plans, corporate restructurings, acquisitions, conversions of shares of our Class B common stock and our other convertible securities into shares of our Class A common stock, and distributions of our Class A common stock by Cantor to its partners. The foregoing risks and uncertainties, as well as those risks and uncertainties discussed under the headings “Item 1A—Risk Factors,” and “Item 7A—Quantitative and Qualitative Disclosures About Market Risk” and elsewhere in this Annual Report on Form 10‑K, may cause actual results and events to differ materially from the forward-looking statements. OVERVIEW AND BUSINESS ENVIRONMENT The Company is a leading global brokerage and financial technology company servicing the global financial, energy and commodities markets. BGC, through its affiliates, specializes in the trade execution of a broad range of products, including fixed income securities 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 services across FX, Equities, Energy and Commodities, Shipping, and Futures and Options. Our business also provides connectivity and network solutions, clearing, market data and network connectivity products, trade compression and other post-trade services, market data and related information services and other back-office services to a broad assortment of financial and non-financial institutions. Our integrated platform is designed to provide flexibility to customers with regard to price discovery, trade execution and transaction processing, as well as accessing liquidity through our platforms, for transactions executed either OTC or through an exchange. Through our Fenics® group of electronic brands, the Company offers several trade execution, market infrastructure and connectivity services, as well as post-trade services. Fenics® brands also operate under the names Fenics®, FMX™, FMX Futures Exchange™, Fenics Markets Xchange™, Fenics Digital™, Fenics UST™, Fenics FX™, Fenics Repo™, Fenics Direct™, Fenics MID™, Fenics Market Data™, Fenics GO™, Fenics PortfolioMatch™, BGC®, BGC Trader™, kACE 2 ®, and Lucera®. Our customers include many of the world’s largest banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, and investment firms. BGC is a global operation with offices across all major geographies, including New York and London, as well as in Bahrain, Beijing, Bogota, 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. As of December 31, 2023, the Company had 2,104 brokers, salespeople, managers, technology professionals and other front-office personnel across our businesses. 76 Table of Contents BGC, BGC Group, BGC Partners, BGC Trader, GFI, GFI Ginga, CreditMatch, Fenics, Fenics.com, FMX, Sunrise Brokers, Poten & Partners, RP Martin, kACE2, Capitalab, Swaptioniser, CBID, Caventor, LumeMarkets, Lucera, and Aurel are trademarks/service marks, and/or registered trademarks/service marks of BGC Group and/or its affiliates. Corporate Conversion On July 1, 2023, the Company completed its Corporate Conversion to a Full C-Corporation in order to reorganize and simplify its organizational structure. As a result of the Corporate Conversion, BGC Group became the public holding company for, and successor to, BGC Partners, and its Class A common stock began trading on Nasdaq, in place of BGC Partners’ Class A common stock, under the ticker symbol “BGC.” Upon completion of the Corporate Conversion, the former stockholders of BGC Partners and the former limited partners of BGC Holdings now participate in the economics of the BGC businesses through BGC Group. Effective as of 12:01 a.m., Eastern Time, on July 1, 2023, BGC Holdings reorganized from a Delaware limited partnership into a Delaware limited liability company through a merger with and into Holdings Merger Sub, with Holdings Merger Sub continuing as a direct subsidiary of BGC Partners. Effective as of 12:02 a.m., Eastern Time, on July 1, 2023, Merger Sub 1 merged with and into BGC Partners, with BGC Partners continuing as a direct subsidiary of BGC Group. At the same time, Merger Sub 2 merged with and into Holdings Merger Sub, with Holdings Merger Sub continuing as a subsidiary of BGC Group. As a result of the Corporate Conversion Mergers, BGC Partners and BGC Holdings became wholly owned subsidiaries of BGC Group. In the Holdings Reorganization Merger, each unit of BGC Holdings outstanding as of immediately prior to the Holdings Reorganization Merger was converted into a substantially equivalent equity interest in Holdings Merger Sub. In the Corporate Merger, each share of Class A common stock, par value $0.01 per share, of BGC Partners and each share of Class B common stock, par value $0.01 per share, of BGC Partners outstanding was converted into one share of Class A common stock, par value $0.01 per share, of BGC Group and one share of Class B common stock, par value $0.01 per share, of BGC Group, respectively. In connection with, but prior to, the Corporate Conversion, the Company completed various transactions which included: • the redemption of certain non-exchangeable limited partnership units in connection with the issuance of shares of BGC Partners Class A common stock and the accompanying tax payments, which led to an equity-based compensation charge of $60.9 million; • the exchange of the remaining 1.5 million exchangeable limited partnership units of BGC Holdings held by employees on June 30, 2023, for 1.0 million shares, after tax withholding, of BGC Partners Class A common stock; • the redemption of certain non-exchangeable limited partnership units of BGC Holdings held by employees and issuance of 16.9 million BGC Partners RSUs on a one-for-one basis on June 30, 2023; • the redemption of certain non-exchangeable Preferred Units of BGC Holdings held by employees and issuance of $49.2 million of BGC Partners RSU Tax Accounts on June 30, 2023, based on the fixed cash value of the Preferred Units redeemed; • the redemption of the remaining 5.6 million non-exchangeable FPUs and issuances of BGC Partners RSUs on a one-for-one basis on June 30, 2023, which in turn reduced the “Redeemable Partnership Interest” to zero with an offsetting impact to “Total equity” in the Company’s Consolidated Statements of Financial Condition as of June 30, 2023; and • the purchase on June 30, 2023 by Cantor from BGC Holdings of an aggregate of 5,425,209 Cantor units for an aggregate consideration of $9,715,772 as a result of the redemption of 5,425,209 FPUs, and 324,223 Cantor units for an aggregate consideration of $598,712 as a result of the exchange of 324,223 FPUs. As a result of the Corporate Conversion: • 64.0 million Cantor units, including 5.7 million purchased on June 30, 2023, were converted into shares of BGC Group Class B common stock, subject to the terms and conditions of the Corporate Conversion Agreement, provided that a portion of the 64.0 million shares of BGC Group Class B common stock issued to Cantor will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in shares of BGC Group Class A or B common stock in connection with certain acquisition transactions prior to July 1, 2030, the seventh anniversary of the Corporate Conversion; • BGC Group assumed all BGC Partners RSUs, RSU Tax Accounts or restricted stock awards outstanding as of June 30, 2023; and 77 Table of Contents • non-exchangeable limited partnership units of BGC Holdings were converted into equity awards denominated in cash, restricted stock and/or RSUs of BGC Group, each as further set forth in the Corporate Conversion Agreement. BGC Group granted 38.6 million restricted stock awards, 25.3 million RSUs, and $74.0 million of RSU Tax Accounts upon the conversion of the non-exchangeable shares of Holdings Merger Sub. There were no limited partnership units of BGC Holdings remaining after the Corporate Conversion was completed. In connection with the Corporate Conversion on July 1, 2023, the BGC Group Board and the Board of Directors of BGC Partners authorized the assumption of all agreements and arrangements between BGC Partners and any executive officer, director or affiliate of BGC Partners, with such modifications necessary to reflect the Corporate Conversion. Pursuant to the foregoing authorization, any existing agreements and arrangements between BGC Partners and any executive officer, director or affiliate of BGC Partners, were generally assumed unchanged other than making BGC Group a party thereto. In connection with the Corporate Conversion on July 1, 2023, the Board and Audit Committee of BGC Group approved the authorized repurchases of Company Equity Securities from any holder of Company Equity Securities, including our directors, officers, and employees, of up to $400.0 million. In connection with the Corporate Conversion on July 1, 2023, the Board and Audit Committee of BGC Group approved the authorized repurchases of Company Debt Securities from any holder of Company Debt Securities, including our directors, officers, and employees, of up to $50.0 million. In connection with the Corporate Conversion on July 1, 2023, BGC Group assumed and adopted: the Eighth Amended and Restated BGC Partners, Inc. Long-Term Incentive Plan, as amended and restated as the BGC Group, Inc. Long Term Incentive Plan; the BGC Partners Second Amended and Restated BGC Partners Incentive Bonus Compensation Plan, as amended and restated, and renamed the BGC Group, Inc. Incentive Bonus Compensation Plan; and the BGC Partners, Inc. Deferral Plan for Employees of BGC Partners, Inc., Cantor Fitzgerald, L.P. and their Affiliates, as amended and restated as the BGC Group, Inc. Deferral Plan for Employees of BGC Group, Inc., Cantor Fitzgerald, L.P. and Their Affiliates. The BGC Group Equity Plan provides for a maximum of 600 million shares of BGC Class A common stock that may be delivered or cash settled pursuant to the exercise or settlement of awards granted under the plan. In connection with the Corporate Conversion on July 1, 2023, the BGC Holdings Limited Partnership Agreement was terminated, and the BGC Holdings, L.P. Participation Plan was terminated. In connection with the Corporate Conversion on July 1, 2023, BGC Group amended and restated its certificate of incorporation to reflect an increase in the authorized shares of BGC Group Class A common stock to 1,500,000,000; an increase in the authorized shares of BGC Group Class B common stock to 300,000,000; and a provision providing for exculpation to officers of BGC Group pursuant to Section 102(b)(7) of the Delaware General Corporation Law. Additionally, BGC Group amended and restated its bylaws to adopt a provision providing that Delaware courts shall be the exclusive forum for certain matters. In connection with the Corporate Conversion on July 1, 2023, the Exchange Agreement with Cantor terminated based on its own terms. In connection with the Corporate Conversion on July 1, 2023, BGC Group, Cantor and certain affiliates of Cantor entered into an Amended and Restated U.S. Master Administrative Services Agreement and an Amended and Restated U.K. Master Administrative Services Agreement. FMX FMX, our electronic U.S. Treasury, Rates futures and Spot FX platform, represents the unique opportunity to reshape the U.S. interest rate cash and futures market. FMX’s U.S. Treasury platform, Fenics UST, grew its market share to 26% for the fourth quarter of 2023, up from 25% in the third quarter of 2023, and 20% a year ago. In January 2024, FMX received CFTC approval to operate an exchange for U.S. interest rate futures products, the largest and most widely traded futures contracts in the world. The Company intends to launch the FMX Futures Exchange in the summer of 2024 and the Company plans to discuss our strategic partners and further details on, or before, our first quarter 2024 earnings call. Fenics For the purposes of this document and subsequent SEC filings, all of our higher margin, technology-driven businesses are referred to as Fenics. The Company categorizes our Fenics businesses as Fenics Markets and Fenics Growth Platforms. Fenics Markets includes the fully electronic portion of BGC’s brokerage businesses, data, network and post-trade revenues that are unrelated to Fenics Growth Platforms, as well as Fenics Integrated revenues. Fenics Growth Platforms includes Fenics UST, 78 Table of Contents Fenics GO, Lucera, Fenics FX, Portfolio Match and other newer standalone platforms. Revenue generated from data, network and post-trade attributable to Fenics Growth Platforms are included within their related businesses. Historically, technology-based product growth has led to higher margins and greater profits over time for exchanges and wholesale financial intermediaries alike, even if overall Company revenues remain consistent. This is largely because automated and electronic trading efficiency allows the same number of employees to manage a greater volume of trades as the marginal cost of incremental trading activity falls. Over time, the conversion of exchange-traded and OTC markets to fully electronic trading has also typically led to an increase in volumes which offset lower commissions, and often lead to similar or higher overall revenues. The Company has been a pioneer in creating and encouraging hybrid and fully electronic execution, and the Company continually works with our customers to expand such trading across more asset classes and geographies. These electronic markets for OTC products have grown as a percentage of overall industry volumes over the past decade as firms like BGC have invested in the kinds of technology favored by our customers. Regulation across banking, capital markets, and OTC derivatives has accelerated the adoption of fully electronic execution, and the Company expects this demand to continue. The Company also believes that new clients, beyond our large bank customer base, will primarily transact electronically across our Fenics platforms. The combination of wider adoption of hybrid and fully electronic execution and our competitive advantage in terms of technology and experience has contributed to our strong growth in electronically traded products. The Company continues to invest in our high-growth, high-margin, technology-driven businesses, including our standalone fully electronic Fenics Growth Platforms. Fenics has exhibited strong growth over the past several years, and the Company believes that this growth has outpaced the wholesale brokerage industry. The Company expects this trend to accelerate as the Company continues to convert more of our Voice/Hybrid execution into higher-margin, technology-driven execution across our Fenics platforms and continue to grow our Fenics Growth Platforms. The Company expects to benefit from the trend towards electronic trading, increased demand for market data, and the need for increased connectivity, automation, and post-trade services. The Company continues to onboard new customers as the opportunities created by electronic and algorithmic trading continue to transform our industry. The Company continues to roll out our next-generation Fenics execution platforms across more products and geographies with the goal of seamlessly integrating the liquidity of voice transactions with customer electronic orders either by a GUI, API, or web-based interface. Revenues in our Fenics businesses increased 20.1% to $130.8 million in the fourth quarter of 2023 and 16.1% to $521.7 million for the year ended December 31, 2023, in each case compared to the prior year period. Within our Fenics businesses, Fenics Markets revenue grew 16.5% to $109.6 million in the fourth quarter of 2023 and 12.6% to $446.6 million for the year ended December 31, 2023, in each case compared to the prior year period. Fenics Markets growth was driven by higher electronic Rates and Credit volumes, along with strong Fenics Market Data subscription revenues. Fenics Market Data signed new customer contracts in the fourth quarter of 2023 with an aggregate contract value 30% higher compared to the same period last year. Fenics Growth Platforms revenue grew 43.3% to $21.2 million in the fourth quarter of 2023 and 41.9% to $75.1 million for the year ended December 31, 2023, in each case compared to the prior year period. Collectively, our newer Fenics Growth Platform offerings are not yet fully up to scale, but continue to grow at a leading rate. Over time, the Company expects these new products and services to become profitable, high-margin businesses as their scale and revenues increase, all else equal. The Company continues to invest in our Fenics Growth Platforms, and notable highlights for the fourth quarter of 2023 compared to the prior year period include: • Fenics UST revenue increased by over 70% on a 38% improvement in average daily volume. • PortfolioMatch grew its U.S. credit volumes more than three-fold year-over-year, achieving record revenues. PortfolioMatch continues to onboard new accounts and increase its market share in its rapidly growing segment of the market. • Capitalab, our post-trade business, generated revenue growth of nearly 90%, driven by higher interest rate compression and foreign exchange matching volumes. Total revenues from our high-margin Data, network and post-trade business, which is predominately comprised of recurring revenue, were up 17.9% to $29.6 million in the fourth quarter of 2023 and 15.6% to $111.5 million for the year ended December 31, 2023, in each case over the prior year period. Data, network and post-trade revenue growth for the fourth quarter of 2023 was driven by Fenics Market Data and Lucera, our network business. 79 Table of Contents Fenics brokerage revenues increased by 20.8% to $101.2 million in the fourth quarter of 2023 and 16.2% to $410.1 million for the year ended December 31, 2023, in each case over the prior year period. Fenics’ revenue growth was led by Fenics Rates, Credit and Data, network and post-trade businesses. Fenics represented 25.3% of BGC’s overall revenue in the fourth quarter of 2023 compared to 25.0% in the fourth quarter of 2022, and 25.8% for the year ended December 31, 2023 compared to 25.0% in the year ended December 31, 2022. Acquisitions On November 1, 2023, the Company completed the acquisition of ContiCap, an independent financial product intermediary specializing in emerging markets. On November 1, 2023, the Company completed the acquisition of Open Energy Group, a technology-driven marketplace and brokerage for renewable energy asset sales and project finance. On February 28, 2023, the Company completed the acquisition of Trident, primarily operating as a commodity brokerage and research company, offering OTC and exchange traded energy and environmental products. 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 our 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). 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. The investment in the Insurance brokerage business generated an internal rate of return of 21.2% for our shareholders. The sale of the business did not represent a strategic shift that would have a major effect on the Company’s operations and financial results and was, therefore, not classified as discontinued operations. CF&Co served as advisor to the Company in connection with the transaction, and as a result, $4.4 million of banking fees was paid to Cantor upon closing of the transaction. For further information regarding the sale of our Insurance brokerage business, please see our Current Report on Form 8-K filed with the SEC on November 1, 2021, as well as Note 5—“Divestitures” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K. 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 were 50% vested and paid in cash at closing, with the remaining 50% vesting and paid in cash two years after closing. The remaining portion of these awards was 100% vested and paid in cash two years after the closing. The payments after closing were only made if the applicable employee remained an employee of the Insurance brokerage business. Other Matters In February 2022, the U.S., U.K., EU, and other countries imposed sanctions on Russian counterparties, and as a result BGC has ceased trading with those clients. The Company derived less than one percent of total revenue from its Moscow branch and sanctioned Russian counterparties. During the years ended December 31, 2023 and 2022, the Company reserved $9.0 million and $11.4 million, respectively, in connection with unsettled trades and receivables with sanctioned Russian entities. Recent Developments / Tax Policy Changes On August 16, 2022, the IR Act was signed into federal law. The IR Act provides for, among other things, a new corporate alternative minimum tax based on 15% of adjusted financial statement income for applicable corporations. The IR Act also provides for a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly 80 Table of Contents traded U.S. corporations and certain U.S. subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself and not its stockholders from which the shares are repurchased. In addition, certain exceptions apply to the excise tax. These tax provisions of the IR Act were effective January 1, 2023. The IR Act and related regulatory developments did not have a material impact on our financial statements nor is it expected to have a material impact in future periods. On July 1, 2021, the OECD released a statement on the Two-Pillar Solution to Address the Tax Challenges Arising From the Digitalization of the Economy, reflecting the agreement of 130 of the member jurisdictions of the Inclusive Framework on some key parameters with respect to Pillars I and II. The objective is to introduce a global minimum tax rate of 15% applicable to multinational groups with global book revenue in excess of EUR 750 million. The tax has the effect of increasing the ETR to 15% in jurisdictions where the ETR calculated under the GloBE Rules is under 15%. In December 2022, the Council of the EU unanimously adopted the EU Minimum Tax Directive, which would require member states to implement these rules. Due to complexities in applying the legislation and calculating GloBE income, the detailed quantitative impact of the enacted or substantively enacted legislation is not yet reasonably estimable. Management performed a high-level analysis of the potential impact of the Pillar Two provisions on its multinational activities. Based on that analysis, management does not believe that the Pillar Two tax regime will result in a material increase to its tax expense. Management will continue to evaluate the potential impact the Pillar Two Framework may have on the future results of operations and financial condition. Financial Services Industry The financial services industry has grown historically due to several factors. One factor was the increasing use of derivatives to manage risk or to take advantage of the anticipated direction of a market by allowing users to protect gains and/or guard against losses in the price of underlying assets without having to buy or sell the underlying assets. Derivatives are often used to mitigate the risks associated with interest rates, equity ownership, changes in the value of FX, credit defaults by corporate and sovereign debtors, and changes in the prices of commodity products. Over this same timeframe, demand from financial institutions, large corporations and other end-users of financial products have increased volumes in the wholesale derivatives market, thereby increasing the business opportunity for financial intermediaries. Another key factor in the historical growth of the financial services industry has been the increase in the number of new financial products. As market participants and their customers strive to mitigate risk, new types of equity and fixed income securities, futures, options and other financial instruments have been developed. Most of these new securities and derivatives were not immediately ready for more liquid and standardized electronic markets, and generally increased the need for trading and required broker-assisted execution. Due largely to the impacts of the global financial crisis of 2008-2009, our businesses had faced more challenging market conditions from 2009 until the second half of 2016. Accommodative monetary policies were enacted by several major central banks, including the Federal Reserve, Bank of England, Bank of Japan and the European Central Bank, in response to the global financial crises. These policies resulted in historically low levels of volatility and interest rates across many of the financial markets in which the Company operates. The global credit markets also faced structural issues, such as increased bank capital requirements under Basel III. Consequently, these factors contributed to lower trading volumes in our Rates and Credit asset classes across most geographies in which the Company operated. From mid-2016 until the first quarter of 2020, the overall financial services industry benefited from sustained economic growth, lower unemployment rates in most major economies, higher consumer spending, the modification or repeal of certain U.S. regulations, and higher overall corporate profitability. The trend towards digitization and electronification within the industry contributed to higher overall volumes and transaction count in fully electronic execution. From the second quarter of 2020 onward, concerns about the future trade relationship between the U.K. and the EU after Brexit, a slowdown in global growth driven by the outbreak of COVID-19, and an increase in trade protectionism were tempered by monetary and fiscal stimulus. During 2021, as the global economy recovered from the COVID-19 pandemic, higher inflation across the U.S. and other G8 countries led many central banks to begin and/or announce tapering and unwinding of asset purchases under quantitative easing programs, as well as implement multiple interest rate hikes. Manufactured zero and near-zero interest rates over the last fourteen years caused the breakdown and disappearance of the historic correlation between issuance and trading volume growth. With meaningful interest rates and issuance that is multiples above 2008 levels, the Company believes the return of this strong positive correlation will drive our trading volumes significantly higher. This has set the stage for broad-based growth across BGC’s businesses and asset classes. The recent change in central bank monetary policies away from zero interest rates, following the highest inflation in decades, together with rising interest rates set the stage for a resurgence in secondary market trading volumes for rates, credit and foreign exchange. For more than fourteen years, BGC and the entire financial service industry’s trading volumes had been constrained by low interest rates and quantitative easing. The Company believes BGC is well positioned to benefit from the return of interest rates, which the Company expects to drive our trading volumes, revenue and profitability higher for the foreseeable future. 81 Table of Contents Industry Consolidation Over the past decade, there has been significant consolidation among the interdealer-brokers and wholesale brokers with which the Company competes. The Company continues to compete with the electronic markets, post-trade and information businesses of NEX, that are part of CME now, through the various offerings on our Fenics platform. The Company will also continue to compete with TP ICAP and Tradition across various Voice/Hybrid brokerage marketplaces as well as via Fenics. Additionally, there have been an increase in acquisitions of OTC trading platforms by exchanges and electronic marketplaces such as ICE buying BondPoint and TMC Bonds, Deutsche Börse buying 360T, CBOE buying Hotspot, MarketAxess buying LiquidityEdge, Tradeweb buying Nasdaq’s U.S. Fixed Income Electronic Trading Platform, LSEG acquiring Quantile, etc. The Company views the recent consolidation in the industry favorably, as the Company expects it to provide additional operating leverage to our businesses in the future. Growth Drivers As a wholesale intermediary in the financial services industry, our businesses are driven primarily by secondary trading volumes in the markets in which the Company brokers, the size and productivity of our front-office headcount including brokers, salespeople, managers, technology professionals and other front-office personnel, regulatory issues, and the percentage of our revenues the Company is able to generate by Fully Electronic means. BGC’s revenues tend to have low correlation in the short- and medium-term with global bank and broker-dealer sales and trading revenues, which reflect bid-ask spreads and mark-to-market movements, as well as industry volumes in both the primary and secondary markets. Below is a brief analysis of the market and industry volumes for some of our products, including our overall Hybrid and Fully Electronic execution activities. Overall Market Volumes and Volatility Volume is driven by a number of factors, including the level of issuance for financial instruments, price volatility of financial instruments, macro-economic conditions, creation and adoption of new products, regulatory environment, and the introduction and adoption of new trading technologies. Historically, increased price volatility has often increased the demand for hedging instruments, including many of the cash and derivative products that the Company brokers. Rates volumes in particular are influenced by market volumes and, in certain instances, volatility. Historically low and negative interest rates, as well as central bank quantitative easing programs, across the globe significantly reduced the overall trading appetite for rates products. Such programs have depressed rates volumes because they entail central banks buying government securities or other securities in the open market in an effort to promote increased lending and liquidity and bring down long-term interest rates. When central banks hold these instruments, they tend not to trade or hedge, thus lowering rates volumes across cash and derivatives markets industry-wide. Following the market dislocation and pandemic, major central banks such as the U.S. Federal Reserve, ECB, Bank of Japan, Bank of England, and Swiss National Bank restarted quantitative easing programs in 2020. Beginning in 2022 inflationary concerns have resulted in rising interest rates and tapering and/or unwinding of central bank asset purchases. The return of interest rates has led to improved macro trading conditions which BGC has benefited in 2023. Management expects this improved environment to continue throughout 2024. This improved backdrop is expected to support both BGC’s Fenics and Voice/Hybrid businesses for the foreseeable future. Additional factors have weighed on market volumes in the products the Company brokers. For example, the Basel III accord, implemented in late 2010 by the G-20 central banks, is a global regulatory framework on bank capital adequacy, stress testing and market liquidity risk that was developed with the intention of making banks more stable in the wake of the financial crisis by increasing bank liquidity and reducing bank leverage. The accord, which took effect on January 1, 2023, requires most large banks in G-20 nations to hold approximately three times as much Tier 1 capital as was required under the previous set of rules. These capital rules have made it more expensive for banks to hold non-sovereign debt assets on their balance sheets, and as a result, analysts say that banks have reduced their proprietary trading activity in corporate and asset-backed fixed income securities as well as in various other OTC cash and derivative instruments. The Company believes that this has further reduced overall market exposure and industry volumes in many of the products the Company brokers, particularly in Credit. During the year ended December 31, 2023, industry volumes were generally higher across Rates and Energy and Commodities. Secondary trading volumes were mixed across FX and Credit, while volumes were generally lower across Equities. BGC’s brokerage revenues were up by 16.1% year-on-year in the quarter. This growth was led by a 42.3% improvement in BGC’s Energy and Commodities business, driven by strong double-digit growth across our energy complex and our environmental products, including our weather derivatives business. Rates revenues increased by 26.1%, reflecting broad-based growth across interest rate products. Foreign Exchange revenues improved by 7.5%, driven by higher volumes across G10 and emerging markets currencies. Credit revenues decreased by 3.6% primarily due to a strong comparable period a 82 Table of Contents year ago, partially offset by higher volumes across emerging markets, U.S. and UK credit products. Equities revenues declined by 3.8%, reflecting lower cash equity volumes, partially offset by higher equity derivatives activity. Below is an expanded discussion of the volume and growth drivers of our various brokerage product categories. Rates Volumes and Volatility Our Rates business is influenced by a number of factors, including global sovereign issuances, interest rates, central bank policies, secondary trading and the hedging of these sovereign debt instruments. The amount of global sovereign debt outstanding remains at historically high levels; the level of secondary trading and related hedging activity was generally higher during 2023 compared to the prior year period. According to Bloomberg and the Federal Reserve Bank of New York, the average daily volume of U.S. Government Securities was up 6%. Over the same time period, listed products on CME were up 16%, while interest rate swap volumes traded on SEF were down 5% compared to 2022, according to Clarus. In comparison, our overall Rates revenues were up 11.1% as compared to a year earlier to $610.5 million. Our Rates revenues, like the revenues for most of our products, are not fully dependent on market volumes and, therefore, do not always fluctuate consistently with industry metrics. This is largely because our Voice, Hybrid, and Fully Electronic Rates desks often have volume discounts built into their price structure, which results in our Rates revenues being less volatile than the overall industry volumes. Overall, analysts and economists expect the absolute level of sovereign debt outstanding to remain at elevated levels for the foreseeable future as governments finance their future deficits and roll over their sizable existing debt. Additionally, yields on government bonds have steadily increased over the course of 2022 and 2023, which has given rise to increased volatility and higher demand to hedge interest rate exposure. The tapering and/or unwinding of asset purchases by central banks and, interest rate hikes, along with elevated levels of government debt issuance, are expected to provide tailwinds to our Rates business. FX Volumes and Volatility Global FX volumes were mixed during 2023. Volumes for CME FX futures and options and CME EBS spot FX were down 3%, and 14%, respectively, and Cboe FX was up 9%. In comparison, our overall FX revenues increased by 5.0% to $314.7 million. Equities Volumes Global equity volumes were generally lower during 2023. According to the Securities Industry and Financial Markets Association, or SIFMA, the average daily volume of U.S. cash equities was down 7%, as compared to a year earlier. Over the same timeframe, Eurex average daily volumes of equity and equity index derivatives were down 7% and Euronext equity derivative index volumes were down 14%. However, according to the OCC, the average daily volume of U.S. options was up 8%. BGC’s equity business primarily consists of equity derivatives, particularly European equity derivatives. Our overall revenues from Equities increased by 0.9% to $236.5 million. Credit Volumes Our Credit business is impacted by the level of global corporate bond issuance, and interest rates. Credit volumes were generally mixed during 2023. FINRA TRACE average daily volume for U.S. Investment Grade was up 11% and U.S. High Yield was down by 1% according to Bloomberg and the Federal Reserve Bank of New York. In comparison, our overall Credit revenues increased by 4.9% to $284.7 million. Energy and Commodities Volumes Energy and Commodities volumes were higher during 2023 compared with the year earlier. CME and ICE energy futures and options volumes were up 5% and 18%, respectively. In comparison, BGC’s Energy and Commodities revenues increased by 32.4% to $386.2 million. FINANCIAL OVERVIEW Revenues Our revenues are derived primarily from brokerage commissions charged for either agency or matched principal transactions, fees charged for data, network and post-trade products, fees from related parties and interest income. 83 Table of Contents Brokerage We earn revenues from our brokerage services on both an agency and matched principal basis. In agency transactions, we charge a commission for connecting buyers and sellers and assisting in the negotiation of the price and other material terms of the transaction. After all material terms of a transaction are agreed upon, we identify the buyer and seller to each other and leave them to settle the trade directly. Principal transaction revenues are primarily derived from matched principal transactions, whereby revenues are earned on the spread between the buy and the sell price of the brokered security, commodity or derivative. Customers either see the buy or sell price on a screen or are given this information over the phone. The brokerage fee is then added to the buy or sell price, which represents the spread we earn as principal transactions revenues. On a limited basis, we enter into unmatched principal transactions to facilitate a customer’s execution needs for transactions initiated by such customers. We also provide market data products for selected financial institutions. We offer our brokerage services in five broad product categories: Rates, FX, Energy and Commodities, Credit, and Equities. We previously offered Insurance brokerage services; however, we sold our Insurance brokerage business to The Ardonagh Group on November 1, 2021. The chart below details brokerage revenues by product category and by Voice/Hybrid versus Fully Electronic (in thousands): For the Year Ended December 31, 2023 2022 2021 Brokerage revenue by product: Rates $ 610,451 $ 549,503 $ 558,507 FX 314,706 299,721 301,328 Energy and Commodities 386,206 291,665 296,458 Credit 284,744 271,419 287,608 Equities 236,517 234,493 247,673 Insurance — — 178,087 Total brokerage revenues $ 1,832,624 $ 1,646,801 $ 1,869,661 Brokerage revenue by product (percentage): Rates 33.3 % 33.4 % 29.9 % FX 17.2 18.2 16.1 Energy and Commodities 21.1 17.7 15.9 Credit 15.5 16.5 15.4 Equities 12.9 14.2 13.2 Insurance — — 9.5 Total brokerage revenues 100.0 % 100.0 % 100.0 % Brokerage revenue by type: Voice/Hybrid $ 1,422,541 $ 1,293,929 $ 1,558,503 Fully Electronic 1 410,083 352,872 311,158 Total brokerage revenues $ 1,832,624 $ 1,646,801 $ 1,869,661 Brokerage revenue by type (percentage): Voice/Hybrid 77.6 % 78.6 % 83.4 % Fully Electronic 1 22.4 21.4 16.6 Total brokerage revenues 100.0 % 100.0 % 100.0 % ____________________________ 1. Includes Fenics Integrated. Our position as a leading wholesale financial broker is enhanced by our Hybrid brokerage platform. We believe that the more complex, less liquid markets on which we focus often require significant amounts of personal and attentive service from our brokers. In more mature markets, we offer Fully Electronic execution capabilities to our customers through our platforms, including Fenics and BGC Trader. Our Hybrid platform allows our customers to trade on a Voice, Hybrid or, where available, Fully Electronic basis, regardless of whether the trade is OTC or exchange-based, and to benefit from the experience and market intelligence of our worldwide brokerage network. Our electronic capabilities include clearing, settlement, post-trade, and other back-office services as well as straight-through processing for our customers across several products. Furthermore, we benefit from the operational leverage in our Fully Electronic platform. We believe our Hybrid brokerage approach provides a competitive advantage over competitors who do not offer this full range of technology. 84 Table of Contents Rates Our Rates business is focused on government debt, futures and currency, and both listed and OTC interest rate derivatives, which are among the largest, most global and most actively traded markets. The main drivers of these markets are global macroeconomic forces such as growth, inflation, government budget policies and new issuances. FX The FX market is one of the largest financial markets in the world. FX transactions can either be undertaken in the spot market, in which one currency is sold and another is bought, or in the derivative market in which future settlement of the identical underlying currencies are traded. We provide full execution OTC brokerage services in most major currencies, including all G8 currencies, emerging market, cross and exotic options currencies. Credit We provide our brokerage services in a wide range of credit instruments, including asset-backed securities, convertible bonds, corporate bonds, credit derivatives and high yield bonds. Energy and Commodities We provide brokerage services for most widely traded energy and commodities products, including futures and OTC products covering refined and crude oil, power and electricity, natural gas, liquefied natural gas, environmental and emissions products, weather derivatives, base metals, coal and soft commodities. We also provide brokerage services associated with the shipping of certain energy and commodities products. Equities We provide brokerage services in a range of markets for equity products, including cash equities, equity derivatives (both listed and OTC), equity index futures and options on equity products. Insurance In prior years, we provided wholesale insurance and reinsurance broking solutions and underwriting services across the global marketplace, operating through the brands Ed Broking, Besso, Piiq Risk Partners and Junge, as well as the group’s managing general agents Cooper Gay, Globe Underwriting and Epsilon. We sold our Insurance brokerage business on November 1, 2021 (see Note 5—“Divestitures” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10‑K for additional information). Data, network and post-trade Fenics Market Data is a supplier of real-time, tradable, indicative, end-of-day and historical market data. Our market data product suite includes fixed income, interest rate derivatives, credit derivatives, FX, FX options, money markets, energy and equity derivatives and structured market data products and services. The data are sourced from the Voice/Hybrid and fully electronic broking operations, as well as the market data operations, including BGC, GFI and RP Martin, among others. It is made available to financial professionals, research analysts and other market participants via direct data feeds and BGC-hosted FTP environments, as well as via information vendors such as Bloomberg, Thomson Reuters, ICE Data Services, QUICK Corp., and other select specialist vendors. Through our network solutions business, we provide customized software to broaden distribution capabilities and provide electronic solutions to financial market participants. The network solutions business leverages our global infrastructure, software, systems, portfolio of intellectual property, and electronic trading expertise to provide customers with electronic marketplaces and exchanges and real-time auctions to enhance debt issuance and to customize trading interfaces. We take advantage of the scalability, flexibility and functionality of our electronic trading system to enable our customers to distribute products to their customers through online offerings and auctions, including private and reverse auctions, via our trading platform and global network. Using screen-based market solutions, customers are able to develop a marketplace, trade with their customers, issue debt, trade odd lots, access program trading interfaces and access our network and intellectual property. We provide option pricing and analysis tools that deliver price discovery that is supported with market data sourced from our BGC, GFI, and Fenics trading systems. 85 Table of Contents Our Capitalab NDF Match business is an advanced matching platform that helps clients offset their fixing risk in non-deliverable forward portfolios. Additionally, Capitalab provides compression services that are designed to bring greater capital and operational efficiency to the global derivatives market. It assists clients in managing the growing cost of holding derivatives, while helping them to meet their regulatory mandates. Through the Swaptioniser service for portfolio compression of Bilateral and Cleared Interest Rate Swaptions, Interest Rate Swaps, Caps and Floors and FX Products, Capitalab looks to simplify the complexities of managing large quantities of derivatives, to help promote sustainable growth, lower systemic risk and improve resiliency in the industry. Furthermore, as an approved compression services provider at LCH, a combined multiproduct Rates solution is provided across the entire cleared and non-cleared portfolio, increasing the overall efficiency, where delta offsets can be leveraged across Rates products and desks. Additionally, Capitalab’s Initial Margin Optimization service allows participants to reduce their bilateral initial margin and central counterparty clearing house initial margin with the efficiency of automated trade processing. Other Revenues We earn other revenues from various sources, including underwriting and advisory fees, and the sources described below. Interest Income We generate interest income primarily from the investment of our daily cash balances, interest earned on securities owned and Reverse Repurchase Agreements. These investments and transactions are generally short-term in nature. We also earn interest income from employee loans, and we earn dividend income on certain marketable securities. Fees from Related Parties We earn fees from related parties for technology services and software licenses and for certain administrative and back-office services we provide to affiliates, particularly from Cantor. These administrative and back-office services include office space, utilization of fixed assets, accounting services, operational support, human resources, legal services and information technology. Expenses Compensation and Employee Benefits The majority of our operating costs consist of cash and non-cash compensation expenses, which include base salaries, broker bonuses based on broker production, guaranteed bonuses, other discretionary bonuses, and all related employee benefits and taxes. Our employees consist of brokers, salespeople, executives and other administrative support. The majority of our brokers receive a base salary and a formula bonus based primarily on a pool of brokers’ production for a particular product or sales desk, as well as on the individual broker’s performance. Members of our sales force receive either a base salary or a draw on commissions. Less experienced salespeople typically receive base salaries and bonuses. In addition, we currently issue RSUs, and in the case of certain U.K. employees who held partnership units prior to the Corporate Conversion, restricted stock awards, as well as other forms of equity-based compensation, to provide liquidity to our employees, to align the interests of our employees and management with those of common stockholders, to help motivate and retain key employees, and to encourage a collaborative culture that drives cross-selling and revenue growth. These awards contain extended vesting schedules which we consider to be highly retentive and that vary based upon compensation level and role (typically three-to-seven-year ratable vesting), which in most cases are largely dependent upon continued service. Prior to the Corporate Conversion, we issued limited partnership units, as well as other forms of unit-based compensation, including grants of exchangeability of limited partnership units into shares of BGC Class A common stock and grants of shares of our restricted stock, to motivate and retain key employees. These limited partnership units, which could be redeemed at any time for zero, were subject to forfeiture if the non-compete, confidentiality or non-solicit provisions of the BGC Holdings Limited Partnership Agreement related to these awards were violated, were also extremely retentive. In addition, prior to the Corporate Conversion, we paid amounts due to a partner upon termination of service over a number of years in order to ensure compliance with partner obligations We also enter into various agreements with certain of our employees, and prior to the Corporate Conversion, 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 in BGC Holdings and Newmark Holdings, prior to the Corporate Conversion, and by distributions that the individuals receive on some or all of their LPUs in Newmark Holdings and any dividends paid on participating RSUs and restricted stock awards, subsequent to the Corporate Conversion. Certain of these loans also may be 86 Table of Contents either wholly or in part repaid from the proceeds of the sale of our employees’ shares of BGC Class A common stock. In addition, certain loans 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, we may also enter into agreements with employees to grant bonus and salary advances or other types of loans. These advances and loans are repayable in timeframes outlined in the underlying agreements. We believe that these loans incentivize and promote retention of our employees. In addition, we also enter into deferred compensation agreements with employees providing services to us. The costs associated with such plans are generally amortized over the period in which they vest. See Note 18—“Compensation” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K for more information. Other Operating Expenses We have various other operating expenses. We incur leasing, equipment and maintenance expenses for our businesses worldwide. We also incur selling and promotion expenses, which include entertainment, marketing and travel-related expenses. We incur communication expenses for voice and data connections with our clients, clearing agents and general usage; professional and consulting fees for legal, audit and other special projects; and interest expense related to short-term operational funding needs, and notes payable and collateralized borrowings. Primarily in the U.S., we pay fees to Cantor for performing certain administrative and other support services, including charges for occupancy of office space, utilization of fixed assets and accounting, operations, human resources, legal services and technology infrastructure support. Management believes that these charges are a reasonable reflection of the utilization of services rendered. However, the expenses for these services are not necessarily indicative of the expenses that would have been incurred if we had not obtained these services from Cantor. In addition, these charges may not reflect the costs of services we may receive from Cantor in the future. We incur commissions and floor brokerage fees for clearing, brokerage and other transactional expenses for clearing and settlement services. We also incur various other normal operating expenses. Other Income (Losses), Net Gain (Loss) on Divestiture and Sale of Investments Gain (loss) on divestiture and sale of investments represents the gain or loss we recognize for the divestiture or sale of our investments. Gains (Losses) on Equity Method Investments Gains (losses) on equity method investments represent our pro-rata share of the net gains (losses) on investments over which we have significant influence but which we do not control. Other Income (Loss) Other Income (loss) is comprised of gains or losses related to fair value adjustments on investments carried under the alternative method. Other Income (loss) also includes realized and unrealized gains or losses related to sales and mark-to-market adjustments on Marketable securities and any related hedging transactions when applicable. Acquisition-related fair value adjustments of contingent consideration and miscellaneous recoveries are also included in Other Income (loss). Provision (Benefit) for Income Taxes We incur income tax expenses or benefit based on the location, legal structure and jurisdictional taxing authorities of each of our subsidiaries. Certain of the Company’s entities are taxed as U.S. partnerships and are subject to the UBT in New York City. U.S. federal and state income tax liability or benefit related to the partnership income or loss, with the exception of UBT, rests with the partners (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” in Part II, Item 8 of this Annual Report on Form 10‑K for discussion of partnership interests), rather than the partnership entity. 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. Outside of the U.S., we operate principally through subsidiary corporations subject to local income taxes. 87 Table of Contents REGULATORY ENVIRONMENT See “Regulation” in Part I, Item 1 of this Annual Report on Form 10‑K for additional information related to our regulatory environment. LIQUIDITY See “Liquidity and Capital Resources” herein for information related to our Liquidity and capital resources. HIRING Key drivers of our revenue are front-office producer headcount and average revenue per producer. We believe that our strong technology platform and unique compensation structure have enabled us to use both acquisitions and recruiting to profitably grow at a faster rate than our largest competitors since our formation in 2004. We have invested significantly through acquisitions and the hiring of new brokers, salespeople, managers, technology professionals and other front-office personnel. The business climate for these acquisitions has been competitive, and it is expected that these conditions will persist for the foreseeable future. We have been able to attract businesses and brokers, salespeople, managers, technology professionals and other front-office personnel to our platform as we believe they recognize that we have the scale, technology, experience and expertise to succeed. As of December 31, 2023, our front-office headcount was 2,104 brokers, salespeople, managers, technology professionals and other front-office personnel, up 6.0% from 1,985 a year ago. Compared to the prior year, average revenue per front-office employee for the year ended December 31, 2023 increased by 11.4% to $958,000 from $861,000. The laws and regulations passed or proposed on both sides of the Atlantic concerning OTC trading seem likely to favor increased use of technology by all market participants, and are likely to accelerate the adoption of both Hybrid and Fully Electronic execution. We believe these developments will favor the larger inter-dealer brokers over smaller, non-public local competitors, as the smaller players generally do not have the financial resources to invest the necessary amounts in technology. We believe this will lead to further consolidation across the wholesale financial brokerage industry, and thus allow us to grow profitably. FINANCIAL HIGHLIGHTS Full year 2023 compared to full year 2022: Income from operations before income taxes was $57.7 million compared to $97.5 million in the prior year period. Total revenues increased $230.1 million, or 12.8%, to $2,025.4 million, largely due to overall growth of 11.3% in our brokerage revenues: • Energy and Commodities increased $94.5 million, or 32.4%, • Rates increased $60.9 million, or 11.1%; • Credit increased $13.3 million, or 4.9%; • FX increased $15.0 million, or 5.0%; and • Equities increased $2.0 million, or 0.9%. In addition, there was an increase of $24.4 million in Interest and dividend income, primarily driven by income earned on bank deposits and money market funds. Further, there was an increase of $15.1 million in Data, network and post-trade revenues, primarily driven by strong revenue growth across Lucera, Fenics Market Data, and our Capitalab post-trade business, as a result of expanding both our client base and our offerings. Total expenses increased $275.7 million, or 16.1%, to $1,992.8 million compared to the prior year period, primarily driven by an increase in total compensation expenses of $243.7 million. The increase in equity-based compensation included a $60.9 million charge for the redemption of certain non-exchangeable limited partnership units in connection with the issuance of shares of BGC Group Class A common stock and the accompanying tax payments related to the Corporate Conversion, in the year ended December 31, 2023. In addition, higher commission revenues on variable compensation contributed to the increase in compensation expenses. The $32.0 million increase in non-compensation expenses was primarily driven by an increase in Interest expense related to the Company’s 8.000% Senior Notes issued on May 24, 2023 and borrowings on the Revolving Credit Agreement. These higher interest expenses were partially offset by lower interest due to the repayment in full of the BGC Partners 5.375% Senior Notes on July 24, 2023. 88 Table of Contents RESULTS OF OPERATIONS The following table sets forth our Consolidated Statements of Operations data expressed as a percentage of total revenues for the periods indicated (in thousands): Year Ended December 31, 2023 2022 2021 Actual Results Percentage of Total Revenues Actual Results Percentage of Total Revenues Actual Results Percentage of Total Revenues Revenues: Commissions $ 1,464,524 72.3 % $ 1,281,294 71.4 % $ 1,541,900 76.5 % Principal transactions 368,100 18.2 365,507 20.3 327,761 16.3 Total brokerage revenues 1,832,624 90.5 1,646,801 91.7 1,869,661 92.8 Fees from related parties 15,968 0.8 14,734 0.8 14,856 0.7 Data, network and post-trade 111,470 5.5 96,389 5.4 89,963 4.5 Interest and dividend income 45,422 2.2 21,007 1.2 21,977 1.1 Other revenues 19,917 1.0 16,371 0.9 18,907 0.9 Total revenues 2,025,401 100.0 1,795,302 100.0 2,015,364 100.0 Expenses: Compensation and employee benefits 992,603 49.1 853,165 47.5 1,271,340 63.1 Equity-based compensation and allocations of net income to limited partnership units and FPUs¹ 355,378 17.5 251,071 14.0 256,164 12.7 Total compensation and employee benefits 1,347,981 66.6 1,104,236 61.5 1,527,504 75.8 Occupancy and equipment 162,743 8.0 157,491 8.8 188,322 9.3 Fees to related parties 32,649 1.6 25,662 1.4 24,030 1.2 Professional and consulting fees 60,398 3.0 68,775 3.8 67,884 3.4 Communications 114,143 5.6 108,096 6.0 117,502 5.8 Selling and promotion 61,884 3.1 49,215 2.7 38,048 1.9 Commissions and floor brokerage 61,523 3.0 58,277 3.3 64,708 3.2 Interest expense 77,231 3.8 57,932 3.2 69,329 3.5 Other expenses 74,278 3.7 87,431 4.9 80,888 4.0 Total expenses 1,992,830 98.4 1,717,115 95.6 2,178,215 108.1 Other income (losses), net: Gains (losses) on divestitures and sale of investments — — (1,029) (0.1) 312,941 15.5 Gains (losses) on equity method investments 9,152 0.5 10,920 0.7 6,706 0.3 Other income (loss) 15,986 0.7 9,373 0.5 19,705 1.0 Total other income (losses), net 25,138 1.2 19,264 1.1 339,352 16.8 Income (loss) from operations before income taxes 57,709 2.8 97,451 5.5 176,501 8.7 Provision (benefit) for income taxes 18,934 0.9 38,584 2.2 23,013 1.1 Consolidated net income (loss) $ 38,775 1.9 % $ 58,867 3.3 % $ 153,488 7.6 % Less: Net income (loss) from operations attributable to noncontrolling interest in subsidiaries 2,510 0.1 10,155 0.6 29,481 1.4 Net income (loss) available to common stockholders $ 36,265 1.8 % $ 48,712 2.7 % $ 124,007 6.2 % ________________________ 1 The components of Equity-based compensation and allocations of net income to limited partnership units and FPUs are as follows (in thousands): 89 Table of Contents Year Ended December 31, 2023 2022 2021 Actual Results Percentage of Total Revenues Actual Results Percentage of Total Revenues Actual Results Percentage of Total Revenues Issuance of common stock and grants of exchangeability $ 171,646 8.5 % $ 147,480 8.2 % $ 128,107 6.4 % Allocations of net income and dividend equivalents 6,302 0.3 13,298 0.8 34,335 1.7 LPU amortization 40,878 2.0 73,734 4.1 78,596 3.9 RSU, RSU Tax Account, and restricted stock amortization 136,552 6.7 16,559 0.9 15,126 0.7 Equity-based compensation and allocations of net income to limited partnership units and FPUs $ 355,378 17.5 % $ 251,071 14.0 % $ 256,164 12.7 % Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues Brokerage Revenues Total brokerage revenues increased by $185.8 million, or 11.3%, to $1,832.6 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. Commission revenues increased by $183.2 million, or 14.3%, to $1,464.5 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. Principal transactions revenues increased by $2.6 million, or 0.7%, to $368.1 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. Our brokerage revenues from Energy and Commodities increased by $94.5 million, or 32.4%, to $386.2 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, which was primarily driven by strong double-digit growth across our energy complex and our environmental products, as well as our ship broking business. Our brokerage revenues from Rates increased by $60.9 million, or 11.1%, to $610.5 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, reflecting broad-based growth across interest rate derivative and cash products. Our FX revenues increased by $15.0 million, or 5.0%, to $314.7 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, which was primarily driven by higher volumes across emerging markets currencies. Our Credit revenues increased by $13.3 million, or 4.9%, to $284.7 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, which was primarily driven by higher volumes across emerging market and European credit products, as well as credit derivatives. Our brokerage revenues from Equities increased by $2.0 million, or 0.9%, to $236.5 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily driven by higher volumes across U.S. equity derivatives. Fees from Related Parties Fees from related parties increased by $1.2 million, or 8.4% to $16.0 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, which was primarily driven by an increase in revenues in connection with services provided to Cantor. Data, Network and Post-Trade Data, network and post-trade revenues increased by $15.1 million, or 15.6%, to $111.5 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. This increase was primarily driven by strong double-digit revenue growth across Lucera, Fenics Market Data, and our Capitalab post-trade business, as a result of expanding both our client base and our offerings. 90 Table of Contents Interest and Dividend Income Interest and dividend income increased by $24.4 million, or 116.2%, to $45.4 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. This was primarily driven by an increase interest income on bank deposits and money market funds, which were primarily driven by changing interest rates and larger balances. Other Revenues Other revenues increased by $3.5 million, or 21.7% to $19.9 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily driven by an increase in dividend income on investments and consulting income. Expenses Compensation and Employee Benefits Compensation and employee benefits expense increased by $139.4 million, or 16.3%, to $992.6 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The primary driver of the increase was higher commission revenues on variable compensation. Equity-Based Compensation and Allocations of Net Income to Limited Partnership Units and FPUs Equity-based compensation and allocations of net income to limited partnership units and FPUs increased by $104.3 million, or 41.5%, to $355.4 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. This was primarily driven by an increase in issuance of common stock and grants of exchangeability, which included a $60.9 million charge for the redemption of certain non-exchangeable limited partnership units in connection with the issuance of shares of BGC Class A common stock and the accompanying tax payments related to the Corporate Conversion. The increase was also due to an increase in RSU, RSU Tax Account, and restricted stock amortization expenses, partially offset by a cessation of LPU amortization expense, related to the Corporate Conversion. Occupancy and Equipment Occupancy and equipment expense increased by $5.3 million, or 3.3%, to $162.7 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. This increase was primarily driven by an increase in amortization expense on developed software and other rent and occupancy expenses, partially offset by a decrease in fixed asset impairment. Fees to Related Parties Fees to related parties increased by $7.0 million, or 27.2%, to $32.6 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. Fees to related parties are allocations paid to Cantor for administrative and support services, such as accounting, occupancy, and legal. Professional and Consulting Fees Professional and consulting fees decreased by $8.4 million, or 12.2%, to $60.4 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily driven by a decrease in consulting and other professional fees. Communications Communications expense increased by $6.0 million, or 5.6%, to $114.1 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, which was primarily driven by increases in various terminal and line service costs across market data and communications. Selling and Promotion Selling and promotion expense increased by $12.7 million, or 25.7%, to $61.9 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, which was primarily driven by an increase in business 91 Table of Contents related travel and client entertainment as COVID-19 restrictions have relaxed across many of the major geographies in which BGC operates. Commissions and Floor Brokerage Commissions and floor brokerage expense increased by $3.2 million, or 5.6%, to $61.5 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily driven by a higher number of trades in the year ended December 31, 2023 and an increase in commission expense. Interest Expense Interest expense increased by $19.3 million, or 33.3%, to $77.2 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily driven by interest expense related to the Company’s 8.000% Senior Notes issued on May 24, 2023 and higher interest expense related to the borrowings on the Revolving Credit Agreement, partially offset by a decrease in interest expense related to the BGC Partners 5.375% Senior Notes due to repayment in full on July 24, 2023. Other Expenses Other expenses decreased by $13.2 million, or 15.0%, to $74.3 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, which was primarily due to a decrease in litigation settlements and reserves, and a decrease in reserves related to potential losses associated with Russia’s Invasion of Ukraine, partially offset by an increase in other provisions. Other Income (Losses), Net Gains (Losses) on Equity Method Investments Gains (losses) on equity method investments decreased by $1.8 million, to a gain of $9.2 million, for the year ended December 31, 2023 as compared to a gain of $10.9 million for the year ended December 31, 2022. Other Income (Loss) Other income (loss) increased by $6.6 million, or 70.6%, to $16.0 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily driven by an increase related to mark-to-market movements on other assets and an increase in other recoveries. Provision (Benefit) for Income Taxes Provision (benefit) for income taxes decreased by $19.7 million, or 50.9%, to $18.9 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The decrease was primarily driven by a decrease in pretax earnings, a one-time benefit in revaluation of deferred tax balances due to ownership interest change, as a result of the Corporate Conversion, and a change in the geographical and business mix of earnings, which can impact our consolidated effective tax rate from period-to-period. Net Income (Loss) Attributable to Noncontrolling Interest in Subsidiaries Net income (loss) attributable to noncontrolling interest in subsidiaries decreased by $7.6 million, or 75.3%, to $2.5 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, which was primarily driven by a decrease in earnings and no longer reflecting net income (loss) attributable to noncontrolling interest in subsidiaries related to BGC Holdings as a result of the Corporate Conversion. Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenues Brokerage Revenues Total brokerage revenues decreased by $222.9 million, or 11.9%, to $1,646.8 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily due to the sale of the Insurance brokerage business during 92 Table of Contents the fourth quarter of 2021, and FX headwinds. Commission revenues decreased by $260.6 million, or 16.9%, to $1,281.3 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Principal transactions revenues increased by $37.7 million, or 11.5%, to $365.5 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. We had no brokerage revenues from Insurance in the year ended December 31, 2022 as a result of the sale during the fourth quarter of 2021, compared to $178.1 million for the year ended December 31, 2021. Our Credit revenues decreased by $16.2 million, or 5.6%, to $271.4 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021. This was primarily driven by lower activity across structured products and FX headwinds. Our brokerage revenues from Equities decreased by $13.2 million, or 5.3%, to $234.5 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily driven by FX headwinds and lower volumes due to market volatility in the year ended December 31, 2022. Our brokerage revenues from Rates decreased by $9.0 million, or 1.6%, to $549.5 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021. The decrease in Rates revenue was primarily driven by FX headwinds, challenging market conditions across medium-term Rates products and lower market volumes. Our brokerage revenues from Energy and Commodities decreased by $4.8 million, or 1.6%, to $291.7 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021, which was primarily led by lower volumes across global oil trading as higher prices and volatility weighed on certain energy products, such as gas, oil, and base metals. Our FX revenues decreased by $1.6 million, or 0.5%, to $299.7 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021. Fees from Related Parties Fees from related parties decreased by $0.1 million, or 0.8% to $14.7 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Data, Network and Post-Trade Data, network and post-trade revenues increased by $6.4 million, or 7.1%, to $96.4 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. This increase was primarily driven by new business contracts in Fenics Market Data and Lucera expanding its client base, partially offset by a decrease in revenues from post-trade services. Interest and Dividend Income Interest and dividend income decreased by $1.0 million, or 4.4%, to $21.0 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. This decrease was primarily driven by a decrease in dividend income and lower interest income earned on employee loans, partially offset by an increase in interest income on government bonds and bank deposits driven by higher interest rates. Other Revenues Other revenues decreased by $2.5 million, or 13.4% to $16.4 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. This was primarily driven by a decrease in revenues from underwriting fees and placement fees, partially offset by an increase in consulting income for Poten & Partners. Expenses Compensation and Employee Benefits Compensation and employee benefits expense decreased by $418.2 million, or 32.9%, to $853.2 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. The primary driver of the decrease was due to the sale of the Insurance brokerage business during the fourth quarter of 2021, which included one-off compensation charges and sale-related expenses totaling $168.6 million, as well as lower commission revenues on variable compensation, increased automation related to the transition to Fully Electronic brokerage services, and the positive FX impact on our U.K. and European operations. 93 Table of Contents Equity-Based Compensation and Allocations of Net Income to Limited Partnership Units and FPUs Equity-based compensation and allocations of net income to limited partnership units and FPUs decreased by $5.1 million, or 2.0%, to $251.1 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. This was driven by a decrease in allocations of net income to limited partnership units and FPUs and a decrease in LPU amortization expense, partially offset by an increase in grants of exchangeability and issuance of Class A common stock. Occupancy and Equipment Occupancy and equipment expense decreased by $30.8 million, or 16.4%, to $157.5 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. This decrease was primarily due to the sale of the Insurance brokerage business during the fourth quarter of 2021, as well as a decrease in other rent and occupancy expenses. Fees to Related Parties Fees to related parties increased by $1.6 million, or 6.8%, to $25.7 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Fees to related parties are allocations paid to Cantor for administrative and support services, such as accounting, occupancy, and legal. Professional and Consulting Fees Professional and consulting fees increased by $0.9 million, or 1.3%, to $68.8 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily driven by an increase in legal and consulting fees, partially offset by a decrease related to the sale of the Insurance brokerage business during the fourth quarter of 2021. Communications Communications expense decreased by $9.4 million, or 8.0%, to $108.1 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, which was primarily driven by decreases in various terminal and line service costs across market data and communications. Selling and Promotion Selling and promotion expense increased by $11.2 million, or 29.3%, to $49.2 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, as COVID-19 restrictions have relaxed across many of the major geographies in which BGC operates. Commissions and Floor Brokerage Commissions and floor brokerage expense decreased by $6.4 million, or 9.9%, to $58.3 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Commissions and floor brokerage expense tends to move in line with brokerage revenues. Interest Expense Interest expense decreased by $11.4 million, or 16.4%, to $57.9 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily driven by the fact that the BGC Partners 5.125% Senior Notes were repaid in May 2021, a decrease in interest expense related to the borrowings on the Revolving Credit Agreement, and a decrease in interest expense due to the sale of the Insurance brokerage business during the fourth quarter of 2021. Other Expenses Other expenses increased by $6.5 million, or 8.1%, to $87.4 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, which was primarily related to an increase in legal settlements, reserves recorded in the year ended December 31, 2022 for potential losses associated with Russia’s Invasion of Ukraine, an increase in other provisions, and an increase in revaluation expense. This was partially offset by a decrease in expenses related to the sale of the Insurance brokerage business during the fourth quarter of 2021, a decrease in amortization expense on intangible assets and a decrease in Charity Day contributions expense. 94 Table of Contents Other Income (Losses), Net Gains (Losses) on Divestitures and Sale of Investments For the year ended December 31, 2022 we had a loss of $1.0 million on divestitures. For the year ended December 31, 2021, we had a gain of $312.9 million as a result of the sale of the Insurance brokerage business. Gains (Losses) on Equity Method Investments Gains (losses) on equity method investments increased by $4.2 million, to a gain of $10.9 million, for the year ended December 31, 2022 as compared to a gain of $6.7 million for the year ended December 31, 2021. Other Income (Loss) Other income (loss) decreased by $10.3 million, or 52.4%, to $9.4 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily driven by a decrease related to mark-to-market movements on other assets and investments, and no income for the year ended December 31, 2022 related to the Insurance brokerage business due to the sale in the fourth quarter of 2021, partially offset by an increase related to fair value adjustments on acquisition earn-outs. Provision (Benefit) for Income Taxes Provision (benefit) for income taxes increased by $15.6 million, or 67.7%, to $38.6 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. The increase was primarily driven by: (i) the non-recurring nontaxable gain on the 2021 disposition of the Insurance brokerage business; (ii) a benefit in the prior year from the revaluation of deferred taxes due to enacted rate changes in the U.K. and the ownership interest change in the operating partnership; and (iii) a change in the geographical and business mix of earnings, which can impact our consolidated effective tax rate from period-to-period. Net Income (Loss) Attributable to Noncontrolling Interest in Subsidiaries Net income (loss) attributable to noncontrolling interest in subsidiaries decreased by $19.3 million, or 65.6%, to $10.2 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021. 95 Table of Contents QUARTERLY RESULTS OF OPERATIONS The following table sets forth our unaudited quarterly results of operations for the indicated periods (in thousands). Results of any period are not necessarily indicative of results for a full year and may, in certain periods, be affected by seasonal fluctuations in our business. Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation. December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2021 March 31, 2022 Revenues: Commissions $ 388,211 $ 350,305 $ 348,720 $ 377,288 $ 315,658 $ 299,430 $ 309,542 $ 356,664 Principal transactions 73,563 84,725 94,883 114,929 82,169 79,568 88,169 115,601 Fees from related parties 4,226 3,723 4,062 3,957 3,896 3,896 3,625 3,317 Data, network and post-trade 29,551 27,797 27,000 27,122 25,063 23,808 23,391 24,127 Interest and dividend income 16,586 10,150 13,371 5,315 5,501 4,110 8,961 2,435 Other revenues 4,623 5,994 5,044 4,256 4,228 5,755 2,068 4,320 Total revenues 516,760 482,694 493,080 532,867 436,515 416,567 435,756 506,464 Expenses: Compensation and employee benefits 248,915 233,087 243,387 267,214 181,671 202,353 211,873 257,268 Equity-based compensation and allocations of net income to limited partnership units and FPUs 78,093 69,268 126,644 81,373 89,332 57,730 46,133 57,876 Total compensation and employee benefits 327,008 302,355 370,031 348,587 271,003 260,083 258,006 315,144 Occupancy and equipment 41,062 40,028 40,488 41,165 40,197 38,710 39,921 38,663 Fees to related parties 9,172 7,046 7,991 8,440 7,377 6,551 6,009 5,725 Professional and consulting fees 16,144 13,734 14,819 15,701 24,286 15,048 13,810 15,631 Communications 29,169 29,222 27,813 27,939 26,237 26,802 27,166 27,891 Selling and promotion 17,009 14,939 15,320 14,616 14,461 11,373 12,443 10,938 Commissions and floor brokerage 15,342 14,755 16,161 15,265 13,591 13,104 14,239 17,343 Interest expense 20,795 20,780 19,914 15,742 14,788 14,499 14,342 14,303 Other expenses 26,519 22,030 13,221 12,508 26,695 19,951 23,010 17,775 Total expenses 502,220 464,889 525,758 499,963 438,635 406,121 408,946 463,413 Other income (losses), net: Gain (loss) on divestiture and sale of investments — — — — (846) (183) — — Gains (losses) on equity method investments 2,584 2,094 2,412 2,062 2,158 3,230 2,729 2,803 Other income (loss) 14,765 3,967 (1,011) (1,735) 2,415 5,545 1,909 (496) Total other income (losses), net 17,349 6,061 1,401 327 3,727 8,592 4,638 2,307 Income (loss) from operations before income taxes 31,889 23,866 (31,277) 33,231 1,607 19,038 31,448 45,358 Provision (benefit) for income taxes 10,626 5,314 (9,067) 12,061 (1,991) 10,813 15,105 14,657 Consolidated net income (loss) $ 21,263 $ 18,552 $ (22,210) $ 21,170 $ 3,598 $ 8,225 $ 16,343 $ 30,701 Less: Net income (loss) attributable to noncontrolling interest in subsidiaries 1,318 1,506 (2,506) 2,192 1,382 2,463 1,581 4,729 Net income (loss) available to common stockholders $ 19,945 $ 17,046 $ (19,704) $ 18,978 $ 2,216 $ 5,762 $ 14,762 $ 25,972 96 Table of Contents The table below details our brokerage revenues by product category for the indicated periods (in thousands): December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2021 March 31, 2022 Brokerage revenue by product: Rates $ 155,802 $ 145,703 $ 144,209 $ 164,737 $ 123,594 $ 129,971 $ 137,129 $ 158,809 FX 77,226 79,795 77,527 80,158 71,868 73,481 74,347 80,025 Energy and commodities 104,739 93,120 98,688 89,659 73,608 68,975 66,687 82,395 Credit 65,642 63,747 65,806 89,549 68,067 58,187 61,257 83,908 Equities 58,365 52,665 57,373 68,114 60,690 48,384 58,291 67,128 Total brokerage revenues $ 461,774 $ 435,030 $ 443,603 $ 492,217 $ 397,827 $ 378,998 $ 397,711 $ 472,265 Brokerage revenue by product (percentage): Rates 33.8 % 33.5 % 32.5 % 33.5 % 31.0 % 34.3 % 34.5 % 33.6 % FX 16.7 18.3 17.5 16.3 18.1 19.4 18.7 17.0 Energy and commodities 22.7 21.4 22.2 18.2 18.5 18.2 16.8 17.4 Credit 14.2 14.7 14.8 18.2 17.1 15.3 15.4 17.8 Equities 12.6 12.1 13.0 13.8 15.3 12.8 14.6 14.2 Total brokerage revenues 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Brokerage revenue by type: Voice/Hybrid $ 360,536 $ 337,522 $ 345,478 $ 379,005 $ 313,994 $ 297,316 $ 311,541 $ 371,078 Fully Electronic 1 101,238 97,508 98,125 113,212 83,833 81,682 86,170 101,187 Total brokerage revenues $ 461,774 $ 435,030 $ 443,603 $ 492,217 $ 397,827 $ 378,998 $ 397,711 $ 472,265 Brokerage revenue by type (percentage): Voice/Hybrid 78.1 % 77.6 % 77.9 % 77.0 % 78.9 % 78.4 % 78.3 % 78.6 % Fully Electronic 1 21.9 22.4 22.1 23.0 21.1 21.6 21.7 21.4 Total brokerage revenues 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % ____________________________ 1. Includes Fenics Integrated. LIQUIDITY AND CAPITAL RESOURCES Balance Sheet Our balance sheet and business model are not capital intensive. Our assets consist largely of Cash and cash equivalents, collateralized and uncollateralized short-dated receivables and less liquid assets needed to support our business. Longer-term capital (equity and notes payable) is held to support the less liquid assets and potential capital investment opportunities. Total assets as of December 31, 2023 were $3.2 billion, an increase of 3.3% as compared to December 31, 2022. The increase in total assets was driven primarily by an increase in Cash and cash equivalents, Loans, forgivable loans and other receivables from employees and partners, net, Goodwill, Other intangible assets, net and Accrued commissions and other receivables, net. We maintain a significant portion of our assets in Cash and cash equivalents and Financial instruments owned, at fair value, with Cash and cash equivalents as of December 31, 2023 of $655.6 million, and our Liquidity as of December 31, 2023 of $701.4 million. See “Liquidity Analysis” below for a further discussion of our Liquidity and a reconciliation to the most comparable GAAP financial measure. Our Financial instruments owned, at fair value, were $45.8 million as of December 31, 2023, compared to $39.3 million as of December 31, 2022. As part of our cash management process, we may enter into tri-party Reverse Repurchase Agreements and other short-term investments, some of which may be with Cantor. As of both December 31, 2023 and 2022, there were no Reverse Repurchase Agreements outstanding. Further, we had no Repurchase agreements or Securities loaned as of both December 31, 2023 and 2022. Additionally, in August 2013, the Audit Committee authorized us 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 from time to time as a liquidity management vehicle. The notes are backed by assets of highly rated banks. We are entitled to invest in the program so long as the program meets investment policy guidelines, including policies relating to ratings. Cantor will earn a spread between the rate it receives from the short-term note issuer and the rate it pays to us on any investments in this program. This spread will be no greater than the 97 Table of Contents spread earned by Cantor for placement of any other commercial paper note in the program. As of both December 31, 2023 and 2022, we did not have any investments in the program. Funding Our funding base consists of longer-term capital (equity and notes payable), collateralized financings and shorter-term liabilities incurred through the normal course of business. We have limited need for short-term unsecured funding in our regulated entities for their brokerage business. Contingent liquidity needs are largely limited to potential cash collateral that may be needed to meet clearing bank, clearinghouse, and exchange margins and/or to fund fails. Current cash and cash equivalent balances exceed our potential normal course contingent liquidity needs. We believe that cash and cash equivalents in and available to our largest regulated entities, inclusive of financing provided by clearing banks and cash segregated under regulatory requirements, is adequate for potential cash demands of normal operations, such as margin or financing of fails. We expect our operating activities going forward to generate adequate cash flows to fund normal operations, share repurchases, and any dividends paid pursuant to our dividend policy. However, we continually evaluate opportunities for growth and to further enhance our strategic position, including, among other things, acquisitions, strategic alliances and joint ventures potentially involving all types and combinations of equity, debt and acquisition alternatives. As a result, we may need to raise additional funds to: • increase the regulatory net capital necessary to support operations; • support continued growth in our businesses; • effect acquisitions, strategic alliances, joint ventures and other transactions; • develop new or enhanced products, services and markets; and • respond to competitive pressures. Acquisitions and financial reporting obligations related thereto may impact our ability to access longer term capital markets funding on a timely basis and may necessitate greater short-term borrowings in the interim. This may impact our credit rating or our costs of borrowing. We may need to access short-term capital sources to meet business needs from time to time, including, but not limited to, conducting operations; hiring or retaining brokers, salespeople, managers, technology professionals and other front-office personnel; financing acquisitions; and providing liquidity, including in situations where we may not be able to access the capital markets in a timely manner when desired by us. Accordingly, we cannot guarantee that we will be able to obtain additional financing when needed on terms that are acceptable to us, if at all. As discussed below, our Liquidity remained strong at $701.4 million as of December 31, 2023, which can be used for share repurchases, dividends, new hires, tax payments, ordinary movements in working capital, and our continued investment in Fenics Growth Platforms. During the twelve months ended December 31, 2023, we repurchased 23.3 million shares of BGC Class A common stock for aggregate consideration of $114.5 million, representing a weighted-average price per share of $4.93. As of February 27, 2024, we have repurchased an additional 6.7 million shares of BGC Class A common stock during the first quarter for aggregate consideration of $47.4 million, representing a weighted-average price per share of $7.03. On November 1, 2021, BGC closed the sale of its Insurance brokerage business to the Ardonagh Group for gross proceeds of $534.9 million, subject to limited post-closing adjustments. The investment in the Insurance brokerage business generated an internal rate of return of 21.2% for our shareholders. The proceeds from the Insurance Business Disposition provided us with significant resources to continue repurchasing shares and to accelerate Fenics growth. Since the announced sale of the Insurance brokerage business in May 2021, BGC has repurchased and redeemed 123.5 million shares of BGC Class A common stock and LPUs as of December 31, 2023. In addition, a portion of these proceeds was used to fully repay the $300.0 million outstanding borrowings under the Company’s Revolving Credit Agreement on November 1, 2021, which had been borrowed earlier in 2021. This repayment along with the maturity of the BGC Partners 5.125% Senior Notes, which were paid in full on May 27, 2021, reduced our outstanding Notes payable and other borrowings. On February 13, 2024, our Board declared a $0.01 dividend for the fourth quarter of 2023. Our current capital allocation priorities are to return capital to stockholders and to continue investing in our high growth Fenics businesses. Historically, we were deeply dividend-centric; going forward, we plan to prioritize share repurchases over dividends. 98 Table of Contents Notes Payable, Other and Short-term Borrowings Unsecured Senior Revolving Credit Agreement On November 28, 2018, BGC Partners 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, BGC Partners 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, BGC Partners 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. On March 10, 2022, BGC Partners 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. On October 6, 2023, the Revolving Credit Agreement was amended to exclude the BGC Partners Notes from the restrictive covenant in the Revolving Credit Agreement limiting the indebtedness of subsidiaries, and BGC Group assumed all rights and obligations of BGC Partners under the Revolving Credit Agreement and became the borrower thereunder. As of December 31, 2023, there were $239.2 million borrowings outstanding, net of deferred financing costs of $0.8 million under the Revolving Credit Agreement. As of December 31, 2022, there were no borrowings outstanding under the Revolving Credit Agreement. Our Liquidity remains strong and was $701.4 million as of December 31, 2023, as discussed below. BGC Partners 5.375% Senior Notes On July 24, 2018, BGC Partners issued an aggregate of $450.0 million principal amount of BGC Partners 5.375% Senior Notes due July 24, 2023. The BGC Partners 5.375% Senior Notes were general senior unsecured obligations of BGC Partners. The BGC Partners 5.375% Senior Notes bore 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. On July 24, 2023, BGC Partners repaid the $450.0 million principal amount plus accrued interest on the BGC Partners 5.375% Senior Notes using the proceeds from the issuance of the BGC Partners 8.000% Senior Notes, cash on hand and borrowings under the Revolving Credit Agreement. Exchange Offer and Market-Making Registration Statement On October 6, 2023, BGC Group completed the Exchange Offer, in which BGC Group offered to exchange the BGC Partners Notes for new notes to be issued by BGC Group with the same respective interest rates, maturity dates and substantially identical terms as the tendered notes, and cash. In connection with the Exchange Offer, and on behalf of BGC Partners, BGC Group also solicited consents from (i) holders of the BGC Partners Notes to certain proposed amendments to the indenture and supplemental indentures pursuant to which such BGC Partners Notes were issued to, among other things, eliminate certain affirmative and restrictive covenants and events of default, including the “Change of Control” provisions described below, which had applied to each series of the BGC Partners Notes, and (ii) from holders of the BGC Partners 8.000% Senior Notes to amend the registration rights agreement relating thereto to terminate such agreement. As of September 19, 2023, the requisite note holder consents were received to adopt the proposed indenture amendments and terminate the registration rights agreement relating to the BGC Partners 8.000% Senior Notes. In connection with the October 6, 2023 closing of the Exchange Offer, (i) $255.5 million aggregate principal amount of BGC Partners 3.750% Senior Notes were exchanged for BGC Group 3.750% Senior Notes and subsequently canceled, $288.2 million aggregate principal amount of BGC Partners 4.375% Senior Notes were exchanged for BGC Group 4.375% Senior Notes and subsequently cancelled, $347.2 million aggregate principal amount of BGC Partners 8.000% Senior Notes were exchanged for BGC Group 8.000% Senior Notes and subsequently cancelled, and equivalent aggregate principal amounts of BGC Group 3.750% Senior Notes, BGC Group 4.375% Senior Notes and BGC Group 8.000% Senior Notes, respectively, were issued; (ii) the indenture and supplemental indentures relating to the BGC Partners 3.750% Senior Notes, the BGC Partners 4.375% Senior Notes and the BGC Partners 8.000% Senior Notes were amended as proposed; and (iii) the registration rights agreement relating to the BGC Partners 8.000% Senior Notes was terminated. On October 19, 2023, we filed a resale registration statement on Form S-3 pursuant to which CF&Co may make offers and sales of the BGC Group 3.750% Senior Notes, the BGC Group 4.375% Senior Notes and the BGC Group 8.000% Senior Notes in connection with ongoing market-making transactions which may occur from time to time. Such market-making transactions in these securities may occur in the open market or may be privately negotiated at prevailing market prices at a 99 Table of Contents time of resale or at related or negotiated prices. Neither CF&Co, nor any other of our affiliates, has any obligation to make a market in our securities, and CF&Co or any such other affiliate may discontinue market-making activities at any time without notice. 3.750% Senior Notes On September 27, 2019, BGC Partners issued an aggregate of $300.0 million principal amount of BGC Partners 3.750% Senior Notes. The BGC Partners 3.750% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners 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 BGC Partners 3.750% Senior Notes will mature on October 1, 2024. BGC Partners may redeem some or all of the BGC Partners 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 supplemental indenture related to the BGC Partners 3.750% Senior Notes). The initial carrying value of the BGC Partners 3.750% Senior Notes was $296.1 million, net of discount and debt issuance costs of $3.9 million, of which $0.2 million were underwriting fees payable to CF&Co. The issuance costs are amortized as interest expense and the carrying value of the BGC Partners 3.750% Senior Notes will accrete up to the face amount over the term of the notes. On October 11, 2019, BGC Partners filed a Registration Statement on Form S-4, which was declared effective by the SEC on October 24, 2019. On October 28, 2019, BGC Partners launched an exchange offer in which holders of the BGC Partners 3.750% Senior Notes, issued in a private placement on September 27, 2019, could exchange such notes for new registered notes with substantially identical terms. The exchange offer closed on December 9, 2019, at which point the initial BGC Partners 3.750% Senior Notes were exchanged for new registered notes with substantially identical terms. As discussed above, on October 6, 2023, pursuant to the Exchange Offer, $255.5 million aggregate principal amount of BGC Partners 3.750% Senior Notes were exchanged for BGC Group 3.750% Senior Notes and subsequently cancelled, and certain amendments to the indenture and supplemental indenture governing the BGC Partners 3.750% Senior Notes became effective. The BGC Group 3.750% Senior Notes will mature on October 1, 2024 and 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, 2024. BGC Group may redeem some or all of the BGC Group 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 supplemental indenture related to the BGC Group 3.750% Senior Notes). If a “Change of Control Triggering Event” (as defined in the supplemental indenture related to the BGC Group 3.750% Senior Notes) occurs, holders may require BGC Group 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. Following the closing of the Exchange Offer, $44.5 million aggregate principal amount of BGC Partners 3.750% Senior Notes remained outstanding. The carrying value of the BGC Group 3.750% Senior Notes was $254.8 million as of December 31, 2023. The carrying value of the BGC Partners 3.750% Senior Notes was $44.4 million as of December 31, 2023. 4.375% Senior Notes On July 10, 2020, BGC Partners issued an aggregate of $300.0 million principal amount of BGC Partners 4.375% Senior Notes. The BGC Partners 4.375% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners 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 BGC Partners 4.375% Senior Notes will mature on December 15, 2025. BGC Partners may redeem some or all of the BGC Partners 4.375% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set forth in the supplemental indenture related to the BGC Partners 4.375% Senior Notes). Cantor purchased $14.5 million of such senior notes. The initial carrying value of the BGC Partners 4.375% Senior Notes was $296.8 million, net of discount and debt issuance costs of $3.2 million, of which $0.2 million were underwriting fees payable to CF&Co. On August 28, 2020, BGC Partners filed a Registration Statement on Form S-4, which was declared effective by the SEC on September 8, 2020. On September 9, 2020, BGC Partners launched an exchange offer in which holders of the BGC Partners 4.375% Senior Notes, issued in a private placement on July 10, 2020, could exchange such notes for new registered notes with substantially identical terms. The exchange offer closed on October 14, 2020, at which point the initial BGC Partners 4.375% Senior Notes were exchanged for new registered notes with substantially identical terms. As discussed above, on October 6, 2023, pursuant to the Exchange Offer, $288.2 million aggregate principal amount of BGC Partners 4.375% Senior Notes were exchanged for BGC Group 4.375% Senior Notes and subsequently cancelled, and certain amendments to the indenture and supplemental indenture governing the BGC Partners 4.375% Senior Notes became effective. The BGC Group 4.375% Senior Notes will mature on December 15, 2025 and 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, 2023. BGC Group may redeem 100 Table of Contents some or all of the BGC Group 4.375% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set forth in the supplemental indenture related to the BGC Group 4.375% Senior Notes). If a “Change of Control Triggering Event” (as defined in the supplemental indenture related to the BGC Group 4.375% Senior Notes) occurs, holders may require BGC Group 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. Following the closing of the Exchange Offer, $11.8 million aggregate principal amount of BGC Partners 4.375% Senior Notes remained outstanding. Cantor participated in the Exchange Offer, and currently holds $14.5 million aggregate principal amount of BGC Group 4.375% Senior Notes. The carrying value of the BGC Group 4.375% Senior Notes was $286.7 million as of December 31, 2023. The carrying value of the BGC Partners 4.375% Senior Notes was $11.8 million as of December 31, 2023. 8.000% Senior Notes On May 25, 2023, BGC Partners issued an aggregate of $350.0 million principal amount of BGC Partners 8.000% Senior Notes. The BGC Partners 8.000% Senior Notes are general unsecured obligations of BGC Partners. The BGC Partners 8.000% Senior Notes bear interest at a rate of 8.000% per year, payable in cash on May 25 and November 25 of each year, commencing November 25, 2023. The BGC Partners 8.000% Senior Notes will mature on May 25, 2028. BGC Partners may redeem some or all of the BGC Partners 8.000% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set forth in the supplemental indenture related to the BGC Partners 8.000% Senior Notes). The initial carrying value of the BGC Partners 8.000% Senior Notes was $346.6 million, net of debt issuance costs of $3.4 million. The issuance costs are amortized as interest expense and the carrying value of the BGC Partners 8.000% Senior Notes will accrete up to the face amount over the term of the notes. On October 6, 2023, pursuant to the Exchange Offer, $347.2 million aggregate principal amount of BGC Partners 8.000% Senior Notes were exchanged for BGC Group 8.000% Senior Notes and subsequently cancelled, and certain amendments to the indenture and supplemental indenture governing the BGC Partners 8.000% Senior Notes became effective. The BGC Group 8.000% Senior Notes will mature on May 25, 2028 and bear interest at a rate of 8.000% per year, payable in cash on May 25 and November 25 of each year, commencing November 25, 2023. BGC Group may redeem some or all of the BGC Group 8.000% Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set forth in the supplemental indenture related to the BGC Group 8.000% Senior Notes). If a “Change of Control Triggering Event” (as defined in the supplemental indenture related to the BGC Group 8.000% Senior Notes) occurs, holders may require BGC Group 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. Following closing of the Exchange Offer, $2.8 million aggregate principal amount of the BGC Partners 8.000% Senior Notes remained outstanding. In connection with the issuance of the BGC Partners 8.000% Senior Notes, BGC Partners entered into a registration rights agreement providing for a future registered exchange offer by May 25, 2024 in which holders of the BGC Partners 8.000% Senior Notes, issued in a private placement on May 25, 2023, could exchange such notes for new registered notes with substantially identical terms. Such registration rights agreement was terminated in connection with the closing of the Exchange Offer. The carrying value of the BGC Group 8.000% Senior Notes was $343.9 million as of December 31, 2023. The carrying value of the BGC Partners 8.000% Senior Notes was $2.7 million as of December 31, 2023. Collateralized Borrowings On April 8, 2019, we entered into a secured loan arrangement of $15.0 million, under which we pledged certain fixed assets as security for a loan. This arrangement incurred interest at a fixed rate of 3.77% and matured on April 8, 2023, at which point the balance was paid in full; therefore, there were no borrowings as of December 31, 2023. As of December 31, 2022, we had $2.0 million outstanding related to this secured loan arrangement. The book value of the fixed assets pledged as of December 31, 2022 was nil. We recorded interest expense related to this secured loan arrangement of nil, $0.1 million and $0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. On April 19, 2019, we entered into a $10.0 million secured loan arrangement, under which we pledged certain fixed assets as security for a loan. This arrangement incurred interest at a fixed rate of 3.89% and matured on April 19, 2023, at which point the loan was repaid in full; therefore, there were no borrowings as of December 31, 2023. As of December 31, 2022, we had $1.3 million outstanding related to this secured loan arrangement. The book value of the fixed assets pledged as of December 31, 2022 was $0.3 million. We recorded interest expense related to this secured loan arrangement of nil, $0.1 million and $0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. 101 Table of Contents Weighted-average Interest Rate For the years ended December 31, 2023 and 2022, the weighted-average interest rate of BGC Partners’ total Notes payable and other borrowings, which include BGC Partners’ Revolving Credit Agreement, Company Debt Securities, and collateralized borrowings, was 5.82% and 4.62%, respectively. Short-term Borrowings On August 22, 2017, we entered into a committed unsecured loan agreement with Itau Unibanco S.A. The agreement provided for short-term loans of up to $4.0 million (BRL 20.0 million). Borrowings under this agreement bore interest at the Brazilian Interbank offering rate plus 3.20%. During June 2023, the borrowings under this agreement were repaid in full, and the loan was terminated; therefore, as of December 31, 2023, there were no borrowings outstanding under the agreement. As of December 31, 2022, there were $2.0 million (BRL10.0 million) of borrowings outstanding under this agreement. As of December 31, 2022, the interest rate was 17.0%. On August 23, 2017, we entered into a committed unsecured credit agreement with Itau Unibanco S.A. The agreement provided for an intra-day overdraft credit line up to $10.4 million (BRL 50.0 million). On August 20, 2021, the agreement was renegotiated, increasing the credit line to $12.4 million (BRL 60.0 million). On May 22, 2023 the agreement was renegotiated, increasing the credit line to $14.5 million (BRL 70.0 million). The maturity date of the agreement is February 17, 2024. This agreement bears a fee of 1.35% per year. As of December 31, 2023 and December 31, 2022, there were no borrowings outstanding under this agreement. On January 25, 2021, we entered into a committed unsecured loan agreement with Banco Daycoval S.A., which provided for short-term loans of up to $2.0 million (BRL 10.0 million) and was renegotiated on June 1, 2021. The amended agreement provided for short-term loans of up to $4.0 million (BRL 20.0 million). During September 2022, the borrowings under this agreement were repaid in full, and the loan was terminated on September 27, 2022. BGC Credit Agreement with Cantor On March 19, 2018, BGC Partners 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 Partners and an affiliate of Cantor, and was approved by the Audit Committee of BGC Partners. On August 6, 2018, BGC Partners entered into an amendment to the BGC Credit Agreement, which increased the aggregate principal amount that can be loaned to the other party or any of its subsidiaries from $250.0 million to $400.0 million that can be outstanding at any time. On October 6, 2023, BGC Group assumed all rights and obligations of BGC Partners under the BGC Credit Agreement. The BGC Credit Agreement will mature on the earlier to occur of (a) March 19, 2024, 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 both December 31, 2023 and 2022, there were no borrowings by the Company or Cantor outstanding under this Agreement. DEBT REPURCHASE PROGRAM See Note 13—“Related Party Transactions” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K under the heading “CEO Program and Other Transactions with CF&Co” for information about our Board-authorized debt repurchase program. LIQUIDITY ANALYSIS We consider our Liquidity, a non-GAAP financial measure, to be comprised of the sum of Cash and cash equivalents, Reverse Repurchase Agreements, and Financial instruments owned, at fair value, less Securities loaned and Repurchase agreements. We consider liquidity to be an important metric for determining the amount of cash that is available or that could be readily available to the Company on short notice. The discussion below describes the key components of our Liquidity analysis. We believe our cash, cash flows, and financing arrangements are sufficient to support our cash requirements for the next twelve months and beyond. 102 Table of Contents We consider the following in analyzing changes in our Liquidity: • Our Liquidity analysis includes a comparison of our Consolidated net income (loss) adjusted for certain non-cash items (e.g., Equity-based compensation) as presented on the cash flow statement. Dividends are payments made to our holders of common shares and are related to earnings from prior periods. These timing differences will impact our cash flows in a given period; • Our investing and funding activities represent a combination of our capital raising activities, including short-term borrowings and repayments, BGC Class A common stock repurchases and, previously, partnership unit redemptions, purchases and sales of securities, dispositions, and other investments (e.g., acquisitions, forgivable loans to new brokers and capital expenditures—all net of depreciation and amortization); • Our securities settlement activities primarily represent deposits with clearing organizations; • Other changes in working capital represent changes primarily in receivables and payables and accrued liabilities that impact our Liquidity; and • Changes in Reverse Repurchase Agreements and Financial instruments owned, at fair value may result from additional cash investments or sales, which will be offset by a corresponding change in Cash and cash equivalents and, accordingly, will not result in a change in our Liquidity. Conversely, changes in the market value of such securities are reflected in our earnings or other comprehensive income (loss) and will result in changes in our Liquidity. At December 31, 2019, the Company completed the calculation of the one-time transition tax on the deemed repatriation of foreign subsidiaries’ earnings pursuant to the Tax Act and previously recorded a net cumulative tax expense of $28.6 million, net of foreign tax credits. An installment election can be made to pay the taxes over eight years with 40% paid in equal installments over the first five years and the remaining 60% to be paid in installments of 15%, 20% and 25% in years six, seven and eight, respectively. The cumulative remaining balance as of December 31, 2023 was $18.8 million. As of December 31, 2023, the Company and its consolidated subsidiaries had $655.6 million of Cash and cash equivalents. In addition, the Company and its consolidated subsidiaries also held securities of $45.8 million within their Liquidity position as of December 31, 2023. Discussion of the year ended December 31, 2023 The table below presents our Liquidity Analysis as of December 31, 2023 and December 31, 2022: December 31, 2023 December 31, 2022 (in thousands) Cash and cash equivalents $ 655,641 $ 484,989 Financial instruments owned, at fair value 45,792 39,319 Total $ 701,433 $ 524,308 The $177.1 million increase in our Liquidity position from $524.3 million as of December 31, 2022 to $701.4 million as of December 31, 2023 was primarily related to the issuance of $350.0 million principal amount of BGC Partners 8.000% Senior Notes, $240.0 million of borrowings from the Revolving Credit Agreement, and cash flow from operations, partially offset by the repayment of the $450.0 million principal amount of, plus accrued interest on, the BGC Partners 5.375% Senior Notes, ordinary movements in working capital, the acquisitions of Trident, ContiCap, as well as Open Energy Group, tax payments, dividends and distributions, share repurchases, and our continued investments in Fenics Growth Platforms. Discussion of the year ended December 31, 2022 The table below presents our Liquidity Analysis as of December 31, 2022 and December 31, 2021: December 31, 2022 December 31, 2021 (in thousands) Cash and cash equivalents $ 484,989 $ 553,598 Financial instruments owned, at fair value 39,319 41,244 Total $ 524,308 $ 594,842 103 Table of Contents The $70.5 million decrease in our Liquidity position from $594.8 million as of December 31, 2021 to $524.3 million as of December 31, 2022 was primarily related to share and unit repurchases and redemptions, dividends and distributions, tax payments, our continued investment in Fenics Growth Platforms and ordinary movements in working capital. CREDIT RATINGS As of December 31, 2023, our public long-term credit ratings and associated outlooks were as follows: Rating Outlook Fitch Ratings Inc. BBB- Stable Standard & Poor’s BBB- Stable Japan Credit Rating Agency, Ltd. BBB+ Stable Kroll Bond Rating Agency BBB Stable Credit ratings and associated outlooks are influenced by a number of factors, including, but not limited to: operating environment, earnings and profitability trends, the prudence of funding and liquidity management practices, balance sheet size/composition and resulting leverage, cash flow coverage of interest, composition and size of the capital base, available liquidity, outstanding borrowing levels and the firm’s competitive position in the industry. A credit rating and/or the associated outlook can be revised upward or downward at any time by a rating agency if such rating agency decides that circumstances warrant such a change. Any downgrade in our credit ratings and/or the associated outlooks could adversely affect the availability of debt financing on terms acceptable to us, as well as the cost and other terms upon which we are able to obtain any such financing. In addition, credit ratings and associated outlooks may be important to customers or counterparties when we compete in certain markets and when we seek to engage in certain transactions. In connection with certain agreements, we may be required to provide additional collateral in the event of a credit ratings downgrade. CLEARING CAPITAL In November 2008, we entered into a clearing capital agreement with Cantor to clear U.S. Treasury and U.S. government agency securities transactions on our behalf. In June 2020, this clearing capital agreement was amended to cover Cantor providing clearing services in all eligible financial products to us and not just U.S. Treasury and U.S. government agency securities. Pursuant to the terms of this agreement, so long as Cantor is providing clearing services to us, Cantor shall be entitled to request from us cash or other collateral acceptable to Cantor in the amount reasonably requested by Cantor under the clearing capital agreement or Cantor will post cash or other collateral on our behalf for a commercially reasonable charge. During the years ended December 31, 2023, 2022 and 2021, the Company was charged $2.2 million, $0.8 million and $0.7 million, respectively, by Cantor for the cash or other collateral posted by Cantor on BGC’s behalf. Cantor had not requested any cash or other property from us as collateral as of December 31, 2023. REGULATORY REQUIREMENTS Our Liquidity and available cash resources are restricted by regulatory requirements applicable to our operating subsidiaries. Many of these regulators, including U.S. and non-U.S. government agencies and self-regulatory organizations, as well as state securities commissions in the U.S., are empowered to conduct administrative proceedings that can result in civil and criminal judgments, settlements, fines, penalties, injunctions, enhanced oversight, remediation, or other relief. In addition, self-regulatory organizations such as FINRA and the NFA, along with statutory bodies such as the FCA, the SEC, and the CFTC, require strict compliance with their rules and regulations. The requirements imposed by regulators are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with broker-dealers and are not designed to specifically protect stockholders. These regulations often serve to limit our activities, including through net capital, customer protection and market conduct requirements. The final phase of Basel III (unofficially called “Basel IV”) is a global prudential regulatory standard designed to make banks more resilient and increase confidence in the banking system. Its wide scope includes reviewing market, credit and operational risk along with targeted changes to leverage ratios. Basel IV includes updates to the calculation of bank capital requirements with the aim of making outcomes more comparable across banks globally. The FCA is the relevant statutory regulator in the U.K. The FCA’s objectives are to protect customers, maintain the stability of the financial services industry and promote competition between financial services providers. It has broad rule-making, investigative and enforcement powers derived from the Financial Services and Markets Act 2000 and subsequent and derivative legislation and regulations. 104 Table of Contents In January 2022, the FCA introduced a new Internal Capital and Risk Assessment (ICARA) process as a replacement for the Internal Capital Adequacy Assessment Process (ICAAP). The ICARA process incorporates business model assessment, forecasting and stress testing, recovery planning and wind-down planning. All firms were required to submit their proposed ICARA documentation by March 31, 2023, after which the FCA will provide feedback that may require further documentation and may lead to a change in capital requirements. The adoption of these proposed rules could restrict the ability of our large bank and broker-dealer customers to operate trading businesses and to maintain current capital market exposures under the present structure of their balance sheets, and will cause these entities to need to raise additional capital in order to stay active in our marketplaces. In July 2023, the FCA further ensured that Consumer Duty is at the heart of every financial institution by rolling out Principle 12 specifically related to Consumer Duty, where a firm must act to deliver good outcomes for retail customers. This initiative is poised to redefine the relationship between consumers and financial institutions, where the FCA has demanded financial institutions foster a culture of trust, transparency, and accountability. Under Consumer Duty, the onus has shifted to financial institutions to prioritize their customers’ best interest in every consideration made by the financial institution (the entire customer life cycle) including demonstration and evidence that the product/service/action is in the best interest of the customer. Although not immediately applicable to our business as we do not conduct business directly with the retail sector, we are conscious of the impact that this will have on underlying clients who have obligations to fulfil. In so doing, they may require our firm to provide additional reporting in order to help them evidence their obligations. In addition, the majority of our other foreign subsidiaries are subject to similar regulation by the relevant authorities in the countries in which they do business. Certain other of our foreign subsidiaries are required to maintain non-U.S. net capital requirements. For example, in Hong Kong, BGC Securities (Hong Kong), LLC, GFI (HK) Securities LLC and Sunrise Brokers (Hong Kong) Limited are regulated by the Securities and Futures Commission. BGC Capital Markets (Hong Kong), Limited and GFI (HK) Brokers Ltd are regulated by The Hong Kong Monetary Authority. All are subject to Hong Kong net capital requirements. In France, Aurel BGC and BGC France Holdings; in Australia, BGC Partners (Australia) Pty Limited and Fixed Income Solutions Pty Limited; in Japan, BGC Shoken Kaisha Limited’s Tokyo branch; in Singapore, BGC Partners (Singapore) Limited, GFI Group Pte Ltd and Ginga Global Markets Pte Ltd; in Korea, BGC Capital Markets & Foreign Exchange Broker (Korea) Limited and GFI Korea Money Brokerage Limited; in Philippines, GFI Group (Philippines) Inc. and in Brazil, BGC Liquidez Distribuidora De Titulos E Valores Mobiliarios Ltda., all have net capital requirements imposed upon them by local regulators. These subsidiaries may also be prohibited from repaying the borrowings of their parents or affiliates, paying cash dividends, making loans to their parent or affiliates or otherwise entering into transactions, in each case, which may result in a significant reduction in their regulatory capital position without prior notification or approval from their principal regulator. See Note 21—“Regulatory Requirements” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K for further details on our regulatory requirements. As of December 31, 2023, $734.1 million of net assets were held by regulated subsidiaries. As of December 31, 2023, these subsidiaries had aggregate regulatory net capital, as defined, in excess of the aggregate regulatory requirements, as defined, of $391.7 million. In April 2013, the Board and Audit Committee authorized management to enter into indemnification agreements with Cantor and its affiliates with respect to the provision of any guarantees provided by Cantor and its affiliates from time to time as required by regulators. These services may be provided from time to time at a reasonable and customary fee. In 2020, the introducing broker guarantees were moved from CF&Co to Mint Brokers for the firm’s stand alone and foreign NFA registered introducing brokers. BGC Derivative Markets and GFI Swaps Exchange, our subsidiaries, operate as SEFs. Mandatory Dodd-Frank Act compliant execution on SEFs by eligible U.S. persons for “made available to trade” products, and a wide range of other rules relating to the execution and clearing of derivative products have been implemented. We also own ELX, which became a dormant contract market on July 1, 2017 and in July 2021, we completed the purchase of the CX Futures Exchange (now FMX Futures Exchange) from Cantor, which represents our futures exchange and related clearinghouse. These rules require authorized execution facilities to maintain robust front-end and back-office IT capabilities and to make large and ongoing technology investments. These execution facilities may be supported by a variety of voice and auction-based execution methodologies, and our Hybrid and Fully Electronic trading capability have performed strongly in this regulatory environment. Much of our global derivatives volumes continue to be executed by non-U.S. based clients outside the U.S. and subject to local prudential regulations. As such, we will continue to operate a number of European regulated venues in accordance with EU or U.K. legislation and licensed by the FCA or EU-based national supervisors. These venues are also operated for non-derivative instruments for these clients. MiFID II was published by the European Securities and Markets Authority in September 2015, and implemented in January 2018 and introduced important infrastructural changes. 105 Table of Contents MiFID II requires a significant part of the market in these instruments to trade on trading venues subject to transparency regimes, not only in pre- and post-trade prices, but also in fee structures and access. In addition, it has impacted a number of key areas, including corporate governance, transaction reporting, pre- and post-trade transparency, technology synchronization, best execution and investor protection. MiFID II was intended to help improve the functioning of the EU single market by achieving a greater consistency of regulatory standards. By design, therefore, it was intended that EU member states should have very similar regulatory regimes in relation to the matters addressed to MiFID. MiFID II has also introduced a new regulated execution venue category called an OTF that captures much of the Voice-and Hybrid-oriented trading in the EU. Much of our EU derivatives and fixed income execution business now takes place on OTFs. Further to its decision to leave the EU, the U.K. has implemented MIFID II’s requirements into its own domestic legislation. Brexit may impact future market structures and MiFID II rulemaking and implementation due to potential changes in mutual passporting and equivalence arrangements between the U.K. and EU member states (for further information see “Overview and Business Environment—Brexit” herein). In addition, the GDPR came into effect in the EU on May 25, 2018 (with the equivalent in the U.K.) and creates new compliance obligations in relation to personal data. The GDPR may affect our practices, and will increase financial penalties for non-compliance significantly. Apart from some minor non-material changes, at this time there has not been any legislation from the EU Commission or the U.K. Government that has materially changed how the U.K. and EU approach financial regulation since MiFID II and the implementation of Brexit. Although divergence of U.K. regulation from EU regulation may occur, there has been no firm legislative change signaled or published by the FCA or the U.K. Government. While we generally believe the net impact of the rules and regulations are positive for our business, it is possible that unintended consequences of the rules and regulations may materially adversely affect us in ways yet to be determined. See “Regulation” included in Part I, Item 1 of this Annual Report on Form 10‑K for additional information related to our regulatory environment. EQUITY As of December 31, 2023, we have 390.1 million shares of BGC Class A common stock and 109.5 million shares of BGC Class B common stock outstanding. Additional disclosures regarding our accounting for stock transactions and unit redemptions are provided in Note 7—“Stock Transactions and Unit Redemptions” to the Company’s consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. The weighted-average share counts, including securities that were anti-dilutive for our earnings per share calculations, for the three months and year ended December 31, 2023 were as follows (in thousands): Three Months Ended December 31, 2023 Year Ended December 31, 2023 Common stock outstanding 1 468,747 426,436 Partnership units 2 — 57,239 RSUs and restricted stock (Treasury stock method) 3 13,565 15,687 Other 7,705 4,908 Total 490,017 504,270 __________________________ 1 Common stock consisted of shares of BGC Class A common stock, shares of BGC Class B common stock and contingent shares of our Class A common stock for which all necessary conditions have been satisfied except for the passage of time. For the quarter ended December 31, 2023, the weighted-average number of shares of BGC Class A common stock was 358.4 million and Class B shares was 109.5 million. For the year ended December 31, 2023, the weighted-average number of shares of BGC Class A common stock was 347.4 million and Class B shares was 77.9 million. 2 Partnership units collectively include FPUs, LPUs, including contingent units of BGC Holdings for which all necessary conditions have been satisfied except for the passage of time, and Cantor units (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10‑K for more information). 3 For the quarter ended December 31, 2023, 13.6 million potentially dilutive securities were not included in the computation of fully diluted EPS because their effect would have been anti-dilutive. Anti-dilutive securities for the quarter ended December 31, 2023, included 11.9 million participating RSUs and 1.7 million participating restricted shares of BGC Class A common stock. For the year ended December 31, 2023, 14.3 million potentially dilutive securities were not included in the computation of fully diluted EPS because their effect would have been anti-dilutive. Anti-dilutive securities for the year ended December 31, 2023, included 12.7 million participating RSUs and 1.6 million participating restricted shares of BGC Class A common stock. As of December 31, 106 Table of Contents 2023, 63.3 million shares of contingent BGC Class A common stock, non-participating RSUs, and non-participating restricted shares of BGC Class A common stock were excluded from fully diluted EPS computations because the conditions for issuance had not been met by the end of the period. The contingent BGC Class A common stock is recorded as a liability and included in “Accounts payable, accrued and other liabilities” in our Consolidated Statement of Financial Condition as of December 31, 2023. Registration Statements We have the effective March 2021 Form S-3 Registration Statement, which was filed on March 8, 2021, with respect to the issuance and sale of up to an aggregate of $300.0 million shares of BGC Class A common stock from time to time on a delayed or continuous basis. We also entered into the July 2023 Sales Agreement, under which, we agreed to pay CF&Co 2% of the gross proceeds from the sale of shares. CF&Co is a wholly owned subsidiary of Cantor and an affiliate of BGC. For additional information on our CEO Program sales agreement, see Note 13—“Related Party Transactions” to the Consolidated Financial Statements of this Annual Report on Form 10-K. We intend to use the net proceeds of any shares of BGC Class A common stock sold under our CEO Program for general corporate purposes, including for potential acquisitions, repurchases of shares of BGC Class A common stock from executive officers and other employees of ours or our subsidiaries and of Cantor and its affiliates. Prior to the Corporate Conversion, we also used the net proceeds for redemption of LPUs and FPUs in BGC Holdings. Certain of such executive officers and other employees of ours or our subsidiaries and of Cantor and its affiliates will be expected to use the proceeds from such sales to repay outstanding loans issued by, or credit enhanced by, Cantor or BGC. We have the effective 2019 Form S-4 Registration Statement, which was filed on September 13, 2019, with respect to the offer and sale of up to 20 million shares of BGC Class A common stock from time to time in connection with business combination transactions, including acquisitions of other businesses, assets, properties or securities. As of December 31, 2023, the Company had issued an aggregate of 2.3 million shares of BGC Class A common stock under the 2019 Form S-4 Registration Statement. We have the effective DRIP Registration Statement, which was filed on June 24, 2011, with respect to the offer and sale of up to 10 million shares of BGC Class A common stock under the DRIP. As of December 31, 2023, the Company had issued 0.8 million shares of BGC Class A common stock under the DRIP. We have the effective Equity Plan Registration Statement, which was filed on July 3, 2023, for the BGC Group Equity Plan, registering the offer and sale of up to 600 million shares of BGC Class A common stock. The BGC Group Equity Plan provides for a maximum of 600 million shares of BGC Class A common stock that may be delivered or cash settled pursuant to the exercise or settlement of awards granted under the BGC Group Equity Plan. As of December 31, 2023, the limit on the aggregate number of shares authorized to be delivered under the BGC Group Equity Plan allowed for the grant of future awards relating to 477.1 million shares of BGC Class A common stock. CONTINGENT PAYMENTS RELATED TO ACQUISITIONS Since 2016, the Company has completed acquisitions whose purchase price included an aggregate of approximately 3.3 million shares of the BGC Class A common stock (with an acquisition date fair value of approximately $13.5 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 $43.1 million in cash that may be issued contingent on certain targets being met through 2023. As of December 31, 2023, the Company has issued 1.4 million shares of BGC Class A common stock, 0.2 million RSUs and paid $53.4 million in cash related to such contingent payments. As of December 31, 2023, there are 0.8 million shares of BGC Class A common stock, including contingent shares for which all necessary conditions have been satisfied except for the passage of time and which are included in our computation of basic EPS, as well as 0.9 million shares of BGC Class A common stock which will be issued if related targets are met and $4.2 million in cash which will be issued if related targets are met, net of forfeitures and other adjustments. LEGAL PROCEEDINGS On August 10, 2023, the shareholder derivative suit concerning our 2017 acquisition of Berkeley Point (as described below) was fully and finally decided in favor of the defendants, with the Delaware Chancery Court issuing a post-trial decision denying the plaintiffs’ causes of action and finding that the transaction was entirely fair to our shareholders and the Delaware Supreme Court affirming that result. On October 5, 2018 Roofers Local 149 Pension Fund filed a putative derivative complaint in the Delaware Chancery Court, captioned Roofers Local 149 Pension Fund vs. Howard Lutnick, et al. (Case No. 2018-0722), alleging breaches of fiduciary duty against (i) the members of the Board, (ii) Howard Lutnick, CFGM, and Cantor as controlling stockholders of 107 Table of Contents BGC, and (iii) Howard Lutnick as an officer of BGC. The complaint challenges the transactions by which BGC (i) completed the Berkeley Point acquisition from CCRE for $875 million and (ii) committed to invest $100 million for a 27% interest in Real Estate, L.P. Among other things, the complaint alleges that (i) the prices BGC paid in connection with the transactions were unfair, (ii) the process leading up to the transaction was unfair, and (iii) the members of the special committee of the Board were not independent. It seeks to recover for the Company unquantified damages, as well as attorneys’ fees. A month later, on November 5, 2018, the same plaintiffs’ firm filed an identical putative derivative complaint against the same defendants seeking the same relief on behalf of a second client, Northern California Pipe Trades Trust Funds. The cases were consolidated into a single action, captioned In re BGC Partners, Inc. Derivative Litigation (Consolidated C.A. No. 2018-0722-AGB), and the complaint filed by Roofers Local 149 Pension Fund on October 5, 2018 was designated as the operative complaint. A trial was held before Vice Chancellor Lori Will on October 11, 2021, which concluded on October 15, 2021. Following the close of the hearing, the parties submitted post-trial briefing and presented oral argument on March 2, 2022. On April 14, 2022, the Court requested limited additional briefing, which the parties submitted on May 13, 2022. On August 19, 2022, the Court issued a post-trial memorandum opinion in favor of BGC, its directors, and controlling shareholders, ruling that the transactions were entirely fair to BGC’s shareholders with respect to both process and price. The Court found that “Berkeley Point was, by all accounts, a unique asset particularly appealing to BGC” and that the price negotiated by BGC’s Special Committee and agreed to by Cantor was at the “lower end” of a range of reasonable prices. The Court further found the Special Committee was “independent, fully empowered, and well-functioning.” Final judgment in the case was entered for the defendants and against the plaintiffs on September 27, 2022. The same day, the plaintiffs filed a notice of appeal, seeking reversal of the memorandum opinion and final judgment. Following briefing, oral argument took place before the Delaware Supreme Court on May 24, 2023. On August 10, 2023, the Delaware Supreme Court issued an Order affirming the trial court’s decision “on the basis of and for the reasons stated” in the August 19, 2022 opinion, concluding the litigation. On March 9, 2023, a purported class action complaint was filed against Cantor, BGC Holdings, and Newmark Holdings in the U.S. District Court for the District of Delaware (Civil Action No. 1:23-cv-00265). The collective action, which was filed by seven former limited partners of the defendants on their own behalf and on behalf of other similarly situated limited partners, alleges a claim for breach of contract against all defendants on the basis that the defendants failed to make payments due under the relevant partnership agreements. Specifically, the plaintiffs allege that the non-compete and economic forfeiture provisions upon which the defendants relied to deny payment are unenforceable under Delaware law. The plaintiffs allege a second claim against Cantor and BGC Holdings for antitrust violations under the Sherman Act on the basis that the Cantor and BGC Holdings partnership agreements constitute unreasonable restraints of trade. In that regard, the plaintiffs allege that the non-compete and economic forfeiture provisions of the Cantor and BGC Holdings partnership agreements, as well as restrictive covenants included in partner separation agreements, cause anticompetitive effects in the labor market, insulate Cantor and BGC Holdings from competition, and limit innovation. The plaintiffs seek a determination that the case may be maintained as a class action, an injunction prohibiting the allegedly anticompetitive conduct, and monetary damages of at least $5.0 million. The Company believes the lawsuit has no merit. However, as with any litigation, the outcome cannot be determined with certainty. Other legal proceedings On February 16, 2024, an alleged Company shareholder, Martin J. Siegel, filed a putative class action lawsuit against Cantor Fitzgerald, LP and Howard W. Lutnick in the Delaware Court of Chancery, asserting that the Corporate Conversion was unfair to Class A shareholders of BGC Partners, Inc. because it increased Cantor’s percentage voting control over the Company. The suit is captioned Martin J. Siegel v. Cantor Fitzgerald, LP, C.A. 2024-0146-LWW. While the lawsuit is in its early stages and does not name the Company as a party, the Company believes the action lacks merit. CANTOR PURCHASE OF LIMITED PARTNERSHIP INTERESTS Cantor had 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, where current, terminating, or terminated partners were permitted by the Company to exchange any portion of their FPUs and Cantor consented to such exchangeability, the Company would 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 acquired any Cantor units as a result of the purchase or redemption by BGC Holdings of any FPUs, Cantor would be entitled to the benefits (including distributions) of such units it acquired from the date of termination or bankruptcy of the applicable Founding/Working Partner. 108 Table of Contents 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. On April 16, 2023, Cantor purchased from BGC Holdings an aggregate of 533,757 Cantor units for an aggregate consideration of $1,051,080 as a result of the redemption of 533,757 FPUs, and 85,775 Cantor units for aggregate consideration of $173,154 as a result of the exchange of 85,775 FPUs. On June 30, 2023, Cantor purchased from BGC Holdings an aggregate of 5,425,209 Cantor units for an aggregate consideration of $9,715,772 as a result of the redemption of 5,425,209 FPUs, and 324,223 Cantor units for an aggregate consideration of $598,712 as a result of the exchange of 324,223 FPUs. As of December 31, 2023, there were no FPUs in BGC Holdings remaining. EQUITY METHOD INVESTMENTS The Company was authorized to enter into loans, investments or other credit support arrangements for Aqua; 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 Company’s 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 (see Note 13—“Related Party Transactions” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K for more information). UNIT REDEMPTIONS AND EXCHANGES—EXECUTIVE OFFICERS On January 2, 2024, Mr. Merkel sold 136,891 shares of Class A common stock to the Company in an exempt transaction made pursuant to Rule 16b-3 under the Exchange Act. The sale price per share of $6.98 was the closing price of a share of Class A common stock on January 2, 2024. The transaction was approved by the Audit and Compensation Committees of the Board and was made pursuant to the Company’s stock buyback authorization. On September 21, 2023, Mr. Windeatt sold 474,808 shares of Class A common stock to the Company in an exempt transaction made pursuant to Rule 16b-3 under the Exchange Act. The sale price per share of $5.29 was the closing price of a share of Class A common stock on September 21, 2023. The transaction was approved by the Audit Committee and the Compensation Committee of the Board and was made pursuant to the Company’s stock buyback authorization. In connection and in consideration for Mr. Windeatt’s execution of the 2023 Deed of Amendment, on July 10, 2023 the Company approved accelerating the vesting of 720,509 of the Company’s RSUs held by Mr. Windeatt (calculated based upon the closing price of the Company’s Class A common stock on July 10, 2023 which was $4.45) and the vesting of $780,333 of the RSU Tax Account held by Mr. Windeatt. Such RSUs and RSU Tax Account amount vested on July 12, 2023, and the total value of this transaction was approximately $3,986,600. On June 8, 2023, the Company repurchased 128,279 exchangeable limited partnership interests held by Mr. Windeatt at a price of $4.79, the closing price of a share of Class A common stock on June 8, 2023. This repurchase was approved by the Compensation Committee of BGC Partners. These exchangeable limited partnership interests in BGC Holdings were granted to Mr. Windeatt on April 1, 2021 by the Compensation Committee as non-exchangeable limited partnership interests which became exchangeable on a one-to-one basis for BGC Class A common stock on April 1, 2023. In connection with the Corporate Conversion, on June 2, 2023 Mr. Merkel sold 150,000 shares of Class A common stock to BGC Partners at $4.21 per share, the closing price of a share of Class A common stock on June 2, 2023. The transaction was approved by the Audit and Compensation Committees of the Board of BGC Partners and was made pursuant to BGC Partners’ stock buyback authorization. In connection with the Corporate Conversion, on May 18, 2023, the BGC Partners Compensation Committee approved the redemption of all of the non-exchangeable BGC Holdings units held by Mr. Merkel at that time. On May 18, 2023, Mr. Merkel’s 148,146 NPSU-CVs, 33,585 PSU-CVs, and 74,896 PSUs were redeemed for zero and an aggregate of 256,627 shares of Class A common stock were granted to Mr. Merkel, and 148,146 NPPSU-CVs with a total determination amount of $681,250 and 33,585 PPSU-CVs with a total determination amount of $162,500 were redeemed for an aggregate cash payment 109 Table of Contents of $843,750. After deduction of shares of BGC Class A common stock to satisfy applicable tax withholding through the surrender of shares of BGC Class A common stock valued at $4.61 per share, Mr. Merkel received 196,525 net shares of Class A common stock. Since Mr. Lutnick had previously repeatedly waived his rights under the Standing Policy, as of May 18, 2023 his rights had accumulated for 7,879,736 non-exchangeable PSUs, and 103,763 non-exchangeable PPSUs with a determination amount of $474,195. Due to the May 18, 2023 monetization of all of Mr. Merkel’s then-remaining non-exchangeable BGC Holdings units, on such date Mr. Lutnick received additional incremental monetization rights for his then-remaining 3,452,991 non-exchangeable PSUs, and 1,348,042 non-exchangeable PPSUs with a determination amount of $6,175,805. In connection with the Corporate Conversion and as a result of the monetization event for Mr. Merkel, on May 18, 2023 Mr. Lutnick elected to exercise in full his monetization rights under the Standing Policy, which he had previously waived in prior years. All of the non-exchangeable BGC Holdings units that Mr. Lutnick held at that time were monetized as follows: 11,332,727 PSUs were redeemed for zero and 11,332,727 shares of Class A common stock were granted to Mr. Lutnick, and 1,451,805 PPSUs with an aggregate determination amount of $6,650,000 were redeemed for an aggregate cash payment of $6,650,000. After deduction of applicable tax withholding through the surrender of shares of BGC Class A common stock valued at $4.61 per share, Mr. Lutnick received 5,710,534 net shares of Class A common stock. On May 18, 2023, Mr. Lutnick also exchanged his then-remaining 520,380 exchangeable PSUs for 520,380 shares of Class A common stock. After deduction of applicable tax withholding through the surrender of shares of BGC Class A common stock valued at $4.61 per share, Mr. Lutnick received 232,610 net shares of Class A common stock. In addition, on May 18, 2023, Mr. Lutnick’s then-remaining 1,474,930 non-exchangeable HDUs were redeemed for a cash capital account payment of $9,148,000, $2.1 million of which was paid by BGC with the remainder paid by Newmark. As a result of the various transactions on May 18, 2023 described above, on May 18, 2023, Mr. Lutnick no longer held any limited partnership units of BGC Holdings. On April 18, 2023, the Dr. Bell sold 21,786 shares of Class A common stock to the Company. The sale price per share of $4.59 was the closing price of a share of Class A common stock on April 18, 2023. The transaction was approved by the Audit Committee and the Compensation Committee of the Board and was made pursuant to the Company’s stock buyback authorization. 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 the 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 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 Holding 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 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 the 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. 110 Table of Contents MARKET SUMMARY The following table provides certain volume and transaction count information for the quarterly periods indicated: December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Notional Volume (in billions) Total Fully Electronic volume 1 $ 14,157 $ 14,051 $ 13,736 $ 13,571 $ 10,626 Total Hybrid volume 78,272 67,965 73,109 74,498 58,022 Total Fully Electronic and Hybrid volume $ 92,429 $ 82,016 $ 86,845 $ 88,069 $ 68,648 Transaction Count (in thousands, except for days) Total Fully Electronic transactions 1 4,316 4,385 4,351 4,550 3,913 Total Hybrid transactions 1,473 1,401 1,409 1,731 1,431 Total Fully Electronic and Hybrid transactions 5,789 5,786 5,760 6,281 5,344 Trading days 63 63 63 63 64 ____________________________ 1. Includes Fenics Integrated. Note: Certain information may have been recast with current estimates to reflect changes in reporting methodology. Such revisions have no impact on the Company’s revenues or earnings. Fully Electronic volume, including new products, was $55.5 trillion for the year ended December 31, 2023, compared to $45.9 trillion for the year ended December 31, 2022. Our Hybrid volume for the year ended December 31, 2023 was $293.8 trillion, compared to $246.9 trillion for the year ended December 31, 2022. CONTRACTUAL OBLIGATIONS AND COMMITMENTS The following table summarizes certain of our contractual obligations at December 31, 2023 (in thousands): Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Debt and collateralized borrowings 1 $ 1,190,000 $ 540,000 $ 300,000 $ 350,000 $ — Operating leases 2 189,186 31,594 48,028 32,624 76,940 Finance leases 2 5,077 1,712 2,738 627 — Interest on debt and collateralized borrowings 3 157,560 49,815 68,467 39,278 — Interest on Short-term borrowings 71 71 — — — One-time transition tax 4 18,831 8,694 10,137 — — Other 5 12,744 12,744 — — — Total contractual obligations $ 1,573,469 $ 644,630 $ 429,370 $ 422,529 $ 76,940 _________________________________ 1 Debt and collateralized borrowings reflects $255.5 million of BGC Group 3.750% Senior Notes (the $255.5 million represents the principal amount of the debt; the carrying value of the BGC Group 3.750% Senior Notes as of December 31, 2023 was approximately $254.8 million), $288.2 million of BGC Group 4.375% Senior Notes (the $288.2 million represents the principal amount of the debt; the carrying value of the BGC Group 4.375% Senior Notes as of December 31, 2023 was approximately $286.7 million) and $347.2 million of BGC Group 8.000% Senior Notes (the $347.2 million represents the principal amount of the debt; the carrying value of the BGC Group 8.000% Senior Notes as of December 31, 2023 was approximately $343.9 million). Debt and collateralized borrowings reflects $44.5 million of BGC Partners 3.750% Senior Notes (the $44.5 million represents the principal amount of the debt; the carrying value of the BGC Partners 3.750% Senior Notes as of December 31, 2023 was approximately $44.4 million), $11.8 million of BGC Partners 4.375% Senior Notes (the $11.8 million represents the principal amount of the debt; the carrying value of the BGC Partners 4.375% Senior Notes as of December 31, 2023 was approximately $11.8 million) and $2.8 million of BGC Partners 8.000% Senior Notes (the $2.8 million represents the principal amount of the debt; the carrying value of the BGC Partners 8.000% Senior Notes as of December 31, 2023 was approximately $2.7 million). See Note 17—“Notes Payable, Other and Short-Term Borrowings” in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding these obligations, including timing of payments and compliance with debt covenants. 111 Table of Contents 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 are presented net of sublease payments to be received. As of December 31, 2023, there were no sublease payments to be received over the life of the agreements. 3 Interest on debt and collateralized borrowings reflects a total of $7.1 million of interest expense associated with the BGC Group 3.750% Senior Notes, $1.2 million of interest expense associated with the BGC Partners 3.750% Senior Notes, $24.5 million of interest expense associated with the BGC Group 4.375% Senior Notes, $1.0 million of interest expense associated with the BGC Partners 4.375% Senior Notes, $122.3 million of interest expense associated with the BGC Group 8.000% Senior Notes, and $1.0 million of interest expense associated with the BGC Partners 8.000% Senior Notes. 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, 2023, the undrawn portion of the committed unsecured Revolving Credit Agreement was $135.0 million. 4 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, 2023 is $18.8 million. 5 Other contractual obligations reflect commitments of $12.7 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. OFF-BALANCE SHEET ARRANGEMENTS In the ordinary course of business, we enter into arrangements with unconsolidated entities, including variable interest entities. See Note 14—“Investments” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K for additional information related to our investments in unconsolidated entities. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of our Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities in our Consolidated Financial Statements. These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments, and we evaluate these estimates on an ongoing basis. To the extent actual experience differs from the assumptions used, our Consolidated Statements of Financial Condition, Consolidated Statements of Operations and Consolidated Statements of Cash Flows could be materially affected. We believe that the following accounting policies involve a higher degree of judgment and complexity. Revenue Recognition We derive our revenues primarily through commissions from brokerage services, the spread between the buy and sell prices on matched principal transactions, fees from related parties, data, network and post-trade services, and other revenues. See Note 3—“Summary of Significant Accounting Policies” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10‑K for further information regarding revenue recognition. Equity-Based and Other Compensation Discretionary Bonus: A portion of our compensation and employee benefits expense is comprised of discretionary bonuses, which may be paid in cash, equity, partnership awards or a combination thereof. We accrue expense in a period based on revenues in that period and on the expected combination of cash, equity and, prior to the Corporate Conversion, partnership units. Given the assumptions used in estimating discretionary bonuses, actual results may differ. Restricted Stock Units: We account for equity-based compensation awards using the guidance in ASC 718, Compensation — Stock Compensation. RSUs provided to certain employees are accounted for as equity awards, and in accordance with U.S. GAAP, we are required to record an expense for the portion of the RSUs that is ultimately expected to vest. Further, forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Because assumptions are used in estimating employee turnover and associated forfeiture rates, actual results may differ from our estimates under different assumptions or conditions. The fair value of RSU awards to employees is based on the market value of the BGC Class A common stock on the grant date. As part of employee compensation, we have granted both participating RSUs, which receive dividends, or non- 112 Table of Contents participating RSUs. For non-participating RSUs, which do not receive dividend equivalents, we adjust the fair value of the RSUs for the present value of expected forgone dividends, which requires us to include an estimate of expected dividends as a valuation input. This grant-date fair value is amortized to expense ratably over the awards’ vesting periods. For participating RSUs where dividends are paid during the vesting period or accumulated and paid to the employee upon vesting, the grant-date fair value of the award should not be reduced. As such, we do not adjust the fair value of the RSUs for the present value of expected forgone dividends. This grant-date fair value is amortized to expense ratably over the awards’ vesting periods. For RSUs with graded vesting features, we have made an accounting policy election to recognize compensation cost on a straight-line basis. The amortization is reflected as part of “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our Consolidated Statements of Operations. Restricted Stock: Restricted stock provided to certain employees is accounted for as an equity award, and as per U.S. GAAP guidance, we are required to record an expense for the portion of the restricted stock that is ultimately expected to vest. We have granted restricted stock, prior to the Corporate Conversion, that is not subject to continued employment or service; however, transferability is subject to compliance with our and our affiliates’ customary noncompete obligations. Such shares of restricted stock are generally 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 compensation expense is reflected as part of “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our Consolidated Statements of Operations. As a result of the Corporate Conversion, the Company has also granted shares of unvested restricted stock, which are subject to continued employment or service with the Company or any affiliate or subsidiary of the company. The fair value of these restricted stock awards held by BGC employees is based on the market value of BGC Class A common stock on the grant date, adjusted as appropriate based upon the award’s ineligibility to receive dividends, as not all of these awards participate in receiving dividends, similar to the RSUs above. The grant-date fair value of the restricted stock 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 our Consolidated Statements of Operations. Limited Partnership Units: Certain BGC employees held LPUs in BGC Holdings and hold LPUs in Newmark Holdings. Generally, such units received quarterly allocations of net income, which were cash distributed on a quarterly basis and generally contingent upon services being provided by the unit holders. In addition, Preferred Units were 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 upon such exchange or grant. This was an acceptable alternative to the common practice among public companies of issuing the gross amount of shares to employees, subject to cashless withholding of shares to pay applicable withholding taxes. Preferred Units were not entitled to participate in partnership distributions other than with respect to the Preferred Distribution. There were none of these LPUs or Preferred Units in BGC Holdings remaining after the Corporate Conversion was completed, while these LPUs and Preferred Units in Newmark Holdings held by BGC employees were not impacted by the Corporate Conversion. The quarterly allocations of net income on BGC Holdings LPUs held by BGC employees were 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 prior to the Corporate Conversion, and quarterly allocations of net income on Newmark Holdings LPUs held by BGC employees, which were not impacted by the Corporate Conversion, are reflected as a component of compensation expense under “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our Consolidated Statements of Operations. Certain of these LPUs entitle the holders to receive post-termination payments equal to the notional amount, generally in four equal yearly installments after the holder’s termination. There were none of these LPUs in BGC Holdings remaining after the Corporate Conversion was completed, while these LPUs in Newmark Holdings held by BGC employees were not impacted by the Corporate Conversion. These LPUs are accounted for as post-termination liability awards under U.S. GAAP. Accordingly, we recognize a liability for these units on our Consolidated Statements of Financial Condition as part of “Accrued compensation” for the amortized portion of the post-termination payment amount, based on the current fair value of the expected future cash payout. We amortize the post-termination payment amount, less an expected forfeiture rate, over the vesting period, and record an expense for such awards based on the change in value at each reporting period in our Consolidated Statements of Operations as part of “Equity-based compensation and allocations of net income to limited partnership units and FPUs.” Certain LPUs were granted exchangeability into shares of BGC or Newmark Class A common stock or were redeemed in connection with the grant of BGC or Newmark Class A common stock issued; BGC Class A common stock was issued on a one-for-one basis, and Newmark Class A common stock is issued based on the number of LPUs exchanged or redeemed 113 Table of Contents multiplied by the then-current Exchange Ratio. At the time exchangeability was granted or shares of BGC or Newmark Class A common stock were issued, we recognized an expense based on the fair value of the award on that grant date, which was included in “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our Consolidated Statements of Operations. There were no LPUs in BGC Holdings remaining after the Corporate Conversion was completed, while LPUs in Newmark Holdings held by BGC employees were not impacted by the Corporate Conversion. During the years ended December 31, 2023, 2022 and 2021, we incurred equity-based compensation expense of $171.6 million, $147.5 million and $128.1 million, respectively, related to LPUs and issuance of common stock. Prior to the Corporate Conversion, certain LPUs had a stated vesting schedule and did not receive quarterly allocations of net income. Compensation expense related to these LPUs was recognized over the stated service period, and these units generally vest between two and five years. During the years ended December 31, 2023, 2022 and 2021, we incurred equity-based compensation expense related to these LPUs of $40.9 million, $73.7 million, and $78.6 million, respectively. This expense is included in “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our Consolidated Statements of Operations. Employee Loans: We have entered into various agreements with certain employees, and prior to the Corporate Conversion, 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 in BGC Holdings and Newmark Holdings, prior to the Corporate Conversion, and by distributions that the individuals receive on some or all of their LPUs in Newmark Holdings and any dividends paid on participating RSUs and restricted stock awards, subsequent to the Corporate Conversion. Certain of these loans also may be either wholly or in part repaid from the proceeds of the sale of the BGC employees’ shares of BGC Class A common stock. In addition, certain loans 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, we may also enter into agreements with employees to grant bonus and salary advances or other types of loans. These advances and loans are repayable in timeframes outlined in the underlying agreements. We review the loan balances each reporting period for collectability. If we determine that the collectability of a portion of the loan balances is not expected, we recognize a reserve against the loan balances. Actual collectability of loan balances may differ from our estimates. As of December 31, 2023 and 2022, the aggregate balance of employee loans, net of reserve, was $367.8 million and $319.6 million, respectively, and is included as “Loans, forgivable loans and other receivables from employees and partners, net” in our Consolidated Statements of Financial Condition. Compensation expense (benefit) for the above-mentioned employee loans for the years ended December 31, 2023, 2022 and 2021 was $51.3 million, $49.5 million and $217.7 million, respectively. The compensation expense related to these loans was included as part of “Compensation and employee benefits” in our Consolidated Statements of Operations. Goodwill Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. As prescribed in U.S. GAAP guidance, Intangibles – Goodwill and Other , goodwill is not amortized, but instead is periodically tested for impairment. We review goodwill for impairment on an annual basis during the fourth quarter of each fiscal year or whenever an event occurs or circumstances change that could reduce the fair value of a reporting unit below its carrying amount. When reviewing goodwill for impairment, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the results of the qualitative assessment indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we choose to bypass the qualitative assessment, we perform a quantitative goodwill impairment analysis as follows. The quantitative goodwill impairment test, used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss should be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is deemed not to be impaired. To estimate the fair value of the reporting unit, we use a discounted cash flow model and data regarding market comparables. The valuation process requires significant judgment and involves the use of significant estimates and assumptions. These assumptions include cash flow projections, estimated cost of capital and the selection of peer companies and relevant multiples. Because assumptions and estimates are used in projecting future cash flows, choosing peer companies and selecting relevant multiples, actual results may differ from our estimates under different assumptions or conditions; and changes to these estimates and assumptions, as a result of changing economic and competitive conditions, could materially affect the determination of fair value and/or impairment. 114 Table of Contents CECL We present financial assets that are measured at amortized cost net of an allowance for credit losses, which represents the amount expected to be collected over their estimated life. Expected credit losses for newly recognized financial assets carried at amortized cost, as well as changes to expected lifetime credit losses during the period, are recognized in earnings. In accordance with the U.S. GAAP guidance, Financial Instruments—Credit Losses , the CECL methodology’s impact on expected credit losses, among other things, reflects the Company’s view of the current state of the economy, forecasted macroeconomic conditions and BGC’s portfolios. The amount of the allowance is based on significant estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. Additional disclosures regarding our accounting for CECL are provided in Note 25 — “Current Expected Credit Losses” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. Income Taxes We account for income taxes using the asset and liability method as prescribed in U.S. GAAP guidance, Income Taxes . Deferred tax assets and liabilities are recognized for the future tax consequences attributable to basis differences between the Consolidated Financial Statement carrying amounts of existing assets and liabilities and their respective tax basis. Certain of our entities are taxed as U.S. partnerships and are subject to UBT in the City of New York. Therefore, the tax liability or benefit related to the partnership income or loss except for UBT rests with the partners (see Note 2—“Limited Partnership Interests in BGC Holdings and Newmark Holdings” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K for a discussion of partnership interests), rather than the partnership entity. As such, the partners’ tax liability or benefit is not reflected in our Consolidated Financial Statements. The tax-related assets, liabilities, provisions or benefits included in our consolidated financial statements also reflect the results of the entities that are taxed as corporations, either in the U.S. or in foreign jurisdictions. We provide for uncertain tax positions based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. Management is required to determine whether a tax position is more likely than not to be sustained upon examination by tax authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Because significant assumptions are used in determining whether a tax benefit is more likely than not to be sustained upon examination by tax authorities, actual results may differ from our estimates under different assumptions or conditions. We recognize interest and penalties related to income tax matters in “Provision for income taxes” in our Consolidated Statements of Operations. A valuation allowance is recorded against deferred tax assets if it is deemed more likely than not that those assets will not be realized. In assessing the need for a valuation allowance, we consider all available evidence, including past operating results, the existence of cumulative losses in the most recent fiscal years, estimates of future taxable income and the feasibility of tax planning strategies. The measurement of current and deferred income tax assets and liabilities is based on provisions of enacted tax laws and involves uncertainties in the application of tax regulations in the U.S. and other tax jurisdictions. Because our interpretation of complex tax law may impact the measurement of current and deferred income taxes, actual results may differ from these estimates under different assumptions regarding the application of tax law. The Tax Act includes the global intangible low-taxed income, GILTI, provision. This provision requires inclusion in the Company’s U.S. income tax return the earnings of certain foreign subsidiaries. The Company has elected to treat taxes associated with the GILTI provision using the Period Cost Method and thus has not recorded deferred taxes for basis differences under this regime. Additional disclosures regarding our accounting for income taxes are provided in Note 20—“Income Taxes” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. See Note 3—“Summary of Significant Accounting Policies” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10‑K for additional information regarding these critical accounting policies and other significant accounting policies. Other than changes due to the Corporate Conversion, there have been no other significant changes to the Company’s critical accounting policies and estimates during fiscal year 2023. RECENT ACCOUNTING PRONOUNCEMENTS See Note 1—“Organization and Basis of Presentation” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10‑K for information regarding recent accounting pronouncements. 115 Table of Contents