Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2008 BGC Partners Inc. Earnings Conference Call. My name is Josh and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answering session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to our host for today’s call, Head of Investor Relations, Jason McGruder. You may proceed, sir.

Good morning. Before we begin, I want to make sure that you know that our fourth-quarter full year 2008 financial results press release was issued last night. It can be found at either the News Center or Investor Relations section of our website at www.BGCPartners.com. We also have a PowerPoint summarizing results in the Investor Relations section. I also refer you to the section of our press release titled ‘Discussion of Forward-Looking Statements’ contained in our financial results press release. I remind you that the information released on this call contains forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities and Exchange Act of 1934 as amended. Such forward-looking statements include statements about the outlook and prospects for BGC Partners and for its industry, as well as statements about our future financial and operating performance. Such statements are based upon current expectations that involve risks and uncertainties. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied, because of the number of risks and uncertainties that include, but are not limited to the risks and uncertainties identified in the earnings release and BGC Partner’s filings with the U.S. Securities and Exchange Commission. We believe that all forward-looking statements are based upon reasonable assumptions when made. However, we caution that it’s impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that accordingly you should not place undue reliance on these statements. Forward-looking statements speak only of the date when made and we undertake no obligation to update these statements in light of subsequent events or developments. Please refer to the complete disclaimer with respect to our forward-looking statements set forth in yesterday’s earnings release and the risk factors set forth in our public filings, which we incorporate by reference. I’d now like to turn the call over to our host Howard Lutnick, Chairman and CEO of BGC Partners Inc.

Good morning and thank you for joining us today on our fourth-quarter 2008 conference call. With me today is Shaun Lynn, our President and Bob West, our Chief Financial Officer. Our pre-tax distributable earnings increased by 46% to $11.3 million or $0.06 per fully diluted share, while our post-tax distributable earnings increased to $8 million or $0.04 per fully diluted share compared with $1 million in the fourth quarter of last year. As Bob will discuss in more detail, our equity-based compensation was $15 million less than what was reflected in our previous accounts. This lowered our pre-tax distributable earnings for the quarter. We believe that paying relatively more cash to employees and relatively less equity had the same effect as repurchasing $15 million worth of stock, but in a more tax efficient fashion. We have declared a dividend equal to our post-tax distributable earnings of $0.04 per share for the fourth quarter, which is payable on March 20, to shareholders of record as of March 6. Revenues in October were up 18% year-over-year to $118 million driven by strong growth in credit and other assets. November revenues were down approximately 10% to $89 million as we had expected and December revenues were up approximately 9% to $81 million. Overall, our fourth-quarter revenues were up 5.5% compared to last year. In January 2009, revenues were down 9% to approximately $100 million compared to January of last year 2008. Our monthly revenues for January 2007, through January 2009 can be found in the appendix of the fourth-quarter 2008 earnings presentation on our Investor Relations website as Jason so eloquently described. I’d now like to turn the call over to Shaun Lynn.

Thanks Howard and good morning, everybody. There has been a lot written lately about the current state of the OTC market, inter-dealer brokers in particular and the relationship of OTC revenues of central accounts party clearing. I thought it would be useful to comment from our perspective, as I mentioned on our last call BGC strongly favors open non-exclusionary central clearing and we already broke a number of OTC and exchanges product in this manner. Our businesses thrived along with a dramatic growth in the percentage of our brokerage revenues coming from centrally cleared products. On our GAAP income statement, we break out our brokerage revenues into commissions and principal transactions. Commission revenues involve name give up transactions that are bilaterally cleared by our clients. Principal transactions are primarily those in which our counterparty is the central clearing organization. Principal transactions accounted for 31% of BGC’s brokerage revenue in the fourth quarter of 2008 compared to less than 10% in the fourth quarter of 2007. This has been drive both by increased central clearing in OTC markets like interest rate swaps as well as by strong growth in the broking of the listed products such as [inaudible]. Even in parts of the OTC markets where central clearing has not yet begun, we have had a strong performance. For example, our quarterly credit revenues were up 31% compared to last year and were also up by double-digits in January of 2009. This growth has two drivers. First, as many of you know, BGC has always been a leading cash bond broker and we have built our credit derivatives business on top of that solid foundation. Our growth in credits has been driven primarily by the trading of credit default swaps along with their underlying cash bond positions as opposed to stand-alone…

Thank you, Shaun, and good morning. For the fourth quarter of 2008, BGC Partners generated revenues for distributable earnings of $287.6 million, up 5.5% compared to $272.7 million in the fourth quarter of 2007. Our brokerage revenues were up 7.7% to $259.8 million in the fourth quarter of 2008 versus $241.3 million recorded in the prior-year period. In the fourth quarter of 2008, credit revenues increased by 31% to $83.3 million while other asset classes increased by 14% to $29.2 million, both compared to the prior-year period. The increase in other asset classes was driven mainly by strong organic growth in equity-related products and the acquisition of our energy broker, Radix. Foreign exchange revenues decreased, by 10% to $30.9 million. Although, we generated a strong increase in revenues, from the fully electronic trading of foreign exchange options. Lower short-term interest rates and steepening yield curves benefited BGC’s voice and hybrid rates business where revenues increased by 8% year-over-year in the fourth quarter. However, overall quarterly rates revenues decreased year-over-year by 1% to $116.4 million due to an industry-wide decline in U.S. treasury volumes. In the fourth quarter of 2008, rates represented 40.5% of total revenues for distributable earnings, credit 29%, foreign exchange 10.7%, and other asset classes 10.2%. Moving on to expenses compensation and employee benefits represented 63% of the Company’s revenues in the fourth quarter of 2008 on a distributable earnings basis compared with 58% in the year earlier period. As Howard mentioned, our fourth quarter 2008 compensation expenses were approximately $15 million higher than the Company had estimated. This was due to the issuance of approximately $15 million less in equity-based compensation than had been reflected in our previous accounts. In our view, this lower equity issuance had the same effect as repurchasing $15 million in stock, but…

(Operator Instructions) Your next question comes from Rich Repetto - Sandler O’Neill. Rich Repetto - Sandler O’Neill : I guess the first question is; can you walk through the accounting on the comp and how that comes, if you paid it in stock than what would be the ballpark EPS in the accounting? Because, that is what I am unclear and then the follow-on to that what is your rationale? I assumed, because the stock price was low. And why couldn’t this happen again in other quarters? That is the question. I will leave it there.

Well, I think and this generally would be true for any time, so it’s sort of a generic example. But if we paid $15 million more stock than we would pay $15 million less cash, our earnings would be higher by $15 million and we would have issued $15 million more in stock, which we would then amortize for instance, depending on what kind of stock we gave. But assuming we gave RSUs, ordinary three-year restricted stock, you would amortize that over three years. So in this generic average issuing more stock would obviously replace cash and you would have earnings in that period. And so, the issuance of less stock reduces your earnings, but also reduces the issuance of stock. Rich Repetto - Sandler O’Neill : The comp charge, if you issued $15 million of RSUs would be spread out. Instead of $15 million in the current quarter, would be $15 million spread out over three years. Is that correct?

Correct. Rich Repetto - Sandler O’Neill : And you would have the increase in share, well, the increase in share count?

Of course. Rich Repetto - Sandler O’Neill : And then I guess the next question, Howard, and for your team is you talked about the increase in principal trading and centrally cleared. That makes very good sense. I am just trying to see, how is it from a risk perspective, if the principal trading is much more a piece of the pie than commission trading prior. You are taking a principal position, even if it is for a split second and how do you look at the risk?

Shaun’s example was trying to show that we are brokers and that the two primary ways we make our money are name give up and matched principal. So when, for instance, in U.S. treasuries a client types into our system a 14 bid and another client types in a 14 offer and they match and do a trade, there were no seconds that we had any principal risk. However, we are at the central counterparty a matched principal, meaning we have bought from client A and have sold to client B at the central counterparty. The central counterparty novates us out, so initially we are a principal in the central counterparty then since we have bought and sold the central counterparty just sort of nicks both of our lines and we have nothing to do, because we don’t have a position nor any market exposure. So what Shaun was trying to point out, was that our business is two-fold and we enjoy our business whether name give up or central counterparty. The benefit for us of central counterparty is, you can see from our balance sheet we have $127 million of receivables, which we collect when we do this name give up business over the next 30, 60, 90 days, whereas, when we do business at central counterparty, we get paid the next day. So it would be a very pleasant thing for us to turn our business entirely into a matched principal business, because that $127 million would turn to cash. Instead of having $361 million in cash, $150 million in debt, and $127 million in receivables, we would have closer to $500 million in cash and $150 million in debt, and no receivables. So we, as Shaun expressed, are huge, huge positive fans of central counterparty, because it has no impact on our business other than it gets us paid much quicker. Rich Repetto - Sandler O’Neill : Then the very last thing is on the non-comp expense, and I always fiddle with your guidance, Howard. If you held at least the way I look at this guidance, I look at the midpoints, I look at the high-end, and the low-end. If you held that non-comp and I sort of line it up like that. If you held the non-comp at $95 million and you did three, let’s just say you did the high-end, it will always work out to a comp ratio of almost close to 60%, 59.7%. Is that just me being too detailed with the guidance or I guess that is probably a little bit of conservatism in the guidance or so?

No, I think what has happened is because of the variability of the U.S. Treasury business, it used to be a very steady concept and then you have seen the volumes industry-wide across the CME and otherwise dramatically deteriorated for a period of time. As Shaun mentioned, we have seen just lately and I mean just lately with the new three-year node and the new issuance from the Treasury stopping issuing just daily management bills and starting to go out into the two-years and three-years and five-year notes, seven-year notes. So now we are starting to see an up-tick, but because of that we tend to lean our guidance towards the high-end of our range. And then if U.S. Treasuries come back that will help us reduce the range and will let us exceed that guidance. But, of course, our guidance is meant to be from our perspective that which we are comfortable that we can meet or exceed, not miss.

Your next question comes from Rob Rutschow - Deutsche Bank.

I was hoping I could follow up on Rich’s question about expenses. In terms of the non-compensation expense, I think you had some seasonal items that were a little higher this quarter and so flat guidance going forward would seem to imply that you will see increases in other areas. So I am wondering where you might be able to cut if things remain weak and in particular your T&E ratio seems a little bit higher than some of your peers.

This is Bob speaking. In terms of the non-comp the last two quarters, you can see it’s at the $94 million dollar range. We have been aggressively managing our non-comp expenses. In terms of things on the fourth quarter, yes, there always are some unusual items that we have in each fourth quarter. And in the first quarter this year we don’t see anything that would be of an unusual nature, so given our trend of aggressive management, we could see that number trending down. But I don’t have anything that we are really ready to talk about in terms of things that are going to move that number other than the normal things that we have in our business. As we continue to grow the business, and of course you would expect it to not necessarily decline, if we hire a lot more people, there is some incomparable costs associated with that number.

So the T&E I should read into that that you are still in expansion mode?

Most assuredly.

Can you give us any idea in terms of what the bonus payments that are coming up this year contractually that you have to your employees relative to last year and maybe looking ahead into next year also, 2010?

Our business and our contracts are broadly percentage based. So, dramatically so, that I don’t know of any, I can’t even think of any particular compensation person that would matter at all, even for me to know it. We pay our people on variable percentages, so their compensation would be dictated by how they did. We have some desks that are paid monthly; most desks are paid quarterly or semi-annually and some are paid annually. But virtually all of them, if not all of them, have a relationship, a direct relationship to a percentage based on their revenues. So we don’t have anything outstanding that would be dislocated from the then quarterly revenue. Was that the question?

Then on the revenue side, can you give us an idea of where you are seeing the most strength so far this quarter? Then also if you can give us an idea of what your credit looked like in terms of cash versus CDS in the fourth quarter?

Hi, Rob. This is Shaun. Our strength in this quarter has mainly come from our credit sector. It has been very, very strong; just fixed income bonds. We have seen recently, as Howard already mentioned, U.S. Treasury I think maybe, we are hoping from this point going forward, resurgence of strength in treasuries. Also, on equity derivatives it has been very, very strong for us over the last six months as we have expanded into that market over, we have mentioned it for about the last year now, but really in the last six months, we have been very fortunate to attract some very, very good people. I would say that going forward; credit is still going to continue to be very strong throughout this whole year.

(Operator Instructions) Your next question comes from Rich Repetto - Sandler O’Neill. Rich Repetto - Sandler O’Neill : Just following up on your comments on the interest rates, I think I understand why credit has been strong, at least relatively stronger than your peers. On the interest rate, I am just trying to understand more the industry as credits decline. Could you give us what you think are the biggest factor and we know there is plenty of them out there like the Lehman restructuring, etc., de-leveraging, spreads, less mortgage-backed issuance, etc., or securitization. But what do you see as the things that caused the decline and what is helping it come back and what could help it come back more on the interest rates?

Our general interest rate trading actually was quite reasonable. The headwind in the business was that we have a very strong and very material U.S. treasury business, which saw a dramatic reduction in volume that came from our loss both from Bear Stearns, which was much earlier in the year, and then obviously Lehman Brothers in September. So both their fees and their volume declined and then we saw a dramatic pullback in the number of trading firms. As they de-leveraged their balance sheets they had to take off volumes, because they had to get their leverage ratios back in line. Now the treasury business tends, for those clients, to be a very high profitable business as compared to its capital and usage. So it is one of the best uses of their capital, because it is not particularly capital-intensive, my understanding of their business. However, when you are extended across 12 businesses and you are trading at 15 times leverage and the banks are starting to pull your lines, you need to cut everything down until you can get out of everything to get back to your first best use. So we think many of these high-frequency traders will begin to re-emerge as they have cleaned up their balance sheets and have money available for this business, which is a very, as I said, high-value business. And we have begun to see some of that. The other things we have seen is that, we have seen traders leaving some of the big banks and getting jobs at some of the smaller firms. You have seen some announcements of people saying that they are going to try to become primary dealers. To try to become a primary dealer means they are going to try to trade a bunch more U.S.…

I will leave the spin of the article to that person. We are in the winter. The article said it expects to open in the spring. I do not recall there being a time since I have been associated with ELX where it was planning to open and any comments made other than the spring. So if one is now dictating from whence within the spring it opens, I don’t know, but I like the concept of the papers saying spring. Spring is next quarter. Next quarter works us. It is up to ELX, it is up to all sorts of Is dotting, T crossing, regulatory approvals, and all the like which Neal Wolkoff and the Management of ELX is working on. We as an organization and a technology system are ready.

Your next question comes from Rob Rutschow - Deutsche Bank.

Just one follow-up, can you tell us what the pre-tax margin on your treasury business is, relative to some of the other businesses?

I don’t think we have ever said that particular margin, but we always express that since our voice brokerage compensation tends to be in the high 50s, or let’s call it 60%, and our electronic compensation tends to be 15%. We generally say that fully electronic trading when it’s mature, which U.S. treasuries is, tends to have a margin of 45 points higher. So it just took our regular margin of our voice brokerage business and added 45 points. We would generally say, we don’t talk about treasuries, because there is really no consequential difference between electronic treasuries versus electronic other products, what we would say it would be in the 75%-plus range.

I apologize if you already disclosed this, can you tell us what the electronics revenues were this quarter?

I’m sorry, and by the way, those margins are incremental margins, because obviously we have substantial fixed costs. So growth comes at a very high profit. And what did you say, our fully electronic revenues were 7%.

At this time, we are showing no further questions available. Mr. Lutnick, you may proceed, sir.

Well, I would like to thank you for joining us for this call. We continue to focus on hiring quality personnel and growing our business. We are focused on our bottom line and we are focused on maximizing profit. We look forward to talking to you next quarter and telling you about our progress. Thank you everyone and have a good day today.

Thank you for your participation in this conference. This concludes the presentation. You may now disconnect. Have a great day. and are :