Welcome to the Q3 2014 BGC Partners Inc. Earnings Conference Call. My name is Angela and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Jason McGruder, Jason you may begin.

Thank you, I'm Head of Investor Relations. Our third quarter 2014 financial results press release was issued this morning. This can be found at either the News Center or Investor Relations sections of our Web site at bgcpartners.com. During this call, we will also be referring to a presentation summarizing our results and which includes other useful information. This too can be found in the Investor Relations section of our site. Throughout today’s call we will be referring to our results only on a distributable earnings basis. Please see today’s press release for GAAP results. Please also see the sections of today’s press release entitled Distributable Earnings Results Compared with GAAP Results, Reconciliation of Revenues Under GAAP and Distributable Earnings, and Reconciliation of GAAP Income to Distributable Earnings for a definition of these terms and how, when and why management uses them. Unless otherwise stated, whenever we refer to income statement items such as revenues, expenses, pre-tax earnings, or post-tax earnings, we are doing so on a distributable earnings basis. Unless otherwise stated, all results provided on this conference call compare to third quarter of 2014 with a year-earlier period. In addition, certain revenue items and non-financial metrics have been adjusted for prior periods to conform to current reporting methodology. Any such adjustments would have had no impact on overall revenues or earnings for either GAAP or distributable earnings. On June 28, 2013, BGC sold its fully electronic trading platform for benchmark U.S. Treasury Notes and Bonds to NASDAQ OMX Group, Inc. For the purposes of today’s call, the assets sold are referred to as eSpeed and the businesses remaining with BGC that are not part of eSpeed are referred to as retained. Also, Newmark Grubb Knight Frank is synonymous with NGKF or our Real Estate Services segment. I also remind you that the information on this call regarding our business that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements involve risks and uncertainties, except as required by law, BGC undertakes no obligation to produce any revisions to forward-looking statements. For a discussion of additional risks and uncertainties, which could cause the actual results to differ from those contained in forward-looking statements, see BGC’s Securities and Exchange filings, including, but not limited to, the risk factors set forth in our public filings, including our most recent Form 10-K and any updates to such risk factors contained in subsequent Form 10-Q or Form 8-K filings. Please also refer to the section of today’s press release titled Important Additional Information for a disclosure regarding our recently launched tender offer for GFI Group. I'm happy to turn the call over to our host, Howard Lutnick, Chairman and CEO of BGC Partners.

Thank you, Jason. Good morning and thank you everyone for joining our third quarter 2014 conference call. With me today are BGC’s President, Shaun Lynn, our Chief Operating Officer, Sean Windeatt, and our Chief Financial Officer, Graham Sadler. BGC’s post-tax earnings increased by more than 80% year-over-year to 56 million dollars, which was a record for the company, these record results reflect pre-tax earnings growing by 54% for our Real Estate Services business and by 74% for our fully electronic businesses. Newmark Grubb Knight Frank continued to benefit from positive real estate industry trends and the successful addition of Cornish & Carey. Financial market volatility improved in September and picked up nicely in October. Within Financial Services, we continued to convert our voice and hybrid desks to more profitable fully electronic trading. We expect the combination of positive industry dynamics and our operational outperformance across both of our businesses to lead to strong growth in the fourth quarter. We anticipate BGC’s fourth quarter pre-tax earnings to increase by between 50% and 72% year-over-year, generating between $69 million and $79 million, and we expect our tax rate to remain about the same. This means that we not only expect to increase our revenues and earnings sequentially over the second half of the year, which is virtually unheard of among our financial services peers, but we also expect to have two quarters in a row of record post-tax earnings. Our liquidity is approximately 625 million dollars, and we still expect to receive about $550 million in NASDAQ OMX stock, which provides us with more than $1.100 billion to fuel BGC’s growth. We anticipate using some of these funds to continue making accretive acquisitions across both Real Estate and Financial Services. An excellent example of which is -- an excellent example of such…

Thanks Howard and good morning everyone. Our Financial Services business increased its pre-tax earnings by 85.4% to $55 million, while revenues were up by 1.8% to $261.2 million. We were able to achieve this by more than 950 basis point expansion in pre-tax margins due in large part to the significant growth of our higher margin fully electronic businesses. Revenues for our e-businesses rose by 40% to $25 million, while their pre-tax earnings increased by 74% to $14 million. As we continued to convert our voice and hybrid desks to fully electronic, and substantially increased revenues from market data and software solutions, we have already succeeded in creating e-businesses with quarterly revenues and profits similar to those of eSpeed before it was sold. We have a pipeline of over $900 million of annual voice and hybrid Financial Services brokerage revenue, a large portion of which can be converted to fully electronic brokerage and/or generate valuable market data. Revenues for our e-businesses were up by approximately 75% year-on-year over the first 20 trading days of October, and their pre-tax earnings margins averaged 53% over the past four quarters. We expect these businesses to be substantially larger than eSpeed going forward. Looking at our overall Financial Services results by asset class: While revenues from our fully electronic rates products were up by approximately 15%, our overall rates revenues were down by 14.3% in the quarter to $93.5 million. In comparison, interest rate volumes were down by 32% at ICE and 5% at Eurex, while Federal Reserve U.S. Treasury volumes were down by 7%. BGC’s fully electronic foreign exchange revenues, including both spot and derivatives, were up by approximately 40%, while our overall FX business increased by 18.7% to $56.2 million. The overall market benefited from better FX volatility in the quarter and…

Thank you Shaun and good morning everyone. BGC generated revenues of $449.8 million, up 8.5% compared with $414.4 million. Our revenues from the Americas were up approximately 16%. Revenues from Europe, Middle-East, and Africa were down by 1%; and Asia-Pacific revenues decreased by 9%. Turning to consolidated expenses: compensation and employee benefits were up by 5.8% but represented only 60.4% of revenues, which was an improvement of 160 basis points despite a larger proportion of revenues coming from real-estate. Non-compensation expenses were down by $7.8 million or 6.5%, and were 24.9% of revenues compared with 29%. This significant improvement was driven by lower costs across most line items as we completed our previously stated goal of reducing overall expenses by $100 million annualized by the end of 2014 compared to the second half 2012 run-rate. This goal excluded the impact of any acquisitions closed in 2014. I am happy to report that we have achieved this target ahead of schedule. In the third quarter of 2014, our compensation ratio improved by approximately 300 basis points compared with the second half of 2012, which lowered our annualized compensation expenses by 45 million dollars. In addition, our annualized non-compensation expenses were reduced by more than $55 million in the third quarter 2014 compared with the second half of 2012. Taken together, our full year expense run-rate was reduced by more than $100 million. Our improved compensation ratio along with a lower non-compensation cost base significantly improves our earnings leverage. This enables us to be much more profitable, particularly as Financial Services industry volumes return. Our pre-tax earnings before non-controlling interest in subsidiaries and taxes were $65.8 million, up by 75.8% when compared with $37.4 million. Our pre-tax margin this quarter expanded by around 560 basis points to 14.6% compared with 9% a…

Thank you, Graham. Our guidance for the fourth quarter is as follows: We expect revenues to be between $475 million and $510 million, an increase of 10% to 18%, as compared with $432.9 million last year. We anticipate pre-tax earnings to be between $69 million and $79 million, an increase of between 50% and 72%, as compared to $46 million last year. We expect our effective tax rate to remain at approximately 15%, this compares with 14.5% last year. And we intend to update our fourth quarter outlook toward the end of the third week of December. With respect to GFI, I know there are a lot of questions that you might want to ask, but we have a live tender offer out there, and the only thing I’m going to say today is that we are very much interested in buying the company, and our offer is very much for real, very. So operator, we’d now like to open the call for questions.

and:

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question is from Patrick O'Shaughnessy from Raymond James Financials. Please go ahead.

So my first real question, obviously really good success so far from Cornish & Carey and the Commercial Real-Estate Group, if you think about that business from long-term. What sort of statistic margins do you think that commercial real-estate business can achieve? Raymond James: So my first real question, obviously really good success so far from Cornish & Carey and the Commercial Real-Estate Group, if you think about that business from long-term. What sort of statistic margins do you think that commercial real-estate business can achieve?

Well, there are multiple businesses in that business. So the brokerage business should get to margins that you’d well understand like the Financial Services Business. Their payouts are a little higher but the amount of technological services that are needed to be provided are little lower. So demand should be long-term steady state this scale and can get up to 20% and that’s just a matter of scale. The capital markets business the selling of buildings produces higher margin per broker, they’re just higher revenue per head and higher revenue per head as you know drives productivity up higher and drives profitability higher. So as you grow your capital markets business you can see margins crossing the 30% line in that category. And you will see us we’re relatively undersized in that space now and as you have seen in like the energy space in financial services when we’re undersized to us to this company that is a great opportunity, we view that as an opportunity to hire and acquire and grow high margins. So I would suggest that business can get in steady state in the 30s. And then you have management business; property management, facilities management those businesses have lower margin but more scale. And so there is pass through revenues associated with that but they have just bigger scale with them and there is good leverage and they have long-term contracts, but the margins tend to be more consistent with the other businesses which you can get them in the 15% range and I would think that’s sort of the steady state. And without a few bigger scales you do a little better. So I think that’s how we look at the business now and that’s how we understand it.

And then I guess the follow up on that point, so now that Cornish & Carey is done. How do you look at the M&A landscape right now in that commercial real-estate business in terms of the amount of firms that are out there that are interesting to your right now? Raymond James: And then I guess the follow up on that point, so now that Cornish & Carey is done. How do you look at the M&A landscape right now in that commercial real-estate business in terms of the amount of firms that are out there that are interesting to your right now?

I think it's rich, I think its rich and I think it's deep. And the combination of the our strength in the big marketplaces coupled with the clear successes we're getting in the market and our growth in the market has made us a very hot brand and when you're hot brand you both land more clients, clients invite you to more pitches and brokers want to come work for you. And so we're a hot brand in the market we win big assignments and big mandates all the time and I think that is very attractive to people. So I think both and that includes company that want to just join us and be part of the mix, Cornish & Carey was very well known it's the number one brand and the number one company in the Bay area of Silicon Valley I mean it's the opposite of a secret the other -- there were plenty of other companies who wanted to buy them and they wanted to be part of our plan because they knew their productivity per broker would built up by being part of us and that is a very exciting part of the business if you can drive productivity up for the employees you just make a more valuable enterprise and you know as anybody knows who's worked with us that the value of the company is our employees. And having world-class talented employees who are becoming more productive, just look at our productivity per head as compared to others, we have a higher productivity per head and we work to drive productivity per head so I think it's a rich landscape there are lots of things we're talking about now and that we're thinking about. And I think we can put our money to work very-very accretively very-very productively and really build a great brand in NGKF.

Got it, thanks and then last one from me -- just on the fully electronic brokerage revenues that you guys have talked about, and certainly we are seeing some nice traction there, can you maybe just go into a little bit more detail on some of the particular electronic products that you are having a lot of success with these days? Raymond James: Got it, thanks and then last one from me -- just on the fully electronic brokerage revenues that you guys have talked about, and certainly we are seeing some nice traction there, can you maybe just go into a little bit more detail on some of the particular electronic products that you are having a lot of success with these days?

Yes, mainly most of the successes in the credit area, FX, stocks, FX, options but we're seeing success across the whole landscape for us globally. We see Volume Match as a product for us being very successful and the market has taken to it and we are continuing to enhance our electronic offering globally and seeing traction much of from those two specific areas but across government areas in Europe and across more traditional areas such as repo and other sectors. For us it's a continual growth strategy. We've grown over the years well over billion dollars in that technology and we started seeing fruit of it. I think the market itself with regards to Dodd-Frank, when that was brought into the marketplace that held us back in some way because we have to rearrange change and develop our systems to accommodate and now you're starting to see new product come out from us so we're going to continue to grow into the fourth quarter earnings '15.

Our next question is from Rich Repetto from Sandler O'Neill. Please go ahead.

Yes, good morning guys. Maybe you said this and I didn't get it. But I'm just trying to get the contribution from Cornish & Carey in the quarter -- revenue, distributable revenue, and distributable earnings. Sandler O'Neill: Yes, good morning guys. Maybe you said this and I didn't get it. But I'm just trying to get the contribution from Cornish & Carey in the quarter -- revenue, distributable revenue, and distributable earnings.

I don't think we went through that. But I mean I think we have put out that their annual revenue in '13 was about $135 million so you sort of can sort of figure out we bought it in the middle of the quarter a little bit more revenue comes at the toward the end of each quarter in real-estate side I wouldn’t say about a half of what they would've done in the third quarter probably a little bit more than that. I don't know it to be wildly more but I haven't looked in particular but it's kind of the best thing can do it at the moment since we hadn't said it and we didn't think it was sort of it's not the driving force of -- our future is combined with our real-estate business doing really well, increased volatility in the financial service business and turning our financial service business electronic is the driving force of our business and Cornish & Carey will be a great part of that but it will be a part of this and there will be more parts to come.

Howard, the only reason why I'm -- when you look, real estate obviously was strong this quarter. The revenues went up 30 million. I know you give the year-over-year comparisons, but just judging where the business is because you've added acquisition but it went up -- your revenue went up 30 million. And I've done that math of Cornish & Carey. It would equate to about, for half a quarter, about 17 so, I guess it's tough for us to assume that it's a little bit more than half of the -- if Cornish & Carey added 17 on that 135 run rate, it's a little bit more than half of the revenue growth in real estate. Correct? Sandler O'Neill: Howard, the only reason why I'm -- when you look, real estate obviously was strong this quarter. The revenues went up 30 million. I know you give the year-over-year comparisons, but just judging where the business is because you've added acquisition but it went up -- your revenue went up 30 million. And I've done that math of Cornish & Carey. It would equate to about, for half a quarter, about 17 so, I guess it's tough for us to assume that it's a little bit more than half of the -- if Cornish & Carey added 17 on that 135 run rate, it's a little bit more than half of the revenue growth in real estate. Correct?

Yes sounds right.

Okay. And then I guess the other question is -- and I know you've given the numbers for the fourth quarter. I'm just trying to see how was -- you don't give these numbers out anymore, but the revenue in October, given the high volatility and the higher proxies that are out there. Sandler O'Neill: Okay. And then I guess the other question is -- and I know you've given the numbers for the fourth quarter. I'm just trying to see how was -- you don't give these numbers out anymore, but the revenue in October, given the high volatility and the higher proxies that are out there.

The proxies towards the high single-digits 7, 8, 9 in that range is probably fine. What the problem is our realty business is becoming an ever bigger portion of the business and if we just talk about financial services it’s sort of part of it. And the way the real-estate business works a strong portion of the business comes in at the end of the quarter. So guiding in the middle of the quarter where you stand is kind of, it could be absolutely useless. You could say, it could look like it was down as compared to last year and the end of the quarter could be widely higher, so that’s why we kind of stopped because we would end up getting out statistics that would confuse rather than assist. But I don’t think the metrics that are out there are, if you go between and 7 and 9 that’s about right from the financial services. But I think Shaun pointed out that our electronic business was up 75% in the month of October and it’s gratifying, because you guys know how much money we’ve invested and how much time we’ve invested. And as it starts to take hold that would change the fundamental economics of our business and value of the company.

And those numbers were strong. And I just, it was hard to keep pace with the numbers that were coming out. But I do understand that the margin improves when you convert to electronic. I guess anymore color, I know you went through the numbers Shaun but I couldn’t absorb them as quick as you were going. But what products are you seeing that this conversion over. And how are you actually achieving that? Is this just converting, getting the brokers to convert and the usual process? What products should we be focused in most on this conversion to electronics? I know you mentioned corporate bonds, was coming et cetera. Sandler O'Neill: And those numbers were strong. And I just, it was hard to keep pace with the numbers that were coming out. But I do understand that the margin improves when you convert to electronic. I guess anymore color, I know you went through the numbers Shaun but I couldn’t absorb them as quick as you were going. But what products are you seeing that this conversion over. And how are you actually achieving that? Is this just converting, getting the brokers to convert and the usual process? What products should we be focused in most on this conversion to electronics? I know you mentioned corporate bonds, was coming et cetera.

I think I have said credit spot effect and things auctions, but more generally Richie it’s across the whole of the company as there is more take up from client base from the brokers acceptance within the marketplace that are looking for quick execution. And because we’ve had this pipeline for so many years investing so much money on these, so it is now starting to hit, hit you out of the park. Of course we continued to invest, we continued to be realistic with what’s achievable in the marketplace because you need volatility and you need to be accepted by the marketplace. But for us we continue to drive forward across all of our markets. Right, this is interest for us and maybe you should expect to see is growing in the fourth quarter and 2015. So specifically for this quarter and going forward FX options credit but you should also be thinking about, rate, money we’ve invested as we’re thinking about 2015, we’re now through Dodd Frank, we’re now through lots of migration work. You have seen the recent announcement we have a new Chief Information Officer that has just joined us. We’re focused on growing and building into the new world and being like a nimble moving with the marketplace, so that is what we are doing.

(Operator Instructions) Our next question is from Niamh Alexander from KBW.

I appreciate the guidance on the quarter. I'm thinking it's mostly revenue driven, as we kind of saw nice revenue in the third quarter. But just to switch to expenses for a sec, your compensation ratio is coming nicely down. You had talked about delivering cost savings, and we are seeing it translate outside of non-comp. But is a kind of there visibility there to get below the 60%, get back towards the 50s as you were pre- the real estate deal? Or is there a timeline to that? KBW: I appreciate the guidance on the quarter. I'm thinking it's mostly revenue driven, as we kind of saw nice revenue in the third quarter. But just to switch to expenses for a sec, your compensation ratio is coming nicely down. You had talked about delivering cost savings, and we are seeing it translate outside of non-comp. But is a kind of there visibility there to get below the 60%, get back towards the 50s as you were pre- the real estate deal? Or is there a timeline to that?

Well, that’s really a math of which deals we do and the scale of those deals, and when they come and so I think it’s just a mix. The real-estate business the splits for brokers, the way they call us split their commission percentages, 50% that’s for the brokers. And then you have the support service, which means you still have accountants, you have all the work. So their compensation ratio would be high. Financial services, you’d have a lower payout but you’d have a higher spend on technology and other things to support them. So the math ends up being about the same. So the answer is overtime we expect to have improvements in our compensation ratio as compared to otherwise be at those companies not join our world, they’ll do it through as you know through the partnership, they’ll do it as you know for having better technology as you draw, but ultimately be approved, continuously approved a point or two. But I don’t think we expect the real-estate business to match what we had in financial services. I don’t think that’s our goal and objective but their goal and objective is to run an extraordinary real-estate brokerage business and extraordinary financial services brokerage business and do them individually and specifically not sort of compare them across it just doesn't make sense.

Okay. Fair enough. Thanks, Howard. And then with respect to the real-estate business, is it -- what you've acquired Cornish & Carey. Is it the same that seasonally the fourth quarter is the best quarter of the year? It's kind of a nice offset to the financial services? And has anything changed there? KBW: Okay. Fair enough. Thanks, Howard. And then with respect to the real-estate business, is it -- what you've acquired Cornish & Carey. Is it the same that seasonally the fourth quarter is the best quarter of the year? It's kind of a nice offset to the financial services? And has anything changed there?

No. The real-estate business the fourth quarter it's the best business best quarter the third quarter is the next the second quarter is the next and the first is the next and that is the polar opposite of financial services where the first quarter is the best and then it goes second, third and then fourth. So they just work nicely together, so we're going to have a big quarter in real-estate in the fourth quarter and we expect other big quarter in financial services in the first quarter and it works really nicely together.

Okay, fair enough. Thanks. And then just on the capital, you are quite cash-rich. You announced your tender offer. And we talked little bit before about the dividend you are kind of at the low end of the payout ratio that you have been at historically. I mean I would expect, given the potential hostile or otherwise offer ongoing, that you don't do anything with it for up while. Is that a pretty reasonable assumption to make? KBW: Okay, fair enough. Thanks. And then just on the capital, you are quite cash-rich. You announced your tender offer. And we talked little bit before about the dividend you are kind of at the low end of the payout ratio that you have been at historically. I mean I would expect, given the potential hostile or otherwise offer ongoing, that you don't do anything with it for up while. Is that a pretty reasonable assumption to make?

I think the idea for our Board is we're committed to -- we have the dividend be stable for the year and then once the year ends we will address you at that time. So I think we've got plenty of time between now and the end of the year. Certainly our business is doing well and it's the high class problem to have a Board considering whether they're happy with the dividend or they wish to raise but they'll consider that for next year.

So you don't think the Board would let the kind of the potential deal that's under consideration that wouldn't really impact the dividend discussions? KBW: So you don't think the Board would let the kind of the potential deal that's under consideration that wouldn't really impact the dividend discussions?

I wouldn't think so.

KBW: O:

So I guess I'll repeat it sorry I don't want to talk about GFI with the live tender out there other than to say we're interested in buying the company and we're very real.

We have no further questions at this time.

Well thank you all for joining us today and we look forward to updating you again in the quarter and speaking to you again at the end of this one. Thanks everyone, speak to you soon.