Executive Summary / Key Takeaways

• Transformative Growth Engine: BGC Group is rapidly evolving into a technology-driven financial infrastructure powerhouse, leveraging its Fenics platforms and strategic acquisitions to deliver record revenues and adjusted earnings, particularly in the high-growth Energy, Commodities, and Shipping (ECS) sector.
• Technological Edge in FMX: The FMX platform, encompassing U.S. Treasuries (UST), Foreign Exchange (FX), and Futures, is a core differentiator, demonstrating significant market share gains and volume growth, with FMX Futures Exchange poised for substantial long-term profitability and competition against established players.
• Strategic Acquisitions Driving Scale: The recent acquisitions of OTC Global Holdings and Sage Energy Partners have fundamentally reshaped BGC's competitive landscape, establishing it as the world's largest ECS broker and immediately contributing to top-line growth and earnings accretion.
• Robust Financial Performance & Outlook: BGC delivered record Q2 2025 revenues of $784 million (up 42% YoY) and adjusted earnings per share of $0.31 (up 34.8% YoY), with Q3 2025 guidance projecting continued strong growth, supported by integration synergies and a new $25 million cost reduction program.
• Disciplined Capital Allocation: Despite significant investments in acquisitions, BGC maintains strong liquidity of $967.3 million and remains committed to returning capital to shareholders through share repurchases, while strategically evaluating potential divestments of high-value tech assets.

BGC's Evolving Identity: A Fintech Powerhouse Reshaping Wholesale Markets

BGC Group, Inc., founded in 1945, has a rich history of adapting and innovating within the financial services industry. From its origins as a traditional brokerage, the company has undergone a profound transformation, notably with the spin-off of its real estate services business to Newmark (NMRK) in 2018 and the Corporate Conversion to BGC Group in July 2023. This strategic evolution has sharpened BGC's focus on its core identity as a global marketplace, data, and financial technology company specializing in brokerage and trade execution across Energy, Commodities, and Shipping (ECS) and financial markets, including fixed income, foreign exchange, equities, and futures and options.

The industry landscape has been a dynamic backdrop for BGC's strategic shifts. Historically, the financial services sector has benefited from the increasing use of derivatives for risk management and the continuous development of new financial products. More recently, the shift in central bank monetary policies away from zero interest rates, coupled with rising inflation since 2022, has created a resurgence in secondary market trading volumes across rates, credit, and foreign exchange. This environment, characterized by meaningful interest rates and issuance volumes significantly above 2008 levels, positions BGC favorably for sustained growth in trading volumes, revenue, and profitability. Market volatility, while a risk, generally benefits BGC by increasing demand for hedging instruments and facilitating price discovery in its deep, liquid wholesale markets.

BGC operates in a competitive arena, directly challenging established players like TP ICAP (TCAP.L) and Tradition (CFT) in voice/hybrid brokerage, and the CME Group (CME) in electronic markets and market data through its FMX platforms. In the rapidly expanding ECS sector, BGC now competes with firms such as Marex (MRX), StoneX (SNEX), and Clarksons (CKN.L). BGC's competitive advantages stem from its integrated technology platform, extensive network effects from global client relationships, and a comprehensive suite of regulatory licenses across diverse markets. These strengths enable BGC to offer flexible execution options—voice, hybrid, and fully electronic—catering to the varied preferences of its institutional client base, which includes major banks, broker-dealers, trading firms, hedge funds, and corporations worldwide.

Technological Differentiation: The Fenics Engine Driving BGC's Moat

At the heart of BGC's strategic differentiation lies Fenics, its suite of electronic brands. Fenics represents BGC's commitment to automation and scalability, providing market infrastructure, connectivity services, fully electronic marketplaces, and advanced analytics. This technology-driven approach is designed to enhance margins and reduce reliance on traditional, labor-intensive brokerage models. Fenics is segmented into "Fenics Markets," which includes the electronic portions of BGC's brokerage businesses, and "Fenics Growth Platforms," comprising newer, high-growth offerings like FMX, PortfolioMatch, and Lucera. Fenics Integrated businesses, a component of Fenics Markets, are expected to deliver pre-tax margins of at least 25%, underscoring the profitability potential of this technological shift.

The FMX platform is a cornerstone of BGC's technological moat, directly challenging the CME's dominance in key markets. FMX consists of:

• FMX UST (U.S. Treasuries): This fully electronic platform generated a record average daily volume (ADV) of $68 billion in Q2 2025, marking a 45% year-over-year increase. Its central limit order book market share has grown to over 35% in Q2 2025, up from 30% a year prior. This demonstrates a tangible, quantifiable advantage in capturing market share through superior electronic execution.
• FMX FX (Spot Foreign Exchange): This platform nearly doubled its ADV to a record $15.6 billion in Q2 2025. This growth is driven by support from FMX's equity partners and the addition of new products and participants, showcasing BGC's ability to expand its footprint in the global FX market.
• FMX Futures Exchange: Launched SOFR futures in September 2024 and U.S. Treasury futures (2-year and 5-year contracts) in May 2025. Management has a clear three-year plan: year one focuses on connecting FCMs, with 9 currently connected and a target of 12 by year-end 2025 to cover the vast majority of customer assets. Year two aims to deepen client connectivity and increase volumes, leading to full competition with CME in year three. The SOFR average daily open interest increased sequentially by 73% in Q2 2025, with July's open interest more than doubling from Q2 levels. This growth trajectory, combined with an expected medium-to-long-term profit margin of 40% to 50% for FMX Futures Exchange, highlights its significant "so what" for investors: a high-margin, scalable business designed to capture substantial market share.

Beyond FMX, other Fenics Growth Platforms are also demonstrating strong performance:

• PortfolioMatch: This platform nearly doubled its ADV in Q2 2025, reflecting market share gains across U.S. and EMEA credit markets. In Q3 2024, U.S. credit volumes increased by over 150%, and European volumes were up more than nine-fold, indicating its effectiveness in capturing growth in a rapidly expanding segment.
• Lucera: BGC's network business, providing critical real-time trading infrastructure, grew its revenue by over 40% in Q2 2025, driven by new clients and product launches. Lucera plans to launch new FX and Rates products throughout 2025, further expanding its revenue opportunities.

These technological advancements are not merely incremental improvements; they are foundational to BGC's competitive moat. By offering superior efficiency, speed, and capital efficiency, particularly in electronic trading, BGC can attract and retain clients, command better pricing, and achieve higher operating leverage. This technological leadership directly translates into improved financial performance and a stronger market position against rivals, who may be slower to adapt or lack the integrated capabilities of Fenics.

Recent Performance: Strategic Execution Yielding Record Results

BGC's strategic pivot towards technology and high-growth sectors is clearly reflected in its recent financial performance. In the second quarter of 2025, the company delivered record revenues of $784 million, a remarkable 42% increase year-over-year. Excluding the transformative acquisition of OTC Global Holdings, revenues still grew by a robust 21%, surpassing the previous quarter's record. This strong top-line growth translated into impressive profitability, with pre-tax adjusted earnings surging 38% to a record $173.6 million. Post-tax adjusted earnings increased 34% to a record $153.7 million, and post-tax adjusted earnings per share reached an all-time high of $0.31, up 34.8% year-over-year. For the first half of 2025, total revenues increased by 28.2% to $1.45 billion, or 17.8% excluding OTC Global.

The growth was broad-based across BGC's asset classes:

• ECS revenues were a standout, growing by 122.2% to a record $261.6 million in Q2 2025, driven by the OTC Global acquisition and strong organic growth (27% ex-OTC). This segment is now BGC's largest, reflecting the success of its strategic investments.
• Rates revenues increased by 20.8% to $200.6 million, benefiting from higher volumes across major interest rate products.
• Foreign Exchange revenues were up 21.9% to $108.5 million, fueled by strong growth in FX options and emerging market currencies.
• Credit revenues saw an 8.5% increase to $75.3 million, primarily from higher U.S. and emerging market credit volumes.
• Equities revenues surged by 43.8% to $73.9 million, showing particular strength in EMEA and the Americas due to increased volatility and market share gains.
  \

Fenics, the technology engine, continued its strong trajectory. Overall Fenics revenues grew by 18.6% to $162.9 million in Q2 2025. Within this, Fenics Markets revenue increased by 16.5% to $134.1 million, driven by higher electronic trading volumes and Fenics Market Data. Fenics Growth Platforms revenue grew by 29.6% to $28.7 million, with an impressive 38% growth excluding the divested Capitalab business, highlighting the accelerating momentum of its newer offerings.

Liquidity remains robust, with $967.3 million as of June 30, 2025, an increase of $69.5 million from year-end 2024. This was supported by the issuance of $700 million in BGC Group 6.15% Senior Notes, partially offset by the $262.8 million cash payment for the OTC Global acquisition and a net decrease in revolving credit borrowings. BGC's capital allocation priorities focus on returning capital to stockholders and investing in business growth. The company repurchased 18.6 million shares of Class A common stock for $171.6 million in the first half of 2025, with further repurchases in Q3.

Strategic Initiatives and Forward Outlook

BGC's forward strategy is anchored by the successful integration of its recent acquisitions and the continued scaling of its Fenics platforms. The acquisition of OTC Global Holdings, completed on April 1, 2025, for $325 million, is a game-changer. It is expected to add over $400 million in annualized revenue, nearly doubling BGC's ECS business and making it the world's largest ECS broker. This, combined with the earlier acquisition of Sage Energy Partners, is immediately accretive to earnings. While OTC Global initially operates at lower margins (low teens) compared to BGC's group average (in excess of 20%), BGC has launched a cost reduction program targeting $25 million in annualized savings by year-end 2025. This program is designed to "close the gap" in margins, with benefits expected to fully materialize in 2026, enhancing overall profitability.

The FMX Futures Exchange remains a key growth driver. Management anticipates having 12 FCMs connected by year-end 2025, covering the "vast majority of customer assets." This connectivity is crucial for scaling volumes and open interest, particularly for U.S. Treasury futures, following the successful launch of SOFR futures. The three-year plan for FMX Futures Exchange—year one connectivity, year two deepening client engagement, and year three full competition with CME—is on track, with management expressing confidence in its trajectory.

Leadership transition has also been a notable development. Following Howard W. Lutnick's confirmation as U.S. Secretary of Commerce in February 2025, John J. Abularrage, JP Aubin, and Sean A. Windeatt were appointed Co-Chief Executive Officers. Mr. Lutnick's divestment of over 16.4 million Class A shares to BGC and 8.97 million Class B shares to Cantor, along with his voting shares in CFGM, ensures compliance with ethics rules without impacting BGC's corporate structure or market operations.

For Q3 2025, BGC projects total revenues between $715 million and $765 million, representing approximately 32% year-over-year growth at the midpoint. Excluding OTC Global, Q3 revenues are expected to grow around 12%. Pre-tax adjusted earnings are anticipated to be in the range of $150 million to $165 million, signaling approximately 24% earnings growth at the midpoint. The full-year 2025 adjusted earnings tax rate is expected to be between 10% and 12%. BGC's long-term organic revenue growth target remains around 10%, a figure management is "very comfortable" with, supported by the inherent operating leverage of its business model and the continued shift to electronic trading. The company is also open to divesting smaller, high-value tech assets within Fenics to demonstrate their intrinsic value, potentially at multiples significantly higher than BGC's current valuation.

Risks and Challenges

While BGC's outlook is positive, investors should consider several risks. The company faces ongoing legal proceedings, including an appealed class action lawsuit alleging breach of contract and antitrust violations related to its partnership agreements. Although BGC believes the lawsuit lacks merit, the outcome remains uncertain. Regulatory changes, such as the Basel III accord, have historically impacted trading volumes in credit products by increasing capital requirements for banks. While BGC has adapted, future regulatory shifts or new tax policies, like the recently signed OBBBA, could introduce unforeseen costs or operational adjustments, though initial assessments suggest no material impact.

Operational and cybersecurity risks are inherent in BGC's business, given its reliance on processing a large volume of transactions daily across diverse markets. System failures, disruptions, or cyber incidents could lead to financial losses, business interruptions, or reputational damage. Furthermore, BGC is exposed to foreign currency risk, with a hypothetical 10% strengthening of the U.S. dollar against the euro and pound sterling potentially impacting net income by approximately $6.6 million. Interest rate fluctuations also pose a risk, with a 1% increase in rates estimated to reduce consolidated net earnings by $0.2 million for a quarter. While BGC employs risk management procedures, unanticipated market movements or evolving threats could still lead to losses.

Conclusion

BGC Group is undergoing a compelling transformation, evolving from a traditional brokerage into a technologically advanced financial infrastructure provider. Its strategic focus on the high-growth ECS sector, amplified by the transformative OTC Global acquisition, and the continuous innovation within its Fenics platforms, particularly FMX, are driving record financial performance. The company's ability to leverage its integrated technology for superior efficiency and market share gains, coupled with disciplined cost management and a clear growth strategy, underpins a robust investment thesis.

Despite inherent industry risks and the complexities of integrating large acquisitions, BGC's leadership is demonstrating a clear path to enhanced profitability and shareholder value. The strong Q2 2025 results and optimistic Q3 2025 guidance, supported by tangible operational achievements in electronic trading and a commitment to organic growth, position BGC as a compelling opportunity for investors seeking exposure to a dynamic, technology-driven leader in wholesale financial markets. The ongoing evolution of its Fenics platforms and the potential for further strategic asset monetization further solidify its long-term growth trajectory.