BGC Group, Inc. (BGC) Earnings Call Transcript & Summary

Welcome, everyone. Thank you for joining. We are just waiting for everyone to connect into the session. We will begin momentarily. Rich, if you want to get started, the call is yours.

Good afternoon or maybe it's even early, good early evening. Welcome to the Virtual FIA, our last session today, and we're very pleased to have Howard Lutnick of BGCP; and Steve Bisgay, to wrap up our sessions. I've known Howard for many, many years, literally from 2000. So for the past over 20 years. Steve, we also know as not only being at BGCP, but at Cantor and at Knight, the CFO there as well. So welcome faces, and it's great to have you both. We've tried to mimic the FIA because we -- as I explained to Howard just prior, that we think it's been a great event over the past 15 years. It's attracted top management from the exchanges and the trading companies right up to the investment community. And it's in a very nice setting at this time of year, too, in Boca Raton. Unfortunately, we can't do it, but we appreciate. It is a nice setting where you're at Howard.

Yes, New York City. I don't know. It's not as nice as Boca.

But hopefully, we'll be back down there next March. So with that, let's get into sort of a content here. So Howard, on the last conference call, there was a discussion among a number of different topics, but one was capital return. And we don't define capital returns specifically as a dividend. And we know you have feelings about your experience with the capital return prior. But I was just wondering whether you could clarify or just give your thoughts, because I'm not so sure that investors caught your full sentiment off the call because that -- off the head. So any other comments you have in regards to capital return, would that be in both share repurchase, dividend or any other thoughts as you generate a significant -- a nice chunk of capital every quarter.

Sure. So you know our history, we had -- for a decade or longer, we had a dividend of 75% of what we call adjusted earnings or distributable earnings, which was the name we had before then. And for some reason, which I can never figure out, and I'm not sure that you could ever figure it out, the stock never really was rewarded for distributing this time. As a matter of fact, the yield ended up being over 10%, which never made any sense to us. So we sort of rethought about it. And I want to be clear, we want to reward our shareholders, and I think having a small dividend, given our experience, is more likely. So we currently have $0.01. We said, we'd probably look at raising it $0.01 or so at the end of the year. So that's $0.02. So you might say that's not very much. And are we going to be buyers of our stock? We do plan currently to be buyers of our stock. We like our stock, meaning we don't like the stock price and, therefore, we find it a very attractive asset to purchase. So for the company, we do plan to buy stock. We plan to be consistently buying stock over time. Obviously, there are times where we can't buy it because of other things the company is doing. So you shouldn't take from one particular month or one particular quarter that we haven't bought as much stock as we might have liked to. It may have been just because our lawyers told us we have to refrain because we're working on things. But overall, look, the company is doing really well, and I look forward to getting into it. But we do plan to reward our shareholders, and we do plan to buy back stock.

I guess, Howard, what would be other uses of cash? Certainly, you've been acquisitive in the past. But barring, if there isn't an acquisition, what -- would there be any other uses of cash that you'd look at, hardly you know both apparently buying those...

Right. I think the -- as I said, I think we are going to be buyers of our stock. And so I'm not saying that we're not going to -- I just don't want to put a percentage on it because that didn't work for me. I thought I was doing a great thing when I had 75%, and I just couldn't figure out why it was discounted. So I think maybe I'm a little damaged from that history. And -- but we do like our stock a lot. The business of the company, I mean, it may well be add-on acquisitions. I don't see anything big on the horizon, but I do expect there to be continuous add-on acquisitions or bolt-ons or things that make us a little better to execute what we're doing big. I'm not looking at anything big on the horizon. But the thing that I think is really big on the horizon is our Fenics assets and our electronic assets of the company are really just -- they are extraordinarily valuable. You were with me when we used to talk about this all the time. In 2012, I spent the whole year talking about how eSpeed was worth more than the whole company. No one ever moved the stock. And then when we sold eSpeed, the full market cap of the company, all of a sudden stock went up. I'm telling you, Rich, Fenics is such a massive value that I think the current stock price just completely underestimates its value to its clients, the big banks of the world and the market makers of the world. The value it's going to create when it helps those clients, the big banks to business with their clients, through Lucera and our ability to connect them to their clients, our market data and all of this, I mean, we are in an extraordinary position, maybe once in a lifetime, but certainly, I mean it is the most exciting time for me at BGC to be able to execute Fenics going forward.

You did the transition very smoothly, Howard. We'll talk about that. So in fact, that was what I want to talk about, too. So one significant portion of Fenics is the interest rate portion. Fenics -- I always get it mixed up Fenics U.S. Treasuries? Or is it...

Yes, Fenics UST.

UST. So we've just seen dramatic volatility in the 10-year. As you certainly talked about over the years about issuance and what that -- the potential that has for trading volumes in the interdealer-broker market. So I guess, overall, with the steepening yield curve, stimulus, et cetera, how is that, I think -- tell me how the outlook for Fenics might have changed, say, over in the last month or so when we've seen some significant interest rate volatility?

Well, look, we sold eSpeed, and then the market went into a state of low volatility, low interest rates sort of kind of quiet and kind of dull. And then all of a sudden, this pandemic is a wow. I mean there's no other way to say it. It's just, wow, it changed everything. The governments around the world just started unleashing economic stimulus. Trillions, I mean, whoever discussed, Rich, trillions at a clip. I mean you don't even think about the difference in $1 trillion, $1.9 trillion. I mean, the $0.9 trillion was a record, let alone $1.9 trillion. And that to say that's after we already did $1.9 trillion and after we brought it down to another $1 trillion. I mean, these are massive issuance scam in the U.S. and everywhere in the world. And so the government bond market of the world is exploding in volume. Interest rates are starting to rise, not in the short end. You know the government is going to try to keep those short end ranges low because if you're borrowing another $4 trillion, U.S. budget deficit is 21 -- the outstanding debt is $21 trillion, size of gross GDP. We haven't had this much debt since the end of World War II. So huge issuance, huge scale to trade. Volumes going to go through the roof that long end -- they're losing control of the long end, rates have started to rise in the long end. I think you're in the best market for growth in rates trading in my lifetime. And that's going to continue a nice long trajectory for the rest of my life. Because, I mean, $21 trillion outstanding, there's only one word for it, Rich, and that is, wow. It's just wow.

I just missed -- I may have missed. If anyone does have questions, we're going to try to take them as well and read them. So if you could type them in, we're happy to take a question or if you want to raise your hand, we're also considering that as well. But back to Fenics and the rates because you've done a great job at not only disposing, I wouldn't call it disposing or monetizing an asset, eSpeed. But then regrowing a replacement asset in Fenics UST. So now that eSpeed has been sold to a fixed -- electronic fixed income broker...

Yes. So #3 merged with #4, that's it. Because Fenics UST is the clear #2. So #3 is Tradeweb, Dealerweb, buying eSpeed, 3 and 4 getting together. I don't know how that equals more than 3 or 4 because they have to bring their systems together. I don't know how that works. But Fenics UST continues to grow. It's the clear #2 to the CME and growing quickly. And if you studied it, you've seen the CMEs market share dropped 10 points since we started growing. So we are taking market share, not from the smaller guys but from the big guy, and that's what the banks care about, and that's what the high-frequency and the professional trading world cares about. They like our model. Our model is much more nuanced, much more sophisticated, now where our spreads doesn't let the professional trading firms and the high frequency guys trade with each other, right? They only are making markets out. They don't bang each other so they can put more volume on the screen. Our screens have more volume, are more nuanced, more clever, tighter spreads, tighter spreads. And that -- people just don't understand when you have a tighter spread, most of the day, you're getting a better price if you trade on Fenics. And that's why our volumes have been growing. That's why our market share keeps growing, closing in on 20% now. Really, really doing really, really well.

You schooled me on sort of some of the flaws that Nasdaq might have had when they took over eSpeed, and we talked about pricing. So anyway, my question is you see BrokerTec, as you say, sort of the soft share. We've seen what Nasdaq did with eSpeed. Is this an issue with exchanges owning over-the-counter fixed income platform, where the big banks don't trust them where they're not as trade -- whether they might say they don't know how to cater to the customer like people like interdealer-brokers or people that do it are more focused. Do you think is it any structural issues or is it just onetime things that these platforms that -- at some point, at least in some points have lost share?

I think 2 things happened. One, when you wake up in the morning and you have a $77 billion monopolist market cap and you try to grow that market cap, cutting prices and providing better service are not the top 2 topics that come to mind. Raising your price, breaking things up. And I always describe the exchanges, like they seeming, what they do is they sell a salad instead of selling -- I sell a salad, they sell lettuce for $2 a slice and tomato for $1.50 a slice. So connecting to the exchange, doing this for the exchange, getting a faster connection. So everything costs is unbundled and charges a lot. And that's how they get to a $77 billion market cap. So you know that there's an opportunity to grow there. And now you have Tradeweb and MarketAxess, again, with $16 million and $20 billion market caps. They are protecting their market cap. They need to grow their revenues, they need to squeeze more money from their accounts, and that leaves a company like ours, a $2.5 billion market cap, plenty of room to go to $5 billion and $7.5 billion of market cap. Plenty of room to grow, plenty of room for Fenics to just make great returns for our shareholders, and still be aggressive and scrappy to grow from there. So I think we have such a long way to grow. I think we are an incredibly attractive place as an entry point to invest in the automation and electronics that are coming. If you look at the CME and Tradeweb and MarketAxess, and you really study the Fenics assets, you're going to see that those assets play an enormous breadth of opportunity in those assets. I think this is the beginning of what I've always worked for. You met me before 9/11, and I thought, we had the ball before 9/11. You know eSpeed was going to grow and build and we were rolling out products, and it was amazing, and then 9/11 sort of took it all from there. It has taken us all this time to be back of that same spot where we have the ball, we have all the pieces. You're watching Fenics from 33% last quarter, you're seeing great things happen. If you study each and every one of our points, we have Fenics U.S. Treasuries. We rolled -- we just rolled out treasury bills. We're rolling out tips. We're rolling out rebuke. You just leverage and leverage and leverage, and that scale is going to create enormous value for my shareholders. And it's going to drive value. And look, as the largest shareholder, it is time, Rich, this company's position is extraordinary and maybe it is time.

That's why that -- okay. That's why that cash should be buying back shares because it's so cheap.

Right. I didn't -- it's great. I didn't say it's great. I just -- I learned the valuable lesson when we had a 75% capital return policy and the stock didn't care about it. So I want to make sure that my shareholders know that we love the stock here, right? We are going to be buying back stock, but I'm not going to put some number and some ratio on it because there are going to be enormous opportunities for this company to execute going forward. And it is my job as the CEO to start to take these assets and start to monetize them, to drive them and make them clear, clear to my shareholders and to my investors and to my partners and even for me, personally, as the biggest shareholder. It is time for this company to start to express enormous value of this asset and $4-and-some-odd cents has nothing to do with our assets. I said this once before, 2012 and 20 -- early 2013, then we executed a variety of transactions that proved that the company is worth wildly more than that, okay? My thesis here is, this company is worth wildly more than what it's currently valued at because its assets, its Fenics assets, are just being underappreciated. And it's our job now to help figure out how to appreciate, right? That's my job.

So you've referenced what you did years past to sort of monetize it was the sale of eSpeed, was the sale of, I believe, parts of GFI as well and...

And some of the Trayport.

Yes. Excuse me, yes, Trayport, right. And you did monetize it, it did -- was -- it created -- you sold eSpeed for what the market cap of BGC pool was at the time. So the -- I guess, my question is, you look at Fenics, what are the -- what should investors know is easily -- nothing is easy, but is monetizable. We talked about Fenics UST. You have a credit platform. But the question I have, the credit platform, it seems to have a lot of the seasonality that the interdealer-broker has, where the fourth quarter is low, first quarter, if you know what I mean, will be the best and it sort of trails from there. Tradeweb and MarketAxess don't seem to have that same seasonality in their credit revenue. So is there something different or in my -- or am I just completely missing it?

There is nothing different. The same credit capital markets that Tradeweb and MarketAxess live in that we live in. It is seasonal. Christmas and Thanksgiving are slower than January and February. It's just -- when people are at the office and people are working, I think those numbers are clear. Sure, can you grow through them? I mean look at Fenics in the fourth quarter, right? Up 33%. So you say, "Well, that's not seasonal." No. The gross market volumes, all other things being equal for my decades in this business, are seasonal. There's nothing about our credit business that is at all different from a macro perspective than Tradeweb and MarketAxess. They're in more the dealer doing business with the client space, right? And we are currently more in the market makers do business with each other. But what is coming from us and is -- what is coming and the brand we use is Lucera, right, and the product we use is ALFA. We're going to help the banks and the market makers connect to their clients. And we are going to bring them in and connect them to each other, so they can trade with each other. If you can imagine, one, you can connect to us like the banks all connect to us. And in that one connection to us, we can then take that connection and connect them to all 50 of their top clients, right? And so what we did is we bought this company called Algomi, and then we totally revamped it, and it's called One ALFA now. And we install that in buy side clients and let the banks stream prices directly to those buy side clients. And so that's a business that's in the Lucera fold, right? We took our network. We took this gigantic network that we have and spent years retooling it so other people could use it. So banks can use it to trade with their clients. And that is a business that you've seen that grow really, really nicely for the last couple of years. And now what you're going to see us use that infrastructure to totally help the banks do business with their clients and start to leak into and ease into being a part of the same infrastructure, if you will, of Tradeweb and MarketAxess. Doing it differently, but doing it in a way that the banks really love it and they're excited about it. And I think they are rooting for us, and that means they're connecting to it, they want to stream forth. The clients are interested in it because they want to have -- I mean, think about it, you're a big buy side firm. You want Morgan Stanley to stream to you, you want Goldman Sachs to stream to you, you want Bank of America stream to you, you want JPMorgan stream to you, you want Citi. I mean, how many of these can I take? "BGC, isn't that your business? Don't you coordinate and consolidate all these things for your brokers. Can't you just coordinate and consolidate all that for me?" And the answer is yes. And the product is called One ALFA, and it's out now, and it's really exciting. So I think we're going to -- we're adding all sorts of pieces to that Fenics puzzle that when you put it all together, you're going to find that it is worth way more than the market cap of currently of BGC.

That's exactly and we've done some analysis. If you look at your Fenics revenues, and let's just say, for example, they were 10% of the Tradeweb. On average, I think that's higher, I think it's more like 20%. But if you took that market cap, that would equal your market cap right now. So in other words, the interdealer-broker and insurance are -- if you had that same valuation on revenue, would be zero. That's why I mean...

So I need to do a better job and me and my partner, Steve Bisgay, well, we need to do a better job figuring out how to express that value to our shareholders. And I want you to know, Rich, that we are clearly on it. We're clearly thinking about it all the time. We know we have built great assets. And now it's important for our shareholders to know that we are going to express those assets in ways that they can see the value. And if I can't think of any other way, the buy back shares, but there are a lot of ways, right, to move the needle in a big way for the stock. And that's what my objective is. So I don't -- I'm not playing for a little bets here. The assets of this company are demonstrably more valuable than its current stock price. And I think it's important for us to let you know that we are working hard on trying to free out how to express that. We expressed it once before. And I think we proved it. And when I speak like this, last time, I said it in 2012, and no one ever thought we would sell eSpeed and we did. So I think we will express great value for this company.

So the last time you expressed it, it did take a sale of eSpeed and Trayport as well. So it took some monetization in the form of sales, like there was no -- that's the way you created value power. So as you look at Fenics, do you think there's a possibility? Like how do you look at Fenics? Is it one entity? Or do you think it could be split off? If needed be, if the market wasn't valuing you, when you feel properly, is there a way that you could -- is it feasible you would spin or sell Fenics UST separate than Fenics -- credit or Fenics GO, et cetera, or Fenics, the FX platform, or -- where do you see the most value combined?

The answer is nothing can be off the table. It just can't be. That's just not right and when you're as confident as we are, the value we've created, we need to be great stewards of our shareholders' money, okay? And that's our job. And so I think a number of these assets, when coupled together, are really of extraordinary value and whether that's how we do that, how we partner with other people, how we express value, maybe we take -- maybe a third-party invests a valuation that is wildly higher than what people think things are now. That's a way to express value. Maybe it's a -- these are all -- everything is on the table, is basically the way to say it. And are we looking to sell at least that or the other thing? No. Is it for sale? No. But would we? Of course, that's the proper thing to say. But the value is there, and it's important for us to find that value. And I think having third parties invest is a good way to show real value. Possibly taking something public at value that's of a certain level. These are all things that are on the table for us to consider. I'm not promising anybody anything, but I'm simply saying that we have the assets and we built those assets. And it's important for us to express value of them going forward over the next year or so. So I'm not saying, "Don't ask what happens now, Rich." You're going to call me next quarter and say, "So what have you done?" I know that, but I'm simply saying it's -- over the next year, as these things play out, we will find a way to express at that.

So one of the ways that companies in this particular timing would acclimate or error, whatever you want to call it, there's other ways to monetize value. And we see day in and day out in SPACs or direct listings, et cetera, just other venues, which unlock value of companies that aren't necessarily GAAP profitable at the moment. You operate, I believe, a SPAC. Is this the way that the Cantor...

Not. Cantor Fitzgerald has a great SPAC franchise. Top 3, I think, today, SPAC franchise generally. So we know SPACs really well. And I personally have sponsored for Cantor Fitzgerald, as part of my Cantor Fitzgerald job, numerous SPACs. So we understand that market cold, and that, of course, is a way to express value. And it is something we are deeply considering, of course.

Understood. You answered my question. I do want to take a couple of questions that have come in from -- but that was an important answer or statement out. One question that came in, it says, "Isn't the insurance business a more obvious sale once its EBITDA margin stabilizes and use proceeds to repurchase shares still at this level?"

I really like the insurance business. I like its growth, I like its opportunity. I like investing in it. I think it served us extraordinarily well. I think it's worth well more than we've invested. If we get the right price for it, we will sell it and use that money to do great things with stock. So nothing is off the table. I told you last time. When we thought about it, we just didn't get the price that we thought it was worth, okay? I explored it, and I just didn't get the value that I thought was fair to my shareholders. If and when I get the value that is fair to my shareholders, I'm open-minded to do a transaction. I'm not promising. Again, I'm not promising. I'm simply saying I'm here to build value for my shareholders. And people think I'm here to build things for my great grandchildren. They're just wrong. They're just wrong. They just don't understand me. They might think that's what I'm doing. They're just wrong. I'm here to win to my shareholders and as the biggest shareholder, and Steve is a big shareholder, you know what I mean? We got to do stuff for our employees, for our shareholders, you have to.

Knowing you for 20 years, I would say they were wrong if they thought that, too. I'd agree. Another question. As sell-side gets fully staffed up with return to office, does this help the traditional side of the interdealer broking market of business?

It does. I mean, I think we estimate that about 1/3 of our clients are working from the office, and 2/3 are still working from another location. I think when they get together and they work from their offices, they'll know their technologies better. And therefore, they trade a little bit more. They trade a little bit -- they'll trade a little bit more, which is good for us. But the other thing that matters is that their salesmen. When they sit together, they're more competitive. And they're not competitive with each other. They're just driven to succeed. The person sitting to your left is doing all sorts of business and you're not accomplishing as much. It's motivational about, "Hey, this person is not better than me. I'm going to work harder." And you can't have that from home. So our brokers are more successful when they're in because they're more motivated. And our clients do more business when they're in. So I think the return -- client return will be a nice tailwind for the company.

Got it. One last follow-up on the question in regards to Fenics. Is Fenics benefiting from the migration from voice broker to electronics? That's sort of a feed, right or not?

For sure, for sure.

So if you were to pull Fenics from that feeder, could Fenics continue to grow, whereas companies like MarketAxess and Tradeweb, they don't -- Tradeweb, would have a little bit of that interdealer broker to feed electronics. But they generally convert -- helping that conversion to other ways other than -- you have a nice pipeline feeder. So the question is, can these Fenics businesses stand alone, whether it be in a SPAC or whether it be in a sale or whatever form, would it be able to continue to grow independently of the voice broker that feeds them now?

So we have a significant number of businesses that are fully electronic, like we talked about, Fenics U.S. Treasury, Fenics GO. We have a whole variety of foreign exchange products. MidFX, which is a big business for us. Asian NDFs, we've just rolled out. So we have a significant number of -- and then the whole Lucera business, the connection business and the interconnect business in the end we used the rails for our network and our system. Those are all totally separable, right? And that's with really no work. We just -- they are separable businesses. The businesses that are, what we call, Fenics integrated, where the electronics and the voice are together, they are really just like a relay race as the hand off has occurred, right? There's a voice brokerage business, clients start to come in electronically. Clients are going to become more and more electronic over time just by time. I don't think anybody thinks of it is really interesting now that you think what's the percentage is going to be more electronic. So what happens is when you could see it in our numbers that are related party number, that's where Fenics charges -- it's intercompany, right? It's where Fenics charges the broker to just provide technology. Now as that reduces because the clients are doing more electronics and it come -- and the business becomes Fenics integrated, that number will go down, and Fenics will literally have all the brokerage revenue. So you're going to see that continue to happen and that is a feeder. So I think it's a great asset of ours. That's a $1.6 billion pipeline of assets that's going to move over. But do we have a substantial -- do we -- do I think we have assets that are equal to the market cap of this company that are separable? The answer is, I do.

And we'll wait for those -- actually, to modify that. Let me go further. Market data growth, it's still in its more infancy and most of the electronic execution facilities like Tradeweb and MarketAxess, probably more advanced than, say, ICE because they bought IDC. So what's the potential for market data growth in the Fenics businesses? It has been growing nicely, but it's certainly not at scale or a big number yet relative to Tradeweb?

You're exactly right. I think it is demonstrably undersized for us. I think we are disappointed at growth rates, in the teens or in the 20s, that disappoints us, I think, because we think it is undersized, we think it has much more growth in that, well north of 20% growth compounded for the long distant future. As we bring more -- like we're not even selling our U.S. Treasury data now. We're just starting to market that now. We have Fenics GO data. We're going to have enormous amounts of data coming in, and I think that will turbocharge the growth rate. So I think you should expect our market data growth to ramp up its growth rate. Now it's in the nice -- it's at a nice level, mid teens level. But I would think we expect it to get well north of 20s. And for the long distant future, we expect well over the 20s.

I guess, another question is just turning to insurance a bit. You made -- I think it was breakeven in the fourth quarter. And you also sort of reiterated these, what I think you call them medium-term targets, like not 2021, but over the medium term, the margins of 15% and the revenues of $300 million. So I guess, has insurance accelerated given their earlier breakeven point? What's your view on insurance now? Again, you said you like the business, like to grow it, et cetera, but you didn't get the price you want. But is that just the view and you're going to continue to grow until you reach...

Well, remember, the timing was a year ago, right? So that's even slightly longer than a year ago, and sort of maybe you wouldn't get the pricing because it was sort of going into the pandemic and all the rest. Maybe it was just lousy timing. But the business of insurance is hardening, meaning the prices are going up. When prices go up in insurance, the commissions go up. So it's a good market, meaning the base underlying terms are good. I think the business should do well. I think the macro insurance should do well. We hired a lot of brokers. And when we hire a lot of brokers, we get a drag on it first year because I don't know if you know, if you're familiar with the way insurance works, but insurance brokers tend to bring over virtually all of their business, but not for the first year. They have a leave-it-behind-for-1-year-and-then-you-can-bring-it contract. Effectively, it is how the insurance industry works. So you tend to be very low productivity, as in extraordinarily low productivity, only new clients. But then your existing clients can follow you a year from today. And of course, the reason they bring most of their clients with them is because the insurance company can stay the same. They're just having you as a service provider, who takes care of the client. And so we've hired a huge number of people, and that was a drag. But now that that's sort of -- much of it is behind us. And those producers are coming, you're going to start seeing us ramp up to that $300 million level. But the market is good. The underlying world is good. There are always bumps in the road, as you know. We have a big aviation business that's kind of weird now, right? The aviation business kind of got a little messed up. We hired all these people in sort of late last year and they joined in February, and then you had the pandemic. So I don't think the aviation people have been able to express their value in the way that we would have expected because I think the airlines are kind of in a little bit of a comatose state. But as they come out of it, I think business will do much better. So I think the economics and the valuation of our insurance business should become more clear going forward. And I wouldn't -- I like the business, I like that. It will turn profitable for us, which means this sort of drag is gone, right? But maybe we'll get our numbers someday. I'm not allowed to make promises, but I like the business a lot.

Yes.

I like its value for the BGC shareholders even more.

In the spirit of the FIA, which is open and we allow others to ask questions, I'm going to allow Patrick O'Shaughnessy to ask, who I know knows the company very well. So Patrick, if you could unmute, you're live.

Howard and Steve, maybe a question for Steve, he looks bored over there. How are you thinking about your free cash flow conversion in 2021? By that, I mean, converting adjusted net income into free cash flow?

Well, I mean, obviously, there are certain things we have to cover in terms of taxes, CapEx, as an example. We've said this before that where our plan is to rely less on equity comp and a little bit more on cash compensation as a driver of cash flow as well.

Okay. And Howard, I want to follow up on the Algomi One ALFA solution that you're rolling out. What's the time line like for you to reach critical mass with that rollout? And what's the revenue model for that business?

So it's a subscription-based model, as a revenue model. The banks and market makers will pay a subscription. And they'll do that not in a -- and we are going to break unit economics, meaning it's not going to be paid per X or per Y, per Z. It will be -- you got 50 accounts for this, you got 100 accounts for this, something like that. There'll be sort of the scale subscription model for the market makers. For the buy side accounts, it will be a very -- a relatively low price for them to use sort of, let's call it, pre-trade aggregation. And then with an EMS, electronic trading system, enabling them to transact business electronically with their clients. And then as they ask for more and more modules, we'll incrementally do customization for them and modular work for them as they go forward. But our objective is low price for the buy side, non-unit economic subscription price for the sell side and the market makers. And since these -- this business is already built, meaning it's using our network, it's using our rails, our margin should be very high in that business, so a full recurring revenue model. And we're out marketing in that. So the timing of when I can approve them as -- if I hang up and call my sales people and say, "Come on, guys, when are you going to get the critical mass?" I think the answer is they're marketing it right now and they're talking to clients right now. The product is available. So I think we're out there marketing it. And it just takes time to install it. This is not a fast sale. It's an installation, but the market makers, the banks want to stream over it and the buy side wants someone to aggregate. So I think we have a good demand. I think we're in a good position. And now it's just execution. But it is a recurring revenue subscription-based model.

Got it. And let's say you're wildly successful with that rollout and a lot of demand for it. As it scales up, how are you thinking about the revenue opportunity? Is it tens of millions, if it -- just as a home run for you guys?

Yes. I'm not interested in talking about stuff that's not a home run, okay? All right. I'm done with that part of my life. This is -- BGC has enormous opportunity. I mean, you've got -- you have to remember that business is really in the same space as MarketAxess and Tradeweb. So you've got $36 billion of market cap in those 2 companies. And the full market cap of BGC is only in the $2.5 billion range. So I mean the scale by which we can succeed is enormous. So I like this business a lot. I think it has enormous runway to be deeply valuable for the shareholders of BGC.

Got you. Maybe last one from me, and then I'll turn it back over to you, Rich. How do you think about the competitive threat from an entity like Tradeweb or even MarketAxess to some extent where I think they're doing more to try to combine liquidity pools between the interdealer space and the dealer-to-client space or all-to-all and really kind of unifying that. Do you think that's an incremental threat to you guys? Or is this something that's kind of always existed?

Yes. I think it's always existed. I don't find there's anything what they have done in the last year that has changed our outlook at all. You heard Rich ask me. So the Tradeweb owned Dealerweb for more than a decade. And we went right by them in market share in 2 years, right? And now we do more than double than they do. So -- and we went right by eSpeed as well. And now they're combining, and I don't know how you combine 2 different systems together, but it's not as if Tradeweb was buying eSpeed, and this was their entrance to the market, right? They had Dealerweb. They've been doing things with Dealerweb for, gosh, as long as I can recall, but probably longer than 10 years. So I just don't think them coming after me makes a lot of sense, right? It's just not their business. I think they have bigger fish to fry in trying their all-to-all disintermediating the banks. That's their all-to-all. You don't need to call a bank, you can trade directly with MarketAxess and Tradeweb, trade with each other and not use the banks. And look, that's their business. How else did they grow from $20 billion to $40 billion, right? That's a much bigger -- that's a much bigger carrier than from us to go from $2.5 billion to $5 billion. So I think we are focused on our knitting, which is -- as we edge into their business, we'll step into the business, and if we do it reasonably well, and as we go into some of these other electronic businesses that do it, go after the CME a little bit, where there's $77 billion market cap. Any pieces of those puzzles that pull in us will make our shareholders a lot of money. So I'm just not going to worry about it.

One more question came in, Howard. So it's Bitcoin, blockchain, carbon capture. What role does BGCP have in this year -- in these areas?

I think something fundamental changed recently with Bitcoin. And that was that the major banks, a couple of the major clearing banks, committed to us that they would clear. And if they will clear Bitcoin, then we can transact Bitcoin. The thing that held BGC back from creating a wholesale market in Bitcoin was how do you clear it and how do you store it? Imagine if we announced that we were going to create a wholesale market, and we're going to use some company that can clear it and store it that you've never heard of, I couldn't do it. So now if the Bank of New York is going to do it, that sounds good to me, right? That sounds reliable, incredible. And we can then go into the Bitcoin business of creating a wholesale market for Bitcoin and using all our tools and technology to do that. So you should expect us to do that in the coming months. And we have done a lot of work on that, meaning it will not look like we started on Tuesday. When we come out with it, you will see that it is really a well thought out multiyear plan, but we couldn't roll it out until we had a proper way to do it in scale. Now I'm not sure it's going to -- what's going to happen. But I think it adds enough notoriety and enough scale that one of the great wholesalers on the face of the earth transacting and then creating wholesale market for the world's trading community, I think, will create market data value and create opportunity for us to transact in the whole virtual currency space, so not just Bitcoin, in the whole virtual currency space. Carbon credits, we've always been one of the largest if not the largest carbon brokerage company, and we continue to invest in that business. We expect to be carbon-neutral by simply -- we're buying enough problem credits and retiring them that our group of companies will be carbon neutral. I may have to do the calculation. It's probably this year we'll be carbon neutral. If for some reason, the math isn't perfect, it will be next year we'll be carbon neutral. But we expect to retire enough credits to take care of ourselves and my whole group of companies. So those things are interesting for us and we invest in them for the long term, but we don't take them out until we can do them for scale. Because to answer your comments, I still want to do small stuff. I want to do stuff that's going to move the needle for my shareholders.

We're at time, Howard, so I won't go back and beat on the same question. But I would -- my last question would be, what's your top priority for the next 3 to 6 months? What do you place as job 1?

Driving asset value for Fenics, for my shareholders. This is definitely the absolute top of the list.

I could ask 11 more questions on it, but I'm going to stop because I don't think we're going to get what's reasonable. So anyway, but we do -- we definitely appreciate you being bold in what you did say. So first, do you have any other closing comments? If not, I will wrap up, but I'll turn it over to you.

Look, I think the company has focused on building its assets for many years. So you've listened to us talk about how we spent $55 million linear building our treasury infrastructure and then $40 million the next year building our Fenics infrastructure. And then we said this year, we expect to turn the quarter and have those be breakeven, we said that last year. So we built -- we've spent a lot of time building those assets. And I think now it's time for us to try to figure out how to express their value, so our shareholders can appreciate them more clearly than me just talking about them in meetings like this.

Thank you, Howard. And Steve, sorry, we -- but we know you're a highly capable CFO as well.

His work will be a boring time. He gets -- he knows this by now.

I do.

Exactly. I want to thank you both for participating. You've made it, the Boca experience as close as what it can be, given the circumstances. Hopefully, we will meet down in Boca Raton next March. So thank you, Howard, and we'll be -- we'll certainly be talking to you soon. And thank you all. We'll return tomorrow with day 2 of the Virtual FIA meetings that we're holding. Thank you.