According to sources, BGC Partners has shuttered its pre-trade data business, Lucera LUMEAlfa, closing the final chapter on pre-trade data pioneer Algomi, and aligning BGC’s business firmly towards its other Fenics platforms, including the planned treasury futures exchange, FMX.
Speaking with analysts on the firm’s Q1 2023 earnings call, chairman and CEO of BGC Partners, Howard Lutnick, noted that Fenics contributed 26% of revenues to the group in Q1 and outlined the challenges and opportunity that the firm saw in the upcoming launch of FMX. “I think the desire to participate with us, to be part of FMX either as partners or as clients and users, continues to rise and I’ve yet to have the meeting where someone said, ‘No, I’m not really interested in participating in the competitor to the CME’s monopoly in America,” he said. “My sense is that the CME, which is an extraordinarily important and powerful enterprise in America, will maybe have backroom conversations with CFTC asking to go a little slower,” he continued. “So, I’m not expecting things to go swiftly necessarily, as they might otherwise because that’s a possibility. I don’t know it, but that’s certainly a possibility. And so, we await the CFTC’s approval whenever that process runs its course.”
The interdealer broker saw strong growth in Q1, with revenues at Fenics, which represents the group’s financial technology assets and services, up 12% year-on-year to US$140 million. Within that, data, software and post-trade revenues improved by 12.4% driven by Fenics Market Data and Lucera, the firm’s aggregation and connectivity software. Lucera LUMEAlfa, which has reportedly now closed, was formed from BGC’s acquisition of Algomi Alfa in Q1 2020, which itself was comprised of the original Algomi business, a pre-trade data aggregator launched in 2014, and Alfa, the pre-trade liquidity and pricing tool developed in-house by AllianceBernstein, and bought by Algomi in 2017. Although sources have said it has now closed, BGC has not responded to requests for comment.
AllianceBernstein’s in-house Alfa tool is reportedly not affected. BGC’s Fenics success in Q1 was led by a 33.1% increase in its Fenics Growth Platforms, driven by its US Treasury platform Fenics UST, global session-based credit platform Portfolio Match and Fenics GO, its equity index options platform. Fenics Markets revenues increased 9.5% which it noted reflected the conversion of voice/hybrid volumes to higher margin, technology-driven Fenics businesses. Stronger trading volumes across electronic fixed income products, notably credit also played a key part.
Lutnick was adamant that FMX will not only get approval but add to Fenics current successes based on visible customer support. “The soft launch is just the beginning of onboarding as many clients as we possibly can,” he said. “Do we have a long line of them? We do. Do we expect to be successful in this process? We do. Is it just work? Yes. Is it more than just work? It is not. And so we are going to work hard at it and we are going to stand up an extraordinary competitor … we do not think anyone has ever seen anything quite like this.”
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