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Speaker 1: Bloomberg Audio Studios, podcasts, radio News.

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Speaker 2: We're going to now talk about a different part of

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Speaker 2: the market. A big move on Wall Street happening right now.

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Speaker 2: Cantor Fitzgerald has got the backing of major names on

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Speaker 2: Wall Street for its upcoming new futures exchange SMX. Investors

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Speaker 2: from Bank of America, Barclays, Citadels, Securities, City, Goldman, and

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Speaker 2: JP Morgan invested more than one hundred and seventy million

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Speaker 2: dollars for a nearly twenty six percent stake in FMX,

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Speaker 2: which will increase as they keep.

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Speaker 3: Using that platform.

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Speaker 2: We're going to bring in Canter Fitzgerald Chairman and CEO.

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Speaker 2: Howard Lucknick. You've talked a little bit about this before,

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Speaker 2: this idea of taking on CME in the future's business.

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Speaker 2: How do you take on a giant today with the help, frankly,

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Speaker 2: of every major Wall Street bank?

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Speaker 4: All right?

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Speaker 1: So BGC BGC Group Public Company owns this exchange, right,

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Speaker 1: and so we are the wholesaler of the world. So

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Speaker 1: you think when Fidelity or Pimco, when they wake up

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Speaker 1: in the morning want to buy something, they call a

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Speaker 1: big bank.

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Speaker 4: Who do those banks call? Like, what do they do? So?

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Speaker 1: BGC Group is the broker in between. So we're sort

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Speaker 1: of the exchange for everything in the world that doesn't.

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Speaker 4: Trade on an exchange.

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Speaker 1: And everybody always asked me, if you're the exchange for

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Speaker 1: everything that doesn't trade on an exchange, why don't you

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Speaker 1: become an exchange. So BGC set up FMX to build

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Speaker 1: a futures exchange to compete with the incredible monopoly of

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Speaker 1: in America, the Chicago Mercantolic Exchange, which is awesome.

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Speaker 4: It's worth eighty billion dollars.

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Speaker 1: And stands alone did ninety nine percent of futures in

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Speaker 1: America last year. It seems like a monopoly to me.

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Speaker 1: So all these banks came in as a partner. Ten

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Speaker 1: of the greatest trading firms one through ten, JP, Morgan Goldman, Sachs,

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Speaker 1: City Group, Morgan, Stanley, Wells, Fargo, Barkley's I don't even know,

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Speaker 1: i'mly going to leave someone else's Bank of America, Citadel,

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Speaker 1: you know, Jump Trading, the number one futures trader in

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Speaker 1: the world, Tower number one treasury traders.

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Speaker 4: These all are.

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Speaker 1: Together, all coming behind this exchange to make this exchange

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Speaker 1: so fun and so amazing.

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Speaker 2: Well, here's the question of CME as you say, has

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Speaker 2: ninety nine percent of the volume. Here, how come these

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Speaker 2: banks have supported you in this? What is the outcome

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Speaker 2: that you and them are looking for?

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Speaker 1: Well, look, when you're alone, like the CMEME, they do

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Speaker 1: as I say, they serve a they have a great

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Speaker 1: product and they charge.

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Speaker 4: They charge a great price, like holy.

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Speaker 1: Moly, and sort of like every Christmas they just raise

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Speaker 1: their price.

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Speaker 4: You know, it's a Christmas present, let's just raise our price.

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Speaker 1: So the banks want an alternative, they want a competitor.

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Speaker 4: And what else they want is innovation. So we have the.

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Speaker 1: Fastest system right, the tightest spreads. And we did this

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Speaker 1: in US treasury. So we started with the US Treasury

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Speaker 1: now had when we announced that we were going to

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Speaker 1: be in the US treasury market, like in exchange, they

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Speaker 1: had eighty five percent market share to see me, so

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Speaker 1: I call them the heavyweight cham right, and there was

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Speaker 1: fifteen percent by other players.

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Speaker 4: So we went in.

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Speaker 1: We now have twenty eight percent and they're in the

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Speaker 1: mid sixties. So if someone thinks we can't get a

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Speaker 1: glove on the champ.

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Speaker 4: They're wrong. They're not watching. So the treasury business was one.

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Speaker 1: Now we're going to do treasury futures you might say, well,

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Speaker 1: why shouldn't you win in that as well, And the

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Speaker 1: answer is, I think we're going to and we're going

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Speaker 1: to do SOFA futures, which are like interest rate swaps,

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Speaker 1: and that's going to be amazingly cool as well.

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Speaker 2: You've been talking about this interest rate business treasuries in

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Speaker 2: particular as well. Are there other markets that you would

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Speaker 2: look to break into that you're not currently in.

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Speaker 1: Well, we're going to start with the interest rate world.

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Speaker 1: But when you've got the world's created trading firms as

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Speaker 1: your partner, they're going to say what's next. And I

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Speaker 1: would think other futures exchanges to start will be a

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Speaker 1: classic move as we go around the world, equities, bonds,

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Speaker 1: it's a futures exchange. You can do anything, So it's

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Speaker 1: really fun. We have the technologies doing in place. See

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Speaker 1: the thing about BGC Group is it already has the

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Speaker 1: connection to all these people.

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Speaker 4: We don't have to start building it today.

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Speaker 1: We're going to open in September, right, and we're going

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Speaker 1: to start and you know, with that futures exchange, you

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Speaker 1: just want everybody to connect. So the first year we're

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Speaker 1: going to get everyone to connect. Second year we're going

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Speaker 1: to get everyone trading, and in the third year it's

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Speaker 1: going to be full blown, a full on competition for

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Speaker 1: the eighty billion dollars heavyweight chair.

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Speaker 2: We'll talk about that timeline in a second, but you

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Speaker 2: had mentioned the Christmas present of higher fees from the exchanges.

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Speaker 2: Do you plan to lower trading costs on this new

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Speaker 2: venue with.

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Speaker 4: The word for certain be helpful?

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Speaker 1: Yes, absolutely, absolutely, absolutely.

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Speaker 4: The concept of being much more efficient, much.

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Speaker 1: Faster, and much cheaper will create eight more volume, will

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Speaker 1: be innovation.

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Speaker 4: We'll do all sorts of things.

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Speaker 1: We'll build an example, if you want to trade one

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Speaker 1: futures contract against another futures contract, it's built into the

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Speaker 1: trading system, so you can't miss. It's atomically built in,

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Speaker 1: rather than two different systems sort of trying to figure

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Speaker 1: it out.

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Speaker 4: I mean, you can just be.

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Speaker 1: Innovative, clever, smart, and faster, and the banks are all

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Speaker 1: behind us, the greatest traders in the world behind us,

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Speaker 1: the greatest technology that's already installed.

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Speaker 4: I think we're I'm really I'm.

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Speaker 1: If I don't seem like I'm having fun, you haven't

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Speaker 1: spent time with me.

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Speaker 4: This is so much fun for us, Howard.

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Speaker 2: Today it's valued at six hundred and sixty seven million

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Speaker 2: dollars with the new backers that you've bought on board.

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Speaker 2: You've kind of mentioned it through your timeline to you

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Speaker 2: expand the business.

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Speaker 3: What is this company valued in three to five years?

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Speaker 1: Well, it's sort of like one of my favorite thoughts

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Speaker 1: is when George Clooney tasted some tequilas, right, and he

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Speaker 1: bought a tequila company. How much was that tequila company worth?

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Speaker 1: I think he bought it for like seven million dollars

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Speaker 1: and then he sold it for seven hundred million. So

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Speaker 1: these banks are my George Clooney, you know, I see

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Speaker 1: the mom like, these guys are just so these men

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Speaker 1: and women are just so handsome.

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Speaker 3: Goal, do you have a target on how big you

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Speaker 3: want to get?

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Speaker 1: I think we want to gain market share. Likely we've

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Speaker 1: done in US treasuries. Our US treasury business, which competes

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Speaker 1: with the Chicago market dollars change, grows one to two

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Speaker 1: points market share every single quarter.

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Speaker 4: So we were twenty six percent at the end of

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Speaker 4: the year. We just put out.

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Speaker 1: This morning with you guys twenty eight percent this quarter,

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Speaker 1: so two percent per quarter.

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Speaker 4: I think we're going to keep growing.

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Speaker 1: We'll get to half and I think our futures exchange

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Speaker 1: will just keep growing and eventually we'll get to half

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Speaker 1: and I think that eventually will become enormously valuable for

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Speaker 1: us for competition. It'll drive down costs, it'll drive up volumes,

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Speaker 1: It'll be great for melic.

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Speaker 2: It's interesting to hear you come in and talk so

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Speaker 2: much about grow because when you look across Wall Street

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Speaker 2: right now, it's hard to find a lot of growth,

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Speaker 2: particularly when it comes to headcount and expansion. What does

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Speaker 2: this mean for all of your companies, Canner Fitzgerald BGC

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Speaker 2: in terms of what you want to be able to

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Speaker 2: do bring more people on board?

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Speaker 3: Is that possible for you?

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Speaker 4: Sure?

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Speaker 1: I mean to be. When you're innovative, you can create

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Speaker 1: new things. So we're hiring tech people up a storm.

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Speaker 1: BGC is growing amazingly.

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Speaker 4: Stock was up. BGC group was up ninety.

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Speaker 1: Percent last year, and it's on a tear again and

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Speaker 1: it's going to be imagined. You have this exchange where

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Speaker 1: all these banks going in at a six hundred and

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Speaker 1: sixty seven million dollar valuation.

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Speaker 4: But that was yesterday.

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Speaker 1: What do you think it's worth today with all these

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Speaker 1: banks as your partners, multiples and multiples higher. I'm sure

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Speaker 1: private equity firms would love to invest at three or

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Speaker 1: four times that much. We aren't sellers. We're going to

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Speaker 1: build a great business. BGC is growing up a storm,

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Speaker 1: and so is Cantor. So I think there's lots of

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Speaker 1: growth ahead.

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Speaker 2: So let's talk about the markets now too, because you're

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Speaker 2: in the treasury business. Of course, we have the two

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Speaker 2: year about to touch five percent once again, a lot

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Speaker 2: of expectations changing in this market, Treasury auctions coming at

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Speaker 2: really a record clip.

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Speaker 3: Almost across the curve. What kind of volatility does that create?

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Speaker 2: And where do you think the treasury market really goes

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Speaker 2: from here this year?

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Speaker 1: All right, So we have two things that are incredible

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Speaker 1: to think about. The Fed's balance sheet is seven point

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Speaker 1: five trillion dollars and that's got to come down.

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Speaker 4: So that means they're not going to buy the treasuries.

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Speaker 4: They need someone else to buy them.

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Speaker 1: That coupled with our beautiful government running deficits of one

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Speaker 1: point eight trillion a year, so you've got just huge supply,

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Speaker 1: huge supply coming that's got to keep rates higher for longer.

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Speaker 1: It has to keep rates higher for longer.

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Speaker 4: I view it as steady.

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Speaker 1: Right when I was here in January with you guys,

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Speaker 1: I said rates would be steady, and where have they

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Speaker 1: been since then? Steady? They remember people were talking about

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Speaker 1: six or seven cuts. I was like, ha, ha, well

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Speaker 1: who was cutting six or seven times? I think the

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Speaker 1: Fed is gonna stay steady. I think inflation is stubborn.

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Speaker 1: We're hanging in there. You're seeing the two year note.

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Speaker 1: Think about this. The market is saying two years at

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Speaker 1: five percent? So what's the core market really saying. They're saying,

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Speaker 1: we're not really going anywhere right where? I mean what

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Speaker 1: short term rates are at five and a quarter? So

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Speaker 1: if you said the average for the next two years

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Speaker 1: was gonna be five percent, right, what you're saying, We're

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Speaker 1: going to stick around here?

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Speaker 4: And we are.

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Speaker 1: So the Fed has the ability to cut a little

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Speaker 1: because remember, if they let go of their balance sheet,

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Speaker 1: that's tightening, right. I'm not buying anymore, you're gonna buy.

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Speaker 1: That's gonna take money out of the system. When the

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Speaker 1: FED stops buying and cuts its balance sheet, that's a tightening.

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Speaker 1: So the FED can cut a little bit of interest rates.

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Speaker 3: When's that first cut?

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Speaker 1: I think right before the election, Not that the FED

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Speaker 1: is involved in elections, but September.

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Speaker 4: I'm thinking, I'm thinking.

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Speaker 1: September, and it's not really to move the economy. It's

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Speaker 1: to show off a little bit, help a little bit.

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Speaker 1: You know, the guy who's employing you today, maybe he'll give.

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Speaker 4: You your job again if he gets elected. Can't hurt.

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Speaker 1: So I think September one cut. That's it, just showing

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Speaker 1: off and I'm really doing it.

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Speaker 2: Really curious about your views on the election here too.

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Speaker 2: Earlier this month, you hosted a fundraiser for Donald Trump

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Speaker 2: alongside John Paulson in Palm Beach. What would a potential

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Speaker 2: Trump presidency trump two point zero?

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Speaker 3: What would that mean for the markets?

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Speaker 4: Well?

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Speaker 1: Again, he last time, if you remember, there was a

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Speaker 1: lot of consternation when he was elected, and my view

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Speaker 1: was it will be good for business, it will be

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Speaker 1: good for the banks, and it was the banks traded

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Speaker 1: incredibly Well. You know, the Republican Party is a less

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Speaker 1: regulatory party, right. You saw the Federal Trade Commission just

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Speaker 1: came out and said non competes are something they want

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Speaker 1: to do away with.

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Speaker 4: That's not really business friendly.

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Speaker 1: Right, So an administration that's more business friendly probably is

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Speaker 1: good for stocks, although you can't say lately, Joe Biden's

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Speaker 1: not good for stocks. The market's doing perfectly fine, and

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Speaker 1: stocks are doing perfectly fine, So I think it's not

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Speaker 1: going to be as much as people think. But I

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Speaker 1: think a Trump administration is just less regulatory, which businesses like.

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Speaker 4: Less like the.

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Speaker 1: Federal Trade Commission saying non competes. You know, they got

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Speaker 1: sued right away. So it just seems overbroad less regulation

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Speaker 1: is good for markets, good for business, and I think businesses.

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Speaker 4: Like that better.

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Speaker 2: Well, what do you think this means in terms of

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Speaker 2: the attitudes from the business community around Donald Trump? Do

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Speaker 2: you think that there's any changes that you've seen, particularly

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Speaker 2: given that you have such a closier to the ground.

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Speaker 4: I think it's you feel more coming. I think they were.

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Speaker 1: They were afraid in the beginning, I think when it

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Speaker 1: was still during the primaries.

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Speaker 4: But you feel more and more people coming.

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Speaker 1: Surprisingly, people who would never have said that before come

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Speaker 1: up to me and say, you know, I'm thinking about

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Speaker 1: it because they really don't like immigration. I mean they

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Speaker 1: just immigration is just something like who talks about immigration

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Speaker 1: at dinner parties? The answers these days, everybody talks about it.

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Speaker 1: I mean, you have it in New York, everywhere, you

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Speaker 1: have it in San Francisco everywhere, so immigration matters, and

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Speaker 1: just the things like today with the Federal Trade Commission.

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Speaker 1: I mean, it's just, you know, it's just big regulatory push.

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Speaker 1: So I think business is moving more towards the Republican side,

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Speaker 1: surprisingly more towards the Republican side than they were before.

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Speaker 1: But I think it's going to be a tough forward election.

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Speaker 1: I really think it's going to be dead heat.

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Speaker 3: Close, dead heat close.

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Speaker 2: How do you think that translates to volatility into the

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Speaker 2: markets throughout the year and into next even given the

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Speaker 2: challenges you're seeing around the world, and given the challenges

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Speaker 2: you're seeing in the US's own economy starting to come up.

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Speaker 1: I think big volatility come the end of September going

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Speaker 1: into the election. I mean the uncertainty, well, investors tend

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Speaker 1: to put their hands in their pockets when they don't

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Speaker 1: know what's going on, right when you have a good

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Speaker 1: confidence of where you're going and you go investing. So

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Speaker 1: I think volumes will decline a bit and volatility will

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Speaker 1: rise because people won't know which way they're coming or going.

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Speaker 1: So I think October is going to be just a

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Speaker 1: crazy time because people won't know what the heck is

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Speaker 1: going on and the election. You know, it's amazing about

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Speaker 1: elections in America. Once it's settled, markets go right back

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Speaker 1: to normal. So I think once it's settled, I think

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Speaker 1: you're going to have a much better market than you're.

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Speaker 4: Going to in October.

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Speaker 2: Another volatile asset bitcoin, You have been very vocal in

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Speaker 2: your kind of constructive view about bitcoin, particularly as it's

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Speaker 2: used around the world.

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Speaker 3: Interesting though, you did.

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Speaker 2: Say that it would be benefiting and be bounding this year,

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Speaker 2: but you didn't say that the ETF would necessarily bring

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Speaker 2: it there.

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Speaker 3: Would you be a buyer of bitcoin at these levels?

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Speaker 1: I think so bitcoin just had right, which means that

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Speaker 1: the work you do to get a bitcoin, the price

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Speaker 1: is twice as high. So that is theoretically a benefit

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Speaker 1: for the next four years for bitcoin. So I think

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Speaker 1: over time bitcoin will rally even from here over the

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Speaker 1: next four years.

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Speaker 4: So if you bring me back four.

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Speaker 1: Years from today, I think the market will be will

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Speaker 1: be higher. And I think these things. It has a

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Speaker 1: place in the world and it's not going away, So

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Speaker 1: I think.

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Speaker 4: That's sort of the way to think about it.

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Speaker 2: You've spoken about your optimism around tether as well.

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Speaker 3: I'm curious about your.

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Speaker 2: View on this, because recently S and P analysts have

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Speaker 2: said if the latest US stable coin built passes that

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Speaker 2: US companies would no longer be able to hold or

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Speaker 2: transact in Tether because it's run by a non US entergy.

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Speaker 2: How do you prepare for something like that?

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Speaker 1: Well, I think, first off, Americans stable coins in general,

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Speaker 1: there's two big ones. There's tether and there's Circle, okay,

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Speaker 1: and Americans should have nothing to do with these things.

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Speaker 1: I have dollars in my pocket, I have dollars in

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Speaker 1: my bank account, I have a credit card and dollars.

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Speaker 1: I can venmo, you PayPal, zell. These are all simple

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Speaker 1: things for Americans. We have no business being near stable coins.

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Speaker 1: But I'll tell you what Argentina, Turkey, Venezuela. If our

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Speaker 1: money right, if our bank account we woke up with

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Speaker 1: the uh, you know, the Turkish lira, which was down

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Speaker 1: sixty five percent last year, we'd be doomed. So you

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Speaker 1: want to hold the digital dollar. So that's where tether

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Speaker 1: really flourishes. It's in the emerging markets. So the concept

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Speaker 1: of trading stable coins in America, I.

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Speaker 4: Just don't get it. So I don't think it has

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Speaker 4: anything to do with America.

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Speaker 1: I think what we care about as Americans is that

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Speaker 1: the dollar is all powerful in the world.

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Speaker 2: Do you worry, ever, that there could be the use

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Speaker 2: of bitcoin or tether being used to evade US sanctions

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Speaker 2: Given the use of it around the world, particularly coming

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Speaker 2: out of Russia.

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Speaker 1: I think the key to digital is that it's always digital.

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Speaker 1: You know, dollars, you remember when we went into Iraq,

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Speaker 1: they found like rooms of four billion dollars on pallets

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Speaker 1: that you can't trace, but digital money you can trace.

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Speaker 1: I think the firms like Circle and Tether have to

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Speaker 1: work deeply closely with law enforcement and grab it because

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Speaker 1: remember these are digital money. All they can do is

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Speaker 1: move around, and the blockchain always keeps track. So think

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Speaker 1: of the AI and think of the tools the government's

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Speaker 1: going to have.

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Speaker 4: They are going to get better and better.

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Speaker 1: The way I describe it is government moves reasonably slowly,

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Speaker 1: but it always gets there, sooner or later we'll get there.

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Speaker 1: So they'll have great AI tools. They're going to use

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Speaker 1: their AI tools. Any criminal that he wants to use

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Speaker 1: Circle or Tether is going to get caught. It's going

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Speaker 1: to get seized because it's digitals. I mean, you can't

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Speaker 1: really hide it. It's on the blockchain. You can follow

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Speaker 1: it from here to here to here to here. So

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Speaker 1: I think it's good for news to say, oh, they're

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Speaker 1: using it like this and this, but they're all going

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Speaker 1: to get caught. They're all working Tether and Circle are

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Speaker 1: working closely with law enforcement, and these crooks are just

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Speaker 1: it's so much worse than a regular dollar, at least

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Speaker 1: a dollar in their pocket they can hide.

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Speaker 4: How can they hide a digital dollar? That's a joke.

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Speaker 3: Howard.

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Speaker 2: We thank you so very much for breaking your big

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Speaker 2: news with us. Congratulations on getting this venue off the ground,

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Speaker 2: and for all of your candor that is Canter Fitzgeraldchure

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Speaker 2: and CEO Howard Lennox