All right, good morning, everyone. Welcome to our, one of our first morning sessions at our, financial services conference. I'm Ben Budish, Barclays Analyst, covering the brokers, asset managers and exchanges. And for our first session, we have Howard Lutnick, Chairman and CEO of BGC Group. Howard, thank you so much for being here. Welcome.
Thanks, Ben.
Maybe just to start with some high-level commentary on the business. You know, BGC's got a pretty long, complicated history. Talk a little bit about that history, and give us a brief overview of what the company looks like today.
Okay, so BGC is the world's most valuable wholesale financial service company. So when J.P. Morgan, Barclays, Goldman, Morgan Stanley, it doesn't matter. When they wake up in the morning, their client calls them. Who do they call, right? And they call BGC Group, which is the largest wholesaler, most valuable wholesaler in the world. So wherever Barclays goes, we're going to follow you like a puppy, all right? So if you want to trade X, we're there as your wholesaler, because when you buy from a client, we can sell it to you. So that theoretical, that business is a growth business because it's in bonds, it's in equities, it's in commodities. So as long as global trading rises, our business had a core tailwind behind us. That changed in two thousand and eight, when interest rates went to zero, right?
We had a beautiful growth company for decades upon decades, and then interest rates went to zero, and that broke the relationship between issuance and secondary market trading volume. Because like you learned in Japan, if interest rates are zero, it's kind of boring. So volumes declined because zero interest rates are just boring. Now that they're back, there's a core structural understanding, which is, if issuance grows, secondary market trade volume tends to grow 60%. So what happened from 2008 to 2022, people forgot about us as a company because we were in zero interest rate environment, and therefore we had, instead of a tailwind, we had this sort of boring headwind, like literally boring.
You'd call a client up and say, "Do you want to sell Coca-Cola and buy Pepsi?" And he said, "Pick up some yield." He goes, "What do we pick up?" I said, "2 basis points." He went, "I'll forget it." It's just too boring, but that's changed and that's back, so we have a core growth rate of 10% going forward. That was my view. I said it in June of 2022. It worked for 2023. It's working so far for 2024. It is. We have that tailwind, and we have a strong tailwind. How about this? Since 2008, rates issuance is up 5x, and volumes are up, like, 12%.
You'd say, "Well, if they were the 60% correlation, does that mean it's going to triple?" And the answer is, God doesn't love me that much, so it's not tripling on Thursday. So what I think is going to happen is we're going to have 10% growth for the rest of my life, as long as there's real interest rates. Credit up 3x , and volume's flat. And you said it, that scale of issuance can't continue. So BGC's core business is in fantastic shape, going to grow relentlessly for the long, long future as the relationship between issuance and secondary market trading volume repairs itself. Okay, just, it's going to continue to grow.
I used to say our business is like. Remember Gillette used to say that, you know, their business is great because every night, half the population of the world goes to bed and comes up needing a razor, right? Not for me necessarily, but most people. The bond business is a spectacular business. The equity business, the commodity business, the global scale of trading on Earth is going to grow. We are the biggest wholesaler in the world, and that relationship is back with real interest rates. Do I care if they're five and a quarter, four and a quarter, three and a quarter, seven and a quarter? No. Just know zero and a quarter. Okay, that's just not a thing, but provided we have real rates, the core business for BGC is rocking.
Great! Well, you answered a lot of my second question about you know what does it take to get the bond market kind of going again? But maybe if you could unpack that just a little bit more. You know you kind of mentioned it hasn't happened yet but it's going to grow for a long time. What underlies that? Is it just banks over time allocating more capital because there's more out there we need to put more traders in seats? You know you indicated 10% growth for the next five to 10 years. Like how does it happen? Is it more turnover? Is it more you know seats people trading? What are the pieces-
Well-
We should kind of be looking for or keeping track of?
So the core relationship when there's zero interest rates is buy and hold, right? If you decide to buy something, you buy it. There's no reason to sell it, to pick up the yields, because there's no yield to pick up. That's why I gave that example, Coke versus Pepsi. Pick up 2 basis points. Why? You know? So what happens is, now the relationship is juicy again, right? If I can sell Coke and buy Pepsi, and pick up 50 basis points, hey, that's worth talking about. So what's happening is the banks, right, are starting to build back that model. Build back the model of talking about secondary market trading, right? We went back into Japan. We pretty much pulled virtually everything out of Japan because it was going to be 20 years of boredom. 20 years of basically no trading.
And now rates are back, not a quarter basis point. But in Japan, a quarter, it's basically a 4x. So 25 basis points in Japan is like 100 basis points here. So that business has started again, and it's started growing again because there's reasons to trade. So I think what you're going to see across America and the Western world is that the banks are going to grow. Their banks' earnings are going to grow from the trading side, demonstrably and clearly going to grow. You've seen them growing lately, and they're going to continue to grow. So that whole ecosystem is growing, and we are a beneficiary of that ecosystem.
So it's simply a matter of the relationship between bonds, the relationship of equities, and the relationship of commodities all means that it's worth trading against them because there's value to create. Smart people at banks are going to advise clients. Those clients are going to do more business. It's worth it for their banks to invest in that space. You're seeing your bank is investing in that space and making money on it. All the big banks are investing in that space and making money, and that means it's coming. The secondary market trading volume is coming. You feel it all the time. It's just volume-based. Remember, we don't make money. We're a marketplace. We're an exchange for everything that doesn't trade on an exchange, and this month, we're opening our futures exchange, right?
So if you sat next to me at a dinner party, and I explained what I did, and you stayed awake, but if you explained what I did, you'd say, "Well, then, if you're an exchange for everything in the world that doesn't trade on an exchange, why don't you become an exchange?" Well, FMX, which we'll get to, is opening this month. But the idea is we don't make money when the markets go up. We don't lose any money when markets go down. We are built and based on volume, and we are the best in the world and built and based on volume. By being the best in the world means our revenues grew 10%, our earnings grew 18%, and all of our competitors grew at best 3% or 5% or 6% revenue.
So they all demonstrably less than us, demonstrably less returns than us, demonstrably less performance than us. Their stocks don't do as well as us. We are a better company. We're smarter, better technology, and we're winning in the space, but the space is finally, thank God, finally coming towards us because we have rates. We have a huge tailwind behind us, and BGC has the biggest sail in the business. When you finally have a tailwind, you know, when there's a headwind and you have big sails, who cares? You're not going anywhere. When you finally have a tailwind and you get to put up your big sails, you rock, and the company's rocking.
Awesome. Well, let's talk a little about your Treasury business before we pivot into FMX. And so you originally sold your Treasury business to, I think, Nasdaq in 2013, restarted it about six years ago. What's been happening over the last six years? You've taken meaningful market share. I guess, why the decision to restart then? Why have you been successful since then?
So you all now understand why I sold. We had, we had the dominant business in, in Treasuries, right? There was a duopoly, us and BrokerTec. We had in the high fifties, they had in the low forties. It was just the two of us. My view was that interest rates were going to be zero for, like, so long and become boring. And so you can't really invest in the business because it's going to become boring, volumes going to be boring, and we could sell it at a very high price. So we sold our eSpeed electronic business of Treasuries to Nasdaq for the market cap of BGC at that time. We sold less than 10% of our revenues for the market cap of the company at that time, right? That relationship is still true.
Our electronic business is worth the market cap of this company, okay? And people just don't understand the value of our electronic assets are so great, and that's why I come to conference with you, Ben, to try to tell people to understand the assets of this company are so great that when our stock goes far, far higher, there's a reason for it, okay? So 2013, we sold our business to Nasdaq because we thought rates were going to be low for a long time, and it wouldn't be fun, okay? We got a high price. We then took the money invested in a commercial real estate brokerage business because that is the largest asset class that likes low interest rates for long periods of time. That company is called Newmark.
It's currently worth about $3.5 billion, and we spun it off to our BGC shareholders, right? We created the company. We invested the money from Nasdaq, built a commercial real estate broker. You sort of get the idea. I don't like when make money when it goes up and lose when it goes down. I'm in the business of markets, and we built that, and that business is on fire. Stock's up over 100% in the last year, and commercial real estate brokerage, which we spun off to our shareholders. 2018, I started to get the sense that rates are going to come back. So it's time to go back in, and you have to go back in early because you have to build it.
So we built a new system, and we built the fastest trading system with the tightest spreads, the ability to change the spreads on the fly and have it completely in sort of integrated with all the banks of the world and all the trading firms of the world, and brought new ideas to the market. One of the ideas which we'll talk about, because remember, we're a marketplace for Treasuries, was that if a trading firm is having a lousy experience with another trading firm. Example, Citadel is making prices. Jump is making prices, right? They want to trade with the banks who are underwriting corporate bonds. They don't want to trade with each other. That's like an unattractive relationship. So we can opt out trading with each other, meaning Jump will never see Citadel's prices, and Citadel will never see Jump's prices.
And what that did is it created comfort that Citadel could put larger size in because they weren't worried about getting picked off by one of their brethren. And so what happened is our volume started to grow because people were comfortable. The CME lets everybody trade with everybody, and they have Shark Tank, and that Shark Tank of Jump Trading with Citadel is 30% of their volume. We have 30% market share, but we've created 5% proprietary volume of Citadel putting in a larger size trade because they're not afraid. So they only put ones over there, but they're willing to put, as an example, fives with us, because they're not afraid.
So when we get to 50% market share, they'll have 15 points of proprietary volume of Shark Tank, and we will have 15 points of proprietary volume based on better markets and more comfort. And which would you bet on? Right. Our Treasury business has grown one or two points market share against the CME sequentially every quarter for 15 quarters, one or two points in market share, 15 quarters in a row, now at 30% market share. It is a steamroller going down a hill. People who say you can't lay a glove on the champ are just not paying attention. You know, that's what the CME would say: "Pay no attention to the man behind the curtain. Pay no attention to cash U.S. Treasuries, which we paid $5.5 billion for.
Ignore that, because they're ripping us." I, I think that's unusual this year.
That's a good pivot into FMX. So I've heard you say it before, you want to take points off the champ. You know, futures are different from the cash business. So what gives you the confidence and sort of what's the impetus behind starting this exchange? You're traditionally an interdealer broker. Why go for, you know, go after this opportunity? And again, why do you think you can be as successful in futures as you have been on the cash side?
Okay, so we are the market for everything in the world that doesn't trade on an exchange, right? And now we're going to go into the exchange business called FMX, and we are opening in futures in the month of September 2024 , which we are in. So that means it can't be more than three weeks from today. You say, "Why don't you just announce the day you're going to open?" And I'll tell you why. Because the way futures work is there are things called FCMs, okay? They are the intermediary between the client and the exchange. So someone has to provide your margin for you and do that work, and they're called an FCM, right? So if one of our FCMs thinks it will be ready on Thursday, and we were planning on opening on Monday, we'll open on Thursday. That's all.
Now, if they said, "I'll open on Thursday in October," then the answer is, "I'll see you in October," but we're opening in September. So the date we're going to open is. We will only have between three and five of the five biggest FCMs connected when we open, right? So we're only opening. It's what we would call a soft opening, which is we're opening, but our first-year objective is to get all of the firms integrated and open. They all have our system, so it's not a systems integration. They all have our system. I just need to get on the FCMs, you know, into their backup process and get them using it, and that will take us. There are 50 FCMs. There are the top 10. We will have the top 10. We will have the top 20.
We will have the top thirty, but it may take us all year to have all fifty. So let's say one year from today, we'll have all fifty. Then the second year, we'll have all clients. And my view is that the growth rate of this company. Number, we already have the system installed. So there are two things you need to be successful in futures. You need a rocking front-end system already installed in everyone in the world who matters. Because I can't call Barclays up and say, "I have a new system. Will you install it?" Because I'll get in line. Someone might say three months, someone might say a year and three months, and while I'm waiting, we're going to go broke and die.
Our system is already installed, and you just heard it say it's got 30% market share in Treasuries, and one of our products is going to be Treasury futures. We're doing interest, U.S. dollar interest rate futures. So for futures, which are a swap and Treasury, derivative and Treasury futures, those two products, those are, of course, brilliantly, the number one and two products in the world. Why did you pick them, Howard? Let me give you a hint. They're the number one and two product in the world. If you wanted to guess what our next one will be, let me give you a hint. It's probably the third biggest in the world.
This is the genius I bring to this business. Really, I am just. You know, you can't even keep it in a jar, it's so brilliant. He picks one, two, and three. And by the way, like, why people ask me, "Why did you do a real estate brokerage business?" I said, "Well, the biggest business in the world that pays commissions is bonds. We do that. Second is equities. We do that." You know what the third largest fee-paying business in the world is that likes low interest rates, and it's the third largest in the world? Real estate! This guy is a genius. I tell you, he can count all the way to three.
And so that's the model. We are going to come with interest rate futures, and we are going to do it because we have a rocking front-end system. And here's the second thing you need. You need to do cross margin.... You can't have a system where you're long at the CME, and instead of taking, and we have a really good price, and so you wanna sell with us, and then you have to post new margin and then on your new exchange, and you don't take off your old margin at the old exchange.
That's a non-starter for capital. So what we are going to do is we have a partnership with the LCH, which is the unique clearer of interest rate swaps, dollar-based interest rate swaps in the world. They have $225 billion of margin underlying 50+ trillion of swaps. $225 billion of beautiful non-cross-margined margin sitting there, and we are uniquely opening to cross margin against it. So if you're long at the CME, and you decide to take the trade off and short with FMX, netting the two, because it's the same exact contract, your cross margin will then net against your swap position, and you will actually save margin.
You will save margin. And then you might say, "Well, then maybe you should put your first trade on." See, that is why we are confident that we are going to succeed, because we have the front-end system already connected everywhere in the world. And number two, we have cross margining with the LCH, which is unique, which is an asset of ours that breaks the moat of the CME, and it has unhinged the CME. They speak about really things that are illogical and impractical as holding us back. In a month, we're opening, and we are fully approved by the CFTC.
Fully, fully approved, and we are opening this month, and the reason we're waiting a date is, I told you, it's... I just wanna make sure that someone's not able to open on Thursday when we're opening on Wednesday. You know, we'll just wait a day. So I'll, I'll announce a day. It'll probably be towards the end of the month to give people the couple of days to figure it out, but it will be in the month of September, which we are in.
Great, and for anybody who's unfamiliar, I should disclose, Barclays is an equity investor in FMX. That's all quite public, but just wanna make sure I've said it here.
So we have 10 investors, right? So we built our Treasury system. Everyone knows we built our Treasury system in the marketplace. So then we invited 10 of the largest trading firms in the world to be partners in FMX, because I didn't want it to take 5 years. I wanted it to take 3. And so it is Barclays, J.P. Morgan, Bank of America, Citi, Wells Fargo, Morgan Stanley, Goldman Sachs, Citadel, Jump, and Tower. If you don't know Jump and Tower, they're the largest futures traders in the world. And so those 10 invested $172 million for a 25% stake in the company, and they are partners with us in this pursuit.
So it is exciting to have the system in place, the partners of the best trading firms in the world, and together, we're gonna compete with... Remember, we are just below a $5 billion market cap company with the business which I described, that's growing 10% a year, top line and 18% bottom line. And we have a futures exchange, which is going to compete with the Chicago Mercantile Exchange's top products, and the CME is worth $70 billion. And another one of your peers just wrote an underperform on them because of us. And I think our ability to double the stock and double it again is out there. So that's why I come to hang out with you to talk about it.
All right, well, let's maybe unpack some of these competitive differentiators, so maybe on the cross-margin side. So you're offering cross margining of futures against swaps. Your competitor has many other products against which they can cross margin futures, including swaps, although in much smaller scale than LCH. So how do you think about, you know, the trade-offs between the sort of plethora of opportunities to cross margin at your competitor versus what you're offering? And do you see, over the next several years, an opportunity to offer cross margining or portfolio margining in additional products? What does that path look like?
All right. So the CME said they saved $20 billion in margin efficiency. Primarily, that's their SOFR futures against Treasury futures, right? It's futures against futures, which is... Most of it, it's about $12 billion of the savings is futures against futures. $7 billion, right, is against swaps. $7 billion against swaps, but 5 of the 7, I think most of it is against LatAm swaps, because they don't have many dollar-based swaps. They have about $12 billion of dollar-based swap margin, and the LCH has 200-plus billion of dollar-based swap margin. So it's not even close, right? And then they saved $1 billion against with their deal with two pots with the FICC. See, two pots mean the FICC holds collateral, and I hold collateral and have to stare at you.
I know the client has an offsetting position with you, but what if you don't give me the money in full? I'll give you a little discount, but I'm not gonna... I can't be too much. Whereas if I have your long and your short... We're cool. I'll just give you a basis margin of 3% and call it a day. So they say $20 billion. We have $225 billion of swap collateral at the LCH. 10% is $22 billion. 20% is $40 billion. It is so large, it is pulverizing for the CME to think about, so they can't think about it. The margin efficiency we will bring is so vast that what you're going to see, and I'll tell you right now, and I'll come back in a year, okay?
FMX will have the largest open interest of any new exchange ever, at the end of its first year. And you say, "Why at the end of the first year?" I told you, we're gonna sign up all the firms. We have to get them all on. But you imagine, at the end of the day, Barclays has got its positions, it's trading, it's trading. At the end of the day, a computer. You guys have computers, too, it's amazing. They use their computer, and they calculate that if the positions are at the LCH, they'll save $1 billion in margin. So they'll sell the CME positions, they'll buy FMX positions, and they'll do their margin and save $1 billion. And that's called open interest. The next morning, Barclays has its positions at FMX, sweeping to the LCH. It's gonna take it off, and so will everybody else.
So when will our best volume be? In the morning. And when else will our best volume be? In the afternoon. So you'll see, in the mornings and the afternoons, FMX will have strong volume. This is in the very beginning, and then it will start leaking towards the middle. First year, we'll get everyone signed up. Second year, we'll get all the clients to use it, and the third year, every quarter, we will have a heavyweight championship bout with the belt on the side of the ring.
And eventually, FMX, because of this cross-margining advantage and Barclays' need to move over at night to save $1 billion in capital, these are the reasons why our open interest will be the largest ever, and eventually, we will have 50% market share of a $70 billion company, when our market cap starts today, just below $5 billion. I mean, I just think we have so much runway. It'll be really fun.
I want to ask you about maybe two other kind of competitive differentiators, but just since you've mentioned it a couple of times, year one, you're getting the FCMs on, year two, the clients. How do we, you know, for us, how do we kind of track your progress here? I'm sure we'll get press releases, but are we gonna get, you know, and maybe this is adjacent, too, but are we gonna get, like, daily volumes? Are we gonna see open interest? What's the barometer in six months, six months from now, next September, when maybe you come back and talk again? How do we know he's on track, they're doing better than expected, I should be more worried, less worried? What are, like, the key things to look for over, say, the first year?
So everyone's gonna look, okay, the day you open, what happened that Tuesday, right? And the answer is, we're gonna trade some, but it's not. We're in a marathon, okay, and it's a three-year marathon for the heavyweight championship bout, okay? We're going into training right now, and we matter, and we're available, so you'll see our volumes, and you'll see our open interest. And at the end of the first quarter, we'll probably have about somewhere between 5 and 7 of the biggest FCMs in the world on our system.
The next quarter, 10 to 15, the next quarter, 25, you know, like that, all the way and at the end of the first year, all 50. So by definition, at the end of the first quarter, if we have 7 of the top 50, we are, you know, less than perfect. Duh! But we're in the process of growing and building, so what you'll see is nice volume and surprisingly nice open interest. Surprisingly growing open interest every single quarter, because the math for Barclays is compelling to Barclays, and the math is compelling to J.P. Morgan. And in fact, the math is compelling to everyone because it's, it's compelling math.
Why keep a position there that does not offset your margin there? If I moved my position to FMX, which, by the way, selling one futures product and buying another futures product is nothing. Everybody has computers now. They, they do it, like, really fast. It's like a, it's like a thing. I think everybody understands that now. These whole computer things, they're amazing. You don't even need to plug them in now. They, like, carry a phone around. So, I mean, this is so simple. The volume's gonna move, and the open interest is gonna sit there, and that's what you're gonna judge us with. Judge us against the comparative open interest of any new product ever, and it will shock you how well we do. Shock you.
Okay, so maybe one other question in terms of the performance of the exchange. So you've talked about a different pricing model, narrower tick sizes. So I think, you know, a reason that might be suggested for why a trader might put volume on CME is they have more confidence in the liquidity, maybe, you know, volatility is low when they put the trade on, but they're worried that, well, what if in the future I want to sell that position, volatility is high? What if, what if there's not enough on FMX, I can't get out? What would your response to that be?
The reason I have 10 partners is to make that go away. I mean, the business of Citadel, Jump, and Tower is they are market makers. If there's volume on the CME, at the exact same contract, there'll be volume on FMX. If there's a 10 bid there, putting a 10 bid here for those three firms, is literally their business. So you will find a mirrored market on each one, and that's why I said, you know, we will-- Our markets will light up like a Christmas tree. It's not because I'm such a clever guy. It's because that's the business of the market makers to do exactly that, right? They buy 10, sell at 10, buy at 10, sell at 10. Buy at 10, it ticks up to 11, wait a second, sell it at 11.
Do it again, do it again, do it again, do it again, do it infinite amounts of times. They'll make the prices the same. So this, this concept of you won't have the liquidity on your new exchange, is a statement from another decade, maybe two decades, okay? But it's just wrong, intellectually wrong. There's a reason why when we turn on, we will have a lovely market, and it's because computers are driving Citadel, Jump, and Tower, not the least of which there's HRT, there's 20 other firms that are great at this. Virtu, we all know, they do it as well, right? I'm just naming the three partners, but the others do it for money, and they're all going to do it. So we will have liquidity. We have a faster system. It's technically newer, more modern and faster.
We will have a lesser tick size, so they will have a quarter spread, we will have an eighth spread. If they. So we will just be smaller. So our treasury business, 50% of all the trades and treasuries on our system are at a price superior to the price on CME. Because if you think about it, if they are 10 to the quarter and we're an eighth to the quarter, right, and half the trades traded an eighth, right? The computer clears ours first and goes to theirs. Okay, that's going to happen naturally. So I think our volumes will be okay. We're not looking to make a grand entrance. We are going, but the place to rate us will be in open interest, where the volume sleeps at night, because that means every morning we've got proprietary volume that's there to begin with.
I think that will differentiate us from every new futures contract ever, and the last futures contract that had record open interest ever was the Bund futures contract, which the CME hates to discuss, because LIFFE had 100%, and then the Deutsche Börse got 100% because they had better cross margining to the cash business. We have a better model mathematically. It is superior. It will carry the day. I'm saying it before I've opened, but you will see it. Just look at the end of every quarter and where our open interest is growing relentlessly every quarter, you'll know the math is coming our way.
Very comprehensive. I have plenty of other questions here, but given the interest in FMX, maybe we pause and see if there are any audience questions. Okay, shy group. Maybe one last question then, on the topic, just in terms of other products, options on futures, the potential for a cross margining agreement with the, with the FICC, like CME has. What are your thoughts there? Are those priorities or is it more about, SOFR, Treasuries, building liquidity in those products, getting everybody on board?
So of the $20 billion in savings, the CME offers, one billion is cross margining with the FICC, okay? They do not have a proprietary relationship with the FICC. We will have a similar relationship with the FICC. When that is, and maybe it'll take a year, maybe it'll take two years, but it'll happen. Have we approached them already? Of course. Have we spoken to their senior management? Of course. Who are the primary owners of the FICC? My bank partners. So I think that's a natural, but it's not a rush. Will we do it? Of course. Will it happen within two years? Sure. Will it happen in a year? Maybe. Does it matter? Eventually, a little bit. $225 billion matters the most, okay. A billion is nice. It is nice. So FICC, will we do options? Of course, right.
Will we extend to other products? Of course. Where? Why are you picking interest rate futures as your first two SOFR futures to start? That's a swap derivative against interest rate, swap cash. Why? Because there's 80%, between 75% and 80% efficiency when you're long one and short the other. It's so huge from a margin efficiency standpoint, that that's what the banks want to do. They want to save that margin, okay? Then Treasuries against swaps. Huge! Huge + 50%. Again, these are great mathematical models. Then what would you do? I said, "I'd do the third largest exchange product in the world." What's that? It's foreign exchange. So you have... And then you would say, "Well, don't you have a cash foreign exchange business?" Yes. How's that growing? I don't know, 30% last quarter, 50% last quarter? Which one? 35% last quarter.
Spot foreign exchange, then you'll do foreign exchange futures. When is that? Later. Later. How about you dominate one and two, and we win the heavyweight championship of the world in one and two, and then open three, okay? It just seems smart. So we have the partners, we have the system. We are going to relentlessly compete with the CME, with the—which is worth $70 billion, and then we will extend to other markets around the world. You have the greatest partners in the world and the greatest clearing model in the world. You just... Keep going. So I think just long, long lead. Yeah. Yeah, it's on. Sorry.
Oh, great. Thank you for your comments. I just wanted to ask you how you thought the CME, right, might respond. If I'm not mistaken, when this was tried by Deutsche Börse, like, a long time ago, I think they might have cut price at the time, but even if they didn't, I know that has been speculated, I think, and the other sell-sider that published a note about this, that maybe they try to elicit-- do something on the pricing side to try to forestall your progress. What sort of response do you think they're going to have? And then what would be your response to that, if you can anticipate anything?
So as a monopoly, they've been able to put up their price every year at Christmas. They used to call. Ten years ago, they would call you guys and tell you they were putting up the price and then send you the letter. And then over the last 10 years, they just send a letter. So congratulations, it's Christmas. Your price is going up 10%. So this year, for the first time, they did not put up their price on rates because they felt the competition was coming. So they started by not putting up their price. Do I think they're going to cut their price? They would likely...
My guess is what they will do, is they're going to call my bank partners and offer them a special deal, which basically is, "I will pay you to do business with me, so that you don't do business with them." So that we seem stillborn, and then we won't get the energy in the beginning. Now, that payment or bribe, will just be inefficient and unacceptable to someone like yourselves, who's got a long view of things. You know, one quarter's worth of payments is not going to make a darn bit of difference to Barclays, so I think it's going to fall on deaf ears. But that, that's my guess. That's what they're out doing.
I mean, they're out talking to banks saying, "I'd pay you to do business with me." Meaning, "No charge you, pay you, will you do it?" And the answer would be, "Sure, if you paid me for a decade." But they'd say, "No, no, no, I want to pay you for like, you know, a month or two," and that. So I think cutting their price a little is not going to matter, since all my big banks have subscription. And we're available, by the way, to do subscription with clients. So if clients want to do volume-based business with us, and they want to sign a subscription model, pay a fixed fee and do unlimited volume, that surely works for us because we're trying to build market share.
So to us, and let's be clear, we're not going to charge any money in the first year, right? Our objective is to have a low price model to build market share, which makes sense because BGC has got this tailwind anyway, right? We were + 10% revenues, + 18% profits, counting the fact that we have a fully approved futures exchange that wasn't open yet. All expenses in the numbers, not open, and we're still growing 18%. When our futures exchange starts to charge, our growth rate is going to be awesome, but that's not this year. Wait a year and grow. Remember, Meta didn't go out and try to monetize their eyeballs for a while. Grow the eyeballs, grow your business, then grow your revenues. But you all know it's coming. You all know it's coming.
With that, we are just about out of time. Howard, thank you so much for coming. What a pleasure to have you.
Thanks for being here. I appreciate it, everybody. Thank you.