11.07.2014

Cawley Takes Reins at BGC’s SEF

11.07.2014
Terry Flanagan

BGC Partners’ new head of its swap execution facility, James Cawley, likes the company’s ability to expand business both organically and through acquisition.

“One of the things that attracted me to BGC is the firm has a good long history of building businesses organically,” said Cawley, who joined BGC two weeks ago. “Obviously eSpeed is a perfect example, where BGC built a business from inception all the way up to market dominance in Treasuries, then to eventual sale.”

“BGC is also fairly opportunistic, and entrepreneurial in terms of not being afraid to bid on a rival business or acquire something that is complementary to their existing franchise,” said Cawley, who was head of Javelin SEF before leaving there about six months ago.

BGC Partners is locked in a battle with CME Group for interdealer broker GFI Group. BGC’s $5.25 per share all-cash offer represents a premium of more than 15% to the $4.55 per share all-stock transaction announced by CME Group and GFI Group on July 30, 2014, and a premium of more than 68% to the price of GFI Group shares on July 29, 2014, the last day prior to the announcement of the CME transaction, the company said on Thursday in response to the GFI Board’s recommendation that stockholders reject BGC’s offer.

Cawley’s remit as CEO of the SEF is to build upon BGC’s existing business. “BGC is on top of its game in euro swaps,” he said. “We rival Icap on any given day for the #1 spot in euro-denominated swaps. We’re top 3 in sterling swaps. And we’re in the game in dollar swaps. Admittedly, we have some work to do there, but that’s why I’m here. “

The marketplace is evolving quickly. For the last two years, market participants have been working on regulations and moving towards ensuring that their existing businesses still are able to operate with all the new rules and changes to market structure.

“That’s been the theme for the last 12 months, First with Footnote 88, BGC and its customers had to prepare for SEF trading,” Cawley said. “Then came Made Available to Trade (MAT) earlier this year, which created another firestorm for the market.”

With both Footnote 88 and MAT now in the rear-view mirror, trading has continued with limited disruption and now is beginning to increase once again. “For the first time in months, you are now beginning to see customers look outward again,” said Cawley. “Customers are now looking at opportunities to see where SEFs can help their bottom line operationally. SEFs are not just about tight, liquid prices on a screen. They are more complex than that and will need to deploy greater resources to better serve their customer.”

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