Cantor Fitzgerald spin-off close to New York flotation

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BGC Partners, the inter-dealer broker spun off from Cantor Fitzgerald in 2004, is close to announcing a flotation in New York that will create a new rival to Icap for investors in the fast-growing niche of the financial industry.

The flotation, which will be announced within weeks, looks certain to increase the bitter rivalry between the two companies. It comes as the third major inter-dealer broker, Tullett Prebon, is being spun off from Collins Stewart.

Traders in the testosterone-fuelled world of inter-dealer broking match buyers and sellers of complex financial instruments such as interest rates and currency derivatives. Trading has exploded as the number of hedge funds has swelled and investment banks have expanded in-house trading businesses.

London-listed Icap, run by the veteran trader Michael Spencer, and BGC, whose chairman and chief executive is Lee Amaitis, have traded allegations of poaching staff and are still engaged in a legal dispute over patents.

The flotation of BGC is being handled by Deutsche Bank, which will publish a draft prospectus in November. The Thanksgiving and Christmas holidays may interrupt marketing of the shares, however, so trading may begin in the New Year.

The firm, named after the trading innovator B Gerald Cantor, has its headquarters at Canary Wharf in London, but has offices in New York and other financial centres including Paris, Hong Kong and Tokyo. It employs 1,600 people.

The company has chosen a flotation over plans for an immediate merger with eSpeed, another Cantor Fitzgerald spin-off, which provides electronic trading services to BGC. Gaining the agreement of BGC and Cantor Fitzgerald's partners and eSpeed's shareholders all at once was seen as too tall an order.

Icap has grown to be the world's largest inter-dealer broker by offering both telephone-based and electronic trading, and BGC is still believed to be keen on a merger with eSpeed that it it expects would create a business close in size to Icap. Such a deal would be easier once the stock market is setting a value for both BGC and eSpeed.