Cantor plans demerger for telephone brokerage business

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The Independent Online

Cantor Fitzgerald, the inter-dealer broker that was devastated by the 11 September 2001 attacks, is to split off its traditional telephone brokerage business into a separate firm to expand its share of this market.

Cantor Fitzgerald, the inter-dealer broker that was devastated by the 11 September 2001 attacks, is to split off its traditional telephone brokerage business into a separate firm to expand its share of this market.

The move is an attempt to revive the fortunes of the voice broking business, which involves dealers speaking to each other to set prices for commodities rather than trading electronically, after it was almost wiped out when terrorists attacked the World Trade Centre in 2001.

All but 100 of the 658 Cantor employees who died in the disaster came from the voice broking arm of the business when its offices, on the top floors of the twin towers, were destroyed.

Since then, Cantor has concentrated on building up its electronic broking platform in an attempt to stand its ground in the highly competitive world of money broking, setting up eSpeed, which allows brokers to trade online.

But yesterday, Cantor said a separate partnership, BGC, would be established from 1 October this year to focus on growing the voice broking arm.

Lee Amaitis, the controversial head of Cantor's international business, will also take on the chairmanship of BGC, which is being named after B Gerald Cantor, who founded the firm in 1945.

Mr Amaitis, who is based in London, has been keeping a low profile in the past few months after he hit the headlines for being involved in a series of court cases with rival firms. There was also a dispute last year with a former employee in which in was alleged that Mr Amaitis referred to his main rival at Icap, its chief executive, Michael Spencer, as a "fucking fat greasy fuck", a claim that Mr Amaitis denied.

The day-to-day running of BGC, which will be based in London and New York, will be by Shaun Lynn, who was managing director of Cantor in Europe. The American part of the business will be led by Daniel LaVecchia, who has also been at the centre of a separate dispute with Icap when he was described by the judge in a separate dispute with Icap as being "pushy and aggressive".

Mr Lynn said: "We spent the first two years after September 11 rebuilding the company to have a solid foundation." But he added that, because Cantor had lost so many employees from voice broking, it had been "very difficult" to regain a foothold in this market. Under plans for the new entity, 100 Cantor employees become partners in BGC, putting in their own cash in return for stakes in the business. That number will be among the total of 400 Cantor employees working on the money broking side who will join BGC.

Mr Lynn said Cantor had decided to create a separate entity dedicated to voice broking because it would be "completely committed and not swayed by other things".

BGC, which is being funded by an initial undisclosed investment from Cantor as well as by the partners' own cash, plans to hire 200 more staff in the next two years. It will trade in a wide range of commodities, including derivatives, foreign exchange and bonds, but not equities.

There was speculation in the market that BGC was being spun off to encourage a buyer to step forward, which would create substantial windfalls for the partners with equity in the new business. BGC's existing 400 brokers will be based in offices in London, New York, Tokyo, Hong Kong, Singapore, Geneva and Milan.

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