-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MzWdAIpX7gHauP6enNZWbhv1wuSfHCI8/CEdsB7TH5II++c0p0gmty7Xj8AYw2DX CIMA2dvF1Y3VjW2TD6DNWQ== 0001047469-04-020682.txt : 20040616 0001047469-04-020682.hdr.sgml : 20040616 20040616070628 ACCESSION NUMBER: 0001047469-04-020682 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20040616 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GFI Group Inc. CENTRAL INDEX KEY: 0001292426 IRS NUMBER: 800006224 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-116517 FILM NUMBER: 04865216 BUSINESS ADDRESS: STREET 1: 100 WALL STREET CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 212-968-4100 MAIL ADDRESS: STREET 1: 100 WALL STREET CITY: NEW YORK STATE: NY ZIP: 10005 S-1 1 a2137763zs-1.htm FORM S-1
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As filed with the Securities and Exchange Commission on June 16, 2004

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

GFI GROUP INC.
(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	6200 (Primary Standard Industrial Classification code number)	80-0006224 (I.R.S. employer identification no.)
100 Wall Street New York, New York 10005 (212) 968-4100 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)
Scott Pintoff, Esq. General Counsel and Corporate Secretary GFI Group Inc. 100 Wall Street New York, New York 10005 (212) 968-4100 (Name, address, including zip code and telephone number, including area code, of agent for service)

Please address a copy of all communications to:
Arnold B. Peinado, III, Esq. John T. O'Connor, Esq. Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, NY 10005 (212) 530-5000		Frederick W. Kanner, Esq. Dewey Ballantine LLP 1301 Avenue of the Americas New York, NY 10019 (212) 259-8000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

CALCULATION OF REGISTRATION FEE

Title of each class of Securities to be registered	Proposed maximum aggregate offering price(1)	Amount of Registration fee


Common Stock, $0.01 par value	$100,000,000	$12,670

(1): Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) under the Securities Act.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 15, 2004

PROSPECTUS

Shares

GFI Group Inc.

Common Stock

$ per share

We are selling shares of our common stock and the selling stockholders named in this prospectus are selling shares. We will not receive any proceeds from the sale of the shares by the selling stockholders. We have granted the underwriters an option to purchase up to additional shares of common stock to cover over-allotments.

This is the initial public offering of our common stock. We currently expect the initial offering price to be between $ and $ per share. We have applied to have our common stock included for quotation on the Nasdaq National Market under the symbol "GFIG."

Investing in our common stock involves risks. See "Risk Factors" beginning on page 7.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public Offering Price	$	$
Underwriting Discount	$	$
Proceeds to GFI (before expenses)	$	$
Proceeds to the Selling Stockholders (before expenses)	$	$

The underwriters expect to deliver the shares to purchasers on or about , 2004.

Joint Book-Running Managers

Citigroup

Merrill Lynch & Co.

Banc of America Securities LLC

JPMorgan

Jefferies & Company, Inc.

The date of this prospectus is , 2004.

You should rely only on the information contained in this prospectus. We have not, the selling stockholders have not, and the underwriters have not, authorized anyone to provide you with different information. We are not, the selling stockholders are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information appearing in this prospectus is accurate as of any date other than the date on the front of this prospectus.

TABLE OF CONTENTS

		Page
Summary		1
Risk Factors		7
Forward-Looking Statements		21
Use of Proceeds		22
Dividend Policy		22
Cash and Capitalization		23
Dilution		25
Selected Consolidated Financial Data		27
Management's Discussion and Analysis of Financial Condition and Results of Operations		29
Our Business		53
Management		68
Certain Relationships and Related Transactions		78
Principal and Selling Stockholders		80
Description of Capital Stock		83
Description of Certain Indebtedness		88
Shares Eligible for Future Sale		90
Material United States Federal Income and Estate Tax Considerations for Non-U.S. Holders		92
Underwriting		95
Legal Matters		98
Experts		98
Where to Find More Information		98
Index to Financial Statements		F-1

Until , 2004, 25 days after the date of this prospectus, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

SUMMARY

This summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all the information that may be important to you. For a more complete understanding of this offering, we encourage you to read this entire prospectus and the documents to which we refer you. You should read the following summary together with the more detailed information and consolidated financial statements and the notes to those statements included elsewhere in this prospectus. Unless otherwise specified or the context requires otherwise, reference in this prospectus to the "Company" or "GFI" or "we," "us" or "our" refers to GFI Group Inc. and its direct and indirect subsidiaries on a consolidated basis. Investors should carefully consider the information set forth under "Risk Factors."

Our Business

We are a leading inter-dealer broker specializing in over-the-counter derivatives products and related securities. We provide brokerage services and data and analytics products to institutional clients in markets for a range of credit, financial, equity and commodity instruments, including complex credit derivatives. We were founded in 1987 with a single brokerage desk and, as of March 31, 2004, we had 86 brokerage desks and more than 430 brokers working in our offices in New York, London, Hong Kong, Singapore and Sydney. Our total revenues for the year ended December 31, 2003 were $265.8 million, compared to total revenues of $101.0 million for the year ended December 31, 1999, representing a compound annual growth rate of 27% over this period. Our total revenues for the three months ended March 31, 2004 were $87.7 million compared to $71.7 million for the three months ended March 31, 2003, an increase of 22%.

We focus on less liquid, more complex markets that offer an opportunity for strong growth and higher commissions per transaction. One of our key markets, the global credit derivatives market, which we entered in 1996, has grown in transaction value from $180 billion in 1997 to $3.58 trillion in 2003 (measured by notional amount) according to surveys conducted by the International Swaps and Derivatives Association. During the last five years, we have been named the "preferred broker" in more credit derivatives categories than any other inter-dealer broker according to industry surveys conducted by Risk magazine.

We serve over 1,000 clients, including leading investment and commercial banks, large corporations, insurance companies and large hedge funds. We earn commissions for our brokerage services and fees for many of our data and analytics products. We function as an intermediary on behalf of our brokerage clients by matching their trading needs with counterparties having reciprocal interests. We do not engage in trading for our own account.

We offer a hybrid brokerage approach to our clients that combines a range of telephonic and electronic trade execution services, depending on the needs of individual markets. We complement our hybrid brokerage capabilities with value-added services, such as data and analytics products for decision support. In 2001, we acquired Fenics Ltd., the developer of a leading analysis tool for foreign exchange derivatives, and we now offer additional Fenics-branded products for certain credit and energy derivatives. Our Fenics analytics products were licensed for use at more than 460 sites globally as of March 31, 2004. We believe our hybrid brokerage capabilities, as complemented by our data and analytics products, provide us with a competitive advantage over other inter-dealer brokers who do not offer this technology or are less adept at integrating technology to meet market needs.

Our Market Opportunity

On most business days, trillions of dollars in securities, commodities, currencies and derivative instruments are traded around the world. These financial instruments are traded in markets with varying degrees of liquidity. A liquid finanical market is one in which a financial instrument is easy to buy or sell quickly with minimal price disturbance. Frequently, markets for newer, more complex financial instruments, such as many types of derivative instruments that are traded over-the-counter, are characterized by fewer market participants, lower trading volumes and less price transparency, resulting in less liquid market conditions. Buyers and sellers of many of these less liquid financial instruments frequently rely on inter-dealer brokers to facilitate liquidity by gathering pricing information and identifying counterparties with reciprocal interests.

We believe the markets for financial instruments, especially the markets for derivative instruments, present us with the following opportunities to provide value to our clients as an inter-dealer broker and provider of market data and analytics products:

•: Need for efficient execution in both liquid and less liquid markets.
•: Need for expertise in the development of new markets.
•: Need for market intelligence.
•: Increasing industry consolidation.

Our Strategy

We intend to continue to grow our business by employing the following strategies:

•: Maintain and enhance our leading positions in key markets. We intend to maintain our position as a leading provider of brokerage services and data and analytics products to the markets on which we focus. We plan to continue leveraging the market strength and brand recognition that we have developed for a range of derivative instruments and underlying securities in the credit, financial, equity and commodity markets.
•: Continue to expand through hiring new brokers and identifying and developing less liquid, high-growth markets. The combined revenue of brokerage desks we have opened since the beginning of 2001, many of which focus on less liquid, high growth markets, represented approximately 28% of our total revenues for the year ended December 31, 2003. We will continue to seek an early-mover advantage in new and evolving products and to selectively establish a presence in less complex products that are complementary to products in which we already provide brokerage services.
•: Continue to pursue diverse revenue opportunities. We intend to continue managing our business with the goal of maintaining the diversity of our revenues. On a geographic basis, approximately 54% of our total revenues for the year ended December 31, 2003 were generated by our U.K. operations, 38% were generated by our U.S. operations and 8% were generated by our operations in the Asia-Pacific region. Additionally, for the year ended December 31, 2003, no one customer accounted for more than 8% of our total revenues from all products, services and regions, and our largest brokerage desk accounted for less than 10% of that year's total

revenues. We believe the diversity of our revenues lessens the impact to us of a downturn in any particular market or geographic region.

•: Strategically expand our operations through business acquisitions. We plan to selectively seek opportunities to expand our brokerage services into new or existing product areas through the acquisition of complementary businesses that enhance our brokerage services or permit us to deepen our existing relationships with institutional clients.
•: Leverage infrastructure and technology to improve margins. We will seek to further leverage our technology by continuing to offer quality data and analytics products and, where possible, installing "straight-through-processing" links with our customers' settlement, risk management and compliance operations in order to better meet the needs of our clients and provide us with additional opportunities to increase our revenue.

Company Information

Our largest stockholder is Jersey Partners Inc., which we refer to as Jersey Partners. Our chief executive officer and founder, Michael Gooch, owns a majority of the shares of Jersey Partners. We conduct substantially all of our business through our subsidiaries.

Our executive offices are located at 100 Wall Street, New York, New York 10005, and our telephone number is (212) 968-4100.

The Offering

Common stock offered by:
	us	shares
	the selling stockholders	shares
Common stock to be outstanding after this offering		shares
Use of proceeds		We expect to receive net proceeds from this offering of approximately $ million. We intend to use the net proceeds to repay indebtedness to Jersey Partners in the principal amount of $9.25 million, plus accrued interest, and for working capital and other general corporate purposes. In addition, we may use a portion of the net proceeds from this offering to make acquisitions (which may include the purchase of the outstanding shares of Fenics capital stock not currently owned by us). See "Use of Proceeds." We will not receive any of the proceeds from the sale of shares by the selling stockholders.
Risk factors		For a discussion of risks relating to us, our business and an investment in our common stock, see "Risk Factors."
Proposed Nasdaq National Market symbol		"GFIG"

The number of shares of common stock to be outstanding after the closing of this offering is based on 216,545,557 shares of our common stock outstanding as of March 31, 2004 (assuming conversion of our shares of preferred stock and Class A Common Stock into Class B Common Stock, which will become our only class of common stock and will be called "common stock," on a 1-for-1 basis), excluding:

•: 25,016,510 shares issuable upon the exercise of options with a weighted average exercise price of $1.26 per share;
•: 1,000,000 shares issuable upon the exercise of a warrant with an exercise price of $1.00 per share; and
•: 14,531,260 shares available for future grants under our 2002 Stock Option Plan.

Unless otherwise indicated, all information contained in this prospectus assumes:

•: that the underwriters do not exercise their option to purchase up to additional shares of our common stock to cover over-allotments, if any;
•: the conversion of all our outstanding Class A Common Stock and all series of our outstanding preferred stock into common stock, which will occur immediately before the closing of this offering; and
•: the filing of our second amended and restated certificate of incorporation and second amended and restated bylaws, which will occur simultaneously with the closing of this offering.

The information in this prospectus does not reflect the 1-for- reverse stock split to be completed prior to the commencement of this offering.

Summary Consolidated Financial Data

The following tables provide summary consolidated financial data. You should read this information in conjunction with the information contained in "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes appearing elsewhere in this prospectus. The summary consolidated financial data as of and for the three months ended March 31, 2003 and March 31, 2004 are derived from our unaudited consolidated financial statements, which appear elsewhere in this prospectus, and include all adjustments, consisting only of normal recurring adjustments, that in our opinion are necessary for a fair presentation of financial position and results of operations as of those dates and for those periods. Historical operating and statistical information may not be indicative of our future performance.

				Year ended December 31,							Three months ended March 31,
				2001			2002		2003		2003		2004
				(dollars in thousands, except share and per share data)
Consolidated Statement of Operations Data:
Revenues
	Commissions:
		Credit		$	78,556		$	114,509	$	115,371	$	34,004	$	37,223
		Financial			52,622			55,194		69,101		16,395		20,540
		Equity			21,774			28,841		27,226		6,553		12,549
		Commodity			59,210			61,307		38,459		10,694		11,824

			Total commissions		212,162			259,851		250,157		67,646		82,136

	Analytics and market data				6,077			9,615		13,143		3,341		4,673
	Interest income				1,543			1,401		1,167		311		276
	Other income(1)				576			4,353		1,377		422		608

			Total revenues		220,358			275,220		265,844		71,720		87,693

Expenses
	Compensation and employee benefits				142,574			174,011		166,276		44,670		55,086
	Impairment of goodwill and intangible asset(2)				38,968			—		—		—		—
	Other expenses(3)				66,226			74,465		72,219		17,892		19,772

			Total expenses		247,768			248,476		238,495		62,562		74,858

Income (loss) before provision for income taxes and minority interest					(27,410	)		26,744		27,349		9,158		12,835
	Provision for income taxes				4,436			14,470		12,885		4,314		6,032
	Minority interest				(30	)		—		—		—		—

Net income (loss)				$	(31,816	)	$	12,274	$	14,464	$	4,844	$	6,803

Earnings per share:
	Basic			$			$		$		$		$
	Diluted			$			$		$		$		$
Weighted average number of shares outstanding:
	Basic
	Diluted

		As of March 31, 2004
		Actual		Pro forma(4)	Pro forma as adjusted(5)
		(dollars in thousands)
Consolidated Statement of Financial Condition Data:
	Cash and cash equivalents	$	73,459
	Total assets(6)	$	447,724
	Total debt, including current portion	$	48,044
	Redeemable convertible preferred stock	$	30,043
	Stockholders' equity	$	45,710

		As of December 31,						As of March 31,
		2001		2002		2003		2003		2004
		(dollars in thousands)
Selected Statistical Data:
	Broker headcount		341		366		397		379		432
	Employees		572		655		668		670		708
	Number of brokerage desks(7)		64		65		78		68		86
	Broker productivity for the period(8)	$	685	$	721	$	648	$	178	$	197

			Year ended December 31,						Three months ended March 31,
			2001		2002		2003		2003		2004
			(dollars in thousands)
Commission Revenues by Geographic Region:
	U.S.		$	89,453	$	108,505	$	102,920	$	25,994	$	34,553
	U.K.			113,946		137,181		128,743		36,439		42,525
	Asia-Pacific			8,763		14,165		18,494		5,213		5,058

		Total	$	212,162	$	259,851	$	250,157	$	67,646	$	82,136

(1): Other income for the year ended December 31, 2002 included $1.4 million from the sale of our treasury repurchase agreement brokerage desk, as well as the receipt during that period of $1.7 million of insurance proceeds resulting from business interruptions in connection with the September 11, 2001 terrorist attacks in New York City.
(2): The impairment charge incurred in 2001 was taken in order to reduce goodwill and an intangible asset associated with the Fenics acquisition to their estimated fair value.
(3): Other expenses is the sum of the following categories of expenses: communications and quotes, travel and promotion, rent and occupancy, depreciation and amortization, professional fees, clearing fees, interest and other expenses.
(4): Pro forma financial condition data reflects the conversion of all our Class A Common Stock and all series of our preferred stock into Class B Common Stock which will become our single class of common stock and will occur immediately before the closing of this offering.
(5): Pro forma, as adjusted financial condition data gives effect to receipt of the net proceeds from the sale by us in this offering of shares of common stock at an assumed initial public offering price of $ per share, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, and the application of the net proceeds as described under "Use of Proceeds."
(6): Total assets included receivables from brokers, dealers and clearing organizations of $266 million at March 31, 2004. These receivables primarily represent securities transactions entered into in connection with our matched principal business which have not settled as of their stated settlement dates. These receivables are substantially offset by $251 million of corresponding payables to brokers, dealers and clearing organizations for these unsettled transactions.
(7): A brokerage desk is defined as one or more individual brokers working together at a single location that provide brokerage services with respect to one or more specific financial instruments. Brokerage desks in different offices are considered separate desks even if they focus on the same financial instrument.
(8): We are presenting broker productivity to show the average amount of revenue generated per broker. Broker productivity is calculated as commission revenues divided by average monthly broker headcount for the period.

RISK FACTORS

An investment in our common stock is subject to a number of risks. You should carefully consider the risks described below together with all the other information contained in this prospectus before deciding whether to purchase our common stock. If any of the following risks occurs, our business, financial condition, prospects or results of operations could be harmed. In such an event, the trading price of our common stock could decline and you may lose part or all of your investment.

Risks Related to Our Business

Economic, political and market factors beyond our control could reduce trading volumes, securities prices and demand for our brokerage services, which could harm our business and our profitability.

In each of the past three years and in the three months ended March 31, 2004, over 93% of our revenues consisted of commissions from our brokerage operations. As a result, our revenues and profitability are likely to decline significantly during periods of low trading volume in the financial markets in which we offer our services, which are directly affected by many national and international factors that are beyond our control. Any one of the following factors, among others, may cause a substantial decline in the financial markets in which we offer our services, resulting in reduced trading volume. These factors include:

•: economic and political conditions in the United States, Europe and elsewhere in the world;
•: concerns about terrorism and war;
•: concerns over inflation and wavering institutional and consumer confidence levels;
•: the availability of cash for investment by our dealer clients and their clients;
•: the level and volatility of interest rates and foreign currency exchange rates;
•: the level and volatility of trading in certain equity and commodity markets;
•: the level and volatility of the difference between the yields on corporate securities being traded and those on related benchmark securities (which difference we refer to as credit spreads); and
•: legislative and regulatory changes.

In recent years, the financial markets in which we offer our services have been adversely affected by acts of war, terrorism and other armed hostilities. These or similar acts have in the past increased or prolonged, and may in the future increase or prolong, negative economic conditions.

Declines in the volume of trading in the markets in which we operate generally result in lower revenue from our brokerage business. In addition, although less common, some of our brokerage commissions are determined on the basis of the value of transactions or on credit spreads. Our profitability would be adversely affected by a decline in revenue because a portion of our costs are fixed. For these reasons, decreases in trading volume or declining prices or credit spreads could have an adverse effect on our business, financial condition or results of operations.

We face substantial competition that could negatively impact our market share and our profitability.

The financial services industry generally, and the inter-dealer brokerage businesses in which we are engaged in particular, are very competitive, and we expect competition to continue to intensify in the future. Some of the companies with which we compete are better capitalized than we are and have greater financial, technical, marketing and other resources than we have. Our current and prospective competitors include:

•: other inter-dealer brokerage firms;

•: electronic multi-dealer trading companies or consortia;
•: other providers of data and analytics products; and
•: securities, futures and derivatives exchanges and electronic communications networks.

Some of our competitors offer a wider range of services, have broader name recognition and have larger client bases than we do. Some of them may be able to respond more quickly to new or evolving opportunities, technologies and client requirements than we can, and may be able to undertake more extensive marketing activities. Our competitors may also seek to hire our brokers, which could result in a loss of brokers by us or in increased costs to retain our brokers. In addition to the competitors described above, our large institutional clients may increase the amount of trading they do directly with each other rather than through us, in which case our revenues could be adversely affected. If we are not able to compete successfully in the future, our business, financial condition and results of operations would be adversely affected.

We have experienced intense price competition in our brokerage business in recent years. Some competitors may offer brokerage services to clients at lower prices than we are offering, which may force us to reduce our prices or to lose market share and revenue. In addition, we focus on providing brokerage services in less liquid markets for complex financial instruments. As the markets for these instruments become more liquid, we could lose market share to other inter-dealer brokers and electronic multi-dealer brokers who specialize in providing brokerage services in more liquid markets. If a financial instrument for which we provide brokerage services becomes listed on an exchange, the need for the services of an inter-dealer broker for that instrument may be severely diminished and, as a result, the need for our services in relation to that instrument could be significantly reduced.

Because competition for the services of brokers is intense, we may not be able to attract and retain the highly skilled brokers we need to support our business.

We strive to provide high-quality brokerage services that allow us to establish and maintain long-term relationships with our clients. Our ability to continue to provide these services and maintain these relationships depends, in large part, upon our brokers. As a result, we must attract and retain highly qualified brokerage personnel. Competition for the services of brokers is intense, especially for brokers with extensive experience in the specialized markets in which we participate or may seek to enter. If we are unable to hire highly qualified brokers, we may not be able to enter new brokerage markets or develop new products. If we lose one or more of our brokers in a particular market in which we participate, our revenues may decrease and we may lose market share in that particular market.

We may not be successful in our efforts to recruit and retain brokerage personnel. If we fail to attract new personnel or to retain and motivate our current personnel, or if we incur increased costs associated with attracting and retaining personnel, our business, financial condition and results of operations may suffer.

In addition, recruitment and retention of qualified staff could result in substantial additional costs. We have been party to, or otherwise involved in, several litigations and arbitrations involving competitor claims in connection with new employee hires and claims from former employees in connection with the termination of their employment. We may also pursue our rights through litigation when competitors hire our employees who are under contract with us. We are currently involved in several litigations and arbitrations with our competitors relating to new employee hires or departures in our New York and London offices. We believe such proceedings are common in our industry due to its highly competitive nature. An adverse settlement or judgment related to these or similar types of claims could have a material adverse effect on our financial condition or results of operations. Regardless of

the outcome of these claims, we generally incur significant expense and management time dealing with these claims.

We are dependent on our management team, and the loss of any key member of our team may prevent us from executing our business strategy effectively; and the loss of Michael Gooch as either our chairman or chief executive officer would be a default under our current credit agreement.

Our future success depends, in large part, upon our management team. In particular, we are highly dependent on the continued services of our CEO and founder, Michael Gooch, and other executive officers who possess extensive financial markets knowledge and management skills. Currently, Michael Gooch is not bound by an employment contract to remain with us for a specified period of time. We may not be able to find an appropriate replacement for Michael Gooch or any other executive officer if the need should arise. If we lose the services of any executive officers or other key personnel, we may not be able to manage and grow our operations effectively, enter new brokerage markets or develop new products. In addition, it is an event of default under our current senior credit facility if Michael Gooch ceases to be the chief executive officer or the chairman of the board of directors of either GFI or Jersey Partners. We maintain "key person" life insurance policies on Michael Gooch, but we do not have any such policies for our other officers or personnel.

If we are unable to continue to identify and exploit new market opportunities, our ability to maintain and grow our business may be adversely affected.

As more participants enter our markets, the resulting competition often leads to lower commissions. This may result in a decrease in revenue in a particular market even if the volume of trades we handle in that market has increased. As a result, our strategy is to broker more trades and increase market share in existing markets and to seek out new markets in which we can charge higher commissions. Pursuing this strategy may require significant management attention and broker expense. We may not be able to attract new clients or successfully enter new markets. If we are unable to continue to identify and exploit new market opportunities on a timely and cost-effective basis, our revenues may decline, which would adversely affect our profitability.

If we are unable to manage the risks of international operations effectively, our business could be adversely affected.

We provide services and products to clients in Europe, Asia and Australia through offices in London, Hong Kong, Singapore and Sydney and we may seek to further expand our operations throughout these regions in the future. On a geographic basis, approximately 54% of our total revenues for the year ended December 31, 2003 were generated by our U.K. operations, 38% were generated by our U.S. operations and 8% were generated by our operations in the Asia-Pacific region. There are certain additional risks inherent in doing business in international markets, particularly in the regulated brokerage industry. These risks include:

•: additional regulatory requirements;
•: tariffs and other trade barriers;
•: difficulties in recruiting and retaining personnel, and managing international operations;
•: potentially adverse tax consequences; and
•: reduced protection for intellectual property rights.

If we are unable to manage any of these risks effectively, our business could be adversely affected.

Our international operations also expose us to the risk of fluctuations in currency exchange rates. For example, a substantial portion of our revenue from our U.K. operations is received in Euros and

U.S. Dollars, whereas many of our expenses from our U.K. operations are payable in British Pounds. We attempt to mitigate this risk by entering into hedging transactions. However, our risk management strategies relating to exchange rates may not prevent us from suffering losses that would adversely affect our financial condition or results of operations.

Our clients' financial or other problems could adversely affect our business.

We provide brokerage services to our clients in the form of either agency or matched principal transactions. In agency transactions, we charge a commission for connecting buyers and sellers and assisting in the negotiation of the price and other material terms of the transaction. After all material terms of a transaction are agreed upon, we identify the buyer and seller to each other and leave them to settle the trade directly. We are exposed to credit risk for commissions we bill to clients for our agency brokerage services. Our clients may default on their obligations to us due to disputes, bankruptcy, lack of liquidity, operational failure or other reasons. Any losses arising from such defaults could adversely affect our financial condition or results of operations.

We have adopted policies and procedures to identify, monitor and manage our credit risk, in both agency and matched principal transactions, through reporting and control procedures and by monitoring credit standards applicable to our clients. These policies and procedures, however, may not be fully effective. Some of our risk management methods depend upon the evaluation of information regarding markets, clients or other matters that are publicly available or otherwise accessible by us. That information may not, in all cases, be accurate, complete, up-to-date or properly evaluated. If our policies and procedures are not fully effective or we are not always successful in monitoring or evaluating the risks to which we are, or may, be exposed, our financial condition or results of operations could be adversely affected. In addition, our insurance policies may not provide adequate coverage for these risks.

The securities settlement process exposes us to risks that may impact our liquidity and profitability. In addition, liability for unmatched trades could adversely affect our results of operations and balance sheet.

Through our subsidiaries, we provide brokerage services by executing transactions for our clients. Some of these are "matched principal" transactions in which we act as a "middleman" by serving as a counterparty to both a buyer and a seller in matching reciprocal back-to-back trades. These transactions are then settled through a clearing institution.

In executing matched principal transactions, we are exposed to the risk that one of the counterparties to a transaction may fail to fulfill its obligations, either because it is not matched immediately or, even if matched, one party fails to deliver the cash or securities it is obligated to deliver. Our focus on less liquid markets exacerbates this risk for us because transactions in these markets tend to be more likely not to settle on a timely basis. Adverse movements in the prices of securities that are the subject of these transactions can increase our risk. In addition, widespread technological or communication failures, such as those which occurred as a result of the terrorist attacks on September 11, 2001 and the blackout in the eastern portion of the United States in August 2003, as well as actual or perceived credit difficulties or the insolvency of one or more large or visible market participants, could cause market-wide credit difficulties or other market disruptions. These failures, difficulties or disruptions could result in a large number of market participants not settling transactions or otherwise not performing their obligations.

We are subject to financing risk in these circumstances because if a transaction does not settle on a timely basis, the resulting unmatched position may need to be financed, either directly by us or through one of our clearing organizations at our expense. These charges may be recoverable from the failing counterparty, but sometimes are not. Finally, in instances where the unmatched position or

failure to deliver is prolonged or widespread due to rapid or widespread declines in liquidity for an instrument, there may also be regulatory capital charges required to be taken by us, which depending on their size and duration, could limit our business flexibility or even force the curtailment of those portions of our business requiring higher levels of capital. Credit or settlement losses of this nature could adversely affect our financial condition or results of operations.

In the process of executing matched principal transactions, miscommunications and other errors by our clients or us can arise whereby a transaction is not completed with one or more counterparties to the transaction, leaving us with either a long or short unmatched position. These unmatched positions are referred to as "out trades," and they create a potential liability for the involved subsidiary of ours. If an out trade is promptly discovered and there is a prompt disposition of the unmatched position, the risk to us is usually limited. If the discovery of an out trade is delayed, the risk is heightened by the increased possibility of intervening market movements prior to disposition. Although out trades usually become known at the time of, or later on the day of, the trade, it is possible that they may not be discovered until later in the settlement process. When out trades are discovered, our policy is to have the unmatched position disposed of promptly, whether or not this disposition would result in a loss to us. The occurrence of out trades generally rises with increases in the volatility of the market and, depending on their number and amount, such out trades have the potential to have a material adverse effect on our financial condition and results of operations. Transactions done on an agency basis may also give rise to such risks.

Financial problems experienced by third parties could affect the markets in which we provide brokerage services.

Problems experienced by third parties could also affect the markets in which we provide brokerage services. For example, the bankruptcy of Enron Corp. and its affiliates in late 2001, as well as the subsequent bankruptcies of other large energy companies, caused a disruption in the global energy markets, which resulted in, among other things, several market participants ceasing or reducing their level of trading activity. This decrease in volume began in the second half of 2002 and was primarily responsible for the approximately 37% decrease in our commission revenues from our commodity products brokerage services for the year ended December 31, 2003 compared to the comparable period in 2002. In addition, in recent years, hedge funds have increasingly begun to make use of credit and other derivatives as part of their trading strategies. Hedge funds typically employ a significant amount of leverage to achieve their results and, in the past, certain hedge funds have had difficulty managing this leverage, which has resulted in market-wide disruptions. If one or more hedge funds that was a significant participant in a derivatives market experienced similar problems in the future, that derivatives market could be adversely affected and, accordingly, our brokerage revenues in that market could decrease.

We operate in a highly regulated industry and we may face restrictions with respect to the way we conduct certain of our operations.

Our business is subject to increasingly extensive government and other regulation and our relationships with our broker-dealer clients may subject us to increasing regulatory scrutiny. These regulations are designed to protect the interests of our clients, rather than our stockholders. The Securities and Exchange Commission, which we refer to as the SEC, the National Association of Securities Dealers, Inc., which we refer to as the NASD, and other agencies extensively regulate the U.S. financial services industry, including certain of our operations in the United States. Some of our international operations are subject to similar regulations in their respective jurisdictions, including regulations overseen by the Financial Services Authority, which we refer to as the FSA, in the United Kingdom, the Securities and Futures Commission in Hong Kong, which we refer to as the SFC, and the Monetary Authority of Singapore, which we refer to as the MAS. These regulatory bodies are

responsible for safeguarding the integrity of the securities and other financial markets and protecting the interests of investors in those markets. Some aspects of our business are subject to extensive regulation, including:

•: the way we deal with clients;
•: capital requirements;
•: financial and reporting practices;
•: required record keeping and record retention procedures;
•: the licensing of employees; and
•: the conduct of directors, officers, employees and affiliates.

If we fail to comply with any of these laws, rules or regulations, we may be subject to censure, fines, cease-and-desist orders, suspension of business, suspensions of personnel or other sanctions, including revocation of our registrations with the NASD, FSA or other similar international agencies to whose regulation we are subject. Our authority to operate as a broker in a jurisdiction is dependent on continued registration in that jurisdiction or the maintenance of a proper exemption from such registration. Our ability to comply with all applicable laws and rules is largely dependent on our compliance, credit approval, audit and reporting systems and procedures, as well as our ability to attract and retain qualified compliance, credit approval, audit and risk management personnel. We cannot assure you that our systems and procedures will be effective.

Changes in laws or regulations or in governmental policies could cause us to change the way we conduct our business, which could adversely affect us. The government agencies that regulate us have broad powers to investigate and enforce compliance and punish noncompliance with their rules, regulations and industry standards of practice. We cannot assure you that we or our directors, officers and employees will comply with the rules and regulations of, and will not be subject to claims or actions by, these agencies. In addition, because our industry is heavily regulated, regulatory approval may be required prior to expansion of business activities. We may not be able to obtain the necessary regulatory approvals for any desired expansion. Even if approvals are obtained, they may impose restrictions on our business or we may not be able to continue to comply with the terms of the approvals or applicable regulations. The implementation of unfavorable regulations or unfavorable interpretations of existing regulations by courts or regulatory bodies could require us to incur significant compliance costs or cause the development or continuation of business activities in affected markets to become impractical. For a further description of the regulations which may limit our activities, see "Our Business — Regulation."

Our regulated subsidiaries are subject to risks associated with net capital requirements, and we may not be able to engage in operations that require significant capital.

The SEC, NASD, FSA and various other domestic and international regulatory agencies have stringent rules and regulations with respect to the maintenance of specific levels of net capital by broker-dealers. Generally, a broker-dealer's net capital is defined as its net worth plus qualified subordinated debt less deductions for certain types of assets. If we fail to maintain the required net capital, we may be subject to suspension or revocation of registration by the NASD or FSA, which would have a material adverse effect on our business. If these net capital rules are changed or expanded, or if there is an unusually large charge against net capital, operations that require the intensive use of capital would be limited. Also, our ability to withdraw capital from our regulated subsidiaries is subject to restrictions, which in turn could limit our ability to pay dividends, repay debt and redeem or purchase shares of our common stock. A large operating loss or charge against net capital could adversely affect our ability to expand or even maintain our present levels of business,

which could have a material adverse effect on our business. In addition, we may become subject to net capital requirements in other foreign jurisdictions in which we currently operate or which we may enter. We cannot predict our future capital needs or our ability to obtain additional financing. For a further discussion of our net capital requirements, see "Our Business — Regulation."

Our investments in expanding our brokerage and market data and analytics services may not produce substantial revenue.

We have made, and expect to continue to make, significant investments in our brokerage and market data and analytics services, including investments in technology and infrastructure, in order to pursue new growth opportunities. With respect to our brokerage services, we may not receive significant revenue and profit from the hiring of a new broker or the development of a new brokerage desk. With respect to our market data and analytics services, we may incur substantial development, sales and marketing expenses and expend significant management effort to create a new product or service. Even after incurring these costs, we ultimately may not sell any or only small amounts of these products or services. Consequently, if revenue does not increase in a timely fashion as a result of these expansion initiatives, the up-front costs associated with expansion may exceed revenue and reduce our working capital and income.

Computer systems failures, capacity constraints and breaches of security could increase our operating costs and cause us to lose clients.

We internally support and maintain many of our computer systems and networks. Our failure to monitor or maintain these systems and networks or, if necessary, to find a replacement for this technology in a timely and cost-effective manner, would have a material adverse effect on our ability to conduct our operations.

We also rely and expect to continue to rely on third parties to supply and maintain various computer and communications systems, such as telephone companies, online service providers, data processors, clearing organizations, software and hardware vendors and back-up services. Our systems, or those of our third party providers, may fail or operate slowly, causing one or more of the following:

•: unanticipated disruptions in service to our clients;
•: slower response times;
•: delays in our clients' trade execution;
•: failed settlement of trades;
•: decreased client satisfaction with our services;
•: incomplete, untimely or inaccurate accounting, recording, reporting or processing of trades;
•: financial losses;
•: litigation or other client claims; and
•: regulatory sanctions.

We cannot assure you that we will not experience systems failures from power or telecommunications outages, acts of God, war, terrorism, human error, natural disasters, fire, sabotage, hardware or software malfunctions or defects, computer viruses, intentional acts of vandalism or similar events. Any system failure that causes an interruption in service or decreases the responsiveness of our service, including failures caused by client error or misuse of our systems, could damage our reputation, business and brand name. In addition, if security measures contained in our systems are breached as a

result of third-party action, employee error, malfeasance or otherwise, our reputation may be damaged and our business could suffer.

If systems maintained by us or third parties malfunction, our clients or other third parties may seek recourse against us. We could incur significant legal expenses defending these claims, even those which we may believe to be without merit. An adverse resolution of any lawsuits or claims against us could result in our obligation to pay substantial damages and could have a material adverse effect on our financial condition or results of operations.

We may have difficulty managing our growth effectively.

We have experienced significant growth in our business activities over the last several years, which has placed, and is expected to continue to place, a significant strain on our management and resources. Continued growth will require continued investment in personnel, facilities, information technology infrastructure and financial and management systems and controls. We may not be successful in implementing all of the processes that are necessary to support our growth, which could result in our expenses increasing faster than our revenues, causing our operating margins and profitability to be adversely affected.

The expansion of our international operations, particularly our Asia-Pacific operations, involves challenges that we may not be able to meet. For example, we may have difficulty effectively managing and staffing our Asia-Pacific operations.

We depend on third-party software licenses. The loss of any of our key licenses could adversely affect our ability to provide our brokerage services.

We license software from third parties, some of which is integral to our business. These licenses are generally terminable if we breach our obligations under the licenses or if the licensor gives us notice in advance of the termination. If any of these relationships were terminated, or if any of these third parties were to cease doing business, we may be forced to spend significant time and money to replace the licensed software. These replacements may not be available on reasonable terms, if at all. A termination of any of these relationships could have a material adverse effect on our financial condition and results of operations.

Our current senior credit facility contains restrictive covenants which may limit our working capital and corporate activities.

We are a party to a credit agreement which imposes operating and financial restrictions on us, including restrictions which may limit our ability to:

•: merge, acquire or dispose of assets;
•: incur liens, indebtedness or contingent obligations;
•: pay dividends and other distributions; and
•: enter into certain lines of business or engage in business with new brokerage clients that do not meet certain credit standards.

Accordingly, in order to engage in various corporate activities we would need the permission of our lenders, whose interests are different from, and may be counter to, those of our stockholders. We may not be able to obtain our lenders' permission to engage in such activities. If we do not obtain the permission of our lenders, we may be prevented from effecting corporate transactions and/or from expanding or properly managing our business.

Our current credit agreement contains several events of default, including for non-payment, certain bankruptcy events, covenant or representation breaches, changes in control of us or Jersey Partners, Michael Gooch ceasing to be our or Jersey Partners' chief executive officer or chairman, and the majority of the lenders reasonably believing that an event or circumstance has occurred that might have a material adverse effect on our ability to perform under the credit agreement and related documents.

We must keep up with rapid technological changes in order to compete effectively.

To remain competitive, we must continue to enhance and improve the responsiveness, functionality, accessibility and other features of our software, network distribution systems and technologies. The financial services industry is characterized by rapid technological change, changes in use and client requirements and preferences, frequent product and service introductions employing new technologies and the emergence of new industry standards and practices that could render our existing technology and systems obsolete. Our success will depend, in part, on our ability to:

•: develop and license technologies useful in our business;
•: enhance our existing services;
•: develop or acquire new services and technologies that address the increasingly sophisticated and varied needs of our existing and prospective clients; and
•: respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis.

The development of technology to support our business entails significant technological, financial and business risks. Further, the adoption of new internet, networking or telecommunications technologies may require us to devote substantial resources to modify and adapt our services. We cannot assure you that we will successfully implement new technologies or adapt our technology and transaction-processing systems to client requirements or emerging industry standards. We also cannot assure you that we will be able to respond in a timely manner to changing market conditions or client requirements. If we are unable to anticipate and respond to the demand for new services, products and technologies on a timely and cost-effective basis, and to adapt to technological advancements and changing standards, we may be unable to compete effectively.

If we acquire other companies or businesses, or if we hire new brokerage personnel, we may have difficulty integrating their operations.

To achieve our strategic objectives, we have acquired or invested in, and in the future may seek to acquire or invest in, other companies and businesses. We also may seek to hire brokers for new or existing brokerage desks. Acquisitions and new hires entail numerous risks, including:

•: difficulties in the assimilation of acquired personnel, operations, services or products;
•: diversion of management's attention from other business concerns;
•: assumption of unknown material liabilities of acquired companies or businesses;
•: commercial litigation;
•: the up-front costs associated with recruiting brokerage personnel, including when establishing a new brokerage desk;
•: failure to achieve financial or operating objectives; and
•: potential loss of clients or key employees of acquired companies, businesses or newly hired brokerage personnel.

If we fail to manage these risks as we make acquisitions or make new hires, our profitability may be adversely affected, and we may never realize the anticipated benefits of the acquisitions or hires. In addition, entering into new businesses may require prior approval from our regulators. Our ability to obtain timely approval from our regulators may hinder our ability to successfully enter new businesses.

We may not be able to obtain additional financing, if needed, on terms that are acceptable.

Our business is dependent upon the availability of adequate funding and sufficient regulatory and clearing capital. Historically, these needs have been satisfied from internally generated funds, investments from our stockholders and lines of credit made available by commercial banking institutions. We believe that, based on current levels of operations and anticipated growth, our cash from operations, together with cash currently available, the net proceeds of this offering and available financing under our credit agreement, will be sufficient to fund our operations for the foreseeable future. However, if for any reason we need to raise additional funds, including to meet increased clearing capital requirements arising from growth in our brokerage business, we may not be able to obtain additional financing when needed. If we cannot raise additional funds on acceptable terms, we may not be able to develop or enhance our business, take advantage of future opportunities or respond to competitive pressure or unanticipated requirements.

In the event of employee misconduct or error, our business may be harmed.

Employee misconduct could subject us to financial losses and regulatory sanctions and could seriously harm our reputation. It is not always possible to deter employee misconduct, and the precautions taken to prevent and detect employee misconduct may not always be effective. Misconduct by employees could include engaging in unauthorized transactions or activities, engaging in improper or unauthorized activities on behalf of clients or improperly using confidential information.

Employee errors, including mistakes in executing, recording or reporting transactions for clients, could cause us to enter into transactions that clients may disavow and refuse to settle, which could expose us to the risk of material losses until the errors are detected and the transactions are unwound or reversed. As with any unsettled transaction, adverse movements in the prices of the securities involved in these transactions before they are unwound or reversed can increase this risk. The risk of employee error or miscommunication may be greater for products that are new or have non-standardized terms.

Seasonal fluctuations in trading may cause our quarterly operating results to fluctuate.

Our business experiences seasonal fluctuations, reflecting reduced trading activity during summer months, particularly in August. We also experience reduced activity in December due to seasonal holidays. As a result, our quarterly operating results may not be indicative of the results we expect for the full year. Our operating results may also fluctuate quarter to quarter due to a variety of factors beyond our control such as conditions in the global financial markets, terrorism, war and other economic and political events. Furthermore, we may experience reduced revenues in a quarter due to a decrease in the number of business days in that quarter.

We may not be able to protect our intellectual property rights or may be prevented from using intellectual property necessary for our business.

We rely primarily on trade secret, contract, copyright, trademark and patent law to protect our proprietary technology. It is possible that third parties may copy or otherwise obtain and use our proprietary technology without authorization or otherwise infringe on our rights. We may also face claims of infringement that could interfere with our ability to use technology that is material to our business operations.

In the future, we may have to rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the validity and scope of the proprietary rights of others or defend against claims of infringement or invalidity. Any such litigation, whether successful or unsuccessful, could result in substantial costs and the diversion of resources and the attention of management, any of which could negatively affect our business.

Consolidation among our clients may cause our revenue to be dependent on a smaller number of clients and may result in additional pricing pressure.

Our primary clients are leading financial services institutions. The number of these clients may decrease as a result of large financial institution mergers. While no client accounted for more than 8% of our total revenues for the year ended December 31, 2003, if our existing clients consolidate and new clients, such as national and regional banks, insurance companies and large hedge funds, do not generate offsetting volumes of transactions, our revenues may become concentrated in a relatively small number of clients. In that event, our revenues may be dependent on our relationships with those clients to a material extent. Furthermore, continued consolidation in the financial services industry could lead to the exertion of additional pricing pressure by our primary clients impacting the commissions we generate from our brokerage services.

Risks Related to this Offering

Jersey Partners has significant voting power and may take actions that may not be in the best interest of our other stockholders.

Upon completion of this offering, Jersey Partners, in which our CEO and founder, Michael Gooch, is the controlling shareholder, will own approximately % of our outstanding common stock. In addition, Jersey Partners, through its wholly-owned subsidiary Magnetic Management LLC, is the managing member of certain limited liability companies which hold shares of our Series A Preferred Stock. As managing member of these entities, Magnetic Management LLC controls the voting of those preferred shares. As a result, through Jersey Partners, Michael Gooch will have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. This concentration of control could be disadvantageous to other stockholders with interests different from those of Michael Gooch. This concentration of voting power may have the effect of delaying or impeding actions that could be beneficial to our other stockholders, including actions that may be supported by our board of directors. The trading price for our common stock could be adversely affected if investors perceive disadvantages to owning our stock as a result of this significant concentration of share ownership. In addition, a subsidiary of Jersey Partners is the landlord on the lease for our principal London office.

There is no established trading market for our common stock, and the market for our stock may be highly volatile or may decline regardless of our operating performance. You may not be able to sell your shares at or above the initial public offering price.

Prior to this offering, you could not buy or sell our common stock publicly. We have applied to have our common stock included for quotation on the Nasdaq National Market. However, an active public market for our common stock may not develop or be sustained after this offering. If a market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at a price that is attractive to you, or at all.

The initial public offering price will be determined through negotiation between us and representatives of the underwriters, and may not be indicative of the market price for our common stock after this offering.

The price at which our common stock will trade after this offering may be volatile due to a number of factors, including:

•: actual or anticipated fluctuations in our quarterly or annual results of operations;
•: changes in, or our failure to meet, market expectations;

•: our success or failure in implementing our growth plans;
•: changes in market valuations of companies viewed as similar to us;
•: technological innovations;
•: changes in governmental regulations;
•: additions or changes in key personnel;
•: depth of the trading market in our common stock;
•: future sales of our common stock;
•: the granting or exercise of employee stock options;
•: increased competition; and
•: general market conditions.

In addition, equity markets, particularly the Nasdaq National Market, have experienced significant price and volume fluctuations that have affected the market prices for the securities of newly public companies for a number of reasons, including reasons that may be unrelated to our business or operating performance. These broad market fluctuations may result in a material decline in the market price of our common stock and you may not be able to sell your shares of common stock at prices you deem acceptable. In the past, following periods of volatility in the equity markets, securities class action lawsuits have been instituted against public companies. Such litigation, if instituted against us, could result in substantial cost and the diversion of management attention.

We have never operated as a public company and the obligations incident to being a public company will require additional expenditures of both time and resources.

Prior to the consummation of this offering, we have never operated as a public company, and we expect that the obligations of being a public company, including substantial public reporting, auditing and investor relations obligations, will require significant additional expenditures, place additional demands on our management and require the hiring of additional personnel. These obligations will increase our operating expenses and could divert our management's attention from our operations. The Sarbanes-Oxley Act of 2002 and the SEC rules and regulations implementing that Act, as well as various Nasdaq National Market rules, will require us to implement additional corporate governance practices and may require further changes. These new rules and regulations will increase our legal and financial compliance costs, and make some activities more difficult, time-consuming or costly. In particular, our management will be required to conduct an annual evaluation of our internal controls, and have that evaluation attested to by our independent auditor. We also expect these new rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance. We may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These new rules and regulations could also make it more difficult for us to attract and retain qualified independent members of our board of directors and qualified members of our management team.

Provisions of our certificate of incorporation and bylaws, agreements to which we are a party and regulations to which we are subject could delay or prevent a change in control of our company and entrench current management.

Our second amended and restated certificate of incorporation and bylaws, which will become effective simultaneously with the closing of this offering, may be deemed to have an anti-takeover effect and may delay, deter or prevent a change of control of us, such as a tender offer or takeover proposal that might result in a premium over the market price for our common stock. In addition, certain of

these provisions make it more difficult to bring about a change in the composition of our board of directors, which could result in entrenchment of current management. For example, our second amended and restated certificate of incorporation and bylaws will:

•: provide for a classified board of directors;
•: not permit the removal of directors other than for cause;
•: not permit stockholders to act by written consent or to call special meetings;
•: require certain advance notice for director nominations and other actions to be taken at annual meetings of stockholders;
•: require supermajority stockholder approval with respect to extraordinary transactions such as mergers and certain amendments to our certificate of incorporation and bylaws (including in respect of the provisions set forth above); and
•: authorize the issuance of "blank check" preferred stock by our board of directors without stockholder approval, which could discourage a takeover attempt.

Under our current senior credit facility, a change in control without each of the lenders' consent may lead the lenders to exercise remedies such as acceleration of the loan and termination of their obligations to fund additional advances under the revolving credit portion of that facility.

Our brokerage businesses are heavily regulated and some of our regulators require that they approve transactions which could result in a change of control, as defined by the then-applicable rules of our regulators. The requirement that this approval be obtained may prevent or delay transactions that would result in a change of control.

If you purchase shares of common stock sold in this offering, you will experience immediate and substantial dilution.

If you purchase shares of our common stock in this offering, you will experience immediate and substantial dilution of $ per share (assuming the common stock is offered at $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus) because the price that you pay will be substantially greater than the pro forma net tangible book value per share of the shares you acquire based on the pro forma net tangible book value per share as of March 31, 2004. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares. You will experience additional dilution upon the exercise of a warrant and upon the exercise of stock options by employees or directors to purchase common stock under our equity incentive plans. At March 31, 2004, we had outstanding stock options and an outstanding warrant to purchase an aggregate of 26,016,510 shares of our common stock at a weighted average exercise price of $1.25 per share. For a more detailed description, see "Dilution."

Our share price may be negatively impacted due to the large number of shares eligible for future sale.

If our stockholders sell, or there is a perception they may sell, substantial amounts of our common stock, including shares issued upon the exercise of outstanding options or our outstanding warrant, in the public market following this offering, the market price of our common stock could decline. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. In addition, we have granted registration rights to many of our existing stockholders.

After the completion of this offering, the holders of an aggregate of approximately shares of our common stock will have registration rights, including the right, exercisable 180 days after

the date of the effectiveness of the registration statement of which this prospectus is a part, to require us to register the sale of their shares and the right to include their shares in public offerings we undertake in the future. After this offering, we intend to register all shares of common stock that we may issue under our stock option plans. Once we register these shares, upon issuance they may be freely sold in the public market, subject to the lock-up agreements described below and in "Underwriting."

Our stockholders agreement contains an agreement pursuant to which, upon our request, our stockholders will not sell their shares for a period designated by us, not to exceed 180 days after the date of the effectiveness of the registration statement of which this prospectus is a part. The agreements pursuant to which we have issued options to purchase our common stock and our outstanding warrant contain similar provisions. In addition, we and our directors and executive officers, the selling stockholders and certain of our other stockholders have agreed that, subject to specified exceptions, we and they will not sell common stock during the 180-day period after the date of this prospectus without the prior written consent of Citigroup and Merrill Lynch.

Upon completion of this offering, we will have outstanding an aggregate of shares of our common stock, assuming no exercise of outstanding options or our outstanding warrant. Of these shares, all shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, unless the shares are purchased by our "affiliates" as that term is defined in Rule 144 under the Securities Act. In addition, other shares will be eligible for sale in the public market, subject to volume limits and manner of sale requirements, upon the expiration of the lock-up arrangements described above.

We will have broad discretion over the use of the proceeds to us from this offering, and we may not use these funds in a manner of which you would approve.

We will have broad discretion to use the net proceeds we receive from this offering, and you will be relying on the judgment of our board of directors and management regarding the use of these proceeds. Although we expect to use the net proceeds from this offering to repay certain indebtedness, for general corporate purposes and for acquisitions (which may include the purchase of the outstanding shares of Fenics capital stock not currently owned by us), we have not allocated these net proceeds for specific purposes and cannot assure you that we will use these funds in a manner of which you would approve.

We do not expect to pay any dividends for the foreseeable future.

We do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future. We expect to retain all future earnings, if any, for investment in our business. In addition, our current senior credit facility prohibits us from paying dividends without the approval of our lenders and any instruments governing our future indebtedness may also contain various covenants that limit our ability to pay dividends. Accordingly, investors must rely on sales of their common stock after price appreciation, which may not occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our common stock.

FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking statements." Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe," "anticipate," "expect," "estimate," "intend," "project," "will be," "will likely continue," "will likely result," or words or phrases of similar meaning including, among other things, statements concerning:

•: the risks and other factors described under the heading "Risk Factors" and elsewhere in this prospectus;
•: expansion and growth of our operations generally or of specific products;
•: our entrance into new brokerage markets, investments in establishing new brokerage desks and the hiring of new brokers;
•: future results of operations and financial condition;
•: business strategies;
•: market and general economic conditions;
•: risks associated with potential acquisitions by us of businesses or technologies;
•: uncertainties associated with currency fluctuations;
•: our failure to protect or enforce our intellectual property rights;
•: our ability to keep up with rapid technological change;
•: changes in laws and regulations governing our business and operations or permissible activities; and
•: changes in the availability of capital.

Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, as well as those risks discussed under the heading "Risk Factors," which may cause actual results to differ materially from the forward-looking statements. We operate in a changing environment in which new risk factors can emerge from time to time. It is not possible for management to predict all possible risks, nor can it assess the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements.

USE OF PROCEEDS

We estimate that the net proceeds from the shares offered by us will be approximately $ million, after deducting the underwriting discount and estimated expenses of this offering and assuming we sell the shares for $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus. If the underwriters exercise their over-allotment option with us in full, we estimate that the net proceeds to us (including those shares) will be approximately $ million. We will not receive any proceeds from the sale of shares by the selling stockholders.

We will retain broad discretion over the allocation of the net proceeds of this offering. We intend to use a portion of the net proceeds of this offering to repay the entire $9.25 million outstanding principal amount, plus accrued interest, of our senior subordinated term loan with Jersey Partners. This note matures on June 15, 2011, and had an interest rate of LIBOR + 5.00%, or 6.10%, at March 31, 2004. We intend to use the remaining portion (estimated to be approximately $ million, or $ million if the over-allotment option is exercised in full) of the proceeds of this offering for working capital and other general corporate purposes and for acquisitions of, or investment in, companies, technologies or other assets that complement our business. We have no present understandings, commitments or agreements to enter into any potential acquisitions or investments. We may also use a portion of the net proceeds to us from this offering to purchase the remaining portion of Fenics capital stock not currently owned by us as discussed under "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources."

Pending specific application of the net proceeds to us, we currently plan to invest the net proceeds received in short-term, investment grade, interest-bearing securities.

DIVIDEND POLICY

We do not anticipate paying any dividends on our common stock in the foreseeable future. We currently expect to retain all future earnings, if any, for investment in our business. In addition, our senior credit facility prohibits us from paying dividends without the approval of our lenders and the instruments governing our future indebtedness may also contain various covenants that limit our ability to pay dividends.

Any declaration and payment of dividends will be at the discretion of our board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends, and other considerations that our board of directors deems relevant. The board's ability to declare a dividend is also subject to limits imposed by Delaware corporate law.

During 2000, 2001 and 2002, one of our subsidiaries paid dividends to Jersey Partners of $1.6 million, $3.3 million and $4.5 million, respectively. The dividends related to periods occurring prior to our reorganization in November 2001 and were paid to Jersey Partners to compensate it for certain tax liabilities in those periods. In addition, on October 1, 2001, the same subsidiary paid a dividend to Jersey Partners of $30 million in cash and accounts receivable in connection with our reorganization. See "Certain Relationships and Related Transactions — Loans from Jersey Partners."

CASH AND CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2004:

•: on an actual basis;
•: on a pro forma basis to reflect the conversion of all our Class A Common Stock and all series of our preferred stock into Class B Common Stock (which will become our only class of common stock and will be called "common stock"), which will occur immediately before the consummation of this offering; and
•: on a pro forma as adjusted basis to give effect to receipt of the net proceeds from the sale by us in this offering of shares of common stock at an assumed initial public offering price of $ per share, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, and the application of the net proceeds as described under "Use of Proceeds."

You should read this table in conjunction with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the notes thereto included elsewhere in this prospectus.

				As of March 31, 2004
				Actual			Pro Forma		Pro Forma as Adjusted
				(dollars in thousands, except per share data)
Cash and cash equivalents				$	73,459		$		$

Total debt, including current portion				$	48,044		$		$

Series C redeemable convertible preferred stock, $.01 par value per share, 35,373,704 shares authorized, issued and outstanding actual; no shares authorized, issued and outstanding pro forma or pro forma as adjusted					30,043			—		—

Stockholders' equity:
	Series A convertible preferred stock, $.01 par value per share, 28,000,000 shares authorized; 27,000,000 shares issued and outstanding actual; no shares authorized, issued and outstanding pro forma or pro forma as adjusted				26,209			—		—
	Series B convertible preferred stock, $.01 par value per share, 2,000,000 shares authorized; 1,700,000 shares issued and outstanding actual; no shares authorized, issued and outstanding pro forma or pro forma as adjusted				2,860			—		—
	Class A common stock, $.01 par value per share, 100,000,000 shares authorized; 55,991,541 shares issued and outstanding actual; no shares authorized, issued and outstanding pro forma or pro forma as adjusted				560			—		—
	Class B common stock, $.01 par value per share, 300,000,000 shares authorized; 96,480,312 shares issued and outstanding actual; no shares authorized, issued and outstanding pro forma or pro forma as adjusted				965			—		—
	Common stock, $.01 par value per share, shares authorized; no shares issued and outstanding actual; shares issued and outstanding pro forma; shares issued and outstanding pro forma as adjusted				—
	Preferred stock, $ par value per share, shares authorized; no shares issued and outstanding actual, pro forma or pro forma as adjusted				—			—		—
	Additional paid in capital				33,621
	Retained earnings (accumulated deficit)				(19,633	)
	Accumulated other comprehensive income				1,128

		Total stockholders' equity			45,710

			Total capitalization	$	123,797		$		$

This table is based on 216,545,557 shares of our common stock outstanding as of March 31, 2004 (assuming conversion of our shares of preferred stock and Class A Common Stock into common stock on a 1-for-1 basis) and excludes:

•: 25,016,510 shares issuable upon exercise of options with a weighted average exercise price of $1.26 per share;
•: 1,000,000 shares issuable upon exercise of a warrant with an exercise price of $1.00 per share; and
•: 14,531,260 shares available for future grants under our 2002 Stock Option Plan.

DILUTION

Dilution is the amount by which the price paid by the purchasers of common stock in this offering will exceed the pro forma net tangible book value per share of common stock after this offering. Our net tangible book value at March 31, 2004 was $ million or $ per share of common stock. Net tangible book value per share represents our tangible assets less total liabilities and redeemable preferred stock, divided by the number of shares of common stock outstanding as of March 31, 2004. Our pro forma net tangible book value as of March 31, 2004 was $ million or $ per share of common stock. Pro forma net tangible book value gives effect to the conversion of all of our outstanding preferred stock and Class A Common Stock into shares of our Class B Common Stock (which will become our only class of common stock and will be called "common stock") which will occur immediately before the closing of this offering. After giving effect to the consummation of this offering and the application of the net proceeds therefrom, our pro forma net tangible book value as of March 31, 2004 would have been $ million or $ per share. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $ per share and an immediate dilution to new investors of $ per share. The following table illustrates this per share dilution:

Assumed initial public offering price per share		$

Net tangible book value per share as of March 31, 2004	$
Pro forma net tangible book value per share as of March 31, 2004
Increase in pro forma net tangible book value per share resulting from this offering

Pro forma net tangible book value per share after this offering

Dilution per share to new investors		$

The following table summarizes, on the pro forma basis set forth above as of March 31, 2004, the difference between the total cash consideration paid and the average price per share paid by existing stockholders and the purchasers of common stock in this offering with respect to the number of shares of common stock purchased from us, before deducting estimated underwriting discounts, commissions and offering expenses payable by us.

	Shares Purchased			Total Consideration
	Shares Purchased			Total Consideration			Average Price Per Share
	Number	Percent		Amount	Percent		Average Price Per Share
Existing stockholders			%	$		%	$
Purchasers of common stock in this offering(1)

Total		100.0	%	$	100.0	%

(1): The shares sold in this offering include shares to be sold by existing stockholders.

The table above is based on 216,545,557 shares of our common stock outstanding as of March 31, 2004 (assuming conversion of our shares of preferred stock and Class A Common Stock into common stock on a 1-for-1 basis) and excludes:

•: 25,016,510 shares issuable upon exercise of options with a weighted average exercise price of $1.26 per share;
•: 1,000,000 shares issuable upon exercise of a warrant with an exercise price of $1.00 per share; and
•: 14,531,260 shares available for future grants under our 2002 Stock Option Plan.

To the extent these options and our outstanding warrant are exercised, there will be further dilution to purchasers of common stock in this offering.

If the underwriters exercise their over-allotment option in full, the following will occur:

•: the pro forma percentage of shares of our common stock held by existing stockholders will decrease to approximately % of the total number of pro forma shares of our common stock outstanding after this offering; and
•: the pro forma number of shares of our common stock held by new public investors will increase to , or approximately % of the total pro forma number of shares of our common stock outstanding after this offering.

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents our selected consolidated historical financial information and should be read in conjunction with our financial statements, the notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

We have derived the selected consolidated financial data as of and for the three months ended March 31, 2003 and March 31, 2004, from our unaudited financial statements included elsewhere herein, which include all adjustments, consisting only of normal recurring adjustments, that in our opinion are necessary for a fair presentation of financial position and results of operations as of those dates and for those periods. Historical operating and statistical information may not be indicative of our future performance.

The historical information with respect to our company (except for the selected statistical data) for the years ended December 31, 1999, 2000, 2001, 2002 and 2003 has been derived from our audited financial statements, which have been audited by Deloitte & Touche LLP, independent registered public accounting firm. The audited financial statements for the years ended December 31, 2001, 2002 and 2003 appear elsewhere in this prospectus.

			Year ended December 31,													Three months ended March 31,
			1999(1)			2000(1)			2001			2002		2003		2003		2004
			(dollars in thousands, except share and per share data)
Consolidated Statement of Operations Data:
Revenues
	Commissions		$	97,664		$	123,635		$	212,162		$	259,851	$	250,157	$	67,646	$	82,136
	Analytics and market data			—			—			6,077			9,615		13,143		3,341		4,673
	Interest income			2,809			1,891			1,543			1,401		1,167		311		276
	Other income(2)			488			193			576			4,353		1,377		422		608

		Total revenues		100,961			125,719			220,358			275,220		265,844		71,720		87,693

Expenses
	Compensation and employee benefits			58,216			80,583			142,574			174,011		166,276		44,670		55,086
	Communications and quotes			8,992			10,061			12,391			15,944		17,880		4,393		5,077
	Travel and promotion			6,550			8,374			11,335			15,522		14,301		3,250		3,948
	Rent and occupancy			4,951			6,584			8,630			10,964		10,645		3,173		2,573
	Depreciation and amortization			1,982			4,743			9,914			10,361		10,297		2,765		3,142
	Professional fees			2,700			6,048			10,634			7,254		7,793		1,889		1,766
	Clearing fees			1,514			1,628			1,750			4,063		3,668		996		1,065
	Interest			1,774			1,532			5,312			3,397		2,470		591		579
	Impairment of goodwill and intangible asset(3)			—			—			38,968			—		—		—		—
	Other expenses			1,328			2,752			6,260			6,960		5,165		835		1,622

		Total expenses		88,007			122,305			247,768			248,476		238,495		62,562		74,858

Income (loss) before provision for income taxes and minority interest				12,954			3,414			(27,410	)		26,744		27,349		9,158		12,835
	Provision for income taxes			5,703			4,490			4,436			14,470		12,885		4,314		6,032
	Minority interest			(236	)		(973	)		(30	)		—		—		—		—

Net income (loss)			$	7,487		$	(103	)	$	(31,816	)	$	12,274	$	14,464	$	4,844	$	6,803

Earnings per share:
	Basic			N/A			N/A		$			$		$		$		$
	Diluted			N/A			N/A		$			$		$		$		$
Weighted average number of shares outstanding:
	Basic			N/A			N/A
	Diluted			N/A			N/A

		As of December 31,										As of March 31,
		1999		2000		2001		2002		2003		2003		2004
		(dollars in thousands, except employee and brokerage desk data)
Consolidated Statement of Financial Condition Data:
	Cash and cash equivalents	$	13,044	$	26,633	$	33,822	$	63,707	$	87,299	$	70,794	$	73,459
	Total assets(4)	$	145,409	$	196,852	$	304,293	$	276,756	$	374,809	$	351,828	$	447,724
	Total debt, including current portion	$	14,019	$	13,466	$	62,815	$	44,966	$	47,997	$	50,399	$	48,044
	Redeemable convertible preferred stock	$	—	$	—	$	—	$	30,043	$	30,043	$	30,043	$	30,043
	Stockholders' equity	$	25,279	$	48,899	$	15,059	$	23,142	$	37,778	$	29,326	$	45,710
Selected Statistical Data:
	Broker headcount		248		261		341		366		397		379		432
	Employees		325		401		572		655		668		670		708
	Number of brokerage desks(5)		43		52		64		65		78		68		86
	Broker productivity for the period(6)	$	418	$	537	$	685	$	721	$	648	$	178	$	197

			Year ended December 31,										Three months ended March 31,
			1999		2000		2001		2002		2003		2003		2004
			(dollars in thousands)
Commission Revenues by Geographic Region:
	U.S.		$	47,225	$	57,370	$	89,453	$	108,505	$	102,920	$	25,994	$	34,553
	U.K.			44,220		58,425		113,946		137,181		128,743		36,439		42,525
	Asia-Pacific			6,219		7,840		8,763		14,165		18,494		5,213		5,058

		Total	$	97,664	$	123,635	$	212,162	$	259,851	$	250,157	$	67,646	$	82,136

(1): Earnings per share were not computed for this year because we were an S corporation until our reorganization in November 2001, and therefore earnings per share information is not meaningful.
(2): Other income for the year ended December 31, 2002 included $1.4 million from the sale of our treasury repurchase agreement brokerage desk, as well as the receipt during that period of $1.7 million of insurance proceeds resulting from business interruptions in connection with the September 11, 2001 terrorist attacks in New York City.
(3): The impairment charge incurred in 2001 was taken in order to reduce goodwill and an intangible asset associated with the Fenics acquisition to their estimated fair value.
(4): Total assets included receivables from brokers, dealers and clearing organizations of $87.2 million, $97.6 million, $157.5 million, $118.5 million, $193.1 million, $182.6 million and $266.2 million at December 31, 1999, 2000, 2001, 2002 and 2003, and at March 31, 2003 and 2004, respectively. These receivables primarily represent securities transactions entered into in connection with our matched principal business which have not settled as of their stated settlement dates. These receivables are substantially offset by the corresponding payables to brokers, dealers and clearing organizations for each of these unsettled transactions.
(5): A brokerage desk is defined as one or more individual brokers working together at a single location that provide brokerage services with respect to one or more specific financial instruments. Brokerage desks in different offices are considered separate desks even if they focus on the same financial instrument.
(6): We are presenting broker productivity to show the average amount of revenue generated per broker. Broker productivity is calculated as commission revenues divided by average monthly broker headcount for the period.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto. This discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. Please see "Forward-Looking Statements" and "Risk Factors" for a discussion of some of the uncertainties, risks and assumptions associated with these statements.

Overview

We are a leading inter-dealer broker specializing in over-the-counter derivatives products and related securities. We provide brokerage services and data and analytics products to institutional clients for a range of credit, financial, equity and commodity instruments. We function as an intermediary on behalf of our brokerage clients by matching their trading needs with counterparties having reciprocal interests. We do not engage in trading for our own account. We focus on the more complex, and often less liquid, markets for sophisticated financial instruments, primarily derivatives, where inter-dealer brokers have traditionally been able to provide services to their clients that generate higher commissions than in the markets for more standardized financial instruments. Our principal offices are in New York, London, Hong Kong, Singapore and Sydney.

Our revenues have grown from $101.0 million for the year ended December 31, 1999 to $265.8 million for the year ended December 31, 2003. The main factors contributing to our growth were:

•: the net addition of 26 brokerage desks during the three year period ending December 31, 2003, resulting in an increase in brokerage personnel from 248 brokers at January 1, 2000 to 397 brokers at December 31, 2003;
•: a continued focus on, and investment in, growing and higher margin product areas, as well as product areas that complement our existing brokerage services;
•: overall volume growth in the markets in which we provide brokerage services;
•: the introduction and continued expansion of our hybrid brokerage capabilities; and
•: the introduction in 2001 and subsequent development of our data and analytics products.

The business that is now GFI was originally formed in 1987 by our chief executive officer and founder, Michael Gooch. GFI Group Inc. was incorporated as GFI's holding company under the laws of the State of Delaware in August of 2001 as part of a reorganization of GFI's then-existing corporate structure, which we refer to as the Reorganization. The Reorganization was completed in November 2001. The Reorganization is described in greater detail in note 3 to our consolidated financial statements. Jersey Partners, our principal stockholder, is principally owned by Michael Gooch and certain of our current and former employees. Jersey Partners currently owns 63.2% of our outstanding common stock before giving effect to this offering and will own % of our common stock after giving effect to this offering ( % if the underwriters exercise their over-allotment option in full).

In April 2001, we acquired approximately 90% of the outstanding capital stock of Fenics Ltd. At that time, Fenics primarily developed and distributed a foreign exchange option pricing and analysis tool for the financial services industry. We acquired Fenics for the purpose of expanding our data and analytics product offerings. We are required to use commercially reasonable efforts to purchase, with cash or our common stock, the remaining 10% of the capital stock of Fenics not owned by us following the consummation of this offering.

Financial Overview

Revenues

We derive our revenues primarily from the commissions we charge to our clients in connection with our inter-dealer brokerage services and the fees we charge for certain of our data and analytics products.

Commissions

We provide brokerage services to our clients in the form of either agency or matched principal transactions. In agency transactions, we charge a commission for connecting buyers and sellers and assisting in the negotiation of the price and other material terms of the transaction. After all material terms of a transaction are agreed upon, we identify the buyer and seller to each other and leave them to settle the trade directly. Commissions charged to our clients in agency transactions vary across the products for which we provide brokerage services. Commissions from agency transactions represented approximately 80%, 77%, 74%, 75% and 70% of our total commission revenue for the years ended December 31, 2001, 2002 and 2003, and the three months ended March 31, 2003 and 2004, respectively. Commissions from agency transactions are recognized on the date on which the related trade is made. However, we do not receive our commissions until our invoice is paid by the client. Clients are invoiced on a monthly basis.

In matched principal transactions, we act as a "middleman" by serving as counter-party for an identified buyer and an identified seller in matching reciprocal back-to-back trades. Because the buyer and seller each settle their transactions with us rather than with each other, the parties are able to maintain their anonymity. We generate revenue from matched principal transactions on the spread between the buy and sell price of the security that is brokered. We refer to this spread as a commission. Revenues from matched principal transactions are recognized on the date on which the trade is made. Generally, we do not receive our commissions until the settlement date of the transaction, typically one to three business days after the trade date. Commissions from matched principal transactions have been growing as a percentage of our total commissions and comprised approximately 20%, 23%, 26%, 25% and 30% of our total commission revenues for the years ended December 31, 2001, 2002 and 2003, and the three months ended March 31, 2003 and 2004, respectively. We do not engage in trading for our own account.

Our brokerage revenues are largely dependent on trading volumes in the specific markets in which we participate, as well as the level of commissions that we are able to charge. Generally, as markets mature and have more participants, the resulting competition leads to lower commissions. Accordingly, our strategy is to continually seek new markets in which we can charge higher commissions and increase our market share and trading volumes in existing markets in order to offset this potential downward pressure on our commission revenues.

We offer our brokerage services in four broad product categories: credit, financial, equity and commodity. The charts below detail our commission revenues by product category in dollars and as a percentage of our total commission revenues for the indicated periods.

			Year ended December 31,									Three months ended March 31,
			2001			2002			2003			2003			2004
			(dollars in thousands)
COMMISSIONS:
	Credit		$	78,556		$	114,509		$	115,371		$	34,004		$	37,223
	Financial			52,622			55,194			69,101			16,395			20,540
	Equity			21,774			28,841			27,226			6,553			12,549
	Commodity			59,210			61,307			38,459			10,694			11,824

		Total commissions	$	212,162		$	259,851		$	250,157		$	67,646		$	82,136

COMMISSIONS:
	Credit			37.0	%		44.1	%		46.1	%		50.3	%		45.3	%
	Financial			24.8			21.2			27.6			24.2			25.0
	Equity			10.3			11.1			10.9			9.7			15.3
	Commodity			27.9			23.6			15.4			15.8			14.4

		Total commissions		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Credit

Our brokerage operations in the credit product category produced a significant percentage of our total commission revenues in the last three years and through the three months ended March 31, 2004. We expect that commissions from credit brokerage operations will continue to constitute the largest percentage of our total commission revenues in 2004. We provide our brokerage services in a wide range of markets for credit instruments, including credit derivatives, investment grade corporate bonds, high-yield bonds and emerging market bonds.

The markets for credit derivatives, generally, and the market for credit default swaps, specifically, have experienced strong growth in the last three years. As a result, more competitors have entered these markets. Increased competition has placed downward pressure on the commissions that we can charge, resulting in lower commission rates. We expect this trend to continue in the markets for more widely traded credit derivative products, such as single-entity credit default swaps. Partially in response to this trend, we have sought to establish and increase our presence in markets for newer credit derivative products that have fewer competitors and allow for higher commissions. We have also sought to support an increasing movement among our clients to integrate certain credit derivatives with other related or correlated financial instruments. We believe this trend, together with our existing presence in the credit derivatives market, may permit us to expand our presence in the markets for these related or correlated financial instruments, some of which are in the credit products area and others of which are in the financial and equity product areas.

Financial

Our financial products brokerage services cover a wide range of markets for financial instruments, including foreign exchange options, bond options and repurchase agreements. The market for foreign exchange options saw increased volume in 2003 due to the increased volatility of the U.S. Dollar. Over the past few years, we have expanded our presence in the financial products area by adding brokerage desks in markets for emerging market foreign exchange options and non-deliverable forwards contracts. In recent years, we have seen growth in the Asia-Pacific markets for financial products and, as a result, we opened an office in Singapore earlier this year to attempt to capitalize on that trend.

Equity

We provide brokerage services in a range of markets for equity products, including U.S. equity, international equity, equity derivatives and Global Depositary Receipts and American Depositary Receipts. Recently, our clients have begun to integrate their trading of certain equity and credit derivative products, in an effort to exploit arbitrage opportunities that may arise from the volatility in price fluctuations of debt and equity instruments issued by a company. In response to this trend, we added four equity brokerage desks globally in the first quarter of 2004 and expect our commission revenues in this area to increase as a result of our expansion.

Commodity

We provide brokerage services in a diverse array of markets for commodity products, including electricity, wet freight derivatives, precious metals, coal, natural gas, weather derivatives and pulp and paper. Wet freight derivatives and pulp and paper are examples of new product markets in which we have participated in the last few years as we continue to develop new markets. Wet freight derivatives allow oil companies, ship owners and other users of wet freight cargo capacity to better manage volatile shipping costs for their products by effectively locking in the cost of shipping future product.

Enron Corp. and its affiliates were active participants in several of the energy product areas in which we provide brokerage services. The bankruptcies of Enron Corp. and other energy companies in late 2001 and 2002 caused a disruption in the global energy markets, which resulted in, among other things, several market participants ceasing or reducing their level of trading activity. This decrease in volume began in the second half of 2002 and was primarily responsible for the approximately 37% decrease in our commission revenues for the year ended December 31, 2003 from our commodity products area compared to 2002. We have recently seen a modest increase in activity in the energy markets in the U.S. and U.K.

Analytics and Market Data

In addition to commissions from our brokerage services, we also earn revenues from the sale of our analytics and market data products. Revenues from analytics and market data represented 3%, 3%, 5%, 5% and 5% of our total revenues for the years ended December 31, 2001, 2002 and 2003, and the three months ended March 31, 2003 and 2004, respectively. We offer our clients analytics and market data products which are used to build pricing models, develop trading strategies and price and revalue their derivative positions. Our Fenics FX calculator is a widely-used analytical tool in the foreign exchange markets.

We generate revenues from software licenses, data subscription fees and upgrade/maintenance fees associated with our analytics and market data products offerings. For software licenses, we charge our clients up-front, one-time license fees and annual and monthly subscription fees. We also charge upgrade fees that are generally treated as follow-on licenses. We sell our data either on a subscription fee basis or in customized one-time sales. Our analytics and market data products are offered to a broader range of clients than are our brokerage services, including national and regional banks, large corporations and hedge funds.

Interest Income

We generate interest income primarily from the investment of our cash balances. We currently invest our cash in highly liquid investments with maturities of three months or less.

Other Income

Other income typically consists of non-recurring items, which historically have included income received by us from litigation settlements, insurance settlements, gains on the sale of a non-strategic brokerage desk, and other non-recurring items. Other income also includes transactional gains or losses based on foreign currency fluctuations.

Expenses

Compensation and Employee Benefits

Our principal operating cost is our compensation and employee benefits expense, which includes salaries, sign-on bonuses, incentive compensation and related employee benefits and taxes. Our employees can be allocated into three general categories: brokerage employees, data and analytics products employees and administrative and support employees, which include our executive officers. The most significant component of our overall compensation and employee benefits expense is the employment costs of our brokers.

Our compensation and employee benefits expense for all employees has both a fixed and variable component. Base salaries and benefit costs are primarily fixed for all employees. Employees also receive bonuses, which constitute the variable portion of our compensation and employee benefits expense. Broker bonuses are primarily based on the operating results of their related brokerage desk as well as their individual performance. For many of our brokerage employees, their bonus constitutes a significant component of their overall compensation. Bonuses for other employees generally are more broadly based on our overall performance. For most of these employees, the bonus is typically a smaller component of their overall compensation than is the case for our brokers. Accordingly, bonus costs, and therefore compensation and employee benefits expense, are variable and normally rise and fall in relation to our commission revenues. Bonuses paid to all employees represented 54%, 55%, 47%, 52% and 53% of total compensation and employee benefits expense for the years ended December 31, 2001, 2002 and 2003 and the three months ended March 31, 2003 and 2004, respectively.

Compensation and employee benefits expense also includes sign-on bonuses for some newly-hired brokers or for some of our existing brokers who agree to long-term employment agreements. These sign-on bonuses are typically amortized over the term of the related employment agreement, which is generally two years. These employment agreements typically contain repayment clauses should the employee voluntarily terminate his or her employment during the initial term of the agreement.

We believe that in certain situations, we can expand our business into strategic product areas through recruitment of experienced brokers who can build successful brokerage desks. Such recruitment may cause us to incur upfront signing bonuses which increase current compensation expense. Recently, we have incurred increased expenses for sign-on bonuses in order to recruit key brokers for the strategic expansion of our brokerage operations in the equity and credit product areas. We expect that expenses relating to sign-on bonuses will continue to increase in 2004 to a level that is substantially higher than historical levels as we further expand into new product areas.

In the past, we compensated the brokers in our U.K. office in British Pounds. As a result, we were exposed to movements in foreign currency exchange rates because most of the revenues associated with our U.K. operations are received in Euros and U.S. Dollars. We have attempted to mitigate this exposure in 2004 by introducing a policy which provides that bonuses earned for all brokers in our U.K. office will be paid in U.S. Dollars, or foreign currency equivalents.

Compensation and employee benefits expense also includes expenses related to employee stock options. Options issued prior to January 1, 2003 under our 2000 Stock Option Plan were accounted for using the intrinsic value method with compensation expense arising upon issuance of options with exercise prices below the fair market value of the stock at the date of grant and totaling approximately

$0.2 million, $0.3 million and $40,000 for the years ended December 31, 2001, 2002 and 2003, respectively. The options issued under our 2002 Stock Option Plan are not exercisable until the consummation of an initial public offering. All options issued prior to January 1, 2003 under our 2002 Stock Option Plan were modified in the second quarter of 2004 to extend the term of each option. Options issued or modified on or after January 1, 2003 are accounted for using the fair value method provided by Statement of Financial Accounting Standards No. 123, pursuant to which we expense the fair value measured at the date of grant, or incremental fair value measured at the date of modification, over the related vesting period. As these options are not exercisable until consummation of an initial public offering, the fair value calculated as of the date of grant or modification will be recorded upon the consummation of this offering to the extent vested. We expect a total non-cash compensation charge of $ (net of tax of $ , or per share of $ ) of which $ (net of tax of $ , or per share of $ ) would be recorded in the quarter in which we consummate this offering, and the balance of which would be recorded over the remaining vesting period.

Communications and Quotes

Our communications expense consists primarily of costs for our voice and data connections with our clients and clearing agents. These costs generally increase as we add new brokerage desks and clients. However, we have seen a general reduction in telecommunications rates in recent years, which we attribute to competition in the telecommunications industry.

Our quote systems expense consists primarily of fees for access to market data and related services, primarily Reuters and Bloomberg services. Many of these costs are fixed because these systems are required regardless of transaction volume. Further, many of our quote systems vendors require one- to two-year service contracts. We have recently begun to expand our presence in certain equity products which require greater usage of information data systems and trade reporting systems. As a result, we expect quote systems expense to increase in the future.

Travel and Promotion

The majority of our travel and promotion expenses are attributable to marketing costs of our brokerage clients, as well as our general corporate marketing expenses. General corporate marketing expenses relate to media, print, trade-show and other advertising efforts undertaken to promote our services and products. The travel and promotion expenses related to our brokerage clients include travel and client entertainment costs. We have a policy that seeks to limit travel and promotion expense attributable to each brokerage desk to an amount consistent with the revenue productivity of that brokerage desk. This is accomplished by deducting any excess travel and promotion expense from the calculation of bonus compensation for many of our desks.

Rent and Occupancy

Our rent and occupancy expenses include the costs of leasing, furnishing and maintaining our offices in the U.S., the U.K. and the Asia-Pacific region, including maintaining our technology infrastructure in these offices. As we expand our business within existing locations or to new locations our rent and occupancy expenses will likely increase.

Depreciation and Amortization

Our depreciation and amortization expense arises from the depreciation and amortization of property, equipment and leasehold improvements, including software internally developed for our trading systems, and the amortization of software inventory developed in connection with analytics products to be marketed to third parties. Over the past few years, we have incurred significant costs in

the development of software for internal use as well as for software to be marketed externally. As a result, depreciation and amortization expense has increased over this period. Software developed for internal use is depreciated once the software is ready for its intended use. Software inventory developed for external sales is amortized once the product is available for general release to clients. We expect that depreciation and amortization expense will increase in 2004 because we will begin to depreciate several large software development projects put into production at the end of 2003 and the beginning of 2004.

Professional Fees

Our professional fees include fees paid to consultants and other professionals who are engaged to support our strategic development of new and existing businesses and technologies. Our legal and accounting fees are also included in these costs. As a public company, we will be subject to various reporting and corporate governance requirements, including the requirements of the Sarbanes-Oxley Act of 2002 and the SEC rules and regulations implementing that Act, as well as recent changes to the Nasdaq National Market rules, which may require us to incur increased professional fee expenses in order to comply with these requirements.

Clearing Fees

Our clearing fees expense relates to clearance, brokerage and other transaction expenses for clearing and settlement services supporting matched principal transactions. These amounts also include fees we pay to exchanges and floor brokers in connection with brokering various equity products. Clearing fees expense generally fluctuates based on transaction volumes and has increased in recent years due to an increase in the volume of matched principal transactions that we executed.

Interest Expense

Our interest expense consists of interest charged by lenders to us in connection with our loans and lines of credit. Our credit obligations bear variable rates of interest. As a result, our interest expense is subject to change based on the prevailing interest rate environment and the amount of variable rate debt we have outstanding.

Other Expenses

Our other expenses primarily relate to Value Added Tax incurred in connection with our brokerage and data and analytics operations in the U.K., litigation reserves, bank charges, regulatory fees, general office expenses and other miscellaneous operating expenses.

Provision for Income Taxes

Our provision for income taxes consists of current and deferred tax provisions relating to federal, state and local taxes, as well as applicable taxes related to foreign subsidiaries. We file a consolidated federal income tax return and combined state and local income tax returns. The difference between our actual income tax rate and our effective tax rate for a given period is primarily a reflection of the tax effects of our foreign operations, general business credits and the non-deductibility of certain expenses.

Results of Operations

The following table sets forth our consolidated results of operations for the indicated periods:

			Year ended December 31,							Three months ended March 31,
			2001			2002		2003		2003		2004
			(dollars in thousands)
REVENUES:
	Commissions
		Credit	$	78,556		$	114,509	$	115,371	$	34,004	$	37,223
		Financial		52,622			55,194		69,101		16,395		20,540
		Equity		21,774			28,841		27,226		6,553		12,549
		Commodity		59,210			61,307		38,459		10,694		11,824

		Total commissions		212,162			259,851		250,157		67,646		82,136

	Analytics and market data			6,077			9,615		13,143		3,341		4,673
	Interest income			1,543			1,401		1,167		311		276
	Other income			576			4,353		1,377		422		608

		Total revenues		220,358			275,220		265,844		71,720		87,693

EXPENSES:
	Compensation and employee benefits			142,574			174,011		166,276		44,670		55,086
	Communications and quotes			12,391			15,944		17,880		4,393		5,077
	Travel and promotion			11,335			15,522		14,301		3,250		3,948
	Rent and occupancy			8,630			10,964		10,645		3,173		2,573
	Depreciation and amortization			9,914			10,361		10,297		2,765		3,142
	Professional fees			10,634			7,254		7,793		1,889		1,766
	Clearing fees			1,750			4,063		3,668		996		1,065
	Interest			5,312			3,397		2,470		591		579
	Impairment of goodwill and intangible asset			38,968			—		—		—		—
	Other expenses			6,260			6,960		5,165		835		1,622

		Total expenses		247,768			248,476		238,495		62,562		74,858

Income (loss) before provision for income taxes and minority interest				(27,410	)		26,744		27,349		9,158		12,835
	Provision for income taxes			4,436			14,470		12,885		4,314		6,032
	Minority interest			(30	)		—		—		—		—

Net income (loss)			$	(31,816	)	$	12,274	$	14,464	$	4,844	$	6,803

The following table sets forth our consolidated results of operations as a percentage of our total revenues for the indicated periods:

			Year ended December 31,						Three months ended March 31,
			2001		2002		2003		2003		2004
REVENUES:
	Commissions
		Credit	35.6	%	41.5	%	43.5	%	47.4	%	42.5	%
		Financial	23.9		20.1		26.0		22.9		23.4
		Equity	9.9		10.5		10.2		9.1		14.3
		Commodity	26.8		22.3		14.5		14.9		13.5

		Total commissions	96.2		94.4		94.2		94.3		93.7
	Analytics and market data		2.8		3.5		4.9		4.7		5.3
	Interest income		0.7		0.5		0.4		0.4		0.3
	Other income		0.3		1.6		0.5		0.6		0.7

	Total revenues		100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

EXPENSES:
	Compensation and employee benefits		64.7	%	63.2	%	62.5	%	62.3	%	62.8	%
	Communications and quotes		5.6		5.8		6.7		6.1		5.8
	Travel and promotion		5.1		5.6		5.4		4.5		4.5
	Rent and occupancy		3.9		4.0		4.0		4.4		2.9
	Depreciation and amortization		4.5		3.8		3.9		3.9		3.6
	Professional fees		4.8		2.6		2.9		2.6		2.0
	Clearing fees		0.8		1.5		1.4		1.4		1.2
	Interest		2.4		1.2		0.9		0.8		0.7
	Impairment of goodwill and intangible asset		17.7		0.0		0.0		0.0		0.0
	Other expenses		2.9		2.5		2.0		1.2		1.9

	Total expenses		112.4	%	90.2	%	89.7	%	87.2	%	85.4	%

Income (loss) before provision for income taxes and minority interest			(12.4	)%	9.8	%	10.3	%	12.8	%	14.6	%
	Provision for income taxes		2.0		5.3		4.8		6.0		6.9
	Minority interest		0.0		0.0		0.0		0.0		0.0

Net income (loss)			(14.4	)%	4.5	%	5.5	%	6.8	%	7.7	%

Three Months Ended March 31, 2004 Compared to the Three Months Ended March 31, 2003

Overview

Net income for the three months ended March 31, 2004 was $6.8 million compared to net income of $4.8 million for the comparable period in 2003, an increase of approximately 41.7%. Total revenues increased by $16.0 million, or 22.3%, to $87.7 million for the three months ended March 31, 2004 from $71.7 million for the comparable period in 2003. Our increased revenues were primarily due to increased commission revenues across each of our product categories. Total expenses increased by $12.3 million, or 19.6%, to $74.9 million for the three months ended March 31, 2004 from $62.6 million for the comparable period in 2003. Expenses increased primarily because of increased compensation expense which was attributable to higher than normal sign-on bonuses in the three months ended March 31, 2004 and an increase in performance bonuses as a result of higher revenues.

Revenues

Commissions

Total commissions increased by $14.5 million, or 21.4%, to $82.1 million for the three months ended March 31, 2004 from $67.6 million for the comparable period in 2003. Commission revenues increased in each of our product categories with most of the increase coming from increased commission revenues in the credit, financial and equity product categories. The increase in equity products revenues of approximately $6.0 million was attributable to the addition of brokerage desks and broker personnel in this area. The increase in financial products revenues of approximately $4.0 million was primarily attributable to continued volume growth in our foreign exchange options, emerging markets and corporate repurchase agreement brokerage desks. The increase in credit product revenues of approximately $3.0 million was primarily attributable to commissions generated by our corporate bond brokerage desks, which were established after the three months ended March 31, 2003.

Analytics and Market Data

Revenues from our analytics and market data products increased by $1.4 million, or 42.4%, to $4.7 million for the three months ended March 31, 2004 from $3.3 million for the comparable period in 2003. This increase was primarily the result of $1.1 million of additional revenue in the first quarter of 2004 from data sales, which were primarily generated under our data distribution agreement with Reuters. In addition, the increased implementation of our subscription-based pricing model for our analytics products resulted in revenue of $0.7 million. These increases were offset by a reduction in sales of our other analytics and market data products of $0.4 million.

Interest Income

Interest income remained relatively level at approximately $0.3 million for the three months ended March 31, 2004, which was consistent with the comparable period in 2003.

Other Income

Other income remained relatively level at $0.6 million for the three months ended March 31, 2004 compared to $0.4 million for the comparable period in 2003. Other income for the three months ended March 31, 2004 primarily consisted of the proceeds received by us from a litigation settlement.

Expenses

Compensation and Employee Benefits

Compensation and employee benefits expense increased by $10.4 million, or 23.3%, to $55.1 million for the three months ended March 31, 2004 from $44.7 million for the comparable period in 2003. This increase was primarily attributable to an increase in the number of brokers from 379 to 432, increased performance-related brokerage bonuses of $3.1 million and an increase in expense related to sign-on bonuses of $2.3 million. The increase in sign-on bonuses for newly hired brokers in 2004 resulted from the expansion of our brokerage operations in equity and corporate bond products.

Total compensation as a percentage of total revenues was relatively level at 62.8% for the three months ended March 31, 2004 and the comparable period in 2003, while broker productivity (defined as commission revenues during the period divided by average monthly broker headcount for the period) increased by approximately 11% for the three months ended March 31, 2004 as compared to the same period in 2003.

Communications and Quotes

Communications and quotes expense increased by $0.7 million, or 15.9%, to $5.1 million for the three months ended March 31, 2004 from $4.4 million for the comparable period in 2003. This increase was primarily attributable to an increase in brokerage personnel.

Travel and Promotion

Travel and promotion expense increased by $0.6 million, or 18.2%, to $3.9 million for the three months ended March 31, 2004 from $3.3 million for the comparable period in 2003. The percentage increase in this expense was consistent with the 21.4% increase in our commission revenue.

Rent and Occupancy

Rent and occupancy expense decreased by $0.6 million, or 18.8%, to $2.6 million for the three months ended March 31, 2004 from $3.2 million for the comparable period in 2003. This decrease was primarily due to reduced repairs and maintenance costs for the three months ended March 31, 2004 as well as increased rent and occupancy expenses for the three months ended March 31, 2003 as a result of payments made in connection with the termination of certain equipment leases.

Depreciation and Amortization

Depreciation and amortization expense increased by $0.3 million, or 10.7%, to $3.1 million for the three months ended March 31, 2004 from $2.8 million for the comparable period in 2003. This increase reflects depreciation of capitalized development costs of several of the software projects that we began amortizing at the end of 2003 and the first quarter of 2004.

Professional Fees

Professional fees remained level at $1.8 million for the three months ended March 31, 2004, which was consistent with the $1.9 million we incurred for the comparable period in 2003.

Clearing Fees

Clearing fees remained level at $1.1 million for the three months ended March 31, 2004, which was consistent with the $1.0 million we incurred for the comparable period in 2003.

Interest Expense

Interest expense remained level at $0.6 million for the three months ended March 31, 2004, which was consistent with the comparable period in 2003.

Other Expenses

Other expenses increased by approximately $0.8 million to $1.6 million for the three months ended March 31, 2004 as compared to $0.8 million for the comparable period in 2003. The increase was primarily attributable to an increase in litigation reserves related to employment matters.

Provision for Income Taxes

Our provision for income taxes totaled $6.0 million for the three months ended March 31, 2004 and $4.3 million for the three months ended March 31, 2003. Our effective tax rate was approximately 47% for each quarter.

Year Ended December 31, 2003 Compared to the Year Ended December 31, 2002

Overview

Our net income for the year ended December 31, 2003 was $14.5 million compared to net income of $12.3 million for the year ended December 31, 2002, an increase of 17.9%. Total revenues decreased by $9.4 million, or 3.4%, to $265.8 million for the year ended December 31, 2003 from $275.2 million for the year ended December 31, 2002. Our decreased revenues were primarily attributable to a decrease in commissions in the commodity products area due to lower trading volumes. Total expenses decreased by 4.0% to $238.5 million for the year ended December 31, 2003 from $248.5 million for the year ended December 31, 2002. Expenses decreased primarily because of reduced bonuses resulting from lower commission revenues. A reduction in our effective tax rate also contributed to the increase in net income for 2003 as compared to 2002.

Revenues

Commissions

Total commissions decreased by $9.7 million, or 3.7%, to $250.2 million for the year ended December 31, 2003 from $259.9 million for the year ended December 31, 2002. The decrease in commission revenue was primarily attributable to a decrease of $22.8 million in commodity products revenues offset by an increase in financial product revenues of $13.9 million. This decrease primarily resulted from reduced trading volumes in the energy markets caused by the continued impact of the bankruptcies of Enron Corp. and other energy companies. These lower trading volumes resulted in a substantial decline in commission revenues relating to energy products and an overall reduction of 37% in commission revenues in the commodity product area generally compared to the same period in 2002. Commission revenues derived from the credit products area were generally unchanged. Increased commission revenue from the brokerage of newer credit products was largely offset by decreased commission revenue from the single-entity credit default swaps market. Commission revenues from the credit products area were negatively affected primarily as a result of increased competition, the narrowing of credit spreads caused by improvement in the global credit outlook and the low interest rate environment. The increase in commission revenues derived from our financial products resulted generally from market growth in a number of products including foreign exchange options, swaptions and medium-term interest rate swaps markets.

Analytics and Market Data

Revenues from our analytics and market data products increased by $3.5 million, or 36.5%, to $13.1 million for the year ended December 31, 2003 from $9.6 million for the year ended December 31, 2002. This increase was primarily the result of increased data sales of $3.8 million, partially offset by a reduction in revenue from our analytics products of $0.3 million.

Interest Income

Interest income decreased by $0.2 million to $1.2 million for the year ended December 31, 2003 from $1.4 million for the year ended December 31, 2002. This decrease was primarily caused by lower interest rates on our cash deposits.

Other Income

Other income decreased by $3.0 million, or 68.2%, to $1.4 million for the year ended December 31, 2003 from $4.4 million for the year ended December 31, 2002. This decrease was primarily due to other income received in 2002 from the sale of our treasury repurchase agreement brokerage desk for $1.4 million, as well as the receipt in 2002 of insurance proceeds of $1.7 million resulting from business interruption in connection with the September 11, 2001 terrorist attacks in New York City.

Expenses

Compensation and Employee Benefits

Compensation and employee benefits expense decreased by $7.7 million, or 4.4%, to $166.3 million for the year ended December 31, 2003 from $174.0 million for the year ended December 31, 2002. This decrease was primarily due to reductions in bonuses to brokers and executives as a result of lower commission revenues in 2003 as compared to 2002. Additionally, the expense for the year ended December 31, 2003 includes an adjustment of $2.9 million due to a reduction in the estimate of employment costs payable in the U.K. related to prior years.

Total compensation as a percentage of total revenues decreased to 62.5% for the year ended December 31, 2003 from 63.2% for the year ended December 31, 2002. Broker productivity decreased by approximately 10% for the year ended December 31, 2003 as compared to the same period in 2002, partially as a result of a decline in commission revenues from the commodity products area.

Communications and Quotes

Communications and quotes expense increased by $2.0 million, or 12.6%, to $17.9 million for the year ended December 31, 2003 from $15.9 million for the year ended December 31, 2002. This increase was primarily due to an increase in communications charges incurred as a result of an increase in broker headcount by 31 brokers and an increase in quote charges due to increased activity in our U.K. and Asia-Pacific offices.

Travel and Promotion

Travel and promotion expense decreased by $1.2 million, or 7.7%, to $14.3 million for the year ended December 31, 2003 from $15.5 million for the year ended December 31, 2002. This decrease was primarily due to policies introduced by management over the course of 2003 which seek to limit these expenses.

Rent and Occupancy

Rent and occupancy expense decreased by $0.4 million, or 3.6%, to $10.6 million for the year ended December 31, 2003 compared to $11.0 million for the year ended December 31, 2002. This decrease was primarily due to decreased utility costs in 2003.

Depreciation and Amortization

Depreciation and amortization expense was $10.3 million for the year ended December 31, 2003 compared to $10.4 million for the year ended December 31, 2002. Depreciation and amortization remained fairly level as a result of the offsetting effects of certain assets fully depreciating during 2003 and the commencement in 2003 of the depreciation of certain previously capitalized development costs for software developed for internal use.

Professional Fees

Professional fees increased by $0.5 million, or 6.8%, to $7.8 million for the year ended December 31, 2003 from $7.3 million for the year ended December 31, 2002. This increase was primarily due to an increase in fees related to accounting and tax services.

Clearing Fees

Clearing fees decreased by $0.4 million, or 9.8%, to $3.7 million for the year ended December 31, 2003 from $4.1 million for the year ended December 31, 2002. This decrease was primarily due to a reduction in trade execution fees reflecting lower trading volume in equity derivatives products.

Interest Expense

Interest expense decreased by $0.9 million, or 26.5%, to $2.5 million for the year ended December 31, 2003 from $3.4 million for the year ended December 31, 2002. This decrease was primarily due to reduced borrowing costs under our credit facility as a result of lower interest rates, and the repayment in February 2003 of indebtedness incurred in connection with our acquisition of Fenics.

Other Expenses

Other expenses decreased by $1.8 million, or 25.7%, to $5.2 million for the year ended December 31, 2003 from $7.0 million for the year ended December 31, 2002, primarily due to a change in our estimate of irrecoverable Value Added Tax related to U.K. operations.

Provision for Income Taxes

Our provision for income taxes totaled $12.9 million for the year ended December 31, 2003 and $14.5 million for the year ended December 31, 2002. Our effective tax rate was approximately 47% for the year ended December 31, 2003 and approximately 54% for the year ended December 31, 2002. This reduction in our effective tax rate was primarily due to a reduction in the amount of disallowed deductions for promotion expenses and the recognition of deferred tax assets relating to our operations in the U.K.

Year Ended December 31, 2002 Compared to the Year Ended December 31, 2001

Overview

Our net income for the year ended December 31, 2002 was $12.3 million compared to a net loss of $31.8 million for the year ended December 31, 2001. The net loss in 2001 was primarily attributable to a $39.0 million impairment charge in 2001 resulting from a reduction in fair value of goodwill and an intangible asset associated with the acquisition of Fenics. Total revenues increased by $54.8 million or 24.9% to $275.2 million for the year ended December 31, 2002 from $220.4 million for the year ended December 31, 2001. Our increased revenues were primarily due to increased trading volumes, particularly in the credit and financial product areas, and the resultant increase in commission revenue. Total expenses, excluding the impairment charge, increased by $39.7 million or 19.0% to $248.5 million for the year ended December 31, 2002 from $208.8 million for the year ended December 31, 2001.

Revenues

Commissions

Total commissions increased by $47.7 million, or 22.5%, to $259.9 million for the year ended December 31, 2002 from $212.2 million for the year ended December 31, 2001, primarily as a result of

increased trading volumes in 2002, particularly in our credit products area, which accounted for $36.0 million of the increase, and the equity products area, which accounted for $7.1 million of the increase.

Analytics and Market Data

Revenues earned from our analytics and market data products increased by $3.5 million to $9.6 million for the year ended December 31, 2002 from $6.1 million for the year ended December 31, 2001. The increase in 2002 primarily resulted from the acquisition of Fenics in April 2001 and the inclusion of its partial year analytics and market data revenue in 2001.

Interest Income

Interest income remained relatively level at $1.4 million for the year ended December 31, 2002 compared to $1.5 million for the same period in 2001.

Other Income

Other income increased by $3.8 million to $4.4 million for the year ended December 31, 2002 from $0.6 million for the year ended December 31, 2001. This increase was primarily due to other income received in 2002 from the sale of our treasury repurchase agreement brokerage desk for $1.4 million, as well as the receipt in 2002 of insurance proceeds of $1.7 million resulting from business interruption in connection with the September 11, 2001 terrorist attacks in New York City.

Expenses

Compensation and Employee Benefits

Compensation and employee benefits expense increased by $31.4 million, or 22.0%, to $174.0 million for the year ended December 31, 2002 from $142.6 million for the year ended December 31, 2001. This increase was primarily due to the increase in bonuses paid to our brokers which reflects the increase in commission revenues for 2002.

Total compensation as a percentage of total revenues decreased to 63.2% for the year ended December 31, 2002 from 64.7% for the year ended December 31, 2001, while broker productivity increased by approximately 5.3% for the year ended December 31, 2002 as compared to the same period in 2001.

Communications and Quotes

Communications and quotes expense increased by $3.5 million, or 28.2%, to $15.9 million for the year ended December 31, 2002 from $12.4 million for the year ended December 31, 2001. This increase was primarily due to expanded communication and quotes requirements for our brokerage desks.

Travel and Promotion

Travel and promotion expense increased by $4.2 million, or 37.2%, to $15.5 million for the year ended December 31, 2002 from $11.3 million for the year ended December 31, 2001. This expense, as a percentage of our commission revenues for the year ended December 31, 2002, was consistent with the comparable period in 2001.

Rent and Occupancy

Rent and occupancy expense increased by $2.4 million, or 27.9%, to $11.0 million for the year ended December 31, 2002 from $8.6 million for the year ended December 31, 2001. This increase was

primarily due to increased rent resulting from additional space we leased in New York and London as a result of the Fenics acquisition and the general expansion of our brokerage operations in New York and Hong Kong.

Depreciation and Amortization

Depreciation and amortization expense increased by $0.5 million, or 5.1%, to $10.4 million for the year ended December 31, 2002 from $9.9 million for the year ended December 31, 2001. This increase in depreciation and amortization expense in 2002 primarily resulted because of the commencement in 2002 of the depreciation of some of the costs we incurred in our information technology and infrastructure build-up during 2001.

Professional Fees

Professional fees decreased by $3.3 million, or 31.1%, to $7.3 million for the year ended December 31, 2002 from $10.6 million for the year ended December 31, 2001. The decrease was largely due to non-recurring consulting fees we paid in 2001 related to the preliminary project stage of software being developed for internal use in our trading systems.

Clearing Fees

Clearing fees increased by $2.3 million to $4.1 million for the year ended December 31, 2002 from $1.8 million for the year ended December 31, 2001. This increase was primarily due to an increase in the number of matched principal transactions we executed, which required increased clearing services, as well as an increase in trade execution fees reflecting greater transaction volumes in the equity derivatives product area.

Interest Expense

Interest expense decreased by $1.9 million, or 35.8%, to $3.4 million for the year ended December 31, 2002 from $5.3 million for the year ended December 31, 2001. This decrease was largely attributable to interest expense of approximately $1.8 million that we incurred in 2001 due to unsettled trades in our treasury repurchase agreement business. These unsettled trades resulted from market disruptions caused by the terrorist attacks of September 11, 2001 in New York City.

Impairment of Goodwill and Intangible Asset

We had no impairment of goodwill and intangible asset expense for the year ended December 31, 2002 compared to an expense of $39.0 million for the year ended December 31, 2001. The impairment charge incurred in 2001 was taken in order to reduce goodwill and an intangible asset associated with the Fenics acquisition to their estimated fair value. This resulted from the determination by management that the carrying value of the goodwill and the intangible asset attributable to Fenics may not have been recoverable after our strategic decision to discontinue the internet-based operations of Fenics in the second quarter of 2001.

Other Expenses

Other expense remained relatively level at $7.0 million for the year ended December 31, 2002 compared to $6.3 million for the year ended December 31, 2001.

Provision for Income Taxes

Our provision for income taxes totaled $14.5 million for the year ended December 31, 2002 and $4.4 million for the year ended December 31, 2001. Our effective tax rate was approximately 54% for

the year ended December 31, 2002 and approximately (16)% for the year ended December 31, 2001. The existence of a financial accounting loss in a year with taxable profits gave rise to the negative effective tax rate recognized for the year ended December 31, 2001. A comparison of the effective tax rates between these two years is not meaningful because the negative effective tax rate for the year ended December 31, 2001 resulted primarily from the impairment charge that we took in 2001 in order to reduce goodwill and an intangible asset associated with the acquisition of Fenics. This impairment charge created a financial accounting loss but was not deductible for income tax purposes.

Liquidity and Capital Resources

To date, we have primarily financed our operations through cash provided by our operations, proceeds received from sales of our equity securities and borrowings under our senior credit facility. At March 31, 2004, we had $73.5 million of cash and cash equivalents compared to $70.8 million as of March 31, 2003 and $33.8 million, $63.7 million and $87.3 million at December 31, 2001, 2002 and 2003, respectively.

The following table sets forth our cash flows from operating activities, investing activities and financing activities for the periods indicated:

	Year ended December 31,									Three months ended March 31,
	2001			2002			2003			2003			2004
	(dollars in thousands)
Cash provided by (used in) operating activities	$	20,653		$	38,582		$	28,924		$	4,203		$	(12,271	)
Cash used in investing activities		(10,990	)		(15,172	)		(7,804	)		(2,735	)		(1,667	)
Cash provided by (used in) financing activities		(2,635	)		6,532			2,761			5,277			—
Effects of foreign currency translation adjustment		161			(57	)		(289	)		345			98

Increase (decrease) in cash and cash equivalents	$	7,189		$	29,885		$	23,592		$	7,090		$	(13,840	)

Cash provided by (used in) operating activities primarily consists of net income adjusted for certain non-cash items including depreciation and amortization and the effects of changes in working capital. Cash used in operating activities for the three months ended March 31, 2004 was $12.3 million and consisted of net income of $6.8 million adjusted for non-cash items of $2.9 million and $22.0 million utilized for working capital. Cash provided by operating activities for the three months ended March 31, 2003, was $4.2 million and consisted of net income of $4.8 million adjusted for non-cash items of $3.1 million and $3.8 million utilized for working capital. The decrease in cash provided by operating activities for the three months ended March 31, 2004 compared to the same period in 2003 was primarily due to the timing of brokerage bonuses and related tax payments for our U.K. operations, which were paid in March for 2004 but were paid in April for 2003, and to an increase in prepaid sign-on bonuses related to new brokerage desks added in the first three months of 2004. In future years, we may pursue strategic expansion opportunities by using our common stock in lieu of cash sign-on bonuses or to acquire brokerage businesses. A significant portion of brokerage bonuses are typically paid semi-annually in March, for the six month period ending December 31 of the prior year, and September, for the six month period ending June 30 of that year.

Cash provided by operating activities was $28.9 million for the year ended December 31, 2003 and consisted of net income of $14.5 million adjusted for non-cash items of $9.4 million and $5.1 million provided by working capital. Cash provided by operating activities was $38.6 million for the year ended December 31, 2002 and consisted of net income of $12.3 million adjusted for non-cash items of $16.0 million and $10.3 million provided by working capital. The non-cash items for the year ended December 31, 2002 reflect an increased provision for doubtful accounts and provision for deferred taxes. Cash provided by operating activities was $20.7 million for the year ended December 31, 2001 and consisted of a net loss of $31.8 million adjusted for non-cash items of $44.5 million and

$8.0 million provided by working capital. Of the non-cash items reflected for the year ended December 31, 2001, $39.0 million related to the impairment of goodwill and intangible asset associated with Fenics.

Cash used in investing activities was $1.7 million for the three months ended March 31, 2004 compared to $2.7 million for the three months ended March 31, 2003. Cash used in investing activities was $7.8 million for the year ended December 31, 2003 compared to $15.2 million for the year ended December 31, 2002 and $11.0 million for the year ended December 31, 2001. The variation in cash used in investing activities were primarily attributable to fluctuating levels of expenditure on information technology assets, both externally purchased and internally developed, in connection with the growth of our business during those periods.

We estimate that for 2004 our expenditures for property, equipment and leasehold improvements, including software developed for internal use, and other investments will aggregate approximately $9.0 million. Our capital expenditures have primarily related to software developed for internal use and computer equipment replacements and upgrades. Currently, we have no material commitments for capital expenditures.

Cash provided by financing activities for the three months ended March 31, 2004 was $0.0 million compared to $5.3 million for the three months ended March 31, 2003. Cash provided by financing activities for the three months ended March 31, 2003 consisted of increased borrowings under our revolving credit facility partially offset by scheduled principal payments on notes payable. Cash provided by financing activities was $2.8 million for the year ended December 31, 2003 compared to $6.5 million for the year ended December 31, 2002. Net borrowings under the revolving portion of our current senior credit facility increased by $10.5 million for the year ended December 31, 2003 compared to $3.7 million for the year ended December 31, 2002. Cash provided by financing activities for the year ended December 31, 2002 also included $30.1 million from the issuance of our Series C Preferred Stock in June 2002 and was partially offset by the repayment of $22.7 million in notes payable to Jersey Partners and the payment of $4.5 million in dividends to Jersey Partners. Cash provided by financing activities was $6.5 million for the year ended December 31, 2002 compared to cash used in financing activities of $2.6 million for the year ended December 31, 2001.

At March 31, 2004, there were $19.0 million in outstanding borrowings under the revolving portion of our senior credit facility, $20.0 million in outstanding borrowings under the term portion of our senior credit facility and $7.0 million in letters of credit outstanding. At March 31, 2004, we had $4.0 million of availability under the revolving portion of our senior credit facility. Our senior credit facility is scheduled to mature in July 2005. Additionally, we are required to repay $2.5 million of the term loan portion of the senior credit facility per quarter beginning in October 2004, with any remaining balance due on the maturity date of the senior credit facility. We are currently in the process of negotiating a new credit facility, which we expect will replace our senior credit facility and increase the aggregate principal amount of borrowings available to us. There can be no assurance that we will be able to enter into a new credit facility on acceptable terms, or at all.

Our liquidity and available cash resources are in part restricted by the regulatory requirements of our four primary operating subsidiaries, GFI Securities LLC, which is a registered broker-dealer in the U.S., and GFI Securities Ltd., GFI Brokers Ltd. and GFInet U.K. Ltd. which are registered broker-dealers in the U.K. As such, they are subject to minimum capital requirements imposed by their respective market regulators that are intended to ensure general financial soundness and liquidity based on certain minimum capital requirements. U.S. and U.K. regulations prohibit a registered broker-dealer from repaying borrowings of its parent or affiliates, paying cash dividends, making loans to its parent or affiliates or otherwise entering into transactions that result in a significant reduction in its regulatory net capital position without prior notification or approval from its principal regulator. The capital structures of each of our broker-dealer subsidiaries are designed to provide each with capital and

liquidity consistent with its business and regulatory requirements. As of March 31, 2004, GFI Securities LLC had net capital of $20.2 million, which was $19.9 million in excess of its required minimum net capital of $0.3 million. As of March 31, 2004, GFI Securities Ltd. had financial resources, as defined by the FSA, of $19.1 million, which was $13.6 million in excess of its required financial resources of $5.5 million. As of March 31, 2004, GFI Brokers Ltd. had financial resources, as defined by the FSA, of $13.0 million, which was $8.1 million in excess of its required financial resources of $4.9 million. As of March 31, 2004, GFInet U.K. Ltd. had financial resources, as defined by the FSA, of $18.0 million, which was $10.1 million in excess of its required financial resources of $7.9 million.

GFI (HK) Securities LLC is subject to the capital requirements of the SFC in Hong Kong. At March 31, 2004, GFI (HK) Securities LLC had capital of approximately $1.1 million, which was $0.7 million in excess of its required minimum net capital of $0.4 million.

In Singapore, the MAS regulates our subsidiary GFI Group PTE Ltd. Our compliance requirements with the MAS include, among other things, maintaining stockholders' equity of 3.0 million Singapore dollars and monitoring GFI Group PTE Ltd.'s trading practices and business activities.

We believe that, based on current levels of operations and anticipated growth, our cash from operations, together with cash currently available, the net proceeds of this offering and availability under our senior credit facility, will be sufficient to fund our operations for at least the next twelve months. Poor financial results, unanticipated expenses, unanticipated acquisitions or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect. There can be no assurance that equity or debt financing will be available when needed or, if available, that the financing will be on terms satisfactory to us and not dilutive to our then-current stockholders.

We intend to use a portion of the net proceeds from this offering, estimated to be approximately $ million, to repay in full the outstanding principal of $9.25 million and accrued interest on the note held by Jersey Partners. We may also use a portion of the net proceeds of this offering to purchase the remaining portion of Fenics capital stock not currently owned by us. Within 120 days after the completion of this offering, we are obligated to provide notice to the remaining holders of the outstanding capital stock of Fenics that a "liquidity event" has occurred. At such holders' election, we are required to use commercially reasonable efforts to acquire such outstanding capital stock at a per share price equal to the fair market value, as of the date of such acquisition, of 3.11 shares of our common stock (which will be adjusted for our reverse stock split). If a holder of Fenics stock elects to sell such stock to us, we may pay the purchase price either in cash or shares of our common stock (at our option) or in any other form of consideration agreed to with the Fenics holders. If we acquired all of the remaining Fenics capital stock with cash, the amount payable by us would be approximately $ , assuming that the fair market value of our common stock on the date of our acquisition of Fenics shares equals the mid-point of the range set forth on the cover of this prospectus.

Contractual Obligations and Commitments

The following table summarizes certain of our contractual arrangements as of March 31, 2004, after giving effect to the conversion of our redeemable convertible preferred stock into shares of our common stock upon the completion of this offering.

				Payments Due by Period
		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
		(dollars in thousands)
Contractual Obligations
Long-Term Debt:
	Notes Payable(1)	$	39,000	$	5,000	$	34,000	$	—	$	—
	Loan Notes Payable(2)		9,250		—		—		3,700		5,550
Operating Leases			33,402		3,786		6,802		6,353		16,461
Purchase Obligations			6,190		4,349		1,841		—		—

Total		$	87,842	$	13,135	$	42,643	$	10,053	$	22,011

(1): Amounts listed under Notes Payable represent outstanding borrowings under our senior credit facility and vary from the notes payable reflected in our financial statements because our financial statements reflect the total debt net of unamortized loan fees.
(2): Amounts listed under Loan Notes Payable represent the remaining outstanding principal amount of a note held by Jersey Partners. We intend to use a portion of the net proceeds of this offering to repay that note in full.

Off-Balance Sheet Entities

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Application of Critical Accounting Policies and Use of Estimates

This Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, also referred to as U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. We base our estimates and judgments on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or conditions. Note 2 of the notes to our consolidated financial statements includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements.

On an ongoing basis, management evaluates its estimates and judgments, particularly as they relate to accounting policies that management believes are critical. That is, these accounting policies are most important to the portrayal of our financial condition and results of operations and they require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Revenue Recognition

In our brokerage business, we recognize revenue relating to the commissions charged to our clients upon the date a specific trade is executed. We do not receive actual payment of the commissions until the specific account receivable is collected in an agency transaction or until the specific settlement date in a matched principal transaction.

We evaluate the level of our allowance for doubtful accounts based on the financial condition of our clients, the length of time receivables are past due and our historical experience with the particular client. Also, if we know of a client's inability to meet its financial obligations, we record a specific provision for doubtful accounts for estimated losses resulting from the inability of that client to make payments. The amount of the provision will be charged against the amounts due to reduce the receivable to the amount we reasonably believe will be collected. If the financial condition of one of our clients were to deteriorate, resulting in an impairment of its ability to make payments, an additional provision could be required. Due to changing economic business and market conditions, we review the provision monthly and make changes to the provision as appropriate. Our allowance for doubtful accounts at March 31, 2004 was $2.2 million.

Stock Options

We have granted employees options to purchase our common stock, generally at an exercise price greater than or equal to the fair market value of the underlying stock at the date of grant. For all options accounted for under APB No. 25, Accounting for Stock Issued to Employees, which requires measurement on the date of grant, we record deferred stock-based compensation to the extent that the value of the stock at the date of grant exceeds the exercise price of the option. For disclosure purposes, we also estimate the impact on our net income of applying the fair value method of measuring compensation cost on stock options with the fair value determined under the minimum value method as provided by Statement of Financial Accounting Standards, or SFAS, No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Effective January 1, 2003, we adopted fair value accounting consistent with SFAS No. 123, Accounting for Stock-Based Compensation, using the prospective method allowed by SFAS No. 148. Under SFAS No. 123, options issued or modified on or after January 1, 2003 are accounted for using the fair value method, pursuant to which we expense the fair value measured at the date of grant, or the incremental fair value measured at the date of modification, over the related vesting period. An assumption utilized in the minimum value calculation is the estimate of the fair value of the underlying stock. In the absence of a public market for our common stock, management estimates the market value of our common stock for option grants based upon recent transactions involving our equity securities and periodic valuation analyses.

Goodwill

Under SFAS No. 142, Goodwill and Other Intangible Assets, management is required to perform a detailed review, at least annually, of the carrying value of our intangible assets, which includes goodwill. In this process, management is required to make estimates and assumptions in order to determine the fair value of our assets and liabilities and projected future earnings using various valuation techniques, including a discounted cash flow model. Management uses its best judgment and information available to it at the time to perform this review. Because management's assumptions and estimates are used in projecting future earnings as part of the valuation, actual results may differ. If management determines that the fair value of the intangible asset is less than its carrying value, an impairment loss would be recognized in an amount equal to the difference between the fair value and the carrying value.

Income Taxes

In accordance with SFAS No. 109, Accounting for Income Taxes, we provide for income taxes using the asset and liability method under which deferred income taxes are recognized for the estimated future tax effects attributable to temporary differences and carry-forwards that result from events that have been recognized either in the financial statements or the income tax returns, but not both. The measurement of current and deferred income tax liabilities and assets is based on provisions of enacted tax laws. Valuation allowances are recognized if, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized. Our interpretation of complex tax law may impact our measurement of current and deferred income taxes.

Quantitative and Qualitative Disclosure about Market Risk

We are exposed to various market risks. Our exposure to market risks primarily consists of foreign currency exchange rate fluctuations related to our international operations, changes in interest rates which impact our variable-rate debt obligations and market risk associated with matched principal transactions.

Foreign Currency Exposure

As a result of our international brokerage activities, we are exposed to risks associated with changes in foreign exchange rates. As foreign currency exchange rates change, the U.S. Dollar equivalent of revenues and expenses denominated in foreign currencies change. Our U.K. operations generate a majority of their revenues in U.S. Dollars and Euros but pay a significant amount of their expenses in British Pounds. We enter into foreign currency forward contracts for terms of not more than eighteen months to mitigate our exposure to foreign currency exchange rate fluctuations. We do not hold or issue any derivative financial instruments for trading purposes.

While our international results of operations, as measured in U.S. dollars, are subject to foreign exchange rate fluctuations, we do not consider the related risk to be material to our results of operations. If the exchange rate between the Euro and British Pound to U.S. dollar were to fluctuate by 10%, the net impact to our net income would have been approximately $0.2 million as of March 31, 2004.

Interest Rate Risk

We had $48.3 million in variable-rate debt outstanding at March 31, 2004. These debt obligations are subject to fluctuations in interest rates, which impact the amount of interest we must pay. If variable interest rates were to change by 0.50% per annum, the net annual impact to our net income would be approximately $0.1 million.

Matched Principal Trades

Through our subsidiaries, we execute matched principal transactions in which we act as a "middleman" by serving as a counterparty to both a buyer and a seller in matching back-to-back trades. These transactions are then settled through a clearing organization. Settlement typically occurs within one to three business days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. In the event of nonperformance by one of the parties to the trade, we may purchase or sell the security in the market, which exposes us to market risk with respect to that security, and may seek reimbursement for losses from the counterparty who failed to complete the trade.

Matched principal trades have been growing recently as a percentage of our revenues. Matched principal trades in the less liquid markets on which we focus tend to be more likely not to settle on a

timely basis than transactions in more liquid markets. Receivables from brokers, dealers and clearing organizations and payables to brokers, dealers and clearing organizations on our consolidated statement of financial condition primarily represent the simultaneous purchase and sale of the securities associated with those matched principal transactions that have not settled as of their stated settlement dates. Our experience has been that substantially all of these transactions ultimately settle.

Recent Accounting Pronouncements

In November 2002, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FASB Interpretation No., or FIN, 45 requires that a guarantor recognize the fair value of a guarantee as a liability at the inception of such guarantee. Additional disclosures are also prescribed for certain guarantee contracts. The recognition and measurement provisions of FIN 45 were effective for guarantees issued or modified after December 31, 2002. The disclosure provisions were effective for periods ending after December 15, 2002. We adopted FIN 45 as required, with no material impact on the consolidated financial statements. We currently provide guarantees, through several subsidiaries, in connection with our memberships in certain exchanges and clearing organizations. The maximum potential liability pursuant to these guarantees cannot be quantified since they are based upon the performance of other members of such exchanges and clearing organizations with whom we have no affiliation. The potential that we would have to make payments under these arrangements is unlikely due to existing collateral requirements imposed by the exchanges and clearing organizations.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 clarifies the circumstances under which a contract with an initial investment meets the characteristics of a derivative under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 149 also amended other existing pronouncements to result in more consistent reporting of derivative contracts. This pronouncement is effective for all contracts entered into or modified after June 30, 2003. We adopted SFAS 149 as required, with no material impact on the consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and debt. SFAS 150 is effective for all contracts entered into or modified after May 31, 2003 and for pre-existing instruments on financial statements for periods after June 15, 2003. We adopted SFAS 150 as required, with no material impact on the consolidated financial statements.

In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, and Interpretation of Accounting Research Bulletin No. 51, which replaces FASB Interpretation No. 46. FIN 46R clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. We do not believe that we have an interest in an entity that is subject to FIN 46R, and as a result, the adoption of FIN 46R is not expected to have a material impact on our financial statements.

Related Party Transactions

This section contains a discussion of payments we have made to certain related parties in the last three years. For a more complete description of these and other related party transactions, see "Certain Relationships and Related Transactions" in this prospectus.

In connection with our Reorganization in 2001, Jersey Partners, our principal stockholder, made two senior subordinated loans to one of our subsidiaries, GFI Group LLC, in the principal amounts of $5.0 million and $20.0 million, respectively. The $5.0 million subordinated loan was repaid by us in two installments of $2.5 million on November 30, 2002 and November 30, 2003, respectively. In June of 2002, we paid $10.8 million to Jersey Partners as partial repayment on the $20.0 million loan. We intend to use a portion of the proceeds of this offering to repay in full the remaining $9.25 million principal amount, plus accrued interest, of this subordinated loan.

As part of the Reorganization, in November 2001 we transferred to Jersey Partners $5.0 million in accounts receivable. We entered into a collection agent and receivables agreement with Jersey Partners pursuant to which we acted on behalf of Jersey Partners to collect such amount and repaid Jersey Partners in five installments commencing on December 31, 2001 and ending on April 30, 2002. In consideration of our performance as collection agent under this agreement we received a fee of $0.3 million and the right to retain all collections in respect of the receivables covered by the agreement after all payments had been made to Jersey Partners. This agreement terminated on April 30, 2002 after our final payment to Jersey Partners.

We lease our offices at 9 Hewett Street in London from GFI Brokers (Channel Islands) Ltd., a wholly-owned subsidiary of Jersey Partners. We currently pay an annual rent of 0.5 million British Pounds under the lease. This lease is for a term of twenty years and expires in 2016. We paid approximately $0.8 million, $0.8 million and $0.9 million in connection with this lease for the years ended December 31, 2001, 2002 and 2003, respectively.

We also lease a corporate apartment in London from GFI Brokers (Channel Islands) Ltd. We paid a monthly lease payment of 3,750 British Pounds for this apartment prior to December 31, 2002 and currently pay a monthly lease payment of 2,000 British Pounds.

Seasonality

The financial markets in which we operate are generally affected by seasonality. Traditionally, the financial markets around the world experience lower volume during the summer and at the end of the year due to a general slowdown in the business environment and, therefore, transaction volume levels may decrease during those periods.

OUR BUSINESS

Introduction

We are a leading inter-dealer broker specializing in over-the-counter derivatives products and related securities. We provide brokerage services and data and analytics products to institutional clients in markets for a range of credit, financial, equity and commodity instruments. We function as an intermediary on behalf of our brokerage clients by matching their trading needs with counterparties having reciprocal interests. We do not engage in trading for our own account. We focus on the more complex, and often less liquid, markets for sophisticated financial instruments, primarily derivatives, where inter-dealer brokers have traditionally been able to provide services to their clients that generate higher commissions than in the markets for more standardized financial instruments. Many of these markets offer an opportunity for strong growth. We have been recognized by various industry publications as a leading provider of inter-dealer brokerage services for certain products in the credit, financial, equity and commodity markets on which we focus.

We offer a hybrid brokerage approach to our clients that combines a range of telephonic and electronic trade execution services, depending on the needs of the individual markets. We complement our hybrid brokerage capabilities with value-added services, such as data and analytics products for decision support.

We earn commissions for our brokerage services and charge fees for certain of our data and analytics products. We sell our products and services solely to institutional clients. Our business was founded in 1987 and, at March 31, 2004, we had 86 brokerage desks and 432 brokers serving over 1,000 brokerage and data and analytics clients, including leading commercial and investment banks, through our principal offices in New York, London, Hong Kong, Singapore and Sydney.

Our Industry

On most business days, trillions of dollars in securities, commodities, currencies and derivative instruments are traded around the world. These products range from standardized financial instruments, such as common equity securities and futures contracts, that are typically traded on exchanges, to more complex, less standardized instruments, such as over-the-counter derivatives, that are typically traded between institutional dealers, which are primarily global investment banks and money center banks. Buyers and sellers of exchange-traded financial instruments benefit from the price transparency and enhanced liquidity provided by liquidity facilitators, such as market makers and specialists, who participate in those markets. Buyers and sellers of many over-the-counter instruments, on the other hand, frequently rely on an inter-dealer broker to facilitate liquidity by gathering pricing information and identifying counterparties with reciprocal interests.

Market Evolution

A liquid financial market is one in which a financial instrument is easy to buy or sell quickly with minimal price disturbance. The liquidity of a market for a particular financial product or instrument depends on several factors, including: the presence of a number of market participants and facilitators of liquidity; the availability of pricing reference data; and the availability of standardized terms. Liquid markets are characterized by substantial price competition, efficient execution and high trading volume. While a market for an exchange-traded instrument is ordinarily liquid, some large over-the-counter markets, such as the market for U.S. treasury securities, are also highly liquid. In such markets, commissions are generally lower because there are often numerous, readily identifiable buyers and sellers causing the traditional telephonic brokerage services of inter-dealer brokers to be less essential and to command less of a premium.

Less liquid markets are characterized by fewer participants, less price transparency and lower trading volumes. Complex financial instruments that are traded over-the-counter are often less liquid and are traded primarily by more sophisticated institutional buyers and sellers. In a less liquid market,

an inter-dealer broker can provide greater value to the efficient execution of a trade by applying its market knowledge to locate a number of bids and offers so that buyers and sellers may find counterparties with which to trade, which can be especially helpful for large or non-standardized transactions. An inter-dealer broker ordinarily accomplishes this by contacting potential counterparties directly by telephone or electronic messaging and, in some cases, with proprietary trading technology. In addition, in a less liquid market with fewer participants, disclosure of the intention of a participant to buy or sell could disrupt the market and lead to poor pricing. By using an inter-dealer broker, the identities of the transaction parties are not disclosed until the trade is consummated and, therefore, market participants better preserve their anonymity. For all these reasons, in a less liquid market, an inter-dealer broker offers important value to market participants.

As a market for a particular financial instrument develops and matures, more buyers and sellers enter the market, resulting in more transactions and more pricing information. In addition, the terms of such financial instrument tend to become more standardized, generally resulting in a more liquid market. In this way, a relatively illiquid market for an instrument may evolve over a period of time into a more liquid market. As this evolution occurs, we believe the characteristics of trading, the preferred mode of execution and the size of commissions that inter-dealer brokers may charge, will also change. In some cases, as the market matures, an inter-dealer broker may lower its client's execution costs by providing the client with an electronic screen or system that displays the most current pricing information. In addition, a market may have some characteristics of both more liquid and less liquid markets, which requires an inter-dealer broker to offer integrated telephonic and electronic brokering. We refer to this integrated service as hybrid brokerage. In some cases, hybrid brokerage involves coupling traditional broker-executed services with various electronic enhancements, such as electronic communications, price discovery tools and order entry. In other cases, hybrid brokerage involves full electronic execution supported by telephonic communication between the broker and its clients.

Below is a graph that represents our view of the typical evolution of a market for a complex financial instrument.

Typical Evolution of a Financial Product

The Derivatives Market

Derivatives are increasingly being used by financial institutions and large corporations to manage risk or take advantage of the anticipated direction of a market by allowing holders to guard against gains or declines in the price of underlying assets without having to buy or sell such underlying assets. The underlying asset may be, among other things, a physical commodity, an interest rate, a stock, an index or a currency. Derivatives are commonly used to mitigate the risks associated with interest rate movements, equity ownership, changes in the value of foreign currency, credit defaults by large corporate and sovereign debtors and changes in the prices of commodity products. Common types of derivatives include futures, options and swaps. They derive their value based on the inherent value of the underlying asset. According to a survey of its members conducted in 2003 by the International Swaps and Derivatives Association, which we refer to as ISDA, over 90% of the world's 500 largest companies use derivative instruments to manage and hedge their risks more effectively.

Derivatives are traded both over-the-counter and on exchanges. According to a recent report of the Bank for International Settlements, over-the-counter derivatives accounted for over 84% of the total outstanding global derivatives transactions in 2003 (as measured by notional amount). The liquidity of markets for particular over-the-counter derivative instruments varies from highly liquid, such as the market for Eurodollar interest rate derivatives, to illiquid, such as the market for certain customized credit derivatives which are structured to meet specific investor needs.

ISDA also reported in a 2004 survey of its members that in the last six months of 2003, among the derivative instruments surveyed, credit derivatives were the fastest growing segment of the derivatives market, growing at a rate of 33% for that six month period. The survey stated that at the end of 2003, notional amounts of credit derivatives grew to approximately $3.58 trillion from approximately $2.15 trillion in 2002. That increase represented year-over-year growth of over 67%. Research from the consulting firm Celent estimates that the global market for credit derivatives as measured by notional amounts will grow to approximately $7.0 trillion by the end of 2006. Credit derivatives are currently traded entirely in over-the-counter transactions, either directly or through inter-dealer brokers and other financial institutions.

Furthermore, the number of different derivative instruments is growing as companies and financial institutions develop new and innovative derivative instruments to meet industry demands for sophisticated risk management and complex financial arbitrage. In its 2003 annual survey, Risk magazine identified over 200 categories of derivatives. Novel derivative instruments often have distinct terms and little or no trading history with which to estimate a price. Markets for new derivative instruments therefore require market intelligence and the services of highly skilled and well-informed brokers and increasingly demand reliable market data and pricing tools.

Our Market Opportunity

Need for efficient execution in both liquid and less liquid markets. While the use of execution technology is becoming more common in the inter-dealer brokerage industry, only certain highly liquid and standardized financial instruments may be fully traded electronically in an efficient manner. More complex over-the-counter products, such as derivatives, typically require telephonic brokerage to provide market intelligence to clients and to aid the execution process. We believe that inter-dealer brokers who provide a combination of telephonic and electronic brokerage services are better positioned to meet the particular needs of the markets in which they operate than competitors that cannot offer these combinations of services.

Need for expertise in the development of new markets. In order to better support their clients' evolving investment and risk management strategies, our dealer clients create new products, including new derivative instruments. Dealers also modify their trading techniques in order to better support their clients' needs, such as by integrating the trading of derivative instruments with the trading of related underlying or correlated assets. We believe the markets for these new products and trading techniques create an opportunity for those inter-dealer brokers who, through market knowledge and extensive client relationships, are able to identify these opportunities and to focus their brokerage operations appropriately.

Need for market intelligence. Inter-dealer brokers with a strong share of the market for a particular financial product are better positioned to provide valuable pricing information than brokers who less frequently serve that market, because of their higher volume of trades and access to more market participants. In less liquid financial markets, including markets for novel and complex financial instruments, market leadership becomes more important because reliable pricing information is scarce. Market participants in these less liquid markets utilize the services of the leading inter-dealer brokers in order to gain access to the most bids and offers for a particular product. Similarly, inter-dealer brokers who have a leading market share can offer superior market data and analytics tools based on their access to the broadest selection of transaction and pricing information.

Increasing industry consolidation. Historically, the inter-dealer brokerage industry consisted of a number of small and mid-sized private companies which used traditional telephonic brokerage methods to serve their clients and to compete against each other in various product categories. The industry has begun to consolidate in recent years, in part, due to the increasing importance of technology, including analytics, data, electronic execution and integrated trade processing. Through acquisitions, larger inter-dealer brokers with access to capital have been better positioned to make the investments necessary to supply their clients with this technology. As a result of these trends, smaller inter-dealer brokers may find it harder to compete and several have been acquired by larger inter-dealer brokers with better access to capital. We believe that the continued consolidation of the industry provides an opportunity for inter-dealer brokers with such access to capital, including the currency of a publicly-traded stock, to strategically expand their businesses to better serve evolving client demands.

Our Competitive Strengths

We believe our principal competitive strengths are the following.

Leading Position in Key Markets. We believe that over our seventeen year history, we have successfully created value in our brand that our clients associate with high quality services in the markets on which we focus. Our leadership in these markets, such as the markets for certain credit and equity derivatives, foreign exchange options and commodity products, has been recognized by rankings in industry publications such as Risk magazine, FX Week and Energy Risk magazine. In an annual survey conducted by Risk magazine, we have been named the "preferred broker" in more categories of credit derivatives than any other inter-dealer broker in each of the last five years. In its 2003 annual survey, Risk magazine also named us as the "preferred broker" in certain currency and equity options markets. The Risk magazine rankings are based on an annual survey of broker-dealers in the various markets covered by the magazine. In addition, our Fenics FX option analysis product is a leading analytic tool in the foreign exchange market. We believe our leading positions in these markets provide us with greater access to market and pricing information in those markets, including a broad selection of proprietary market data that we are able to provide to our clients. We believe our leadership positions in these areas and our well-developed relationships with leading financial institutions also better enables us to identify and exploit market opportunities resulting from the introduction of new or evolving financial instruments in those markets.

Ability to Identify and Develop High Growth, Less Liquid Markets. We focus on complex and innovative financial markets where liquidity is harder to achieve and, therefore, our services are more valuable to market participants. We believe these markets offer an opportunity for growth to inter-dealer brokers that move early to foster liquidity. We seek to anticipate the development and growth of markets for evolving, innovative financial products in which we believe we can garner a leading market position and enjoy higher commissions. For example, we entered the credit derivatives market in 1996, at a time when we believed the market showed promise but had only modest activity. According to the British Bankers' Association, the size of the global credit derivatives market was only $180 billion in 1997 (measured by notional amount outstanding). According to ISDA, it has grown to $3.58 trillion in 2003, a compounded annual growth rate of over 64% for that six year period. We believe our familiarity with the needs of such rapidly growing markets and our experience with complex product structures allow us to better serve clients in high-growth, less liquid markets than many of our competitors.

Hybrid Brokerage Platforms. Most of the trading in our markets was historically performed over the telephone between individual brokers and clients. However, in an increasing number of the markets in which we participate, telephonic brokerage services are being supplemented by electronic trading systems. While we expect this trend to continue, we believe that the more complex, less liquid markets on which we focus often require significant amounts of personal and attentive service from our brokers. We seek to tailor our use of technology to the trading nuances of each specific market. To the extent we identify a need for it in a market, we offer a hybrid approach to our clients that combines a range of telephonic and electronic trade execution services depending on the needs of the individual markets. We use technology to enhance the service and productivity of our brokers, not as a replacement for their skills. We also believe we add value for clients who trade in the complex financial markets in which we specialize by offering data and analytics products for decision support. We seek to establish data communication and "straight-through-processing" links with our clients' settlement, risk management and compliance operations in order to better serve their needs and to strengthen our relationships with them. "Straight-through-processing" is the automated processing of transactions between us and our clients. We believe our hybrid brokerage approach provides us with a competitive advantage over competitors who do not offer this technology.

Quality Data and Analytics Products. We are one of the few inter-dealer brokers that offers a broad array of data and analytics products to participants in the complex financial markets in which we specialize. Our data products are derived from the trade data compiled from our brokerage services in our key markets. Our analytics products benefit from the reputation of the Fenics brand for reliability, ease of use and independence from any large dealer. Our Fenics tools are used, not only by our traditional brokerage clients, but also by their clients, such as national and regional financial institutions and large corporations worldwide. These products are designed to serve the needs of certain markets for reliable data and trusted analytics tools. We believe that our ability to offer these products helps to support our leadership in our key markets.

Experienced Senior Management and Skilled Brokers and Technology Developers. We have a senior management team that is experienced in identifying and exploiting markets for evolving, innovative financial instruments. We also employ over 430 skilled and specialized brokers, many of whom have extensive product and industry experience. Working with our senior management, our brokers have shown an ability to identify future trading markets and take advantage of opportunities they may present. Although the competition for brokers is intense, we have historically experienced low broker turnover, and have been able to effectively hire new brokers and establish new brokerage desks in areas in which we seek to expand our operations. In addition, our technology developers are experienced at developing commercial quality software that is tailored to the needs of the markets in which we focus. We believe that the combination of our experienced senior management and skilled brokers and technology developers gives us a competitive advantage in executing our business strategy.

Diverse Product and Service Offerings. We offer our products and services in a diverse array of financial markets and geographic regions. Historically, the markets on which we focus have volume and revenue cycles that are relatively distinct from each other and have generally not been correlated to movements in the equity markets. In addition, our decision support products, including our analytical tools and market data, give us an opportunity to leverage and expand our client base, providing revenue sources beyond our traditional brokerage clients. We believe our diverse product and service offerings provide us with a competitive advantage over many of our competitors that may have more limited product and servicing offerings and, therefore, may be more susceptible to downturns in a particular market or geographic region.

Our Strategy

We intend to continue to grow our business by being a leading provider of brokerage services and data and analytics to the markets on which we focus. We intend to employ the following strategies to achieve our goals.

Maintain and enhance our leading positions in key markets. We intend to maintain our position as a leading provider of brokerage services and data and analytics products to the markets on which we focus. We plan to continue leveraging the market strength and brand recognition that we have developed for a range of derivative instruments and underlying securities in the credit, financial, equity and commodity markets. We will also continue deploying our specialized brokers in higher-margin product areas and improve their productivity through technological innovation. We intend to continue offering our quality data and analytics products in more complex products requiring reliable decision- support tools. Through these means, we seek to enhance our services in existing markets and deepen long-standing relationships with our global institutional clients.

Continue to expand through hiring new brokers and identifying and developing less liquid, high-growth markets. We opened 16 new brokerage desks in 2003, 14 new brokerage desks in 2002 and 17 new brokerage desks in 2001. Many of these brokerage desks cover the less liquid, high-growth markets in which we specialize or cover markets that are complementary to those markets. Combined, the revenue of brokerage desks opened since the beginning of 2001 contributed 27.6% to our total revenues for the year ended December 31, 2003. We have opened 14 new brokerage desks in the three months ended March 31, 2004. In the past, we have primarily established these new brokerage desks through the strategic redeployment of existing brokers from other brokerage desks and the selective hiring of new brokers. Individual brokerage desks are separately tracked and monitored in an effort to drive performance. We will continue to focus on identifying high growth markets where liquidity is more valuable and that provide us with an early-mover opportunity. We also intend to continue expanding geographically, especially in the Asia-Pacific markets, where we believe there are opportunities to increase our revenues.

Continue to pursue diverse revenue opportunities. We offer our products and services in a diverse array of financial markets and geographic regions, which we believe can lessen the impact to us of a downturn in any particular market or geographic region. We intend to continue managing our business with the goal of maintaining the diversity of our revenues. On a geographic basis, approximately 54% of our total revenues for the year ended December 31, 2003 were generated by our U.K. operations, 38% were generated by our U.S. operations and 8% were generated by our operations in the Asia-Pacific region. Additionally, for the year ended December 31, 2003, no one customer accounted for more than 8% of our total revenues from all products, services and regions, and our largest brokerage desk accounted for less than 10% of that year's total revenues.

Strategically expand our operations through business acquisitions. Historically, the inter-dealer brokerage industry was fragmented and concentrated mainly on the national or regional marketplace. Over time, however, the industry has experienced increasing consolidation as larger inter-dealer brokers

have sought to enhance their brokerage services and offset client commission pressure in maturing product categories by acquiring smaller competitors that specialize in specific product markets. We plan to selectively seek opportunities to expand our brokerage services into new or existing product areas through the acquisition of complementary businesses. By increasing our product offerings, we can increase the number of points of contact with our institutional clients which we believe will further institutionalize our client relationships and strengthen the GFI brand.

Leverage infrastructure and technology to improve margins. Although we will continue to invest in our operational capabilities and technology, we believe that we are now well-positioned to leverage our operations and technology to create cost efficiencies and improve margins. Moreover, we will continue to offer our quality data and analytics products and, where possible, install "straight-through-processing" links with our clients' settlement, risk management and compliance operations, in order to better serve their needs and to provide us with additional opportunities to increase our revenue. We will also seek to further expand our pre-tax margins through management of the cost of our operations and the selective application of technology to improve broker productivity.

Product Specialization

Our brokerage operations focus on a wide variety of credit, financial, equity and commodity instruments around the world. Within these broad categories we operated 86 brokerage desks as of March 31, 2004 that cover financial markets and products in various geographic areas.

Within these markets, we focus on the more complex, less liquid markets for sophisticated financial instruments, primarily over-the-counter derivatives. Over-the-counter derivatives are generally structured as forwards, swaps or options. A forward is an agreement between two parties to exchange an asset or cash flows at a specified future date at a price agreed on the trade date. A swap is an agreement between two parties to exchange cash flows or other assets or liabilities at specified payment dates during the agreed-upon life of the contract. An option is an agreement that gives the buyer the right, but not the obligation, to buy or sell a specified amount of an underlying asset at an agreed upon price on, or until, the expiration of the contract. We also support and enhance our brokerage operations by offering several data and analytics products to our clients.

Credit Products. We provide brokerage services in a broad range of credit derivative and fixed income instruments. The most common credit derivative, a credit default swap, was developed by global banks during the early 1990s. A credit default swap is essentially like an insurance contract, in which the insured party pays a periodic premium until the contract expires or a credit event occurs. In return for this premium, the contract seller makes a payment to the buyer if there is a credit default or other specified credit event with respect to the issuer of the underlying credit instrument referenced in the credit default swap. The credit default swap market has evolved in the last two years from trading simple single-entity credit default swaps to a range of customized product structures and index products, allowing investors greater flexibility in tailoring credit positions that correspond to their desired risk level.

Each of our offices in New York, London, Sydney and Hong Kong provides brokerage services in a broad range of credit derivative products, including single-entity credit default swaps, emerging market credit default swaps, credit indices, options on single-entity credit default swaps, options on credit indices and credit index tranches. We also provide brokerage services in markets for a range of non-derivative credit instruments, such as investment grade corporate bonds, high yield corporate bonds, emerging market Eurobonds, bank capital preferred shares, asset-backed bonds and floating rate notes. We have recently expanded our services in New York and London to better accommodate clients that engage in trading strategies that combine credit default swaps with convertible bonds and equity derivatives on securities of a single issuer or basket of issuers. This expansion allows us increasingly to compile data on a single issuer from each of the bond, equity and credit derivative markets and to

provide investors with analytical insight into a single issuer or related issuers. We support our credit brokerage with GFI CreditMatch, an electronic trading system that provides trading, trade processing and straight-through-processing functionality to our clients.

Financial Products. We provide brokerage services in a range of financial instruments, including foreign exchange options, "exotic" options, which include non-standard options on baskets of foreign currencies, forward contracts and non-deliverable forward contracts, which are forward contracts that do not require physical delivery of the underlying asset, and interest rate swaps. For these products, we offer experienced telephone brokerage in our New York, London, Singapore and Sydney offices, augmented in select markets with our GFI FX Trading System, a browser-based electronic trading platform. We also offer a straight-through-processing capability that automatically reports completed telephonic and electronic transactions directly to our clients' position-keeping systems and provides position updates. This processing capability covers all currency option trades executed through many of our worldwide brokerage desks. In Asia, we recently expanded our brokerage services to cover regional currency derivative products. Our New York office focuses on providing brokerage services for foreign exchange option trading among the U.S. Dollar, the British Pound and the Euro, which are referred to as the G3 currencies, and the Canadian markets as well as foreign exchange options, forward contracts and non-deliverable forward contracts and interest rate swaps for certain Latin America currencies. Our London office also covers foreign exchange option trading in the G3 currencies along with nearly all European cross currencies, including Eastern Europe and Russia, in which we provide brokerage services for forwards and non-deliverable forwards. Our brokers in Singapore and Sydney provide brokerage services for all pan-Asian currency pairs for foreign exchange options, along with forwards and non-deliverable forwards in emerging markets such as South Africa.

Equity Products. We provide brokerage services in a range of equity products, including U.S. domestic equity, international equity, equity derivatives and Global Depositary Receipts and American Depositary Receipt stocks. For these products, we offer telephonic brokerage services from our brokerage desks in London, Hong Kong and New York and, where appropriate, our electronic screen-based trading systems. Through our various offices we broker trades in the over-the-counter market as well as certain exchange traded securities. Our London office provides brokerage services in equity index options, single stock options, global depository receipts, Pan-European equities and Japanese equity derivatives. From our Hong Kong office, we offer brokerage services in Japanese equity derivatives and convertible securities. In its 2003 annual survey, AsiaRisk magazine named us as the "preferred broker" for Japanese equity convertibles. Our New York office provides brokerage services in single stock cash equities, single stock options, index options, sector options, equity default swaps, variance swaps, total return swaps and American depositary receipts.

Commodity Products. We provide brokerage services in a wide range of commodity products, including electricity, wet freight derivatives, precious metals, coal, natural gas, weather derivatives and pulp and paper. Wet freight derivatives allow oil companies, ship owners and other users of wet freight cargo capacity to better manage volatile shipping costs for their products by effectively locking in the cost of shipping future product. Through a joint venture, we offer hybrid telephonic and electronic brokerage of wet freight derivatives. Weather derivatives allow utilities, agri-businesses and other weather-affected businesses to better manage risks associated with changes in weather patterns. For example, a utility may purchase a weather derivative in order to guard against the risk that unseasonably cool summer weather will result in lower energy consumption by its clients. We have extensive experience brokering both cash-based and derivative instruments in energy products such as electricity, natural gas and weather derivatives. Our London office provides brokerage services in energy products, including natural gas, coal and electricity in most European national markets, such as the United Kingdom, France and Germany. In London, our telephonic brokerage capabilities are augmented with electronic brokerage capabilities that enable our clients to execute electricity, wet freight derivatives and coal transactions on the GFI Energy trading system or on a trading system we

license from a third party. From our New York office, we provide brokerage services in natural gas and in numerous U.S. regional electricity markets.

We further provide both telephonic and electronic brokerage in pulp, recycled, printing, writing and packaging paper products, including a full range of derivative instruments for such products, such as physical forwards, financial swaps, options, caps, floors and collars. From our brokerage desks in New York, London and Sydney, we also serve the global precious metals markets with brokerage in spot, forward, swap and options contracts focusing on gold, silver, platinum and palladium.

Data and Analytics. In selected markets, we offer market data and analytics products that are used to build pricing models, develop trading strategies as well as manage, price and revalue derivative portfolios. These products are sold on a subscription basis through a dedicated sales team. We believe that offering these products builds client loyalty and expands our profile in these markets while generating additional revenue.

We offer market data in the following product areas: foreign exchange options, credit derivatives, European repurchase agreements, emerging market bonds, European energy and North American energy. We make our data available through a number of channels including streaming web portals, file transfer protocol downloads, Fenics analytical tools and data vendors. Revenue from market data services consists of up-front license fees and monthly subscription fees and individual large database sales. In addition, we have data distribution relationships with Reuters, Telerate and Bloomberg who license our data for distribution to their global user bases.

We currently offer our Fenics analytics products in the foreign exchange option, precious metals, credit derivative and energy derivative markets. Fenics FX is a leading foreign exchange option analysis tool that is used at more than 460 sites globally as of March 31, 2004. Fenics FX provides an array of tools, math models and independent market data that permits clients to quickly and accurately price and revalue both standard and exotic foreign exchange options. Fenics FX can also be integrated with most aspects of a client's trading infrastructure, and allows clients to control, monitor and more effectively oversee each stage of foreign exchange option trading. We also offer Fenics Credit, a tool for pricing and managing credit derivatives. Fenics Credit was developed in partnership with independent academics Dr. John Hull and Dr. Alan White of the University of Toronto. Fenics Credit allows clients to price and manage credit default swaps, credit options and baskets of credit derivatives. Fenics Energy is an advanced option pricing and risk analysis tool for the over-the-counter electricity and gas markets which allows users to price a broad range of option contracts. We offer our clients a selection of post-trade products and services. Our Fenics analytics products provide position keeping and tracking in foreign exchange, precious metals, credit and energy transactions. Our data products are increasingly used for portfolio revaluation and mark-to-market functions as the independence and quality of our trade prices assist users to meet new accounting regulations.

Clients

The dealers that are our principal brokerage clients are many of the leading financial institutions in the world, including: Bear Stearns, Citigroup, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley and UBS. Our clients also include institutional investors, large corporations, insurance companies and large hedge funds. We maintain a thorough credit approval process to limit exposure to counterparty risk and employ stringent monitoring to control the market and counterparty risk from our matched principal and agency businesses. Our brokers may only execute transactions for clients that have been approved through the credit department. Our credit approval process generally includes verification of key financial information and operating data and anti-money laundering verification checks. Our credit review process includes consideration of independent credit agency reports and a visit to the entity's premises, if necessary. We have developed and utilize a proprietary, electronic credit monitoring system.

Credit approval is granted by our credit committee, which is comprised of senior management and representatives from our compliance, finance and legal departments. Credit approval is granted subject to certain trading limits and may be subject to additional conditions, such as the receipt of collateral or other credit support. Counterparties are reviewed for continued credit approval on at least an annual basis, and the results are provided to the credit committee. Maintenance procedures include reviewing current audited financial statements and publicly available information on the client, collecting data from credit rating agencies where available and reviewing any changes in ownership, title or capital of the client. In the last five years, we have had no material losses due to the nonpayment of commissions receivable.

Sales and Marketing

In order to promote new and existing brokerage, data and analytics software services, we utilize our own marketing and public relations expertise and implement selective advertising and media campaigns. We participate in numerous trade-shows to reach potential brokerage, data and technology clients. We also utilize speaking opportunities to position key brokers and specialists as market experts and help promote our core products and services. Additionally, we market our brokerage services through the direct interaction of our brokers with their clients. This direct interaction also permits our brokers to discuss new product and market developments with our clients. Our data and analytics products are actively marketed through a dedicated sales and support team. As of March 31, 2004, we employed 44 sales, marketing and customer support professionals, consisting of 26 sales employees and executives, 3 marketing employees and 15 customer support employees. Our sales force calls on a broad range of clients including traders, risk managers, sales staff, analysts and e-commerce specialists at banks, hedge funds, fund managers, insurance companies and treasurers in large corporations.

We have found that our close proximity to our markets as an inter-dealer broker supports our capabilities as a developer and vendor of related market data and analytics products. We believe that our market position enables us to respond to market trends and discover, develop and launch new services in the rapidly evolving derivatives industry.

Technology

Brokerage Technology. We employ a technology development philosophy that emphasizes state-of-the-art technology with cost efficiency in both our electronic brokerage systems and data and analytics products. We take a flexible approach by developing in-house, purchasing or leasing technology products and services and by outsourcing support and maintenance to manage technology expense more effectively. For each market in which we operate, we seek to provide the optimal mix of electronic and telephonic brokerage.

In order to facilitate both electronic and telephonic brokerage, we seek to adopt trading systems based on the following criteria: functionality, connectivity, performance, scalability, security and stability. In some of our markets we offer interactive real-time trading systems that allow clients to view and maintain their orders directly at their workstations without direct contact with our brokers.

We offer our products and services through a global communications network that is designed to ensure secure, reliable and timely access to the most current market information. We provide our clients with a variety of means to connect to our brokers and trading systems, including dedicated point-to-point data lines, virtual private networks and the Internet.

We are working with a small but increasing number of our clients to implement straight-through-processing between our trading systems and our clients' trade capture systems. This automates large parts of the trade capture and settlement process reducing errors, risks and costs traditionally associated with post trade activities.

Market Data and Analytics Products Technology. Our market data and analytics products are developed internally using advanced development methodologies and computer languages. Through years of developing Fenics products, our in-house software development team is experienced in creating simple, intuitive software for use with complex derivative instruments.

Support and Development. At March 31, 2004, we employed a team of 109 computer, telecommunication, network, database, client support, quality assurance and software development specialists. The activities of our development staff are split approximately evenly between infrastructure support services and software development. We devote substantial resources to the continuous development and support of our electronic brokerage capabilities, the introduction of new products and services to our clients and the training of our employees. Our software development capabilities allow us to be flexible in our decisions to either purchase or license technology from third parties or to develop it internally.

Disaster Recovery. We have contingency plans in place to protect against major carrier failures, disruption in external services (market data and internet service providers), server failures and power outages. All services are connected via redundant and diverse circuits and, where possible, site diversity is implemented. Production applications are implemented with a primary and back-up server, and all data centers have uninterruptible power source and generator back-up power. Our servers are backed-up daily, and back-up tapes are sent off-site weekly.

Intellectual Property

We seek to protect our internally developed and purchased intellectual property through a combination of patent, copyright, trademark, trade secret, contract and fair business practice laws. Where appropriate, we also license software and technology that is protected by intellectual property rights belonging to third parties.

Our proprietary technology, including our Fenics software, is generally licensed to clients under written license agreements. Although clients who license the Fenics Software Developers Kit are able to customize the Fenics application, the source code for the Fenics products is typically not provided to clients.

We pursue registration of some of our trademarks in the United States and in other countries. "GFI Group" and "Fenics" are registered trademarks in the United States and numerous overseas jurisdictions. We have also applied for registration of various other trademarks, including multiple derivations of the "GFI Group" and "GFInet" names.

We have applied for several patents related to our products and services. We believe that no single patent or group of patents will be of material importance to our business as a whole.

Competition

Competition in the inter-dealer brokerage industry is intense. Our primary competitors with respect to our brokerage services are currently other inter-dealer brokers and trading consortia and exchanges. Our primary competitors for our data and analytics products are currently other data and technology vendors and other inter-dealer brokers.

Inter-Dealer Brokers. The current size of the wholesale brokerage market is difficult to estimate as there is little formal external data on the industry, and many participants are private companies. However, we believe there are five major, diversified inter-dealer brokers with which we compete. These are ICAP plc, the Tullet Liberty division of Collins Stewart Tullet plc, Prebon Group Limited, Tradition Financial Services (a subsidiary of Viel & Cie) and Cantor Fitzgerald and its subsidiary eSpeed, Inc. Collins Stewart recently announced that it has agreed to terms for the purchase of Prebon Group. Other inter-dealer broker competitors include several smaller firms that tend to specialize in specific product areas and a few trading platforms for specific products organized by consortia of major dealers.

Consortia and Exchanges. The internet boom resulted in the establishment of many electronic brokerage start-ups. Only a limited number of these firms, with either backing from groups that have organized themselves as a consortia or from one or more inter-dealer brokers, have survived. Major financial institutions have formed consortia in the past and may form additional consortia in the future, which may compete directly with us. In addition, in the future it is possible that our dealer clients will seek to reduce their trading costs by trading directly with each other rather than using the services of an inter-dealer broker.

Certain derivatives exchanges allow participants to trade standardized futures and options contracts. Major derivative exchanges include the Chicago Mercantile Exchange, the Chicago Board of Trade, The Chicago Board of Options, Eurex and Euronext.liffe. Exchange-traded products, unlike the over-the-counter products we focus on, typically contain more standardized terms, are more commoditized, and are typically traded in contracts representing smaller notional amounts. Recently, several exchanges have entered into agreements with some inter-dealer brokers to clear over-the-counter products. We believe that exchanges will continue to seek to leverage their platforms and attempt to grow by introducing products designed to compete with certain of the products inter-dealer brokers provide brokerage services for the over-the-counter marketplace.

Data and Analytics. Several large market data and information providers compete for a presence on virtually every trading desk in our industry. Some of these entities currently offer varying forms of electronic trading of the types of financial instruments in which we specialize. Some of these entities have announced their intention to expand their electronic trading platforms or to develop new platforms. In addition, these entities are currently competitors to, and in some cases clients of, our data and analytical services.

Regulation

Certain of our subsidiaries, in the ordinary course of their business, are subject to extensive regulation by government and self-regulatory organizations both in the U.S. and abroad. As a matter of public policy, these regulatory bodies are responsible for safeguarding the integrity of the securities and other financial markets and protecting the interests of investors in those markets rather than the interests of securities firms or their creditors or stockholders. As a result, these regulations cannot be expected to protect or further the interests of our company or our stockholders and may have the effect of limiting or curtailing our activities, including activities that might be profitable.

U.S. Regulation and Certain Clearing Arrangements. GFI Securities LLC, one of our subsidiaries, is registered as a broker-dealer with the SEC and the State of New York, and is a member of the NASD. Broker-dealers are subject to regulations and industry standards of practice that cover many aspects of their business, including initial licensing requirements, sales and trading practices, safekeeping of clients' funds and securities, capital structure, record keeping, supervision and the conduct of affiliated persons, including directors, officers and employees. GFI Securities LLC also operates an electronic trading system that is regulated pursuant to Regulation ATS under the Securities Act.

We face the risk of significant intervention by regulatory authorities, including extensive examination and surveillance activity. The SEC, the NASD and other governmental regulatory authorities (including state securities commissions) and self-regulatory organizations that supervise and regulate us generally have broad oversight and enforcement powers. If we fail to remain in compliance with laws, rules and industry standards of practice, we could face investigations and judicial or administrative proceedings that may result in substantial fines. Alternatively, or in addition to being fined, our regulators could institute administrative proceedings that can result in censure, the issuance of cease and desist orders, the suspension or expulsion of a broker-dealer and its affiliated persons, officers or employees or other similar consequences.

In addition, the businesses that GFI Securities LLC may conduct are limited by its membership agreement with the NASD. The membership agreement may be amended by application to include additional businesses. This application process is time-consuming and may not be successful. As a result, GFI Securities LLC may be prevented from entering new businesses that may be profitable in a timely manner, or at all.

As a member of the NASD, GFI Securities LLC is subject to certain regulations regarding changes in control of its ownership. NASD Rule 1017 generally provides that NASD approval must be obtained in connection with any transaction resulting in a change in control of a member firm. The NASD defines control as ownership of 25% or more of the firm's equity by a single entity or person and would include a change in control of a parent company. As a result of these regulations, our future efforts to sell shares or raise additional capital may be delayed or prohibited by the NASD.

Two brokerage desks at one of our subsidiaries have experienced issues relating to reporting trades to the NASD on a timely basis, which is required by NASD rules. In April 2004, this subsidiary was fined $20,000 for issues relating to late reporting of trades in 2002. In addition, this subsidiary has been fined a total of $30,000 on two other occasions during the past two years for similar issues in prior periods. This subsidiary is currently being examined by the NASD for similar issues relating to trade reporting for periods subsequent to 2002. Since its last examination, and after discussion with the NASD, this subsidiary has taken steps designed to improve its ability to report trades in a timely manner. While we believe that these efforts will be effective and diminish or eliminate this problem, we cannot make any assurance that our efforts will be effective. In connection with its current examination, the NASD may seek to impose further fines on us or seek to take other corrective action.

GFI Securities LLC is also an introducing broker with the National Futures Association, which we refer to as the NFA, and the Commodity Futures Trading Commission, which we refer to as the CFTC. The NFA and CFTC require their members to fulfill certain obligations, including the filing of quarterly and annual financial reports. Failure to fulfill these obligations in a timely manner can result in disciplinary action against the firm.

The SEC, NASD, CFTC and various other regulatory agencies within and outside of the United States have stringent rules and regulations with respect to the maintenance of specific levels of net capital by regulated entities. Generally, a broker-dealer's capital is net worth plus qualified subordinated debt less deductions for certain types of assets. The Net Capital Rule under the Securities Exchange Act of 1934 requires that at least a minimum part of a broker-dealer's assets be maintained in a relatively liquid form.

If these net capital rules are changed or expanded, or if there is an unusually large charge against our net capital, our operations that require the intensive use of capital would be limited. A large operating loss or charge against our net capital could adversely affect our ability to expand or even maintain these current levels of business, which could have a material adverse effect on our business and financial condition.

The SEC and the NASD impose rules that require notification when net capital falls below certain predefined criteria. These rules also dictate the ratio of debt to equity in the regulatory capital composition of a broker-dealer, and constrain the ability of a broker-dealer to expand its business under certain circumstances. If a firm fails to maintain the required net capital, it may be subject to suspension or revocation of registration by the applicable regulatory agency, and suspension or expulsion by these regulators could ultimately lead to the firm's liquidation. Additionally, the Net Capital Rule and certain NASD rules impose requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC and the NASD for certain capital withdrawals.

All of our subsidiaries that are subject to net capital rules have been, and currently are, in compliance with those rules and have net capital in excess of the minimum requirements. We do not believe that we are currently subject to any regulatory inquiries that, if decided adversely, would have any material adverse effect on us and our subsidiaries taken as a whole.

GFI Securities LLC is also a member of the Mortgage-Backed Securities Clearing Corporation, which we refer to as the MBSCC, for the purpose of clearing certain mortgage-backed securities. This membership requires GFI Securities LLC to maintain minimum net capital of $5.0 million in excess of the minimum amount prescribed in its membership agreement, including a minimum deposit with the MBSCC of $250,000.

We maintain clearing arrangements with selected financial institutions in order to settle our matched principal transactions and maintain deposits with such institutions in support of those arrangements.

Foreign Regulation and Certain Clearing Arrangements. Our overseas businesses are also subject to extensive regulation by various foreign governments and regulatory bodies. In the United Kingdom, the FSA regulates our subsidiaries, GFI Brokers Ltd., GFI Securities Ltd. and GFInet U.K. Ltd. The regulatory framework applicable to the U.K. subsidiaries is extensive and broadly similar to that described above for our U.S. regulated subsidiaries.

As with those U.S. subsidiaries subject to NASD rules, the ability of our regulated U.K. subsidiaries to pay dividends or make capital distributions may be impaired due to applicable capital requirements. Our regulated U.K. subsidiaries are subject to "consolidated" regulation, in addition to being subject to regulation on a legal entity basis. Consolidated regulation impacts the regulated entity and its parent holding companies in the U.K, including the regulated entity's ability to pay dividends or distribute capital.

Our regulated U.K. subsidiaries are also subject to regulations regarding changes in control similar to those described above for GFI Securities LLC. Under FSA rules, regulated entities must obtain prior approval for any transaction resulting in a change in control of a regulated entity. Under applicable FSA rules, control is defined as a 10% interest in the regulated entity or its parent. As a result of these regulations, our future efforts to sell shares or raise additional capital may be delayed or prohibited by the FSA.

GFI Securities Ltd. is a member of Euroclear for the purpose of clearing certain debt and equity transactions. This membership requires GFI Securities Ltd. to maintain a minimum amount of net capital depending on the unsettled amounts of such transactions.

In Hong Kong, the SFC regulates our subsidiary, GFI (HK) Securities LLC, as a Securities Dealer. The compliance requirements of the SFC include, among other things, net capital requirements (known as the Financial Resources Rule) and stockholders' equity requirements. The SFC regulates the activities of the officers, directors, employees and other persons affiliated with GFI (HK) Securities LLC and requires the registration of such persons.

In Singapore, the MAS regulates our subsidiary GFI Group PTE Ltd. The compliance requirements of the MAS include, among other things, maintaining stockholders' equity of 3 million Singapore dollars and monitoring GFI Group PTE Ltd.'s trading practices and business activities. The MAS regulates the activities of certain of the officers and employees of GFI Group PTE Ltd, and requires regular reports of our financial condition.

All of our subsidiaries that are subject to foreign net capital rules have been, and currently are, in compliance with those rules and have net capital in excess of the minimum requirements. We do not believe that we are currently subject to any foreign regulatory inquiries that, if decided adversely, would have any material adverse effect on us and our subsidiaries taken as a whole.

Changes in Existing Laws and Rules. Additional legislation and regulations, changes in rules promulgated by the government, regulatory bodies or clearing organizations described above or changes in the interpretation or enforcement of laws and regulations may directly affect the manner of our operation, our net capital requirements or our profitability. In addition, any expansion of our activities into new areas may subject us to additional regulatory requirements that could adversely affect our business, reputation and results of operations.

Employees

At March 31, 2004, we employed 708 people. Of these, 432 are brokers, 109 are technology and telecommunications specialists and 44 comprise our analytics sales, marketing and customer support professionals. Approximately 48% of our employees are based in New York, 45% are based in London and the remaining 7% are based in Asia-Pacific. None of our employees are represented by a labor union. We consider our relationships with our employees to be good and have not experienced any interruption of operations due to labor disagreements.

Facilities

Our executive headquarters are located at 100 Wall Street, New York, New York 10005, where we occupy approximately 62,000 square feet of leased space, pursuant to a lease between GFI and Reckson Associates Realty Corp. that expires on September 30, 2013. Jersey Partners is also liable for our obligations under this lease. Our U.K. offices are in two locations in London: 9 Hewett Street, EC2 and 25 Christopher Street, EC2, where we occupy approximately 19,000 square feet and 5,400 square feet, respectively. 9 Hewett Street is owned by GFI Brokers (Channel Islands) Limited, a wholly owned subsidiary of Jersey Partners, with whom we are parties to a lease that expires on March 25, 2016. We occupy the Christopher Street premises pursuant to a lease between us and Meritcape Limited that expires on February 14, 2013. We believe our facilities are adequate for our operations for the next twelve months. In connection with our acquisition of Fenics, we became party to a lease with 30 Broad Street Associates for office space in lower Manhattan. We also lease office space in Hong Kong, Singapore and Sydney to support our brokerage operations.

Legal Proceedings

In the last several years, we have been party to, or otherwise involved in, litigations, claims and arbitrations in the U.S. and U.K. These proceedings have generally involved either competitor claims in connection with new employee hires, or claims from former employees in connection with the termination of their employment from us. We are currently involved in several litigations and arbitrations with our competitors and former employees in U.S. and U.K.

We believe proceedings of this type are common in the inter-dealer brokerage industry due to its highly competitive nature. We believe that damages, if any, resulting from such proceedings will not, in the aggregate, have a material adverse effect on our financial condition, but may be material to our operating results for any particular period. Although there is a potential for client claims alleging the occurrence of errors in the handling of trades, we have not been involved in any such proceedings in recent years.

MANAGEMENT

Directors, Executive Officers and Key Employees

Our directors, executive officers and key employees and their ages as of March 31, 2004 are as follows:

Name	Age	Position(s)
Michael Gooch(1)	45	Chairman of the Board and Chief Executive Officer
Colin Heffron	40	President and Director
Donald P. Fewer	40	Senior Managing Director — Head of North America and Director
Stephen McMillan	41	Senior Managing Director — Head of Europe and Director
Jurgen Breuer	38	Senior Managing Director — Head of Asia
James A. Peers	53	Chief Financial Officer
Russell Lewis	45	Chief Information Officer
J. Christopher Giancarlo	44	Executive Vice President — Corporate Development
Michel Everaert	35	Global Head of Product Marketing
Scott Pintoff	33	General Counsel and Corporate Secretary
James A. Watson	44	Global Head of Sales
Ron Levi	42	Managing Director — Europe
Nick Brown	47	Managing Director — North America
Sheena Griffiths	40	Global Human Resources Director
Geoffrey Kalish(2)	40	Director
Christopher Pike(2)	34	Director
Robert Taylor(1)	46	Director
John W. Ward(1)	61	Director

(1): Member of the compensation committee
(2): Member of the audit committee

Michael Gooch, Chairman of the Board and Chief Executive Officer, has been our Chairman and Chief Executive Officer since he founded our business in 1987. Prior to founding our company, Mr. Gooch worked for Citibank, Refco Group, Bierbaum Martin, Harlow Meyer Savage and Tullet & Tokyo Forex. Mr. Gooch is also the President and majority shareholder of Jersey Partners, the majority stockholder of our company.

Colin Heffron, President and Director, has been our President since February 2004 and is responsible for all of our brokerage, data and analytics businesses. Mr. Heffron joined our company in our New York office in 1988 as a broker of foreign currency options before moving to London to assist in the establishment of our London office. From 1991 until 1994, Mr. Heffron headed our global currency options business. From 1994 until 1997, Mr. Heffron ran the day-to-day operations of all of our European businesses. From 1998 until February 2004, Mr. Heffron was head of all of our operations in Europe and joint-head of Asian operations. Mr. Heffron has been a director since our Reorganization in November 2001.

Donald P. Fewer, Senior Managing Director — Head of North America and Director, has been our head of North American brokerage operations since June 2000. Mr. Fewer joined our company in 1996 to establish our company's global credit derivatives brokerage services. Prior to joining our company, Mr. Fewer was a Senior Vice President in the structured products group at Garvin Guy Butler Corp. Mr. Fewer was previously a Senior Vice President at Prebon-Yamane (U.S.A.) Inc., where he headed the firm's treasury group, responsible for all non-trading floor operations, and was a member of its

North American Executive Committee. Mr. Fewer has been a director since our Reorganization in November 2001.

Stephen McMillan, Senior Managing Director — Head of Europe and Director, is head of European Brokerage and our data and analytics business. Mr. McMillan joined our company in April 2000 as our Global Chief Operating Officer prior to being appointed to his current position in February 2004. Prior to joining our company, he was CEO of Garban Europe Ltd. from 1997 until 1999 and an Executive Board member of Garban PLC, now ICAP PLC. From 1991 until 1997, Mr. McMillan was Managing Director and Director of Garban Europe Ltd. From 1987 until 1990, he was a Director of Cantor Fitzgerald's securities business in London and prior to that he worked for KPMG in the United Kingdom and Australia. Mr. McMillan has been a director since our Reorganization in November 2001.

Jurgen Breuer, Senior Managing Director — Head of Asia, is head of Asian Brokerage. Mr. Breuer joined our company in January 1998. Prior to his appointment to his current position in January 2004, Mr. Breuer managed our company's European repo and freight derivatives business in London. Prior to joining our company, Mr. Breuer held trading and management positions with Oppenheimer, Société Generale and Citibank.

James A. Peers, Chief Financial Officer, joined our company in August 2002. Prior to joining our company, Mr. Peers was a Senior Vice President at Bank One in Chicago from 1999 to 2001 where he held various positions, including Corporate Controller. He also was the CFO for Rabobank International in New York and a Senior Vice President — Corporate Development for Canadian Imperial Bank of Commerce in New York. Mr. Peers is a Certified Public Accountant and Chartered Accountant and was a partner at Ernst & Young where he spent 18 years working in the Toronto and Chicago offices mainly with financial institutional clients.

Russell Lewis, Chief Information Officer, joined our company in November 2000. Prior to joining our company, Mr. Lewis was Chief Operating Officer at Internet Trading Technologies, a vendor of internet-based trading systems from 1999 to 2000. Prior to Internet Trading Technologies, Mr. Lewis was Chief Information Officer at Jefferies & Company and a Vice President at Salomon Brothers Inc.

J. Christopher Giancarlo, Executive Vice President, Corporate Development, joined our company in April 2001 following our acquisition of Fenics, where he structured strategic alliances with major investment banks. Prior to joining Fenics in 2000, Mr. Giancarlo was a corporate partner in the New York law firm of Brown Raysman Millstein Felder & Steiner, LLP from 1997 to 2000.

Michel Everaert, Global Head of Product Marketing, joined our company in May 2000. Prior to joining GFI, he was Senior Sales Manager for Investment Banking Services at Logica PLC from November 1998 to April 2000. and prior to that position he held marketing and sales positions at Dow Jones Telerate and Reuters.

Scott Pintoff, General Counsel and Corporate Secretary, joined our company in April 2000. Prior to assuming the duties of General Counsel in April 2002, Mr. Pintoff was GFI's Associate General Counsel. Before joining our company, he was an associate with the law firm of Dewey Ballantine LLP from 1996 to 2000.

James Watson, Global Head of Sales, joined our company in March 2002. Mr. Watson joined our company from UCC Direct Services in Houston, Texas where he was Vice President Sales and Product Support from 1998 to 2000. Prior to that he held a variety of senior sales and support positions globally with Reuters, Bridge and Slamdunk Networks in the United Kingdom.

Ron Levi, Managing Director — Europe, joined our company in 1993. Prior to joining our company, he was Director of Fixed Income at Garban PLC. Mr. Levi was appointed Managing Director in 2001, and assumed his current responsibilities in January 2004.

Nick Brown, Managing Director — North America, joined our company in November 2003. Prior to joining our company, Mr. Brown was a managing director of Technolia LLC, a telecom consulting company, from 1998 until 2000. Mr. Brown's experience in the inter-dealer brokerage industry includes positions as the Managing Director, North America, of Tullett & Tokyo from 1990 to 1996 and President of Harlow Meyer Savage from 1986 to 1989. Mr. Brown is also a director of Jersey Partners and the Financial Markets Association and was formerly a member of the Federal Reserve Bank of New York Foreign Exchange Steering Committee and Wit Capital's board of directors.

Sheena Griffiths, Global Human Resources Director, joined our company in August 2000. Prior to joining GFI, Ms. Griffiths spent four months as a Manager, Employment Management of the FSA. Prior to that Ms. Griffiths was Human Resources Director, London and Europe, for Garban Europe Limited, now ICAP plc. Prior to that position, Ms. Griffiths spent 13 years with NatWest Group (now Royal Bank of Scotland) working in both Corporate and Human Resource positions.

Geoffrey Kalish, Director, is a founder and Managing Director at Venturion Capital LLC and joined our board of directors in April, 2000 as an appointee of our Series A Preferred Stockholders. Mr. Kalish has worked for Smith Barney, Drexel Burnham Lambert, Kidder Peabody and Westpac Bank in a variety of proprietary trading and corporate finance positions. He is also Chairman of the Board of Insurance Vianet, Inc. and a supervisory board member of ProCapital, S.A.

Christopher Pike, Director, is a partner at Advent International and joined our board of directors in June 2002 as an appointee of our Series C Preferred Stockholders. Prior to joining Advent International, he worked for Coopers & Lybrand. He is also director of Managed Healthcare Associates, Redprairie, Americus Dental Labs and Long Term Care Group.

Robert Taylor, Director, is a partner at Advent International and joined our board of directors in June 2002 as an appointee of our Series C Preferred Stockholders. Prior to joining Advent International, he worked for private equity firms Wingate Partners and Valley National Investors. He is also director of American Radiology Services, Keystone Automotive Holdings, Inc. and Long Term Care Group.

John W. Ward, Director, joined our board of directors in April 2004 as an appointee of Jersey Partners, our Class A Common Stockholder. Mr. Ward has been an independent consultant with Transition International, Inc. since its formation in 1992. He joined the board of Fenics Software Inc. in 1999 and served until our acquisition of that company in 2001. Mr. Ward was also a director of Ameritrade Holdings Corporation from 1997 until 2002 and served as chairman of its compensation committee until 2001. He was also a director of AHL Services Inc. from 2000 until 2003. He was formerly Chairman of the Merrill Lynch International Banking Group.

Board Composition

Our board of directors currently has eight members, comprised of four executive officers and four independent directors, three of whom were appointed by our preferred stockholders and one which was appointed by Jersey Partners, our Class A Common Stockholder.

In accordance with our second amended and restated certificate of incorporation, immediately after this offering our board of directors will be divided into the following three classes with staggered three-year terms:

•: Class I, whose initial term will expire at the annual meeting of stockholders to be held in 2005;
•: Class II, whose initial term will expire at the annual meeting of stockholders to be held in 2006; and
•: Class III, whose initial term will expire at the annual meeting of stockholders to be held in 2007.

The Class I directors will be , the Class II directors will be and the Class III directors will be .

At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.

Board Committees

Our board of directors has an audit committee and a compensation committee and, following this offering, our board will have an officer nominating committee and a board credentialing committee.

Audit Committee. The audit committee assists our board of directors in its oversight of our internal accounting controls and audit processes and independent auditors. The audit committee has sole authority for the appointment, compensation and oversight of our independent auditors and approval of any significant non-audit relationship with the independent auditors. Following completion of this offering, the audit committee will also be responsible for preparing the reports required by the rules of the SEC to be included in our proxy statement relating to our annual meeting of stockholders. Currently, the audit committee is comprised of Christopher Pike, as chairman, and Geoffrey Kalish. Following the completion of this offering, will be added as a member of our audit committee. The board of directors has determined that is an audit committee financial expert, as defined by SEC guidelines and as required by applicable Nasdaq listing standards.

Compensation Committee. The compensation committee assists our board of directors in its oversight of executive compensation, determines our goals and objectives relevant to compensation, and, based on evaluations submitted by management, recommends to our board compensation levels and systems for our board and our executive officers that correspond to our goals and objectives. Following completion of this offering, the compensation committee will also produce an annual report on executive compensation for inclusion in our proxy statement relating to our annual meeting of stockholders. Currently, Michael Gooch (chairman), Robert Taylor and John W. Ward are the members of the compensation committee. Following the completion of this offering, Michael Gooch will resign from the compensation committee and John W. Ward will succeed Mr. Gooch as chairman of this committee.

Officer Nominating Committee. Following completion of this offering, our board intends to appoint an officer nominating committee. The officer nominating committee will be responsible for recommending to our board of directors individuals to be nominated as officers. The committee's responsibilities will include evaluation of new candidates as well as evaluation of current officers.

Board Credentialing Committee. Following completion of this offering, our board intends to appoint a board credentialing committee. The board credentialing committee will be responsible for recommending to our board of directors individuals to be nominated as directors and committee members. This committee's responsibilities include evaluation of new candidates as well as evaluation of current directors.

Director Compensation

Our employees who serve as our directors and directors that have been appointed by our preferred stockholders are not compensated for serving as our directors. John W. Ward, a non-employee director, was appointed by our Class A common stockholder and will receive an annual retainer of $70,000 for

his services as director. All directors are reimbursed for their expenses incurred in attending board and committee meetings.

In May 2004, in consideration for service as our director, John W. Ward was granted an option to purchase 25,000 shares of our common stock at the initial public offering price of the shares to be issued in this offering, subject to vesting over a term of two years and otherwise pursuant to our 2002 Stock Option Plan.

Mr. Ward currently owns 103,300 shares of Fenics and may receive cash or shares of our common stock in connection with our purchase of the remaining Fenics shares that we do not own as described under "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources."

Executive Compensation

The following table summarizes the compensation paid to, awarded to or earned by our chief executive officer and our four other most highly compensated executive officers whose total annual salary and bonus exceeded $100,000 for the year ended December 31, 2003. We refer to these officers collectively as our "named executive officers."

Summary Compensation Table

		Annual Compensation
Name and Principal Position	Year	Salary		Bonus			Other Annual Compensation(1)
Michael Gooch Chairman of the Board and Chief Executive Officer	2003	$	525,000	$	650,000			—
Colin Heffron President	2003	$	500,000	$	1,100,000			—
Donald P. Fewer Senior Managing Director — Head of North America	2003	$	500,000	$	975,000			—
Stephen McMillan Senior Managing Director — Head of Europe	2003	$	670,000	$	700,000	(2)		—
James A. Peers Chief Financial Officer	2003	$	250,000	$	300,000		$	68,126	(3)

(1): In accordance with the rules of the SEC, other compensation in the form of perquisites and other personal benefits has been omitted in those instances where the aggregate amount of such perquisites and other personal benefits constituted less than the lesser of $50,000 or 10% of the total of annual salary and bonuses for the officer for such year.
(2): Includes amounts awarded to the members of the family of Mr. McMillan by the independent trustees of GFI Brokers GBT, a trust established by the board of directors of GFI Brokers Ltd. for the benefit of family members of employees of GFI Brokers Ltd.
(3): Includes $32,851 reimbursed to Mr. Peers for moving expenses in 2003 and $35,275 related to commissions on the sale of his residence which was paid by our company to Mr. Peers in 2004.

Stock Option Grants In Year Ended December 31, 2003

No stock options to purchase our common stock were granted to the named executive officers during the year ended December 31, 2003.

Aggregated Option Exercises During Year Ended December 31, 2003 and Year-End Option Values

None of the named executive officers exercised options during the fiscal year ended December 31, 2003. The following table sets forth the number and value of securities underlying options held as of December 31, 2003.

	Number of Securities Underlying Unexercised Options at December 31, 2003		Value of Unexercised In-the-Money Options at December 31, 2003(1)
Name
Name	Exercisable	Unexercisable(2)	Exercisable	Unexercisable
Michael Gooch	—	—	—	—
Colin Heffron	—	600,000
Donald P. Fewer	—	800,000
Stephen McMillan	—	1,500,000
James A. Peers	—	750,000

(1): There was no public trading market for our common stock as of December 31, 2003. Accordingly, these values have been calculated on the basis of the assumed public offering price of $ per share, less the applicable exercise price per share, multiplied by the number of shares underlying the options.
(2): These stock options will be exercisable upon our completing an initial public offering of our common stock. Upon completion of this offering, the number of shares underlying unexercisable options which, as of December 31, 2003, would have been exercisable had this offering been completed as of such date are as follows: Mr. Heffron (200,000), Mr. Fewer (350,000), Mr. McMillan (825,000) and Mr. Peers (375,000).

Employment Agreements

Each of Stephen McMillan, Donald P. Fewer and James A. Peers have entered into employment agreements with us. At this time, Michael Gooch and Colin Heffron do not have employment agreements with us.

Stephen McMillan

We entered into an employment agreement with Stephen McMillan on May 1, 2002. The current term of the agreement expires on February 28, 2005. The agreement will automatically extend for one-year periods and can be terminated prior to any such extension by either party upon three months notice. Mr. McMillan is currently serving as our Senior Managing Director — Head of Europe. We currently pay Mr. McMillan an annual base salary equal to the British Pounds equivalent of approximately $600,000 and pay the British Pounds equivalent of approximately $50,000 per annum on Mr. McMillan's behalf into our U.K. Occupational Pension Plan. Mr. McMillan is also eligible to receive an annual discretionary bonus in an amount to be determined by us. He is also entitled to receive all employee benefits and participate in all insurance programs generally available to similarly situated employees. The agreement requires Mr. McMillan to abide by restrictive covenants relating to non-competition, non-solicitation and non-disclosure during his employment and for specified periods following termination of employment. Mr. McMillan's employment agreement does not provide for any severance payments upon the termination of his employment.

Donald P. Fewer

We entered into an employment agreement with Donald P. Fewer on July 17, 2000, which was subsequently amended in March 2004. The term of the agreement, as amended, expires on July 16, 2006. Thereafter, it is automatically extended for two-year periods, unless the agreement is terminated three months prior to such extension by either party. Mr. Fewer is currently serving as our Senior Managing Director — Head of North America. We currently pay Mr. Fewer an annual base salary of $650,000. Mr. Fewer is also eligible to receive an annual discretionary bonus in an amount to be determined by us. He is also entitled to receive all employee benefits and participate in all insurance programs generally available to similarly situated employees. The agreement requires Mr. Fewer to abide by restrictive covenants relating to non-competition, non-solicitation and non-disclosure during his employment and for specified periods following termination of employment. Mr. Fewer's employment agreement does not provide for any severance payments upon the termination of his employment.

James A. Peers

We entered into an employment agreement with James A. Peers on November 18, 2002 pursuant to which Mr. Peers serves as our Chief Financial Officer. This agreement has an indefinite term, subject to termination of the agreement by either party upon six months notice. We currently pay Mr. Peers an annual base salary of $300,000. Mr. Peers is also eligible to receive an annual discretionary bonus in an amount to be determined by us. He is also entitled to receive all employee benefits and participate in all insurance programs generally available to similarly situated employees and was compensated for certain moving expenses in connection with the commencement of his employment.

This agreement provides that that upon resignation with "good reason" within six months following a "change in control", as such terms are defined in the agreement, Mr. Peers will generally be entitled to receive: (1) a lump sum payment in an amount equal to twelve months base salary, minus applicable withholdings and deductions; (2) the cost of maintaining health and dental insurance coverage for the earlier of six months after the termination of employment or until he secures new employment; (3) all employee or incentive stock options granted to him which are outstanding and unexercised on the date of termination of employment will become fully vested and such options will continue to be exercisable at any time within the one year period following the date of termination; and (4) an amount in lieu of discretionary bonus equal to (x) such bonus, if any, paid for the fiscal year immediately preceding the year in which such employment is terminated, multiplied by (y) a fraction, the numerator of which is the number of days of employment during the fiscal year in which employment was terminated, and the denominator of which is 365.

The agreement also provides that if Mr. Peers is terminated "without cause" (other than due to death or disability), as defined in this agreement, he will be entitled to receive: (1) a salary continuation benefit for a period of up to six months, which will be reduced by any portion of the notice period in which he is not requested to work and; (2) an amount in lieu of discretionary bonus equal to (x) such bonus, if any, paid for the fiscal year immediately preceding the year in which employment is terminated, multiplied by (y) a fraction, the numerator of which is the number of days of employment during the fiscal year in which employment was terminated, and the denominator of which is 365.

The agreement requires Mr. Peers to abide by restrictive covenants relating to non-competition, non-solicitation and non-disclosure during his employment and for specified periods following termination of employment.

Compensation Committee Interlocks and Insider Participation

The members of our compensation committee currently are Michael Gooch, Robert Taylor and John W. Ward. Upon consummation of this offering, Mr. Gooch will resign from the compensation committee. None of our executive officers, other than Mr. Gooch, currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving on our board of directors or compensation committee. Mr. Gooch, our chief executive officer, is chairman of the board of Jersey Partners, our majority stockholder.

Limitation of Liability; Indemnification

As permitted by the General Corporation Law of the State of Delaware, which we also call the DGCL, our certificate of incorporation provides that our directors will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability:

•: for any breach of the director's duty of loyalty to us or our stockholders;
•: for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•: under Section 174 of the DGCL, relating to prohibited dividends, distributions and repurchases or redemptions of stock; or
•: for any transaction from which the director derives an improper personal benefit.

However, such limitation of liability would not apply to violations of the federal securities laws, nor does it limit the availability of non-monetary relief in any action or proceeding against a director. Our certificate of incorporation and bylaws also include provisions for indemnification of our directors and officers to the fullest extent permitted by the DGCL. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

We have obtained directors' and officers' insurance providing indemnification for all of our directors and officers for certain liabilities. We believe that these provisions and this insurance are necessary to attract and retain qualified directors and officers. At present, there is no pending or threatened litigation or proceeding involving any of our directors, officers, employees or agents that is likely to result in a claim for indemnification under our directors' and officers' insurance policy.

Equity Incentive Plans

2002 Stock Option Plan

In June 2002, we adopted the GFI Group Inc. 2002 Stock Option Plan. The purpose of this plan is to promote the success and enhance the value of our company by linking the personal interests of our employees, directors and consultants, who receive awards under this plan to those of our stockholders. This plan is further intended to motivate and retain the services of our employees and directors, upon whose judgment, interest and special effort our success is largely dependant.

This plan is administered by a committee which consists of our board of directors, or a committee of two or more non-employee, outside directors chosen by our board. The committee is authorized to construe and interpret this plan and to promulgate, amend, and rescind rules and regulations relating to the implementation and administration of this plan. The committee is also authorized to select the persons eligible for awards under the plan, determine the amount and form of awards, and impose restrictions, terms and conditions upon options. The committee's determinations need not be uniform

and may be made selectively among plan participants. Any determination, decision, or action of the committee in connection with the construction, interpretation, administration, or implementation of this plan is final, conclusive and binding upon all participants and any person's claiming under or through any participant.

This plan authorizes the grant of incentive stock options and nonqualified stock options with respect to our common stock or any other security issued by us in substitution or exchange therefor. The plan also permits the committee to grant dividend equivalent rights in connection with the shares of common stock, as well as automatic "reload" options. Subject to certain adjustment provisions in this plan, this plan allows for the issuance of up to 25 million shares. This plan authorizes awards to employees of our company, our subsidiaries, parent and affiliates and to consultants and directors of our company, but incentive stock options may be granted only to employees of GFI, our parent and our subsidiaries. Subject to certain adjustment provisions in this plan, a maximum number of 5 million shares of common stock may be granted subject to options to any single participant in any calendar year. Each option is evidenced by a signed, written award agreement between our company and each participant containing the terms and conditions of the option grant.

Under this plan, the committee determines the exercise price for options at the time the options are granted. With respect to incentive stock options, the exercise price per share is not permitted to be less than 100% of the fair market value per share as of the date of grant. Further, in the case of incentive stock options, if the optionee, as of the date of grant, owns more than 10% of the combined voting power of all classes of shares of our capital stock or of any subsidiary, parent or affiliate, the exercise price per share is not permitted to be less than 110% of the fair market value per share as of the date of grant.

The exercise price per share will be payable at the time the option is exercised in accordance with any procedures established by the committee. The exercise price is payable by any method established by the committee, including by delivery of shares already owned by a participant for at least six months, having a fair market value equal to the exercise price.

Options granted under this plan may not be exercised prior to the consummation of this offering.

In the event of changes in the outstanding stock or capital structure of our company by reason of extraordinary cash dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or certain changes in control, or in the event of changes in applicable law or other changes in circumstances that results in substantial dilution or enlargement of rights granted to optionees, then to the extent our board of directors deems equitable in order to maintain the intended operation of this plan, any option granted under this plan, any agreements evidencing such options, the maximum number of shares of common stock available for grant and the maximum number of shares of common stock which may be granted to any optionee in any single calendar year is subject to adjustment or substitution as to the number, price or kind of shares of stock or other consideration.

In the event of certain changes in control following this offering, any outstanding options held by optionees which are not exercisable or are otherwise unvested, will automatically be deemed exercisable, or otherwise vested, as the case may be, as of immediately prior to the change in control. This provision could have the effect of dissuading potential acquirors from pursuing merger discussions with our company.

This plan will automatically terminate on the day immediately preceding the tenth annual anniversary of its adoption, unless terminated sooner by our board of directors. Our board may amend or suspend this plan at any time. No amendment may be made, without stockholder approval, which will change the maximum number of shares of common stock that may be granted under this plan or the maximum number of shares that may be granted to an optionee in any calendar year.

As of March 31, 2004, options to purchase 10,468,740 shares of common stock were outstanding under this plan, leaving 14,531,260 shares available for future grants under the plan.

2000 Stock Option Plan

The GFInet inc. 2000 Stock Option Plan was adopted in March 2000 and is largely similar to the GFI Group Inc. 2002 Stock Option Plan, with certain exceptions. This plan allowed for the issuance of up to 20 million shares, and a maximum number of 6.67 million shares of common stock were able to be granted subject to options to any single participant in any calendar year. The exercisability of options issued under this plan is contingent upon the earlier of our completing an initial public offering of our common stock, or a specified event, which must occur by March 31, 2005 (unless other specified events have occurred).

As of March 31, 2004, options to purchase 14,547,770 shares of our common stock have been granted and were outstanding under this plan. Since our Reorganization in November 2001, we have not issued any options under the 2000 Stock Option Plan and we do not intend to issue options under this plan in the future.

Employee 401(k) Plan

We have established a tax-qualified employee savings and retirement plan for all permanent employees over age 21. Under our GFI Group Inc. Employee 401(k) plan, employees may elect to reduce their current compensation by up to 25% or the statutory limit, $13,000 in 2004, whichever is less, and have us contribute such amount to the 401(k) plan. The plan does not provide for matching contributions to be made by us. As of March 31, 2004, we had 328 employees and former employees participating in the plan, which had total assets of $10.4 million. During 2002 and 2003, participants contributed $1.9 million and $2.0 million to the plan, respectively.

U.K. Plans

We have established a defined contribution plan pursuant to the applicable laws in the United Kingdom. Employees of our U.K. Subsidiaries may voluntarily designate a portion of their monthly compensation to be contributed which we match up to a certain percentage. The GFI Group Personal Pension Plans within the U.K. are open to all of our U.K. employees after the completion of three months of employment. Additionally, there is an Occupational Pension Plan which is available only to senior employees. We also match contributions made under this plan. We made aggregate contributions of $0.3 million, $0.8 million, and $1.0 million in 2001, 2002 and 2003, respectively, for our GFI Group Personal Pension Plans and our Occupational Pension Plan.

In 2003, the boards of directors of GFI Brokers Ltd., GFI Securities Ltd., and GFInet UK Ltd., each resolved to set up Guardian Benefit Trusts for the benefit of the family members of our U.K. employees. Recommendations are made by the boards to the independent trustees of the relevant Guardian Benefit Trust as to possible distributions of assets to family members. The independent trustees have sole and absolute discretion as to how they invest and distribute the assets on behalf of family members having considered any recommendations that they may receive from the family members.

Other Employee Benefits Plans

Our eligible employees are entitled to participate in several health and welfare plans established by us, including: medical, dental and vision benefits, employee flexible spending accounts, short-term and long-term disability insurance, critical illness and life insurance.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Loans from Jersey Partners

In November 2001, in connection with our Reorganization described under "Management's Discussion and Analysis of Financial Condition and Results of Operations — Overview" and in note 3 to our consolidated financial statements, our subsidiary, GFI Group LLC, paid a dividend to its then-parent Jersey Partners consisting of $30.0 million in cash and certain accounts receivable. Simultaneously, Jersey Partners loaned the cash and accounts receivable back to GFI Group LLC in exchange for (i) two notes in the original principal amounts of $5.0 million and $20.0 million, respectively and (ii) a collection agency note in the original principal amount of $5.0 million. The collection agency note was repaid in full in 2002.

The notes are guaranteed by the material non-regulated subsidiaries of GFI Group LLC, and are secured by, among other things, liens on and security interests in substantially all of the assets of GFI Group LLC and its material subsidiaries. However, the notes are, by their terms, subordinated in right of payment to our senior indebtedness, including the indebtedness under our senior credit facility. The $5.0 million note was repaid by us in two installments of $2.5 million on November 30, 2002 and November 30, 2003. In connection with the issuance of our Series C Preferred Stock, we repaid $10.75 million of the principal amount of the $20.0 million note in June 2002. The remaining $9.25 million in principal amount of this note is currently outstanding and is scheduled to be repaid in five annual installments of $1.85 million each plus interest, commencing on June 15, 2007 and continuing through 2011.

The terms of the $20 million note permit Jersey Partners to require that up to 20% of the aggregate net proceeds we receive from this offering be used to repay the note. The terms of the $20.0 million note also permit us to prepay the note at any time without penalty. We intend to use a portion of the net proceeds received by us in this offering to prepay in full the $9.25 million outstanding principal amount plus accrued interest of this note upon the consummation of this offering. See "Use of Proceeds."

Fenics Acquisition

In April 2001, we acquired approximately 90% of the outstanding capital stock of Fenics. We acquired Fenics for the purpose of expanding our data, analytics and internet product offerings. The purchase price of approximately $40.7 million consisted of an exchange of 15,733,851 shares of common stock of GFInet inc, our subsidiary, and assumption of debt of Fenics of approximately $9.0 million. This debt bore interest at rates between 9% and 11% and was fully repaid by February 2003. Within 120 days after the completion of this offering, we are obligated to provide notice to the remaining holders of the outstanding capital stock of Fenics that a "liquidity event" has occurred. At such holders' election, we are required to use commercially reasonable efforts to acquire the holders' shares of Fenics capital stock for shares of our common stock or cash, at our option, or any other form of consideration agreed to with the Fenics holders. Each share of Fenics capital stock is to be acquired by us at a value equal to the fair market value, as of the date of the acquisition, of 3.11 shares of our common stock (as adjusted for our reverse stock split). Certain of the remaining shares of Fenics are held by John W. Ward, one of our directors, and certain of our officers and employees.

Stockholders Agreement

On June 3, 2002, we entered into an Amended and Restated Stockholders Agreement with all of our then existing common and preferred stockholders. Most of the provisions of the Stockholders

Agreement will terminate immediately before the closing of this offering. The following terms of the Stockholders Agreement, however, will remain in effect following the closing:

•: certain of our stockholders who acquired their shares as part of our acquisition of Fenics will, for a limited period of time, continue to be subject to agreements contained in the Stockholders Agreement which limit their ability to compete against or interfere with our business;
•: for a period of 18 months following the consummation of this offering, we will retain the ability to repurchase any shares held by a former Fenics stockholder or certain holders of our Series A Preferred Stock, if we reasonably and in good faith determines that such stockholder has violated the terms of any confidentiality provision or restriction on competition applicable to it and that such violation has or could have an adverse effect on us that is greater than a de minimis impact; and
•: all of the stockholders party to the agreement will be, upon our request, prohibited from selling any of their shares during a period (not to exceed 180 days) selected by us and the managing underwriters of any public offering of our shares.

Registration Rights

Each series of our preferred stock is entitled to certain registration rights that apply to the common stock into which the preferred stock will be converted. See "Description of Capital Stock — Registration Rights."

U.K. Leases

We lease our offices at 9 Hewett Street in London from GFI Brokers (Channel Islands) Ltd., which is a wholly-owned subsidiary of Jersey Partners. The lease extends for a period of twenty years, expiring in 2016. The annual lease payments to Jersey Partners under the lease are 0.5 million British Pounds.

Shares Issued to Insiders

The following table summarizes issuances of our equity securities since January 1, 2001 to holders of more than 5% of our equity securities, other than shares issued in exchange for existing shares of GFInet inc. in connection with our Reorganization.

		Series C Preferred Stock		Total Consideration
Entities affiliated with Venturion Capital LLC		5,930,297		$	5.7 million
Entities affiliated with Advent Partners Limited Partnership		28,652,709		$	27.5 million

In addition, on July 1, 2001, Venturion was issued an option to purchase 200,000 shares of our Class B Common Stock that currently has an exercise price of $1.00 per share.

Each share of the Series C Preferred Stock listed above will be converted automatically into shares of our common stock immediately before the closing of this offering.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information as of May 31, 2004, with respect to the beneficial ownership of our common stock, after giving effect to this offering, by:

•: our Chief Executive Officer and our four other most highly compensated executive officers;
•: each of our directors;
•: all of our directors and executive officers as a group;
•: each person or group of affiliated persons who is known by us to beneficially own more than 5% of our common stock; and
•: each selling stockholder.

The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. Unless otherwise indicated below, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. The information set forth in the following table excludes any shares of our common stock purchased in this offering by the respective beneficial owner and assumes the conversion of all of our Class A Common Stock and all classes of our preferred stock into Class B Common Stock (which will become our only class of common stock and will be called "common stock") which will occur immediately before the closing of this offering.

The number of shares of common stock outstanding, on an as converted basis, used in calculating the percentage for each listed person or entity includes common stock underlying options or a warrant held by the person or entity that are exercisable within 60 days of May 31, 2004, but excludes common stock underlying options or warrants held by any other person or entity. Options issued under our stock option plans are generally not exercisable prior to the completion of this offering. For purposes of the information presented below, we have assumed this condition is satisfied with respect to all options that would otherwise be exercisable within 60 days of May 31, 2004. Percentage of beneficial ownership is based on an assumed 216,545,557 shares of common stock outstanding as of May 31, 2004 (assuming conversion of our shares of preferred stock and Class A Common Stock into common stock on a 1-for-1 basis) and 93,655 additional shares to be issued upon the conversion of our Series B Preferred

Stock. Unless otherwise indicated, the address of each beneficial owner is c/o GFI Group Inc., 100 Wall Street, New York, New York 10005.

	Shares Beneficially Owned Prior to Offering				Shares Beneficially Owned After Offering
Name of Beneficial Owner	Shares Beneficially Owned Prior to Offering			Shares Being Offered	Shares Beneficially Owned After Offering
Name of Beneficial Owner	Number	Percent		Shares Being Offered	Number	Percent
Executive Officers and Directors:
Michael Gooch(1)	144,229,705	66.58	%
Colin Heffron(2)	510,000	*
Donald P. Fewer(3)	650,000	*
Stephen McMillan(4)	1,150,000	*
James A. Peers(4)	375,000	*
Geoffrey Kalish(5)	19,033,638	8.78	%
Christopher Pike(6)	28,652,709	13.23	%
Robert Taylor(7)	28,652,709	13.23	%
John W. Ward	—	*
All executive officers and directors as a group (14 persons)(8)	197,271,182	88.89	%
5% Stockholders:
Jersey Partners Inc.(9)	144,229,705	66.58	%
Entities affiliated with Venturion Capital LLC(10)	19,033,638	8.78	%
Entities affiliated with Advent Partners Limited Partnership(11)	28,652,709	13.23	%
Other Selling Stockholders:


Total

*: Less than 1%.
(1): Includes all shares of our company beneficially owned by Jersey Partners as described in footnote (9) below, including those shares held by the Magnetic Entities as described in that footnote. Mr. Gooch controls the voting and disposition of these shares through his ownership of approximately 70% of the outstanding common stock of Jersey Partners. Mr. Gooch will also beneficially own 20,000 shares of our common stock to be distributed by the Magnetic Entities, as described in footnote (9) below, and Diane Gooch, Mr. Gooch's wife, and Gooch Investment Trust will collectively beneficially own 230,000 shares as to which Mr. Gooch disclaims beneficial ownership.
(2): Includes 350,000 shares issuable upon exercise of options that are exercisable within 60 days of the completion of this offering. Also includes 50,000 shares to be distributed to Mr. Heffron by the Magnetic Entities as described in footnote (9) below. Also includes 60,000 shares to be distributed by the Magnetic Entities to Frank and Eleanor Heffron, Mr. Heffron's parents, and 50,000 shares to be distributed by the Magnetic Entities to Kevin and Jane Heffron, Mr. Heffron's brother and sister-in-law, as to all of which Mr. Heffron disclaims beneficial ownership. Does not include any of the shares of our company owned by Jersey Partners. Mr. Heffron owns approximately 4.9% of the outstanding common stock of Jersey Partners.
(3): Includes 550,000 shares issuable upon exercise of options that are exercisable within 60 days of the completion of this offering. Also includes 100,000 shares to be distributed to Mr. Fewer by the

Magnetic Entities as described in footnote (9) below. Does not include any of the shares of GFI owned by Jersey Partners. Mr. Fewer holds options to purchase 68,000 shares of common stock of Jersey Partners, which would represent less than 1% of the outstanding common stock of Jersey Partners.

(4): Represents shares issuable upon exercise of options that are exercisable within 60 days of the completion of this offering.
(5): Represents 19,033,638 shares beneficially owned by funds affiliated with Venturion. Mr. Kalish disclaims beneficial ownership of the shares held by these funds except to the extent of his pecuniary interests in such funds.
(6): Represents 28,652,709 shares beneficially owned by funds affiliated with Advent Partners. Mr. Pike disclaims beneficial ownership of the shares held by these funds except to the extent of his pecuniary interests in such funds.
(7): Represents 28,652,709 shares beneficially owned by funds affiliated with Advent Partners. Mr. Taylor disclaims beneficial ownership of the shares held by these funds except to the extent of his pecuniary interests in such funds.
(8): Includes 5,295,130 shares issuable upon exercise of options that are exercisable within 60 days of the completion of this offering.
(9): Includes 55,991,541 shares of Class A Common Stock and 333,334 shares of Series A Preferred Stock held directly by Jersey Partners that will automatically convert into shares of our common stock, as well as 80,000,000 shares of Class B Common Stock that will become shares of our common stock, in each case, immediately before the closing of this offering. Also includes 3,677,500 shares of Series A Preferred Stock held by Magnetic Holdings International (DE) LLC, 2,497,500 shares of Series A Preferred Stock held by Magnetic Holdings International (DNE) LLC, 1,013,000 shares of Series A Preferred Stock held by Magnetic Holdings International (FE) LLC and 350,000 shares of Series A Preferred Stock held by Magnetic Holdings International (FNE) LLC that will similarly convert into shares of our common stock. We refer to these entities collectively as the Magnetic Entities. Jersey Partners, through its wholly-owned subsidiary, Magnetic Management LLC, is the managing member of each of the Magnetic Entities. Pursuant to the terms of the limited liability company agreement of each of the Magnetic Entities, all of our company's shares held by that Magnetic Entity will be distributed to the holders of interests in that Magnetic Entity 180 days after the completion of this offering. Also includes 177,270 shares of Class B Common Stock held by N-Two LLC, a subsidiary of Jersey Partners. N-Two LLC will receive 115,000 shares of our common stock in connection with the distribution to be made by Magnetic Holdings International (DE) LLC. Magnetic Management LLC will receive 12,500 shares of our common stock in connection with the distribution to be made by Magnetic Holdings International (DE) LLC.
(10): Includes 200,000 shares issuable upon exercise of options that are exercisable within 60 days of the completion of this offering. Shares and options are held by the following entities affiliated with Venturion: Venturion Market Making Ventures LLC, Venturion Capital LLC, Venturion GFI LLC and Venturion GFI II, LLC. The address of Venturion is 275 Madison Avenue, 38th Floor, New York, New York, 10016.
(11): Shares held by the following entities affiliated with Advent Partners: Global Private Equity IV Limited Partnership, Advent Partners GPE-IV Limited Partnership and Advent Partners Limited Partnership. The address of Advent Partners is c/o Advent International Corporation, 75 State Street, Boston, Massachusetts, 02109.

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock and provisions of our second amended and restated certificate of incorporation and bylaws are summaries. You should refer to the second amended and restated certificate of incorporation and the bylaws that will be in effect upon completion of this offering, copies of which have been filed with the Securities and Exchange Commission as exhibits to our registration statement, of which this prospectus forms a part. The descriptions of the common stock and preferred stock reflect the conversion of all of our preferred stock and Class A Common Stock into Class B Common Stock that will occur automatically immediately before the closing of this offering.

Upon the closing of this offering, our authorized capital stock will consist of shares of common stock, par value $0.01 per share, and shares of preferred stock, par value $0.01 per share, all of which preferred stock will be undesignated.

As of March 31, 2004, we had issued and outstanding:

•: 55,991,541 shares of Class A Common Stock outstanding held by one stockholder of record, Jersey Partners;
•: 96,480,312 shares of Class B Common Stock outstanding held by 34 stockholders of record; and
•: 64,073,704 shares of preferred stock convertible into shares of common stock held by 37 stockholders of record.

As of March 31, 2004, we also had outstanding:

•: options to purchase 25,016,510 shares of Class B Common Stock at a weighted exercise price of $1.26 per share; and
•: a warrant to purchase 1,000,000 shares of Class B Common Stock at an exercise price of $1.00 per share.

All of the shares of our Class A Common Stock and our preferred stock will, by their respective terms, automatically convert into shares of Class B Common Stock immediately before the closing of this offering and will no longer be authorized, issued or outstanding. In the case of the Series C Preferred Stock, in the event that the price of our common stock issued in this offering is less than , each Series C Preferred Stock stockholder will receive shares of our existing Class B Common Stock with a value, based on the price of the common stock issued in this offering, that is twice the Series C Preferred Stock issuance price for each share of Series C Preferred Stock. We will file an amended and restated certificate of incorporation in connection with the closing of this offering to rename the Class B Common Stock to "common stock" and reflect the elimination of the other designated capital stock.

Common Stock

Upon the closing of this offering, there will be shares of common stock outstanding (assuming no exercise of the underwriters' over-allotment option or outstanding options or warrants). All outstanding shares of common stock are fully paid and nonassessable, and the shares of our common stock that will be issued on completion of this offering will be fully paid and nonassessable.

Subject to preferences that may be applicable to any then outstanding series of preferred stock, the holders of common stock are entitled to receive ratably any dividends that may be declared from time to time by the board of directors. Other than the dividends paid to Jersey Partners relating to periods prior to our Reorganization in 2001, we have not paid any cash dividends on our common stock in the past three years. We do not intend to pay cash dividends on our common stock at any time in the foreseeable future. In the event of our liquidation, dissolution or winding-up, the holders of common

stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. Our common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our common stock.

The holders of our common stock are entitled to one vote per share and do not have cumulative voting rights. As a result stockholders owning or controlling more than 50% of the total votes cast for election of directors can elect all the directors in that slate for the year.

Preferred Stock

Our board of directors has the authority, by adopting resolutions, to issue shares of preferred stock in one or more series, with the designations and preferences for each series set forth in the adopting resolutions. Our certificate of incorporation authorizes our board of directors to determine, among other things, the rights, preferences and limitations pertaining to each series of preferred stock. Our board of directors could authorize the issuance of preferred stock with terms and conditions that could discourage a takeover or other transaction that some holders of our common stock might believe to be in their best interests or in which holders of common stock might receive a premium for their shares over and above market price.

Registration Rights

We have entered into Registration Rights Agreements with certain of the holders of each series of our preferred stock. Such registration rights apply to the common stock into which the preferred stock can be converted. Upon conversion of all outstanding shares of preferred stock into common stock immediately prior to this offering, the holders of approximately shares of common stock and holders of warrants to purchase shares of common stock will have the right to require us to include their shares in any registration statement filed with the SEC subsequent to this one. Under the Registration Rights Agreements, holders of shares having registration rights can demand that we file a registration statement or request that their shares be covered by a registration statement that we are otherwise filing. The terms of the Registration Rights Agreements we have entered into with the holders of each series of our preferred stock are substantially similar (other than with respect to Series B Preferred Stockholders who do not hold demand registration rights) and are described in further detail below.

Demand Registration Rights. At any time after the 180th day following the effective date of our registration statement for this offering, the holders of (i) at least a majority of the Series C Preferred Stock having registration rights and (ii) at least 66²/3% of the Series A Preferred Stock having registration rights have the right to demand that we file a registration statement for the offer and sale of their securities if the aggregate market price of the shares to be registered is at least $5.0 million with respect to the Series C preferred shares or $12.5 million with respect to the Series A preferred shares at the time of the demand. We are required to inform the other stockholders of that series that a demand has been made and the other holders are entitled to include their shares in that demand registration. With respect to Series C preferred shares having registration rights, we are not obligated to file a registration statement on Form S-1 on more than one occasion so long as, when that registration statement becomes effective, it covers not less than 66% of the holders demanding registration and with respect to Series A preferred shares having registration rights, we are only required to file one registration statement on Form S-1. If we are eligible to file a registration statement on Form S-3, the holders of 20% of the Series C preferred shares having registration rights and the holders of 25% of the Series A preferred shares having registration rights have the right to demand that we file a registration statement on Form S-3 so long as the aggregate amount of securities to be sold under the registration statement is at least $3.0 million. With respect to Series C preferred shares having registration rights, we are not obligated to file a registration statement on Form S-3 on

more than two occasions and with respect to each series we are generally not obligated to file a registration statement on Form S-3 more than once in any twelve month period. In each case, we have the ability to delay the filing of a registration statement under specified conditions, such as for a period of time following the effective date of a prior registration statement or if we are in possession of material nonpublic information that it would not be in our best interests to disclose.

Piggyback Registration Rights. If we register any securities for public sale (subject to customary exceptions), stockholders with registration rights will have the right to include their shares in the registration statement. The underwriters of any underwritten offering will have the right to limit the number of shares having registration rights to be included in the registration statement.

Expenses of Registration. Except as provided in the Registration Rights Agreements, we will pay all expenses relating to any demand or piggyback registration other than underwriting discounts and commissions, stock transfer taxes and attorneys' fees of the selling stockholders (except for attorneys' fees of a single counsel for the Series C Preferred Stock selling stockholders up to $50,000).

Indemnification. The Registration Rights Agreements contain customary cross-indemnification provisions, pursuant to which we are obligated to indemnify the selling stockholders in the event of material misstatements or omissions attributable to us in a registration statement, and they are obligated to indemnify us for material misstatements or omissions attributable to them. The indemnification obligations of Series A Preferred Stock or Series B Preferred Stock selling stockholders are limited in amount to the gross cash proceeds received by such selling stockholders for the shares sold by them in the related offering and the indemnification obligations of Series C Preferred Stock selling stockholders are limited in amount to the net cash proceeds, if any, received by such selling stockholder for the shares sold by it in the related offering.

Transfer and Expiration of Registration Rights. Stockholders may transfer their registration rights in connection with the transfer of their shares if specified requirements are satisfied. The registration rights described above will generally terminate with respect to a particular stockholder's securities upon the earlier to occur of (i) the close of business on the third anniversary of the consummation of this offering (fifth anniversary with respect to Series C Preferred Stock selling stockholders) and (ii) the date that the securities (x) have been transferred pursuant to an effective registration statement or (y) have been sold under Rule 144 of the Securities Act or can be freely sold under Rule 144(k) under the Securities Act and after such sale can be resold by the transferee without registration under the Securities Act.

Warrant

In June 2000, GFInet inc., one of our subsidiaries, issued to Newnetco LLC a warrant to purchase 1.0 million shares of our common stock at an exercise price of $1.00 per share. The warrant was issued as compensation for consulting services provided by Newnetco LLC. This warrant became exercisable on May 17, 2002 and expires on June 15, 2005 if not exercised before that date. The holder of this warrant has the right (subject to customary exceptions) to include its shares in a registration statement filed by us with the SEC other than in connection with this offering.

Transfer Agent and Registrar

The Transfer Agent and Registrar for our common stock is EquiServe.

Provisions of our Certificate of Incorporation and Bylaws and Certain Regulatory Requirements That May Have an Anti-Takeover Effect

Our second amended and restated certificate of incorporation and bylaws will contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of

our board of directors and the policies formulated by our board of directors. These provisions are also expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with us. These provisions, as well as certain provisions of contracts to which we are a party, may discourage or hinder attempts to acquire us or remove incumbent directors or management even if some, or a majority, of our stockholders believe that such action is in their best interest.

Certificate of Incorporation and Bylaws. The provisions in our second amended and restated certificate of incorporation and bylaws with the intent described above include:

•: Classified board of directors. Our board of directors will be divided into three classes of directors serving staggered three-year terms, with approximately one-third of the board of directors being elected each year, starting in the year following closing of this offering. Our second amended and restated certificate of incorporation provides that the board of directors will consist of not more than nine nor less than five directors and our bylaws provide that the exact number of directors within such range will be fixed from time to time by the board of directors. This system of electing and (as described below) removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us and may maintain the incumbency of our board of directors, as it generally makes it more difficult for stockholders to replace a majority of the directors.
•: Vacancies Filled by the Board. Vacancies on our board of directors may be filled by a majority of the remaining directors (even if they constitute less than a quorum), or by a sole remaining director.
•: Removal of Directors. Our directors may be removed only for cause.
•: Stockholder Meetings. Only our board of directors, the chairman of our board of directors or our chief executive officer may call special meetings of stockholders. Stockholders cannot call special meetings of stockholders.
•: No Action by Written Consent. Stockholders may take action only at an annual or special meeting of stockholders. Stockholders may not act by written consent.
•: Requirements for Advance Notification of Stockholder Proposals and Director Nominations. Stockholders must comply with advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors. In general, these provisions will provide that notice of intent to nominate a director or raise matters at such meetings must be received in writing by us not less than 90 nor more than 120 days prior to the anniversary of the date of the proxy statement for the previous year's annual meeting of stockholders, and must contain certain information concerning the person to be nominated or the matters to be brought before the meeting and concerning the stockholder submitting the proposal.
•: No Cumulative Voting. There is no cumulative voting in the election of directors.
•: Supermajority Stockholder Vote for Extraordinary Transactions and Amendments. Certain extraordinary transactions, such as mergers and change of control transactions for which a stockholder vote is otherwise required and certain amendments to our second amended and restated certificate of incorporation and bylaws (including in respect of the provisions set forth above), will require the approval of 66²/3% of the votes cast in such vote, and at least a majority of our issued and outstanding shares entitled to vote in the election of directors. Our bylaws may also be amended by resolution of a majority of our entire board of directors.
•: "Blank Check" Preferred Stock. We will be authorized to issue, without any further vote or action by the stockholders, up to shares of preferred stock in one or more classes or series and, with respect to each such class or series, to fix the number of shares constituting the class or

series and the designation of the class or series, the voting powers (if any) of the shares of the class or series, and the preferences and relative, participating, optional and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of such class or series.

Contracts. Under our current senior credit facility, a change of control without consent of each of the lenders may lead the lenders to exercise remedies, such as acceleration of the loan and termination of their obligations to fund additional advances under the revolving credit portion of that facility.

Delaware Takeover Statute. We have elected to be exempt from the restrictions imposed under Section 203 of the Delaware General Corporation Law, which we refer to as the DGCL. Section 203 provides that, subject to certain exceptions specified therein, a Delaware corporation will not engage in any business combination, which generally includes mergers, consolidations or acquisitions of additional shares of the corporation, with an interested stockholder for a three-year period following the date that such stockholder becomes an interested stockholder with certain exceptions, unless the corporation's board of directors and stockholders approve the business combination in a prescribed manner. In general, Section 203 defines an "interested stockholder" as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by such entity or person. Following this offering, subject to certain restrictions, we may elect by an amendment to our certificate of incorporation to be subject to Section 203 of the DGCL. However, such an amendment will not restrict a business combination between us and an interested stockholder if that stockholder became an interested stockholder prior to the effective date of that amendment.

Regulatory Approval. We are also required to obtain the approval of certain regulatory agencies, such as the NASD and FSA, for certain transactions that could result in a change of control. See "Our Business — Regulation."

DESCRIPTION OF CERTAIN INDEBTEDNESS

The following is a summary of the material provisions of the instruments evidencing our material indebtedness. It does not include all of the provisions of our material indebtedness, copies of which have been filed as exhibits to our registration statement filed in connection with this offering.

Jersey Partners Note

On October 1, 2001, in connection with our Reorganization, GFI Group LLC borrowed $20.0 million from Jersey Partners under a senior subordinated loan agreement. $10.75 million of the principal amount of this loan was repaid in June of 2002 and the remaining $9.25 million in principal amount of this loan is currently outstanding and scheduled to be repaid in five annual installments of $1.85 million each plus interest, commencing on June 15, 2007 and continuing through 2011. We intend to use a portion of the net proceeds of this offering received by us to repay the remaining outstanding principal of $9.25 million and accrued interest on this loan in full following the closing of this offering. As of March 31, 2004, the outstanding accrued and unpaid interest on this loan was $0.4 million.

The note bears interest at a rate per annum equal to the lesser of (a) LIBOR plus the applicable margin in effect for that interest period, or (b) 7.5%. The applicable margin was 5.0% at March 31, 2004 and is capped at that amount for the remaining term of the loan. If an event of default has occurred under this loan agreement, the interest rate automatically increases to a rate per annum which is two percentage points in excess of the interest rate that would otherwise then be applicable.

This note is guaranteed by the material subsidiaries of GFI Group LLC, and is secured by, among other things, liens on and security interests in substantially all of the assets of GFI Group LLC and its material subsidiaries. However, this note is, by its terms, subordinated in right of payment to our senior indebtedness, including the indebtedness described below under our senior credit facility. See "Certain Relationships and Related Transactions — Loans from Jersey Partners."

Senior Credit Facility

In July 2002, we entered into a revolving and term facilities agreement with Barclays Bank plc, Brown Brothers Harriman & Co. and Bank of America, which we refer to as our credit agreement. We and GFInet are borrowers under the agreement and certain of our non-regulated subsidiaries are guarantors under the agreement. The credit agreement provides for a revolving cash facility and a guarantee facility in an aggregate principal amount up to $30.0 million and a term cash facility in an aggregate principal amount up to $20.0 million. As of March 31, 2004, we had outstanding revolving credit facility borrowings of $19.0 million, outstanding term facility borrowings of $20.0 million and letters of credit borrowings of $7.0 million.

Both the revolving loans and term loans under the credit agreement bear interest at a rate per annum equal to LIBOR (or EURIBOR, if applicable) plus the applicable margin in effect for that interest period. So long as no default has occurred under the credit agreement and our EBITDA for the related period is equal to or in excess of $12.5 million, the applicable margin for the loans is 1.75% per annum. If these conditions do not apply, the applicable margin is 2.25% per annum. The credit agreement contains several covenants, including, among others, limitations (and in some cases, prohibitions) on our ability to:

•: merge, acquire or dispose of assets;
•: incur liens, indebtedness or contingent obligations;
•: pay dividends and other distributions; and
•: enter into new lines of business or engage in businesses with new brokerage clients that do not meet certain credit standards.

The credit agreement also contains a number of financial covenants which require us to maintain, among other things, certain levels of EBITDA (both as an absolute matter and in relation to our consolidated senior debt) and certain levels of eligible accounts receivable.

As of March 31, 2004, we were in compliance with all covenants contained in the credit agreement.

The credit agreement contains several events of default, including events of default for non-payment, certain bankruptcy events, covenant or representation breaches, changes in control of us or Jersey Partners, Michael Gooch ceasing to be our or Jersey Partners' chief executive officer and chairman and the majority lenders reasonably believing that an event or circumstance has occurred that might have a material adverse effect on our ability to perform under the credit agreement and related documents.

Our obligations under the credit agreement are secured by a lien on substantially all of our assets and the assets of our guarantor subsidiaries.

We are currently in the process of negotiating a new credit facility which we expect will replace our senior credit facility and increase the aggregate principal amount of borrowings available to us. There can be no assurance that we will be able to enter into a new credit facility on acceptable terms, or at all.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for our common stock, and a liquid trading market for our common stock may not develop or be sustained after this offering. Future sales of substantial amounts of our common stock, including shares issued upon exercise of outstanding options and warrants or in the public market after this offering, or the anticipation of those sales, could adversely affect the price of our common stock from time to time and could impair our ability to raise capital through sales of our equity securities.

Based on shares outstanding as of March 31, 2004, and including options exercised since that date, upon the completion of this offering, we will have outstanding shares of common stock, after giving effect to the issuance of shares of common stock in this offering and the automatic conversion of all outstanding shares of our convertible preferred stock into an aggregate of shares of our common stock.

Of the shares to be outstanding after the completion of this offering, the shares sold in this offering will be freely tradable without restriction under the Securities Act unless purchased by our "affiliates," as that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock are "restricted securities" under Rule 144. Substantially all of these restricted securities will be subject to the 180-day lock-up period described below.

Number of Shares		Date
		On the date of this prospectus
		At 180 days from the date of this prospectus
		At various times after 180 days from the date of this prospectus

After the 180-day lock-up period, these restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144, Rule 144(k) or Rule 701 under the Securities Act.

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus a person who has beneficially owned shares of our common stock for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

•: 1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately after this offering; or
•: the average weekly trading volume of our common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144(k), generally, a person who was not an affiliate at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell those shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. We cannot estimate the number of shares of common stock that our existing stockholders will elect to sell under Rule 144.

Lock-Up Agreements

We, our directors and executive officers, the selling stockholders and certain of our other stockholders, have agreed that, without the prior written consent of Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, they will not, during the period ending 180 days after the date of this prospectus, subject to exceptions specified in the lock-up agreements, dispose of or hedge any shares of our common stock or any securities convertible into or exchangeable for our common stock. Our Stockholders Agreement and the agreements pursuant to which our options or our warrant were granted contain similar restrictions for our benefit.

Rule 701

In general, under Rule 701 of the Securities Act as currently in effect, any of our employees, consultants or advisors who purchased shares of our common stock from us in connection with a compensatory stock or option plan or other written agreement is eligible to resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. Subject to the 180-day lock-up period described above, approximately shares of our common stock will be eligible for sale in accordance with Rule 701.

Additional Registration Statement

We intend to file a registration statement under the Securities Act as soon as practicable after the closing of this offering to register shares of our common stock reserved for issuance under our 2002 Stock Option Plan, including shares underlying outstanding stock options. This registration statement will become effective upon filing, and shares covered by that registration statement will be eligible for sale in the public market immediately after the effective date of that registration statement, subject to manner of sale, public information, volume limitation and notice provisions of Rule 144 applicable to our affiliates, and any limitations on sale under the 2002 Stock Option Plan and the lock-up agreements described above.

Registration Rights

In general, upon completion of this offering and until such holders may sell all of their shares under Rule 144(k) promulgated under the Securities Act, the holders of shares of our common stock, can require us, 180 days after the date of the effectiveness of the registration statement of which this prospectus is a part, to register their shares under the Securities Act or, if we file another registration statement under the Securities Act, may elect to include their shares in such registration. If these shares are registered, they will be freely tradable without restriction under the Securities Act. For additional information see "Description of Capital Stock — Registration Rights."

MATERIAL UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS

The following is a general discussion of the material United States federal income and estate tax consequences of the ownership and disposition of our common stock by a non-U.S. holder that purchases shares pursuant to this offer. As used in this discussion, the term non-U.S. holder means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes:

•: an individual who is a citizen or resident of the United States;
•: a corporation or partnership (including any entity treated as a corporation or partnership for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any State thereof or the District of Columbia, other than a partnership treated as foreign under U.S. Treasury regulations;
•: an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
•: a trust (1) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust, or (2) that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

This discussion does not consider:

•: U.S. federal gift tax consequences, U.S. state or local or non-U.S. tax consequences;
•: specific facts and circumstances that may be relevant to a particular non-U.S. holder's tax position, including, if the non-U.S. holder is a partnership or trust that the U.S. tax consequences of holding and disposing of our common stock may be affected by certain determinations made at the partner or beneficiary level;
•: the tax consequences for the stockholders, partners or beneficiaries of a non-U.S. holder;
•: special tax rules that may apply to particular non-U.S. holders, such as financial institutions, insurance companies, tax-exempt organizations, hybrid entities, U.S. expatriates, broker-dealers, and traders in securities; or
•: special tax rules that may apply to a non-U.S. holder that holds our common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment.

The following discussion is based on provisions of the Internal Revenue Code of 1986, as amended (the "Code"), applicable U.S. Treasury regulations and administrative and judicial interpretations, all as in effect on the date of this prospectus, and all of which are subject to change, retroactively or prospectively. The following summary assumes that a non-U.S. holder holds our common stock as a "capital asset" within the meaning of section 1221 of the Code (generally, property held for investment). Each non-U.S. holder should consult a tax advisor regarding the U.S. federal, state, local and non-U.S. income and other tax consequences of acquiring, holding and disposing of shares of our common stock.

Dividends

We do not plan to pay any dividends on our common stock for the foreseeable future. However, in the event that we pay dividends on our common stock, we will have to withhold a U.S. federal withholding tax at a rate of 30%, or a lower rate under an applicable income tax treaty, from the gross amount of dividends paid to a non-U.S. holder.

Dividends that are effectively connected with a non-U.S. holder's conduct of a trade or business in the United States or, if an income tax treaty applies, attributable to a permanent establishment in the United States ("ECI"), are taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons. In that case, we will not have to withhold U.S. federal withholding tax if the non-U.S. holder complies with applicable certification and disclosure requirements. In addition to the U.S. tax on ECI, in the case of a holder that is a foreign corporation and has ECI, a branch profits tax may be imposed at a 30% rate, or a lower rate under an applicable income tax treaty, on the dividend equivalent amount.

In order to claim the benefit of an income tax treaty or claim exemption from withholding because the income is effectively connected with the conduct of a trade or business in the United States, the non-U.S. holder must provide a properly executed Form W-8BEN, for treaty benefits, or W-8ECI, for effectively connected income, prior to the payment of dividends. These forms must be periodically updated. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty and their ability to claim exemption from withholding because the income is effectively connected with the conduct of a trade or business in the United States, and related certification requirements.

A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the U.S. Internal Revenue Service ("IRS") in a timely manner.

Gain on Disposition of Common Stock

A non-U.S. holder generally will not be taxed on gain recognized on a disposition of our common stock unless:

•: the gain is effectively connected with a non-U.S. holder's conduct of a trade or business in the United States or, alternatively, if an income tax treaty applies, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States; in these cases, the gain will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons, unless an applicable treaty provides otherwise, and, if the non-U.S. holder is a foreign corporation, the branch profits tax described above may also apply;
•: the non-U.S. holder is an individual who holds our common stock as a capital asset, is present in the United States for 183 days or more in the taxable year of the disposition and meets other requirements; in this case, the non-U.S. holder will be subject to a 30% tax on the gain derived from the disposition; or
•: we are or have been a United States real property holding corporation, or "USRPHC," for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held our common stock; in this case, the non-U.S. holder may be subject to U.S. federal income tax on its net gain derived from the disposition of our common stock at regular graduated rates. Generally, a corporation is a USRPHC if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. If we are, or were to become, a USRPHC, gain realized upon disposition of our common stock by a non-U.S. holder that did not directly or indirectly own more than 5% of our common stock during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held our common stock generally would not be subject to U.S. federal income tax, provided that our common stock is "regularly traded on an established securities market" within the meaning of Section 897(c)(3) of the Code. We believe that we are not currently, and we do not anticipate becoming in the future, a USRPHC.

Federal Estate Tax

Common stock owned or treated as owned by an individual who is a non-U.S. holder at the time of death, unless an applicable estate tax or other treaty provides otherwise, will be included in the individual's gross estate for U.S. federal estate tax purposes, and therefore may be subject to U.S. federal estate tax.

Information Reporting and Backup Withholding Tax

We must report annually to the IRS and to each non-U.S. holder the amount of dividends paid to that holder and the tax withheld from those dividends. These reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable income tax treaty. Copies of the information returns reporting those dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder is a resident under the provisions of an applicable income tax treaty or agreement.

Under some circumstances, U.S. Treasury regulations require additional information reporting and backup withholding (currently at a rate of 28%) on some payments on our common stock. The gross amount of dividends paid to a non-U.S. holder that fails to certify its non-U.S. holder status in accordance with applicable U.S. Treasury regulations generally will be reduced by backup withholding at the applicable rate.

The payment of the proceeds of the disposition of our common stock by a non-U.S. holder to or through the U.S. office of any broker generally will be reported to the IRS and reduced by backup withholding unless the non-U.S. holder either certifies its status as a non-U.S. holder under penalties of perjury or otherwise establishes an exemption. The payment of the proceeds of the disposition of our common stock by a non-U.S. holder to or through a non-U.S. office of a non-U.S. broker generally will not be reduced by backup withholding or reported to the IRS unless the non-U.S. broker has certain enumerated connections with the United States. In general, the payment of proceeds from the disposition of our common stock by or through a non-U.S. office of a broker that is a U.S. person or that has certain enumerated connections with the United States will be reported to the IRS and may, in limited circumstances, be reduced by backup withholding, unless the broker receives a statement from the non-U.S. holder, signed under penalty of perjury, certifying its non-U.S. status or the broker has documentary evidence in its files that the holder is a non-U.S. holder.

Non-U.S. holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder will be refunded, or credited against the holder's U.S. federal income tax liability, if any, provided that the required information or appropriate claim for refund is furnished to the IRS in a timely manner.

UNDERWRITING

Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as joint book-running managers of the offering, and, together with Banc of America Securities LLC, J.P. Morgan Securities Inc. and Jefferies & Company, Inc. are acting as representatives of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus, each underwriter named below has agreed to purchase, and we and the selling stockholders have agreed to sell to that underwriter, the number of shares set forth opposite the underwriter's name.

Underwriters		Number of Shares

Citigroup Global Markets Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Banc of America Securities LLC
J.P. Morgan Securities Inc.
Jefferies & Company, Inc.

Total

The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the shares (other than those covered by the over-allotment option described below) if they purchase any of the shares.

The underwriters propose to offer some of the shares directly to the public at the public offering price set forth on the cover page of this prospectus and some of the shares to dealers at the public offering price less a concession not to exceed $ per share. The underwriters may allow, and dealers may reallow, a concession not to exceed $ per share on sales to other dealers. If all of the shares are not sold at the initial offering price, the representatives may change the public offering price and the other selling terms. The representatives have advised us and the selling stockholders that the underwriters do not intend sales to discretionary accounts to exceed five percent of the total number of shares of our common stock offered by them.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares of common stock at the public offering price less the underwriting discount. The underwriters may exercise the option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional shares approximately proportionate to that underwriter's initial purchase commitment.

We, our officers and directors, the selling stockholders and certain of our other stockholders have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of Citigroup and Merrill Lynch, dispose of or hedge any shares of our common stock or any securities convertible into or exchangeable for our common stock. Citigroup and Merrill Lynch, together, in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.

Each underwriter has represented, warranted and agreed that:

•: it has not offered or sold and, prior to the expiry of a period of six months from the closing date, will not offer or sell any shares included in this offering to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or

disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995;

•: it has only communicated and caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act of 2000, which we refer to as the FSMA, received by it in connection with the issue or sale of any shares included in this offering in circumstances in which section 21(1) of the FSMA does not apply to us;
•: it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares included in this offering in, from or otherwise involving the United Kingdom;
•: the offer in The Netherlands of the shares included in this offering is exclusively limited to persons who trade or invest in securities in the conduct of a profession or business (which include banks, stockbrokers, insurance companies, pension funds, other institutional investors and finance companies and treasury departments of large enterprises);
•: (1) it has not offered or sold and will not offer or sell our common stock in Hong Kong SAR by means of this prospectus or any other document, other than to persons whose ordinary business involves buying or selling shares or debentures, whether as principal or agent or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32 of the Laws of Hong Kong SAR), and (2) unless it is a person who is permitted to do so under the securities laws of Hong Kong SAR, it has not issued or held for the purpose of issue in Hong Kong and will not issue or hold for the purpose of issue in Hong Kong SAR this prospectus, any other offering material or any advertisement, invitation or document relating to the common stock, otherwise than with respect to common stock intended to be disposed of to persons outside Hong Kong SAR or only to persons whose business involves the acquisition, disposal, or holding of securities, whether as principal or as agent;
•: the shares offered in this prospectus have not been registered under the Securities and Exchange Law of Japan, and it has not offered or sold and will not offer or sell, directly or indirectly, the common stock in Japan or to or for the account of any resident of Japan, except (1) pursuant to an exemption from the registration requirements of the Securities and Exchange Law and (2) in compliance with any other applicable requirements of Japanese law; and
•: this prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common stock, may not be circulated or distributed, nor may the common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (1) to an institutional investor or other person specified in Section 274 of the Securities and Futures Act, 15 Chapter 289 of Singapore, which we refer to as the SFA, (2) to a sophisticated investor, and in accordance with the conditions, specified in Section 275 of the SFA or (3) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Prior to this offering, there has been no public market for our common stock. Consequently, the initial public offering price for the shares was determined by negotiations among us, the selling stockholders and the representatives. Among the factors considered in determining the initial public offering price were our record of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management, and currently prevailing general conditions in the equity securities markets, including

current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the prices at which the shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our common stock will develop and continue after this offering.

We have applied to have our common stock included for quotation on the Nasdaq National Market under the symbol "GFIG".

The following table shows the underwriting discounts and commissions that we and the selling stockholders are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares of common stock.

	Paid by GFI		Paid by Selling Stockholders
	No Exercise	Full Exercise	No Exercise	Full Exercise
Per Share	$	$	$	$
Total	$	$	$	$

In connection with the offering, Merrill Lynch, as stabilizing agent, on behalf of the underwriters, may purchase and sell shares of common stock in the open market. These transactions may include short sales, syndicate covering transactions and stabilizing transactions. Short sales involve syndicate sales of common stock in excess of the number of shares to be purchased by the underwriters in the offering, which creates a syndicate short position. "Covered" short sales are sales of shares made in an amount up to the number of shares represented by the underwriters' over-allotment option. In determining the source of shares to close out the covered syndicate short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the overallotment option. Transactions to close out the covered syndicate short involve either purchases of the common stock in the open market after the distribution has been completed or the exercise of the over-allotment option. The underwriters may also make "naked" short sales of shares in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares of common stock in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of bids for or purchases of shares in the open market while the offering is in progress.

The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when Merrill Lynch repurchases shares originally sold by that syndicate member in order to cover syndicate short positions or make stabilizing purchases.

Any of these activities may have the effect of preventing or retarding a decline in the market price of the common stock. They may also cause the price of the common stock to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions on the Nasdaq National Market or in the over-the-counter market, or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

We and the selling stockholders estimate that our respective portions of the total expenses of this offering will be $ and $ .

Some of the underwriters have performed investment banking and advisory services for us from time to time for which they have received customary fees and expenses. The underwriters may, from time to time, engage in transactions with and perform services for us in the ordinary course of their

business. An affiliate of Banc of America Securities LLC is a lender under our senior credit facility. In addition, many of our underwriters or their affiliates are also our brokerage clients.

A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters. The representatives may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. The representatives will allocate shares to underwriters that may make internet distributions on the same basis as other allocations. In addition, shares may be sold by the underwriters to securities dealers who resell shares to online brokerage account holders.

We and the selling stockholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make because of any of those liabilities.

LEGAL MATTERS

Milbank, Tweed, Hadley & McCloy LLP, New York, New York, will pass upon the validity of the issuance of the common stock offered hereby. Dewey Ballantine LLP, New York, New York, is counsel for the underwriters in connection with this offering.

EXPERTS

Our financial statements as of December 31, 2002 and 2003, and for each of the three years in the period ended December 31, 2003, included in this prospectus and the related financial statement schedule included elsewhere in the registration statement have been audited by Deloitte & Touche LLP, independent registered public accounting firm, as stated in their reports appearing herein and elsewhere in the registration statement, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

WHERE TO FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the issuance of shares of our common stock being offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. For further information with respect to us and the shares of our common stock, reference is made to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the registration statement, each such statement is qualified by the provisions in such exhibit, to which reference is hereby made. We are not currently subject to the informational requirements of the Securities Exchange Act of 1934. As a result of the offering of the shares of our common stock, we will become subject to the informational requirements of the Exchange Act, and, in accordance therewith, will file quarterly and annual reports and other information with the SEC. The registration statement, such reports and other information can be inspected and copied at the Public Reference Room of the SEC located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. Such materials may also be accessed electronically by means of the SEC's home page on the internet (http://www.sec.gov).

INDEX TO FINANCIAL STATEMENTS

		Page
GFI GROUP INC.
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Statements of Financial Condition as of December 31, 2002 and 2003 and March 31, 2004 (unaudited)		F-3
Consolidated Statements of Operations for the years ended December 31, 2001, 2002 and 2003 and for the three-month periods ended March 31, 2003 and 2004 (unaudited)		F-4
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2001, 2002 and 2003 and for the three-month periods ended March 31, 2003 and 2004 (unaudited)		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2002 and 2003 and for the three-month periods ended March 31, 2003 and 2004 (unaudited)		F-6
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2001, 2002 and 2003 and for the three-month period ended March 31, 2004 (unaudited)		F-7
Notes to Consolidated Financial Statements		F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
GFI Group Inc.

We have audited the accompanying consolidated statements of financial condition of GFI Group Inc. and subsidiaries (the "Company") as of December 31, 2002 and 2003, and the related consolidated statements of operations, comprehensive income (loss), cash flows and changes in stockholders' equity for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2002 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

New York, New York
June 15, 2004

F-2

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands, except share and per share amounts)

			December 31,
			December 31,						March 31, 2004
			2002			2003			March 31, 2004
									(Unaudited)
ASSETS
	Cash and cash equivalents		$	63,707		$	87,299		$	73,459
	Deposits with clearing organizations			7,100			7,516			7,499
	Accrued commissions receivable, net of allowance for doubtful accounts			28,231			27,952			37,051
	Receivables from brokers, dealers and clearing organizations			118,549			193,108			266,202
	Property, equipment and leasehold improvements, net			31,792			30,077			28,889
	Software inventory, net			1,036			2,536			2,997
	Goodwill			11,284			11,482			11,482
	Intangible assets, net			3,055			2,248			2,046
	Other assets			12,002			12,591			18,099

TOTAL ASSETS			$	276,756		$	374,809		$	447,724

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
LIABILITIES:
	Accrued compensation		$	45,687		$	42,576		$	32,141
	Accounts payable and accrued expenses			20,272			22,267			18,142
	Payables to brokers, dealers and clearing organizations			100,143			177,690			250,879
	Notes payable, net			28,105			38,747			38,794
	Loan and agency notes payable			16,861			9,250			9,250
	Income taxes payable			4,615			6,266			8,636
	Other liabilities			7,888			10,192			14,129

		Total liabilities		223,571			306,988			371,971

Commitments and contingencies				—			—			—
Series C redeemable convertible preferred stock, $0.01 par value; 35,373,704 shares authorized and outstanding (liquidation value of $35.6, $38.4 and $39.2 (unaudited) million, respectively)				30,043			30,043			30,043
STOCKHOLDERS' EQUITY:
	Convertible preferred stock (liquidation value of $29.6 million)			29,069			29,069			29,069
	Class A common stock, $0.01 par value; 100,000,000 authorized; 55,991,541 outstanding			560			560			560
	Class B common stock, $0.01 par value; 300,000,000 authorized; 96,480,312 outstanding			965			965			965
	Additional paid in capital			33,559			33,603			33,621
	Retained earnings (accumulated deficit)			(40,900	)		(26,436	)		(19,633	)
	Accumulated other comprehensive income (loss)			(111	)		17			1,128

		Total stockholders' equity		23,142			37,778			45,710

TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY			$	276,756		$	374,809		$	447,724

See notes to consolidated financial statements.

F-3

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

			Year Ended December 31,							Three Months Ended March 31,
			2001			2002		2003		2003		2004
										(Unaudited)
REVENUES:
	Commissions		$	212,162		$	259,851	$	250,157	$	67,646	$	82,136
	Analytics and market data			6,077			9,615		13,143		3,341		4,673
	Interest income			1,543			1,401		1,167		311		276
	Other income			576			4,353		1,377		422		608

		Total revenues		220,358			275,220		265,844		71,720		87,693

EXPENSES:
	Compensation and employee benefits			142,574			174,011		166,276		44,670		55,086
	Communications and quotes			12,391			15,944		17,880		4,393		5,077
	Travel and promotion			11,335			15,522		14,301		3,250		3,948
	Rent and occupancy			8,630			10,964		10,645		3,173		2,573
	Depreciation and amortization			9,914			10,361		10,297		2,765		3,142
	Professional fees			10,634			7,254		7,793		1,889		1,766
	Clearing fees			1,750			4,063		3,668		996		1,065
	Interest			5,312			3,397		2,470		591		579
	Impairment of goodwill and intangible asset			38,968			—		—		—		—
	Other expenses			6,260			6,960		5,165		835		1,622

		Total expenses		247,768			248,476		238,495		62,562		74,858

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST				(27,410	)		26,744		27,349		9,158		12,835

PROVISION FOR INCOME TAXES				4,436			14,470		12,885		4,314		6,032
MINORITY INTEREST				(30	)		—		—		—		—

NET INCOME (LOSS)			$	(31,816	)	$	12,274	$	14,464	$	4,844	$	6,803

	Basic earnings per share		$	(0.33	)	$	0.08	$	0.09	$	0.03	$	0.04
	Diluted earnings per share		$	(0.33	)	$	0.06	$	0.07	$	0.02	$	0.03
	Weighted average shares outstanding — basic			96,460,256			149,975,864		152,471,853		152,471,853		152,471,853
	Weighted average shares outstanding — diluted			96,460,256			200,294,204		221,893,243		220,816,685		225,974,844

See notes to consolidated financial statements.

F-4

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

		Year Ended December 31,									Three Months Ended March 31,
		2001			2002			2003			2003		2004
											(Unaudited)
NET INCOME (LOSS)		$	(31,816	)	$	12,274		$	14,464		$	4,844	$	6,803
OTHER COMPREHENSIVE INCOME (LOSS):
	Unrealized gain on foreign exchange forward contracts, net of tax		—			—			417			—		1,013
	Foreign currency translation adjustment, net of tax		161			(57	)		(289	)		345		98

COMPREHENSIVE INCOME (LOSS)		$	(31,655	)	$	12,217		$	14,592		$	5,189	$	7,914

See notes to consolidated financial statements.

F-5

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

					Year Ended December 31,									Three Months Ended March 31,
					2001			2002			2003			2003			2004
														(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)				$	(31,816	)	$	12,274		$	14,464		$	4,844		$	6,803
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation and amortization				9,914			10,361			10,297			2,765			3,142
		Amortization of loan fees				—			130			142			44			46
		Impairment of goodwill and intangible asset				38,968			—			—			—			—
		Provision for allowance for doubtful accounts				822			2,181			(559	)		—			62
		Loss on disposal of fixed assets				—			122			86			—			—
		Deferred compensation				216			271			44			12			18
		Expenses paid for with common stock				20			106			—			—			—
		(Benefit) provision for deferred taxes				(5,483	)		3,190			(771	)		206			(417	)
		Loss on foreign currency exchange for loan notes payable				—			1,021			128			112			—
		Gain on the sale of U.S. treasury repurchase agreement brokerage desk				—			(1,350	)		—
		(Increase) decrease in operating assets:
			Deposits with clearing organizations			91			10,793			(416	)		(82	)		17
			Accrued commissions receivable			(10,006	)		8,589			838			(4,743	)		(9,162	)
			Receivables from brokers, dealers and clearing organizations			(59,906	)		38,968			(74,559	)		(64,024	)		(73,094	)
			Software inventory			—			(1,036	)		(1,755	)		(312	)		(546	)
			Other assets			(7,018	)		652			692			929			(4,079	)
		Increase (decrease) in operating liabilities:
			Accrued compensation			24,696			4,678			(3,111	)		(2,133	)		(10,435	)
			Accounts payable and accrued expenses			(480	)		4,319			1,995			(2,201	)		(4,124	)
			Payables to brokers, dealers and clearing organizations			54,755			(55,025	)		77,547			58,998			73,189
			Income taxes payable — current			5,050			(3,180	)		1,651			477			2,370
			Other liabilities			830			1,518			2,211			9,311			3,939

				Cash provided by (used in) operating activities		20,653			38,582			28,924			4,203			(12,271	)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Cash acquired from Fenics					593			—			—			—			—
	Cash used for business acquisitions & intangible assets					(1,024	)		(33	)		(198	)		—			—
	Purchase of property, equipment and leasehold improvements					(10,559	)		(16,496	)		(7,626	)		(2,735	)		(1,667	)
	Disposal of property and equipment					—			7			20			—			—
	Proceeds from sale of U.S. treasury repurchase agreement brokerage desk					—			1,350			—			—

				Cash used in investing activities		(10,990	)		(15,172	)		(7,804	)		(2,735	)		(1,667	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Repayment of notes payable					(21,969	)		(55,603	)		(7,500	)		(7,500	)		—
	Proceeds from notes payable					25,500			59,300			18,000			18,000			—
	Repayment of loan and agency notes payable					(520	)		(22,697	)		(7,739	)		(5,223	)		—
	Proceeds from loan and agency notes payable					30,000			—			—			—			—
	Capital transactions in subsidiaries					2,119			—			—			—			—
	Dividends to JPI					(33,266	)		(4,536	)		—			—			—
	Capital transactions with JPI					(4,644	)		—			—			—			—
	Issuance of preferred stock					145			30,068			—			—			—

				Cash provided by (used in) financing activities		(2,635	)		6,532			2,761			5,277			—

		Effects of foreign currency translation adjustment				161			(57	)		(289	)		345			98
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS						7,189			29,885			23,592			7,090			(13,840	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD						26,633			33,822			63,707			63,707			87,299

CASH AND CASH EQUIVALENTS, END OF PERIOD					$	33,822		$	63,707		$	87,299		$	70,797		$	73,459

SUPPLEMENTAL DISCLOSURE:
Interest paid					$	3,270		$	4,613		$	1,943		$	425		$	545
Income taxes paid					$	3,336		$	15,359		$	11,724		$	3,136		$	3,575

See notes to consolidated financial statements.

F-6

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands)

				Common Stock							Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)
		Convertible Preferred Stock		Common Stock				Additional Paid In Capital
		Convertible Preferred Stock		Class A		Class B		Additional Paid In Capital									Total
BALANCE, JANUARY 1, 2001		$	28,639	$	—	$	800	$	3,231		$	16,444		$	(215	)	$	48,899
	Dividends paid to JPI		—		—		—		—			(33,266	)		—			(33,266	)
	Share issuance		405		—		165		32,820			—			—			33,390
	Foreign currency translation adjustment		—		—		—		—			—			161			161
	Deferred compensation		—		—		—		216			—			—			216
	Net loss		—		—		—		—			(31,816	)		—			(31,816	)
	Capital transactions in subsidiaries		—		—		—		2,119			—			—			2,119
	Capital transactions with JPI		—		500		—		(5,144	)		—			—			(4,644	)

BALANCE, DECEMBER 31, 2001			29,044		500		965		33,242			(48,638	)		(54	)		15,059
	Dividends paid to JPI		—		—		—		—			(4,536	)		—			(4,536	)
	Share issuance		25		60		—		46			—			—			131
	Foreign currency translation adjustment		—		—		—		—			—			(57	)		(57	)
	Deferred compensation		—		—		—		271			—			—			271
	Net income		—		—		—		—			12,274			—			12,274

BALANCE, DECEMBER 31, 2002			29,069		560		965		33,559			(40,900	)		(111	)		23,142
	Foreign currency translation adjustment		—		—		—		—			—			(289	)		(289	)
	Unrealized gains on foreign exchange forward contracts		—		—		—		—			—			417			417
	Deferred compensation		—		—		—		44			—			—			44
	Net income		—		—		—		—			14,464			—			14,464

BALANCE, DECEMBER 31, 2003			29,069		560		965		33,603			(26,436	)		17			37,778
	Foreign currency translation adjustment (Unaudited)		—		—		—		—			—			98			98
	Unrealized gains on foreign exchange forward contracts (Unaudited)		—		—		—		—			—			1,013			1,013
	Deferred compensation (Unaudited)		—		—		—		18			—			—			18
	Net income (Unaudited)		—		—		—		—			6,803			—			6,803

BALANCE, MARCH 31, 2004 (Unaudited)		$	29,069	$	560	$	965	$	33,621		$	(19,633	)	$	1,128		$	45,710

See notes to consolidated financial statements.

F-7

GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information as of March 31, 2004 and three months ended March 31, 2003 and 2004 is unaudited)

(In thousands, except share and per share amounts)

1. ORGANIZATION AND BUSINESS

The consolidated financial statements include the accounts of GFI Group Inc. and its subsidiaries (collectively the "Company"). The Company completed a plan of reorganization on November 30, 2001, which resulted in a reorganization of entities under the common control of Jersey Partners, Inc. ("JPI") (the "Reorganization"). This reorganization of entities under common control was accounted for similar to a pooling of interests (see Note 3).

GFInet inc. ("GFInet"), a wholly-owned subsidiary of the Company, provides brokerage and data services for securities, commodities, foreign exchange and derivative contracts to broker-dealers and other financial and nonfinancial institutions as well as develops and distributes foreign exchange option, credit and energy pricing tools and sells associated data to the financial services industry and other corporations through its principal subsidiaries: GFI Securities LLC ("SLLC"), GFI Brokers LLC, GFI Group LLC ("GLLC"), GFI Securities Ltd., GFI Brokers Ltd., GFI (HK) Securities LLC, GFInet U.K. Ltd. and Fenics Ltd. and subsidiaries ("Fenics").

All material intercompany transactions and balances have been eliminated. Certain reclassifications have been made to prior year amounts to conform to current year presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingencies in the consolidated financial statements. Management believes that the estimates utilized in the preparation of the consolidated financial statements are reasonable and prudent. Actual results could differ materially from these estimates.

Cash and Cash Equivalents — Cash and cash equivalents consist of cash and highly liquid investments with maturities, when purchased, of three months or less.

Receivables from and Payables to Brokers and Dealers — Receivables from and payables to brokers and dealers primarily represent securities transactions which have not settled as of their stated settlement dates. These transactions relate primarily to the simultaneous purchase and sale of securities by GFI Securities Ltd. and SLLC to facilitate brokerage transactions.

Brokerage Transactions — Brokerage transactions and related revenues and expenses, including commissions, are recorded on a trade date basis.

Hedging — The Company uses foreign exchange forward contracts to reduce the effects of fluctuations in the receivables from commissions denominated in foreign currencies. These transactions meet the requirements for hedge accounting, including correlation. The Company reclassifies gains and losses on the foreign exchange forward contracts included in other comprehensive income into earnings at the time the hedged transactions are recognized. The ineffective portion of the hedge, if any, is included in current earnings.

Property, Equipment and Leasehold Improvements — Property, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation and

F-8

amortization are calculated using the straight-line method generally over two to seven years. Property and equipment are depreciated over their estimated useful lives. Leasehold improvements are amortized over the shorter of the remaining term of the respective lease to which they relate or the remaining useful life of the leasehold improvement. Internal and external costs incurred in developing or obtaining computer software for internal use are capitalized in accordance with Statement of Position ("SOP") 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, and are amortized on a straight-line basis over the estimated useful life of the software, generally three years. General and administrative costs related to developing or obtaining such software are expensed as incurred.

Analytics and Market Data Revenue Recognition — The Company earns revenue consisting mostly of fees for licenses of software products as well as maintenance, installation, customer training and technical support of those products. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery of the product has occurred and no significant implementation obligations remain, the fee is fixed and determinable, and collectibility is probable. Fees for future updates of software products are considered separate arrangements and related revenues are recognized when the customer acknowledges participation in the update and delivery occurs.

The Company licenses its products through its direct sales force and indirectly through resellers. The Company's license agreements for such products do not provide for a right of return.

Software Inventory — In accordance with Statement of Financial Accounting Standards ("SFAS") No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed, the Company capitalizes certain software development costs, related to internally developed software used in the generation of sales of option calculators, once technological feasability is established. Software inventory is stated at the lower of cost or net realizable value, which is based on projected revenues. Amortization is calculated on the greater of the ratio of current year revenue to current year revenue plus projected revenue or straight-line, generally over three years. Amortization begins when a product is available for general release to customers. Expenditures for maintenance and repairs are charged directly to expense as incurred.

Income Taxes — In accordance with SFAS No. 109, Accounting for Income Taxes, the Company provides for income taxes using the asset and liability method under which deferred income taxes are recognized for the estimated future tax effects attributable to temporary differences and carry-forwards that result from events that have been recognized either in the financial statements or the income tax returns, but not both. The measurement of current and deferred income tax liabilities and assets is based on provisions of enacted tax laws. Valuation allowances are recognized if, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized.

Foreign Currency Translation Adjustments and Transactions — Assets and liabilities of foreign subsidiaries having non-U.S. dollar functional currencies are translated at year-end rates of exchange, and revenue and expenses are translated at end-of-month rates of exchange. Gains or losses resulting from translating foreign currency financial statements are reflected in foreign currency translation

F-9

adjustments and are reported as a separate component of comprehensive income and stockholders' equity. Gains or losses resulting from foreign currency transactions are included in net income (loss).

Stock-Based Compensation — In December 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure ("SFAS 148"). This statement provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. Effective January 1, 2003, the Company adopted the fair value recognition provisions of SFAS No. 123 Accounting for Stock-based Compensation ("SFAS 123"), prospectively to all awards granted, modified, or settled after January 1, 2003. Pursuant to this method, the Company expenses the grant-date fair value of options issued to employees on or after January 1, 2003 over the related vesting period and the compensation expense related to modifications of outstanding options is calculated as the difference between fair value of the existing and modified options on the date of modification. Prior to this date, the Company used the intrinsic method as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"), as permitted by SFAS 123.

The following pro forma financial information shows the effect, net of tax, on net income (loss) had the fair value method been applied for all periods presented. See Note 18 for assumptions used in estimating fair value.

	For the year ended December 31,									For the three months ended March 31,
	2001			2002			2003			2003			2004
										(Unaudited)
Net income (loss) — as reported	$	(31,816	)	$	12,274		$	14,464		$	4,844		$	6,803
Add:
Effect of stock-based employee compensation included in reported net income (loss), net of tax		216			271			44			12			18
Deduct:
Total stock-based employee compensation determined under fair value method, net of tax		(712	)		(559	)		(433	)		(108	)		(96	)

Net income (loss) — pro forma	$	(33,312	)	$	11,986		$	14,075		$	4,748		$	6,725

Basic earnings per share — as reported	$	(0.33	)	$	0.08		$	0.09		$	0.03		$	0.04
Basic earnings per share — pro forma	$	(0.33	)	$	0.08		$	0.09		$	0.03		$	0.04
Diluted earnings per share — as reported	$	(0.33	)	$	0.06		$	0.07		$	0.02		$	0.03
Diluted earnings per share — pro forma	$	(0.33	)	$	0.06		$	0.06		$	0.02		$	0.03

The pro forma amounts do not include any expense related to the GFI Group Plan stock options, as exercisability of those options is contingent on the consummation of an initial public offering (see Note 18).

F-10

Segment and Geographic Information — The Company's only operating segment, brokerage operations, operates across domestic and international markets. Substantially all of the Company's identifiable assets are in the United States and the United Kingdom.

Goodwill and Intangible Assets — In accordance with SFAS No. 142 Goodwill and Intangible Assets ("SFAS 142"), goodwill and intangible assets with indefinite lives are no longer amortized, but instead are tested for impairment annually or more frequently if circumstances indicate impairment may have occurred. The Company has selected January 1^st as the date to perform the annual impairment test. At January 1, 2002, 2003 and 2004, the annual impairment test was performed and no impairment existed. Due to the adoption of SFAS 142, $1,027 of intangible assets were reclassified as goodwill in the year ended December 31, 2002. Intangible assets with definite lives continue to be amortized on a straight-line basis over their useful lives.

Impairment of Long-Lived Assets — Long-lived assets, such as property, equipment and leasehold improvements, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset exceeds the expected future cash flows, on an undiscounted basis, to be generated from the assets, including eventual disposition. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value.

Unaudited Interim Financial Information — The accompanying unaudited consolidated financial statements have been prepared by GFI Group Inc. pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the audited financial statements and related notes thereto. The accompanying unaudited consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of results for the interim periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the estimates. The results of operations for the three month period ended March 31, 2004 are not necessarily indicative of the results to be expected for any future period or the full fiscal year.

Recent Accounting Pronouncements — In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45") Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires that a guarantor recognize the fair value of a guarantee as a liability at the inception of such guarantee. Additional disclosures are also prescribed for certain guarantee contracts. The recognition and measurement provisions of FIN 45 were effective for guarantees issued or modified after December 31, 2002. The disclosure provisions were effective for periods ending after December 15, 2002. See Note 16 for additional information related to guarantees.

F-11

In April 2003, the FASB issued SFAS No. 149 Amendment of Statement 133 on Derivative Instruments and Hedging Activities ("SFAS 149"). SFAS 149 clarifies the circumstances under which a contract with an initial investment meets the characteristics of a derivative under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 149 also amended other existing pronouncements to result in more consistent reporting of derivative contracts. This pronouncement is effective for all contracts entered into or modified after June 30, 2003. The Company adopted SFAS 149 as required, with no material impact on the Company's consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150 Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("SFAS 150"). SFAS 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and debt. SFAS 150 is effective for all contracts entered into or modified after May 31, 2003 and for pre-existing instruments on financial statements for periods after June 15, 2003. The Company adopted SFAS 150 as required, with no material impact on the Company's consolidated financial statements.

In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, and Interpretation of Accounting Research Bulletin No. 51 ("FIN 46R"), which replaces FASB Interpretation No. 46. FIN 46R clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The Company does not believe that it has an interest in an entity that is subject to this Interpretation, therefore, the adoption of FIN 46R is not expected to have a material impact on the Company's consolidated financial statements.

3. CORPORATE REORGANIZATION

On November 30, 2001, JPI and the other stockholders of GFInet reorganized the ownership structure of GFInet and GLLC in order to streamline their operations and achieve certain operational, tax and related efficiencies. Prior to the Reorganization, JPI incorporated GFI Group Inc. ("GFI") under the laws of the State of Delaware.

Pursuant to an agreement between JPI, GFI and GLLC, JPI contributed 99% of its membership interests in GLLC, as well as certain agreed-upon assets and liabilities of JPI, to GFI for consideration of 50 million shares of GFI Class A Common Stock. The remaining 1% of JPI's membership interest was redeemed at the closing of the Reorganization and issued to GFInet. GFI also entered into a merger agreement with GFInet, which provided for a merger of GFInet into a wholly-owned subsidiary of GFI with GFInet as the surviving corporation. Subsequently, GFI contributed 98% of its membership interest in GLLC to GFInet.

F-12

The outstanding options or warrants to purchase shares of GFInet's common stock became options or warrants to purchase shares of Class B Common Stock of GFI on the same terms. Upon completion of the Reorganization, JPI owned 74.2% of the Company prior to dilution for outstanding warrants and options.

4. LOAN NOTES AND AGENCY NOTES PAYABLE

On October 1, 2001, GLLC paid a dividend to JPI for $30,000 in the form of cash and accounts receivable. Simultaneously, JPI loaned the cash and accounts receivables back to GLLC for a two tranche loan note and an agency note bearing interest of one month LIBOR plus 2.75%, 3.75% and 4.75% at December 31, 2001, 2002 and 2003, respectively. The balances outstanding at December 31, 2002 and 2003, were $11,750 and $9,250, respectively.

Tranche A was repaid in two annual installments of $2,500 each, on November 30, 2002 and 2003, respectively. Tranche B is due for repayment in five annual installments of $1,850 each, commencing on June 15, 2007. This loan is secured by a second priority security interest in substantially all of the assets of the Company and certain of its subsidiaries.

The agency note payable had a principal amount of $5,000 payable over the five-month period immediately following the effective date of the Reorganization. GFI repaid the note in full during 2002.

Also, loan notes of $9,057 denominated in British Pounds, were issued as part of the Fenics acquisition (see Note 5). The loan notes bore interest at rates between 9% and 11% with payments to be made on October 31, 2002 and January 31, 2003 in equal installments. The notes were repaid in full by February 2003. As a result, the balances outstanding were $5,111 and $0 at December 31, 2002 and 2003, respectively.

5. ACQUISITIONS AND RELATED INTANGIBLE ASSETS AND GOODWILL

Fenics Acquisition — On April 5, 2001, GFInet acquired a majority interest (approximately 90%) of Fenics' outstanding capital stock. The acquisition was accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the acquisition date with the excess allocated to goodwill and other identified intangible assets. Upon an initial public offering, the remaining stockholders of Fenics could require the Company to acquire the minority shares of Fenics' stock still outstanding. The purchase would be at a rate of 3.11 shares of the Company's common stock for each share of Fenics stock and can be accomplished with either the transfer of the Company's common stock or an equivalent amount in cash. In accordance with EITF Issue 00-6, Accounting for Freestanding Derivative Financial Instruments Indexed to, and Potentially Settled in the Stock of a Consolidated Subsidiary, we have accounted for this obligation at fair value, with a liability of $1,389 recorded on the acquisition date and included in other liabilities. Gains and losses from subsequent changes in the fair value of this obligation have been included in earnings.

The purchase price of approximately $40,702 consisted of an exchange of 15,733,851 shares of GFInet's common stock and loan notes of $9,057, of which $6,822 was for the purchase of preferred

F-13

stock and $2,235 was for dividends payable to the holders of the preferred stock. In accounting for the transaction and setting a price, management obtained a pricing analysis performed by an external valuation firm. There were $1,024 of direct transaction costs related to the acquisition, consisting primarily of legal, financial advisor and other professional fees, which were capitalized as part of the purchase price. Since April 5, 2001, Fenics' results of operations have been included in the Company's consolidated financial statements.

Management determined the fair value of the identifiable intangible assets acquired based upon an independent valuation model. The purchase price and applicable valuation model at the date of acquisition of Fenics was allocated as follows:

		Purchase Price			Valuation Model
Property and equipment		$	1,354		—
Net liabilities assumed, excluding property and equipment			(15,913	)	—
Identifiable intangible assets:
	Workforce in place		1,150		Cost Approach
	Customer base		1,050		Cost Approach
	Trade name		1,370		Income Approach
	Core technology		10,130		Income Approach
Goodwill			41,561		—

Total		$	40,702

Goodwill and intangibles were being amortized using the straight-line method. Goodwill was being amortized over 40 years and intangibles are amortized between five and seven years, both subject to the effect of certain new accounting pronouncements. For the year ended December 31, 2001, amortization of goodwill and other intangible assets associated with this acquisition totaled $2,698.

Effective January 1, 2002, in accordance with SFAS 142, goodwill was no longer being amortized, rather it is reviewed annually for impairment. Intangible assets with definite lives are amortized between 5 to 7 years.

As a result of the adoption of SFAS 142, the workforce in place intangible asset is not being amortized and was reclassified as goodwill. The customer base, trade name, and core technology intangible assets have lives of 6 years, 6 years and 5 years, respectively. The average life of the amortizable intangible assets is 5.5 years. For the years ended December 31, 2001, 2002 and 2003 amortization of these intangible assets was $1,822, $806 and $806 respectively. In addition, during the year ended December 31, 2002, a patent was acquired with an original cost of $34. For the years ended December 31, 2002, and 2003, the Company recognized amortization related to the patent of $1 and $2 respectively.

F-14

Had goodwill and the workforce in place intangible asset not been amortized during the year ended December 31, 2001, the Company's reported net loss would have been reduced by $510 to ($31,306) and the net loss per share would have been reduced by $0.01 to ($0.32).

At December 31, 2003, expected amortization expense for the indefinite lived intangible assets and patent is as follows:

2004	$	808
2005		808
2006		506
2007		103
2008		2

Total	$	2,227

Impairment of Intangible Asset and Goodwill — Subsequent to the acquisition of Fenics, the Company determined that the carrying value of goodwill and certain identified intangible assets may not be recoverable after a strategic decision was made to discontinue Fenics' previously planned internet based operations. The potential impairment was measured using a projected discounted cash flow model with a discount rate commensurate with the risk inherent in Fenics' current business model.

As a result, the Company recorded a $37,451 impairment charge to reduce goodwill and an intangible asset associated with the Fenics acquisition to their estimated fair value. The estimate of fair value was based upon the projected discounted cash flows from the sale of the foreign exchange option-pricing model for the succeeding four years using a discount rate of 15.0% and an estimated terminal value (prior to discount) of approximately $30,000. The assumptions supporting the estimated cash flows, including the discount rate and an estimated terminal value, reflect management's best estimates. The discount rate was based upon the weighted average cost of capital for comparable companies and the risk associated with Fenics' business.

Of the total impairment charge, $6,900 was applied to reduce core technology to $1,710 and the remaining impairment charge of $30,551 reduced goodwill to $10,256 both after taking into account the impact of amortization.

Commerex Acquisition — On April 17, 2001, GFInet acquired the remaining portion of the outstanding common stock of its subsidiary, Commerex.com Inc. ("Commerex") from the minority interest stockholders, bringing its ownership interest to 100%. Under the purchase method of accounting, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The purchase transaction was affected through the issuance of 758,281 shares of GFInet's common stock with a value of $1,517, at the date of acquisition.

Prior to the purchase, the operations of Commerex had substantially ceased and substantially all assets and liabilities had been disposed of. As such, the net assets were zero on the date of acquisition. Accordingly, the total purchase of $1,517 was allocated to goodwill.

F-15

After the acquisition, the Company performed an impairment assessment of goodwill due to the lack of continuing operations. As a result, the Company recorded an impairment charge of the entire $1,517, reducing goodwill to zero. On September 30, 2003, Commerex was merged with and into GFInet.

6. DEPOSITS WITH CLEARING ORGANIZATIONS

The Company maintains deposits at various clearing companies and organizations that perform clearing and custodial functions for the Company. These deposits consist of cash.

7. ACCRUED COMMISSIONS RECEIVABLE

Accrued commissions receivable represent amounts due from brokers, dealers, banks and other financial and nonfinancial institutions for the execution of securities, commodities, foreign exchange and derivative brokerage transactions. Accrued commissions receivable are presented net of allowance for doubtful accounts of approximately $3,024 and $2,154 as of December 31, 2002 and 2003, respectively. The allowance is based on management's estimate and is reviewed on a periodic basis based on the aging of outstanding receivables and counterparty exposure.

8. RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS

		As of December 31,
		As of December 31,				As of March 31, 2004
		2002		2003		As of March 31, 2004
						(Unaudited)
Receivables from brokers, dealers and clearing organizations:
	Contract value of fails to deliver	$	107,351	$	162,182	$	263,100
	Balance receivable from clearing organizations		11,198		30,926		3,102

Total		$	118,549	$	193,108	$	266,202

Payables to brokers, dealers and clearing organizations:
	Contract value of fails to receive	$	97,988	$	154,709	$	248,706
	Balance payable to clearing organizations		—		18,236		—
	Payable to financial institutions		2,155		4,745		2,173

Total		$	100,143	$	177,690	$	250,879

Substantially all open fail to deliver and fail to receive transactions at December 31, 2002 and 2003 have subsequently settled at the contracted amounts.

Payable to clearing organizations of $18,236 at December 31, 2003, represents amounts owed to clearing organizations in the normal course of operations.

F-16

9. SOFTWARE INVENTORY

		As of December 31,
		2002		2003
Software inventory, cost
	Work in process	$	1,036	$	1,772
	Finished goods		—		1,019

			1,036		2,791
	Accumulated amortization		—		(255	)

Software inventory, net		$	1,036	$	2,536

Amortization for the years ending December 31, 2001, 2002 and 2003 was $0, $0 and $255, respectively.

10. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements consist of the following:

	As of December 31,
	2002			2003
Software	$	33,319		$	38,419
Computer equipment		10,197			10,909
Leasehold improvements		6,284			6,609
Communications equipment		5,633			6,406
Furniture and fixtures		1,849			1,968
Automobiles		212			181

		57,494			64,492
Accumulated depreciation and amortization		(25,702	)		(34,415	)

Property, equipment, and leasehold improvements less accumulated depreciation and amortization	$	31,792		$	30,077

Depreciation and amortization for the years ending December 31, 2001, 2002 and 2003 was $8,207, $9,555 and $9,234, respectively.

11. NOTES PAYABLE

On July 4, 2002, the Company entered into a three year $50,000 Multicurrency Revolving and Term Facilities Agreement with three banks (the "2002 Credit Facility"). Included in the balance available is a $10,000 guarantee line that the Company can draw on for certain purposes including letters of credit. Amounts outstanding under the 2002 Credit Facility incur interest at the annual rate of one month LIBOR plus a margin of 2.25% or, if the Company's consolidated EBITDA, as defined in the agreement, is $12,500 or greater for the preceding calendar quarter, at the annual rate of one month LIBOR plus a margin of 1.75% (as of December 31, 2003, with respect to the revolving portion

F-17

of the 2002 Credit Facility, 3.33% and with respect to the term portion of the 2002 Credit Facility, 3.41%). The interest rate on the guarantee is the margin, depending on the consolidated EBITDA, less 10 basis points (as of December 31, 2003, 2.15%).

Amounts outstanding under the 2002 Credit Facility are secured by substantially all the assets of the Company and certain of the Company's subsidiaries. The maturity date of the 2002 Credit Facility is July 4, 2005. In addition, the Company is required to repay $2,500 of the Term loan per quarter beginning October 2004 with any remaining balance due on July 4, 2005, the maturity date of the credit facility.

	As of December 31,
	2002				2003
	Revolving		Term		Revolving		Term
Loan Available *	$	30,000	$	20,000	$	30,000	$	20,000
Loans Outstanding	$	8,500	$	20,000	$	19,000	$	20,000
Guarantee Outstanding	$	5,000		N/A	$	7,000		N/A

*: Amounts available under the Revolving portion include $10,000 for guarantees and letters of credit.

The 2002 Credit Facility contains certain financial and other covenants. During 2003, the Company amended one of its restrictive covenants related to cash flow and relevant ratios were adjusted accordingly. The Company was in compliance with all applicable covenants, as amended, at December 31, 2002 and 2003. At December 31, 2002 and 2003, notes payable were recorded net of unamortized loan fees of $395 and $253, respectively.

F-18

12. INCOME TAXES

The provision for income taxes consists of the following:

		For the year ended December 31,
		2001			2002			2003
Current Provision:
	Federal	$	—		$	612		$	426
	Foreign		8,876			9,537			9,906
	State and local		1,043			1,131			3,324

Total current provision			9,919			11,280			13,656

Deferred (Benefit) Provision:
	Federal		(4,199	)		952			2,455
	Foreign		504			(147	)		(3,475	)
	State and local		(1,788	)		2,385			249

Total deferred (benefit) provision			(5,483	)		3,190			(771	)

Total		$	4,436		$	14,470		$	12,885

The Company expects to file consolidated/combined income tax returns for Federal, state and local purposes for the year ended December 31, 2003. GLLC expects to file partnership income tax returns for the year ended December 31, 2003.

As a result of the Reorganization described in Note 3, the results of the Company's operations for the year ended December 31, 2001, were included in several tax returns. JPI filed as a "S" corporation for the year ended December 31, 2001. GFInet filed a separate return for Federal, state and local purposes for the 11-month period ended November 30, 2001. The results of GFInet's operations for the one-month period ended December 31, 2001 were included in the consolidated/combined income tax returns of GFI Group Inc. for the period ended December 31, 2001. The results of operations for GLLC for the 11-month period ended November 30, 2001 were included in the consolidated income tax returns of JPI. GLLC filed partnership income tax returns for the one-month period ended December 31, 2001.

Federal, state and local income taxes have been provided for the various entities recognized for tax purposes. Provision has also been made for taxes in foreign countries based on the profits of the foreign subsidiaries, as applicable.

F-19

SFAS No. 109 requires the financial statement recognition of net deferred tax assets unless it is more likely than not that the assets will not be realized. Significant components of the Company's gross deferred tax assets (liabilities) were as follows:

		As of December 31,
		2002			2003
Deferred tax assets:
Foreign tax credits		$	2,994		$	2,405
Foreign deferred items			—			3,475
Net operating/capital loss carryforwards			4,847			4,082
Other credits			1,261			—
Liability reserves			1,800			1,437
Prepaid expenses			—			783
Other			123			2
Valuation allowance			(4,847	)		(4,082	)

	Total deferred tax assets	$	6,178		$	8,102

Deferred tax liabilities:
Depreciation/amortization		$	(2,113	)	$	(4,200	)
Other			(348	)		(440	)
Prepaid expenses			(934	)		—

	Total deferred tax liabilities	$	(3,395	)	$	(4,640	)

Net deferred tax assets		$	2,783		$	3,462

The deferred assets relating to net operating/capital loss carryforwards listed above consist of losses from operations in the U.S. and U.K. These carryforward losses are subject to certain limitations and will start to expire between 2007 and 2022. The decrease in the net operating/capital loss asset from 2002 to 2003 relates to the settlement of a tax audit and utilization of capital and net operating loss carryforwards in the U.S. However, due to the uncertainty as to the ultimate utilization of these assets, a full valuation allowance at December 31, 2002 and 2003, has been established to offset this asset.

The difference between the Company's effective tax rate and the U.S. Federal statutory rate is due primarily to state and local income taxes, the effect of the Company's foreign operations, general business credits, non-deductibility of certain expenses (primarily promotional expenses) and the effect of the revaluations of certain business segments.

F-20

A reconciliation of the statutory U.S. Federal income taxes to the Company's income tax provision for earnings follows:

	For the year ended December 31,
	2001		2002		2003
U.S. Federal income tax at corporate statutory rate	35.0	%	35.0	%	35.0	%
U.S. income not subject to U.S. Federal corporate tax	3.6		0.0		0.0
U.S. state and local tax	2.6		8.5		8.5
Write-off of goodwill	(51.5	)	0.0		0.0
Effect of foreign operations	(0.1	)	6.0		(2.4	)
Non-deductible expenses	(7.5	)	5.0		4.5
General business credit	0.0		(2.4	)	(0.8	)
Other	1.7		2.0		2.3

Effective tax rate	(16.2	)%	54.1	%	47.1	%

Significant items affecting the 2001 rate reconciliation that do not affect subsequent rate reconciliations include certain U.S. income not subject to tax (pre-conversion to subchapter C corporation status) and certain deductions not allowable as expenses for U.S. income tax purposes (write-off of goodwill relating to Fenics).

As discussed above, on November 30, 2001, GFI "converted" from a subchapter S corporation to a subchapter C corporation for U.S. Federal income tax purposes. Generally, under U.S. income tax principles, a subchapter S corporation is not subject to Federal income tax. As such, income earned in 2001 prior to the conversion was not subject to tax at the corporate level. The tax burden on such income was incurred by the stockholders directly. This represents an approximate 3.6% beneficial impact on the 2001 rate reconciliation. Additionally, during 2001, goodwill, which was written off for financial accounting purposes, was not deductible for tax purposes. This represents an approximate 51.5% detrimental impact on the 2001 rate reconciliation.

13. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income (loss) by the sum of the weighted average number of shares outstanding plus the dilutive effect of convertible preferred stock using the "if-converted" method and outstanding stock options and warrants using the "treasury stock" method.

F-21

Basic and diluted earnings per share for the years ended December 31, 2001, 2002 and 2003 and the three months ended March 31, 2003 and 2004, were as follows:

			For the year ended December 31,							For the three months ended March 31,
			2001			2002		2003		2003		2004
										(Unaudited)
Basic earnings per share
	Net income (loss) applicable to stockholders		$	(31,816	)	$	12,274	$	14,464	$	4,844	$	6,803
	Weighted average shares outstanding			96,460,256			149,975,864		152,471,853		152,471,853		152,471,853

		Basic earnings per share	$	(0.33	)	$	0.08	$	0.09	$	0.03	$	0.04

Diluted earnings per share
	Net income (loss) applicable to stockholders		$	(31,816	)	$	12,274	$	14,464	$	4,844	$	6,803
	Weighted average shares outstanding			96,460,256			149,975,864		152,471,853		152,471,853		152,471,853
	Effect of dilutive shares
		Options and warrants		—			—		—		—		887,031
		Convertible preferred shares		—			28,695,959		28,700,000		28,700,000		28,700,000
		Redeemable convertible preferred shares		—			21,622,381		40,721,390		39,644,832		43,915,960

	Weighted average shares outstanding and common stock equivalents			96,460,256			200,294,204		221,893,243		220,816,685		225,974,844

		Diluted earnings per share	$	(0.33	)	$	0.06	$	0.07	$	0.02	$	0.03

Due to the net loss in 2001, options and warrants to purchase 20,127,576 shares of common stock and preferred shares convertible into 28,515,507 shares of common stock were excluded from the computation of diluted earnings per share because their effect would be anti-dilutive. Options and warrants to purchase 23,485,915, 23,382,120 and 15,056,740 shares with exercise prices greater than the average market prices of common stock were outstanding during 2002 and 2003 and the three months ended March 31, 2004, respectively, and were excluded from the respective computations of diluted earnings per share because their effect would be anti-dilutive.

14. SERIES C REDEEMABLE CONVERTIBLE PREFERRED STOCK

During 2002, GFI issued 35,373,704 shares of Series C Redeemable Convertible Preferred Stock (the "Series C Preferred Stock"). As of December 31, 2002 and 2003, 35,373,704 shares are outstanding.

Redemption: At any time, and from time to time, after the fifth anniversary of the Series C Preferred Stock issuance date, holders of a majority of the outstanding shares of the Series C Preferred Stock may request redemption of all or any part of the outstanding shares of Series C Preferred Stock. The redemption price per share of Series C Preferred Stock shall be an amount equal to the Series C Preferred Stock issuance price multiplied by one and one-half (1.5).

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Conversion: Each share of Series C Preferred Stock is convertible at the option of the holder thereof at any time into shares of Class B Common Stock at an initial conversion rate of one share of Class B Common Stock for each share of Series C Preferred Stock. Upon the earlier to occur of an IPO or the election of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock to convert such shares into Class B Common Stock, each share of Series C Preferred Stock will also be automatically converted into Class B Common Stock. In the event such automatic conversion is due to the occurrence of an IPO, the Series C Preferred Stock will be converted into Class B Common Stock at a conversion rate based on the initial public offering price per share to the public at the time of an IPO (the "IPO price"). In the event that the IPO price is less than twice the original issuance price of the Series C Preferred Stock, as adjusted, each holder of Series C Preferred Stock will receive shares of Class B Common Stock with a value, based on the IPO price, that is twice the Series C Preferred Stock issuance price for each share of Series C Preferred stock. If the IPO price is greater than twice the original issuance price of the Series C Preferred Stock, as adjusted, each share of Series C Preferred Stock would convert into one share of Class B Common Stock.

Dividends: Before the payment of any dividends in respect of any shares of GFI Common Stock, the holders of the Series C Preferred Stock (on an as-if-converted to GFI Class B Common Stock basis) are entitled to share ratably with the holders of GFI Common Stock in certain dividends declared on the Class B Common Stock.

Voting Rights: The holders of the Series C Preferred Stock, voting separately as a class, have certain voting and veto rights, including the right to elect two of the directors of the Company. In addition, the holders of Series C Preferred Stock have the right to vote, together with holders of Class B Common Stock as a single class, on all matters upon which the holders of Class B Common Stock (other than the election of directors) are entitled to vote pursuant to applicable Delaware law or GFI's Certificate of Incorporation.

Liquidation Preference: In the event of any voluntary or involuntary liquidation, dissolution or winding-up of GFI, before any payment or distribution of the assets of, or the proceeds thereof, may be made or set apart for the holders of any stock ranking junior to the Series C Preferred Stock upon liquidation, the holders of Series C Preferred Stock are entitled to receive, a liquidating distribution in an amount equal to greater of (a) the Series C Preferred Stock issuance price plus an amount equal to 8% of the Series C Preferred Stock issuance price compounded annually, or (b) sum of the Series C Preferred Stock issuance price plus the net distributable proceeds that the holders of the Series C Preferred Stock would be entitled to receive for each share of Series C Preferred Stock upon a liquidation event assuming a hypothetical conversion into Class B Common Stock immediately prior to such liquidation event.

F-23

Rank: The Series C Preferred Stock generally ranks senior to the GFI Common Stock as well as the Company's Series A and B Preferred Stock, as to payment of dividends, voting, distributions of assets upon liquidation, dissolution or winding-up, whether voluntary or involuntary, or otherwise.

Purchase Price Adjustment: In the event that an IPO or certain other corporate events set forth in the Series C Preferred Stock purchase agreement have not taken place prior to the third anniversary of the issuance of the Series C Preferred Stock and the Company has not met certain earnings thresholds, the Company shall issue to the then-current holders of the Series C Preferred Stock 4,271,128 shares of Class B Common Stock, subject to adjustment, for each of the three years following the Series C Preferred Stock issuance date in which the thresholds were not met. Such shares of Class B Common Stock, if and when issued, shall be subject to redemption on similar terms as set forth above for the Series C Preferred Stock.

15. STOCKHOLDERS' EQUITY

As discussed in Note 3, the Company reorganized its operations on November 30, 2001. The transaction was accounted for in a manner similar to a pooling of interest, therefore all prior period amounts have been restated.

GFI Group Inc.'s equity capital structure consists of Class A Common Stock, Class B Common Stock, Series A Convertible Preferred Stock and Series B Convertible Preferred Stock.

Common Stock

Each holder of GFI Common Stock is entitled to one vote per share on all matters submitted to a vote of stockholders. Subject to the rights of holders of the Company's preferred stock, the holders of GFI Common Stock are entitled to receive dividends when, as and if declared by GFI's board of directors. Except as described below, the shares of GFI Common Stock do not have any preemptive or other subscription rights, conversion rights or redemption or sinking fund provisions.

Class A Common Stock: In addition to the rights of the holders of Common Stock described generally above, the holders of GFI's Class A Common Stock have certain additional voting and veto rights, including the right to elect 60% of the directors of the Company.

Each share of Class A Common Stock will be automatically converted into GFI Class B Common Stock at an initial conversion rate of one share of Class B Common Stock for each share of Class A Common Stock immediately prior to the closing of a qualified initial public offering ("IPO") or upon the majority election of the holders of the then outstanding shares of Class A Common Stock.

Class B Common Stock: In addition to the rights of the holders of Common Stock described generally above, the holders of GFI's Class B Common Stock, voting separately as a class, have the right to elect two of the directors of the Company.

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Preferred Stock

		Series A Convertible Preferred Stock				Series B Convertible Preferred Stock
		Shares		Amount		Shares		Amount
Authorized			28,000,000		—		2,000,000		—
Issued:
	2001		165,000	$	165		120,000	$	240
	2002		25,000		25		—		—
	2003		—		—		—		—
Outstanding:
	January 1, 2001		26,810,000	$	26,019		1,580,000	$	2,620
	December 31, 2001		26,975,000		26,184		1,700,000		2,860
	December 31, 2002		27,000,000		26,209		1,700,000		2,860
	December 31, 2003		27,000,000		26,209		1,700,000		2,860
Par value per share		$	0.01			$	0.01

Series A Convertible Preferred Stock

Conversion: Each share of Series A Convertible Preferred Stock (the "Series A Preferred Stock") is convertible at the option of the holder thereof at any time into shares of Class B Common Stock of the Company at an initial conversion rate of one share of Class B Common Stock for each share of Series A Preferred Stock. In addition, each share of Series A Preferred Stock will be automatically converted into one share of Class B Common Stock, as adjusted for certain corporate events, upon the earlier to occur of an IPO or the majority election of the holders of the then outstanding shares of Series A Preferred.

Dividends: Before the payment of any dividends in respect of any shares of GFI Common Stock, the holders of the Series A Preferred Stock (on an as-if-converted to GFI Class B Common Stock basis) are entitled to share ratably with the holders of GFI Common Stock in certain dividends declared on the Class B Common Stock.

Voting Rights: The holders of GFI's Series A Preferred Stock, voting separately as a class, have certain voting and veto rights, including the right to elect one of the directors of the Company. In addition, the holders of Series A Preferred Stock have the right to vote, together with holders of Class B Common Stock as a single class, on all matters upon which the holders of Class B Common Stock (other than the election of directors) are entitled to vote pursuant to applicable Delaware law or GFI's Certificate of Incorporation.

F-25

upon liquidation, the holders of Series A Preferred Stock are entitled to receive a liquidating distribution of $1.00 per share, subject to adjustment, plus any accrued and unpaid dividends.

Rank: The Series A Preferred Stock generally ranks senior to the GFI Common Stock and on parity with the Series B Preferred Stock as to payment of dividends, voting, distributions of assets upon liquidation, dissolution or winding-up, whether voluntary or involuntary, or otherwise.

Series B Convertible Preferred Stock

Conversion: Each share of Series B Convertible Preferred Stock (the "Series B Preferred Stock") will be automatically converted into shares of Class B Common Stock, immediately prior to the closing of an IPO, at an initial conversion rate of one share of Class B Common Stock for each share of Series B Preferred Stock.

Dividends: Before the payment of any dividends in respect of any shares of GFI Common Stock, the holders of the Series B Preferred Stock (on an as-if-converted to GFI Class B Common Stock basis) are entitled to share ratably with the holders of GFI Common Stock in certain dividends declared on the Class B Common.

Voting Rights: Except as provided by law, the Series B Preferred Stock generally does not have any voting rights. To the extent the Series B Preferred Stock has voting rights, such stock is required to be voted equally with the shares of Class B Common Stock, and not as a separate class.

Liquidation Preference: In the event of any voluntary or involuntary liquidation, dissolution or winding-up of GFI, before any payment or distribution of the assets of GFI, or the proceeds thereof, may be made or set apart for the holders of any stock ranking junior to the Series B Preferred Stock upon liquidation, the holders of Series B Preferred Stock are entitled to receive a liquidating distribution of $1.50 per share, plus any accrued and unpaid dividends.

Rank: The Series B Preferred Stock generally ranks senior to the GFI Common Stock and on parity with the Series A Preferred Stock as to payment of dividends, voting, distributions of assets upon liquidation, dissolution or winding-up, whether voluntary or involuntary, or otherwise.

Dividends to JPI — Historically, GFI has paid dividends to JPI in amounts at least equal to the amount of corporate income taxes that would have been payable had JPI not been an S corporation. Amounts paid were $3,266, $4,536 and $0 for the years ended December 31, 2001, 2002 and 2003, respectively. The amount paid in 2002 related to JPI's tax liabilities for the 11-month period ended November 30, 2001. This amount represented a distribution that was declared prior to the reorganization for the benefit of JPI, the sole member of GLLC on the date that the distribution was declared. In addition, on October 1, 2001, GLLC paid a dividend to JPI of $30,000 in cash and accounts receivable (see Note 4).

Capital Transactions with JPI — Capital transactions with JPI are a result of capital contributions and capital distributions between JPI and various subsidiaries of the Company, prior to, and in conjunction with, the Reorganization.

F-26

Capital Transactions in Subsidiaries — Capital transactions in subsidiaries are a result of capital transactions in a majority-owned subsidiary during the year ended December 31, 2001.

16. COMMITMENTS AND CONTINGENCIES

The Company has non-cancelable operating leases for computer hardware and software, communications equipment, and office space that expire on various dates through 2016. At December 31, 2003, the future minimum rental commitments under such leases are as follows:

2004	$	3,772
2005		3,532
2006		3,296
2007		3,141
2008		3,141
Thereafter		16,930

Total	$	33,812

Many of the leases for office space contain escalation clauses that require payment of additional rent to the extent of increases in certain operating and other costs. Rent expense under the leases for the years ended December 31, 2001, 2002, and 2003 was $2,089, $4,077, and $3,990, respectively.

The Company, through its subsidiary GFI UK Holdings, entered into lease agreements with an affiliate, which expire in 2016. Under these agreements, GFI UK Holdings is required to pay an annual rent of £500 ($893 at December 31, 2003, which is included in the future rental commitments table).

Litigation — In the normal course of business, the Company and certain subsidiaries included in the consolidated financial statements have been named as defendants in various lawsuits and proceedings and have been involved in certain regulatory examinations. Although the ultimate outcome of these matters cannot be ascertained at this time, it is the opinion of management, after consultation with counsel, that the resolution of such matters will not have a material adverse effect on the financial condition of the Company, but may be material to the Company's operating results for any particular period.

Risks and Uncertainties — The Company primarily generates its revenues by executing and facilitating transactions for counterparties. Revenues for these services are transaction based. As a result, the Company's revenues could vary based upon the transaction volume of securities, commodities, foreign exchange and derivative markets.

Guarantees — The Company, through its subsidiaries, is a member of certain exchanges and clearinghouses. Under the membership agreements, members are generally required to guarantee certain obligations. Additionally, if a member becomes unable to satisfy its obligations to the clearinghouse, other members may be required to meet shortfalls. To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral as well as meet certain minimum financial standards. The Company's maximum potential liability under these arrangements cannot be quantified. However, the potential for the Company to be required to make payments under these arrangements is

F-27

unlikely. Accordingly, no contingent liability is recorded in the Consolidated Statement of Financial Condition for these arrangements.

17. RETIREMENT PLANS

In the United States, the Company has established the GFI Group 401(k) plan, pursuant to the applicable laws of the Internal Revenue Code. It is available to all eligible U.S. employees as stated in the plan document and is subject to the provisions of the Employee Retirement Income Security Act of 1974. Employees may voluntarily contribute a portion of their compensation, not to exceed the statutory limit. The Company did not make any contributions to the plan for the years ended December 31, 2001, 2002, or 2003.

In the U.K. the Company has established two defined contribution plans pursuant to the applicable laws in the U.K. Employees of the U.K. subsidiaries may voluntarily designate a portion of their monthly compensation to be contributed, which the Company matches up to a certain percentage. The GFI Group Personal Pension Plans are open to all U.K. employees after the completion of three months of employment. Additionally, there is an Occupational Pension Plan which is available only to senior employees. The Company also matches contributions made under this plan. The Company has made aggregate contributions of $341, $796 and $959 in 2001, 2002 and 2003, respectively, for the GFI Group Personal Pension Plans and Occupational Pension Plan.

18. STOCK OPTIONS

As of December 31, 2003, the Company maintained two stock option plans: The GFI Group Inc. 2002 stock option plan (the "GFI Group Plan") and the GFInet inc. 2000 stock option plan (the "GFInet Plan"). Under each plan: options may be granted to employees, non-employee directors or consultants to the Company; both incentive and non-qualified stock options are available for grant; options are issued with terms up to ten years from date of grant; and options are generally issued with an exercise price equal to or greater than the fair market value at the time the option is granted. In addition to these terms, both the GFI Group Plan and the GFInet Plan contain events that must occur prior to any options becoming exercisable. Options outstanding under both plans will be exercisable into Class B Common Stock.

The exercisability of options issued under the GFI Group Plan is contingent upon the Company completing an initial public offering of the Company's common stock. In the event that an initial public offering is not consummated prior to the expiration of the term, the stock option will terminate. Pursuant to the requirements of APB 25, the measurement date for options issued under the GFI Group Plan is later than the grant date; therefore, the measurement date for options issued prior to January 1, 2003 will occur as of the date of the consummation of an initial public offering. Subsequent to December 31, 2003, the Company amended all outstanding options issued under the GFI Group Plan prior to January 1, 2003 to extend the term of each option. These amendments were accounted for as modifications under SFAS 123. Pursuant to the requirements of SFAS 123, options issued on or after January 1, 2003 are measured at fair value at the date of grant. All options modified after January 1, 2003 are measured at the incremental fair value of the options calculated on the date of modification, in addition to the amount calculated as fair value on the date of grant. For options issued on or modified after January 1, 2003, compensation expense measured on the date of grant or modification will not be recorded until the consummation of an initial public offering. Upon consummation of an initial public offering, compensation expense related to options issued during the year ended December 31, 2003 will not have a material effect on the consolidated financial statements.

F-28

The exercisability of options issued under the GFInet Plan is contingent upon the earlier of the Company completing an initial public offering of the Company's common stock, or a specified corporate action, which must occur by March 31, 2005 (unless other specified events have occurred). In the event that an initial public offering is not consummated by March 31, 2005 and the specified corporate action has occurred, the awards are exercisable on March 31, 2005, to the extent such awards have vested. In the event an initial public offering has not occurred and employees exercise options, stockholders will be bound by certain restrictions, including the passage of time, prior to resale. The measurement date for all options issued under the GFInet Plan was the date of grant. During 2001, options were issued under the GFInet Plan with exercise prices below the fair market value of the stock at the date of grant. Accordingly, $216, $271 and $44 was recognized as compensation expense during the years ended December 31, 2001, 2002 and 2003, respectively.

The fair value of the options granted under both the GFI Group Plan and GFInet Plan was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected term of five years; (iii) volatility of 0%; and (iv) an average risk-free interest rate of 4.5%, 3.7% and 2.9% for the years ended December 31, 2001, 2002 and 2003, respectively. Options under both plans vest ratably over a period of two to four years.

All repriced options are reflected as cancellations and grants in all the summaries below of stock option transactions.

A summary of stock option transactions is as follows:

		GFI Group Plan				GFInet Plan
		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding January 1, 2001		—		$	—	12,998,000		$	1.19
	Granted	—			—	5,576,048			1.61
	Terminated	—			—	(182,000	)		1.11

Outstanding December 31, 2001		—			—	18,392,048			1.32
	Granted	6,071,740			1.25	1,513,000			1.30
	Terminated	(63,500	)		1.25	(3,427,373	)		1.39

Outstanding December 31, 2002		6,008,240			1.25	16,477,675			1.30
	Granted	1,929,000			1.25	—			—
	Terminated	(466,500	)		1.25	(1,566,295	)		1.50

Outstanding December 31, 2003		7,470,740			1.25	14,911,380			1.28
	Granted (Unaudited)	2,998,000	*		1.25	300,000			1.28
	Terminated (Unaudited)	—			—	(663,610	)		1.55

Outstanding March 31, 2004 (Unaudited)		10,468,740			1.25	14,547,770			1.26

*: Included in the number of options granted under the GFI Group Plan during the three months ended March 31, 2004 is an option to purchase 500,000 shares of the Company's common stock

F-29

with an exercise price equal to the initial public offering price. The exercise price was assumed to be $1.25 at the date of grant and will be subsequently adjusted to reflect the initial public offering price.

The following table summarizes information about the GFI Group Plan options as of December 31, 2003:

		Stock Options Outstanding							Stock Options Exercisable
Exercise Price		Options Outstanding as of December 31, 2003		Weighted Average Remaining Life (Years)		Weighted Average Exercise Price			Number Exercisable as of December 31, 2003		Weighted Average Exercise Price
$1.25		7,470,740		8.70		$	1.25		—		—

The following table summarizes information about the GFInet Plan options as of December 31, 2003:

	Stock Options Outstanding				Stock Options Exercisable
Exercise Price	Options Outstanding as of December 31, 2003	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number Exercisable as of December 31, 2003	Weighted Average Exercise Price
$1.00	10,267,880	6.47	$	1.00	—	—
1.25	940,000	6.97		1.25	—	—
1.50	332,000	7.01		1.50	—	—
2.00	2,660,500	7.16		2.00	—	—
2.25	35,000	7.02		2.25	—	—
2.50	676,000	6.69		2.50	—	—

The following table summarizes information about the GFI Group Plan options as of March 31, 2004 (unaudited):

		Stock Options Outstanding							Stock Options Exercisable
Exercise Price		Options Outstanding as of March 31, 2004		Weighted Average Remaining Life (Years)		Weighted Average Exercise Price			Number Exercisable as of March 31, 2004		Weighted Average Exercise Price
$1.25		10,468,740	*	8.83		$	1.25		—		—

*: Included in the number of options granted under the GFI Group Plan during the three months ended March 31, 2004 is an option to purchase 500,000 shares of the Company's common stock with an exercise price equal to the initial public offering price. The exercise price was assumed to be $1.25 at the date of grant and will be subsequently adjusted to reflect the initial public offering price.

F-30

The following table summarizes information about the GFInet Plan options as of March 31, 2004 (unaudited):

	Stock Options Outstanding				Stock Options Exercisable
Exercise Price	Options Outstanding as of March 31, 2004	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number Exercisable as of March 31, 2004	Weighted Average Exercise Price
$1.00	9,959,770	6.23	$	1.00	—	—
1.25	1,210,000	6.82		1.25	—	—
1.50	347,000	6.76		1.50	—	—
2.00	2,370,000	6.93		2.00	—	—
2.25	5,000	6.76		2.25	—	—
2.50	656,000	6.43		2.50	—	—

Fenics Plan — In addition, the Company maintained the Fenics 2000 Employee Stock Option Plan (the "Fenics Plan") which was dissolved during the year ended December 31, 2002. Under the Fenics Plan: options were granted to employees of Fenics; non-qualified options were granted; options were issued with terms of up to ten years from date of grant; and options were issued with an exercise price equal to or greater than the fair market value at the time the option was granted.

The fair value of the options granted under the Fenics Plan were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected term of ten years; (iii) volatility of 0%; and (iv) a weighted average risk-free interest rate of 5.11%. Options vested ratably over a period of two to four years.

A summary of stock option transactions for the Fenics Plan is as follows:

		Fenics Plan
		Options		Weighted Average Exercise Price
Outstanding January 1, 2001		735,528		$	2.30
	Terminated	(233,576	)		2.25

Outstanding December 31, 2001		501,952			2.32
	Terminated	(501,952	)		2.32

Outstanding December 31, 2002		—			—

At December 31, 2003, the Fenics Plan had no options outstanding or exercisable.

Warrant — At December 31, 2003, there was one warrant outstanding to purchase one million shares of Class B Common Stock at $1.00 per share which was issued in June 2000 and which expires on June 15, 2005.

F-31

19. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company, through GLLC and GFInet and their primary subsidiaries, operates as an inter-dealer broker. In this role, the Company is interposed between buyers and sellers ("counterparties"). Brokerage transactions facilitated by the Company are settled primarily between the counterparties on a give-up basis. Those transactions not settled in this manner are transacted on a matched principal basis and are cleared through various clearing organizations. In the event of counterparty nonperformance, the Company may be required to purchase or sell financial instruments at unfavorable market prices, which may result in a loss to the Company. The Company does not anticipate nonperformance by counterparties. The Company monitors its credit risk daily and has a policy of reviewing regularly the credit standing of counterparties with which it conducts business.

Unsettled transactions (i.e., securities failed-to-receive and securities failed-to-deliver) are attributable to matched-principal transactions executed by subsidiaries and are recorded at contract value. Cash settlement is achieved upon receipt or delivery of the security. In the event of nonperformance, the Company may purchase or sell the security in the market and seek reimbursement for losses from the contracted counterparty.

20. FAIR VALUE OF FINANCIAL INSTRUMENTS

Substantially all of the Company's financial instruments are carried at fair value or amounts that approximate fair value.

21. REGULATORY REQUIREMENTS

SLLC is a registered broker-dealer with the Securities and Exchange Commission and the National Association of Securities Dealers, Inc. ("NASD"). Also, SLLC is a registered introducing broker with the National Futures Association and the Commodity Futures Trading Commission. Accordingly, SLLC is subject to the Net Capital rules under the Securities Exchange Act of 1934 and the NASD, and SLLC is subject to the Net Capital rules under the Commodity Exchange Act. Under these rules, SLLC is required to maintain minimum Net Capital of not less than the greater of $250 or 2% of aggregate debits, as defined.

On November 30, 2003, SLLC merged with Inter-Dealer Brokers LLC, a wholly-owned subsidiary of GFInet, and a registered broker-dealer. This merger was accounted for in a manner similar to a pooling of interests. SLLC was the surviving entity of the merger.

At December 31, 2003, SLLC had Net Capital and Excess Net Capital as follows:

	SLLC
Net Capital at December 31, 2003	$	17,404
Minimum Net Capital		250

Excess Net Capital	$	17,154

F-32

GFI Brokers Ltd. ("Brokers"), GFI Securities Ltd. ("Securities") and GFInet U.K. Ltd. ("Net UK") are subject to the capital requirements of the Financial Services Authority in the United Kingdom. Under this rule, minimum capital, as defined, must be maintained as follows:

	Brokers		Securities		Net UK
Net Capital at December 31, 2003	$	12,546	$	17,384	$	17,575
Minimum Net Capital Required		3,539		4,997		7,864

Excess Net Capital	$	9,007	$	12,387	$	9,711

GFI (HK) Securities LLC is subject to the capital requirements of the Securities and Futures Commission in Hong Kong, which require that GFI (HK) Securities LLC maintain minimum capital, as defined, of approximately $386. At December 31, 2003, GFI (HK) Securities LLC had capital of approximately $1,698, which exceeded the minimum requirement by approximately $1,312.

Regulatory rules may restrict the Company's ability to withdraw capital from its regulated subsidiaries.

22. GEOGRAPHIC INFORMATION

The Company offers its products and services in the United States, the United Kingdom and the Asia-Pacific region.

Information regarding revenue for the years ended December 31, 2001, 2002 and 2003, and information regarding long-lived assets (defined as property, equipment, leasehold improvements and software inventory) in geographic areas as of December 31, 2002 and 2003 are as follows:

	For the year ended December 31,
	2001		2002		2003
Revenues:
United States	$	93,446	$	114,905	$	101,666
United Kingdom		115,015		144,120		143,911
Asia-Pacific		11,897		16,195		20,267

Total	$	220,358	$	275,220	$	265,844

	As of December 31,
	2002		2003
Long-lived Assets, as defined:
United States	$	28,942	$	29,021
United Kingdom		3,209		2,907
Asia-Pacific		677		685

Total	$	32,828	$	32,613

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Revenues are attributed to geographic areas based on the location of the Company's brokers.

23. OTHER INCOME

On February 28, 2002, the Company sold its U.S. treasury repurchase agreement brokerage desk for $1,350.

During the year ended December 31, 2002, the Company received insurance proceeds related to business interruption in connection with the September 11, 2001 terrorist attacks in New York City of approximately $1,700.

In the normal course of business, the Company does not enter into derivative contracts for speculative purposes. During the period from June 2002 to July 2003, the Company entered into foreign currency forward contracts for terms of not more than eighteen months to mitigate its exposure of foreign currency exchange rate fluctuations. The Company protects itself from adverse currency rate fluctuations in firmly committed and projected future foreign currency transactions. These forward contracts were primarily denominated in United States Dollars and Euros and were convertible into British Pounds. All derivative contracts, such as foreign exchange contracts, are recorded at their fair value; therefore, gains (losses) of $0, $1,615 and ($1,360) on such instruments are included in the Consolidated Statement of Operations as other income for the years ended December 31, 2001, 2002 and 2003, respectively.

24. DERIVATIVES AND HEDGING ACTIVITIES

During 2003, the Company entered into foreign exchange forward contracts to hedge certain transactions, primarily accounts receivables denominated in foreign currencies between the contract date and their ultimate settlement. These contracts have been designated as cash flow hedges. In July 2003, the Company entered into a series of eighteen forward contracts each settling monthly over an eighteen-month period. The derivatives are recorded in the Consolidated Statements of Financial Condition at fair value in other assets or other liabilities. The earnings impact resulting from the change in fair value of the derivative instruments is recorded in the same line item in the Consolidated Statements of Operations as the underlying exposure being hedged. For the year ended December 31, 2003, unrealized gains totaling $716 were recorded as other comprehensive income. Changes in the fair value of these instruments, recognized currently in earnings to offset the remeasurement of the related assets and liabilities, were not significant.

The Company does not hold or issue financial instruments for trading purposes. The counterparty with whom the Company trades foreign exchange contracts is a major international financial institution. The Company continually monitors its positions with and the credit quality of this financial institution and does not expect nonperformance by the counterparty.

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25. OTHER COMPREHENSIVE INCOME (LOSS)

			For the year ended December 31,
			2001			2002			2003
Unrealized gain on foreign exchange forward contracts
	Current Period Change:
		Before Tax Amount	$	—		$	—		$	716
		Tax Expense (Benefit)		—			—			(299	)

		After Tax Amount	$	—		$	—		$	417

Foreign currency translation adjustment
		Before Tax Amount	$	277		$	(97	)	$	(496	)
		Tax Expense (Benefit)		(116	)		40			207

		After Tax Amount	$	161		$	(57	)	$	(289	)

F-35

Shares

Common Stock

PROSPECTUS

, 2004

Joint Book-Running Managers

Citigroup

Merrill Lynch & Co.

Banc of America Securities LLC

JPMorgan

Jefferies & Company, Inc.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13: Other Expenses of Issuance and Distribution

The following table sets forth the expenses (other than the underwriting discount and commissions) expected to be incurred by the registrant while issuing and distributing the securities registered pursuant to this Registration Statement. All amounts other than the SEC registration fee, NASD filing fee and Nasdaq National Market listing fee are estimates.

Registration fee		$	12,670
NASD filing fee			10,500
Nasdaq National Market listing fee			*
Legal fees and expenses			*
Accounting fees and expenses			*
Printing and engraving			*
Directors and Officers Insurance			*
Blue sky fees and expenses (including legal fees)			*
Transfer agent fees			*
Miscellaneous			*

	Total	$	*

*: To be provided by Amendment.

Item 14: Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law permits indemnification of the Registrant's officers and directors under certain conditions and subject to certain limitations. Section 145 of the Delaware General Corporation Law also provides that a corporation has the power to purchase and maintain insurance on behalf of its officers and directors against any liability asserted against such person and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of Section 145 of the Delaware General Corporation Law.

Article 5 of the Registrant's bylaws provides that the Registrant will indemnify its directors and executive officers to the fullest extent authorized by the Delaware General Corporation Law. The rights to indemnity thereunder continue as to a person who has ceased to be a director, officer, employee or agent and inure to the benefit of the heirs, executors and administrators of the person. In addition, expenses incurred by a director or executive officer in defending any civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Registrant (or was serving at the Registrant's request as a director or officer of another corporation) will be paid by the Registrant in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it will ultimately be determined that he or she is not entitled to be indemnified by the Registrant as authorized by the relevant section of the Delaware General Corporation Law.

As permitted by Section 102(b)(7) of the Delaware General Corporation Law, Article 9 of the Registrant's certificate of incorporation provides that a director of the Registrant will not be personally liable for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in good faith or acts or omissions that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from

II-1

which the director derived any improper personal benefit. The Registrant has purchased directors' and officers' liability insurance. We believe that this insurance is necessary to attract and retain qualified directors and officers.

The underwriting agreement (Exhibit 1.1 hereto) contains provisions by which the underwriters have agreed to indemnify the Registrant, each person, if any, who controls the Registrant within the meaning of Section 15 of the Securities Act, each director of the Registrant, and each officer of the Registrant who signs this registration statement, and each selling stockholder with respect to information furnished in writing by or on behalf of the underwriters for use in the registration statement.

Item 15: Recent Sales of Unregistered Securities

The following is a summary of transactions by the Registrant during the past three years, adjusted to reflect the Registrant's 1-for- reverse stock split that will occur prior to the commencement of this offering, involving sales and issuances of securities that were not registered under the Securities Act of 1933.

On November 30, 2001, the Registrant completed the planned reorganization of our then-existing corporate structure. As part of this reorganization:

•: The Registrant issued 50 million shares of our Class A Common Stock to Jersey Partners in consideration for the contribution by Jersey Partners to us of 99% of its membership interests in GFI Group LLC and the redemption and reissuance of 1% of such membership interests to GFInet inc. The issuance of these securities in connection with the reorganization was exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act and Regulation D promulgated thereunder as a transaction by an issuer not involving a public offering.
•: GFInet merged into a wholly-owned subsidiary of ours, with GFInet remaining as the surviving company. The Registrant issued 96,454,332 shares of our Class B Common Stock to the common stockholders of GFInet, who surrendered all of their shares of GFInet common stock in exchange for an equivalent number of shares of our Class B Common Stock. The Registrant issued 27,000,000 shares of Series A Preferred Stock and 1,700,000 shares of Series B Preferred Stock to the preferred stockholders of GFInet, who surrendered all of their shares of such series of GFInet convertible preferred stock in exchange for an equivalent number of shares of such series of our convertible preferred stock. The issuance of these securities in connection with the reorganization was exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act and Regulation D promulgated thereunder as a transaction by an issuer not involving a public offering.
•: The Registrant's subsidiary, GFI Group LLC, paid a dividend of $30 million in cash and certain accounts receivable to its then-parent Jersey Partners. In exchange for a loan of this cash and accounts receivable from Jersey Partners, GFI Group LLC issued to Jersey Partners two term notes in the original principal amounts of $5 million and $20 million and an agency note in the original principal amount of $5 million (which was repaid in full by GFI Group LLC in 2002). The issuance of these notes was exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering.
•: On June 3, 2002, the Registrant issued 5,991,541 shares of Class A Common Stock to Jersey Partners in full satisfaction of the Registrant's obligations to Jersey Partners for post-closing adjustments to the exchange of stock that took place in the reorganization. The issuance of these securities was exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering.

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On June 3, 2002, the Registrant issued and sold 35,373,704 shares of its Series C Convertible Preferred Stock, par value $.01 per share to a limited number of institutional "accredited investors" (as defined in Rule 501(A)(1), (2), (3) or (7) under the Securities Act). The issuance of these securities was exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act and Regulation D promulgated thereunder as a transaction by an issuer not involving a public offering. Citigroup Global Markets acted as the Registrant's private placement agent for this transaction and was paid a placement agency fee of approximately $2.4 million.

On April 23, 2002, the Registrant issued 25,980 shares of Class B Common Stock to Brown Brothers Harriman & Co. The issuance of these securities was exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering.

From January 1, 2001 to March 31, 2004, the Registrant has granted options to purchase 16,947,788 shares of its common stock to its directors, officers and employees pursuant to its stock option plans at exercise prices ranging from $1.00 per share of common stock to $2.50 per share of common stock (which range excludes an option to purchase 500,000 shares of common stock at an exercise price equal to the offering price of this offering), pursuant to exemptions from registration provided by rule 701 and/or Section 4(2) under the Securities Act.

Item 16: Exhibits and Financial Statements; Schedules

(a): Exhibits:

NUMBER		DESCRIPTION
1.1*		Form of Underwriting Agreement
3.1*		Restated Certificate of Incorporation of the Registrant, as currently in effect
3.2*		Form of Second Amended and Restated Certificate of Incorporation of the Registrant, to be filed upon the closing of this offering
3.3*		Amended and Restated Bylaws of the Registrant, as currently in effect
3.4*		Form of Second Amended and Restated Bylaws of the Registrant, to be effective upon the closing of this offering
4.1*		See Exhibits 3.2 and 3.4 for provisions of the Second Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws for the Registrant defining the rights of holders of Common Stock of the Registrant
4.2*		Specimen Stock Certificate
4.3*		Stockholders' Agreement, dated as of November 30, 2001, among the Registrant and the stockholders named therein
4.4*		Series A Registration Rights Agreement, dated as of March 10, 2000, between the Registrant and the parties named therein, as amended by the Amendment Agreement dated as of November 30, 2001, by and among the Registrant, GFInet inc. and the parties named therein, as amended by Amendment No. 2 to the Registration Rights Agreement dated as of June 3, 2002, by and among the Registrant and the parties named therein
4.5*		Series B Registration Rights Agreement, dated as of June 1, 2000, between the Registrant and the parties named therein, as amended by the Amendment Agreement dated as of November 30, 2001, by and among the Registrant, GFInet inc. and the parties named therein, as amended by Amendment No. 2 to the Registration Rights Agreement dated as of June 3, 2002, by and among the Registrant and the parties named therein

II-3

4.6*		Series C Registration Rights Agreement, dated as of June 3, 2002, between the Registrant and the parties named therein
4.7*		Warrant dated July 15, 2000 issued to Newnetco LLC
5.1*		Opinion of Milbank, Tweed, Hadley & McCloy LLP with respect to the validity of the securities offered
10.1*		Multicurrency Revolving and Term Facilities Agreement, dated July 4, 2002, between the Registrant and GFInet inc., as borrowers, Barclays Bank plc, as agent for the lenders, U.K. security trustee and as guarantee bank, Brown Brothers Harriman & Co., as swingline agent for the lenders and as U.S. security trustee, Barclays Capital as co-ordinator and Barclays Bank plc, Brown Brothers Harriman & Co. and Bank of America, N.A., as original lenders
10.2*		Pledge and Security Trust Agreement, dated July 4, 2002 by the Registrant, GFInet inc., GFI Group LLC, Fenics Software Inc., GFI Brokers LLC, GFI Energy Net LLC and the other grantors, in favor of Brown Brothers Harriman & Co., as U.S. security trustee
10.3*		Employment Agreement, dated as of July 17, 2000, between the Registrant and Donald P. Fewer, as amended by the First Amendment to Employment Agreement dated as of March 11, 2004
10.4*		Employment Agreement, dated as of May 1, 2002, between the Registrant and Stephen McMillan
10.5*		Employment Agreement, dated as of November 18, 2002, between the Registrant and James A. Peers
10.6*		2002 Stock Option Plan
10.7*		2000 Stock Option Plan
10.8*		U.K. Defined Contribution Plans
11.1*		Statement regarding computation of earnings per share
21.1*		List of subsidiaries of the Registrant
23.1		Consent of Independent Registered Public Accounting Firm
23.2*		Consent of Counsel (included in Exhibits 5.1)
24.1		Power of Attorney (see page II-6)

*: To be filed by amendment.
(b): Financial Statement Schedule:

Schedule I — Condensed Financial Information of GFI Group Inc. (Parent Company Only) at December 31, 2002 and 2003 and for each of the three years in the period ended December 31, 2003.

Schedules other than those referred to above have been omitted because they are not applicable, are not required or because the information is included elsewhere in the Registrant's consolidated financial statements or the notes thereto.

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Item 17: Undertakings

The following undertakings correspond to the specified paragraph designation from Item 512 of Regulation S-K.

(a) Equity Offering of Nonreporting Registrant. The undersigned Registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Acceleration of Effectiveness. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act will be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York and state of New York, on the 15th day of June, 2004.

GFI GROUP INC.
By:	/s/ J. CHRISTOPHER GIANCARLO
	Name:	J. Christopher Giancarlo
	Title:	Executive Vice President — Corporate Development

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael Gooch, J. Christopher Giancarlo and Scott Pintoff, and each of them, his or her true and lawful attorney-in-fact and agent, with full power and substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement (including any and all pre-effective and post-effective amendments), any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, agents, or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date

/s/ MICHAEL GOOCH Michael Gooch	Chairman of the Board and Chief Executive Officer (principal executive officer)	June 15, 2004
/s/ COLIN HEFFRON Colin Heffron	President and Director	June 15, 2004
/s/ DONALD P. FEWER Donald P. Fewer	Senior Managing Director — Head of North America and Director	June 15, 2004
/s/ STEPHEN MCMILLAN Stephen McMillan	Senior Managing Director — Head of Europe and Director	June 15, 2004
/s/ JAMES A. PEERS James A. Peers	Chief Financial Officer (principal financial and accounting officer)	June 15, 2004
/s/ GEOFFREY KALISH Geoffrey Kalish	Director	June 15, 2004
/s/ CHRISTOPHER PIKE Christopher Pike	Director	June 15, 2004
/s/ ROBERT TAYLOR Robert Taylor	Director	June 15, 2004
/s/ JOHN W. WARD John W. Ward	Director	June 15, 2004

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Schedule I

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
GFI Group Inc.

We have audited the consolidated financial statements of GFI Group Inc. and subsidiaries (the "Company") as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, and have issued our report thereon dated June 15, 2004 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 16 of this Registration Statement. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Deloitte & Touche LLP
New York, New York
June 15, 2004

S-1

GFI GROUP INC.
(Parent Company Only)

CONDENSED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2002 AND 2003
(In thousands)

			2002		2003
Assets:
	Cash and cash equivalents		$	17,065	$	11,782
	Investments in subsidiaries, equity basis			23,502		39,704
	Advances to subsidiaries			40,492		54,980
	Other assets			283		226

		Total assets	$	81,342	$	106,692

Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity:
	Notes payable, net			28,105		38,747
	Other liabilities			52		124

				28,157		38,871

	Commitments and contingencies			—		—
	Redeemable convertible preferred stock			30,043		30,043
	Stockholders' equity			23,142		37,778

Total liabilities, redeemable convertible preferred stock and stockholders' equity			$	81,342	$	106,692

See notes to condensed financial statements.

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GFI GROUP INC.

(Parent Company Only)

CONDENSED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
(In thousands)

			2001			2002		2003
REVENUES:
	Income (loss) from subsidiaries		$	(31,816	)	$	12,677	$	15,297
	Interest income			—			161		138

		Total revenues		(31,816	)		12,838		15,435

EXPENSES:
	Interest expense			—			849		1,489
	Other expenses			—			174		183

		Total expenses		—			1,023		1,672

INCOME (LOSS) BEFORE BENEFIT FROM INCOME TAXES				(31,816	)		11,815		13,763

BENEFIT FROM INCOME TAXES				—			459		701

NET INCOME (LOSS)			$	(31,816	)	$	12,274	$	14,464

See notes to condensed financial statements.

S-3

GFI GROUP INC.
(Parent Company Only)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
(In thousands)

			2001			2002			2003

Cash flows from operating activities
	Net income (loss)		$	(31,816	)	$	12,274		$	14,464
	Adjustments to reconcile net income (loss) to net cash used in operating activities—
		Noncash transactions in net income (loss)		31,816			(13,048	)		(15,809	)
	Changes in operating assets and liabilities			—			(40,221	)		(14,438	)

Cash used in operating activities				—			(40,995	)		(15,783	)

Cash flows from investing activities				—			—			—

Cash flows from financing activities				—			58,060			10,500

Increase (decrease) in cash and cash equivalents				—			17,065			(5,283	)
Cash and cash equivalents, beginning of year				—			—			17,065

Cash and cash equivalents, end of year			$	—		$	17,065		$	11,782

See notes to condensed financial statements.

S-4

GFI GROUP INC.
(Parent Company Only)
NOTES TO CONDENSED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
(In thousands)

1. BASIS OF PRESENTATION

The accompanying condensed financial statements (the "Parent Company Financial Statements"), including the notes thereto, should be read in conjunction with the consolidated financial statements of GFI Group Inc. and subsidiaries ("the Company") and the notes thereto.

The Parent Company Financial Statements for the years ended December 31, 2001, 2002 and 2003 are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingencies in the condensed financial statements. Management believes that the estimates utilized in the preparation of the condensed financial statements are reasonable and prudent. Actual results could differ materially from these estimates.

2. CORPORATE REORGANIZATION

On November 30, 2001, Jersey Partners Inc. ("JPI") and the other stockholders of GFInet inc. ("GFInet") reorganized the ownership structure of GFInet and JPI's wholly-owned subsidiary GFI Group LLC ("GLLC"), in order to streamline their operations and achieve certain operational, tax and related efficiencies. Prior to the Reorganization, JPI incorporated GFI Group Inc. ("GFI") under the laws of the State of Delaware.

Pursuant to an agreement between JPI, GFI and GLLC, JPI contributed 99% of its membership interests in GLLC, as well as certain agreed-upon assets and liabilities of JPI, to GFI for consideration of 50 million shares of GFI Class A Common Stock. The remaining 1% of JPI's membership interest was redeemed at the closing of the reorganization and issued to GFInet. GFI also entered into a merger agreement with GFInet, which provided for a merger of GFInet into a wholly-owned subsidiary of GFI with GFInet as the surviving corporation. Subsequently, GFI contributed 98% of its membership interest in GLLC to GFInet.

As a result of the merger, the common stockholders of GFInet surrendered to GFI all of their shares of GFInet common stock in exchange for an equivalent number of shares of Class B Common Stock of GFI. In addition, the GFInet preferred stockholders surrendered to GFI all of their shares of GFInet Series A convertible preferred stock and GFInet Series B convertible preferred stock for an equivalent number of GFI's Series A Preferred Stock and GFI Series B Preferred Stock, respectively. The outstanding options or warrants to purchase shares of GFInet's common stock became options or warrants to purchase shares of Class B Common Stock of GFI on the same terms. Upon completion of the Reorganization, JPI owned 74.2% of the Company prior to dilution for outstanding warrants and options.

The Reorganization was achieved as a noncash transaction for GFI.

3. GUARANTEES

From time to time, the Company provides guarantees, on behalf of its subsidiaries, to clients for the purpose of providing credit enhancement for such clients. Such guarantees generally provide that the Company will guarantee the performance of all liabilities, obligations and undertakings owed by such subsidiary with respect to matched principal transactions entered into by such

S-5

subsidiary with the relevant client. These guarantees are generally terminable on less than 30 days notice. The Company has not recorded any contingent liability in the condensed financial statements for these indemnifications and believes that the occurrence of any events that would trigger payments under these guarantees is remote.

4. ADVANCES TO SUBSIDIARIES

As of December 31, 2002 and 2003, GFI Group Inc. has receivables from subsidiaries of $40,492 and $54,980 related primarily to the allocation of funds received, from notes payable and issuance of equity securities, to subsidiaries to fund working capital.

S-6

EXHIBIT INDEX

NUMBER		DESCRIPTION
1.1*		Form of Underwriting Agreement
3.1*		Restated Certificate of Incorporation of the Registrant, as currently in effect
3.2*		Form of Second Amended and Restated Certificate of Incorporation of the Registrant, to be filed upon the closing of this offering
3.3*		Amended and Restated Bylaws of the Registrant, as currently in effect
3.4*		Form of Second Amended and Restated Bylaws of the Registrant, to be effective upon the closing of this offering
4.1*		See Exhibits 3.2 and 3.4 for provisions of the Second Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws for the Registrant defining the rights of holders of Common Stock of the Registrant
4.2*		Specimen Stock Certificate
4.3*		Stockholders' Agreement, dated as of November 30, 2001, among the Registrant and the stockholders named therein
4.4*		Series A Registration Rights Agreement, dated as of March 10, 2000, between the Registrant and the parties named therein, as amended by the Amendment Agreement dated as of November 30, 2001, by and among the Registrant, GFInet inc. and the parties named therein, as amended by Amendment No. 2 to the Registration Rights Agreement dated as of June 3, 2002, by and among the Registrant and the parties named therein
4.5*		Series B Registration Rights Agreement, dated as of June 1, 2000, between the Registrant and the parties named therein, as amended by the Amendment Agreement dated as of November 30, 2001, by and among the Registrant, GFInet inc. and the parties named therein, as amended by Amendment No. 2 to the Registration Rights Agreement dated as of June 3, 2002, by and among the Registrant and the parties named therein
4.6*		Series C Registration Rights Agreement, dated as of June 3, 2002, between the Registrant and the parties named therein
4.7*		Warrant dated July 15, 2000 issued to Newnetco LLC
5.1*		Opinion of Milbank, Tweed, Hadley & McCloy LLP with respect to the validity of the securities offered
10.1*		Multicurrency Revolving and Term Facilities Agreement, dated July 4, 2002, between the Registrant and GFInet inc., as borrowers, Barclays Bank plc, as agent for the lenders, U.K. security trustee and as guarantee bank, Brown Brothers Harriman & Co., as swingline agent for the lenders and as U.S. security trustee, Barclays Capital as co-ordinator and Barclays Bank plc, Brown Brothers Harriman & Co. and Bank of America, N.A., as original lenders
10.2*		Pledge and Security Trust Agreement, dated July 4, 2002 by the Registrant, GFInet inc., GFI Group LLC, Fenics Software Inc., GFI Brokers LLC, GFI Energy Net LLC and the other grantors, in favor of Brown Brothers Harriman & Co., as U.S. security trustee
10.3*		Employment Agreement, dated as of July 17, 2000, between the Registrant and Donald P. Fewer, as amended by the First Amendment to Employment Agreement dated as of March 11, 2004
10.4*		Employment Agreement, dated as of May 1, 2002, between the Registrant and Stephen McMillan

10.5*		Employment Agreement, dated as of November 18, 2002, between the Registrant and James A. Peers
10.6*		2002 Stock Option Plan
10.7*		2000 Stock Option Plan
10.8*		U.K. Defined Contribution Plans
11.1*		Statement regarding computation of earnings per share
21.1*		List of subsidiaries of the Registrant
23.1		Consent of Independent Registered Public Accounting Firm
23.2*		Consent of Counsel (included in Exhibits 5.1)
24.1		Power of Attorney (see page II-6)

*: To be filed by amendment.

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TABLE OF CONTENTS
SUMMARY
Our Business
Our Market Opportunity
RISK FACTORS
FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DIVIDEND POLICY
CASH AND CAPITALIZATION
DILUTION
SELECTED CONSOLIDATED FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OUR BUSINESS
MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PRINCIPAL AND SELLING STOCKHOLDERS
DESCRIPTION OF CAPITAL STOCK
DESCRIPTION OF CERTAIN INDEBTEDNESS
SHARES ELIGIBLE FOR FUTURE SALE
MATERIAL UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE TO FIND MORE INFORMATION
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands, except share and per share amounts)
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts)
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands)
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands)
GFI GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Information as of March 31, 2004 and three months ended March 31, 2003 and 2004 is unaudited) (In thousands, except share and per share amounts)
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
POWER OF ATTORNEY

Schedule I

GFI GROUP INC. (Parent Company Only) CONDENSED STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 2002 AND 2003 (In thousands)
GFI GROUP INC. (Parent Company Only) CONDENSED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003 (In thousands)
GFI GROUP INC. (Parent Company Only) CONDENSED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003 (In thousands)
GFI GROUP INC. (Parent Company Only) NOTES TO CONDENSED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003 (In thousands)
EXHIBIT INDEX
EX-23.1 2 a2137763zex-23_1.htm EXHIBIT 23.1
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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement of GFI Group Inc. and subsidiaries on Form S-1 of our report dated June 15, 2004, appearing in the Prospectus, which is part of this Registration Statement and of our report dated June 15, 2004 relating to the financial statement schedule appearing elsewhere in this Registration Statement.

We also consent to the reference to us under the headings "Selected Consolidated Financial Data" and "Experts" in such Prospectus.

/s/ Deloitte & Touche LLP
New York, New York
June 15, 2004

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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