10-K

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ý	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended: December 31, 2004
Or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                             to

Commission File No: 000-51103

GFI Group Inc.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	80-0006224 (I.R.S. Employer Identification No.)
100 Wall Street, New York, NY (Address of principal executive offices)	10005 (Zip Code)

Registrant's telephone number, including area code: (212) 968-4100

Securities registered pursuant to Section 12(b) of the Act:

Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 Par Value Per Share

(Title of Class)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES o    NO ý

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.    ý

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES o    NO ý

        The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the last reported sales price per share of $25.53 for our common stock on the Nasdaq National Market on February 28, 2005 was approximately $193,911,890. The registrant did not have publicly traded securities as of June 30, 2004 and has no outstanding non-voting stock.

        As of February 28, 2005 there were 26,751,455 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
None.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	4
Item 2.	Properties	26
Item 3.	Legal Proceedings	26
Item 4.	Submission of Matters to a Vote of Security Holders	27
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder
	Matters and Issuer Purchases of Equity Securities	28
Item 6.	Selected Consolidated Financial Data	29
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 8.	Financial Statements and Supplementary Data	57
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	91
Item 9A.	Controls and Procedures	91
PART III
Item 10.	Directors and Executive Officers of the Registrant	92
Item 11.	Executive Compensation	95
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	101
Item 13.	Certain Relationships and Related Transactions	104
Item 14.	Principal Accountant Fees and Services	107
PART IV
Item 15.	Exhibits, Financial Statement Schedules	108
Signatures		110

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FORWARD-LOOKING STATEMENTS

        This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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. These forward-looking statements are based largely on the expectations of management and are subject to a number of risks and uncertainties including, but not limited to, the following:

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the risks and other factors described under the heading "Risk Factors" and elsewhere in this Annual Report;



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expansion and growth of our operations generally or of specific products;



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our ability to attract and retain key personnel, including highly qualified brokerage personnel;



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our entrance into new brokerage markets, investments in establishing new brokerage desks and the hiring of new brokers;



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future results of operations and financial condition;



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business strategies;



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economic, political and market factors affecting trading volumes, securities prices, or demand for the Company's brokerage services;



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risks associated with potential acquisitions by us of businesses or technologies;



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uncertainties associated with currency fluctuations;



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our failure to protect or enforce our intellectual property rights;



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our ability to keep up with rapid technological change;



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changes in laws and regulations governing our business and operations or permissible activities;



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uncertainties relating to litigation; and



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changes in the availability of capital.

        The foregoing risks and uncertainties, as well as those risks discussed under the headings "Risk Factors"; "Item 7—Managements Discussion and Analysis of Financial Condition and Results of Operations" and "Item 7A—Quantitative and Qualitative Disclosures About Market Risk" and elsewhere is this Annual Report, may cause actual results to differ materially from the forward-looking statements. The information included herein is given as of the filing date of this Form 10-K with the Securities Exchange Commission (the "SEC") and future events or circumstances could differ significantly from these forward-looking statements. The Company does not undertake to publically update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I.

ITEM 1.    BUSINESS

Overview of Business

        We founded our business in 1987. GFI Group Inc. (the "Company") was incorporated under the laws of the State of Delaware in August 2001. Since November 2001, the Company has been a holding company that, through its subsidiaries, is 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 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 per transaction than in the markets for more standardized financial instruments. Many of these markets offer an opportunity for strong growth.

        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 revenues for our brokerage services and charge fees for certain of our data and analytics products.

Website Access to Reports

        Our Internet website address is www.gfigroup.com. Through our Internet website, we make available, free of charge, the following reports as soon as reasonably practicable after electronically filing them with, or furnishing them to, the SEC: our annual report on Form 10-K; our quarterly reports on Form 10-Q; our current reports on Form 8-K; Forms 3, 4 and 5 filed on behalf of directors and executive officers; and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our Proxy Statements for our Annual Meetings will also be available through our Internet website.

        Information relating to corporate governance of the Company is also available on our website including information concerning our directors, board committees, including committee charters, our Code of Business Conduct and Ethics for all employees and for senior financial officers and our compliance procedures for accounting and auditing matters.

        Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

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,

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on the other hand, frequently rely on an inter-dealer broker to facilitate liquidity by gathering pricing information and identifying counterparties with reciprocal interests.

        We define a liquid financial market as 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 can offer 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.

Our Market Focus

        Our brokerage operations focus on a wide variety of credit, financial, equity and commodity instruments around the world. 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

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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.

        We provide brokerage services to our clients in the form of either agency or 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 they then settle the trade directly. Commissions charged to our clients in agency transactions vary across the products for which we provide brokerage services.

        We generate revenue from principal transactions on the spread between the buy and sell price of the security that is brokered. Our principal transactions revenue is primarily derived from matched principal transactions. In matched principal transactions, we act as a "middleman" by serving as counterparty for an identified buyer and an identified seller in matching reciprocal back-to-back trades. These transactions are then settled through clearing institutions with whom we have a contractual relationship. Because the buyer and seller each settle their transactions through us rather than with each other, the parties are able to maintain their anonymity. A very limited number of our brokerage desks are allowed to enter into unmatched principal transactions to facilitate a customer's execution needs for transactions initiated by such customers. These unmatched positions are intended to be held short term and in liquid markets. Revenue from principal transactions has been growing as a percentage of our total brokerage revenue. The increase in our revenue from principal transactions has primarily resulted from the development of our brokerage services in new and existing product areas in which principal execution is either required or more common than agency execution.

        Credit Products.    We provide brokerage services in a broad range of credit derivative and cash bond 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 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, Hong Kong, and Singapore 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. Consistent with our hybrid brokerage model, clients may choose between utilizing GFI CreditMatch® to trade certain credit derivative products entirely on screen or executing the same transaction over the telephone through our brokers.

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        Financial Products.    We provide brokerage services in a range of financial instruments, including foreign exchange options, exotic options and interest rate swaps. Exotic options 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. For these products, we offer telephonic brokerage services in our New York, London, Singapore, Hong Kong 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 currency option trades executed through our worldwide brokerage desks. Our New York office focuses on providing brokerage services for foreign exchange option trading among the U.S. Dollar, the Japanese Yen 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 the Russian Rouble and Eastern European currencies, in which we provide brokerage services for forwards and non-deliverable forwards. Our brokers in Singapore provide brokerage services for foreign exchange currency options and non deliverable forwards for regional and G3 currencies. Our Sydney office brokers foreign exchange currency options for the Australian dollar and G3 currencies for our customers in Australia.

        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 ("GDRs") and American Depositary Receipt ("ADRs") 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 GDRs and ADRs for Hong Kong, Korean and Japanese equity derivatives. 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 ADRs.

        Commodity Products.    We provide brokerage services in a wide range of commodity products, including electricity, wet and dry freight derivatives, precious metals, coal, natural gas, oil, weather derivatives, emissions 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 partnership with A.C.M. Shipping Limited, we offer hybrid telephonic and electronic brokerage of wet freight derivatives in London, Singapore and New York. 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 provide extensive brokerage services for both cash-based and derivative instruments in energy products such as electricity, natural gas and weather derivatives. Our London office provides energy product brokerage services in many European national markets, including for electricity, natural gas, oil, coal and emissions. In London, our telephonic brokerage capabilities are augmented with electronic brokerage capabilities that enable our clients to trade electricity, coal, and wet and dry freight derivatives 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, oil and in numerous U.S. regional electricity markets. Our Singapore office brokers dry freight derivatives and has recently commenced the brokering of oil derivatives.

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        We 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 license market data and analytics products that are used to build pricing models, develop trading strategies and to 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 provide 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, Bloomberg and Comstock 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, energy derivative and wet and dry freight markets. Fenics FX is a leading foreign exchange option analysis tool that was licensed for use at more than 600 sites globally as of December 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 are currently developing a foreign exchange options trading system that will enable one of the world's largest banks to offer customized online pricing and trading services to their buy-side clients. This project will bring together our Fenics FX capability with our experience in developing online trading platforms. 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. Fenics Freight provides market data, analytical tools and option pricing for freight derivatives.

Our Clients

        We provide brokerage services and data and analytics products to over 1,300 institutional clients, including leading investment and commercial banks, large corporations, insurance companies and large hedge funds. Nothwithstanding our large number of clients, the majority of our brokerage revenues are generated by several dozen large financial institutions. 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.

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

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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 December 31, 2004, we employed 42 sales, marketing and customer support professionals, consisting of 27 sales employees and executives, 3 marketing employees and 12 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.

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.

        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 the systems used by our clients to record, report and store transaction data. These efforts seek to automate large parts of the trade reporting and settlement process, thereby reducing errors, risks and costs traditionally associated with post-trade activities. We may also develop or customize trading systems for our customers.

        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 December 31, 2004, we employed a team of 116 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 critical services are connected via redundant and diverse circuits and, where possible, we employ site diversity. 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.

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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.

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

        We have applied for several patents related to our products and services. We believe that no single patent or application or group of patents or applications 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, multi-dealer trading consortia and securities and futures 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 several participants are private companies. However, we believe there are four major, diversified inter-dealer brokers with which we compete. Other inter-dealer broker competitors include a number of smaller firms that tend to specialize in specific product areas and several trading platforms for specific products.

        Consortia and Exchanges.    The Internet boom resulted in the establishment of many electronic brokerage or trading platform start-ups. Only a limited number of these firms, with either backing from groups that have organized themselves as a consortia of major dealers or from one or more inter-dealer brokers, have survived. Dealer firms within a consortium platform could elect to conduct a disproportionate or increased share of their business between other member firms, or even to deal directly with each other, thus reducing liquidity in the traditional inter-dealer markets and potentially reducing the size of our market.

        Certain derivatives exchanges allow participants to trade standardized futures and options contracts. 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 covered by inter-dealer brokers in 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. Further, we face competition for certain sales of our data products from data vendors formed as a consortium of major financial institutions.

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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. These regulations are designed primarily to protect the interests of the investing public generally and thus 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 National Association of Securities Dealers ("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 of 1933, as amended (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.

        Four of GFI Securities LLC's equity and bond brokerage desks have experienced issues relating to reporting trades to the NASD on a timely basis, which is required by NASD rules. In February 2005, this subsidiary was fined $25,000 for issues relating to late trade reporting of trades in 2004. In addition, this subsidiary has been fined a total of $50,000 on three other occasions during the past two years for similar issues in prior periods. GFI Securities LLC is currently being examined by the NASD for similar issues relating to late trade reporting for four periods in 2003 and 2004. 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 examinations, the NASD may seek to impose further fines on us or seek to take other corrective action.

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        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 Exchange Act 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.

        GFI Securities LLC has been, and currently is, in compliance with the net capital rules and has 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 Financial Services Authority ("FSA") regulates our subsidiaries, GFI Brokers Limited, GFI Securities Limited and GFInet U.K. Limited. GFInet U.K. Limited does not currently conduct any regulated business and we have applied to the FSA to request that GFInet U.K. Limited's FSA license be cancelled as of December 31, 2004. The regulatory framework applicable to our U.K. regulated 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

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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 broadly defined as a 10% interest in the regulated entity or its parent or otherwise exercising significant influence over the management of the regulated entity. 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 Limited is a member of Euroclear for the purpose of clearing certain debt and equity transactions. This membership requires GFI Securities Limited to deposit collateral with Euroclear so that Euroclear will extend a clearing line to GFI Securities Limited.

        In Hong Kong, the Securities and Futures Commission (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 Monetary Authority of Singapore ("MAS") regulates our subsidiary GFI Group PTE Ltd. The applicable 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.

        In Sydney, our brokerage operations are conducted through a branch of GFI Brokers Limited. GFI Brokers Limited is registered as a foreign corporation in Australia and is conditionally exempt from the requirement to hold an Australian financial services license under the Australian Securities and Investments Commission Corporations Act 2001 in respect of the financial services it provides in Australia. This exemption applies to foreign companies regulated by the FSA in accordance with UK regulatory standards.

        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. As we expand our foreign businesses, we will also become subject to regulation by the governments and regulatory bodies in other countries. The compliance requirements of these different overseer bodies may include, but are not limited to, net capital or stockholders' equity requirements.

        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.

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Employees

        At December 31, 2004, we employed 868 people. Of these, 560 are brokerage personnel (consisting of 502 brokers and 58 trainees and clerks), 116 are technology and telecommunications specialists and 42 comprise our analytics sales, marketing and customer support professionals. Approximately 48% of our employees are based in New York, 43% are based in London and the remaining 9% 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.

Risk Factors

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 ended December 31, 2004, 2003 and 2002, over 94% of our revenues were generated by 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 revenues 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

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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.

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        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.

        Our future success depends, in large part, upon our management team. In particular, we are highly dependent on the continued services of our chief executive officer and founder, Michael Gooch, and other executive officers who possess extensive financial markets knowledge and management skills. Neither Michael Gooch nor Colin Heffron, our president, are bound by employment contracts to remain with us for a specified period of time. We may not be able to find an appropriate replacement for Michael Gooch, Colin Heffron 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. 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 50% and 54% of our total revenues for the years ended December 31, 2004 and 2003, respectively, were generated by our U.K. operations, 44% and 38%, respectively, were generated by our U.S. operations and 6% and 8%, respectively, 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;

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•

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 generally provide brokerage services to our clients in the form of either agency or matched principal transactions. As described in further detail below, we also engage in unmatched 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 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.

        Through our subsidiaries, we provide brokerage services by executing transactions for our clients. An increasing number 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 clearing institutions with whom we have a contractual relationship.

        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. For additional information on risks associated with the securities settlement process see "Item 7A—Qualitative and Quantitative Disclosure about Market Risk."

We have market risk exposure from unmatched principal transactions entered into by some of our equity and credit product brokerage desks.

        We allow certain of our brokerage desks to enter into unmatched principal transactions in the ordinary course of business, primarily for the purpose of facilitating clients' execution needs. As a

17

result, we have market risk exposure on these unmatched principal transactions. Our exposure varies based on the size of the overall positions, the terms of the instruments brokered, and the amount of time the positions are held before we dispose of the position. These unmatched positions are intended to be held short term. We do not track our exposure to unmatched positions on an intra-day basis. To the extent these unmatched positions are not disposed of intra-day, we mark these positions to market. Principal gains and losses resulting from these positions could on occasion have a disproportionate effect, positive or negative, on our financial condition and results of operations for any particular reporting period.

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. 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 the investing public generally rather than our stockholders. The SEC, 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 FSA in the United Kingdom, the SFC in Hong Kong, and the MAS in Singapore. 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;



•

the conduct of directors, officers, employees and affiliates;



•

systems and control requirements;



•

restrictions on marketing; and



•

client identification and anti-money laundering requirements.

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        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.

        One of our subsidiaries is currently being examined by the NASD for potential violations of trade reporting rules, which require that certain trades be reported immediately or shortly after the trade has been executed. In the past, we have been fined by the NASD for this subsidiary's failure to report trades within the required time frame. In connection with its current examinations, the NASD may seek to impose further fines on us or seek to take other corrective action. We have taken steps designed to improve this subsidiary's ability to report trades in a timely manner. However, we cannot provide any assurance that our efforts will be effective.

        Some of our subsidiaries are subject to regulations regarding changes in control of their ownership. These regulations generally provide that regulatory approval must be obtained in connection with any transaction resulting in a change in control of the subsidiary, which may include changes in control of GFI Group Inc. As a result of these regulations, our future efforts to sell shares or raise additional capital may be delayed or prohibited in circumstances in which such a transaction would give rise to a change in control as defined by the applicable regulatory body. See "Item 1—Business—Regulation."

        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 "Item 1—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

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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 "Item 1—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

20

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 credit agreement contains restrictive covenants which may limit our working capital and corporate activities.

        We are a party to a credit agreement with Bank of America N.A. and certain other lenders dated August 23, 2004 (the "2004 Credit Agreement") which imposes operating and financial restrictions on us, including restrictions which may, directly or indirectly, limit our ability to:

•

merge, acquire or dispose of assets;



•

incur liens, indebtedness or contingent obligations;



•

make investments;



•

engage in certain transactions with affiliates and insiders;



•

enter into sale and leaseback transactions;



•

pay dividends and other distributions; and



•

enter into new lines of businesses that are substantially different from our current lines of business.

        In addition, our 2004 Credit Agreement contains covenants that require us to maintain specified financial ratios and satisfy specified financial tests. As a result of these covenants and restrictions, we

21

may be limited in how we conduct our business, and we may be unable to raise additional financing, to compete effectively or to take advantage of new business opportunities. We cannot assure you that we will be able to remain in compliance with these covenants in the future.

        Our 2004 Credit Agreement also contains several events of default, including for non-payment, certain bankruptcy events, covenant or representation breaches or a change in control.

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. Development by our competitors of new electronic trade execution or market information products that gain acceptance in the market could give those competitors a "first mover" advantage that may make it difficult for us to overcome with our own technology. 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, which could negatively affect our business.

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. These acquisitions or new hires may be necessary in order for us to enter into or develop new product areas. 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;

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•

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. Clearing capital is the amount of cash, guarantees or similar collateral that we must provide or deposit with our third party clearing organizations in support of our obligations under our contractual clearing arrangements with these organizations. 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 our initial public offering ("IPO") and available financing under our 2004 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 meeting 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 and negatively affect our business. 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 generally experiences seasonal fluctuations, reflecting reduced trading activity during summer months, particularly in August. We also generally 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.

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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. We may face limitations or restrictions on the distribution of some of the market data generated by our brokerage desks. This may limit the comprehensiveness and quality of the data we are able to distribute or sell.

        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 approximately 7% and 8% of our total revenues for the year ended December 31, 2004 and 2003, respectively, 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.

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

        Jersey Partners, in which our chief executive officer and founder, Michael Gooch, is the controlling shareholder, owns 51.4% of our outstanding common stock. In addition, Magnetic Management LLC, a wholly owned subsidiary of Jersey Partners, is the managing member of certain limited liability companies which hold shares of our common stock. As managing member of these entities, Magnetic Management LLC controls the voting of those shares until July 2005 when they will be distributed to the members of the limited liability companies. As a result of the foregoing, through Jersey Partners, Michael Gooch has 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 currently the landlord on the lease for our principal London office.

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Provisions of our certificate of incorporation and bylaws, agreements to which we are a party, regulations to which we are subject and provisions of our stock option plans 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 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:

•

provide for a classified board of directors;



•

do not permit our stockholders to remove members of our board of directors other than for cause;



•

do 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 2004 Credit Agreement, a change in control 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.

        In addition, our stock option plans contain provisions pursuant to which options that are unexercisable or unvested may automatically become exercisable or vested as of the date immediately prior to certain change of control events. These provisions could have the effect of dissuading potential acquirors from pursuing merger discussions with us.

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 2004 Credit Agreement limits our ability to pay 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.

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ITEM 2.    PROPERTIES

        Our executive headquarters are located at 100 Wall Street, New York, New York 10005, where as of December 31, 2004 we occupied approximately 62,000 square feet of leased space, pursuant to a lease between GFI and Reckson Associates Realty Corp. ("Reckson") that expires on September 30, 2013. Jersey Partners, Inc. is also liable for our obligations under this lease. In January 2005, we entered into a lease amendment with Reckson to occupy an additional approximately 17,000 square feet through September 30, 2013.

        Our U.K. offices are currently in two locations in London: 9 Hewett Street, EC2A and 25 Christopher Street, EC2A, 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 are currently exploring new lease opportunities in the U.K. with the goals of combining the operations at our Hewett Street and Christopher Street offices into a single location and providing us with flexibility for future expansion as the need arises. Based on current market conditions, we expect that any new lease in the U.K. would result in increased rent and occupancy expense. Further, any new facility would require us to incur moving expenses and increased capital expenditures which could be material to our results of operations in the period of the move. In anticipation of entering into a new lease in the U.K., we have agreed to terminate our lease with GFI Brokers (Channel Islands) Limited effective September 2005 and to make certain termination and other payments to it in connection with such termination. We accrued an estimated obligation for contract termination costs in the amount of $2.9 million at December 31, 2004. After giving effect to the facility expansions described above, we believe our facilities will be 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 that expires in 2006. We also lease office space totaling approximately 12,000 square feet to support our brokerage operations in Hong Kong, Singapore, Tokyo and Sydney with various lease expirations through 2016.

ITEM 3.    LEGAL PROCEEDINGS

        In the normal course of business, we are and have been party to, or otherwise involved in, litigations, claims and arbitrations in the U.S. and U.K. that involve claims for substantial amounts. 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. As described in "Item 1 Business—Regulation", we are also involved, from time to time, in investigations or proceedings by government agencies and self-regulatory organizations.

        We believe proceedings of this type are common in the inter-dealer brokerage industry due to its highly competitive nature. Although the ultimate outcome of these proceedings cannot be ascertained at this time, after consultation with counsel, 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.

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ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        During the quarter ended December 31, 2004, but prior to the time that we became a reporting company under the Exchange Act, our stockholders approved the following matters by written consent:

        1.     a 1-for-9.5 reverse stock split of our Class A Common Stock, Class B Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Redeemed Convertible Preferred Stock;

        2.     the Amendment to the Amended and Restated Certificate of Incorporation providing for the 1-for-9.5 reverse stock split of our Class A Common Stock, Class B Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Redeemable Convertible Preferred Stock;

        3.     the Second Amended and Restated Certificate of Incorporation providing for (i) a change in the number of authorized shares of common and preferred stock; (ii) a change in the terms of the members of the Board of Directors to provide for the classification of the board; and (iii) the adoption of certain additional antitakeover provisions;

        4.     the 2004 Equity Incentive Plan; and

        5.     the Senior Executive Annual Bonus Plan.

        Each of these matters was approved by the holders of a majority of our Class A Common Stock, Class B Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Redeemable Convertible Preferred Stock. Following the consummation of our IPO, each of these classes converted into shares of our common stock.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Common Stock

        Our Common Stock, $.01 par value, began trading on the Nasdaq National Market under the symbol "GFIG" on January 26, 2005. Prior to January 26, 2005, there was no public trading market for our Common Stock.

        On February 28, 2005, the last reported sales price for our common stock on the Nasdaq National Market was $25.53 and there were approximately 60 holders of record of our Common Stock.

Use of Proceeds of Initial Public Offering

        The effective date of our registration statement (Registration No. 333-116517) filed on Form S-1 relating to our IPO was January 25, 2005. In our IPO, we sold 3,947,369 shares of Common Stock at a price of $21.00 per share and the selling stockholders sold 2,788,439 shares (including shares sold pursuant to the underwriters' over-allotment option) of Common Stock at a price of $21.00 per share. Our IPO was managed on behalf of the underwriters by Citigroup, Merrill Lynch & Company, Banc of America Securities LLC, JP Morgan, and Jefferies & Company, Inc. The offering closed on January 31, 2005. Proceeds to us from our IPO, after deduction of the underwriting discounts and commissions of approximately $5.8 million and offering costs of approximately $2.9 million, totaled approximately $74.2 million. Of the $74.2 million raised, approximately $9.65 million has been used to repay the outstanding principal amount plus accrued interest, of our senior subordinated term loan with Jersey Partners. This note was to mature on June 15, 2011, and had an interest rate of LIBOR + 5.00%, or 7.40%, at December 31, 2004. Pursuant to the terms of the senior subordinated loan agreement, upon the consummation of our IPO, we were required to pay the loan back in full.

        In February 2005, we used a portion of the net proceeds from the IPO to pay down in full the current outstanding balances under our 2004 Credit Agreement of $52.5 million plus accrued interest.

        We intend to use the remaining portion of the proceeds of our IPO 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 also intend to use a portion of the net proceeds from our IPO to purchase the remaining portion of Fenics capital stock not currently owned by us. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." Pending application as described above, we currently plan to invest the remaining 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 2004 Credit Agreement limits our ability to pay 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

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also subject to limits imposed by Delaware corporate law. In addition, our subsidiaries are permitted to pay dividends to us subject to (i) certain regulatory restrictions related to the maintenance of minimum net capital in those of our subsidiaries that are subject to net capital requirements imposed by the applicable governmental regulators, and (ii) general restrictions imposed on dividend payments under the jurisdiction of incorporation or organization of each subsidiary.

Recent Sales of Unregistered Securities

        For the year ended December 31, 2004, we granted a total of 491,895 options to purchase our common stock to officers, directors and employees pursuant to our 2002 GFI Group Inc. Stock Option Plan. The exercise prices of these options ranged from $11.88 per share of common stock to $21.00 per share of common stock. These options were granted pursuant to exemptions from registration provided by Rule 701 and/or Section 4(2) under the Securities Act.

ITEM 6.    Selected Consolidated Financial Data

        The following table sets forth selected consolidated financial data for the five years ended December 31, 2004. This selected consolidated financial data should be read in conjunction with "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations" and with our consolidated financial statements and the notes thereto contained in this Form 10-K.

				For the Year Ended December 31,
				2004		2003		2002		2001			2000(1)
				(dollars in thousands except share and per share data)
Consolidated Statement of Operations Data
Revenues
	Brokerage revenues:
		Agency commissions		$	262,039	$	184,920	$	200,492	$	169,453			(2	)
		Principal transactions			101,339		65,237		59,359		42,709			(2	)
			Total brokerage revenues	$	363,378	$	250,157	$	259,851	$	212,162		$	123,635
		Analytics and market data			16,081		13,143		9,615		6,077			—
		Interest income			1,578		1,167		1,401		1,543			1,891
		Other income(3)			3,983		1,377		4,353		576			193
Total revenues				$	385,020	$	265,844	$	275,220	$	220,358		$	125,719
Expenses:
	Compensation and employee benefits				241,847		166,276		174,011		142,574			80,583
	Impairment of goodwill and intangible asset(4)				—		—		—		38,968			—
	Other expenses				100,019		72,219		74,465		66,226			41,722
	Total expenses				341,866		238,495		248,476		247,768			122,305
Income (loss) before provision for income taxes and minority interest					43,154		27,349		26,744		(27,410	)		3,414
	Provision for income taxes(5)				20,031		12,885		14,470		4,436			4,490
	Minority interest				—		—		—		(30	)		(973	)
Net income (loss)				$	23,123	$	14,464	$	12,274	$	(31,816	)	$	(103	)
Earnings Per Share
Basic				$	1.01	$	0.63	$	0.59	$	(3.13	)		N/A
Diluted				$	0.95	$	0.61	$	0.58	$	(3.13	)		N/A
Weighted average number of shares outstanding
Basic					16,049,655		16,049,655		15,786,933		10,153,711			N/A
Diluted					24,334,003		23,693,418		21,231,412		10,153,711			N/A
Dividends(6)				$	—	$	—	$	4,536	$	33,266		$	1,634

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		As of December 31,
		2004		2003		2002		2001		2000
		(dollars in thousands)
Consolidated Statement of Financial Conditions Data:
	Cash and cash equivalent	$	105,161	$	87,299	$	63,707	$	33,822	$	26,633
	Total assets(7)	$	640,223	$	374,809	$	276,756	$	304,293	$	196,852
	Total debt, including current portion	$	58,841	$	47,997	$	44,966	$	62,815	$	13,466
	Redeemable convertible preferred stock	$	30,043	$	30,043	$	30,043		—		—
	Total stockholders' equity	$	53,369	$	37,778	$	23,142	$	15,059	$	48,899
Selected Statistical Data:
	Brokerage personnel headcount(8)		560		397		366		341		261
	Employees		868		668		655		572		401
	Number of brokerage desks(9)		101		78		65		64		52
	Broker productivity for the period(10)	$	757	$	648	$	721	$	685	$	537

			For the Year Ended December 31,
			2004		2003		2002		2001		2000
			(dollars in thousands)
Brokerage Revenues by Geographic Region:
	U.S.		$	170,438	$	102,920	$	108,505	$	89,453	$	57,370
	U.K.			172,417		128,743		137,181		113,946		58,425
	Asia-Pacific			20,523		18,494		14,165		8,763		7,840
		Total	$	363,378	$	250,157	$	259,851	$	212,162	$	123,635

(1)

Earnings per share were not computed for this year because we were not an S corporation until our reorganization in November 2001, and therefore earnings per share information is not meaningful.

(2)

The Company did not separately identify agency commission and principal transaction revenues for the year ended December 31, 2000.

(3)

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.

(4)

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.

(5)

Income earned prior to our reorganization in November 2001 was not subject to U.S. Federal income tax at the corporate level.

(6)

In 2002, 2001 and 2000, our subsidiary, GFI Group LLC, paid dividends of $4.5 million, $3.3 million and $1.6 million, respectively, to Jersey Partners to compensate it for certain tax liabilities in those periods during which Jersey Partners was the sole member of GFI Group LLC. The amount paid in 2002 related to Jersey Partners' tax liabilities for the 11-month period ended November 30, 2001. In addition, on October 1, 2001, GFI Group LLC paid a dividend to Jersey Partners of $30.0 million in cash and accounts receivable as part of the reorganization. We do not expect that either we or our subsidiaries will pay dividends to our stockholders in the foreseeable future.

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(7)

Total assets included receivables from brokers, dealers and clearing organizations of $408.2 million, $192.7 million, $118.5 million, $157.5 million, and $97.6 at December 31, 2004, 2003, 2002, 2001 and 2000, 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 these unsettled transactions.

(8)

Brokerage personnel headcount includes brokers, trainees and clerks. As of December 31, 2004, we employed 502 brokers.

(9)

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.

(10)

We are presenting broker productivity to show the average amount of revenue generated per broker. Broker productivity is calculated as brokerage revenues divided by average brokerage personnel headcount for the period.

ITEM 7.    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 thereof. This discussion contains forward-looking statements. Actual results could differ materially from the results discussed in these 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 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 brokerage revenues 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 $275.2 million for the year ended December 31, 2002 to $385.0 million for the year ended December 31, 2004. The main factors contributing to our growth were:

•

the net addition of 36 brokerage desks during the three year period ended December 31, 2004, resulting in an increase in brokerage personnel (consisting of brokers, trainees and clerks) from 366 brokerage personnel at December 31, 2002 to 560 brokerage personnel at December 31, 2004;



•

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;

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•

the introduction and continued expansion of our hybrid brokerage capabilities; and



•

the development of our data and analytical 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.

        Jersey Partners, our principal stockholder, is majority owned by Michael Gooch and certain of our current and former employees. Jersey Partners owns 51.4% of our outstanding common stock.

Financial Overview

Revenues

        We derive our revenues primarily through our inter-dealer brokerage services and the fees we charge for certain of our data and analytics products.

Brokerage Revenues

        Brokerage revenues represent revenues generated from our brokerage transactions. We provide brokerage services to our clients in the form of either agency or 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 they then 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 72%, 74%, and 77% of our total brokerage revenue for the years ended December 31, 2004, 2003 and 2002, 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.

        We generate revenue from principal transactions on the spread between the buy and sell price of the security that is brokered. Our principal transactions revenue is primarily derived from matched principal transactions. In matched principal transactions, we act as a middleman by serving as counterparty 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. A very limited number of our brokerage desks are allowed to enter into unmatched principal transactions to facilitate a customer's execution needs for transactions initiated by such customers. These unmatched positions are intended to be held short term and in liquid markets. Revenues from principal transactions are recognized on the date on which the trade is made. Generally, we do not receive our net proceeds until the settlement date of the transaction, typically one to three business days after the trade date. Revenue from principal transactions has been growing as a percentage of our total brokerage revenue and comprised approximately 28%, 26% and 23% of our total brokerage revenue for the years ended December 31, 2004, 2003 and 2002, respectively. The increase in our revenue from principal transactions has primarily resulted from the development of our brokerage services in new and existing product areas in which principal execution is either required or more common than agency execution.

        The performance of our brokerage desks is largely dependent on a number of factors, including market developments affecting the products we broker, the size of transactions, the location of the markets, the terms of the instruments brokered, the currency of the instruments brokered, commission structure, competition, recruitment or departure of key brokers or customers, volatility and the level of

32

trading activity in the various products that we broker. Additionally, as markets mature and have more participants, the resulting competition generally leads to lower commissions or spreads. 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 brokerage revenues.

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

		For the Year Ended December 31,
		2004			2003			2002
BROKERAGE REVENUES:
	Credit	$	153,089		$	115,371		$	114,509
	Financial		84,709			69,101			55,194
	Equity		71,473			27,226			28,841
	Commodity		54,107			38,459			61,307
Total brokerage revenues		$	363,378		$	250,157		$	259,851
	Credit		42.1	%		46.1	%		44.1	%
	Financial		23.3			27.6			21.2
	Equity		19.7			10.9			11.1
	Commodity		14.9			15.4			23.6
Total brokerage revenues			100.0	%		100.0	%		100.0	%

        As the chart above indicates, our brokerage operations in the credit product category produced a significant percentage of our total brokerage revenues in each of the last three years. We expect that revenues from credit brokerage operations will continue to constitute the largest percentage of our total brokerage revenues for the foreseeable future. In the past, a combination of increasing brokerage revenues from credit brokerage operations and declining brokerage revenues in other product categories, such as the commodity product category, resulted in an increasing percentage of our total brokerage revenues being generated in the credit product category. For the year ended December 31, 2004, the percentage of revenues from the credit product category decreased by 4% from the prior year due to the increase in revenues from financial and equity product categories. We believe that brokerage revenues from our four brokerage categories will continue to fluctuate year to year based on, among other things, developments in those markets which are outside our control, such as the effects that the bankruptcies of Enron and other energy companies had on the energy portion of the commodity product category, and initiatives by us to increase our presence in certain markets, such as our recent initiative to increase the number of brokerage desks in our equity product category.

Credit

        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

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support an increasing movement among our clients to integrate transactions involving 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. Our customers increased their trading of foreign exchange options in 2003 and 2004 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 addition, we opened our Singapore office, in part, to capitalize on the growth trend in the Asia-Pacific markets for financial products.

Equity

        We provide brokerage services in a range of markets for equity products, including U.S. equity, international equity, equity derivatives and GDRs and ADRs. 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 ten new equity brokerage desks globally during 2004 and expect our brokerage revenues in this area to increase as a result of the expansion in our product base.

Commodity

        We provide brokerage services in a diverse array of markets for commodity products, including electricity, wet and dry freight derivatives, precious metals, coal, natural gas, weather derivatives, emissions 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.

        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 energy market participants began to fully evidence itself in the second half of 2002 and was primarily responsible for the approximately 37% decrease in our brokerage revenues from our commodity products area for the year ended December 31, 2003 compared to 2002. We have recently seen an increase in activity in the energy markets in the U.S. and U.K.

Analytics and Market Data

        In addition to revenues from our brokerage services, we also earn revenues from the sale of our analytics and market data products. 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.

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        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 marketed 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 primarily consists of transactional gains (loss) based on foreign currency fluctuations and gains (losses) on foreign exchange derivative contracts. Additionally, we have historically included income received by us from non-recurring items such as litigation settlements, insurance settlements, gains on the sale of a non-strategic brokerage desk, and other non-recurring items. Other income also includes income recognized from technology hosting services we provide to a third party.

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 brokerage personnel.

        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. Bonuses for brokerage personnel 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 brokerage personnel. Accordingly, bonus costs, and therefore compensation and employee benefits expense, are variable and normally rise and fall in relation to our brokerage revenues. 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 in September, for the six month period ending June 30 of that year. Bonuses expensed to all employees represented 53%, 47% and 55% of total compensation and employee benefits expense for the years ended December 31, 2004, 2003 and 2002, 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.

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        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. Expenses relating to sign-on bonuses have increased in 2004 to a level that is substantially higher than historical levels as we further expanded into new product areas. 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.

        In the past, we compensated the brokerage personnel 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 brokerage personnel 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 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 $0.03 million, $0.04 million and $0.3 million, for the years ended December 31, 2004, 2003 and 2002, respectively. The options issued under our 2002 Stock Option Plan were not exercisable until the consummation of the IPO on January 31, 2005. 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 were not exercisable until consummation of the IPO, the fair value calculated as of the date of grant or modification will be recorded in January 2005 to the extent vested. Based on options outstanding at December 31, 2004, a total non-cash compensation charge of approximately $2.0 million (net of tax of approximately $1.2 million, or per share of approximately $0.05) of which approximately $0.9 million (net of tax of approximately $0.5 million, or per share of approximately $0.02) will be recorded in the first quarter of 2005, and the balance of which will be recorded over the remaining vesting period. Additionally, compensation and employee benefits expense will include the cost associated with the issuance of restricted stock or restricted stock units. In January 2005, we issued 143,488 restricted stock units to certain of our employees, primarily our executive officers. These awards were measured at fair value as of the date of grant and will be recorded over the appropriate vesting periods.

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 provided by Reuters and Bloomberg. 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.

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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. The Company is currently exploring new lease opportunities in the U.K. We expect that rent and occupancy expenses will increase as a result of the new lease.

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 continue to increase because we continue to incur significant costs in the development of software for internal use as well as software to be marketed externally. Additionally, we expect that depreciation and amortization expense will increase in connection with our expected move to new premises in the U.K.

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 are 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 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 principal transactions that we executed.

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Interest Expense

        Our interest expense consists of interest charged by lenders to us in connection with our loans and lines of credit provided by our 2004 Credit Agreement and by our third party clearing organizations. 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 irrecoverable Value Added Tax ("VAT") incurred in connection with our brokerage and data and analytics operations in the U.K., litigation reserves, changes in the fair value of the Fenics purchase obligation (see "Liquidity and Capital Resources" and Note 19 to our consolidated financial statements for additional detail on the Fenics purchase obligation), bank charges, regulatory fees, general office expenses and other miscellaneous operating expenses. Irrecoverable VAT represents the portion of VAT we pay in connection with purchases of services and products in the U.K. which cannot be claimed as a credit on our VAT return. Irrecoverable VAT amounts are determined based on a computed VAT recovery rate.

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 the statutory 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.

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Results of Operations

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

				Year Ended December 31,
				2004		2003		2002
				(dollars in thousands)
REVENUES:
	Brokerage revenues:
		Agency commissions		$	262,039	$	184,920	$	200,492
		Principal transactions			101,339		65,237		59,359
			Total brokerage revenues		363,378		250,157		259,851
	Analytics and market data				16,081		13,143		9,615
	Interest income				1,578		1,167		1,401
	Other income				3,983		1,377		4,353
	Total revenues				385,020		265,844		275,220
EXPENSES:
	Compensation and employee benefits				241,847		166,276		174,011
	Communications and quotes				20,536		16,512		15,944
	Travel and promotion				19,511		14,301		15,522
	Rent and occupancy				10,669		10,645		10,964
	Depreciation and amortization				13,856		10,297		10,361
	Professional fees				9,468		7,793		7,254
	Clearing fees				9,816		3,668		4,063
	Interest				3,159		2,470		3,397
	Other expenses				10,353		6,533		6,960
	Lease termination costs to affiliate				2,651		—		—
	Total expenses				341,866		238,495		248,476
Income before provision for income taxes					43,154		27,349		26,744
	Provision for income taxes				20,031		12,885		14,470
Net income				$	23,123	$	14,464	$	12,274

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

				Year ended December 31,
				2004		2003		2002
REVENUES:
	Brokerage revenues:
		Agency commissions		68.0	%	69.6	%	72.8	%
		Principal transactions		26.3		24.6		21.6
			Total brokerage revenues	94.3		94.2		94.4
	Analytics and market data			4.2		4.9		3.5
	Interest income			0.4		0.4		0.5
	Other income			1.1		0.5		1.6
	Total revenues			100.0	%	100.0	%	100.0	%
EXPENSES:
	Compensation and employee benefits			62.8	%	62.5	%	63.2	%
	Communications and quotes			5.3		6.2		5.8
	Travel and promotion			5.1		5.4		5.6
	Rent and occupancy			2.8		4.0		4.0
	Depreciation and amortization			3.6		3.9		3.8
	Professional fees			2.5		2.9		2.6
	Clearing fees			2.5		1.4		1.5
	Interest			0.8		0.9		1.2
	Other expenses			2.7		2.5		2.5
	Lease termination costs to affiliate			0.7		0.0		0.0
	Total expenses			88.8	%	89.7	%	90.2	%
Income before provision for income taxes				11.2	%	10.3	%	9.8	%
Provision for income taxes				5.2		4.8		5.3
Net income				6.0	%	5.5	%	4.5	%

Year ended December 31, 2004 Compared to the Year Ended December 31, 2003

        Net income for the year ended December 31, 2004 was $23.1 million as compared to net income of $14.5 million for the year ended December 31, 2003, an increase of $8.6 million or approximately 59.3%. Total revenues increased by $119.2 million, or 44.8%, to $385.0 million for the year ended December 31, 2004 from $265.8 million for the prior year. Our increased revenues were primarily due to increased brokerage revenues across each of our product categories. Total expenses increased by $103.4 million, or 43.3%, to $341.9 million for the year ended December 31, 2004 from $238.5 million for the prior year. Expenses increased primarily because of increased compensation expense, which was attributable to an increase in performance-based bonuses as a result of higher revenues, and higher sign-on bonuses for the year ended December 31, 2004.

Revenues

Brokerage Revenues

        Total brokerage revenues increased by $113.2 million or 45.2%, to $363.4 for the year ended December 31, 2004 from $250.2 million for the year ended December 31, 2003. Agency commissions increased by $77.1 million, or 41.7% to $262.0 million for the year ended December 31, 2004 as compared to $184.9 million for the year ended December 31, 2003. Principal transactions increased by

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$36.1 million, or 55.4%, to $101.3 million for the year ended December 31, 2004 from $65.2 million for the year ended December 31, 2003. Of the total increase in brokerage revenues of $113.2 million, approximately $52.2 million was attributable to the addition of thirty-four new brokerage desks across all product areas since the beginning of the year. Revenues increased in each of our product categories with most of the increase in our equity product category. The increase in equity products brokerage revenues of approximately $44.2 million was primarily attributable to the addition of ten new brokerage desks that generated approximately $25.3 million of brokerage revenues for the year ended December 31, 2004. The remaining increase of $18.9 million in brokerage revenues for the equity products was generated from our existing brokerage desks with our equity derivative desks alone accounting for the majority of this increase. The increase in credit product brokerage revenues of approximately $37.7 million was attributable to $17.9 million in brokerage revenues generated by the addition of twelve new brokerage desks and continued revenue generated by our existing brokerage desks, primarily our credit derivatives and corporate bond desks. The increase in commodity products brokerage revenues of approximately $15.6 million was primarily due to the increase of four new brokerage desks that generated $7.2 million in brokerage revenues and increased brokerage revenues generated by existing desks as a result of the continuing recovery in the energy product markets and the expansion of our wet shipping desk. The increase in financial products brokerage revenues of approximately $15.6 million was primarily attributable to the performance from both new and existing brokerage desks, primarily non-deliverable forward, interest rate and swaptions desks.

Analytics and Market Data

        Revenues from our analytics and market data products increased by $3.0 million, or 22.9%, to $16.1 million for the year ended December 31, 2004 from $13.1 million for the year ended December 31, 2003. This increase was primarily attributable to our data distribution agreement with a third party, which generated $2.7 million in revenues for the year ended December 31, 2004 as compared to $1.6 million for the year ended December 31, 2003.

Interest Income

        Interest income increased by $0.4 million, or 33.3%, to $1.6 million for the year ended December 31, 2004 as compared to $1.2 million for the year ended December 31, 2003. The increase is mainly attributable to the higher level of average cash balances during the year.

Other Income

        Other income increased by $2.6 million to $4.0 million for the year ended December 31, 2004 as compared to $1.4 million for the year ended December 31, 2003. Other income for the year ended December 31, 2004 mainly consisted of transactional net gains (losses) based on foreign currency fluctuations, net gains (losses) on foreign exchange derivative contracts and proceeds received by us from a litigation settlement related to an employment contract dispute with one of our competitors.

Expenses

Compensation and Employee Benefits

        Compensation and employee benefits expenses increased by $75.5 million, or 45.4%, to $241.8 million for the year ended December 31, 2004 from $166.3 million for the year ended December 31, 2003. The increase was primarily attributable to an increase in the number of brokerage personnel from 397 at December 31, 2003 to 560 at December 31, 2004, increase in performance-related brokerage bonuses of $40.9 million and an increase in expense related to sign-on bonuses of $6.2 million. Total increase in sign-on bonuses for newly hired brokers in 2004 resulted from the expansion of our brokerage operations in equity, credit and commodity products.

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        Total compensation and employee benefits as a percentage of total revenues increased slightly to 62.8% at December 31, 2004 from 62.5% at December 31, 2003. Broker productivity (defined as total brokerage revenues during the period divided by average monthly brokerage personnel headcount for the period) increased by approximately 16.8% for the year ended December 31, 2004 as compared to the prior year.

Communications and Quotes

        Communications and quotes increased by $4.0 million, or 24.2%, to $20.5 million for the year ended December 31, 2004 from $16.5 million from the year ended December 31, 2003. The increase was primarily attributable to the increase in brokerage desks and brokerage personnel.

Travel and Promotion

        Travel and promotion increased by $5.2 million, or 36.4%, to $19.5 million for the year ended December 31, 2004 from $14.3 million for year ended December 31, 2003. This expense, as a percentage of our total brokerage revenues for the year ended December 31, 2004 decreased slightly to 5.4% from 5.7% for the year ended December 31, 2003. We believe this decrease was due to the implementation of 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 desk.

Depreciation and Amortization

        Depreciation and amortization expense increased by $3.6 million, or 35.0%, to $13.9 million for the year ended December 31, 2004 from $10.3 million for the year ended December 31, 2003. This increase reflects depreciation of capitalized development costs of several software projects that we began amortizing at the end of 2003 and the first quarter of 2004 and $0.6 million of accelerated depreciation related to certain long-lived assets to be abandoned as a result of the early termination of our primary U.K. lease.

Professional Fees

        Professional fees increased by $1.7 million, or 21.8%, to $9.5 million for the year ended December 31, 2004 from $7.8 million for the year ended December 31, 2003. This increase was primarily due to the increase in information technology consulting, audit, tax, internal audit outsourcing and legal fees.

Clearing Fees

        Clearing fees increased by $6.1 million, or 164.9%, to $9.8 million for the year ended December 31, 2004 from $3.7 million for the year ended December 31, 2003. This increase was due to a higher volume in the number of principal transactions executed during the year ended December 31, 2004 as compared to the year ended December 31, 2003. Principal transactions are generally settled through third party clearing organizations that charge us a fee for their services. We also use the services of floor brokers on certain stock exchanges to assist in the execution of transactions. Fees paid to floor brokers in these circumstances are included in clearing fees.

Interest Expense

        Interest expense increased by $0.7 million, or 28.0%, to $3.2 million for the year ended December 31, 2004 from $2.5 million for the year ended December 31, 2003. The increase was primarily due to increased interest charges on third party clearing accounts related to our brokerage operations.

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Other Expenses

        Other expenses increased by $3.9 million, or 60.0%, to $10.4 million for the year ended December 31, 2004 from $6.5 million for the year ended December 31, 2003. The increase was primarily attributable to an increase in fair value of the Fenics purchase obligation, the write-off of certain unrealizable asset balances and an increase in other general office and miscellaneous expenses, such as charitable contributions, dues and subscriptions and bank charges.

Lease Termination Costs to Affiliates

        Lease termination costs to affiliates for the year ended December 31, 2004 were $2.7 million. These costs represent the estimated lease termination costs in connection with our primary lease in the U.K., which we lease from an affiliate. On December 31, 2004, we terminated that U.K. lease with the termination date effective on September 1, 2005.

Provision for Income Taxes

        Our provision for income taxes totaled $20.0 million for the year ended December 31, 2004 and $12.9 million for the year ended December 31, 2003. Our effective tax rate was approximately 46% for the year ended December 31, 2004 as compared to 47% for the year ended December 31, 2003. The reduction in the effective tax rate was primarily due to decreases in state and local income taxes and promotion expenses, as well as increases in business tax credits, offset by an increase in taxes related to foreign operations.

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 brokerage revenues in the commodity products area due to a reduction in trading activity. 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 brokerage revenues. A reduction in our effective tax rate also contributed to the increase in net income for 2003 as compared to 2002.

Revenues

Brokerage Revenues

        Total brokerage revenues 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. Agency commissions decreased by $15.6 million, or 7.8%, to $184.9 million for the year ended December 31, 2003 from $200.5 million for the year ended December 31, 2002. Revenues from principal transactions increased by $5.9 million, or 9.9% to $65.2 million for the year ended December 31, 2003 from $59.4 million for the year ended December 31, 2002. Brokerage revenues from new brokerage desks established during the period from May 2002 through the end of 2003 generated an increase of $22.6 million in brokerage revenues for the year ended December 31, 2003, however this increase was offset by a $32.3 million decrease in brokerage revenues from existing desks mainly in commodity and credit products. The decrease in commodity product brokerage revenues of approximately $22.8 million primarily resulted from reduced trading in the energy markets caused by the continued impact of the bankruptcies of Enron Corp. and other energy companies, leading to a substantial decline in brokerage revenues

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relating to energy products and an overall reduction of 37% in brokerage revenues in the commodity product area as compared to the same period in 2002. Brokerage revenues derived from the credit products area were generally unchanged because increased brokerage revenues of $13.3 million from the addition of nine new or restructured brokerage desks was largely offset by decreased brokerage revenues from our existing brokerage desks as new competitors entered the credit product markets in 2003 resulting in downward pressure on our commission rates. The increase in financial product brokerage revenues of $13.9 million resulted primarily from market growth in a number of products whose growth was affected by the increased volatility of the U.S. dollar.

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 brokerage revenues in 2003 as compared to 2002 and a $2.9 million reduction in 2003 in our accrual for the employer portion of National Insurance Contributions ("NIC") related to certain 2002 employee bonuses in the U.K. Based on legal developments in the U.K. and management's evaluation of facts and circumstances available in 2003, management decided that it would not be probable that we would be obligated to pay the NIC related to these bonuses and we reduced our accrual accordingly.

        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 brokerage revenues from the commodity products area.

Communications and Quotes

        Communications and quotes expense increased by $0.6 million, or 3.8%, to $16.5 million for the year ended December 31, 2003 from $15.9 million for the year ended December 31, 2002. This increase

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was primarily due to an increase in communications charges incurred as a result of an increase in brokerage personnel by 31 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 remained relatively level at $6.5 million for the year ended December 31, 2003, compared to $7.0 million for the year ended December 31, 2002.

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.

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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 foreign operations, specifically the recording of certain foreign deferred items, including foreign depreciation and software charges and unpaid intra-company royalties and interest. Unpaid intra-company royalties and interest give rise to a deferred tax asset because, for U.K. income tax purposes, no current year deduction is permitted for intra-company royalties or interest unless they are paid in the year of accrual or within one year of such accrual. As a result, a deduction would be allowed for those expenses when paid so long as payment occurs within one year of accrual and, until such payment is made, we record a deferred asset.

Quarterly Results of Operations (Unaudited)

        The following table sets forth, by quarter, our unaudited statement of income data for the period from January 1, 2003 to December 31, 2004. Results of any period are not necessarily indicative of results for a full year.

			Quarter Ended
			December 31, 2004		September 30, 2004		June 30, 2004		March 31, 2004		December 31, 2003		September 30, 2003		June 30, 2003			March 31, 2003
			(dollars in thousands)
Revenues
	Brokerage revenues:
		Agency commissions	$	73,366	$	69,705	$	60,589	$	58,379	$	43,832	$	44,964	$	45,672		$	50,452
		Principal transactions		25,627		24,977		26,978		23,757		17,746		15,064		15,233			17,194
Total brokerage revenues				98,993		94,682		87,567		82,136		61,578		60,028		60,905			67,646
	Analytics and market data			3,732		3,664		4,012		4,673		3,094		3,167		3,541			3,341
	Interest income			776		356		170		276		391		176		289			311
	Other income (loss)			1,597		1,077		701		608		1,648		436		(1,129	)		422
Total revenues				105,098		99,779		92,450		87,693		66,711		63,807		63,606			71,720
Expenses
	Compensation and employee benefits			66,224		62,062		58,475		55,086		42,731		36,751		42,124			44,670
	Communications and quotes			5,341		5,196		5,325		4,674		4,115		4,230		4,107			4,060
	Travel and promotion			6,251		4,382		4,930		3,948		3,952		3,551		3,548			3,250
	Rent and occupancy			2,479		2,861		2,756		2,573		2,208		2,377		2,887			3,173
	Depreciation and amortization			4,060		3,411		3,243		3,142		3,026		2,295		2,211			2,765
	Professional fees			2,676		2,848		2,178		1,766		2,259		2,104		1,541			1,889
	Clearing fees			3,623		2,743		2,385		1,065		900		803		969			996
	Interest			1,076		838		666		579		671		600		608			591
	Other expenses			3,343		2,299		2,686		2,025		2,007		2,363		995			1,168
	Lease termination costs to affiliate			2,651		—		—		—		—		—		—			—
	Total expenses			97,724		86,640		82,644		74,858		61,869		55,074		58,990			62,562
Income before provision for taxes				7,374		13,139		9,806		12,835		4,842		8,733		4,616			9,158
Provision for income taxes				4,017		5,266		4,716		6,032		2,281		4,114		2,176			4,314
Net income			$	3,357	$	7,873	$	5,090	$	6,803	$	2,561	$	4,619	$	2,440		$	4,844

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

			Quarter Ended
			December 31, 2004		September 30, 2004		June 30, 2004		March 31, 2004		December 31, 2003		September 30, 2003		June 30, 2003		March 31, 2003
Revenues
	Brokerage revenues:
		Agency commissions	69.8	%	69.9	%	65.5	%	66.6	%	65.7	%	70.5	%	71.8	%	70.3	%
		Principal transactions	24.4		25.0		29.2		27.1		26.6		23.6		24.0		24.0
Total brokerage revenues			94.2		94.9		94.7		93.7		92.3		94.1		95.8		94.3
	Analytics and market data		3.6		3.6		4.3		5.3		4.6		4.9		5.5		4.7
	Interest income		0.7		0.4		0.2		0.3		0.6		0.3		0.5		0.4
	Other income (loss)		1.5		1.1		0.8		0.7		2.5		0.7		(1.8	)	0.6
	Total revenues		100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Expenses
	Compensation and employee benefits		63.1	%	62.2	%	63.3	%	62.8	%	64.1	%	57.6	%	66.2	%	62.3	%
	Communications and quotes		5.1		5.2		5.8		5.3		6.2		6.6		6.5		5.7
	Travel and promotion		5.9		4.4		5.4		4.5		5.9		5.6		5.6		4.5
	Rent and occupancy		2.4		2.9		3.0		2.9		3.3		3.7		4.5		4.4
	Depreciation and amortization		3.9		3.4		3.5		3.6		4.5		3.6		3.5		3.9
	Professional fees		2.5		2.9		2.4		2.0		3.4		3.3		2.4		2.6
	Clearing fees		3.4		2.7		2.6		1.2		1.3		1.3		1.5		1.4
	Interest		1.0		0.8		0.7		0.7		1.0		0.9		1.0		0.8
	Other expenses		3.2		2.3		2.9		2.3		3.0		3.7		1.6		1.6
	Lease termination costs to affiliate		2.5		—		—		—		—		—		—		—
	Total expenses		93.0	%	86.8	%	89.6	%	85.3	%	92.7	%	86.3	%	92.8	%	87.2	%
Income before provision for taxes			7.0		13.2		10.4		14.7		7.3		13.7		7.2		12.8
Provision for income taxes			3.8		5.3		5.1		6.9		3.4		6.4		3.4		6.0
Net income			3.2	%	7.9	%	5.3	%	7.8	%	3.9	%	7.3	%	3.8	%	6.8	%

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        The tables below detail our brokerage revenues by product category in dollars and as a percentage of our total brokerage revenues for the indicated periods.

		Quarter Ended
		December 31, 2004			September 30, 2004			June 30, 2004			March 31, 2004			December 31, 2003			September 30, 2003			June 30, 2003			March 31, 2003
		(dollars in thousands)
Brokerage Revenues:
	Credit	$	36,304		$	42,315		$	37,247		$	37,223		$	27,231		$	25,597		$	28,539		$	34,004
	Financial		24,870			20,377			18,922			20,540			17,648			18,107			16,951			16,395
	Equity		21,753			18,656			18,515			12,549			7,043			7,181			6,449			6,553
	Commodity		16,066			13,334			12,883			11,824			9,656			9,143			8,966			10,694
	Total brokerage revenues	$	98,993		$	94,682		$	87,567		$	82,136		$	61,578		$	60,028		$	60,905		$	67,646
Brokerage Revenues:
	Credit		36.7	%		44.7	%		42.6	%		45.3	%		44.2	%		42.6	%		46.9	%		50.3	%
	Financial		25.1			21.5			21.6			25.0			28.7			30.2			27.8			24.2
	Equity		22.0			19.7			21.1			15.3			11.4			12.0			10.6			9.7
	Commodity		16.2			14.1			14.7			14.4			15.7			15.2			14.7			15.8
	Total brokerage revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Liquidity and Capital Resources

        Our primary sources of liquidity for the years ended December 31, 2004, 2003 and 2002 were cash flows from operations, proceeds received from sales of our equity securities and borrowings under our credit facilities. In August 2004, we entered into the 2004 Credit Agreement that provides for a revolving credit facility in a principal amount of $80.0 million, which includes a letter of credit facility that has a sub-limit of $30.0 million. The 2004 Credit Agreement can be increased to $100.0 million with the consent of the lenders. Borrowings under the 2004 Credit Agreement were used to repay in full our outstanding borrowings under our previous credit facility (the "2002 Credit Facility").

        Cash and cash equivalents consist of cash and highly liquid investments with maturities, when purchased, of three months or less. At December 31, 2004, we had $105.2 million of cash and cash equivalents compared to $87.3 million and $63.7 million at December 31, 2003 and 2002, respectively. The changes to our cash and cash equivalents balances for these periods are due to our operating, investing and financing activities as discussed below.

        The following table sets forth our cash flows from operating activities, investing activities and financing activities for the years ended December 31,

	2004			2003			2002
Cash provided by operating activities	$	15,212		$	28,924		$	38,582
Cash used in investing activities		(7,795	)		(7,804	)		(15,172	)
Cash provided by financing activities		10,574			2,761			6,532
Effects of foreign currency translation adjustment		(129	)		(289	)		(57	)
Increase in cash and cash equivalents	$	17,862		$	23,592		$	29,885

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        Cash provided by 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 provided by operating activities was $15.2 for the year ended December 31, 2004 and consisted of net income of $23.1 million adjusted for non-cash items of $14.0 million and $21.9 million utilized for working capital. Cash provided for operating activities decreased by $13.7 million or 47.4% for the year ended December 31, 2004 as compared to the year ended December 31, 2003. The decrease was primarily due to the changes in working capital, including accrued commissions receivable and net receivables from and payables to brokers, dealers and clearing organizations offset by the increases in net income and accrued compensation. 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 $9.2 million and $5.3 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 $16.1 million and $10.3 million provided by working capital.

        Cash used in investing activities was $7.8 million for each of the years ended December 31, 2004 and 2003 as compared to $15.2 million for the year ended December 31, 2002. The decrease in cash used in investing activities during 2004 and 2003 as compared to 2002 was primarily attributable to fluctuating levels of expenditures on information technology assets, both externally purchased and internally developed.

        Cash provided by financing activities was $10.6 million for the year ended December 31, 2004 as compared to $2.8 million for the year ended December 31, 2003. Net borrowings under our credit facilities increased by $11.5 million for the year ended December 31, 2004. Cash provided by financing activities was $2.8 million for the year ended December 31, 2003 as compared to $6.5 million for the year ended December 31, 2002. Net borrowing under the revolving portion of our 2002 Credit Facility increased by $10.5 million for the year ended December 31, 2003 as 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.

        At December 31, 2004, there were $50.5 million in outstanding borrowings and $6.5 million pursuant to letters of credit under our 2004 Credit Agreement. At December 31, 2004, we had $23 million of availability under the 2004 Credit Agreement. As of December 31, 2004, we were in compliance with all of our obligations under this agreement. In February 2005, we paid down the outstanding borrowings and accrued interest under the 2004 Credit Agreement with proceeds from our IPO.

        Our liquidity and available cash resources are in part restricted by the regulatory requirements of three of our primary operating subsidiaries, GFI Securities LLC, which is a registered broker-dealer in the U.S., and GFI Securities Limited and GFI Brokers Limited, which are registered broker-dealers in the U.K. These three subsidiaries 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. Our non-regulated subsidiaries are not subject to these restrictions. 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 December 31, 2004, GFI Securities LLC had Net Capital, as defined under the Exchange Act, of $19.7 million, which was $19.4 million in excess of its required minimum net capital of $0.3 million. As of December 31, 2004, GFI Securities Limited had financial

49

resources, as defined by the FSA, of $15.1 million, which was $7.0 million in excess of its required financial resources of $8.1 million. As of December 31, 2004, GFI Brokers Limited had financial resources, as defined by the FSA, of $7.9 million, which was $0.5 million in excess of its required financial resources of $7.4 million.

        GFI (HK) Securities LLC is subject to the capital requirements of the SFC in Hong Kong. At December 31, 2004, GFI (HK) Securities LLC had net capital of approximately $1.7 million, which was $1.3 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. At December 31, 2004, GFI Group PTE Ltd had stockholders' equity of 3.8 million Singapore dollars (U.S. $2.3 million), which was 0.8 million Singapore dollars (U.S. $0.5 million) in excess of its required stockholders' equity.

        Although we have no material commitments for capital expenditures, we anticipate that we will experience a substantial increase in our capital expenditures and lease commitments consistent with our anticipated growth in operations, infrastructure and personnel. We currently anticipate that we will continue to experience significant growth in our operating expenses for the foreseeable future and that our operating expenses will be a material use of our cash resources.

        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 our IPO and availability under our credit agreement, 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.

        In January 2005, we completed our IPO and received estimated net proceeds of $74.2 million after deducting the underwriting discount and expenses of the offering. We used a portion of the net proceeds from the IPO to repay in full the outstanding principal of $9.25 million and accrued interest on the note held by Jersey Partners. We also intend to use a portion of the net proceeds of the IPO to purchase the remaining portion of Fenics capital stock not currently owned by us. At the time we acquired our approximately 90% interest in Fenics in 2001, we agreed to purchase the remaining approximately 10% of the capital stock of Fenics following the completion of an initial public offering at a per share price equal to the fair market value, as of the date of such offer, of 0.3274 shares of our common stock.    On March 9, 2005, we made a written offer to purchase all of the ordinary shares in Fenics Limited not held by us for an amount equal to $8.37 per Fenics Limited share (the "Purchase Price"). The Purchase Price represents 0.3274 multiplied by $25.58, which was the average closing price of our common stock over the immediately preceding four calendar weeks. This offer was made to all minority shareholders of Fenics Limited and, in the aggregate, is an offer to buy 532,098 ordinary shares in Fenics Limited at a total purchase price of $4.5 million.

        Further, in February 2005 we used a portion of the net proceeds from the IPO to pay down in full the current outstanding balances under our 2004 Credit Agreement of $52.5 million plus accrued interest.

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Contractual Obligations and Commitments

        The following table summarizes certain of our contractual obligations as of December 31, 2004:

		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)	$	50,500	$	—	$	50,500	$	—	$	—
	Loan Notes Payable(2)		9,250		—		1,850		5,550		1,850
Operating Leases(3)			21,187		3,582		4,797		4,528		8,280
Purchase Obligations(4)			6,497		5,283		1,214		—		—
Total		$	87,434	$	8,865	$	58,361	$	10,078	$	10,130

(1)

Amounts listed under Notes Payable represent outstanding borrowings under our 2004 Credit Agreement and vary from the notes payable reflected in our financial statements because our financial statements reflect the total debt net of unamortized loan fees. In February 2005, we used a portion of the net proceeds of our IPO to pay down all current amounts outstanding under our 2004 Credit Agreement.

(2)

Amounts listed under Loan Notes Payable represent the remaining outstanding principal amount of a note held by Jersey Partners. We used a portion of the net proceeds of our IPO to repay that note in full on January 31, 2005.

(3)

Amounts listed under Operating Leases include a lease agreement with an affiliate, which was scheduled to terminate in 2016 with an annual rent of £0.5 million ($0.9 million at December 31, 2004). In December 2004, we agreed to terminate this lease effective September 2005 and to make certain termination and other payments upon such termination. As a result, we accrued an obligation for the contract termination fees and other payment that totaled $2.9 million as of December 31, 2004. See Note 15 of the notes to our consolidated financial statements for further details.

(4)

Amounts listed under Purchase Obligations include agreements for quotes with various information service providers.

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.

Critical Accounting Policies and Estimates

General

        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 U.S. generally accepted accounting principles, which require us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other factors that we believed are reasonable under the circumstances. We believe that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions.

        An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made; if

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different estimates reasonably could have been used; or if changes in the estimate that are reasonably likely to occur periodically could materially impact the financial statements. We believe the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

Revenue Recognition

        We provide brokerage services to our clients in the form of either agency or principal transactions. In agency transactions, we charge commissions for executing transactions between buyers and sellers. We earn revenue from principal transactions on the spread between the buy and sell price of the security that is brokered. Our principal transaction revenue is primarily derived from matched principal transactions. In matched principal transactions, we simultaneously agree to buy instruments from one party and sell them to another. Certain of our brokerage desks enter into unmatched principal transactions in the ordinary course of business, primarily for the purpose of facilitating our clients' execution needs. These unmatched positions are intended to be held short term. Brokerage revenues and related expenses from agency and principal transactions are recognized on a trade date basis. We do not receive actual payment of the commissions or the net spread until the specific account receivable is collected in an agency transaction or until the specific settlement date in a 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 December 31, 2004 was $2.9 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 estimated the market value of our common stock for option grants based upon recent transactions involving our equity securities and periodic valuation analyses.

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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.

Contingencies

        In the normal course of business, we have been named as defendants in various lawsuits and proceedings and have been involved in certain regulatory examinations. Additional actions, investigations or proceedings may be brought from time to time in the future. We are subject to the possibility of losses from these various contingencies. Considerable judgment is necessary to estimate the probability and amount of any loss from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. We accrue a liability for the estimated costs of adjudication or settlement of asserted and unasserted claims existing as of the balance sheet date. We have recorded reserves for certain contingencies to which we may have exposure, such as reserves for certain income tax and litigation contingencies and contingencies related to the employer portion of National Insurance Contributions in the U.K.

        It is not presently possible to determine our ultimate exposure to these matters and there is no assurance that the resolution of these matters will not significantly exceed the reserves we have accrued. It is management's opinion that the ultimate resolution of these matters, while not likely to have a material adverse effect on our consolidated financial condition, could be material to our operating results for any particular period.

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.

Recent Accounting Pronouncements

        In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. This statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and is effective as of the first interim period that begins after June 15, 2005. We are currently evaluating the impact that adoption of this statement will have on our results of operations and financial position.

        In December 2004, the FASB issued Staff Position ("FSP") No. 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004.

53

The American Jobs Creation Act of 2004 (the "Act"), signed into law on October 22, 2004, provides for a special one-time tax deduction, or dividend received deduction ("DRD"), of 85% of qualifying foreign earnings that are repatriated in either a company's last tax year that began before the enactment date or the first tax year that begins during the one-year period beginning on the enactment date. FSP 109-2 provides entities additional time to assess the effect of repatriating foreign earnings under the Act for purposes of applying SFAS No. 109, Accounting for Income Taxes, which typically requires the effect of a new tax law to be recorded in the period of enactment. The Company will elect, if applicable, to apply the DRD to qualifying dividends of foreign earnings repatriated in its fiscal year ending December 31, 2005.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        In the normal course of business, we are exposed to foreign currency exchange rate fluctuations related to our international brokerage operations, changes in interest rates which impact our variable-rate debt obligations, credit risk associated with potential non-performance by counterparties or customers and market risk associated with our principal transactions. Our risk management strategy with respect to foreign currency risks includes the use of derivative financial instruments. We use derivatives only to manage existing underlying exposures of the Company. Accordingly, we do not use derivative contracts for speculative purposes. Our risks, risk management strategy, and a sensitivity analysis estimating the effects of changes in fair values for exposures relating to foreign currency and interest rate exposures are outlined below.

Foreign Currency Exposure Risk

        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 exchange forward and foreign exchange collar contracts ("Foreign Exchange Derivative Contracts") for terms not more than twenty-four months to mitigate our exposure to foreign currency exchange rate fluctuations. Foreign Exchange Derivative Contracts entered into prior to June 2003 did not meet the requirements for hedge accounting and therefore gains and losses were included in earnings. All Foreign Exchange Derivative Contracts entered into during June 2003 and thereafter are designated and qualify as foreign currency cash flow hedges under SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended. The gain or loss on derivatives designated as cash flow hedges is included in other comprehensive income in the period that changes in fair value occur and is reclassified to income in the same period that the hedged item affects income. At December 31, 2004, we had outstanding Foreign Exchange Derivative Contracts to purchase and sell foreign currency with notional amounts translated into U.S. Dollars of $130.2 million. We would have paid $10.8 million at December 31, 2004 to settle these contracts, which represents the fair value of these contracts. At December 31, 2004, if the Euro strengthened by 10% against the U.S. Dollar, it would decrease the fair value of these contracts and, as a result, accumulated other comprehensive income would decrease by approximately $6.4 million, net of tax.

        We are also exposed to counterparty credit risk for nonperformance of derivative contracts and in the event of nonperformance, to market risk for changes in currency rates. The counterparty with whom we trade foreign exchange contracts is a major international financial institution. We monitor our positions with and the credit quality of this financial institution and we do not anticipate nonperformance by the counterparty.

        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 U.S. dollar strengthened by 10% against the Euro and the British Pound

54

strengthened by 10% against the U.S. dollar, the net impact to our net income would have been a reduction of approximately $0.4 million as of December 31, 2004.

Interest Rate Risk

        We had $59.8 million in variable-rate debt outstanding at December 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 increase by 0.50% per annum, the annual impact to our net income would be a reduction of approximately $0.2 million.

Credit Risk

        Credit risk arises from potential non-performance by counterparties and customers. We have established policies and procedures to manage our exposure to credit risk. 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 by our credit committee following review by our 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.

Principal Transactions

        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 third-party 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.

        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 are less likely 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.

        Matched principal transactions expose us to risks. 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 and over the counter markets exacerbates this risk for us because transactions in these markets are less likely 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

55

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 us. 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.

        We allow certain of our brokerage desks to enter into unmatched principal transactions in the ordinary course of business, primarily for the purpose of facilitating clients' execution needs. As a result, we have market risk exposure on these unmatched principal transactions. Our exposure varies based on the size of the overall positions, the terms of the instruments brokered, and the amount of time the positions are held before we dispose of the position. These unmatched positions are intended to be held short term. We do not track our exposure to unmatched positions on an intra-day basis. To the extent these unmatched positions are not disposed of intra-day, we mark these positions to market. Principal gains and losses resulting from these positions could on occasion have a disproportionate effect, positive or negative, on our financial condition and results of operations for any particular reporting period.

        We attempt to mitigate the risks associated with principal transactions through our credit approval and credit monitoring processes. We maintain a credit approval process as described above under the discussion of "Credit Risk" as a means of mitigating exposure to counterparty risk. In addition, our credit committee regularly monitors concentration of market risk to financial instruments, countries or counterparties and regularly monitors trades that have not settled within prescribed settlement periods or volume thresholds. We have developed and utilize a proprietary, electronic credit monitoring system, which provides management with twice daily credit reports that analyze credit concentration.

56

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Table of Contents

Report of Independent Registered Public Accounting Firm	58
Consolidated Statements of Financial Condition	59
Consolidated Statements of Income	60
Consolidated Statements of Comprehensive Income	61
Consolidated Statements of Cash Flows	62
Consolidated Statements of Changes in Stockholders' Equity	63
Notes to Consolidated Financial Statements	64

57

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders 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, 2004 and 2003, and the related statements of income, comprehensive income, cash flows and changes in stockholders' equity for each of the three years in the period ended December 31, 2004. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, the consolidated financial statements present fairly, in all material respects, the financial position of GFI Group Inc. and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.

/s/  DELOITTE & TOUCHE LLP

New York, New York
March 30, 2005

58

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands except share and per share amounts)

		December 31,
								Proforma December 31, 2004
		2004			2003
								(unaudited)
ASSETS
Cash and cash equivalents		$	105,161		$	87,299
Deposits with clearing organizations			8,833			7,945
Accrued commissions receivable, net of allowance for doubtful accounts			50,665			27,952
Receivables from brokers, dealers and clearing organizations			408,241			192,679
Property, equipment and leasehold improvements, net			25,449			30,077
Software inventory, net			3,495			2,536
Goodwill			11,482			11,482
Intangible assets, net			1,439			2,248
Other assets			25,458			12,591
TOTAL ASSETS		$	640,223		$	374,809
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
LIABILITIES
	Accrued compensation	$	64,097		$	42,576
	Accounts payable and accrued expense		21,560			22,267
	Payables to brokers, dealers and clearing organizations		376,065			177,690
	Notes payable, net		49,591			38,747
	Loan note payable		9,250			9,250
	Income taxes payable		10,336			6,266
	Other liabilities		23,041			10,192
	Lease termination costs payable to affiliate		2,871			—
Total Liabilities		$	556,811		$	306,988
Commitments and contingencies
Series C redeemable convertible preferred stock, $0.01 par value; 35,373,704 shares authorized; 3,723,545 shares outstanding at December 31, 2004 and 2003, respectively; none issued or outstanding pro forma (unaudited) (liquidation value of $41.5 million and $38.4 million, respectively)			30,043			30,043		$	—
STOCKHOLDERS' EQUITY
	Convertible preferred stock (liquidation value of $29.6 million)		29,069			29,069			—
	Class A common stock, $0.01 par value; 100,000,000 authorized; 5,893,846 outstanding at December 31, 2004 and 2003, respectively; none issued or outstanding pro forma (unaudited)		59			59			—
	Class B common stock, $0.01 par value; 300,000,000 authorized; 10,155,809 outstanding at December 31, 2004 and 2003, respectively; 22,804,086 issued and outstanding pro forma (unaudited)		102			102			228
	Additional paid in capital		35,162			34,967			94,207
	Retained earnings (accumulated deficit)		(3,313	)		(26,436	)		(3,313	)
	Accumulated other comprehensive (loss) income		(7,710	)		17			(7,710	)
	Total Stockholders' Equity		53,369			37,778		$	83,412
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY		$	640,223		$	374,809

See notes to consolidated financial statements

59

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)

				Year Ended December 31,
				2004		2003		2002
REVENUES:
	Brokerage revenues:
		Agency commissions		$	262,039	$	184,920	$	200,492
		Principal transactions			101,339		65,237		59,359
			Total brokerage revenues		363,378		250,157		259,851
		Analytics and market data			16,081		13,143		9,615
		Interest income			1,578		1,167		1,401
		Other income			3,983		1,377		4,353
Total revenues					385,020		265,844		275,220
EXPENSES:
	Compensation and employee benefits				241,847		166,276		174,011
	Communications and quotes				20,536		16,512		15,944
	Travel and promotion				19,511		14,301		15,522
	Rent and occupancy				10,669		10,645		10,964
	Depreciation and amortization				13,856		10,297		10,361
	Professional fees				9,468		7,793		7,254
	Clearing fees				9,816		3,668		4,063
	Interest				3,159		2,470		3,397
	Other expenses				10,353		6,533		6,960
	Lease termination costs to affiliate				2,651		—		—
		Total expenses			341,866		238,495		248,476
INCOME BEFORE PROVISION FOR INCOME TAXES					43,154		27,349		26,744
PROVISION FOR INCOME TAXES					20,031		12,885		14,470
NET INCOME				$	23,123	$	14,464	$	12,274
EARNINGS PER SHARE
	Basic—Class A and Class B common stock			$	1.01	$	0.63	$	0.59
	Diluted			$	0.95	$	0.61	$	0.58
WEIGHTED AVERAGE SHARES OUSTANDING BASIC
	Class A common stock				5,893,846		5,893,846		5,632,931
	Class B common stock				10,155,809		10,155,809		10,154,002
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED					24,334,003		23,693,418		21,231,412
EARNINGS PER SHARE—PRO FORMA (unaudited)
	Basic			$	1.01
	Diluted			$	0.95
	Weighted average shares outstanding—basic				22,804,086
	Weighted average shares outstanding—diluted				24,343,855

See notes to consolidated financial statements

60

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

		Year Ended December 31,
		2004			2003			2002
NET INCOME		$	23,123		$	14,464		$	12,274
OTHER COMPREHENSIVE INCOME (LOSS):
	Unrealized gain (loss) on foreign exchange derivative contracts, net of tax	$	(7,598	)	$	417		$	—
	Foreign currency translation adjustment, net of tax		(129	)		(289	)		(57	)
COMPREHENSIVE INCOME		$	15,396		$	14,592		$	12,217

See notes to consolidated financial statements

61

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

				Year Ended December 31,
				2004			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	23,123		$	14,464		$	12,274
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			13,856			10,297			10,361
		Amortization of loan fees			270			142			130
		Provision for allowance for doubtful accounts			815			(559	)		2,181
		Loss on disposal of fixed assets			—			86			122
		Deferred compensation			195			44			271
		Expenses paid for with common stock			—			—			106
		(Benefit) provision for deferred taxes			(4,344	)		(771	)		3,190
		Loss on foreign currency exchange for loan notes payable			—			128			1,021
		Gain on the sale of U.S. treasury repurchase agreement brokerage desk			—			—			(1,350	)
		Loss on Fenics Purchase Obligation			570			(198	)		19
		Lease termination costs to affiliate			2,651			—			—
		(Increase) decrease in operating assets:
			Deposits with clearing organizations		(888	)		(845	)		10,793
			Accrued commissions receivable		(22,981	)		838			8,589
			Receivables from brokers, dealers and clearing organizations		(215,562	)		(74,130	)		38,968
			Software inventory		(1,584	)		(1,755	)		(1,036	)
			Other assets		(6,941	)		692			652
		Increase (decrease) in operating liabilities:
			Accrued compensation		21,521			(3,111	)		4,678
			Accounts payable and accrued expenses		(486	)		1,995			4,319
			Payables to brokers, dealers and clearing organizations		198,375			77,547			(55,025	)
			Income taxes payable—current		4,070			1,651			(3,180	)
			Other liabilities		2,552			2,409			1,499
			Cash provided by operating activities		15,212			28,924			38,582
CASH FLOWS FROM INVESTING ACTIVITIES:
	Cash used for business acquisitions & intangible assets				—			(198	)		(33	)
	Purchase of property, equipment and leasehold improvements				(7,795	)		(7,626	)		(16,496	)
	Disposal of property and equipment				—			20			7
	Proceeds from sale of U.S. treasury repurchase agreement brokerage desk				—			—			1,350
		Cash used in investing activities			(7,795	)		(7,804	)		(15,172	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Repayment of notes payable				(3,000	)		(7,500	)		(55,603	)
	Proceeds from notes payable				14,500			18,000			59,300
	Repayment of loan notes payable				—			(7,739	)		(22,697	)
	Payment of loan fees				(926	)		—			—
	Dividends to JPI				—			—			(4,536	)
	Issuance of preferred stock				—			—			30,068
	Cash provided by financing activities				10,574			2,761			6,532
	Effects of foreign currency translation adjustment				(129	)		(289	)		(57	)
INCREASE IN CASH AND CASH EQUIVALENTS					17,862			23,592			29,885
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					87,299			63,707			33,822
CASH AND CASH EQUIVALENTS, END OF PERIOD				$	105,161		$	87,299		$	63,707
SUPPLEMENTAL DISCLOSURE:
Interest paid				$	3,036		$	1,943		$	4,613
Income taxes paid, net of refunds				$	20,907		$	12,581		$	15,359

See notes to consolidated financial statements

62

GFI GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands)

										Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)
		Convertible Preferred Stock		Common Stock				Additional Paid In Capital
				Class A		Class B										Total
BALANCE, JANUARY 1, 2002		$	29,044	$	53	$	102	$	34,552	$	(48,638	)	$	(54	)	$	15,059
	Dividends paid to JPI		—		—		—		—		(4,536	)		—			(4,536	)
	Share issuance		25		6		—		100		—			—			131
	Foreign currency translation adjustment		—		—		—		—		—			(57	)		(57	)
	Deferred compensation		—		—		—		271		—			—			271
	Net income		—		—		—		—		12,274			—			12,274
BALANCE, DECEMBER 31, 2002			29,069		59		102		34,923		(40,900	)		(111	)		23,142
	Foreign currency translation adjustment		—		—		—		—		—			(289	)		(289	)
	Unrealized gains on foreign exchange derivative contracts		—		—		—		—		—			417			417
	Deferred compensation		—		—		—		44		—			—			44
	Net income		—		—		—		—		14,464			—			14,464
BALANCE, DECEMBER 31, 2003			29,069		59		102		34,967		(26,436	)		17			37,778
	Foreign currency translation adjustment		—		—		—		—		—			(129	)		(129	)
	Unrealized losses on foreign exchange derivative contracts		—		—		—		—		—			(7,598	)		(7,598	)
	Deferred compensation		—		—		—		195		—			—			195
	Net income		—		—		—		—		23,123			—			23,123
BALANCE, DECEMBER 31, 2004		$	29,069	$	59	$	102	$	35,162	$	(3,313	)	$	(7,710	)	$	53,369

See notes to consolidated financial statements.

63

GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 is majority owned by Jersey Partners, Inc. ("JPI").

        The Company, through its subsidiaries, provides brokerage services to institutional clients in markets for a range of credit, financial, equity and commodity instruments. The Company complements its brokerage capabilities with value-added services, such as data and analytics software products for decision support, which it licenses to the financial services industry and other corporations. The Company's principal operating subsidiaries include: GFInet inc. ("GFInet"), GFI Securities LLC ("SLLC"), GFI Brokers LLC, GFI Group LLC ("GLLC"), GFI Securities Limited, GFI Brokers Limited, GFI (HK) Securities LLC, GFInet U.K. Limited and Fenics Limited 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.

        On January 31, 2005, the Company completed its initial public offering (the "IPO"), selling 3,947,369 shares of common stock at $21.00 per share. See Note 25 for further detail.

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 Limited to facilitate brokerage transactions.

Brokerage Transactions—The Company provides brokerage services to its clients in the form of either agency or principal transactions.

Agency Commissions—In agency transactions, the Company charges commissions for executing transactions between buyers and sellers. Agency commissions revenues and related expenses are recognized on a trade date basis.

Principal Transactions—Principal transaction revenue is primarily derived from matched principal transactions. In matched principal transactions, the Company simultaneously agrees to buy instruments from one customer and sell them to another customer. A very limited number of brokerage desks are allowed to enter into unmatched principal transactions to facilitate a customer's execution needs for transactions initiated by such customers. These unmatched positions are intended to be held short term and in liquid markets. The Company does not enter into unmatched principal transactions for purposes

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of speculating on movements in the markets. The Company earns revenue from principal transactions on the spread between the buy and sell price of the security that is brokered.

        Additionally, from time to time, for the purpose of facilitating our customers' execution needs, the Company holds securities positions. These positions are marked to market on a daily basis. Principal transactions revenues and related expenses are recognized on a trade date basis.

Analytics and Market Data Revenue Recognition—Analytics revenue consists mostly of fees for licenses of software products as well as maintenance, installation, customer training and technical support of those products. Market data revenue primarily consists of subscription fees. Analytics 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. Market data revenue is recognized over the term of the subscription period.

        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.

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

Construction Type Contract—During the year ended December 31, 2004, the Company entered into a product development and customization contract whereby the Company would develop an online currency trading system and customize it for a customer. The Company will own the back-end portion of the online currency trading system and this technology will be available to license to other third parties. The contract is accounted for using the completed-contract method in accordance with Accounting Research Bulletin No. 45, Long-Term Construction-Type Contracts," and with the applicable guidance provided by SOP 81-1, Accounting for Performance of Construction Type and Certain Production Type Contracts as the Company is unable to make reasonably dependable estimates of progress towards completion. Under this method, revenues and expenses are deferred and netted on the Consolidated Statements of Financial Condition until such time when the project is substantially complete. As of December 31, 2004, the net asset reflected in other assets on the Consolidated Statements of Financial Condition was $402, comprised of costs to date of $2,328 net of billings to date of $1,926. The Company does not anticipate a loss on this contract.

        Additionally, in conjunction with the product development and customization contract, the Company provides hosting services to the customer. Revenue for hosting services is recognized over the term of the hosting period.

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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 feasibility 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.

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. Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives.

Derivative Financial Instruments—The Company uses foreign exchange derivative contracts to reduce the effects of fluctuations in the receivables from commissions denominated in foreign currencies. Foreign exchange derivative contracts entered into prior to June 2003 did not meet the requirements for hedge accounting and therefore gains and losses were included in earnings. All foreign exchange derivative contracts entered into after June 2003 are designated and qualify as foreign currency cash flow hedges under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended ("SFAS 133"). The Company reclassifies gains and losses on the foreign exchange derivative contracts included in other comprehensive income into earnings at the time the hedged transactions are recognized. The Company estimates that approximately $3.6 million, net of tax, of the unrealized loss recognized in other comprehensive income (loss) as of December 31, 2004 will be reclassified into earnings within the next 12 months. The Company measures effectiveness by assessing the changes in the expected future cash flows of the hedged items. The ineffective portion of the hedges, if any, is included in other expenses. There is no portion of the derivative instruments' gains or losses that has been excluded from the assessment of effectiveness.

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 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 as other income.

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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.

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 had the fair value method been applied for all periods presented. See Note 17 for assumptions used in estimating fair value.

	Year Ended December 31,
	2004			2003			2002
Net income—as reported	$	23,123		$	14,464		$	12,274
Add:
Effect of stock-based employee compensation included in reported net income, net of tax		33			44			271
Deduct:
Total stock-based employee compensation determined under fair value method, net of tax		(328	)		(433	)		(559	)
Net income—pro forma	$	22,828		$	14,075		$	11,986
Basic earnings per share—as reported	$	1.01		$	0.63		$	0.59
Basic earnings per share—pro forma	$	1.00		$	0.62		$	0.58
Diluted earnings per share—as reported	$	0.95		$	0.61		$	0.58
Diluted earnings per share—pro forma	$	0.94		$	0.60		$	0.56

Unaudited pro forma information—Prior to the closing of the Company's IPO in January 2005, all outstanding shares of the Series C Redeemable Convertible Preferred Stock, the Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock and the Class A Common Stock were converted into shares of Class B Common Stock. See Note 25 for further details. The pro forma balance sheet gives effect to this conversion as if it had occurred at December 31, 2004. The pro forma balance sheet does not give effect to the offering proceeds.

        Pro forma earnings per share, presented below, gives effect to the conversion of all outstanding shares of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Redeemable Convertible Preferred Stock and Class A Common Stock, in connection with the IPO as if the conversion had occurred at the beginning of the period. As a result of the conversion of the

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preferred stock, pro forma earnings per share is calculated using the "if converted" method and not the two-class method, as presented in Note 12.

		For the year ended December 31, 2004
		(unaudited)
Basic earnings per share
Net income applicable to stockholders		$	23,123
Weighted average common shares outstanding			22,804,086
Basic earnings per share		$	1.01
Diluted earnings per share
Net income applicable to stockholders		$	23,123
Weighted average common shares outstanding			22,804,086
Effect of dilutive shares
	Options and warrant		190,993
	Effect of contingently issuable shares		1,348,776
Weighted average shares outstanding and common stock equivalents			24,343,855
Diluted earnings per share		$	0.95

Recent Accounting Pronouncements—In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123. This statement supersedes APB Opinion No. 25 and requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and is effective as of the first interim period that begins after June 15, 2005. The Company is currently evaluating the impact that adoption of this statement will have on its results of operations and financial position.

        In December 2004, the FASB issued Staff Position ("FSP") No. 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. The American Jobs Creation Act of 2004 (the "Act"), signed into law on October 22, 2004, provides for a special one-time tax deduction, or dividend received deduction ("DRD"), of 85% of qualifying foreign earnings that are repatriated in either a company's last tax year that began before the enactment date or the first tax year that begins during the one-year period beginning on the enactment date. FSP 109-2 provides entities additional time to assess the effect of repatriating foreign earnings under the Act for purposes of applying SFAS No. 109, Accounting for Income Taxes, which typically requires the effect of the new tax law to be recorded in the period of enactment. The Company will elect, if applicable, to apply the DRD to qualifying dividends of foreign earnings repatriated in its fiscal year ending December 31, 2005.

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3.    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.

4.    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 $2,879 and $2,154 as of December 31, 2004 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.

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

		December 31,
		2004		2003
Receivables from brokers, dealers and clearing organizations:
	Contract value of fails to deliver	$	378,479	$	154,666
	Balance receivable from clearing organizations		29,762		38,013
Total		$	408,241	$	192,679
Payables to brokers, dealers and clearing organizations:
	Contract value of fails to receive	$	361,559	$	154,709
	Balance payable to clearing organizations		11,201		18,236
	Payable to financial institutions		3,305		4,745
Total		$	376,065	$	177,690

        Substantially all open fail to deliver and fail to receive transactions at December 31, 2004 and 2003 have subsequently settled at the contracted amounts.

        Payable to clearing organizations of $11,201 and $18,236 at December 31, 2004 and 2003, respectively, represents amounts owed to clearing organizations in the normal course of operations.

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6.    PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

        Property, equipment and leasehold improvements consist of the following:

	Year Ended December 31,
	2004			2003
Software	$	40,357		$	38,419
Computer equipment		13,474			10,909
Leasehold improvements		7,387			6,609
Communications equipment		7,785			6,406
Furniture and fixtures		3,093			1,968
Automobiles		181			181
Total		72,277			64,492
Accumulated depreciation and amortization		(46,828	)		(34,415	)
Property, equipment, and leasehold improvements less accumulated depreciation and amortization	$	25,449		$	30,077

        Depreciation and amortization for the years ending December 31, 2004, 2003 and 2002 was $12,424, $9,234 and $9,555, respectively.

        In October 2004, the Company committed to a plan to explore new lease opportunities in the U.K. with the goal of combining the operations at two facilities into a larger single location that would allow for flexibility for future expansion and to abandon certain fixed assets in the facilities. Accordingly, the Company accelerated the depreciable lives of these assets to be abandoned to their estimated useful lives. Total accelerated depreciation relating to the fixed assets to be abandoned is $1,598, of which $599 was recorded during the three months ended December 31, 2004 and $999 will be recorded during 2005. See Note 24 for further details.

7.    SOFTWARE INVENTORY

		December 31,
		2004			2003
Software inventory, cost
	Work in process	$	2,732		$	1,772
	Finished goods		1,643			1,019
			4,375			2,791
	Accumulated amortization		(880	)		(255	)
Software inventory, net		$	3,495		$	2,536

        Amortization for the years ending December 31, 2004, 2003 and 2002 was $625, $255 and $0, respectively.

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8.    GOODWILL AND INTANGIBLE ASSETS

        Based on the results of its annual impairment tests, the Company determined that no impairment of goodwill existed as of January 1, 2005, 2004 and 2003. However, future goodwill impairment tests could result in a charge to earnings. The Company will continue to evaluate goodwill on an annual basis as of the beginning of its new fiscal year, and whenever events and changes in circumstances indicate that there may be a potential impairment.

        Intangible assets include customer base, trade name, core technology and a patent. As of December 31, 2004 and 2003, the historical carrying cost of these intangible assets was $1,050, $1,370, $3,230 and $34, respectively. Accumulated amortization of intangible assets totaled $4,245 and $3,436 at December 31, 2004 and 2003, respectively. In addition, for the years ended December 31, 2004, 2003 and 2002, amortization expense of these intangible assets was $808, $808, and $806, respectively.

        At December 31, 2004, expected amortization expense over the next five years for the definite lived intangible assets and patent is as follows:

2005	$	808
2006		506
2007		103
2008		2
2009		2
Total	$	1,421

9.     NOTES PAYABLE

        On August 23, 2004, the Company entered into a credit agreement with Bank of America N.A. and certain other lenders (the "2004 Credit Agreement"). The 2004 Credit Agreement provides for a multicurrency revolving credit facility in a principal amount of $80,000, which includes a letter of credit facility with a sub-limit of $30,000. The 2004 Credit Agreement can be increased to $100,000 with the consent of the lenders. The 2004 Credit Agreement matures on August 23, 2007. Revolving loans may be either base rate loans or currency rate loans. Currency rate loans and the letters of credit bear interest at the annual rate of LIBOR plus the applicable margin in effect for that interest period. Base rate loans bear interest at a rate per annum equal to a base rate plus the applicable margin in effect for that interest period. As long as no default has occurred under the 2004 Credit Agreement, the applicable margin for both the base rate and currency rate loans is based on a matrix that varies with a ratio of outstanding debt to EBITDA, as defined in the 2004 Credit Agreement. At December 31, 2004, the applicable margin is 1.75% and the one-month LIBOR is 2.40%. Amounts outstanding under the 2004 Credit Agreement are secured by substantially all the assets of the Company and certain assets of the Company's subsidiaries.

        In February 2005, a portion of the proceeds from the IPO was used to pay down the current outstanding borrowings and interest under the 2004 Credit Agreement. See Note 25 for more information.

        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 that

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was available was a $10,000 guarantee line that the Company could draw on for certain purposes including letters of credit. Amounts outstanding under the 2002 Credit Facility incurred 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, was $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 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 was the margin, depending on the consolidated EBITDA, less 10 basis points (as of December 31, 2003, 2.15%). The original maturity date of the 2002 Credit Facility was July 4, 2005. However, in August 2004, the Company used borrowings from the 2004 Credit Agreement to repay in full the outstanding borrowings and interest under the 2002 Credit Facility. Consequently, the 2002 Credit Facility was terminated in its entirety on August 23, 2004.

	As of December 31,
	2004				2003
	Revolving			Term	Revolving			Term
Loan Available	$	80,000	(1)	N/A	$	30,000	(2)	$	20,000
Loans Outstanding	$	50,500		N/A	$	19,000		$	20,000
Letter of Credit or Guarantee Outstanding	$	6,500		N/A	$	7,000			N/A

(1)

Amounts available include up to $30,000 for letters of credit.

(2)

Amounts available included up to $10,000 for guarantees and letters of credit.

        As of December 31, 2004, the combined aggregate maturities for all outstanding long-term notes payable were as follows:

	Revolving
2005	$	—
2006		—
2007		50,500
Total	$	50,500

        At December 31, 2004 and 2003, notes payable were recorded net of unamortized loan fees of $909 and $253, respectively.

        The 2004 Credit Agreement contains, and the 2002 Credit Facility contained, certain financial and other covenants. The Company was in compliance with all applicable covenants at December 31, 2004 and 2003.

10.   LOAN NOTE PAYABLE

        The balances outstanding for the JPI loan note payable was $9,250 as of December 31, 2004 and 2003. The loan was due for repayment in five annual installments of $1,850 each, commencing on June 15, 2007 and accrued interest at one-month LIBOR plus an applicable margin (5.0% at December 31, 2004). This loan was secured by a second priority security interest in substantially all of the assets of the Company and certain of its subsidiaries.

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        As of December 31, 2004 the combined aggregate maturities for the outstanding long-term loan note payable were as follows:

2005	$	—
2006		—
2007		1,850
2008		1,850
2009		1,850
Thereafter		3,700
Total	$	9,250

        On January 31, 2005, a portion of the proceeds from the IPO was used to repay the JPI loan note payable in its entirety. See Note 25 for more information.

11.   INCOME TAXES

        The provision for income taxes consists of the following:

		Year ended December 31,
		2004			2003			2002
Current Provision:
	Federal	$	6,690		$	426		$	612
	Foreign		14,212			9,906			9,537
	State and local		3,473			3,324			1,131
Total current provision			24,375			13,656			11,280
Deferred (Benefit) Provision:
	Federal		(1,295	)		2,455			952
	Foreign		(2,257	)		(3,475	)		(147	)
	State and local		(792	)		249			2,385
Total deferred (benefit) provision			(4,344	)		(771	)		3,190
Total		$	20,031		$	12,885		$	14,470

        The Company had pre-tax income from foreign operations of $26,429, $18,286, and $21,040 for the years ended December 31, 2004, 2003 and 2002, respectively. Pre-tax income from domestic operations was $16,725, $9,063 and $5,704 for the years ended December 31, 2004, 2003 and 2002, respectively.

        Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws

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that will be in effect when such differences are expected to reverse. Significant components of the Company's gross deferred tax assets (liabilities) were as follows:

		As of December 31,
		2004			2003
Deferred tax assets:
Foreign tax credits		$	1,830		$	2,405
Foreign deferred items			5,565			3,475
Net operating/capital loss carryforwards			3,514			4,082
Unrealized loss on currency hedging			3,244			—
Basis difference in foreign subsidiary			1,389			—
Liability reserves			681			1,437
Prepaid expenses			785			783
Other			545			301
Valuation allowance			(3,514	)		(4,082	)
	Total deferred tax assets	$	14,039		$	8,401
Deferred tax liabilities:
Depreciation/amortization		$	(2,408	)	$	(4,200	)
Unrealized gain on currency hedging			—			(299	)
Other			(167	)		(440	)
	Total deferred tax liabilities	$	(2,575	)	$	(4,939	)
Net deferred tax assets		$	11,464		$	3,462

        The deferred tax assets relating to foreign deferred items listed above consist primarily of depreciation and amortization, unpaid intra-group royalties and interest, and lease termination costs. The deferred tax assets relating to net operating or capital loss carryforwards listed above consist of losses from operations in the U.S., U.K., and Singapore. These carryforward losses will start to expire in 2007. Considering recent historical earnings and the potential future taxable profits available for offset and various limitations applied to carryforward losses, a full valuation allowance has been established with respect to this asset. Additionally, the Company has $1.8 million of foreign tax credit carryfoward at December 31, 2004 that will start to expire in 2013.

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

	December 31,
	2004		2003		2002
U.S. Federal income tax at corporate statutory rate	35.0	%	35.0	%	35.0	%
U.S. state and local tax	4.8		8.5		8.5
Effect of foreign operations	3.3		(2.4	)	6.0
Non-deductible expenses	4.1		5.1		5.0
General business credit	(1.0	)	(0.2	)	(2.4	)
Other	0.2		1.1		2.0
Effective tax rate	46.4	%	47.1	%	54.1	%

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        The Company is subject to regular examinations by various tax authorities in jurisdictions in which the Company has significant business operations. The Company regularly assesses the likelihood of additional assessments in each of the tax jurisdictions resulting from these examinations. Tax reserves have been established, which the Company believes to be adequate in relation to the potential for additional assessments. Once established, reserves are adjusted as information becomes available or when an event requiring a change to the reserve occurs. The resolution of these tax matters could have a material impact on the Company's effective tax rate.

12.   EARNINGS PER SHARE

        The Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, and the Series C Redeemable Convertible Preferred Stock, (together, the "Convertible Preferred Securities") are participating securities, such that in the event a dividend is declared or paid on the common stock, the Company must declare and pay dividends on the Convertible Preferred Securities as if the Convertible Preferred Securities had been converted into common stock. Basic earnings per share for Class A and Class B common stock is calculated by dividing net income available to common stockholders by the weighted average number of Class A and Class B common shares outstanding, respectively, during the period.

        Diluted earnings per share is calculated by dividing net income by the sum of the weighted average number of shares outstanding plus the dilutive effect of convertible preferred stock using the "if-converted" method, contingently issuable shares of Class B common stock to the Series C Redeemable Convertible Preferred Stockholders (See Note 13) and outstanding stock options and warrant using the "treasury stock" method.

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

			December 31,
			2004			2003			2002
Basic earnings per share
	Net income applicable to stockholders		$	23,123		$	14,464		$	12,274
	Income allocated to participating preferred stockholders			(6,842	)		(4,280	)		(2,906	)
	Income available to common stockholders		$	16,281		$	10,184		$	9,368
	Weighted average common shares outstanding:
		Class A common stock		5,893,846			5,893,646			5,632,931
		Class B common stock		10,155,809			10,155,809			10,154,002
	Weighted average common shares outstanding			16,049,655			16,049,655			15,786,933
	Basic earnings per share—Class A and Class B common stock		$	1.01		$	0.63		$	0.59
Diluted earnings per share
	Net income applicable to stockholders		$	23,123		$	14,464		$	12,274
	Weighted average common shares outstanding			16,049,655			16,049,655			15,786,933
	Effect of dilutive shares:
		Options and warrant		190,993			—			—
		Convertible preferred shares		3,021,034			3,021,034			3,020,628
		Redeemable convertible preferred shares		3,723,545			3,723,545			2,162,718
	Effect of contingently issuable shares subject to Series C purchase price adjustment			1,348,776			899,184			261,133
	Weighted average shares outstanding and common stock equivalents			24,334,003			23,693,418			21,231,412
	Diluted earnings per share		$	0.95		$	0.61		$	0.58

        Options and a warrant to purchase 263,079, 1,674,882 and 1,839,755 shares with exercise prices greater than the average market prices of common stock, as estimated by management, were outstanding during 2004, 2003 and 2002, respectively, and were excluded from the respective computations of diluted earnings per share because their effect would be anti-dilutive. Options to purchase 1,248,191, 803,552 and 648,236 shares were outstanding under the GFI Group Inc. 2002 Stock Option Plan at December 31, 2004, 2003 and 2002, respectively and were excluded from the computation of diluted earnings per share for the respective periods because the IPO contingency related to the exercisability of these options was not met (see Note 17). Once this contingency is met, options granted under the GFI Group Inc. 2002 Stock Option Plan will be included in diluted earnings per share to the extent they are dilutive.

13.   SERIES C REDEEMABLE CONVERTIBLE PREFERRED STOCK

        As of December 31, 2003 and 2004, the Company had 3,723,545 outstanding shares of Series C Redeemable Convertible Preferred Stock (the "Series C Preferred Stock").

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        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).

        Conversion:    Each share of Series C Preferred Stock was 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 completion of our IPO in January 2005, each share of the Series C Preferred Stock was converted into Class B Common Stock at a conversion rate of one-to-one based on the IPO price per share to the public. See Note 25 for further details.

        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.

        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 449,592 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.

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14.   STOCKHOLDERS' EQUITY

Reverse Split of Common and Preferred Stock—On October 29, 2004 the Board of Directors of the Company approved a 1 for 9.50 reverse stock split of the Company's outstanding common and preferred stock, which was effected on January 20, 2005. All share and per share data in the accompanying financial statements have been retroactively adjusted to reflect the intended stock split.

Conversion—Subsequent to year end, all shares of Class A Common Stock, Series A and B Convertible Preferred Stock and Series C Preferred Stock were converted into Class B Common Stock and Class B Common Stock was renamed Common Stock. See Note 25 for more details.

        At December 31, 2004 and 2003, respectively, 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.

		Class A Common Stock Shares		Class B Common Stock Shares
Authorized			100,000,000		300,000,000
Issued:
	2002		630,689		2,734
	2003		—		—
	2004		—		—
Outstanding:
	January 1, 2002		5,263,157		10,153,075
	December 31, 2002		5,893,846		10,155,809
	December 31, 2003		5,893,846		10,155,809
	December 31, 2004		5,893,846		10,155,809
Par value per share		$	0.01	$	0.01

Share Issuance

        During the second quarter of 2002, the Company issued 630,689 shares of Class A Common Stock to JPI simultaneously with the closing of the issuance of the Series C Preferred Stock described in Note 13. The issuance of Class A Common Stock was in full satisfaction of the Company's obligations to JPI arising out of the reorganization which occurred in 2001.

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.

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        Upon completion of our IPO in January 2005, each share of Class A Common Stock was automatically converted into one share of Class B Common Stock. See Note 25 for more details.

        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.

Preferred Stock

		Series A Convertible Preferred Stock			Series B Convertible Preferred Stock
		Shares		Amount	Shares		Amount
Authorized			28,000,000	—		2,000,000	—
Issued:
	2002		2,620	25		—	—
	2003		—	—		—	—
	2004		—	—		—	—
Outstanding:
	January 1, 2002		2,839,473	26,184		178,941	2,860
	December 31, 2002		2,842,093	26,209		178,941	2,860
	December 31, 2003		2,842,093	26,209		178,941	2,860
	December 31, 2004		2,842,093	26,209		178,941	2,860
Par value per share		$	0.01		$	0.01

Share Issuance—During the first quarter of 2002, the Company issued 2,620 Series A Convertible Preferred Shares for $25,000.

Series A Convertible Preferred Stock

        Conversion:    Each share of Series A Convertible Preferred Stock (the "Series A Preferred Stock") was 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. Upon completion of our IPO in January 2005, each share of Series A Preferred Stock was automatically converted 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 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.

        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,

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may be made or set apart for the holders of any stock ranking junior to the Series A Preferred Stock upon liquidation, the holders of Series A Preferred Stock are entitled to receive a liquidating distribution of $9.50 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") was automatically convertable 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. Upon completion of the Company's IPO in January 2005, each share of Series B Preferred Stock was automatically converted into approximately 1.0017 shares of Class B Common Stock. See Note 25 for further details.

        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 $14.25 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—Prior to the Company's corporate reorganization in November 2001, GFI 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 $0, $0 and $4,536 for the years ended December 31, 2004, 2003 and 2002, respectively. The amount paid in 2002 related to JPI's tax liabilities for the 11-month period ended November 30, 2001.

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15.    COMMITMENTS AND CONTINGENCIES

Operating Leases—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, 2004, the future minimum rental commitments under such leases are as follows:

2005	$	3,582
2006		2,533
2007		2,264
2008		2,264
2009		2,264
Thereafter		8,280
Total	$	21,187

        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, 2004, 2003, and 2002 was $4,300, $3,990 and $4,077, respectively.

        The Company, through its subsidiary GFI UK Holdings, is a tenant under a lease agreement with an affiliate, which was due to expire in 2016. Under this agreement, GFI UK Holdings is required to pay an annual rent of £500 ($959 at December 31, 2004, which is included in the future rental commitments table). In December 2004, the Company and the affiliate agreed to terminate this lease in September 2005. As part of the lease termination agreement, the Company agreed to pay certain termination and other payments upon such termination. At December 31, 2004, the Company accrued an estimated obligation for contract termination costs in the amount of £1,500 (or US $2,871). The Company believes that the accrual is reasonable based on information that is currently available.

Purchase Obligations—The Company has various unconditional purchase obligations. These obligations are for the purchase of quotes from a number of information service providers during the normal course of business. As of December 31, 2004, the Company had total purchase commitment for quotes of approximately $6,497, with $5,283 due within the next twelve months and $1,214 due between one to two years.

Contingencies—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. Additional actions, investigations or proceedings may be brought from time to time in the future. We are subject to the possibility of losses from these various contingencies. Considerable judgment is necessary to estimate the probability and amount of any loss from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. The Company accrues a liability for the estimated costs of adjudication or settlement of asserted and unasserted claims existing as of the end of the reporting period.

        The Company has recorded reserves for certain contingencies to which we may have exposure, such as reserves for certain income tax and litigation contingencies and contingencies related to the employer portion of National Insurance Contributions in the U.K.

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        It is not presently possible to determine the Company's ultimate exposure to these matters and there is no assurance that the resolution of these matters will not significantly exceed the reserves accrued by the Company. It is the opinion of the Company's management that the ultimate resolution of these matters, while not likely to have a material adverse effect on the consolidated financial condition of the Company, could 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, management believes that the potential for the Company to be required to make payments under these arrangements is unlikely. Accordingly, no contingent liability is recorded in the Consolidated Statements of Financial Condition for these arrangements.

16.    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, 2004, 2003, or 2002.

        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 $1,166, $959 and $796 in 2004, 2003 and 2002, respectively, for the GFI Group Personal Pension Plans and Occupational Pension Plan.

17.    STOCK OPTIONS

        In October 2004, the Company adopted the GFI Group Inc. 2004 Equity Incentive Plan (the "2004 Equity Incentive Plan"). This plan permits the grant of non-qualified stock options, stock appreciation rights, shares of restricted stock, restricted stock units and performance units to employees, non-employee directors or consultants. Subject to certain adjustment provisions in this plan, 3,000,000 shares of our common stock, or any other security issued by the Company in substitution or exchange therefore, are available for grants of awards under this plan. There were no grants under the 2004 Equity Incentive Plan during the year ended December 31, 2004.

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        As of December 31, 2004, the Company had stock options outstanding under two 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 for 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 which occurred in January 2005. During 2004, 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 be recorded upon our IPO in January 2005 to the extent such options are vested. Based on options outstanding at December 31, 2004, the total compensation charge related to all options issued on or modified after January 1, 2003 as estimated at date of grant will be $2,036, or $1,227 net of tax. Of this, approximately $714, or $437 net of tax, would have been recorded through December 31, 2004 based on applicable service periods if the exercisability of the options had not been contingent upon the consummation of the IPO.

        The exercisability of options issued under the GFInet Plan is contingent upon the earlier of the Company completing an IPO of the Company's common stock, which occurred in January 2005, or the date upon which certain limited liability companies that have purchased our capital stock distribute such capital stock to their members. 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, $33, $44 and $271 were recognized as compensation expense during the years ended December 31, 2004, 2003 and 2002, respectively. During 2004, the Company amended certain options issued under the GFInet Plan to extend the term of such options. These amendments were accounted for as modifications under SFAS 123. Accordingly, $162 was recognized as compensation expense during the year ended December 31, 2004 related to these modified options.

        The fair value of the options granted or modified under both the GFI Group Plan and GFInet Plan was estimated on the date of grant or modification 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% (until the filing of the Company's initial registration statement on June 16, 2004); and (iv) an average risk-free interest rate of 3.4%, 2.9% and 3.7% for the years ended December 31, 2004, 2003 and 2002, respectively. In estimating the fair value of options granted subsequent to the filing of its initial registration statement on June 16, 2004, the Company assumed an average volatility of 33% based on the average volatilities of comparable public entities. Options under both plans vest ratably over a period of two to four years.

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        All repriced and modified 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, 2002		—		—	1,936,005		12.52
	Granted	654,920		11.88	159,263		12.31
	Terminated	(6,684	)	11.88	(360,776	)	13.19
Outstanding December 31, 2002		648,236		11.88	1,734,492		12.36
	Granted	208,316		11.88	—		—
	Terminated	(53,000	)	11.88	(164,873	)	14.64
Outstanding December 31, 2003		803,552		11.88	1,569,619		12.12
	Granted	1,098,552		13.78	141,052		11.93
	Terminated	(653,912	)	11.88	(253,390	)	14.37
Outstanding December 31, 2004		1,248,191		13.55	1,457,282		11.71

        The following table summarizes information about the GFI Group Plan options as of December 31, 2004:

	Stock Options Outstanding				Stock Options Exercisable
Exercise Price	Options Outstanding as of December 31, 2004	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number Exercisable as of December 31, 2004	Weighted Average Exercise Price
$11.88	1,019,453	9.19	$	11.88	—	—
21.00	228,738	9.51	$	21.00	—	—

        The following table summarizes information about the GFInet Plan options as of December 31, 2004:

	Stock Options Outstanding				Stock Options Exercisable
Exercise Price	Options Outstanding as of December 31, 2004	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number Exercisable as of December 31, 2004	Weighted Average Exercise Price
$  9.50	1,023,628	5.16	$	9.50	—	—
11.88	137,896	7.74		11.88	—	—
14.25	32,679	6.01		14.25	—	—
19.00	212,983	6.15		19.00	—	—
21.38	526	6.01		21.38	—	—
23.75	49,570	5.60		23.75	—	—

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Warrant

        At December 31, 2004, there was one warrant outstanding to purchase 0.1 million shares of Class B Common Stock at $9.50 per share. The warrant was issued in June 2000 as compensation primarily for consulting services relating to the Company's efforts to develop certain technology. The warrant became exercisable in May 2002 and expires on June 15, 2005.

18.    FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

        The Company, through its indirect subsidiaries, operates as an inter-dealer broker. In this role, the Company is interposed between buyers and sellers ("counterparties"). Agency transactions facilitated by the Company are settled between the counterparties on a give-up basis. Principal transactions 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.

        In certain circumstances, the Company may enter into transactions involving futures contracts to manage the Company's exposure on unmatched principal transactions. These transactions are executed on a margin basis through one of our third-party clearing organization. Futures contracts are executed on an exchange, and cash settlement is made on a daily basis for market movements. Accordingly, futures contracts generally do not have credit risk. Futures contracts are carried at fair value and are based on quoted market prices. Unrealized gains or losses on futures contracts are recorded in principal transaction revenues. At December 31, 2004, the Company does not have any open futures contracts.

        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.

19.    FINANCIAL INSTRUMENTS

Derivative Financial Instruments—The Company is exposed to changes in the U.S. Dollar compared to the British Pound and the Euro for anticipated sales and expenses in those currencies. The risk management policy of the Company is to manage transactional foreign exchange exposure through the use of foreign exchange forward and foreign exchange collar contracts ("Foreign Exchange Derivative Contracts"). Foreign Exchange Derivative Contracts entered into prior to June 2003 did not meet the requirements for hedge accounting and therefore gains and losses were included in earnings. All Foreign Exchange Derivative Contracts entered into during June 2003 and thereafter are designated and qualify as foreign currency cash flow hedges under SFAS 133. The Foreign Exchange Derivative Contracts are recorded in the Consolidated Statements of Financial Condition at fair value in other assets or other liabilities. Gains and losses on the effective portion of the hedges as well as on the underlying items being hedged are recorded to other income in the Consolidated Statements of Income.

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        For the years ended December 31, 2004 and 2003, there was no hedge ineffectiveness. For the years ended December 31, 2004 and 2003, unrealized gains (losses) before tax totaling ($11,141) and $716, respectively, were recorded as other comprehensive income (loss). There has been no discontinuance of cash flow hedges that would require a reclassification of gains into earnings. Management does not anticipate any events or transactions that would result in the reclassification into earnings of gains and losses that are reported in accumulated other comprehensive income due to hedge discontinuance.

        As part of the Company's acquisition of approximately 90% of the outstanding capital stock of Fenics in 2001, following completion of the Company's IPO the Company was required to offer to purchase the minority shares of Fenics' stock (532,098 shares) at a per share price equal to the fair market value, as of the date of such offer, of 0.3274 shares of the Company's common stock for each share of Fenics stock. This 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 Financial Instruments Indexed to, and Potentially Settled in the Stock of a Consolidated Subsidiary, the Company has accounted for this obligation at fair value, with a liability recorded in other liabilities (the "Fenics Purchase Obligation"). Gains and losses from changes in the fair value of this obligation have been included in earnings. Subsequent to year-end, the Company made an offer to purchase the minority shares for cash. See Note 25 for more details.

        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 monitors its positions with and the credit quality of this financial institution and does not expect nonperformance by the counterparty.

Fair Value of Financial Instruments—Substantially all of the Company's assets and liabilities are carried at fair value or contracted amounts that approximate fair value. Assets and liabilities that are recorded at contracted amounts approximating fair value consist primarily of receivables from and payables to brokers, dealers and clearing organizations. These receivables and payables are short term in nature and have subsequently substantially all settled at the contracted amounts. The Company's debt obligations are carried at historical amounts. The fair value of the Company's debt obligations was estimated using market rates of interest available to the Company for debt obligations of similar types and approximates the carrying value at December 31, 2004 and 2003. The Company's derivatives are summarized below showing the fair value of the related assets and liabilities that are included in other assets or other liabilities in the Consolidated Statements of Financial Condition as of December 31, 2004 and 2003 are as follows:

Asset/(Liabilities)	2004			2003
Foreign Exchange Derivative Contracts	$	(10,812	)	$	716
Fenics Purchase Obligation		(1,022	)		(452	)

        The fair value of the Foreign Exchange Derivative Contracts was estimated based on quoted market prices of comparable instruments. The fair value of the Fenics Purchase Obligation was estimated using an exchange option model that included assumptions of management's estimate of the fair value of the common stock of the Company and the common stock of Fenics, volatility, correlation and the expected life of the obligation.

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20.    REGULATORY REQUIREMENTS

        SLLC is a registered broker-dealer with the Securities and Exchange Commission and the National Association of Securities Dealers, Inc. ("NASD"). SLLC is also 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 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.

        At December 31, 2004 SLLC had Net Capital and Excess Net Capital as follows:

	SLLC
Net Capital at December 31, 2004	$	19,708
Minimum Net Capital		250
Excess Net Capital	$	19,458

        GFI Brokers Limited ("Brokers") and GFI Securities Limited ("Securities") 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 Capital at December 31, 2004	$	7,877	$	15,055
Minimum Net Capital Required		7,352		8,061
Excess Net Capital	$	525	$	6,994

        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, 2004 GFI (HK) Securities LLC had capital of approximately $1,738, which exceeded the minimum requirement by approximately $1,352.

        GFI Group PTE Ltd is subject to the compliance requirements of the Monetary Authority of Singapore ("MAS"), which require that GFI Group PTE Ltd, among other things, maintain stockholders' equity of 3,000 Singapore dollars and monitoring its trading practices and business activities. At December 31, 2004, GFI Group PTE Ltd. had stockholders' equity of 3,796 Singapore dollars (or approximately $2,326), which exceeded the minimum requirement by approximately 796 Singapore dollars (or approximately $487).

        Regulatory rules may restrict the Company's ability to withdraw capital from its regulated subsidiaries. The Company's regulated subsidiaries were in compliance with all minimum net capital requirements as of December 31, 2004.

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21.   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, 2004, 2003 and 2002, and information regarding long-lived assets (defined as property, equipment, leasehold improvements and software inventory) in geographic areas as of December 31, 2004 and 2003 are as follows:

	For the year ended December 31,
	2004		2003		2002
Revenues:
United States	$	170,661	$	101,666	$	114,905
United Kingdom		191,831		143,911		144,120
Asia-Pacific		22,528		20,267		16,195
Total	$	385,020	$	265,844	$	275,220

	As of December 31,
	2004		2003
Long-lived Assets, as defined:
United States	$	24,686	$	29,021
United Kingdom		3,304		2,907
Asia-Pacific		954		685
Total	$	28,944	$	32,613

        Revenues are attributed to geographic areas based on the location of the Company's brokers.

22.   OTHER INCOME

        Foreign exchange derivative contracts entered into prior to June 2003 did not meet the requirements for hedge accounting and therefore, gains and losses were included in earnings. All foreign exchange derivative contracts entered subsequent to June 2003 are designated and qualify as foreign currency cash flow hedges with gains and losses reclassified from other comprehensive income into earnings at the time when the hedged transactions are recognized (See Note 19). All derivative contracts are recorded at their fair value; therefore, for years ended December 31, 2003 and 2002, the Company recorded gains and losses relating to forward contracts entered into prior to June 2003 of ($1,360) and $1,615 in the Consolidated Statements of Income as other income, respectively.

        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.

        On February 28, 2002, the Company sold its U.S. treasury repurchase agreement brokerage desk for $1,350.

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23.   OTHER COMPREHENSIVE INCOME (LOSS)

		For the year ended December 31,
		2004			2003			2002
Unrealized gain (loss) on foreign exchange forward contracts
	Current Period Change:
	Before Tax Amount	$	(11,141	)	$	716		$	—
	Tax Expense (Benefit)		3,543			(299	)		—
	After Tax Amount	$	(7,598	)	$	417		$	—
Foreign currency translation adjustment
	Before Tax Amount	$	(284	)	$	(496	)	$	(97	)
	Tax Expense (Benefit)		155			207			40
	After Tax Amount	$	(129	)	$	(289	)	$	(57	)

24.   RELATED PARTY TRANSACTIONS

Loan Note Payable

        As disclosed in Note 10, the outstanding balance of the loan note payable to JPI was $9,250 as of December 31, 2004 and 2003, respectively.

        Interest expense on the outstanding related party loan notes was $601, $634, and $939 for the years ended December 31, 2004, 2003 and 2002, respectively.

Office lease arrangements with affiliates

        The Company, through its subsidiary GFI UK Holdings, is a tenant under a lease agreement with an affiliate, which agreement was due to expire in 2016. Under these agreements, GFI UK Holdings is required to pay an annual rent of £500 ($959 at December 31, 2004, which is included in the future rental commitments table disclosed in Note 15 Commitments and Contingencies). In December 2004, the Company and the affiliate agreed to terminate this lease in September 2005 and to make certain termination and other payments upon such termination. The Company accrued an estimate for this obligation of £1,500 (or $2,871) at December 31, 2004.

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25.   SUBSEQUENT EVENTS

        On January 31, 2005, the Company sold 3,947,369 shares of common stock in the IPO at $21.00 per share. Net proceeds from the IPO were approximately $74,200 after deducting the underwriting discount and other expenses of the offering. In addition, on January 31, 2005, the Company used a portion of the proceeds from the IPO to prepay the entire $9,250 outstanding principal amount plus accrued interest of $428 of loan note payable with JPI.

        In January 2005, all shares of Class A Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock were automatically converted into Class B Common Stock. Each share of Class A Common Stock, Series A Preferred Stock and Series C Preferred Stock converted into one share of Class B Common Stock. Each share of Series B Preferred Stock converted into approximately 1.0017 shares of Class B Common Stock resulting in an additional 9,852 shares. Class B Common Stock was renamed Common Stock.

        In February 2005, the Company used a portion of the proceeds from the IPO to pay down the then outstanding balances (approximately $52,500) plus accrued interest under the 2004 Credit Agreement.

        In March 2005, the Company made a written offer to purchase 532,098 ordinary shares of Fenics for an amount equal to $8.37 per Fenics share (the "Purchase Price"). The Purchase Price represents 0.3274 multiplied by $25.58, which was the average closing price of the Company's common stock over the immediately preceding four calendar weeks. Assuming the Company purchases all 532,098 ordinary shares of Fenics, the total purchase price will be $4,454.

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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None.

ITEM 9a.    CONTROLS AND PROCEDURES

        As of the end of the period covered by this report, the Company's management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report in providing a reasonable level of assurance that information we are required to disclose in reports we file or furnish under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

        In addition, the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the Company's internal controls over financial reporting and determined that there have been no changes in our internal controls over financial reporting during the fourth quarter of 2004 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        The following table provides information concerning our current executive officers and directors:

Name	Age	Position(s)
Michael Gooch(C)	46	Chairman of the Board and Chief Executive Officer
Colin Heffron(B)	41	President and Director
Donald P. Fewer	41	Senior Managing Director—Head of North America
Stephen McMillan	42	Senior Managing Director—Head of Europe
Jurgen Breuer	39	Senior Managing Director—Head of Asia
James A. Peers	54	Chief Financial Officer
Russell Lewis	46	Chief Information Officer
J. Christopher Giancarlo	45	Executive Vice President—Corporate Development
Michel Everaert	36	Global Head of Product Marketing
Scott Pintoff	34	General Counsel and Corporate Secretary
Geoffrey Kalish(A)(1)(2)	41	Director
Christopher Pike(A)(2)	35	Director
John W. Ward(B)(1)(3)	62	Director
Marisa Cassoni(C)(2)(3)	53	Director

(1)

Current member of the Compensation Committee.

(2)

Current member of the Audit Committee.

(3)

Current member of the Board Credentialing Committee.

(A)

Denotes Class I Director with term to expire in 2006.

(B)

Denotes Class II Director with term to expire in 2007.

(C)

Denotes Class III Director with term to expire in 2008.

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, 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.

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Stephen McMillan, Senior Managing Director—Head of Europe, 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.

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 positions with Oppenheim, 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.

Geoffrey Kalish, Director, joined our board of directors in April 2000 as an appointee of our Series A Preferred Stockholders. Mr. Kalish is a founder and Managing Director at Venturion Capital LLC and has held such position since May 1998. Prior to founding Venturion, Mr. Kalish 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, joined our board of directors in June 2002 as an appointee of our Series C Preferred Stockholders. Mr. Pike is a partner at Advent International and has held such position since January 2003. From February 1997 until January 2003, Mr. Pike was a principal with Advent International. Prior to joining Advent International, he worked for Coopers & Lybrand. He is also a director of Redprairie, Americus Dental Labs and Long Term Care Group.

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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.

Marisa Cassoni, Director, joined our board in January 2005. Ms. Cassoni is currently Group Finance Director of Royal Mail plc., a postal services company wholly-owned by the U.K. government and has held such position since 2001. Ms. Cassoni had previously been Group Finance Director at Britannic Assurance plc from 1998 to 2001. From 1987 to 1998, she was an employee of the Prudential Corporation, becoming Group Finance Director of the Prudential's U.K. Division in 1994. Ms. Cassoni qualified as a Chartered Accountant while at Deloitte & Touche where she was employed from 1975 to 1986, becoming a Corporate Finance Manager in 1984. She has been a non-executive director of Severn Trent plc, a U.K. quoted utility company since September 2001. In that capacity, she chairs that company's Treasury Committee and is a member of its Remuneration and Audit Committees.

Committees of the Board of Directors

        Our board of directors has an Audit Committee, a Compensation 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 our 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. The Audit Committee will also be responsible for preparing reports required by the rules of the SEC to be included in our proxy statements relating to annual meetings of stockholders. The Audit Committee is comprised of Christopher Pike, as chairman, Geoffrey Kalish, and Marisa Cassoni. The Board of Directors has determined that each member of the Audit Committee is an "independent director" as defined in the NASDAQ corporate governance standards and meets the independence requirements contained in Exchange Act Rule 10A-3(b)(1). In addition, the Board of Directors has determined that each of Mr. Pike, Mr. Kalish and Ms. Cassoni meet the NASDAQ standards of financial sophistication and the SEC's criteria of an "Audit Committee financial expert."

        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. The Compensation Committee is comprised of John W. Ward, as chairman and Geoffrey Kalish.

        Board Credentialing Committee.    The Board Credentialing Committee is responsible for recommending individuals to our board of directors to be nominated as directors and committee members. This committee's responsibilities also include evaluating new candidates as well as evaluating the performance of our board of directors. The Board Credentialing Committee is comprised of Marisa Cassoni and John W. Ward.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Exchange Act requires the Company's officers and directors, and any persons who own more than 10% of the Company's Common Stock, to file reports of initial ownership of the Company's Common Stock and subsequent changes in that ownership with the SEC and furnish the

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Company with copies of all forms they file pursuant to Section 16(a). Our officers and directors and 10% owners were not subject to these requirements during fiscal 2004, however, based on a review of forms furnished to the Company, we believe that all of our officers, directors and 10% owners have met their Section 16 reporting obligations since our registration statement related to our IPO was declared effective on January 25, 2005.

Codes of Ethics

        We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. We have also adopted a Code of Business Conduct and Ethics that is applicable to the Company's senior financial and accounting officers (including the chief executive officer, chief financial officer and corporate controller). A copy of these codes are posted on the Company's website, www.gfigroup.com, under the section "Investor Relations—Corporate Governance" and are filed as exhibits to this Annual Report of Form 10-K. In the event the Company substantively amends or waives a provision of its Codes of Business Conduct and Ethics, the Company intends to disclose the amendment or waiver on the Company's website as well.

ITEM 11.    EXECUTIVE COMPENSATION

        The following table provides certain summary information concerning all compensation earned for the year ended December 31, 2004 and the year ended December 31, 2003 by our Chief Executive Officer and the four most highly compensated executive officers of the Company (other than the Chief Executive Officer) serving as of December 31, 2004 (collectively, the "Named Executive Officers"):

Summary Compensation Table

Name and Principal Position	Year	Annual Compensation Salary($)		Bonus($)			Awards Securities Underlying Options(#)	Other Annual Compensation($)(1)
Michael Gooch Chairman of the Board and Chief Executive Officer	2004	$	650,000	$	550,000		—		—
	2003	$	525,000	$	650,000		—		—
Colin Heffron President	2004	$	708,522	$	900,000		94,737	$	138,000	(2)
	2003	$	493,633	$	1,098,004		—		—
Donald P. Fewer Senior Managing Director— Head of North America	2004	$	650,000	$	850,000		—		—
	2003	$	500,000	$	975,000		—		—
Stephen McMillan Senior Managing Director— Head of Europe	2004	$	682,916	$	1,050,000		—		—
	2003	$	670,687	$	700,000	(3)	—		—
Jurgen Breuer Senior Managing Director— Head of Asia	2004	$	353,185	$	600,000		—	$	74,000	(4)
	2003	$	271,278	$	428,648		—		—

(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

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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 approximately $117,000 in payments made to Mr. Heffron with respect to housing costs incurred by him in connection with his residence in the U.K. and approximately $21,000 in reimbursement of expenses incurred in connection with his relocation from the U.K. to the United States.

(3)

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 Limited for the benefit of family members of employees of GFI Brokers Limited.

(4)

Amount represents rental payments made by us in connection with Mr. Breuer's residence in Hong Kong.

        The following table sets forth the options granted during 2004 to, and the value of the options held on December 31, 2004 by, our Named Executive Officers. There were no stock appreciation rights granted during 2004 to any of our Named Executive Officers.

Option Grants in Last Fiscal Year

        Individual Grants

Options Granted in Last Fiscal Year
							Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation For Option Terms
	Number of Securities Underlying Options Granted	Percent of Total Options Granted to Employees
Name				Exercise Price Per Share		Expiration Date
							5%		10%
Colin Heffron(1)	42,105	8.56	%	$	11.88	February 1, 2014	$	940,069	$	1,793,193
	52,632	10.70	%	$	21.00	February 1, 2014	$	800,364	$	1,866,783

(1)

These options were granted on February 1, 2004.

        The potential realizable value at assumed annual rates of stock price appreciation for the option term represents hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. SEC rules specify the 5% and 10% assumed annual rates of compounded stock price appreciation, which do not represent our estimate or projection of our future common stock prices. These amounts represent assumed rates of appreciation in the value of our common stock from the IPO price. Actual gains, if any, on stock option exercises depend on the future performance of our common stock and overall stock market conditions. The amounts reflected in the table above may not necessarily be achieved.

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Aggregated Option Exercises in the Last Fiscal Year Ended December 31, 2004 and Year-End Option Values

        None of the named executive officers exercised options during the fiscal year ended December 31, 2004. The following table sets forth the number and value of securities underlying options held as of December 31, 2004.

	Number of Securities Underlying Unexercised Options at December 31, 2004		Value of Unexercised In-the-Money Options at December 31, 2004(1)
Name
	Exercisable	Unexercisable(2)	Exercisable	Unexercisable
Michael Gooch	—	—	—		—
Colin Heffron	—	157,895	—	$	985,526
Donald P. Fewer	—	84,211	—		843,421
Stephen McMillan	—	157,895	—		1,590,789
Jurgen Breuer	—	15,789	—		169,079

(1)

There was no public trading market for our common stock as of December 31, 2004. Accordingly, these values have been calculated on the basis of the public offering price of $21.00 per share, less the applicable exercise price per share, multiplied by the number of shares underlying the options.

(2)

These stock options became exercisable upon the completion of our IPO on January 31, 2005, to the extent vested. The number of shares underlying unexercisable options which, as of December 31, 2004, would have been exercisable had our IPO been completed as of such date are as follows: Mr. Heffron (36,842), Mr. Fewer (57,894), Mr. McMillan (121,053) and Mr. Breuer (15,789).

Compensation to Directors

        Our employees who serve as our directors are not compensated for serving as our directors. All directors are reimbursed for their expenses incurred in attending board and committee meetings.

        John W. Ward, a non-employee director, received an annual retainer of $70,000 for his services as a director in 2004. In addition, in May 2004, in consideration for his services as a director, Mr. Ward was granted an option to purchase 2,632 shares of our common stock for an exercise price of $21.00, 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 will receive approximately $864,621 for those shares 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."

        On March 24, 2005, our Board of Directors, upon the recommendation of the Compensation Committee, adopted a compensation policy for non-employee directors in order to provide competitive compensation to attract and retain qualified non-employee directors. This policy will be effective for fiscal year 2005.

        Under this compensation policy, each non-employee director shall be paid an annual retainer of $40,000. In addition, each non-employee director shall be paid $1,000 for each Board meeting attended and each non-employee director who is a member of a committee of the Board shall be paid $1,000 for each committee meeting attended. Furthermore, the Chairperson of the Audit Committee shall be paid an additional annual retainer of $15,000 and the Chairperson of the Compensation Committee shall be paid an additional annual retainer of $10,000.

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        Each non-employee director may elect to receive these fees and retainers in either cash, restricted stock units or a combination of both, provided that any election to receive restricted stock units must be made prior to the beginning of each year. Cash payments will be paid in quarterly installments in arrears. If a non-employee director elects to receive all or a portion of his/her fees and retainers in the form of restricted stock units, then such restricted stock units will be granted in January of each year based on the price of the Company's common stock on December 31^st of the previous year and will vest quarterly over the year. For 2005, those non-employee directors who elect to receive restricted stock units will be granted such units in April 2005 based on the price of the Company's common stock on March 31, 2005.

        The compensation policy adopted by the Board also provides for annual grants of restricted stock units to non-employee directors on the following terms. Beginning in 2006, in January of each year, the Company will grant to each non-employee director a number of restricted stock units equal to $40,000 divided by the closing price of the Company's common stock on the date of grant. The date of grant shall be determined by the Compensation Committee. Such restricted stock unit grants shall be subject to the terms and conditions of a separate grant agreement and the GFI Group Inc. 2004 Equity Incentive Plan. Subject to the restrictions and conditions to be set forth in the grant agreement, one-third of the units shall become unrestricted and vest on each of the first, second and third anniversaries of the date of grant.

Employment Agreements

        We have entered into employment agreements providing for annual compensation in excess of $100,000 with certain of our executive officers. The material terms of the employment agreements are described in the following paragraphs.

        Each of Stephen McMillan, Donald P. Fewer and Jurgen Breuer have entered into employment agreements with us. We also have an employment agreement with James A. Peers, our Chief Financial Officer. Michael Gooch and Colin Heffron do not have employment agreements with us.

        On December 30, 2004, we entered into an agreement regarding our obligations to our chief executive officer if he is terminated following a permanent disability. "Permanent disability" is defined as Mr. Gooch's physical or mental illness, disability or impairment that prevents Mr. Gooch from continuing the performance of his normal duties and responsibilities for a period in excess of six consecutive months. A written determination of two qualified physicians shall be conclusive evidence of whether a "permanent disability" has occurred.

        This agreement provides that if Mr. Gooch is terminated due to his "permanent disability" then he (or his personal representative, as the case may be) shall be entitled to (a) salary and bonus continuation benefits for a period of three years following the date of his termination, at a rate equal to the rate of his base salary and bonus for the last full fiscal year immediately preceding such termination (including the cash value of any restricted stock, stock options or other equity grants awarded in such year), (b) for the three year period beginning on the date of his termination, we will make available coverage under our medical, dental and life insurance plans on the same terms as such plans are made available to the our most senior salaried officers generally, and (c) reimbursement of any expenses incurred by Mr. Gooch in the ordinary course of employment prior to his termination consistent with our then existing expense reimbursement policy.

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, 2006. 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. In 2004,

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Mr. McMillan was paid an annual base salary equal to the British Pounds equivalent of approximately $600,000 and 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. The terms of Mr. McMillan's employment agreement and the performance of his duties thereunder are governed by English law.

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. In 2004, Mr. Fewer was paid 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.

Jurgen Breuer

        We entered into an employment agreement with Jurgen Breuer on December 1, 2003. The current term of the agreement expires on December 31, 2005. The agreement will automatically extend for one-year periods and can be terminated prior to any such extension by either party upon four months notice. Mr. Breuer is currently serving as our Senior Managing Director-Head of Asia. In 2004, Mr. Breuer was paid an annual base salary equal to the British Pound equivalent of $350,000 and we are obligated to lease him an apartment and cover the related rental costs up to a maximum of 50,000 Hong Kong dollars per month. Mr. Breuer is also eligible to receive an annual discretionary bonus in an amount to be determined by us. He is also entitled to participate in such medical, dental and life insurance programs generally available to similarly situated employees. The agreement requires Mr. Breuer 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. Breuer's employment agreement does not provide for any severance payment upon the termination of his employment. The terms of Mr. Breuer's employment agreement and the performance of his duties thereunder are governed by English law.

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. In 2004, Mr. Peers was paid 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.

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        This agreement provides 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

        During the fiscal year 2004, Mr. Gooch, our Chief Executive Officer, served as a member of our Compensation Committee. Upon the consummation of our IPO, Mr. Gooch resigned from the Compensation Committee and the Compensation Committee is currently comprised of solely independent directors. None of our executive officers 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 as a member of our Board of Directors or compensation committee.

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ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners

        The following table sets forth certain information relating to the only entities that, as of February 28, 2005 (other than as set forth under "Security Ownership of Directors and Executive Officers" below) are known to us to be the beneficial owners of more than five percent of our Common Stock:

	Shares Beneficially Owned
Name and Address of Beneficial Owner
	Number	Percent
Entities Affiliated with Jersey Partners Inc.(1) 1111 Route 110 Suite 327-328 Farmingdale, NY 11735	14,551,595	54.40	%
Entities Affiliated with Advent International Corporation (2) 75 State Street 29th Floor Boston, MA 02109	3,016,074	11.27	%
Entities Affiliated with Venturion Capital LLC (3) 275 Madison Avenue New York, NY 10016	1,609,387	6.01	%

(1)

Includes 387,105 shares of Common Stock held by Magnetic Holdings International (DE) LLC, 262,894 shares of Common Stock held by Magnetic Holdings International (DNE) LLC, 106,631 shares of Common Stock held by Magnetic Holdings International (FE) LLC and 36,842 shares of Common Stock held by Magnetic Holdings International (FNE) LLC. 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 effective date of our registration statement relating to our initial public offering. Also includes 39,712 shares of Common Stock held by N-Two LLC, a subsidiary of Jersey Partners. N-Two LLC will receive 12,105 shares of our common stock in connection with the distribution to be made by Magnetic Holdings International (DE) LLC. Magnetic Management LLC will receive 1,315 shares of our common stock in connection with the distribution to be made by Magnetic Holdings International (DE) LLC.

(2)

Shares are held by the following entities affiliated with Advent International Corporation: Global Private Equity IV Limited Partnership, Advent Partners GPE-IV Limited Partnership and Advent Partners Limited Partnership.

(3)

Includes 21,053 shares issuable upon exercise of options that are exercisable within 60 days of December 31, 2004. Shares and options are held by the following entities affiliated with Venturion: 11,720 shares held by Venturion Market Making Ventures LLC, 21,053 options held by Venturion Capital LLC, 1,528,807 shares held by Venturion GFI LLC and 43,807 shares held by Venturion GFI II, LLC.

Security Ownership of Directors and Executive Officers

        The following table sets forth certain information, as of February 28, 2005, with respect to the beneficial ownership of our Common Stock by: (i) each director; (ii) each of the Named Executive

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Officers; and (iii) all executive officers and directors as a group. Each person listed below can be reached at our headquarters located at 100 Wall Street, New York, NY 10005.

	Shares Beneficially Owned
Name and Address of Beneficial Owner
	Number	Percent
Named Executive Officers and Directors:
Michael Gooch(1)(2)	14,551,595	54.40	%
Colin Heffron(3)	52,632	*
Donald P. Fewer(4)	68,420	*
Stephen McMillan(5)	121,053	*
Jurgen Breuer(5)	15,789	*
Geoffrey Kalish(6)	1,609,387	6.01	%
Christopher Pike(7)	3,016,074	11.27	%
John W. Ward(5)	2,632	*
Marisa Cassoni	4,762	*
All executive officers and directors as a group (14 persons)(8)	19,769,463	72.30	%

*

Less than 1%

(1)

Includes all shares of our company beneficially owned by Jersey Partners as described in footnote (2) 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 2,105 shares of our common stock to be distributed by the Magnetic Entities, as described in footnote (2) below, and Diane Gooch, Mr. Gooch's wife, and Gooch Investment Trust will collectively beneficially own 24,210 shares as to which Mr. Gooch disclaims beneficial ownership.

(2)

Includes 13,718,411 shares of Common Stock held directly by Jersey Partners. Also includes 387,105 shares of Common Stock held by Magnetic Holdings International (DE) LLC, 262,894 shares of Common Stock held by Magnetic Holdings International (DNE) LLC, 106,631 shares of Common Stock held by Magnetic Holdings International (FE) LLC and 36,842 shares of Common Stock held by Magnetic Holdings International (FNE) LLC. 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 effective date of our registration statement relating to our initial public offering. Also includes 39,712 shares of Common Stock held by N-Two LLC, a subsidiary of Jersey Partners. N-Two LLC will receive 12,105 shares of our common stock in connection with the distribution to be made by Magnetic Holdings International (DE) LLC. Magnetic Management LLC will receive 1,315 shares of our common stock in connection with the distribution to be made by Magnetic Holdings International (DE) LLC.

(3)

Includes 47,369 shares issuable upon exercise of options that are exercisable within 60 days of February 28, 2005. Also includes 5,263 shares to be distributed to Mr. Heffron by the Magnetic Entities as described in footnote (2) above. 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.

(4)

Includes 57,894 shares issuable upon exercise of options that are exercisable within 60 days of February 28, 2005. Also includes 10,526 shares to be distributed to Mr. Fewer by the Magnetic

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Entities as described in footnote (2) above. 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.

(5)

Represents shares issuable upon exercise of options that are exercisable within 60 days of February 28, 2005.

(6)

Represents 1,609,387 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.

(7)

Represents 3,016,074 shares beneficially owned by funds affiliated with Advent International Corporation. Mr. Pike disclaims beneficial ownership of the shares held by these funds except to the extent of his pecuniary interests in such funds.

(8)

Includes 592,909 shares issuable upon exercise of options that are exercisable within 60 days of February 28, 2005.

EQUITY COMPENSATION PLAN INFORMATION

        The following table provides information as of December 31, 2004 with respect to the Company's Common Stock that may be issued under its existing equity compensation plans, which include the GFInet Inc. 2000 Stock Option Plan, the GFI Group Inc. 2002 Stock Option Plan and the GFI Group Inc. 2004 Equity Incentive Plan. The table shows the number of securities to be issued under compensation plans that have been approved by stockholders and those that have not been so approved. The footnotes and other information following the table are intended to provide additional detail on the compensation plans.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights(1)	Weighted-average exercise price of outstanding options, warrants and rights(1)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))(2)
	(a)	(b)		(c)
Equity compensation plans approved by security holders	2,810,736	$	12.44	4,383,388
Equity compensation plans not approved by security holders	—		—	—
Total	2,810,736	$	12.44	4,383,388

(1)

Contains information regarding stock options and a warrant. There are no rights outstanding.

(2)

Upon completion of our IPO in January 2005, the Company reduced the shares available for future grants under its equity compensation plans to 3,000,000.

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ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Loans from Jersey Partners

        In connection with our reorganization that took place in November 2001, our subsidiary, GFI 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 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 were guaranteed by the material non-regulated subsidiaries of GFI LLC, and were secured by, among other things, liens on and security interests in substantially all of the assets of GFI 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 credit agreement. 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.

        Pursuant to the terms of the $20 million note, Jersey Partners required us to use up to 20% of the aggregate net proceeds we received from our IPO to repay the note. On January 31, 2005, we used a portion of the net proceeds received by us in our IPO to prepay in full the $9.25 million outstanding principal amount as of December 31, 2004, plus accrued interest of approximately $0.4 million.

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 1,656,189 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 our IPO, we were obligated to provide notice to the remaining holders of the outstanding capital stock of Fenics that a "liquidity event" has occurred and to attempt to purchase the remaining approximately 10% of the capital stock of Fenics at a per share price equal to the fair market value, as of the date of such notice, of 0.3274 shares of our common stock. On March 9, 2005, we made a written offer to purchase all of the ordinary shares in Fenics Limited not held by us for an amount equal to $8.37 per Fenics Limited share (the "Purchase Price"). The Purchase Price represents 0.3274 multiplied by $25.58, which was the average closing price of the GFI Group common stock over the immediately preceding four calendar weeks. This offer was made to all minority shareholders of Fenics Limited and, in the aggregate, is an offer to purchase 532,098 ordinary shares of Fenics Limited for a total purchase price of $4.5 million.

        Certain of the remaining shares of Fenics are held by John W. Ward, one of our directors, and certain of our officers and employees. These persons will receive cash for those shares 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."

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

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Agreement terminated immediately before the closing of our IPO. The following terms of the Stockholders Agreement, however, will remain in effect following the closing the IPO:

•

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 determine 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

        We entered into Registration Rights Agreements with certain of the holders of each series of our preferred stock, all of which converted into shares of our common stock upon the consummation of our IPO. Such registration rights apply to the common stock into which the preferred stock converted. Following our IPO, the holders of approximately 5,442,299 shares of common stock and the holder of a warrant to purchase 105,263 shares of common stock will have the right to demand that we file a registration statement to register their shares 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).

        Demand Registration Rights.    At any time after the 180th day following the effective date (January 25, 2005) of our registration statement for our IPO, 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 holding registration rights 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. The Series C

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Preferred Stock and the Series A Preferred Stock have been converted into common stock as a result of our IPO. The registration rights described herein apply to the shares of common stock into which the Series C Preferred Stock and the Series A Preferred Stock have been converted.

        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.

        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 our IPO (fifth anniversary with respect to Series C Preferred Stock) 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.

U.K. Leases

        We currently lease our offices at 9 Hewett Street in London from GFI Brokers (Channel Islands) Limited, which is a wholly-owned subsidiary of Jersey Partners. The annual lease payments to Jersey Partners under the lease are £0.5 million. The lease was scheduled to terminate in 2016. As described under "Our Business—Facilities" we are currently exploring new lease opportunities in the U.K. in an effort to expand our capacity in the U.K. and have agreed to terminate our lease with GFI Brokers (Channel Islands) Limited effective September 2005 and to make certain termination and other payments to it payable upon such termination. We accrued an estimated obligation for these contract termination costs in the amount of $2.9 million. We believe that the accrual is reasonable based on information that is currently available.

        We also lease a corporate apartment in London from GFI Brokers (Channel Islands) Limited. We are currently paying a monthly lease payment of approximately £2,000 for this apartment.

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ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

        The following table summarizes the aggregate fees billed to us by Deloitte & Touche LLP ("Deloitte"):

	2004		2003
Audit Fees(a)	$	1,782,530	$	921,618
Audit Related Fees(b)		6,364		51,251
Tax Fees		419,137		494,688
Total	$	2,208,031	$	1,467,557

(a)

Audit fees consist of aggregate fees billed for professional services rendered for the audit of our consolidated financial statements, the review of our quarterly financial statements, the issuance of comfort letters, statutory and regulatory audits, consents and other services related to SEC matters. Included in audit fees for 2004 is $850,000 related to professional services rendered in connection with the IPO.

(b)

Audit related fees consist of aggregate fees billed for professional services related to regulatory matters in the U.S. and U.K. and an audit of our 401(k) plan.

        In considering the nature of the services provided by Deloitte, our Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with Deloitte and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.

AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES

        During 2004, our audit committee specifically approved the appointment of Deloitte & Touche LLP to be our independent auditors for the year ended December 31, 2004. Deloitte & Touche LLP was also approved to perform reviews, pursuant to Statement of Auditing Standards No. 71, of our quarterly financial reports within the year ended December 31, 2004 and certain other audit related services. Pursuant to our Audit Committee Charter, the Audit Committee will pre-approve all audit services, internal control-related services and permitted non-audit services to be performed for us by our auditors, subject to certain de minimus exceptions.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1)	Financial Statements.    See Index to Financial Statements on page 57.
(a)(2)	Financial Statement Schedules.    We have included Schedule I—Condensed Financial Information of GFI Group Inc. (Parent Company Only) on pages I-1 to I-5.
(a)(3)	Exhibits.    The following Exhibits are filed as part of this Report as required by Regulation S-K. Exhibits 10.5 through 10.28 are management contracts or compensatory plans or arrangements.

NUMBER	DESCRIPTION
3.1	Second Amended and Restated Certificate of Incorporation of the Registrant.
3.2	Second Amended and Restated Bylaws of the Registrant.
4.1*	See Exhibits 3.1 and 3.2 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. (Filed as Exhibit 4.2 to the Company's Registration Statement on Form S-1, File No. 333-116517)
4.3*	Amended and Restated Stockholders Agreement, dated as of June 3, 2002, among the Registrant and the stockholders named therein. (Filed as Exhibit 4.3 to the Company's Registration Statement on Form S-1, File No. 333-116517)
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. (Filed as Exhibit 4.4 to the Company's Registration Statement on Form S-1, File No. 333-116517)
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. (Filed as Exhibit 4.5 to the Company's Registration Statement on Form S-1, File No. 333-116517)
4.6*	Series C Registration Rights Agreement, dated as of June 3, 2002, between the Registrant and the parties named therein. (Filed as Exhibit 4.6 to the Company's Registration Statement on Form S-1, File No. 333-116517)
4.7*	Warrant dated June 15, 2000 issued to Newnetco LLC. (Filed as Exhibit 4.7 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.1*	Credit Agreement, dated August 23, 2004, among the Registrant and GFI Holdings Limited, as borrowers, subsidiaries of the Registrant named therein, as guarantors, Bank of America, N.A., as administrative agent, Barclays Bank Plc, as syndication agent, the other lenders party thereto and Bank of America Securities LLC, as sole lead arranger and sole book running manager. (Filed as Exhibit 10.1 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.2*	Domestic Security Agreement, dated August 23, 2004, by the Registrant, GFI Group LLC, GFInet inc., GFI Brokers LLC, Interactive Ventures LLC and Fenics Software Inc. as grantors, in favor of Bank of America, N.A., as administrative agent. (Filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1, File No. 333-116517)

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10.3*	Debenture, dated August 23, 2004, by GFI Holdings Limited and the other subsidiaries named therein, as chargors, in favor of Bank of America, N.A., as administrative agent. (Filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.4*	Disability Agreement, dated as of December 30, 2004, between the Registrant and Michael A. Gooch. (Filed as Exhibit 10.4 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.5*	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. (Filed as Exhibit 10.5 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.6*	Employment Agreement, dated as of May 1, 2002, between the GFI Holdings Limited and Stephen McMillan. (Filed as Exhibit 10.6 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.7*	Employment Agreement, dated as of November 18, 2002, between the Registrant and James A. Peers. (Filed as Exhibit 10.7 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.8*	Employment Agreement, dated as of December 1, 2003, between GFI Holdings Limited and Jurgen Breuer. (Filed as Exhibit 10.8 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.9*	2002 Stock Option Plan. (Filed as Exhibit 10.9 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.10*	2000 Stock Option Plan. (Filed as Exhibit 10.10 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.11*	GFI Group Occupational Pension Plan. (Filed as Exhibit 10.11 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.12*	Guardian Trust of GFI Brokers Limited. (Filed as Exhibit 10.12 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.13*	2004 Equity Incentive Plan. (Filed as Exhibit 10.13 to the Company's Registration Statement on Form S-1, File No. 333-116517)
10.14*	Senior Executive Annual Bonus Plan. (Filed as Exhibit 10.14 to the Company's Registration Statement on Form S-1, File No. 333-116517)
14.1	GFI Group Inc. Code of Business Conduct and Ethics
14.2	GFI Group Inc. Code of Business Conduct and Ethics for Senior Financial Officers.
21.1*	List of subsidiaries of the Registrant. (Filed as Exhibit 21.1 to the Company's Registration Statement on Form S-1, File No. 333-116517)
23.1	Consent of Independent Registered Public Accounting Firm.
31.1	Certification of Principal Executive Officer.
31.2	Certification of Principal Financial Officer.
32.1	Written Statement of Chief Executive Officer Pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2	Written Statement of Chief Financial Officer Pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

*

Previously filed.

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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K for the fiscal year ended December 31, 2004 to be signed on its behalf by the undersigned, thereunto duly authorized, on the 31^st day of March, 2005.

GFI GROUP INC.
By:	/s/  JAMES A. PEERS Name: James A. Peers Title: Chief Financial Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K 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)	March 31, 2005
/s/  COLIN HEFFRON Colin Heffron	President and Director	March 31, 2005
/s/  JAMES A. PEERS James A. Peers	Chief Financial Officer (principal financial and accounting officer)	March 31, 2005
/s/  GEOFFREY KALISH Geoffrey Kalish	Director	March 31, 2005
/s/  CHRISTOPHER PIKE Christopher Pike	Director	March 31, 2005
/s/  JOHN W. WARD John W. Ward	Director	March 31, 2005
/s/  MARISA CASSONI Marisa Cassoni	Director	March 31, 2005

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Schedule I

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
GFI Group Inc.

        We have audited the consolidated financial statements of GFI Group Inc. and subsidiaries (the "Company") as of December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004, and have issued our report thereon dated March 30, 2005 (included elsewhere herein). Our audits also included the financial statement schedule of the Company listed in Item 15. 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
March 30, 2005

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GFI GROUP INC.
(Parent Company Only)

CONDENSED STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31, 2004 AND 2003

(In thousands)

		December 31				Proforma December 31
		2004		2003		2004
						(unaudited)
Assets:
	Cash and cash equivalents	$	25	$	11,782
	Investments in subsidiaries, equity basis		64,059		39,704
	Advances to subsidiaries		65,687		54,980
	Other assets		3,376		226
	Total assets	$	133,147	$	106,692
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity:
	Notes payable, net	$	49,591	$	38,747
	Other liabilities		144		124
			49,735		38,871
	Redeemable convertible preferred stock		30,043		30,043	$	—
	Stockholders' equity		53,369		37,778	$	83,412
Total liabilities, redeemable convertible preferred stock and stockholders' equity		$	133,147	$	106,692

See notes to condensed financial statements.

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GFI GROUP INC.
(Parent Company Only)

CONDENSED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(In thousands)

		2004		2003		2002
REVENUES:
	Income from subsidiaries	$	24,299	$	15,297	$	12,677
	Interest income		23		138		161
	Total revenues		24,322		15,435		12,838
EXPENSES:
	Interest expense		1,642		1,489		849
	Other expenses		576		183		174
	Total expenses		2,218		1,672		1,023
INCOME BEFORE BENEFIT FROM INCOME TAXES			22,104		13,763		11,815
BENEFIT FROM INCOME TAXES			1,019		701		459
NET INCOME		$	23,123	$	14,464	$	12,274

See notes to condensed financial statements.

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GFI GROUP INC.
(Parent Company Only)

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(In thousands)

		2004			2003			2002
Cash flows from operating activities
	Net income	$	23,123		$	14,464		$	12,274
	Adjustments to reconcile net income to net cash used in operating activities
	Noncash transactions in net income		(24,853	)		(15,809	)		(13,048	)
	Changes in operating assets and liabilities		(2,111	)		97			(231	)
Cash used in operating activities			(3,841	)		(1,248	)		(1,005	)
Cash flows used in investing activities			(18,490	)		(14,535	)		(39,990	)
Cash flows from financing activities			10,574			10,500			58,060
Increase (decrease) in cash and cash equivalents			(11,757	)		(5,283	)		17,065
Cash and cash equivalents, beginning of year			11,782			17,065			—
Cash and cash equivalents, end of year		$	25		$	11,782		$	17,065

See notes to condensed financial statements.

I-4

GFI GROUP INC.
(Parent Company Only)

NOTES TO CONDENSED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(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, 2004, 2003 and 2002 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.

Unaudited pro forma information—Prior to the closing of our initial public offering in January 2005, all outstanding shares of the Series C Redeemable Convertible Preferred Stock, the Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock and the Class A Common Stock were converted into shares of Class B Common Stock. The pro forma balance sheet gives effect to this conversion as if it had occurred at the beginning of the period. The pro forma balance sheet does not give effect to the offering proceeds.

2.    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 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.

3.    ADVANCES TO SUBSIDIARIES

        As of December 31, 2004 and 2003, GFI Group Inc. has receivables from subsidiaries of $65,687 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.

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TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
PART I.
Risk Factors
PART II
Market Information
Table of Contents
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands except share and per share amounts)
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share data)
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
GFI GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands)
GFI GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands except share and per share amounts)
PART III
Summary Compensation Table
Option Grants in Last Fiscal Year
EQUITY COMPENSATION PLAN INFORMATION
PART IV
SIGNATURES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
GFI GROUP INC. (Parent Company Only) CONDENSED STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 2004 AND 2003 (In thousands)
GFI GROUP INC. (Parent Company Only) CONDENSED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 (In thousands)
GFI GROUP INC. (Parent Company Only) CONDENSED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 (In thousands)
GFI GROUP INC. (Parent Company Only) NOTES TO CONDENSED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 (In thousands)

EX-3.1

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EXHIBIT 3.1

SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GFI GROUP INC.

        GFI Group Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "DGCL"), does hereby certify:

        1.  The name of the Corporation is GFI Group Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was August 7, 2001.

        2.  The effective date (the "Effective Date") of this Second Amended and Restated Certificate of Incorporation shall be the date it is filed with the Secretary of State of the State of Delaware.

        3.  This Second Amended and Restated Certificate of Incorporation has been duly proposed by resolutions, adopted and declared advisable unanimously by the Board of Directors of the Corporation, duly adopted by written consent of the stockholders of the Corporation, and duly executed and acknowledged by the officers of the Corporation in accordance with the provisions of Sections 103, 141, 228, 242 and 245 of the DGCL.

        4.  On the Effective Date, the following reclassification (the "Reclassification") of the authorized and outstanding capital stock of the Corporation shall occur without any action by the holder of any shares thereof:

        (i)  each share of the Corporation's Class A Common Stock, par value $.01 per share (the "Class A Common Stock"), issued and outstanding immediately prior to the Effective Date shall be reclassified into one validly issued, fully paid, and non-assessable share of Common Stock, par value $.01 per share (the "Common Stock");

        (ii)  each share of the Corporation's Class B Common Stock, par value $.01 per share (the "Class B Common Stock"), issued and outstanding immediately prior to the Effective Date shall be reclassified into one validly issued, fully paid, and non-assessable share of Common Stock;

        (iii)  each share of the Corporation's Series A Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"), issued and outstanding immediately prior to the Effective Date shall be reclassified as and changed into such number of validly issued, fully paid, and non-assessable shares of Common Stock as provided pursuant to the Certificate of Designation, Preferences and Rights of Series A Preferred Stock;

        (iv)  each share of the Corporation's Series B Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred Stock"), issued and outstanding immediately prior to the Effective Date shall be reclassified as and changed into such number of validly issued, fully paid, and non-assessable shares of Common Stock as provided pursuant to the Certificate of Designation, Preferences and Rights of Series B Preferred Stock; and

        (v)  each share of the Corporation's Series C Redeemable Convertible Preferred Stock, par value $.01 per share (the "Series C Preferred Stock"), issued and outstanding immediately prior to the Effective Date shall be reclassified as and changed into such number of validly issued, fully paid, and non-assessable shares of Common Stock as provided pursuant to the Certificate of Designation, Preferences and Rights of Series C Preferred Stock.

        6.  The text of the Corporation's Amended and Restated Certificate of Incorporation, as amended, is hereby amended and restated in its entirety as follows:

        FIRST: The name of the corporation is GFI Group Inc. (the "Corporation").

        SECOND: The address of the Corporation's registered office in the State of Delaware is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

        THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "DGCL").

        FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is one hundred five million (105,000,000) shares, consisting of one hundred million (100,000,000) shares of Common Stock and five million (5,000,000) shares of preferred stock, par value $.01 per share (the "Preferred Stock"). The powers, designations, preferences and relative, participating, optional or other special rights (and the qualifications, limitations or restrictions thereof) of the Common Stock and the Preferred Stock are as follows:

        (a)  Preferred Stock.

        The Board of Directors of the Corporation (the "Board of Directors") is hereby expressly authorized at any time, and from time to time, to create and provide for the issuance of shares of Preferred Stock in one or more series and, by filing a certificate pursuant to the DGCL (a "Preferred Stock Designation"), to establish the number of shares to be included in each such series, and to fix the designations, preferences and relative, participating, optional or other special rights of the shares of each such series and the qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issue thereof adopted by the Board of Directors, including, but not limited to, the following:

        (i)  the designation of and the number of shares constituting such series, which number the Board of Directors may thereafter (except as otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares of such series then outstanding);

        (ii)  the dividend rate for the payment of dividends on such series, if any, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends, if any, shall bear to the dividends payable on any other class or classes of or any other series of capital stock, the conditions and dates upon which such dividends, if any, shall be payable, and whether such dividends, if any, shall be cumulative or non-cumulative;

        (iii)  whether the shares of such series shall be subject to redemption by the Corporation, and, if made subject to such redemption, the times, prices and other terms and conditions of such redemption;

        (iv)  the terms and amount of any sinking fund provided for the purchase or redemption of the shares of such series;

        (v)  whether or not the shares of such series shall be convertible into or exchangeable for shares of any other class or classes of, any other series of any class or classes of capital stock of, or any other security of, the Corporation or any other corporation, and, if provision be made for any such conversion or exchange, the times, prices, rates, adjustments and any other terms and conditions of such conversion or exchange;

        (vi)  the extent, if any, to which the holders of the shares of such series shall be entitled to vote as a class or otherwise with respect to the election of directors or otherwise;

        (vii)  the restrictions, if any, on the issue or reissue of shares of the same series or of any other class or series;

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        (viii)  the amounts payable on and the preferences, if any, of the shares of such series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; and

        (ix)  any other relative rights, preferences and limitations of that series.

        (b)  Common Stock.

        The Common Stock shall be subject to the express terms of any series of Preferred Stock set forth in the Preferred Stock Designation relating thereto. Each holder of Common Stock shall have one vote in respect of each share of Common Stock held by such holder of record on the books of the Corporation for the election of directors and on all other matters on which stockholders of the Corporation are entitled to vote. The holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in stock or otherwise.

        FIFTH: (a) In furtherance, and not in limitation, of the powers conferred by law, the Board of Directors is expressly authorized and empowered:

        (i)  to adopt, amend or repeal the Bylaws of the Corporation, provided, however, that any Bylaws adopted by the Board of Directors under the powers hereby conferred may be amended or repealed by the Board of Directors or by the stockholders having voting power with respect thereto; and

        (ii)  from time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to inspection of stockholders; and, except as so determined, or as expressly provided in this Second Amended and Restated Certificate of Incorporation or in any Preferred Stock Designation, no stockholder shall have any right to inspect any account, book or document of the Corporation other than such rights as may be conferred by law.

        (b)  The Corporation may in its Bylaws confer powers upon the Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by law.

        (c)  Notwithstanding anything contained in this Second Amended and Restated Certificate of Incorporation to the contrary, the affirmative vote of at least sixty-six and two- thirds percent (66 2/3%) of the votes cast in such vote, provided that such affirmative vote represents at least a majority of the Voting Stock (as defined below), either present or represented by proxy, voting together as a single class, shall be required to amend, repeal or adopt any provision inconsistent with (i) Articles FOURTH, FIFTH, EIGHTH, NINTH, TENTH or ELEVENTH hereof or (ii) Section 2.2, 2.4, 2.5, 2.7 or 2.10 of Article II, Section 3.2, 3.3, 3.5, 3.7 or 3.10 of Article III, Section 4.3 of Article IV, Article V or Article X of the Bylaws of the Corporation. "Voting Stock" shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors.

        SIXTH: (a) Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock as set forth in this Second Amended and Restated Certificate of Incorporation to elect additional directors under specified circumstances or to consent to specific actions taken by the Corporation, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing in lieu of a meeting of such stockholders.

        (b)  Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock as set forth in this Second Amended and Restated Certificate of Incorporation to elect additional directors under specified circumstances, a special meeting of the holders of capital

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stock of the Corporation entitled to vote on any business to be considered at any such meeting may be called by the Chairman of the Board of Directors, the Chief Executive Officer of the Corporation, or pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would at the time have if there were no vacancies (the "Whole Board").

        (c)  Notwithstanding anything contained in this Second Amended and Restated Certificate of Incorporation to the contrary, the affirmative vote of at least sixty-six and two- thirds percent (66 2/3%) of the votes cast in such vote, provided that such affirmative vote represents at least a majority of the Voting Stock, either present or represented by proxy, voting together as a single class, shall be required to amend, repeal or adopt any provision inconsistent with this Article SIXTH.

        SEVENTH: (a) Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock as set forth in this Second Amended and Restated Certificate of Incorporation to elect additional directors under specified circumstances, the Board of Directors shall consist of not less than five (5) nor more than nine (9) members, the exact number of which shall be fixed from time to time by the affirmative vote of a majority of the Whole Board.

        (b)  Unless and except to the extent that the Bylaws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.

        (c)  The directors, other than those who may be elected by the holders of any series of Preferred Stock or any other series or class of stock as set forth in this Second Amended and Restated Certificate of Incorporation, shall be divided into three classes and designated as Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of such number of members as would constitute one-third of the Whole Board. The initial division of the members of the Board of Directors into classes shall be made by the affirmative vote of a majority of the Whole Board. Class I directors shall initially be elected for a term expiring at the 2005 annual meeting of stockholders, Class II directors shall initially be elected for a term expiring at the 2006 annual meeting of stockholders, and Class III directors shall initially be elected for a term expiring at the 2007 annual meeting of stockholders. Members of each class shall hold office until their resignation, removal or until their successors are elected and qualified. At each succeeding annual meeting of the stockholders of the Corporation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election, and until their resignation, removal or until their successors are elected and qualified.

        (d)  Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock as set forth in this Second Amended and Restated Certificate of Incorporation to elect additional directors under specified circumstances, any director may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least sixty-six and two- thirds percent (66 2/3%) of the votes cast in such vote, provided that such affirmative vote represents at least a majority of the Voting Stock, either present or represented by proxy, voting together as a single class.

        (e)  Advance notice of stockholder nominations for the election of directors shall be given in the manner provided in the Bylaws of the Corporation.

        (f)  Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock as set forth in this Second Amended and Restated Certificate of Incorporation to elect additional directors under specified circumstances, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the

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Board of Directors, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires and until such director's successor shall have been duly elected and qualified. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

        (g)  Notwithstanding anything contained in this Second Amended and Restated Certificate of Incorporation to the contrary, the affirmative vote of at least sixty-six and two- thirds percent (66 2/3%) of the votes cast in such vote, provided that such affirmative vote represents at least a majority of the Voting Stock, either present or represented by proxy, voting together as a single class, shall be required to amend, repeal or adopt any provisions inconsistent with this Article SEVENTH.

        EIGHTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders 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 Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. No amendment or repeal of this Article EIGHTH shall adversely affect any right or protection of a director of the Corporation existing hereunder in respect of any act or omission occurring prior to such amendment or repeal.

        NINTH: (a) Any Fundamental Transaction (as defined below) entered into by the Corporation or any of its Subsidiaries (as defined below) with any other corporation, limited liability company, partnership, trust or other entity or any person shall require the affirmative vote of the holders of not less than sixty-six and two-thirds percent (66 2/3%) of the votes cast in such vote, provided that such affirmative vote represents at least a majority of the Voting Stock, either present or represented by proxy, voting together as a single class. For the purposes of this Second Amended and Restated Certificate of Incorporation, "Fundamental Transaction" shall mean (1) (A) any merger, consolidation or share exchange with or into any corporation, limited liability company, partnership, trust or other entity or any person, (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of all or substantially all the property or assets of the Corporation, including stock or assets of any of its Subsidiaries, in a single transaction or series of related transactions, (C) any filing of a voluntary or consent to filing of an involuntary petition for relief under title 11 of the United States Code or any successor statute or under any reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law with respect to the Corporation of any of its material subsidiaries or (D) any dissolution or liquidation of the Corporation or revocation thereof; provided that, in each such case, the DGCL or the rules of any applicable national securities exchange or inter-dealer quotation system on which the Corporation's securities are listed or quoted, as applicable, requires that such transaction, or series of related transactions, be approved or authorized by a vote of holders of the Corporation's Common Stock. For the purposes of this Second Amended and Restated Certificate of Incorporation, "Subsidiary" shall mean a domestic or foreign corporation, limited liability company, partnership, trust or other entity that has a majority of its outstanding voting securities or voting interests owned, directly or indirectly, by the Corporation.

        TENTH: The Corporation hereby expressly elects not to be governed by or subject to the provisions of Section 203 of the DGCL.

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        ELEVENTH: Except as may be expressly provided in this Second Amended and Restated Certificate of Incorporation, the Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Second Amended and Restated Certificate of Incorporation or a Preferred Stock Designation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by law, and all powers, preferences and rights of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Second Amended and Restated Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article ELEVENTH, provided, however, that no Preferred Stock Designation shall be amended after the issuance of any shares of the series of Preferred Stock created thereby, except in accordance with the terms of such Preferred Stock Designation and the requirements of law.

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        IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by its Executive Vice President, Corporate Development and attested by its Secretary and General Counsel this 31^st day of January, 2005.

			GFI GROUP INC.
			By:
				Name:	J. Christopher Giancarlo
				Title:	Executive Vice President, Corporate Development
ATTEST
By:
	Name:	Scott Pintoff
	Title:	Secretary and General Counsel

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SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF GFI GROUP INC.

EX-3.2

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Exhibit 3.2

SECOND AMENDED AND RESTATED


BYLAWS


OF


GFI GROUP INC.

TABLE OF CONTENTS

		Page
ARTICLE I    OFFICE AND RECORDS		1
Section 1.1	Delaware Office	1
Section 1.2	Other Offices	1
Section 1.3	Books and Records	1
ARTICLE II    STOCKHOLDERS		1
Section 2.1	Annual Meeting	1
Section 2.2	Special Meetings	1
Section 2.3	Notice of Meetings	1
Section 2.4	Quorum	2
Section 2.5	Voting	2
Section 2.6	Proxies	2
Section 2.7	Notice of Stockholder Business and Nominations	2
Section 2.8	Inspectors of Elections; Opening and Closing the Polls	5
Section 2.9	List of Stockholders	5
Section 2.10	No Stockholder Action by Written Consent	5
ARTICLE III    DIRECTORS		5
Section 3.1	General Powers	5
Section 3.2	Number, Tenure and Qualifications	5
Section 3.3	Vacancies and Newly Created Directorships	6
Section 3.4	Resignation	6
Section 3.5	Removal	6
Section 3.6	Meetings	6
Section 3.7	Quorum and Voting	6
Section 3.8	Written Consent of Directors in Lieu of a Meeting	7
Section 3.9	Compensation	7
Section 3.10	Committees of the Board of Directors	7
ARTICLE IV    OFFICERS		7
Section 4.1	Elected Officers	7
Section 4.2	Election and Term of Office	7
Section 4.3	Resignation and Removal	8
Section 4.4	Compensation and Bond	8
Section 4.5	Chairman of the Board	8
Section 4.6	President	8
Section 4.7	Vice Presidents	8
Section 4.8	Treasurer	8
Section 4.9	Secretary.	8
Section 4.10	Assistant Treasurers	8
Section 4.11	Assistant Secretaries	9
Section 4.12	Delegation of Duties	9
ARTICLE V    INDEMNIFICATION AND INSURANCE		9
Section 5.1	Right to Indemnification	9
Section 5.2	Right to Advancement of Expenses	9
Section 5.3	Right of Indemnitee to Bring Suit	9
Section 5.4	Non-Exclusivity of Rights	10
Section 5.5	Insurance	10
Section 5.6	Indemnification of Employees and Agents of the Corporation	10
Section 5.7	Contract Rights	11

ARTICLE VI    COMMON STOCK		11
Section 6.1	Certificates	11
Section 6.2	Transfers of Stock	11
Section 6.3	Lost, Stolen or Destroyed Certificates	11
Section 6.4	Stockholder Record Date	11
ARTICLE VII    SEAL		12
Section 7.1	Seal	12
ARTICLE VIII    WAIVER OF NOTICE		12
Section 8.1	Waiver of Notice	12
ARTICLE IX    CHECKS, NOTES, DRAFTS, ETC.		12
Section 9.1	Checks, Notes, Drafts, Etc.	12
ARTICLE X    AMENDMENTS		13
Section 10.1	Amendments	13

SECOND AMENDED AND RESTATED

BYLAWS

OF

GFI GROUP INC.

ARTICLE I
Office and Records

        Section 1.1    Delaware Office.    The principal office of the Corporation in the State of Delaware shall be located in the City of Wilmington, County of New Castle, and the name and address of its registered agent is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.

        Section 1.2    Other Offices.    The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require.

        Section 1.3    Books and Records.    The books and records of the Corporation may be kept at the Corporation's principal executive offices in New York, New York or at such other locations outside the State of Delaware as may from time to time be designated by the Board of Directors.

ARTICLE II
Stockholders

        Section 2.1    Annual Meeting.    The annual meeting of stockholders of the Corporation shall be held on such date, at such time and at such place as may be fixed by the Board of Directors.

        Section 2.2    Special Meetings.    Subject to the rights of the holders of any series of preferred stock of the Corporation (the "Preferred Stock"), or any other series or class of stock as set forth in the Second Amended and Restated Certificate of Incorporation of the Corporation, as amended and restated from time to time (the "Certificate of Incorporation") to elect additional directors under specified circumstances, a special meeting of the holders of capital stock of the Corporation entitled to vote on any business to be considered at any such meeting may be called by the Chairman of the Board, the Chief Executive Officer, and the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would at the time have if there were no vacancies (the "Whole Board"). The Board of Directors may designate the place of meeting for any special meeting of the stockholders, and if no such designation is made, the place of meeting shall be the principal executive offices of the Corporation.

        Section 2.3    Notice of Meetings.    Whenever stockholders are required or permitted to take any action at a meeting, unless notice is waived as provided in Section 8.1 of these Bylaws, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

        Unless otherwise provided by law, and except as to any stockholder duly waiving notice, the written notice of any meeting shall be given personally or by mail, not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, notice shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at his or her address as it appears on the records of the Corporation. Any previously scheduled meeting of the stockholders may be postponed by resolution of the Board of Directors upon public notice given prior to the time previously scheduled for such meeting of stockholders.

        When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If, however, the adjournment is for more than thirty (30) days, or if after the

adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

        Section 2.4    Quorum.    Except as otherwise provided by law or by the Certificate of Incorporation or by these Bylaws, at any meeting of stockholders the holders of a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the "Voting Stock"), either present or represented by proxy, shall constitute a quorum for the transaction of any business at such meeting, except that when specified business is to be voted on by a class or series voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum for the transaction of such business. The chairman of the meeting or a majority of the voting power of the shares of Voting Stock so represented may adjourn the meeting from time to time, whether or not there is such a quorum (or in the case of specified business to be voted on as a class or series, the chairman or a majority of the shares of such class or series so represented may adjourn the meeting with respect to such specified business). No notice of the time and place of adjourned meetings need be given except as provided in the last paragraph of Section 2.3 of these Bylaws. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

        Section 2.5    Voting.    Except as otherwise set forth in the Certificate of Incorporation with respect to the right of any holder of any series of Preferred Stock or any other series or class of stock to elect additional directors under specified circumstances, whenever directors are to be elected at a meeting, they shall be elected by a plurality of the votes cast at the meeting by the holders of stock entitled to vote. Whenever any corporate action, other than the election of directors, is to be taken by vote of stockholders at a meeting, such corporate action shall, except as otherwise required by law or by the Certificate of Incorporation or by these Bylaws, be authorized by the affirmative vote of the holders of a majority of the shares of stock present or represented by proxy and entitled to vote with respect to such corporate action.

        Except as otherwise provided by law, or by the Certificate of Incorporation, each holder of record of stock of the Corporation entitled to vote on any matter at any meeting of stockholders shall be entitled to one vote for each share of such stock standing in the name of such holder on the stock ledger of the Corporation on the record date for the determination of the stockholders entitled to vote at the meeting.

        Upon the demand of any stockholder entitled to vote, the vote for directors or the vote on any other matter at a meeting shall be by written ballot, but otherwise the method of voting and the manner in which votes are counted shall be discretionary with the presiding officer at the meeting.

        Section 2.6    Proxies.    Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. Every proxy shall be signed by the stockholder or by its duly authorized attorney. Such proxy must be filed with the Secretary of the Corporation or his or her representative at or before the time of the meeting.

        Section 2.7    Notice of Stockholder Business and Nominations.

        (A)    Annual Meeting of Stockholders.

        (1)   Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) by or at the direction of the Chairman of the Board, the Chief Executive Officer or the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board or (b) by any stockholder of the Corporation who is entitled to vote at the meeting with respect to the election of directors or the business to be proposed by such stockholder, as the case may be, who complies with the notice procedures set forth in clauses (2) and (3) of paragraph (A) of this Section 2.7 and who is a

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stockholder of record at the time such notice is delivered to the Secretary of the Corporation as provided below.

        (2)   For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (b) of paragraph (A)(1) of this Section 2.7, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must be a proper subject for stockholder action under the Delaware General Corporation Law (the "DGCL"). To be timely, a stockholder's notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty (30) days, or delayed by more than sixty (60) days, from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

        (3)   Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section 2.7 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least one hundred days (100) days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by paragraph (A)(2) of this Section 2.7 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

        (B)    Special Meeting of Stockholders.    Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) by or at the direction of the Chairman of the Board, the Chief Executive Officer or the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board or (ii) by any stockholder of the Corporation who is entitled to vote at the meeting with respect to the election of directors, who complies with the notice procedures set forth in this paragraph (B) and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation as provided below. Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder's notice as required by paragraph (A)(2) of this Section 2.7 shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) day prior to such special meeting and

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not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

        (C)    General.    (1) Only persons who are nominated in accordance with the procedures set forth in this Section 2.7 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.7.

        (2)   Except as otherwise provided by law, the Certificate of Incorporation or this Section 2.7, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 2.7 and, if any proposed nomination or business is not in compliance with this Section 2.7, to declare that such defective nomination or proposal shall be disregarded.

        (3)   For purposes of this Section 2.7, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

        (4)   Notwithstanding the foregoing provisions of this Section 2.7, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.7. Nothing in this Section 2.7 shall be deemed to restrict any rights (i) of stockholders to request inclusion of proposals in the Corporation's proxy materials with respect to a meeting of stockholders pursuant to Rule 14a-8 under Exchange Act or (ii) of the holders of any series of Preferred Stock or any other series or class of stock as set forth in the Certificate of Incorporation to elect directors under specified circumstances or to consent to specific actions taken by the Corporation.

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        Section 2.8    Inspectors of Elections; Opening and Closing the Polls.

        (A)  The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives of the Corporation, to act at the meeting and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act, or if all inspectors or alternates who have been appointed are unable to act, at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties to the best of his or her ability. The inspectors shall have the duties prescribed by the DGCL.

        (B)  The chairman of the meeting shall fix and announce at the meeting the time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

        Section 2.9    List of Stockholders.    The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the stock ledger of the Corporation in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting, either on a reasonably accessible electronic network, provided that information required to gain access to such list is provided with the notice of the meeting, or during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Nothing in this Section shall require the Corporation to include electronic mail addresses or other electronic contact information on such list.

        The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this Section 2.9 or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

        Section 2.10    No Stockholder Action by Written Consent.    Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock as set forth in the Certificate of Incorporation to elect additional directors under specified circumstances or to consent to specific actions taken by the Corporation, any action required or permitted to be taken by the stockholders of the Corporation must be taken at an annual or special meeting of the stockholders and may not be taken by any consent in writing by such stockholders.

ARTICLE III
Directors

        Section 3.1    General Powers.    The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon it, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders.

        Section 3.2    Number, Tenure and Qualifications.    The directors, other than those who may be elected by the holders of any series of Preferred Stock or any other series or class of stock as set forth in the Certificate of Incorporation, shall be divided into three classes, and designated as Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of such number of members as would constitute one-third of the Whole Board. Class I directors shall initially be elected for a term expiring at the 2006 annual meeting of stockholders, Class II directors shall initially be elected for a term expiring at the 2007 annual meeting of stockholders and Class III directors shall initially be elected for a term expiring at

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the 2008 annual meeting of stockholders. Members of each class shall hold office until their resignation or removal or until their successors shall have been duly elected and qualified. At each succeeding annual meeting of stockholders of the Corporation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election, and until their resignation or removal or until their successors are elected and qualified.

        Section 3.3    Vacancies and Newly Created Directorships.    Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock as set forth in the Certificate of Incorporation to elect additional directors under specified circumstances, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires and until such director's resignation, removal or until such director's successor shall have been duly elected and qualified. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

        Section 3.4    Resignation.    Any director may resign at any time upon written notice to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time be not specified, upon receipt thereof, and the acceptance of such resignation, unless required by the terms thereof, shall not be necessary to make such resignation effective.

        Section 3.5    Removal.    Subject to the rights of the holders of any series of Preferred Stock or any other series or class of stock as set forth in the Certificate of Incorporation to elect additional directors under specified circumstances, any director may be removed from office at any time, but only for cause as reasonably determined in good faith by the Board of Directors and then only at a meeting of stockholders by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66²/3%) of the votes cast in such vote, provided that such affirmative vote represents at least a majority of the Voting Stock, either present or represented by proxy, voting together as a single class.

        Section 3.6    Meetings.    Meetings of the Board of Directors, regular or special, may be held at any place within or without the State of Delaware. Members of the Board of Directors, or of any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. An annual meeting of the Board of Directors shall be held at the same place and immediately following each annual meeting of stockholders, and no further notice thereof need be given other than this provision. The Board of Directors may fix times and places for additional regular meetings of the Board of Directors and no further notice of such meetings need be given. The Chairman of the Board, the Chief Executive Officer or the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board, shall be authorized to call a special meeting of the Board of Directors at such time and place as shall be specified in the notice or waiver thereof. Notice of any special meeting shall be given to each director at his or her business or residence in writing or by telegram or by telephone communication. If mailed, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by telegram, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company at least twenty-four hours before such meeting. If by facsimile or electronic mail transmission, such notice shall be transmitted at least twenty-four hours before such meeting. If by telephone, the notice shall be given at least twelve hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws as provided under Section 10.1 of these Bylaws.

        Section 3.7    Quorum and Voting.    A whole number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if there be less than a quorum, a majority of the directors present may adjourn the meeting from time to time, and no further notice thereof need be given other than announcement at the meeting which shall be so adjourned. Except as otherwise provided by law, by the Certificate of Incorporation, or by

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these Bylaws, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

        Section 3.8    Written Consent of Directors in Lieu of a Meeting.    Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or of such committee.

        Section 3.9    Compensation.    Directors may receive compensation for services to the Corporation in their capacities as directors or otherwise in such manner and in such amounts as may be fixed from time to time by the Board of Directors.

        Section 3.10    Committees of the Board of Directors.    The Board of Directors may from time to time, by resolution passed by majority of the Whole Board, designate one or more committees, each committee to consist of one or more directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The resolution of the Board of Directors may, in addition or alternatively, provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Except as expressly provided by resolution of the Board of Directors or as otherwise provided by applicable law or restricted by the rules of a national securities exchange or inter-dealer quotation system on which the Corporation's securities are then listed, action taken by a committee pursuant to such delegated authority shall not be binding on the Corporation and shall be subject to ratification or rejection by the Whole Board. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it, except as otherwise provided by law. Unless the resolution of the Board of Directors expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Any such committee may adopt rules governing the method of calling and time and place of holding its meetings. Unless otherwise provided by the Board of Directors, a majority of any such committee (or the member thereof, if only one) shall constitute a quorum for the transaction of business, and the vote of a majority of the members of such committee present at a meeting at which a quorum is present shall be the act of such committee. Each such committee shall keep a record of its acts and proceedings and shall report thereon to the Board of Directors whenever requested so to do. Any or all members of any such committee may be removed, with or without cause, by resolution of the Board of Directors, passed by a majority of the Whole Board.

ARTICLE IV
Officers

        Section 4.1    Elected Officers.    The elected officers of the Corporation shall be a Chairman of the Board, a President, a Secretary and a Treasurer, and may also include one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers, and such other officers with such titles as the resolution of the Board of Directors choosing them shall designate. All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV, together with such other powers and duties as from time to time may be conferred by the Board of Directors or any committee thereof. The Chairman of the Board shall be chosen from among the directors. Any number of such offices may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity. The Board of Directors may appoint, and may delegate power to appoint, such other officers, agents and employees as it may deem necessary or proper, who shall hold their offices or positions for such terms, have such authority and perform such duties as may from time to time be determined by or pursuant to authorization of the Board of Directors.

        Section 4.2    Election and Term of Office.    The elected officers of the Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall

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be held as soon thereafter as convenient. Subject to Section 4.3 of these Bylaws, each officer shall hold office until his or her successor shall have been duly elected and shall have qualified or until his or her death or until such officer shall resign or be removed.

        Section 4.3    Resignation and Removal.    Any officer may resign at any time upon written notice to the Corporation. Any elected officer may be removed by a majority of the members of the Whole Board, with or without cause, at any time. The Board of Directors may delegate such power of removal as to officers, agents and employees not elected by the Board of Directors. Such removal shall be without prejudice to a person's contract rights, if any, but the appointment of any person as an officer, agent or employee of the Corporation shall not of itself create contract rights.

        Section 4.4    Compensation and Bond.    The compensation of the officers of the Corporation shall be fixed by the Board of Directors, but this power may be delegated to any officer in respect of other officers under his or her control. The Corporation may secure the fidelity of any or all of its officers, agents or employees by bond or otherwise.

        Section 4.5    Chairman of the Board.    The Chairman of the Board shall preside at all meetings of stockholders and of the Board of Directors. The Chairman of the Board shall be responsible for the general management of the affairs of the Corporation, shall make reports to the Board of Directors and the stockholders and shall perform all duties incidental to such office which may be required by law and all such other duties as are properly required by the Board of Directors. The Chairman of the Board shall possess the same power as the President to sign all certificates, contracts and other instruments of the Corporation which may be authorized by the Board of Directors. The Chairman of the Board shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.

        Section 4.6    President.    The President shall act in a general executive capacity and shall assist the Chairman of the Board in the administration and operation of the Corporation's business and general supervision of its policies and affairs. The President shall, in the absence of or because of the inability to act of the Chairman of the Board, perform all duties of the Chairman of the Board and preside at all meetings of stockholders and of the Board of Directors, except as otherwise provided by the Board of Directors. The President may sign, alone or with the Secretary or any other proper officer of the Corporation authorized by the Board of Directors, certificates, contracts and other instruments of the Corporation as authorized by the Board of Directors.

        Section 4.7    Vice Presidents.    Each Vice President shall have such powers and perform such duties as the Board of Directors, the Chairman of the Board or the President may from time to time prescribe. In the absence or inability to act of the President, unless the Board of Directors shall otherwise provide, the Vice President who has served in that capacity for the longest time and who shall be present and able to act, shall perform all the duties and may exercise any of the powers of the President.

        Section 4.8    Treasurer.    The Treasurer shall have charge of all funds and securities of the Corporation, shall endorse the same for deposit or collection when necessary and deposit the same to the credit of the Corporation in such banks or depositaries as the Board of Directors may authorize. He or she may endorse all commercial documents requiring endorsements for or on behalf of the Corporation and may sign all receipts and vouchers for payments made to the Corporation. He or she shall have all such further powers and duties as generally are incident to the position of Treasurer or as may be assigned to him or her by the Chairman of the Board, the President or the Board of Directors.

        Section 4.9    Secretary.    The Secretary shall record all the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose and shall also record therein all action taken by written consent of directors in lieu of a meeting. He or she shall attend to the giving and serving of all notices of the Corporation. He or she shall have custody of the seal of the Corporation and shall attest the same by his or her signature whenever required. He or she shall have charge of the stock ledger and such other books and papers as the Board of Directors may direct, but he or she may delegate responsibility for maintaining the stock ledger to any transfer agent appointed by the Board of Directors. He or she shall have all such further powers and duties as generally are incident to the position of Secretary or as may be assigned to him or her by the President or the Board of Directors.

        Section 4.10    Assistant Treasurers.    In the absence or inability to act of the Treasurer, any Assistant Treasurer may perform all the duties and exercise all the powers of the Treasurer. An Assistant Treasurer shall also perform such other duties as the Treasurer or the Board of Directors may assign to him or her.

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        Section 4.11    Assistant Secretaries.    In the absence or inability to act of the Secretary, any Assistant Secretary may perform all the duties and exercise all the powers of the Secretary. An Assistant Secretary shall also perform such other duties as the Secretary or the Board of Directors may assign to him or her.

        Section 4.12    Delegation of Duties.    In case of the absence of any officer of the Corporation, or for any other reason that the Board of Directors may deem sufficient, the Board of Directors may confer for the time being the powers or duties, or any of them, of such officer upon any other officer or upon any director.

ARTICLE V
Indemnification and Insurance

        Section 5.1    Right to Indemnification.    Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of any other corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to any employee benefit plan (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including, without limitation, attorneys' fees, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended, and amounts paid or to be paid in settlement) reasonably incurred by such indemnitee in connection therewith; provided, however, that except as provided in Section 5.3 with respect to proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors.

        Section 5.2    Right to Advancement of Expenses.    The right to indemnification conferred in Section 5.1 shall include the right to be paid by the Corporation the expenses (including attorneys' fees) incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that, if the DGCL requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this Section 5.2 or otherwise.

        Section 5.3    Right of Indemnitee to Bring Suit.    If a claim under Section 5.1 or Section 5.2 is not paid in full by the Corporation within thirty (30) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right of an advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the DGCL. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal

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counsel or stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article V or otherwise shall be on the Corporation.

        Section 5.4    Non-Exclusivity of Rights.    The right to indemnification and the advancement of expenses conferred in this Article V shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, provision of these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

        Section 5.5    Insurance.    The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

        Section 5.6    Indemnification of Employees and Agents of the Corporation    The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and rights to the advancement of expenses, to any employee or agent of the Corporation to the fullest extent of the provisions of this Article V with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

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        Section 5.7    Contract Rights.    The rights to indemnification and to the advancement of expenses conferred in Sections 5.1, 5.2, 5.3 and this 5.7 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators. Except to the extent an amendment to Sections 5.1, 5.2, 5.3 or this 5.7 of these Bylaws is required by applicable law to be adopted, as evidenced by a written opinion of counsel (which may be an employee of the Corporation), the provisions of Sections 5.1, 5.2, 5.3 or this 5.7 may not be amended or repealed without the prior unanimous written consent of the members of the Board of Directors then in office; provided, however, notwithstanding the foregoing, no amendment or repeal of Sections 5.1, 5.2, 5.3 or this 5.7 shall adversely affect any right of any director, officer, employee or agent existing thereunder in respect of any act or omission occurring prior to such amendment or repeal.

ARTICLE VI
Common Stock

        Section 6.1    Certificates.    Certificates for stock of the Corporation shall be in such form as shall be approved by the Board of Directors and shall be signed in the name of the Corporation by the Chairman of the Board, the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Such certificates may be sealed with the seal of the Corporation or a facsimile thereof. Any of or all the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

        Section 6.2    Transfers of Stock.    Transfers of stock shall be made only upon the books of the Corporation by the holder, in person or by duly authorized attorney, and on the surrender of the certificate or certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. The Board of Directors shall have the power to make all such rules and regulations, not inconsistent with the Certificate of Incorporation and these Bylaws and the DGCL, as the Board of Directors may deem appropriate concerning the issue, transfer and registration of certificates for stock of the Corporation. The Board of Directors may appoint one or more transfer agents or registrars of transfers, or both, and may require all stock certificates to bear the signature of either or both.

        Section 6.3    Lost, Stolen or Destroyed Certificates.    The Corporation may issue a new stock certificate in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate or his or her legal representative to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate. The Board of Directors may require such owner to satisfy other reasonable requirements as it deems appropriate under the circumstances.

        Section 6.4    Stockholder Record Date.    In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.

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        If no record date is fixed by the Board of Directors, (l) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the date on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and (2) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

        A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

        Only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend or other distribution, or to exercise such rights in respect of any such change, conversion or exchange of stock, or to participate in such action, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date so fixed.

ARTICLE VII
Seal

        Section 7.1    Seal.    The seal of the Corporation shall be circular in form and shall bear, in addition to any other emblem or device approved by the Board of Directors, the name of the Corporation, the year of its incorporation and the words "Corporate Seal" and "Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

ARTICLE VIII
Waiver of Notice

        Section 8.1    Waiver of Notice.    Whenever notice is required to be given to any stockholder or director of the Corporation under any provision of the DGCL or the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. In the case of a stockholder, such waiver of notice may be signed by such stockholder's attorney or proxy duly appointed in writing. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice.

ARTICLE IX
Checks, Notes, Drafts, Etc.

        Section 9.1    Checks, Notes, Drafts, Etc.    Checks, notes, drafts, acceptances, bills of exchange and other orders or obligations for the payment of money shall be signed by such officer or officers or person or persons as the Board of Directors or a duly authorized committee thereof may from time to time designate.

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ARTICLE X
Amendments

        Section 10.1    Amendments.    These Bylaws may be amended, added to, rescinded or repealed at any meeting of the Board of Directors or of the stockholders, provided that notice of the proposed change was given in the notice of the meeting and, in the case of the Board of Directors, in a notice given no less than twenty-four hours prior to the meeting; provided, however, that, in the case of amendments by stockholders, notwithstanding any other provisions of these Bylaws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of stock required by law, the Certificate of Incorporation or these Bylaws, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66²/3%) of the votes cast in such vote, provided that such affirmative vote represents at least a majority of the Voting Stock, either present or represented by proxy, voting together as a single class, shall be required to alter, amend or repeal any provision of Section 2.2, 2.4, 2.5, 2.7 or 2.10 of Article II, Section 3.2, 3.3, 3.5, 3.7 or 3.10 of Article III, Article V or Article X of these Bylaws.

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TABLE OF CONTENTS
SECOND AMENDED AND RESTATED BYLAWS OF GFI GROUP INC.
ARTICLE I Office and Records
ARTICLE II Stockholders

EX-14.1

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Exhibit 14.1

GFI GROUP INC.
CODE OF BUSINESS CONDUCT AND ETHICS

PURPOSE

        This Code of Business Conduct and Ethics (this "Code") contains the policy guidelines and procedures adopted by the Board of Directors of the Company (the "Board") that relate to the legal and ethical standards for conducting Company business. This Code cannot and is not intended to cover every applicable law or to anticipate every issue that may arise, but does set out basic principles to guide all directors, officers and employees of the Company. This Code supplements, but does not replace the Company's Employee Handbook and the policies referenced therein. If you are unclear about a particular situation, stop and ask for guidance before taking action.

ADMINISTRATION/APPLICABILITY/VIOLATIONS

        The Board is responsible for setting the standards of business conduct contained in this Code and updating these standards as appropriate to reflect legal and regulatory developments.

        This Code applies to all directors, officers and employees of the Company (the "Covered Persons"). It is the obligation of each and every Covered Person to become familiar with this Code, to adhere to the standards and restrictions set forth herein, to conduct himself or herself accordingly and to avoid even the appearance of impropriety.

        While the Company's Legal Department will oversee the procedures designed to implement and enforce this Code, it is the individual responsibility of each Covered Person to comply with this Code. Those who violate this Code will be subject to appropriate disciplinary action which, depending on the severity of the violation, may include suspension or termination.

POLICY GUIDELINES

A.    Conflicts of Interest

        Covered Persons have a duty of loyalty to the Company, and must therefore avoid any actual or apparent conflict of interest with the Company. A "conflict of interest" exists when a person's private interest interferes, or appears to interfere, in any way with the interests of the Company as a whole. A conflict situation can arise when a Covered Person takes actions or has interests that may make it difficult to perform his or her work on behalf of the Company objectively and effectively. Conflicts of interest include, but are not limited to, the following examples:

1.

engaging in a significant personal business transaction involving the Company for profit or gain;



2.

being a consultant to, or a director, officer or employee of, a supplier, customer or competitor of the Company;



3.

having a significant financial or other beneficial interest in a supplier, customer or competitor of the Company;



4.

receiving, directly or indirectly, improper personal benefits as a result of using Company property or obtaining Company services;



5.

conducting Company business with a family member, or taking any business action that improperly benefits a family member; and



6.

accepting money, personal gifts, discounts, loans (other than loans from lending institutions at prevailing interest rates), guarantees or other special treatment or gratuities from any supplier, customer or competitor of the Company.

Any such conflicts of interest may arise as a result of actions taken by, or interests of, a family member of a Covered Person. Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Board Credentialing Committee. Conflicts of interest may not always be clear-cut, so if you have a question, you should ask for guidance from the Legal Department before taking action.

B.    Corporate Opportunities

        Covered Persons owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. Covered Persons are therefore prohibited from (i) taking for themselves personally opportunities that are discovered through the use of Company property, information or position without the consent of the Legal Department, (ii) using Company property, information or position for improper personal gain and (iii) competing with the Company.

C.    Confidentiality

        Covered Persons must not disclose to anyone outside the Company any "confidential information" entrusted to them by the Company or its suppliers, customers or business partners, except when disclosure is authorized by the Legal Department or otherwise legally required. "Confidential information" includes all non-public information that might be useful to competitors, or harmful to the Company or its suppliers, customers or business partners, if disclosed. Confidential information includes, for example, trade secrets, technology, research, customer and supplier lists, unannounced financial data and projections, marketing and pricing strategies and business plans.

        The obligation to preserve confidential information continues even after a Covered Person is no longer employed by the Company or an officer or director of the Company.

D.    Competition and Fair Dealing

        The Company seeks to outperform our competitors fairly and honestly through superior performance, but never through unethical or illegal business practices. Stealing proprietary information, possessing trade secret information that was obtained without the owner's consent or inducing disclosures of such information by past or present employees, agents or representatives of other companies is prohibited.

        Covered Persons should endeavor to deal fairly and in good faith with the Company's customers, suppliers and competitors and their employees. No Covered Person should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other intentional unfair-dealing practice.

        Covered Persons are prohibited from:

1.

entering into any understanding, agreement, plan or scheme, whether express or implied and whether formal or informal, with any competitor with regard to prices, terms or conditions of sale or service, production, distribution, territories or customers;



2.

exchanging or discussing with a competitor prices, terms or conditions of sale or service, or any other competitive information; or



3.

engaging in any other conduct which violates any applicable anti-trust or competition laws.

E.    Protection and Proper Use of Company Assets

        Company assets, such as information, materials, supplies, time, software, hardware and facilities, among other property, are valuable resources owned, licensed or otherwise belonging to the Company. Company assets also include proprietary information such as intellectual property, including patents,

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trademarks, trade secrets and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Company assets should be used only for legitimate business purposes. Accordingly, all Covered Persons should endeavor to protect the Company's assets and ensure their efficient use.

        Unauthorized use of Company assets is prohibited and should be reported. The personal use of Company assets without permission is prohibited, although incidental personal use is permitted. If you have any questions about whether your personal use of a Company asset is incidental, you should ask for guidance from the Legal Department before taking action.

F.    Compliance with Laws, Rules and Regulations

        All Covered Persons must obey, and ensure that the Company obeys, all laws and governmental regulations of the cities, states and countries in which the Company operates. Although Covered Persons are not expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel. If a law conflicts with a policy in this Code, you must comply with the law. If a local custom or policy conflicts with this Code, you must comply with this Code. If you have any questions about these conflicts, you should consult your supervisor or the Legal Department as to how to handle the situation.

        The Company takes a proactive stance on compliance with all applicable laws, rules and regulations. Particularly, the Company is committed to:

1.

maintaining a workplace that is free from discrimination or harassment based on race, gender, age, color, religion or any other characteristic that is unrelated to the Company's interests or otherwise protected by law;



2.

complying with all applicable environmental, health and safety laws;



3.

supporting fair competition and laws prohibiting restraints of trade and other unfair trade practices;



4.

prohibiting any unlawful, improper or other questionable payments (including bribes or kickbacks), gifts, favors or other gratuities to suppliers, customers, U.S., state, local or foreign government officials or other third parties; and



5.

complying with all applicable federal and state securities laws, including laws prohibiting insider trading.

Covered Persons who have access to material non-public information about the Company are not permitted to use or share that information for stock trading purposes or for any other purpose except for use in the conduct of Company business. To use material non-public information for personal financial benefit or to "tip" others who might make an investment decision on the basis of this information is not only unethical but also illegal. If you have any questions, please consult the Legal Department.

G.    Record Keeping

        The Company requires honest and accurate recording and reporting by Covered Persons of information in order to make responsible business decisions. For example, only the true and actual number of hours worked should be reported. In addition, many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor.

        All of the Company's books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company's transactions and must conform both to

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applicable legal requirements and to the Company's system of internal controls. Unrecorded or "off the books" funds or assets should not be maintained unless permitted by applicable law or regulation.

        Business records and communications often become public, and Covered Persons should avoid exaggeration, derogatory remarks, guesswork or inappropriate characterizations of people and companies that could be misunderstood. This applies equally to e-mail, internal memos and formal reports. Records should always be retained or destroyed according to the Company's record retention policies. In accordance with those policies, in the event of litigation or governmental investigation, please consult the Legal Department prior to taking any related action.

H.    Accurate and Timely Periodic Reports

        The Company is committed to providing full, fair, accurate, timely and understandable disclosure in periodic reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and other regulatory authorities and in other public communications made by the Company. All Company employees and officers who are involved in the Company's public disclosure process are responsible for fulfilling this commitment.

REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR

        Covered Persons have a duty to adhere to this Code and all existing Company policies and to report to the Company any suspected violations in accordance with applicable procedures. Employees are encouraged to talk to supervisors, managers or the Legal Department about observed violations of this Code or any other illegal or unethical behavior or when in doubt about the best course of action in a particular situation. Directors and officers should report any known or suspected violations of this Code or any other illegal or unethical behavior to the CEO or the General Counsel or pursuant to provisions of the Employee Handbook.

        It is the policy of the Company not to allow retaliation for reports of violations of this Code or any other illegal or unethical behavior by any employee made in good faith. All employees are expected to cooperate in internal investigations of misconduct.

DISCLOSURE/AMENDMENTS AND WAIVERS

        This Code will be made available on the Company's website. The Company shall include a statement in its Annual Report on Form 10-K filed with the SEC indicating that a copy of this Code is available on its website and in print to any stockholder who requests a copy.

        Any waiver of any provision of this Code for any executive officer or director may be made only by the Board. The provisions of this Code may be waived for any employee who is not an executive officer or director by the CEO or the Legal Department.

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GFI GROUP INC. CODE OF BUSINESS CONDUCT AND ETHICS

EX-14.2

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Exhibit 14.2

GFI GROUP INC.
CODE OF BUSINESS CONDUCT AND ETHICS
FOR
SENIOR FINANCIAL OFFICERS

PURPOSE

        The purpose of this Code of Business Conduct and Ethics for Senior Financial Officers (this "Code") is to promote (1) the honest and ethical conduct of the Senior Financial Officers (as defined below), including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, (2) full, fair, accurate, timely and understandable public disclosures by the Company and (3) compliance with all applicable laws, rules and regulations. It is the Company's intention that this Code be its written code of ethics under Section 406 of the Sarbanes-Oxley Act of 2002 complying with the standards set forth in Securities and Exchange Commission Regulation S-K Item 406.

APPLICABILITY/VIOLATIONS

        This Code is applicable to the Company's CEO, CFO, chief accounting officer, controller and any persons performing similar functions (together the "Senior Financial Officers"). While the Company expects honest and ethical conduct in all aspects of business from all of its employees, it expects the highest possible honest and ethical conduct from the Senior Financial Officers. The honesty, integrity and sound judgment of Senior Financial Officers is fundamental to the Company's reputation and success.

        Compliance with this Code is a condition of employment, and violations of this Code may result in disciplinary action which, depending on the severity of the violation, may include suspension or termination.

        This Code supplements the Company's Code of Business Conduct and Ethics, which sets forth the fundamental principles and key policies and procedures that govern the conduct of all of the Company's directors, officers and employees. Senior Financial Officers are bound by the requirements and standards set forth in the Code of Business Conduct and Ethics, the standards set forth in this Code and any other applicable policies and procedures.

STANDARDS OF CONDUCT

        Senior Financial Officers are expected to:

1.

Act with honesty and integrity, avoiding actual or apparent conflicts of interest between personal and professional relationships;



2.

Disclose to the General Counsel or the Legal Department any material transaction or relationship that reasonably could be expected to give rise to such a conflict of interest;



3.

Provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the U.S. Securities and Exchange Commission (the "SEC") and in other public communications made by the Company;



4.

Comply with rules and regulations of federal, state, provincial and local governments, and other appropriate private and public regulatory agencies;



5.

Respect the confidentiality of non-pubic information acquired in the course of one's work, under no circumstances use such information for personal advantage and prevent the disclosure of such information except when authorized or otherwise legally obligated to do so;

6.

Share knowledge and maintain professional skills important and relevant to stockholders' needs;



7.

Achieve responsible use, control, and stewardship over all Company assets and resources that are employed or entrusted to such officer;



8.

Disclose to the Audit Committee any information concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize or report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's financial reporting, disclosure or internal controls.



9.

Promote, as appropriate, contact by employees with the General Counsel or the Audit Committee for any issues concerning the improper accounting or financial reporting of the Company without fear of retaliation; and



10.

Refrain from unduly or fraudulently influencing, coercing, manipulating or misleading any authorized audit and from interfering with any auditor engaged in the performance of an internal or independent audit of the Company's financial statements or accounting books and records.

REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR

        If you have any questions or concerns about this Code, you should seek guidance from the Legal Department. If you know of or suspect a violation of applicable laws or regulations or of this Code, you must promptly report that information to the CEO and the General Counsel.

        It is the policy of the Company not to allow retaliation for reports of violations of this Code or any other illegal or unethical behavior by any Senior Financial Officer made in good faith. All Senior Financial Officers are expected to cooperate in internal investigations of misconduct.

DISCLOSURE/AMENDMENTS AND WAIVERS

        This Code will be made available on the Company's website. The Company shall include a statement in its Annual Report on Form 10-K filed with the SEC indicating that a copy of this Code is available on its website and in print to any stockholder who requests a copy.

        Any waiver of any provision of this Code for any Senior Financial Officer may be made only by the Board of Directors. Any change in or waiver from, and the grounds for such change or waiver of, this Code shall be disclosed promptly, and in any event within five business days, following such amendment or waiver, as required by the SEC and the applicable NASDAQ listing requirements.

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GFI GROUP INC. CODE OF BUSINESS CONDUCT AND ETHICS FOR SENIOR FINANCIAL OFFICERS

EX-23.1

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Exhibit 23.1

Independent Auditor's Consent

        We consent to the incorporation by reference in Registration Statement No. 333-122905 on Form S-8 of our reports dated March 30, 2005, relating to the consolidated financial statements and financial statement schedule of GFI Group Inc., appearing in this Annual Report on Form 10-K of GFI Group Inc. for the fiscal year ended December 31, 2004.

/s/  DELOITTE & TOUCHE LLP

New York, New York
March 30, 2005

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Independent Auditor's Consent

EX-31.1

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Exhibit 31.1

Certification

I, Michael Gooch, certify that:

1.

I have reviewed this Annual Report on Form 10-K of GFI Group Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 31, 2005

/s/  MICHAEL GOOCH Michael Gooch
Chairman of the Board,
Chief Executive Officer

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Certification

EX-31.2

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Exhibit 31.2

Certification

I, James A. Peers, certify that:

1.

I have reviewed this Annual Report on Form 10-K of GFI Group Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 31, 2005

/s/  JAMES A. PEERS James A. Peers
Chief Financial Officer

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Certification

EX-32.1

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Exhibit 32.1

Certification of Chief Executive Officer of GFI Group Inc.
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

        In connection with the Annual Report of GFI Group Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Gooch, Chairman and Chief Executive Officer of the Company, certify, pursuant to the 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 31, 2005

/s/  MICHAEL GOOCH Michael Gooch
Chairman of the Board
Chief Executive Officer

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Certification of Chief Executive Officer of GFI Group Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-32.2

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Exhibit 32.2

Certification of Chief Financial Officer of GFI Group Inc.
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

        In connection with the Annual Report of GFI Group Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James A. Peers, Chief Financial Officer of the Company, certify, pursuant to the 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 31, 2005

/s/  JAMES A. PEERS James A. Peers
Chief Financial Officer

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Certification of Chief Financial Officer of GFI Group Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002