DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	9 Months Ended
Sep. 30, 2012
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION *Description of Business* GAIN Capital Holdings, Inc., together with its subsidiaries (the “Company”) is a Delaware corporation formed and incorporated on March 24, 2006. GAIN Holdings, LLC is a wholly-owned subsidiary of GAIN Capital Holdings, Inc., and owns all outstanding membership units in GAIN Capital Group, LLC (“Group, LLC”), the primary regulated entity in the United States of America. Group, LLC is a retail foreign exchange dealer (“RFED”) and a registered Futures Commission Merchant (“FCM”) with the Commodity Futures Trading Commission (“CFTC”). As such, it is subject to the regulations of the CFTC, an agency of the U.S. Government, and the rules of the National Futures Association (“NFA”), an industry self-regulatory organization. The following list includes each of the Company’s significant U.S. and international regulated subsidiaries: GAIN Capital Group, LLC. GAIN Capital-Forex.com U.K., Ltd. Forex.com Japan Co., Ltd. GAIN Capital Forex.com Australia Pty. Ltd. GAIN Capital-Forex.com Hong Kong Ltd. GAIN Capital-Forex.com Canada, Ltd. During 2012, the Company purchased all of the outstanding shares of capital stock of Paragon Futures Group, Inc. (“Paragon”), a Delaware corporation. Paragon owns all of the membership interests of Open E Cry, LLC (“OEC”), an internet based futures business which is subject to the regulations of the CFTC. In addition, in 2011, in order to streamline its international corporate holding structure, the Company added the following entities: GAIN Capital Holdings International, BV GAIN Capital Holdings International Finance Company, BV GAIN Capital GTX International, BV GAIN Capital-Forex.com International, BV Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial statements for the interim periods. The unaudited condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements, and, in accordance with SEC rules, omit or condense certain information and footnote disclosures. Results for the interim periods are not necessarily indicative of results to be expected for any other interim period or for the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 15, 2012 (the “2011 Form 10-K”). There have been no changes in the significant accounting policies from those included in the 2011 Form 10-K, except as noted below. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, after the elimination of inter-company transactions and balances. Previously, the Company presented certain revenue related to our institutional business in “Other revenue” on the Consolidated Statement of Operations and Comprehensive Income and Condensed Consolidated Statement of Operations and Comprehensive Income. However, due to the expansion of the Company’s institutional business in recent periods, the Company has presented these amounts within “Institutional trading revenue” in the Condensed Consolidated Statement of Operations and Comprehensive Income presented herein. The change in presentation had no effect on the total non-interest revenue or total net revenue. Previously the Company presented all of its cash and cash equivalents in “Cash and cash equivalents” on the Consolidated Balance Sheet and Condensed Consolidated Balance Sheet. However, in an effort to improve clarity of presentation and reflect the separation between the cash on hand which correlates to amounts held on behalf of customers and free cash, the Company has separated all cash and cash equivalents into “Cash and cash equivalents” and “Cash and cash equivalents held for customers”. Cash and cash equivalents held for customers represents cash held to fund customer liabilities in connection with funds deposited by customers and funds accruing to customers as a result of trades or contracts. Cash and cash equivalents represents all cash and highly liquid investments with an original maturity of 90 days or less at the time of acquisition, less amounts in Cash and cash equivalents held for customers. In connection with the preparation of this Quarterly Report on Form 10-Q, the Company determined that it was not appropriate to include amounts included on the Condensed Consolidated Balance Sheet under Cash and cash equivalents held for customers in Cash and cash equivalents – beginning of period and Cash and cash equivalents – end of period on the Condensed Consolidated Statements of Cash Flows. Instead it was determined that amounts included in Cash and cash equivalents – beginning of period and Cash and cash equivalents – end of period on the Condensed Consolidated Statements of Cash Flows should reflect only amounts included in the Condensed Consolidated Balance Sheet under Cash and cash equivalents, as adjusted by changes in Cash and cash equivalents held for customers reflected in the Condensed Consolidated Statements of Cash Flows during the period. To reflect this adjustment, the Company excluded $310.5 million and $426.6 million from Cash and cash equivalents – beginning of period and Cash and cash equivalents – end of period, respectively, in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2012. Similarly, the Company excluded $256.7 million and $286.4 million from Cash and cash equivalents – beginning of period and Cash and cash equivalents – end of period, respectively, in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2011. The Company has evaluated the effect of the foregoing adjustments, both qualitatively and quantitatively, and concluded that they did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements. Previously, the Company included amounts in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet in the Condensed Consolidated Statements of Cash Flows as part of Cash provided by operating activities. The Company has determined that these amounts should be reflected in Cash used for investing activities on the Condensed Consolidated Statements of Cash Flows. The Company has evaluated the effect of this adjustment, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements.

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

GAIN Capital Holdings, Inc., together with its subsidiaries (the “Company”) is a Delaware corporation formed and incorporated on March 24, 2006. GAIN Holdings, LLC is a wholly-owned subsidiary of GAIN Capital Holdings, Inc., and owns all outstanding membership units in GAIN Capital Group, LLC (“Group, LLC”), the primary regulated entity in the United States of America.

Group, LLC is a retail foreign exchange dealer (“RFED”) and a registered Futures Commission Merchant (“FCM”) with the Commodity Futures Trading Commission (“CFTC”). As such, it is subject to the regulations of the CFTC, an agency of the U.S. Government, and the rules of the National Futures Association (“NFA”), an industry self-regulatory organization.

The following list includes each of the Company’s significant U.S. and international regulated subsidiaries:

GAIN Capital Group, LLC.

GAIN Capital-Forex.com U.K., Ltd.

Forex.com Japan Co., Ltd.

GAIN Capital Forex.com Australia Pty. Ltd.

GAIN Capital-Forex.com Hong Kong Ltd.

GAIN Capital-Forex.com Canada, Ltd.

During 2012, the Company purchased all of the outstanding shares of capital stock of Paragon Futures Group, Inc. (“Paragon”), a Delaware corporation. Paragon owns all of the membership interests of Open E Cry, LLC (“OEC”), an internet based futures business which is subject to the regulations of the CFTC.

In addition, in 2011, in order to streamline its international corporate holding structure, the Company added the following entities:

GAIN Capital Holdings International, BV

GAIN Capital Holdings International Finance Company, BV

GAIN Capital GTX International, BV

GAIN Capital-Forex.com International, BV

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial statements for the interim periods. The unaudited condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements, and, in accordance with SEC rules, omit or condense certain information and footnote disclosures. Results for the interim periods are not necessarily indicative of results to be expected for any other interim period or for the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 15, 2012 (the “2011 Form 10-K”). There have been no changes in the significant accounting policies from those included in the 2011 Form 10-K, except as noted below. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, after the elimination of inter-company transactions and balances.

Previously, the Company presented certain revenue related to our institutional business in “Other revenue” on the Consolidated Statement of Operations and Comprehensive Income and Condensed Consolidated Statement of Operations and Comprehensive Income. However, due to the expansion of the Company’s institutional business in recent periods, the Company has presented these amounts within “Institutional trading revenue” in the Condensed Consolidated Statement of Operations and Comprehensive Income presented herein. The change in presentation had no effect on the total non-interest revenue or total net revenue.

Previously the Company presented all of its cash and cash equivalents in “Cash and cash equivalents” on the Consolidated Balance Sheet and Condensed Consolidated Balance Sheet. However, in an effort to improve clarity of presentation and reflect the separation between the cash on hand which correlates to amounts held on behalf of customers and free cash, the Company has separated all cash and cash equivalents into “Cash and cash equivalents” and “Cash and cash equivalents held for customers”. Cash and cash equivalents held for customers represents cash held to fund customer liabilities in connection with funds deposited by customers and funds accruing to customers as a result of trades or contracts. Cash and cash equivalents represents all cash and highly liquid investments with an original maturity of 90 days or less at the time of acquisition, less amounts in Cash and cash equivalents held for customers.

In connection with the preparation of this Quarterly Report on Form 10-Q, the Company determined that it was not appropriate to include amounts included on the Condensed Consolidated Balance Sheet under Cash and cash equivalents held for customers in Cash and cash equivalents – beginning of period and Cash and cash equivalents – end of period on the Condensed Consolidated Statements of Cash Flows. Instead it was determined that amounts included in Cash and cash equivalents – beginning of period and Cash and cash equivalents – end of period on the Condensed Consolidated Statements of Cash Flows should reflect only amounts included in the Condensed Consolidated Balance Sheet under Cash and cash equivalents, as adjusted by changes in Cash and cash equivalents held for customers reflected in the Condensed Consolidated Statements of Cash Flows during the period.

To reflect this adjustment, the Company excluded $310.5 million and $426.6 million from Cash and cash equivalents – beginning of period and Cash and cash equivalents – end of period, respectively, in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2012. Similarly, the Company excluded $256.7 million and $286.4 million from Cash and cash equivalents – beginning of period and Cash and cash equivalents – end of period, respectively, in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2011.

The Company has evaluated the effect of the foregoing adjustments, both qualitatively and quantitatively, and concluded that they did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements.

Previously, the Company included amounts in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet in the Condensed Consolidated Statements of Cash Flows as part of Cash provided by operating activities. The Company has determined that these amounts should be reflected in Cash used for investing activities on the Condensed Consolidated Statements of Cash Flows. The Company has evaluated the effect of this adjustment, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements.