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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark one)

|X|        QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
           EXCHANGE ACT OF 1934

           For the quarterly period ended JUNE 30, 2001

                                       OR

|_|        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. 0-21324

                                   NYFIX, INC.
             (Exact name of registrant as specified in its charter)

                  NEW YORK                             06-1344888
            (State of incorporation)     (I.R.S. Employer identification number)

                 333 LUDLOW STREET, STAMFORD, CONNECTICUT 06902
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (203) 425-8000

                         ------------------------------


            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 |X| No |_|


28,640,035  shares of Common  Stock were issued and  outstanding  as of July 31,
2001.


NYFIX, INC.

FORM 10-Q
   For the quarterly period ended June 30, 2001


CONTENTS                                                                   PAGE

PART I.     FINANCIAL INFORMATION

   Item 1.   Financial Statements

             Consolidated Balance Sheets as of June 30, 2001 (unaudited)
             and December 31, 2000                                            3

             Consolidated Statements of Income (unaudited) for the
             three and six month periods ended June 30, 2001 and 2000         4

             Condensed Consolidated Statements of Cash Flows (unaudited)
             for the six month periods ended June 30, 2001 and 2000           5

             Notes to Consolidated Financial Statements (unaudited)           6

   Item 2.   Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                       11

   Item 3.   Quantitative and Qualitative Disclosures About Market Risk      17

PART II. OTHER INFORMATION

   Item 2.   Changes in Securities and Use of Proceeds                       18

   Item 4.   Submission of Matters to a Vote of Security Holders             18

   Item 6.   Exhibits and Reports on Form 8-K                                19

SIGNATURE                                                                    19



PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                           NYFIX, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                                                                      June 30,         December 31,
                                                                                        2001              2000
                                                                                   -------------    -------------
                                                                                    (Unaudited)

ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                      $  41,524,165    $   4,866,629
    Short-term investments in marketable securities                                   20,000,000             --
    Accounts receivable - less allowance of $587,000 and $421,000                     17,533,340       12,058,370
    Inventory, net                                                                     1,547,175        1,742,823
    Prepaid expenses and other current assets                                          1,187,488          646,814
    Due from NYFIX Millennium                                                          1,859,953        1,985,081
    Receivable from officers                                                             205,341          200,441
    Deferred income taxes                                                              1,859,000        1,859,000
                                                                                   -------------    -------------

                      Total Current Assets                                            85,716,462       23,359,158
PROPERTY AND EQUIPMENT, net                                                           13,930,148       11,472,473
INVESTMENT IN NYFIX MILLENNIUM                                                        27,500,000       19,500,000
OTHER ASSETS                                                                           4,015,971        3,226,719

                      TOTAL ASSETS                                                 $ 131,162,581    $  57,558,350
                                                                                   =============    =============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts payable                                                               $   3,236,610    $   2,915,167
    Accrued expenses                                                                   5,263,351        2,444,825
    Current portion of capital lease obligations                                         902,331          692,525
    Current portion of long-term debt                                                  1,500,000        2,000,000
    Advance billings                                                                   7,826,719        6,147,705
                                                                                   -------------    -------------

                      Total Current Liabilities                                       18,729,011       14,200,222

LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS                                         1,037,512        1,130,394
                                                                                   -------------    -------------

                      Total Liabilities                                               19,766,523       15,330,616
                                                                                   -------------    -------------


SHAREHOLDERS' EQUITY:
    Preferred stock - par value $1.00; 5,000,000 shares authorized; none issued
    Common stock - par value $.001; 60,000,000 shares authorized, 28,608,285 and
          25,109,550 shares issued and outstanding                                        28,608           25,110
    Additional paid-in capital                                                       108,675,615       42,558,040
    Retained earnings                                                                  3,372,019          306,482
    Due from officers and directors                                                     (680,184)        (661,898)
                                                                                   -------------    -------------

                      Total Shareholders' Equity                                     111,396,058       42,227,734
                                                                                   -------------    -------------

                      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 131,162,581    $  57,558,350
                                                                                   =============    =============


The accompanying notes to the consolidated financial statements are an integral part of these statements.

                                       3


                           NYFIX, INC. AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

                                                                     Three Month Period Ended            Six Month Period Ended
                                                                     ------------------------            ----------------------
                                                                    June 30,          June 30,          June 30,          June 30,
                                                                      2001             2000               2001             2000
                                                                 ------------      ------------      ------------      ------------

REVENUES:
Sales                                                            $  1,456,427      $  1,222,646      $  3,161,650      $  2,148,087
Subscription revenues                                               6,936,183         3,649,670        12,724,581         6,566,170
Service contracts                                                   1,118,749           662,012         2,047,279         1,200,079
                                                                 ------------      ------------      ------------      ------------

      Total Revenues                                                9,511,359         5,534,328        17,933,510         9,914,336
                                                                 ------------      ------------      ------------      ------------
COST OF REVENUES:

Cost of sales                                                         208,172           216,901           375,680           390,923
Cost of subscription revenues                                       1,793,349         1,162,147         3,314,380         2,002,196
Cost of service contracts                                             254,434           158,861           506,311           294,838
                                                                 ------------      ------------      ------------      ------------
      Total Cost of Revenues                                        2,255,955         1,537,909         4,196,371         2,687,957
                                                                 ------------      ------------      ------------      ------------

GROSS PROFIT                                                        7,255,404         3,996,419        13,737,139         7,226,379
                                                                 ------------      ------------      ------------      ------------

OPERATING EXPENSES:

Selling, general and administrative                                 3,772,624         2,341,977         7,154,745         4,343,470
Research and development                                              108,088           111,669           186,406           214,004
Depreciation and amortization                                         655,870           254,081         1,172,627           482,360
                                                                 ------------      ------------      ------------      ------------
      Total Operating Expenses                                      4,536,582         2,707,727         8,513,778         5,039,834
                                                                 ------------      ------------      ------------      ------------

EARNINGS FROM OPERATIONS                                            2,718,822         1,288,692         5,223,361         2,186,545

Interest expense                                                     (108,870)          (65,888)         (219,965)         (131,970)

Interest income                                                        62,954            50,677           111,200            75,342

Other (expense) income                                                 (5,133)             --             (14,456)              142
                                                                 ------------      ------------      ------------      ------------

EARNINGS BEFORE PROVISION FOR INCOME TAXES                          2,667,773         1,273,481         5,100,140         2,130,059

PROVISION FOR INCOME TAXES                                          1,065,778           196,422         2,034,603           289,240
                                                                 ------------      ------------      ------------      ------------

NET EARNINGS                                                     $  1,601,995      $  1,077,059      $  3,065,537      $  1,840,819
                                                                 ============      ============      ============      ============

BASIC EARNINGS PER COMMON SHARE                                  $       0.06      $       0.04      $       0.12      $       0.08
                                                                 ============      ============      ============      ============

BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                   25,869,171        24,286,943        25,682,770        24,317,960
                                                                 ============      ============      ============      ============

DILUTED EARNINGS PER COMMON SHARE                                $       0.06      $       0.04      $       0.11      $       0.07
                                                                 ============      ============      ============      ============

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                 27,487,941        26,481,865        27,350,371        26,416,915
                                                                 ============      ============      ============      ============


The accompanying notes to the consolidated financial statements are an integral part of these statements.

                                       4




                           NYFIX, INC. AND SUBSIDIARY

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                                                       Six Month Period Ended
                                                                                       ----------------------
                                                                                   June 30, 2001    June 30, 2000
                                                                                   -------------    -------------


NET CASH PROVIDED BY OPERATING ACTIVITIES                                          $  5,012,150    $  1,965,472
                                                                                   -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of marketable securities                                              (20,000,000)           --
    Capital expenditures                                                             (4,073,179)     (1,686,605)
    Due from (advances to) NYFIX Millennium                                             125,128         186,839
    Payments for product enhancement costs and other assets                          (1,564,550)       (913,590)
                                                                                   -------------    -------------
                      Net cash used in investing activities                         (25,512,601)     (2,413,356)
                                                                                   -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments under capital lease obligations                                 (407,026)           --
    Repayment of borrowings                                                            (500,000)           --
    Issuance of common stock                                                         58,065,013       2,362,037
                                                                                   -------------    -------------
                     Net cash provided by financing activities                       57,157,987       2,362,037
                                                                                   -------------    -------------
INCREASE IN CASH AND CASH EQUIVALENTS                                                36,657,536       1,914,153

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                        4,866,629       1,565,649
                                                                                   -------------    -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $ 41,524,165    $  3,479,802
                                                                                   =============    =============


SUPPLEMENTAL INFORMATION:
    Cash paid during the period for interest                                       $    183,571    $     97,812
    Cash paid during the period for income taxes                                        155,405         109,400
    Capital lease obligations incurred                                                  523,950            --
    Common stock issued for investment in NYFIX Millennium                            8,000,000            --

The accompanying notes to the consolidated financial statements are an integral part of these statements.


                                       5



NYFIX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
------------------------------------------------------


1.          ORGANIZATION

            NYFIX,  Inc. is listed on the Nasdaq  Stock  Market under the symbol
            NYFX.

            References  herein to "we",  "our" and the "Company" refer to NYFIX,
            Inc. and  consolidated  subsidiary  unless the context  specifically
            requires otherwise.


2.          BASIS OF PRESENTATION

            The  accompanying   unaudited   condensed   consolidated   financial
            statements   have  been  prepared  in  accordance   with  accounting
            principles  generally  accepted in the United  States of America for
            interim  financial  information  and with the  instructions  to Form
            10-Q. In the opinion of management, all adjustments,  which comprise
            normal  and  recurring  accruals  considered  necessary  for a  fair
            presentation,  have been  included.  The  preparation  of  financial
            statements  in  conformity  with  accounting   principles  generally
            accepted in the United States of America requires management to make
            estimates and assumptions that affect the reported amounts of assets
            and liabilities and disclosure of contingent  assets and liabilities
            at the date of the financial statements, and the reported amounts of
            revenues and expenses  during the reporting  period.  Actual results
            could  differ from those  estimates.  Operating  results for the six
            month period ended June 30, 2001 are not  necessarily  indicative of
            the results  that may be expected  for the year ending  December 31,
            2001. For further information,  refer to the consolidated  financial
            statements and footnotes  thereto  included in the Company's  annual
            report on Form 10-K for the year ended December 31, 2000.

            Certain 2000 balances have been  reclassified to conform to the 2001
            presentation.

3.          SHORT-TERM INVESTMENTS IN MARKETABLE SECURITIES

            The  Company's   investments   in  marketable   securities   are  in
            instruments that are short-term in nature,  and are all conservative
            risk  investments  with  the  revenue  anticipation  fully  insured.
            Management   determines  the  appropriate   classification   of  its
            investments  in  debt   securities  at  the  time  of  purchase  and
            reevaluates  such  determinations  at each balance  sheet date.  The
            Company's  marketable  securities are defined as  available-for-sale
            securities  under the  provisions of SFAS No. 115,  "Accounting  for
            Certain    Investment    in    Debt    and    Equity    Securities."
            Available-for-sale  securities  are  carried  at fair  value.  These
            instruments are not subject to gains or losses.


                                       6




4.          INVENTORY

            Inventory consists of the following:

                                                                  June 30,        December 31,
                                                                    2001             2000
                                                                -----------       -----------

                                                                 (unaudited)

               Parts                                            $ 1,119,965       $ 1,174,727
               Work in process                                       40,641            39,629
               Finished goods                                       478,269           620,467
               Less: allowance for obsolescence                     (91,700)          (92,000)
                                                                -----------       -----------

                                     Total                      $ 1,547,175       $ 1,742,823
                                                                ===========       ===========


5.          PROPERTY AND EQUIPMENT, NET

            Property and equipment consists of the following:

                                                                  June 30,        December 31,
                                                                   2001               2000
                                                               -----------        -----------

                                                                 (unaudited)
               Computer software                                 $   569,837      $   458,939
               Leasehold improvements                                946,232          558,356
               Furniture and equipment                             2,704,462        2,428,962
               Subscription and service bureau equipment          14,457,853       11,161,438
               Service bureau equipment under capital leases       2,546,842        2,022,892
                                                                 -----------      -----------
                                                                  21,225,226       16,630,587
               Less: Accumulated depreciation                      7,295,078        5,158,114
                                                                 -----------      -----------

                                     Total                       $13,930,148      $11,472,473
                                                                 ===========      ===========



6.          INVESTMENT IN NYFIX MILLENNIUM

            On October 27, 1999,  the Company  announced  the formation of NYFIX
            Millennium,  L.L.C.  ("NYFIX  Millennium") with seven  international
            investment banks and brokerage firms (the "Consortium"). The Company
            owns 50% of NYFIX  Millennium and the Consortium  owns the remaining
            50%. NYFIX Millennium operates as an alternative trading system. All
            of the  partners  of  the  Consortium,  and  the  Company,  invested
            $2,000,000  each  in  NYFIX  Millennium.   Each  Consortium  partner
            received  281,250  shares of  common  stock of the  Company,  for an
            aggregate  1,968,750  shares, in return for granting the Company the
            option to purchase up to an additional 30% of NYFIX Millennium.  The
            Company may exercise the option through the exchange of one share of
            the  Company's  common  stock for each NYFIX  Millennium  unit to be
            purchased,  subject  to  adjustments  in the  event  of  any  split,
            combination,  reclassification  or other  adjustments to the capital
            structure of the Company.


                                       7

xxx


            In March 2001, NYFIX Millennium added four new partners. Pursuant to
            the terms of the Operating  Agreement of NYFIX Millennium,  each new
            partner contributed $2,000,000 to NYFIX Millennium,  and the Company
            maintained  its  50%  ownership  interest  in  NYFIX  Millennium  in
            exchange  for  reducing  certain  of its  rights  to share in future
            dividend  distributions  of NYFIX  Millennium.  The  Company  issued
            94,000  shares of its common stock to each new partner in return for
            the same option rights noted above.

            The Company's total investment in NYFIX Millennium of $27,500,000 at
            June 30, 2001, consists of $25,500,000  (1,968,750 shares in 1999 of
            Company stock x $8.89 and 376,000  shares in 2001 of Company stock x
            $21.28) and a capital cash  contribution of $2,000,000.  Pursuant to
            the Operating  Agreement,  the first  $14,000,000  in losses will be
            allocated to the  Consortium  investors,  which equals the extent of
            their capital  investment in NYFIX  Millennium.  Losses in excess of
            $14,000,000, if any, will be allocated to the new investors up to an
            additional  $8,000,000,  which  equals the  extent of their  capital
            investment in NYFIX  Millennium.  No portion of these losses will be
            borne by the Company.  The Company has  temporarily  funded  certain
            operating  costs  and  capital   expenditures  on  behalf  of  NYFIX
            Millennium until its operations  commence.  Such costs are reflected
            as Due from NYFIX Millennium on the Company's  consolidated  balance
            sheets.

7.          CAPITAL STOCK

            On June 22, 2001, the Company  completed a secondary public offering
            as authorized by its Board of Directors, issuing 3,000,000 shares of
            its  Common  Stock at a price of $21.00 per  share,  generating  net
            proceeds  of  approximately  $57.3  million,   after  deducting  the
            underwriting discounts and commissions and offering expenses paid by
            the Company. The Company intends to use the net proceeds for working
            capital and other general corporate  purposes.  The Company may also
            use a portion of the net proceeds for  acquisitions  of  businesses,
            products and  technologies  or the  establishment  of joint ventures
            that  are  complementary  to our  business.  While  the  Company  is
            exploring certain opportunities,  there are no definitive agreements
            with  respect  to any  transactions.  The amount  actually  used for
            working  capital  purposes  will  depend  on a  number  of  factors.
            Accordingly,  the  Company  will  retain  broad  discretion  in  the
            allocation of the net proceeds of the offering.  Pending these uses,
            the net proceeds were invested in interest-bearing, investment-grade
            securities in accordance with the Company's investment policy.

8.          2001 STOCK OPTION PLAN

            On March 13, 2001, the Board of Directors of NYFIX, Inc. adopted the
            Company's 2001 Stock Option Plan (the "Plan").  The number of shares
            available  under  the Plan  was  fixed  at  2,000,000.  The Plan was
            approved at the Company's  Annual  Meeting of  Shareholders  held on
            June 4, 2001. All stock options  granted are at fair market value at
            the date of grant,  and expire ten years from the date of grant. The
            Plan was effective on May 1, 2001 and expires on April 30, 2011.

9.          INCOME TAXES

            Commencing in 2001, the Company is subject to full statutory  income
            tax  rates as  compared  to the prior  period  in which the  Company
            utilized the benefits of available net operating loss carryforwards.
            In the  prior  year's  three and six month  periods,  the  Company's
            income tax  provision  consisted  of  estimated  state,  local,  and
            foreign income taxes.

                                       8





10.         EARNINGS PER SHARE INFORMATION

            The Company's  basic earnings per share ("EPS") is calculated  based
            on  net   earnings   available  to  common   shareholders   and  the
            weighted-average  number of shares  outstanding  during the reported
            period.  Diluted EPS includes  additional dilution from common stock
            equivalents,  such as stock  issuable  pursuant  to the  exercise of
            stock options and warrants.

                                             Three Month                  Six Month
                                            Period Ended                Period Ended
                                    --------------------------  --------------------------
                                        June 30,     June 30,      June 30,       June 30,
                                          2001         2000          2001           2000
                                    -------------------------   --------------------------

Net Earnings                        $ 1,601,995   $ 1,077,059   $ 3,065,537   $ 1,840,819
                                    ===========   ===========   ===========   ===========

Basic Weighted Average Shares
  Outstanding                        25,869,171    24,286,943    25,682,770    24,317,960
                                     ===========   ===========  ===========   ===========

Basic Earnings per Common Share     $      0.06   $      0.04   $      0.12   $      0.08
                                    ===========   ===========   ===========   ===========

Basic Weighted Average Shares
  Outstanding                        25,869,171    24,286,943    25,682,770    24,317,960
     Dilutive Options                 1,586,377     2,128,477     1,635,042     2,033,353
     Dilutive Warrants                   32,393        66,445        32,559        65,602
                                     -----------   -----------  -----------   -----------
Diluted Weighted Average Shares
  Outstanding                        27,487,941    26,481,865    27,350,371    26,416,915
                                     ==========   ===========   ===========   ===========

Diluted Earnings per Common Share   $      0.06   $      0.04   $      0.11   $      0.07
                                    ===========   ===========   ===========   ===========


11.         IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

            In June 1998,  the Financial  Accounting  Standards  Board  ("FASB")
            issued  SFAS  No.  133  ("SFAS  133"),  "Accounting  for  Derivative
            Instruments and Hedging  Activities."  SFAS 133 is effective for all
            fiscal years  beginning  after June 15, 2000.  SFAS 133, as amended,
            establishes   accounting  and  reporting  standards  for  derivative
            instruments,  including certain derivative  instruments  embedded in
            other contracts and for hedging activities.  Under SFAS 133, certain
            contracts that were not formerly considered derivatives may now meet
            the  definition  of a  derivative.  The  Company  adopted  SFAS  133
            effective  January 1, 2001.  The adoption of SFAS 133 did not have a
            significant impact on the financial position, results of operations,
            or cash flows of the Company.

            In March  2000,  the FASB issued  FASB  Interpretation  No. 44 ("FIN
            44"),   "Accounting   for  Certain   Transactions   Involving  Stock
            Compensation."  FIN 44, an interpretation  of Accounting  Principles
            Bulletin 25 ("APB 25"),  "Accounting for Stock Issued to Employees,"
            provides   guidance  on  the   application   of  APB  25  for  stock
            compensation  involving  employees.  The  adoption of FIN 44 did not
            have an effect on the financial position,  results of operations, or
            cash flows of the Company.

                                       9





            In June 2001, the FASB issued two new  pronouncements:  SFAS No. 141
            ("SFAS  141"),  "Business  Combinations,"  and SFAS No.  142  ("SFAS
            142"),  "Goodwill and Other  Intangible  Assets." SFAS 141 prohibits
            the use of the pooling-of-interest  method for business combinations
            initiated  after June 30,  2001,  and also  applies to all  business
            combinations accounted for by the purchase method that are completed
            after June 30, 2001. There are also transition provisions that apply
            to business  combinations  completed  before July 1, 2001, that were
            accounted  for by the purchase  method.  SFAS 142 is  effective  for
            fiscal years  beginning after December 15, 2001, to all goodwill and
            other  intangible  asets  recognized in an entity's balance sheet at
            that  date,   regardless  of  when  those  assets  were   originally
            recognized.  The Company is currently  evaluating the impact of SFAS
            141 and SFAS 142 on its consolidated financial statements.

12.         BUSINESS SEGMENT INFORMATION

            The  Company  operates in a single  industry  segment as a financial
            technology company focusing on electronic trading infrastructure and
            technologies. The Company provides desktop solutions, stationary and
            wireless exchange floor systems,  electronic  automation systems and
            straight through  processing to the professional  trading segment of
            the  brokerage  community.  The  Company  has  offices in  Stamford,
            Connecticut,  New York,  Chicago  and  London.  Each  office has the
            opportunity  to sell or enter into  subscriptions  for either of the
            Company's products and services.  However,  the operating results of
            the Company's  products and services are not  individually  reported
            nor  are  they  managed  or  evaluated  individually  by  the  Chief
            Executive  Officer,  who is the Company's  chief decision  maker. As
            such,  the Company  does not segment  its  business by products  and
            services.

            Summarized  financial  information  by  geographic  location  is  as
follows (in 000's):

                                  Three Month Period Ended        Six Month Period Ended
                                  -------------------------------------------------------
                                  June 30,         June 30,       June 30,      June 30,
                                    2001             2000           2001          2000
                                  ---------------------------    -----------------------

Revenues:
    Stamford/New York            $ 7,544          $ 4,192        $13,765        $ 7,709
    London                           978            1,098          2,575          1,823
    Chicago                          990              244          1,594            382
    Inter-location sales            --
                                                     --             --                5
    Inter-location elimination      --
                                                     --             --               (5)
                                 -------        ---------        -------        -------
 Total Revenues                  $ 9,512          $ 5,534        $17,934        $ 9,914
                                 =======        =========        =======        =======

 Gross Profit:
    Stamford/New York            $ 5,471          $ 2,787        $ 9,919        $ 5,254
    London                           826              982          2,286          1,622
    Chicago                          958              227          1,532            350
                                 -------        ---------       --------       --------
 Gross Profit                    $ 7,255          $ 3,996        $13,737        $ 7,226
                                 =======        =========       ========       ========

                                       10





ITEM 2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND
            RESULTS OF OPERATIONS

The following  discussion and analysis  should be read in  conjunction  with the
consolidated  financial  statements  and notes thereto.  Historical  results and
percentage relationships are not necessarily indicative of the operating results
for any future period.

OVERVIEW

We commenced  operations in January 1991,  initially focusing on capturing trade
order information via our Guided-Input7  Touchpad system, and since then we have
transitioned  to become a provider  of  infrastructure,  systems,  software  and
wireless trading  technologies to the brokerage industry.  We provide electronic
trading and straight-through  trade processing solutions to various participants
in the  brokerage  industry  such as brokerage  firms,  international  banks and
global  exchanges  trading in equities,  futures and options.  Our deployment of
products and services via the NYFIX  network has resulted in our  processing  an
average NYSE daily volume of 212 million  shares in the first quarter of 2000, a
number  which has grown to  approximately  500 million in the second  quarter of
2001, with daily volumes reaching as high as 843 million shares.

By 1996, the financial  services industry had adopted the Financial  Information
Exchange Protocol,  commonly referred to as the FIX protocol, which provides the
brokerage  industry  with a common  underlying  language  to  enable  electronic
trading   and   communications.   In  late  1997,   we  built  a   communication
infrastructure  known as the NYFIX network  utilizing  the FIX  protocol,  which
provides each  customer with  dedicated  circuits  into the NYFIX  network,  and
provides global  electronic  connectivity for trade order routing.  We currently
offer our  services,  consisting of  integrated  hardware and software  systems,
together with linkage through our data center. Our customers typically subscribe
to our services by paying a monthly fee per  terminal for use of our  integrated
infrastructure  and  software  systems.  Beginning  in  late  1997,  we  focused
primarily  on selling our products  and  services on a  subscription  basis with
ongoing monthly  subscription  fees rather than a software and capital equipment
sales model with one-time, upfront fees.

Our revenues are comprised of subscription,  sales and service contract revenue.
Consistent with our transition to a subscription sales model from a hardware and
software  sales model,  subscription  fees  represent a majority and  increasing
share of our total revenues.  Subscription  revenue contracts are primarily with
brokerage firms,  international  banks and global exchanges trading in equities,
and are generally for an initial period of one to three years, with one to three
year renewal  periods.  Subscription  revenues are  recognized  ratably over the
lives of the subscription  agreements with customers and begin once installation
is complete.  Sales  revenue,  which is comprised of software  sales and capital
equipment sales, is generated primarily by sales to customers in the futures and
options  trading  market,  and is expected to decrease in both aggregate  dollar
amounts and as a percentage of total  revenues as we continue to shift our focus
to servicing  those markets  using a  subscription  fee model.  Sales revenue is
recognized upon shipment of the product and acceptance by the customer.  Service
contract  revenue is comprised of  maintenance  contracts  for capital sales and
subscriptions  and is  recognized  ratably  over the period  that the service is
provided.  Service  contract  revenue on  subscription  contracts  is charged to
customers as a fixed percentage of such contracts.

Cost of revenues  principally  consists  of  subscription  communication  lines,
amortization  of  capitalized  product  enhancement  costs and  depreciation  of
subscription-based equipment, labor, materials and overhead.

                                       11





Selling,  general and  administrative  expenses  account for the majority of our
operating  expenses  and  consist  of  salaries  and  benefits,  rent and office
expenses,  non-customer  specific  communication  fees,  provisions for doubtful
accounts and marketing expenses. During the past several years, we have expanded
our  efforts to support an  increasing  number of services  and to increase  the
number of exchanges,  brokerage firms and buyside institutions connecting to the
NYFIX network.  We believe that our continued  investment in the  development of
our system and its associated applications and services has increased orderflow,
which in turn should facilitate both revenue growth and further  distribution of
our products.

Research  and  development  expenses  relate  to  developing  new  products  and
technologies to meet the current and future needs of our customers.  These costs
consist  primarily of salaries and costs  related to technical  and  programming
personnel.

Depreciation and amortization  expense consists of depreciation and amortization
of equipment and software used to operate our systems.

On  October  27,  1999,  we  announced  the  formation  of NYFIX  Millennium,  a
consortium of us and seven  international  investment banks and brokerage firms,
consisting of Deutsche  Bank,  ING Barings,  Lehman  Brothers,  Morgan  Stanley,
Sanford C. Bernstein & Co., SG Cowen Securities Corp. and UBS Warburg.  Each
partner,  including us, invested $2.0 million in NYFIX  Millennium.  Each of our
partners received 25,000 units of NYFIX Millennium,  collectively  owning 50% of
NYFIX Millennium,  and we owned the remaining 50%. In addition,  we purchased an
option to buy from our partners an additional 30% ownership in NYFIX Millennium,
for which we paid each of our partners 281,250 shares of our common stock. If we
exercise this option, we will issue an aggregate of an additional 236,250 shares
of our common stock to our partners for units of NYFIX  Millennium owned by such
partners.

In March 2001, NYFIX Millennium added Bank of America,  First Union  Securities,
J.P.  Morgan & Co. and J.P.  Morgan H&Q  (formerly Chase H&Q) as new
partners.  Pursuant to the terms of the operating agreement of NYFIX Millennium,
each new partner contributed $2.0 million to NYFIX Millennium, and we maintained
our 50% ownership  interest in NYFIX Millennium in exchange for reducing certain
of our rights to share in future dividend distributions of NYFIX Millennium.  We
issued  94,000  shares of our common stock to each new partner in return for the
same option  rights noted above.  If we exercise  this option,  we will issue an
aggregate of an additional 60,000 shares of our common stock to our new partners
for units of NYFIX Millennium owned by such new partners.

                                       12





RESULTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 2001  COMPARED TO THREE AND SIX MONTHS ENDED
JUNE 30, 2000

REVENUES
Subscription revenue increased 90% and 94% to $6,937,000 and $12,725,000 for the
three and six months ended June 30, 2001, from $3,649,000 and $6,566,000 for the
same  periods  in  2000,  respectively,  principally  due to  increased  desktop
placements among existing customers,  and also the addition of new customers and
new product  offerings  sold to existing and new  customers.  As a percentage of
total revenues,  subscription  revenue increased to 73% and 71% in the three and
six  months  ended June 30,  2001 from 66% and 66% in the same  periods in 2000,
respectively.

Sales revenue  increased 19% and 47% to $1,457,000  and $3,162,000 for the three
and six months ended June 30, 2001,  from $1,223,000 and $2,148,000 for the same
periods in 2000, respectively.  The increase in sales revenue is principally due
to continued  customer  demand for the Company's  Order Book  Management  System
("OBMS")  derivatives  trading software products,  which was partially offset by
decreases in hardware  sales.  As a percentage of total  revenue,  sales revenue
decreased to 15% and 22% in the three and six months  ended June 30, 2001,  from
18% and 22% in the same periods in 2000, respectively,  which is consistent with
the Company's overall goal to transition to a recurring revenue-based model.

Service contract revenue  increased 69% and 71% to $1,118,000 and $2,047,000 for
the three and six months ended June 30, 2001,  from $662,000 and  $1,200,000 for
the same  periods  in 2000,  respectively,  principally  due to an  increase  in
subscription   contract  revenue.   Service  contract  revenue  remained  fairly
consistent as a percentage  of total  revenue,  comprising  12% and 11% of total
revenue in the three and six months ended June 30, 2001,  as compared to 12% and
12% in the same period in 2000, respectively.

COST OF REVENUES AND GROSS PROFIT
Gross profit as a percentage of total revenues  increased to 76% and 77% for the
three and six months ended June 30, 2001,  from 72% and 73% for the same periods
in 2000, respectively, as gross profit on a percentage and dollar basis improved
for all three revenue  categories for both the three and six month periods.  The
increase in gross profit dollars was due primarily to higher revenues, which was
offset somewhat by increased communication charges relating to increased desktop
connections,  higher labor costs due to increased  service contract revenues and
higher  depreciation  expense  for  subscription-based  equipment.  The  Company
obtains its materials and supplies from a variety of vendors in the U.S. and Far
East and did not experience  any  significant  price  increases in its component
parts purchased during the first half of 2001.  Included in cost of revenues was
amortization  expense of product  enhancement costs of $415,000 and $773,000 for
the three and six months  ended June 30,  2001,  as  compared  to  $295,000  and
$536,000 for the same periods in 2000,  respectively.  Depreciation  expense for
subscription-based  equipment  was  $516,000  and $969,000 for the three and six
months  ended June 30,  2001,  as compared to $290,000 and $521,000 for the same
periods in 2000, respectively.

SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased 61% and 65% to $3,773,000
and $7,155,000 for the three and six months ended June 30, 2001, from $2,341,000
and  $4,343,000 for the same periods in 2000,  respectively,  but decreased as a
percentage of total  revenues to 40% in the current six month period from 44% in
the prior  year's six month  period.  The  dollar  increase  reflects  increased
salaries,  related  personnel  costs,  recruiting fees, rent expense and various
office expenses due to personnel increases to support the Company's growth.

                                       13





RESEARCH AND DEVELOPMENT
Research and development  expenses decreased 4% and 13% to $108,000 and $186,000
for the three and six months ended June 30, 2001, from $112,000 and $214,000 for
the same periods in 2000,  respectively,  primarily as a result of the Company's
focus on enhancing its existing  product line to allow  current and  prospective
customers to be more  efficient  and  productive  in their  business.  As stated
above, product enhancement costs are reflected in Cost of Revenues.

DEPRECIATION AND AMORTIZATION
Depreciation and amortization  expenses  increased 158% and 143% to $656,000 and
$1,173,000  for the three and six months ended June 30, 2001,  from $254,000 and
$482,000 for the same periods in 2000, respectively,  reflecting principally the
continued   investment   in  the  Company's   infrastructure,   in  addition  to
administrative  support  equipment  and  leasehold  improvements  to support the
Company's growth.

INTEREST EXPENSE
Interest  expense  increased  65% and 67% to $109,000 and $220,000 for the three
and six months  ended June 30,  2001,  from  $66,000 and  $132,000  for the same
periods in 2000,  respectively,  principally  as a result of interest on capital
lease obligations of $54,000 and $111,000 during the current year's periods.

INTEREST INCOME
Interest income  increased 28% and 49% to $64,000 and $112,000 for the three and
six months ended June 30, 2001, from $50,000 and $75,000 for the same periods in
2000,  respectively,  principally due to higher average cash balances maintained
by the Company during the current  year's  periods  versus the comparable  prior
year's periods.

PROVISION FOR INCOME TAXES
The provision for income taxes  increased to $1,065,000  and  $2,034,000 for the
three and six months  ended June 30,  2001,  from  $196,000 and $289,000 for the
same periods in 2000,  respectively.  Commencing in 2001, the Company is subject
to full statutory income tax rates as compared to the prior periods in which the
Company utilized the benefits of available net operating loss carryforwards. The
Company's  effective  tax rate of 40% in the  current  year  exceeds the Federal
statutory rate primarily due to state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

In June 2001, the Company raised $57,284,000 from a secondary public offering of
3,000,000  shares of its common stock,  net of expenses.  The Company intends to
use the net proceeds for working capital and other general  corporate  purposes.
The  Company  may also use a portion of the net  proceeds  for  acquisitions  of
businesses,  products and  technologies or the  establishment  of joint ventures
that are  complementary to our business.  While the Company is exploring certain
opportunities,   there  are  no  definitive   agreements  with  respect  to  any
transactions.  The amount actually used for working capital purposes will depend
on a number of factors. Accordingly, the Company will retain broad discretion in
the  allocation of the net proceeds of the offering.  At June 30, 2001, the cash
and cash  equivalents  balance  increased  to  $41,524,000  from  $4,867,000  at
December  31,  2000  primarily  as a result  of net  proceeds  from  the  public
offering,  the  exercise  of  stock  options  and  cash  provided  by  operating
activities,  partially  offset by purchases of  marketable  securities,  capital
expenditures  and the  acquisition  of other  assets to  support  the  Company's
infrastructure and repayments under loan and capital lease obligations.

At June 30, 2001, the Company had invested  $20,000,000 of the secondary  public
offering proceeds in current marketable  security  instruments,  having interest
rates ranging from 2.50% to 3.75%,  $29,990,000 in a tax-free money fund with an
average  yield of 2.40% and  $8,890,000  in a mutual fund with a 30 day yield of
3.51% at June 30, 2001.

                                       14





At June 30, 2001,  the Company had total debt of  $3,440,000,  which  represents
amounts  outstanding under the line of credit and capital lease obligations.  At
June 30, 2001, the Company had no material  commitments for capital expenditures
or inventory purchases.

On July 13,  1998,  the Company  entered  into a  three-year  $3 million line of
credit  agreement with a financial  institution  with advances on such agreement
available to the Company  during the first 18 months.  The credit  agreement was
primarily intended to finance equipment expenditures.  Outstanding  indebtedness
under the  credit  agreement  bore  interest  at either  LIBOR plus 1.25% or the
bank's  prime  rate,  at the  Company's  discretion.  The  Company  drew down an
aggregate  of  $1,800,000  under the  agreement  during  1998 and an  additional
$700,000  during 1999. The credit  agreement  prohibited the Company from making
principal repayments prior to February 1, 2000. Repayment of principal commenced
on July 30, 2000 with twelve monthly  installments of $83,333 with the remaining
balance  due on July 30,  2001.  The  Company  repaid the  remaining  balance of
$1,500,000 in full on July 17, 2001.

The Company believes it has sufficient liquidity,  including cash generated from
operations and issuances of common stock, to support its cash needs for at least
the next twelve months.

WORKING CAPITAL
At June 30, 2001 and  December  31,  2000,  the  Company had working  capital of
$66,987,000  and  $9,159,000,   respectively.   The  Company's  present  capital
resources  include  proceeds  from  issuances of common stock and from  internal
operations.

CASH PROVIDED BY OPERATING ACTIVITIES
During the six months ended June 30, 2001,  net cash provided by operations  was
$5,012,000  as compared to net cash  provided by  operations  for the six months
ended June 30,  2000 of  $1,965,000.  The  increase  is  primarily  due to a 67%
increase in net earnings to  $3,066,000  for the six months ended June 30, 2001,
from  $1,841,000  for the six months  ended June 30,  2000.  The increase in the
current  year's six month period is also due  principally  to  depreciation  and
amortization of $2,915,000, an increase in accrued expenses of $2,819,000 and an
increase in deferred  revenue of  $1,679,000,  offset by an increase in accounts
receivable of  $5,647,000.  The increase in the prior year's six month period is
also due  principally  to  depreciation  and  amortization  of $1,539,000 and an
increase in deferred  revenue of  $1,749,000,  offset by an increase in accounts
receivable of $3,561,000. The increases in depreciation and amortization reflect
the Company's  continued  investment in its  infrastructure and in improving its
products.  The increase in accrued expenses  reflects  increased tax liabilities
due to increased sales and profitability.  The increases in deferred revenue and
accounts receivable also reflect the Company's sales growth.

CASH USED IN INVESTING ACTIVITIES
During the six months  ended June 30, 2001 and 2000,  net cash used in investing
activities was  $25,513,000 and  $2,413,000,  respectively.  The increase in the
current year's six month period is primarily due to the $20,000,000  invested in
current marketable  securities,  purchases of equipment related primarily to the
Company's  data center and  subscription  equipment of  $4,073,000  and payments
related to product  enhancement  costs for the  Company's  product  portfolio of
$1,565,000.  The increase in the prior year's six month period is primarily  due
to purchases of equipment  related  primarily to the  Company's  data center and
subscription equipment of $1,687,000 and payments related to product enhancement
costs for the Company's product portfolio of $914,000.

                                       15





CASH PROVIDED BY FINANCING ACTIVITIES
During the six months  ended  June 30,  2001,  net cash  provided  by  financing
activities was $57,158,000,  compared to net proceeds from financing  activities
of $2,362,000 for the six months ended June 30, 2000.  During the current year's
six month period net proceeds of $57,284,000  from the secondary public offering
and  $781,000  from the  exercise  of stock  options  were  partially  offset by
repayments under the revolving line of credit of $500,000 and principal payments
under capital lease  obligations  of $407,000.  During the six months ended June
30, 2000,  proceeds  from the exercise of warrants and stock  options  generated
cash of $2,362,000.

SEASONALITY

The Company  believes  that its  operations  are not  significantly  effected by
seasonality.  NYFIX Millennium's revenues and the Company's transaction revenues
may be affected by the trading  volume  seasonality  inherent in the  underlying
markets.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
133  ("SFAS  133"),   "Accounting   for  Derivative   Instruments   and  Hedging
Activities." SFAS 133 is effective for all fiscal years beginning after June 15,
2000. SFAS 133, as amended,  establishes  accounting and reporting standards for
derivative  instruments,  including certain derivative  instruments  embedded in
other contracts and for hedging  activities.  Under SFAS 133, certain  contracts
that were not formerly  considered  derivatives may now meet the definition of a
derivative. The Company adopted SFAS 133 effective January 1, 2001. The adoption
of SFAS 133 did not have a significant impact on the financial position, results
of operations, or cash flows of the Company.

In  March  2000,  the  FASB  issued  FASB  Interpretation  No.  44  ("FIN  44"),
"Accounting for Certain  Transactions  Involving Stock Compensation." FIN 44, an
interpretation of Accounting Principles Bulletin 25 ("APB 25"),  "Accounting for
Stock Issued to Employees,"  provides  guidance on the application of APB 25 for
stock compensation  involving employees.  The adoption of FIN 44 did not have an
effect on the financial  position,  results of operations,  or cash flows of the
Company.

In June 2001, the FASB issued two new pronouncements: SFAS No. 141 ("SFAS 141"),
"Business  Combinations,"  and SFAS No. 142 ("SFAS  142"),  "Goodwill  and Other
Intangible Assets." SFAS 141 prohibits the use of the pooling-of-interest method
for business combinations initiated after June 30, 2001, and also applies to all
business  combinations  accounted for by the purchase  method that are completed
after June 30, 2001. There are also transition provisions that apply to business
combinations  completed  before  July 1, 2001,  that were  accounted  for by the
purchase method. SFAS 142 is effective for fiscal years beginning after December
15, 2001, to all goodwill and other  intangible  asets recognized in an entity's
balance  sheet at that date,  regardless  of when those  assets were  originally
recognized.  The Company is currently evaluating the impact of SFAS 141 and SFAS
142 on its consolidated financial statements.

                                       16





RISK FACTORS: FORWARD LOOKING STATEMENTS

This document contains certain forward-looking  statements within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the  safe  harbors   created   thereby.   Investors  are   cautioned   that  all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the  ability of the  Company to market and  develop  its  products.
Although   the   Company   believes   that  the   assumptions   underlying   the
forward-looking   statements  contained  herein  are  reasonable,   any  of  the
assumptions could be inaccurate,  and therefore,  there can be no assurance that
the  forward-looking  statements  included  in this  document  will  prove to be
accurate.   In  light  of  the   significant   uncertainties   inherent  in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and plans of the Company will be achieved.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk generally represents the risk of loss that may be expected to result
from the  potential  change in value of a  financial  instrument  as a result of
fluctuations in credit ratings of the issuer,  equity prices,  interest rates or
foreign  currency  exchange  rates.  The  Company  is  exposed  to  market  risk
principally  through  changes in interest  rates and foreign  currency  exchange
rates.  Interest  rate  exposure  is  principally  limited to the $20 million of
current  marketable  securities and $30 million of tax-free money funds invested
at June 30, 2001.  Risk is spread on the  marketable  securities due to the fact
that  payment  on them is fully  insured  and no more  than 5% of the  Company's
portfolio can be in any one security issue. The fair value of the Company's cash
and investment  portfolio at June 30, 2001,  approximated  carrying value due to
its short-term  duration.  The potential decrease in fair value resulting from a
hypothetical  10%  decrease  in  interest  rates for the  marketable  securities
contained in the investment  portfolio and the tax-free money funds would not be
material to earnings,  cash flows or fair value. The financial statements of the
Company's  London sales office are remeasured  into U.S.  dollars using the U.S.
dollar as the  functional  currency.  The market risk  associated  with  foreign
currency   exchange   rates  is  not  material  in  relation  to  the  Company's
consolidated  financial  position,  results of  operations  or cash  flows.  The
Company does not use derivative financial instruments for any purpose.

                                       17





PART II.   OTHER INFORMATION

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS.

During  March and April 2001,  the Company  issued  94,000  shares of its common
stock to each of Bank of America,  First Union  Securities,  J.P. Morgan and Co.
and J.P.  Morgan  H&Q  (formerly  Chase  H&Q) in  connection  with their
investments  in NYFIX  Millennium,  L.L.C.  The  consideration  received  by the
Company for such  issuances  was an option to buy from each of them 30% of their
respective  membership  interests in NYFIX Millennium.  If the Company exercises
such option,  it will issue an aggregate of an  additional  60,000 shares of its
common stock for the membership interests.

In connection with the issuance of its shares to the four investors, the Company
relied on the  exemption  from  registration  provided  by  Section  4(2) of the
Securities Act of 1933.

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

(a)         The 2000 annual meeting of shareholders was held on June 4, 2001.

(b)         Not applicable

(c)         Matters voted on at the meeting and the number of votes cast:

                  Proposal 1 - Election of Directors for a term of one year.

                          Name                     Shares For                   Withheld Vote
                          ----                     ----------                   -------------

                  Peter K. Hansen                  21,062,909                    1,591,951
                  George O. Deehan                 22,578,954                       75,906
                  William J. Lynch                 22,587,879                       66,981
                  Carl E. Warden                   22,583,944                       70,916

                  Proposal 2 - To adopt the Company's 2001 Stock Option Plan.

                  For                               9,990,445
                  Against                           3,162,002
                  Abstain                              28,446
                  Broker Non-Votes                  9,473,967

                  Proposal  3 - To ratify  the  appointment  of  Deloitte  &
Touche LLP as auditors of the Company for the year ending December 31, 2001.

                  For                              22,589,447
                  Against                              40,279
                  Abstain                              25,134

                                       18





ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

           (a)    EXHIBITS

                  10.1  2001 Stock Option Plan, filed herewith.

           (b)    REPORTS ON FORM 8-K

                  None

Omitted  from  this Part II are items  which  are  inapplicable  or to which the
answer is negative for the period presented.


--------------------------------------------------------------------------------




                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                   NYFIX, INC.
                                  (Registrant)



                                      By: /s/ Richard A. Castillo
                                          ---------------------------
                                          Richard A. Castillo
                                          Chief Financial Officer and Secretary
                                          (Principal Financial and Accounting
                                          Officer)


Dated: August 9, 2001

                                       19