10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 2002

                         Commission File Number 0-21324
                            ------------------------

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

              New York                                   06-1344888
(State of other jurisdiction of          (I.R.S. Employer identification number)
incorporation or organization)

                                333 Ludlow Street
                           Stamford, Connecticut 06902
                                 (203) 425-8000
                    (Address of principal executive offices)


           Securities Registered Pursuant to Section 12(g) of the Act:

                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001 per share            The NASDAQ Stock Market
      (Title of each class)          (Name of each exchange on which registered)

Indicate by check mark whether the registrant has (1) 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
                                      ---    ---

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 amendment to this
Form 10-K. [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes X    No
                                        ---     ---

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant was  approximately  $227 million as of June 28, 2002.  Solely for the
purpose of this  calculation,  shares  held by  directors  and  officers  of the
Registrant  have  been  excluded.   Such  exclusion   should  not  be  deemed  a
determination by the Registrant that such individuals are, in fact, "affiliates"
of the  Registrant.  The  amount  shown is based on the  closing  price of NYFIX
common stock as reported on the NASDAQ stock market.

Number of shares of NYFIX Common Stock, par value $.001, outstanding as of March
14, 2003: 31,133,155

                      DOCUMENTS INCORPORATED BY REFERENCE:

                   Portions of the NYFIX, Inc. Proxy Statement
             for the 2003 Annual Meeting of Stockholders - Part III
             ------------------------------------------------------





                                   NYFIX, Inc.
                           Annual Report on Form 10-K
                      For the Year Ended December 31, 2002
                                Table of Contents


Item             Description                                                Page
- ----             -----------                                                ----
                                     PART I

Item  1.   Business............................................................3
Item  2.   Properties.........................................................20
Item  3.   Legal Proceedings..................................................20
Item  4.   Submission of Matters to a Vote of Security Holders................21
           Executive Officers and Management of the Registrant................22


                                     PART II

Item  5.   Market for Registrant's Common Equity and Related
             Stockholder Matters .............................................24
Item  6.   Selected Financial Data............................................27
Item  7.   Management's Discussion and Analysis of Financial
             Condition and Results of Operations.................... .........28
Item  7a.  Quantitative and Qualitative Disclosures about Market Risk.........52
Item  8.   Financial Statements and Supplementary Data........................52
Item  9.   Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure .............................52



                                    PART III

Item 10.   Directors and Executive Officers of the Registrant.................53
Item 11.   Executive Compensation.............................................53
Item 12.   Security Ownership of Certain Beneficial Owners
             and Management and Related Stockholder Matters ..................53
Item 13.   Certain Relationships and Related Transactions.....................53
Item 14.   Controls and Procedures............................................53


                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules and Report on Form 8-K.....54
           Signatures.........................................................57
           Certifications Pursuant to Section 302 of the Sarbanes-Oxley
             Act of 2002 .....................................................58


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                                   NYFIX, INC.


        Certain  information  contained  or  incorporated  by  reference in this
filing with the  Securities  and  Exchange  Commission  on Form 10-K that is not
purely  historical  are  forward-looking  statements,  within the meaning of the
Private Securities Litigation Reform Act of 1995, that are based on management's
beliefs,  certain assumptions and current expectations.  These statements may be
identified  by  their  use of  forward-looking  terminology  such  as the  words
"expects,"  "projects,"  "anticipates,"  "intends" and other similar words. Such
forward-looking  statements  involve  risks and  uncertainties  that could cause
actual  results to differ  materially  from  those  projected.  These  risks and
uncertainties  include,  but are not limited to, general economic,  business and
market  conditions,   competitive  pricing  pressures,  timely  development  and
acceptance of new products,  ability to further penetrate the financial services
market with a full range of our  products and the highly  competitive  market in
which we operate.  Certain of these risks and  uncertainties  are discussed more
fully in Part II,  Management's  Discussion and Analysis of Financial  Condition
and Results of Operations,  Factors Affecting Operating Results and elsewhere in
this filing on Form 10-K. The  forward-looking  statements  contained herein are
made as of the date  hereof and we,  except as may be  required  by law,  do not
undertake any obligation to update any forward-looking statements,  whether as a
result of future events, new information or otherwise.

                                     PART I

ITEM 1. BUSINESS

General

        NYFIX,  Inc.,  a New  York  corporation  founded  in 1991,  through  our
subsidiaries   and   affiliates,    provides   electronic   trading   technology
infrastructure and execution services to the professional trading segment of the
brokerage  industry.  Our products and services automate  institutional  trading
workflows by streamlining data entry and seamlessly  integrate  electronic order
and execution handling.  We offer a complete electronic desktop order management
solution, stationary and wireless handheld exchange floor technology, and a high
volume  trade  execution   platform.   Our  products  deliver  straight  through
processing ("STP") for front, middle and back office trade information handling.
We deliver our  products  mainly as a service  bureau  offering  and maintain an
extensive  data center with a network of electronic  circuits that link industry
participants  together  and provide  access to the  domestic  and  international
equities and derivatives markets.

        Our   electronic   trading   systems,    industry-wide   trade   routing
connectivity,  STP and execution  services and systems  supported by our desktop
solutions,  stationary  and  wireless  exchange  floor  systems  and  electronic
automation systems provide a complete  electronic  solution to enter, manage and
route trade data and execute orders for brokerage firms and international  banks
trading in equities, futures and options.

        We operate a diverse electronic order routing and communication platform
(our "NYFIX  Network"),  based on the  Financial  Information  eXchange  ("FIX")
protocol. The FIX protocol is the messaging standard underlying language,  which
was developed to enable real-time  electronic  trading and  communications.  Our
NYFIX  Network is  connected  to  redundant  data  centers  enabling  electronic
communications  between our customers  throughout  the equities and  derivatives
markets as well as  offering  long-term  optical  disk  storage  and  compliance
retrieval of customer  transactions.  Through our NYFIX Network,  we provide the
technology and infrastructure  for trade  communication and global order routing
between buy-side and sell-side  institutions,  numerous exchange floors, as well
as other electronic  trade execution  venues,  such as electronic  communication
networks ("ECN") and alternative  trading systems ("ATS"). We sell an integrated
portfolio of modular desktop trading applications, exchange floor automation and
exchange access applications for trading in domestic and international equities,
and derivatives,  including futures and options. Many of our applications reside
on our  centralized  system in our data  center and are  accessible  through our
NYFIX Network.  By seamlessly  integrating  our proprietary  infrastructure  and

                                       3




                                     NYFIX, INC.


software applications, we provide our customers with a complete electronic order
management and execution solution.

        Through NYFIX Millennium,  L.L.C.  ("NYFIX  Millennium"),  our 80% owned
broker-dealer  subsidiary,  we have developed an ATS that functions similarly to
an ECN in that it matches buy and sell orders. NYFIX Millennium can match either
buy and sell orders or pass them through to the  exchange or execution  venue of
the trader's choice, in real-time,  which we believe is a unique feature and key
differential  from other ATSs and ECNs that rely on captive  order  liquidity or
orders  that need to  reside  in the  system  to be  matched.  NYFIX  Millennium
augments  traditional  auction  markets by combining  the  electronic  execution
technology  of an  ECN  with  the  liquidity  of  traditional  primary  markets.
Institutional traders benefit from the order invisibility and anonymity provided
by NYFIX Millennium,  which eliminates the negative price impact associated with
displaying  large  blocks  of  shares.  NYFIX  Millennium  ATS  went  into  full
production  on  September  5, 2001 and we continue to focus on  expanding  NYFIX
Millennium's user base and execution volumes.

          To date,  we have  principally  derived our revenue  from one to three
year term subscriptions,  product sales and services.  In addition to developing
our subscription revenue, we have developed  transaction-based  revenue.  Rather
than a monthly  per-terminal  fee,  transaction-based  revenue  is be derived by
charging  a per  share  fee for  trades  executed.  We are  well  positioned  to
distribute order routing terminals in certain domestic and international  market
segments  seeking  more  exchange  and  execution  access  and trade  processing
services in return for per share  transaction-based  fees. We believe there is a
substantial market for these types of transaction revenue streams.

        Headquartered in Stamford,  Connecticut,  we have additional  offices in
New York City, London, Chicago and San Francisco.

AVAILABLE INFORMATION

        We are  required  to file  certain  documents  with the  Securities  and
Exchange Commission (the "SEC"), as required under Sections 13(a), 13(c), 14, or
15(d) of the  Securities  Exchange Act of 1934, as amended.  The SEC maintains a
website at  http://www.sec.gov,  which contains  reports,  proxy and information
statements,  and other information  regarding us. You may also read and copy any
document we file with the SEC at its Public  Reference  Room,  450 Fifth Street,
N.W.,  Washington,  D.C. 20549. The SEC may be contacted at  1-800-SEC-0330  for
further information on the operation of the Public Reference Room.

        Our website can be found at http://www.nyfix.com.  Information contained
on our website is not a part of this document.  We make available free of charge
on our website our annual report on Form 10-K,  quarterly  reports on Form 10-Q,
current  reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to Section  13(a) or 15(d) of the  Exchange  Act as soon as  reasonably
practicable after we  electronically  file such material with, or furnish it to,
the SEC.

        We will provide you with a copy of these filings, including the exhibits
to such filings  which we have  specifically  incorporated  by reference in such
filings,  at no cost,  upon request to: NYFIX,  Inc.,  Stamford Harbor Park, 333
Ludlow Street, Stamford, CT 06902, Attention: Chief Financial Officer, telephone
(203) 425-8000.


ACQUISITIONS AND INVESTMENTS

NYFIX TRANSACTION SERVICES

                                       4




                                     NYFIX, INC.


        In December  2001,  we acquired an inactive  broker-dealer,  an Illinois
corporation,  for $34,000 and filed a membership  application  with the National
Association of Securities Dealers ("NASD") to operate as a broker-dealer through
the wholly-owned  subsidiary,  which we renamed NYFIX Transaction Services, Inc.
("NYFIX Transaction Services").  The application was approved by the NASD in May
2002 and NYFIX  Transaction  Services began generating  revenue on July 1, 2002.
NYFIX Transaction Services provides electronic execution services,  primarily to
domestic and international broker-dealers and specialized trading firms.

NYFIX MILLENNIUM

        NYFIX  Millennium,  a  broker-dealer,  developed  an  ATS,  which  is an
electronic  system that  matches  buyers and sellers in a  completely  anonymous
environment.  The system  aims to provide  high  quality  execution  for clients
through computerized matching technologies. NYFIX Millennium offers users access
to multiple  liquidity points through a single terminal,  complete anonymity and
invisibility,   intelligent   order  routing  and  the   opportunity  for  price
improvement and liquidity  enhancement.  NYFIX Millennium  provides an efficient
way for major  financial  institutions  and  traders  to obtain  the best  match
available for their transactions in the listed equities marketplace.

        In September  1999,  NYFIX  Millennium was formed as a Delaware  limited
liability company, by us and seven international  investment banks and brokerage
firms  consisting of:  Deutsche Bank US Financial  Markets,  ABN Amro Securities
(formerly  ING  Barings),  Lehman  Brothers,  Morgan  Stanley Dean Witter Equity
Investments Ltd.,  Alliance Capital Management  (formerly Sanford C. Bernstein &
Co.),  Societe  Generale  Investment  Corporation  (formerly  SG Cowen)  and UBS
Warburg (the "Initial  Partners").  Each of the Initial  Partners  invested $2.0
million in NYFIX  Millennium  in exchange for 25,000 units of NYFIX  Millennium,
collectively owning a 50% membership  interest in NYFIX Millennium.  We invested
$2.0 million and owned the remaining 50%. In addition, we purchased an option to
buy, from the Initial Partners,  an additional 30% membership  interest in NYFIX
Millennium  (the  "Option"),  for  which we paid  each of the  Initial  Partners
281,250  shares of our common  stock.  The Option  allowed  us to  increase  our
membership  interest  in  NYFIX  Millennium  up to 80% of the  total  membership
interest  through the exchange of one share of our common stock for each unit of
NYFIX Millennium purchased, subject to certain adjustments.

        In March 2001, NYFIX Millennium added four more partners,  consisting of
Bank of America,  Wachovia  Securities  (formerly  First Union  Securities)  and
LabMorgan  Corporation  (formerly  J.P.  Morgan & Co.  and Chase  H&Q) (the "New
Partners").  Pursuant to the terms of the NYFIX Millennium  Operating Agreement,
each New Partner  invested  $2.0  million in NYFIX  Millennium  in exchange  for
25,000 units of NYFIX Millennium.  We maintained our 50% membership  interest in
NYFIX  Millennium in exchange for reducing  certain of our rights to share in 4%
of 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 noted above,
with LabMorgan  Corporation (as the successor to two partners) receiving 188,000
shares.

        At December  31,  2001,  our  investment  in NYFIX  Millennium  of $27.5
million  consisted  of $25.5  million of our shares of common  stock  (1,968,750
shares in 1999 of our  common  stock at $8.89 per  share and  376,000  shares in
March and April  2001 of our common  stock at $21.28 per share) and our  capital
cash contribution of $2.0 million. We funded certain operating costs and capital
expenditures on behalf of NYFIX  Millennium.  Such advances of $5.2 million were
reflected as "due from  unconsolidated  affiliates" on our consolidated  balance
sheet at December  31,  2001.  In  addition,  we loaned to NYFIX  Millennium  an
aggregate of $11.0  million,  plus accrued  interest,  of which $5.0 million was
loaned in 2002.  The $6.0  million  loaned in 2001,  plus accrued  interest,  is
reflected  in  "notes   receivable  from   unconsolidated   affiliates"  on  our
consolidated balance sheet at December 31, 2001.

        On January 23, 2002,  we notified the Initial  Partners and New Partners
that we would exercise our Option,  effective  February 1, 2002. In exchange for


                                       5



                                  NYFIX, INC.


the  increased  membership  interest  in NYFIX  Millennium,  we paid the Initial
Partners and New  Partners an  aggregate  of 296,250  shares of our common stock
with a fair value of $4.5 million,  with each Initial Partner  receiving  33,750
shares of common stock and each New Partner  receiving  15,000  shares of common
stock. As a result,  we increased our ownership of NYFIX  Millennium to 80%. The
results  of  operations  of NYFIX  Millennium  have  been  included  in our 2002
consolidated  statement of operations  since the acquisition  date. All advances
and loans,  including  accrued  interest,  have been eliminated in consolidation
commencing on February 1, 2002.  The excess of the purchase  price over the fair
value of the net assets  acquired  was $27.8  million  and has been  recorded as
goodwill. Some of our key considerations for the acquisition of NYFIX Millennium
included  NYFIX  Millennium's  growth  in  revenue,  the  attractiveness  of the
synergies we anticipated with our  recently-acquired  NYFIX Transaction Services
broker-dealer,  and our  ability  to  exercise  significant  control  over NYFIX
Millennium's operations.

        Pursuant to our NYFIX Millennium  Operating  Agreement,  as amended, the
first $22.0 million in NYFIX  Millennium  operating  losses since  inception was
allocated to the Initial Partners and New Partners,  which equaled the extent of
their capital  contribution to NYFIX Millennium.  The minority interest in NYFIX
Millennium  disclosed in our accompanying  consolidated  statement of operations
for the year ended December 31, 2002 reflects the allocation of NYFIX Millennium
losses to the Initial Partners and New Partners  post-acquisition  to the extent
of their capital contribution, thereby reducing their minority interest to zero.
In addition, we recognized NYFIX Millennium operating losses of $6.0 million for
the year ended  December  31,  2002,  which were $4.0  million  greater than our
capital  contribution  of $2.0 million.  While we expect NYFIX  Millennium to be
profitable in the future, there can be no assurances of such profitability. As a
result, we have not allocated to the Initial Partners and New Partners their pro
rata share of NYFIX  Millennium  losses in excess of our  capital  contribution,
aggregating  $1.0  million,  at  December  31,  2002,  since  we  cannot  assure
recoverability  of the asset that such an allocation would create.  At such time
when NYFIX  Millennium  achieves  profitability,  24% of its profits,  net of us
recovering our over-allocated  losses, will be allocated to the Initial Partners
and New Partners.

JAVELIN TECHNOLOGIES, INC.

        On March 31, 2002, we acquired 100% of the outstanding  capital stock of
Javelin   Technologies,   Inc.,  a  Delaware  corporation   (together  with  its
subsidiaries,  "Javelin"). We financed the transaction with a combination of (i)
$10.0 million in net cash;  (ii)  2,784,896  shares of our common stock having a
fair value of $41.2 million; and (iii) 493,699 shares of our common stock having
a fair value of $3.5  million  reserved for  issuance  upon  exercise of Javelin
stock  options  assumed by us. The  excess of the  purchase  price over the fair
value of the net assets  acquired  was $42.3  million  and has been  recorded as
goodwill. Javelin is a provider of electronic trade communication technology and
the  FIX  protocol  technology.  The  FIX  protocol  is the  messaging  standard
underlying language,  which was developed to enable real-time electronic trading
and  communications.  In utilizing  the FIX protocol  technology,  companies can
eliminate  the  high  costs  and  associated   risks  of  developing  their  own
proprietary network links and implementing a non-standard protocol.  Javelin has
over 1,000 installations at more than 350 major buy and sell-side  institutions,
securities clearing houses,  hedge fund managers,  exchanges and ECNs worldwide,
including  over  50  clients  in  Europe  and  20  in  Asia.  Some  of  our  key
considerations for the acquisition of Javelin included:  increased  connectivity
to  the  buy-side   institutional   market,   consolidated   product   offering,
cross-selling of core products and transaction  services,  and a single point of
electronic  exchange access across all major domestic and  international  equity
and derivatives exchanges.

EUROLINK NETWORK, INC.

        On March 6, 2002, we acquired a convertible  preferred stock interest in
EuroLink Network, Inc. ("EuroLink"),  a Delaware corporation with its operations
based in Madrid,  Spain, for $4.0 million in cash.  EuroLink offers the European
securities  industry  direct  electronic  access to the U.S. equity markets from
Europe.  EuroLink offers our equity  terminals and market access services to the
European marketplace,  primarily on a transaction fee basis. The preferred stock


                                       6



                                  NYFIX, INC.


will automatically  convert into a 40% common stock interest upon the earlier of
two years from the date of the agreement or a change of control,  as defined, of
EuroLink.  We also have an option to  purchase  up to an  additional  40% common
stock interest in EuroLink,  from certain of its stockholders,  at a price to be
determined based upon a formula of EuroLink's earnings, as defined.

RENAISSANCE TRADING TECHNOLOGIES, LLC

        On October 2, 2002, we acquired an 18% interest in  Renaissance  Trading
Technologies,  LLC  ("Renaissance"),   a  Delaware  limited  liability  company.
Renaissance  was  formed  to   commercialize  a  NASDAQ  trading  platform  (the
"Platform"). We acquired our interest in return for 300,000 shares of our common
stock with a fair value of $1.1  million.  We have also loaned $1.5 million (the
"Note") to  Renaissance,  for which  Renaissance  issued a  convertible  secured
promissory note. The Note bears an interest rate of 5.5%, is due in October 2007
or earlier,  as set forth therein,  and is convertible into additional equity in
Renaissance,  at our option,  at certain times over the next five years. We also
have an option to purchase up to a  controlling  interest  in  Renaissance  at a
price to be determined based upon a formula,  as defined. In connection with our
investment  of  Renaissance,  we acquired,  for $1.0 million,  the  intellectual
property  rights and source code to the Platform,  which was developed  over the
last  several  years by a major bank and  brokerage  firm and  contributed  such
intellectual property rights and source code to Renaissance.

INDUSTRY OVERVIEW

AUTOMATION REMAINS A PRIORITY

        Historically,  financial institutions have relied on voice communication
and  paper-based  trading  and  settlement  practices,  and stock  markets  have
traditionally  operated physical trading floors, also relying primarily on paper
tickets in an open  outcry  model.  In this  model,  member  firm floor  brokers
deliver  orders to a  specialist,  an  intermediary  that  makes a market in the
stocks listed on the exchange.  In addition to  processing  inefficiencies,  the
presence of an  intermediary  results in pricing that does not always  represent
the true value of a security at any given point in time.

        A series of major trading scandals during the 1990s prompted  investment
firms,  brokerage  firms and  regulators  to accept  that the pace,  volume  and
volatility  in the  markets had  reached a level  where  real-time  computerized
electronic  tracking of trading activities was necessary.  The global securities
industry  quickly  began to  experience  a  significant  surge in the demand for
automated processes.  The development of integrated  networks,  order management
systems,  direct access technologies and fully electronic  marketplaces was at a
high point during the Internet boom of the late 1990s.

        Many firms and regulators in the securities trading industry  recognized
the necessity of  implementing  STP solutions,  which integrate and automate all
aspects of trading - front, middle and back office - reducing settlement cycles,
costly errors and processing costs.

        While this drive toward  automation  has led to marked  improvements  in
efficiency  throughout  the  industry,  a large  number  of  financial  entities
continue  to  rely  on  manual  processes  even  today.  Due to  the  efficiency
improvements  realized by firms who have implemented  electronic processes and a
series of  regulatory  mandates,  automation  remains a priority for  investment
banks,  brokerage  firms and exchanges  worldwide  despite the current  economic
downturn.  Although  spending  has been  significantly  reduced  across  several
segments  of the global  securities  industry,  these  institutions  realize the
importance of investing in infrastructure and automation technologies.


                                       7



                                  NYFIX, INC.


        Regulations  governing the recording and  transmission  of orders to and
from the New York Stock  Exchange  ("NYSE")  were adopted in 2001 ("Rule  123"),
requiring that all NYSE member firms adopt electronic order management  systems.
The  second  phase of Rule  123 will  require  that all  orders  need to be sent
electronically.  In addition,  there has been consideration  given to decreasing
the time between the trade and settlement of orders,  from the previous standard
of three days to one day (known as "T+1").

THE IMPORTANCE OF STANDARDS

        As a major step toward  industry  standardization  for electronic  order
routing,  the financial services industry began to adopt the FIX protocol as the
industry standard by the mid-1990s.  The FIX protocol is the messaging  standard
underlying language,  which was developed to enable real-time electronic trading
and  communications  and is now considered the globally accepted and predominant
standard for  electronic  order  routing.  In January 2003,  the Group of Thirty
("G30"),  a  Washington-based  think  tank  comprised  of leaders  from  central
banking,  private  finance  and  academia,  released  a  report  identifying  20
recommendations to increase  efficiency and  interoperability  within the global
securities  industry.   Among  these   recommendations  was  the  importance  of
developing and adopting standards,  including the FIX protocol,  to automate the
front, middle and back office.

ECN AND ATS EVOLUTION

        The advent of  high-speed  electronic  data  communication  networks and
computerized   trading  has   highlighted   the  potential  for  more  efficient
interaction  between  buyers and  sellers  in the  financial  markets.  The U.S.
equities  markets have seen the  introduction of new regulations  paving the way
for ECNs and ATSs to compete with traditional exchanges such as the NYSE and the
American  Stock   Exchange   ("Amex")  in  the  listed  market  and  the  NASDAQ
over-the-counter  ("OTC")  market.  These  ECNs and ATSs  seek to  provide  more
efficient trading mechanisms while bringing buyers and sellers directly together
without an intermediary.

        As almost every  traditional  exchange floor in Europe and Asia has been
replaced by electronic  systems,  much debate continues in the U.S.  relating to
the role of the specialist  and the efficiency of the NYSE, the world's  largest
exchange  floor in terms of its listed  companies'  market  capitalization.  The
debate  has  increased  with  the   introduction  of  decimal   trading.   While
decimalization   was  designed  and   implemented  to  make  price  quotes  more
understandable  for consumers,  an unexpected side effect of decimalization  has
been an increase in the trading  activity of the specialists  competing with the
buyers and sellers,  resulting in the reluctance of  institutional  investors to
expose block orders on the books of the specialists.

        A number of ECNs and ATSs  emerged  in the  marketplace  during the late
1990s.  The  challenge  for these new  trading  venues is to attract  sufficient
trading  liquidity,  also known as orderflow,  which is transaction volume being
entered  into  these  trading  venues.  While  ECNs have  apparently  captured a
significant portion of the NASDAQ OTC market-share in executed volume, they have
not been  effective  capturing  significant  executed daily volume in the listed
equity  market,  due  in  large  part  to a lack  of  access  to the  electronic
infrastructure carrying listed orderflow.

        Financial  institutions have become increasingly  focused on the overall
quality of  execution  and  transaction  cost of trades.  Sophisticated  trading
strategies,  particularly  those  involving  multiple  securities  or  types  of
financial  instruments,  are difficult to execute  without both direct and rapid
market access and a system that provides easy to use order entry, management and
execution.

BUSINESS CONTINUITY AND DISASTER RECOVERY PLANNING AND OUTSOURCING

        In addition to  automation  and STP,  business  continuity  and disaster
recovery  technologies  have become  crucial to an  institution's  technological


                                       8



                                  NYFIX, INC.


infrastructure.  Business  continuity  is a part of the STP movement and yet its
importance  has been  significantly  emphasized  within the  financial  services
community  following the tragedy of the September 11, 2001 terrorist  attacks in
New York. The concern for repeated  terrorism has fueled  investment in business
continuity solutions, but factors such as globalization, STP, process automation
and disruption of power or technology errors are also important.

        Data storage and recovery and wide-area network ("WAN") applications are
but some of the requirements  needed to implement proper business continuity and
disaster  recovery  operations.  While  institutions are seeking  solutions that
offer  direct  access,  speed  of  delivery,   quality  of  execution  and  full
integration  between  traditional  exchanges and modern ECNs and ATSs,  many are
realizing  that they cannot  continue  to  internally  develop or  maintain  the
systems  and  connectivity  infrastructures  needed to keep  pace  with  current
technological  developments and regulatory mandates.  As a result, a significant
number  of  these  firms  are  looking  to  outside  providers  to  solve  their
automation, efficiency, and business continuity challenges.

OUR SOLUTION AND STRATEGY

        Our goal is to become a leading  provider of real-time  electronic trade
entry,  routing  and  execution  solutions  to  the  global  financial  services
industry.  We  consistently  monitor the  industry to analyze and  determine  an
efficient  and  effective  schedule  for new  product  introductions,  marketing
efforts and organizational  growth initiatives in order to meet the needs of the
changing  markets.   The  following  points  outline  our  top-level  strategies
necessary  to  achieve  success  and bring  greater  efficiencies  to the global
marketplace:

     o    MAXIMIZE THE SYNERGIES OF OUR RECENT  ACQUISITIONS  AND INVESTMENTS TO
          INCREASE  CUSTOMERS IN OUR NYFIX  NETWORK.  With the  acquisitions  of
          NYFIX  Millennium,  NYFIX  Transaction  Services and Javelin,  and our
          investments  in  Renaissance  and  EuroLink,   we  have  significantly
          expanded  our  presence  beyond  our  traditional   customer  base  of
          sell-side  institutions  trading on the NYSE. To further  increase our
          subscription and  transaction-based  revenue model we are focusing our
          sales  and  marketing   efforts  on  connecting   not  only  sell-side
          broker-dealers,  but  also  buy-side  institutions  and  international
          exchanges to our NYFIX  Network.  With the  integration of sales teams
          from recent acquisitions we are maximizing  synergistic  opportunities
          to introduce relevant products to both new and existing customers.  We
          will  continue to address  the  evolving  requirements  of the trading
          community by hopefully introducing new complementary  solutions,  such
          as advanced analytical and risk management applications, OTC services,
          multi-currency facilities, stock allocation and clearing services. The
          enhancement  of our current  product line,  along with the addition of
          new products,  will help us increase our presence in the institutional
          marketplace and allow us to sell more profitable  products to existing
          customers.  We  plan  to  continue  to  develop  and  own  all  of the
          underlying  intellectual  property rights associated with our existing
          and future products.

     o    INCREASE TRANSACTION REVENUE STREAMS IN OUR ATS AND ELECTRONIC TRADING
          INFRASTRUCTURE  PRODUCTS.  As the  markets  become  increasingly  more
          automated,  providing customers with effective desktop order capturing
          and  electronic  access  technology is emerging as the most  important
          marketing parameter. The large quantity of orderflow processed through
          our  NYFIX  Network  has  uniquely   positioned  us  to  increase  our
          transaction-based  revenue.  In  addition  to  developing  transaction
          revenue  streams in NYFIX  Millennium by generating a critical mass of
          orderflow  from our  customers,  the  formation  of NYFIX  Transaction
          Services  enabled us to  introduce  a number of  offerings  to compete
          effectively  with and replace the role of certain  brokers in specific
          target segments. Specifically, we can effectively compete for business
          with little or no conflict with our existing client base in some areas
          of international, and to some degree domestic, correspondent brokerage
          business. In the correspondent


                                       9



                                   NYFIX, INC.


          brokerage  business,  one  brokerage  firm  generally  services a much
          smaller or specialized  brokerage firm and charges a transaction based
          per share fee for providing  access to exchange  executions.  EuroLink
          distributes   our  equity   products  and  services  to  the  European
          marketplace,  primarily focusing on increasing orderflow volume to and
          from the U.S.  This is a perfect  example of how our various  business
          groups complement one another.

     o    EXPAND THE UNIVERSE OF SECURITIES  TRADED  THROUGH OUR NYFIX  NETWORK.
          Our NYFIX  Network and NYFIX  Millennium  ATS can be used to trade and
          match  basically any financial  instrument,  from equities to futures,
          commodities  or  other  derivative  instruments.  We are  focusing  on
          increasing  the  usage  of NYFIX  Millennium  conditional  orders,  by
          aggressively  marketing  the  ATS to a  variety  of  firms,  including
          traditional    broker-dealers,    market   makers   and    statistical
          arbitrageurs.  Through the  interaction of the system's  various order
          types, such as conditional and  pass-through,  and continued growth of
          NYFIX Network share volume,  we believe that NYFIX  Millennium is able
          to  provide  superior  results  in  trade  execution  quality  for our
          customers.  With the addition of  Renaissance's  Platform,  we hope to
          significantly expand the universe of equities traded through our NYFIX
          Network  to  encompass  the OTC  markets.  We also plan to expand  our
          presence in futures and options  trading and grow our market  share in
          international  markets  through a  significant  increase in our direct
          connectivity to international  exchanges  trading in both equities and
          derivatives.

     o    CONTINUE TO PROTECT OUR CUSTOMERS' ROLES IN THE  DISTRIBUTION  MARKET.
          Many  market  observers   believe  that  equity  markets  will  become
          completely electronic,  thereby significantly altering the traditional
          role of  broker-dealers.  The fear of a  diminishing  role and loss of
          revenue has caused the  broker-dealer  community  to largely  withhold
          support  for any  market  modernization  system  that can be  accessed
          directly  by  buy-side  institutions  and  other  investors.  It is an
          important element of our strategy to introduce our business model in a
          manner that does not ultimately threaten our sell-side customers' role
          in the distribution channel. We believe this strategy provides us with
          a significant  advantage over our  competitors  whose  initiatives may
          ultimately eliminate the broker from the trading process.

OUR TECHNOLOGY

        Our  technology is designed to meet our  customers'  business  needs for
consistently  available,  expandable,  and  cost  efficient  infrastructure  and
software.  We apply what we believe to be industry best  practices in areas such
as  strategic  planning,  implementation  partnerships,   operating  procedures,
documentation  and  application  development  methodology.   Our  infrastructure
technologies  provide market participants with highly reliable  connectivity and
liquidity  pools,  while  our  software  applications  provide  an  easy  to use
integrated suite of desktop applications and exchange floor systems.

OUR NYFIX NETWORK

        Built in late 1997, our NYFIX Network provides our customers with global
connectivity for trade order routing through dedicated  circuits.  Access to our
NYFIX Network  private order  routing and financial  information  communications
infrastructure  is  offered  to  our  customers  on  both a  subscription  and a
transaction  basis and is  supported  by  large-scale  redundant  data  centers.
Through our NYFIX  Network,  we provide the technology  and  infrastructure  for
trade  communication  and global order  routing  between  buy-side and sell-side
institutions,  numerous  exchange  floors,  as well as  other  electronic  trade
execution  venues,  such  as ECNs  and  ATSs.  Consisting  of  more  than  1,500
high-speed  frame-relay  circuits,  fiber optics and synchronous optical network
("SONET")  infrastructure,  our NYFIX Network provides an efficient,  secure and
reliable  method  for  electronic  trade  communication.  Our NYFIX  Network  is
connected to redundant data centers to enable electronic  communications between


                                       10



                                   NYFIX, INC.


our customers throughout the equities and derivatives markets. Our NYFIX Network
and data  center  structure  also  offer  long-term  optical  disk  storage  and
retrieval  of  customer   transactions  for  compliance  purposes.  We  sell  an
integrated  portfolio of modular  desktop trading  applications,  exchange floor
automation  and  exchange  access  applications  for  trading  in  domestic  and
international equities, and derivatives,  including futures and options. Many of
our  applications  reside on our  centralized  system in our data center and are
accessible through our NYFIX Network. By seamlessly  integrating our proprietary
infrastructure  and  software  applications,  we provide  our  customers  with a
complete electronic order management and execution solution.

INFRASTRUCTURE TECHNOLOGIES

        Our  underlying  infrastructure   implementation  procedures  involve  a
modular,  or "building block,"  standard.  A building block standard consists of
the amount of storage,  processing and network  capacity  necessary to support a
set of customers. As we add customers to our NYFIX Network,  building blocks can
be easily inserted into our architecture to accommodate continued network growth
and which can  potentially  reduce our average cost per  customer.  Our building
block architecture relies upon advanced technology standards,  including storage
area network  architecture,  which is best suited for high-performance  database
access and  transaction  processing.  This  technology  is easily  scalable.  We
believe that we are a technology  leader in our industry in that we maintain two
data  centers,  either  of  which  can  support  all of our  current  production
requirements,  providing  fully active  redundancy  for our  customers.  We also
maintain our WAN, which we host for customer usage,  giving us an advantage when
troubleshooting  problems.  Our NYFIX Network and data center  infrastructure is
continuously  monitored  by an  automated  system that logs the  performance  of
communication lines, equipment and systems, ensuring continuous availability and
optimal  performance  for  our  customers.  To  achieve  the  highest  level  of
availability,  we rely on multiple telecommunication carriers for data transport
between core data centers and customers, including AT&T, Sprint, WorldCom, Qwest
and Verizon.  As our data volume is  significant,  we are able to diversify  our
telecommunication  needs across carriers,  decreasing our reliance on any single
telecommunication  service  provider  without losing the benefit of economies of
scale.

        Our data centers are located in two independent  data center  facilities
in  Carlstadt  and North  Bergen,  New Jersey  maintained  by  SunGard  Recovery
Services LP, formerly owned by Comdisco Holding, Inc. By co-locating  equipment,
we derive  operating  economies  while  obtaining the highest quality of service
available in a physical plant. Our data centers' around-the-clock facilities are
protected by state-of-the-art fire suppression and heating, ventilation, and air
conditioning  systems  and have  multiple,  uninterruptible  sources  of  power,
including  backup  generators  and fully  redundant  power  distribution  units.
Security   personnel,   procedures  and  video   surveillance   protect  against
unauthorized physical access to our equipment.

APPLICATION DEVELOPMENT

        We work closely  with our  customers  and  business  partners to develop
managed  software  services  that will  address  unfulfilled  market  needs.  We
establish a business  case for each  potential  new offering and major  software
update to ensure that any new initiative meets strategic, operational, technical
and economic criteria. We have implemented methodology tools and procedures that
have enhanced our ability to author quality products and applications.

        Our software is authored to take  advantage of the FIX protocol and runs
on various  operating  system  platforms,  including  UNIX,  Linux and Microsoft
Windows.  We  maintain  a  library  of  reusable  program  code  and use  naming
conventions,  which  facilitates  rapid  application  development and provides a
homogenous  and  familiar  look  and  feel to our  customers.  Our  standardized
approach greatly enhances the quality of our programs and products.  Our quality


                                       11



                                   NYFIX, INC.


control  department  has a  dedicated  laboratory,  which  simulates  our  NYFIX
Network.  All of our new  product  releases  are  tested  under  load and stress
conditions using automated tools for reliability,  interoperability and quality.
Our sales support,  customer  training and technical  engineering  group provide
ongoing  feedback  from our customer  base to our product  development  team and
quality control  department.  This allows us to continuously  refine and enhance
our products to better serve our customers' needs.

PRODUCTS AND SERVICES

        Our products and services  provide a variety of financial  service firms
with  end-to-end  solutions  for their  trading  technology  needs.  The trading
process  typically  involves three main functions - front office,  middle office
and back  office.  These terms  correspond  with a phase of the trade  execution
process.  Front office generally  refers to order entry,  routing and execution;
middle office  typically  refers to the process  whereby trades are allocated to
the proper accounts;  and back office refers to trade settlement and processing.
We specialize in  front office  solutions but have also developed  solutions for
the middle office and  interfaces to the most popular back office  systems.  Our
solutions  facilitate STP, reducing transaction costs and reducing the potential
for trading errors due to manual re-entry of order and execution information.

        We provide  trading  technology  and execution  services to a variety of
firm types in the financial industry.  For our clients, we offer connectivity to
our NYFIX Network,  which enables  buy-side firms to  electronically  connect to
their trading counter-parties, typically sell-side firms, who in turn connect to
various  execution  venues such as exchanges,  ECNs and ATSs.  Our NYFIX Network
offers   unparalleled   electronic   connectivity   to   hundreds   of   trading
counter-parties  for a fraction of the cost it would take for a firm to maintain
their own proprietary  network.  As part of our NYFIX Network, we provide secure
and reliable  electronic  connectivity,  certify all  connections to each firm's
trading counter-parties and provide  around-the-clock service and support. A key
component to our NYFIX Network is the maintenance of multiple data centers.  Our
NYFIX Network's  multiple data center  configuration  ensures all client data is
replicated at both data centers in real-time,  providing  security and integrity
of client data in the case of a disaster.  We also offer customers an archive of
their   past   trading   data,   which   can  be   accessed   through  a  secure
Internet browser.  This greatly  simplifies our customers'  compliance  with SEC
trade data storage and retention  requirements  and makes  retrieving  past data
extremely easy and convenient.

BUY-SIDE SOLUTION SET

        For buy-side  institutions,  including investment  managers,  mutual and
pension fund managers and hedge funds, we offer a suite of services for seamless
trading.  We offer an  integrated  market  data,  order  management  and routing
application,  which  enables  customers  to monitor  markets and enter and route
orders with a few mouse clicks. In addition to our subscription-based  offering,
our  transaction-based   offering  enables  customers  to  gain  technology  and
execution  services for a single fee per executed  share.  Our Javelin  products
offer a variety of technology  solutions for a firm's connectivity needs. Appia,
Javelin's  flagship  product,  is a high performance,  multi-protocol  messaging
engine to enable electronic  connectivity  between firms.  Javelin also offers a
simplified product, Instant Integrator, for firms with less software development
expertise.

SELL-SIDE SOLUTION SET

        NYFIX USA,  LLC  ("NYFIX  USA"),  our core  business  has  traditionally
focused on supplying technology solutions to sell-side, or brokerage, firms. For
the  brokerage  community,  we offer a wide  range of  services,  all  available
through our NYFIX  Network.  Our NYFIX  Network  provides  brokerage  firms with
connectivity to their buy-side clients as well as to various exchanges, ECNs and
ATSs.  Our NYFIX Network also  provides  connectivity  to an extensive  array of
independent  brokers  operating  on the  trading  floor  of the  NYSE,  commonly


                                       12



referred to as "$2 brokers." We offer a variety of trading workstation  products
for the  institutional  trading  desk and a series  of order  management  system
options are available,  enabling us to meet each customer's individual needs. We
also offer order  management  systems for exchange floor trading,  which enables
our exchange  clients to receive  orders  electronically  from trading desks and
route execution information,  all in real-time. Our NYFIX Overseas, Inc. ("NYFIX
Overseas")  business  offers order booking  management  systems  ("OBMS") to the
derivatives market.

        In 2002, we introduced a completely  redesigned wireless handheld system
for exchange  floor brokers.  We also offer a number of auxiliary  services with
our order  management  system  ("OMS")  products.  These  include  interfaces to
various back office systems,  data storage and retrieval,  electronic submission
of trade data to NYSE systems and other services to facilitate STP.

TRADE EXECUTION SERVICES

        We also offer brokerage firms various options for trade  execution.  The
first of these  options  is our NYFIX  Millennium  ATS,  which is an  electronic
system that matches  buyers and sellers in a completely  anonymous  environment.
The  system  aims  to  provide  high  quality   execution  for  clients  through
computerized matching technologies.  NYFIX Millennium is designed to offer users
access  to  multiple  liquidity  points  through  a  single  terminal,  complete
anonymity and  invisibility,  intelligent  order routing and the opportunity for
price  improvement  and  liquidity  enhancement.  NYFIX  Millennium  provides an
efficient way for major  financial  institutions  and traders to obtain the best
match available for their transactions in the listed equities  marketplace.  Our
NYFIX Millennium ATS resides in our data centers, is integrated within our NYFIX
Network,  and offers matching of both pass-through and conditional  orders.  Our
NYFIX Transaction  Services  business  provides clients with electronic  trading
technology and execution services on a transaction-based fee schedule.

        In 2002, we established  NYFIX Partners,  Inc. ("NYFIX  Partners"),  our
wholly-owned subsidiary, which was granted its introducing broker-dealer license
from the National Futures Association. As a registered,  independent introducing
broker,  NYFIX  Partners  will enable  smaller  firms to utilize our  technology
without undertaking major infrastructure costs associated with implementation on
a global scale.  NYFIX  Partners'  customers will be able to route orderflow for
execution  on  global  futures  exchanges.   NYFIX  Partners  expects  to  begin
operations in 2003.

CUSTOMERS

        Our target customers include large institutional money management firms,
small to mid-sized institution and hedge funds,  institutional brokerage traders
and risk managers; NASDAQ principal and agency traders;  institutional brokerage
derivatives traders; exchange floor brokers and clerks; and independent brokers.
We serve a global customer base and seek to build long-term  relationships  with
industry-leading   clients,   serving   as  a   comprehensive   technology   and
infrastructure  provider to fulfill  their  electronic  trading needs through an
integrated set of products, services and solutions.

        Our revenue has  increased to $55.8  million in 2002, an increase of 35%
from $41.4  million in 2001. To date,  we have  principally  derived our revenue
from  subscriptions,  product sales and  services.  In 2002, we began to develop
transaction-based  revenue. Rather than a flat fee as for our subscription-based
and  service  contract  revenue,  transaction-based  revenue is derived by a per
share fee for trades executed through our systems. As previously  mentioned,  we
believe we are well positioned to distribute order routing  terminals in certain
domestic and  international  market  segments  seeking more direct  exchange and
execution  access  and  trade  processing  services  in  return  for  per  share
transaction  fees. We believe  there is a substantial  market for these types of
transaction revenue streams.

        For the year ended  December 31, 2002,  no customer  accounted  for more
than  10% of our  revenue.  For the  year  ended  December  31,  2001,  ABN Amro
Securities and Deutsche Bank AG accounted for 12% and 10%, respectively,  of our
revenue.  For the year ended  December 31, 2000, no customer  accounted for more
than 10% of our revenue.

 SALES AND MARKETING


                                       13



                                   NYFIX, INC.


        One of the  goals of our  sales and  marketing  activities  is to create
awareness and sustained interest in our technology and infrastructure. Our sales
teams have been integrated to synergize our combined product  offerings  brought
about by  acquisitions  and  investments  made in 2002.  We focus on  developing
customer  acceptance  of our  product  lines  and  focus on  developing  general
upgrades rather than on individual  client  customization.  Our sales teams work
closely  with our  product  development  team and  several of our  products  and
enhancements have been developed based on user-group consensus.

        Our sales cycle, for new clients, is generally one to six months,  while
sales of additional  products and services to existing clients is typically less
time.  For our  technology  customers,  we  generally  provide our  products and
services on one to three-year subscription and service agreements with automatic
annual  renewals at the end of the initial term.  For our  transaction  services
customers, we generally provide one to two-year agreements.

        We maintain an in-house  marketing  department  covering  all aspects of
exhibition,  collateral  marketing  materials planning and production.  We focus
primarily on direct  marketing  efforts  designed to reach our target segment of
customers   rather  than  mass   marketing,   which  we  believe  results  in  a
significantly more effective return on our marketing  investment.  In connection
with the broadening of industry  awareness of NYFIX  Millennium,  we may support
certain  mass  marketing  initiatives  to promote  the  benefits of the ATS to a
greater audience.

COMPETITION

        The  electronic  order  management  and  delivery   industry  is  highly
competitive and constantly evolving through technological and regulatory change.
Our  competition  varies  widely  and  we  encounter  different   categories  of
competitors  for  each of our  product  and  service  offerings.  We  also  face
competition   from  potential   customers  who  choose  to  maintain  their  own
infrastructure  and develop  their own  in-house  proprietary  order  management
software systems.

        Competition  within  our  industry  is based on a  variety  of  factors,
including  product  features,  product  functionality  and performance,  product
quality and  reliability,  price,  and technical  support and customer  service.
Based on our experience, we believe that we compete effectively in each of these
categories.  We also believe that our presence throughout the STP chain provides
us with an added competitive advantage.

        We face competition in the following five areas:

     o    NETWORK  SERVICES.  Transaction  Network  Services and Global Crossing
          Ltd. (who is under Chapter 11 and has undergone a  restructuring)  are
          large  fiber optic  networks  capable of  carrying  multiple  types of
          financial   information.   Both  of  these  companies   provide  basic
          connectivity  offerings  for order  routing,  however,  we believe our
          NYFIX Network provides value-added connectivity,  through our embedded
          FIX protocol communication and sophisticated links to global execution
          providers and venues.

     o    EXCHANGE  FLOOR  TECHNOLOGY.  We  are a  provider  of  exchange  floor
          automation  technology,  including  stationary  and  wireless  trading
          technologies.  While we offer access to numerous  exchanges  globally,
          our most  significant  presence is in the U.S.  listed equity  market.
          Member firms operate  approximately  1,500 booths on the NYSE. Most of
          these firms are in the process of automating  their floor  operations.
          With more than 500  stationary  systems and over 250 handheld  devices
          deployed on the NYSE exchange floor,  our systems have  contributed to
          the  automation  efforts  for  many  member  firms.  The  NYSE  offers
          competitive  floor  technology  to  member  firms  and there are other
          smaller competitors in this area, including Tradeware.


                                       14



                                   NYFIX, INC.


     o    DESKTOP PRODUCTS. We face competition from vendors who produce desktop
          solutions  for traders who are not on the  exchange  floor,  including
          several  vendors in listed  equities  such as Brass (a  subsidiary  of
          SunGard,  Inc.),  RoyalBlue  Group and  Bloomberg.  These  competitors
          either have or are building data centers for a service bureau offering
          and have the ability to pass listed orderflow through their systems to
          the exchange  floors,  including  the NYSE. We believe that we compete
          effectively  with these  vendors  by  offering  easy-to-use,  seamless
          integration with our exchange floor products and extensive  electronic
          market connectivity.

     o    FIX ENGINES. We face competition from vendors who produce FIX protocol
          engine  solutions  such  as  Financial  Fusion,  Cameron  Systems  and
          Transact  Tools.  We believe  that we compete  effectively  with these
          vendors by  providing  FIX  solutions  to the world's  leading buy and
          sell-side   institutions,   clearing  houses,   hedge  fund  managers,
          exchanges and ECNs.

     o    TRADE EXECUTION  SERVICES.  NYFIX  Millennium  faces  competition from
          traditional  stock  exchanges,  the  largest of which is the NYSE.  In
          addition,  NYFIX Millennium faces competition from other ATSs and ECNs
          offering a variety of execution  services.  Some of these  competitors
          include   Instinet/Island,   ITG  Posit,   Archipelago  and  Bloomberg
          TradeBook.  NYFIX  Transaction  Services also faces competition from a
          variety of correspondent and electronic brokerage firms.

INTELLECTUAL PROPERTY AND OTHER PROPERTY RIGHTS

        Our success and ability to compete are dependent to a significant degree
on our intellectual property,  which includes our proprietary technology,  trade
secrets and client  base.  However,  no one patent,  trademark  or other form of
intellectual property is critical to our business.

        The trademark NYFIX is the primary  trademark used to identify our goods
and services.  We are the registered exclusive owner of the trademark as well as
additional  product  brand  trademarks  globally.  Each  trademark  is valid and
protected  in  perpetuity  provided  it is being  used and  renewed  during  the
appropriate renewal period designated by the trademark laws of the country where
registered.  There  are no known  third  party  objections  to NYFIX  trademarks
globally.

        We do not license any core  technologies.  The core  technologies of our
business are proprietary  software  applications  built around the FIX messaging
specifications,  which is  protected  by  copyright,  patent,  trade  secret and
contract  law. The FIX  protocol  technology  is available  for use by any party
indefinitely  if used  properly.  The  source  and  object  code  for  our  core
proprietary  software  applications are protected using various applicable modes
of intellectual  property protection,  including two pending patent applications
and one issued patent.  The issued patent is valid through the year 2014 and the
applications,  once  issued,  through  2022.  There  are no  known  third  party
infringement claims against our software applications.

        In   addition,   it  is  our  policy  to  enter  into   confidentiality,
intellectual  property  ownership  and/or  non-competition  agreements  with our
customers,  associates,  independent  contractors and business partners,  and to
control access to and distribution of our intellectual property.

GOVERNMENT REGULATION

        The U.S.  securities  industry is subject to extensive  regulation under
both  Federal  and  state  laws.   In  addition,   the  SEC,  the  NASD,   other
self-regulatory organizations, commonly known as SROs, such as the various stock
exchanges,  and other regulatory bodies,  such as state securities  commissions,
require strict compliance with their rules and regulations. We have subsidiaries
that are registered  with the SEC as  broker-dealers.  Much of the regulation of
broker-dealers has been delegated by the SEC to SROs,  including the NASD, which


                                       15



                                   NYFIX, INC.


has been designated by the SEC as our principal regulator. The NASD adopts rules
(subject to approval by the SEC) that regulate the broker-dealer industry. These
rules  regulate the conduct of our U.S.  broker-dealer  subsidiaries.  The NASD,
through its regulatory subsidiary, NASDR, also conducts periodic examinations of
the  operations  of  those  subsidiaries.   Our  U.S.  broker-dealers  also  are
registered as broker-dealers in a number of states and are subject to regulation
by state securities administrators in states in which they conduct business.

        In  addition,  our U.S.  broker-dealer  subsidiaries  are members of the
Securities  Investor  Protection  Corporation  ("SIPC").  SIPC provides  certain
protection  for  customers'  accounts  in  the  event  of the  liquidation  of a
broker-dealer.  SIPC is funded through assessments on registered broker-dealers.
The costs  associated with compliance,  i.e.,  fees,  implementing and following
compliance  procedures,  filing  reports,  etc.  are  minimal  and do not have a
material effect on our profitability.

        As a matter  of  public  policy,  regulatory  bodies  are  charged  with
safeguarding  the integrity of the  securities and other  financial  markets and
with protecting the interests of investors  participating in those markets,  not
protecting  creditors or stockholders of broker-dealers.  Companies that operate
in the securities industry are subject to regulation  concerning many aspects of
their business,  including trade practices,  capital structure, record retention
and the  conduct  of  directors,  officers  and  employees.  We face the risk of
significant   intervention  by  regulatory   authorities,   including  extensive
examination and surveillance activity. Failure to comply with any of these laws,
rules  or   regulations   could  result  in  censure,   fine,  the  issuance  of
cease-and-desist  orders or the suspension or disqualification of our directors,
officers  or  employees.  Neither  we  nor  any of our  directors,  officers  or
employees are currently subject to any cease-and-desist  orders,  suspensions or
disqualifications under the rules of any of these regulatory  organizations.  An
adverse ruling in the future against us or our directors, officers or employees,
including censure or suspension, could result in us, our directors, officers and
other  employees  being required to pay a substantial  fine or  settlement,  and
could result in their suspension or expulsion. Any such penalty could materially
affect our profitability.  If any of our employees are suspended or disqualified
it could harm our ability to successfully provide services to our clients.  This
could, in turn, have an adverse effect on our reputation in the industry,  which
could further harm our profitability.

        The regulatory environment in which we operate is subject to change. Our
profitability  may be  adversely  affected  if,  as a result  of new or  revised
legislation  or   regulations   imposed  by  the  SEC,  other  U.S.  or  foreign
governmental  regulatory  authorities  or the NASD,  we are forced to incur more
costs in order to comply.  We may also be  adversely  affected by changes in the
interpretation  or enforcement of existing laws and rules by these  governmental
authorities and the NASD.  Additional  regulation,  changes in existing laws and
rules, or changes in  interpretations  or enforcement of existing laws and rules
often directly  affect the method of operation and  profitability  of securities
firms. We cannot predict what effect any such changes might have.

        Starting in 1994, the SEC and the U.S.  Department of Justice  conducted
anti-trust  investigations  of the NASD,  addressing  concerns  of fraud,  price
fixing and collusion.  In December 1997, 30 major  brokerage  firms and the U.S.
Department of Justice entered into a settlement of these anti-trust proceedings.
In response to the  findings of these  investigations  and  consistent  with the
recommendations  in the SEC Market 2000 Report  issued in 1994,  the SEC adopted
the order handling  rules.  These rules cover how to display and execute a limit
order.

        In December 1998,  following the issuance of the order  handling  rules,
the SEC  promulgated  new rules relating to the regulation of certain ATSs, such
as  NYFIX  Millennium  (known  as  "Regulation   ATS").  The  SEC  expanded  its
interpretation of the definition of "exchange" under the U.S. securities laws to
encompass  a  range  of  electronic  brokerage  activities.  At the  same  time,
Regulation  ATS permits  systems to register as  broker-dealers,  rather than as
national securities  exchanges with the SEC, if they comply with the regulation.


                                       16



                                   NYFIX, INC.


We have modified and enhanced our trading  systems to comply with Regulation ATS
and continue to review and monitor our systems and procedures for compliance.

        The introduction of  decimalization in April 2001 has also had an impact
on  the  U.S.   securities   markets  and   increased   competition   for  ATSs.
Decimalization  may assist  investors in  obtaining  price  improvement  because
improvement in smaller increments is possible.  Because  decimalization  narrows
the average trading  spreads,  it has also had a significant  negative impact on
the profitability of traditional broker-dealers. Decimalization has also caused,
and  may  continue  to  cause,  traditional   broker-dealers  to  execute  their
customers'  orders  internally rather than route them to external market centers
for  execution,  because  the  additional  price risk they incur to fill  orders
internally   has   decreased.   Increased   internal   trading  by   traditional
broker-dealers has also reduced, and could continue to reduce, our orderflow.

        We provide our  customers  with access to U.S.  exchange-listed  stocks,
including  connectivity to the NYSE and its exchange specialists.  NYSE Rule 390
was  abolished in May 2000,  which had required that all NYSE members and member
firms  execute  transactions  in stocks  listed or traded on or before April 26,
1979, during market hours only on the floor of the NYSE,  subject to exceptions.
Rule 390 had prevented NYSE members from executing some  transactions with their
customers completely  in-house,  but it also prevented them from exposing orders
in other market centers.  As a result,  we are able to execute trades  involving
all NYSE-listed  stocks on behalf of all of our customers.  Because these stocks
accounted for  approximately  50% of the average  daily trading  volume in 2001,
abolition of Rule 390 may  eventually  lead to increased  competition in trading
NYSE-listed stocks that were previously subject to the rule.

        On January 30, 2001, SEC rules became effective that require many market
participants  to make detailed  public  disclosure in electronic form of certain
statistical measures of execution quality for orders in equity securities (known
as "Quality of Execution Data" rules). Market centers must disclose information,
categorized  by security,  size and type of order about the time frames in which
orders are executed and on the prices offered by  participants  relative to each
other and the  marketplace.  These  rules  also  require  securities  brokers to
provide  detailed  disclosure in electronic  form regarding  their order routing
practices.  In September 2001, the SEC issued an interpretation that provides an
exemption  from this order routing  disclosure as long as the average  number of
customer  non-directed  orders routed by the security broker during the calendar
quarter  is 500 or less.  We cannot  predict  what  impact  these  rules and the
consequent  disclosures  will have on the  number  and size of orders we receive
from customers.

        The  SEC  and  the  NASD,  as well  as  other  regulatory  agencies  and
securities  exchanges  within and outside the U.S.,  have  stringent  rules with
respect to the  maintenance  of  specific  levels of net  capital  by  regulated
broker-dealers.  These rules  include the SEC's net capital  rule,  to which our
U.S.  broker-dealer  subsidiaries  are  subject.  The  failure  by one of  these
subsidiaries  to maintain  its required  net capital may lead to  suspension  or
revocation of its registration by the SEC and its suspension or expulsion by the
NASD and other U.S. or  international  regulatory  bodies,  and ultimately could
require its  liquidation.  In addition,  a change in the net capital rules,  the
imposition of new rules or any unusually large charge against the net capital of
one of our broker-dealer  subsidiaries  could limit its operation,  particularly
those that are capital  intensive.  A large  charge to the net capital of one of
these subsidiaries could result from an error or other operational  failure or a
failure of a customer  to  complete  one or more  transactions,  including  as a
result of that customer's insolvency or other credit difficulties, and we cannot
assure you that we would be able to furnish  the  affected  subsidiary  with the
requisite  additional capital to offset that charge. The net capital rules could
also   restrict  our  ability  to  withdraw   capital  from  our   broker-dealer
subsidiaries, which could limit our ability to pay cash dividends, repay debt or
repurchase shares of our outstanding stock. A significant  operating loss or any
unusually large charge against net capital could adversely  affect our financial
condition, results of operations or cash flows.


                                       17



                                   NYFIX, INC.


        The SEC has also  indicated that it is reviewing  issues  concerning the
Intermarket  Trading  System  ("ITS").  The NYSE has  advocated  the redesign or
elimination  of the ITS,  which links market  centers  that trade listed  equity
securities,  allowing an order to trade a security that is listed on two or more
markets to be executed  in the market  displaying  the best price.  The NYSE has
also  suggested  that,  if the ITS is  maintained,  access  should be limited to
exchanges and  self-regulatory  organizations,  such as the NYSE. The NYSE could
also seek to withdraw from the ITS.  Changes in the ITS, such as restrictions on
our  access to the  system,  the  withdrawal  of the NYSE from the system or the
elimination of the system in its entirety, could adversely affect our ability to
attract business in NYSE-listed stocks.

        We are unable to predict the outcome of the  various  deliberations  and
discussions  on  the  evolution  of  the  U.S.  equities  market  structure  and
regulatory framework,  although these issues or other issues of market structure
may have a significant impact on our equities business.

        In December 2000,  Congress passed the Commodity  Futures  Modernization
Act,  which allows  single stock  futures to be traded on the exchanges and adds
guidelines  for the  SEC's  role in  regulating  some  equity  based  derivative
securities.  This act also streamlines the regulation of U.S. futures  exchanges
and limits the jurisdiction of the Commodities Future Trade Commission.

        Our business,  both directly and indirectly,  relies on the Internet and
other electronic  communications  gateways. We intend to expand our use of these
gateways.  To date,  the use of the  Internet  has  been  relatively  free  from
regulatory  restraints.  However,  the SEC,  SROs and  states are  beginning  to
address  regulatory  issues  that may  arise in  connection  with the use of the
Internet.  Accordingly,  new regulations or interpretations  may be adopted that
constrain our own and our customers'  abilities to transact business through the
Internet or other electronic communications gateways.

        NYSE Rule 123 governs the recording and transmission of orders to and on
the NYSE floor. This Rule was amended in 2001. Currently,  Rule 123 requires all
orders  received  on the  NYSE  floor  to be  input  into  an  electronic  order
management  system for better  monitoring  and  tracking of trades,  and it also
requires that all orders and order details must be capable of being  transmitted
to a designated NYSE data base within such time frame as the NYSE may prescribe.
Rule  123  requires  that  each  order  includes  the  symbol,  clearing  member
organization,  order  identifier,  identification  of member recording the order
details,  number of shares, side of market,  designation as market, limit, stop,
stop limit, any limit price or stock price,  time in force,  designation as held
or  not  held,  special   conditions,   time  of  recording  order  details  and
modification  of terms of order or  cancellation  of order. We believe that Rule
123 regulations  have had a positive  impact on our business  because we already
produce  systems  capable of meeting and exceeding the regulatory  requirements,
with many  additional  features  designed to reduce error and maximize  customer
efficiency.

        The financial  services  industry,  including the  securities  brokerage
business,  is also  heavily  regulated  outside of the U.S.  We are  required to
comply  with  regulatory   controls  of  each  specific  country  in  which  our
subsidiaries or we conduct business,  a well as the regulations of each exchange
of which our  subsidiaries  or we are  members.  As we expand our  international
operations, we may be required to comply with requirements that are inconsistent
with our existing  international  activities.  As a result,  the varying cost of
compliance with these different  regulatory  jurisdictions and other factors may
affect our business or limit our ability to expand our international operations.

        In many countries, the laws and regulations applicable to the securities
and  financial  services  industries  are  uncertain  and  evolving.   In  these
countries,  it may be difficult  for us to determine the exact  requirements  of
local laws and  regulations  in every  market,  particularly  because  legal and
regulatory developments generally trail technological advances. Our inability to
remain in compliance with regulatory  requirements in a particular  jurisdiction
could have a materially  adverse  effect on our operations in that market and on


                                       18



                                   NYFIX, INC.


our reputation generally.

        Any of the  non-U.S.  regulatory  agencies  may  conduct  administrative
proceedings  against us, which can result in censure,  fine,  the  prevention of
activities or our  suspension  or expulsion  from their country as an investment
services provider.  The applicable  regulations cover minimum financial resource
requirements  and  conduct  of  business  rules  for all  authorized  investment
businesses.

        The  costs  associated  with  new   regulations,   changes  in  existing
regulations  or  changes  in  the  interpretation  or  enforcement  of  existing
regulations outside the U.S. may adversely affect or limit our business
or  operations  and  adversely  affect our  financial  condition  and  operating
results.

PRODUCT DEVELOPMENT AND PRODUCTION

        We design,  develop and produce our  proprietary  software  and hardware
products at our  facilities  in  Stamford,  Connecticut,  New York,  Chicago and
London. We obtain our materials, supplies and services from a variety of vendors
in the U.S. and Asia. We did not experience any  significant  price increases in
component parts purchased during 2002.

        Our  manufactured  products are based on standard PC components  readily
available  in the  consumer  market  place.  All  electronic,  computer  related
components  utilized  within  our  product  are  not  manufacturer  or  supplier
specific.  We can substitute  components  from a diverse group of  manufacturers
with no assembly or delivery delays to our customers.

        Electronic  and computer  components  utilized  within our  manufactured
products  are  generally  purchased  from  Tier 2 and Tier 3  resellers.  Tier 2
suppliers are defined as manufacturer representatives for multiple product lines
and are generally  regional or national  distributors  for those products.  They
typically   maintain  an   engineering   or  technical   staff  for  design  and
specification  support. They primarily focus on resellers and manufacturers as a
customer  base.  Tier 3  suppliers  are  defined as  component  level  resellers
specializing in various product lines procured from multiple Tier 2 distribution
sources.  They generally do not maintain any engineering or technical staff, and
are geared primarily around consumer sales.

        Generally  we do not  maintain  any  type  of  purchasing  or  governing
agreement with said vendors.  In some cases when it is to our benefit to lock in
competitive pricing we would generate a blanket purchase order. The advantage of
this is that competitive  pricing and product  availability is locked in for the
term of the blanket  order.  Some of the Tier 2 resellers  that we use are: CDW,
Dell,  Arrow  Electronics  and  MicroWarehouse.  Each of these  resellers  stock
products from all the major computer  manufactures,  such as: IBM, Aaeon, Intel,
Sony, NEC,  Samsung,  Kingston,  ELO and AMD. Tier 3 resellers for the most part
are generally  smaller Internet  accessible  suppliers that deal in a variety of
electronic and computer  components.  These  suppliers are only used when Tier 2
suppliers  quote extended lead times or pricing not consistent  with the current
market on preferred products.

        Our  manufactured  products contain several custom parts specific to our
design.  These parts are limited to sheet metal  enclosures and internal wiring.
We own the  designs  for these  components  and can  source  them from  multiple
vendors in our  immediate  area or  throughout  the U.S.  Currently  we maintain
relationships  with a minimum of two  alternate  vendors  for  cabling and sheet
metal,  either of which can deliver  components within standard delivery cycles.
For both of these  components we use vendors such as CTC,  Advantage Sheet Metal
and Interface Technology.

        We rely on a number of third parties to supply software and systems,  as
well as equipment and related maintenance.  Our systems are built using a number
of  commonly  used  technologies.  As an example we use  systems  from EMC,  Sun
Microsystems, Oracle, Sybase, Veritas and Microsoft. Our products are subject to


                                       19



                                   NYFIX, INC.


potential defects in these third party  components.  Although we (as well as the
individual  vendors)  exercise  strict testing and  verification  of systems and
software, defects can cause disruptions of customer service. We have invested in
various  test  systems to make sure  supplier's  components  work as well as our
developed software.

        Since we depend on third parties to supply us with  underlying  software
and systems on a reliable,  timely basis,  we maintain  service and  maintenance
agreements  with all our main vendors.  We have standard  service  agreements at
different  levels  depending  on how  critical  the  vendor's  system  is to the
operation of our business.  For most systems we have a high level of redundancy,
which gives us less time  critical  dependency on a particular  vendor.  We have
service and maintenance agreements with our vendors. Because of the diversity in
vendors, there is no dependence on a single vendor.

BUSINESS SEGMENTS

        We operate in two reportable segments based on type of services offered:
Technology Services and Transaction  Services.  Financial information by segment
and geographic area is set forth in Note 16, "Business  Segment  Information" of
our Notes to Consolidated  Financial  Statements as noted in the Index appearing
under Item 15 (a) (1).

BACKLOG AND SEASONALITY

We believe  that  sales  backlog is not a  meaningful  indication  of our future
revenue as a substantial  portion of our revenue is derived from contracts,  for
which our  equipment  or  software  is already  installed  and we are  currently
recognizing  revenue.  Our  operations,  to date,  have  not been  significantly
affected by seasonality.

EMPLOYEES

        As of February 28, 2003 we had 230 full-time employees,  including 75 in
product development, 66 in operations and support, 52 in sales and marketing and
37 in general and administrative  functions. None of our employees is covered by
a collective  bargaining  agreement.  We believe that our relationships with our
employees  are good.  Throughout  our  operating  history,  we have  experienced
excellent retention of our technical employees. We believe that this has enabled
us to attract and develop  staff,  managers and project  leaders with  extensive
technical and brokerage industry experience.

ITEM 2. PROPERTIES

        Our  headquarters,  executive  offices and production  facilities are in
Stamford,  Connecticut,  consisting  of  20,900  square  feet of  leased  space,
expiring in 2005.  We  currently  maintain  three  offices on Wall Street in New
York, New York,  comprising 45,600 square feet, with 21,800 square feet expiring
in 2005 and 23,800  square feet expiring in 2010, of which 8,000 square feet are
sublet to an  affiliate.  We also have an office in  London,  England,  where we
lease 5,500 square feet expiring in 2009, of which 1,250 square feet are sublet.
In addition, we maintain sales offices in Chicago and San Francisco,  consisting
of 2,900 square feet expiring in 2005 and 4,200 square feet expiring in 2004, of
which 2,500  square feet are sublet,  respectively.  We also  maintain  two data
center  facilities in Carlstadt and North  Bergen,  New Jersey,  consisting of a
total of 850 square feet with leases expiring in 2005.  Although we may consider
consolidating  certain  offices in New York, we believe that the  facilities are
adequate for our current needs.

 ITEM 3. LEGAL PROCEEDINGS

        During  the course of normal  business,  we become  involved  in various
routine  legal  proceedings.  We  maintain  insurance  coverage  of types and in
amounts, which we believe to be adequate. We believe that we are not presently a
party to any  material  litigation  the  outcome of which  could  reasonably  be


                                       20



                                   NYFIX, INC.


expected to have a material adverse effect on our financial position, results of
operations or cash flows.

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

None.


                                       21



                                   NYFIX, INC.


SUPPLEMENTAL ITEM:      EXECUTIVE OFFICERS AND MANAGEMENT

        Information concerning our executive officers and management as of March
14, 2003 is set forth below:


Name                        Age     Position
- ----                        ---     --------
Peter Kilbinger Hansen      42      President, Chief Executive Officer and
                                      Chairman of the Board
Robert C. Gasser            38      Chief Executive Officer, NYFIX Millennium
                                       and President, NYFIX Transaction Services
Mark R. Hahn                45      Chief Financial Officer and Secretary
Lars Kragh                  42      Chief Information Officer
Paolo Aloe                  39      Senior Vice President, Software Development,
                                       NYFIX USA
John J. Coulter             36      President and Chief Operating Officer,
                                       Javelin
Keith R. Jamaitis           32      Chief Operating Officer, NYFIX USA
Jon Steward                 43      President, NYFIX Overseas

PETER  KILBINGER  HANSEN,  our  founder,  has  served  as our  President,  Chief
Executive  Officer and Chairman of the Board of Directors  since June 1991.  Mr.
Hansen also  serves as a member of the  Compensation  Committee  of the Board of
Directors.  Prior  to our  founding,  Mr.  Hansen  served  from  1988 to 1991 as
Director of Banking Systems of Business Line A/S, a Danish  company.  Mr. Hansen
holds a degree in Economics from Neil's Brock Business  School of Copenhagen and
an associated degree in economics from the Copenhagen University of Language and
Economics.

ROBERT C. GASSER has served as Chief Executive  Officer,  NYFIX Millennium,  our
80%-owned  broker-dealer  subsidiary,  since  October  2001.  Mr. Gasser is also
President  of NYFIX  Transaction  Services,  since  its  formation  and the NASD
approval in May 2002.  Prior to joining us,  from 1987 to 2001,  Mr.  Gasser was
Head of U.S. Equity Trading for JP Morgan, an investment bank. During his tenure
at JP Morgan,  Mr. Gasser served on various industry  committees,  including the
NASDAQ  Quality of Markets  Committee  and the NYSE  Upstairs  Traders  Advisory
Committee.  In addition,  he directed the firm's  investment in NYFIX Millennium
and Archipelago,  where he actively served on the Board of Managers.  Mr. Gasser
holds  a  Bachelor  of  Science  degree  in  Foreign   Service  from  Georgetown
University, School of Foreign Service.

MARK R.  HAHN  joined  us in  September  2002 as  Chief  Financial  Officer  and
Secretary.  Prior to that, from April 2002 through  September 2002, Mr. Hahn was
Vice President and Controller  for Modem Media,  Inc., an interactive  marketing
and  technology  company.  He joined that firm in January 2002 as a  consultant.
From 1998 to 2001, Mr. Hahn was with Metromedia Fiber Network Services,  Inc., a
technology infrastructure company, as Vice President Finance, Network Planning &
Analysis from  December 1999 through  November 2001 and before that as Corporate
Controller from April 1998. Prior to that, Mr. Hahn was with V Band Corporation,
a technology  infrastructure company as Vice President,  Chief Financial Officer
and Secretary from August 1995 to April 1998 and before that as Controller  from
November  1994.  Mr. Hahn began his career  with Price  Waterhouse  & Co.  (now,
PricewaterhouseCoopers LLP), as a certified public accountant.

LARS KRAGH has served as Chief  Information  Officer  since July 1999.  Prior to
that, Mr. Kragh was our Executive Vice President of Research and Development and
held other  technology  positions since our inception in 1991.  Prior to joining
us, Mr.  Kragh  developed  network  systems for the banking  industry  involving
numerous system integrations with global market data providers. Mr. Kragh earned
a Masters of Science degree in Electrical Engineering from the Danish University
of Technology.

PAOLO ALOE has served as our Senior Vice President, Software Development,  NYFIX
USA, our wholly-owned subsidiary, since December 2001. From May 2000 to December
2001, Mr. Aloe was with NYFIX Millennium, our affiliate. Most recently,


                                       22



                                   NYFIX, INC.


he was Vice President,  Software Development from August 2000. Prior to that, he
was Senior  Systems  Architect.  From  February  1999 to May 2000,  Mr. Aloe was
Senior  Technical  Consultant at Solomon Smith Barney,  an investment bank. From
April 1997 to February 1999,  Mr. Aloe was IT Architect at IBM Global  Services,
Inc. From February 1995 to April 1997, Mr. Aloe was Project Engineer for us when
we were known as Trinitech Systems,  Inc. Mr. Aloe holds a degree in Engineering
of Electronics from the University of Pisa, Italy.

JOHN J. COULTER has served as President and Chief  Operating  Officer,  Javelin,
our  wholly-owned  subsidiary,  since June 2001 and from  October 1999 as Senior
Vice President of Javelin's west coast operations.  From April 1998 to September
1999,  Mr.  Coulter was Global  Account  Manager for Reuters  America,  Inc., an
information and technology company. From May 1997 to April 1998, Mr. Coulter was
Vice  President  Sales for Vie Systems,  Inc., a middleware  provider.  Prior to
that, Mr. Coulter was co-founder of TRIAD in 1995 as part of Ease  Technologies,
Inc, a systems integration  company. Mr. Coulter holds a Bachelor of Arts degree
in Journalism from Fairfield University.

KEITH R.  JAMAITIS  has  served  as Chief  Operating  Officer,  NYFIX  USA,  our
wholly-owned subsidiary, since January 2002. Prior to that, Mr. Jamaitis was our
Senior Vice  President of Operations,  Vice President of Product  Management and
other  positions  since 1997.  Prior to that,  Mr.  Jamaitis  was a product line
manager  with  Executone  Information  Systems,  a  technology  company and held
various  positions in hardware and software  systems  development  and technical
management in the telecommunications industry. Mr. Jamaitis holds a Bachelors of
Science degree in Electrical Engineering from the University of Connecticut.

JON  STEWARD  has  served  as  President,   NYFIX  Overseas,   our  wholly-owned
subsidiary,  since June 1993.  Prior to that, he held various sales positions at
Cable & Wireless,  Telerate and ADP, all technology  companies.  Mr. Steward was
educated in London and went to Middlesex  University  where he studied  business
management.


                                       23



                                   NYFIX, INC.


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) MARKET INFORMATION

        Our common  stock is traded on the NASDAQ  Stock Market under the symbol
NYFX.  The  following  table  sets  forth the high and low sales  prices for the
common stock, for the periods presented, as reported by the NASDAQ stock market.


Prices of Common Stock                           High                 Low
                                            -----------            -----------

2002
First Quarter                               $     20.06            $      9.90
Second Quarter                              $     15.65            $      7.55
Third Quarter                               $      8.95            $      3.10
Fourth Quarter                              $      5.46            $      3.23

2001
First Quarter                               $     34.88            $     19.88
Second Quarter                              $     32.00            $     16.75
Third Quarter                               $     26.28            $     12.10
Fourth Quarter                              $     23.49            $     11.33


(B) HOLDERS

        At March 14, 2003 the records of our transfer agent indicated that there
were 417 holders of record of our common stock.


(C) DIVIDENDS

        Stockholders  of our common  stock are entitled to dividends if and when
declared by the Board of Directors out of funds legally  available.  We have not
paid or  declared  any  dividends  on any class of our  capital  stock since our
organization  and have no present  intention  of paying  cash  dividends  on our
common stock. We intend to utilize any income we may achieve for the development
of our business and for working capital purposes.


                                       24



                                  NYFIX, INC.


(D) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

        The  following   table   provides   information   regarding  our  equity
compensation plans at December 31, 2002:




                                   Number of securities                           Number of securities
                                     to be issued upon        Weighted-average    remaining available for
                                        exercise of           exercise price of   future issuance under equity
     Plan Category                 outstanding options     outstanding options    compensation plans
- -------------------------------    -------------------     --------------------   ----------------------------
Equity compensation plans
  approved by security holders           6,676,119               $10.64                   633,700

Equity compensation plans not
  approved by security holders (1)         348,680                 7.80                   119,650
                                   -------------------     --------------------   ----------------------------
Total                                    7,024,799               $10.50                   753,350
                                   ===================     ====================   ============================


(1)  As a result of our acquisition of Javelin on March 31, 2002, we assumed the
     outstanding  stock  options of Javelin  that were  granted  pursuant to the
     Javelin  1999 Stock  Option Plan (the  "Javelin  Plan").  The Javelin  Plan
     authorized grants of stock options of Javelin. At the acquisition date, the
     Javelin  options where  converted into our options at a conversion  rate of
     0.51 to one. The options  granted  under the Javelin Plan were fully vested
     at the time of our  acquisition of Javelin  pursuant to a change of control
     clause  within the Javelin  Plan.  A total of 511,167  shares of our common
     stock have been  reserved  for  issuance  upon  exercise  of such  options.
     Pursuant to the Javelin  Plan,  as amended,  we may grant stock options and
     stock   purchase   rights  to  our  employees,   officers,   directors  and
     consultants.  The maximum term of an incentive stock option grant under the
     Javelin Plan is limited to ten years. The exercise price of incentive stock
     options  granted  under the Javelin Plan must be at least equal to the fair
     market  value of our stock at the date of grant,  as  defined.  The Javelin
     Plan was  effective  on July 1,  1999 and  expires  on June  30,  2009.  At
     December 31, 2002,  stock options to purchase  348,680 shares of our common
     stock were outstanding under the Javelin Plan.

(E) RECENT SALES OF UNREGISTERED SECURITIES

        On October 2, 2002,  we  acquired  an 18%  interest  in  Renaissance  by
issuing  100,000  shares of our common stock to each of the three  principals of
Renaissance: Edward Brandman, Daniel Ryan and Ken DeGiglio, with a fair value of
$1.1 million.  Pursuant to the purchase agreement,  Messrs.  Brandman,  Ryan and
DeGiglio  agreed to  contribute  an  aggregate  of 150,000 of such shares of our
common  stock  to  Renaissance  for  distribution  to  the  other  employees  of
Renaissance. Renaissance was formed to commercialize the NASDAQ Platform.

        We have an option to  purchase  a minimum  of 20% to a maximum of 40% of
the  total  outstanding  membership  units  of  Renaissance  at a  price  to  be
determined  based upon a formula  between October 2004 and October 2006. We also
loaned $1.5 million to Renaissance,  for which Renaissance  issued a convertible
secured  promissory  note.  The note bears an interest  rate of 5.5%,  is due in
October  2007,  and is  convertible  into  6,400,000  units  (or  32%  of  total
outstanding  membership  units,  subject to  dilution)  of  Renaissance,  at our
option, anytime after October 2003.

        In connection with our investment in  Renaissance,  we acquired for $1.0
million, the intellectual property rights and source code to the Platform, which
was developed over the last several years by a major bank and brokerage firm and


                                       25



                                  NYFIX, INC.


contributed  such  intellectual  property  and source  code to  Renaissance.  In
addition,  we advanced to  Renaissance  $1.0 million to fund  certain  operating
costs and capital expenditures,  through December 31, 2002. In consideration for
the  intellectual  property rights  contributed and the advanced  funding of the
operating costs and capital expenditures,  we will share in 50% of Renaissance's
revenue for, at minimum, 3 years.

        In connection with the issuance of shares of our common stock to Messrs.
Brandman,  Ryan and  DeGiglio,  we relied  on the  exemption  from  registration
provided  by  Section  4(2) of the  Securities  Act of  1933.  Since  all of the
recipients  of our  shares  are  "accredited  investors"  as defined in Rule 501
promulgated  under the  Securities  Act, we believe that the  transaction  falls
within the safe harbor provided by Regulation D, thereunder.


                                       26



                                  NYFIX, INC.


ITEM 6. SELECTED FINANCIAL DATA


        The  following   table  presents  our  selected   financial   data.  The
information  set  forth  below  should  be  read  in  conjunction  with  Item 7,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" and our consolidated financial statements and notes thereto included
herein.


                                                 Year Ended December 31,
                                ------------------------------------------------------
                                   2002        2001       2000       1999       1998
                                -------     -------    --------   -------    ---------
Consolidated statement of
  operations data:
Revenue                         $ 55,812    $ 41,397   $ 23,980   $ 12,209   $  6,235
Gross profit                      29,102      27,237     15,078      5,271      3,265
Operating expense                 36,140      14,097      8,603      5,744      3,789
(Loss) income from operations     (7,038)     13,140      6,475      1,194     (2,226)
Net (loss) income                 (3,166)      8,136      5,677        960     (2,234)
Net (loss) income per
 common share:
    Basic                       $  (0.11)   $   0.30   $   0.23   $   0.04   $  (0.11)
    Diluted                     $  (0.11)   $   0.29   $   0.21   $   0.04   $  (0.11)


                                                     At December 31,
                                ------------------------------------------------------
                                   2002        2001       2000       1999       1998
                                --------    --------   --------   --------   --------
Consolidated balance sheet
   data:
Cash and cash equivalents       $ 11,213    $  4,968   $  4,867   $  1,566   $  3,948
Short-term investments            10,727      28,974       --          --         --
Working capital                   30,823      47,513      9,159      4,513      5,970
Property and equipment, net       18,186      14,366     11,472      5,873      2,854
Total assets                     160,817     108,572     57,558     38,828     12,998
Long-term debt, including          1,753       1,501      3,823      2,500      1,800
   current portion
Stockholders' equity             147,065      99,242     42,228     29,885      8,119


        Certain   reclassifications   have  been   made  in  the  prior   years'
consolidated financial statements to conform to the current year's presentation.
In connection  therewith,  we reclassified certain operating expenses during the
years ended December 31, 2001, 2000, 1999 and 1998, to cost of revenue.


                                       27




ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW


        NYFIX,  Inc.,  a New  York  corporation  founded  in 1991,  through  our
subsidiaries   and   affiliates,    provides   electronic   trading   technology
infrastructure and execution services to the professional trading segment of the
brokerage  industry.  Our products and services automate  institutional  trading
workflows by streamlining data entry and seamlessly  integrate  electronic order
and execution handling.  We offer a complete electronic desktop order management
solution, stationary and wireless handheld exchange floor technology, and a high
volume trade execution platform.  Our products deliver STP for front, middle and
back office trade  information  handling.  We deliver our  products  mainly as a
service bureau  offering and maintain an extensive data center with a network of
electronic circuits that link industry  participants together and provide access
to the domestic and international equities and derivatives markets.

         Headquartered in Stamford,  Connecticut,  we have additional offices in
New York City, London, Chicago and San Francisco.

        Our   electronic   trading   systems,    industry-wide   trade   routing
connectivity,  STP and execution  services and systems  supported by our desktop
solutions,  stationary  and  wireless  exchange  floor  systems  and  electronic
automation systems provide a complete  electronic  solution to enter, manage and
route trade data and execute orders for brokerage firms and international  banks
trading in equities, futures and options.

        We  operate  a  diverse   electronic  order  routing  and  communication
platform,  our NYFIX Network, based on the FIX protocol. The FIX protocol is the
messaging standard underlying language,  which was developed to enable real-time
electronic  trading  and  communications.  Our NYFIX  Network  is  connected  to
redundant data centers enabling electronic  communications between our customers
throughout the equities and  derivatives  markets as well as offering  long-term
optical disk storage and compliance retrieval of customer transactions.  Through
our NYFIX  Network,  we provide  the  technology  and  infrastructure  for trade
communication   and  global  order  routing   between   buy-side  and  sell-side
institutions,  numerous  exchange  floors,  as well as  other  electronic  trade
execution  venues,  such as ECNs and ATSs.  We sell an  integrated  portfolio of
modular desktop  trading  applications,  exchange floor  automation and exchange
access  applications  for trading in domestic and  international  equities,  and
derivatives,  including futures and options.  Many of our applications reside on
our centralized  system in our data center and are accessible  through our NYFIX
Network. By seamlessly  integrating our proprietary  infrastructure and software
applications,  we  provide  our  customers  with  a  complete  electronic  order
management and execution solution.

        Through NYFIX Millennium,  our 80% owned  broker-dealer  subsidiary,  we
have developed an ATS that functions  similarly to an ECN in that it matches buy
and sell orders.  NYFIX  Millennium can match either buy and sell orders or pass
them  through to the  exchange or execution  venue of the  trader's  choice,  in
real-time,  which we believe is a unique feature and key differential from other
ATSs and ECNs that rely on captive order liquidity.  NYFIX  Millennium  augments
traditional auction markets by combining the electronic  execution technology of
an ECN with the liquidity of traditional primary markets.  Institutional traders
benefit from the order  invisibility and anonymity provided by NYFIX Millennium,
which  eliminates the negative price impact  associated  with  displaying  large
blocks of shares.  NYFIX Millennium's ATS went into full production on September
5, 2001 and we continue to focus on expanding NYFIX  Millennium's  user base and
execution volumes.


                                       28



                                  NYFIX, INC.


ACQUISITIONS AND INVESTMENTS

NYFIX TRANSACTION SERVICES

        In December 2001, we acquired an inactive  broker-dealer for $34,000 and
filed a  membership  application  with the NASD to  operate  as a  broker-dealer
through  the  wholly  owned  subsidiary,  which  we  renamed  NYFIX  Transaction
Services. The application was approved by NASD in May 2002 and NYFIX Transaction
Services  started  generating  revenue  as of July 1,  2002.  NYFIX  Transaction
Services  provides  electronic  execution  services,  primarily  to domestic and
international broker-dealers and specialized trading firms.

NYFIX MILLENNIUM

        NYFIX  Millennium,  a  broker-dealer,  developed  an  ATS,  which  is an
electronic  system that  matches  buyers and sellers in a  completely  anonymous
environment.  The system  aims to provide  high  quality  execution  for clients
through computerized matching technologies. NYFIX Millennium offers users access
to multiple  liquidity points through a single terminal,  complete anonymity and
invisibility,   intelligent   order  routing  and  the   opportunity  for  price
improvement and liquidity  enhancement.  NYFIX Millennium  provides an efficient
way for major  financial  institutions  and  traders  to obtain  the best  match
available for their transactions in the listed equities marketplace.

        In September 1999,  NYFIX  Millennium was formed as a limited  liability
company,  by us and seven  international  investment  banks and brokerage firms,
consisting of Deutsche Bank, ABN Amro Securities (formerly ING Barings),  Lehman
Brothers,  Morgan Stanley Dean Witter Equity Investments Ltd.,  Alliance Capital
Management  (formerly Sanford C. Bernstein & Co.),  Societe Generale  Investment
Corporation  (formerly SG Cowen) and UBS Warburg (the "Initial Partners").  Each
of the Initial  Partners  invested $2.0 million in NYFIX  Millennium in exchange
for  25,000  units of NYFIX  Millennium,  collectively  owning a 50%  membership
interest in NYFIX  Millennium.  We invested $2.0 million and owned the remaining
50%. In addition,  we purchased an option to buy, from the Initial Partners,  an
additional 30% membership interest in NYFIX Millennium (the "Option"), for which
we paid each of the Initial  Partners  281,250  shares of our common stock.  The
Option allowed us to increase our membership  interest in NYFIX Millennium up to
80% of the total  membership  interest  through the exchange of one share of our
common  stock for each unit of NYFIX  Millennium  purchased,  subject to certain
adjustments.

        In March 2001, NYFIX Millennium added four more partners,  consisting of
Bank of America,  Wachovia  Securities  (formerly  First Union  Securities)  and
LabMorgan  Corporation  (formerly  J.P.  Morgan & Co.  and Chase  H&Q) (the "New
Partners").  Pursuant to the terms of the NYFIX Millennium  Operating Agreement,
each New Partner  invested  $2.0  million in NYFIX  Millennium  in exchange  for
25,000 units of NYFIX Millennium.  We maintained our 50% membership  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 noted above,
with LabMorgan  Corporation (as the successor to two partners) receiving 188,000
shares.

        At December  31,  2001,  our  investment  in NYFIX  Millennium  of $27.5
million  consisted  of $25.5  million of our shares of common  stock  (1,968,750
shares in 1999 of our  common  stock at $8.89 per  share and  376,000  shares in
March and April  2001 of our common  stock at $21.28 per share) and our  capital
cash contribution of $2.0 million. We funded certain operating costs and capital
expenditures on behalf of NYFIX  Millennium.  Such advances of $5.2 million were
reflected as "Due from  unconsolidated  affiliates" on our consolidated  balance
sheet at December  31,  2001.  In  addition,  we loaned to NYFIX  Millennium  an
aggregate of $11.0  million,  plus accrued  interest,  of which $5.0 million was
loaned in 2002.  The $6.0  million  loaned in 2001,  plus accrued  interest,  is
reflected  in  "notes   receivable  from   unconsolidated   affiliates"  on  our
consolidated balance sheet at December 31, 2001.


                                       29



                                  NYFIX, INC.


        On January 23, 2002,  we notified the Initial  Partners and New Partners
that we would exercise our Option,  effective  February 1, 2002. In exchange for
the  increased  membership  interest  in NYFIX  Millennium,  we paid the Initial
Partners and New  Partners an  aggregate  of 296,250  shares of our common stock
with a fair value of $4.5 million,  with each Initial Partner  receiving  33,750
shares of common stock and each New Partner  receiving  15,000  shares of common
stock. As a result,  we increased our ownership of NYFIX  Millennium to 80%. The
results  of  operations  of NYFIX  Millennium  have  been  included  in our 2002
consolidated  statement of operations  since the acquisition  date. All advances
and loans,  including  accrued  interest,  have been eliminated in consolidation
commencing on February 1, 2002.  The excess of the purchase  price over the fair
value of the net assets  acquired  was $27.8  million  and has been  recorded as
goodwill. Some of our key considerations for the acquisition of NYFIX Millennium
included  NYFIX  Millennium's  growth  in  revenue,  the  attractiveness  of the
synergies we anticipated with our  recently-acquired  NYFIX Transaction Services
broker-dealer,  and our  ability  to  exercise  significant  control  over NYFIX
Millennium's operations.

        Pursuant to our NYFIX Millennium  Operating  Agreement,  as amended, the
first $22.0 million in NYFIX  Millennium  operating  losses since  inception was
allocated to the Initial Partners and New Partners,  which equaled the extent of
their capital  contribution to NYFIX Millennium.  The minority interest in NYFIX
Millennium  disclosed in our accompanying  consolidated  statement of operations
for the year ended December 31, 2002 reflects the allocation of NYFIX Millennium
losses to the Initial  Partners and New Partners post  acquisition to the extent
of their capital contribution, thereby reducing their minority interest to zero.
In addition, we recognized NYFIX Millennium operating losses of $6.0 million for
the year ended  December  31,  2002,  which were $4.0  million  greater than our
capital  contribution  of $2.0 million.  While we expect NYFIX  Millennium to be
profitable in the future, there can be no assurances of such profitability. As a
result, we have not allocated to the Initial Partners and New Partners their pro
rata share of NYFIX  Millennium  losses in excess of our  capital  contribution,
aggregating  $1.0  million,  at  December  31,  2002,  since  we  cannot  assure
recoverability  of the asset that such an allocation would create.  At such time
when NYFIX  Millennium  achieves  profitability,  24% of its profits,  net of us
recovering our over-allocated  losses, will be allocated to the Initial Partners
and New Partners.

JAVELIN

        On March 31, 2002, we acquired 100% of the outstanding  capital stock of
Javelin.  We financed the transaction with a combination of (i) $10.0 million in
net cash; (ii) 2,784,896 shares of our common stock having a fair value of $41.2
million;  and (iii)  493,699  shares of our common  stock having a fair value of
$3.5 million  reserved  for  issuance  upon  exercise of Javelin  stock  options
assumed  by us.  The  excess of the  purchase  price over the fair value of net
assets acquired was $42.3 million and has been recorded as goodwill.  Javelin is
a  provider  of  electronic  trade  communication  technology  and FIX  protocol
technology.  The FIX protocol is the  messaging  standard  underlying  language,
which was developed to enable real-time  electronic trading and  communications.
In utilizing the FIX protocol technology, companies can eliminate the high costs
and  associated  risks of  developing  their own  proprietary  network links and
implementing a non-standard  protocol.  Javelin has over 1,000  installations at
more than 350 major buy and sell-side institutions,  securities clearing houses,
hedge fund managers, exchanges and ECNs worldwide,  including over 50 clients in
Europe and 20 in Asia.  Some of our key  considerations  for the  acquisition of
Javelin included:  increased  connectivity to the buy-side institutional market,
consolidated  product  offering,  cross-selling of core products and transaction
services,  and a single point of  electronic  exchange  access  across all major
domestic and international equity and derivatives exchanges.

EUROLINK


                                       30



                                  NYFIX, INC.


        On March 6, 2002, we acquired a convertible  preferred stock interest in
EuroLink with its operations  based in Madrid,  Spain, for $4.0 million in cash.
EuroLink offers the European securities industry direct electronic access to the
U.S. equity markets from Europe. EuroLink offers our equity terminals and market
access  services to the European  marketplace,  primarily on a  transaction  fee
basis.  The preferred stock will  automatically  convert into a 40% common stock
interest  upon the  earlier  of two years  from the date of the  agreement  or a
change of control, as defined,  of EuroLink.  We also have an option to purchase
up to an  additional  40% common stock  interest in EuroLink from certain of its
stockholders  at a price to be  determined  based upon a formula  of  EuroLink's
earnings, as defined.

RENAISSANCE

        On October 2, 2002,  we  acquired  an 18%  interest  in  Renaissance,  a
limited  liability  company.  Renaissance was formed to commercialize the NASDAQ
Platform.  We acquired our  interest in return for 300,000  shares of our common
stock with a fair value of $1.1  million.  We have also loaned  $1.5  million to
Renaissance, for which Renaissance issued a convertible secured promissory note.
The Note bears an interest rate of 5.5%,  is due in October 2007 or earlier,  as
set forth therein, and is convertible into additional equity in Renaissance,  at
our option, at certain times over the next five years. We also have an option to
purchase up to a controlling interest in Renaissance at a price to be determined
based  upon a  formula,  as  defined.  In  connection  with our  investment,  we
acquired,  for $1.0 million, the intellectual property rights and source code to
the Platform,  which was  developed  over the last several years by a major bank
and brokerage firm and contributed such intellectual  property rights and source
code to Renaissance.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

        Management's  Discussion and Analysis of Financial Condition and Results
of Operations discusses our consolidated  financial statements,  which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States of America.  These  principles  require us to make  estimates and
assumptions  which could  materially  affect the reported  amounts of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the  financial  statements  and the  reported  amounts of revenue and expense
during the reporting period. On an on-going basis, we evaluate our estimates and
assumptions,   including   those  related  to  accounts   receivable   reserves,
investments,   goodwill,   long-lived  assets,   revenue  recognition,   product
enhancement  costs,  income taxes and  contingencies.  We base our estimates and
assumptions  on  historical  experience  and on various  other  factors that are
believed to be reasonable under the circumstances, the results of which form the
basis for making assumptions about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

        We believe the following accounting policies, among others, are critical
to the understanding of our results of operations due to the assumptions we must
make in their  application.  Senior management has discussed the development and
selection  of  these  accounting  policies,  and  estimates,   and  the  related
disclosures  with  the  Audit  Committee  of  the  Board  of  Directors  ("Audit
Committee"). See Note 1 in the Notes to the Consolidated Financial Statements in
Item 15 of this  Annual  Report  on Form  10-K  for our  significant  accounting
policies.

REVENUE RECOGNITION

        Our revenue is comprised of  subscription,  sale,  service  contract and
transaction components.

        Subscription   revenue  contracts  are  generally  for  leasing  of  our
equipment  and use of our NYFIX  Network,  with an initial  term of one to three
years  with  automatic  renewal  periods  unless  we  receive  prior  notice  of


                                       31



                                  NYFIX, INC.


cancellation.  Under  the terms of the  subscription  contracts,  customers  are
typically  invoiced  a flat  periodic  charge  after  initial  installation  and
acceptance.  Revenue  related to these  contracts is recognized over the initial
term of the  contract  on a  straight-line  basis.  We also  include  within our
subscription revenue,  telecommunication and other charges,  which we provide to
the customer at cost plus a normal  profit.  Such revenue is  recognized  as the
services are provided. As we have no history of significant cancellations, we do
not record a reserve for cancellations.

        Sale  revenue,  which is  comprised  of software  and capital  equipment
sales,  is  recognized  when the  software and  equipment  have been shipped and
accepted  by the  customer  and when other  contractual  obligations,  including
installation if applicable,  have been satisfied and collection of the resulting
receivable is reasonably  assured.  As we have no history of  significant  sales
returns, we do not record a reserve for sales returns and allowances.

        Service contract  revenue,  which is comprised of maintenance  contracts
for  subscription  equipment and software and capital  equipment,  is recognized
over the  contract  period  on a  straight-line  basis.  Service  contracts  for
subscription equipment are generally co-terminus with the subscription contract.
Service  contracts  for  software and capital  equipment  are  generally  for an
initial  term of one to three years with  automatic  renewal  periods  unless we
receive prior notice of cancellation.

        Transaction  revenue  contracts  provide for  transaction  or  execution
services,  which are  comprised of a usage or  transaction-based  fee for trades
executed  through our  broker-dealer  operations.  Revenue on these contracts is
generally  invoiced  in  arrears  and  recognized  in the  period in which it is
earned.  We  periodically  enter  into  contracts,  which  include  subscription
equipment   and   telecommunication   charges  to  be   invoiced  at  a  minimum
transaction-based  fee.  We account  for these  contracts  as both  subscription
revenue,  for its minimal fee, and transaction revenue, for the amount earned in
excess of its minimal fee. We value the minimal fee as the fair value of similar
subscription equipment leased and telecommunication  charges provided to similar
customers.

        Certain   subscription  and  service  contract  agreements  provide  for
invoicing  in advance  of the  service  being  performed,  generally  quarterly.
Revenue on contracts  invoiced in advance is deferred and  recognized as revenue
over the period earned and is included in "deferred revenue" in our accompanying
consolidated  balance sheets.  Shipping,  handling and installation  charges, if
any,  are  generally  invoiced to a customer  and are  included in revenue  upon
completion of the installation.

        We  periodically   enter  into   arrangements   that  include   multiple
deliverables,  which  typically  consist  of the sale of  software  and  capital
equipment with additional services,  such as installation,  training and service
among others. Services provided subsequent to initial delivery and installations
are typically invoiced separately. We account for each element of an arrangement
with  multiple  deliverables  separately.   The  arrangement   consideration  is
allocated to each element  based on the  relative  fair values of each  element.
Vendor  specific  objective  evidence  for fair value of services  is  primarily
determined by reference to renewal pricing.


ACCOUNTS RECEIVABLE

        Accounts  receivable  are stated at net  realizable  value by  recording
allowances  for  those  accounts  receivable  amounts  that  we  believe  to  be
uncollectible.  The estimate of our allowance for doubtful  accounts is based on
collection  experience,  which  includes  analyzing  prior  accounts  receivable
written-off  and reviewing the aging of the accounts  receivable.  Our allowance
for doubtful  accounts  includes amounts for specific accounts that are believed
to be  uncollectible,  as well as amounts  that have been  computed  by applying
certain  percentages  based on  historical  loss  trends,  to  certain  accounts
receivable  aging  categories,  net of  accounts  receivable  for which  revenue
recognition has been deferred.

                                       32




                                  NYFIX, INC.


PROPERTY AND EQUIPMENT

        Property and equipment is stated at cost less accumulated  depreciation.
Included in equipment are certain costs related to the  development of our NYFIX
Network to support our subscription and service based businesses.


BUSINESS COMBINATIONS AND GOODWILL

        Business  combinations  are accounted  for under the purchase  method of
accounting and include the results of operations of the acquired businesses from
the dates of their respective acquisition.  Net assets of acquired companies are
recorded  at  their  fair  value  to us at the  date  of  acquisition.  Goodwill
represents acquisition costs in excess of the fair value of net assets acquired.
We adopted  Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  142,
GOODWILL AND OTHER INTANGIBLE  ASSETS effective  January 1, 2002, which requires
that goodwill and certain other  intangible  assets having  indefinite  lives no
longer be amortized to income, but instead be tested for impairment  annually as
well as on an interim basis if events or changes in circumstances  indicate that
goodwill might be impaired.  Effective  October 1, 2002, we performed the annual
test for impairment using the discounted cash flow valuation  method.  There was
no impairment to the value of our recorded goodwill.


CAPITALIZED PRODUCT ENHANCEMENT COSTS

        We capitalize certain costs of internally  developed software as product
enhancement costs.  Internally  capitalized costs consist of payroll and payroll
related costs,  purchased  materials and services and software to be used within
our products.  We defer those costs that significantly enhance the marketability
or  significantly  extend  the  life of our  products.  We are  required  to use
professional  judgment in determining whether product enhancement costs meet the
criteria for immediate  expense or  capitalization,  in accordance with SFAS No.
86,  ACCOUNTING  FOR THE  COSTS OF  COMPUTER  SOFTWARE  TO BE SOLD,  LEASED,  OR
OTHERWISE   MARKETED.   Product   enhancement  costs  are  amortized  using  the
straight-line method over three years.

LONG-LIVED ASSETS

        We review the carrying value of long-lived  assets,  including  property
and equipment,  intangible  assets,  investments and other long-term amounts due
from  unconsolidated  affiliates,  and capitalized product enhancement costs for
impairment  whenever events or  circumstances  indicate that the carrying amount
may not be fully  recoverable.  If such an event or  circumstances  occurs,  the
related  estimated  fair value of the assets  would be compared to the  carrying
amount,  and if needed, we would record an impairment to the extent by which the
carrying amount exceeds the fair value of the asset.  There was no impairment of
long-lived assets recorded for the years ended December 31, 2002, 2001 and 2000.

INCOME TAXES

        Income taxes are  accounted  for under the asset and  liability  method.
Under this method,  deferred tax assets and liabilities are recognized  based on
the  estimated  future tax  consequences  of  differences  between the financial
statement  carrying  amounts of assets and liabilities and their  respective tax
bases.  Deferred tax assets and liabilities are measured using presently enacted
tax rates in effect for the periods the temporary differences are expected to be
settled. A valuation allowance is established, as needed, to reduce net deferred


                                       33



                                  NYFIX, INC.


tax assets to realizable  value. A valuation  allowance has not been established
for our deferred tax assets,  as we believe it is more likely than not that they
will be realized.

CONTINGENCIES

        Contingencies  are recorded as  liabilities  when it is probable  that a
liability has been incurred and the amount of the loss is reasonably  estimable.
Disclosure is required when there is a reasonable  possibility that the ultimate
loss will exceed the recorded provision.  We use outside counsel to assist us in
various  matters  including   securities  and  SEC  regulations,   acquisitions,
trademark, patent and personnel matters. We rely on the professional judgment of
outside   counsel  as  well  as  our  own  assessment  in  determining   whether
contingencies should be recorded.

OVERVIEW OF FINANCIAL RESULTS

        The following table shows our revenue, gross profit and gross profit, as
a percentage of revenue, by reportable segment for the periods indicated:


                                                          Year Ended December 31,
                                                 -----------------------------------------
                                                    2002            2001            2000
                                                 --------         --------        --------
Revenue:                                                   (in thousands)
  Technology Services                            $ 48,853         $ 41,397        $ 23,980
  Transaction Services                              7,109               --              --
  Eliminations                                       (150)              --              --
                                                 --------         --------        --------
    Total revenue                                $ 55,812         $ 41,397        $ 23,980
                                                 ========         ========        ========

Gross profit:
  Technology Services                            $ 28,608         $ 27,237        $ 15,078
  Transaction Services                                494               --              --
                                                 --------         --------        --------
    Total gross profit                           $ 29,102         $ 27,237        $ 15,078
                                                 ========         ========        ========

Gross profit, as a percentage of revenue:
  Technology Services                                59 %             66 %            63 %
  Transaction Services                                7 %               --              --
                                                 --------         --------        --------
    Total                                            52 %             66 %            63 %
                                                 ========         ========        ========

The  following  table  shows our  revenue,  cost of  revenue,  gross  profit and
operating expense expressed as percentages of revenue for the periods indicated:


                                       34



                                  NYFIX, INC.


                                                    Year Ended December 31,
                                             ----------------------------------
                                               2002         2001           2000
                                             ------        ------        ------

Revenue:
  Subscription                                56.8%         70.0%         66.5%
  Sale                                        15.3%         19.6%         21.2%
  Service contract                            15.2%         10.4%         12.3%
  Transaction                                 12.7%           --            --
                                             ------        ------        ------
     Total revenue                           100.0%        100.0%        100.0%
                                             ------        ------        ------

Cost of Revenue:
  Subscription                                50.8%         41.5%         47.4%
  Sale                                        24.3%         11.0%         13.2%
  Service contract                            22.6%         28.7%         23.0%
  Transaction                                 93.1%           --            --
     Total cost of revenue                    47.9%         34.2%         37.1%

Gross Profit:
  Subscription                                49.2%         58.5%         52.6%
  Sale                                        75.7%         89.0%         86.8%
  Service contract                            77.4%         71.3%         77.0%
  Transaction                                  6.9%           --            --
     Total gross profit                       52.1%         65.8%         62.9%

Operating Expense:
  Selling, general and administrative         53.5%         29.6%         31.6%
  Research and development                     2.5%          1.1%          1.9%
  Depreciation and amortization                8.7%          3.4%          2.4%
                                             ------        ------        ------
     Total operating expense                  64.7%         34.1%         35.9%
                                             ------        ------        ------

        Our revenue is comprised of  subscription,  sale,  service  contract and
transaction  components.  Subscription  fees  currently  represent a majority of
total  revenue.  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  automatic  renewal
periods, unless we receive prior notice of cancellation. Subscription revenue is
recognized  on  a  straight-line  basis  over  the  lives  of  the  subscription
agreements  and  begins  once  installation  is  complete  and  accepted  by the
customer.  Sale  revenue,  which is comprised of software and capital  equipment
sales, is generated primarily by sales to customers in the futures,  options and
currencies  trading  market,  and is recognized upon shipment of the product and
acceptance by the customer. Service contract revenue is comprised of maintenance
contracts for software and capital  equipment sales and  subscription  equipment
and is recognized  over the contract period on a  straight-line  basis.  Service
contract revenue is typically  charged to customers as a fixed percentage of the
original sale contract.  Transaction  revenue consists of per-share fees charged
to customers who route orders through our order matching  system,  and per-share
fees charged to customers,  primarily domestic and international  broker-dealers
and  specialized  trading  firms,  to provide  execution and smart order routing
solutions.

        Cost of revenue  principally  consists of costs associated with our data
centers  where  we  maintain   equipment  and   infrastructure  to  support  our


                                       35



                                  NYFIX, INC.


operations,  amortization of capitalized product enhancement costs, depreciation
of subscription equipment and execution, clearing fees and market data feeds.

        Selling, general and administrative expense accounts for the majority of
our  operating  expense and consists of salaries and  benefits,  rent and office
expense,  provision for doubtful accounts and marketing expense. During the past
several years,  we have expanded our efforts to support an increasing  number of
services and to increase the number of exchanges,  sell-side  firms and buy-side
institutions connecting to our NYFIX Network.

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

        Depreciation  and  amortization  expense  consists of  depreciation  and
amortization of corporate equipment and software, and amortization of intangible
assets.

        Certain   reclassifications   have  been   made  in  the  prior   years'
consolidated financial statements to conform to the current year's presentation.
In connection  therewith,  we reclassified  certain operating expense to cost of
revenue, during the years ended December 31, 2001 and 2000.

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

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

REVENUE

        Total  revenue  increased  $14.4  million,  or 35%, to $55.8 million for
2002, from $41.4 million for 2001,  primarily due to revenue attributable to our
recently  acquired Javelin  business,  transaction  revenue  attributable to our
recently acquired  broker-dealer  subsidiaries,  and increased  subscription and
service contract  revenue from increased demand from our existing  customers and
the  addition of new  customers.  These  amounts were  slightly  offset by lower
revenue attributable to capital sales of software and hardware.

        Subscription  revenue  increased $2.7 million,  or 10%, to $31.7 million
for 2002,  from $29.0 million for 2001,  primarily due to  subscription  revenue
attributable to our recently acquired Javelin and NYFIX Millennium businesses of
$1.8 million,  increased demand from our existing customers and the net addition
of  new  customers,   of  $0.9  million.  As  a  percentage  of  total  revenue,
subscription  revenue  decreased to 56.8% in 2002 from 70.0% in 2001,  primarily
due to the addition of  transaction  revenue in 2002 and the increase of service
contract  revenue of $3.6 million for our recently  acquired  Javelin  products.
Without transaction revenue, subscription revenue would have been 65.1% of total
revenue.

        Sale revenue  increased  $0.4 million,  or 5%, to $8.5 million for 2002,
from $8.1  million for 2001.  Sale  revenue  increased  $2.8  million due to our
recently  acquired Javelin  business.  This amount was  significantly  offset by
lower sale revenue for our core products of $2.4 million, principally due to our
continued  effort to convert  customers to our  subscription-based  model.  As a
percentage  of total  revenue,  sales revenue  decreased to 15.3% in 2002,  from
19.6% in 2001,  partially  due to the  effect  of the  addition  of  transaction
revenue and the general  slower  growth of sale revenue  compared with our other
revenue components during 2002.

        Service contract revenue increased $4.2 million, or 96%, to $8.5 million
for 2002,  from $4.3 million in 2001.  The increase is primarily  due to service
contract revenue of our recently acquired Javelin business of $3.6 million,  and
an  increase in  subscription  contract  revenue  for our core  products of $0.6
million. As a percentage of total revenue, service contract revenue was 15.2% in


                                       36



                                  NYFIX, INC.


2002, as compared to 10.4% in 2001, primarily due to the aforementioned  service
contract revenue for our recently acquired Javelin  business,  offset in part by
the effect of the addition of transaction revenue during 2002.

        Transaction  revenue  amounted to $7.1 million for 2002, and represented
12.7% of total revenue for the year. Transaction revenue was attributable to our
broker-dealer  businesses,  including NYFIX Transaction Services,  which started
generating  revenue on July 1, 2002,  and NYFIX  Millennium,  whose results have
been included in our consolidated  financial statements since our acquisition of
NYFIX Millennium on February 1, 2002.

COST OF REVENUE

        Total cost of revenue increased $12.6 million,  or 89%, to $26.7 million
for 2002,  from $14.1 million in 2001,  due  primarily to increased  data center
costs of $3.8  million,  clearing,  execution  and other  costs  related  to our
recently acquired NYFIX Millennium and NYFIX Transaction Services businesses, of
$2.5 million,  increased  costs  attributable  to support our recently  acquired
Javelin  business of $2.5 million,  increased  telecommunication  charges due to
more desktop  connections and increased  capacity in our data centers to support
our core business, of $1.7 million,  increased depreciation expense attributable
to  investment  in data center  equipment  to support our  subscription  revenue
components,  of $1.3  million,  and  increased  amortization  expense of product
enhancement costs due to continued efforts to maintain  competitive  products of
$0.6 million.

        Subscription  cost of revenue  increased $4.1 million,  or 34%, to $16.1
million for 2002,  from $12.0 million for 2001,  primarily due to increased data
center  costs,   including   telecommunication   charges  due  to  more  desktop
connections  and  increased  capacity  in our  data  centers,  of $2.5  million,
increased costs  attributable to our recently  acquired Javelin business of $0.7
million,  increased  depreciation  and  amortization  expense  of $0.7  million,
attributable  to increased  subscription  equipment at our customers,  increased
investment in our data center equipment to support our subscription revenue, and
product  enhancement  costs due to  continued  efforts to  maintain  competitive
products. As a percentage of subscription revenue,  subscription cost of revenue
increased to 50.8% in 2002 from 41.5% in 2001, primarily due to increases in the
aforementioned  costs  related  to  investments  in our data  centers,  which we
believe will support future revenue growth.

        Sale cost of revenue increased $1.2 million, or 132% to $2.1 million for
2002,  from $0.9  million  for 2001.  The  increase  in sale cost of  revenue is
primarily  due to increased  labor costs to deliver and install our hardware and
software  of  $0.9  million,  attributable  to  our  recently  acquired  Javelin
business, and increased  amortization expense, of $0.3 million,  attributable to
capitalized software included in our products.  As a percentage of sale revenue,
sale cost of revenue  increased to 24.3% in 2002, from 11.0% in 2001,  primarily
due to the aforementioned cost increases.

        Service contract cost of revenue increased $0.7 million,  or 55% to $1.9
million for 2002,  from $1.2 million in 2001. The increase is principally due to
service  contract labor costs of our recently  acquired Javelin business of $0.7
million.  As a percentage of service contract revenue,  service contract cost of
revenue decreased to 22.6% in 2002, as compared to 28.7% in 2001.

        Transaction  cost of revenue was $6.6 million for 2002, and  represented
93.1% of transaction  revenue.  Transaction  cost of revenue was attributable to
our previously mentioned broker-dealer  businesses,  including NYFIX Transaction
Services,   which  started  generating  revenue  on  July  1,  2002,  and  NYFIX
Millennium,  which  results  have been  included in our  consolidated  financial
statements  since our  acquisition  of NYFIX  Millennium  on  February  1, 2002.
Transaction  cost of revenue  primarily  included  data center  cost,  including
labor,  maintenance,  lease,  communication  and  data  feed  expenses,  of $3.3
million,  clearing and execution  related fees of $1.9 million and  depreciation
and amortization expense of $1.0 million.


                                       37



                                  NYFIX, INC.


GROSS PROFIT

        Gross  profit  decreased  to 52.1% for 2002,  from  65.8% for 2001.  The
decrease in gross profit is primarily  attributable to the impact of lower gross
profit for our recently acquired Javelin business, the impact of increased labor
costs to deliver and install our hardware and software,  increased  depreciation
and  amortization  expense  of our  product  enhancement  costs and data  center
infrastructure  investments to support our subscription and transaction  revenue
components.

        Subscription  gross profit  decreased to 49.2% for 2002,  from 58.5% for
2001. The decrease in subscription gross profit is primarily attributable to the
impact of lower gross  profit for our  recently  acquired  Javelin  business and
depreciation and amortization  expense related to our product  enhancement costs
and capital and  telecommunication  infrastructure  investments made in our data
center.

        Sale gross profit  decreased to 75.7% for 2002, from 89.0% for 2001. The
decrease in sale gross profit is primarily  attributable  to the impact of lower
gross  profit  for  our  recently   acquired   Javelin  business  and  increased
depreciation  expense  attributable to software capitalized which is included in
our products delivered to our customers.

        Service  contract gross profit  increased to 77.4% for 2002,  from 71.3%
for  2001.   The  increase  in  service   contract  gross  profit  is  primarily
attributable  to the impact of higher  gross  profit for our  recently  acquired
Javelin business.

        Transaction gross profit was 6.9% for 2002. Transaction gross profit was
adversely  affected by the impact of certain fixed costs  incurred  prior to the
start of our NYFIX  Transaction  Services  business,  which  started  generating
revenue on July 1, 2002, and NYFIX Millennium,  which results have been included
in  our  consolidated  financial  statements  since  our  acquisition  of  NYFIX
Millennium  on February 1, 2002.  Gross  profit was also  adversely  affected by
higher data center costs to handle increased system demands.

SELLING, GENERAL AND ADMINISTRATIVE

        Selling,  general and administrative expense increased $17.7 million, or
144% to $29.9 million for 2002,  from $12.2  million for 2001.  The increase was
primarily  due to the  selling,  general  and  administrative  expense  for  our
recently acquired NYFIX Millennium and Javelin  businesses and start-up expenses
related to NYFIX Transaction  Services of $13.2 million,  and increased costs of
corporate departments to support a larger organization,  of $4.5 million,  which
reflects  increased  salaries,  commissions  and  related  benefit  costs,  rent
expense,  and various office expenses due to an increase in personnel to support
our growth and acquisitions.  As a percentage of total revenue,  selling general
and  administrative  expense  increased to 53.5% in 2002 from 29.6% in 2001. The
increase as a percentage of total revenue was attributable to increased  expense
to support our growth and acquisitions.

RESEARCH AND DEVELOPMENT

        Research  and  development  expense  increased to $1.4 million for 2002,
from $0.5 million for 2001,  primarily as a result of our continuing  efforts to
develop new products and services.  As a percentage of total  revenue,  research
and development expense was 2.5% for 2002 as compared to 1.1% for 2001.

DEPRECIATION AND AMORTIZATION

        Depreciation and amortization  expense increased $3.5 million,  or 246%,
to $4.9  million  for  2002,  from $1.4  million  for 2001.  This  increase  was
primarily  attributable to the  depreciation  and  amortization  expense for our
recently acquired NYFIX Millennium and Javelin businesses,  of $0.8 million, the
continued  investment  in  our  infrastructure,  and to  administrative  support


                                       38



                                  NYFIX, INC.


equipment and leasehold improvements to support our growth, of $1.1 million, and
amortization  expense  related to our acquired  intangible  assets in connection
with our recently  acquired  NYFIX  Millennium and Javelin  businesses,  of $1.6
million. As a percentage of total revenue, depreciation and amortization expense
was 8.7% for 2002 as compared to 3.4% for 2001.  The increase in  percentage  of
revenue was primarily attributable to the impact of the aforementioned costs.

INTEREST EXPENSE

        Interest expense  decreased  $81,000,  or 24% to $262,000 for 2002, from
$343,000  for 2001,  principally  as a result of decreased  interest  expense on
loans due to the payoff of our line of credit  during July 2001 of $118,000  and
lower interest paid on capital lease obligations of $33,000. Slightly offsetting
these amounts was interest  incurred in connection with late payments of certain
obligations, of $70,000.

INVESTMENT INCOME

        Investment income decreased slightly to $0.7 million for 2002, from $0.8
million for 2001, principally due to the combination of lower average investment
balances   coupled  with  lower  yields  on  cash   equivalents  and  short-term
investments in 2002 as compared to 2001.

OTHER EXPENSE

        Other expense increased  $607,000 to $621,000 for 2002, from $14,000 for
2001,  principally  as a result of  losses  recognized  from our  unconsolidated
affiliates of $474,000 for EuroLink and of $138,000 for Renaissance in 2002.

INCOME TAX

        We recorded an income tax benefit of $3.8 million for 2002,  compared to
a provision  for income taxes of $5.4  million for 2001.  The income tax benefit
was  attributable  to our  pretax  loss in 2002 and  certain  Federal  and state
research and  development tax credits,  of $0.9 million,  available for research
and development expenses incurred during 1999 to 2002. Our effective tax benefit
rate of 52% in the  current  year  exceeds the Federal  statutory  benefit  rate
primarily due to the effects of the aforementioned  research and development tax
credits and state income taxes.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

REVENUE

        Total  revenue  increased  $17.4  million,  or 73%, to $41.4 million for
2001,  from $24.0  million for 2000,  primarily  due to  increased  demand among
existing  subscription  customers,  the addition of new  customers,  new product
offerings  sold to existing and new customers  and increased  demand for capital
sales of our derivatives products, offset slightly by lower hardware sales.

        Subscription  revenue increased $13.0 million,  or 81%, to $29.0 million
for 2001, from $16.0 million for 2000,  primarily due to increased  demand among
existing subscription  customers,  the addition of new customers and new product
offerings.  As a percentage of total revenue,  subscription revenue increased to
70.0% in 2001  from  66.5% in  2000,  due to our  continued  effort  to  convert
customers to a subscription-based revenue model.

        Sale revenue  increased  $3.0 million,  or 60% to $8.1 million for 2001,
from $5.1 million for 2000.  The increase in sale  revenue was  attributable  to
increased  customer demand for our OBMS product of $3.6 million,  offset in part
by a decrease  in  hardware  sales of $0.6  million.  As a  percentage  of total
revenue, sales revenue decreased to 19.6% in 2001, from 21.2% in 2000, primarily


                                       39



                                  NYFIX, INC.


due to our efforts to convert customers to a  subscription-based  model and less
reliance on capital sales.

        Service contract revenue increased $1.4 million, or 47%, to $4.3 million
for  2001,  from  $2.9  million  in  2000,  due  primarily  to  an  increase  in
subscription  revenue for our core  products.  As a percentage of total revenue,
service  contract  revenue was 10.4% in 2001, as compared to 12.3% in 2000. This
decrease was primarily due to subscription  revenue increasing more than service
contract  revenue.  Telecommunication  fees  revenue,  which is a  component  of
subscription  revenue  but not  subject to  service  contracts,  increased  $2.0
million.

COST OF REVENUE

        Total cost of revenue  increased $5.3 million,  or 59%, to $14.2 million
for 2001,  from $8.9 million in 2000,  due  primarily  to increased  data center
costs, including telecommunication,  maintenance and rental expenses due to more
desktop connections and increased capacity in our data centers, of $2.3 million,
increased  depreciation expense attributable to increased subscription equipment
leased to our customers and increased investment in our data center equipment to
support our subscription  revenue components,  of $1.3 million,  increased labor
costs of $1.1 million, to support our subscription and service contract revenue,
and increased amortization expense of product enhancement costs of $0.6 million,
due to continued efforts to maintain competitive products.

        Subscription  cost of revenue  increased $4.4 million,  or 59%, to $12.0
million for 2001,  from $7.6 million for 2000,  primarily due to increased  data
center costs, including  telecommunication,  maintenance and rental expenses due
to more desktop  connections and increased capacity in our data centers, of $1.8
million,  increased  depreciation expense attributable to increased subscription
equipment at our customers and increased investment in our data center equipment
to support our subscription revenue, of $1.3 million,  increased labor costs, of
$0.9 million to support our  subscription  revenue,  and increased  amortization
expense of  product  enhancement  costs due to  continued  efforts  to  maintain
competitive  products, of $0.3 million. As a percentage of subscription revenue,
subscription  cost of  revenue  decreased  to 41.5% in 2001 from  47.4% in 2000,
primarily due to greater  increases in  subscription  revenue than  subscription
cost of revenue.

        Sale cost of revenue increased $0.2 million,  or 33% to $0.9 million for
2001,  from $0.7  million  for 2000.  The  increase  in sale cost of  revenue is
primarily due to increased  amortization  expense for product enhancement costs.
As a  percentage  of sale  revenue,  sale cost of revenue  decreased to 11.0% in
2001,  from 13.2% in 2000,  primarily  due to greater  increases in sale revenue
than sale cost of revenue.

        Service contract cost of revenue increased $0.5 million,  or 84% to $1.2
million for 2001,  from $0.7 million for 2000.  The increase is primarily due to
increased  labor  costs to support our  customers.  As a  percentage  of service
contract  revenue,  service contract cost of revenue increased to 28.7% in 2001,
as compared to 23.0% in 2000.

GROSS PROFIT

        Gross  profit  increased  to 65.8% for 2001,  from  62.9% for 2000.  The
increase in gross profit is primarily  attributable to more profitable  software
installations  as  compared  to  equipment  installations,  offset  in  part  by
increased  communication  charges  relating to  increased  desktop  connections,
higher  labor  costs due to  increased  data center  costs and service  contract
revenue, increased depreciation expense for subscription-based  equipment due to
additional  units being  placed into  service  and higher  amortization  expense
related to product enhancement costs.

        Subscription  gross profit  increased to 58.5% for 2001,  from 52.6% for
2000.  The increase in  subscription  gross profit is  attributable  to software
being a larger component of the installation as opposed to equipment,  which had


                                       40



                                  NYFIX, INC.


a  higher  gross  profit,  offset  in part by  increased  communication  charges
relating to increased desktop  connections,  higher labor costs due to increased
subscription    contract   revenue,    increased    depreciation   expense   for
subscription-based  equipment due to additional  units being placed into service
and  increased  purchases  and  leases  of  data  center  equipment  and  higher
amortization expense related to product enhancement costs.

        Sale gross profit  increased  slightly to 89.0% for 2001, from 86.8% for
2000. The increase in sale gross profit is primarily attributable to the sale of
more profitable software, primarily our OBMS product.

        Service  contract gross profit  decreased to 71.3% for 2001,  from 77.0%
for  2000.   The  decrease  in  service   contract  gross  profit  is  primarily
attributable to higher costs of labor to service our products.

SELLING, GENERAL AND ADMINISTRATIVE

        Selling,  general and administrative  expense increased $4.6 million, or
61% to $12.2  million for 2001,  from $7.6  million for 2000.  The  increase was
primarily due to increased  salaries and commissions,  related  personnel costs,
rent expense and various office  expenses to support an increase in employees of
24% in 2001 from 2000 to support our growth.  As a percentage of total  revenue,
selling general and administrative expense decreased to 29.6% in 2001 from 31.6%
in 2000.  The decrease as a percentage  of total revenue was  attributable  to a
greater increase in revenue as compared to the increased  expense to support our
growth and acquisitions.

RESEARCH AND DEVELOPMENT

        Research and  development  expense of $0.5 million for 2001 was constant
with the $0.5 million for 2000. As a percentage of total  revenue,  research and
development  expense  was 1.1% for 2001 as  compared to 1.9% for 2000 as revenue
increased for 2001 while research and development expense remained constant.

DEPRECIATION AND AMORTIZATION

        Depreciation and amortization  expense increased $0.8 million,  or 149%,
to $1.4  million  for  2001,  from $0.6  million  for 2000.  This  increase  was
primarily  attributable  to  additional  investment  in  administrative  support
equipment and leasehold  improvements to support our growth.  As a percentage of
total  revenue,  depreciation  and  amortization  expense  was  3.4% for 2001 as
compared to 2.4% for 2000.  The increase in  percentage of revenue was primarily
attributable to the impact of the aforementioned costs.

INTEREST EXPENSE

        Interest  expense of $0.3  million for 2001 was  constant  with the $0.3
million for 2000, as we had increased  interest on capital lease  obligations of
$0.1 million,  offset by a decrease in loan interest expense of $0.1 million due
to the payoff of our line of credit during July 2001.

INVESTMENT INCOME

        Investment  income increased to $0.8 million for 2001, from $0.2 million
for 2000,  principally due to the higher average investment balances as a result
of the proceeds from our offering of common stock in June 2001.

INCOME TAX

        Our income tax  provision  increased to $5.4 million in 2001 as compared
to $0.6  million  for  2000.  The  increase  in our  income  tax  provision  was
attributable  to an increase in our pretax  income in 2001.  Our  effective  tax


                                       41



                                  NYFIX, INC.


provision rate of 40% in 2001 reflects the combined Federal statutory income tax
rate and state income taxes. The effective income tax provision rate of 9.6% for
2000 was lower than the Federal  statutory  tax rate as a result of the reversal
of  valuation  allowances  as we believed  that we would  realize the benefit of
prior income tax net operating  losses and other  temporary  differences,  which
resulted in the previously established valuation allowance.

EVENTS OF SEPTEMBER 11TH

        The events of September 11, 2001, did not have a material  effect on our
financial position,  results of operations, or cash flows. We believe that these
events did not affect our  overall  growth  outlook.  We  credited  the  ongoing
investment  in  state-of-the-art  redundant  data centers and our NYFIX  Network
infrastructure for our ability to maintain 100% effective  operations across all
products  and  services  throughout  the  month of  September  2001.  While  our
employees  worked  around the clock to assist many clients in recovery  testing,
and in some cases establishing  temporary emergency operations,  we opted not to
charge any customers one-time fees in connection with these efforts. We also did
not incur any significant  incremental  expense in connection with the events of
September 11, 2001.

        Although  the events of  September  11, 2001 did not have a  significant
effect  on our  results  of  operations,  they  did  have  an  effect  on  NYFIX
Millennium,  which we had a 50%  ownership  interest  in,  at that  time.  After
roll-out  efforts  were  temporarily  stalled by the tragic  events of September
11th,  NYFIX  Millennium  usage  increased  later in the fourth quarter of 2001,
bringing the system back to initial execution levels.

LIQUIDITY AND CAPITAL RESOURCES

        In June 2001, we raised $57.3 million, net of expenses, from a follow-on
public  offering of 3 million  shares of our common stock.  We used a portion of
the net proceeds for working  capital  requirements,  to re-purchase 1.3 million
shares of our common  stock,  to  continue to invest in our  infrastructure  and
products and,  subsequently,  to acquire  Javelin in March of 2002 and invest in
EuroLink and  Renaissance.  At December 31, 2002, our cash, cash equivalents and
short-term  investments  totaled  $21.9  million as compared to $33.9 million at
December 31, 2001. We had  investments  of $10.7  million in current  marketable
security  instruments,  having  interest  rates ranging from 1.2% to 3.5%,  $0.6
million in a tax-free  money fund with an average 30 day yield of 0.55% and $6.3
million in money market funds with an average 30 day yield of 1.1%,  at December
31, 2002.

        At  December  31,  2002,  we had  total  debt  of  $1.8  million,  which
represented  current and  long-term  amounts  outstanding  under  capital  lease
obligations.  At December 31, 2002, we had no material  commitments  for capital
expenditures  or inventory  purchases.  Our  long-term  capital  needs depend on
numerous factors,  including the rate we obtain new clients and expand our staff
and  infrastructure,  as needed, to accommodate such growth, as well as the rate
at which we choose to invest in new technologies to modify our NYFIX Network and
infrastructure. We have ongoing needs for capital, including working capital for
operations and capital expenditures to maintain and expand our operations.

        We believe  that we can achieve  synergies  from our  recently  acquired
NYFIX Millennium and Javelin businesses.  Although our NYFIX Millennium business
has incurred losses through its development and start-up stages, we believe that
revenue will  continue to increase as we gain greater  acceptance of our product
offerings.  However,  we expect NYFIX  Millennium  to possibly  need  additional
working  capital during the first six to nine months of 2003,  until it achieves
positive cash flow from  operations.  Our strategy is to migrate Javelin to more
of a  subscription-based  revenue model, similar to our core NYFIX USA business.
This  may  cause  Javelin   capital  sale  revenue  to  be   unpredictable   and
inconsistent.  As such, this too, may unfavorably impact our working capital. In
addition, our unconsolidated affiliates, Renaissance and EuroLink, have required


                                       42



                                  NYFIX, INC.


$3.1  million  in funding  from us in the past.  We may be  required  to provide
additional  funding to them,  until they  generate  positive cash flow or obtain
other sources of capital. Such additional funding, if required,  may unfavorably
impact our working capital.

        We believe that our cash and investments of $21.9 million, together with
anticipated  cash to be generated from  operations will be sufficient to support
our  capital  and  operating  needs,  including  the  operating  needs  of NYFIX
Millennium and Javelin for at least the next twelve months.

        The following  summarizes our contractual  obligations under capital and
operating  leases at December  31,  2002,  and the effect such  obligations  are
expected to have on our liquidity and cash flows in future periods:

                                      Capital       Operating         Total
                                      -------        -------        -------
Year ending December 31,                          (in thousands)
- -----------------------
   2003                               $ 1,161        $ 4,983        $ 6,144
   2004                                   551          4,898          5,449
   2005                                   136          2,224          2,360
   2006                                    --            786            786
   2007                                    --            820            820
   Thereafter                              --          2,030          2,030
                                      -------        -------        -------
   Total minimum lease payments       $ 1,848        $15,741        $17,589
                                      =======        =======        =======

WORKING CAPITAL

        At  December  31,  2002,  we had  working  capital  of $30.8  million as
compared to $47.5 million at December 31, 2001.  Our present  capital  resources
include proceeds from internal  operations.  The decrease in working capital was
principally  due to the cash used to acquire  Javelin  and invest in and provide
loans and working capital advances to our  unconsolidated  affiliates,  EuroLink
and Renaissance.


CASH PROVIDED BY OPERATING ACTIVITIES

        Net cash provided by operating  activities in 2002 was $4.1 million,  as
our net loss of $3.2 million, adjusted for non-cash items, such as depreciation,
amortization,  deferred  taxes,  provision  for  bad  debts,  equity  in loss of
unconsolidated   affiliates  and  minority   interest   provided  $7.4  million.
Unfavorable  working  capital  changes  offset by other  changes,  net of assets
acquired and liabilities assumed from our recently acquired NYFIX Millennium and
Javelin businesses, decreased cash by $3.3 million.

        Net cash provided by operating  activities in 2001 was $10.6 million, as
our  net  income  of  $8.1  million,   adjusted  for  non-cash  items,  such  as
depreciation,  amortization, deferred taxes and provision for bad debts provided
$16.3 million.  Unfavorable  working  capital offset by other changes  decreased
cash by $5.7 million.

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

        The 2002 cash provided by investing  activities  was $2.8 million.  This
consisted  primarily of net proceeds  from the sales and purchases of short-term
investments of $22.4 million, offset by payments for our recently acquired NYFIX
Millennium  and  Javelin  businesses,  net of cash  acquired,  of $6.8  million,
investments  in and net advances to  unconsolidated  affiliates of $5.4 million,
capital  expenditures,  mostly for data center  equipment and software,  of $4.6


                                       43



                                  NYFIX, INC.


million and product enhancement costs of $2.8 million.

        The 2001 cash used in  investing  activities  was  $48.1  million.  This
consisted primarily of net purchases of short-term  investments of $29.0 million
using the proceeds  from our  follow-on  offering,  loans and net advances to an
unconsolidated affiliate of $9.2 million, capital expenditures,  mostly for data
center equipment and to support our infrastructure,  of $7.1 million and product
enhancement costs of $2.7 million.

CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

        In 2002, our net cash used in financing activities totaled $0.7 million,
consisting  primarily of principal  payments under capital lease  obligations of
$1.2  million,  offset by net  proceeds  from the  exercise of stock  options by
employees of $0.5 million.

        In 2001,  our net cash  provided by financing  activities  totaled $37.6
million,  consisting primarily of $57.3 million raised in our follow on offering
and $2.2 million  provided by net proceeds from the exercise of stock options by
employees, offset by purchases of treasury stock of $19.1 million, repayments of
borrowings  under our credit  facility of $2.0  million and  principal  payments
under capital lease obligations of $0.8 million.

SEASONALITY AND INFLATION

        We believe that our operations have not been  significantly  affected by
seasonality or inflation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In October  2001,  the Financial  Accounting  Standards  Board  ("FASB")
issued SFAS No. 144,  ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS,  which
supercedes SFAS No. 121,  ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR  LONG-LIVED  ASSETS TO BE  DISPOSED  OF, and the  accounting  and  reporting
provisions of Accounting  Principles Board Opinion ("APB") No. 30, REPORTING THE
RESULTS OF  OPERATIONS  -  REPORTING  THE  EFFECTS OF DISPOSAL OF A SEGMENT OF A
BUSINESS,  AND  EXTRAORDINARY,  UNUSUAL AND  INFREQUENTLY  OCCURRING  EVENTS AND
TRANSACTIONS,  for the disposal of a segment of a business. SFAS No. 144 retains
many of the  provisions  of SFAS No. 121, but addresses  certain  implementation
issues  associated  with that  Statement.  SFAS No. 144 is effective  for fiscal
years  beginning  after  December  15, 2001.  We adopted SFAS No. 144  effective
January 1, 2002. The adoption of SFAS No. 144 did not have a material  effect on
our financial position, results of operations or cash flows.

        In  April  2002,  the  FASB  issued  SFAS No.  145,  RESCISSION  OF FASB
STATEMENTS  NO. 4, 44 AND 64,  AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS.  SFAS No. 145  eliminates  extraordinary  accounting  treatment for
reporting  gains or losses on debt  extinguishment,  and amends  other  existing
authoritative  pronouncements to make various technical corrections.  We adopted
SFAS No. 145  effective  January 1, 2003.  The  adoption of SFAS No. 145 did not
have a material effect on our financial position,  results of operations or cash
flows.

        In July 2002,  the FASB  issued  SFAS No.  146,  ACCOUNTING  FOR EXIT OR
DISPOSAL ACTIVITIES.  SFAS No. 146 requires recording costs associated with exit
or disposal  activities at their fair values when a liability has been incurred.
Under  previous  guidance,  certain exit costs were  accrued  upon  management's
commitment  to an exit plan.  The  provisions  of SFAS No. 146 are effective for
exit or disposal activities  initiated after December 31, 2002. We do not expect
that  adoption  of SFAS No.  146 will have a  material  effect on our  financial
position, results of operations or cash flows.

        In November 2002, the FASB Emerging Issues Task Force ("EITF") reached a
consensus  on No.  00-21,  ACCOUNTING  FOR REVENUE  ARRANGEMENTS  WITH  MULTIPLE
DELIVERABLES.   EITF  No.  00-21  applies  to  certain   contractually   binding


                                       44



                                  NYFIX, INC.


arrangements   under  which  a  company  performs  multiple  revenue  generating
activities  and requires that all companies  account for each element  within an
arrangement  with multiple  deliverables  as separate units of accounting if (a)
the delivered item has value on a stand-alone  basis, (b) there is objective and
reliable  evidence  of fair  value and (c) the  amount of the total  arrangement
consideration  is fixed.  EITF No. 00-21 is effective  for revenue  arrangements
entered into in fiscal periods  beginning after June 15, 2003. We are evaluating
the  provisions  of EITF  No.  00-21  and  whether  the  implementation  of this
statement  will have a material  effect on our  financial  position,  results of
operations or cash flows.

        In  November  2002,  the FASB  issued  FASB  Interpretation  ("FIN") 45,
GUARANTOR'S  ACCOUNTING AND DISCLOSURE  REQUIREMENTS  FOR GUARANTEES,  INCLUDING
INDIRECT  GUARANTEES OF INDEBTEDNESS OF OTHERS.  FIN 45 disclosure  requirements
are  effective  for the year ended  December 31, 2002 and other  provisions  are
effective for 2003. The interpretation  requires additional  disclosure relating
to guarantees and in some cases requires the  recognition of a liability for the
fair value of certain guarantees. The adoption of FIN 45 had no effect on us, as
we do not guarantee the liabilities of others.

        In  December  2002,  the  FASB  issued  SFAS  No.  148,  ACCOUNTING  FOR
STOCK-BASED  COMPENSATION - TRANSITION AND DISCLOSURE.  SFAS No. 148 amends SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, to provide alternative methods
of transition  for  companies  that  voluntarily  change to the fair value based
method of accounting for stock-based  employee  compensation.  SFAS No. 148 also
amends  the  disclosure  provisions  of SFAS  No.  123 and APB No.  28,  INTERIM
FINANCIAL  REPORTING,  to  require  disclosure  in the  summary  of  significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and income per share
in annual and interim financial  statements.  The disclosure  provisions of SFAS
No. 148 are effective for both interim and annual  periods ending after December
15, 2002. We have adopted the disclosure  provisions of SFAS No. 148 at December
31, 2002.

        In January  2003,  the FASB  issued FIN 46,  CONSOLIDATION  OF  VARIABLE
INTEREST  ENTITIES,   which  requires  the  consolidation  of  certain  entities
considered to be variable interest entities ("VIEs"). An entity is considered to
be a VIE  when it has  equity  investors  which  lack the  characteristics  of a
controlling  financial interest,  or its capital is insufficient to permit it to
finance  its  activities  without  additional  subordinated  financial  support.
Consolidation of a VIE by an investor is required when it is determined that the
investor will absorb a majority of the VIE's expected losses or residual returns
if they occur.  FIN 46 provides  certain  exceptions  to these rules,  including
qualifying special purpose entities subject to the requirements of SFAS No. 140,
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL  ASSETS AND  EXTINGUISHMENTS
OF  LIABILITIES.  VIEs  created  after  January  31,  2003 must be  consolidated
immediately,  while  VIEs  that  existed  prior  to  February  1,  2003  must be
consolidated  as of July 1, 2003. We are evaluating the provisions of FIN 46 and
whether the implementation of this statement,  with regard to our unconsolidated
affiliates,  will have a material effect on our financial  position,  results of
operations or cash flows.

FACTORS AFFECTING OPERATING RESULTS

SOME  OF  OUR  RECENTLY-ACQUIRED  SUBSIDIARIES  HAVE  NOT  BEEN  PROFITABLE  AND
THEREFORE WE MAY NOT BE PROFITABLE IN THE FUTURE.

        In December 2001, we acquired an inactive  broker-dealer  and renamed it
NYFIX  Transaction  Services,   Inc.  In  May  2002,  the  NASD  approved  NYFIX
Transaction  Services'  membership  application and it first started  generating
revenues  as of July 1,  2002.  Through  its  first  year of  operations,  NYFIX
Transaction Services had incurred a net loss of $0.8 million. Although we expect
NYFIX Transaction Services to start to generate positive cash flows during 2003,
we can provide no  assurances of our success in doing such.  Accordingly,  NYFIX
Transaction  Services may need us to provide the  necessary  capital to maintain
their minimum capital requirements, thus impacting our working capital.


                                       45



                                  NYFIX, INC.


        Effective as of February 1, 2002, we increased our ownership interest in
NYFIX  Millennium from 50% to 80%. NYFIX Millennium was formed in September 1999
and since  that time has been in the  development  and  start-up  stages and has
incurred  aggregate  net losses of $28.0  million  through  December  31,  2002.
Although we expect NYFIX  Millennium  to start to generate  positive  cash flows
towards the latter half of 2003,  we can provide no assurances of our success in
doing such.  Accordingly,  NYFIX Millennium may need us to provide the necessary
capital to maintain  their  minimum  capital  requirements,  thus  impacting our
working capital.

        Effective as of March 31, 2002, we acquired  Javelin.  Javelin  incurred
net losses of $1.8 million, $6.7 million and $2.0 million for the years 2000 and
2001 and the three months ended March 31, 2002,  respectively.  Although Javelin
results are not reported separately, Javelin continued to incur operating losses
until the fourth  quarter of 2002.  We believe that our  synergies  with Javelin
will enhance our overall operating results.  However,  our strategy to apply our
subscription-based  model to  Javelin's  products,  where  feasible,  may not be
successful.  Javelin's business is heavily  concentrated  towards capital sales,
which are very unpredictable and inconsistent.  Transitioning Javelin to more of
a subscription-based model could have an adverse impact on our working capital.

A NUMBER OF OUR SUBSIDIARIES  HAVE A LIMITED OPERATING  HISTORY,  WHICH MAKES IT
DIFFICULT TO EVALUATE THEIR PROSPECTS, SO THEIR FUTURE FINANCIAL PERFORMANCE MAY
DISAPPOINT SECURITIES ANALYSTS OR INVESTORS AND RESULT IN A DECLINE IN OUR STOCK
PRICE.

        NYFIX  Millennium and Javelin were formed in September 1999 and November
1997,  respectively.  Also, we purchased NYFIX Transaction  Services in December
2001.  Because of their limited operating  history,  these entities have limited
financial data,  which can be used to evaluate their  businesses.  Consideration
must be given to their  prospects  in  light  of the  risks,  expenses,  delays,
problems and difficulties  frequently  encountered in the establishment of a new
business in an emerging and rapidly evolving industry. NYFIX Millennium, Javelin
and NYFIX Transaction  Services may not be successful in their  businesses,  and
profitability may never be attained or sustained.

WE HAVE TWO UNCONSOLIDATED SUBSIDIARIES,  WHICH MAY NEED ADDITIONAL FUNDING FROM
US, THUS HAVING AN ADVERSE IMPACT ON OUR LIQUIDITY.

        We have provided funding to our unconsolidated  affiliates,  Renaissance
and EuroLink,  in the past. In our balance sheet,  at December 31, 2002, we have
amounts due and notes receivable from unconsolidated affiliates of $3.1 million.
We provided  Renaissance an additional $1.0 million in the first quarter of 2003
in exchange for a secured  promissory note.  Renaissance may require  additional
funds from us, until they generate positive cash flow or obtain other sources of
capital.  We cannot  provide  assurance  that  additional  interim  funding,  if
required, won't have an adverse impact on our liquidity.

A  SIGNIFICANT  POWER  AND  TELECOMMUNICATIONS  FAILURE  COULD  CAUSE US TO LOSE
REVENUES AND CUSTOMERS AND SUBJECT US TO LIABILITY FOR CUSTOMER LOSSES.

        Our  services  depend on our  ability to store,  retrieve,  process  and
manage  significant  databases and to  electronically  receive and process trade
orders. Our systems and data centers could fail due to power failures, caused by
a variety of factors, or outages,  caused by high demand placed on the utility's
infrastructure.  Due to the complexity of these  electrical  systems,  errors or
failures could occur which render an entire site to be unusable.

        We constantly  monitor  system loads and  performances  and as necessary
upgrade our systems to handle estimated increases in power consumption. However,
we may not be able to accurately  predict future demand.  To mitigate the impact
of power failures,  we maintain  critical data center facilities at two separate
locations in North Bergen, New Jersey and Carlstadt,  New Jersey. Although these
data centers are serviced by the same  utility,  they are serviced via different
sub-stations.  In the  event of a power  outage at any of our data  centers,  we
maintain  uninterruptible  power  supplies  ("UPS") to provide  limited  battery
backup for critical  systems.  We also  maintain  diesel-powered  generators  to
backup the UPSs.


                                       46



                                  NYFIX, INC.


        In the event of loss of power or  telecommunications  services at either
of these locations,  we believe there are sufficient  backup facilities in place
to give us the necessary  time to access,  or fail-over  to, our redundant  data
center.  It is  possible  that  multiple  telecommunications  vendors  could  be
impacted so severely that the  multi-vendor  and  multi-site  strategy would not
insure communications services to our clients.

        Since it is  fairly  common  for  multiple  carriers  to share  the same
physical  infrastructure  such as Central  Offices  (CO's),  telephone poles and
below-ground  conduit,  instances  like  major  cable cuts or  regional  natural
disasters could adversely impact our clients and us.

ANY  INFILTRATION  OF  HARMFUL  VIRUSES  COULD  CAUSE  US TO LOSE  REVENUES  AND
CUSTOMERS AND SUBJECT US TO LIABILITY FOR CUSTOMER LOSSES.

        We utilize  multiple  methods to combat viruses.  The first method is to
prevent  viruses from entering our NYFIX Network.  This is done by placing rigid
restrictions on our NYFIX Network called access controls lists ("ACL"). ACLs are
used where clients or vendors  connect to our NYFIX Network.  A second method of
preventing  viruses from entering our NYFIX  Network is the use of firewalls.  A
firewall  typically guards an internal network against malicious access from the
outside;  however,  firewalls  may also be  configured  to limit  access  to the
outside from internal users. In spite of the ACLs and firewalls, it may still be
possible for viruses to enter our NYFIX Network.

        If a virus is still  able to  penetrate  our NYFIX  Network,  we utilize
centrally managed anti-virus scanning software on servers and workstations.  Our
anti-virus  software actively scans servers and workstations on the network.  In
spite of the active  anti-virus  scanning,  it is possible for a virus to not be
detected.

        As  an  additional  method  to  combat  viruses,  we  utilize  intrusion
detection  software ("IDS").  IDS servers and software are located at key points
around the network and monitor systems for malicious activity.

WE  RELY  ON  MULTIPLE   TELECOMMUNICATIONS  CARRIERS  FOR  DATA  DELIVERY.  ANY
DISRUPTIONS  TO THESE  SERVICES  COULD  HAVE A  MATERIAL  ADVERSE  EFFECT ON OUR
BUSINESS.

        We utilize frame relay network services from five major carriers:  AT&T,
Qwest, Sprint, WorldCom and Verizon. Customers are given the choice of using one
or more  network  carriers  to provide  network  services to their  location.  A
majority of NYFIX clients utilize a dual carrier solution.

        The utilization of five major carriers has multiple benefits:

     o    Diversity  of  telecommunication   infrastructure  between  the  major
          carriers

     o    A  competitive  environment  to help  insure  aggressive  pricing  for
          network services

     o    The ability to completely migrate circuits from one carrier to another
          due to  non-competitive  pricing  or a  carrier  no  longer  providing
          adequate services.

        In the event that a major carrier was to shut down their network with no
advance warning (e.g.  WorldCom),  it would take at least 45 days to replace the
circuits  with  another  vendor.  In the  event of a move  from one  carrier  to
another,  we would incur  substantial  expenses related to the cost of utilizing
two  carriers  for the  same  period  of  time.  We could  also be  impacted  by
exclusivity  agreements  between carriers and connecting  points on the network.
For example,  WorldCom is the sole provider of network  services for NASDAQ.  In
the event WorldCom discontinued  operations,  we would incur costs transitioning
to a new NASDAQ network service provider.


                                       47



                                  NYFIX, INC.


        The  approximate  time  necessary  for the transfer of circuits from one
carrier to the other would be four to six weeks.  During the transfer,  we would
incur  overlapping  circuit charges for a minimum of thirty days.  These charges
are due to a  thirty  day  delay  that  begins  when  the  original  circuit  is
disconnected, therefore, the minimum cost of moving business from one carrier to
another would be at least one months worth of charges from the original carrier.

WE FACE SUBSTANTIAL  COMPETITION IN OUR INDIVIDUAL  PRODUCT AREAS FROM COMPANIES
THAT HAVE LARGER AND GREATER  FINANCIAL,  TECHNICAL AND MARKETING  CAPABILITIES,
WHICH  COULD MAKE IT MORE  DIFFICULT  TO GAIN OR MAINTAIN  MARKET  SHARE AND MAY
HINDER OUR ABILITY TO COMPETE SUCCESSFULLY.

        We operate in a highly  competitive  market  and expect  competition  to
intensify in the future.  Certain of our  competitors,  including  the financial
exchanges,  may have significantly  greater  financial,  technical and marketing
resources  and more  extensive  customer  bases and  extensive  knowledge of the
industry.

        Our industry is constantly evolving through technological and regulatory
change. Our competition varies widely and we encounter  different  categories of
competitors  for  each of our  product  and  service  offerings.  We  also  face
competition from customers who choose to maintain their own  infrastructure  and
develop their own in-house proprietary order management software systems.

OUR ABILITY TO SELL OUR PRODUCTS  AND  SERVICES  AND GROW OUR BUSINESS  COULD BE
SIGNIFICANTLY IMPAIRED IF WE LOSE THE SERVICES OF KEY PERSONNEL.

        Our business is highly dependent on a number of key executive  officers,
including Peter K. Hansen,  our founder,  Chief Executive Officer and President,
and Lars Kragh, our Chief Information  Officer,  who have been with us since our
inception in 1991.  The loss of the services of any of our key  personnel  could
have a material adverse effect on our business and results of operations.

WE RELY, IN PART,  ON OTHERS TO SUPPLY THE  MATERIALS  AND SUPPLIES,  UNDERLYING
SOFTWARE AND SYSTEMS WE USE TO PROVIDE OUR SERVICES.  IF WE ARE UNABLE TO OBTAIN
THIRD PARTY SUPPORT AND DELIVERY ON A TIMELY AND RELIABLE BASIS,  OUR ABILITY TO
PERFORM  SERVICES  COULD BE  HINDERED  AND THE  RELATIONSHIPS  WE HAVE  WITH OUR
CUSTOMERS COULD BE HARMED.

        Our  manufactured  products are based on standard PC components  readily
available  in the  consumer  market  place.  All  electronic,  computer-related
components  utilized  within  our  products  are not  manufacturer  or  supplier
specific.  We can substitute  components  from a diverse group of  manufacturers
with no assembly or delivery delays to our customers.


                                       48



                                  NYFIX, INC.


        However, our manufactured products contain several custom parts specific
to our design.  These parts are limited to sheet metal  enclosures  and internal
wiring.  We own the  designs  for  these  components  and can  source  them from
multiple  vendors in our  immediate  area or  throughout  the U.S.  Currently we
maintain  relationships  with a minimum of two alternate vendors for cabling and
sheet metal,  either of which can deliver  components  within standard  delivery
cycles. For both of these components we use vendors such as CTC, Advantage Sheet
Metal and Interface Technology. Although we maintain relationships with numerous
vendors for our  manufactured  products,  if we are unable to obtain third party
delivery and support on a timely and reliable basis,  our ability to provide our
product and services could be hindered.

        We rely on a number of third parties to supply software and systems,  as
well as equipment and related maintenance.  Our systems are built using a number
of commonly used technologies. As an example, we use systems from EMC, Sun Micro
Systems,  Oracle,  Sybase,  Veritas and  Microsoft.  Our products are subject to
potential defects in these third party  components.  Although we (as well as the
individual  vendors)  exercise  strict testing and  verification  of systems and
software, defects can cause disruptions of customer service. We have invested in
various  test  systems to make sure  supplier's  components  work as well as our
developed software.

        Since we depend on third parties to supply us with  underlying  software
and systems on a reliable,  timely basis,  we maintain  service and  maintenance
agreements  with all our main vendors.  We have standard  service  agreements at
different  levels,  depending  on how  critical  the  vendor's  system is to the
operation of our business.  For most systems we have a high level of redundancy,
which gives us less time  critical  dependency on a particular  vendor.  We have
service and maintenance agreements with all above-mentioned  vendors. Because of
the diversity in vendors, there is no dependence on a single vendor. However, if
we are  unable to obtain  third  party  support  and  delivery  on a timely  and
reliable  basis,  our  ability to perform  services  could be  hindered  and the
relationships we have with our customers could be harmed.

OUR PRODUCTS MAY SUFFER FROM DEFECTS OR ERRORS, WHICH MAY HARM OUR REPUTATION OR
SUBJECT US TO PRODUCT LIABILITY CLAIMS.

        The  products  we offer are  inherently  complex.  Despite  testing  and
quality control,  current versions, new versions or enhancements of our products
may contain errors. Any errors, slowdown or failure in our products may harm our
reputation  or subject us to product  liability  claims.  Significant  technical
challenges  also arise with our  products  because our  customers  purchase  and
integrate them with a number of third party computer  applications and software.
Such  integration  may not always be successful.  Any defects or errors that are
discovered after commercial release could result in the loss of revenue or delay
in market acceptance of our products. Moreover, we could face higher development
costs  if our  products  contain  undetected  errors,  or if we fail to meet our
customers'  expectations.  Although  we  maintain  general  liability  insurance
coverage,  this coverage may not continue to be available on reasonable terms or
at all. In addition, a product liability claim, whether or not successful, could
harm our business by increasing our costs and distracting our management.

WE MAY NOT BE ABLE TO PROTECT  OUR  INTELLECTUAL  PROPERTY  RIGHTS,  WHICH COULD
WEAKEN OUR COMPETITIVE POSITION, REDUCE OUR REVENUES AND INCREASE OUR COSTS.

        Our success and ability to compete are dependent to a significant degree
on our intellectual property rights, which includes our proprietary  technology,
trade secrets and client base. However,  no one patent,  trademark or other form
of intellectual property rights is critical to our business.

        Despite  our  efforts to protect our  proprietary  rights,  unauthorized
parties  may  attempt  to copy or  otherwise  obtain  and  use our  products  or
technology.  Monitoring  unauthorized  use of our products is  difficult  and we


                                       49



                                  NYFIX, INC.


cannot be certain that the steps we have taken will prevent  unauthorized use of
our technology, particularly in foreign countries where the laws may not protect
our  proprietary  rights as fully as in the U.S. If competitors  are able to use
our technology,  our ability to compete effectively could be harmed.  Litigation
may be necessary in the future to enforce our intellectual  property rights,  to
protect  our  trade  secrets,  to  determine  the  validity  and  scope  of  the
proprietary  rights of others,  or to defend against claims of  infringement  or
invalidity.  Litigation,  whether or not successful, could result in substantial
costs and diversions of resources.

        We may in the future receive  notices of claims of infringement of other
parties' proprietary rights. We cannot assure you that claims of infringement or
invalidity,  or claims for indemnification  resulting from infringement  claims,
will not be asserted or prosecuted against us. Any such claims,  with or without
merit, could be time consuming to defend,  result in costly  litigation,  divert
management's  attention  and  resources  or require us to enter into  royalty or
licensing  agreements.  We cannot  assure you that these  royalties  or licenses
would be available on reasonable terms, if at all.

CONDUCTING BUSINESS IN INTERNATIONAL MARKETS SUBJECTS US TO ADDITIONAL RISKS.

        For the years ended December 31, 2000, 2001 and 2002, approximately 11%,
15% and 5%,  respectively,  of our revenue was  derived  from our  international
operations.  Although we have recently relied less on international  revenue, we
believe it will be an important  component for our future success.  Thus, we are
subject to risks inherent in doing business in international markets, including:

     o    difficulties  in  recruiting  and  retaining  personnel  and  managing
          international operations;

     o    a high degree of costs  associated  with  servicing  smaller  national
          markets; and

     o    fluctuations in currency exchange rates.

        Any of the above could  affect the  profitability  of our  international
operations or hinder our ability to expand further internationally.

A DECLINE IN SUBSCRIPTION REVENUE, OUR LARGEST SOURCE OF REVENUE, OR TRANSACTION
REVENUE WOULD ADVERSELY AFFECT OUR PROFITABILITY.

        Subscription   revenue  is  our  most  significant  source  of  revenue.
Subscription  revenue is fixed based on a contractual period of time,  typically
one to three years,  and are not affected by trading volumes.  However,  trading
volumes do affect the  revenues of our  customers  and this could  affect  their
future  purchases of our  technology  and  services.  Pricing  pressures  due to
competition, failure to sign new agreements with customers because of reductions
in their new technology  spending,  and observed  consolidation in the financial
sector could affect our revenues and  profitability.  Our costs  associated with
supporting the  subscription  agreements are generally  fixed and thus a loss of
revenue would impact profitability.

        Transaction  revenue  has  been a  growing  component  of  our  revenue,
however,  there is no assurance we can continue to grow transaction  revenue. As
our costs to support  transaction  revenue  are  generally  fixed,  a decline in
revenue would directly impact our  profitability.  Several risk factors apply to
the analysis of the potential growth of transaction revenue.

        There is significant  competitive pressure brought on by a proliferation
of electronic execution  competitors.  There is the potential for changes in the
current U.S.  Market  Structure  that may make it difficult for the  transaction
business to compete with more traditional  broker-dealer  business  models.  For
example, the NYSE could establish limits on electronic access, or the NYSE could
create an electronic matching order engine of their own.

        Customer   demands  for  increased   bandwidth  and  speed  could  place
significant stress on our  infrastructure  requiring  continued  reinvestment in


                                       50



                                  NYFIX, INC.


hardware  and  software to keep pace with overall  business  growth.  We have no
current plans to transition from the subscription or  transaction-based  revenue
model due to general  acceptance of it in the  marketplace and the current trend
of recurring, predictable revenue recognition and cash flows.

THE SECURITIES BROKERAGE INDUSTRY IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION.
IF NYFIX  MILLENNIUM  OR NYFIX  TRANSACTION  SERVICES  FAIL TO COMPLY WITH THESE
REGULATIONS,  THEY MAY BE SUBJECT TO  DISCIPLINARY OR OTHER ACTION BY REGULATORY
ORGANIZATIONS.

        We are subject to extensive government  regulation and may be subject to
disciplinary  or other action by regulatory  organizations  if we fail to comply
with such regulation, which could increase our capital expenditures and decrease
our earnings.

        NYFIX Millennium and NYFIX Transaction Services are subject to extensive
regulation under both federal and state laws. In addition to these laws, we must
comply with rules of the Securities  and Exchange  Commission  (SEC),  including
Regulation ATS for NYFIX Millennium,  and The National Association of Securities
Dealers, Inc. (NASD), various stock exchanges,  state securities commissions and
other  regulatory   bodies  charged  with  safeguarding  the  integrity  of  the
securities  markets and other financial  markets and protecting the interests of
investors  participating in these markets.  As registered broker dealers,  NYFIX
Millennium and NYFIX  Transaction  Services are subject to numerous  regulations
covering the securities business, including:

     o    marketing practices;

     o    capital structure, including net capital requirements;

     o    record keeping; and

     o    conduct of directors, officers and employees.

        Any  failure  to comply  with  these  regulations  could  subject  NYFIX
Millennium and NYFIX  Transaction  Services to censure,  fines,  the issuance of
cease-and-desist  orders  or  the  suspension,  and/or  disqualification  of its
officers,  directors or employees. The fines, if material, could have an adverse
effect  on  our  earnings   because  it  could  greatly   increase  our  capital
expenditures.  If any of our employees were suspended or disqualified, we may be
unable to meet the needs of our clients or to solicit new  business.  This could
also have an adverse  effect on our earnings.  Furthermore,  any such  penalties
could  materially  harm our  reputation  in the  industry,  which  could  have a
long-term effect on our financial growth.

NYFIX  MILLENNIUM'S  AND  NYFIX  TRANSACTION   SERVICES'   COMPLIANCE  AND  RISK
MANAGEMENT METHODS MAY NOT BE EFFECTIVE.

        NYFIX  Millennium's and NYFIX  Transaction  Services'  ability to comply
with  regulations  depends  largely on the  establishment  and maintenance of an
effective  compliance  system,  as well as their  ability to attract  and retain
qualified compliance personnel.  NYFIX Millennium and NYFIX Transaction Services
could be subject to disciplinary  or other actions due to claimed  noncompliance
with  regulations  in the  future.  If a  claim  of  noncompliance  is made by a
regulatory  authority,  the efforts of the  management of NYFIX  Millennium  and
NYFIX  Transaction  Services  could be diverted to  responding to such claim and
NYFIX Millennium and NYFIX  Transaction  Services could be subject to a range of
possible  consequences,  including the payment of fines,  civil lawsuits and the
suspension of one or more portions of its business.  In addition,  their mode of
operation and profitability may be directly affected by:

     o    additional legislation;

     o    changes  in rules  promulgated  by the SEC,  the  NASD,  the  Board of
          Governors of the Federal Reserve  System,  the various stock exchanges
          or other self-regulatory organizations; or


                                       51



                                  NYFIX, INC.


     o    changes in the  interpretation  or  enforcement  of existing  laws and
          rules.

        In addition, NYFIX Millennium's status as a recognized ATS requires that
its trade  execution  and  communication  systems be able to handle  anticipated
present and future peak trading volumes.  If any of our systems become disabled,
the  ability  to  process  trades  and  handle  peak  trading  volumes  will  be
compromised.  The status of NYFIX Millennium as an SEC registered  broker-dealer
and NASD member is  conditioned,  in part,  on its ability to process and settle
trades.

TERRORIST  THREATS  AND  ATTACKS  AND THE  IRAQI  WAR HAVE  CREATED  SIGNIFICANT
INSTABILITY  AND  UNCERTAINTY IN THE FINANCIAL  MARKETPLACE TO WHICH WE SELL AND
MAY CREATE A MORE VOLATILE ENVIRONMENT.

        The terrorist attacks in the U.S. on September 11, 2001, the declaration
of war by the U.S.  against  terrorism  and the current war in Iraq have created
significant  instability and uncertainty in the financial  marketplace,  both in
the U.S.  and  globally.  Such  adverse  political  events may have a  continued
negative  impact on economic  conditions  in the financial  marketplace  and our
customers.  The  unfavorable  conditions  may  have  an  adverse  effect  on our
financial  operations  including,  but not limited to, our ability to expand the
market for our products,  enter into  strategic  relationships  and  effectively
compete.

ITEM 7A. 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.  We do not use derivative  financial
instruments for any purpose.

        We are exposed to market risk  principally  through  changes in interest
rates and equity prices.  Our short-term  investment  portfolio of $10.7 million
and $29.0 million at December 31, 2002 and 2001, respectively, consisted of $6.8
million and $9.0 million,  respectively,  of auction rate  certificates and $3.9
million and $20.0  million,  respectively,  of mutual fund  securities.  Risk is
limited on the auction rate  certificates  portfolio  due to the fact that it is
invested in insured  municipal  bonds of which no more than 5% of our  portfolio
can be invested in any one security issue. The potential  decrease in fair value
resulting from a hypothetical  10% change in interest rates for the auction rate
certificates would not be material to income, cash flows or fair value.

        The mutual fund securities  portfolio was invested in a quoted fund that
is  managed by an  institution  which  primarily  invests  in  investment  grade
securities,  with up to a maximum of 10% invested in high yield securities rated
B or higher.  These  securities  are subject to equity price risk. The estimated
potential loss in fair value  resulting from a hypothetical  10% decrease in the
quoted price is $0.4 million.

        We are also  subject to interest  rate risk on our $2.0 million of notes
receivable from  unconsolidated  affiliates at December 31, 2002. A hypothetical
10% change in interest rates would not result in a material change in their fair
value.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        See  index  to  Financial  Statements  on  Page  F-1.  NYFIX  Millennium
        financial  statements  for each of the years ended December 31, 2001 and
        2000 immediately follow the Notes to Consolidated Financial Statements.

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

        None.


                                       52



                                  NYFIX, INC.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        The  information  required  by  this  Item  is  incorporated  herein  by
reference to the Section  entitled  "Proposal No. 1 - Election of Directors" and
"Executive  Compensation"  in our Proxy  Statement  for the June 10, 2003 Annual
Meeting of Stockholders, to be filed with the SEC no later than April 30, 2003.

ITEM 11. EXECUTIVE COMPENSATION

        The  information  required  by  this  Item  is  incorporated  herein  by
reference  to  the  Section  entitled  "Executive  Compensation"  in  our  Proxy
Statement for the June 10, 2003 Annual Meeting of Stockholders, to be filed with
the SEC no later than April 30, 2003.

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

        The  information  required  by  this  Item  is  incorporated  herein  by
reference to the Section  entitled  "Security  Ownership" of our Proxy Statement
for the June 10, 2003 Annual Meeting of  Stockholders,  to be filed with the SEC
no later than April 30, 2003.  Information  regarding securities  authorized for
issuance under our equity  compensation plans is set forth in Part II, Item 5 of
this report.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The  information  required  by  this  Item  is  incorporated  herein  by
reference  to  the  Section   entitled   "Certain   Relationships   and  Related
Transactions"  in our Proxy  Statement  for the June 10, 2003 Annual  Meeting of
Stockholders, to be filed with the SEC no later than April 30, 2003.

ITEM 14. CONTROLS AND PROCEDURES

        We maintain  disclosure  controls  and  procedures  that are designed to
ensure that information  required to be disclosed in our Exchange Act reports is
recorded,  processed,  summarized and reported within the time periods specified
in the SEC's  rules and forms,  and that such  information  is  accumulated  and
communicated to our management,  including our Chief Executive Officer and Chief
Financial Officer, as appropriate,  to allow timely decisions regarding required
disclosure  based  closely  on  the  definition  of  "disclosure   controls  and
procedures"  in Rule  13a-14(c).  In designing  and  evaluating  the  disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated,  can provide only reasonable assurance
of achieving the desired  control  objectives,  and management  necessarily  was
required to apply our judgment in evaluating the  cost-benefit  relationship  of
possible controls and procedures.

        Within  90 days  prior to the date of this  report,  we  carried  out an
evaluation,  under the supervision and with the participation of our management,
including 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.

        There have been no  significant  changes in our internal  controls or in
other factors that could  significantly  affect the internal controls subsequent
to the date we completed our evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.


                                       53



                                  NYFIX, INC.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) DOCUMENTS FILED AS PART OF THIS REPORT

            (1) Financial Statements

                        See index to Financial Statements on Page F-1.

            (2) Financial Statement Schedules

                         Schedule II - Valuation and  Qualifying  Accounts - see
                 Note 17 in the Notes to Consolidated Financial Statements.

                        NYFIX Millennium,  L.L.C.  financial  statements for the
                 year  ended  December  31,  2001 and NYFIX  Millennium,  L.L.C.
                 financial  statements  for the year  ended  December  31,  2000
                 immediately   follow  the  Notes  to   Consolidated   Financial
                 Statements.

                        All  other   supplemental   schedules  included  audited
                 financial statements of NYFIX Millennium,  L.L.C. for the years
                 ended December 31, 2001 and 2000. Other supplemental  schedules
                 are omitted because they are not required,  inapplicable or the
                 required  information  is shown in the  consolidated  financial
                 statements or notes thereto.

            (3) Exhibits

                  3.1               Composite  Certificate of  Incorporation  of
                                    the  Registrant.   Incorporated   herein  by
                                    reference    from   Exhibit   3.1   to   the
                                    Registrant's Form S-3 filed June 1, 2001.


                  3.2               By-Laws  of  the  Registrant.   Incorporated
                                    herein by reference  from Exhibit 3.2 to the
                                    Registrant's  Form 10 filed  March 5,  1993.
                                    ("Form 10")

                  4.1               Rights   Agreement   between   Chase  Mellon
                                    Shareholder  Services,  L.L.C. (now known as
                                    Mellon Investor Services) and the Registrant
                                    dated September 1, 1997. Incorporated herein
                                    by   reference   from   Exhibit   2  to  the
                                    Registrant's  registration statement on Form
                                    8-A12B filed September 10, 1997.

                  4.2               First Amendment to Rights Agreement  between
                                    Chase Mellon  Shareholder  Services,  L.L.C.
                                    (now known as Mellon Investor  Services) and
                                    the  Registrant   dated  October  25,  1999.
                                    Incorporated   herein  by   reference   from
                                    Exhibit 3 to the  Registrant's  registration
                                    statement on Form 8-A12B/A filed November 3,
                                    1999.

                  10.1              Limited    Liability    Company    Operating
                                    Agreement   of  NYFIX   Millennium,   L.L.C.
                                    Incorporated   herein  by   reference   from
                                    Exhibit  10.4  to  the  Registrant's  Annual
                                    Report  on  Form  10-K  for the  year  ended
                                    December 31, 1999.

                  10.2              Amendments  to Operating  Agreement of NYFIX
                                    Millennium,  L.L.C.  as of November 1, 2000.
                                    Incorporated   herein  by   reference   from
                                    Exhibit  2.2  to  the  Registrant's  Current
                                    Report on Form 8-K/A filed April 17, 2002.


                                       54



                                  NYFIX, INC.


                  10.3              Agreement  and  Plan  of  Merger  among  the
                                    Registrant,   NYOlympus,  Inc.  and  Javelin
                                    Technologies,  Inc.,  dated as of March  12,
                                    2002.  Incorporated herein by reference from
                                    Exhibit  2.1  to  the  Registrant's  Current
                                    Report  on Form 8-K  filed  April  15,  2002
                                    ("Javelin 8-K").

                  10.4              Amendment  No.  1 to  Agreement  and Plan of
                                    Merger among the Registrant, NYOlympus, Inc.
                                    and Javelin Technologies,  Inc., dated as of
                                    March  20,  2002.   Incorporated  herein  by
                                    reference from Exhibit 2.2 of Javelin 8-K.

                  10.5              Amendment  No.  2 to  Agreement  and Plan of
                                    Merger among the Registrant, NYOlympus, Inc.
                                    and Javelin Technologies,  Inc., dated as of
                                    March  26,  2002.   Incorporated  herein  by
                                    reference from Exhibit 2.3 of Javelin 8-K.


                  10.6              Employment Agreement between Peter K. Hansen
                                    and the  Registrant  dated  June  24,  1991.
                                    Incorporated   herein  by   reference   from
                                    Exhibit 3.2 of Form 10.

                  10.7              Amended and Restated  1991  Incentive  Stock
                                    Option  Plan  of  NYFIX,  Inc.  Incorporated
                                    herein by reference from Exhibit 10.3 to the
                                    Registrant's  Annual  Report on Form  10-KSB
                                    for the year ended December 31, 1996.

                  10.8              Amendment No. 1 to Amended and Restated 1991
                                    Incentive  and  Nonqualified   Stock  Option
                                    Plan.  Incorporated herein by reference from
                                    Exhibit  10.4  to  the  Registrant's  Annual
                                    Report  on  Form  10-K  for the  year  ended
                                    December 31, 2000 ("2000 10-K").

                  10.9              Amendment No. 2 to Amended and Restated 1991
                                    Incentive  and  Nonqualified   Stock  Option
                                    Plan.  Incorporated herein by reference from
                                    Exhibit 10.5 to 2000 10-K.

                  10.10             NYFIX,   Inc.   2001  Stock   Option   Plan.
                                    Incorporated   herein  by   reference   from
                                    Exhibit 10.1 to the  Registrant's  Quarterly
                                    Report  on Form  10-Q for the  period  ended
                                    June 30, 2001.

                  10.11             Amendment  No. 1 to NYFIX,  Inc.  2001 Stock
                                    Option Plan.

                  10.12             Subordinated   Loan   Agreement  for  Equity
                                    Capital, dated October 30, 2001, between the
                                    Registrant  and  NYFIX  Millennium,   L.L.C.
                                    Incorporated   herein  by   reference   from
                                    Exhibit  10.1 to the  Registrant's  Form 8-K
                                    filed February 14, 2002.

                  10.13             Purchase  Agreement,  dated as of October 2,
                                    2002, between Edward Brandman,  Daniel Ryan,
                                    Ken DeGiglio and the Registrant.

                  10.14             Convertible  Secured  Promissory  Note  from
                                    Renaissance Trading Technologies, LLC to the
                                    Registrant,  dated as of October 2, 2002, in
                                    the principal amount of $1.5 million.

                  10.15             Amended  and  Restated   Limited   Liability
                                    Company  Operating  Agreement of Renaissance
                                    Trading Technologies, LLC.

                  10.16             Employment  Agreement between Lars Kragh and
                                    the Registrant dated January 1, 2003.

                  10.17             Employment  Agreement  between  Mark R. Hahn
                                    and the Registrant dated January 1, 2003.

                  10.18             Employment   Agreement   between  Robert  C.
                                    Gasser and the  Registrant  dated  September
                                    21, 2001.


                                       55


                                  NYFIX, INC.

                  21.1             Subsidiaries of the Registrant

                  23.1             Consent of Deloitte & Touche LLP

                  23.2             Consent of Deloitte & Touche LLP

                  24.1             Power of Attorney (see signature page)

                  99.1             Certification of Chief Executive Officer

                  99.2             Certification of Chief Financial Officer



(B) REPORTS ON FORM 8-K

        None.

(C) EXHIBITS

        See in Item 15(a)3.

(D) FINANCIAL STATEMENT SCHEDULES

        See in Item 15(a)2.


                                       56



                                  NYFIX, INC.


                                   SIGNATURES


        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934,  the  Registrant  has caused this report to be signed this
31st  day of  March  2003  on our  behalf  by the  undersigned,  thereunto  duly
authorized.


                                   NYFIX, INC.


                                   By: /s/ Peter Kilbinger Hansen
                                       -----------------------------------------
                                         Peter Kilbinger Hansen
                                         Chairman of the Board
                                               and President
                                         (Chief Executive Officer)



                                POWER OF ATTORNEY

        NYFIX,  Inc.  and  each  of the  undersigned  do  hereby  appoint  Peter
Kilbinger  Hansen and Mark R. Hahn, and each of them severally,  its or his true
and lawful attorney to execute on behalf of NYFIX,  Inc. and the undersigned any
and all  amendments to this Annual Report on Form 10-K and to file the same with
all exhibits  thereto and other  documents  in  connection  therewith,  with the
Securities and Exchange Commission;  each of such attorneys shall have the power
to act hereunder with or without the other.


            Pursuant to the requirements of the Securities Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


/s/ Peter Kilbinger Hansen          Chairman of the Board and President         March 31, 2003
- --------------------------          (Principal Executive Officer)
Peter Kilbinger Hansen

/s/ Mark R. Hahn                    Chief Financial Officer and Secretary       March 31, 2003
- --------------------------          (Principal Financial Officer and
Mark R. Hahn                        Principal Accounting Officer)

/s/ George O. Deehan                Director                                    March 31, 2003
- --------------------------
George O. Deehan

/s/ William J. Lynch                Director                                    March 31, 2003
- --------------------------
William J. Lynch

/s/ Carl E. Warden                  Director                                    March 31, 2003
- --------------------------
Carl E. Warden



                                       57



                                  NYFIX, INC.


                           CERTIFICATIONS PURSUANT TO
                                 SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

 CERTIFICATIONS
 --------------

I, Peter K. Hansen, certify that:

1.   I have reviewed this annual report on Form 10-K of NYFIX, Inc.;

2.   Based on my  knowledge,  this  annual  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 annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  position,  results of operations  and cash flows of
     the registrant as of, and for, the periods presented in this annual 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-14 and 15d-14) for the registrant and have:

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


               b) evaluated the  effectiveness  of the  registrant's  disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

               c)  presented  in this annual  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

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

               a) all  significant  deficiencies  in the design or  operation of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

               b) any fraud,  whether or not material,  that involves management
               or  other   employees  who  have  a   significant   role  in  the
               registrant's internal controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.


Date: March 31, 2003


/s/ Peter K. Hansen
- -------------------------------------------
Peter K. Hansen
Chairman, President and
Chief Executive Officer



                                       58



                                  NYFIX, INC.


I, Mark R. Hahn, certify that:

1.   I have reviewed this annual report on Form 10-K of NYFIX, Inc.;

2.   Based on my  knowledge,  this  annual  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 annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  position,  results of operations  and cash flows of
     the registrant as of, and for, the periods presented in this annual 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-14 and 15d-14) for the registrant and have:

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

               b) evaluated the  effectiveness  of the  registrant's  disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date");

               and c) presented in this annual report our conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

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

               a) all  significant  deficiencies  in the design or  operation of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

               b) any fraud,  whether or not material,  that involves management
               or  other   employees  who  have  a   significant   role  in  the
               registrant's internal controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.



Date: March 31, 2003

/s/ Mark R. Hahn
- -------------------------------------------
Mark R. Hahn
Chief Financial Officer


                                       59



                          Index to Financial Statements



                                                                                 Page

Independent Auditors' Report...................................................  F-2

Financial Statements:

   Consolidated Balance Sheets at December 31, 2002 and 2001...................  F-3

   Consolidated Statements of Operations for the Years Ended
        December 31, 2002, 2001 and 2000.......................................  F-4

   Consolidated Statements of Stockholders' Equity and
        Comprehensive Income (Loss) for the Years Ended
        December 31, 2002, 2001 and 2000.......................................  F-5

   Consolidated Statements of Cash Flows for the Years Ended
        December 31, 2002, 2001 and 2000.......................................  F-6

Notes to Consolidated Financial Statements.....................................  F-7


                                      F-1



                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and
Stockholders of NYFIX, Inc.


        We have audited the accompanying  consolidated  balance sheets of NYFIX,
Inc. at December 31, 2002 and 2001, and the related  consolidated  statements of
operations, stockholders' equity and comprehensive income (loss), and cash flows
for each of the  three  years in the  period  ended  December  31,  2002.  These
consolidated  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 auditing standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management  as well as  evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

        In our opinion,  such consolidated  financial statements present fairly,
in all material respects,  the financial position of NYFIX, Inc. at December 31,
2002 and 2001,  and the results of its operations and its cash flows for each of
the three  years in the  period  ended  December  31,  2002 in  conformity  with
accounting principles generally accepted in the United States of America.



                                                           DELOITTE & TOUCHE LLP


Stamford, Connecticut
February 24, 2003


                                      F-2



                                                  NYFIX, Inc.
                                          Consolidated Balance Sheets
                               (in thousands, except share and per share amounts)


                                                                                    December 31,
                                                                               ----------------------
                                                                                 2002          2001
                                                                               ---------    ---------
Assets
Current assets:
  Cash and cash equivalents                                                    $  11,213    $   4,968
  Short-term investments                                                          10,727       28,974
  Accounts receivable, less allowances of $1,207 and $511                         16,601       12,949
  Inventory, net                                                                   1,098        1,599
  Due from unconsolidated affiliates                                                 537        5,222
  Deferred income taxes                                                              590          443
  Prepaid expenses and other                                                       2,938        2,139
                                                                               ---------    ---------
      Total current assets                                                        43,704       56,294
Property and equipment, net                                                       18,186       14,366
Goodwill                                                                          70,161           34
Acquired intangible assets, net                                                    9,404         --
Investments in unconsolidated affiliates                                           5,510       27,500
Notes receivable from unconsolidated affiliates                                    1,519        6,043
Other amounts due from unconsolidated affiliates                                   1,002         --
Deferred income taxes                                                              6,181          348
Other assets                                                                       5,150        3,987
                                                                               ---------    ---------
      Total assets                                                             $ 160,817    $ 108,572
                                                                               =========    =========
Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                                                             $   3,729    $   3,848
  Accrued expenses                                                                 5,360        3,530
  Current portion of capital lease obligations                                     1,089          952
  Deferred revenue                                                                 2,561          451
  Other current liabilities                                                          142         --
                                                                               ---------    ---------
      Total current liabilities                                                   12,881        8,781
Long-term portion of capital lease obligations                                       664          549
Other long-term liabilities                                                          207         --
                                                                               ---------    ---------
      Total liabilities                                                           13,752        9,330
                                                                               ---------    ---------
Commitments and contingencies (See Notes)
Stockholders' equity:
  Preferred stock, $1.00 par value; 5,000,000 shares authorized; none issued        --           --
  Common stock, $0.001 par value; 60,000,000 shares authorized;                       32           29
  32,420,558 and 28,869,800 issued
  Additional paid-in capital                                                     161,347      110,498
  Retained earnings                                                                5,276        8,442
  Treasury stock, 1,301,300 shares, at cost                                      (19,100)     (19,100)
  Due from officers                                                                 (597)        (592)
  Accumulated other comprehensive income (loss)                                      107          (35)
                                                                               ---------    ---------
      Total stockholders' equity                                                 147,065       99,242
                                                                               ---------    ---------
      Total liabilities and stockholders' equity                               $ 160,817    $ 108,572
                                                                               =========    =========


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


                                      F-3



                                     NYFIX, Inc.
                        Consolidated Statements of Operations
                       (in thousands, except per share amounts)


                                                                       Year Ended December 31,
                                                               --------------------------------------
                                                                2002             2001          2000
                                                               --------       --------       --------

Revenue:
   Subscription                                                $ 31,715       $ 28,955       $ 15,955
   Sale                                                           8,517          8,123          5,089
   Service contract                                               8,471          4,319          2,936
   Transaction                                                    7,109            --             --
                                                               --------       --------       --------
     Total revenue                                               55,812         41,397         23,980
                                                               --------       --------       --------
Cost of Revenue:
   Subscription                                                  16,105         12,027          7,557
   Sale                                                           2,072            894            670
   Service contract                                               1,918          1,239            675
   Transaction                                                    6,615            --             --
                                                               --------       --------       --------
     Total cost of revenue                                       26,710         14,160          8,902
                                                               --------       --------       --------

Gross Profit:
   Subscription                                                  15,610         16,928          8,398
   Sale                                                           6,445          7,229          4,419
   Service contract                                               6,553          3,080          2,261
   Transaction                                                      494           --              --
                                                               --------       --------       --------
     Total gross profit                                          29,102         27,237         15,078
                                                               --------       --------       --------
Operating Expense:
   Selling, general and administrative                           29,884         12,239          7,584
   Research and development                                       1,386            452            454
   Depreciation and amortization                                  4,870          1,406            565
                                                               --------       --------       --------
     Total operating expense                                     36,140         14,097          8,603
                                                               --------       --------       --------
(Loss) income from operations                                    (7,038)        13,140          6,475


Interest expense                                                   (262)          (343)          (333)
Investment income                                                   666            780            156
Other expense                                                      (621)           (14)           (20)
                                                               --------       --------       --------
(Loss) income  before income tax (benefit)                       (7,255)        13,563          6,278
   provision and minority interest
Income tax (benefit) provision                                   (3,783)         5,427            601
                                                               --------       --------       --------
(Loss) income before minority interest                           (3,472)         8,136          5,677
Minority interest in NYFIX Millennium, net of tax of $195           306            --             --
                                                               --------       --------       --------
Net (loss) income                                              $ (3,166)      $  8,136       $  5,677
                                                               ========       ========       ========

Basic (loss) income per common share                           $  (0.11)      $   0.30       $   0.23
                                                               ========       ========       ========
Basic weighted average common shares outstanding                 30,126         26,784         24,480
                                                               ========       ========       ========
Diluted (loss) income per common share                         $  (0.11)      $   0.29       $   0.21
                                                               ========       ========       ========
Diluted weighted average common shares outstanding               30,126         28,542         26,425
                                                               ========       ========       ========


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

                                      F-4



                                   NYFIX, INC.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
                      (in thousands, except share amounts)



                                                                                                              Retained
                                                      Common stock issued                                     earnings
                                              --------------------------------         Additional          (accumulated
                                                Shares               Par value       paid-in capital          deficit)
                                              ----------             ----------      ---------------        ------------
Balance January 1, 2000                       23,854,837             $       24      $        35,863        $     (5,371)
Net income and
  comprehensive income                                 -                      -                    -               5,677
Payment for fractional shares                          -                      -                   (4)                  -
Exercise of stock options and warrants         1,254,713                      1                3,988                   -
Issuance of warrants                                   -                      -                   76                   -
Advances to officers, net                              -                      -                    -                   -
Tax benefit from exercise of
  stock options                                        -                      -                2,635                   -
                                              ----------                -------      ---------------        ------------
Balance December 31, 2000                     25,109,550                     25               42,558                 306
Comprehensive income:
Net income                                             -                      -                    -               8,136
Net unrealized loss on
  available-for-sale securities                        -                      -                    -                   -

Total comprehensive income

Exercise of stock options                        384,250                      -                2,223                   -
Issuance of common stock                       3,376,000                      4               65,261                   -
Issuance of warrants                                   -                                          44                   -
Payments from officers, net                            -                      -                    -                   -
Purchase of treasury stock
   (1,301,300 shares)                                  -                      -                    -                   -
Tax benefit from exercise of
  stock options                                        -                      -                  412                   -
                                              ----------                -------      ---------------        ------------
Balance December 31, 2001                     28,869,800                     29              110,498               8,442
Comprehensive loss:
Net loss                                               -                      -                    -              (3,166)
Net unrealized gain on
  available-for-sale securities                        -                      -                    -                   -

Total comprehensive loss

Exercise of stock options                        169,612                      -                  477                   -
Issuance of common stock                       3,381,146                      3               50,272                   -
Advances to officers, net                              -                      -                    -                   -
Tax benefit from exercise of
  stock options                                        -                      -                  100                   -
                                              ----------                -------      ---------------        ------------
Balance December 31, 2002                     32,420,558                $    32      $       161,347        $      5,276
                                              ==========                =======      ===============        ============




                                                                          Accumulated other    Total
                                                Treasury     Due from      comprehensive     stockholders'
                                                 stock       officers       income (loss)       equity
                                               ---------      -------     ----------------   ----------
Balance January 1, 2000                         $      -     $   (632)    $              -   $   29,884
Net income and
  comprehensive income                                 -            -                    -        5,677
Payment for fractional shares                          -            -                    -           (4)
Exercise of stock options and warrants                 -            -                    -        3,989
Issuance of warrants                                   -            -                    -           76
Advances to officers, net                              -          (30)                   -          (30)
Tax benefit from exercise of
  stock options                                        -            -                    -        2,635
                                               ---------      -------     ----------------   ----------
Balance December 31, 2000                              -         (662)                   -       42,227
Comprehensive income:
Net income                                             -            -                    -        8,136
Net unrealized loss on
  available-for-sale securities                        -            -                  (35)         (35)
                                                                                             ----------
Total comprehensive income                                                                        8,101
                                                                                             ----------
Exercise of stock options                              -            -                    -        2,223
Issuance of common stock                               -            -                            65,265
Issuance of warrants                                   -            -                    -           44
Payments from officers, net                            -           70                    -           70
Purchase of treasury stock
   (1,301,300 shares)                            (19,100)           -                    -      (19,100)
Tax benefit from exercise of
  stock options                                        -            -                    -          412
                                               ---------      -------     ----------------   ----------
Balance December 31, 2001                        (19,100)        (592)                 (35)      99,242
Comprehensive loss:                                                                                   -
Net loss                                               -            -                    -       (3,166)
Net unrealized gain on
  available-for-sale securities                        -            -                  142          142
                                                                                             ----------
Total comprehensive loss                                                                         (3,024)
                                                                                             ----------
Exercise of stock options                              -            -                    -          477
Issuance of common stock                               -            -                    -       50,275
Advances to officers, net                              -           (5)                   -           (5)
Tax benefit from exercise of
  stock options                                        -            -                    -          100
                                               ---------      -------     ----------------   ----------
Balance December 31, 2002                      $ (19,100)     $  (597)    $            107   $  147,065
                                               =========      =======     ================   ==========


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

                                      F-5

                            NYFIX, Inc.
                      Consolidated Statements of Cash Flows
                                 (in thousands)


                                                                         Year Ended December 31,
                                                                    2002        2001          2000
                                                                --------      --------      --------

Cash flows from operating activities:
  Net (loss) income                                             $ (3,166)     $  8,136      $  5,677
  Adjustments to  reconcile  net (loss)  income to net cash
   provided by operating activities:
    Depreciation and amortization                                 11,661         6,465         3,697
    Deferred income taxes                                         (2,540)        1,473          (585)
    Provision for bad debts                                        1,146           233           416
    Equity in loss of unconsolidated affiliates                      612          --            --
    Minority interest in NYFIX Millennium                           (306)         --            --
    Changes in assets and liabilities (net of business
    acquisitions):
     Accounts receivable                                            (703)       (1,124)       (5,385)
     Inventory                                                       501           143          (439)
     Prepaid expenses and other                                     (892)       (1,292)         (212)
     Deferred revenue                                               (598)       (5,696)        2,969
     Accounts payable, accrued expenses and other                 (1,567)        2,286         3,220
      liabilities
     Other, net                                                      (13)           (1)           48
                                                                --------      --------      --------
      Net cash provided by operating activities                    4,135        10,623         9,406
                                                                --------      --------      --------
Cash flows from investing activities:
  Purchases of short-term investments                            (10,631)      (91,183)         --
  Proceeds from sales of short-term investments                   32,992        62,150          --
  Capital expenditures for property and equipment                 (4,566)       (7,121)       (6,084)
  Capitalization of product enhancement costs and other           (2,829)       (2,744)       (2,180)
  Proceeds from sale of equipment                                    387          --            --
  Payments for acquisitions, net of cash acquired                 (6,795)         --            --
  Investments in unconsolidated affiiliates                       (5,000)         --            --
  Loans and advances to unconsolidated affiiliates, net of          (362)       (9,237)       (1,123)
   repayments
 (Advances to) payments from officers                               (371)           72            (4)
                                                                --------      --------      --------
      Net cash provided by (used in) investing activities          2,825       (48,063)       (9,391)
                                                                --------      --------      --------
Cash flows from financing activities:
   Principal payments under capital lease obligations             (1,192)         (846)         (200)
   Repayment of borrowings                                          --          (2,000)         (500)
   Purchases of treasury stock                                      --         (19,100)         --
   Net proceeds from issuance of common stock                        477        59,487         3,986
                                                                --------      --------      --------
      Net cash (used in) provided by financing activities           (715)       37,541         3,286
                                                                --------      --------      --------
Net increase in cash and cash equivalents                          6,245           101         3,301
Cash and cash equivalents, beginning of year                       4,968         4,867         1,566
                                                                --------      --------      --------
Cash and cash equivalents, end of year                          $ 11,213      $  4,968      $  4,867
                                                                ========      ========      ========

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

                                      F-6



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1.      BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


NATURE OF OPERATIONS

        NYFIX, Inc., (together with its subsidiaries, the "Company"), founded in
1991,  provides  electronic  trading  technology  infrastructure  and  execution
services to the  professional  trading  segment of the brokerage  industry.  The
Company's  products and services  automate  institutional  trading  workflows by
streamlining data entry and seamlessly  integrate electronic order and execution
handling.  The Company  offers a complete  electronic  desktop order  management
solution, stationary and wireless handheld exchange floor technology, and a high
volume trade execution platform. The Company's products deliver straight through
processing for front,  middle and back office trade  information  handling.  The
Company  delivers our products mainly as a service bureau offering and maintains
an  extensive  data  center  with a network  of  electronic  circuits  that link
industry   participants   together  and  provide  access  to  the  domestic  and
international  equities  and  derivatives  markets.  Headquartered  in Stamford,
Connecticut,  the  Company  has  additional  offices in New York  City,  London,
Chicago and San Francisco.


PRINCIPLES OF CONSOLIDATION

        The accompanying  consolidated financial statements include the accounts
of  NYFIX,  Inc.  and its  majority-owned  and  wholly-owned  subsidiaries.  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

        Prior  to  February  1,  2002,  the  Company's  50%  ownership  in NYFIX
Millennium,  L.L.C.  ("NYFIX  Millennium")  was  accounted  for under the equity
method.  The Company's  ownership of EuroLink  Network,  Inc.  ("EuroLink")  and
Renaissance Trading  Technologies,  LLC ("Renaissance") was accounted for by the
equity  method,  since the  Company  has the  ability  to  exercise  significant
influence over the operating and financial policies of those companies.


USE OF ESTIMATES

        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 affects the reported  amounts
of assets and liabilities,  the disclosure of contingent  assets and liabilities
at the dates of the consolidated  financial  statements and the reported amounts
of  revenue  and  expense  during  the  reporting  periods  in the  consolidated
financial   statements  and  accompanying   notes.  The  estimates  include  the
collectibility of accounts receivable,  the use and recoverability of inventory,
the useful  lives of  tangible  and  intangible  assets and the  realization  of
deferred tax assets,  among others.  The markets for the Company's  products are
characterized  by  intense  competition,  rapid  technological  development  and
pricing  pressures,  all of which could affect the future  realizability  of the
Company's  assets.  Estimates and assumptions are reviewed  periodically and the
effects of revisions are reflected in the consolidated  financial  statements in
the period they are determined to be necessary. Actual results could differ from
those estimates.


RECLASSIFICATIONS

        Certain   reclassifications   have  been   made  in  the  prior   years'
consolidated financial statements to conform to the current year's presentation.
In connection therewith,  the Company reclassified certain operating expenses to
cost of revenue, during the years ended December 31, 2001 and 2000.


                                      F-7



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

REVENUE RECOGNITION

        The  Company's  revenue is  comprised  of  subscription,  sale,  service
contract, and transaction components.

        Subscription   revenue  contracts  are  generally  for  leasing  of  the
Company's equipment and use of its NYFIX Network, with an initial term of one to
three years with automatic  renewal  periods  unless the Company  receives prior
notice of cancellation. Under the terms of the subscription contracts, customers
are typically  invoiced a flat periodic  charge after initial  installation  and
acceptance.  Revenue  related to these  contracts is recognized over the initial
term of the contract on a straight-line  basis. The Company also includes within
its subscription revenue, telecommunication and other charges, which the Company
provides  to the  customer  at  cost  plus a  normal  profit.  Such  revenue  is
recognized  as the  services  are  provided.  As the  Company  has no history of
significant   cancellations,   the  Company   does  not  record  a  reserve  for
cancellations.

        Sale  revenue,  which is  comprised  of software  and capital  equipment
sales,  is  recognized  when the  software and  equipment  have been shipped and
accepted  by the  customer  and when other  contractual  obligations,  including
installation if applicable,  have been satisfied and collection of the resulting
receivable is reasonably  assured.  As the Company has no history of significant
sales  returns,  the  Company  does not record a reserve  for sales  returns and
allowances.

        Service contract  revenue,  which is comprised of maintenance  contracts
for  subscription  equipment and software and capital  equipment,  is recognized
over the  contract  period  on a  straight-line  basis.  Service  contracts  for
subscription equipment are generally co-terminus with the subscription contract.
Service  contracts  for  software and capital  equipment  are  generally  for an
initial  term of one year with  automatic  renewal  periods  unless the  Company
receives prior notice of cancellation.

        Transaction  revenue  contracts  provide for  transaction  or  execution
services,  which are  comprised of a usage or  transaction-based  fee for trades
executed through the Company's broker-dealer operations. Revenue on contracts is
generally  invoiced  in  arrears  and  recognized  in the  period in which it is
earned.  The  Company   periodically   enters  into  contracts,   which  include
subscription equipment and telecommunication charges to be invoiced at a minimum
transaction-based  fee.  The  Company  accounts  for  these  contracts  as  both
subscription  revenue,  for its minimal fee, and  transaction  revenue,  for the
amount  earned in excess of its minimal fee. The Company  values the minimal fee
as the fair value of similar subscription equipment leased and telecommunication
charges provided to similar customers.

        Certain   subscription  and  service  contract  agreements  provide  for
invoicing  in advance  of the  service  being  performed,  generally  quarterly.
Revenue on contracts  invoiced in advance is deferred and  recognized as revenue
over the period earned and is included in "deferred revenue" in the accompanying
consolidated  balance sheets.  Shipping,  handling and installation  charges, if
any,  are  generally  invoiced to a customer  and are  included in revenue  upon
completion of the installation.

        The Company  periodically enters into arrangements that include multiple
deliverables,  which  typically  consist  of the sale of  software  and  capital
equipment with additional services,  such as installation,  training and service
among others. Services provided subsequent to initial delivery and installations
are typically invoiced  separately.  The Company accounts for each element of an
arrangement with multiple deliverables separately. The arrangement consideration
is allocated to each element  based on the relative fair values of each element.
Vendor  specific  objective  evidence  for fair value of services  is  primarily
determined by reference to renewal pricing.


                                      F-8



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

COST AND EXPENSE

        Inbound freight charges are included in inventory. When the inventory is
sold, the cost of inventory,  including the inbound freight charges, is relieved
and charged to cost of revenue.  When the inventory is leased on a  subscription
basis, the cost of inventory, including the inbound freight charges, is relieved
and transferred to a subscription and service bureau equipment  account included
within "property and equipment,  net" in the accompanying  consolidated  balance
sheets. The cost of the leased subscription and service bureau equipment is then
depreciated  over the estimated  useful life of the equipment.  The depreciation
expense related to this equipment is included in cost of subscription revenue in
the accompanying consolidated statements of operations.

        The Company  operates  data  centers  where it maintains  equipment  and
infrastructure  to support  its  operations.  Telecommunication  and other costs
incurred  on behalf of its  customers  and costs to maintain  the data  centers,
including  depreciation and amortization of assets utilized by the data centers,
are recognized as either a cost of subscription or cost of transaction  revenue,
as appropriate.

        Research and  development  costs are  expensed as incurred.  These costs
consist  primarily of salaries and related costs for  technical and  programming
personnel.  Research and development expense was $1.4 million, $0.5 million, and
$0.5 million for the years ended December 31, 2002, 2001 and 2000, respectively.

        The Company expenses advertising costs as incurred.  Advertising expense
was $1.0 million,  $0.2 million,  and $0.2 million for the years ended  December
31, 2002, 2001 and 2000, respectively.


CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

        The Company  considers all highly liquid  investments with maturities of
three months or less to be cash equivalents.  The short-term investments consist
of auction rate  certificates  and mutual funds.  Such investments are stated at
fair value as determined  by the most recently  traded price of each security at
the balance sheet date. The Company's  short-term  investments are classified as
available-for-sale  securities  under the  provisions  of Statement of Financial
Accounting  Standards  ("SFAS") No. 115,  ACCOUNTING FOR CERTAIN  INVESTMENTS IN
DEBT AND EQUITY SECURITIES.

        Management determines the appropriate  classification of its investments
in debt and equity  securities  at the time of  purchase  and  reevaluates  such
determinations  at each balance sheet date.  Available-for-sale  securities  are
carried at fair value, with the unrealized gains or losses, net of tax, reported
as  other   comprehensive   income  (loss)  and  as  a  separate   component  of
stockholders'   equity.  Sales  of  securities  are  recorded  by  the  specific
identification method.

        The cost basis of short-term  investments  at December 31, 2002 and 2001
was $10.5 million and $29.0 million, respectively.

ACCOUNTS RECEIVABLE

        Accounts  receivable  are stated at net  realizable  value by  recording
allowances for those accounts  receivable  amounts that the Company believes are
uncollectible.  The Company's estimate of its allowance for doubtful accounts is
based  on  collection  experience,   which  includes  analyzing  prior  accounts
receivable  written-off and reviewing the aging of the accounts receivable.  The
Company's allowance for doubtful accounts includes amounts for specific accounts
that are  believed  to be  uncollectible,  as well as  amounts  that  have  been
computed by applying  certain  percentages  based on historical loss trends,  to
certain accounts  receivable aging  categories,  net of accounts  receivable for


                                      F-9



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

which revenue recognition has been deferred.

BUSINESS CONCENTRATIONS AND CREDIT RISK

        The   Company's   revenue  is  derived  from  the   financial   services
marketplace,  primarily  the brokerage  community.  As of and for the year ended
December 31, 2002, one customer accounted for 11% of accounts receivable, but no
customer  accounted  for more than 10% of revenue.  As of and for the year ended
December 31, 2001, one customer accounted for 12% of revenue and 16% of accounts
receivable another customer  accounted for 10% of revenue,  and a third customer
accounted for 15% of accounts receivable.  As of and for the year ended December
31, 2000, no customer accounted for more than 10% of revenue or more than 10% of
accounts receivable.

INVENTORY VALUATION

        Inventory consists of parts,  finished goods and materials and is stated
at  the  lower  of  cost,  determined  on an  average  cost  basis,  or  market.
Provisions, when required, are made to reduce excess and obsolete inventories to
the estimated net realizable values.  Inventory  provisions are calculated using
management's best estimate of inventory value based on the age of the inventory,
quantities on hand compared with  historical and projected usage and current and
anticipated demand.


PROPERTY AND EQUIPMENT

        Property and equipment is stated at cost less accumulated  depreciation.
Included  in  equipment  are certain  costs  related to the  development  of the
Company's  NYFIX  Network  to  support  its   subscription   and  service  based
businesses.


BUSINESS COMBINATIONS AND GOODWILL

        Business  combinations  are accounted  for under the purchase  method of
accounting and include the results of operations of the acquired businesses from
the dates of their respective acquisition. Net assets of acquired businesses are
recorded  at their fair value at the date of  acquisition.  Goodwill  represents
acquisition  costs in  excess  of the fair  value of net  assets  acquired.  The
Company adopted SFAS No. 142,  GOODWILL AND OTHER INTANGIBLE  ASSETS,  effective
January 1, 2002,  which  requires  that  goodwill and certain  other  intangible
assets having indefinite lives not be amortized to income, but instead be tested
for  impairment  annually as well as on an interim basis if events or changes in
circumstances  indicate that goodwill  might be impaired.  Effective  October 1,
2002, the Company  performed its annual test for impairment using the discounted
cash  flow  valuation  method.  There  was no  impairment  to the  value  of the
Company's recorded goodwill.


CAPITALIZED PRODUCT ENHANCEMENT COSTS

        The Company capitalizes  certain costs of internally  developed software
as product  enhancement costs.  Internally  capitalized costs consist of payroll
and payroll related costs,  purchased  materials and services and software to be
used  within  the  Company's  products.  The  Company  defers  those  costs that
significantly  enhance the marketability or significantly extend the life of the
Company's  products.  Management  is  required to use  professional  judgment in
determining  whether product  enhancement  costs meet the criteria for immediate
expense or  capitalization,  in accordance with SFAS No. 86,  ACCOUNTING FOR THE
COSTS OF COMPUTER SOFTWARE TO BE SOLD,  LEASED, OR OTHERWISE  MARKETED.  Product
enhancement costs are amortized using the straight-line method over three years.


                                      F-10



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

LONG-LIVED ASSETS

        The Company reviews the carrying value of long-lived  assets,  including
property and  equipment,  intangible  assets,  investments  and other  long-term
amounts due from  unconsolidated  affiliates and capitalized product enhancement
costs for impairment whenever events or circumstances indicate that the carrying
amount may not be fully recoverable.  If such an event or circumstances  occurs,
the related estimated fair value of the assets would be compared to the carrying
amount,  and if needed,  the Company would record an impairment to the extent by
which the  carrying  amount  exceeds  the fair value of the asset.  There was no
impairment of long-lived  assets recorded for the years ended December 31, 2002,
2001 and 2000.

INCOME TAXES

        Income taxes are  accounted  for under the asset and  liability  method.
Under this method,  deferred tax assets and liabilities are recognized  based on
the  estimated  future tax  consequences  of  differences  between the financial
statement  carrying  amounts of assets and liabilities and their  respective tax
bases.  Deferred tax assets and liabilities are measured using presently enacted
tax rates in effect for the periods the temporary differences are expected to be
settled. A valuation allowance is established, as needed, to reduce net deferred
tax  assets  to their  realizable  value.  A  valuation  allowance  has not been
established for the Company's deferred tax assets, as the Company believes it is
more likely than not that they will be realized.


FINANCIAL INSTRUMENTS

        The  carrying  value for all  current  assets  and  current  liabilities
approximates fair value because of their short-term nature.


FOREIGN CURRENCY TRANSLATION

        The Company's functional currency is the U.S. dollar.  Accordingly,  the
monetary  assets and  liabilities  of the London  operation  are  translated  at
year-end exchange rates while non-monetary assets and liabilities are translated
at  historical  rates.  Revenue and expense are  translated  at average rates in
effect during the year,  except for  depreciation  and cost of sales,  which are
translated at historical rates. The resulting currency  translation gain or loss
is included in the results of operations.


COMPREHENSIVE INCOME (LOSS)

        The Company reflects other comprehensive  income (loss),  which consists
of unrealized gains and losses on available-for-sale  securities,  as a separate
component  of  stockholders'  equity  as  required  by SFAS No.  130,  REPORTING
COMPREHENSIVE INCOME.


STOCK-BASED EMPLOYEE COMPENSATION

        The Company  accounts for its stock-based  employee  compensation  plans
under the recognition and measurement  provisions of Accounting Principles Board
Opinion  ("APB") No. 25,  ACCOUNTING  FOR STOCK ISSUED TO EMPLOYEES  and related
interpretations. The Company does not recognize stock-based compensation expense
in its reported results as all stock options granted had an exercise price equal
to the fair  value of the  underlying  common  stock on the date of  grant.  The
following  table  illustrates  the effect on net (loss) income and (loss) income
per share if the Company had applied the fair value recognition provisions of


                                      F-11





                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


SFAS No. 123, as required by SFAS No. 148, to stock-based employee compensation
(also see Note 15):


                                                                          Year Ended December 31,
                                                        ---------------------------------------------------
                                                           2002                2001                  2000
                                                        ---------------------------------------------------
                                                                   (in thousands, except per share amounts)

Net (loss) income, as reported                          $  (3,166)          $   8,136             $   5,677
Compensation expense based on the fair value
   method, net of tax                                      (4,553)             (7,948)               (7,327)
                                                        ---------           ---------             ---------
Pro forma net (loss) income                             $  (7,719)          $     188             $  (1,650)
                                                        =========           =========             =========


Basic (loss) income per common share:
   As reported                                          $   (0.11)          $    0.30             $    0.23
                                                        =========           =========             =========
   Pro forma                                            $   (0.26)          $    0.01             $   (0.07)
                                                        =========           =========             =========


Diluted (loss) income per common share:
   As reported                                          $   (0.11)          $    0.29             $    0.21
                                                        =========           =========             =========
   Pro forma                                            $   (0.26)          $    0.01             $   (0.07)
                                                        =========           =========             =========


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In October  2001,  the Financial  Accounting  Standards  Board  ("FASB")
issued SFAS No. 144,  ACCOUNTING  FOR THE  IMPAIRMENT  OR DISPOSAL OF LONG-LIVED
ASSETS,  which  supercedes  SFAS  No.  121,  ACCOUNTING  FOR THE  IMPAIRMENT  OF
LONG-LIVED  ASSETS  AND  FOR  LONG-LIVED  ASSETS  TO BE  DISPOSED  OF,  and  the
accounting  and  reporting  provisions  of APB No. 30,  REPORTING THE RESULTS OF
OPERATIONS - REPORTING  THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS,  AND
EXTRAORDINARY,  UNUSUAL AND INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS,  for
the  disposal  of a segment  of a  business.  SFAS No. 144  retains  many of the
provisions  of  SFAS  No.  121,  but  addresses  certain  implementation  issues
associated  with that  Statement.  SFAS No. 144 is  effective  for fiscal  years
beginning  after December 15, 2001.  The Company  adopted SFAS No. 144 effective
January 1, 2002. The adoption of SFAS No. 144 did not have a material  effect on
the Company's financial position, results of operations or cash flows.

        In  April  2002,  the  FASB  issued  SFAS No.  145,  RESCISSION  OF FASB
STATEMENTS  NO. 4, 44 AND 64,  AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS.  SFAS No. 145  eliminates  extraordinary  accounting  treatment for
reporting  gains or losses on debt  extinguishment,  and amends  other  existing
authoritative  pronouncements to make various technical corrections. The Company
adopted SFAS No. 145 effective January 1, 2003. The adoption of SFAS No. 145 did
not have a  material  effect on the  Company's  financial  position,  results of
operations or cash flows.

        In July 2002,  the FASB  issued  SFAS No.  146,  ACCOUNTING  FOR EXIT OR
DISPOSAL ACTIVITIES.  SFAS No. 146 requires recording costs associated with exit
or disposal  activities at their fair values when a liability has been incurred.
Under  previous  guidance,  certain exit costs were  accrued  upon  management's
commitment to an exit plan. The provisions of SFAS No. 146 are effective for exit
or disposal  activities  initiated after December 31, 2002. The Company does not
expect that adoption of SFAS No. 146 will have a material effect on its financial
position, results of operations or cash flows.



                                      F-12



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

        In November 2002, the FASB Emerging Issues Task Force ("EITF") reached a
consensus  on No.  00-21,  ACCOUNTING  FOR REVENUE  ARRANGEMENTS  WITH  MULTIPLE
DELIVERABLES.   EITF  No.  00-21  applies  to  certain   contractually   binding
arrangements   under  which  a  company  performs  multiple  revenue  generating
activities  and requires that all companies  account for each element  within an
arrangement  with multiple  deliverables  as separate units of accounting if (a)
the delivered item has value on a stand-alone  basis, (b) there is objective and
reliable  evidence  of fair  value and (c) the  amount of the total  arrangement
consideration  is fixed.  EITF No. 00-21 is effective  for revenue  arrangements
entered into in fiscal  periods  beginning  after June 15, 2003.  The Company is
evaluating  the provisions of EITF No. 00-21 and whether the  implementation  of
this statement will have a material effect on the Company's  financial position,
results of operations or cash flows.

        In  November  2002,  the FASB  issued  FASB  Interpretation  ("FIN") 45,
GUARANTOR'S  ACCOUNTING AND DISCLOSURE  REQUIREMENTS  FOR GUARANTEES,  INCLUDING
INDIRECT  GUARANTEES OF INDEBTEDNESS OF OTHERS.  FIN 45 disclosure  requirements
are  effective  for the year ended  December 31, 2002 and other  provisions  are
effective for 2003. The interpretation  requires additional  disclosure relating
to guarantees and in some cases requires the  recognition of a liability for the
fair value of certain  guarantees.  The  adoption of FIN 45 had no effect on the
Company, as it does not guarantee the liabilities of others.

        In  December  2002,  the  FASB  issued  SFAS  No.  148,  ACCOUNTING  FOR
STOCK-BASED  COMPENSATION - TRANSITION AND DISCLOSURE.  SFAS No. 148 amends SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, to provide alternative methods
of transition  for  companies  that  voluntarily  change to the fair value based
method of accounting for stock-based  employee  compensation.  SFAS No. 148 also
amends  the  disclosure  provisions  of SFAS  No.  123 and APB No.  28,  INTERIM
FINANCIAL  REPORTING,  to  require  disclosure  in the  summary  of  significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and income per share
in annual and interim financial  statements.  The disclosure  provisions of SFAS
No. 148 are effective for both interim and annual  periods ending after December
15, 2002. The Company has adopted the  disclosure  provisions of SFAS No. 148 at
December 31, 2002.

        In January  2003,  the FASB  issued FIN 46,  CONSOLIDATION  OF  VARIABLE
INTEREST  ENTITIES,   which  requires  the  consolidation  of  certain  entities
considered to be variable interest entities ("VIEs"). An entity is considered to
be a VIE  when it has  equity  investors  which  lack the  characteristics  of a
controlling  financial interest,  or its capital is insufficient to permit it to
finance  its  activities  without  additional  subordinated  financial  support.
Consolidation of a VIE by an investor is required when it is determined that the
investor will absorb a majority of the VIE's expected losses or residual returns
if they occur.  FIN 46 provides  certain  exceptions  to these rules,  including
qualifying special purpose entities subject to the requirements of SFAS No. 140,
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL  ASSETS AND  EXTINGUISHMENTS
OF  LIABILITIES.  VIEs  created  after  January  31,  2003 must be  consolidated
immediately,  while  VIEs  that  existed  prior  to  February  1,  2003  must be
consolidated as of July 1, 2003. The Company is evaluating the provisions of FIN
46 and  whether  the  implementation  of  this  statement,  with  regard  to the
Company's  unconsolidated  affiliates,  will  have  a  material  effect  on  the
Company's financial position, results of operations or cash flows.

2.      INVENTORY

        Inventory consisted of the following:



                                      F-13

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


                                                                December 31,
                                                           ---------------------
                                                            2002           2001
                                                           ------         ------
                                                              (in thousands)

Parts and materials                                        $  912         $1,120
Work in process                                                52            152
Finished goods                                                294            409
                                                           ------         ------
     Total inventory, gross                                $1,258         $1,681
Less: Allowance for obsolescence                              160             82
                                                           ------         ------
     Total inventory, net                                  $1,098         $1,599
                                                           ======         ======

3.      PROPERTY AND EQUIPMENT

        Property and equipment consisted of the following:

                                                   December 31,
                                                 -----------------
                                                  2002      2001     Useful Lives
                                                 -------   -------   ------------
                                                   (in thousands)

Computer software                                $ 4,042   $ 1,124   4 - 5 years
Leasehold improvements                             1,943     1,312   2 - 8 years
Furniture and equipment                            5,757     3,253   3 - 7 years
Subscription and data center equipment            22,868    18,428   3 - 5 years
                                                 -------   -------
     Total property and equipment, gross          34,610    24,117
Less: Accumulated depreciation                    16,424     9,751
                                                 -------   -------
     Total property and equipment, net           $18,186   $14,366
                                                 =======   =======

        Assets held under capital leases, included in above, consisted of the
following:

                                                     December 31,
                                                   --------------
                                                    2002     2001   Useful Lives
                                                   ------   ------  ------------
                                                    (in thousands)

Furniture and equipment                            $  115   $ --     3 - 5 years
Data center equipment                               2,969    2,547   3 - 5 years
                                                   ------   ------
     Total property and equipment held under
        capital leases, gross                       3,084    2,547
Less: Accumulated depreciation                      1,018      629
                                                   ------   ------
     Total property and equipment held under
        capital leases, net                        $2,066   $1,918
                                                   ======   ======

        Depreciation  and  amortization  expense for property and  equipment was
$7.7  million,  $4.7 million and $2.5  million for the years ended  December 31,
2002, 2001 and 2000, respectively.  Of these amounts, $4.4 million, $3.3 million
and $2.0  million  for the  years  ended  December  31,  2002,  2001  and  2000,
respectively,  were included in cost of revenue. Amortization expense for assets
held under capital leases included above was $1.2 million, $0.5 million and $0.1
million for the years ended December 31, 2002, 2001 and 2000, respectively.



                                      F-14



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

4.      ACQUISITIONS, GOODWILL AND ACQUIRED INTANGIBLE ASSETS

ACQUISITIONS

NYFIX MILLENNIUM

        NYFIX  Millennium,  a  broker-dealer,  developed  an  ATS,  which  is an
electronic  system that  matches  buyers and sellers in a  completely  anonymous
environment.  The system  aims to provide  high  quality  execution  for clients
through computerized matching technologies. NYFIX Millennium offers users access
to multiple  liquidity points through a single terminal,  complete anonymity and
invisibility,   intelligent   order  routing  and  the   opportunity  for  price
improvement and liquidity  enhancement.  NYFIX Millennium  provides an efficient
way for major  financial  institutions  and  traders  to obtain  the best  match
available for their transactions in the listed equities marketplace.

        In September 1999,  NYFIX  Millennium was formed as a limited  liability
company, by the Company and seven  international  investment banks and brokerage
firms,  consisting of Deutsche Bank, ABN Amro Securities (formerly ING Barings),
Lehman Brothers,  Morgan Stanley Dean Witter Equity  Investments Ltd.,  Alliance
Capital  Management  (formerly  Sanford C.  Bernstein & Co.),  Societe  Generale
Investment  Corporation  (formerly  SG  Cowen)  and UBS  Warburg  (the  "Initial
Partners").  Each  of the  Initial  Partners  invested  $2.0  million  in  NYFIX
Millennium in exchange for 25,000 units of NYFIX Millennium, collectively owning
a 50% membership interest in NYFIX Millennium. The Company invested $2.0 million
and owned the  remaining  50%. In addition,  the Company  purchased an option to
buy, from the Initial Partners,  an additional 30% membership  interest in NYFIX
Millennium  (the  "Option"),  for which  the  Company  paid each of the  Initial
Partners  281,250 shares of its common stock.  The Option allowed the Company to
increase  its  membership  interest in NYFIX  Millennium  up to 80% of the total
membership  interest  through the  exchange of one share of its common stock for
each unit of NYFIX Millennium purchased, subject to certain adjustments.

        In March 2001, NYFIX Millennium added four more partners,  consisting of
Bank of America,  Wachovia  Securities  (formerly  First Union  Securities)  and
LabMorgan  Corporation  (formerly  J.P.  Morgan & Co.  and Chase  H&Q) (the "New
Partners").  Pursuant to the terms of the NYFIX Millennium  Operating Agreement,
each New Partner  invested  $2.0  million in NYFIX  Millennium  in exchange  for
25,000 units of NYFIX  Millennium.  The Company  maintained  its 50%  membership
interest in NYFIX  Millennium in exchange for reducing  certain of its rights to
share  in 4% of the  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 noted above, with LabMorgan Corporation (as the successor to
two partners) receiving 188,000 shares.

        At December 31, 2001,  the Company's  investment in NYFIX  Millennium of
$27.5  million  consisted  of  $25.5  million  of  shares  of its  common  stock
(1,968,750  shares in 1999 of the Company's  common stock at $8.89 per share and
376,000  shares in March and April 2001 of the Company's  common stock at $21.28
per share) and the Company's  capital cash  contribution  of $2.0  million.  The
Company's funded certain  operating costs and capital  expenditures on behalf of
NYFIX  Millennium.  Such  advances of $5.2 million  were  reflected as "due from
unconsolidated  affiliates" on the  accompanying  consolidated  balance sheet at
December  31, 2001.  In  addition,  the Company  loaned to NYFIX  Millennium  an
aggregate of $11.0  million,  plus accrued  interest,  of which $5.0 million was
loaned in 2002.  The $6.0  million  loaned in 2001,  plus accrued  interest,  is
reflected  in  "notes   receivable  from   unconsolidated   affiliates"  on  the
accompanying consolidated balance sheet at December 31, 2001.


                                      F-15



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

        On January 23, 2002, the Company  notified the Initial  Partners and New
Partners that the Company would exercise its Option, effective February 1, 2002.
In exchange  for the  increased  membership  interest in NYFIX  Millennium,  the
Company  paid the Initial  Partners  and New  Partners an  aggregate  of 296,250
shares of the  Company's  common stock with a fair value of $4.5  million,  with
each  Initial  Partner  receiving  33,750  shares of  common  stock and each New
Partner  receiving  15,000  shares of common  stock.  As a result,  the  Company
increased its ownership of NYFIX Millennium to 80%. The results of operations of
NYFIX  Millennium  have been  included  in the  accompanying  2002  consolidated
statement of  operations  since the  acquisition  date.  All advances and loans,
including accrued interest, have been eliminated in consolidation  commencing on
February 1, 2002.  The excess of the  purchase  price over the fair value of the
net assets acquired was $27.8 million and has been recorded as goodwill. Some of
the  Company's  key  considerations  for the  acquisition  of  NYFIX  Millennium
included  NYFIX  Millennium's  growth  in  revenue,  the  attractiveness  of the
synergies we anticipated with the Company's  recently-acquired NYFIX Transaction
Services  broker-dealer,  and the  Company's  ability  to  exercise  significant
control over NYFIX Millennium's operations.

        Pursuant to the NYFIX Millennium  Operating  Agreement,  as amended, the
first $22.0 million in NYFIX  Millennium  operating  losses since  inception was
allocated to the Initial Partners and New Partners,  which equaled the extent of
their capital  contribution to NYFIX Millennium.  The minority interest in NYFIX
Millennium  disclosed on the accompanying  consolidated  statement of operations
for the year ended December 31, 2002 reflects the allocation of NYFIX Millennium
losses to the Initial  Partners and New Partners post  acquisition to the extent
of their capital contribution, thereby reducing their minority interest to zero.
In addition,  the Company has recognized  NYFIX  Millennium  operating losses of
$6.0  million for the year ended  December  31,  2002,  which were $4.0  million
greater than the  Company's  capital  contribution  of $2.0  million.  While the
Company expects NYFIX Millennium to be profitable in the future, there can be no
assurances of such profitability.  As a result, the Company has not allocated to
the Initial  Partners and New Partners their pro rata share of NYFIX  Millennium
losses  in  excess  of the  Company's  capital  contribution,  aggregating  $1.0
million, at December 31, 2002, since the Company cannot assure recoverability of
the asset  that  such an  allocation  would  create.  At such  time  when  NYFIX
Millennium  achieves  profitability,  24% of its profits,  net of the  Company's
recovering its over-allocated  losses, will be allocated to the Initial Partners
and New Partners.


JAVELIN

        Javelin Technologies, Inc. ("Javelin") is a provider of electronic trade
communication  technology and FIX protocol  technology.  The FIX protocol is the
messaging standard underlying language,  which was developed to enable real-time
electronic trading and communications. In utilizing the FIX protocol technology,
companies can eliminate the high costs and associated  risks of developing their
own proprietary network links and implementing a non-standard protocol.

        On March 31, 2002,  the Company  acquired  100% of the capital  stock of
Javelin. Some of the Company's key considerations for the acquisition of Javelin
include: increased connectivity to the buy-side institutional market,


                                      F-16

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

        consolidated  product  offering,  cross-selling  of  core  products  and
transaction  services,  and a single point of electronic  exchange access across
all major domestic and international equity and derivatives exchanges.

        The Company  financed the  transaction  with a combination  of (i) $10.0
million in net cash; (ii) 2,784,896 shares of common stock of the Company having
a fair value of $41.2  million;  and (iii) 493,699 shares of common stock of the
Company having a fair value of $3.5 million  reserved for issuance upon exercise
of  Javelin  stock  options  assumed  by  the  Company.   The  Company  incurred
approximately  $1.2 million in costs directly  associated with the  acquisition,
which  were  included  in the  overall  consideration.  The cash  portion of the
purchase price was financed through  available  funds. In addition,  the Company
agreed to issue  additional  shares to the Javelin  stockholders  contingent  on
attainment  of certain  2002  revenue  targets.  The  revenue  targets  were not
achieved  and,  accordingly,  no additional  shares were issued.  The results of
operations  of  Javelin  have  been  included  in the  consolidated  results  of
operations since the acquisition date. The excess of the purchase price over the
fair value of the net assets acquired was $42.3 million and has been recorded as
goodwill.

        Of the  aforementioned  purchase price, $1.0 million in cash and 270,945
shares of common stock,  having a fair value of $4.0  million,  is being held in
escrow  by an  unrelated  party  and  is  subject  to a  final  working  capital
adjustment  to be  calculated as of March 31, 2002 and the effect of the outcome
of specific  litigation to be determined  based on activities  through March 31,
2003.  The  Company  will  record  the  return of  escrow,  if any,  based  upon
activities through March 31, 2003, as a reduction in goodwill.

        In connection with the  acquisition of Javelin,  the Company assumed the
liability  for the servicing of Javelin's  service  maintenance  contracts.  The
Company  has  accounted  for the  deferred  revenues  related  to these  service
contracts of Javelin in connection  with the acquisition in accordance with EITF
01-3,  ACCOUNTING IN A BUSINESS COMBINATION FOR DEFERRED REVENUE OF AN ACQUIREE.
The Company recorded a liability as of the date of the acquisition  equal to the
fair value of this  liability  and adjusted  the amount for the  expected  gross
profit that Javelin would  normally  realize on service  maintenance  contracts.
Such  amounts  since the date of  acquisition  are  recognized  as  revenue on a
straight-line basis over the remaining service maintenance  contract period. The
purchase  price  allocation  of these  obligations  was  included  in  "deferred
revenues" in the accompanying consolidated balance sheet at December 31, 2002.


NYFIX TRANSACTION SERVICES

        In December 2001,  the Company  acquired an inactive  broker-dealer  for
$34,000 and filed a  membership  application  with the National  Association  of
Securities  Dealers  ("NASD") to operate as a  broker-dealer  through the wholly
owned  subsidiary,  which was  renamed  NYFIX  Transaction  Services,  Inc.  The
application  was  approved  in May 2002 and  NYFIX  Transaction  Services  began
generating  revenue  on  July  1,  2002.  NYFIX  Transaction  Services  provides
electronic execution, primarily to domestic and international broker-dealers and
specialized  trading firms.  The acquisition was accounted for as a purchase and
the cost of the acquisition has been allocated to goodwill.


ALLOCATION OF ASSETS ACQUIRED

        The purchase prices of the above acquisitions have been allocated to the
assets  acquired  and  liabilities  assumed  based  on the  fair  values  at the
respective acquisition dates, as follows:


                                      F-17

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                                          NYFIX
                                                        Millennium       Javelin
                                                        ----------       -------
Assets:                                                       (in thousands)
   Current assets                                        $ 7,600         $ 5,598
   Property and equipment                                  4,731           1,345
   Intangible assets                                       2,200           8,800
   Goodwill                                               27,806          42,321
   Deferred tax assets                                      --             3,534
   Other assets                                               74             288
                                                         -------         -------
      Total assets acquired                               42,411          61,886
                                                         -------         -------
Liabilities:
   Current liabilities                                     3,904           5,244
   Long-term debt                                          6,000             166
   Other long-term liabilites                               --               356
   Minority interest                                         501            --
                                                         -------         -------
      Total liabilities assumed                           10,405           5,766
                                                         -------         -------
         Net assets acquired                             $32,006         $56,120
                                                         =======         =======


PRO FORMA EFFECT

        The table below  depicts the  summarized  unaudited  pro forma  combined
results of operations for the years ended  December 31, 2002 and 2001,  assuming
the  acquisitions  of  NYFIX  Millennium  and  Javelin  had  taken  place at the
beginning of each of those years,  and giving  effect to the addition of the New
Partners and the Option  exercise as of January 1, 2001. The unaudited pro forma
combined  results  of  operations  for both  years was  prepared  based upon the
historical  results of operations of NYFIX, NYFIX Millennium and Javelin for the
respective   years,  and  include  certain   adjustments,   such  as  additional
amortization  expense as a result of acquired  intangible  assets. The unaudited
pro forma combined results of operations  presented below have been prepared for
comparative  purposes only and do not necessarily reflect future events that may
occur after the acquisitions.  As a result of these  assumptions,  estimates and
uncertainties,   the  accompanying  unaudited  pro  forma  combined  results  of
operations  does not purport to describe the actual  results of operations  that
would have been  achieved  had the  acquisitions  in fact  occurred on the dates
indicated,  nor does it purport  to  predict  the  Company's  future  results of
operations.

        The summarized  unaudited pro forma combined  results of operations were
as follows:

                                                        Year Ended December 31,
                                                        -----------------------
                                                          2002           2001
                                                        --------        --------
                                                             (in thousands,
                                                        except per share amounts)

Revenue                                                 $ 59,573        $ 53,295
                                                        ========        ========

Net (loss) income                                       $ (4,620)       $  3,123
                                                        ========        ========

Basic (loss) income per common share                    $  (0.15)       $   0.10
                                                        ========        ========




                                      F-18



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

GOODWILL AND ACQUIRED INTANGIBLE ASSETS

        Goodwill and other acquired  intangibles at December 31, 2002, primarily
relate to the  Company's  2002  acquisitions  of NYFIX  Millennium  and  Javelin
described above. The Company completed the asset valuations for the acquisitions
and the annual goodwill  impairment test during the fourth quarter of 2002. Upon
completion of the valuations, intangible assets were adjusted from the estimated
amount of $11.9  million as of September 30, 2002 to $11.0  million,  and fourth
quarter amortization expense was adjusted accordingly.

        Acquired  intangible  assets  consisted of the following at December 31,
2002:

                                                         Weighted-Average
                                            Amount          Useful Life
                                         -------------   -----------------
                                         (in thousands)
Existing technology                      $    7,500           5.2 years
Customer related intangibles                  2,700          10.5 years
Trademarks and other                            800           5.3 years
                                         ----------
     Total intangible assets, gross          11,000
Less: Accumulated amortization                1,596
                                         ----------
     Total intangible assets, net        $    9,404
                                         ==========


        Amortization  expense of acquired intangible assets was $1.6 million for
the year ended December 31, 2002. Future estimated  amortization expense for the
next five years is as follows:

                                                               Amount
                                                            ------------
Year ending December 31,                                    (in thousands)
2003                                                        $      2,048
2004                                                               2,048
2005                                                               2,048
2006                                                               2,048
2007                                                                 923
Thereafter                                                           289
                                                            ------------
     Future estimated amortization expense                  $      9,404
                                                            ============


        The changes in the  carrying  amount of goodwill by segment for the year
ended December 31, 2002, were as follows:


                                      F-19



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                             Technology   Transaction
                                              Services     Services       Total
                                             ----------   -----------    -------

                                                        (in thousands)
Balance as of January 1, 2002                  $  --        $    34      $    34
Goodwill acquired during year:
     NYFIX Millennium                             --         27,806       27,806
     Javelin                                    42,321         --         42,321
                                               -------      -------      -------
Balance as of December 31, 2002                $42,321      $27,840      $70,161
                                               =======      =======      =======

5.      INVESTMENTS IN AFFILIATES

EUROLINK

        On March 6, 2002,  the Company  acquired a convertible  preferred  stock
interest in  EuroLink,  with its  operations  based in Madrid,  Spain,  for $4.0
million  in cash.  EuroLink  offers  the  European  securities  industry  direct
electronic  access to the U.S.  equity markets from Europe.  EuroLink offers the
Company's   equity   terminals  and  market  access  services  to  the  European
marketplace,  primarily on a transaction  fee basis.  The  preferred  stock will
automatically  convert into a 40% common stock  interest upon the earlier of two
years from the date of the  agreement  or a change of control,  as  defined,  of
EuroLink.  The Company  also has an option to purchase up to an  additional  40%
common stock interest in EuroLink from certain of its stockholders at a price to
be determined  based upon a formula of  EuroLink's  earnings,  as defined.  Such
exercise  price  ranges  from a minimum  of $1.0  million  to a maximum of $10.0
million.  The option is exercisable  between April 1, 2004 and June 30, 2004 and
is  payable  in  equal  amounts  of cash and the  Company's  common  stock.  The
investment in EuroLink is being  accounted for under the equity  method.  During
the year ended December 31, 2002, the Company  recorded a loss on the investment
of $0.5  million,  which was  included in "other  expense"  in the  accompanying
consolidated  statement  of  operations.  In  addition,  the  Company had a note
receivable from EuroLink at December 31, 2002 in the amount of $0.5 million, due
October 2003,  bearing an interest rate of 6.0%, which was included in "due from
unconsolidated affiliates" in the accompanying consolidated balance sheet.


RENAISSANCE

        On October 2, 2002, the Company acquired an 18% interest in Renaissance.
The Company  acquired its interest in return for 300,000 shares of the Company's
stock with a fair value of $1.1 million. Renaissance was formed to commercialize
a NASDAQ trading  platform (the  "Platform").  The Company also has an option to
purchase  a  minimum  of 20% to a  maximum  of  40%  of  the  total  outstanding
membership  units  of  Renaissance  at a price  to be  determined  based  upon a
formula,  between  October 2004 and October  2006.  The Company also loaned $1.5
million to  Renaissance,  for which  Renaissance  issued a  convertible  secured
promissory  note.  The note bears an  interest  rate of 5.5%,  is due in October
2007, and is convertible  into 6,400,000 units (or 32% of the total  outstanding
membership units,  subject to dilution) of Renaissance,  at the Company's option
anytime after October 2003. The investment in Renaissance is being accounted for
under the equity  method.  During the year ended  December 31, 2002, the Company
recorded a loss on the investment of $0.1 million,  which was included in "other
expense" in the accompanying consolidated statements of operations.



                                      F-20



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

        In  connection  with its  investment,  the  Company  acquired,  for $1.0
million,  and contributed to Renaissance,  the intellectual  property rights and
source code to the Platform,  which was developed over the last several years by
a major bank and  brokerage  firm and  contributed  such  intellectual  property
rights and source code to  Renaissance.  In  addition,  the Company  advanced to
Renaissance   $1.0  million  to  fund  certain   operating   costs  and  capital
expenditures.   Such  advances  were   reflected  as  "other  amounts  due  from
unconsolidated  affiliates" in the accompanying  consolidated  balance sheet. In
consideration for the intellectual  property rights contributed and the advanced
funding of the operating costs and capital expenditures,  the Company will share
in 50% of Renaissance's  revenue for, at minimum, 3 years. The Company subleases
approximately 8,000 square feet of office space to Renaissance at annual cost of
$0.2 million.

6.      OTHER ASSETS

        Other assets included deferred product enhancement costs of $3.9 million
and $3.4 million at December 31, 2002 and 2001, respectively, net of accumulated
amortization  of $7.4  million and $5.0  million at December  31, 2002 and 2001,
respectively.  Included in cost of revenue was amortization  expense of deferred
product  enhancement  costs of $2.4  million,  $1.8 million and $1.2 million for
2002, 2001 and 2000,  respectively.  Included in depreciation  and  amortization
expense was amortization expense for other assets of $4,000 in each of the three
years in the period ended December 31, 2002.

7.          ACCRUED EXPENSES

        Accrued expense consisted of the following:

                                                               December 31,
                                                         -----------------------
                                                          2002             2001
                                                         ------           ------
                                                              (in thousands)
Income taxes payable                                     $ --             $  536
Taxes, other than income taxes                            2,216            1,729
Commissions payable                                         561              560
Payroll-related accruals                                  1,153              334
Other current liabilities                                 1,430              371
                                                         ------           ------
     Total accrued expenses                              $5,360           $3,530
                                                         ======           ======


8.      DEBT AND LEASE OBLIGATIONS

        On July 13, 1998, the Company  entered into a three-year $3 million line
of credit agreement with a financial institution. Outstanding indebtedness under
the credit  agreement  bore  interest at LIBOR plus 1.25%,  or the bank's  prime
rate,  at the Company's  discretion.  The Company drew down an aggregate of $1.8
million under the agreement  during 1998 and an additional  $0.7 million  during
1999.  The weighted  average  outstanding  borrowings  were  approximately  $1.8
million at a weighted  average interest rate of 6.49% for 2001. The Company paid
the outstanding  balance in full on July 17, 2001 and did not renew the expiring
credit facility.

        At December 31, 2002,  the Company was  committed  under  capital  lease
obligations  with  interest  rates  ranging from 4.24% to 12.59% for  maturities
ranging from January 2, 2003 to May 1, 2005. At December 31, 2002, capital lease
obligations  were $1.8 million,  of which $1.1 million was classified as current
in the accompanying consolidated balance sheet.



                                      F-21

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

        Future minimum lease  payments,  net of sub-lease  rental income,  under
non-cancelable  capital and  operating  leases with lease terms in excess of one
year at December 31, 2002 were as follows:

                                                                  Capital         Operating
                                                               ------------      -----------
Year ending December 31,                                              (in thousands)
2003                                                           $      1,161      $     4,983
2004                                                                    551            4,898
2005                                                                    136            2,224
2006                                                                    --               786
2007                                                                    --               820
Thereafter                                                              --             2,030
                                                               ------------      -----------
     Total minimum lease payments                                     1,848      $    15,741
                                                                                 ===========
Less: amount representing interest                                       95
                                                               ------------
     Present value of minimum capital lease payments           $      1,753
                                                               ============


        Aggregate rental expense,  net of sub-lease  rental income,  amounted to
$4.6  million,  $1.5 million and $1.0  million for the years ended  December 31,
2002, 2001 and 2000, respectively.

9.      CONTINGENCIES

LITIGATION

        During the course of normal  business,  the Company becomes  involved in
various routine legal proceedings.  The Company maintains  insurance coverage of
types and in amounts,  which it believes to be  adequate.  The Company  believes
that it is not presently a party to any material  litigation that the outcome of
which could  reasonably  be expected  to have a material  adverse  effect on its
financial position, results of operations or cash flows.


10.     EQUITY

COMMON STOCK

        In  connection  with the  acquisitions  mentioned  in Notes 4 and 5, the
Company  issued an aggregate  of  1,968,750  shares of common stock to the NYFIX
Millennium Initial Partners in October 1999, with a fair value of $17.5 million,
an  aggregate  of 376,000  shares of common  stock to the NYFIX  Millennium  New
Partners  in  March  and  April  2001,  with a fair  value of $8.0  million,  an
aggregate  of 296,250  shares of common  stock to the NYFIX  Millennium  Initial
Partners and New Partners in February  2002,  with a fair value of $4.5 million,
an  aggregate of 2,784,896  shares of common  stock to Javelin  stockholders  in
March  2002,  with a fair value of $41.2  million  and an  aggregate  of 300,000
shares of common stock to the  Renaissance  stockholders in October 2002, with a
fair value of $1.1 million.

        On June 22, 2001, the Company  completed a follow-on  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 $57.3 million,
after deducting the underwriting discounts and commissions and offering expenses
paid by the Company.




                                      F-22

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

STOCKHOLDER'S RIGHTS PLAN

        On  September 1, 1997,  the Board of Directors  declared a dividend of a
preference share purchase right (a "Right") for each outstanding share of common
stock of the Company held by  stockholders of record on September 19, 1997. Each
share of common stock issued by the Company  after such record date has the same
Right attached  thereto.  Each Right entitles the registered  holder to purchase
from the Company,  at any time after a  stockholder  acquires 20% or more of the
Company's outstanding common stock, as set forth in the Rights Agreement, shares
of the Company's  Series A Preferred Stock  ("Preference  Stock").  The purchase
price is $40 per one  one-hundredth of a share of Preference  Stock,  subject to
adjustment as set forth in the Rights Agreement.


TREASURY STOCK

        On August 23, 2001,  the Company  announced  that its Board of Directors
had  authorized  the  repurchase  of up to 1,000,000  shares of its  outstanding
common stock.  Through  September 30, 2001, the Company had repurchased the full
1,000,000 shares in the open market at prevailing  market prices at an aggregate
cost of $15.2 million.

        On October 2, 2001,  the Company  announced  that its Board of Directors
had  authorized  the  repurchase  of up to an additional  500,000  shares of its
outstanding common stock. Through December 31, 2001, the Company had repurchased
an additional  301,300 shares in the open market at prevailing  market prices at
an aggregate cost of $3.9 million.

11.     INCOME TAXES

        Deferred   income  taxes  reflect  the  net  tax  effects  of  temporary
differences  between the carrying amount of assets and liabilities for financial
reporting purposes and the amount used for income tax purposes.  The tax effects
of temporary  differences that give rise to significant portions of the deferred
tax assets and deferred tax  liability  recognized at December 31, 2002 and 2001
were presented below:

                                                                December 31,
                                                             -------------------
                                                              2002         2001
                                                             ------       ------
Deferred tax assets:                                           (in thousands)
   Bad debt expense                                          $  590       $  243
   Deferred revenue                                             900         --
   Inventory obsolescence                                        34           34
   Intangible asset amortization                                353         --
   Capitalized product development costs                        941          611
   Net operating loss carryforward                            2,513          108
   Basis in NYFIX Millennium                                  2,665         --
   Research and development tax credits                         579         --
   Other                                                        412           77
                                                             ------       ------
      Total deferred tax assets                               8,987        1,073
                                                             ------       ------
Deferred tax liabilities:
   Depreciation and amortization                              2,044          282
   Other                                                        172         --
                                                             ------       ------
      Total deferred tax liabilities                          2,216          282
                                                             ------       ------
      Total deferred tax assets, net                         $6,771       $  791
                                                             ======       ======




                                      F-23

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

        At December  31,  2002,  the Company  had a Federal net  operating  loss
carryforward of $5.3 million, which may be used to offset future taxable income,
if any. The Company's net operating loss carryforward results primarily from net
operating  loss  carryforwards  acquired in connection  with the  acquisition of
Javelin and expire  between 2020 and 2022.  The  Company's  net  operating  loss
carryforward  is subject to an annual  limitation,  as defined in Section 382 of
the Internal Revenue Code, of approximately $2.2 million. No valuation allowance
has been established against the deferred tax asset since management believes it
is more likely than not that the deferred tax assets will be realized.

        The  exercise  of  non-qualified  stock  options  and the  disqualifying
dispositions  of incentive  stock options under the Company's stock option plans
gives rise to  compensation  which is  includable  in the taxable  income of the
recipients  and  deductible  by the Company  for  Federal  and state  income tax
purposes.  The tax benefit  recognized  from the  utilization of such deductions
increased  paid-in  capital by $0.1  million and $0.4  million  during the years
ended December 31, 2002 and 2001, respectively.

        The reconciliation between the Federal statutory income tax rate and the
Company's effective income tax rate was as follows:

                                                          Year Ended December 31,
                                                         ------------------------
                                                         2002     2001     2000
                                                         ----     ----     ----

Statutory Federal tax rate                               (35)%     35 %     34 %
State and local taxes, net of federal benefit             (5)%      5 %      2 %
Research and development tax credits and other           (12)%     --        1 %
Valuation allowance                                       --       --      (27)%
                                                         -----    -----    -----
     Effective tax rate                                  (52)%     40 %     10 %
                                                         =====    =====    =====


        Research  and  development  tax credits for the year ended  December 31,
2002 related  primarily to research and  development  expenses  incurred in 1999
through 2002.

        Significant  components  of the income tax (benefit)  provision  were as
follows:

                                                      Year Ended December 31,
                                                   ----------------------------
                                                     2002       2001      2000
                                                   -------    -------   -------

Current:                                                    (in thousands)
   Federal                                         $(1,243)   $ 2,101   $ 1,020
   State and foreign                                  --        1,853       166
                                                   -------    -------   -------
      Total current                                 (1,243)     3,954     1,186
                                                   -------    -------   -------
Deferred:
   Federal                                          (1,331)     1,255     1,200
   State and foreign                                (1,209)       218       225
   Decrease in valuation allowance                    --         --      (2,010)
                                                   -------    -------   -------
      Total deferred                                (2,540)     1,473      (585)
                                                   -------    -------   -------
         Total income tax (benefit) provision      $(3,783)   $ 5,427   $   601
                                                   =======    =======   =======


                                      F-24



                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

12.     (LOSS) INCOME PER SHARE

        The  Company's   basic  (loss)  income  per  common  share  ("EPS")  was
calculated based on net (loss) income  available to common  stockholders and the
weighted-average  number of  shares  outstanding  during  the  reported  period.
Diluted EPS included additional dilution from common stock equivalents,  such as
stock  issuable  pursuant  to the  exercise  of  outstanding  stock  options and
warrants.  Stock options  representing  1,285,298  shares were excluded from the
loss per share calculation for the year ended December 31, 2002, as their effect
was anti-dilutive.


                                                                            Year Ended December 31,
                                                                ---------------------------------------------
                                                                   2002              2001              2000
                                                                --------           --------          --------
                                                                   (in thousands, except per share amounts)
Net (loss) income                                               $ (3,166)          $  8,136          $  5,677
                                                                ========           ========          ========
Basic (loss) income per common share                            $  (0.11)          $   0.30          $   0.23
                                                                ========           ========          ========

Basic weighted average common shares outstanding                  30,126             26,784            24,480
Potentially dilutive effect of stock options and warrants           --                1,758             1,945
                                                                --------           --------          --------
Diluted weighted average shares outstanding                       30,126             28,542            26,425
                                                                ========           ========          ========
Diluted (loss) income per common share                          $  (0.11)          $   0.29          $   0.21
                                                                ========           ========          ========


13.     RELATED PARTY TRANSACTIONS

        The Initial and New Partners of NYFIX Millennium (see Note 4) are
customers of the Company.

        The Company has notes  receivable  from  certain of its officers for the
exercise of options  for the  Company's  common  stock,  with  interest at rates
ranging from 5.5% to 7.5%, for  maturities  ranging from October 1, 2003 to June
30, 2005.  Such notes  aggregated  $0.6 million and $0.6 million at December 31,
2002 and 2001,  respectively,  and were included in "due from  officers"  within
stockholders'  equity  on the  accompanying  consolidated  balance  sheets.  The
Company has notes  receivable from certain of its officers,  with an interest at
rate of 5.5% and  maturing  July 2004.  Such notes  aggregated  $0.4  million at
December  31,  2002 and were  included  in "other  assets"  on the  accompanying
consolidated balance sheet. The Company also had amounts receivable from certain
of its officers for travel and payroll advances of $0.2 million and $0.2 million
at  December  31,  2002 and 2001,  respectively  and were  included  in "prepaid
expense and other" on the accompanying consolidated balance sheets.

14.     EMPLOYEE BENEFIT PLANS

        The  Company  sponsors  a 401(k)  retirement  plan (the  "401(k)  Plan")
covering   substantially  all  of  its  U.S.   employees  who  meet  eligibility
requirements. The 401(k) Plan permits participants to contribute a percentage of
their  annual  compensation,  as  defined,  not to exceed the  Federal  limit of
$12,000 in 2002.  The 401(k) Plan  permits the Company to match  employees'  tax
deferred contributions up to a maximum of 3% of employees' compensation provided
the Company employs the employee at the end of the year. Remaining contributions
under the Plan are discretionary.

        As a result of the Company's  acquisition  of Javelin on March 31, 2002,
the Company  assumed  Javelin's  401(k)  retirement  plan (the  "Javelin  401(k)
Plan").  The  Javelin  401(k)  Plan  permitted   participants  to  contribute  a
percentage of their annual  compensation,  as defined, not to exceed the Federal
limit of $12,000 in 2002.  The  Javelin  401(k)  Plan  required  the  Company to
contribute an amount equal to 3% of the employees'  compensation,  regardless of
their  participation  in the plan.  Remaining  contributions  under the Plan are
discretionary.



                                      F-25

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

        The Company also maintains  various benefit plans for its  international
employees. The Company may make discretionary  contributions to these plans. The
aggregate  cost of  contributions  made by the Company to all  employee  benefit
plans were $0.6 million,  $0.3 million and $0.1 million in 2002,  2001 and 2000,
respectively.

15.     STOCK-BASED COMPENSATION

STOCK WARRANTS

        In July 1998,  the Company  entered into a three-year $3 million line of
credit agreement (the "Agreement") with a financial  institution,  which expired
on July 30, 2001. The debt was personally secured by a non-employee  stockholder
of the Company and the Company's  president.  In consideration  for securing the
Agreement,  the  non-employee  stockholder  and president  received  337,500 and
56,250  warrants,  respectively,  to  purchase  the  Company's  common  stock at
approximately  $2.83 per  share,  which was the  market  value of the  Company's
common stock on the date such warrants were issued.  The expense  related to the
warrants issued was recognized  over the three-year  term of the Agreement.  The
remaining unexercised warrants expired on July 30, 2001.

2001 STOCK OPTION PLAN

        On March 13, 2001,  the Company  adopted the 2001 Stock Option Plan (the
"2001 Plan") for which a total of 2,000,000 shares of the Company's common stock
have been  reserved for  issuance.  The 2001 Plan was approved at the  Company's
Annual  Meeting of  Stockholders  held on June 4,  2001.  In 2002,  the  Company
adopted an amendment to the 2001 Plan, to increase the total number of shares of
the  Company's  common stock  reserved for  issuance to 3,500,000  shares.  This
amendment was approved at the Company's  Annual Meeting of Stockholders  held on
June 10,  2002.  Pursuant to the 2001 Plan,  as  amended,  the Company may grant
stock options and stock purchase  rights to the Company's  employees,  officers,
directors and  consultants.  The Board of Directors,  or a committee to whom the
Board of Directors has delegated authority,  selects individuals to whom options
are granted.  Options generally become  exercisable over a three-year period and
expire in ten years. The exercise price of incentive stock options granted under
the 2001 Plan must be at least equal to the fair market  value of the  Company's
stock at the date of grant,  as defined.  The 2001 Plan was  effective on May 1,
2001 and expires on April 30,  2011.  At December  31,  2002,  stock  options to
purchase 2,996,976 shares of the Company common stock were outstanding.

JAVELIN STOCK OPTION PLAN

        As a result of the Company's  acquisition  of Javelin on March 31, 2002,
the Company assumed the  outstanding  stock options of Javelin that were granted
pursuant to the Javelin 1999 Stock Option Plan (the "Javelin Plan"). The Javelin
Plan authorized grants of stock options of Javelin. At the acquisition date, the
Javelin options where converted into the Company's  options at a conversion rate
of 0.51 to one. The options  granted under the Javelin Plan were fully vested at
the time of the Company's acquisition of Javelin pursuant to a change of control
clause  within the  Javelin  Plan.  A total of 511,167  shares of the  Company's
common stock have been reserved for  issuance.  Pursuant to the Javelin Plan, as
amended,  the Company may grant stock options and stock  purchase  rights to the
Company's employees, officers, directors and consultants. The maximum term of an
incentive stock option grant under the Javelin Plan is limited to ten years. The
exercise price of incentive stock options granted under the Javelin Plan must be
at least equal to the fair market  value of the  Company's  stock at the date of
grant, as defined. The Javelin Plan was effective on July 1, 1999 and expires on
June 30, 2009. At December 31, 2002, stock options to purchase 348,680 shares of
the Company common stock were outstanding.



                                      F-26

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1991 STOCK OPTION PLAN

        On March 30, 1999, the Board of Directors adopted the first amendment to
the Amended and Restated 1991 Incentive and Nonqualified  Stock Option Plan (the
"1991 Plan").  Under the 1991 Plan, as amended,  the number of options  reserved
for issuance was increased from 3,375,000  shares to 5,625,000  shares of common
stock.   This  amendment  was  approved  at  the  Company's  Annual  Meeting  of
Stockholders  held on June 7, 1999.  On March 29,  2000,  the Board of Directors
adopted the second amendment to the 1991 Plan. Under this amendment,  the number
of  options  reserved  for  issuance  was  increased  from  5,625,000  shares to
6,625,000  shares of common stock.  This amendment was approved at the Company's
Annual Meeting of Stockholders  held on June 5, 2000.  Options granted generally
become  exercisable  over a three-year  period and expire in ten years. The 1991
Plan expired on June 23, 2001. All available options have been granted under the
1991 Plan, as amended and no further  grants will be made. At December 31, 2002,
stock  options to purchase  3,679,143  shares of the Company  common  stock were
outstanding.

        The summary of the activity of stock warrants for the years ending
December 31, 2001 and 2000, was as follows:

                                                              Year Ended December 31,
                                                -----------------------------------------------------
                                                        2001                           2000
                                                -------------------------    ------------------------
                                                                Weighted                    Weighted
                                                                average                     average
                                                                exercise                    exercise
                                                 Shares          price         Shares        price
                                                --------       ----------    ---------     ----------
Outstanding at beginning
   of the year                                   56,250         $ 2.83        551,250       $ 2.74
Granted                                             -              -              -            -
Exercised                                       (56,250)          2.83       (495,000)        2.70
Cancelled                                           -              -              -            -
Outstanding and excercisable                    --------                     ----------
   at end of the year                               -           $  -           56,250       $ 2.83
                                                ========                     =========


        The summary of the activity under stock option plans for the years
ending December 31, 2002, 2001, and 2000, was as follows:


                                      F-27

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


                                                                     Year Ended December 31,
                                       -----------------------------------------------------------------------------------
                                               2002                           2001                          2000
                                       -------------------------    ------------------------      ------------------------
                                                       Weighted                    Weighted                      Weighted
                                                       average                     average                       average
                                                       exercise                    exercise                      exercise
                                        Shares          price         Shares        price           Shares        price
                                       --------       ----------    ---------     ----------      ---------     ----------

Outstanding at beginning
   of the year                        5,753,940         $12.95      4,529,387      $11.50        3,552,485         $ 4.09
Granted                               1,900,850           4.97      2,025,926       15.58        2,007,063          28.00
Assumed in the acquisition
   of Javelin                           493,699           7.80          --           --               -               --
Exercised                              (169,612)          2.81       (384,250)       5.79         (759,713)          3.75
Cancelled                              (954,078)         14.32       (417,123)      16.58         (270,448)         12.41
Outstanding at end                    ---------                     ---------                    ---------
   of the year                        7,024,799         $10.53      5,753,940       12.95        4,529,387          11.50
                                      =========                     =========                    =========
Exercisable at end of the year        3,963,679         $10.34      2,835,723      $ 9.03        1,376,321         $ 3.16
                                      =========                     =========                    =========

Weighted average fair value
   of options granted                                   $ 3.23                     $12.47                          $16.02

Weighted average fair value
   of options assumed in
   the acquision of Javelin                             $12.28                     $ --                            $ --


        The following table summarizes information about stock options
outstanding and exercisable at December 31, 2002:

                                  Options Outstanding                 Options Exercisable
                        ------------------------------------        --------------------------
                                       Weighted
                                       Average      Weighted                          Weighted
                                      Remaining     Average                           Average
Range of Exercise                       Life        Exercise                          Exercise
     Prices               Shares       (Years)       Price           Shares            Price
- -----------------       ---------     ---------    ---------        ---------       ----------

$ 1.14 - $ 4.40         2,957,296        6.9       $   3.06         1,570,496       $    2.29
$ 4.41 - $ 8.80           853,160        8.2           7.46           437,910            6.80
$ 8.81 - $13.20         1,123,000        8.6          12.16           581,643           12.02
$13.21 - $17.60           957,192        7.3          14.76           724,459           14.70
$17.61 - $22.00           224,725        4.9          21.25           185,192           21.29
$22.01 - $26.40           398,776        7.7          23.38           241,661           23.42
$26.41 - $30.80            99,650        7.0          28.03            72,818           27.98
$30.81 - $35.20           307,800        7.5          32.62            78,200           32.00
$35.21 - $39.60            92,700        7.7          36.68            63,300           36.70
$39.61 - $44.00            10,500        7.8          40.13             8,000           40.09
                        ---------                                   ---------
                        7,024,799        7.4       $  10.53         3,963,679       $   10.34
                        =========                                   =========

        The fair value of each option  grant is  estimated  on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions:


                                      F-28

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                                       Year Ended December 31,
                                              -----------------------------------------
                                                2002             2001            2000
                                              --------         --------        --------

Average risk-free interest rate                 3.8 %            4.6 %          6.1 %
Average expected life                           6.5 years        4.3 years      5.0 years
Expected volatility                              79 %             71 %           70 %
Expected dividend yield                           0 %              0 %            0 %



16.     BUSINESS SEGMENT INFORMATION

        The Company has adopted  the  disclosure  requirements  of SFAS No. 131,
"Disclosures  About  Segments of an Enterprise and Related  Information,"  which
establishes  standards for additional  disclosure  about operating  segments for
interim and annual financial  statements.  This standard requires  financial and
descriptive  information be disclosed for segments whose  operating  results are
reviewed  by  the  Company  for  decisions  on  resource  allocation.   It  also
establishes  standards  for related  disclosures  about  products and  services,
geographic areas and major customers.

        Prior to 2002, the Company  operated in a single  industry  segment as a
provider  of  electronic   trading   infrastructure   and  technologies  to  the
professional trading segment of the brokerage  community.  With the acquisitions
of NYFIX Millennium and NYFIX Transaction Services (see Note 4), the Company now
operates as a financial  services  technology  company in two industry segments,
Technology Services and Transaction Services.  The Company's reportable segments
are  based  upon the  nature  of  products  within  the  Company.  The  products
comprising  the  reportable  segments are managed  separately and have differing
technology and marketing  strategies.  The accounting policies of the reportable
segments  are  the  same  as  those  described  in the  summary  of  significant
accounting  policies  contained  herein  within Note 1. The  operating  segments
reported  below are the  segments of the Company  for which  separate  financial
information is available and for which operating results are evaluated regularly
by senior  management  in deciding  how to allocate  resources  and in assessing
performance.

        The Technology  Services segment provides  desktop  solutions,  wireless
exchange  floor  systems,  electronic  automation  systems and  straight through
processing to the professional trading segment of the brokerage community.

        The Transaction  Services segment,  which is substantially  comprised of
the  Company's  NYFIX  Millennium  and NYFIX  Transaction  Services  businesses,
provides an electronic order routing and matching  environment,  anonymous order
matching  and  execution  services  to both the  Company's  existing  technology
customers  and web-based  desktop  users,  and execution and smart order routing
solutions,   primarily  to  domestic  and   international   broker-dealers   and
specialized trading firms.

        Summarized financial information by business segment for the years ended
December 31, 2002, 2001 and 2000 was as follows:



                                      F-29

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                                                      Year Ended December 31,
                                                        ----------------------------------------------------
                                                           2002                  2001                 2000
                                                        ---------             ---------            ---------
Revenue:                                                                   (in thousands)
   Technology Services                                  $  48,853             $  41,397            $  23,980
   Transaction Services                                     7,109                  --                   --
   Eliminations                                              (150)                 --                   --
                                                        ---------             ---------            ---------
      Total revenue                                     $  55,812             $  41,397            $  23,980
                                                        =========             =========            =========

Gross Profit:
   Technology Services                                  $  28,608             $  27,237            $  15,078
   Transaction Services                                       494                  --                   --
                                                        ---------             ---------            ---------
      Total gross profit                                $  29,102             $  27,237            $  15,078
                                                        =========             =========            =========

Identifiable assets:
   Technology Services                                  $  85,300             $  34,053            $  28,811
   Transaction Services                                    35,838                  --                   --
   Corporate                                               39,679                74,519               28,747
                                                        ---------             ---------            ---------
      Total indentifiable assets                        $ 160,817             $ 108,572            $  57,558
                                                        =========             =========            =========

Depreciation and amortization:
   Technology Services                                  $   9,900             $   6,406            $   3,664
   Transaction Services                                     1,586                  --                   --
   Corporate                                                  175                    59                   33
                                                        ---------             ---------            ---------
      Total depreciation and amortization               $  11,661             $   6,465            $   3,697
                                                        =========             =========            =========

Capital expenditures:
   Technology Services                                  $   3,671             $   6,593            $   5,982
   Transaction Services                                       586                  --                   --
   Corporate                                                  309                   528                  102
                                                        ---------             ---------            ---------
      Total capital expenditures                        $   4,566             $   7,121            $   6,084
                                                        =========             =========            =========

        Identifiable assets by segment include assets directly identifiable with
those segments. Corporate assets consist primarily of cash and cash equivalents,
short-term  investments,  deferred tax assets and investments in  unconsolidated
affiliates associated with non-operating activities.

        Reconciling  information between business segments and the (loss) income
before income taxes and minority interest was as follows:




                                      F-30

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


                                                                            Year Ended December 31,
                                                                ----------------------------------------------
                                                                  2002               2001                2000
                                                                --------           --------           --------
                                                                                (in thousands)
Gross profit for reportable segments                            $ 29,102           $ 27,237           $ 15,078
Operating expenses                                               (36,140)           (14,097)            (8,603)
Interest expense                                                    (262)              (343)              (333)
Investment income                                                    666                780                156
Other expense                                                       (621)               (14)               (20)
                                                                --------           --------           --------
(Loss) income before income taxes and minority interest         $ (7,255)          $ 13,563           $  6,278
                                                                ========           ========           ========



        Summarized financial information by geographic location for 2002, 2001
and 2000 was as follows:

                                                                           Year Ended December 31,
                                                                ----------------------------------------------
                                                                  2002               2001               2000
                                                                --------           --------           --------
Revenue:                                                                        (in thousands)
   United States                                                $ 52,774           $ 35,134           $ 21,302
   Foreign                                                         3,038              6,263              2,678
                                                                --------           --------           --------
      Total revenue                                             $ 55,812           $ 41,397           $ 23,980
                                                                ========           ========           ========

Long-lived assets:
   United States                                                $115,099           $ 50,652           $ 32,573
   Foreign                                                         2,014              1,626              1,626
                                                                --------           --------           --------
      Total long-lived assets                                   $117,113           $ 52,278           $ 34,199
                                                                ========           ========           ========


        Revenues were attributed based upon the origin of the product  delivered
or service  provided.  Revenue  from export  sales,  principally  software  sale
revenue,  was $2.6  million,  $4.0  million and $2.4 million for the years ended
December 31, 2002, 2001 and 2000, respectively.

        Classes of products representing 10% or more of revenue were:

                                                              Year Ended December 31,
                                                       ----------------------------------
                                                       2002          2001            2000
                                                       ----          ----            ----
Technology Services Revenue:
   Subscription revenue - Fix Trader                   13.8%         17.2%           16.3%
   Subscription revenue - communication charges          (1)         10.1%             (1)
   Sale revenue - OBMS software                          (1)         14.9%           17.0%

  (1) less than 10%



                                      F-31

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

17.     VALUATION AND QUALIFYING ACCOUNTS




                                                                 Additions
                                              Balance at         Charged to         Deductions
                                             Beginning of        Costs and             and            Balance at
                                                Year              Expenses          Write-offs        End of Year
                                             ------------        ----------         ----------        -----------

Allowance for doubtful accounts:                                         (in thousands)
   Year ended December 31, 2002                $   511            $ 1,146             $   450            $ 1,207
                                               =======            =======             =======            =======
   Year ended December 31, 2001                $   421            $   233             $   143            $   511
                                               =======            =======             =======            =======
   Year ended December 31, 2000                $   125            $   416             $   120            $   421
                                               =======            =======             =======            =======

Inventory reserve:
   Year ended December 31, 2002                $    82            $    78             $  --              $   160
                                               =======            =======             =======            =======
   Year ended December 31, 2001                $    92            $   (10)            $  --              $    82
                                               =======            =======             =======            =======
   Year ended December 31, 2000                $    82            $    10             $  --              $    92
                                               =======            =======             =======            =======


18.     SUPPLEMENTAL CASH FLOW INFORMATION

        Information about the cash flow activities related to acquisitions
during the year ended December 31, 2002 were as follows:

                                                                      Year Ended
                                                                      December 31,
                                                                         2002
                                                                    -------------
                                                                    (in thousands)
Fair value of net assets acquired, net of cash acquired                $ 99,620
Fair value of liabilities assumed                                       (16,171)
Common stock issued for acquisitions                                    (49,154)
Pre-acquisition investment basis                                        (27,500)
                                                                       --------
      Payments for acquisitions, net of cash acquired                  $  6,795
                                                                       ========


        Information  about  other cash flow  activities  during the years  ended
December 31, 2002, 2001 and 2000 were as follows:

                                                                             Year Ended December 31,
                                                                  --------------------------------------------
                                                                    2002           2001              2000
                                                                  --------       ---------         ---------
Supplemental disclosures of cash flow information:                             (in thousands)
   Cash paid for interest                                         $   262         $   301           $   274
   Cash paid for income taxes, net of refunds                         937           2,985               286
Supplemental schedule of noncash investing and
   financing information:
      Capital lease obligations incurred for the purchase           1,278             524             2,023
         of property and equipment
      Common stock issued for investments in                        1,121           8,000              --
         unconsolidated affiliates
      Unrealized (gain) loss on available-for-sale securities         142             (35)             --





                                      F-32

                                   NYFIX, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

19. QUARTERLY FINANCIAL DATA - UNAUDITED

                                                                         Three Months Ended
                                                 ----------------------------------------------------------------------
                                                  March 31,          June 30,         September 30,        December 31,
                                                 ----------          --------         -------------        ------------
2002                                                         (in thousands, except per share amounts)

Revenue                                          $ 10,071            $ 13,086            $ 15,368            $ 17,287
                                                 ========            ========            ========            ========
Gross profit, as previously
   reported                                      $  7,328            $  8,735            $ 10,799            $  9,357
Reclassification                                   (1,704)             (2,534)             (2,879)               --
                                                 --------            --------            --------            --------
Gross profit, as reclassified                    $  5,624            $  6,201            $  7,920            $  9,357
                                                 ========            ========            ========            ========
Net income (loss)                                $     98            $ (2,919)           $   (906)           $    561
                                                 ========            ========            ========            ========
Income (loss) per share:
   Basic                                         $   --              $  (0.10)           $  (0.03)           $   0.02
                                                 ========            ========            ========            ========
   Diluted                                       $   --              $  (0.10)           $  (0.03)           $   0.02
                                                 ========            ========            ========            ========

2001

Revenue                                          $  8,422            $  9,511            $ 11,404            $ 12,060
                                                 ========            ========            ========            ========
Gross profit, as previously
   reported                                      $  6,482            $  7,255            $  8,959            $  9,370
Reclassification                                     (909)             (1,125)             (1,440)             (1,355)
                                                 --------            --------            --------            --------
Gross profit, as reclassified                    $  5,573            $  6,130            $  7,519            $  8,015
                                                 ========            ========            ========            ========
Net income (loss)                                $  1,464            $  1,602            $  2,758            $  2,312
                                                 ========            ========            ========            ========
Income (loss) per share:
   Basic                                         $   0.06            $   0.06            $   0.10            $   0.08
                                                 ========            ========            ========            ========
   Diluted                                       $   0.05            $   0.06            $   0.10            $   0.08
                                                 ========            ========            ========            ========



        As described in Note 1, certain  reclassifications have been made to the
quarterly information noted above to conform to the current year's presentation.
In connection therewith, certain operating expenses were reclassified to cost of
revenue.


                                      F-33



             NYFIX MILLENNIUM, L.L.C. (A DEVELOPMENT STAGE COMPANY)





                              FINANCIAL STATEMENTS
            FOR THE YEAR ENDED DECEMBER 31, 2001, AND FOR THE PERIOD
                   SEPTEMBER 9, 1999 TO DECEMBER 31, 2001 AND
                          INDEPENDENT AUDITORS' REPORT





INDEPENDENT AUDITORS' REPORT


To the Members of
NYFIX Millennium, L.L.C.
New York, New York


        We have audited the following financial  statements of NYFIX Millennium,
L.L.C. (a development  stage company) (the  "Company"),  as of December 31, 2001
and for the year ended  December  31, 2001 and for the period  September 9, 1999
(date of  inception)  to December 31, 2001 that you are filing  pursuant to Rule
17a-5 under the Securities Exchange Act of 1934.

                                                                         Page

            Statement of Financial Condition                              3
            Statements of Operations                                      4
            Statements of Cash Flows                                      5
            Statements of Changes in Members' Capital                     6
            Statements of Changes in Subordinated Borrowings              7

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

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the financial  position of the Company at December 31, 2001,  and the
results of its  operations  and its cash flows for the year ended  December  31,
2001 and for the period from  September 9, 1999 (date of  inception) to December
31, 2001 in conformity  with  accounting  principles  generally  accepted in the
United States of America.





The Company is in the  development  stage at December 31, 2001.  As discussed in
Note 1 to the  financial  statements,  successful  completion  of the  Company's
development program and, ultimately,  the attainment of profitable operations is
dependent  upon future  events,  including  maintaining  adequate  financing  to
fulfill its  development  activities,  and achieving a revenue level adequate to
support the Company's cost structure.


DELOITTE & TOUCHE LLP

Stamford, Connecticut
February 22, 2002




                                      -2-


NYFIX MILLENNIUM L.L.C.
(A Development Stage Company)

STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2001
- --------------------------------------------------------------------------------


ASSETS

CASH                                                               $  2,585,436

SECURITIES -  At estimated market value                               8,492,031

PROPERTY AND EQUIPMENT - Net                                          4,799,343

OTHER ASSETS                                                            469,951
                                                                   ------------

TOTAL ASSETS                                                       $ 16,346,761
                                                                   ============


LIABILITIES AND MEMBERS' CAPITAL

LIABILITIES:
  Due to NYFIX, Inc.                                               $  5,221,736
  Subordinated loan payable to NYFIX, Inc.                            6,000,000
  Accounts payable and accrued expenses                               1,246,397
                                                                   ------------

           Total liabilities                                         12,468,133
                                                                   ------------

MEMBERS' CAPITAL:
  Capital contributions                                              24,000,000
  Deficit accumulated while in development stage                    (20,121,372)
                                                                   ------------

           Total members' capital                                     3,878,628
                                                                   ------------

TOTAL LIABILITIES AND MEMBERS' CAPITAL                             $ 16,346,761
                                                                   ============

See notes to financial statements.



                                      -3-


NYFIX MILLENNIUM L.L.C.
(A Development Stage Company)

STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

                                                                        Period
                                                                     September 9,
                                                                     1999 (Date of
                                                                     Inception) to
                                                     Year Ended      December 31,
                                                        2001             2001

REVENUES:
  Commissions                                      $    142,139    $     142,139
  Interest income                                       294,528        1,141,106
  Other                                                   1,368            1,368
                                                    -----------      -----------
           Total revenues                               438,035        1,284,613
                                                    -----------      -----------

EXPENSES:
  Employee compensation and benefits                  6,149,337       11,440,603
  Communications and data processing                  2,597,044        3,864,078
  Occupancy                                             861,149        1,497,502
  Marketing and promotion                               568,060          827,533
  Professional services                                 276,339          833,549
  Depreciation and amortization                         960,159        1,328,741
  Interest expense                                       43,151           43,151
  Clearing                                               33,512           33,512
  Administrative and other                              542,827        1,537,316
                                                    -----------      -----------

           Total expenses                            12,031,578       21,405,985
                                                    -----------      -----------

NET LOSS                                           $(11,593,543)   $(20,121,372)
                                                    ===========      ===========

See notes to financial statements.


                                      -4-


NYFIX MILLENNIUM, L.L.C.
(A Development Stage Company)

STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------

                                                                                                  Period
                                                                                                September 9,
                                                                                                1999 (Date of
                                                                                                Inception) to
                                                                       Year Ended               December 31,
                                                                          2001                     2001

OPERATING ACTIVITIES:
  Net loss                                                            $(11,593,543)             $(20,121,372)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation and amortization                                          960,159                 1,328,741
  Changes in operating assets and liabilities:
    Increase in other assets                                              (115,330)                 (469,951)
    Increase in due to NYFIX, Inc.                                       3,236,655                 5,221,736
    Increase in accounts payable and accrued expenses                      707,633                 1,246,397
                                                                      ------------              ------------

             Net cash used in operating activities                      (6,804,426)              (12,794,449)
                                                                      ------------              ------------

INVESTING ACTIVITIES:
  Purchases of securities, net                                          (2,088,010)               (8,492,031)
  Purchases of property and equipment                                   (2,777,333)               (6,128,084)
                                                                      ------------              ------------

            Net cash used in investing activities                       (4,865,343)              (14,620,115)
                                                                      ------------              ------------

FINANCING ACTIVITIES:
  Increase in subordinated loan payable to NYFIX, Inc.                   6,000,000                 6,000,000
  Capital contributions                                                  8,000,000                24,000,000
                                                                      ------------              ------------

            Net cash provided by financing activities                   14,000,000                30,000,000
                                                                      ------------              ------------


NET INCREASE IN CASH                                                     2,330,231                 2,585,436

CASH, BEGINNING OF PERIOD                                                  255,205                      --
                                                                      ------------              ------------

CASH, END OF PERIOD                                                   $  2,585,436              $  2,585,436
                                                                      ============              ============

See notes to financial statements.


                                      -5-


NYFIX MILLENNIUM, L.L.C.
(A Development Stage Company)

STATEMENTS OF CHANGES IN MEMBERS' CAPITAL
- --------------------------------------------------------------------------------

                                                                        Period
                                                                     September 9,
                                                                     1999 (Date of
                                                                     Inception) to
                                                   Year Ended        December 31,
                                                      2001               2001


BALANCE, BEGINNING OF PERIOD                      $ 7,472,171        $      --

  Capital contributions                             8,000,000         24,000,000

  Net loss                                         11,593,543         20,121,372
                                                  -----------        -----------

BALANCE, DECEMBER 31, 2001                        $ 3,878,628        $ 3,878,628
                                                  ===========        ===========


See notes to financial statements.



                                      -6-


NYFIX MILLENNIUM, L.L.C.
(A Development Stage Company)

STATEMENTS OF CHANGES IN SUBORDINATED BORROWINGS
- --------------------------------------------------------------------------------

                                                                        Period
                                                                     September 9,
                                                                     1999 (Date of
                                                                     Inception) to
                                                       Year Ended    December 31,
                                                          2001           2001

SUBORDINATED BORROWINGS, BEGINNING OF PERIOD           $     --       $     --

Issuance of subordinated notes                          6,000,000      6,000,000
                                                       ----------     ----------

SUBORDINATED BORROWINGS, DECEMBER 31, 2001             $6,000,000     $6,000,000
                                                       ==========     ==========

See notes to financial statements.


                                      -7-



NYFIX MILLENNIUM, l.l.c.
(A Development Stage Company)


NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------


1.      ORGANIZATION

        NYFIX Millennium,  L.L.C. (the "Company") is a limited liability company
        that was  organized  on  September  9, 1999.  The Company was  organized
        primarily for the purpose of generating  transaction-oriented revenue by
        providing  broker-dealers and institutional  investors with stock market
        trade executions through an alternative trading system ("ATS").  Through
        September 4, 2001,  activities consisted primarily of the development of
        an ATS. On  September 5, 2001,  the Company  placed the ATS into service
        and revenue began to be generated.  The Company is owned by NYFIX,  Inc.
        ("NYFIX") and a group of eleven banks and brokerage  firms,  (the "Other
        Members"), (collectively, the "Members"). As of December 31, 2001, NYFIX
        owns 50% of the Company and the Other  Members  own the  remaining  50%.
        NYFIX  contributed  $2 million for its  member's  interest and the Other
        Members each  contributed $2 million for their members'  interests for a
        total cash contributed capital amount of $24,000,000. In addition, NYFIX
        purchased an option from the Other Members allowing NYFIX to purchase up
        to an additional 30% of the Company's  members' interests from the Other
        Members. See Note 7.

        The Company is registered  as a  broker-dealer  in securities  under the
        Securities  Exchange  Act of 1934 and  operates as an ATS in  compliance
        with Securities and Exchange  Commission ("SEC")  regulations.  Further,
        the Company is a member of the National Association of Security Dealers,
        Inc.

2.      SIGNIFICANT ACCOUNTING POLICIES

        SECURITIES - Security  transactions  and the related  income and expense
        are  recorded  on a  trade-date  basis.  Interest  is accrued as earned.
        Securities are carried at estimated  market value based on quoted market
        prices,  with the realized  and  unrealized  gains and losses  reflected
        within  operations.  All  securities  are held in the Company's name and
        custodied with one major financial  institution.  There were no gains or
        losses on sales of securities during the year ended December 31, 2001.

        COMMISSIONS - Commissions and the related clearing expenses are recorded
        on a trade-date basis as securities transactions occur.

        PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost and
        are depreciated over their estimated useful lives, which range from 3 to
        5 years, on a straight-line basis.  Leasehold improvements are amortized
        over the  lesser  of their  economic  useful  lives or the  terms of the
        related  leases.  Costs  incurred  for  computer  software  developed or
        obtained for internal use, including payroll and  payroll-related  costs
        for  employees  incurred  in  developing   internal-use   software,  are
        capitalized  during  development  stage  activities.  Upon  placing  the
        software  into  service,  the costs are  amortized,  on a  straight-line
        basis, over three years.

        INCOME  TAXES - The  Company  is a  limited  liability  company  that is
        treated as a partnership  for federal and state income tax purposes.  As
        such,  the Company is not subject to income tax. The loss  applicable to
        the operations of the Company is includable in the income tax returns of
        the Members.


                                      -8-



        MEMBERS' CAPITAL - Capital  contributions of the members are recorded as
        received.  Withdrawal  of capital by a member would be recognized at the
        withdrawal date. There have been no withdrawals of capital.

        USE OF ESTIMATES - 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  contingent  liabilities  at  the  date  of  the
        financial  statements and the reported  amounts of revenues and expenses
        during the year. Actual results could differ from those estimates.

        RECLASSIFICATIONS - Certain amounts in the financial  statements for the
        period  September 9, 1999 (date of  inception) to December 31, 2001 have
        been reclassified to conform to the 2001 presentation.

        NEW ACCOUNTING  PRONOUNCEMENT  - On January 1, 2001, the Company adopted
        SFAS  No.  133,  Accounting  for  Derivative   Instruments  and  Hedging
        Activities,  as amended  in June 1999 by SFAS No.  137,  Accounting  for
        Derivative   Instruments  and  Hedging  Activities  -  Deferral  of  the
        Effective  Date of SFAS  No.  133,  and in June  2000 by SFAS  No.  138,
        Accounting  for  Certain  Derivative  Instruments  and  Certain  Hedging
        Activities  (collectively,  "SFAS No. 133").  SFAS No. 133 requires that
        all  derivatives,   including  certain  derivatives  embedded  in  other
        contracts, be recognized in the statement of financial condition, either
        as assets or as  liabilities,  and be measured at their fair value.  The
        adoption  of SFAS  No.  133 had no  impact  on the  Company's  financial
        statements. As of December 31, 2001, the Company had no derivatives.

3.      PROFIT AND LOSS ALLOCATIONS

        Pursuant to the Company's operating agreement,  the first $22 million in
        losses of the Company  will be  allocated  to the Other  Members,  which
        equals their capital investment in the Company. Profits,  distributed as
        dividends,  are allocated 76% to NYFIX and 24% to the Other Members.  In
        the event of liquidation, distribution of the assets of the Company will
        be  distributed  to the Members in  accordance  with the extent of their
        positive capital accounts.

4.      REGULATORY NET CAPITAL REQUIREMENT

        The Company is subject to the Uniform  Net  Capital  Rule (Rule  15c3-1)
        under  the  Securities  and  Exchange  Act of 1934  which  requires  the
        maintenance  of  minimum  net  capital  and  requires  that the ratio of
        aggregate  indebtedness to net capital both as defined, shall not exceed
        15 to 1. At December 31, 2001,  the Company had  regulatory  net capital
        and  minimum  regulatory  net capital  requirements  of  $4,614,752  and
        $431,209, respectively. The Company's net capital ratio was 1.40 to 1 at
        December 31, 2001.

5.      RELATED PARTY TRANSACTIONS

        During 2001, and for the period  September 9, 1999 to December 31, 2001,
        certain  operating costs and capital  expenditures were paid by NYFIX on
        behalf of the  Company.  Such  costs are being  repaid to NYFIX with the
        unpaid  balance  reflected  as  Due to  NYFIX,  Inc.  on  the  Company's
        statement  of  financial  condition.   The  balance  due  to  NYFIX  was
        $5,221,736 at December 31, 2001.

        NYFIX has entered into several lease  agreements for computer and office
        equipment  and office  space.  The equipment and office space is used by
        the Company under the terms of a management  agreement  with NYFIX.  The
        management  agreement requires the Company to repay NYFIX for the amount
        of the



                                      -9-


        lease payments on a month-to-month basis. The leases in effect at
        December 31, 2001 expire at various dates through November 2005.

        Future payments to NYFIX for such leases are expected to be as follows:

          Year Ending
          December 31,

             2002                                                   $  508,616
             2003                                                      452,201
             2004                                                      447,691
             2005                                                      302,190
                                                                    ----------

                                                                    $1,710,698
                                                                    ==========

        Loans  have been made to an  officer  of the  Company.  These  loans are
        unsecured and are repayable  during 2002. Loans receivable were $150,000
        at  December  31,  2001 and are  included  in other  assets  within  the
        accompanying statement of financial condition.

        On October  30,  2001,  the Company  entered  into a  Subordinated  Loan
        Agreement for Equity Capital (the "Loan Agreement") with NYFIX effective
        November 30,  2001,  pursuant to which NYFIX  loaned  $6,000,000  to the
        Company.  The loan is due on November  30, 2004 and earns  interest at a
        rate of 7.5% per annum.  The Loan  Agreement  was found by the  National
        Association of Securities Dealers, Inc. (the "NASD") to be acceptable as
        a  satisfactory  subordination  agreement,  effective as of November 30,
        2001. The subordinated  loan is available in computing net capital under
        the SEC's  uniform  net  capital  rule.  To the extent that such loan is
        required for the Company's continued compliance with minimum net capital
        requirements,  it may  not be  repaid.  The  fair  value  of  this  loan
        approximates the carrying value in the statement of financial condition.
        Interest expense was $43,151 on the Loan Agreement during the year ended
        December 31, 2001.

6.      PROPERTY AND EQUIPMENT

          Software                                                   $ 2,503,045
          Office computers                                             1,846,697
          Data center equipment                                        1,276,557
          Furniture, fixtures, and leasehold improvements                501,785
          Less accumulated depreciation and amortization              (1,328,741)
                                                                     -----------
                                                                     $ 4,799,343
                                                                     ===========


        As of December  31,  2001,  the  Company's  property  and  equipment  is
        comprised of the following:


7.      SUBSEQUENT EVENT

        On  February  1,  2002,  NYFIX  exercised  its  option  to  purchase  an
        additional 30% of the Company by issuing shares of NYFIX common stock to
        the Other Members, thereby making the Company an 80% owned subsidiary of
        NYFIX.

                                     ******

                                      -10-




             NYFIX MILLENNIUM, L.L.C. (A DEVELOPMENT STAGE COMPANY)



              2000 FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES

                          INDEPENDENT AUDITORS' REPORT




INDEPENDENT AUDITORS' REPORT

NYFIX Millennium, L.L.C.
New York, New York


We have audited the following financial  statements of NYFIX Millennium,  L.L.C.
(a development  stage company) (the "Company"),  as of December 31, 2000 and for
the year ended December 31, 2000 and for the period  September 9, 1999, (date of
inception) to December 31, 2000 that you are filing pursuant to Rule 17a-5 under
the Securities Exchange Act of 1934.

                                                                            Page

            Statement of Financial Condition                                 3
            Statements of Operations                                         4
            Statements of Cash Flows                                         5
            Statements of Changes in Members' Capital                        6

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

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the financial  position of NYFIX  Millennium,  L.L.C. at December 31,
2000,  and the results of its  operations  and its cash flows for the year ended
December 31, 2000 and for the period from September 9, 1999 to December 31, 2000
in conformity with accounting principles generally accepted in the United States
of America.






The Company is in the  development  stage at December 31, 2000.  As discussed in
Note 1 to the  financial  statements,  successful  completion  of the  Company's
development program and, ultimately,  the attainment of profitable operations is
dependent  upon future  events,  including  maintaining  adequate  financing  to
fulfill its  development  activities,  and achieving a revenue level adequate to
support the Company's cost structure.


DELOITTE & TOUCHE LLP

Stamford, Connecticut
February 23, 2001




                                       -2-





NYFIX MILLENNIUM, L.L.C.
(A Development Stage Company)

STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2000
- --------------------------------------------------------------------------------


ASSETS

CASH                                                               $    255,205

SECURITIES -  At market value                                         6,404,021

PROPERTY AND EQUIPMENT - Net                                          2,982,169

OTHER ASSETS                                                            354,621
                                                                   ------------

TOTAL ASSETS                                                       $  9,996,016
                                                                   ============


LIABILITIES

DUE TO NYFIX, INC                                                  $  1,985,081

ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                   538,762
                                                                   ------------

           Total liabilities                                          2,523,843
                                                                   ------------

MEMBERS' CAPITAL

CAPITAL CONTRIBUTIONS                                                16,000,000

DEFICIT ACCUMULATED WHILE IN DEVELOPMENT STAGE                       (8,527,827)
                                                                   ------------

           Total members' capital                                     7,472,173
                                                                   ------------

TOTAL LIABILITIES AND MEMBERS' CAPITAL                             $  9,996,016
                                                                   ============


See notes to financial statements.

                                       -3-



NYFIX MILLENNIUM L.L.C.
(A Development Stage Company)

STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

                                                                        Period
                                                                     September 9,
                                                                     1999 (Date of
                                                                     Inception) to
                                                                     December 31,
                                                         2000            2000


REVENUES - Dividend and interest income              $   719,655     $   846,578
                                                      ----------      ----------

EXPENSES:
  Employee compensation and benefits                   4,685,634       5,291,264
  Communications and data processing                   1,254,492       1,267,034
  Occupancy                                              956,524       1,004,935
  Professional services                                  404,643         557,210
  Administrative and other                               788,694       1,253,962
                                                      ----------      ----------

           Total expenses                              8,089,987       9,374,405
                                                      ----------      ----------

NET LOSS                                             $(7,370,332)    $(8,527,827)
                                                      ==========      ==========


See notes to financial statements.

                                       -4-



NYFIX MILLENNIUM, L.L.C.
(A Development Stage Company)

STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------

                                                                                              Period
                                                                                           September 9,
                                                                                           1999 (Date of
                                                                                           Inception) to
                                                                                           December 31,
                                                                             2000              2000

OPERATING ACTIVITIES:
  Net loss                                                              $ (7,370,332)     $ (8,527,827)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation                                                             362,420           368,583
  Changes in operating assets and liabilities:
    Increase in other assets                                                (162,378)         (354,621)
    Increase in due to NYFIX, Inc.                                         1,162,034         1,985,081
    Increase in accounts payable and accrued expenses                        507,959           538,762
                                                                        ------------      ------------

             Net cash used in operating activities                        (5,500,297)       (5,990,022)
                                                                        ------------      ------------

INVESTING ACTIVITIES:
  Purchases of securities owned, net                                      (6,404,021)       (6,404,021)
  Purchases of fixed assets                                               (3,162,049)       (3,350,752)
                                                                        ------------      ------------

            Net cash used in investing activities                         (9,566,070)       (9,754,773)
                                                                        ------------      ------------

FINANCING ACTIVITIES:
  Capital contributions                                                         --          16,000,000
                                                                        ------------      ------------


NET INCREASE IN CASH                                                     (15,066,367)          255,205

CASH, BEGINNING OF PERIOD                                                 15,321,572              --
                                                                        ------------      ------------

CASH, END OF PERIOD                                                     $    255,205      $    255,205
                                                                        ============      ============


See notes to financial statements.



                                       -5-


NYFIX MILLENNIUM, L.L.C.
(A Development Stage Company)

STATEMENTS OF CHANGES IN MEMBERS' CAPITAL
- --------------------------------------------------------------------------------

                                                                        Period
                                                                     September 9,
                                                                     1999 (Date of
                                                                     Inception) to
                                                                     December 31,
                                                    2000                2000

BALANCE, BEGINNING OF PERIOD                   $ 14,842,505        $       --

  Capital contributions                                --            16,000,000

  Net loss                                       (7,370,332)         (8,527,827)
                                               ------------        ------------

BALANCE, DECEMBER 31, 2000                     $  7,472,173        $  7,472,173
                                               ============        ============


See notes to financial statements.

                                       -6-



NYFIX MILLENNIUM, l.l.c.
(A Development Stage Company)


NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------


1.  ORGANIZATION

NYFIX Millennium, L.L.C. (the "Company") is a limited liability company that was
organized on  September 9, 1999.  The Company was  organized  primarily  for the
purpose of generating  transaction- oriented revenue by providing  institutional
investors  with stock market trade  executions  through an  alternative  trading
system ("ATS"). Through December 31, 2000 activities have consisted primarily in
the  development  of an ATS. In December  2000,  the Company placed the ATS into
service and  revenue is  anticipated  to begin in 2001.  The Company is owned by
NYFIX Inc.  ("NYFIX")  and a group of seven banks and brokerage  firms,  ("Other
Members"),  (collectively, the "Members"). NYFIX owns 50% of the Company and the
Other  Members own the remaining  50%.  NYFIX  contributed  $2 million for their
ownership  interest and the Other Members each  contributed $2 million for their
ownership  interests for a total cash contributed capital amount of $16,000,000.
In addition,  NYFIX purchased an option from the Other Members allowing NYFIX to
purchase up to an additional  30% of the  Company's  common stock from the Other
Members.

The Company is registered as a broker-dealer  in securities under the Securities
Exchange Act of 1934 and will operate as an ATS in  compliance  with  Securities
and Exchange Commission ("SEC"),  regulations.  Further, the Company is a member
of the National Association of Security Dealers, Inc.

2.  SIGNIFICANT ACCOUNTING POLICIES

SECURITIES  - Security  transactions  and the  related  income and  expense  are
recorded on a trade date basis.  Dividends are recorded on the ex-dividend  date
and interest is accrued as earned.  Securities  are carried at market value with
the realized and unrealized gains and losses reflected within net income.  There
were no  realized  or  unrealized  gains or  losses  during  1999 or  2000.  All
securities are held in the Company's name and custodied with one major financial
institution.

PROPERTY  AND  EQUIPMENT - Property and  equipment  are recorded at cost and are
depreciated  over their  estimated  useful  lives.  Leasehold  improvements  are
amortized  over the lesser of their  economic  useful  lives or the terms of the
related leases.

INCOME TAXES - The Company is a limited  liability  company that is treated as a
partnership  for federal and state income tax purposes.  As such, the Company is
not subject to income tax. The loss  applicable to the operations of the Company
is includable in the income tax returns of the Members.

MEMBERS'  CAPITAL  -  Capital  contributions  of the  members  are  recorded  as
received.  Withdrawal  of  capital  by a  member  would  be  recognized  at  the
withdrawal  date.  During 1999, there were $16 million of  contributions.  There
have been no withdrawals during 2000 or 1999.

USE OF ESTIMATES - 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
contingent  liabilities at the date of the financial statements and the reported
amounts of revenues and expenses  during the year.  Actual  results could differ
from those estimates.

                                       -7-



PENDING ACCOUNTING  PRONOUNCEMENTS - In September 2000, the Financial Accounting
Standards  Board  ("FASB")  issued SFAS No. 140,  which  replaces  SFAS No. 125,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities  (SFAS No. 125).  It revises the standards  for  accounting  for
securitizations  and other  transfers of  financial  assets and  collateral  and
requires certain disclosures, but it carries over most of the provisions of SFAS
No. 125  without  reconsideration.  SFAS No.  140 is  effective  for  transfers,
servicing, or extinguishments occurring after March 15, 2001, except for certain
provisions  relating to the accounting and disclosure for secured borrowings and
collateral,  for which the effective date was December 15, 2000. The adoption of
the  effective  provisions  of this  statement  did  not  impact  the  Company's
financial  condition or results of operations.  Management  does not believe the
adoption  of the  remaining  provisions  will  have  a  material  impact  on the
Company's financial condition or results of operations.

In  June  1998,  the  FASB  issued  SFAS  No.  133,  Accounting  for  Derivative
Instruments  and Hedging  Activities  (SFAS No. 133), as amended in June 1999 by
SFAS No. 137,  Accounting for Derivative  Instruments  and Hedging  Activities -
Deferral of the  Effective  Date of SEAS No.  133,  and in June 2000 by SFAS No.
138,   Accounting  for  Certain  Derivative   Instruments  and  Certain  Hedging
Activities  (collectively,  SFAS  No.  133).  SFAS  No.  133  requires  that all
derivatives,  including  certain  derivatives  embedded in other  contracts,  be
recognized  in the  statement  of  financial  condition,  either as assets or as
liabilities,  and be measured at their fair value. SFAS No. 133 became effective
January 1, 2001. No adjustment  was required as a result of the adoption of this
statement.

3.  PROFIT AND LOSS ALLOCATIONS

Pursuant to the Company's operating  agreement,  the first $14 million in losses
of the Company  will be  allocated  to the Other  Members,  which  equals  their
capital  investment  in the Company.  Profits,  distributed  as  dividends,  are
allocated  80%  to  NYFIX  and  20% to  the  Other  Members.  In  the  event  of
liquidation,  distribution  of the assets of the Company will be  distributed to
the Members in accordance with the extent of their positive capital accounts.

4.  REGULATORY NET CAPITAL REQUIREMENT

The Company is subject to the Uniform Net Capital Rule (Rule  15c3-1)  under the
Securities and Exchange Act of 1934,  which requires the  maintenance of minimum
net capital and requires that the ratio of aggregate indebtedness to net capital
both as defined, shall not exceed 15 to 1. At December 31, 2000, the Company had
regulatory  net capital  and minimum  regulatory  net  capital  requirements  of
$4,128,525 and $168,256,  respectively.  The Company's net capital ratio was .61
to 1 at December 31, 2000.

5.  RELATED PARTY TRANSACTIONS

During 2000, and for the period September 9, 1999 to December 31, 2000,  certain
operating  costs and  capital  expenditures  were paid by NYFIX on behalf of the
Company.  Such  costs are  reflected  as Due to  NYFIX,  Inc.  on the  Company's
statement of financial condition.  As of December 31, 2000 a payable to NYFIX of
approximately $2 million is recorded.



                                       -8-




NYFIX entered into several lease  agreements  for computer  equipment and office
space.  The equipment and office space is used by the Company under the terms of
a management agreement with NYFIX. The management agreement requires the Company
to repay  NYFIX for the amount of the  expense on a  month-to-month  basis.  The
leases in effect at December 31, 2000 expire at various dates through June 2005.
Future payments to NYFIX for such leases are expected to be as follows:

   2001                                                          $   848,604
   2002                                                              700,104
   2003                                                              227,223
   2004                                                               68,916
   2005                                                               34,458
                                                                 -----------
                                                                 $ 1,879,305
                                                                 ===========


Loans are made to  employees  of the Company at the  discretion  of  management.
These loans are unsecured and repayable  upon demand.  During 2000,  the maximum
amount  outstanding  was  $119,000.  Loans  receivable  under this  program were
$117,000  at  December  31, 2000 and are  included  in other  assets  within the
accompanying statement of financial condition.


                                       -9-

EX-10.11

                                                                   Exhibit 10.11


                   AMENDMENT NO. 1 TO 2001 STOCK OPTION PLAN

The 2001 Stock Option Plan (the "Plan") was approved at the 2001 Annual  Meeting
of  Shareholders.  On April  16,  2002,  at a  regular  meeting  of the Board of
Directors, the Board unanimously voted to increase the number of shares reserved
for issuance  under  Section 4 of the Plan to 3,500,000  shares of common stock.
This increase in the number of shares  available  under the Plan, from 2,000,000
shares, was approved at the 2002 Annual Meeting of Shareholders held on June 10,
2002.

EX-10.13

                                                                   Exhibit 10.13


                               PURCHASE AGREEMENT


                        Purchase Agreement,  dated as of October 2, 2002, by and
between  NYFIX,  Inc.,  a New York  corporation  (the  "Buyer"),  and the  other
signatories hereto (the "Sellers").

                        WHEREAS,   the  Sellers   currently   own  100%  of  the
outstanding  units of  membership  interests  ("Units") of  Renaissance  Trading
Technologies, LLC (the "Company"); and

                        WHEREAS, the Sellers desire to sell, and the Buyer
wishes to purchase, such number of Units as equals 18% of the outstanding Units,
upon the terms and subject to the conditions hereafter set forth.

                        NOW, THEREFORE,  in order to implement the foregoing and
in consideration of the mutual agreements contained herein, the parties
hereto, intending to be legally bound, hereby agree as follows:

SECTION 1.  SALE OF SHARES.
            --------------

            1.1.  AGREEMENT  TO PURCHASE AND SELL.  The Buyer  hereby  agrees to
purchase  an  aggregate  of 18% of the Units (the  "Purchased  Units")  from the
Sellers,  and the Sellers  hereby  agree to sell 18% of each of their  number of
Units to the Buyer,  for an  aggregate of 300,000  shares (the  "Shares") of the
Buyer's  common stock.  The Sellers shall  contribute an aggregate of 150,000 of
the Shares to the  Company  (the  "Employees  Shares"),  which  Shares  shall be
distributed  by the Company to its employees  who become  members of the Company
after the date hereof.  Each Seller shall receive 50,000 Shares (which shall not
come from the Employees Shares).

SECTION 2.  REPRESENTATIONS AND WARRANTIES OF THE SELLER.
            --------------------------------------------

            Each of the Sellers,  jointly and  severally,  hereby  represent and
warrant to the Buyer that:

            2.1. ORGANIZATION; GOOD STANDING. The Company is a limited liability
company duly organized,  validly existing and in good standing under the laws of
the State of Delaware and has all requisite  limited liability company power and
authority  to carry on its  business  as now  conducted  and as  proposed  to be
conducted.  The Company is duly  qualified  to transact  business and is in good
standing in each  jurisdiction  in which the failure so to qualify  would have a
material adverse effect on its business or properties.

            2.2 VALIDITY.  This Agreement has been duly and validly executed and
delivered by such Seller and constitutes a legal, valid and binding agreement of
such  Seller,  enforceable  against  such Seller in  accordance  with its terms,
except  as  such  enforceability  may  be  affected  by  applicable  bankruptcy,
insolvency or similar laws relating to or affecting  creditors' rights generally
or by equitable principles.





            2.3. NO CONSENTS;  NO  CONTRAVENTION.  The  execution,  delivery and
performance by such Seller of this Agreement does not require any authorization,
consent,  approval  or  action  by  or  in  respect  of,  or  filing  with,  any
governmental body, agency, official or other person and does not contravene,  or
constitute a default under,  any provision of applicable law or regulation or of
any agreement,  judgment, order, decree or other instrument to which such Seller
is a party or by which such Seller is bound.

            2.4.   CAPITALIZATION.   The  outstanding  capital  of  the  Company
currently  consists  of  10,000,000  Units,  all  of  which  are  owned,  in the
aggregate,  by the Sellers. There are no outstanding options,  warrants,  rights
(including  conversion or preemptive  rights) or agreements  for the purchase or
acquisition from the Company of any membership  interests or other securities of
the  Company.  The  Company  is not a  party  or  subject  to any  agreement  or
understanding  of any kind,  and there is no agreement or  understanding  of any
kind  between  any  individual,  corporation,   partnership,  limited  liability
company,  association,  trust or  other  entity  or  organization,  including  a
government or political  subdivision or an agency or instrumentality  thereof (a
"Person"), which affects or relates to the acquisition, disposition or voting or
giving of written  consents  with respect to any  security of the  Company.  The
Company has no subsidiaries  and does not currently own or control,  directly or
indirectly, any interest in any other Person.

            2.5.  GOOD  AND  TRANSFERABLE   TITLE.  Such  Seller  has  good  and
transferable  title to his Units,  and such Units will be  transferred  free and
clear of any lien, pledge, mortgage, charge, security interest or encumbrance of
any kind, except for encumbrances imposed by federal and state securities laws.

            2.6. NO LITIGATION.  (i) There is no action,  suit,  proceeding,  or
investigation  pending or to the Sellers' knowledge currently threatened against
the Company (nor, to their  knowledge,  is there any reasonable basis therefor);
(ii) the Company is not a party or subject to the provisions of any order, writ,
injunction,   judgment,   or  decree  of  any  court  or  government  agency  or
instrumentality; and (iii) there is no action, suit, proceeding or investigation
involving the Company or the Sellers which such parties intend to initiate.

            2.7.  DISCLOSURE.  No  representation,  warranty or statement by the
Seller or the Company made in this Agreement  contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein, in light of the circumstances  under which they were made, not
misleading.

SECTION 3.  REPRESENTATIONS AND WARRANTIES OF THE BUYER.
            -------------------------------------------

            The Buyer hereby represents and warrants to the Seller that:

            3.1. VALIDITY. This Agreement has been duly and validly executed and
delivered by the Buyer and constitutes a legal,  valid and binding  agreement of
the Buyer, enforceable against the Buyer in accordance with its terms, except as
such  enforceability  may be affected by  applicable  bankruptcy,  insolvency or
similar  laws  relating  to  or  affecting  creditors'  rights  generally  or by





equitable principles.

            3.2. NO CONSENTS;  NO  CONTRAVENTION.  The  execution,  delivery and
performance by the Buyer of this  Agreement does not require any  authorization,
consent,  approval  or  action  by  or  in  respect  of,  or  filing  with,  any
governmental body, agency, official or other Person and does not contravene,  or
constitute a default under,  any provision of applicable law or regulation or of
any agreement, judgment, order, decree or other instrument to which the Buyer is
a party or by which the Buyer is bound.

            3.3. RESTRICTED SECURITIES. The Buyer understands that the Units are
characterized as "restricted  securities" as defined under Rule 144 of the Rules
and  Regulations  promulgated  under the Securities Act of 1933, as amended (the
"Securities Act"), and understands the resale limitations imposed by such rule.

            3.4. LEGEND. It is understood that the certificate  representing the
Units will bear the following or similar legend:

            "THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
            OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
            OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT UNDER THE
            ACT IN EFFECT  WITH  RESPECT  TO THESE  SECURITIES  OR AN OPINION OF
            COUNSEL   REASONABLY   SATISFACTORY   TO  THE   COMPANY   THAT  SUCH
            REGISTRATION IS NOT REQUIRED."

SECTION 4.  REGISTRATION RIGHTS.
            -------------------

            4.1. REGISTRATION OF THE SHARES; LOCK-UP. (a) The Shares received by
the Sellers as  consideration  for the Units shall not  initially be  registered
under the Securities Act of 1933, as amended (the  "Securities  Act"), and shall
bear a legend to such  effect in the form  determined  by the  Buyer.  The Buyer
hereby agrees to file a registration  statement  pursuant to the Securities Act,
covering the resale of all of the Shares (the  "Registration  Statement") by the
Sellers and the employees of the Company  receiving Shares upon the distribution
contemplated   by  Section  1.1  hereof  (each  a  "Selling   Stockholder"   and
collectively,  the "Selling  Stockholders"),  as soon as  practicable  but in no
event later than 60 days from the date of this  Agreement  (the "Filing  Date").
The Buyer  will use its  reasonable  best  efforts  to cause  such  Registration
Statement to be declared  effective by the Securities  Exchange  Commission (the
"SEC") as soon as  practicable  after such filing.  The Buyer also agrees to use
its  reasonable  best  efforts  to keep  the  Registration  Statement  effective
(including  the  preparation  and  filing  of  any  amendments  and  supplements
necessary  for  that  purpose)   during  the  period  from  the  date  that  the
Registration Statement is declared effective by the SEC until the earlier of (i)
the date on which the Selling Stockholders shall have sold all of the Shares and
(ii) the date on which all of the Shares are eligible to be sold or transferred,
without holding period or volume  limitations,  pursuant to Rule 144 promulgated
under the Securities Act (the "Effective  Period").  The Buyer agrees to provide
to each Selling Stockholder the number of copies of the final prospectus and any
amendments or supplements  thereto as are





reasonably  requested  by such  Selling  Stockholder.  The Buyer shall  promptly
notify the Selling  Stockholders  of any threatened  stop order by the SEC or if
the  Registration  Statement  ceases to be effective  for any reason at any time
during the Effective Period, and NYFIX shall use its reasonable best efforts and
take all reasonable  actions required to prevent the entry of such stop order or
to obtain  the  prompt  withdrawal  of any order  suspending  the  effectiveness
thereof.

            (b) Notwithstanding the effectiveness of the Registration Statement,
each of the Sellers  hereby  agrees that he shall not,  directly or  indirectly,
sell,  offer to  sell,  contract  to  sell,  transfer,  pledge,  hypothecate  or
otherwise  transfer  or dispose of any of the  Shares,  except  pursuant  to the
following schedule: Dates % of Shares Permitted to be Sold

                    Dates                   % of Shares Permitted to be Sold
                    -----                   --------------------------------

Prior to the one-year anniversary
   of the date hereof                       up to 40%
After the first year and prior to
   the two-year anniversary                 up to an aggregate of 60%
After the second year and prior to
   the three-year anniversary               up to an aggregate of 80%
After the third year                        up to an aggregate of 100%

            4.2. RESTRICTIONS OF REGISTRATION.  Notwithstanding  anything to the
contrary  contained in Section 4.1 above, if the Board of Directors of the Buyer
determines reasonably and in good faith that (i) such filing would jeopardize or
delay any plan by the Buyer to engage in any  acquisition  of assets (other than
in the ordinary course of business) or any merger,  consolidation,  tender offer
or other significant transaction,  (ii) such filing would require the disclosure
of  material  information  that the Buyer has a bona fide  business  purpose for
preserving as  confidential or (iii) at such time the Buyer is unable to comply,
despite its best efforts to so comply, with the filing  requirements  applicable
to the  requested  registration,  then the Buyer may  postpone the filing or the
effectiveness of such registration  statement until the earlier of the date that
is 60 days  from the  Filing  Date or (x) the date upon  which the  contemplated
transaction is completed or abandoned,  (y) the date the material information is
otherwise  disclosed  to the public or ceases to be material or (z) the date the
Buyer is able to comply with the applicable filing requirements.

            4.3. BUYER  INDEMNIFICATION.  The Buyer agrees to indemnify,  to the
fullest  extent  permitted  by law,  each Seller  against  all  losses,  claims,
damages,  liabilities and expenses  (including,  but not limited to,  reasonable
attorneys' fees) to which such  indemnified  party may become subject insofar as
they are caused by, arise out of, or are based upon any untrue or alleged untrue
statement  of a material  fact  contained  in any  registration  statement,  any
prospectus or  preliminary  prospectus  or any  amendment  thereof or supplement
thereto,  or any omission or alleged  omission to state  therein a material fact
required to be stated  therein or  necessary to make the  statements  therein in
light of the  circumstances  in which  they  were  made not  misleading,  except
insofar as the same are (i) caused by or  contained  in any written  information
furnished to the Buyer by a Seller  expressly  for use  therein,  (ii) caused by
such  Seller's  failure  to  deliver  a copy of the  registration  statement  or
prospectus or any amendment or supplement  thereto as required by the Securities
Act or (iii) caused by the use of a prospectus or preliminary  prospectus or any
amendment or  supplement  thereto after receipt of notice from the Buyer that it
should no longer be used.





            4.4. SELLERS INFORMATION; SELLERS INDEMNIFICATION. Each Seller shall
furnish to the Buyer in writing such  information  and  affidavits  as the Buyer
reasonably  requests for use in connection with any such registration  statement
or prospectus  and, to the fullest  extent  permitted by law, will indemnify the
Buyer, its directors, officers and employees, each underwriter (if any) and each
Person who  controls  the Buyer or such  underwriter  (within the meaning of the
Securities  Act or the  Securities  Exchange  Act of 1934)  against  any losses,
claims,  damages,  liabilities  and  expenses  (including,  but not  limited to,
attorneys' fees) to which such  indemnified  party may become subject insofar as
they are caused by, arise out of, or are based upon any untrue or alleged untrue
statement of a material fact contained in the registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto, or any
omission or alleged  omission to state  therein a material  fact  required to be
stated  therein  or  necessary  to make the  statements  therein in light of the
circumstances  in which  they were made not  misleading,  but only to the extent
that such untrue  statement or omission is contained in any written  information
or affidavit so furnished in writing by such Seller expressly for use therein or
the failure by such Seller to deliver a copy of the  registration  statement  or
prospectus or amendment or supplement thereto as required by the Securities Act.
The liability of any Seller under this Section 4.4 shall not in any event exceed
the net proceeds  received by such Seller from the sale of Shares covered by the
Registration Statement.

            4.5.    INDEMNIFICATION    PROCEDURE.   Any   Person   entitled   to
indemnification under Sections 4.3 or 4.4 above, will (i) use reasonable efforts
to give  prompt  written  notice to the  indemnifying  party of any  claim  with
respect to which it seeks  indemnification  and (ii) unless in such  indemnified
party's reasonable  judgment a conflict of interest between such indemnified and
indemnifying  parties  may  exist  with  respect  to  such  claim,  permit  such
indemnifying  party to assume the defense of such claim with counsel  reasonably
satisfactory to the indemnified party;  provided,  however,  that the failure of
any Person  entitled  to  indemnification  hereunder  to give such notice to the
indemnifying  party  shall not  constitute  a waiver  of,  or a  defense  of the
indemnifying party to, such Person's right to  indemnification  hereunder unless
such failure has a material adverse effect upon the indemnifying party's ability
to defend said action. If such defense is assumed,  the indemnifying  party will
not be subject to any liability for any settlement made by the indemnified party
without  its consent  (which  consent  will not be  unreasonably  withheld).  An
indemnifying  party who is not entitled to, or elects not to, assume the defense
of a claim will not be  obligated  to pay the fees and expenses of more than one
counsel for all parties  indemnified by such indemnifying  party with respect to
such  claim,  unless  in the  reasonable  judgment  of any  indemnified  party a
conflict of interest may exist between such  indemnified  party and any other of
such  indemnified  parties  with  respect  to such  claim,  in which  event  the
indemnifying  party  will  pay the  fees and  expenses  of up to one  additional
counsel.

SECTION 5.  MISCELLANEOUS.
            -------------

            5.1.  ASSIGNMENT.  This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.

            5.2. SURVIVAL.  All representations,  warranties and agreements made
in this Agreement shall survive the execution hereof.





            5.3. ENTIRE AGREEMENT.  This Agreement  supersedes any and all prior
contracts,  understandings,  discussions  and  agreements  between  the  parties
hereto,  and constitutes the complete  understanding  between the parties,  with
respect to the subject matter hereof. No statement, representation,  warranty or
covenant has been made by any party with respect thereto except as expressly set
forth herein.

            5.4.  MODIFICATION; WAIVER.  This Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed,  in the case
of an  amendment,  by all the  undersigned,  or in the case of a waiver,  by the
party  against  whom the waiver is to be  effective.  No failure or delay by any
party in exercising any right,  power or privilege  hereunder shall operate as a
waiver  thereof nor shall any single or partial  exercise  thereof  preclude any
other or further exercise  thereof or the exercise of any other right,  power or
privilege. The rights and remedies herein provided shall be cumulative and shall
not be exclusive to any rights or remedies by law or at equity.

            5.5.  APPLICABLE  LAW.  This  Agreement  shall  be  governed  by and
construed  and  enforced in  accordance  with the laws of the State of New York,
regardless  of the law that might be applied  under  principles  of conflicts of
law.

            5.6. SEVERABILITY.  Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,  be
ineffective  to the  extent  of  such  invalidity  or  unenforceability  without
rendering  invalid or  unenforceable  the remaining terms and provisions of this
Agreement or affecting  the  validity or  enforceability  of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as to be enforceable.

            5.7. EXPENSES OF THE TRANSACTION. Each party to this Agreement shall
pay all costs and expenses  incurred by it in connection with this Agreement and
the transactions contemplated hereby.

            5.8.  FURTHER  ASSURANCES.  From time to time, at the request of any
party  hereto  or  as  required  under   applicable  law  and  without   further
consideration,  each party  hereto will  execute and deliver to such  requesting
party or other person or persons,  as appropriate,  such documents and take such
other action (but without incurring any financial obligation except as otherwise
required by this Agreement) as such requesting  party may reasonably  request in
order to consummate  more  effectively and in accordance with applicable law the
transactions contemplated hereby.

            5.9.  NOTICES.  All notices and other  communications  provided  for
herein  shall be in writing and shall be deemed to have been duly given and made
if served  either by  personal  delivery to the party for whom  intended  (which
shall include delivery by a reputable  overnight courier) or three business days
after being  deposited,  postage prepaid,  certified or registered mail,  return
receipt requested, in the United States mail bearing the following address shown
for, or such other address as may be  designated  in writing  hereafter by, such
party:





            If to the Sellers:           at the  addresses  set forth  opposite
                                         their    respective   names   on   the
                                         signature pages hereto.

               with a copy to:           Hogan & Hartson  LLP 555 13th  Street,
                                         NW  Washington,  DC  20004  Attention:
                                         John Beckman, Esq.

              If to the Buyer:           NYFIX,  Inc.  Stamford Harbor Park 333
                                         Ludlow Street  Stamford ,  Connecticut
                                         06902 Attention: Peter K. Hansen

               with a copy to:           Olshan  Grundman  Frome  Rosenzweig  &
                                         Wolosky  LLP  505  Park  Avenue,  16th
                                         Floor   New  York,   New  York   10022
                                         Attention: Benjamin S. Reichel, Esq.

            5.10. Counterparts.  This Agreement may be executed in any number of
counterparts,  each of which shall be deemed to be an original  and all of which
together shall be deemed to be one and the same instrument.  A facsimile copy of
a signature  page shall be deemed an  original  signature  for  purposes of this
Agreement.


                            [SIGNATURE PAGE FOLLOWS]





             IN WITNESS  WHEREOF,  the parties  hereto have each  executed  this
Agreement as of the date first written above.


BUYER:

NYFIX, INC.


By:  /s/ Peter K. Hansen
        -----------------------------
        Name:  Peter K. Hansen
        Title:  President


SELLERS:

/s/ Edward Brandman                               Address: 6 Wolf Hill Terrace
- -----------------------------                     ------------------------------
Edward Brandman                                   Martinsville, NJ 08836
                                                  ------------------------------
                                                  ------------------------------
                                                  ------------------------------

/s/ Daniel Ryan                                   Address: 37 River Avenue
- -----------------------------                     ------------------------------
Daniel Ryan                                       Cornwall on Hudson, NY 12520
                                                  ------------------------------
                                                  ------------------------------

/s/ Ken DeGiglio                                  Address: 5 Forest Gardens Dr.
- -----------------------------                     ------------------------------
Ken DeGiglio                                      Matawan, NJ 07747
                                                  ------------------------------
                                                  ------------------------------

EX-10.14

                                                                   Exhibit 10.14


                      RENAISSANCE TRADING TECHNOLOGIES, LLC

                       CONVERTIBLE SECURED PROMISSORY NOTE

NEITHER  THIS  NOTE  NOR THE  LIMITED  LIABILITY  COMPANY  UNITS  ISSUABLE  UPON
CONVERSION  HAVE BEEN  REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED
("ACT"),  OR UNDER  ANY  STATE  SECURITIES  LAW AND SUCH  SECURITIES  MAY NOT BE
PLEDGED,   SOLD,  ASSIGNED  OR  TRANSFERRED  IN  THE  ABSENCE  OF  AN  EFFECTIVE
REGISTRATION  STATEMENT  WITH RESPECT  THERETO UNDER THE ACT AND ANY  APPLICABLE
STATE  SECURITIES  LAW,  OR UNLESS THE  COMPANY  RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.

$1,500,000                                                 As of October 2, 2002


FOR VALUE RECEIVED,  RENAISSANCE TRADING  TECHNOLOGIES,  LLC, a Delaware limited
liability company (the "Company"),  promises to pay to the order of NYFIX, INC.,
a New York corporation  (the "Holder"),  on the earlier to occur of (i) the five
year anniversary of the date hereof (the "Maturity  Date"),  or (ii) an Event of
Default (as defined in Section 1 below),  unless this Note is converted prior to
such dates pursuant to Section 3 below, the principal amount of ONE MILLION FIVE
HUNDRED  THOUSAND DOLLARS  ($1,500,000),  in such coin or currency of the United
States  of  America  as at the time of  payment  shall be legal  tender  for the
payment of public or private debts, together with interest on the unpaid balance
of said principal  amount from time to time  outstanding at the rate of five and
one-half percent (5 1/2%) per annum.

If any payment hereunder becomes due and payable on a Saturday,  Sunday or legal
holiday under the laws of the United States of America or the State of New York,
or both,  the due date  thereof  shall be  extended  to the next  business  day.
Payments of principal and interest are to be made at the address provided herein
for the Holder (or at such other  place as the Holder  shall have  notified  the
Company in writing at least five (5) days before such payment is due) or by wire
transfer pursuant to the Holder's written instructions.

     1.  EVENTS OF  DEFAULT.  (a) Upon the  occurrence  of any of the  following
events (herein called "Events of Default"):


          (i) The Company shall fail to pay the principal of or interest on this
     Note on the Maturity Date;

          (ii) (A) The Company  shall  commence any  proceeding  or other action
     relating  to  it  in  bankruptcy  or  seek   reorganization,   arrangement,
     readjustment  of  its  debts,   receivership,   dissolution,   liquidation,





     winding-up,  composition or any other relief under any  bankruptcy  law, or
     under  any  other  insolvency,  reorganization,  liquidation,  dissolution,
     arrangement,  composition, readjustment of debt or any other similar act or
     law, of any jurisdiction,  domestic or foreign,  now or hereafter existing;
     or (B) the Company shall admit the material  allegations of any petition or
     pleading in connection with any such  proceeding;  or (C) the Company shall
     apply for,  or consent or  acquiesce  to, the  appointment  of a  receiver,
     conservator,  trustee or similar officer for it or for all or a substantial
     part of its property;  or (D) the Company  shall make a general  assignment
     for the benefit of creditors;

          (iii) (A) The  commencement  of any  proceedings  or the taking of any
     other action  against the Company in bankruptcy or seeking  reorganization,
     arrangement,   readjustment   of  its  debts,   liquidation,   dissolution,
     arrangement,  composition,  or any other relief under any bankruptcy law or
     any other similar act or law of any jurisdiction,  domestic or foreign, now
     or hereafter existing;  or (B) the appointment of a receiver,  conservator,
     trustee or similar officer for the Company for any of its property;  or (C)
     the  issuance  of a warrant of  attachment,  execution  or similar  process
     against any of the property of the Company;

          (iv) The  Company  shall  fail to comply  with any of its  obligations
     under this Note, which failure shall continue uncured for five (5) business
     days after notice thereof to the Company;

          (v) The Company  shall  default with respect to any  indebtedness  for
     borrowed money (other than under this Note or otherwise related to payments
     due the Holder under any other agreement) with a principal amount in excess
     of $75,000 if either (a) the effect of such  default is to  accelerate  the
     maturity  of such  indebtedness  (giving  effect  to any  applicable  grace
     periods) or (b) the holder of such indebtedness  declares the Company to be
     in default (giving effect to any applicable grace periods); or

          (vi) Any judgment or judgments  against the Company or any attachment,
     levy or execution against any of its properties for any amount in excess of
     $75,000 in the  aggregate  shall remain  unpaid,  or shall not be released,
     discharged,  dismissed,  stayed or fully bonded for a period of thirty (30)
     days or more after its entry, issue or levy, as the case may be;

then,  and in any such event,  the Holder,  at the  Holder's  option and without
written notice to the Company,  may declare the entire  principal amount of this
Note then outstanding  together with accrued unpaid interest thereon immediately
due and payable, and the same shall forthwith become immediately due and payable
without presentment,  demand, protest, or other notice of any kind, all of which
are  expressly  waived.  The Events of Default  listed herein are solely for the
purpose of  protecting  the interests of the Holder of this Note. If the Note is
not paid in full upon acceleration,  as required above, interest shall accrue on
the  outstanding  principal  of and  interest  on this Note from the date of the


                                       2



Event of Default up to and  including the date of payment at a rate equal to the
lesser  of  twelve  percent  (12.0%)  per  annum or the  maximum  interest  rate
permitted by applicable law.

                        (b) NON-WAIVER AND OTHER REMEDIES.  No course of dealing
or  delay  on the  part of the  Holder  of this  Note in  exercising  any  right
hereunder  shall  operate as a waiver or  otherwise  prejudice  the right of the
Holder of this Note. No remedy  conferred hereby shall be exclusive of any other
remedy  referred to herein or now or hereafter  available at law, in equity,  by
statute or otherwise.

                        (c) COLLECTION COSTS; ATTORNEY'S FEES. In the case of an
Event of Default, if this Note is turned over to an attorney for collection, the
Company agrees to pay all reasonable costs of collection,  including  reasonable
attorney's  fees and expenses  and all  out-of-pocket  expenses  incurred by the
Holder in connection  with such  collection  efforts,  which amounts may, at the
Holder's option, be added to the principal hereof.

            2. CANCELLATION. Upon full satisfaction of the Company's obligations
hereunder,  the Holder  shall  promptly  deliver or cause to be delivered to the
Company this Note for cancellation.

            3.  CONVERSION.  (a) Following the twelve month  anniversary  of the
date of this Note, the Holder has the right, at the Holder's option, at any time
prior to payment in full of the  principal  and accrued  interest due under this
Note, to convert the outstanding  principal  amount of this Note, into 6,400,000
fully paid and non-assessable  units of membership interests of the Company (the
"Units"),  subject  to  adjustment  for  all  splits,  combinations,  dividends,
recapitalizations  and the like on the Company's  Units.  Upon  conversion,  the
Company  shall pay to the Holder a cash  amount  equal to all accrued and unpaid
interest on this Note as of such date.

                        (b) Upon conversion of this Note under Section 3(a), the
Holder  shall  surrender  this Note to the Company.  As promptly as  practicable
after the  conversion  of this Note,  the Company at its expense  will issue and
deliver  to the  Holder a  certificate  or  certificates  for the number of full
shares of Units issuable upon such  conversion.  Such conversion shall be deemed
to have been made immediately  prior to the close of business on the date of the
surrender of this Note, and the person or persons  entitled to receive the Units
issuable  upon such  conversion  shall be treated for all purposes as the record
holder or holders of such Units as of such date.

                                       3




            4. PURCHASE OPTION. As additional consideration for making this loan
to the Company,  the Holder is hereby  granted the option to purchase the number
of Units equal to the amount of the Units  repurchased  by the Company  from the
Company's  members  pursuant to Section 14.3 of the Amended and Restated Limited
Liability Operating Agreement of the Company of even date herewith,  in exchange
for a payment  by the  Holder to the  Company  equal to such  Units'  book value
(defined as the  Company's  members  equity as  determined  in  accordance  with
accounting principles generally accepted in the United States of America divided
by the number of Units  outstanding  at the time) as of the end of the Company's
most recent quarter-end.

            5. GRANT OF SECURITY INTEREST.  (a) The Company hereby grants to the
Holder a first priority  security  interest in all of the intellectual  property
rights transferred from the Holder to the Company set forth on Schedule I hereto
(the "Intellectual Property"), in order to secure the payment and performance in
full of all  obligations  of the Company now or  hereafter  existing  under this
Note. The security interest granted herein will terminate (and all rights to the
Intellectual  Property  will  revert  to  the  Company)  upon  the  payment  and
performance in full of all such obligations or the exercise by the Holder of the
conversion option set forth in Section 3(a) above.

                        (b) At any time and from time to time,  the  Company (at
the  Company's   expense)   will  promptly   execute  and  deliver  all  further
instruments,  and will  take  all  further  action,  that  may be  necessary  or
desirable,  or that the Holder may reasonably  request,  in order to perfect and
protect any security  interest  granted or purported to be granted  hereby or to
enable the Holder to exercise and endorse its rights and remedies hereunder with
respect to the Intellectual Property.

            6.  PREPAYMENTS.  The  Company  shall not prepay any  portion of the
principal of this Note without the prior written consent of the Holder.

            7. REQUIRED CONSENT.  The Company may not modify any of the terms of
this Note without the prior written consent of the Holder.

            8. LOST DOCUMENTS. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Note or
any Note exchanged for it, and (in the case of loss, theft or destruction) of
indemnity satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
such Note, if mutilated, the Company will make and deliver in lieu of such Note
a new Note of like tenor and unpaid principal amount and dated as of the
original date of the Note.

            9. MISCELLANEOUS.

                        9.1  SEVERABILITY.  In  case  any  one  or  more  of the
provisions contained in this Note should be invalid, illegal or unenforceable in
any  respect,  the  validity,  legality  and  enforceability  of  the  remaining
provisions  contained  herein  shall  not in any  way be  affected  or  impaired
thereby.

                                       4




                        9.2  NOTICES  AND   ADDRESSES.   All  notices,   offers,
acceptances  and any other  acts under this Note  (except  payment)  shall be in
writing,  and shall be  sufficiently  given if  delivered  to the  addressee  in
person, by Federal Express or similar receipted delivery,  by facsimile delivery
or, if mailed, postage prepaid, by certified mail, return receipt requested,  as
follows:

    To Holder:             NYFIX, Inc.
                           Stamford Harbor Park
                           333 Ludlow Street
                           Stamford, Connecticut 06902
                           Attn:  Peter K. Hansen, CEO
                           Fax:  (203) 425-8100

    With a copy to:        Olshan Grundman Frome Rosenzweig & Wolosky LLP
                           505 Park Avenue
                           New York, New York 10002
                           Attn:  Benjamin S. Reichel, Esq.
                           Fax:  (212) 935-1787

    To the Company :       Renaissance Trading Technologies, LLC
                           44 Wall Street
                           New York, New York 10005
                           Attn:  Edward Brandman, CEO
                           Fax:  (212) ______________

    With a copy to:        Hogan & Hartson LLP
                           555 13th Street, NW
                           Washington, DC 20004
                           Attn:  John Beckman, Esq.
                           Fax:  (202) 637-5464

or to such other address as any of them, by notice to the others may designate
from time to time. Time shall be counted to, or from, as the case may be, the
delivery in person or five (5) business days after mailing.

                        9.3   GOVERNING   LAW.   This  Note  and  any   dispute,
disagreement,  or issue of construction  or  interpretation  arising  hereunder,
whether  relating to its  execution,  its  validity,  the  obligations  provided
therein or performance,  shall be governed and interpreted  according to the law
of the State of New York.

                        9.4  BINDING  EFFECT;  ASSIGNMENT.  This  Note  and  the
various rights and obligations  arising  hereunder shall inure to the benefit of
and be binding  upon the  parties  hereto and their  respective  successors  and
permitted  assigns.  Neither  this  Note  nor any of the  rights,  interests  or
obligations  hereunder  shall be transferred or assigned (by operation of law or
otherwise)  by the  Company  without  the prior  written  consent of the Holder.

                                       5




Neither  this Note nor any of the rights,  interests  or  obligations  hereunder
shall be  transferred  or assigned  (by  operation of law or  otherwise)  by the
Holder without the prior written  consent of the Company,  except that this Note
may be assigned by the Holder to any entity in which NYFIX,  Inc.  owns at least
an 80% direct or indirect equity interest.  Any transfer or assignment of any of
the rights,  interests or obligations hereunder in violation of the terms hereof
shall be void and of no force or effect.

                        9.5 JURISDICTION  AND VENUE.  Each of the Holder and the
Company (i) agree that any legal suit,  action or  proceeding  arising out of or
relating to this Note shall be instituted exclusively in the courts of the State
of New York,  (ii) waive any objection to the venue of any such suit,  action or
proceeding  and the right to assert that such forum is not a  convenient  forum,
and (iii) irrevocably  consent to the jurisdiction of the courts of the State of
New York in any such suit, action or proceeding, and further agree to accept and
acknowledge service of any and all process which may be served in any such suit,
action or  proceeding  and agree that  service of  process  upon them  mailed by
certified mail to their  respective  addresses  shall be deemed in every respect
effective service of process upon them in any such suit, action or proceeding.

                        9.6 SECTION HEADINGS.  Section headings herein have been
inserted  for  reference  only and shall  not be  deemed  to limit or  otherwise
affect,  in any matter, or be deemed to interpret in whole or in part any of the
terms or provisions of this Note.

                        IN WITNESS WHEREOF, the Company has caused this Note to
be made and issued in its name on the date specified above by the duly
authorized representative of the Company.

                                         RENAISSANCE TRADING TECHNOLOGIES, LLC


                                         By:  /s/ Daniel J. Ryan
                                              ----------------------------------
                                               Name:  Daniel J. Ryan
                                               Title:  EVP and CFO

                                       6




                                   SCHEDULE I

                          List of Intellectual Property

"Renaissance" is the Nasdaq Market Making /Trading system that was developed at
Robertson Stephens as an alternative to the existing vendor supplied system.

    The basic scope of the Renaissance system can be summarized as follows:

          *  Order Management and Routing
          *  Execution Management/AutoEx
          *  Position Management
          *  Real-time P&L
          *  Quote Management
          *  Nasdaq Compliance Rules

    The Source Code and Supporting Documentation consists of the following:

          *  All software versions for all platforms and operating environments
          *  All specifications, technical or
             programmers' notes, source code annotations,
             user guides, manuals, files, instructions,
             software architecture designs, flowcharts,
             plans, drawings, diagrams, and documentation
             that are exclusively related to the Software

                                       7

EX-10.15

                                                                   Exhibit 10.15





                              AMENDED AND RESTATED

            LIMITED LIABILITY COMPANY OPERATING AGREEMENT


                                       OF


                      RENAISSANCE TRADING TECHNOLOGIES, LLC
- --------------------------------------------------------------------------------
                     (a Delaware limited liability company)













                              AMENDED AND RESTATED
                  LIMITED LIABILITY COMPANY OPERATING AGREEMENT

                                       OF

                      RENAISSANCE TRADING TECHNOLOGIES, LLC


            This  Amended  and  Restated  Limited  Liability  Company  Operating
Agreement of Renaissance Trading Technologies,  LLC, a limited liability company
organized pursuant to the Act (as hereinafter  defined),  dated as of October 2,
2002, by and among the Company and the persons  executing this Agreement (each a
"Member"),  hereby amends and restates the Original  Agreement  (as  hereinafter
defined).

                                    ARTICLE I
                                   DEFINITIONS

            For purposes of this Agreement, unless the context clearly indicates
otherwise, terms used herein shall have the meaning set forth in the Act and the
following terms shall have the following meanings:

            1.1  ACT.  The  Delaware  Limited  Liability  Company  Act  and  all
amendments thereto.

            1.2 ADDITIONAL  MEMBER. A Member who has been or becomes admitted as
a Member pursuant to Article XI hereof, other than Renaissance Members.

            1.3  AFFILIATE.  Affiliate  shall have the meaning  ascribed to such
term in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.

            1.4 AGREEMENT.  This Amended and Restated Limited  Liability Company
Operating  Agreement,  including all amendments  adopted in accordance with this
Agreement and the Act.

            1.5  ARTICLES.  The  Articles of  Organization  of the  Company,  as
amended from time to time, and filed with the Secretary of State of the State of
Delaware.

            1.6 ASSIGNEE.  A transferee  of any Unit of Membership  Interest who
has not been admitted as a Substitute Member.

            1.7 BOARD OF DIRECTORS  OR BOARD.  Board of Directors or Board shall
mean the Board of Directors of the Company.

            1.8  CAPITAL  ACCOUNTS.  Capital  Accounts  shall  mean the  capital
account of a Member as described in Section 7.2 hereof.





            1.9 CAPITAL CONTRIBUTION. Any contribution of Property made by or on
behalf of a Member, Substitute Member, Additional Member or Assignee.

            1.10 COMPANY.  The company named at the beginning of this Agreement,
a limited liability company formed under the laws of the State of Delaware,  and
any successor limited liability company.

            1.11  DESIGNATED  DIRECTORS.  Shall  have the  meaning  set forth in
Section 6.2 hereof.

            1.12 FISCAL YEAR. The calendar year.

            1.13 INITIAL MEMBERS. NYFIX and the Management Team.

            1.14 MANAGEMENT TEAM. The management team of the Company, consisting
of Edward Brandman, Daniel Ryan and Ken DeGiglio.

            1.15 MEMBERSHIP  INTEREST.  The rights of a Member to  distributions
(liquidating  or  otherwise)  and  allocations  of the Profits,  Losses,  gains,
deductions  and credits of the  Company  and,  to the extent  permitted  by this
Agreement, to possess and exercise voting rights.

            1.16 NYFIX. NYFIX, Inc., a New York corporation.

            1.17 ORIGINAL  AGREEMENT.  The Limited  Liability  Company Operating
Agreement  of the  Company,  entered  into  by the  Management  Team,  as of the
Original Effective Date.

            1.18 ORIGINAL EFFECTIVE DATE.  September 9, 2002, the effective date
of the Original Agreement.

            1.19  PERSON.  Any  individual,  partnership,  corporation,  limited
liability  company,  association,  joint venture,  organization,  trust or other
entity.

            1.20  PROPERTY.  Any  property,   real  or  personal,   tangible  or
intangible  including,  without  limitation,  money,  and any legal or equitable
interest  in such  property,  but  excluding  services  and  promises to perform
services in the future.

            1.21  RENAISSANCE  MEMBER.  The Management  Team and each individual
that is an  employee  of the  Company on the date hereof who becomes a Member by
receiving Units from the Management Team.

            1.22 REQUIRED  APPROVAL.  The approval of all of the NYFIX Designees
and the Renaissance Designees.





            1.23  SCHEDULE D.  Schedule D to this  Agreement  setting  forth the
name,  address,  Capital  Contribution,  Membership  Interest  and Units of each
Initial Member, and the Member designated as the Tax Matters Partner.

            1.24 SUBSTITUTE  MEMBER. An Assignee who has been admitted to all of
the rights of membership pursuant to Section 10.3 hereof.

            1.25 TAX  CHARACTERIZATION  AND ADDITIONAL TAX TERMS. It is intended
that the Company be  characterized  and treated as a partnership for, and solely
for,  federal,  state and local income tax purposes.  For such purpose,  (i) the
Company  shall be subject to all of the  provisions of Subchapter K of Chapter 1
of Subtitle A of the Code, (ii) all references to a "Partner," to "Partners" and
to the "Partnership" in this Agreement and in the provisions of the Code and Tax
Regulations  cited in this Agreement  shall be deemed to refer to a Member,  the
Members and the Company,  respectively.  In addition,  the following terms shall
have the following meanings:

            (a) CODE shall mean the Internal Revenue Code of 1986, as amended.

            (b) PROFITS AND LOSSES shall mean,  for each Fiscal Year,  an amount
     equal  to the  Company's  taxable  income  or loss for  such  Fiscal  Year,
     determined in accordance with Section 703(a) of the Code (for this purpose,
     all  items of  income,  gain,  loss,  or  deduction  required  to be stated
     separately  pursuant to Section  703(a)(1) of the Code shall be included in
     taxable income or loss), with the following adjustments:

                        (i)  Any  income  of the  Company  that is  exempt  from
          federal  income tax and not otherwise  taken into account in computing
          Profits or Losses pursuant to this Section 1.25 shall be added to such
          taxable income or loss;

                        (ii)  Any  expenditures  of  the  Company  described  in
          Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of
          the Code expenditures pursuant to Section  1.704-1(b)(2)(iv)(i) of the
          Tax  Regulations,  and not  otherwise  taken into account in computing
          Profits or Losses  pursuant to this Section 1.25,  shall be subtracted
          from such taxable income or loss;

                        (iii) In the  event  the  agreed  fair  market  value of
          Company assets is adjusted pursuant to Section 1.704-1(b)(2)(iv)(f) of
          the  Tax  Regulations  or  other   pertinent   sections  of  such  Tax
          Regulations, the amount of such adjustment shall be taken into account
          as gain or loss for purposes of computing  Profits and Losses;  and in
          lieu  of  the  depreciation,  amortization  and  other  cost  recovery
          deductions  taken into  account in computing  such  taxable  income or
          loss, there shall be taken into account depreciation,  amortization or
          other cost recovery  computed  with  reference to the value of Company
          property  approved by the Designated  Directors (if different from its
          adjusted tax basis)  pursuant to Section  1.704-1(b)(2)(iv)(g)  of the
          Tax Regulations for such Fiscal Year; and





                        (iv)   Notwithstanding  any  other  provisions  in  this
          Agreement,  any items which are  specially  allocated  pursuant to the
          provisions of Schedule A and Item 8.1(c) below shall not be taken into
          account in computing Profit or Loss.

            1.26  UNIT.  One  of the  units  of  Membership  Interest  that  are
authorized to be issued under this Agreement.  Each Unit represents a Membership
Interest  with an  initial  ratio of one  divided  by the total  number of Units
issued hereunder, subject to adjustment as provided herein.

                                   ARTICLE II
                                    FORMATION

            2.1  ORGANIZATION.  The  Members  hereby  organize  the Company as a
Delaware limited liability company pursuant to the provisions of the Act.

            2.2  AGREEMENT.  For and in  consideration  of the mutual  covenants
herein contained and for other good and valuable consideration,  the receipt and
sufficiency  of  which  is  hereby  acknowledged,  the  Members  executing  this
Agreement hereby agree to the terms and conditions of this Agreement,  as it may
from time to time be amended.  Except as otherwise  provided  herein,  it is the
express intention of the Members that this Agreement shall be the sole source of
agreement of the parties and, except to the extent a provision of this Agreement
expressly  incorporates federal income tax rules by reference to sections of the
Code or Tax Regulations or is expressly prohibited or ineffective under the Act,
this Agreement shall govern, even when inconsistent with, or different than, the
provisions  of the Act or any other law or rule.  To the extent any provision of
this Agreement is prohibited or ineffective  under the Act, this Agreement shall
be deemed to be  amended  to the least  extent  necessary  in order to make this
Agreement effective under the Act. In the event the Act is subsequently  amended
or  interpreted  in such a way to make any provision of this  Agreement that was
formerly invalid valid,  such provision shall be considered to be valid from the
effective date of such interpretation or amendment.

            2.3  NAME.  The name of the  Company  is the  name set  forth at the
beginning of this  Agreement  and all business of the Company shall be conducted
under that name.

            2.4 TERM. The Company shall be dissolved and its affairs wound up in
accordance with the Act and this Agreement.

            2.5  PRINCIPAL  OFFICE.  The  principal  office of the Company  (the
"Principal  Office")  shall be located  at 44 Wall  Street,  New York,  New York
10005.  The Board of Directors may, from time to time,  with Required  Approval,
change the location of the Principal Office.

            2.6  REGISTERED  AGENT  AND  OFFICE.  The  name and  address  of the
registered  agent  for the  service  of  process  shall be  Corporation  Service
Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The Board
of Directors,  may,  from time to time,  change the  registered  agent or office
through  appropriate  filings  with the  Department  of  State  of the  State of
Delaware. In the event the registered agent ceases to act as such for any reason





or the  registered  office shall change,  the Board of Directors  shall promptly
designate a replacement  registered agent or file a notice of change of address,
as the case may be.

            2.7 NUMBER OF MEMBERS.  The Company  shall not at any time have more
than 100 Members or  "beneficial  owners"  within the meaning of the  Investment
Company Act of 1940.

                                   ARTICLE III
                           PURPOSE; NATURE OF BUSINESS

            The business  purpose of the Company is to engage in the business of
developing,  marketing and selling trading  technologies and services (including
order  management  and  routing,  execution,  risk  and  quote  management,  and
compliance)  across the pre-trade,  trade and post-trade process in the domestic
and  international  financial  markets,  and to  engage in any  lawful  business
permitted  by the Act or laws of any  jurisdiction  in which the  Company may do
business, as approved by the Designated Directors,  and to enter into any lawful
transaction and engage in any lawful  activities in furtherance of the foregoing
purposes and as may be  necessary,  incidental  or  convenient  to carry out the
business of the Company as contemplated by this Agreement. The authority granted
to the Board of  Directors  hereunder  to bind the  Company  shall be limited to
actions necessary or convenient to this business.


                                   ARTICLE IV
                             ACCOUNTING AND RECORDS

            The Company  shall prepare and timely file income tax returns of the
Company in all  jurisdictions  where such filings are required,  and the Company
shall prepare and deliver to each Member,  as soon as practicable  following the
expiration of each Fiscal Year, and at the Company's  expense,  all  information
returns and reports  required by the Code and Tax Regulations and information in
respect of the Company  necessary for the  preparation  of the Members'  federal
income tax returns.

                                    ARTICLE V
                         NAMES AND ADDRESSES OF MEMBERS

            The names and  addresses  of the  Members  are as set forth on their
respective signature pages hereto.





                                   ARTICLE VI
                          RIGHTS AND DUTIES OF MEMBERS

            6.1  MANAGEMENT  OF THE  COMPANY.  (a) The  business  affairs of the
Company  shall be  managed by the Board of  Directors  in  accordance  with this
Agreement. The Board may exercise all such powers of the Company and do all such
lawful  acts and  things as are not by  statute or this  Agreement  directed  or
required to be exercised or done by the Members.  The Members, in their capacity
as such,  shall not have any  right of  control  or  management  power  over the
business  and  affairs  of the  Company or to bind the  Company in any  respect;
provided,  however,  that nothing  herein shall preclude any Member from serving
the  Company as a  director,  officer or agent of the  Company,  following  such
Member's election or appointment in accordance with the terms of this Agreement.

                        (b) The Board of Directors,  with Required Approval, may
delegate any or all of its powers to committees of the Board and to officers and
agents  elected  or  designated  by the  Board or a duly  constituted  committee
thereof.

                        (c) The Board of  Directors  shall be the  "manager"  as
defined in the Act;  provided,  however,  that the directors shall only have the
rights,  powers and authority set forth in this Agreement and, unless  expressly
authorized  by the  Designated  Directors,  a  director,  acting  alone  in such
capacity,  shall  have no  authority  or right to act on  behalf  of or bind the
Company in connection with any matter.

            6.2  BOARD  MEMBERS.  (a) The  Board of  Directors  shall  initially
consist of five voting directors (collectively,  the "Voting Directors"), two to
be  designated  by NYFIX (the "NYFIX  Designees"),  two to be  designated by the
Renaissance  Members (the  "Renaissance  Designees"  and together with all NYFIX
Designees, the "Designated Directors"),  and one outside director to be mutually
agreed upon by the Designated  Directors.  The  Renaissance  Designees  shall be
designated  upon the  affirmative  vote of the  Renaissance  Members  holding  a
majority of the Units held by the Renaissance Members. Subject to Section 6.2(b)
below,  the  number of Voting  Directors  may be  increased  or  decreased  with
Required  Approval.  The  NYFIX  Designees  shall  initially  consist  of  Keith
Jamaities and Paolo Aloe, the Renaissance  Designees shall initially  consist of
Edward  Brandman and Ken DeGiglio,  and the initial  outside  director  shall be
selected by the Designated  Directors within 30 days of the date hereof.  Any of
the Directors may be changed by the applicable designator(s) from time to time.

                        (b) If and when the  number  of Units  owned by NYFIX is
greater  than the  number  of  Units  owned  by all of the  Renaissance  Members
combined, then NYFIX shall have the right to appoint a third NYFIX Designee as a
Voting Director, thereby increasing the total number of Voting Directors to six.
If and when the number of Units owned by NYFIX is equal to or greater than twice
the number of Units owned by all of the Renaissance Members combined, then NYFIX





shall have the right to appoint a fourth  NYFIX  Designee as a Voting  Director,
thereby increasing the total number of Voting Directors to seven.

                        (c)  The  Voting  Directors  may  appoint  a  number  of
advisory board members  (collectively,  the "Advisory  Directors")  equal to the
number  of  Additional  Members,  such  that  one  Advisory  Director  shall  be
designated by each Additional  Member.  Each Advisory  Director  appointed shall
have  the  right  to  attend  all  Board  meetings  and  to  participate  in all
discussions  regarding the management of the Company and make recommendations to
the Voting Directors. All decisions relating to the management and operations of
the  Company  shall  be made  solely  through  a  majority  vote  of the  Voting
Directors, except as otherwise provided in this Agreement.

                        (d) The  Company  is  required  to carry  Directors  and
Officers  liability  insurance with coverage of at least $2,000,000,  unless the
Board of  Directors by the Required  Approval  determines  that the cost of such
coverage is not reasonable in relation to the Company's annual budget,  in which
case the  Company is required  to carry such  lesser  coverage as is  reasonably
available  on  commercially  reasonable  terms  as  determined  by the  Board of
Directors.

            6.3  MEETINGS.  (a) The Board of Directors  shall meet at least once
each calendar quarter, unless otherwise agreed by the Designated Directors. Such
meetings shall be held on such date as shall be determined by the president or a
majority of the Board of Directors.

                        (b) Other meetings of the Board of Directors shall be
held at such time as the Designated Directors shall from time to time determine.

                        (c) The Board of Directors shall select a secretary who
shall  give  written  notice to each  director  of each  meeting of the Board of
Directors,  which notice shall state the place,  date,  time and purpose of such
meeting.  Notice of each such  meeting  shall be given to each  director,  if by
mail,  addressed to him at his  residence  or usual place of business,  at least
five (5) days  before the day on which such  meeting is to be held,  or shall be
sent to him at such  place by  telecopy,  telegraph,  cable,  or  other  form of
recorded  communication,  or be delivered  personally  or by telephone not later
than two (2) days before the day on which such  meeting is to be held. A written
waiver of notice,  signed by the director entitled to notice,  whether before or
after  the time of the  meeting  referred  to in such  waiver,  shall be  deemed
equivalent to notice.  Neither the business to be transacted at, nor the purpose
of any meeting of the Board of Directors need be specified in any written waiver
of  notice  thereof.  Attendance  of a  director  at a  meeting  of the Board of
Directors shall constitute a waiver of notice of such meeting.

                        (d) The Board of Directors may hold its meetings at such
place or  places  within or  without  the State of  Delaware  as the  Designated
Directors  may from time to time  determine,  or as shall be  designated  in the
respective notices or waivers of notice of such meetings.





                        (e) A majority of the directors then in office (or who
are  members of any  committee  of the Board of  Directors)  shall be present in
person at any meeting of the Board of Directors (or a committee thereof,  as the
case may be) in order to constitute a quorum for the  transaction of business at
such meeting,  and the vote of a majority of those directors (or members of such
committee)  present at any such  meeting  at which a quorum is present  shall be
necessary for the passage of any resolution or act of the Board of Directors (or
such committee),  except as otherwise  expressly required by this Agreement.  In
the  absence  of a quorum for any such  meeting,  a  majority  of the  directors
present  thereat may adjourn such meeting from time to time until a quorum shall
be present.

            6.4 DIRECTORS'  CONSENT IN LIEU OF 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,  without  prior  notice and
without a vote,  if a consent  in  writing,  setting  forth the action so taken,
shall be signed by all the members of the Board of Directors  or such  committee
and such  consent is filed with the minutes of the  proceedings  of the Board of
Directors or such committee.

            6.5  REQUIRED  APPROVAL.  Any  decisions or actions set forth in the
following list must have the Required Approval:

                 (a) except as set forth in Article XI and Section  14.1 hereof,
the  issuance  by the  Company  of  equity  securities,  any  equity  derivative
securities,  securities  convertible into equity securities or rights to acquire
equity securities;

                 (b) the  sale,  lease,  transfer  or  other  disposition  (in a
transaction or related  series of  transactions)  of any material  assets of the
Company  (including,  without  limitation,  any material  intellectual  property
assets);

                 (c) any merger or consolidation involving the Company;

                 (d) the liquidation or dissolution of the Company;

                 (e) the filing for bankruptcy by the Company;

                 (f) any  expenditure  by the  Company  of any kind in excess of
$50,000,   including  but  not  limited  to  capital  expenditures,   consulting
agreements  or  pursuant  to  contracts   (other  than  employment   agreements)
obligating the Company to pay $50,000 or more during a 12-month period;

                 (g)  the   incurrence  or  repayment  by  the  Company  of  any
indebtedness in excess of $50,000;

                 (h) the hiring by the Company of employees with annual salaries
of $100,000 or more;





                 (i) the  payment by the  Company  of  bonuses or other  special
payments of any kind to the Management Team;

                 (j) the  reduction  or change  in the  Directors  and  Officers
liability insurance coverage; and

                 (k) the  making  of any  plans or  agreements  to do any of the
foregoing.

            6.6 OFFICERS. The Company shall have such officers as are designated
or appointed by the Board of Directors.

            6.7  LIABILITY  OF MEMBERS.  Neither  the Members nor the  directors
serving on the Board of Directors shall be liable as such for the liabilities of
the Company.

            6.8 RECORDS TO BE MAINTAINED. The Board of Directors shall maintain,
or cause to be maintained, the following records at the Principal Office:

                 (a) A current list of the full name and last known  business or
residence  address of each Member and former  Member and the Capital  Account of
each Member  associated  with their  respective  Membership  Interests,  as of a
recent practicable date;

                 (b) A copy of the Certificate and all amendments thereto;

                 (c) Copies of all past federal, foreign, state and local income
tax returns and reports of the Company;

                 (d)  Copies  of  this   Agreement,   including  all  subsequent
amendments hereto; and

                 (e) Copies of all past financial statements of the Company.

            6.9 REPORTS TO CERTAIN  MEMBERS.  (a) The Board of  Directors  shall
provide (or cause the Company to provide) the  following  reports to NYFIX,  the
Management  Team  and  certain  Additional  Members  selected  by the  Board  of
Directors:

                 (i)  within  14 days of the end of  each  month,  an  unaudited
     detailed balance sheet of the Company as of the close of the last completed
     month,  a statement  of income  showing the  results of  operations  of the
     Company  during  such month,  and a statement  of cash flows of the Company
     during such month,  each prepared in accordance with accounting  principles
     generally   accepted  in  the  United  States  of  America   (collectively,
     "Financial Statements");





                 (ii)  within  30  days of the  end of  each  calendar  quarter,
     unaudited Financial Statements for such quarter;

                 (iii)  within 30 days of the end of each  calendar  quarter,  a
     quarterly  Financial Statement forecast for the current and following eight
     quarters; and

                 (iv) within 60 days of the end of each calendar  year,  audited
     Financial Statements, including footnotes thereto, for such year.

                        (b) The Board of Directors shall provide (or cause the
Company to provide) to all  Members,  within a timely  manner,  the  information
necessary for the Members to prepare tax returns as required by the Code and the
laws of any applicable state.

                        (c) The  Board of  Directors  shall  provide  to  NYFIX,
within 5 days of the end of a month, a monthly sales pipeline.

            6.10 EMPLOYEE HANDBOOK.  The Company agrees to adopt, within 90 days
of the  Original  Effective  Date,  an  Employee  Handbook  and  Expense  Policy
consistent with those adopted by NYFIX.

            6.11  INDEMNIFICATION.  (a)  To  the  fullest  extent  permitted  by
applicable  law,  the Company  shall  indemnify  and hold  harmless  any Member,
director  serving  on the Board of  Directors,  officer,  or  Affiliate  thereof
(individually, in each case, an "Indemnitee") from and against any loss, damage,
claim or liability  incurred by such Indemnitee by reason of any act or omission
performed,  or  omitted to be  performed,  by such  Indemnitee  in good faith on
behalf of the Company and in a manner reasonably believed to be within the scope
of authority  conferred on such  Indemnitee  by this  Agreement,  except that no
Indemnitee  shall be entitled to be indemnified in respect of any loss,  damage,
claim or liability incurred by such Indemnitee by reason of willful  misconduct,
fraud, gross negligence or breach of this Agreement with respect to such acts or
omissions;  provided,  however, that any indemnity under this Section 6.11 shall
be provided out of and to the extent of Company assets only, and no Member shall
have any personal liability on account thereof.

                        (b)  If  any  claim   shall  be   asserted   against  an
Indemnitee,   in   respect  of  which  such   Indemnitee   proposes   to  demand
indemnification  under this Section 6.11 from the Company, such Indemnitee shall
notify  the  Company  to that  effect  with  reasonable  promptness  after  such
assertion,  and the Company shall have the right to assume the entire control of
the defense or  settlement  of any such claim,  through its own attorneys and at
its expense, and in connection therewith,  such Indemnitee shall cooperate fully
to make  available  to the Company all  information  under its control  relating
thereto.

                        (c) All rights to indemnification  provided herein shall
survive  the  termination  of this  Agreement  and the  withdrawal,  removal  or
insolvency of any Member;  provided, that a claim for indemnification  hereunder
is made by or on behalf of the Indemnitee seeking such indemnification  prior to





the time that  distribution  in liquidation of the assets of the Company is made
pursuant to Article XII.

                        (d) The Board of  Directors  and the  Company  may enter
into indemnity  contracts with Indemnitees and adopt written procedures pursuant
to which  arrangements  are made for the advancement of expenses and the funding
of obligations and containing such other procedures regarding indemnification as
are appropriate.


                                   ARTICLE VII
                    CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

            7.1 CAPITAL CONTRIBUTIONS. Each Member shall, no later than upon his
execution  and delivery of this  Agreement,  make the Capital  Contribution  set
forth on his signature page hereto, and each Member shall receive the Membership
Interests  set  forth  on  his  signature  page  hereto.   No  further   Capital
Contribution shall be required of a Member,  except as agreed to by that Member.
No Member shall have the right to withdraw or be repaid any Capital Contribution
except as provided in this Agreement.

            7.2 CAPITAL ACCOUNT.  A separate capital account shall be maintained
for each Member  throughout the term of the Company in accordance with the rules
of Section  1.704-1(b)(2)(iv)  of the Tax  Regulations as in effect from time to
time and,  to the  extent not  inconsistent  therewith,  to which the  following
provisions apply:

                        (a) To each  Member's  Capital  Account  there  shall be
            credited (i) the amount of money  contributed  by such Member to the
            Company (including liabilities of the Company assumed by such Member
            as provided in Section 1.704-1(b)(2)(iv)(c) of the Tax Regulations);
            (ii)  the  fair  market  value of any  Property  contributed  to the
            Company  by  such  Member  (net  of  liabilities   secured  by  such
            contributed  Property  that the Company is  considered  to assume or
            take  subject  to under  Section  752 of the  Code);  and (iii) such
            Member's  share of  Profits  and items of  income  and gain that are
            specially allocated.

                        (b) To each  Member's  Capital  Account  there  shall be
            debited  (i) the amount of money  distributed  to such Member by the
            Company (including liabilities of such Member assumed by the Company
            as provided in Section  1.704-1(b)(2)(iv)(c) of the Tax Regulations)
            other than amounts which are in repayment of debt obligations of the
            Company  to such  Member;  (ii) the fair  market  value of  Property
            distributed  to such  Member  (net of  liabilities  secured  by such
            distributed  Property  that such Member is  considered  to assume or
            take  subject  to under  Section  752 of the  Code);  and (iii) such
            Member's  share of Losses  and items of loss or  deduction  that are
            specially allocated.

The foregoing  provisions and the other provisions of this Agreement relating to
the  maintenance  of  Capital  Accounts  are  intended  to comply  with  Section
1.704-1(b) of the Tax  Regulations  and Section  704(c) of the Code and shall be





interpreted and applied in a manner consistent with such Tax Regulations and the
provisions  set forth in Schedule A attached  hereto.  In the event the Board of
Directors shall determine,  with Required Approval, that it is prudent to modify
the manner in which the  Capital  Accounts,  or any  debits or  credits  thereto
(including,  without limitation,  debits or credits relating to liabilities that
are secured by contributed  or  distributed  Property or that are assumed by the
Company  or any  Member),  are  computed  in  order  to  comply  with  such  Tax
Regulations,  the  Board  may make such  modification,  provided  that it is not
likely to have a  material  effect on the  amounts  distributable  to any Member
pursuant to Article XII hereof upon the dissolution of the Company.

            7.3 NO OBLIGATION TO RESTORE DEFICIT BALANCE.  Except as required by
law, no Member  shall be required to restore any deficit  balance in its Capital
Account.

            7.4 WITHDRAWAL.  A Member shall not be entitled to withdraw any part
of its Capital Account or to receive any distribution  from the Company,  except
as specifically provided in Sections 8.2 or with Required Approval.

            7.5  INTEREST.  No Member  shall be  entitled  to  interest  on such
Member's Capital Contribution or on any Profits retained by the Company.

                                  ARTICLE VIII
                          ALLOCATIONS AND DISTRIBUTIONS

            8.1 PROFITS AND LOSSES. Profits and Losses, and each item of Company
income, gain, loss,  deduction,  credit and tax preference with respect thereto,
for each Fiscal Year (or shorter period in respect of which such items are to be
allocated)  shall be  allocated  among the Members as  provided in this  Article
VIII.

                        (a) PROFITS. Profits for any Fiscal Year shall be
allocated  among  the  Members  in  proportion  to their  respective  Membership
Interests;  provided,  however,  that if a Member has previously had its Capital
Account reduced pursuant to Section  8.1(b)(i) below,  then there shall first be
credited to such Capital Account a portion of the profits equal to the amount of
such reduction.

                        (b)  LOSSES.   Losses  for  any  Fiscal  Year  shall  be
allocated in the following order of priority:

                                    (i) first, to the Members, in proportion to
their respective Membership Interests, but only to the extent of
their respective positive Capital Account balances; and

                                    (ii) then, the balance, if any, among the
Members in proportion to their respective Membership Interests.





                        (c) SPECIAL ALLOCATION OF CERTAIN COMPENSATION EXPENSES.
Any expense attributable to the issuance of shares of NYFIX, Inc.'s common stock
("NYFIX  Common  Stock") by the  Company  to its  employees  shall be  specially
allocated  solely to those Members who  contributed  such shares to the Company,
and such expense shall not be reflected in the allocations of Profits and Losses
set forth in Sections 8.1(a) and 8.1(b), above.

            8.2 DISTRIBUTIONS.

                        (a)  Within  a  reasonable  time  after  the end of each
Fiscal Year, the Company shall, to the extent of available  cash,  distribute to
each  Member cash in an amount  intended to provide  each such Member with funds
for the payment of federal  income taxes  resulting  from the  allocations  made
pursuant to Section 8.1 hereof to such  Member for such Fiscal  Year;  provided,
however,  any cash distribution to be paid to any Member pursuant to this clause
may be  reduced  by the  amount of any cash  distributions  paid to such  Member
during or in respect of such Fiscal Year.  Any  distributions  paid  pursuant to
this clause shall be based upon a notional tax rate determined by the Designated
Directors  and  applied to all such  profit  allocations  regardless  of the tax
status of the individual Member.

                        (b) Distributions  shall be made pro rata to the Members
in  accordance  with  their  Membership  Interests  at  such  time or  times  as
determined by the Designated  Directors  consistent  with the provisions of this
Agreement.

                        (c) In the case of a distribution of property, the Board
of Directors  shall endeavor to the extent feasible to distribute to each Member
the Property which such Member had previously contributed to the Company.

            8.3 NYFIX  CONTRIBUTIONS  AND SERVICES;  REVENUE SHARING.  NYFIX has
contributed  to the Company the  intellectual  property  rights  relating to the
Company's  Nasdaq market  making/trading  system  (including  all related source
code) described on Schedule B attached hereto (the "Intellectual  Property") and
has agreed to provide  the  Company  with the  services  set forth on Schedule C
attached hereto. In consideration  thereof,  NYFIX shall be entitled to receive,
in a non-Member  capacity,  50% of the revenues (but excluding pass throughs not
paid by NYFIX) from sales of the Company's  products or services.  The remaining
50% shall go to the Company.  The party that is  responsible  for collecting the
revenues  shall  remit 50% to the  other  party  within  five  business  days of
receipt.  This revenue sharing arrangement shall remain in effect for thirty-six
months   following  the  Original   Effective  Date  and   thereafter   will  be
automatically terminate.

            8.4 OTHER ALLOCATION RULES.

                        (a) For purposes of determining the Profits,  Losses, or
any other item  allocable  to any  period  (including  allocations  to take into
account any changes in any Member's Membership Interest during a Fiscal Year and
any  transfer of any interest in the  Company),  Profits,  Losses,  and any such
other  item  shall  be  determined  on a daily,  monthly,  or  other  basis,  as
determined by the Board of Directors using any permissible  method under Section
706 of the Code and the Tax Regulations thereunder.

                        (b) The Members are aware of the income tax consequences
of the allocations made by this Article VIII and hereby agree to be bound by the
provisions of this Article VIII in reporting  their shares of Company income and
loss for income tax purposes.


                                   ARTICLE IX
                                     TAXES

            9.1 TAX MATTERS PARTNER. The Member designated as such on Schedule D
shall be the Tax Matters Partner of the Company  pursuant to Section  6231(a)(7)
of the Code. Such Member shall not resign as the Tax Matters Partner unless,  on
the  effective  date of such  resignation,  the Company has  designated  another
Member as Tax  Matters  Partner and such Member has given its consent in writing
to its appointment as Tax Matters Partner. The Tax Matters Partner shall receive
no additional  compensation  from the Company for its services in that capacity,
but all expenses  incurred by the Tax Matters  Partner in such capacity shall be
borne by the  Company.  The Tax  Matters  Partner is  authorized  to employ such
accountants,  attorneys and agents as he, in his sole discretion,  determines is
necessary  to or useful in the  performance  of his duties.  In  addition,  such
Member shall serve in a similar capacity with respect to any similar tax related
or other election provided by state or local laws. The Tax Matters Partner shall
be required to obtain the  Required  Approval in the case of the  extension of a
statute of limitations or a settlement of a tax audit or other tax controversy.

            9.2 SECTION 754  ELECTION.  The Board of Directors may agree to have
the Company make the election  permitted by Section 754 of the Code with respect
to  adjustments  to the basis of Property of the Company.  The cost of preparing
such election,  and any additional accounting expenses of the Company occasioned
by such  election,  shall be borne by the  transferees  or  distributees  of the
interest in the Company.





                                    ARTICLE X
                         TRANSFER OF MEMBERSHIP INTEREST

            10.1 COMPLIANCE  WITH  SECURITIES  LAWS. No Unit has been registered
under the Securities Act of 1933, as amended (the  "Securities  Act"),  or under
any applicable state securities laws. A Member may not transfer (a transfer, for
purposes of this Agreement,  shall be deemed to include,  but not be limited to,
any sale, transfer, assignment, pledge, creation of a security interest or other
disposition) all or any part of such Member's Unit,  except upon compliance with
the  applicable  federal and state  securities  laws.  The Company shall have no
obligation to register any Unit under the Securities Act or under any applicable
state  securities  laws,  or to make any  exemption  therefrom  available to any
Member.

            10.2 TRANSFER OF ECONOMIC INTEREST. The right to receive allocations
of Profits and Losses and to receive  distributions  may not be transferred,  in
whole or in part, unless the following terms and conditions have been satisfied:

                        (a) The  Designated  Directors  shall have  consented in
writing to the  transfer,  which  consent  may be  arbitrarily  withheld by such
directors;

                        (b) The transferor shall have assumed all costs incurred
by the Company in connection with the transfer;

                        (c) If requested by the Board, the transferor shall have
furnished the Company with a written  opinion of counsel,  satisfactory  in form
and  substance  to counsel for the Company,  that such  transfer  complies  with
applicable  federal and state  securities  laws and the  Agreement and that such
transfer, for federal income tax purposes, will not cause the termination of the
Company under Section 708(b) of the Code,  cause the Company to be treated as an
association  taxable  as a  corporation  for income tax  purposes  or  otherwise
adversely affect the Company or the Members; and

                        (d) The transferor shall have complied with such other
conditions as the Board of Directors may reasonably require from
time to time.

Transfers  will be recognized by the Company as effective only upon the close of
business on the last day of the calendar  month  following  satisfaction  of the
above conditions.  Any transfer in contravention of this Article X shall be void
ab initio and  without  force and  effect and shall not bind the  Company or the
other  Members.  Transfers by Members to Affiliates  shall not be subject to the
provisions of Section 10.2(a) hereof.

            10.3  TRANSFER OF  MEMBERSHIP  INTEREST AND  ADMISSION OF SUBSTITUTE
MEMBER. Except for the right to receive allocations of Profits and Losses and to
receive distributions, a Unit may not be transferred, in whole or in part, and a
transferee  shall not have a right to become a Member  unless,  in  addition  to
satisfying  the terms and  conditions  of  Sections  10.2(b),  (c) and (d),  the
following terms and conditions have also been satisfied:

                        (a) The  Designated  Directors  shall have  consented in
writing to the  transfer  and  substitution,  which  consent may be  arbitrarily
withheld by such directors;

                        (b) The transferee  shall have assumed the  obligations,
if any, of the transferor to the Company; and

                        (c)  The  transferor  and  the  transferee   shall  have
complied with such other  requirements  as the Board of Directors may reasonably
impose including, without limitation, the conditions that the transferee:





                                    (i) adopt and  approve  in  writing  all the
terms and provisions of the Agreement then in effect; and

                                    (ii) pay such fees as may be reasonable to
pay the costs of the Company in effecting such substitution.

Transfers by Members to Affiliates  and transfers  made pursuant to Section 14.3
below shall not be subject to the provisions of Section 10.3(a).

            10.4  STATUS  OF  TRANSFEREE.  A  transferee  of a Unit who is not a
Substitute  Member  shall be  entitled  only to receive  that share of  Profits,
Losses and distributions,  and the return of Capital Contributions, to which the
transferor would otherwise be entitled with respect to the interest transferred,
and shall not have the rights of a Member of the  Company  under the Act or this
Agreement including,  without limitation, the right to obtain any information on
account of the Company's transactions, to inspect the Company's books or to vote
with the  Members  on, or to grant or withhold  consents  or  approvals  of, any
matter.  The Company shall,  however,  if a transferee  and  transferor  jointly
advise the  Company in writing of a transfer of a Unit,  furnish the  transferee
with pertinent tax information at the end of each Fiscal Year.

            10.5 LEGEND ON CERTIFICATES. Certificates representing the Units, if
any, shall bear the following or similar legend:

                           "THE UNITS OF  MEMBERSHIP  INTERESTS  REPRESENTED  BY
                           THIS   CERTIFICATE   ARE  SUBJECT  TO  AN   OPERATING
                           AGREEMENT,  A  COPY  OF  WHICH  IS  ON  FILE  AT  THE
                           PRINCIPAL OFFICE OF THE COMPANY. THE UNITS MAY NOT BE
                           SOLD, TRANSFERRED,  ASSIGNED, PLEDGED,  HYPOTHECATED,
                           OR OTHERWISE DISPOSED OF EXCEPT AS EXPRESSLY PROVIDED
                           BY THE TERMS OF THE OPERATING AGREEMENT."

            10.6  DISPOSITIONS  NOT IN COMPLIANCE  WITH THIS ARTICLE  VOID.  Any
attempted  disposition of Unit, or any part thereof, not in compliance with this
Article X shall be void ab initio  and  without  force and  effect and shall not
bind the Company or the other Members.


                                   ARTICLE XI
                              ADMISSION OF MEMBERS

            11.1  ADMISSION  OF  MEMBERS.  The  Board  of  Directors  may  admit
Additional Members to the Company with the Required Approval,  and may determine
the Capital  Contributions and Membership Interests of such Additional Member or
Members;  provided,  however,  that the aggregate number of Membership Interests
held by Additional  Members shall not equal greater than 40% of all  outstanding
Membership Interests; and provided, further, that no Person shall be admitted as





an  Additional  Member  without  the prior  written  consent  of the  Designated
Directors. To the extent that a NYFIX Designee does not consent to the admission
of an  Additional  Member,  NYFIX shall have 30 business  days to match (or find
someone else to match) the  consideration  and proposed terms of such investment
at which time if NYFIX does not match (or find  someone else to match) the offer
then the NYFIX  Designee  shall  consent  to the  admission  of such  Additional
Member; provided, however, that if such consideration and proposed terms are not
on  financially  reasonable  terms,  then the NYFIX  Designee  may  withhold its
consent to the admission of such  Additional  Member and need not match (or find
someone  else to match) the offer.  A person so  approved  to be  admitted as an
Additional Member shall be so admitted upon making a Capital Contribution to the
Company,  executing a counterpart to this Agreement, and furnishing to the Board
of Directors an acceptance,  in form satisfactory to the Board, of all the terms
and  conditions of this  Agreement  and such other  documents as the Board shall
require.  Such admission shall become  effective on the date that the Designated
Directors  determine that such conditions  have been satisfied.  With respect to
any such  Additional  Member  admitted to the Company,  the Capital  Accounts of
Members other than such Additional Member shall be adjusted, i.e. "booked up" or
"booked   down"   as   the   case   may   be,   in   accordance   with   Section
1.704-1(b)(2)(iv)(f)  of the Tax Regulations to reflect the Capital Contribution
of the  Additional  Member,  except as otherwise  determined  by the  Designated
Directors.

                                   ARTICLE XII
                           DISSOLUTION AND WINDING UP

            12.1  DISSOLUTION.  The Company  shall be dissolved  and its affairs
wound up upon receipt of Required Approval.

            12.2 EFFECT OF DISSOLUTION.  Upon dissolution, the Company shall not
be  terminated  and shall  continue  until the  winding up of the affairs of the
Company is completed and a certificate of  cancellation  has been filed with the
Office of the Secretary of State of the State of Delaware.

            12.3 DISTRIBUTION OF ASSETS ON DISSOLUTION.  Subject to Section 12.5
below,  upon the winding up of the Company,  the  Designated  Directors (or such
Person(s)  designated by such  directors)  shall take full account of the assets
and  liabilities  of the  Company,  shall  liquidate  the  assets  (unless  such
directors determine that a distribution of any Company Property in-kind would be
more  advantageous  to the  Members  than the sale  thereof,  in which  case the
adjustments to the Members'  respective  Capital Account pursuant to Section 7.2
shall  be  made  immediately  prior  to such  distribution)  as  promptly  as is
consistent with obtaining the fair value thereof, and shall apply and distribute
the proceeds therefrom in the following order:

                        (a) first,  to the payment of the debts and  liabilities
of the Company to creditors,  including Members who are creditors, to the extent
permitted  by law, in  satisfaction  of such debts and  liabilities,  and to the
payment of necessary expenses of liquidation;

                        (b) second, to the setting up of any reserves which the
Designated  Directors  may deem  necessary or  appropriate  for any  anticipated
obligations or contingencies of the Company arising out of or in connection with
the operation or business of the Company.  Such reserves may be paid over by the
Board to an escrow agent or trustee  selected by the Designated  Directors to be
disbursed   by  such  escrow   agent  or  trustee  in  payment  of  any  of  the
aforementioned  obligations or contingencies  and, if any balance remains at the
expiration  of  such  period  as  the  Board  shall  deem  advisable,  shall  be
distributed by such escrow agent or trustee in the manner hereinafter provided;

                        (c) third,  to the Members pro rata in  accordance  with
and to the extent of their positive capital account balances, if any; and

                        (d)  then,  to the  Members  in  accordance  with  their
Membership Interests.

            Liquidation  proceeds shall be paid within 60 days of the end of the
Company's taxable year in which the liquidation occurs. Such distributions shall
be in cash or Property (which need not be distributed proportionately) or partly
in both, as determined by the Board.  In the case of a distribution of Property,
the Board shall endeavor,  to the extent feasible,  to distribute to each Member
the Property which such Member had previously contributed to the Company.

            If at the time of  liquidation  the Designated  Directors  determine
that an immediate sale of some or all Company Property would cause undue loss to
the Members, the Board may, in order to avoid such loss, defer liquidation.

            12.4 WINDING UP AND FILING  CERTIFICATE  OF  CANCELLATION.  Upon the
commencement  of the winding up of the Company,  a certificate  of  cancellation
shall be  delivered  by the  Company to the  Secretary  of State of the State of
Delaware  for  filing.  The  certificate  of  cancellation  shall  set forth the
information  required  by the  Act.  The  winding  up of the  Company  shall  be
completed when all debts,  liabilities  and obligations of the Company have been
paid and discharged or reasonably adequate provision therefor has been made, and
all of the  remaining  Property  of the  Company  has  been  distributed  to the
Members.






            12.5 PREFERENCE.  Notwithstanding anything to the contrary contained
in this Article XII, upon dissolution and winding up of the Company, NYFIX shall
receive,  in  preference to all other  Members,  (i) a cash amount equal to $1.0
million and (ii) all of the rights to the Intellectual Property.

                                  ARTICLE XIII
                              NYFIX PURCHASE OPTION

            13.1 NYFIX  PURCHASE  OPTION.  (a) NYFIX  shall have the option (the
"NYFIX Option"), but not the obligation,  to purchase Units of the other Members
as follows:

                                    (i)   Between   the  24th  and  30th  months
            following the Original  Effective Date,  NYFIX may purchase from the
            other Members,  on a pro rata basis, a minimum of 20%, and a maximum
            of  40%  of  all  of the  outstanding  Units,  based  on an  implied
            valuation for the Company of $48 million;

                                    (ii)   Between  the  31st  and  36th  months
            following the Original Effective Date, NYFIX may purchase additional
            Units  from the  other  Members,  on a pro rata  basis,  based on an
            implied valuation for the Company of $60 million; provided, however,
            that if the NYFIX  Option was not  exercised  pursuant to clause (i)
            above and NYFIX elects to exercise the NYFIX Option pursuant to this
            clause (ii), then NYFIX must purchase a minimum of 20% of all of the
            outstanding Units; and

                                    (iii)  Between  the  37th  and  48th  months
            following the Original Effective Date, NYFIX may purchase additional
            Units  from the  other  Members,  on a pro rata  basis,  based on an
            implied valuation for the Company of $72 million; provided, however,
            that if the NYFIX Option was not  exercised  pursuant to clauses (i)
            or (ii) above and NYFIX elects to exercise the NYFIX Option pursuant
            to this clause  (iii),  then NYFIX must purchase a minimum of 20% of
            all of the outstanding Units.

Notwithstanding  anything to the contrary contained in this Section 13.1(a),  in
no event may NYFIX  exercise  the NYFIX Option for more than an aggregate of 40%
of all of the outstanding Units; provided,  however, that if NYFIX has exercised
the NYFIX  Option for the entire  40%,  then it may  negotiate  with  individual
Members for  additional  Units of such Members.  Upon the expiration of the 48th
month   following  the  Original   Effective   Date,   the  NYFIX  Option  shall
automatically  lapse and expire and shall not thereafter afford NYFIX any rights
whatsoever.

                        (b) Upon the exercise of the NYFIX Option, a pro rata
portion of the  outstanding  Company  Options (as defined in Section 14.1 below)
shall be deemed to have been  exercised for Units and therefore  will be subject
to the NYFIX Option.

                        (c) NYFIX may exercise the NYFIX Option by delivering
written  notice (the "Exercise  Notice") to the Company and the Members  stating
NYFIX's election to exercise the NYFIX Option. The Exercise Notice shall include
the following: (i) the aggregate number of Units NYFIX intends to purchase; (ii)
the  calculation  of the  aggregate  amount of  consideration  to be paid to the
Members  (the  "Exercise  Price");  (iii)  whether  the  exercise is through the
exchange  of cash or Shares;  and (iv) the  proposed  Exercise  Date (as defined
below).  NYFIX shall deliver the Exercise  Notice to the Company and the Members
at least three  business  days prior to the date of the closing of the  purchase
and sale of the Units  pursuant to this Section 13.1 (the "Exercise  Date").  On
the Exercise Date, NYFIX shall pay the Exercise Price in cash or shares of NYFIX
Common Stock (the "Shares").  The fair market value of the Shares shall be based
on the  five-day  trading  average  ending on the day  immediately  prior to the
Exercise Date. Except as set forth in the proviso of the penultimate sentence of
Section 13.1(a) above, any Units purchased pursuant to the NYFIX Option shall be
purchased pro rata from all of the other Members  according to their  Membership
Interests.  In connection  with any purchase of Units by NYFIX  pursuant to this





Section 13.1 using  Shares,  NYFIX agrees to grant to each Member  receiving the
Shares, registration and indemnification rights on the following terms:

                                    (i)  NYFIX  agrees  to  file a  registration
statement  pursuant to the  Securities  Act,  covering  the resale of all of the
Shares  (the  "Registration  Statement")  as soon as  possible  but in any event
within 60 days following the Exercise  Date.  NYFIX agrees to use its reasonable
best efforts to cause the Registration Statement to be declared effective by the
Securities  and Exchange  Commission  (the "SEC") as soon as  practicable  after
filing it and will  notify  each Member  when such  Registration  Statement  has
become  effective.  NYFIX agrees to use its reasonable  best efforts to keep the
Registration  Statement  effective  (including the preparation and filing of any
amendments and  supplements  necessary for that purpose)  during the period from
the date that the Registration  Statement is declared effective by the SEC until
the  earlier  of (i) the date on which the  Members  shall  have sold all of the
Shares and (ii) the date on which all of the Shares are  eligible  to be sold or
transferred  under Rule 144 without holding period or volume  limitations  (such
period,  the  "Effective  Period").  Upon  seeking  to offer and sell its Shares
pursuant to the Registration Statement, each Member agrees to provide in writing
in a timely  manner,  information  regarding the proposed  distribution  by such
Member of the Shares and such other information reasonably requested by NYFIX in
connection  with the  preparation  of and for the inclusion in the  Registration
Statement.  NYFIX  agrees to provide to each  Member the number of copies of the
final  prospectus and any  amendments or  supplements  thereto as are reasonably
requested  by such  Member.  NYFIX  shall  promptly  notify  the  Member  of any
threatened stop order by the SEC or if the  Registration  Statement ceases to be
effective  for any reason at any time  during the  Effective  Period,  and NYFIX
shall use its reasonable best efforts and take all reasonable  actions  required
to prevent  the entry of such stop order or to obtain the prompt  withdrawal  of
any order suspending the effectiveness thereof.

                                    (ii) NYFIX agrees to indemnify and hold
harmless,  to the  extent  permitted  by law and  subject  to the  terms of this
Agreement, each Member, its directors,  officers,  employees and agents and each
person who  controls  such Member  (within the  meaning of the  Securities  Act)
against  any  losses,  claims,  damages,  liabilities  and  expenses  (including
reasonable  attorneys' fees and disbursements)  arising out of or based upon any
untrue  or  alleged  untrue  statement  of a  material  fact  contained  in  the
Registration  Statement (or any  amendment  thereto) or the  prospectus  (or any
amendment or  supplement  thereto) or any omission or alleged  omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements made therein in the light of the circumstances  under which they were
made not misleading;  provided,  however,  that NYFIX shall not be liable to any
Member to the extent that any such loss,  claim,  damage,  liability  or expense
arises out of, or is based upon, any untrue or alleged  untrue  statement or any
omission,  if such  statement or omission  shall have been made in reliance upon
and in conformity with information  relating to such Member furnished in writing
to  NYFIX  by any  such  Member  expressly  for  use in the  preparation  of the
Registration  Statement (or any  amendment  thereto) or the  prospectus  (or any
amendment or supplement thereto).





                                    (iii) In  connection  with the  Registration
Statement,  each Member agrees to indemnify,  to the extent permitted by law and
subject  to the  terms  of  this  Agreement,  NYFIX,  its  directors,  officers,
employees  and agents and each person who controls  NYFIX (within the meaning of
the  Securities  Act)  against  any losses,  claims,  damages,  liabilities  and
expenses (including reasonable attorneys' fees and disbursements) arising out of
or based  upon any  untrue  or  alleged  untrue  statement  of a  material  fact
contained  in the  Registration  Statement  (or any  amendment  thereto)  or the
prospectus  (or any amendment or supplement  thereto) or any omission or alleged
omission  to state  therein a material  fact  required  to be stated  therein or
necessary to make the statements made therein in the light of the  circumstances
under  which  they were made not  misleading,  to the  extent  that such  untrue
statement  or  omission  was  made  in  reliance  upon  and in  conformity  with
information furnished in writing to NYFIX by such Member (in his or her capacity
as a  shareholder  of  NYFIX)  expressly  for  use  in  the  preparation  of the
Registration  Statement (or any  amendment  thereto) or the  prospectus  (or any
amendment or supplement thereto). The liability of any Member under this Section
13.1(c)(iii)  shall not in any event  exceed the net  proceeds  received by such
Member from the sale of Shares covered by the Registration Statement.

                                    (iv) Each party entitled to  indemnification
under this Section  13.1(c)  shall give notice to the party  required to provide
indemnification  promptly after such  indemnified  party has actual knowledge of
any claim as to which indemnity may be sought, and shall permit the indemnifying
party to  assume  the  defense  of any such  claim or any  litigation  resulting
therefrom;  provided that counsel for the indemnifying  party, who shall conduct
the defense of such claim or  litigation,  shall be approved by the  indemnified
party  (whose  approval  shall not be  unreasonably  withheld or  delayed);  and
provided,  further,  that the delay or failure of any indemnified  party to give
notice as  provided  herein  shall not  relieve  the  indemnifying  party of its
obligations  under  this  Section  13.1(c),   except  to  the  extent  that  the
indemnifying  party shall have been materially  adversely affected by such delay
or  failure.  The  indemnified  party may  participate  in such  defense at such
party's expense;  provided,  however, that the indemnifying party shall pay such
expense if the indemnified party shall have reasonably  concluded that there may
be  a  conflict  between  the  positions  of  the  indemnifying  party  and  the
indemnified  party in  conducting  the  defense of any such claim or  litigation
resulting therefrom. No indemnified party shall consent to entry of any judgment
or settle  any claim or  litigation  without  the prior  written  consent of the
indemnifying party. If the indemnification  provided for in this Section 13.1(c)
from the indemnifying  party is unavailable to an indemnified party hereunder in
respect of any losses,  claims,  damages,  liabilities  or expenses  referred to
therein as a result of a judicial  determination that such  indemnification  may
not be enforced in such case  notwithstanding  this Agreement,  the indemnifying
party, in lieu of indemnifying such indemnified  party,  shall contribute to the
amount  paid or payable by such  indemnified  party as a result of such  losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified  parties in
connection  with the actions  which  resulted in such losses,  claims,  damages,
liabilities or expense, as well as any other relevant equitable  considerations.
The relative fault of such indemnifying  party and indemnified  parties shall be
determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue statement of material fact or omission or
alleged  omission  to state a  material  fact,  has been made by, or  relates to





information supplied by, such indemnifying party or indemnified parties, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent such action. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation.


                                   ARTICLE XIV
                                 MISCELLANEOUS

            14.1 COMPANY  OPTION PLAN.  (a) The Company  shall adopt an employee
incentive  plan  approved  by the  Designated  Directors,  pursuant to which the
Company can issue to its employees  options to purchase Units,  restricted Units
or other  instruments  to acquire  Units or  participate  in the  profits of the
Company,  up to an  aggregate  of 10% of the  outstanding  Units  (the  "Company
Options") as follows:

                                    (i) up to 2% prior  to  December  31,  2002;
            provided  that they may only be issued to  employees  who joined the
            Company after the Original Effective Date;

                                    (ii) up to an additional 4% between  January
            1, 2003 and December 31, 2003;  provided that they may not be issued
            to Renaissance Members until their annual reviews;

                                    (iii) up to an additional 4% between January
            1, 2004 and December 31, 2004; and

                                    (iv)  all  remaining  options  up to the 10%
            maximum after December 31, 2004.

Notwithstanding  anything to the contrary  contained  in this  Section  14.1(a),
under no  circumstance  shall Company  Options be issued to the Management  Team
without the prior written consent of the NYFIX Designees.

                           (b) Each Company Option shall have an exercise price
equal to the fair market value of a Unit on the date of grant,  as determined by
the Designated Directors.

                           (c) Each Company Option shall vest in equal amounts
on the first four anniversaries of the date of grant; provided, however, that if
a holder of a Company  Option has his  employment  with the Company  terminated,
then such holder shall be credited with one additional vesting period.

            14.2  EMPLOYMENT  AGREEMENTS.  Each  Renaissance  Member  agrees  to
execute an Employment Agreement as well as a Non-Competition, Non-Disclosure and
Non-Solicitation  Agreement,  in forms  reasonably  acceptable to the Management
Team.





            14.3  REPURCHASE  OF UNITS.  To the  extent a  Renaissance  Member's
employment with the Company is terminated,  for any reason,  prior to the fourth
anniversary  of the  Original  Effective  Date,  such  Renaissance  Member shall
forfeit  a  portion  of his  Units to the  Company,  pursuant  to the  following
schedule:

             Date of Termination                         % of Units Forfeited
             -------------------                         --------------------
 Prior to the first anniversary                            100%
 Between the first and second anniversaries                 80%
 Between the second and third anniversaries                 50%
 Between the third and fourth anniversaries                 20%
 After the fourth anniversary                                0%

Such  forfeited  Units  shall be  automatically  cancelled.  At the time of such
forfeiture,  the  Company  shall  have the right  (the  "Company's  Option")  to
repurchase  such  Member's  Units that were not  forfeited,  at their book value
(defined as the Members  Equity as  determined  in  accordance  with  accounting
principles  generally  accepted in the United  States of America  divided by the
number  of  Units   outstanding)  as  of  the  end  of  the  Company's  previous
quarter-end.  In addition,  NYFIX shall have the option (at its sole discretion)
to require the Company to exercise the  Company's  Option,  provided  that NYFIX
purchases an equal number of Units from the Company for the book value.

            14.4 NOTICES.  Notices to the Company shall be sent to the Principal
Office of the Company.  Notices to the Members shall be sent to their  addresses
set forth on their signature pages hereto.  Any Member may require notices to be
sent to a different  address by giving notice to the other Members in accordance
with this Section 14.4. Any notice or other communication  required or permitted
hereunder  shall be in  writing,  and shall be deemed  to have been  given  with
receipt confirmed if and when delivered personally,  mailed first class (postage
prepaid),  delivered to a nationally  recognized  overnight courier,  or sent by
facsimile, to such addresses.

            14.5 ENTIRE AGREEMENT.  This Agreement,  together with the Schedules
attached  hereto,  constitute  the entire  agreement  between  the  parties  and
supersedes  any prior  agreement or  understanding  between them  respecting the
subject matter hereof.

            14.6 SAVING  CLAUSE.  If any  provision  of this  Agreement,  or the
application  of such  provision  to any  person or  circumstance,  shall be held
invalid,  the remainder of this Agreement,  or the application of such provision
to persons  or  circumstances  other than those as to which it is held  invalid,
shall not be affected thereby.

            14.7  COUNTERPARTS.  This  Agreement  may be  executed  in  multiple
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together  shall  constitute one and the same  instrument.  A facsimile copy of a
signature shall be deemed an original signature.





            14.8 GOVERNING LAW. The Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.

            14.9 NO RIGHTS OF CREDITORS AND THIRD PARTIES UNDER  AGREEMENT.  The
Agreement  is entered  into among the Company and the Members for the  exclusive
benefit of the Company,  its Members and their  successors  and  assignees.  The
Agreement  is  expressly  not  intended  for the benefit of any  creditor of the
Company  or any  other  person.  Except  and  only  to the  extent  provided  by
applicable  statute,  no such  creditor or any third party shall have any rights
under the  Agreement  or any  agreement  between the Company and any Member with
respect to any Capital Contribution or otherwise.

            14.10 AMENDMENTS. All amendments to this Agreement shall require the
approval of the Members holding at least a majority of the Membership Interests.
After an amendment under this Section 14.10 becomes effective, the Company shall
mail to the Members a notice briefly describing such amendment.

            14.11  GENERAL  INTERPRETIVE   PRINCIPLES.   For  purposes  of  this
Agreement,  except  as  otherwise  expressly  provided  or  unless  the  context
otherwise requires:

                        (a) the terms  defined  in this  Agreement  include  the
plural as well as the singular, and the use of any gender herein shall be deemed
to include the other gender;

                        (b) accounting  terms not otherwise  defined herein have
the meanings  given to them in the United  States in accordance  with  generally
accepted accounting principles consistently applied;

                        (c) references  herein to "Sections,"  "paragraphs"  and
other subdivisions  without reference to a document are to designated  Sections,
paragraphs and other subdivisions of this Agreement;

                        (d) a reference to a paragraph without further reference
to a Section is a reference  to such  paragraph as contained in the same Section
in  which  the  reference  appears,  and this  rule  shall  also  apply to other
subdivisions;

                        (e) the words "herein," "hereof,"  "hereunder" and other
words of  similar  import  refer  to this  Agreement  as a whole  and not to any
particular provision; and

                        (f) the term "include" or "including" shall mean without
limitation by reason of enumeration.


                            [SIGNATURE PAGE FOLLOWS]





                        IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands as of the date first written above.


MEMBERS:


Entity Name (if applicable):
                             ---------------------------------------------------


Signature:   /s/ Peter K. Hansen
             -------------------------------------------------------------------
             Name:
             Title (if applicable):

Address:     333 Ludlow St.
             -------------------------------------------------------------------
             Stamford, CT 06902
             -------------------------------------------------------------------

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



Number of Membership Interests:   1,800,000
                               -----------------------------------------


Capital Contribution:   Intellectual Property
                        --------------------------------------------------------





IN WITNESS  WHEREOF,  the parties hereto have hereunto set their hands as of the
date first written above.


MEMBERS:


Entity Name (if applicable):
                             ---------------------------------------------------


Signature:   /s/ Edward Brandman
             -------------------------------------------------------------------
             Name: Edward Brandman
             Title (if applicable):

Address:     6 Wolf Hill Terrace
             -------------------------------------------------------------------
             Martinsville, NJ 08836
             -------------------------------------------------------------------
             -------------------------------------------------------------------



Number of Membership Interests:   2,733,333
                                  -----------------------------------------


Capital Contribution:   50,000 shares of NYFIX common stock
                        --------------------------------------------------------





IN WITNESS  WHEREOF,  the parties hereto have hereunto set their hands as of the
date first written above.


MEMBERS:


Entity Name (if applicable):
                             ---------------------------------------------------


Signature:   /s/ Daniel Ryan
             -------------------------------------------------------------------
             Name: Daniel Ryan
             Title (if applicable):

Address:     37 River Avenue
             -------------------------------------------------------------------
             Cornwall on Hudson, NY 12520
             -------------------------------------------------------------------
             -------------------------------------------------------------------



Number of Membership Interests:   2,733,334
                                  -----------------------------------------


Capital Contribution:   50,000 shares of NYFIX common stock
                        --------------------------------------------------------





IN WITNESS  WHEREOF,  the parties hereto have hereunto set their hands as of the
date first written above.


MEMBERS:


Entity Name (if applicable):
                             ---------------------------------------------------


Signature:   /s/ Ken DeGiglio
             -------------------------------------------------------------------
             Name: Ken DeGiglio
             Title (if applicable):

Address:     5 Forest Gardens Dr.
             -------------------------------------------------------------------
             Matawan, NJ 07747
             -------------------------------------------------------------------
             -------------------------------------------------------------------



Number of Membership Interests:   2,733,333
                                  -----------------------------------------


Capital Contribution:   50,000 shares of NYFIX common stock
                        --------------------------------------------------------





                                   SCHEDULE A


            Special Allocations. The following special allocations shall be made
in the following order:

1.   MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section 1.704-2(f)
     of the Tax Regulations,  if there is a net decrease in Partnership  Minimum
     Gain during any Fiscal Year, each Member shall be specially allocated items
     of  Company  income  and gain for such  Fiscal  Year  (and,  if  necessary,
     subsequent  Fiscal Years) in an amount equal to such Member's  share of the
     net decrease in  Partnership  Minimum Gain,  determined in accordance  with
     Section  1.704-2(g)  of the Tax  Regulations.  Allocations  pursuant to the
     previous  sentence  shall be made in proportion to the  respective  amounts
     required to be allocated to each Member pursuant  thereto.  The items to be
     so allocated shall be determined in accordance with Sections  1.704-2(f)(6)
     and  1.704-2(j)(2)  of the Tax  Regulations.  This paragraph is intended to
     comply with the minimum gain chargeback  requirement in Section  1.704-2(f)
     of the Tax Regulations and shall be interpreted consistently therewith.

2.   PARTNER MINIMUM GAIN  CHARGEBACK.  Except as otherwise  provided in Section
     1.704-2(i)(4) of the Tax Regulations, if there is a net decrease in Partner
     Nonrecourse  Debt Minimum Gain  attributable to a Partner  Nonrecourse Debt
     during  any  Fiscal  Year,  each  Member  who  has a share  of the  Partner
     Nonrecourse  Debt Minimum  Gain  attributable  to such Partner  Nonrecourse
     Debt,  determined  in  accordance  with  Section  1.704-2(i)(5)  of the Tax
     Regulations,  shall be specially allocated items of Company income and gain
     for such Fiscal Year (and,  if  necessary,  subsequent  Fiscal Years) in an
     amount  equal  to such  Member's  share  of the  net  decrease  in  Partner
     Nonrecourse  Debt Minimum  Gain  attributable  to such Partner  Nonrecourse
     Debt,  determined  in  accordance  with  Section  1.704-2(i)(4)  of the Tax
     Regulations. Allocations pursuant to the previous sentence shall be made in
     proportion  to the  respective  amounts  required to be  allocated  to each
     Member pursuant  thereto.  The items to be so allocated shall be determined
     in accordance  with Sections  1.704-2(i)(4)  and  1.704-2(j)(2)  of the Tax
     Regulations. This paragraph (2) is intended to comply with the minimum gain
     chargeback  requirement in Section 1.704-2(i)(4) of the Tax Regulations and
     shall be interpreted consistently therewith.

3.   QUALIFIED INCOME OFFSET. In the event any Member unexpectedly  receives any
     adjustments,   allocations,   or   distributions   described   in   Section
     1.704-1(b)(2)(ii)(d)(4),   Section   1.704-1(b)(2)(ii)(d)(5),   or  Section
     1.704-1(b)(2)(ii)(d)(6) of the Tax Regulations, items of Company income and
     gain  shall be  specially  allocated  to the Member in an amount and manner
     sufficient to eliminate, to the extent required by the Tax Regulations, the
     Adjusted  Capital  Account  Deficit of the  Member as quickly as  possible,
     provided  that an allocation  pursuant to this  paragraph (3) shall be made
     only if and to the extent that the Member  would have an  Adjusted  Capital





     Account Deficit after all other  allocations  provided for in this schedule
     have  been  tentatively  made as if this  paragraph  (3)  were  not in this
     schedule.

4.   GROSS  INCOME  ALLOCATION.  In the event any Member  has a deficit  Capital
     Account at the end of any Fiscal  Year which is in excess of the sum of the
     amounts such Member is  obligated  to restore  pursuant to the terms of the
     Agreement  or  is  deemed  to be  obligated  to  restore  pursuant  to  the
     penultimate  sentences of Sections  1.704-2(g)(1)  and 1.704-2(i)(5) of the
     Tax  Regulations,  each such Member shall be specially  allocated  items of
     Company  income  and  gain in the  amount  of such  excess  as  quickly  as
     possible,  provided that an allocation pursuant to this paragraph (4) shall
     be made only if and to the  extent  that such  Member  would have a deficit
     Capital Account in excess of such sum after all other allocations  provided
     for in this schedule have been made as if paragraph (3) and this  paragraph
     (4) were not in this Agreement.

5.   NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Fiscal Year shall be
     specially  allocated  among the Members in proportion  to their  Membership
     Interests.

6.   PARTNER NONRECOURSE DEDUCTIONS.  Any Partner Nonrecourse Deductions for any
     Fiscal  Year  shall be  specially  allocated  to the  Member  who bears the
     economic risk of loss with respect to the Partner Nonrecourse Debt to which
     such Partner  Nonrecourse  Deductions are  attributable  in accordance with
     Section 1.704-2(i)(1) of the Tax Regulations.

7.   MANDATORY  ALLOCATIONS  UNDER  SECTION  704(C)  OF THE  CODE.  In the event
     Section  704(c)  of the  Code or  Section  704(c)  of the  Code  principles
     applicable under Section  1.704-1(b)(2)(iv)  of the Tax Regulations require
     allocations of Profits or Losses in a manner  different than that set forth
     above, the provisions of Section 704(c) of the Code and the Tax Regulations
     thereunder  shall control such allocations  among the Members.  Any item of
     Company  income,  gain,  loss and  deduction  with  respect to any property
     (other than cash) that has been  contributed  by a Member to the capital of
     the  Company  or which  has been  revalued  for  Capital  Account  purposes
     pursuant to Section  1.704-l(b)(2)(iv) of the Tax Regulations) and which is
     required  or  permitted  to be  allocated  to such  Member  for  income tax
     purposes  under  Section  704(c) of the Code so as to take into account the
     variation  between the tax basis of such property and its fair market value
     at the time of its  contribution  shall be allocated  solely for income tax
     purposes in a manner so required or permitted  under Section  704(c) of the
     Code;  provided,   however,  that  curative  allocations  --------  -------
     consisting of the special allocation of gain or loss upon the sale or other
     disposition of the  contributed  property shall be made in accordance  with
     Section  1.704-3(c)  of the Tax  Regulations  to the  extent  necessary  to
     eliminate any disparity, to the extent possible,  between the Members' book
     and tax  Capital  Accounts  attributable  to  such  property.





8.   CURATIVE  ALLOCATIONS.  The  allocations  set forth above (the  "Regulatory
     Allocations")  are intended to comply with certain  requirements of the Tax
     Regulations  and it is  the  intent  of the  Members  that,  to the  extent
     possible,  all Regulatory Allocations shall be offset with other Regulatory
     Allocations.  Furthermore,  notwithstanding  any  other  provision  of this
     Schedule A, the Members shall make such offsetting  special  allocations of
     Company income,  gain,  loss, or deduction in whatever manner it determines
     appropriate  so that,  after such  offsetting  allocations  are made,  each
     Member's Capital Account balance is, to the extent  possible,  equal to the
     Capital  Account  balance  such  Member  would  have had if the  Regulatory
     Allocations  were not part of this  Agreement  and all  Company  items were
     allocated pursuant to Article VIII. The Company (i) shall take into account
     future Regulatory  Allocations  that,  although not yet made, are likely to
     offset  other  Regulatory   Allocations   previously  made,  and  (ii)  may
     reallocate  Profits  and  Losses  for prior  open  years (or items of gross
     income and  deduction  of the Company for such years)  among the Members to
     the extent it is not  possible to achieve such result with  allocations  of
     items of income (including gross income) and deduction for the current year
     and future  years.  This  paragraph  8 shall  control  notwithstanding  any
     reallocation  or  adjustment  of taxable  income,  taxable  loss,  or items
     thereof by the Internal Revenue Service or any other taxing authority.

9.   DEFINITIONS:

                        a. ADJUSTED  CAPITAL  ACCOUNT  DEFICIT shall mean,  with
                        respect to any Member,  the deficit balance,  if any, in
                        such  Member's  Capital  Account  as of  the  end of the
                        relevant  Fiscal  Year,   after  giving  effect  to  the
                        following adjustments:

                        (1) Credit to such  Capital  Account  the  minimum  gain
                        chargeback that such Member is deemed to be obligated to
                        restore   pursuant  to  the  penultimate   sentences  of
                        Sections  1.704-2(g)(1)  and  1.704-2(i)(5)  of the  Tax
                        Regulations; and

                        (2) Debit to such Capital Account the items described in
                        Sections                        1.704-1(b)(2)(ii)(d)(4),
                        1.704-1(b)(2)(ii)(d)(5),  and 1.704-1(b)(2)(ii)(d)(6) of
                        the Tax Regulations.

               The foregoing  definition of Adjusted  Capital Account Deficit is
               intended   to   comply   with   the    provisions    of   Section
               1.704-1(b)(2)(ii)(d)   of  the  Tax   Regulations  and  shall  be
               interpreted consistently therewith.

                        b.  NONRECOURSE  DEDUCTIONS has the meaning set forth in
                        Section 1.704-2(b)(1) of the Tax Regulations.





                        c.  NONRECOURSE  LIABILITY  has the meaning set forth in
                        Section 1.704-2(b)(3) of the Tax Regulations.

                        d. PARTNER NONRECOURSE DEBT has the meaning set forth in
                        Section 1.704-2(b)(4) of the Tax Regulations.

                        e.  PARTNER  NONRECOURSE  DEBT  MINIMUM  GAIN  means  an
                        amount,  with respect to each Partner  Nonrecourse Debt,
                        equal to the Partnership  Minimum Gain that would result
                        if such  Partner  Nonrecourse  Debt  were  treated  as a
                        Nonrecourse  Liability,  determined in  accordance  with
                        Section 1.704-2(i)(3) of the Tax Regulations.

                        f. PARTNER  NONRECOURSE  DEDUCTIONS  has the meaning set
                        forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the
                        Tax Regulations.

                        g. PARTNERSHIP MINIMUM GAIN has the meaning set forth in
                        Sections   1.704-2(b)(2)   and  1.704-2(d)  of  the  Tax
                        Regulations.

                        h. TAX  REGULATIONS  shall mean any final,  temporary or
                        proposed regulations  promulgated by Treasury Department
                        pursuant  to the  Code as such  Tax  Regulations  may be
                        amended from time to time.  All  references  herein to a
                        specific section of the Tax Regulations  shall be deemed
                        also  to  refer  to  any   corresponding   provision  of
                        succeeding Tax Regulations.





                                   SCHEDULE B

            "Renaissance"  is the Nasdaq Market Making  /Trading system that was
developed  at  Robertson  Stephens  as an  alternative  to the  existing  vendor
supplied system.

            The basic  scope of the  Renaissance  system  can be  summarized  as
follows:

                           *        Order Management and Routing
                           *        Execution Management/AutoEx
                           *        Position Management
                           *        Real-time P&L
                           *        Quote Management
                           *        Nasdaq Compliance Rules

            The  Source  Code  and  Supporting  Documentation  consists  of  the
following:

                           *        All software versions for all platforms and
                                    operating environments
                           *        All specifications, technical or
                                    programmers' notes, source code annotations,
                                    user guides, manuals,  files,  instructions,
                                    software architecture  designs,  flowcharts,
                                    plans, drawings, diagrams, and documentation
                                    that are exclusively related to the Software





                                   SCHEDULE C


            In return for the revenue sharing, NYFIX agrees that it will provide
the Company with the following services:

CORPORATE:
- --------------------------------------------------------------------------------
                        NYFIX customer goodwill
                        Contract issuance & negotiation
                        Delivery planning
                        Tracking of staggered deliveries
                        Invoicing
                        Receivable collections
                        Liabilitity exposure

MARKETING:
- ------------------------
                        Exhibitions
                        Conferences
                        Web-site
                        Collateral Material
                        PR
                        Other

SALES:
- ------------------------
                        Executive Management
                        Sales Management
                        Sales Executives
                        Account Executives
                        Travel, Other


CORPORATE
INFRA-STRUCTURE:
- --------------------------------------------------------------------------------
                        [NYFIX is not actually  providing  the Company  directly
                        with these functions, but rather is allocating a portion
                        of NYFIX  personnel's  time to coordinate and assist the
                        Company and its personnel with these functions

                                   Accounting
                                   Facilities Management
                                   Human Resource (MUST be Benefits)
                                   Legal
                                   General Support
                                   Policy, Process Procedure implementation





DATA CENTER INFRASTRUCTURE/DEVELOPMENT:
                         ----------------------
                        Sourcing,  Installation,  Networking
                        Fixtrader  changes
                        Core Network  allocation
                        Data Feeds and Services Network
                        Systems Management
                        Network  Management
                        Comdisco remote hands
                        Installation of equipment and Rack
                        Cabling
                        Account Management
                        Technical   Project   Management
                        Special Development
                        Help Desk Support

            NYFIX  also  agrees  that it will  purchase  certain  equipment  and
services for use by the Company and in turn will charge the Company directly for
the actual cost incurred (the "Actual Costs"). Cash reimbursement to NYFIX shall
be made as follows:  (i) upon  determination  by the Board of  Directors  of the
Company that the Company has sufficient  capital to make the payments,  then the
entire  amount of the Actual Costs shall be paid to NYFIX,  or (ii) at least 25%
(or such larger percentage as the Board of the Company deems appropriate) of all
additional equity investments  received by the Company ("New Investments") shall
be paid to NYFIX upon receipt thereof;  provided,  however, that in no event may
the amount paid to NYFIX be greater than the Actual Costs,  and provided further
that the  entire  amount  of the  Actual  Costs  must be paid to NYFIX  upon the
Company  receiving New  Investments  aggregating at least $8 million.  A list of
equipment and services in this category is as follows:

CORPORATE
INFRA-STRUCTURE:
- -----------------------------------------------
                                               Space
                                               Power,  Cleaning,  Security other
                                               PC's, Telephone, Front-desk, fax,
                                               internet      General      office
                                               facilities and equipment

DATA CENTER INFRASTRUCTURE/DEVELOPMENT:
                                               Equipment
                                               Software
                                               Dev Software & Hw Maintenance
                                               Agreements
                                               Rack space and facilities
                                               Power install
                                               Additional WAN equipment
                                               Network Switches (core and RSC)
                                               Telco Costs (# Full  T3's)
                                               NYFIX  Edge routers and CSU
                                               Tibco PC License

Health Benefits                                All health and insurance  related
                                               benefits  that  NYFIX   employees
                                               currently receive





                                   SCHEDULE D


Name and Address                    Capital        Membership
                                   Contribution    Interest      Units

NYFIX, Inc.                          $0 (1)          18%(2)     1,800,000
333 Ludlow Street
Stamford, CT 06902

Edward Brandman                      $0 (3)          27.3333%   2,733,333
6 Wolf Hill Terrace
Martinsville, NJ 08836

Daniel Ryan *                        $0 (3)          27.3334%   2,733,334
37 River Avenue
Cornwall on Hudson, NY 12520

Ken DeGiglio                         $0 (3)          27.3333%   2,733,333
5 Forest Gardens Dr.
Matawan, NJ 07747


(1)  NYFIX contributed the Intellectual Property.
(2)  Acquired  pursuant to an Agreement  between NYFIX and the Management  Team,
     dated as of the date hereof.
(3)  Each of the  Management  Team members  contributed  50,000  shares of NYFIX
     common stock.

* This Member is designated as the Tax Matters Partner.

EX-10.16

                                                                   Exhibit 10.16


                               EXECUTIVE AGREEMENT

     AGREEMENT  made and  effective  as of the 1st day of  January,  2003 by and
among NYFIX, INC. a New York corporation with its principal office at 333 Ludlow
Street,  Stamford, CT 06902 (hereinafter "Employer" or "Company"),  and Mr. Lars
Kragh,   residing  at  23  Camelot  Court,   Stamford,   CT  06907  (hereinafter
"Employee").

     WHEREAS,  Employer,  through its subsidiaries,  provides electronic trading
systems,  industry-wide trade routing connectivity,  straight-through processing
and  execution  services  and  systems to the global  equities  and  derivatives
financial markets, and

     WHEREAS, Employer desires to assure the services of Employee for the period
provided in this  Agreement,  and  Employee is willing to serve in the employ of
Employer  on a full-time  basis for said  period  upon the terms and  conditions
hereinafter set forth;

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

     1. EMPLOYMENT.  Employer agrees to employ Employee,  and Employee agrees to
enter the employ of the Employer for the period  stated in Paragraph  "3" hereof
and upon the other terms and conditions set forth herein.

     2.  POSITION  AND  RESPONSIBILITIES.  During the  period of his  employment
hereunder,  Employee agrees to serve as Chief Information  Officer and report to
Peter Kilbinger Hansen, Chief Executive Officer of the Company.

     3. TERM OF  EMPLOYMENT.  The  period of  Employee's  employment  under this
Agreement  shall be deemed to have  commenced  as of  January  1, 2003 and shall
continue for a period of one year until December 31, 2003 (the "Term"). The Term
shall be  automatically  renewed in one-year  increments  unless  terminated  as
provided  herein,  or unless either party gives 90 days prior written  notice of
its intention to discontinue the automatic extension.

     4. DUTIES.  During the period of his  employment  hereunder  and except for
illness,  vacation  periods,  and reasonable  leaves of absence,  Employee shall
devote substantially all of his business time, attention,  skill, and efforts to
the faithful performance of his duties hereunder.

            In addition to paid  holidays,  as defined by the Company's  holiday
schedule,  employee  shall  receive  a  prorated  4 week  vacation  in the first
calendar  year  of  this  Agreement,  and 4  weeks  paid  vacation  during  each
subsequent  calendar  year of this  Agreement.  All  vacation  periods  shall be
scheduled at the convenience of the Employer.





     5. COMPENSATION.

     5.1.  BASE  SALARY:  Employer  shall pay Employee as  compensation  for his
services  hereunder a total annual base salary of $231,875 and will  increase to
$250,000  effective  April 1, 2003.  The base salary is  comprised of a standard
$245,000 US dollars  plus an  additional  $5,000 US dollars for  non-competition
compensation  (see  paragraph 9). In addition,  Executive  will be entitled to a
leased automobile maintained and paid by the Company, including fuel, insurance,
tolls  and  parking.  Executive  will  also be  offered  to  participate  in the
Company's health insurance plan(s) and 401(k) plan.

     5.2.  OTHER  COMPENSATION:  At any point of time the Company  reserves  the
right to extend special  bonuses or incentives  which could include stock option
grants.  However,  such  arrangements  are  solely at  management's  discretion.
Employee  shall also be entitled to  participate  in such other  benefits as may
from time to time be generally  made  available to  Employer's  employees.  This
contract is not obligating the company to extend such bonuses or incentives.

     6. PAYMENT TERMS.  The salary payment shall be made in accordance  with the
usual payroll system of the Company, presently bi-weekly.

     7. REIMBURSEMENT OF EXPENSES.  Employer shall pay or reimburse Employee for
all reasonable  travel and other expenses incurred by Employee in performance of
his  obligations  under this  Agreement,  provided that  Employer  approves such
expenses in advance.

     8.  CONFIDENTIALITY.  The Employee  recognizes  and  acknowledges  that the
Employer's trade secrets,  employers specific  combination of use of third-party
parts,  proprietary technology and software, and confidential information as may
exist and be shared with Employee from time to time are valuable,  special,  and
unique  assets of the  Employer.  The Employer and the Employee  recognize  that
access to and knowledge of such  technology and  information is essential to the
Employee's  duties  hereunder.  In return  for his  access  and  knowledge,  the
Employee  agrees that he will not,  during the term of this  Agreement or at any
time thereafter,  disclose any such secrets,  technology,  or information to any
person, firm, corporation, or other entity for any reason or purpose whatsoever,
nor shall the Employee make use of any such secrets,  technology, or information
for his own  purposes or for the benefit of any person,  firm,  corporation,  or
other entity under any circumstances during or after the term of this Agreement.

     9.  NON-COMPETITION.  You will not for the first 12 months after the end of
your  employment  with us either  directly or indirectly  as a sole  proprietor,
partner,  stockholder,  investor, officer or director of a corporation, or as an
employee,  agent,  associate or consultant of any person,  firm,  corporation or
other entity - without NYFIX, Inc. written approval:

(i)              engage  in  any   activity  or   employment   in  the  faithful
                 performance  of which it could be reasonably  anticipated  that
                 you would or would be  required  or expected to use or disclose
                 any confidential information or trade secrets of NYFIX; Inc. or
                 its subsidiaries,

           (ii)  you will not solicit business or accept orders for products and
                 services  competitive  with  the  Employers  or  the  Employers
                 Subsidiaries  or  Affiliates,  from  any of  their  clients  or
                 prospective clients with whom you dealt with either directly or
                 indirectly during the period of your employment;





     10.  ENFORCEMENT;  SEVERABILITY.  It is the  desire  and the  intent of the
parties hereto that the  provisions of this Agreement  hereof be enforced to the
fullest extent permissible under the laws and public policy of the jurisdictions
in which  enforcement  is  sought.  Accordingly,  if any  particular  portion or
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
the  remaining  portion or such  provision or the  remaining  provisions of this
Agreement,  or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those to
which it is held invalid or unenforceable, shall not be effected thereby.

     11.  TERMINATION.  This Agreement may not be terminated  during its term by
the Employer for any reason other than  material  breach by the Executive of the
agreement.

     12.  GOVERNING  LAW  AND  VENUE.  This  Agreement  shall  be  construed  in
accordance with the laws of the State of New York.

     13. INDEMNIFICATION. The Executive hereby covenants and agrees that he will
not do any act or incur any  obligation  on be-half of the  Employer of any kind
whatsoever unless authorized by the Employer.  The Employer hereby covenants and
agrees  that  it will  indemnify  Executive  and  hold  him  harmless  from  any
obligation  or  liability  incurred by the  Employer or by the  Executive  as an
Officer, Director,  Employee or Agent of the Employer,  including the reasonable
expenses  of  legal  defense  thereof,  for  any  act,  omission,  or  liability
undertaken or incurred during the course of this Agreement.

     14.  NOTICES.  Any notice  required to be given  pursuant to this Agreement
shall be effective  only if in writing and  delivered  personally or by mail. If
given by mail, such notice must be sent by registered or certified mail, postage
prepaid,  mailed to the parties at the addresses set forth on the signature page
hereof,  or at such other  addresses as the parties may designate,  from time to
time,  by  written  notice.  Mailed  notices  shall be deemed  received  two (2)
business days after the date of deposit in the mail.

     15.   SURVIVAL.   The   representations,    warranties,    covenants,   and
indemnifications  contained  herein shall survive the execution hereof and shall
be effective regardless of the expiration or termination hereof.

     IN WITNESS WHEREOF,  the Parties hereto have executed this Agreement on the
1st day of January, 2003:


                                 NYFIX, INC.


                                By:  /s/ Mark R. Hahn
                                  -------------------------
                                    Mark R. Hahn
                                    Chief Financial Officer

                                 EXECUTIVE:


                                  /s/ Lars Kragh
                                  -------------------------
                                    Lars Kragh

EX-10.17

                                                                   Exhibit 10.17


                               EXECUTIVE AGREEMENT

     AGREEMENT  made and  effective  as of the 1st day of  January,  2003 by and
among NYFIX, INC. a New York corporation with its principal office at 333 Ludlow
Street,  Stamford, CT 06902 (hereinafter "Employer" or "Company"),  and Mr. Mark
R. Hahn,  residing at 475  Silvermine  Road, New Canaan,  CT 06840  (hereinafter
"Executive").

     WHEREAS,  Employer,  through its subsidiaries,  provides electronic trading
systems,  industry-wide trade routing connectivity,  straight-through processing
and  execution  services  and  systems to the global  equities  and  derivatives
financial markets, and

     WHEREAS,  Employer  desires to assure the  services  of  Executive  for the
period  provided in this  Agreement,  and  Executive  is willing to serve in the
employ of  Employer  on a  full-time  basis for said  period  upon the terms and
conditions hereinafter set forth;

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

     1. EMPLOYMENT. Employer agrees to employ Executive, and Executive agrees to
enter the employ of the Employer for the period  stated in Paragraph  "3" hereof
and upon the other terms and conditions set forth herein.

     2.  POSITION  AND  RESPONSIBILITIES.  During the  period of his  employment
hereunder,  Executive  agrees to serve as Chief Financial  Officer and report to
Peter Kilbinger Hansen, Chief Executive Officer of the Company.

     3. TERM OF  EMPLOYMENT.  The period of  Executive's  employment  under this
Agreement  shall be deemed to have  commenced  as of  January  1, 2003 and shall
continue  for  a  period  of  one  year  until   December  31,  2003  and  renew
automatically  for one  year at a time  unless  sooner  terminated  as  provided
herein, under Item 11. Termination, or by breach of contract.

     4. DUTIES.  During the period of his  employment  hereunder  and except for
illness,  vacation periods,  and reasonable  leaves of absence,  Executive shall
devote substantially all of his business time, attention,  skill, and efforts to
the faithful performance of his duties hereunder.





            In addition to paid  holidays,  as defined by the Company's  holiday
schedule,  Executive  shall  receive a  prorated  4 week  vacation  in the first
calendar  year  of  this  Agreement,  and 4  weeks  paid  vacation  during  each
subsequent  calendar  year of this  Agreement.  All  vacation  periods  shall be
scheduled at the convenience of the Employer.

     5. COMPENSATION.

     5.1.  BASE SALARY:  Employer  shall pay Executive as  compensation  for his
services  hereunder a total annual base salary of  $300,000.  The base salary is
comprised of a standard $295,000 US dollars plus an additional $5,000 US dollars
for  non-competition  compensation  (see  paragraph 9).  Executive  will also be
offered to  participate  in the Company's  health  insurance  plan(s) and 401(k)
plan.

     5.2.  OTHER  COMPENSATION:  At any point of time the Company  reserves  the
right to extend special  bonuses or incentives  which could include stock option
grants.  However,  such  arrangements  are  solely at  management's  discretion.
Executive  shall also be entitled to  participate  in such other benefits as may
from time to time be generally  made  available to Employer's  Executives.  This
contract is not obligating the company to extend such bonuses or incentives.

     6. PAYMENT TERMS.  The salary payment shall be made in accordance  with the
usual payroll system of the Company, presently bi-weekly.

     7. REIMBURSEMENT OF EXPENSES. Employer shall pay or reimburse Executive for
all reasonable travel and other expenses incurred by Executive in performance of
his  obligations  under this  Agreement,  provided that  Employer  approves such
expenses in advance.

     8.  CONFIDENTIALITY.  The Executive  recognizes and  acknowledges  that the
Employer's trade secrets,  employers specific  combination of use of third-party
parts,  proprietary technology and software, and confidential information as may
exist and be shared with Executive from time to time are valuable,  special, and
unique assets of the Employer.  The Employer and the  Executive  recognize  that
access to and knowledge of such  technology and  information is essential to the
Executive's  duties  hereunder.  In return  for his access  and  knowledge,  the
Executive  agrees that he will not,  during the term of this Agreement or at any
time thereafter,  disclose any such secrets,  technology,  or information to any
person, firm, corporation, or other entity for any reason or purpose whatsoever,
nor shall the Executive make use of any such secrets, technology, or information
for his own  purposes or for the benefit of any person,  firm,  corporation,  or
other entity under any circumstances during or after the term of this Agreement.

     9.  NON-COMPETITION.  You will not for the first 12 months after the end of
your  employment  with us either  directly or indirectly  as a sole  proprietor,
partner,  stockholder,  investor, officer or director of a corporation, or as an
Executive,  agent,  associate or consultant of any person, firm,  corporation or
other entity - without NYFIX, Inc. written approval:

          (i)  engage in any activity or employment in the faithful  performance
               of which it could be  reasonably  anticipated  that you  would or
               would be required or expected to use or disclose any confidential
               information or trade secrets of NYFIX; Inc. or its subsidiaries,





          (ii) you will not solicit  business or accept  orders for products and
               services   competitive   with  the  Employers  or  the  Employers
               Subsidiaries  or  Affiliates,   from  any  of  their  clients  or
               prospective  clients with whom you dealt with either  directly or
               indirectly during the period of your employment;

     10.  ENFORCEMENT;  SEVERABILITY.  It is the  desire  and the  intent of the
parties hereto that the  provisions of this Agreement  hereof be enforced to the
fullest extent permissible under the laws and public policy of the jurisdictions
in which  enforcement  is  sought.  Accordingly,  if any  particular  portion or
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
the  remaining  portion or such  provision or the  remaining  provisions of this
Agreement,  or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those to
which it is held invalid or unenforceable, shall not be effected thereby.

     11.  TERMINATION.  This  Agreement may be terminated by either party at any
time upon thirty (30) days written notice.

     12.  GOVERNING  LAW  AND  VENUE.  This  Agreement  shall  be  construed  in
accordance with the laws of the State of New York.

     IN WITNESS WHEREOF,  the Parties hereto have executed this Agreement on the
1st day of January, 2003:


                                 NYFIX, INC.


                                By: /s/ Peter Kilbinger Hansen
                                   ---------------------------------------------
                                    Peter Kilbinger Hansen
                                    Chief Executive Officer

                                 EXECUTIVE:


                                  /s/ Mark R. Hahn
                                 -----------------------------------------------
                                    Mark R. Hahn

EX-10.18

                                                                   EXHIBIT 10.18


                               EXECUTIVE AGREEMENT

     AGREEMENT  made and effective as of the 21st day of September,  2001 by and
among NYFIX, Inc. a New York corporation with its principal office at 333 Ludlow
Street,  Stamford,  CT 06902 and its subsidiary  office at 1-3 Dufferin  Street,
London,  UK  (hereinafter  "Employer" or "Company"),  and MR. ROBERT GASSER,  99
Treadwell Ave, Madison, NJ 07940 (hereinafter "Executive").

     WHEREAS,  Employer is in the business of developing and marketing  advanced
electronic trading systems to brokerage firms and international global exchanges
trading in  equities,  currencies  and  futures  and  options  and has formed an
affiliate  NYFIX  Millennium  LLC,  (hereinafter  "NYFIX  Millennium")  that  is
co-owned by the Company and a consortium of business partners.  NYFIX Millennium
is designed as an integrated ATS (alternative  trading system),  exchange access
and best execution system and will leverage existing  infrastructure deployed by
the Company's NYFIX Network and FIX engine technology, and

     WHEREAS,  Employer  desires to retain the  services  of  Executive  for the
period  provided in this  Agreement,  and  Executive  is willing to serve in the
employ of  Employer  on a  full-time  basis for said  period  upon the terms and
conditions hereinafter set forth;

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

     1. EMPLOYMENT. Employer agrees to employ Executive, and Executive agrees to
enter the employ of the Employer  for the period  stated in section 3 hereof and
upon the other terms and conditions set forth herein.

     2.  POSITION  AND  RESPONSIBILITIES.  During the  period of his  employment
hereunder,  Executive  agrees to serve as the Chief  Executive  Officer of NYFIX
Millennium,  and report directly to Peter Kilbinger Hansen, CEO and President of
the Company.

     3. TERM OF  EMPLOYMENT.  The period of  Executive's  employment  under this
Agreement  shall be deemed to have  commenced  as of October 5, 2001,  and shall
continue for a period of one year until October 4, 2002 (the  "Term").  The Term
shall be  automatically  renewed in one-year  increments  unless  terminated  as
provided  herein,  or unless either party gives 60 days prior written  notice of
its intention to discontinue the automatic extension.

     4. DUTIES.  During the period of his  employment  hereunder  and except for
illness,  vacation periods,  and reasonable  leaves of absence,  Executive shall
devote substantially all of his business time, attention,  skill, and efforts to
the faithful performance of his duties hereunder.

            In addition to paid  holidays,  as defined by the Company's  holiday
schedule, Executive shall receive a prorated (4) four week vacation in the first
calendar  year  of  this  Agreement,  and 4  weeks  paid  vacation  during  each
subsequent calendar year of this Agreement.







     5. COMPENSATION.

     5.1. BASE SALARY: Employer shall cause NYFIX Millennium to pay Executive as
compensation  for his services  hereunder a total annual base salary of $400,000
plus a bonus of 2% on Millennium  pre-tax earnings.  Quarterly  advances against
this bonus is subject to approval by the Company's  CEO.  Executive will also be
offered to  participate  in the Company's  health  insurance  plan(s) and 401(k)
plan.

     5.2.  OTHER  COMPENSATION:  At any point of time the Company  reserves  the
right to extend special  bonuses or incentives  which could include stock option
grants.  However,  such  arrangements  are  solely at  management's  discretion.
Executive  shall also be entitled to  participate  in such other benefits as may
from time to time be generally  made  available to Employer's  executives.  This
contract is not obligating the company to extend such bonuses or incentives.

In addition to the above  compensation,  Executive  will  receive the  following
stock-option grants:

                  i)    A sign-up  pre-grant of 225,000 options vesting over a 3
                        year period at a rate of 75,000  options  vesting at the
                        end of "year 1,"  75,000  options  vesting at the end of
                        "year 2." and 75,000 options vesting at the end of "year
                        3"

                  ii)   A bonus  grant of  100,000  options,  which  shall  vest
                        either  on the date when  NYFIX  Millennium  has  earned
                        $50,000,000  in pre-tax  earnings which must be achieved
                        cumulatively in consecutive quarters not to exceed four,
                        or at the end of year five.

These option  grants are subject to the terms and  conditions  of the  Company's
2001 Stock Option Plan and must be approved by the Option Committee of the Board
of Directors, at the next Board of Directors Meeting.

     6. PAYMENT TERMS.  The salary payment shall be made in accordance  with the
usual payroll system of the Company, presently bi-weekly.

     7. REIMBURSEMENT OF EXPENSES.  Employer shall cause NYFIX Millennium to pay
or reimburse  Executive for all reasonable travel and other expenses incurred by
Executive in performance of his obligations under this Agreement,  provided that
such expenses are approved in advance by Employer.

     8.  CONFIDENTIALITY.  Executive recognizes and acknowledges that Employer's
trade secrets,  specific  combination of use of third-party  parts,  proprietary
technology and software, and confidential information as may exist and be shared
with Executive from time to time are valuable, special, and unique assets of the
Employer.  Employer and Executive recognize that access to and knowledge of such
technology and information is essential to the Executive's duties hereunder.  In
return for his access and knowledge,  Executive  agrees that he will not, during
the term of this Agreement or at any time thereafter, disclose any such secrets,
technology, or information to any person, firm, corporation, or other entity for
any reason or purpose  whatsoever,  nor shall the Executive make use of any such
secrets,  technology,  or information for his own purposes or for the benefit of
any person, firm, corporation, or other entity under any circumstances during or
after the term of this Agreement.

     9.  NON-COMPETITION.  Executive will not for the first 12 months  following
termination of employment  with the Company  either  directly or indirectly as a
sole  proprietor,  partner,  stockholder,  investor,  officer or  director  of a
corporation, or as an executive, employee, agent, associate or consultant of any
person,  firm,  corporation or other entity,  and without the Company's  written
approval:





          (i)  engage in any activity or employment in the faithful  performance
               of which it could be reasonably anticipated to cause Executive to
               use or disclose any confidential  information or trade secrets of
               the Company or NYFIX Millennium;

          (ii) enter into employment with an ATS (alternative trading system) or
               ECN (electronic  communication  network)  organization  using FIX
               protocol to  communicate  equity order flow from customers to the
               ECN  and/or  ATS  execution  facility,  except  if  Executive  is
               terminated without cause.

     10.  ENFORCEMENT;  SEVERABILITY.  It is the  desire  and the  intent of the
parties hereto that the  provisions of this Agreement  hereof be enforced to the
fullest extent permissible under the laws and public policy of the jurisdictions
in which  enforcement  is  sought.  Accordingly,  if any  particular  portion or
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
the  remaining  portion or such  provision or the  remaining  provisions of this
Agreement,  or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those to
which it is held invalid or unenforceable, shall not be effected thereby.

     11.  TERMINATION.  This Agreement may not be terminated  during its term by
the Employer for any reason other than (i) a material breach by the Executive of
any of  the  terms  of  this  Agreement,  (ii)  Executive  engaging  in  conduct
materially injurious to the company, NYFIX Millennium, its affiliates, customers
or  suppliers,  (iii)  Executive  engaging  in any  act  of  fraud  which  would
constitute a felony under federal or state law.

Notwithstanding   anything  to  the  contrary  contained  herein,  Employer  may
terminate  this Agreement (i) upon ten (10) days' written  notice,  in the event
that Executive is unable to perform his assigned duties and responsibilities due
to  illness,  physical  or  mental  disability  or any  other  reason,  and such
disability  continues  for a period of 180 days  within any  twelve  consecutive
months, or (ii) upon the death of the Employee.

     The Executive  shall have Good Reason for  terminating  his employment with
the Corporation under this Agreement if one or more of the following occurs:

          (a)  layoff or involuntary  termination of the Executive's employment,
               except in  connection  with the  termination  of the  Executive's
               employment as a result of termination for Cause,  the non-renewal
               of this  Agreement  or of the  Executive's  disability,  death or
               retirement;

          (b)  a reduction by the Corporation in the Executive's Base Salary; or

          (c)  any material violation by the Company of this Agreement;

     Notwithstanding the foregoing,  no action by the Company shall give rise to
a Good Reason if it results from the Executive's termination for Cause, death or
retirement, and no action by the Corporation specified in paragraphs (a) through
(c) of this  section  shall give rise to a Good  Reason if it  results  from the
Executive's disability.

     Should  Employer  involuntary   terminate   Executive's   employment,   and
involuntary  termination  occurs  after  Executive's  six-month  anniversary  of
employment  and  involuntary  termination  is  not  as a  result  of a  "Hostile
Acquisition,"  Executive  will receive six months of base salary in one lump sum
payment,  and an  immediate  vesting  of the  nearest  options  to be  vested as





reflected in paragraph  5.2.i of this  agreement,  as severance at the effective
date  of  the  involuntary  termination;  or  Should  the  Employer  involuntary
terminate Executive after the one year anniversary of employment, and not result
from a "Hostile Acquisition,"  Executive will receive one year of base salary in
one lump sum  payment  and an  immediate  vesting of the  nearest  options to be
vested as  reflected in  paragraph  5.2.i of this  agreement as severance at the
effective date of the involuntary termination.

In the event NYFIX Millennium is involved in a "Hostile Acquisition," and should
the acquiring company terminate Executive's services, Executive will receive two
times  Executive's  annual  base  salary.  In  addition,  fifty  percent  of any
"unvested" options will become fully vested.

In the event NYFIX  Millennium  should Merge with another  Non-NYFIX  Inc. owned
Company or NYFIX, Inc should Divest NYFIX Millennium, and Executive were to have
employment  terminated,  and if this event  should occur  following  Executive's
second  anniversary  of  employment,  Executive  will  receive  100%  vesting of
executive's bonus grant of 100,000 options mentioned above.

     12.  GOVERNING  LAW  AND  VENUE.  This  Agreement  shall  be  construed  in
accordance with the laws of the State of New York.

     13. NOTICES

     Any  notice  required  to be  given  pursuant  to this  Agreement  shall be
effective  only if in writing and  delivered  personally or by mail. If given by
mail, such notice must be sent by registered or certified mail, postage prepaid,
mailed to the parties at the addresses  set forth on the signature  page hereof,
or at such other  addresses as the parties may designate,  from time to time, by
written  notice.  Mailed notices shall be deemed  received two (2) business days
after the date of deposit in the mail.

     14.  ASSIGNMENT: EFFECT ON AGREEMENT

     It is hereby  acknowledged  and  agreed  that the  Executive's  rights  and
obligations  under  this  Agreement  are  personal  in  nature  and shall not be
assigned  or  delegated.  This  agreement  shall be  binding on and inure to the
benefit of the heirs,  personal  representatives,  successors and assigns of the
parties,  subject,  however,  to the  restrictions  on assignment and delegation
contained herein.

     15. ENTIRE AGREEMENT

     This  Agreement  (and the Exhibits  attached  hereto which are part of this
Agreement)  contains the entire agreement and understanding  between the parties
and supersedes  all prior  agreements and  understandings,  oral or written.  No
modification,  termination or attempted waiver shall be valid, unless in writing
and signed by both parties.






     IN WITNESS WHEREOF,  the Parties hereto have executed this Agreement on the
21st day of September 2001:

                                NYFIX, Inc.


                                By: /s/ Peter Kilbinger Hansen
                                   ---------------------------------------------
                                    Peter Kilbinger Hansen
                                    Chief Executive Officer

                                   EXECUTIVE:


                                   /s/ Robert Gasser
                                   ---------------------------------------------
                                   Robert Gasser

EX-21

                                   NYFIX, INC.


                                                                    EXHIBIT 21.1



                        LIST OF SIGNIFICANT SUBSIDIARIES

NYFIX USA, LLC, a New York  Corporation.
Javelin  Technologies,  Inc., a Delaware Corporation.
NYFIX  Transaction  Services,  Inc.,  an Illinois Corporation.
NYFIX Overseas,  Inc., a Delaware Corporation with branches in Chicago, IL
   and London, UK.
NYFIX Millennium,  L.L.C., an 80% owned Delaware Corporation.
NYFIX  Partners, Inc., a Delaware Corporation.

All subsidiaries are wholly-owned unless otherwise indicated.

EX-23

                                                                    EXHIBIT 23.1

                          INDEPENDENT AUDITORS' CONSENT

We consent to the  incorporation  by reference in  Registration  Statements  No.
333-70037, No. 333-60314, No. 333-83920, No. 333-93943 and No. 333-88350 on Form
S-3 and No. 333-95285,  No.  333-81604,  No. 333-62158 and No. 333-88346 on Form
S-8 of NYFIX,  Inc.  of our report on NYFIX,  Inc.,  dated  February  24,  2003,
appearing in this Annual  Report on Form 10-K of NYFIX,  Inc. for the year ended
December 31, 2002.


                                    /S/ DELOITTE & TOUCHE LLP




Stamford, Connecticut
March 31, 2003

EX-23

                                                                    EXHIBIT 23.2

                          INDEPENDENT AUDITORS' CONSENT

We consent to the  incorporation  by reference in  Registration  Statements  No.
333-70037, No. 333-60314, No. 333-83920, No. 333-93943 and No. 333-88350 on Form
S-3 and No. 333-95285,  No.  333-81604,  No. 333-62158 and No. 333-88346 on Form
S-8 of NYFIX, Inc. of our reports on NYFIX Millennium, L.L.C. dated February 22,
2002 and  February 23,  2001,  appearing  in this Annual  Report on Form 10-K of
NYFIX,  Inc. for the year ended  December  31,  2002.


                                    /S/ DELOITTE & TOUCHE LLP




Stamford, Connecticut
March 31, 2003

EX-99

                                                                    Exhibit 99.1

                            CERTIFICATION 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 NYFIX, Inc. (the "Company") on Form 10-K
for the  period  ending  December  31,  2002 as filed  with the  Securities  and
Exchange  Commission  on the date hereof  (the  "Report"),  I, Peter K.  Hansen,
Chairman,  President and Chief Executive Officer of the Company, hereby certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

   (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.


 /s/ Peter K. Hansen
- ----------------------------------------------
Peter K. Hansen
Chairman, President and
Chief Executive Officer
March 31, 2003

This  certification  accompanies  this  Report  pursuant  to Section  906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002,  be deemed  filed by the  Company  for  purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.

EX-99

                                                                    Exhibit 99.2

                            CERTIFICATION 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 NYFIX, Inc. (the "Company") on Form 10-K
for the period ending December 31, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Mark R. Hahn, Chief
Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to
the best of my knowledge, that:

    (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.


 /s/ Mark R. Hahn
- ---------------------------------------------
Mark R. Hahn
Chief Financial Officer
March 31, 2003

This certification accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.