10-Q/A

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

                                   FORM 10-Q/A
                                (AMENDMENT NO. 1)

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

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2003

                         COMMISSION FILE NUMBER 0-21324
                            ------------------------

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

         DELAWARE                                           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)

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

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

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

There were 32,263,781  shares of Common Stock issued and outstanding as of April
30, 2004.






                                   NYFIX, INC.

                                   FORM 10-Q/A

                    For the quarter ended September 30, 2003



                                                                            PAGE
                                                                            ----

PART I.     FINANCIAL INFORMATION

            Introductory Note                                                3

   Item 1.  Consolidated Financial Statements (Unaudited)

            Consolidated Balance Sheets as of September 30, 2003
              (As Restated) and December 31, 2002                            4

            Consolidated Statements of Operations for the three
              and nine months ended September 30, 2003 and
              September 30, 2002 (As Restated)                               5

            Consolidated Statements of Cash Flows for the nine
              months ended September 30, 2003 and September 30, 2002
              (As Restated)                                                  6

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                      7

   Item 2.   Management's Discussion and Analysis of Ffinancial
              Condition and Results of  Operations                          23

   Item 3.   Quantitative and Qualitative Disclosures About Market Risk     36

   Item 4.   Controls and Procedures                                        37


PART II.     OTHER INFORMATION

   Item 1.   Legal Proceedings                                              38

   Item 2.   Changes in Securities and Use of Proceeds                      38

   Item 6.   Exhibits and Reports on Form 8-K                               38

   Signatures                                                               39

                                       2










                          PART I. FINANCIAL INFORMATION


INTRODUCTORY NOTE

        NYFIX,  Inc.  is filing  this  Amendment  No. 1 on Form  10-Q/A  for the
quarter ended September 30, 2003 that was originally  filed on November 14, 2003
(the "Original 10-Q"), to reflect the restatement of our consolidated  financial
statements  based on the accounting of our 1999 and 2001 investments in and 2002
acquisition  of an  additional  interest  in NYFIX  Millennium,  L.L.C.  ("NYFIX
Millennium").  See Item 2,  "Management's  Discussion  and Analysis of Financial
Condition  and Results of  Operations"  ("MD&A") and Note 2 to the  Consolidated
Financial Statements included elsewhere herein.

        For the  convenience  of the reader,  this Amendment No. 1 amends in its
entirety the Original  10-Q.  This  Amendment No. 1 continues to speak as of the
date of the  Original  10-Q,  and we have not updated the  disclosure  contained
herein to reflect any events  that  occurred at a later date other than that set
forth above.  All  information  contained in this  Amendment No. 1 is subject to
updating and  supplementing  as provided in our periodic  reports filed with the
Securities  and Exchange  Commission  (the "SEC")  subsequent to the date of the
filing of the Original 10-Q.

        The following sections of this Quarterly Report on Form 10-Q/A have been
revised from the Original 10-Q:

        o   Item 1 - Consolidated Financial Statements
        o   Item 2 - Management's Discussion and Analysis of Financial Condition
            and Results of Operations
        o   Item 4 - Controls and Procedures

        We have  recently  filed with the SEC our Form 10-K/A for the year ended
December 31, 2002. We have not amended,  and do not intend to amend,  any of our
filed  annual or  quarterly  reports  prior to  December  31,  2002.  Therefore,
financial  information that has been filed prior to our Form 10-K/A for the year
ended December 31, 2002 or otherwise reported for these periods should no longer
be relied upon and is superseded by the information in this quarterly report. We
have also recently filed Quarterly Reports on Form 10-Q/A for the quarters ended
March  31,  2003 and June 30,  2003,  which  have  also  been  affected  by this
restatement.

                                       3






                    ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                                   NYFIX, INC.
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

                                                                                SEPTEMBER 30,    DECEMBER 31,
                                                                                    2003            2002
                                                                                --------------   -------------
ASSETS                                                                           (AS RESTATED)
Current assets:
   Cash and cash equivalents                                                      $  11,572      $  11,213
   Short-term investments                                                             4,900         10,727
   Accounts receivable, less allowances of $1,535 and $1,207                         18,394         16,601
   Inventory, net                                                                       950          1,098
   Due from unconsolidated affiliates                                                   610            537
   Deferred income taxes                                                                758            590
   Prepaid expenses and other                                                         3,116          2,938
                                                                                  ---------      ---------
       Total current assets                                                          40,300         43,704

Property and equipment, less accumulated depreciation of $22,414 and $16,424         17,514         18,186
Goodwill                                                                             57,626         49,261
Acquired intangible assets, net                                                      10,785          9,404
Investments in unconsolidated affiliates                                              3,195          5,510
Notes receivable from unconsolidated affiliates                                        --            1,519
Other amounts due from unconsolidated affiliates                                       --            1,002
Deferred income taxes                                                                13,476         12,879
Other assets                                                                          7,056          5,150
                                                                                  ---------      ---------
       Total assets                                                               $ 149,952      $ 146,615
                                                                                  =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                               $   4,887      $   3,729
   Accrued expenses                                                                   4,664          5,360
   Current portion of capital lease obligations                                         653          1,089
   Current portion of long-term debt and other liabilities                              507            142
   Deferred revenue                                                                   2,745          2,561
                                                                                  ---------      ---------
       Total current liabilities                                                     13,456         12,881
Long-term portion of capital lease obligations                                          248            664
Long-term debt and other liabilities                                                  2,500            207
                                                                                  ---------      ---------
       Total liabilities                                                             16,204         13,752
                                                                                  ---------      ---------

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;                         33             32
     33,131,096 and 32,420,558 issued
   Additional paid-in capital                                                       182,248        178,818
   Accumulated deficit                                                              (28,435)       (26,397)
   Treasury stock, 1,361,300 and 1,301,300 shares, at cost                          (19,480)       (19,100)
   Notes receivable issued for common stock                                            (622)          (597)
   Accumulated other comprehensive income                                                 4            107
                                                                                  ---------      ---------
       Total stockholders' equity                                                   133,748        132,863
                                                                                  ---------      ---------
       Total liabilities and stockholders' equity                                 $ 149,952      $ 146,615
                                                                                  =========      =========

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

                                       4




                                   NYFIX, INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                              THREE MONTHS ENDED           NINE MONTHS ENDED
                                                  SEPTEMBER 30,               SEPTEMBER 30,
                                             ------------------------     ------------------------
                                                2003           2002         2003         2002
                                             ----------     ---------     --------    ------------
                                                                                      (AS RESTATED)
REVENUE:
   Subscription                               $  9,115      $  8,326      $ 25,765      $ 23,566
   Sale                                          2,117         2,509         6,800         5,113
   Service contract                              2,327         2,258         7,094         5,849
   Transaction                                   2,836         2,275         9,715         3,997
                                              --------      --------      --------      --------
       Total revenue                            16,395        15,368        49,374        38,525
                                              --------      --------      --------      --------
COST OF REVENUE:
   Subscription                                  5,365         4,364        14,750        11,399
   Sale                                            496           630         1,394         1,535
   Service contract                                618           545         1,706         1,425
   Transaction                                   1,871         1,909         5,990         4,421
                                              --------      --------      --------      --------
       Total cost of revenue                     8,350         7,448        23,840        18,780
                                              --------      --------      --------      --------
GROSS PROFIT:
   Subscription                                  3,750         3,962        11,015        12,167
   Sale                                          1,621         1,879         5,406         3,578
   Service contract                              1,709         1,713         5,388         4,424
   Transaction                                     965           366         3,725          (424)
                                              --------      --------      --------      --------
       Total gross profit                        8,045         7,920        25,534        19,745
                                              --------      --------      --------      --------
OPERATING EXPENSE:
   Selling, general and administrative           8,502         7,037        24,626        21,919
   Research and development                        381           431           943         1,070
   Equity in loss of NYFIX Millennium             --            --            --           1,340
   Depreciation and amortization                 1,316         2,288         3,695         4,045
                                              --------      --------      --------      --------
       Total operating expense                  10,199         9,756        29,264        28,374
                                              --------      --------      --------      --------
Loss from operations                            (2,154)       (1,836)       (3,730)       (8,629)

Investment income                                  304           276           557           436
Interest expense                                   (16)          (73)          (74)         (216)
Other expense, net                                 (62)         (132)         (649)         (271)
                                              --------      --------      --------      --------
Loss before income tax benefit                  (1,928)       (1,765)       (3,896)       (8,680)
Income tax benefit                                (871)         (859)       (1,858)       (3,074)
                                              --------      --------      --------      --------
Net loss                                      $ (1,057)     $   (906)     $ (2,038)     $ (5,606)
                                              ========      ========      ========      ========

Basic and diluted loss per common share       $  (0.03)     $  (0.03)     $  (0.06)     $  (0.19)
                                              ========      ========      ========      ========
Basic and diluted weighted average common
   shares outstanding                           31,791        30,772        31,367        29,808
                                              ========      ========      ========      ========

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

                                       5




                                   NYFIX, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)

                                                                                 NINE MONTHS ENDED
                                                                                   SEPTEMBER 30,
                                                                              --------------------------
                                                                                 2003          2002
                                                                              ----------   -------------
Cash flows from operating activities:                                                      (AS RESTATED)
   Net loss                                                                   $ (2,038)     $ (5,606)
   Adjustments to reconcile net loss to net cash provided by
     (used in) operating activities:
     Depreciation and amortization                                               9,505         8,956
     Deferred income taxes                                                        (560)         (108)
     Provision for bad debts                                                       589           969
     Equity in loss of unconsolidated affiliates                                   725         1,611
     (Gain) loss on sale of investments                                           (235)            1
     Changes in assets and liabilities (net of business
      acquisitions):
      Accounts receivable                                                       (2,372)       (1,373)
      Inventory                                                                    148           249
      Prepaid expenses and other                                                  (300)       (3,687)
      Deferred revenue                                                             184          (182)
      Accounts payable, accrued expenses and other liabilities                    (578)       (3,733)
                                                                              --------      --------
           Net cash provided by (used in) operating activities                   5,068        (2,903)
                                                                              --------      --------
Cash flows from investing activities:
   Purchases of short-term investments                                          (4,129)       (9,786)
   Sales of short-term investments                                               9,986        31,542
   Capital expenditures for property and equipment                              (4,098)       (2,361)
   Capitalization of product enhancement costs and other                        (3,857)       (2,231)
   Proceeds from sale of equipment                                                --             380
   Payments for acquisitions, net of cash acquired                                  18        (6,795)
   Investments in unconsolidated affiliates                                       --          (4,000)
   (Loans and advances to) repayments from unconsolidated affiliates, net       (2,211)        2,178
   (Advances to) payments from officers, net                                      --            (402)
                                                                              --------      --------
           Net cash (used in) provided by investing activities                  (4,291)        8,525
                                                                              --------      --------
Cash flows from financing activities:
   Principal payments under capital lease obligations                             (852)         (863)
   Net proceeds from issuance of common stock                                      434           313
                                                                              --------      --------
           Net cash used in financing activities                                  (418)         (550)
                                                                              --------      --------
Net increase in cash and cash equivalents                                          359         5,072
Cash and cash equivalents, beginning of period                                  11,213         4,968
                                                                              --------      --------
Cash and cash equivalents, end of period                                      $ 11,572      $ 10,040
                                                                              ========      ========

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

                                       6



                                   NYFIX, INC.

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 brokerage firms and institutional  investors. 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,  Financial  Information  eXchange
("FIX")  protocol  messaging  and  monitoring  tools,  and a high  volume  trade
execution  platform.  The Company's products deliver straight through processing
for front,  middle and back office  trade  transaction  processing.  The Company
maintains multiple data centers with an extensive network of electronic circuits
that links industry participants for electronic trade communication and provides
access to the global equities and derivatives  financial markets.  Headquartered
in Stamford,  Connecticut,  the Company has additional offices in New York City,
London, Chicago and San Francisco.

BASIS OF PRESENTATION

        The accompanying  interim  consolidated  financial  statements have been
prepared in accordance  with the rules and  regulations  of the  Securities  and
Exchange Commission's  Regulation S-X and consequently do not include all of the
disclosures  required  under  accounting  principles  generally  accepted in the
United States of America.  The Company  believes that the disclosures  contained
herein are  adequate  to make the  information  presented  not  misleading.  The
accompanying  consolidated  financial  statements  are unaudited and include the
accounts of the Company and reflect all  adjustments,  which were  comprised  of
normal and recurring  accruals,  considered  necessary by management  for a fair
presentation of the Company's financial condition and results of operations. All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

        The operating  results for the three and nine months ended September 30,
2003 and 2002 are not  necessarily  indicative of the results to be expected for
any future  interim  period or any future  year.  These  consolidated  financial
statements should be read in conjunction with the audited  financial  statements
and footnotes thereto in the Company's Annual Report on Form 10-K/A for the year
ended December 31, 2002.

        Effective  November  1,  2000,  the  Company  accounted  for its  equity
investment  in NYFIX  Millennium  on the equity  method.  Since the  Company was
viewed as the only  investor  with a  substantive  economic  investment in NYFIX
Millennium, the Company absorbed 100% of NYFIX Millennium's operating losses. On
February 1, 2002, the Company  acquired an additional 30% ownership  interest in
NYFIX  Millennium  resulting in a total  ownership  interest of 80% and regained
control of the NYFIX Millennium Board of Directors.  Effective on that date, the
Company consolidated the financial statements of NYFIX Millennium and recognized
100% of NYFIX Millennium's operating losses. (See Note 4).

        Prior to July 1,  2003,  the  Company's  18%  ownership  in  Renaissance
Trading  Technologies,  LLC  ("Renaissance")  was accounted for under the equity
method, since the Company had the ability to exercise significant influence over
the operating and financial policies of Renaissance. Effective July 1, 2003, the
Company  acquired the  remaining 82% of  Renaissance,  which the Company did not
already own. As of that date, the Company  consolidated the financial  position,
results of operations and cash flows of Renaissance  (see Note 4). The Company's
40% ownership interest in EuroLink Network,  Inc.  ("EuroLink") is accounted for
under the equity method (see Note 5).

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

                                       7




                                   NYFIX, INC.

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,   recoverability  of  goodwill  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
realization  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  period's
consolidated   financial   statements   to  conform  to  the  current   period's
presentation.   In  connection  therewith,   the  Company  reclassified  certain
operating  expenses,  primarily related to the Company's data center operations,
totaling $2.9 million and $7.1 million to cost of revenue for the three and nine
months ended September 30, 2002, respectively.

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 and loss per share if the
Company  had applied  the fair value  recognition  provisions  of  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-based
Compensation",  as  required  by  SFAS  No.  148,  "Accounting  for  Stock-based
Compensation - Transition and Disclosure," to stock-based employee compensation:

                                                 THREE MONTHS ENDED               NINE MONTHS ENDED
                                                     SEPTEMBER 30,                  SEPTEMBER 30,
                                             ------------------------------    -------------------------
                                                2003             2002             2003            2002
                                             ------------     ------------     ------------     --------
                                                       (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net loss, as reported                        $    (1,057)     $      (906)     $    (2,038)     $ (5,606)
Compensation expense based on the fair
   value method, net of tax                       (1,200)          (1,991)          (4,220)       (6,030)
                                             -----------      -----------      -----------      --------
Pro forma net loss                           $    (2,257)     $    (2,897)     $    (6,258)     $(11,636)
                                             ===========      ===========      ===========      ========

Basic and diluted loss per common share:
   As reported                               $     (0.03)     $     (0.03)     $     (0.06)     $  (0.19)
                                             ===========      ===========      ===========      ========
   Pro forma                                 $     (0.07)     $     (0.09)     $     (0.20)     $  (0.39)
                                             ===========      ===========      ===========      ========

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In January  2003,  the Financial  Accounting  Standards  Board  ("FASB")
issued FASB  Interpretation  ("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

                                       8




                                   NYFIX, INC.


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.  On October 9,
2003,  the FASB  deferred  until the first interim or annual period ending after
December 15, 2003,  the  provision  that VIEs that existed  prior to February 1,
2003 must be consolidated. The Company is evaluating the provisions of FIN 46 to
determine whether its  unconsolidated  affiliate,  EuroLink,  is a VIE. From the
inception of its investment  through September 30, 2003, the Company  recognized
its 40%  ownership  interest of EuroLink's  net losses of $1.2 million,  or $0.5
million,  after tax.  If the Company  determines  that  EuroLink  is a VIE,  the
Company  would be required to recognize the  incremental  losses of $0.7 million
after tax of  EuroLink's  net  losses  and the  Company  would  consolidate  the
financial  position,  results of operations  and cash flows of EuroLink into the
Company's financial statements effective October 1, 2003 (see Note 5). Effective
July 1, 2003, the Company acquired the remaining 82% of its other unconsolidated
affiliate,  Renaissance, which the Company did not already own. Accordingly, the
financial  position,  results of operations and cash flows of  Renaissance  were
consolidated into the Company's  financial  statements as of that date (see Note
4).

        In May 2003, the FASB Emerging Issues Task Force ("EITF")  finalized the
scope provisions of Issue No. 00-21,  "Accounting for Revenue  Arrangements with
Multiple Deliverables." Issue 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.  Issue No. 00-21 is effective for revenue  arrangements
entered into in reporting periods beginning after June 15, 2003. The adoption of
Issue No. 00-21, effective July 1, 2003, did not have an effect on the Company's
financial position or results of operations.

2.          RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

        Subsequent to the issuance of the consolidated  financial  statements as
of and for the three and nine months ended September 30, 2003, management of the
Company  determined to restate its financial  statements to account for its 1999
and 2001  investments  in and 2002  acquisition  of an additional  30% ownership
interest in NYFIX Millennium, as summarized below.  See Note 4 for a description
of the Company's acquisition of NYFIX Millennium.

ACCOUNTING FOR THE COMPANY'S 1999 INVESTMENT IN NYFIX MILLENNIUM AND ISSUANCE OF
THE COMPANY'S COMMON STOCK TO THE INITIAL PARTNERS

        The Company restated its financial  statements to account for its equity
investment in NYFIX Millennium,  the issuance of its common stock to the Initial
Partners to purchase the Option and the Initial  Partners'  cash  contributed to
NYFIX  Millennium as an  "Integrated  Transaction"  with a  measurement  date of
October 27, 1999 (the  "Measurement  Date").  The Measurement  Date was the date
when the Company and the "Initial Partners" entered into the Operating Agreement
and funded  NYFIX  Millennium,  and when the Company  issued its common stock in
exchange  for the "Option"  and a press  release to announce  the  transactions.
See Note 4 for the definitions of Initial Partners and Option.

        Since the fair value of the  Company's  common  stock issued to purchase
the Option was greater than the cash equity  investment by the Initial Partners,
it was determined that the Initial Partners'  consideration  given in the option
transaction  was not viewed as having  economic  substance or  investment  risk.
Thus,  the  Company  restated  its  financial  statements  to  account  for this


                                       9



                                   NYFIX, INC.


Integrated Transaction as a sale of its common stock to the Initial Partners, in
exchange  for cash and the  Option.  The  Company  accounted  for the  total $16
million  contributed  to NYFIX  Millennium  (the  Company's  $2 million  and the
Initial Partners' $14 million) as its investment in NYFIX Millennium.

        Viewing the  transactions  as an  Integrated  Transaction,  the restated
accounting  reflected  the  issuance of the  Company's  common stock with a fair
value of $34.6  million  on the  Measurement  Date to the  Initial  Partners  in
exchange for $14 million in cash and the Option. The $34.6 million fair value of
the Company's common stock issued was $20.6 million in excess of the $14 million
cash invested by the Initial Partners. Of this $20.6 million excess, the Company
allocated $4.2 million to the Option based on its fair value.  As the Option had
an indefinite  life, it was not amortized.  There were no additional  intangible
assets acquired.  Thus, the remaining $16.4 million was accounted for as a prior
period adjustment relating to 1999.

ACCOUNTING FOR THE COMPANY'S COMMON STOCK ISSUED TO THE NEW PARTNERS IN 2001

        The  Company  restated  its  financial  statements  to  account  for the
issuance of its common  stock to the New Partners to purchase the Option and the
New Partners' cash contributed to NYFIX Millennium as an Integrated  Transaction
with measurement dates of March 16, 2001 (for one of the New Partners) and April
2, 2001 (for three of the New Partners).  These dates were when the New Partners
entered into the Operating  Agreement and funded NYFIX Millennium,  and when the
Company issued its common stock in exchange for the Option and press releases to
announce the transactions. See Note 4 for the definition of New Partners.

        As with the investment of the Initial Partners,  since the fair value of
the  Company's  common  stock issued to purchase the Option was greater than the
cash equity  investment  by the New  Partners,  it was  determined  that the New
Partners' consideration given in the option transaction was not viewed as having
economic substance or investment risk. The Company accounted for this Integrated
Transaction  as a sale of its common stock to the New Partners,  in exchange for
cash and the Option. The Company accounted for the total $8 million  contributed
to NYFIX Millennium ($2 million from each of the New Partners) as its investment
in NYFIX Millennium.

        Viewing the  transactions as an Integrated  Transaction,  the accounting
reflected the issuance of the  Company's  common stock with a fair value of $8.4
million on the measurement  dates to the New Partners in exchange for $8 million
in cash and the Option.  The Company allocated the $0.4 million in excess of the
$8 million New  Partners'  cash equity  investment  in NYFIX  Millennium  to the
Option based on its fair value. As the Option had an indefinite life, it was not
amortized. There were no additional intangible assets acquired.

RECOGNITION OF NYFIX MILLENNIUM OPERATING LOSSES

        As  described  above,  since the cash equity  investment  by the Initial
Partners  and the New Partners  was not viewed as having  economic  substance or
investment risk, the Company accounted for 100% of NYFIX Millennium's  operating
losses from the date of NYFIX Millennium's inception.  Accordingly,  in the nine
months ended September 30, 2002, the Company  recognized equity in loss of NYFIX
Millennium of $1.3 million,  reversed the previously record minority interest of
$0.3 and related  tax  benefit of $0.2  million,  and  eliminated  inter-company
interest  related to a note  receivable  from NYFIX  Millennium of $38,000.  The
Company  recognized  100% of  NYFIX  Millennium's  operating  losses  since  the
Company's   acquisition  of  an  additional  30%  ownership  interest  in  NYFIX
Millennium  (attaining a total  ownership of 80%) in February  2002. If and when
NYFIX Millennium achieves profitability, 24% of its profits will be allocated to
the  Initial  Partners  and New  Partners  in  accordance  with the  contractual
agreement amongst the parties.

CONSOLIDATION OF NYFIX MILLENNIUM FINANCIAL STATEMENTS

        Effective  November 1, 2000, the Company no longer  controlled the NYFIX
Millennium  Board  of  Directors  and  accounted  for its  investment  in  NYFIX
Millennium under the equity method. On February 1, 2002, the Company acquired an

                                       10




                                   NYFIX, INC.


additional  30% ownership  interest in NYFIX  Millennium  resulting in its total
ownership  interest  of 80%  and  the  Company  regained  control  of the  NYFIX
Millennium  Board of  Directors.  At that date,  the  Company  consolidated  the
financial statements of NYFIX Millennium.

ACCOUNTING  FOR THE COMPANY'S  EXERCISE OF THE OPTION AND  ALLOCATION OF THE NET
PURCHASE PRICE

        When the Company  exercised the Option on February 1, 2002,  the Company
issued  to the  Initial  Partners  and  the  New  Partners  an  aggregate  of an
additional  296,250 shares of its common stock with a fair value of $4.5 million
on the date of exercise.  At the point of  exercising  the Option and  regaining
control  of the  NYFIX  Millennium  Board of  Directors  and as a result  of the
aforementioned items, the Company's aggregate purchase price of NYFIX Millennium
was $9.1 million  consisting  of: (i) the Option issued by the Initial  Partners
with a fair value of $4.2  million;  (ii) the Option  issued by the New Partners
with a fair value of $0.4 million,  and (iii) the Company's  common stock issued
to the Initial  Partners  and New  Partners  to exercise  the Option with a fair
value of $4.5 million.  The Company allocated $2.2 million of the purchase price
to the fair value of intangible  assets  acquired  resulting in goodwill of $6.9
million.

NET EFFECT OF RESTATEMENT ADJUSTMENTS

        The  net  effect  of the  adjustments  made  to  restate  the  Company's
financial  statements  was for the  Company  to  reduce  its  total  assets  and
stockholders'  equity at September  30, 2003 by $14.2  million.  The total asset
reduction  was  comprised of i) a decrease in goodwill of $20.9  million for the
acquisition of an additional  30% ownership  interest in NYFIX  Millennium  from
$27.8  million to $6.9  million;  and ii) an increase in deferred  tax assets of
$6.7  million  for the tax  benefit of the 1999  charge to  operations  of $16.4
million  related to the  purchase of the Option from the Initial  Partners.  The
stockholders'  equity  reduction  was  comprised  of the net  effect  of:  i) an
increase in accumulated  deficit of $31.7 million,  which included a) the equity
in loss of NYFIX  Millennium of $1.3 million for the three and nine months ended
September 30, 2002; b) the reversal of the previously recorded minority interest
of $0.3  million and related tax benefit of $0.2  million for the three and nine
months ended  September 30, 2002; c) the elimination of  inter-company  interest
income  related to a note  receivable  from NYFIX  Millennium of $38,000 for the
three and nine months ended  September  30, 2002;  d) the  aforementioned  prior
period  adjustment  related to 1999 of $9.7 million,  net of tax benefit of $6.7
million;  e) a prior  period  adjustment  of  $20.1  million  related  to  NYFIX
Millennium's  1999  through  2001  operating  losses;  and  f)  a  prior  period
adjustment  related to the  elimination of 2001  inter-company  interest  income
related  to a note  receivable  from NYFIX  Millennium  of  $43,000;  and ii) an
increase in additional  paid-in capital of $17.5 million,  which  represents the
additional fair value of our common stock issued for the Option of $17.1 million
and $0.4 million in 1999 and 2001,  respectively.  As of September 30, 2003, the
Company's  restated  total  assets  were  $150.0  million as  compared to $164.2
million  and  restated  stockholders'  equity was $133.7  million as compared to
$147.9 million, prior to the restatement.

        The  following  table  summarizes  the  effects  of  the  aforementioned
adjustments on the Company net loss:

                                                   NINE MONTHS ENDED
                                                  SEPTEMBER 30, 2002
                                                  ------------------
                                                    (IN THOUSANDS)
Net loss, as previously reported                       $(3,727)
   Operating expense and other adjustments:
     Equity in loss of NYFIX Millennium                  1,340
                                                       -------
           Total operating expense and other             1,340
                                                       -------
     Investment income                                     (38)
     Provision for income taxes                           (195)
     Minority interest                                    (306)
                                                       -------
Increase in net loss                                    (1,879)
                                                       -------
Net loss, as restated                                  $(5,606)
                                                       =======

        The  following   tables   summarize  the  significant   effects  of  the
restatement:

                                       11




                                   NYFIX, INC.

                                               NINE MONTHS ENDED
                                               SEPTEMBER 30, 2002
                                             ------------------------
                                                AS
                                             PREVIOUSLY
                                              REPORTED   AS RESTATED
                                             ---------   -----------
                                              (IN THOUSANDS, EXCEPT
                                                PER SHARE AMOUNTS)
Consolidated statement of operations
  data:
  Operating expense:
   Equity in loss of NYFIX Millennium        $  --        $ 1,340
                                             -------      -------
           Total operating expense              --          1,340
                                             -------      -------
   Loss from operations                       (7,289)      (8,629)
   Investment income                             474          436
   Loss before income tax benefit             (7,302)      (8,680)
     and minority interest
   Income tax benefit                         (3,269)      (3,074)
   Loss before minority interest              (4,033)      (5,606)
   Minority interest in NYFIX Millennium         306         --
   Net loss                                   (3,727)      (5,606)

   Net loss per common share -
     basic and diluted:                      $ (0.13)     $ (0.19)

                                                       AS OF SEPTEMBER 30, 2003
                                                      --------------------------
                                                         AS
                                                      PREVIOUSLY
                                                       REPORTED     AS RESTATED
                                                      ----------    ----------
                                                          (IN THOUSANDS)
Consolidated balance sheet data:
   Goodwill                                           $  78,526     $  57,626
   Deferred income taxes                                  6,778        13,476
       Total assets                                     164,154       149,952
   Additional paid-in capital                           164,777       182,248
   Retained earnings (accumulated deficit)                3,238       (28,435)
       Total stockholders' equity                       147,950       133,748
       Total liabilities and stockholders' equity       164,154       149,952

3.      INVENTORY

        Inventory consisted of the following:

                                          SEPTEMBER 30,    DECEMBER 31,
                                             2003             2002
                                          ------------    --------------
                                                  (IN THOUSANDS)
Parts and materials                          $  935           $  912
Work in process                                --                 52
Finished goods                                  175              294
                                             ------           ------
       Total inventory, gross                 1,110            1,258
Less: Allowance for obsolescence                160              160
                                             ------           ------
       Total inventory, net                  $  950           $1,098
                                             ======           ======

                                       12




                                   NYFIX, INC.

4.      ACQUISITIONS, GOODWILL AND OTHER ACQUIRED INTANGIBLES

ACQUISITIONS

RENAISSANCE

        On  October  2,  2002,  the  Company  acquired  an 18%  interest  in the
membership  units of  Renaissance.  Renaissance  was formed to  commercialize  a
NASDAQ trading platform (the  "Platform").  The Company acquired its interest in
return  for  300,000  shares of the  Company's  stock  with a fair value of $1.1
million.  In  addition,  the  Company  received an option to  purchase,  between
October 2004 and October 2006, 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. The intellectual property rights and source code to the Platform
were developed  over the last several years by a major bank and brokerage  firm.
In connection with its investment,  the Company acquired,  for $1.0 million, the
intellectual property rights and source code to the Platform from the major bank
and brokerage firm, and contributed such intellectual property rights and source
code to  Renaissance.  In  consideration  for the  intellectual  property rights
contributed   and  advanced   funding  of  the   operating   costs  and  capital
expenditures,  the Company was to share in 50% of Renaissance's  revenue for, at
minimum, three years.

        In October  2002,  the Company  loaned $1.5  million to  Renaissance  in
exchange for a convertible  secured  promissory  note. The note bore an interest
rate of 5.5%, was due in October 2007, or was  convertible  into 6,400,000 units
(or 32% of the total  outstanding  membership  units,  subject to  dilution)  of
Renaissance,  at the Company's  option.  In February 2003, the Company loaned an
additional  $1.0 million to  Renaissance  in exchange  for a secured  promissory
note.  The note bore an interest  rate of 5.5% and was due in February  2008. In
addition,  the Company  advanced to  Renaissance  $1.0  million and $1.2 million
during the three  months  ended  December 31, 2002 and six months ended June 30,
2003, respectively,  to fund certain operating costs and capital expenditures of
Renaissance.  The $1.0 million  advance was reflected as "other amounts due from
unconsolidated  affiliates" in the  accompanying  consolidated  balance sheet at
December 31, 2002. The Company sublet  approximately 8,000 square feet of office
space to Renaissance  at an annual cost of $0.2 million.  Prior to July 1, 2003,
the  Company's  investment  in  Renaissance  was  accounted for under the equity
method.  During the six months ended June 30, 2003, the Company  recorded losses
on the investment of $394,000,  which were included in "other  expense,  net" in
the accompanying  consolidated statement of operations for the nine months ended
September 30, 2003.

        On  July  1,  2003,  the  Company  acquired  the  remaining  82%  of the
membership units of Renaissance, which it did not already own. The Company's key
considerations  for the acquisition of Renaissance  included the ability to sell
its products  into the OTC market,  by  integrating  Renaissance  features  into
existing NYFIX products to enable  customers to have a single view and access to
the OTC and listed marketplaces from one workstation.

        The  Company  financed  the July  2003  Renaissance  acquisition  by (i)
exercising its option to convert the outstanding  $1.5 million  promissory note,
plus accrued interest of $0.1 million,  for an additional 32% of the outstanding
membership  units in  Renaissance;  and (ii) acquiring from the  unitholders the
remaining 50% of the membership units in Renaissance,  for a total value of $5.7
million,  by issuing (a) 462,286  shares of its common stock into an irrevocable
trust for the benefit of certain unitholders of Renaissance, having a fair value
of $2.7 million;  (b) promissory notes payable in, at the Company's option,  its
common stock or cash to certain unitholders of Renaissance  maturing in December
2004,  having a fair value of $1.3 million;  (c) promissory notes payable in, at
the  Company's  option,  its  common  stock or cash to  certain  unitholders  of
Renaissance  with annual maturity dates ranging between June 2004 and June 2007,
having a fair  value of $1.4  million;  and (d) 59,653  shares of the  Company's
common  stock  with  certain  selling  restrictions  to certain  unitholders  of
Renaissance,  having a fair  value of $0.3  million.  There were  nominal  costs

                                       13




                                   NYFIX, INC.

incurred  directly  associated with the acquisition,  which were included in the
overall  consideration.   In  connection  with  the  acquisition,   the  Company
contributed to capital certain obligations that Renaissance owed to the Company,
including  the  aforementioned  promissory  note and advances  aggregating  $3.2
million.  In addition,  the Company reacquired 60,000 shares of its common stock
that it had issued in connection  with its original  investment in  Renaissance,
and which  Renaissance  had acquired as an asset.  The Company has accounted for
these 60,000 shares as "treasury stock" in the accompanying consolidated balance
sheet at September 30, 2003.

        The Renaissance acquisition was accounted for under the purchase method.
The financial position, results of operations and cash flows of Renaissance have
been included in the  Company's  consolidated  results of  operations  since the
acquisition   date.   The  total   purchase   price,   including  the  Company's
pre-acquisition  investment basis,  converted note,  incremental equity acquired
and contributed capital was $11.9 million. The excess of the purchase price over
the fair value of the net assets acquired was $8.4 million and has been recorded
as  goodwill.  Preliminary  allocations  have  been  made  to the  tangible  and
intangible  assets.  While it is anticipated  that a substantial  portion of the
purchase price will be classified as goodwill, the Company has not completed its
final allocation of the purchase price to the tangible and intangible  assets of
Renaissance.  Asset valuations will be performed by an independent  third-party,
and are expected to be completed by December 31, 2003.

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.

        On October 27, 1999, the Measurement Date (see Note 2), NYFIX Millennium
was formed by the Company and seven global  international  investment  banks and
brokerage firms consisting of the "Initial Partners": 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 invested
$14.0 million  ($2.0  million each) in NYFIX  Millennium in exchange for 175,000
units  (25,000  units  each)  of  NYFIX  Millennium,  collectively  owning a 50%
ownership  interest in NYFIX  Millennium.  The Company invested $2.0 million and
owned the remaining 50% (175,000 units).  The Company purchased from the Initial
Partners  an  option  to buy an  additional  30%  ownership  interest  in  NYFIX
Millennium (the "Option").  As consideration for the Option,  the Company issued
to the Initial  Partners an aggregate  of  1,968,750  shares of its common stock
with a fair value of $34.6  million on October 27, 1999.  The Option,  which was
exercisable  at any time,  had no expiration  date,  and required the Company to
issue an aggregate of an  additional  236,250  shares of its common stock to the
Initial  Partners upon exercise.  Exercising the Option would enable the Company
to  increase  its  ownership  interest in NYFIX  Millennium  to 80% of the total
ownership  interests.  Viewing these transactions as an Integrated  Transaction,
the  accounting  for the  Integrated  Transaction  reflected the issuance of the
Company's  common  stock  with a fair  value of  $34.6  million  to the  Initial
Partners in exchange for $14 million in cash and the Option.  The $34.6  million
fair value of the  Company's  common stock issued was $20.6 million in excess of
the $14 million cash  invested by the Initial  Partners.  Of this $20.6  million
excess,  the  Company  allocated  $4.2  million to the Option  based on its fair
value. As the Option had an indefinite life, it was not amortized. There were no
other intangible assets acquired.  The remaining $16.4 million was accounted for
as a prior period adjustment relating to 1999.

                                       14




                                   NYFIX, INC.

        Since the fair value of the  Company's  common  stock issued to purchase
the Option was greater than the cash equity  investment by the Initial Partners,
it was determined that the Initial Partners'  consideration  given in the option
transaction  was not viewed as having  economic  substance or  investment  risk.
Thus,  the  Company  restated  its  financial  statements  to  account  for this
Integrated Transaction as a sale of its common stock to the Initial Partners, in
exchange  for cash and the  Option.  The  Company  accounted  for the  total $16
million  contributed  to NYFIX  Millennium  (the  Company's  $2 million  and the
Initial  Partners'  $14  million)  as its  investment  in NYFIX  Millennium  and
absorbed 100% of the operating losses.

        On March 16, 2001 and April 2, 2001,  NYFIX  Millennium  added four "New
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  invested $8.0 million ($2.0 million each) in NYFIX
Millennium   in  exchange  for  100,000  units  (25,000  units  each)  of  NYFIX
Millennium.  To maintain its 50%  ownership  interest in NYFIX  Millennium,  the
Company reduced certain of its rights to share future dividend  distributions of
NYFIX Millennium. The Company purchased from the New Partners an option, similar
to the  option  purchased  from  the  Initial  Partners,  to  buy an  additional
ownership  interest in NYFIX Millennium.  As consideration for that option,  the
Company issued to the New Partners, an aggregate of 376,000 shares of its common
stock with a fair value of $8.4  million on the  measurement  dates of March 16,
2001 for one of the New  Partners  and  April 2,  2001 for the  other  three New
Partners.  The option, which was also exercisable at any time, had no expiration
date,  and required the Company to issue an  aggregate of an  additional  60,000
shares of its  common  stock to the New  Partners  upon  exercise.  Hereinafter,
references  to the "Option"  include the option  received  from both the Initial
Partners and the New Partners. Exercising the Option would enable the Company to
increase  its  ownership  interest  in  NYFIX  Millennium  to 80%  of the  total
ownership interests.  The fair value of the Company's common stock issued to the
New  Partners was $0.4  million in excess of the $8 million New  Partners'  cash
equity investment in NYFIX  Millennium.  The Company allocated this $0.4 million
to the Option based on its fair value. As the Option had an indefinite  life, it
was not amortized.

        As with the investment of the Initial Partners,  since the fair value of
the  Company's  common  stock issued to purchase the Option was greater than the
cash equity  investment  by the New  Partners,  it was  determined  that the New
Partners' consideration given in the option transaction was not viewed as having
economic substance or investment risk. The Company accounted for this Integrated
Transaction  as a sale of its common stock to the New Partners,  in exchange for
cash and the Option. The Company accounted for the total $8 million  contributed
to NYFIX Millennium ($2 million from each of the New Partners) as its investment
in NYFIX Millennium and continued to absorb 100% of the operating losses.

                                       15




                                   NYFIX, INC.


        Effective  February  1, 2002,  the  Company  exercised  the  Option.  In
exchange for the increased  ownership interest in NYFIX Millennium,  the Company
issued to the Initial  Partners and New Partners an aggregate of 296,250  shares
of its common stock,  with a fair value of $4.5 million on the date of exercise.
As a result, the Company increased its ownership interest in NYFIX Millennium to
80%. At the point of exercising  the Option and  regaining  control of the NYFIX
Millennium  Board and as a result of the  aforementioned  items,  the  Company's
aggregate  purchase price of NYFIX Millennium was $9.1 million,  which consisted
of:  (i) the Option  issued by the  Initial  Partners  with a fair value of $4.2
million;  (ii) the Option  issued by the New Partners  with a fair value of $0.4
million, and (iii) the Company's common stock issued to the Initial Partners and
New Partners for exercise of the Option with a fair value of $4.5 million on the
date of  exercise.  The  Company  allocated  $2.2  million  to the fair value of
intangible assets acquired,  resulting in goodwill of $6.9 million.  Some of the
Company's key  considerations for the acquisition of an additional 30% ownership
interest in NYFIX Millennium  included its ability to control NYFIX Millennium's
operations to effect changes in NYFIX Millennium's business model as a result of
the   attractiveness   of  the   synergies   anticipated   with  the   Company's
recently-acquired     NYFIX    Transaction     Services     broker-dealer    and
soon-to-be-acquired Javelin business.

        As previously mentioned, the Company absorbed 100% of NYFIX Millennium's
operating  losses  from the date of NYFIX  Millennium's  inception.  If and when
NYFIX Millennium achieves profitability, 24% of its profits will be allocated to
the  Initial  Partners  and New  Partners  in  accordance  with the  contractual
agreement amongst the parties.

        Viewing the situation  from NYFIX  Millennium's  inception in 1999 until
the  execution of the Amended  Operating  Agreement on November 1, 2000 based on
contractual  provisions  that  provided for the  Company's  control of the NYFIX
Millennium  Board of  Directors,  the Company  consolidated  NYFIX  Millennium's
financial  statements from inception until November 1, 2000.  Effective with the
amendment to the Operating  Agreement,  dated  November 1, 2000,  the Company no
longer  controlled the NYFIX  Millennium  Board of Directors  and,  accordingly,
accounted for its investment in NYFIX  Millennium  under the equity  method.  On
February 1, 2002,  the Company  acquired an additional  30% of NYFIX  Millennium
resulting in its 80%  ownership  of NYFIX  Millennium  and the Company  regained
control of the NYFIX  Millennium  Board of Directors.  At that date, the Company
consolidated the financial statements of NYFIX Millennium.

        NYFIX  Millennium's  statement  of  operations  for the one month period
ended January 31, 2002 was as follows:

                                       16




                                   NYFIX, INC.

                                        MONTH ENDED
                                         JANUARY 31,
                                           2002
                                        --------------
                                        (IN THOUSANDS)
Revenue:
   Transaction                             $    77

Cost of Revenue:
   Transaction                                 105
                                           -------

Gross Profit:
   Transaction                                 (28)

Operating Expense:
   Selling, general and administrative       1,215
   Research and development                   --
   Depreciation and amortization               117
                                           -------
       Total operating expense               1,332

Interest expense                               (38)
Interest income                                 20
                                           -------
       Net loss                            $(1,378)
                                           =======

         Financial  information  reconciling  NYFIX  Millennium's  statement  of
operations to the Company's equity in loss of NYFIX Millennium for the one month
period ended January 31, 2002 was as follows:

                                                    MONTH ENDED
                                                    JANUARY 31,
                                                        2002
                                                    --------------
                                                    (IN THOUSANDS)

     Net loss                                          $(1,378)
     Elimination of inter-company interest                  38
                                                       -------
     Equity in loss of NYFIX Millennium                $(1,340)
                                                       =======

JAVELIN

        Javelin Technologies, Inc. ("Javelin") is a provider of electronic trade
communication  technology  and FIX  protocol  technology.  The FIX protocol is a
messaging standard,  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
included   increased   connectivity  to  the  buy-side   institutional   market,

                                       17




                                   NYFIX, INC.

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. The results of operations
of Javelin have been included in the consolidated statements 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  as of March 31,
2002,  is being held in escrow by an  unrelated  third party and is subject to a
final working capital adjustment, to be calculated as of March 31, 2002, and the
resolution  of a dispute with respect to the  disposition  of the assets held in
escrow,  to be determined  based on activities  through March 31, 2003. In March
2003, the Company filed claims for partial  reimbursement  of such funds. In May
2003, the Company was served as a defendant in KLEDARAS V. NYFIX, Inc. (Superior
Court,  NY County) Index No.  601502/03,  which had been filed in New York State
court in New York City. Mr. George Kledaras,  as  representative of shareholders
of Javelin,  sought the  release of the escrow  fund and  alleged  damages of at
least $18 million against the Company and its Chairman and CEO, Peter K. Hansen,
in connection  with such  acquisition.  In June 2003,  pursuant to a stipulation
with the Company,  Mr.  Kledaras  dismissed his lawsuit without  prejudice.  The
Company and Mr. Kledaras are currently attempting to negotiate a settlement with
respect to  disposition of the escrow fund. The entire amount of cash and shares
continues  to be held in  escrow  pending  resolution  of its  disposition.  The
Company  will record the return of the escrow  funds,  if any, as a reduction of
goodwill.  The Company does not believe that the disposition of this matter will
have a material adverse impact on its financial condition, results of operations
or cash flows.

        In connection with the  acquisition of Javelin,  the Company assumed the
liability  for the servicing of Javelin's  service  maintenance  contracts.  The
Company  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  were  recognized  as  revenue  on  a
straight-line basis over the respective  remaining service maintenance  contract
periods  through  March  31,  2003.  The  purchase  price  allocation  of  these
obligations was included in "deferred revenue" 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.

GOODWILL AND ACQUIRED INTANGIBLE ASSETS

        Goodwill and other acquired  intangibles at September 30, 2003 primarily
relate to the Company's 2003  acquisition of Renaissance and 2002 acquisition of

                                       18




                                   NYFIX, INC.

an 80%  ownership  interest  in NYFIX  Millennium  and  acquisition  of  Javelin
described  above.  Goodwill and other acquired  intangibles at December 31, 2002
primarily relate to the Company's  acquisitions of NYFIX Millennium and Javelin.
The Company  completed the asset  valuations for the 2002  acquisitions  and the
annual goodwill impairment test during the fourth quarter of 2002.

        Acquired intangible assets consisted of the following:

                                                                   WEIGHTED-
                                          SEPTEMBER   DECEMBER      AVERAGE
                                          30, 2003    31, 2002     USEFUL LIFE
                                          ---------   ---------    -----------
                                              (IN THOUSANDS)
Existing technology                        $10,500     $ 7,500     5.1 years
Customer related intangibles                 2,700       2,700     5.3 years
Trademarks and other                           800         800     10.5 years
                                           -------    --------
        Total intangible assets, gross      14,000      11,000
Less: Accumulated amortization               3,215       1,596
                                           -------    --------
        Total intangible assets, net       $10,785     $ 9,404
                                           =======    ========

        Amortization  expense of acquired intangible assets was $0.6 million and
$1.6  million  for  the  three  and  nine  months  ended   September  30,  2003,
respectively.  During the three and nine months ended  September  30,  2003,  no
goodwill was deemed to be impaired or written-off.

        Based on identified  intangible  assets  recorded at September 30, 2003,
and assuming no  subsequent  impairment  of the  underlying  assets,  the future
amortization expense is expected to be as follows:

Remainder of 2003                                       $   662
2004                                                      2,648
2005                                                      2,648
2006                                                      2,648
2007                                                      1,523
Thereafter                                                  656
                                                        -------
    Future estimated amortization expense               $10,785
                                                        =======

        The changes in the  carrying  amount of goodwill by segment for the nine
months ended September 30, 2003, were as follows:

                                         TECHNOLOGY  TRANSACTION
                                         SERVICES     SERVICES      TOTAL
                                         ----------  -----------  ---------
                                                   (IN THOUSANDS)
Balance as of December 31, 2002            $42,321     $ 6,940     $49,261
Goodwill acquired during the period:
    Renaissance (preliminary estimate)       8,365        --         8,365
                                           -------     -------     -------
Balance as of September 30, 2003           $50,686     $ 6,940     $57,626
                                           =======     =======     =======

                                       19




                                   NYFIX, INC.

5.      INVESTMENT 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 three and nine months ended September 30, 2003, the Company  recorded losses
on the  investment of $62,000 and $330,000,  respectively,  and during the three
and nine months ended  September 30, 2002,  the Company  recorded  losses on the
investment of $132,000 and $271,000, respectively, which were included in "other
expense,  net" in the  accompanying  consolidated  statements of operations.  In
addition,  the Company had a note receivable from EuroLink at September 30, 2003
and December  31, 2002 in the amount of $0.5  million  plus accrued  interest at
6.0%,  due  October  2003,  which  was  included  in  "due  from  unconsolidated
affiliates"  in the  accompanying  consolidated  balance  sheets.  As previously
noted,  the Company is evaluating the provisions of FIN 46 to determine  whether
its investment in EuroLink is a VIE. If the Company  determines that EuroLink is
a VIE,  the Company  will be required to  recognize  incremental  losses of $0.7
million,  after tax,  of  EuroLink's  net losses  since its  investment  and the
financial  position,  results of  operations  and cash flows of EuroLink will be
consolidated into the Company's financial statements starting October 1, 2003.

6.      INCOME TAXES

        The Company  recorded  tax benefits of $0.9 million and $1.9 million for
the three and nine months ended  September  30,  2003,  and tax benefits of $0.9
million and $3.0 million for the three and nine months ended September 30, 2002,
respectively.  The Company  will receive no income tax benefit for the equity in
loss of NYFIX Millennium of $1.3 million for the nine months ended September 30,
2002. The Company's effective tax benefit rate was 45% and 48% for the three and
nine months  ended  September  30, 2003,  respectively,  and 48% and 35% for the
three and nine months ended  September  30, 2002,  respectively.  The  Company's
effective  tax benefit  rate for the three and nine months ended  September  30,
2003 is higher than the Federal  statutory  rate primarily due to the effects of
the recognition of certain research and development tax credits and state income
taxes.  The  Company's  effective tax benefit rate for the three and nine months
ended September 30, 2002 exceeds the Federal statutory rate primarily due to the
effect  of state  income  taxes and the  impact  of the  equity in loss of NYFIX
Millennium.

7.      PER SHARE INFORMATION

        The Company's  basic loss per common share ("EPS") was calculated  based
on the net loss available to common stockholders and the weighted-average number
of shares outstanding during the reporting period. Diluted EPS normally includes
additional  dilution  from  common  stock  equivalents,  such as stock  issuable
pursuant  to  the  exercise  of  outstanding   stock   options.   Stock  options
representing  1,208,916 and 1,038,184 shares for the three and nine months ended
September 30, 2003,  respectively,  and 520,129 and 792,714 shares for the three
and nine months ended September 30, 2002,  respectively,  were excluded from the
loss per share calculations since the amounts would be anti-dilutive.

                                       20



                                   NYFIX, INC.


8.      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.

        The Company operates as a financial  services  technology company in two
industry segments,  Technology Services and Transaction Services.  The Company's
broker-dealer operations, NYFIX Millennium, NYFIX Transaction Services and NYFIX
Clearing Corporation ("NYFIX Clearing"), which are managed separately within the
Company  and are  regulated  by the  NASD,  comprise  the  Transaction  Services
segment.  NYFIX Millennium  developed an ATS, which is an electronic system that
matches  buyers  and  sellers  in  a  completely  anonymous  environment.  NYFIX
Transaction  Services  provides  electronic  execution  services,  primarily  to
domestic and international  broker-dealers and specialized  trading firms. NYFIX
Clearing was approved, by the NASD, for broker-dealer status in August 2003, and
by the Depository  Trust and Clearing  Corporation  and the National  Securities
Clearing  Corporation in November 2003. As a result,  NYFIX Clearing  expects to
begin clearing trades for its affiliated  companies during the fourth quarter of
2003. 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,  which  classifies  its  revenue  as
subscription,  sale or service contract,  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 provides  broker-dealer  operations and generally
classifies its revenue as transaction.

        Summarized financial information by business segment was as follows:

                               THREE MONTHS ENDED          NINE MONTHS ENDED
                                   SEPTEMBER 30,              SEPTEMBER 30,
                              ------------------------    -----------------------
                                2003          2002         2003           2002
                              ---------     ---------     --------      ---------
Revenue:                                        (IN THOUSANDS)
   Technology Services        $ 13,695      $ 13,031      $ 40,378      $ 34,344
   Transaction Services          3,313         2,412        10,827         4,256
   Eliminations                   (613)          (75)       (1,831)          (75)
                              --------      --------      --------      --------
       Total revenue          $ 16,395      $ 15,368      $ 49,374      $ 38,525
                              ========      ========      ========      ========

Gross Profit:
   Technology Services        $  7,164      $  7,580      $ 22,454      $ 20,098
   Transaction Services            881           340         3,080          (353)
                              --------      --------      --------      --------
       Total gross profit     $  8,045      $  7,920      $ 25,534      $ 19,745
                              ========      ========      ========      ========

        Reconciling  information  between business  segments and the loss before
income tax benefit was as follows:

                                       21



                                   NYFIX, INC.

                                           THREE MONTHS ENDED         NINE MONTHS ENDED
                                              SEPTEMBER 30,              SEPTEMBER 30,
                                        -------------------------   ------------------------
                                           2003          2002         2003          2002
                                        ----------     ---------    ----------    ----------
                                                            (IN THOUSANDS)
Gross profit for reportable segments     $  8,045      $  7,920      $ 25,534      $ 19,745
Operating expenses                        (10,199)       (9,756)      (29,264)      (28,374)
Interest expense                              (16)          (73)          (74)         (216)
Investment income                             304           276           557           436
Other expense, net                            (62)         (132)         (649)         (271)
                                         --------      --------      --------      --------
Loss before income tax benefit           $ (1,928)     $ (1,765)     $ (3,896)     $ (8,680)
                                         ========      ========      ========      ========

9.      OTHER COMPREHENSIVE LOSS

        The components of other comprehensive loss, net of tax, were as follows:

                                       THREE MONTHS ENDED        NINE MONTHS ENDED
                                          SEPTEMBER 30,            SEPTEMBER 30,
                                      ------------------------------------------------
                                        2003         2002        2003         2002
                                      --------    ----------   ---------    ----------
                                                       (IN THOUSANDS)
Net loss                              $(1,057)     $  (906)     $(2,038)     $(5,606)
Changes in net unrealized gain on        (207)         136         (103)         196
   available-for-sale securities
                                      -------      -------      -------      -------
Total comprehensive loss              $(1,264)     $  (770)     $(2,141)     $(5,410)
                                      =======      =======      =======      =======

        Accumulated  other  comprehensive  income,  net of tax, at September 30,
2003 and December 31, 2002 consisted of the  accumulated  net unrealized gain on
available-for-sale securities of $4,000 and $107,000, respectively.

10.     CASH FLOW SUPPLEMENTAL INFORMATION

        Information  about  the  cash  flow  activities   related  to  the  2003
Renaissance  acquisition and the 2002 NYFIX Millennium and Javelin  acquisitions
was as follows:

                                       22




                                   NYFIX, INC.

                                                                     NINE MONTHS ENDED
                                                                        SEPTEMBER 30,
                                                                  -------------------------
                                                                     2003          2002
                                                                  ----------     ---------
                                                                       (IN THOUSANDS)
Fair value of assets acquired, net of cash acquired                $ 12,649      $ 76,219
Fair value of liabilities assumed                                    (1,016)      (15,670)
Promissory note converted to equity                                  (1,560)         --
Fair value of capital contributed                                    (3,181)         --
Fair value of notes issued                                           (2,703)         --
Common stock issued                                                  (2,997)      (49,154)
Treasury stock acquired                                                 380          --
Pre-acquisition investment basis                                     (1,590)       (4,600)
                                                                   --------      --------
(Cash acquired from acquisition, net of payments)/payments for
acquisitions, net of cash acquired                                 $    (18)     $  6,795
                                                                   ========      ========

        The  preceding  fair values of net assets and  liabilities  for the nine
months ended  September  30, 2003 were based on the  preliminary  values at that
time. The final  allocation of assets  acquired at September 30, 2003 may differ
from the fair values presented.

        Information about other cash flow activities was as follows:

                                                                NINE MONTHS ENDED
                                                                  SEPTEMBER 30,
                                                             ------------------------
                                                                2003         2002
                                                             ----------   -----------
                                                                  (IN THOUSANDS)
Supplemental disclosures of cash flow information:
   Cash paid for interest                                      $    74      $   216
   (Refunds received) cash paid for income taxes, net           (1,084)       1,739
Supplemental schedule of noncash investing and
  financing information:
   Capital lease obligations incurred for the purchase            --          1,278
     of property and equipment
   Common stock issued for investments in                         --          1,121
     unconsolidated affiliates
   Common stock issued for notes                                  --             70
   Unrealized gain (loss) on available-for-sale securities         103         (196)

                                       23




                                   NYFIX, INC.


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

        NYFIX,  Inc.,  founded in 1991, through our subsidiaries and affiliates,
provides electronic trading technology  infrastructure and execution services to
brokerage firms and institutional  investors. 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,  Financial  Information  eXchange  ("FIX")  protocol
messaging and monitoring tools, and a high volume trade execution platform.  Our
products deliver straight through processing ("STP") for front,  middle and back
office trade transaction  processing.  We maintain multiple data centers with an
extensive  network of electronic  circuits that links industry  participants for
electronic trade  communication and we provide access to the global equities and
derivatives financial 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  L.L.C.  ("NYFIX  Millennium"),  our 80% owned
broker-dealer  subsidiary,  we have developed an ATS that functions similarly to
an  electronic  communication  networks  ("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 can
eliminate 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.

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

        The following discussion and analysis gives effect to the restatement of
our  financial  statements to account for our 1999 and 2001  investments  in and
2002 acquisition of an additional 30% ownership interest in NYFIX Millennium, as
discussed in Note 2 of the Consolidated Financial Statements.

                                       24




                                   NYFIX, INC.

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.

        For our  accounting  policies  that,  among others,  are critical to the
understanding  of our results of operations due to the  assumptions we must make
in their application,  refer to Item 7, Management's Discussion and Analysis, in
our Annual  Report on Form  10-K/A for the year ended  December  31, 2002 ("2002
Form 10-K/A").  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 our 2002 Form 10-K/A for our
significant  accounting  policies.  In the first nine months of 2003, there have
been no material changes to our significant accounting policies.

        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
operations,  amortization of capitalized product enhancement costs, depreciation
of subscription equipment and execution, clearing fees and market data feeds. We
formed a clearing  subsidiary,  NYFIX Clearing  Corporation  ("NYFIX Clearing"),
which was approved, by the NASD, for broker-dealer status in August 2003, and by
the  Depository  Trust  and  Clearing  Corporation  ("DTCC")  and  the  National
Securities  Clearing  Corporation in November 2003. As a result,  NYFIX Clearing
expects to begin clearing trades for its affiliated  companies during the fourth
quarter  of 2003.  We  believe  that we can  significantly  lower the ticket and
transaction  charges that we are currently  incurring in our transaction segment
by becoming self-clearing.

        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

                                       25




                                   NYFIX, INC.

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.

        Equity in loss of NYFIX  Millennium  relates to the operating losses for
our unconsolidated affiliate prior to its acquisition by us.

        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  period's
consolidated   financial   statements   to  conform  to  the  current   period's
presentation.   In  connection  therewith,  we  reclassified  certain  operating
expenses, primarily related to our data center operations, totaling $2.9 million
and  $7.1  million  to cost of  revenue  for the  three  and nine  months  ended
September 30, 2002.

        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.

HISTORICAL RESULTS OF OPERATIONS

THREE MONTHS ENDED  SEPTEMBER 30, 2003 COMPARED TO THREE MONTHS ENDED  SEPTEMBER
30, 2002

REVENUE

        Total revenue  increased  $1.0 million,  or 7%, to $16.4 million for the
three months ended  September 30, 2003,  from $15.4 million for the three months
ended  September 30, 2002,  primarily due to increased  subscription  revenue of
$0.8 million and increased transaction revenue of $0.6 million.  These increases
were partially offset by lower sale revenue of $0.4 million.

        Subscription  revenue increased $0.8 million, or 9%, to $9.1 million for
the three  months  ended  September  30,  2003,  from $8.3 million for the three
months ended September 30, 2002, primarily as a result of increased subscription
revenue from our technology services segment of $0.5 million,  due largely to an
increase for our Javelin  products,  increased  subscriptions for connections to
our network,  attributable to our buyside initiative,  as well as an increase in
our  transaction  services  segment.  These  increases were slightly offset by a
decrease in subscriptions for our derivatives products. As a percentage of total
revenue,  subscription  revenue  increased  to  56% in the  three  months  ended
September  30,  2003,  from 54% in the three months  ended  September  30, 2002,
primarily due to higher  subscription  revenue as described above and lower sale
revenue,  primarily for our Javelin products.  The acquisition of Renaissance on
July 1, 2003 did not have a  significant  effect on revenue for the three months
ended September 30, 2003.

        Sale revenue  decreased  $0.4  million,  or 16%, to $2.1 million for the
three months ended  September  30, 2003,  from $2.5 million for the three months
ended  September 30, 2002,  primarily  due to decreased  revenue for our Javelin
products.  As a percentage of total revenue,  sale revenue  decreased to 13% for
the three  months  ended  September  30,  2003 as  compared to 16% for the three
months ended September 30, 2002, primarily due to the aforementioned decrease in
sale revenue for our Javelin products.

        Service  contract revenue was $2.3 million for the both the three months
ended  September 30, 2003 and 2002. As a percentage  of total  revenue,  service

                                       26




                                   NYFIX, INC.

contract  revenue was 14% in the three  months  ended  September  30,  2003,  as
compared to 15% in the three months ended September 30, 2002.

        Transaction  revenue increased $0.5 million, or 25%, to $2.8 million for
the three  months ended  September  30, 2003 as compared to $2.3 million for the
three months ended September 30, 2002, primarily due to both increased customers
and increased  transaction  activity for existing customers.  As a percentage of
total revenue,  transaction  revenue was 17% in the three months ended September
30,  2003,  as compared to 15% in the three  months  ended  September  30, 2002,
primarily due to the aforementioned increased transaction revenue.

COST OF REVENUE

        Total cost of revenue  increased  $0.9 million,  or 12%, to $8.4 million
for the three  months ended  September  30, 2003 as compared to $7.5 million for
the  three  months  ended   September  30,  2002,  due  primarily  to  increased
telecommunication  charges,  resulting from increased  desktop  connections  and
capacity in our data centers,  of $0.4 million;  increased cross connection fees
to connect our subscription  customers to third-party  networks of $0.2 million;
increased  depreciation  expense  attributable  to increased  investment in data
center  infrastructure of $0.2 million; and increased  transaction fees and data
feed costs of $0.2 million attributable to increased transaction revenue.

        Subscription  cost of revenue  increased  $1.0 million,  or 23%, to $5.4
million  for the three  months  ended  September  30,  2003 as  compared to $4.4
million  for the  three  months  ended  September  30,  2002,  primarily  due to
increased  data  center  costs,  including  telecommunication  charges due to an
increase  in desktop  connections  and  capacity  in our data  centers,  of $0.4
million;  increased cross connection fees to connect our subscription  customers
to third-party networks of $0.2 million;  increased labor costs of $0.2 million;
and  increased   depreciation   and   amortization   expense  of  $0.1  million,
attributable   primarily   to   increased   investment   in  our   data   center
infrastructure.  As a percentage of subscription  revenue,  subscription cost of
revenue  increased to 59% in the three months ended  September 30, 2003 from 52%
in the three months ended September 30, 2002,  primarily due to increases in the
aforementioned  costs, which exceeded the increase in subscription  revenue, and
the inclusion of Renaissance cost of revenue in the three months ended September
30, 2003 with minimal Renaissance subscription revenue.

        Sale cost of revenue decreased $0.1 million, or 21%, to $0.5 million for
the three  months ended  September  30, 2003 as compared to $0.6 million for the
three months ended  September 30, 2002. The decrease in sale cost of revenue was
primarily due to decreased  labor costs.  As a percentage of sale revenue,  sale
cost of revenue  decreased to 23% in the three months ended  September 30, 2003,
from 25% in the  three  months  ended  September  30,  2002,  due  primarily  to
decreased Javelin labor costs and sale revenue.

        Service contract cost of revenue increased $0.1 million, or 13%, to $0.6
million for the three months ended  September 30, 2003, from $0.5 million in the
three  months ended  September  30, 2002.  The  increase  was  primarily  due to
increased  labor costs.  As a percentage of service  contract  revenue,  service
contract  cost of revenue  increased to 27% in the three months ended  September
30,  2003,  as compared to 24% in the three  months  ended  September  30, 2002,
primarily attributable to the aforementioned increased labor costs.

        Transaction  cost of revenue  remained  constant at $1.9 million for the
three months ended  September 30, 2003 and 2002, as increased  transaction  fees
and data feed fees of $0.2 million  were offset by reduced  labor costs and data
center costs other than  depreciation.  As a percentage of transaction  revenue,
transaction cost of revenue decreased to 66% in the three months ended September
30, 2003, as compared to 84% in the three months ended  September 30, 2002,  due
primarily to increased transaction revenue.

                                       27




                                   NYFIX, INC.

GROSS PROFIT (AS A PERCENTAGE OF REVENUE)

        Gross profit  decreased to 49% for the three months ended  September 30,
2003 as compared to 52% for the three  months  ended  September  30,  2002.  The
decrease  in gross  profit is  primarily  attributable  to the impact of reduced
subscription   margin  due  to  increased   data  center  costs  and   increased
telecommunication  charges,  resulting from lower margin on desktop  connections
and increased  capacity in our data centers and increased cross  connection fees
to connect our  subscription  customers to third-party  networks,  offset by the
impact of increased transaction revenue.

        Subscription  gross  profit  decreased to 41% for the three months ended
September 30, 2003, as compared to 48% for the three months ended  September 30,
2002. The decrease in  subscription  gross profit is primarily  attributable  to
increased data center costs,  including  telecommunication  charges, due to more
desktop  connections  and  increased  capacity  in our data  centers,  increased
cross-connection  fees to connect  our  subscription  customers  to  third-party
networks,  increased  labor costs and increased  depreciation  and  amortization
expense related to infrastructure investments in our data center. Also affecting
gross  profit  was the  inclusion  of  Renaissance  cost of revenue in 2003 with
minimal Renaissance subscription revenue.

        Sale gross profit  increased to 77% for the three months ended September
30, 2003 as compared to 75% for the three months ended  September 30, 2002.  The
increase  in sale  gross  profit  was  primarily  attributable  to the impact of
decreased  Javelin  labor  costs  partially  offset by  decreased  Javelin  sale
revenue.

        Service  contract  gross  profit  decreased  to 73% for the three months
ended September 30, 2003 as compared to 76% for the three months ended September
30, 2002, primarily due to increased labor costs.

        Transaction  gross  profit  increased  to 34% for the three months ended
September  30, 2003 as compared to 16% for the three months ended  September 30,
2002.  The  increase  in  gross  profit  was  attributable  to the  increase  in
transaction revenue, as costs remained the same.

SELLING, GENERAL AND ADMINISTRATIVE

        Selling,  general and administrative  expense increased $1.5 million, or
21%, to $8.5 million for the three months ended  September  30, 2003 as compared
to $7.0 million for the three months ended  September 30, 2002. The increase was
primarily attributable to increased salaries and benefits of $0.4 million due to
higher health  insurance  expenses and the staff associated with the Renaissance
acquisition,  increased  bad  debt  expense  of $0.3  million  due to  increased
reserves for accounts  receivable,  and  increased  administrative  fees of $0.3
million.  As a percentage of total revenue,  selling general and  administrative
expense  increased to 52% in the three months ended  September 30, 2003 from 46%
in the three months ended  September  30, 2002.  The increase as a percentage of
total revenue was primarily  attributable to increased salaries and commissions,
related  personnel  costs and  various  office  expenses  due to an  increase in
personnel to support our growth and acquisitions, increased bad debt allowances,
professional fees and other selling, general and administrative expenses.

RESEARCH AND DEVELOPMENT

        Research and development  expense remained  constant at $0.4 million for
the three months ended  September  30, 2003 and 2002.  As a percentage  of total
revenue,  research and development  expense decreased to 2% for the three months
ended September 30, 2003, from 3% for the three months ended September 30, 2002.
The decrease as a percentage  of total revenue was  attributable  to a growth in
revenue while research and development expense remained constant.

DEPRECIATION AND AMORTIZATION

        Depreciation and amortization expense decreased $1.0 million, or 42%, to
$1.3 million for the three months ended  September  30, 2003 as compared to $2.3
million for the three months ended September 30, 2002.  Amortization expense for

                                       28




                                   NYFIX, INC.

the three  months  ended  September  30, 2002  includes a change in estimate for
acquired intangibles related to our acquisitions of NYFIX Millennium and Javelin
of $0.9 million. As a percentage of total revenue, depreciation and amortization
expense  decreased to 8% for the three months ended  September 30, 2003 from 15%
for the three months ended  September 30, 2002.  The decrease as a percentage of
total revenue was primarily  attributable to the decreased  amortization expense
and the increase in revenue.

LOSS FROM OPERATIONS

        Loss from operations increased $0.3 million, or 17%, to $2.1 million for
the three months ended  September  30, 2003, as compared to $1.8 million for the
three months ended September 30, 2002. The additional  losses were primarily due
to higher selling,  general and  administrative  expense,  subscription  cost of
revenue and costs  associated with  Renaissance,  which were partially offset by
increased  revenue,  primarily  transaction  and  subscription  revenue  for our
broker-dealer subsidiaries, and lower amortization expense on intangible assets.
In addition, our 2002 results were unfavorably impacted by the equity in loss of
NYFIX  Millennium of $1.3 million.  As a percentage of total revenue,  loss from
operations was a deficit of 13% in the three months ended  September 30, 2003 as
compared to a deficit of 12% in the three months ended  September 30, 2002.  The
slight  decline  as  a  percentage  of  total  revenue  was  attributable  to  a
combination of the increase in cost of revenue and operating  expenses offset by
the growth in revenue.

INVESTMENT INCOME

        Investment income increased  $28,000,  or 10%, to $304,000 for the three
months  ended  September  30,  2003,  from  $276,000  for the three months ended
September  30,  2002.  The increase was  primarily  due to interest  income on a
refund on 2002 estimated  Federal  income tax payments of $26,000,  as increased
gains on sales of  investments  of $101,000  were  offset by reduced  investment
interest of $99,000 due to lower average investment balances and lower yields.

INTEREST EXPENSE

        Interest  expense  decreased  $57,000,  or 78%, to $16,000 for the three
months  ended  September  30,  2003,  from  $73,000 for the three  months  ended
September 30, 2002,  principally  due to reduced  capital lease  obligations and
reduced miscellaneous interest expense.

OTHER EXPENSE, NET

        Other  expense  decreased  $70,000 to $62,000 for the three months ended
September 30, 2003 as compared to $132,000 for the three months ended  September
30, 2002, due primarily to reduced  losses  incurred from our equity in the loss
of EuroLink, our unconsolidated affiliate.

INCOME TAXES

        We recorded an income tax benefit of $0.9  million for the three  months
ended  September 30, 2003 and 2002.  The income tax benefit for the three months
ended  September 30, 2003 was  attributable to a tax benefit on our pre-tax loss
of $1.9  million,  various  prior  period  permanent  items and certain  Federal
research and development tax credits.  Our effective tax benefit rate of 45% for
the three months ended  September 30, 2003 exceeded the Federal  statutory  rate
primarily  due to the effect of the  aforementioned  federal  tax  benefits  and
research  and  development  tax  credits.  The income tax  benefit for the three
months ended September 30, 2002 was attributable to a tax benefit on our pre-tax
loss of $1.8 million and recognition of certain Federal research and development
tax credits  from prior  years.  Our  effective  tax benefit rate of 49% for the
period  exceeded the Federal  statutory  rate primarily due to the effect of the
aforementioned tax credits and the effect of state tax benefits.

                                       29




                                   NYFIX, INC.


NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2002

REVENUE

        Total revenue increased $10.9 million,  or 28%, to $49.4 million for the
nine months ended  September 30, 2003, as compared to $38.5 million for the nine
months ended September 30, 2002, primarily due to increased  transaction revenue
of $5.7 million and increased  revenue for our Javelin products of $3.4 million.
NYFIX Transaction  Services started  generating revenue on July 1, 2002, and the
results of NYFIX  Millennium  have been included in our  consolidated  financial
statements  since  our  acquisition  of  an  80%  ownership  interest  in  NYFIX
Millennium on February 1, 2002.

        Subscription revenue increased $2.2 million, or 9%, to $25.8 million for
the nine months ended  September  30, 2003 as compared to $23.6  million for the
nine months ended September 30, 2002, primarily due to increases in subscription
revenue  attributable to a full nine months for our Javelin products as compared
to six months in 2002,  increased  demand and the net addition of new  customers
from our NYFIX Transaction Services and increased  subscriptions for connections
to our network, attributable to our buyside initiative. As a percentage of total
revenue,  subscription  revenue  decreased  to  52%  in the  nine  months  ended
September  30,  2003  from 61% in the nine  months  ended  September  30,  2002,
primarily  due to the  increased  transaction  revenue  from  our  broker-dealer
operations and the increase of sale and service contract revenue attributable to
a full nine months  revenue from our Javelin  products as compared to six months
revenue in 2002.  The  acquisition of Renaissance on July 1, 2003 did not have a
significant effect on revenue for the nine months ended September 30, 2003.

        Sale revenue  increased  $1.7  million,  or 33%, to $6.8 million for the
nine months  ended  September  30, 2003 as compared to $5.1 million for the nine
months ended  September 30, 2002,  primarily due to increased  sale revenue from
our Javelin products, which was attributable to a full nine months of revenue in
2003 as compared to six months in 2002. As a percentage of total  revenue,  sale
revenue  increased to 14% in the nine months ended  September 30, 2003, from 13%
in the nine months ended September 30, 2002,  primarily due to the increase from
the sale revenue for our Javelin  products,  which was  partially  offset by the
effect of the increased  transaction revenue for the nine months ended September
30, 2003.

        Service contract revenue increased $1.3 million, or 21%, to $7.1 million
for the nine months ended  September 30, 2003 as compared to $5.8 million in the
nine months ended  September 30, 2002,  due to the addition of service  contract
revenue from our Javelin  products.  As a percentage of total  revenue,  service
contract  revenue  was 14% in the nine  months  ended  September  30,  2003,  as
compared to 15% in the nine months ended  September  30, 2002,  primarily due to
the effect of increased  transaction revenue for the nine months ended September
30, 2003, which was substantially offset by the aforementioned  service contract
revenue increase from our Javelin business.

        Transaction  revenue increased $5.7 million to $9.7 million for the nine
months ended  September  30, 2003 as compared to $4.0 million in the nine months
ended  September  30, 2002,  due to increased  transaction  activity for new and
existing  customers of NYFIX  Transaction  Services and NYFIX  Millennium.  As a
percentage  of total  revenue,  transaction  revenue  was 20% in the nine months
ended  September 30, 2003, as compared to 10% in the nine months ended September
30, 2002,  primarily due to the aforementioned  transaction revenue derived from
NYFIX Transaction Services and NYFIX Millennium.

COST OF REVENUE

        Total cost of revenue  increased $5.0 million,  or 27%, to $23.8 million
for the nine months ended September 30, 2003 as compared to $18.8 million in the
nine  months   ended   September   30,   2002,   due   primarily   to  increased
telecommunication charges, resulting from more desktop connections and increased
capacity in our data centers to support our business, of $1.4 million; increased

                                       30




                                   NYFIX, INC.

clearing and specialist fees related to our transaction revenue of $1.2 million;
increased  labor  costs  of  $0.9  million;   increased   depreciation   expense
attributable  to  investment  in data  center  infrastructure  of $0.7  million;
increased  cross  connection  fees to  connect  our  subscription  customers  to
third-party  networks of $0.6  million;  and increased  amortization  of product
enhancement costs attributable to new product releases of $0.2 million.

        Subscription  cost of revenue  increased $3.4 million,  or 29%, to $14.8
million  for the nine  months  ended  September  30,  2003 as  compared to $11.4
million for the nine months ended September 30, 2002, primarily due to increased
data center  costs,  including  telecommunication  charges  resulting  from more
desktop connections and increased capacity in our data centers, of $1.6 million;
increased  cross  connection  fees of $0.6  million to connect our  subscription
customers to  third-party  networks;  increased  depreciation  and  amortization
expense of $0.5 million,  attributable  primarily to increased investment in our
data center  infrastructure,  and  increased  labor costs of $0.4  million.  The
acquisition of Renaissance on July 1, 2003 did not have a significant  effect on
cost of revenue for the nine months ended September 30, 2003. As a percentage of
subscription revenue,  subscription cost of revenue increased to 57% in the nine
months ended  September 30, 2003 from 48% in the nine months ended September 30,
2002,  primarily due to higher increases in the aforementioned costs relative to
revenue.

        Sale cost of revenue decreased $0.1 million,  or 9%, to $1.4 million for
the nine months  ended  September  30, 2003 as compared to $1.5  million for the
nine months  ended  September  30,  2002,  due to  decreased  costs of purchased
software  of $0.2  million and reduced  labor  costs of $0.1  million  offset by
increased  amortization expense attributable to capitalized software included in
our products of $0.2  million.  As a percentage  of sale  revenue,  sale cost of
revenue  decreased to 21% in the nine months ended  September 30, 2003, from 30%
in the nine months ended September 30, 2002, due primarily to increased revenue.

        Service contract cost of revenue increased $0.3 million, or 20%, to $1.7
million for the nine months ended  September 30, 2003,  from $1.4 million in the
nine months  ended  September  30,  2002.  The  increase  was  primarily  due to
increased  service  contract  labor costs of $0.4  million.  As a percentage  of
service contract revenue,  service contract cost of revenue was 24% for both the
nine months ended  September  30, 2003 and 2002, as the increase in revenue kept
pace with the increase in labor costs.

        Transaction  cost of revenue  increased  $1.6  million,  or 35%, to $6.0
million for the nine months ended September 30, 2003 as compared to $4.4 million
for the nine months ended  September 30, 2002. The increase in transaction  cost
of revenue was primarily due to increased  clearing and specialist  fees of $1.2
million;  increased labor costs of $0.3 million;  increased depreciation expense
attributable  to  investment  in data  center  infrastructure  of $0.3  million;
increased  amortization expense attributable to capitalized software included in
our products of $0.1 million;  partially  offset by reduced  commissions paid of
$0.1  million.  As a percentage  of  transaction  revenue,  transaction  cost of
revenue  decreased  to 62% in the nine  months  ended  September  30,  2003,  as
compared to 111% in the nine months ended  September 30, 2002,  due primarily to
the fact that NYFIX Transaction Services incurred costs in the nine months ended
September 30, 2002, but did not start generating revenue until July 1, 2002.

GROSS PROFIT (AS A PERCENTAGE OF REVENUE)

        Gross profit  increased to 52% for the nine months ended  September  30,
2003 as  compared to 51% for the nine  months  ended  September  30,  2002.  The
increase in gross  profit is primarily  attributable  to the impact of increased
transaction  revenue and Javelin sale  revenue,  offset by reduced  subscription
margin  due to  increased  data  center  costs and  increased  telecommunication
charges,  resulting  from lower  margins on desktop  connections  and  increased
capacity in our data centers to support our core business,  and increased  cross
connection fees to connect our subscription customers to third-party networks.

                                       31




                                   NYFIX, INC.

        Subscription  gross  profit  decreased  to 43% for the nine months ended
September 30, 2003,  from 52% for the nine months ended  September 30, 2002. The
decrease in  subscription  gross profit is primarily  attributable  to increased
data center costs,  including  telecommunication  charges,  resulting  from more
desktop connections and increased capacity in our data centers,  increased cross
connection fees to connect our subscription  customers to a third-party network,
increased  depreciation  and  amortization  expense  related to our  capital and
telecommunication  infrastructure  investments  made  in  our  data  center  and
increased labor costs.

        Sale gross profit  increased to 80% for the nine months ended  September
30, 2003 as compared to 70% for the nine months ended  September  30, 2002.  The
increase  in sale  gross  profit  was  primarily  attributable  to the impact of
increased  Javelin revenue and decreased  costs of purchased  software and labor
offset by increased  amortization  expense  attributable to capitalized software
included in our products delivered to our customers.

        Service  contract  gross  profit  remained  constant at 76% for the nine
months  ended  September  30, 2003 and 2002.  The  increase  in Javelin  service
contract revenue was offset by the impact of higher labor costs.

        Transaction  gross  profit  increased  to 38% for the nine months  ended
September  30, 2003 as  compared  to a deficit of 11% for the nine months  ended
September  30,  2002.  The  increase  in gross  profit was  attributable  to the
increase in  transaction  revenue,  which grew at a higher  rate than costs.  As
mentioned  previously,  NYFIX  Transaction  Services  incurred costs in the nine
months ended September 30, 2002, but did not start generating revenue until July
1, 2002.

SELLING, GENERAL AND ADMINISTRATIVE

        Selling,  general and administrative  expense increased $2.7 million, or
12%, to $24.6  million for the nine months ended  September 30, 2003 as compared
to $21.9 million for the nine months ended  September 30, 2002. The increase was
primarily  due to  increased  selling,  general and  administrative  expense for
Javelin of $0.7 million due to the fact that costs were included for a full nine
months in 2003 as  compared to six months in 2002;  increased  labor and benefit
costs of $0.9 million,  including  increased  employee health insurance expense;
increased office rent, telephone expense and non-capital  equipment purchases of
$0.4 million to support our growth;  increased insurance expense of $0.3 million
due to rising premiums and expanded coverage;  increased  administrative fees of
$0.3 million;  and  increased  promotion and trade show expense of $0.1 million;
offset by decreased bad debt expense of $0.4 million due to reduced reserves for
accounts  receivable.  As a percentage  of total  revenue,  selling  general and
administrative  expense  decreased to 50% in the nine months ended September 30,
2003 from 57% in the nine months ended  September  30,  2002.  The decrease as a
percentage of total revenue was  attributable to a higher growth in revenue than
selling, general and administrative expense.

RESEARCH AND DEVELOPMENT

        Research and development expense decreased $0.1 million, or 12%, to $1.0
million for the nine months ended September 30, 2003 as compared to $1.1 million
for the nine months ended  September 30, 2002. As a percentage of total revenue,
research  and  development  expense  decreased  to 2% for the nine months  ended
September  30, 2003 from 3% for the nine months ended  September  30, 2002.  The
decrease as a  percentage  of total  revenue was  attributable  primarily to the
increase in revenue.

EQUITY IN LOSS OF NYFIX MILLENNIUM

        Effective  February 1, 2002,  we  exercised  the Option to increase  our
ownership  interest  in  NYFIX  Millennium,  from  50% to 80% and on  that  date
consolidated NYFIX Millennium's financial statements.  NYFIX Millennium incurred

                                       32




                                   NYFIX, INC.

operating  losses  of $1.3  million  for the  month of  January  2002,  which we
recognized under the equity method.

DEPRECIATION AND AMORTIZATION

        Depreciation and amortization  expense decreased $0.3 million, or 9%, to
$3.7 million for the nine months ended  September 30, 2003 from $4.0 million for
the  nine  months  ended   September  30,  2002.  This  decrease  was  primarily
attributable to decreased depreciation expense of $0.4 million, due primarily to
reduced leased  equipment.  As a percentage of total revenue,  depreciation  and
amortization  expense  decreased to 7% for the nine months ended  September  30,
2003 from 10% for the nine months ended  September  30, 2002.  The decrease as a
percentage of total revenue was  attributable to the growth in revenue and lower
depreciation expense.

LOSS FROM OPERATIONS

        Loss from operations decreased $4.9 million, or 57%, to $3.7 million for
the nine months ended  September 30, 2003, as compared to a loss from operations
of $8.6 million for the nine months ended September 30, 2002. The improvement in
operating  results  was  primarily  due to the  increase  in  revenue  from  our
transaction  segment and Javelin  business offset by higher cost of revenues and
operating expenses. As a percentage of total revenue, loss from operations was a
deficit of 8% in the nine  months  ended  September  30,  2003 as  compared to a
deficit of 19% in the nine months ended September 30, 2002. The improvement as a
percentage of total revenue was  attributable to a higher growth in revenue than
costs of our acquired businesses.

INVESTMENT INCOME

        Investment  income  increased $0.2 million,  or 33%, to $0.6 million for
the nine months ended  September 30, 2003, from $0.4 million for the nine months
ended September 30, 2002. The increase was  principally due to additional  gains
on sales of short-term investments.

INTEREST EXPENSE

        Interest  expense  decreased  $142,000,  or 66%, to $74,000 for the nine
months  ended  September  30,  2003,  from  $216,000  for the nine months  ended
September  30,  2002,  principally  due to reduced  interest  on  capital  lease
obligations of $63,000 and interest incurred in connection with late payments of
certain obligations of $70,000 in the nine months ended June 30, 2002.

OTHER EXPENSE, NET

        Other expense  increased  $378,000 to $649,000 for the nine months ended
September  30, 2003 as compared to $271,000 for the nine months ended  September
30,  2002,  due  primarily  to  losses  incurred  from our  equity  in losses of
unconsolidated  affiliates.  Our accounting for Renaissance by the equity method
was included  through June 30, 2003.  Effective  July 1, 2003,  we increased our
ownership in Renaissance to 100%, and  accordingly,  we consolidated the results
of operations of Renaissance  as of that date.  There was no impact for the nine
months ended September 30, 2002 as we made our initial investment in Renaissance
in the fourth quarter of 2002.

INCOME TAXES
        We recorded  an income tax  benefit of $1.9  million for the nine months
ended September 30, 2003,  compared to an income tax benefit of $3.1 million for
the nine months ended  September  30, 2002.  The income tax benefits in the nine
months  ended  September  30,  2003 were  attributable  to a tax  benefit on our
pre-tax loss of $3.9 million and tax benefits  relating to various  prior period
permanent  items and certain  Federal and state  research  and  development  tax
credits.  Our  effective  tax  benefit  rate  of 48% in the  nine  months  ended
September  30, 2003  exceeded the Federal  statutory  rate  primarily due to the
effect of the  aforementioned  state and federal tax  benefits  and research and
development tax credits.

                                       33




                                   NYFIX, INC.

        The income tax benefit in the nine months ended  September  30, 2002 was
attributable  to a tax  benefit on our  pre-tax  loss of $8.7  million  for that
period and recognition of certain  Federal  research and development tax credits
from prior  years.  We will receive no income tax benefit for the equity in loss
of NYFIX  Millennium  of $1.3  million in 2002 as these  operating  losses  were
allocated to the Initial Partners and New Partners for income tax purposes.  Our
effective  tax  benefit  rate  of  35%  for  the  period  was  affected  by  the
aforementioned  tax credits and the effect of state tax  benefits  and offset by
impact of the equity in loss of NYFIX Millennium.

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
and provide  funding to EuroLink  and  Renaissance.  At  September  30, 2003 and
December 31, 2002, our cash, cash equivalents and short-term investments totaled
$16.5 million and $21.9 million,  respectively. We had short-term investments in
current marketable  security  instruments of $4.9 million at September 30, 2003,
having  interest  rates  ranging from 0.85% to 1.15%.  Included in cash and cash
equivalents at September 30, 2003 was $6.6 million in money market funds with an
average 30 day yield of 0.65%.

        As discussed in Note 4 to the Consolidated Financial Statements, on July
1, 2003 we acquired the remaining 82% of the  membership  units of  Renaissance,
which we did not previously  own. We financed the  acquisition by (i) exercising
our option to convert the outstanding $1.5 million promissory note, plus accrued
interest of $0.1 million,  for an additional 32% of the  outstanding  membership
units in Renaissance;  and (ii) acquiring from its unitholders the remaining 50%
of the membership  units in Renaissance,  for a total value of $5.7 million,  by
issuing (a) 462,286  shares of our common  stock into a trust for the benefit of
certain  unitholders of  Renaissance,  having a fair value of $2.7 million;  (b)
promissory notes payable in, at our option,  our common stock or cash to certain
unitholders  of Renaissance  maturing in December  2004,  having a fair value of
$1.3 million;  (c) promissory notes payable in, at our option,  our common stock
or cash to certain unitholders of Renaissance with annual maturity dates ranging
between June 2004 and June 2007,  having a fair value of $1.4  million;  and (d)
59,653 shares of our common stock with certain  selling  restrictions to certain
unitholders  of  Renaissance  having a fair  value of $0.3  million.  There were
nominal costs incurred  directly  associated  with the  acquisition,  which were
included in the overall  consideration.  In connection with the acquisition,  we
contributed,  to  capital,  certain  obligations  that  Renaissance  owed to us,
including  the  aforementioned   $1.5  million  promissory  note  and  advances,
aggregating $3.2 million. In addition, we reacquired 60,000 shares of our common
stock  that  we had  issued  in  connection  with  our  original  investment  in
Renaissance,  and which  Renaissance  had acquired as an asset. We accounted for
these shares as treasury stock on our consolidated balance sheet.

        At  September  30,  2003,  we had  total  debt  of $3.6  million,  which
represented  current and long-term amounts outstanding under promissory notes to
certain  former  unitholders  of  Renaissance  of $2.7 million and under capital
lease  obligations  of $0.9  million.  At September 30, 2003, 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.

        Our NYFIX  Millennium,  NYFIX  Transaction  Services and NYFIX  Clearing
broker-dealer subsidiaries,  individually,  have to maintain certain minimum net
capital  requirements as mandated by certain regulatory  agencies.  At September
30, 2003, we had cash and  short-term  investments of $12.0 million that was not

                                       34




                                   NYFIX, INC.

subject to our  broker-dealer  minimum net  capital.  During the fourth  quarter
through  November 13, 2003 we funded an additional $7.6 million and committed an
additional $2.5 million of our consolidated cash to NYFIX Clearing,  to maintain
its minimum  excess net capital  requirement  of $10.0 million as a condition of
its approval by the DTCC. Our broker-dealer operations may need additional funds
in the  future  to  maintain  their  minimum  and  minimum  excess  net  capital
requirements.  If our broker-dealers fall below their minimum and minimum excess
net  capital  requirements,  their  operations  would  be  restricted  by  their
respective regulatory agencies.

        We believe that we can achieve  synergies from combining our Javelin and
Renaissance businesses with regard to integrating the product offerings of these
operations  with our existing  product  offerings.  Although  our  broker-dealer
businesses have incurred losses through their  development and start-up  stages,
we believe that revenue will continue to increase as we gain greater  acceptance
of our product  offerings.  Although we have only  provided  our  unconsolidated
affiliate,  EuroLink,  with $0.6  million in  cumulative  funding,  EuroLink may
need additional  working capital funding until it generates  positive cash flow,
and is exploring several sources of funding, including us.

        We believe that our cash and short-term  investments of $16.5 million at
September  30,  2003,  together  with  anticipated  cash  to be  generated  from
operations  in the  fourth  quarter  of 2003 and beyond  will be  sufficient  to
support our capital and operating  needs,  our net capital  requirements  of our
broker-dealer operations and the operating needs of our unconsolidated affiliate
EuroLink,  for at least the next twelve months. We believe,  if needed, we would
be able to obtain  sufficient credit facilities to provide any necessary funding
without negatively impacting our operating or investment strategy.

WORKING CAPITAL

        At  September  30,  2003,  we had  working  capital of $26.8  million as
compared to $30.8 million at December 31, 2002. The decrease in working  capital
was principally due to the cash used to acquire property and equipment,  enhance
products,  fund pre-acquisition  working capital advances to Renaissance and the
additional current liabilities recognized in conjunction with our acquisition of
Renaissance.  These  amounts  were offset by cash flows  provided  by  operating
activities.

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

        Net cash  provided by  operating  activities  in the nine  months  ended
September 30, 2003 was $5.1 million,  as our net loss of $2.0 million,  adjusted
for  non-cash  items,  such  as  depreciation,   amortization,  deferred  taxes,
provision  for bad  debts  and  equity  in loss  of  unconsolidated  affiliates,
provided  $8.0 million.  Unfavorable  working  capital  changes of $3.3 million,
including  an increase in accounts  receivable  of $2.4  million,  a decrease in
accounts  payable  and other  liabilities  of $0.6  million  and an  increase in
prepaid  expenses and other assets of $0.3  million,  were  partially  offset by
favorable net changes in other working capital items of $0.4 million,  resulting
in a net cash decrease from working capital of $2.9 million.

        Net cash used in operating activities in the nine months ended September
30,  2002  was  $2.9  million,  as our net loss of $5.6  million,  adjusted  for
non-cash items, such as depreciation,  amortization,  deferred taxes,  provision
for bad debts and our equity in loss of our unconsolidated affiliates,  provided
$5.8 million.  Unfavorable working capital changes of $8.9 million, including an
increase in prepaid  expenses  and other assets of $3.7  million,  a decrease in
accounts payable and accrued  expenses of $3.7 million,  an increase in accounts
receivable of $1.3 million,  and a decrease in deferred revenue of $0.2 million,
were  partially  offset by favorable  decreases  in  inventory of $0.2  million,
resulting in a net cash decrease from working capital of $8.7 million.

                                       35




                                   NYFIX, INC.

CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

        For the nine months ended  September 30, 2003 net cash used in investing
activities was $4.3 million.  This consisted primarily of capital  expenditures,
primarily  for data center  equipment and  software,  of $4.1  million,  product
enhancement  costs of $3.9  million  and loans and  advances  to  unconsolidated
affiliates of $2.2 million. These amounts were partially offset by proceeds from
the net sales of short-term investments of $5.9 million.

        For the nine  months  ended  September  30,  2002 net cash  provided  by
investing activities was $8.5 million.  This consisted primarily of net sales of
short-term  investments of $21.8  million,  which was partially used to fund the
cash  required  for our  Javelin  acquisition  of  $10.0  million  and  EuroLink
investment  of $4.0  million,  repayment  of loans and net  advances  from NYFIX
Millennium  of $2.2  million  prior to our  acquisition  of an 80%  interest  on
February 1, 2002 and the sale of  equipment  of $0.4  million.  These items were
partially  offset by the net  payments  for the  Javelin  and  NYFIX  Millennium
acquisitions  of $6.8  million,  our  investment  in EuroLink  of $4.0  million,
capital  expenditures,  mostly for data  center  equipment  and to  support  our
infrastructure,  of $2.4 million,  product enhancement costs of $2.2 million and
other uses of $0.4 million.

CASH USED IN FINANCING ACTIVITIES

        For the nine months ended September 30, 2003 and 2002, our net cash used
in financing  activities  totaled $0.4 million and $0.6  million,  respectively,
consisting  primarily of principal  payments  under capital  lease  obligations,
partially  offset by net proceeds  from the  issuance of common stock  resulting
from the exercise of stock options by employees.

LEGAL PROCEEDINGS

        In May 2003,  we were served as a defendant  in KLEDARAS V. NYFIX,  INC.
(Superior  Court- NY County)  Index No.  601502/03,  which had been filed in New
York State court in New York City. Mr. George  Kledaras,  as  representative  of
shareholders of Javelin, sought the release of an escrow fund consisting of cash
and  securities  of the Company  established  in  connection  with the Company's
acquisition of Javelin.  He also alleged damages of at least $18 million against
us and our Chairman and CEO,  Peter K. Hansen,  in  connection  with the Javelin
acquisition.  In June 2003,  pursuant  to a  stipulation  with us, Mr.  Kledaras
dismissed  his lawsuit  without  prejudice.  Mr.  Kledaras and we are  currently
attempting to negotiate a settlement  with respect to  disposition of the escrow
fund.  The  entire  amount  of cash and  shares  continues  to be held in escrow
pending resolution of its disposition. We do not believe that the disposition of
this matter will have a material  adverse  impact on our  financial  conditions,
results of operations or cash flows of the Company.

SEASONALITY AND INFLATION

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

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In January  2003,  the Financial  Accounting  Standards  Board  ("FASB")
issued FASB  Interpretation  ("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

                                       36




                                   NYFIX, INC.

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.  On October 9,
2003,  the FASB  deferred  until the first interim or annual period ending after
December 15, 2003,  the  provision  that VIEs that existed  prior to February 1,
2003  must  be  consolidated.  We are  evaluating  the  provisions  of FIN 46 to
determine whether our  unconsolidated  affiliate,  EuroLink,  is a VIE. From the
inception of our investment  through  September 30, 2003, we have recognized our
40%  ownership  interest  of  EuroLink's  net  losses of $1.2  million,  or $0.5
million,  after tax. If we determine that EuroLink is a VIE, we will be required
to recognize the incremental  losses of $0.7 million after tax of EuroLink's net
losses and we will consolidate the financial position, results of operations and
cash flows of EuroLink into our financial  statements  effective October 1, 2003
(see Note 5). Effective July 1, 2003, we acquired the remaining 82% of our other
unconsolidated   affiliate,   Renaissance,   which  we  did  not  already   own.
Accordingly,  the financial  position and results of  operations of  Renaissance
were consolidated into our financial statements as of that date (see Note 4).

        In May 2003, the FASB Emerging Issues Task Force ("EITF")  finalized the
scope provisions of Issue No. 00-21,  "Accounting for Revenue  Arrangements with
Multiple Deliverables." Issue 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.  Issue No. 00-21 is effective for revenue  arrangements
entered into in reporting periods beginning after June 15, 2003. The adoption of
Issue No. 00-21, effective July 1, 2003, did not have an effect on our financial
position or results of operations.

RISK FACTORS: FORWARD LOOKING STATEMENTS

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Market risk  generally  represents the risk of loss that may be expected
to result  from the  potential  change in value of a financial  instrument  as a
result of fluctuations in credit ratings of the issuer, equity prices,  interest
rates or foreign  currency  exchange rates.  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 $4.9 million and
$10.7  million at  September  30,  2003 and  December  31,  2002,  respectively,
consisted  of $4.9  million  and $6.8  million,  respectively,  of auction  rate
certificates  and $3.9 million at December 31, 2002, 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.

                                       37




                                   NYFIX, INC.

        The mutual fund securities  portfolio was invested in a quoted fund that
was managed by an  institution  which  primarily  invested in  investment  grade
securities,  with up to a maximum of 10% invested in high yield securities rated
B or higher. These securities were subject to equity price risk.

        We are also  subject to interest  rate risk on our $0.5 million and $2.0
million  of  notes  receivable  principal  from  unconsolidated   affiliates  at
September 30, 2003 and December 31, 2002. A hypothetical  10% change in interest
rates would not result in a material change in their fair value.

ITEM 4.  CONTROLS AND PROCEDURES

        Based on an evaluation of the  effectiveness of the design and operation
of our disclosure controls and procedures, our Chief Executive Officer and Chief
Financial  Officer  concluded  that, as of the end of the period covered by this
report,  our disclosure  controls and  procedures  were effective 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.

        On May 27, 2004, we restated the consolidated  financial statements that
appear in this Form 10-Q/A.  The  restatement  relates to our accounting for our
1999 and 2001  investments in and 2002 acquisition of an additional 30% interest
in NYFIX  Millennium.  Based on an evaluation of the effectiveness of the design
and  operation of our  disclosure  controls and  procedures,  in light of, among
other things, the facts and circumstances of our May 27, 2004 restatement of our
financial  statements,  our Chief Executive  Officer and Chief Financial Officer
concluded  that,  as of the  end of the  period  covered  by  this  report,  our
disclosure  controls and procedures  were  effective 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.

        In  light  of  our   determination  on  May  27,  2004  to  restate  our
consolidated   financial  statements  that  appear  in  this  Form  10-Q/A,  our
management   directed   that  steps  be  taken  to  review  the   operation  and
effectiveness  of our  internal  controls  and  procedures  with  respect to our
accounting for investment and acquisition transactions.

                                       38




                                   NYFIX, INC.


                           PART II. OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

        In May 2003,  we were served as a defendant  in Kledaras v. NYFIX,  Inc.
(Superior  Court - NY County) Index No.  601502/03,  which had been filed in New
York State court in New York City. Mr. George  Kledaras,  as  representative  of
shareholders of Javelin, sought the release of an escrow fund consisting of cash
and securities of the Company  established in connection with our acquisition of
Javelin.  He also  alleged  damages of at least $18  million  against us and our
Chairman and CEO, Peter K. Hansen,  in connection with the Javelin  acquisition.
In June 2003,  pursuant to a  stipulation  with us, Mr.  Kledaras  dismissed his
lawsuit  without  prejudice.  Mr.  Kledaras and we are  currently  attempting to
negotiate a settlement with respect to disposition of the escrow fund.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS

        As of July 1,  2003,  we  issued  521,939  shares of our  common  stock,
acquired  60,000  previously  issued shares of our common stock and issued notes
with a fair value of $2.7  million to the unit  holders of  Renaissance  Trading
Technologies,  LLC  in  connection  with  acquiring  the  remaining  82%  of the
ownership interests of Renaissance, which we did not previously own.

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

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

    (a)   EXHIBITS

31.1     Certification of Chief Executive Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.
31.2     Certification of Chief Financial Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.
32.1     Certification of Chief Executive Officer pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002.
32.2     Certification of Chief Financial Officer pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002.

    (b)   REPORTS ON FORM 8-K

          On July 3, 2003,  we reported  under Items 5 and 7 of Form 8-K that we
          had entered into a binding  agreement  to acquire 100% of  Renaissance
          Trading Technologies LLC.

          On July 22, 2003, we reported  under Items 5 and 7 of Form 8-K that we
          had named William C. Jennings to our Board of Directors.

          On July 24, 2003, we reported  under Items 7 and 9 of Form 8-K updated
          guidance for our second quarter 2003.

          On July 29,  2003,  we  reported  under Items 7 and 12 of Form 8-K our
          results for the second quarter 2003.

          On  September  29, 2003,  we reported  under Items 5 and 7 of Form 8-K
          that we had completed our  acquisition of 100% of Renaissance  Trading
          Technologies LLC.

                                       39



                                   NYFIX, INC.


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


                                   SIGNATURES

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




                                   NYFIX, INC.



                                   By: /s/ Mark R. Hahn
                                       -------------------------------------
                                       Mark R. Hahn
                                       Chief Financial Officer
                                       (Principal Financial and Accounting
                                          Officer)


Dated: May 28, 2004

                                       40




                                 Exhibits Index

Exhibit

31.1     Certification of Chief Executive Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.
31.2     Certification of Chief Financial Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.
32.1     Certification of Chief Executive Officer pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002.
32.2     Certification of Chief Financial Officer pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002.

EX-31.1

                                                                    Exhibit 31.1

                            CERTIFICATION PURSUANT TO
               RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter K. Hansen, certify that:

1.   I have reviewed this quarterly report on Form 10-Q/A of NYFIX, Inc.;

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

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

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

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

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

c.         Disclosed  in this  report  any change in the  registrant's  internal
           control  over   financial   reporting   that   occurred   during  the
           registrant's  most recent  fiscal  quarter (the  registrant's  fourth
           fiscal  quarter in the case of an annual  report) that has materially
           affected,   or  is  reasonably  likely  to  materially   affect,  the
           registrant's internal control over financial reporting; and

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

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

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

Date: May 28, 2004


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

EX-31.2

                                                                    Exhibit 31.2


                            CERTIFICATION PURSUANT TO
               RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark R. Hahn, certify that:

1.   I have reviewed this quarterly report on Form 10-Q/A of NYFIX, Inc.;

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

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

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

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

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

     c.    Disclosed  in this  report  any change in the  registrant's  internal
           control  over   financial   reporting   that   occurred   during  the
           registrant's  most recent  fiscal  quarter (the  registrant's  fourth
           fiscal  quarter in the case of an annual  report) that has materially
           affected,   or  is  reasonably  likely  to  materially   affect,  the
           registrant's internal control over financial reporting; and

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

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

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

Date: May 28, 2004


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

EX-32.1

                                                                    Exhibit 32.1


                            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 Quarterly  Report of NYFIX,  Inc. (the "Company") on Form
10-Q/A for the period ending September 30, 2003 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
May 28, 2004

A signed  original of this  written  statement  required by Section 906 has been
provided to NYFIX, Inc. and will be retained by NYFIX, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.

This  certification  accompanies  this  Report  pursuant  to Section  906 of the
Sarbanes-Oxley  Act of 2002 and  shall not be deemed  filed by the  Company  for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

                                                                    Exhibit 32.2

                            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 Quarterly  Report of NYFIX,  Inc. (the "Company") on Form
10-Q/A for the period ending September 30, 2003 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
May 28, 2004

A signed  original of this  written  statement  required by Section 906 has been
provided to NYFIX, Inc. and will be retained by NYFIX, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.

This  certification  accompanies  this  Report  pursuant  to Section  906 of the
Sarbanes-Oxley  Act of 2002 and  shall not be deemed  filed by the  Company  for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.