<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

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

For Quarter Ended:     Commission File Number:  000-19619
September 30, 1998

                                HOENIG GROUP INC.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Delaware                                        13-3625520
----------------------------------                   ------------------------
  (State or other jurisdiction                      (I.R.S. Employer I.D. No.)
of incorporation or organization)


4 International Drive
Rye Brook, NY                                                10573
-------------------------------------------------------------------------------
(Address of principal executive offices)                   (Zip Code)

                                 (914) 935-9000
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


-------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicated 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 twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]  No [ ]

As of  November 14, 1998, there were 8,530,309 shares of common stock, par 
value $.01 per share, outstanding.

<PAGE>

                                HOENIG GROUP INC.
                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998

                                      INDEX
                                                                          Page

PART I - FINANCIAL INFORMATION

        ITEM 1.  Financial Statements

                 Consolidated Statements of Financial Condition -
                 September 30, 1998 and December  31, 1997                 1

                 Consolidated Statements of Income - Three and
                 Nine Months Ended September 30, 1998 and 1997             2

                 Consolidated Statements of Cash Flows -
                 Nine Months Ended September 30, 1998 and 1997             3

                 Notes to Unaudited Consolidated Financial Statements      4-6

        ITEM 2.  Management's Discussion and Analysis
                   of Financial Condition and Results of Operations        7-13


PART II - OTHER INFORMATION

        ITEM 1.       Legal Proceedings                                   14

        ITEM 6.   Exhibits and Reports on Form 8-K                        14


        Signatures                                                        15

        Exhibit Index                                                     16

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                HOENIG GROUP INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 AS OF SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            September 30, 1998        December 31, 1997
                                                            ------------------        -----------------
<S>                                                               <C>                      <C>
ASSETS
Cash and equivalents                                               $16,771,346              $20,468,926
U.S. Government obligations, at market value                         9,916,377               17,754,737
Receivables from correspondent brokers and dealers                  10,266,853                6,837,648
Receivables from customers                                           1,162,160                4,031,489
Equipment, furniture and leasehold improvements
 - net of accumulated depreciation and amortization                  1,836,579                2,207,121
Securities owned, at market value                                    9,461,514                2,065,399
Exchange memberships - at cost                                       1,321,235                1,321,235
Investment management fees receivable                                1,260,629                1,297,684
Deferred research/services expense                                   2,053,160                1,070,079
Investment in limited partnerships, at equity                        5,156,687                  633,858
Other assets                                                         3,554,481                3,333,167
                                                                  ------------              -----------
     Total Assets                                                  $62,761,021              $61,021,343
                                                                   ===========              ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Accrued research/services payable                                  $11,404,102              $ 8,341,475
Accrued compensation                                                 5,813,721                5,701,392
Payable to brokers and dealers                                       1,562,661                4,579,680
Payable to customers                                                 3,006,379                  902,914
Accrued expenses                                                     1,156,121                  728,726
Securities sold, but not yet purchased, at market value                662,850                   85,125
Short-term bank loan payable                                            29,097                        -
Other liabilities                                                    1,056,001                1,156,310
                                                                     ---------               ----------
     Total Liabilities                                              24,690,932               21,495,622
                                                                    ----------               ----------

STOCKHOLDERS' EQUITY
Common stock $.01 par value per share
    Voting-authorized 40,000,000 shares, issued
    10,838,850 in 1998 and 10,809,750 in 1997                          108,389                  108,098
Additional paid in capital                                          26,900,933               26,628,159
Accumulated comprehensive income                                      (888,232)                (930,035)
Retained earnings                                                   23,485,117               20,190,841
                                                                    ----------               ----------
                                                                    49,606,207               45,997,063
Less treasury stock at cost - 2,313,541
   shares in 1998 and 1,618,378 shares in 1997                     (11,536,118)              (6,471,342)
                                                                  ------------              -----------
     Total Stockholders' Equity                                     38,070,089               39,525,721
                                                                    ----------               ----------
     Total Liabilities and Stockholders' Equity                    $62,761,021              $61,021,343
                                                                   ===========              ===========

</TABLE>

            See Notes to Unaudited Consolidated Financial Statements

                                       1
<PAGE>

                               HOENIG GROUP INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                      Three Months Ended                            Nine Months Ended
                                                         September 30,                                 September 30,
                                               --------------------------------         ---------------------------------------
Revenues                                           1998                 1997                   1998                     1997
                                                   ----                 ----                   ----                     ----
<S>                                           <C>                  <C>                    <C>                      <C> 
 Gross commissions                             $19,803,593          $16,398,169            $55,480,358              $50,671,115
 Investment management fees                      1,789,006            1,750,076              5,727,181                4,771,783
 Other                                              27,720               68,556                122,975                  328,830
                                               -----------          -----------         --------------             ------------
     Total operating revenues                   21,620,319           18,216,801             61,330,514               55,771,728

Expenses
Clearing, floor brokerage and
      exchange charges                           2,524,795            2,485,943              7,115,892                7,887,781
 Employee compensation                           5,633,220            5,058,752             16,127,820               14,670,416
 Independent research and services               8,003,410            7,478,163             24,636,086               23,179,016
 Other                                           2,922,558            2,696,110              7,986,312                7,515,660
                                               -----------            ---------           ------------               ----------
     Total expenses                             19,083,983           17,718,968             55,866,110               53,252,873

Operating Income                                 2,536,336              497,833              5,464,404                2,518,855

Investment Income and Other
 Interest, dividends                               424,643              500,533              1,353,422                1,419,780
 Gain (loss) on investments, other                (907,758)              63,407              (767,869)                  189,991
                                               -----------            ---------              ---------                ---------
 Net investment income (loss) and other           (483,115)             563,940                585,553                1,609,771

 Income before income taxes                      2,053,221            1,061,773              6,049,957                4,128,626
 Provision for income taxes                        978,470              417,005              2,755,681                1,586,056
                                               -----------           ----------            -----------               ----------
 Net income                                     $1,074,751           $  644,768             $3,294,276               $2,542,570
                                               ===========           ==========             ==========               ==========

Net income per share
       Basic                                   $       .13           $      .07             $      .37               $      .27
                                               ===========           ==========             ==========               ==========
       Diluted                                 $       .12           $      .07             %      .35               $      .26
                                               ===========           ==========             ==========               ==========

Weighted average shares outstanding
       Basic                                     8,572,743            9,342,978              8,897,316                9,457,567
                                               ===========            =========              =========                =========
       Diluted                                   9,165,260            9,749,853              9,448,538                9,810,778
                                               ===========            =========              =========                =========
</TABLE>

            See Notes to Unaudited Consolidated Financial Statements

                                       2
<PAGE>

                                HOENIG GROUP INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
           NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
                                   (UNAUDITED)

<TABLE>
<CAPTION>

CASH FLOWS FROM OPERATING ACTIVITIES                                 1998                1997
                                                                     ----                ----
<S>                                                               <C>                 <C>       
 Net income                                                       $3,294,276          $2,542,570
 Adjustments to reconcile net income
   to net cash provided by (used in) operating activities:
  Depreciation and amortization                                      978,366             858,406
  Loss on write-off of fixed assets                                  193,210                  -
Foreign currency translation adjustment                               41,800             (93,871)
  Issuance of stock options                                          139,407             138,323
Changes in assets and liabilities:
  Securities owned, net                                              843,208              12,766
  Receivables from correspondent brokers and dealers             (3,429,205)          (6,942,579)
  Receivables from customers                                       2,869,329            (874,717)
  Investment management fees receivables                              37,055            (283,079)
  Payable to customers                                             2,103,465           7,796,862
  Deferred research/services expense                               (983,081)            (434,133)
  Other assets                                                     (528,018)            (374,101)
  Payable to brokers and dealers                                 (3,017,019)             814,165
  Accrued research/services payable                                3,062,627             843,012
  Accrued compensation                                               112,329             225,594
  Accrued expenses                                                   427,395             (99,733)
  Other liabilities                                                (100,309)             554,550
                                                                ------------        ------------
Net cash provided by operations                                    6,044,835           4,684,035

CASH FLOWS FROM INVESTING ACTIVITIES:
  U.S. Government obligations                                      7,838,360            (483,246)
  Investment in limited partnerships, at equity                  (4,522,829)            (130,610)
  Investment in securities                                       (7,661,598)             148,239
  Purchases of equipment, furniture and leasehold
     improvements                                                  (494,330)            (842,530)
                                                                ------------        ------------
Net cash (used in) investing activities:                         (4,840,397)          (1,308,147)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common stock                                           212,779             153,978
  Treasury stock purchased                                       (5,346,416)          (1,593,533)
  Issuance of treasury stock                                         202,522                   -
  Short term bank loan payable                                        29,097                   -
                                                                ------------        ------------
Net cash (used in) financing activities:                         (4,902,018)          (1,439,555)

  Net increase (decrease) in cash and equivalents                (3,697,580)           1,936,333
  Cash and equivalents beginning of period                        20,468,926          18,307,886
                                                                ------------          ----------

  Cash and equivalents end of period                             $16,771,346         $20,244,219
                                                                ============         ===========
  Supplemental disclosure of cash flow information:
         Interest paid:                                         $     90,190        $    146,873
                                                                ============        ============
         Taxes paid:                                            $  2,532,796        $  1,357,275
                                                                ============        ============
</TABLE>
 
           See Notes to Unaudited Consolidated Financial Statements
 
                                      3
<PAGE>

                                HOENIG GROUP INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION.

         In the opinion of management, the accompanying unaudited interim
consolidated financial statements reflect all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
of Hoenig Group Inc. (the "Company"), the results of its operations and changes
in cash flows for the periods presented. The interim consolidated financial
statements included herein have been prepared by the Company without
independent audit. Certain information normally included in the financial
statements and related notes prepared in accordance with generally accepted
accounting principles has been condensed or omitted. These consolidated
financial statements and notes thereto should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997. The
results of operations for the periods ended September 30, 1998 are not
necessarily indicative of operating results for the full year.

NOTE 2 - NET CAPITAL AND RESERVE REQUIREMENTS.

         Hoenig & Co., Inc. ("Hoenig"), the Company's principal operating
subsidiary, is subject to the Uniform Net Capital Rule (Rule 15c3-1), which
requires that Hoenig maintain net capital of the greater of $100,000 or
one-fifteenth of aggregate indebtedness. At September 30, 1998, Hoenig's
minimum required net capital was $688,000, its net capital ratio was .77 to 1,
and its net capital was approximately $13,311,000, which was $12,623,000 in
excess of regulatory requirements. Hoenig's Tokyo office (a branch of Hoenig)
capital requirement was (Y)55,000,000 ($402,000). Hoenig & Company Limited
("Limited"), the Company's United Kingdom brokerage subsidiary, is required to
maintain financial resources of at least 110% of its capital requirement (as
defined). Limited's financial resources requirement at September 30, 1998 was
approximately (pound)509,000 ($865,000); it had excess financial resources at
such date of approximately (pound)568,000 ($965,000). Hoenig (Far East) Limited
("Far East"), the Company's Hong Kong brokerage subsidiary, is required to
maintain liquid capital of the greater of HK$3,000,000 ($387,000) or 5% of the
average quarterly total liabilities. Far East's required liquid capital was
approximately HK$16,149,000 ($2,085,000) at September 30, 1998, and it had
excess liquid capital of approximately HK$20,263,000 ($2,616,000).

NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS.

         Axe-Houghton Associates, Inc. ("Axe-Houghton"), the Company's asset
management subsidiary, is the general partner of two limited partnerships and
maintains investments in each of the partnerships. Axe-Houghton's partnership
investments were 0.34% ($31,916) and 18.56% ($541,675) at September 30, 1998.
Axe-Houghton does not maintain control of the partnerships for consolidation
purposes.

         During the first quarter 1998, the Company modified its cash
management program for the purpose of increasing its rate of return on
investments. As part of that program, the Company invested in two
multi-manager, market neutral limited partnerships. These multi-manager limited
partnerships, which are managed by professional money managers, make
investments in other unaffiliated limited partnerships and funds which employ a
variety of alternative investment strategies. These strategies include
relative-value, event-driven, hedged-directional, convertible arbitrage,
convertible hedging and basis spread trading.

         All of the Company's investments in limited partnerships are accounted
for under the equity method.

                                       4
<PAGE>

NOTE 4 - FINANCIAL INSTRUMENTS.

         As part of its modified cash management program, the Company invested
in a diversified portfolio of investment grade preferred stock and U.S.
Treasury futures used to hedge the preferred stock positions and a
bank-sponsored, flexible, market-linked deposit which maintains investments in
U.S. and foreign equity indices, floating rate deposits, baskets of European
equity securities and a U.S. Treasury zero coupon bond.

         Each of these investments is managed by professional money managers.
The flexible, market-linked deposit is not federally insured; however, the
sponsoring bank has agreed to protect 100% of the Company's principal
investment, less management fees due to the bank, if the Company maintains the
deposit for one year.

         Each of these investments uses or includes derivative financial
instruments for the purpose of reducing exposure to certain investment risks,
including interest rate fluctuations. These investments are accounted for at
fair market value based upon available market information and valuations
received from the managers. Changes in the market value, as well as gains or
losses resulting from the termination or maturity of these instruments, are
recognized as gains or losses on investments in the period in which they occur.
The Company does not hold financial instruments for trading purposes as part of
its business operations.

NOTE 5 - STOCKHOLDERS' EQUITY.

         On June 17, 1998, the Company's Board of Directors authorized the
management of the Company to repurchase up to an additional one million shares
of the Company's Common Stock from time to time in open-market and privately
negotiated transactions. As of June 30, 1998, the Company completed the one
million-share repurchase program announced in November 1994. The 1994
repurchase program was in addition to the one million shares repurchased in a
previous program announced in the fourth quarter 1992. As of September 30,
1998, the Company has repurchased a total of 2,248,212 shares under these three
repurchase programs.

         From January 1, 1998 through September 30, 1998, the Company
repurchased 772,500 shares of Common Stock at an aggregate cost of $5.3
million. The total cost of the purchases under the repurchase programs and the
purchase of shares from the Estate of Ronald H. Hoenig in December 1995 (net of
584,671 shares issued out of Treasury Stock) is $11,536,118.

NOTE 6 - COMPREHENSIVE INCOME.

         The Financial Accounting Standards Board has issued Statement of
Financial Standards No. 130, "Reporting Comprehensive Income", which is
effective for fiscal years beginning after December 15, 1997. This Statement
establishes standards of reporting of comprehensive income and its components.
Comprehensive Income includes gains or losses resulting from the translation of
the Company's foreign currency financial statements included in stockholders'
equity in the Statements of Financial Condition.

         Comprehensive Income for the periods ended September 30, 1998 and 1997
is as follows:

<TABLE>
<CAPTION>
                                                1998            1997
                                                ----            ----
<S>                                         <C>              <C>       
 Net income                                 $3,294,276       $2,542,570

 Other Comprehensive Income:

 Foreign currency translation adjustment        41,803         (93,871)
 Tax expense (benefit)                          19,037         (36,056)
                                            ----------       ----------
                                                22,766         (57,815)

 Comprehensive Income                       $3,317,042       $2,484,755
                                            ==========       ==========
</TABLE>

                                       5
<PAGE>

NOTE 7. EARNINGS PER SHARE.

         The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS
128 simplifies the standards for computing and presenting earnings per share
("EPS") previously found in APB Opinion No. 15, Earnings per Share. SFAS 128 is
effective for financial statements issued for periods ending after December 15,
1997. Basic earnings per share is calculated by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per
share is similar to basic, but adjusts for the effect of potential common
shares.

The following table presents the computations of basic and diluted earnings per
share for the periods indicated:

<TABLE>
<CAPTION>
                                                       Nine Months Ended               Three Months Ended
                                                         September 30,                    September 30,
                                                -----------------------------      ---------------------------
                                                   1998               1997           1998              1997
                                                   ----               ----           ----              ----
<S>                                             <C>                <C>             <C>              <C>       
Net Income available to common stockholders     $3,294,276         $2,542,570      $1,074,751       $  644,768

     Weighted average shares outstanding         8,897,316          9,457,567       8,572,743        9,342,978

     Effect of dilutive instruments
         Employee stock options                    551,222            353,211         592,517          406,875
                                                   -------          ---------      ----------       ----------

     Total weighted average diluted shares       9,448,538          9,810,778       9,165,260        9,749,853
                                                ==========         ==========      ==========       ==========

Basic earnings per share                        $      .37         $      .27      $      .13       $      .07
                                                ==========         ==========      ==========       ==========

Diluted earnings per share                      $      .35         $      .26      $      .12       $      .07
                                                ==========         ==========      ==========       ==========
</TABLE>


NOTE 8- CONTINGENCIES.

         In March 1998, Lawrence W. Gallo, a former employee of Hoenig,
instituted an arbitration before NASD Regulation against Hoenig and Fredric P.
Sapirstein, Hoenig's Chairman and Chief Executive Officer. Mr. Gallo
principally alleges defendants wrongfully terminated Mr. Gallo's employment in
breach of his employment agreement and falsely stated the reason for his
termination in a securities regulatory filing on Form U-5. Mr. Gallo is seeking
approximately $2.2 million in compensatory damages against each of the
defendants, plus punitive damages, liquidated damages, interest, reasonable
attorneys' fees and modification of the Form U-5. Hoenig has filed an answer,
denying Mr. Gallo's allegations, and a counter-claim against Mr. Gallo, seeking
damages of not less than $220,000, based on Mr. Gallo's breach of his
employment agreement with Hoenig. The Company believes that Hoenig and Mr.
Sapirstein have meritorious defenses to the arbitration, and Hoenig intends to
vigorously oppose Mr. Gallo's claims and pursue its counter-claim against
Mr. Gallo.

NOTE 9 - SUBSEQUENT EVENTS.

         On October 8, 1998, the Company entered into new employment
arrangements with two employees of Hoenig, which are effective January 1, 1999.
Minimum aggregate annual compensation to be paid under these arrangements is
$825,000. These arrangements provide for increased variable, performance-based
compensation, which, assuming current levels of activity, will result in
increased compensation expense as compared to prior periods.

                                       6
<PAGE>

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

         Certain statements in this report that relate to future plans, events
or performance are forward-looking statements. Such statements may include, but
are not limited to, those relating to the effects of future growth, measures
taken to address operating losses in certain international operations,
acquisition and expansion plans, plans to address the institution of the Euro
in 1999, plans to address the Year 2000 issue and other technology issues, the
Company's investment activities and its current equity capital levels. Actual
results might differ materially due to a variety of important factors that
cannot be predicted with certainty. These factors involve risks and
uncertainties relating to, among other things, general economic conditions,
market fluctuations, competitive conditions within the brokerage and asset
management businesses, declines in stock market prices and trading volumes,
changes in demand for asset management and securities brokerage services, the
Company's ability to recruit and retain key employees, changes in U.S. and
foreign securities laws and regulations, particularly regarding Independent
Research and Directed Brokerage Arrangements, trading and investment
activities, litigation and other factors discussed throughout this report and
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.


GENERAL

         Hoenig Group Inc. (the "Company") provides global securities brokerage
to institutional clients through its wholly-owned brokerage subsidiaries in the
United States, United Kingdom, Hong Kong and Japan. The Company's wholly-owned
subsidiary, Axe-Houghton Associates, Inc. ("Axe-Houghton"), provides
professional asset management to public and corporate employee benefit plans,
investment partnerships and other institutional clients.

         The Company's principal source of revenues is commissions earned for
executing trades on behalf of its customers. The Company executes trades in
equity securities on all of the world's major stock exchanges, acting primarily
as agent for its customers, and also executes trades in U.S. fixed income
securities on an agency and riskless principal basis. The Company earns
commissions in connection with four types of brokerage services: commissions
received in connection with providing independent research and other services
to investment managers ("Independent Research Arrangements"); commissions
received in exchange for paying expenses of, or commission refunds to, the
customer ("Directed Brokerage Arrangements"); commissions received in
connection with providing the Company's proprietary research ("Proprietary
Research"); and commissions received for execution-only services ("Execution -
Only Brokerage"). The Company's profit margin on Execution-Only Brokerage and
Proprietary Research is higher than that on Independent Research Arrangements
and Directed Brokerage Arrangements because the Company does not incur direct
expenses for research and other services in connection with such activities.

         The Company generally expects a certain amount of commissions for
every $1 in research, other services and commission refunds provided under
Independent Research Arrangements and Directed Brokerage Arrangements. This
ratio is negotiated on an individual customer basis. Ratios continue to be
under downward competitive pressure in most of the markets in which the Company
conducts brokerage activities. The Company's earnings in any period are
affected by its ability to earn commissions under Independent Research and
Directed Brokerage Arrangements on a timely basis, since revenues are recorded
only when earned. The timing of the receipt of these commissions could cause
variations in earnings from year to year and quarter to quarter.

         The Company's second largest source of revenues is investment
management fees earned by Axe-Houghton in connection with the provision of
asset management services to institutional clients. The profit margin on the
Company's asset management business is higher than those on the Company's
brokerage activities and also varies with the types of asset management
services provided by the Company. At September 30, 1998, Axe-Houghton had $3.9
billion in assets under management, of which approximately $507.3 million
represented a temporary assignment.

         Growth in assets under management is affected by numerous factors,
including the ability to attract new clients, investment performance results,
the number and variety of investment disciplines offered, as well as the

                                       7
<PAGE>

performance of the securities markets generally. Declines in the performance
of small capitalization growth equities may adversely affect the Company's
assets under management and related revenues and income.

         Axe-Houghton is negotiating new employment arrangements with two
employees whose employment contracts expired on April 8, 1998. While the
Company anticipates that these negotiations will result in mutually
satisfactory employment arrangements with these individuals, no assurances can
be given as to when or how the negotiations will conclude. The financial
results of Axe-Houghton could be adversely affected if such negotiations are
not successfully resolved.

         The Company has entered into new employment arrangements with an
executive officer and another employee of Hoenig which take effect in 1999.
These new arrangements provide for increased variable, performance-based
compensation which, assuming current levels of activity, will result in
increased compensation expense as compared to prior periods.

         With respect to its asset management and securities brokerage
businesses, the Company continues to evaluate opportunities to increase
distribution capabilities, expand its client base and supplement its product
line through acquisitions, strategic alliances and the hiring of additional
personnel.


THREE MONTHS ENDED SEPTEMBER 30, 1998 VERSUS THREE MONTHS ENDED SEPTEMBER 30,
1997.

         The Company's operating income before income taxes for the three
months ended September 30, 1998 increased 409.5% to $2.5 million, versus $0.5
million in 1997. The increase in operating income is primarily attributable to
an increase in operating income from the U.S. brokerage operations, offset in
part by continued operating losses from international brokerage operations
(United Kingdom, Hong Kong and Japan). The Company's net income for the
three-months ended September 30, 1998 increased 66.7% to $1.1 million, versus
$0.6 million in 1997. Net income increased at a lower rate than pre-tax and
operating income due to net investment losses, as well as a higher tax rate in
1998. The higher tax rate results from an increase in operating and pre-tax
income from the U.S. operations, which are taxed at a higher rate, as well as a
decrease in income derived from the Company's brokerage operation in Hong Kong,
which is taxed at a lower rate than the U.S. tax rates.

         Operating revenues increased 18.7% to $21.6 million for three months
ended September 30, 1998 from $18.2 million for the three months ended
September 30, 1997. Commission revenues increased 20.8% to $19.8 million from
$16.4 million for the same period in 1997. During the third quarter 1998,
commission revenues earned in U.S. equity markets increased, which was offset
by a decrease in commission revenues earned by the Company's international
operations, particularly the Company's operations in Hong Kong and Japan
("Asian Brokerage"). As a result, commission revenues derived from
international brokerage operations represented 18.0% of the Company's total
commissions during the third quarter 1998 as compared to 34.5% for the same
period in 1997.

         Operating revenues derived from the Company's U.S. brokerage
operations for the third quarter ended September 30, 1998 increased 50.4% as
compared to the same period in 1997, resulting in a 316.1% increase in
operating income derived from U.S. brokerage operations as compared to the
third quarter ended September 30, 1997. This increase in operating income also
reflects a decrease in execution and settlement costs and in expenses
associated with independent research and other services, each as a percentage
of commission revenues.

         Operating revenues derived from international brokerage operations
continued to decline during the third quarter ended September 30, 1998 as
compared to the same period in 1997. Operating revenues derived from the
Company's Asian Brokerage operations decreased 49.6% during the three months
ended September 30, 1998 as compared to the same period in 1997, resulting from
continued market volatility and reduced trading volumes in Japan and Southeast
Asia. Despite the reduction in operating revenues, international brokerage
operating losses remained at

                                      8
<PAGE>

$0.2 million in both 1998 and 1997 as a result of cost reduction measures taken
with respect to Asian Brokerage operations within the last year. These losses
resulted from a 63.8% decrease in operating income earned by the Company's Hong
Kong operation in the third quarter 1998 as compared to the third quarter 1997
and continued operating losses in Japan. Continued declines in commission
revenues in Japan and Southeast Asia would result in additional operating losses
by the Company's Asian Brokerage operations. The Company continues to explore
various means of addressing operating losses in Japan.

         Investment management fee revenues remained at $1.8 million for the
three months ended September 30, 1998 as compared to the same period in 1997.
Assets managed in small capitalization growth equities decreased 19.8% to
$516.0 million as of September 30, 1998 from $643.0 million as of September 30,
1997 as a result of market declines in small capitalization growth equities.
Total assets under management decreased to $3.9 billion as of September 30,
1998 as compared to $ 4.0 billion as of September 30, 1997. The decrease in
assets under management for the quarter ended September 30, 1998 was
attributable to significant declines in the global financial markets during the
third quarter which resulted in a decline in investment performance for the
three-month period ended September 30, 1998. During the third quarter, total
assets under management decreased 11.2% from June 30, 1998. Assets managed in
small capitalization growth equities decreased 27.9% from the prior quarter.
The effect on revenues of these declines, particularly with respect to small
capitalization growth equities, will be seen in future periods, as the majority
of Axe-Houghton's clients are billed in advance based on assets under
management as of the end of the prior quarter.

         Expenses related to independent research and other services provided
to the Company's brokerage clients during the third quarter 1998, including
commission refunds, increased 7.0% to $8.0 million from $7.5 million for the
same period in 1997. These expenses were 40.4% of commission revenues for the
quarter ended September 30, 1998 as compared to 45.6% for the corresponding
period in 1997. These expenses increased at a lower rate than commission
revenues primarily due to an increase in execution-only brokerage, as well as
the timing of commission revenues earned relative to independent research and
services expenses incurred for the three months ended September 30, 1998.

         Clearing, floor brokerage and exchange charges remained at $2.5
million during the third quarter 1998 as compared to the same period in 1997.
These expenses represented 12.8% of commissions in the third quarter 1998 and
15.2% of commissions in the third quarter 1997. The decrease in these expenses
as a percentage of commissions is primarily due to: (1) an increase in the
percentage of commissions earned in U.S. equity markets, where such expenses
are charged at lower rates than comparable trades in certain Asian markets; (2)
a reduction in the costs of execution and settlement of U.S. equity
transactions; and (3) a decrease in the percentage of commissions earned on
transactions executed in Southeast Asian markets where execution and settlement
costs are higher, coupled with an increase in the percentage of Asian Brokerage
commissions earned on transactions executed in the Hong Kong market, which cost
less to execute and settle than comparable trades in other Asian markets.

         Employee compensation increased 11.4% to $5.6 million in the third
quarter 1998 from $5.1 million during the same period in 1997. This resulted
primarily from an increase in reserves for discretionary and performance-based
bonus compensation.

         All other expenses increased 8.4% to $2.9 million in the third quarter
1998 as compared to $2.7 million in the same period in 1997. This resulted
primarily from an increase in expenses related to market data and the write-off
of certain fixed assets.

         Net investment loss for the three months ended September 30, 1998 was
$0.5 million as compared to net investment income of $0.6 million in 1997. This
decrease was primarily attributed to realized and unrealized losses of $0.9
million incurred on the Company's investments in limited partnerships and a
managed portfolio of preferred stock and U.S. Treasury Futures used to hedged
the preferred stock. This loss was attributed to significant declines in the
global financial markets during the three months ended September 30, 1998. The
Company monitors these investments on an ongoing basis and may make adjustments
in the cash management program as warranted.

                                       9
<PAGE>

NINE MONTHS ENDED SEPTEMBER 30, 1998 VERSUS NINE MONTHS ENDED SEPTEMBER 30,
1997.

         The Company's operating income before income taxes for the nine months
ended September 30, 1998 increased 116.9% to $5.4 million, versus $2.5 million
in 1997. The increase in operating income is primarily attributable to an
increase in operating income from U.S. brokerage and investment management
operations, offset in part by continued operating losses from international
brokerage operations. The Company's net income for the nine months ended
September 30, 1998 increased 29.6% to $3.3 million, versus $2.5 million in
1997. Net income increased at a lower rate than pre-tax and operating income
due to a loss on investments, as well as a higher tax rate in 1998. The higher
tax rate resulted from an increase in operating and pre-tax income from
U.S. operations, which are taxed at a higher rate, as well as a decrease in
income derived from the Company's brokerage operation in Hong Kong, which is
taxed at a lower rate than U.S. tax rates.

         Operating revenues increased 10.0% to $61.3 million for the nine
months ended September 30, 1998 from $55.8 million for the nine months ended
September 30, 1997. Commission revenues increased 9.5% to $55.5 million for the
nine months ended September 30, 1998 from $50.7 million for the same period in
1997. This increase resulted primarily from an increase in commission revenues
earned by the Company's U.S. brokerage operations, offset in part by a decrease
in commission revenues earned by the Company's international brokerage
operations, particularly Asian Brokerage operations. Commission revenues
derived from international brokerage operations represented 20.4% of the
Company's total commissions during the nine months ended September 30, 1998 as
compared to 34.8% for the same period in 1997.

         Operating revenues derived from the Company's U.S. brokerage
operations for the nine months ended September 30, 1998 increased 32.6% as
compared to the same period in 1997. Operating income derived from the
Company's U.S. brokerage operations during the nine months ended September 30,
1998 increased 119.1% as compared to the same period in 1997 primarily due to
an increase in commission revenues and a decrease in execution and settlement
costs as a percentage of commission revenues.

         Operating revenues and operating income from international brokerage
operations declined during the nine months ended September 30, 1998, resulting
in operating losses. Operating revenues of the Company's Asian Brokerage
operations decreased 49.8% during the nine months ended September 30, 1998 as
compared to the same period in 1997 as a result of continued volatility and
reduced trading volumes in Japan and Southeast Asia. International brokerage
operations incurred operating losses of $0.8 million for the nine months ended
September 30, 1998 as compared to operating income of $0.1 million for the same
period in 1997. These losses resulted from a 65.7% decrease in operating income
in Hong Kong and operating losses in Japan and the United Kingdom.

         Investment management fees increased 20.0% to $5.7 million for the
nine months ended September 30, 1998, from $4.8 million in 1997. Total assets
under management decreased 1.8% to $3.9 billion as of September 30, 1998, as
compared with $4.0 billion as of September 30,1997. Assets managed in small
capitalization growth equities decreased 19.8% to $516.0 million as of
September 30, 1998 from $643.0 million as of September 30, 1997. The decrease
in assets under management for the period ended September 30, 1998 was
attributed to significant declines in global financial markets during the third
quarter which resulted in a decline in investment performance for the nine
months ended September 30, 1998.

         Expenses related to independent research and other services provided
to the Company's brokerage clients during the nine months ended September 30,
1998 increased 6.3% to $24.6 million from $23.2 million for the same period in
1997. These expenses were 44.4% of commission revenues for the nine months
ended September 30, 1998 as compared to 45.7% for the corresponding period in
1997.

         Clearing, floor brokerage and exchange charges decreased 9.8% to $7.1
million during the nine months ended September 30, 1998 from $7.9 million in
1997. These expenses represented 12.8% of commissions earned during the

                                       10
<PAGE>

nine months ended September 30, 1998 and 15.6% of commissions earned during
the same period in 1997. The decrease in these expenses as a percentage of
commissions is primarily due to: (1) an increase in the percentage of
commissions earned in U.S. equity markets, where such expenses are charged at
lower rates than comparable trades executed in certain Asian markets; (2) a
reduction in the costs of execution and settlement of U.S. equity transactions;
and (3) a decrease in the percentage of commissions earned on transactions
executed in Southeast Asian markets where execution and settlement costs are
higher, coupled with an increase in the percentage of Asian Brokerage commission
revenues earned on transactions executed in the Hong Kong market, which cost
less to execute and settle than comparable trades in other Asian markets.

         Employee compensation increased 9.9% to $16.1 million for the
nine-month period ended September 30, 1998 from $14.7 million in 1997. This
resulted primarily from an increase in reserves for discretionary and
performance-based bonus compensation.

         All other expenses increased 6.3% to $8.0 million in the nine months
ended September 30, 1998 as compared to $7.5 million in 1997. This resulted
primarily from an increase in expenses related to market data, communications,
and depreciation and amortization during the nine months ended September 30,
1998 and the write-off of certain fixed assets during the third quarter 1998.

         Net investment income for the nine months ended September 30, 1998
decreased to $0.6 million as compared to $1.6 million in 1997. This decrease
was primarily attributable to realized and unrealized losses of $0.9 million
incurred during the third quarter 1998 on the Company's investments in limited
partnerships and a managed portfolio of preferred stock and U.S. Treasury
Futures used to hedged the preferred stock. These losses resulted from
significant declines in the global financial markets during the three months
ended September 30, 1998.


LIQUIDITY AND CAPITAL RESOURCES

         At September 30, 1998, the Company had cash, U.S. Government
obligations, net accounts receivable and other investments of $48.8 million.
All receivables from correspondent brokers and dealers are fully collectible,
and no provision for uncollectibles is required.

         The Company modified its cash management program during the first
quarter 1998 to increase its rate of return on investments. The Company
invested a portion of funds previously held as cash and equivalents, U.S.
government obligations and corporate bonds in investments which include limited
partnership interests in two multi-manager, market neutral limited
partnerships; a diversified portfolio of investment grade preferred stock and
U.S. Treasury futures used to hedge the preferred stock positions; and a
bank-sponsored, flexible, market-linked deposit account which maintains
investments in U.S. and foreign equity indices, floating rate deposits, baskets
of European equity securities and a U.S. Treasury zero coupon bond. Each of
these investments is managed by professional money managers. The flexible,
market-linked deposit is not federally insured; however, the sponsoring bank
has agreed to protect 100% of the Company's principal investment, less the
bank's management fees, if the deposit is maintained for one year. These
investments generally are not transferable and are less liquid than investments
in U.S. government obligations and corporate bonds. Investment losses incurred
during the third quarter 1998 have not had a material effect on the Company's
liquidity or capital resources.

         During the nine months ended September 30, 1998, the Company
repurchased 772,500 shares of its common stock under previously announced stock
repurchase programs at a total cost of $5.3 million. These repurchases have not
had a material effect on the Company's liquidity or capital resources.

         The Company has determined that certain fixed assets, which include
computer software and other information technology assets, will be written off
during the third and fourth quarter 1998. The total amount of the write-off
is not expected to exceed $375,000. Approximately $165,000 was written off in
the third quarter 1998.

                                       11
<PAGE>

         The Company believes that its current capital resources and liquidity,
plus additional funds generated by operations, will be sufficient to meet
current and future operating needs. The Company continues to explore
opportunities to expand existing businesses and to acquire new businesses,
which could potentially have an impact on liquidity and capital resources.


YEAR 2000 AND EURO

         The Year 2000 issue ("Y2K Issue") is the result of computer systems
and applications that currently use two digits rather than four to recognize a
particular year. The Y2K Issue affects the Company's information technology
("IT") systems (i.e., computer systems, network elements and software
applications), as well as other business systems that have time-sensitive
programs or microprocessors that may not properly reflect or recognize the year
2000 ("non-IT systems"). The failure to reflect or recognize dates after 1999
could cause the Company's IT and non-IT systems to fail or cause errors which
would lead to disruptions in operations or increased costs. Such failure could,
for example, limit the Company's ability to execute trades, cause settlement of
trades to fail, lead to incomplete or inaccurate accounting, recording or
processing of securities trades, result in generation of erroneous results or
give rise to uncertainty about the Company's exposure to certain risks. If not
remedied, potential risks include business interruption or shutdown, financial
loss, regulatory actions, reputational harm and legal liability.

         Like many financial services companies, the Company is heavily reliant
upon third parties for many of the IT and non-IT systems that are essential to
the Company's ability to perform its day-to-day operations. These third parties
include trading counter parties, financial intermediaries, securities
exchanges, depositories, clearing agencies, clearing houses, commercial banks
and various vendors, including providers of market data and pricing services,
telecommunication services and other utilities. As a result, the Company's
operations and financial results may be adversely affected in the event that
such third parties do not adequately address the Y2K Issue and the Company is
not able to make contingency plans. As is true for other companies, the Company
is vulnerable to Y2K failures beyond its control, particularly with respect to
utility and transportation service providers.

         The Company has developed a five-phase program for addressing the Y2K
Issue, which consists of the following:

         o    Phase I is defining the Y2K Issue and what constitutes Y2K
              compliance and educating Company personnel about the Y2K Issue.

         o    Phase II is identifying those systems which may be affected by
              the Y2K Issue.

         o    Phase III is developing action plans to address the Y2K Issue for
              identified systems.

         o    Phase IV is the testing of the action plans intended to resolve
              the Y2K Issue.

         o    Phase V is the implementation of the action plans.

         The Company has completed Phase I of its program and has completed
Phase II with respect to internal IT systems and non-IT systems that may be
affected by the Y2K Issue. The Company has identified a number of internal IT
and non-IT systems as being Y2K compliant. With respect to all systems 
identified as not Y2K compliant, the Company has begun Phase III of the program
and is in the process of developing action plans to remediate any Y2K problems 
through upgrades, corrections or replacements. Phases III and IV also involve 
developing contingency plans to address non-compliant systems and testing of 
those plans. The Company has not yet developed comprehensive contingency plans 
in the event that the Company is unable to timely resolve any Y2K problems. The
Company will address the need for contingency plans once it completes its 
assessment of systems likely to be affected by the Y2K Issue. The failure to 
develop and implement, if necessary, appropriate contingency plans could have a
material adverse impact on the Company's operations and financial results.

                                       12
<PAGE>

         With respect to external systems(both IT and non-IT), the Company has
solicited information and assurances from third-party service providers,
customers and suppliers and is in the process of collecting and evaluating
responses. Most of the Company's external service providers and suppliers have
indicated that they will issue upgrades or replacement products that will be
Y2K compliant during the fourth quarter 1998.

         The Company anticipates that it will complete Phases II and III of its
program with respect to all IT and non-IT systems by the end of 1998 and will
complete Phases IV and V by June 1999. The Company has hired a consulting firm
to assist Company personnel in effecting the Company's Y2K program.

         Based on current information, the Company believes that during 1998
and 1999, it will spend approximately $400,000 to complete the five-phase Y2K
program and address the Y2K Issue, which includes the costs of software
replacements and corrections, additional hardware and hardware upgrades and
consulting fees. The Company does not expect these costs to be material to its
financial position, results of operations or cash flows in a given period. The
Company will expense Y2K costs as they are incurred. The total amount of Y2K
expenses incurred through September 30, 1998 was $95,635.

         The costs of addressing the Y2K Issue and anticipating dates for the
Y2K Issue are based on management's best estimates, which were derived using
numerous assumptions of future events, including the continued availability of
certain resources, third-party modification plans and other factors. However,
there can be no guarantee that these estimates will be achieved, and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, the availability of cost-effective
alternatives or replacements for third-party products and services which are
not expected to be Y2K compliant and similar uncertainties.
 
         The Company's systems are also being reviewed to determine what
modifications will be necessary to accommodate the upcoming introduction of the
"Euro", which is scheduled to begin on January 1, 1999. As of January 1, 1999,
the Euro will be adopted as the common legal currency of eleven participating
member countries of the Economic and Monetary Union. The Euro and participating
member currencies will co-exist through July 1, 2002, with the Euro gradually
replacing national currencies. 

         The Company expects to be prepared for the introduction of the Euro by
January 1, 1999. The Company is in the process of implementing modifications
to its IT systems and programs in order to prepare for transition to the Euro.
The Company is engaged in testing those systems and processes which may be
affected by the institution of the Euro.

         The Company also is communicating with third parties with which it
regularly transacts business regarding the implications of the Euro and the
effect it will have on their business dealings with the Company. These third
parties include financial intermediaries, trading counter parties, securities
exchanges, depositions, clearing agencies, clearing houses, commercial banks 
and various vendors, including information and pricing service providers. The
Company is dependent on the successful implementation of its Euro conversion
procedures by such third parties. If these thrid parties do not appropriately
address the introduction of the Euro, the Company's trade execution, clearance,
settlement and other operations could be adversely affected.

         Costs associated with the modifications necessary to prepare for the
Euro are not anticipated to be material to the Company's financial position,
results of operations or cash flows in a given period and will be expensed as
incurred.

                                       13
<PAGE>

                           PART II. OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

          The description of legal proceedings required by this Item is hereby
          incorporated by reference to Note 8 of Notes to Unaudited Consolidated
          Financial Statements included herein.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)     EXHIBITS

          10.16    Employment Agreement, dated October 8, 1998, between 
                   Max H. Levine and Hoenig Group Inc.
          27.1     Financial Data Schedule.
          27.2     Restated Financial Data Schedule.

          (b)      REPORTS ON FORM 8-K

          The Registrant did not file any reports on Form 8-K during the quarter
          ended September 30, 1998.

                                       14
<PAGE>

                                   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.


                                 HOENIG GROUP INC.



Date:    November 13, 1998       By:/s/Fredric P. Sapirstein
                                       ---------------------
                                       Fredric P. Sapirstein,
                                       Chairman and Chief
                                       Executive Officer



Date:    November 13, 1998       By:/s/Alan B. Herzog
                                       --------------
                                       Alan B. Herzog,
                                       Chief Operating Officer and
                                       Chief Financial Officer

                                       15
<PAGE>

                                 EXHIBIT INDEX

  Exhibit No.        Description
  -----------        -----------

  10.16              Employment Agreement, dated October 8, 1998 between
                     Max H. Levine and Hoenig Group Inc.

  27.1               Financial Data Schedule

  27.2               Restated Financial Data Schedule









                                       16