UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

|(Mark One)                                   |                                                                                         
|-------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                            | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 
|FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005
|OR                                          
|o                                            | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|FOR THE TRANSITION PERIOD
FROM            TO

Commission File No: 000-51103

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

|Delaware(State or other jurisdiction of
incorporation or organization) |  | 80-0006224(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------- |  | ----------------------------------------------
|100 Wall Street, New York, NY(Address of principal executive offices)  |  | 10005(Zip Code)                               
|Registrant's telephone number, including area code:(212) 968-4100     

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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 ý    NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
 YES o    NO ý

The number of shares of registrant's common stock outstanding on August 5, 2005 was 27,030,681.



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Table of Contents

Part IFinancial Information

|Item 1.                   |  | Financial Statements                                                                                                                                 |  |   
|------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|                          |  | Condensed Consolidated Statements of Financial Condition as of June 30, 2005 (unaudited) and December 31, 2004                                       |  | 4 
|                          |  | Condensed Consolidated Statements of Income for the three and six months ended June 30, 2005 (unaudited) and June 30, 2004 (unaudited)               |  | 5 
|                          |  | Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2005 (unaudited) and June 30, 2004 (unaudited) |  | 6 
|                          |  | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2005 (unaudited) and June 30, 2004 (unaudited)                     |  | 7 
|                          |  | Notes to Condensed Consolidated Financial Statements                                                                                                 |  | 8 
|Item 2.                   |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                |  | 23
|Item 3.                   |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                           |  | 39
|Item 4.                   |  | Controls and Procedures                                                                                                                              |  | 40
|Part IIOther Information
|Item 1.                   |  | Legal Proceedings                                                                                                                                    |  | 40
|Item 2.                   |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                          |  | 40
|Item 6.                   |  | Exhibits                                                                                                                                             |  | 41

2

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Available Information

Our Internet website address iswww.gfigroup.com. Through our Internet website, we make available, free of charge,
documents we file or furnish with the Securities and Exchange Commission (the "SEC"), as soon as reasonably practicable after electronically filing them with, or furnishing them to, the SEC,
including: our annual report on Form 10-K; our quarterly reports on Form 10-Q; our current reports on Form 8-K; Forms 3, 4 and 5 filed on
behalf of directors and executive officers; and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Our Proxy Statements for our Annual Meetings will also be available through our Internet website.

Information
relating to corporate governance of the Company is also available on our website, including information concerning our directors, board committees, including committee
charters, our Code of Business Conduct and Ethics for all employees and for senior financial officers and our compliance procedures for accounting and auditing matters.

Our
Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Quarterly Report on Form 10-Q.

3

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PART IFINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

GFI GROUP INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION  (In thousands except share and per share amounts)

|                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                       | June 30,
2005 |         | December 31,
2004 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | ------- | ----------------- | -
|
|ASSETS                                                                                                                                                                                                                                                           |                                                                                                                                                                                                       |               |         |                   |  
|                                                                                                                                                                                                                                                                 | Cash and cash equivalents                                                                                                                                                                             |               | $       | 109,633           |  
|                                                                                                                                                                                                                                                                 | Deposits with clearing organizations                                                                                                                                                                  |               |         | 9,295             |  
|                                                                                                                                                                                                                                                                 | Accrued commissions receivable, net of allowance for doubtful accounts                                                                                                                                |               |         | 78,598            |  
|                                                                                                                                                                                                                                                                 | Receivables from brokers, dealers and clearing organizations                                                                                                                                          |               |         | 304,626           |  
|                                                                                                                                                                                                                                                                 | Property, equipment and leasehold improvements, net                                                                                                                                                   |               |         | 21,566            |  
|                                                                                                                                                                                                                                                                 | Software inventory, net                                                                                                                                                                               |               |         | 4,528             |  
|                                                                                                                                                                                                                                                                 | Goodwill                                                                                                                                                                                              |               |         | 12,803            |  
|                                                                                                                                                                                                                                                                 | Intangible assets, net                                                                                                                                                                                |               |         | 1,035             |  
|                                                                                                                                                                                                                                                                 | Other assets                                                                                                                                                                                          |               |         | 33,389            |  
|                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                       |               |         |                   |  
|TOTAL ASSETS                                                                                                                                                                                                                                                     |                                                                                                                                                                                                       | $             | 575,473 |                   | $
|                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                       |               |         |                   |  
|LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY                                                                                                                                                                                     |                                                                                                                                                                                                       |               |         |                   |  
|LIABILITIES                                                                                                                                                                                                                                                      |                                                                                                                                                                                                       |               |         |                   |  
|                                                                                                                                                                                                                                                                 | Accrued compensation                                                                                                                                                                                  |               | $       | 80,695            |  
|                                                                                                                                                                                                                                                                 | Accounts payable and accrued expense                                                                                                                                                                  |               |         | 22,102            |  
|                                                                                                                                                                                                                                                                 | Payables to brokers, dealers and clearing organizations                                                                                                                                               |               |         | 257,622           |  
|                                                                                                                                                                                                                                                                 | Notes payable, net                                                                                                                                                                                    |               |         |                  |  
|                                                                                                                                                                                                                                                                 | Loan note payable                                                                                                                                                                                     |               |         |                  |  
|                                                                                                                                                                                                                                                                 | Income taxes payable                                                                                                                                                                                  |               |         | 12,163            |  
|                                                                                                                                                                                                                                                                 | Other liabilities                                                                                                                                                                                     |               |         | 13,783            |  
|                                                                                                                                                                                                                                                                 | Lease termination costs payable to affiliate                                                                                                                                                          |               |         | 179               |  
|                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                       |               |         |                   |  
|Total Liabilities                                                                                                                                                                                                                                                |                                                                                                                                                                                                       | $             | 386,544 |                   | $
|                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                       |               |         |                   |  
|Commitments and contingencies                                                                                                                                                                                                                                    |                                                                                                                                                                                                       |               |         |                   |  
|Series C redeemable convertible preferred stock, $0.01 par value; none authorized and outstanding at June 30, 2005; 35,373,704 shares authorized and 3,723,545 shares outstanding at December 31, 2004 (liquidation value of $41.5 million at December 31,
2004) |                                                                                                                                                                                                       |               |        |                   |  
|STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                             |                                                                                                                                                                                                       |               |         |                   |  
|                                                                                                                                                                                                                                                                 | Convertible preferred stock, $0.01 par value; none authorized and outstanding at June 30, 2005; (liquidation value of $29.6 million at December 31, 2004)                                             |               |         |                  |  
|                                                                                                                                                                                                                                                                 | Preferred Stock, $0.01 par value; 5,000,000 shares authorized at June 30, 2005, none outstanding; none authorized or outstanding at December 31, 2004                                                 |               |         |                  |  
|                                                                                                                                                                                                                                                                 | Class A common stock, $0.01 par value; none authorized and outstanding at June 30, 2005; 100,000,000 shares authorized and 5,893,846 outstanding at December 31, 2004                                 |               |         |                  |  
|                                                                                                                                                                                                                                                                 | Common stock, $0.01 par value; 100,000,000 shares authorized and 26,890,404 shares outstanding at June 30, 2005; 300,000,000 shares authorized and 10,155,809 shares outstanding at December 31, 2004 |               |         | 269               |  
|                                                                                                                                                                                                                                                                 | Additional paid in capital                                                                                                                                                                            |               |         | 171,171           |  
|                                                                                                                                                                                                                                                                 | Retained earnings (accumulated deficit)                                                                                                                                                               |               |         | 22,523            |  
|                                                                                                                                                                                                                                                                 | Accumulated other comprehensive loss                                                                                                                                                                  |               |         | (5,034            | )
|                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                       |               |         |                   |  
|Total Stockholders' Equity                                                                                                                                                                                                                                       |                                                                                                                                                                                                       |               | 188,929 |                   |  
|                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                       |               |         |                   |  
|TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY                                                                                                                                                                               |                                                                                                                                                                                                       | $             | 575,473 |                   | $
|                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                       |               |         |                   |  

See notes to condensed consolidated financial statements

4

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GFI GROUP INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)  (In thousands except share and per share amounts)

|                                            |                                      | Three Months Ended June 30, |                          | Six Months Ended June 30,
|------------------------------------------- | ------------------------------------ | --------------------------- | ------------------------ | -------------------------
|
|REVENUES:                                   |                                      |                             |                          |                          
|                                            | Brokerage revenues:                  |                             |                          |                          
|                                            |                                      | Agency commissions          |                          | $                        
|                                            |                                      | Principal transactions      |                          |                          
|                                            |                                      |                             |                          |                          
|                                            |                                      |                             | Total brokerage revenues |                          
|                                            | Analytics and market data            |                             |                          | 4,711                    
|                                            | Interest income                      |                             |                          | 883                      
|                                            | Other income                         |                             |                          | 6,376                    
|                                            |                                      |                             |                          |                          
|Total revenues                              |                                      |                             | 140,323                  |                          
|                                            |                                      |                             |                          |                          
|EXPENSES:                                   |                                      |                             |                          |                          
|                                            | Compensation and employee benefits   |                             |                          | 80,896                   
|                                            | Communications and quotes            |                             |                          | 6,341                    
|                                            | Travel and promotion                 |                             |                          | 6,041                    
|                                            | Rent and occupancy                   |                             |                          | 3,913                    
|                                            | Depreciation and amortization        |                             |                          | 3,599                    
|                                            | Professional fees                    |                             |                          | 2,927                    
|                                            | Clearing fees                        |                             |                          | 2,974                    
|                                            | Interest expenses                    |                             |                          | 597                      
|                                            | Other expenses                       |                             |                          | 5,809                    
|                                            | Lease termination costs to affiliate |                             |                          | (2,266                   
|                                            |                                      |                             |                          |                          
|Total Expenses                              |                                      |                             | 110,831                  |                          
|INCOME BEFORE PROVISION FOR INCOME TAXES    |                                      |                             | 29,492                   |                          
|PROVISION FOR INCOME TAXES                  |                                      |                             | 12,810                   |                          
|                                            |                                      |                             |                          |                          
|NET INCOME                                  |                                      | $                           | 16,682                   |                          
|                                            |                                      |                             |                          |                          
|EARNINGS PER SHARE                          |                                      |                             |                          |                          
|                                            | Basic                                |                             | $                        | 0.62                     
|                                            | Diluted                              |                             | $                        | 0.60                     
|WEIGHTED AVERAGE SHARES OUSTANDING BASIC    |                                      |                             |                          |                          
|                                            | Class A common stock                 |                             |                          |                         
|                                            | Common stock                         |                             |                          | 26,791,156               
|WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED |                                      |                             | 27,726,612               |                          

See
notes to condensed consolidated financial statements

5

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GFI GROUP INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF  COMPREHENSIVE INCOME (UNAUDITED)  (In thousands)

|                                   |                                                                             | Three Months Ended June 30, |        | Six Months Ended June 30, |  
|---------------------------------- | --------------------------------------------------------------------------- | --------------------------- | ------ | ------------------------- | -
|
|NET INCOME                         |                                                                             | $                           | 16,682 |                           | $
|OTHER COMPREHENSIVE INCOME (LOSS): |                                                                             |                             |        |                           |  
|                                   | Unrealized gain/(loss) on foreign exchange derivative contracts, net of tax |                             | $      | 4,096                     |  
|                                   | Foreign currency translation adjustment, net of tax                         |                             |        | (88                       | )
|                                   |                                                                             |                             |        |                           |  
|COMPREHENSIVE INCOME               |                                                                             | $                           | 20,690 |                           | $
|                                   |                                                                             |                             |        |                           |  

See
notes to condensed consolidated financial statements

6

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GFI GROUP INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  (In thousands)

|                                                 |                                                                               | Six Months Ended June 30,                                                         |                                      
|------------------------------------------------ | ----------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:            |                                                                               |                                                                                   |                                      
|                                                 | Net income                                                                    |                                                                                   | $                                    
|                                                 | Adjustments to reconcile net income to net cash used in operating activities: |                                                                                   |                                      
|                                                 |                                                                               | Depreciation and amortization                                                     |                                      
|                                                 |                                                                               | Amortization of loan fees                                                         |                                      
|                                                 |                                                                               | Provision for allowance for doubtful accounts                                     |                                      
|                                                 |                                                                               | Deferred compensation                                                             |                                      
|                                                 |                                                                               | Benefit from deferred taxes                                                       |                                      
|                                                 |                                                                               | Loss on Fenics purchase obligation                                                |                                      
|                                                 |                                                                               | Unrealized gain on fair value adjustment of foreign exchange derivative contracts |                                      
|                                                 |                                                                               | Lease termination cost to affiliate                                               |                                      
|                                                 | (Increase) decrease in operating assets:                                      |                                                                                   |                                      
|                                                 |                                                                               | Deposits with clearing organizations                                              |                                      
|                                                 |                                                                               | Accrued commissions receivable                                                    |                                      
|                                                 |                                                                               | Receivables from brokers, dealers and clearing organizations                      |                                      
|                                                 |                                                                               | Software inventory                                                                |                                      
|                                                 |                                                                               | Other assets                                                                      |                                      
|                                                 | Increase (decrease) in operating liabilities:                                 |                                                                                   |                                      
|                                                 |                                                                               | Accrued compensation                                                              |                                      
|                                                 |                                                                               | Accounts payable and accrued expenses                                             |                                      
|                                                 |                                                                               | Payables to brokers, dealers and clearing organizations                           |                                      
|                                                 |                                                                               | Income taxes payablecurrent                                                      |                                      
|                                                 |                                                                               | Other liabilities                                                                 |                                      
|                                                 |                                                                               | Cash paid to affiliate for lease termination                                      |                                      
|                                                 |                                                                               |                                                                                   |                                      
|                                                 |                                                                               |                                                                                   | Cash used in operating activities    
|                                                 |                                                                               |                                                                                   |                                      
|CASH FLOWS FROM INVESTING ACTIVITIES:            |                                                                               |                                                                                   |                                      
|                                                 | Cash used for acquisition of minority interest in Fenics                      |                                                                                   |                                      
|                                                 | Purchase of property, equipment and leasehold improvements                    |                                                                                   |                                      
|                                                 |                                                                               |                                                                                   |                                      
|                                                 |                                                                               |                                                                                   | Cash used in investing activities    
|                                                 |                                                                               |                                                                                   |                                      
|CASH FLOWS FROM FINANCING ACTIVITIES:            |                                                                               |                                                                                   |                                      
|                                                 | Repayment of notes payable                                                    |                                                                                   |                                      
|                                                 | Proceeds from notes payable                                                   |                                                                                   |                                      
|                                                 | Repayment of loan notes payable                                               |                                                                                   |                                      
|                                                 | Issuance of common stock                                                      |                                                                                   |                                      
|                                                 | Proceeds from exercise of stock options and warrant                           |                                                                                   |                                      
|                                                 |                                                                               |                                                                                   |                                      
|                                                 |                                                                               |                                                                                   | Cash provided by financing activities
|                                                 |                                                                               |                                                                                   |                                      
|                                                 | Effects of foreign currency translation adjustment                            |                                                                                   |                                      
|INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                               |                                                                                   | 4,472                                
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   |                                                                               |                                                                                   | 105,161                              
|                                                 |                                                                               |                                                                                   |                                      
|CASH AND CASH EQUIVALENTS, END OF PERIOD         |                                                                               | $                                                                                 | 109,633                              
|                                                 |                                                                               |                                                                                   |                                      
|SUPPLEMENTAL DISCLOSURE:                         |                                                                               |                                                                                   |                                      
|Interest paid                                    |                                                                               | $                                                                                 | 2,031                                
|Income taxes paid, net of refunds                |                                                                               | $                                                                                 | 18,613                               

See
notes to condensed consolidated financial statements

7

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GFI GROUP INC. AND SUBSIDIARIES  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (UNAUDITED)  (In thousands except share and per share amounts)

1.     ORGANIZATION AND BUSINESS

The condensed consolidated financial statements include the accounts of GFI Group Inc. and its subsidiaries (collectively, the "Company"). The Company,
through its subsidiaries, provides brokerage services to institutional clients in markets for a range of credit, financial, equity and commodity instruments. The Company complements its brokerage
services with decision-support services such as value-added data and analytics software products, which it licenses to participants in the financial services industry, including investment and
commercial banks, large corporations, insurance companies and large hedge funds. The Company's principal operating subsidiaries include: GFInet inc., GFI Securities LLC, GFI Brokers LLC, GFI
Group LLC, GFI Securities Limited, GFI Brokers Limited, GFInet U.K. Limited, GFI (HK) Securities LLC, GFI Group Pte Ltd. and Fenics Limited and its subsidiaries. The Company is majority owned
by Jersey Partners, Inc. ("JPI").

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of PresentationThe Company's condensed consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses, and the disclosure of contingencies in the condensed consolidated financial statements. Management believes that the estimates utilized in the preparation of the
condensed consolidated financial statements are reasonable and prudent. Actual results could differ materially from these estimates.

All
material intercompany transactions and balances have been eliminated.

The
condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2004 (the "2004 Form 10-K"). The condensed consolidated financial statements reflect all adjustments
that are, in the opinion of management, necessary for the fair statement of the results for the interim period. The results of operations for interim periods are not necessarily indicative of results
for the entire year.

Cash and Cash EquivalentCash and cash equivalents consist of cash and highly liquid investments with maturities, when
purchased, of three months or less.

Receivables from and Payables to Brokers and DealersReceivables from and payables to brokers and dealers primarily represent
securities transactions that have not settled as of their stated settlement dates. These transactions relate primarily to the simultaneous purchase and sale of securities by GFI Securities Limited and
GFI Securities LLC to facilitate principal brokerage transactions.

Accrued Commissions ReceivableAccrued commissions receivable represents amounts due from brokers, dealers, banks and other
financial and nonfinancial institutions for the execution of securities, commodities, foreign exchange and derivative brokerage transactions. Accrued commissions receivable are presented net of
allowance for doubtful accounts of approximately $2,928 and $2,879 as of June 30, 2005 and December 31, 2004, respectively. The allowance is based on management's estimate and is
reviewed on a periodic basis based on the aging of outstanding receivables and counterparty exposure.

Brokerage TransactionsThe Company provides brokerage services to its clients in the form of either agency or principal
transactions.

8

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Agency CommissionsIn agency transactions, the Company charges commissions for executing transactions between buyers and
sellers. Agency commissions revenues and related expenses are recognized on a trade date basis.

Principal TransactionsPrincipal transaction revenue is primarily derived from matched principal transactions. In matched
principal transactions, the Company simultaneously agrees to buy instruments from one customer and sell them to another customer. A very limited number of brokerage
desks are allowed to enter into unmatched principal transactions to facilitate a customer's execution needs for transactions initiated by such customers. These unmatched positions are intended to be
held short term and in liquid markets. The Company does not enter into unmatched principal transactions for purposes of speculating on movements in the markets. The Company earns revenue from
principal transactions on the spread between the buy and sell price of the security that is brokered.

When
the Company does hold securities positions, these positions are marked to market on a daily basis. Principal transactions revenues and related expenses are recognized on a trade
date basis.

Analytics and Market Data Revenue RecognitionAnalytics revenue consists mostly of fees for licenses of analytical software
products as well as maintenance, installation, customer training and technical support of those products. Market data revenue primarily consists of subscription fees. Analytics revenue is recognized
when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery of the product has occurred and no significant implementation obligations remain, the fee is fixed
and determinable, and collectibility is probable. Fees for future updates of software products are considered separate arrangements and related revenues are recognized when the customer acknowledges
participation in the update and delivery occurs. Market data revenue is recognized over the term of the subscription period.

The
Company markets its analytics and market data products through its direct sales force and indirectly through resellers. The Company's license agreements for such products do not
provide for a right of return.

Goodwill and Intangible AssetsIn accordance with Statement of Financial Accounting Standards ("SFAS") No. 142 Goodwill and Intangible Assets("SFAS 142"), goodwill and intangible assets with indefinite lives are no longer amortized, but instead are tested
for impairment annually or more frequently if circumstances indicate impairment may have occurred. The Company has selected January 1st as the date to perform the annual
impairment test. Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives.

Derivative Financial InstrumentsThe Company uses foreign exchange derivative contracts to reduce the effects of fluctuations
in certain receivables and payables denominated in foreign currencies. Certain of these foreign exchange derivative contracts may be designated and qualify as foreign currency cash flow hedges under
SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, as amended ("SFAS 133"). The Company reclassifies gains and
losses on the designated foreign exchange derivative contracts included in accumulated other comprehensive loss into earnings at the time the hedged transactions are recognized. The Company measures
effectiveness by assessing the changes in the expected future cash flows of the hedged items. The ineffective portion of a hedge, if any, is included in other income. There is no portion of the
derivative instruments' gains or losses that has been excluded from the assessment of effectiveness.

9

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In
March 2005, the Company discontinued hedge accounting for a foreign exchange derivative contract that was previously designated and qualified as a hedge under SFAS 133.
The de-designation of this contract was necessary because the Company renegotiated the exchange rates in the contract that resulted in its termination and the execution of a new contract.
Subsequent to such de-designation, the Company discontinued prospectively hedge accounting for the original contract. The net unrealized loss, at the date of de-designation,
associated with this contract will remain in accumulated other comprehensive loss and will be reclassified into earnings over the term of the original contract. The new foreign exchange derivative
contract did not qualify for hedge accounting under SFAS 133. Accordingly this contract is recorded at fair value and all realized and unrealized gains and losses on this contract are included
in earnings.

Foreign Currency Translation Adjustments and TransactionsAssets and liabilities of foreign subsidiaries having
non-U.S. dollar functional currencies are translated at period end rates of exchange, and revenue and expenses are translated at the average rates of exchange. Gains or losses resulting
from translating foreign currency financial statements are reflected as foreign currency translation adjustments and are reported as a separate component of comprehensive income and included in
accumulated other comprehensive loss in stockholders' equity. Gains or losses resulting from foreign currency transactions are included in net income as other income.

Segment and Geographic InformationThe Company's only operating segment, brokerage and data and analytics operations, operates
across domestic and international markets. Substantially all of the Company's identifiable assets are in the United States and the United Kingdom.

Share-Based CompensationOur share-based compensation consists of stock options and restricted stock units (the "RSUs").
Effective January 1, 2003, the Company adopted the fair value recognition provisions of SFAS No. 123,Accounting for Stock-Based
Compensation("SFAS 123"), as amended by SFAS No. 148,Accounting for Stock-Based CompensationTransition and
Disclosure, prospectively to all awards granted, modified, or settled after January 1, 2003. Pursuant to this method, the Company expenses the grant-date
fair value of options issued to employees on or after January 1, 2003 over the related vesting period and the compensation expense related to modifications of outstanding options is calculated
as the difference between fair value of the existing and modified options on the date of modification. Prior to January 1, 2003, the Company used the intrinsic method as prescribed by
Accounting Principles Board Opinion No. 25,Accounting for Stock Issued to Employees("APB 25"), as permitted by SFAS 123. For RSUs, the
fair value at the date of grant is recorded as deferred compensation and is amortized to compensation expense over the vesting period of the grants.

10

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The
following pro forma financial information shows the effect, net of tax, on net income had the fair value method been applied for all periods presented.

|                                                                                        |  | Three Months Ended June 30, |        | Six Months Ended June 30, |  
|--------------------------------------------------------------------------------------- |  | --------------------------- | ------ | ------------------------- | -
|
|Net incomeas reported                                                                  |  | $                           | 16,682 |                           | $
|Add:                                                                                    |  |                             |        |                           |  
|Effect of stock-based employee compensation included in reported net income, net of tax |  |                             | 336    |                           |  
|Deduct:                                                                                 |  |                             |        |                           |  
|Total stock-based employee compensation determined under fair value method, net of tax  |  |                             | (336   | )                         |  
|                                                                                        |  |                             |        |                           |  
|Net incomepro forma                                                                    |  | $                           | 16,682 |                           | $
|                                                                                        |  |                             |        |                           |  
|Basic earnings per shareas reported                                                    |  | $                           | 0.62   |                           | $
|Basic earnings per sharepro forma                                                      |  | $                           | 0.62   |                           | $
|Diluted earnings per shareas reported                                                  |  | $                           | 0.60   |                           | $
|Diluted earnings per sharepro forma                                                    |  | $                           | 0.60   |                           | $

Recent Accounting PronouncementIn March 2005, the SEC staff issued Staff Accounting Bulletin No. 107 ("SAB
No. 107") to provide guidance on SFAS No. 123(R),Share-Based Payment("SFAS No. 123(R)"), which is a revision of SFAS
No. 123. SAB No. 107 provides the staff's view regarding the valuation of share-based payment arrangements for public companies. In particular, this SAB provides guidance related to
share-based payment transactions with non-employees, the transition from nonpublic to public entity status, valuation methods (including assumptions such as expected volatility and
expected term), the accounting for certain redeemable financial instruments issued under share-based payment arrangements, the classification of compensation expense, non-GAAP financial
measures, first time adoption of SFAS No. 123(R), the modification of employee share options prior to the adoption of SFAS No. 123(R) and disclosure in Management's Discussion and
Analysis subsequent to the adoption of SFAS No. 123(R). SAB No. 107 became effective March 29, 2005. In April 2005, the SEC modified the effective date of SFAS
No. 123(R) to be as of the first reporting period of the first fiscal year beginning after June 15, 2005. The SEC's modification of the effective date did not change the accounting
required by SFAS No. 123(R). The impact of SFAS No. 123(R) and SAB No. 107 on the Company's consolidated financial statements is currently being evaluated and is not anticipated
to be material.

In
May 2005, the Financial Accounting Standards Board (the "FASB") issued FASB Statement 154,Accounting Changes and Error Correctionsa
replacement of APB Opinion No. 20 and FASB Statement No. 3("SFAS No. 154"). SFAS No. 154 changes the requirements for the accounting for and
reporting of a change in accounting principle. The provisions of SFAS No. 154 require, unless impracticable, retrospective application to prior periods' financial statements of (1) all
voluntary changes in accounting principles and (2) changes required by a new accounting pronouncement, if a specific transition is not provided. SFAS No. 154 also requires that a change
in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate, which requires prospective
application of the new method. SFAS No. 154 will be effective for all accounting changes made in fiscal years beginning after December 15, 2005.

11

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3.     RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS

|                                                              |                                                | June 30,
2005 |         | December 31,
2004
|------------------------------------------------------------- | ---------------------------------------------- | ------------- | ------- | -----------------
|Receivables from brokers, dealers and clearing organizations: |                                                |               |         |                  
|                                                              | Contract value of fails to deliver             |               | $       | 276,486          
|                                                              | Balance receivable from clearing organizations |               |         | 28,140           
|                                                              |                                                |               |         |                  
|Total                                                         |                                                | $             | 304,626 |                  
|                                                              |                                                |               |         |                  
|Payables to brokers, dealers and clearing organizations:      |                                                |               |         |                  
|                                                              | Contract value of fails to receive             |               | $       | 235,033          
|                                                              | Balance payable to clearing organizations      |               |         | 10,913           
|                                                              | Payable to financial institutions              |               |         | 11,676           
|                                                              |                                                |               |         |                  
|Total                                                         |                                                | $             | 257,622 |                  
|                                                              |                                                |               |         |                  

Substantially
all open fail to deliver and fail to receive transactions at June 30, 2005 and December 31, 2004 have subsequently settled at the contracted amounts.

4.     GOODWILL AND INTANGIBLE ASSETS

In March 2005, the Company made an offer to purchase for $8.37 per share all of the ordinary shares in Fenics Limited that were not owned by the Company
for a total purchase price of $4,454. In April 2005, the Company legally became the sole shareholder of Fenics Limited. During the second quarter of 2005, Fenics minority shareholders were paid
for 501,521 shares tendered to the Company, or approximately 94% of the outstanding minority shares. The remaining minority shares will be paid for when they are tendered to the Company. The
acquisition of the Fenics minority shares resulted in an increase in goodwill of $1,321 during the second quarter of 2005.

The
change in the carrying amount of intangible assets for the three and six months ended June 30, 2005 was amortization expense of $203 and $404, respectively.

5.     NOTES PAYABLE

At June 30, 2005, there was $6,500 in outstanding letters of credit under the Company's credit facility agreement with Bank of America N.A. and certain
other lenders dated August 23, 2004 (the "Credit Facility") and the amount available to the Company for borrowing under the Credit Facility was $73,500, including up to $23,500 for additional
letters of credit.

12

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6.     EARNINGS PER SHARE

Basic and diluted earnings per share for the three and six months ended June 30, 2005 and 2004 were as follows:

|                                                                                     |                                                                  | Three Months Ended June 30, |            | Six Months Ended June 30, |  
|------------------------------------------------------------------------------------ | ---------------------------------------------------------------- | --------------------------- | ---------- | ------------------------- | -
|
|Basic earnings per share                                                             |                                                                  |                             |            |                           |  
|Net income applicable to stockholders                                                |                                                                  | $                           | 16,682     |                           | $
|Income allocated to participating preferred stockholders                             |                                                                  |                             |           |                           |  
|                                                                                     |                                                                  |                             |            |                           |  
|Income available to common stockholders                                              |                                                                  | $                           | 16,682     |                           | $
|Weighted average common shares outstanding:                                          |                                                                  |                             |            |                           |  
|                                                                                     | Class A common stock                                             |                             |            |                          |  
|                                                                                     | Common stock                                                     |                             |            | 26,791,156                |  
|                                                                                     |                                                                  |                             |            |                           |  
|Weighted average common shares outstanding                                           |                                                                  |                             | 26,791,156 |                           |  
|                                                                                     |                                                                  |                             |            |                           |  
|Basic earnings per shareClass A common stock and common Stock                       |                                                                  | $                           | 0.62       |                           | $
|                                                                                     |                                                                  |                             |            |                           |  
|Diluted earnings per share                                                           |                                                                  |                             |            |                           |  
|Net income applicable to stockholders                                                |                                                                  | $                           | 16,682     |                           | $
|Weighted average common shares outstanding                                           |                                                                  |                             | 26,791,156 |                           |  
|Effect of dilutive shares:                                                           |                                                                  |                             |            |                           |  
|                                                                                     | Options and warrant                                              |                             |            | 935,456                   |  
|                                                                                     | Convertible preferred shares                                     |                             |            |                          |  
|                                                                                     | Redeemable convertible preferred shares                          |                             |            |                          |  
|Effect of contingently issuable shares subject to Series C purchase price adjustment |                                                                  |                             |           |                           |  
|                                                                                     |                                                                  |                             |            |                           |  
|                                                                                     | Weighted average shares outstanding and common stock equivalents |                             |            | 27,726,612                |  
|                                                                                     |                                                                  |                             |            |                           |  
|Diluted earnings per share                                                           |                                                                  | $                           | 0.60       |                           | $
|                                                                                     |                                                                  |                             |            |                           |  

Outstanding
options to purchase 0, 49,724, 320,737 and 401,842 shares were excluded from the computation of diluted earnings per share for the three and six months ended June 30,
2005 and 2004, respectively, because their effect would be anti-dilutive. In addition, 256,870 and 200,492 RSUs were also excluded from the computation of diluted earnings per share for
the three and six months ended June 30, 2005, respectively, because their effect would be anti-dilutive.

Options
to purchase 1,170,183 and 1,136,078 shares under the GFI Group Inc. 2002 Stock Option Plan (the "GFI Group 2002 Plan") were outstanding for the three and six months ended
June 30, 2004, respectively, and were excluded from the computation of diluted earnings per share because the exercisability of the options was contingent upon the completion of an initial
public offering ("IPO").

13

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This
contingency was met in January 2005, therefore, options issued under this plan were included in subsequent periods in diluted earnings per share to the extent they were dilutive.

In
June 2005, a warrant issued in 2000 with an exercise price of $9.50 was exercised. In connection with the warrant exercise, the Company received $1,000 of proceeds and issued
105,263 shares of common stock.

7.     SHARE-BASED COMPENSATION

In addition to vesting requirements, the exercisability of options issued under the GFI Group 2002 Plan was contingent upon the Company completing its IPO, which
occurred in January 2005. For options issued or modified on or after January 1, 2003 under the GFI Group 2002 Plan, compensation expense measured on the date of grant or modification was
recorded upon the IPO in January 2005, to the extent these options were vested, with the remaining compensation charge to be recorded over the remaining vesting period. For the three and six
months ended June 30, 2005, compensation expense of $158 and $1,049, respectively, was recognized in connection with these options. In addition, for the three and six months ended
June 30, 2005, compensation expense of $0 and $64, respectively, was recognized related to certain options issued under the GFInet inc. 2000 Stock Option Plan (the "GFInet 2000 Plan")
that were modified in 2004.

The
following is a summary of stock option transactions:

|                              |            | GFI Group 2002 Plan |         | GFInet 2000 Plan
|----------------------------- | ---------- | ------------------- | ------- | ----------------
|
|Outstanding December 31, 2004 |            | 1,248,191           |         | 13.55           
|                              | Exercised  |                     | (30,528 | )               
|                              | Terminated |                     | (12,262 | )               
|                              |            |                     |         |                 
|Outstanding June 30, 2005     |            | 1,205,401           |         | 13.57           
|                              |            |                     |         |                 

The
following table summarizes information about the GFI Group 2002 Plan options as of June 30, 2005:

|  |       | Stock Options Outstanding |         |  |      | Stock Options Exercisable
|- | ----- | ------------------------- | ------- |  | ---- | -------------------------
|
|$ | 11.88 |                           | 981,926 |  | 8.71 |                          
|  | 21.00 |                           | 223,475 |  | 9.02 |                          

14

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The
following table summarizes information about the GFInet 2000 Plan options as of June 30, 2005:

|  |       | Stock Options Outstanding |           |  |      | Stock Options Exercisable
|- | ----- | ------------------------- | --------- |  | ---- | -------------------------
|
|$ | 9.50  |                           | 1,018,471 |  | 4.62 |                          
|  | 11.88 |                           | 137,896   |  | 7.24 |                          
|  | 14.25 |                           | 31,626    |  | 5.49 |                          
|  | 19.00 |                           | 210,089   |  | 5.70 |                          
|  | 23.75 |                           | 49,570    |  | 5.11 |                          

For
the three and six months ended June 30, 2005, the Company granted 113,382 and 256,870 RSUs, respectively, under the GFI Group 2004 Equity Incentive Plan with a grant date fair
value in the range of $21.00 to $35.60. The RSUs will be forfeited if a participant leaves the Company for reasons other than retirement, disability or death prior to the vesting dates. The RSUs vest
over periods ranging from eight months to three years and will be converted into an equal number of unrestricted shares of common stock upon vesting. For the three and six months ended June 30,
2005, compensation expense of $398 and $584, respectively, was recognized in connection with the grant of the RSUs.

8.     COMMITMENTS AND CONTINGENCIES

Operating leasesThe Company has non-cancelable operating leases for office space that
expire on various dates through 2015. At June 30, 2005, the future minimum rental commitments under such leases are as follows:

2006

$
4,2122007


3,4092008


4,0572009


5,6162010


5,912Thereafter


25,315Total

$
48,521


The
preceding table reflects a significant increase in the Company's future minimum rental commitments. A majority of the increase in the future minimum rental commitments is related to
a ten-year lease that the Company entered into in April 2005 for premises which will serve as its primary U.K. office space. The total minimum rental commitments under this lease
totaled
$22,634, with $1,144 due within one to three years, $5,716 due within three to five years and $15,774 due in more than five years.

Many
of the Company's leases for office space contain escalation clauses that require payment of additional rent to the extent of any increases in certain operating and other costs. Rent
expense under the leases for the three and six months ended June 2005 and 2004 was $2,176, $3,586, $1,061 and $2,103, respectively.

15

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The
Company, through its subsidiary GFI Holdings Ltd., was a tenant of its primary U.K. office space under a lease agreement with a wholly owned subsidiary of JPI, which was due
to expire in 2016. In December 2004, the Company and the affiliate agreed to terminate this lease effective September 2005 (the "Lease Termination Agreement") and to make certain
termination and other payments upon such termination. At December 31, 2004, the Company accrued £1,500 (approximately $2,871) for the estimated cost to terminate the lease.

In
April 2005, the Company entered into an amendment of the Lease Termination Agreement. The amendment accelerated the termination of the lease to April 2005 and required
the Company to pay a termination charge of £200 (approximately $381). In addition, GFI Holdings Ltd. executed a new sublease with the subsidiary of JPI for an eighteen-month term
with rent of £500 (approximately $895) per annum plus related costs, such as utilities, real estate taxes and service charges. As a result of the amendment, in the second quarter of 2005,
the Company reduced its lease termination liability by approximately £1,200 (or $2,266). In addition, the Company anticipates that it will cease using these premises in the fourth quarter
and will accrue approximately $895 for the remaining rent plus any related charges on the lease at that time.

Purchase ObligationsThe Company has various unconditional purchase obligations for the purchase of quotes from a number of
information service providers used in the normal course of business. As of June 30, 2005, the Company had total purchase commitment for quotes of approximately $7,731, with $6,113 due within
the next twelve months and $1,618 due between one to two years. Additionally, the Company has purchase commitments for capital expenditures related to its U.K. primary lease of approximately
£1,098 (approximately $1,965), all of which are due within the next twelve months.

ContingenciesIn the normal course of business, the Company and certain subsidiaries included in the consolidated financial
statements have been named as defendants in various lawsuits and proceedings and have been involved in certain regulatory examinations. Additional actions, investigations or proceedings may be brought
from time to time in the future. We are subject to the possibility of losses from these various contingencies. Considerable judgment is necessary to estimate the probability and amount of any loss
from such contingencies. An accrual is made when it is probable
that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. The Company accrues a liability for the estimated costs of adjudication or
settlement of asserted and unasserted claims existing as of the end of the reporting period.

The
Company has recorded reserves for certain contingencies to which we may have exposure, such as reserves for certain income tax and litigation contingencies and contingencies related
to the employer portion of National Insurance Contributions in the U.K.

The
Company is subject to regular examinations by various tax authorities in jurisdictions in which the Company has significant business operations. The Company regularly assesses the
likelihood of additional assessments in each of the tax jurisdictions resulting from these examinations. Tax reserves have been established, which the Company believes to be adequate in relation to
the potential for additional assessments. Once established, reserves are adjusted as information becomes available or when an event occurs requiring a change to the reserve. The resolution of these
tax matters could have a material impact on the Company's effective tax rate.

16

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It is not presently possible to determine the Company's ultimate exposure to these matters and there is no assurance that the resolution of these matters will not
significantly exceed the reserves accrued by the Company. It is the opinion of the Company's management that the ultimate resolution of these matters, while not likely to have a material adverse
effect on the consolidated financial condition of the Company, could be material to the Company's operating results for any particular period.

Risks and UncertaintiesThe Company primarily generates its revenues by executing and facilitating transactions for its
customers. Revenues for these services are transaction based. As a result, the Company's revenues could vary based upon the transaction volume of securities, commodities, foreign exchange and
derivative markets.

GuaranteesThe Company, through its subsidiaries, is a member of certain exchanges and clearinghouses. Under the membership
agreements, members are generally required to guarantee certain obligations. Additionally, if a member becomes unable to satisfy its obligations to the clearinghouse, other members may be required to
meet shortfalls. To mitigate these performance risks, the exchanges and clearinghouses often require members to post collateral as well as meet certain minimum financial standards. The Company's
maximum potential liability under these arrangements cannot be quantified. However, management believes that the potential for the Company to be required to make payments under these arrangements is
unlikely. Accordingly, no contingent liability is recorded in the Condensed Consolidated Statements of Financial Condition for these arrangements.

9.     FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

Our financial instruments with off-balance sheet risk are described in "Note 18Financial Instruments with Off-Balance
Sheet Risk" contained in the 2004 Form 10-K. There have been no material changes to our off-balance sheet risk during the six months ended June 30, 2005.

10.   FINANCIAL INSTRUMENTS

We are exposed to market risk associated with movements in foreign currency exchange rates. There have been no material changes to our risk management policy as
described in "Note 19Financial Instruments" contained in the 2004 Form 10-K.

In
March 2005, the Company discontinued hedge accounting for a foreign exchange derivative contract that was previously designated and qualified as a hedge under SFAS
No. 133. The de-designation of this contract was necessary because the Company renegotiated the exchange rates in the contract that resulted in its termination and the execution of
a new contract. Subsequent to such de-designation, the Company discontinued prospectively hedge accounting for the original contract. The net unrealized loss, at the date of
de-designation, associated with this contract will remain in accumulated other comprehensive loss and will be reclassified into earnings over the term of the original contract. The new
foreign exchange derivative contract did not qualify for hedge accounting under SFAS 133. Accordingly this contract is recorded at fair value and all realized and unrealized gains and losses
are included in earnings. The contract was settled at June 30, 2005 for a realized gain of $1,131. From the inception of this new contract through June 30, 2005 the Company recorded a
net gain in other income of $7,805 related to these two contracts. In addition, at June 30, 2005, there was $6,177 before tax ($4,324 after-tax) remaining in accumulated other
comprehensive loss that will be recognized over the next six quarters.

17

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For
the three and six months ended June 30, 2005 and 2004, there was no hedge ineffectiveness. For the three and six months ended June 30, 2005 and 2004, unrealized gains
(losses) before tax totaling $5,907, $4,248, ($1,173) and $566, respectively, were recorded as other comprehensive income (loss). There has been no discontinuance of cash flow hedges that would
require a reclassification of gains into earnings. Management does not anticipate any events or transactions that would result in the reclassification into earnings of gains and losses that are
reported in accumulated other comprehensive income due to hedge discontinuance.

The
Company's derivatives are summarized below showing the fair value of the related liabilities that are included in other liabilities in the Condensed Consolidated Statements of
Financial Condition as of June 30, 2005 and December 31, 2004 as follows:

Liabilities

June 30, 2005

December 31, 2004Foreign exchange derivative contracts

$
334

$
10,812Fenics purchase obligation


172


1,022


The
fair value of the foreign exchange derivative contracts was estimated based on quoted market prices of comparable instruments. The fair value of the Fenics purchase obligation was
estimated using an exchange option model that included assumptions of management's estimate of the fair value of the common stock of the Company and the common stock of Fenics, volatility, correlation
and the expected life of the obligation.

Included
in other liabilities in the Condensed Consolidated Statement of Financial Condition as of June 30, 2005 is a $2,589 equity position held by the Company and recorded at
current market value.

11.   REGULATORY REQUIREMENTS

GFI Securities LLC is a registered broker-dealer with the SEC and the National Association of Securities Dealers, Inc. GFI Securities LLC is also a
registered introducing broker with the National Futures Association and the Commodity Futures Trading Commission. Accordingly, GFI Securities LLC is subject to the net capital rules under the Exchange
Act and the Commodity Exchange Act. Under these rules, GFI Securities LLC is required to maintain Minimum Net Capital, as defined, of not less than the greater of $250 or 2% of aggregate debits, as
defined.

At
June 30, 2005, GFI Securities LLC had Net Capital and Excess Net Capital as follows:

Net Capital at June 30, 2005

$
28,895Minimum Net Capital


250Excess Net Capital

$
28,645


18

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GFI
Brokers Limited and GFI Securities Limited are subject to the capital requirements of the Financial Services Authority in the United Kingdom. Under these requirements, minimum
capital, as defined, must be maintained as follows:

|                             |  | GFI Brokers Limited |        | GFI Securities Limited
|---------------------------- |  | ------------------- | ------ | ----------------------
|Net Capital at June 30, 2005 |  | $                   | 14,394 |                       
|Minimum Net Capital required |  |                     | 8,551  |                       
|                             |  |                     |        |                       
|Excess Net Capital           |  | $                   | 5,843  |                       
|                             |  |                     |        |                       

GFI
(HK) Securities LLC is subject to the capital requirements of the Securities and Futures Commission in Hong Kong, which require that GFI (HK) Securities LLC maintain minimum capital,
as defined, of approximately $386. At June 30, 2005, GFI (HK) Securities LLC had capital of approximately $1,333, which exceeded the minimum requirement by approximately $947.

GFI
Group Pte Ltd. is subject to the compliance requirements of the Monetary Authority of Singapore, which require that GFI Group Pte Ltd., maintain stockholders' equity of
3,000 Singapore dollars. At December 31, 2004, GFI Group Pte Ltd. had stockholders' equity of 3,796 Singapore dollars (or approximately $2,326), which exceeded the minimum requirement by
approximately 796 Singapore dollars (or approximately $487).

During
the second quarter of 2005, GFI Securities Limited was registered in Japan as a member of the Japan Securities Dealers Association ("JSDA"). GFI Securities Limited's Japanese
branch is required to maintain a "brought-in" capital, as defined, of Japanese Yen 50,000 as part of the licensing requirement. Additionally, GFI Securities Limited is subject to JSDA's
requirement that revenue plus "brought-in" capital exceed a ratio of 140.0% of relevant expenditure. At June 30, 2005, GFI Securities Limited met JSDA's licensing requirement by
maintaining a "brought-in" capital in Japanese Yen 50,000. Additionally, GFI Securities Limited's revenue plus "brought-in" capital ratio was 2,526.0%, which exceeded the
financial requirement by approximately 2,386.0%.

Regulatory
rules may restrict the Company's ability to withdraw capital from its regulated subsidiaries. The Company's regulated subsidiaries were in compliance with all minimum net
capital requirements as of June 30, 2005.

12.   GEOGRAPHIC INFORMATION

The Company offers its products and services globally from offices in the United States, the United Kingdom and the Asia-Pacific region.

19

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Information
regarding revenue for the three and six months ended June 30, 2005 and 2004, and information regarding long-lived assets (defined as property, equipment,
leasehold improvements and software inventory) in geographic areas as of June 30, 2005 and December 31, 2004 is as follows:

|               |  | Three Months Ended June 30, |         | Six Months Ended June 30,
|-------------- |  | --------------------------- | ------- | -------------------------
|
|Revenues:      |  |                             |         |                          
|United States  |  | $                           | 71,880  |                          
|United Kingdom |  |                             | 57,562  |                          
|Asia-Pacific   |  |                             | 10,881  |                          
|               |  |                             |         |                          
|Total          |  | $                           | 140,323 |                          
|               |  |                             |         |                          

|                               |  | June 30, 2005 |        | December 31, 2004
|------------------------------ |  | ------------- | ------ | -----------------
|Long-lived Assets, as defined: |  |               |        |                  
|United States                  |  | $             | 22,756 |                  
|United Kingdom                 |  |               | 2,107  |                  
|Asia-Pacific                   |  |               | 1,231  |                  
|                               |  |               |        |                  
|Total                          |  | $             | 26,094 |                  
|                               |  |               |        |                  

Revenues
are attributed to geographic areas based on the location of the Company's brokers.

13.   Other Comprehensive Income (Loss)

|                                                                |                        | Three Months Ended June 30 |   | Six Months Ended
June 30 |  
|--------------------------------------------------------------- | ---------------------- | -------------------------- | - | ------------------------ | -
|
|Unrealized gain (loss) on foreign exchange derivative contracts |                        |                            |   |                          |  
|                                                                | Current Period Change: |                            |   |                          |  
|                                                                | Before Tax Amount      |                            | $ | 5,907                    |  
|                                                                | Tax (Expense) Benefit  |                            |   | (1,811                   | )
|                                                                |                        |                            |   |                          |  
|                                                                | After Tax Amount       |                            | $ | 4,096                    |  
|                                                                |                        |                            |   |                          |  
|Foreign currency translation adjustment                         |                        |                            |   |                          |  
|                                                                | Before Tax Amount      |                            | $ | (161                     | )
|                                                                | Tax (Expense) Benefit  |                            |   | 73                       |  
|                                                                |                        |                            |   |                          |  
|                                                                | After Tax Amount       |                            | $ | (88                      | )
|                                                                |                        |                            |   |                          |  

20

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14.   RELATED PARTY TRANSACTIONS

Office Lease Termination with an Affiliate

The Company, through its subsidiary GFI Holdings Ltd., previously leased its primary U.K. office space under a lease agreement with a wholly owned
subsidiary of JPI, which was due to expire in 2016. In December 2004, the Company and the affiliate entered into a Lease Termination Agreement whereby both parties agreed to terminate this
lease effective September 2005 and to make certain termination and other payments upon such termination. The Company accrued £1,500 (approximately $2,871) for the estimated cost to
terminate the lease. In April 2005, the Company and the affiliate amended the Lease Termination Agreement. The amendment accelerated the termination of the lease to April 2005 and
required the Company to pay a termination charge of £200 (approximately $381). In addition, GFI Holdings Ltd. executed a new sublease with the subsidiary of JPI for an
eighteen-month term with rent of £500 (approximately $895) per annum plus related costs, such as utilities, real estate taxes and service charges. As a result of the amendment, in the
second quarter of 2005, the Company reduced its lease termination liability by approximately £1,200 (or $2,266). In addition, the Company anticipates that it will cease using these
premises in the fourth quarter of 2005 and will accrue approximately $895 for the remaining rent plus any related charges on the lease at that time.

21

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
GFI Group Inc.
New York, New York

We
have reviewed the accompanying condensed consolidated statement of financial condition of GFI Group Inc. and subsidiaries (the "Company") as of June 30, 2005, and the
related condensed consolidated statements of income and comprehensive income for the three-month and six-month periods ended June 30, 2005 and 2004 and the condensed consolidated
statements of cash flows for the six-month periods ended June 30, 2005 and 2004. These interim financial statements are the responsibility of the Company's management.

We
conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally
of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.

Based
on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.

We
have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of financial condition of GFI
Group Inc. and subsidiaries as of December 31, 2004, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for the year then ended
(not presented herein); and in our report dated March 30, 2005, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the
accompanying
condensed consolidated statement of financial condition as of December 31, 2004 is fairly stated, in all material respects, in relation to the consolidated statement of financial condition from
which it has been derived.

/s/
Deloitte & Touche LLP
New York, New York
August 15, 2005

22

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words
"believe," "anticipate," "expect," "estimate," "intend," "project," "will be," "will likely continue," "will likely result," or words or phrases of similar meaning. These forward-looking statements
are based largely on the expectations of management and are subject to a number of risks and uncertainties including, but not limited to, the following:



The
foregoing risks and uncertainties, as well as those risks discussed under this Management's Discussion and Analysis of Financial Condition and Results of Operations and "Item
3Quantitative and Qualitative Disclosures About Market Risk" and elsewhere in this Quarterly Report, may cause actual results to differ materially from the forward-looking statements.
Additionally, our 2004 Form 10-K contains various factors under the heading "Item 1Business: Risk Factors" and elsewhere that could cause actual results to differ
materially from expected or historic results. The information included herein is given as of the filing date of this Form 10-Q with the SEC and future events or circumstances could
differ significantly from these forward-looking statements. The Company does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise.

23

---



Business Overview

We founded our business in 1987. The Company was incorporated under the laws of the State of Delaware in 2001 to be a holding company for its subsidiaries. The
Company, through its subsidiaries, is a leading inter-dealer broker specializing in over-the-counter derivatives products and related securities. We provide brokerage services
and data and analytics products to institutional clients in markets for a range of credit, financial, equity and commodity instruments. We function as an intermediary on behalf of our brokerage
clients by matching their trading needs with counterparties having reciprocal interests. We focus on the more complex, and often less liquid, markets for sophisticated financial instruments, primarily
derivatives, that offer an opportunity for strong growth and higher commissions per transaction than the markets for more standardized financial instruments.

We
offer a hybrid brokerage approach to our clients, combining a range of telephonic and electronic trade execution services, depending on the needs of the individual markets. We
complement our hybrid brokerage capabilities with decision support services, such as value-added data and analytics products. We earn revenues for our brokerage services and charge fees for certain of
our data and analytics products.

On
January 31, 2005, we completed an IPO of our common stock, selling 3,947,369 shares of common stock at $21.00 per share. Our proceeds from the IPO after deducting underwriters'
discounts and expenses were $73.7 million.

For
a detailed description of the Company's business, including its operations and the associated risks, see the Company's 2004 Form 10-K filed by the Company under
the Exchange Act.

Business Environment

The global business environment during the quarter ended June 30, 2005 was generally positive for our business, featuring satisfactory volume levels and
modest volatility in global equity and commodity markets, and more pronounced volatility in global credit and foreign exchange markets.

The
Company's business generally benefits from robust trading volumes and volatility in the markets it serves. Trading volumes in many of our markets are driven by the trading activity
of our dealer customers that, in turn, is partially responsive to the demand of their "buy-side" customers, which increasingly reflect the trading activities of hedge funds. During the
second quarter of 2005, we continued to experience strong revenue from our brokerage customers despite reported decreases in the overall investment inflows into hedge funds during the period.

In
terms of overall volatility during the quarter, global equity markets remained relatively unchanged with the Chicago Board Options Exchange SPX Volatility Index (the "VIX Index")
average price increasing slightly over the first quarter 2005, but down considerably from the second quarter of 2004. Volatility, according to the VIX Index, increased in the second quarter primarily
due to high profile analyst downgrades in the automotive and retail industries. Modest commodity volatility in the second quarter, primarily in the petroleum product markets, resulted from the
combination of continuing Middle-East tensions, supply complications and strong demand keeping prices at historically high levels. Crude and Natural Gas futures contracts pricing
volatility on the New York Mercantile Exchange were mixed for the quarter.

Volatility
in the credit markets resulted from widening of credit spreads following credit analyst downgrades in the auto, auto supplies and retail industries, combined with higher
short-term interest rates resulting from two short-term interest rate increases by the Federal Reserve Board and a flattening yield curve. Increased bond market volatility in
the credit markets was evidenced by the pricing of the Dow Jones (DJ) CDX North American Investment Grade Index (which represents a basket of 125 investment grade credit default swap premiums in North
America), and to a lesser extent, the Dow Jones credit default swap indices in Europe and some emerging markets. Prices on these

24

---



indices
generally experienced short-term volatility spikes around the time of the downgrades and certain other credit events.

An
increase in foreign exchange volatility was likely attributable to a number of factors, including the increased valuation of the U.S. Dollar during the period, a lower than expected
U.S. federal deficit, continued low long-term U.S. interest rates, increased U.S. inbound foreign investment and uncertainty surrounding the Euro following several national referenda
rejecting the European Constitution. An increase in short-term interest rates in the United States in the second quarter also likely contributed to higher volatility in the foreign
exchange markets. The U.S. Dollar Index (a trade-weighted basket of six major currencies) increased 6% versus first quarter 2005. The U.S. Dollar appreciated from 0.53 to 0.59 versus British Pound
Sterling (USD/GBP), and from 0.77 to 0.83 versus Euro (USD/EUR) over the first quarter 2005.

Results of Operations

The following table sets forth our condensed consolidated results of operations for the periods indicated:

|                                         |                                      | Three Months Ended June 30, |         | Six Months Ended June 30,
|---------------------------------------- | ------------------------------------ | --------------------------- | ------- | -------------------------
|
|REVENUES:                                |                                      |                             |         |                          
|                                         | Brokerage revenues:                  |                             |         |                          
|                                         |                                      | Agency commissions          |         | $                        
|                                         |                                      | Principal transactions      |         |                          
|                                         |                                      |                             |         |                          
|                                         |                                      | Total brokerage revenues    |         |                          
|                                         | Analytics and market data            |                             |         | 4,711                    
|                                         | Interest income                      |                             |         | 883                      
|                                         | Other income                         |                             |         | 6,376                    
|                                         |                                      |                             |         |                          
|Total revenues                           |                                      |                             | 140,323 |                          
|                                         |                                      |                             |         |                          
|EXPENSES:                                |                                      |                             |         |                          
|                                         | Compensation and employee benefits   |                             |         | 80,896                   
|                                         | Communications and quotes            |                             |         | 6,341                    
|                                         | Travel and promotion                 |                             |         | 6,041                    
|                                         | Rent and occupancy                   |                             |         | 3,913                    
|                                         | Depreciation and amortization        |                             |         | 3,599                    
|                                         | Professional fees                    |                             |         | 2,927                    
|                                         | Clearing fees                        |                             |         | 2,974                    
|                                         | Interest expenses                    |                             |         | 597                      
|                                         | Other expenses                       |                             |         | 5,809                    
|                                         | Lease termination costs to affiliate |                             |         | (2,266                   
|                                         |                                      |                             |         |                          
|                                         |                                      | Total Expenses              |         |                          
|INCOME BEFORE PROVISION FOR INCOME TAXES |                                      |                             | 29,492  |                          
|PROVISION FOR INCOME TAXES               |                                      |                             | 12,810  |                          
|                                         |                                      |                             |         |                          
|NET INCOME                               |                                      | $                           | 16,682  |                          
|                                         |                                      |                             |         |                          

25

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The
following table sets forth our condensed consolidated results of operations as a percentage of our total revenues for the periods indicated:

|                                         |                                    | Three Months Ended June 30, |                          | Six Months Ended June 30, |     
|---------------------------------------- | ---------------------------------- | --------------------------- | ------------------------ | ------------------------- | ----
|
|REVENUES:                                |                                    |                             |                          |                           |     
|                                         | Brokerage revenues:                |                             |                          |                           |     
|                                         |                                    | Agency commissions          |                          | 70.8                      | %   
|                                         |                                    | Principal transactions      |                          | 20.7                      |     
|                                         |                                    |                             |                          |                           |     
|                                         |                                    |                             | Total brokerage revenues |                           | 91.5
|                                         | Analytics and market data          |                             | 3.4                      |                           | 4.3 
|                                         | Interest income                    |                             | 0.6                      |                           | 0.2 
|                                         | Other income                       |                             | 4.5                      |                           | 0.8 
|                                         |                                    |                             |                          |                           |     
|Total revenues                           |                                    | 100.0                       | %                        | 100.0                     | %   
|                                         |                                    |                             |                          |                           |     
|EXPENSES:                                |                                    |                             |                          |                           |     
|                                         | Compensation and employee benefits |                             | 57.6                     | %                         | 63.3
|                                         | Communications and quotes          |                             | 4.6                      |                           | 5.8 
|                                         | Travel and promotion               |                             | 4.3                      |                           | 5.4 
|                                         | Rent and occupancy                 |                             | 2.8                      |                           | 3.0 
|                                         | Depreciation and amortization      |                             | 2.6                      |                           | 3.5 
|                                         | Professional fees                  |                             | 2.1                      |                           | 2.4 
|                                         | Clearing fees                      |                             | 2.1                      |                           | 2.6 
|                                         | Interest expenses                  |                             | 0.4                      |                           | 0.7 
|                                         | Other expenses                     |                             | 4.1                      |                           | 2.9 
|                                         | Lease termination to affiliate     |                             | (1.6                     | )                         |    
|                                         |                                    |                             |                          |                           |     
|                                         |                                    | Total Expenses              |                          | 79.0                      | %   
|INCOME BEFORE PROVISION FOR INCOME TAXES |                                    | 21.0                        |                          | 10.4                      |     
|PROVISION FOR INCOME TAXES               |                                    | 9.1                         |                          | 5.1                       |     
|                                         |                                    |                             |                          |                           |     
|NET INCOME                               |                                    | 11.9                        | %                        | 5.3                       | %   
|                                         |                                    |                             |                          |                           |     

Three Months Ended June 30, 2005 Compared to the Three Months Ended June 30, 2004

Net income for the three months ended June 30, 2005 was $16.7 million as compared to net income of $5.1 million for the three months ended
June 30, 2004, an increase of $11.6 million or approximately 227.5%. Total revenues increased by $47.8 million, or 51.7%, to $140.3 million for the three months ended
June 30, 2005 from $92.5 million for the same period from the prior year. Our increased revenues were primarily due to increased brokerage revenues across each of our product categories.
Additionally, broker productivity (defined as total revenues during the period divided by average monthly brokerage personnel headcount for the period) increased by approximately 10.2% for the three
months ended June 30, 2005 from the same period in the prior year. Total expenses increased by $28.2 million, or 34.1%, to $110.8 million for the three months ended
June 30, 2005 from $82.6 million for the same period from the prior year. Expenses increased primarily because of increased compensation expense, which was attributable to an increase in
the number of brokerage personnel and an increase in performance-based bonuses as a result of higher brokerage commission revenues for the three months ended June 30, 2005.

26

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Revenues

Brokerage Revenues

We offer our brokerage services in four broad product categories: credit, financial, equity and commodity. The charts below detail our brokerage revenues by
product category in dollars and as a percentage of our total brokerage revenues for the periods indicated.

Three Months Ended June 30,2005

2004BROKERAGE REVENUES:Credit

$
60,749

$
37,247Financial


29,835


18,922Equity


21,869


18,515Commodity


15,900


12,883Total brokerage revenues

$
128,353

$
87,567BROKERAGE REVENUES:Credit


47.3
%

42.6
%Financial


23.3


21.6Equity


17.0


21.1Commodity


12.4


14.7Total brokerage revenues


100.0
%

100.0
%


Total
brokerage revenues increased by $40.8 million, or 46.6%, to $128.4 million for the three months ended June 30, 2005, as compared to $87.6 million for
the three months ended June 30, 2004. Agency commissions increased by $38.7 million, or 63.9%, to $99.3 million for the three months ended June 30, 2005 as compared to
$60.6 million for the three months ended June 30, 2004. Principal transactions increased by $2.1 million, or 7.8%, to $29.1 million for the three months ended
June 30, 2005 from $27.0 million for the three months ended June 30, 2004.

Of
the total increase in brokerage revenues of $40.8 million, approximately $27.6 million was attributable to the performance of our existing brokerage desks across all
product areas. The increase in credit product brokerage revenues of $23.5 million was due to a number of factors including: robust trading activity in the credit markets due to the uncertain
equity markets, strong volatility in credit spreads in key credit sectors, such as the automotive and retail industries, continued overall growth in the credit derivatives market, and an increase in
the number of credit product brokerage personnel. Our existing credit product desks contributed $14.6 million of the total increase in credit product brokerage revenues. The remaining increase
of $8.9 million was generated by the addition of fifteen new or restructured credit product desks since June 30, 2004. A "restructured" brokerage desk generally refers to a brokerage
desk that has been created out of a part of an existing desk in order to allow the brokers on that restructured desk to focus on one or more specific financial instruments or market sectors for which
the existing brokerage desk had previously provided brokerage services. The increase in total credit revenues was also partially attributable to the increase in the number of credit product brokerage
personnel, which increased by 32 to 185 at June 30, 2005, as compared to 153 at June 30, 2004.

The
increase in financial product brokerage revenues of $10.9 million was primarily attributable to the combination of increased revenues from brokerage desks covering existing
interest rate markets, a slight rebound in revenues from brokerages desks covering emerging markets and an increase in the number of financial product brokerage personnel. The majority of the increase
in our financial product brokerage revenues was generated from our existing financial product desks, which contributed $8.8 million of the increase in financial product brokerage revenues. The
remaining increase of

27

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$2.1 million
in financial product brokerage revenues was attributable to the addition of five new or restructured financial product desks since June 30, 2004. Another factor that
contributed to the increase in the total financial product brokerage revenues related to an increase in the number of financial product brokerage personnel, which increased by 66 to 187 at
June 30, 2005, as compared to 121 at June 30, 2004. Of the total increase in equity product brokerage revenues of $3.4 million, our existing equity product desks contributed
substantially all of the increase in equity product brokerage revenues. The increase in equity product brokerage revenues was also partially attributable to an increase in the number of equity product
brokerage personnel, which increased by 32 to 131 at June 30, 2005, as compared to 99 at June 30, 2004. The increase in our commodity product brokerage revenues of $3.0 million
was attributable to the combination of investment in new or restructured desks, an increase in the number of participants in the market, modest volatility in several energy markets, and an increase in
the number of commodity brokerage personnel, which increased by 22 to 126 at June 30, 2005, as compared to 104 at June 30, 2004. Our new or restructured commodity product desks
contributed $2.1 million of the increase in commodity product brokerage revenues. The remaining increase of $0.9 million was generated from our existing commodity product desks.

Analytics and Market Data

Revenues from our analytics and market data products increased by $0.7 million, or 17.5%, to $4.7 million for the three months ended June 30,
2005 as compared to $4.0 million for the three months ended June 30, 2004. The increase was primarily due to the increase in sales of license subscriptions for analytical software for
foreign exchange derivatives and, energy products and other pricing data and consulting fees.

Interest Income

Interest income increased by $0.7 million, or 350.0%, to $0.9 million for the three months ended June 30, 2005 as compared to
$0.2 million for the three months ended June 30, 2004. The increase was mainly attributable to the higher level of average cash balances in the U.S. resulting from operations and the
increase in interest income on clearing accounts related to our brokerage operations.

Other Income

Other income increased by $5.7 million, or 814.3%, to $6.4 million for the three months ended June 30, 2005 from other income of
$0.7 million for the three months ended June 30, 2004. The increase is primarily related to $8.4 million in gains from one of our foreign exchange derivative contracts, offset by
a loss of $0.8 million reclassified from accumulated other comprehensive loss into earnings on a foreign exchange derivative contract that was de-designated as a hedge in
March 2005 and the transactional net losses based on foreign currency fluctuations. See Note 10 to the Condensed Consolidated Financial Statements for further discussion of foreign
exchange derivative contracts. Other income for the three months ended June 30, 2004 mainly consisted of transactional net gains based on foreign currency fluctuations.

Expenses

Compensation and Employee Benefits

Compensation and employee benefits increased by $22.4 million, or 38.3%, to $80.9 million for the three months ended June 30, 2005 from
$58.5 million for the three months ended June 30, 2004. The increase was primarily due to an increase in the number of brokerage personnel from 477 at June 30, 2004 to 629 at
June 30, 2005 and an increase in aggregate brokerage personnel performance bonuses of $16.6 million over the same periods resulting in large part from our overall higher brokerage
commission revenues and increase in personnel.

28

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Total
compensation and employee benefits as a percentage of total revenues decreased to 57.6% at June 30, 2005 from 63.3% from June 30, 2004 primarily due to the increased
use of deferred compensation arrangements.

Communications and Quotes

Communications and quotes increased by $1.0 million, or 18.9%, to $6.3 million for the three months ended June 30, 2005 from
$5.3 million from the three months ended June 30, 2004. The increase was primarily attributable to the increase in brokerage personnel.

Travel and Promotion

Travel and promotion increased by $1.1 million, or 22.4%, to $6.0 million for the three months ended June 30, 2005 from $4.9 million
for the three months ended June 30, 2004. This expense, as a percentage of our total brokerage revenues for the three months ended June 30, 2005 decreased to 4.7% from 5.6% for the same
period from the prior year primarily due to the Company's efforts to lower costs and the increase in the Company's total brokerage revenues.

Rent and Occupancy

Rent and occupancy increased by $1.1 million, or 39.3%, to $3.9 million for the three months ended June 30, 2005 from $2.8 million for
the three months ended June 30, 2004. The increase was primarily due to the increase in rent expenses resulting from the lease of additional office space in the U.S. and U.K. and increased
property insurance. See Note 8 to the Condensed Consolidated Financial Statements for further discussion of the U.K. lease.

Depreciation and Amortization

Depreciation and amortization increased by $0.4 million, or 12.5%, to $3.6 million for the three months ended June 30, 2005 from
$3.2 million for the three months ended June 30, 2004. The increase was attributable to the increase in fixed assets and the accelerated depreciation of $0.5 million related to
certain long-lived assets to be abandoned as a result of the early termination of the lease of our primary U.K. office premises.

Professional Fees

Professional fees increased by $0.8 million, or 36.4%, to $3.0 million for the three months ended June 30, 2005 from $2.2 million for
the three months ended June 30, 2004. The increase was primarily due to the increase in audit, tax and legal fees.

Clearing Fees

Clearing fees increased by $0.6 million, or 25.0%, to $3.0 million for the three months ended June 30, 2005 from $2.4 million for the
three months ended June 30, 2004. This increase was due to a higher volume in the number of principal transactions executed during the three months ended June 30, 2005 as compared to the
same period in the prior year. Principal transactions are generally settled through third party clearing organizations that charge us a fee for their services. We also use the services of floor
brokers on certain stock exchanges to assist in the execution of transactions. Fees paid to floor brokers in these circumstances are included in clearing fees.

Interest Expense

Interest expense decreased by $0.1 million, or 14.3%, to $0.6 million for the three months ended June 30, 2005 from $0.7 million for
the three months ended June 30, 2004. The decrease was primarily due to lower interest expense under our Credit Facility, offset by the increased interest charges on clearing accounts related
to our brokerage operations during the three months ended June 30, 2005, as compared to the three months ended June 30, 2004.

29

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Other Expenses

Other expenses increased by $3.1 million, or 114.8%, to $5.8 million for the three months ended June 30, 2005 from $2.7 million for
the three months ended June 30, 2004. The increase was primarily attributable to a charge of $3.2 million made in connection with newly-hired brokerage personnel in Singapore to
buy-out their employment contracts with their former employers and an increase in litigation reserves, offset by a decrease in irrecoverable Value Added Tax relating to the purchases in
communications and quotes in the U.K. and a decrease in other general office and miscellaneous expenses.

Lease Termination Costs to Affiliate

Lease termination costs to affiliate represent the estimated lease termination costs in connection with our primary lease in the U.K., which we lease from an
affiliate. In April 2005, the Company and the affiliate executed an amendment to the Lease Termination Agreement entered into in December 2004. The amendment accelerated termination of
the lease to April 2005 and required the Company to pay a termination charge. As a result of the amendment, in the second quarter of 2005, the Company reduced its lease termination liability by
approximately £1,200 (or $2,266). See Note 14 to the Condensed Consolidated Financial Statements for further discussion of the Lease Termination Agreement.

Provision for Income Taxes

Our provision for income taxes totaled $12.8 million for the three months ended June 30, 2005 and $4.7 million for the three months ended
June 30, 2004. Our effective tax rate was approximately 43.4% for the three months ended June 30, 2005 as compared to 48.1% for the comparable period in 2004. The reduction in the
effective tax rate was primarily due to a decrease in taxes related to foreign operations, which was partially offset by an increase in state and local income taxes.

Six Months Ended June 30, 2005 Compared to the Six Months Ended June 30, 2004

Net income for the six months ended June 30, 2005 was $25.8 million as compared to net income of $11.9 million for the six months ended
June 30, 2004, an increase of $13.9 million or approximately 116.8%. Total revenues increased by $82.5 million, or 45.8%, to $262.6 million for the six months ended
June 30, 2005 from $180.1 million for the same period from the prior year. Our increased revenues were primarily due to increased brokerage revenues across each of our product
categories. Additionally, broker productivity (defined as total revenues during the period divided by average monthly brokerage personnel headcount for the period) increased by approximately 5.4% for
the six months ended June 30, 2005. Total expenses increased by $59.0 million, or 37.5%, to $216.5 million for the six months ended June 30, 2005 from $157.5 million
for the same period from the prior year. Expenses increased primarily because of increased compensation expense, which was attributable to an increase in performance-based bonuses as a result of
higher brokerage commission revenues for the six months ended June 30, 2005.

30

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Revenues

Brokerage Revenues

We offer our brokerage services in four broad product categories: credit, financial, equity and commodity. The charts below detail our brokerage revenues by
product category in dollars and as a percentage of our total brokerage revenues for the periods indicated.

Six Months Ended June 30,2005

2004BROKERAGE REVENUES:Credit

$
112,402

$
74,470Financial


56,120


39,462Equity


42,871


31,064Commodity


33,043


24,707Total brokerage revenues

$
244,436

$
169,703BROKERAGE REVENUES:Credit


46.0
%

43.9
%Financial


23.0


23.2Equity


17.5


18.3Commodity


13.5


14.6Total brokerage revenues


100.0
%

100.0
%


Total
brokerage revenues increased by $74.7 million, or 44.0%, to $244.4 million for the six months ended June 30, 2005, as compared to $169.7 million for the
six months ended June 30, 2004. Agency commissions increased by $69.8 million, or 58.7%, to $188.8 million for the six months ended June 30, 2005 as compared to
$119.0 million for the six months ended June 30, 2004. Principal transactions increased by $5.0 million, or 9.9%, to $55.7 million for the six months ended June 30,
2005 from $50.7 million for the six months ended June 30, 2004.

Of
the total increase in brokerage revenues of $74.7 million, approximately $54.8 million was attributable to the performance of our existing brokerage desks across all
product areas. We believe the increase in credit product brokerage revenues of $37.9 million was due to a number of factors, including robust trading activity in the credit markets due to the
uncertain equity markets, strong volatility in credit spreads in key credit sectors, such as the automotive and retail industries, continued underlying growth in the credit derivatives market, and an
increase in the number of credit product brokerage personnel. Our existing credit product desks contributed $28.0 million of the total increase in credit product brokerage revenues. The
remaining increase of $9.9 million was generated by the addition of fifteen new or restructured credit product desks since June 30, 2004. The increase in total credit revenues was also
partially attributable to an increase in the number of product brokerage personnel, which increased by 32 to 185 at June 30, 2005, as compared to 153 at June 30, 2004.

The
increase in financial product brokerage revenues of $16.7 million was primarily attributable to a combination of increased revenues from existing interest rate markets, a
slight rebound in revenues from brokerages desks covering emerging markets, and an increase in the number of financial product brokerage personnel. The majority of the increase in our financial
product brokerage revenues was generated from our existing financial product desks, which contributed $14.4 million of the increase in financial product brokerage revenues. The remaining
increase of $2.3 million in financial product brokerage revenues was attributable to the addition of five new or restructured financial product desks since June 30, 2004. Another factor
that contributed to the increase in the total financial product brokerage revenues related to an increase in the number of financial product brokerage personnel,

31

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which
increased by 66 to 187 at June 30, 2005, as compared to 121 at June 30, 2004. Of the total increase in equity product brokerage revenues of $11.8 million, our existing
equity product desks contributed $8.5 of the total increase in equity product brokerage revenues. The remaining increase of $3.3 million was generated by the addition of six new or restructured
equity product desks since June 30, 2004. The total increase in equity product brokerage revenues was also partially attributable to the increase in the number of equity product brokerage
personnel, which increased by 32 to 131 at June 30, 2005, as compared to 99 at June 30, 2004. The increase in our commodity product brokerage revenues of $8.3 million was
attributable to a combination of investment in new or restructured desks, an increase in the number of participants in the market, modest volatility in the energy market, and an increase in the number
of commodity product brokerage personnel. Our new or restructured commodity product desks contributed $4.5 million of the increase in commodity product brokerage revenues. The remaining
increase of $3.8 million was generated from our existing commodity product desks. The increase in our total commodity product brokerage revenues was also partially attributable to an increase
in the number of commodity product brokerage personnel, which increased by 22 to 126 at June 30, 2005, as compared to 104 at June 30, 2004.

Analytics and Market Data

Revenues from our analytics and market data products increased by $1.4 million, or 16.1%, to $10.1 million for the six months ended June 30,
2005 as compared to $8.7 million for the six months
ended June 30, 2004. The increase was primarily due to the increase in sales of license subscriptions for analytical software for foreign exchange derivatives and energy products and other
pricing data and consulting fees.

Interest Income

Interest income increased by $1.5 million, or 375.0%, to $1.9 million for the six months ended June 30, 2005 as compared to
$0.4 million for the six months ended June 30, 2004. The increase is mainly attributable to the higher level of average cash balances in the U.S. resulting from the net proceeds raised
from our IPO and the increase in interest income on clearing accounts related to our brokerage operations.

Other Income

Other income increased by $4.8 million, or 369.2%, to $6.1 million for the six months ended June 30, 2005 from other income of
$1.3 million for the six months ended June 30, 2004. The increase is primarily related to $8.4 million in gains from one of our foreign exchange derivative contracts, offset by a
loss of $0.8 million reclassified from accumulated other comprehensive loss into earnings on a foreign exchange derivative contract that was de-designated as a hedge in
March 2005 and transactional net losses based on foreign currency fluctuations. See Note 10 to the Condensed Consolidated Financial Statements for further discussion of foreign exchange
derivative contracts. Other income for the six months ended June 30, 2004 mainly consisted of transactional net gains based on foreign currency fluctuations.

Expenses

Compensation and Employee Benefits

Compensation and employee benefits increased by $42.8 million, or 37.7%, to $156.4 million for the six months ended June 30, 2005 from
$113.6 million for the six months ended June 30, 2004. The increase was primarily due to an increase in the number of brokerage personnel from 477 at June 30, 2004 to 629 at
June 30, 2005 and an increase in brokerage personnel performance bonuses of $26.3 million resulting in large part from our overall higher brokerage commission revenues.

32

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Total
compensation and employee benefits as a percentage of total revenues decreased to 59.5% at June 30, 2005 from 63.0% from June 30, 2004 primarily due to the increased
use of deferred compensation arrangements.

Communications and Quotes

Communications and quotes increased by $2.1 million, or 21.0%, to $12.1 million for the six months ended June 30, 2005 from
$10.0 million from the six months ended June 30, 2004. The increase was primarily attributable to the increase in brokerage personnel.

Travel and Promotion

Travel and promotion increased by $2.9 million, or 32.6%, to $11.8 million for the six months ended June 30, 2005 from $8.9 million
for the six months ended June 30, 2004. This expense, as a percentage of our total brokerage revenues for the six months ended June 30, 2005, decreased to 4.8% from 5.2% for the six
months ended June 30, 2004. The decrease was primarily due to the Company's efforts to lower costs and the increase in the Company's total brokerage revenues.

Rent and Occupancy

Rent and occupancy increased by $2.1 million, or 39.6%, to $7.4 million for the six months ended June 30, 2005 from $5.3 million for
the six months ended June 30, 2004. The increase was primarily due to the increase in rent expenses resulting from the lease of additional office space in the U.S. and U.K. and increased
property insurance. See Note 8 to the Condensed Consolidated Financial Statements for further discussion of the U.K. lease.

Depreciation and Amortization

Depreciation and amortization increased by $1.3 million, or 20.3%, to $7.7 million for the six months ended June 30, 2005 from
$6.4 million for the six months ended June 30, 2004. The increase was attributable to the increase in fixed assets and the accelerated depreciation of $1.1 million related to
certain long-lived assets to be abandoned as a result of the early termination of the lease of our primary U.K. office premises.

Professional Fees

Professional fees increased by $1.5 million, or 38.5%, to $5.4 million for the six months ended June 30, 2005 from $3.9 million for
the six months ended June 30, 2004. The increase was primarily due to the increase in audit, tax and legal fees.

Clearing Fees

Clearing fees increased by $2.8 million, or 80.0%, to $6.3 million for the six months ended June 30, 2005 from $3.5 million for the
six months ended June 30, 2004. This increase was due to a higher volume in the number of principal transactions executed during the six months ended June 30, 2005 as compared to the
same period in the prior year. Principal transactions are generally settled through third party clearing organizations that charge us a fee for their services. We also use the services of floor
brokers on certain stock exchanges to assist in the execution of transactions. Fees paid to floor brokers in these circumstances are included in clearing fees.

Interest Expense

Interest expense increased by $0.6 million, or 50.0%, to $1.8 million for the six months ended June 30, 2005 from $1.2 million for the
six months ended June 30, 2004. The increase was primarily

33

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due
to increased interest charges on clearing accounts related to our brokerage operations, offset by the lower interest expense under our Credit Facility.

Other Expenses

Other expenses increased by $5.1 million, or 108.5%, to $9.8 million for the six months ended June 30, 2005 from $4.7 million for the
six months ended June 30, 2004. The increase was primarily attributable to a number of factors including a charge of $3.2 million in connection with newly-hired brokerage personnel in
Singapore to buy-out their employment contracts with their former employers, an increase in the fair value of the Fenics purchase obligations, and an increase in litigation reserves,
offset by a decrease in irrecoverable Value Added Tax relating to the purchases in communications and quotes in the U.K. and a decrease in other general office and miscellaneous expenses.

Lease Termination Costs to Affiliate

Lease termination costs to affiliate represent the estimated lease termination costs in connection with our primary lease in the U.K., which we lease from an
affiliate. In April 2005, the Company and the affiliate executed an amendment to the Lease Termination Agreement entered into in December 2004. The amendment accelerated termination of
the lease to April 2005 and required the Company to pay a termination charge. As a result of the amendment, in the second quarter of 2005, the Company reduced its lease termination liability by
approximately £1,200 (or $2,266). See Note 14 to the Condensed Consolidated Financial Statements for further discussion of the Lease Termination Agreement.

Provision for Income Taxes

Our provision for income taxes totaled $20.3 million for the six months ended June 30, 2005 and $10.7 million for the six months ended
June 30, 2004. Our effective tax rate was approximately 44.0% for the six months ended June 30, 2005 as compared to 47.5% for the comparable period in 2004. The reduction in the
effective tax rate was primarily due to a decrease in taxes related to foreign operations, which was partially offset by an increase in state and local income taxes.

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Quarterly Results of Operations

The following table sets forth, by quarter, our unaudited statement of income data for the period from January 1, 2004 to June 30, 2005. Results of
any period are not necessarily indicative of results for a full year.

|                                  |                                      | Quarter Ended         
|--------------------------------- | ------------------------------------ | ----------------------
|
|
|Revenues                          |                                      |                       
|                                  | Brokerage revenues:                  |                       
|                                  |                                      | Agency commissions    
|                                  |                                      | Principal transactions
|                                  |                                      |                       
|                                  |                                      |                       
|                                  |                                      |                       
|                                  | Analytics and market data            |                       
|                                  | Interest income                      |                       
|                                  | Other income (loss)                  |                       
|                                  |                                      |                       
|                                  | Total revenues                       |                       
|                                  |                                      |                       
|Expenses                          |                                      |                       
|                                  | Compensation and employee benefits   |                       
|                                  | Communications and quotes            |                       
|                                  | Travel and promotion                 |                       
|                                  | Rent and occupancy                   |                       
|                                  | Depreciation and amortization        |                       
|                                  | Professional fees                    |                       
|                                  | Clearing fees                        |                       
|                                  | Interest expenses                    |                       
|                                  | Other expenses                       |                       
|                                  | Lease termination costs to affiliate |                       
|                                  |                                      |                       
|                                  | Total expenses                       |                       
|                                  |                                      |                       
|Income before provision for taxes |                                      |                       
|Provision for income taxes        |                                      |                       
|                                  |                                      |                       
|Net income                        |                                      |                       
|                                  |                                      |                       

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The following table sets forth our quarterly results of operations as a percentage of our total revenues for the indicated periods:

|                                  |                                      | Quarter Ended          |                         
|--------------------------------- | ------------------------------------ | ---------------------- | ------------------------
|
|Revenues                          |                                      |                        |                         
|                                  | Brokerage revenues:                  |                        |                         
|                                  |                                      | Agency commissions     |                         
|                                  |                                      | Principal transactions |                         
|                                  |                                      |                        |                         
|                                  |                                      |                        | Total brokerage revenues
|                                  | Analytics and market data            |                        | 3.4                     
|                                  | Interest income                      |                        | 0.6                     
|                                  | Other income (loss)                  |                        | 4.5                     
|                                  |                                      |                        |                         
|                                  | Total revenues                       |                        | 100.0                   
|                                  |                                      |                        |                         
|Expenses                          |                                      |                        |                         
|                                  | Compensation and employee benefits   |                        | 57.6                    
|                                  | Communications and quotes            |                        | 4.6                     
|                                  | Travel and promotion                 |                        | 4.3                     
|                                  | Rent and occupancy                   |                        | 2.8                     
|                                  | Depreciation and amortization        |                        | 2.6                     
|                                  | Professional fees                    |                        | 2.1                     
|                                  | Clearing fees                        |                        | 2.1                     
|                                  | Interest expenses                    |                        | 0.4                     
|                                  | Other expenses                       |                        | 4.1                     
|                                  | Lease termination costs to affiliate |                        | (1.6                    
|                                  |                                      |                        |                         
|                                  | Total expenses                       |                        | 79.0                    
|                                  |                                      |                        |                         
|Income before provision for taxes |                                      | 21.0                   |                         
|Provision for income taxes        |                                      | 9.1                    |                         
|                                  |                                      |                        |                         
|Net income                        |                                      | 11.9                   | %                       
|                                  |                                      |                        |                         

The table below details our brokerage revenues by product category in dollars and as a percentage of our total brokerage revenues for the
indicated periods:

|                    |                          | June 30,
2005 |   | March 31,
2005 |   | December 31,
2004 |         | September 30,
2004 |   | June 30,
2004 |   | March 30,
2004 |       
|------------------- | ------------------------ | ------------- | - | -------------- | - | ----------------- | ------- | ------------------ | - | ------------- | - | -------------- | ------
|Brokerage Revenues: |                          |               |   |                |   |                   |         |                    |   |               |   |                |       
|                    | Credit                   |               | $ | 60,749         |   | $                 | 51,653  |                    | $ | 36,304        |   | $              | 42,315
|                    | Financial                |               |   | 29,835         |   |                   | 26,285  |                    |   | 24,870        |   |                | 20,377
|                    | Equity                   |               |   | 21,869         |   |                   | 21,002  |                    |   | 21,753        |   |                | 18,656
|                    | Commodity                |               |   | 15,900         |   |                   | 17,143  |                    |   | 16,066        |   |                | 13,334
|                    |                          |               |   |                |   |                   |         |                    |   |               |   |                |       
|                    | Total brokerage revenues |               | $ | 128,353        |   | $                 | 116,083 |                    | $ | 98,993        |   | $              | 94,682
|                    |                          |               |   |                |   |                   |         |                    |   |               |   |                |       
|Brokerage Revenues: |                          |               |   |                |   |                   |         |                    |   |               |   |                |       
|                    | Credit                   |               |   | 47.3           | % |                   | 44.5    | %                  |   | 36.7          | % |                | 44.7  
|                    | Financial                |               |   | 23.2           |   |                   | 22.6    |                    |   | 25.1          |   |                | 21.5  
|                    | Equity                   |               |   | 17.0           |   |                   | 18.1    |                    |   | 22.0          |   |                | 19.7  
|                    | Commodity                |               |   | 12.4           |   |                   | 14.8    |                    |   | 16.2          |   |                | 14.1  
|                    |                          |               |   |                |   |                   |         |                    |   |               |   |                |       
|                    | Total brokerage revenues |               |   | 100.0          | % |                   | 100.0   | %                  |   | 100.0         | % |                | 100.0 
|                    |                          |               |   |                |   |                   |         |                    |   |               |   |                |       

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The table below details our brokerage revenues by geographic region in dollars and as a percentage of our total brokerage revenues for the
indicated periods:

|                    |                          | Quarter Ended |  
|------------------- | ------------------------ | ------------- | -
|
|
|Brokerage Revenues: |                          |               |  
|                    | U.S.                     |               | $
|                    | U.K.                     |               |  
|                    | Asia-Pacific             |               |  
|                    |                          |               |  
|                    | Total brokerage revenues |               | $
|                    |                          |               |  
|Brokerage Revenues: |                          |               |  
|                    | U.S.                     |               |  
|                    | U.K.                     |               |  
|                    | Asia-Pacific             |               |  
|                    |                          |               |  
|                    | Total brokerage revenues |               |  
|                    |                          |               |  

The
table below details our brokerage revenues by month in dollars for the indicated periods:

|                    |  | January |        | February |   | March  |  | April |        | May |   | June  
|------------------- |  | ------- | ------ | -------- | - | ------ |  | ----- | ------ | --- | - | ------
|
|Brokerage revenues: |  |         |        |          |   |        |  |       |        |     |   |       
|2005                |  | $       | 41,057 |          | $ | 33,839 |  | $     | 41,187 |     | $ | 44,026
|2004                |  |         | 27,248 |          |   | 25,123 |  |       | 29,765 |     |   | 26,956
|2003                |  |         | 23,452 |          |   | 21,708 |  |       | 22,487 |     |   | 18,509

|     |  | July |        | August |   | September |  | October |        | November |   | December
|---- |  | ---- | ------ | ------ | - | --------- |  | ------- | ------ | -------- | - | --------
|2004 |  | $    | 30,459 |        | $ | 30,806    |  | $       | 33,417 |          | $ | 36,141  
|2003 |  |      | 21,000 |        |   | 18,122    |  |         | 20,908 |          |   | 24,366  

Liquidity and Capital Resources

On January 31, 2005, we completed an IPO of our common stock, selling 3,947,369 shares of common stock at $21.00 per share. Our proceeds from the IPO after
deducting underwriters' discounts and expenses were $73.7 million.

At
June 30, 2005, we had cash and cash equivalents of $109.6 million, an increase of $34.3 million as compared to $105.2 million at December 31, 2004.
Cash used in operating activities was $3.6 million and consisted of net income of $25.8 million adjusted for non-cash items of $3.0 million and $32.4 million utilized for
working capital. The $32.4 million utilized for working capital was primarily comprised of changes in net payables to brokers, dealers and clearing organizations, accrued commissions
receivables and other assets, offset by increases in accrued compensation and other liabilities. Cash used in investing activities of $7.3 million reflected cash used for the acquisition of the
minority interest in Fenics and purchases of property, equipment and leasehold improvements. Cash provided by financing activities of $15.6 million reflected net proceeds received from the IPO
and the exercise of stock options and the warrant, offset by the repayment of the notes payable to JPI in January 2005 and the borrowing outstanding under our Credit Facility in
February 2005.

Our
liquidity and available cash resources are in part restricted by the regulatory requirements of our operating subsidiaries including GFI Securities LLC, GFI Securities Limited, GFI
Brokers Limited, GFI (HK) Securities LLC and GFI Group Pte Ltd. GFI Securities LLC is subject to regulatory capital

37

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requirements
under the Securities Exchange Act of 1934 and the Commodity Exchange Act. GFI Securities Limited and GFI Brokers Limited are subject to the regulatory capital requirements of the
Financial Services Authority in the United Kingdom. GFI Securities Limited's Japanese branch is subject to licensing and financial requirements by the Japan Securities Dealers Association. GFI (HK)
Securities LLC is subject to the regulatory capital requirements of the Securities and Futures Commission in Hong Kong. GFI Group Pte Ltd. is subject to the regulatory compliance requirements
of the Monetary Authority of Singapore. At June 30, 2005, GFI Securities LLC, GFI Securities Limited, GFI Brokers Limited, GFI (HK) Securities LLC and GFI Group Pte Ltd. were in
compliance with their respective regulatory capital requirements. See Note 11 to our condensed consolidated financial statements for a further discussion of these regulatory requirements.

We
anticipate that we will experience an increase in our capital expenditures and lease commitments consistent with our anticipated growth in operations, infrastructure and personnel. We
currently anticipate that we will continue to experience significant growth in our operating expenses for the foreseeable future and that our operating expenses will be a material use of our cash
resources.

We
believe that, based on current levels of operations and anticipated growth, our cash from operations, together with cash currently available and availablility under our Credit
Facility, will be sufficient to fund our operations for at least the next twelve months. Poor financial results, unanticipated expenses, unanticipated acquisitions or unanticipated strategic
investments could give rise to additional financing requirements sooner than we expect. There can be no assurance that equity or debt financing will be available when needed or, if available, that the
financing will be on terms satisfactory to us and not dilutive to our then-current stockholders.

Contractual Obligations and Commitments

The following table summarizes certain of our contractual obligations as of June 30, 2005:

|                        |  |   |        | Payments Due by Period
|----------------------- |  | - | ------ | ----------------------
|
|
|Contractual Obligations |  |   |        |                       
|Operating Leases(1)     |  | $ | 48,521 |                       
|Purchase Obligations(2) |  |   | 9,696  |                       
|                        |  |   |        |                       
|Total                   |  | $ | 58,217 |                       
|                        |  |   |        |                       

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Off-Balance Sheet Entities

The Company did not have any off-balance sheet entities at June 30, 2005.

Critical Accounting Policies and Estimates

We have disclosed in Note 2 to our condensed consolidated financial statements and under "Item 7Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in the 2004 Form 10-K those accounting policies that we consider to be significant in determining its results of operations
and financial condition. There have been no material changes in accounting principals utilized by the Company since the 2004 Form 10-K. The accounting principles utilized by the
Company in preparing its condensed consolidated financial statements conform in all material respects to generally accepted accounting principles in the United States of America.

Recent Accounting Pronouncements

In March 2005, the SEC staff issued SAB No. 107 to provide guidance on SFAS No. 123(R), Share-Based Payments, (SFAS No. 123(R)). SAB
No. 107 provides the staff's view regarding the valuation of share-based payment arrangements for public companies. In particular, this SAB provides guidance related to share-based payment
transactions with non-employees, the transition from non public to public entity status, valuation methods (including assumptions such as expected volatility and expected term), the
accounting for certain redeemable financial instruments issued under share-based payment arrangements, the classification of compensation expense, non-GAAP financial measures, first time
adoption of SFAS No. 123(R), the modification of employee share options prior to the adoption of SFAS No. 123(R) and disclosure in Management's Discussion and Analysis subsequent to the
adoption of SFAS No. 123(R). SAB No. 107 became effective March 29, 2005. In April 2005, the SEC modified the effective date of SFAS No. 123(R) to be as of the first
reporting period of the first fiscal year beginning after June 15, 2005. The SEC's modification of the effective date did not change the accounting required by SFAS No. 123(R). The
impact of SFAS No. 123(R) and SAB No. 107 on the Company's condensed consolidated financial statements is currently being evaluated.

In
May 2005, the Financial Accounting Standards Board (the "FASB") issued FASB Statement 154,Accounting Changes and Error Correctionsa
replacement of APB Opinion No. 20 and FASB Statement No. 3("SFAS No. 154"). SFAS No. 154 changes the requirements for the accounting for and
reporting of a change in accounting principle. The provisions of SFAS No. 154 require, unless impracticable, retrospective application to prior periods' financial statements of (1) all
voluntary changes in accounting principles and (2) changes required by a new accounting pronouncement, if a specific transition is not provided. SFAS No. 154 also requires that a change
in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounting for as a change in accounting estimate, which requires prospective
application of the new method. SFAS No. 154 will be effective for all accounting changes made in fiscal years beginning after December 15, 2005.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our quantitative and qualitative disclosures about market risk are described in "Item 7Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in our 2004 Form 10-K. Except as described below in this Form 10-Q, there have been no material changes to those market risks
during the six months ended June 30, 2005.

Foreign Currency Exposure Risk

We are exposed to market risk associated with movements in foreign currency exchange rates. There have been no material changes to our risk management policy as
described in "Item 7AQuantitative and Qualitative Disclosures about Market Risk" contained in our 2004 Form 10-K.

39

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At
June 30, 2005, we had an outstanding foreign exchange derivative contract to purchase and sell foreign currency with notional amounts translated into U.S. Dollars of
$108.9 million. At June 30, 2005, if the Euro strengthened by 10% against the U.S. Dollar, it would decrease the fair value of these contracts and, as a result, accumulated other
comprehensive income would decrease by approximately $6.6 million, net of tax.

While
our international results of operations, as measured in U.S. dollars, are subject to foreign exchange rate fluctuations, we do not consider the related risk to be material to our
results of operations. If the U.S. Dollar strengthened by 10% against the Euro and the British Pound, the net impact to our net income would have been a reduction of approximately $0.2 million.

Interest Rate Risk

At June 30, 2005, we had no variable-debt outstanding. As such, we currently do not anticipate any material impact to our net income resulting
from fluctuations in interest rates.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company's management carried out an evaluation, under the supervision and with the participation of our
Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report in providing a reasonable level of
assurance that information we are required to disclose in reports we file or furnish under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
SEC's rules and forms.

In
addition, the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the Company's internal controls over financial reporting
and determined that there have been no changes in our internal controls over financial reporting during the second quarter of 2005 that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the normal course of business, we are and have been party to, or otherwise involved in, litigations, claims and arbitrations that involve claims for
substantial amounts. These proceedings have generally involved either competitor claims in connection with new employee hires, or claims from former employees in connection with the termination of
their employment from us. We are also involved, from time to time, in investigations or proceedings by government agencies and self-regulatory organizations. There is also potential for
client claims alleging the occurrence of errors in the execution of brokerage transactions.

We
believe proceedings of these types are common in the inter-dealer brokerage industry due to its highly competitive nature. Although the ultimate outcome of these proceedings cannot be
ascertained at this time, after consultation with counsel, we believe that damages, if any, resulting from such proceedings will not, in the aggregate, have a material adverse effect on our financial
condition, but may be material to our operating results for any particular period.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During May and June 2005, we used $4.2 million of the net proceeds from the IPO to purchase approximately 94% of the remaining outstanding Fenics
Limited shares. We intend to use

40

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approximately
$0.3 million to pay for the remaining 6% of the Fenics Limited shares when they are tendered to the Company. See Note 4 to our condensed consolidated financial statements
for further discussion.

We
intend to use the remaining portion of the proceeds of our IPO for working capital and other general corporate purposes and for acquisitions of, or investment in, companies,
technologies or other assets that complement our business, including key personnel recruitment. Pending application as described above, we have invested the remaining net proceeds received in
short-term, investment grade, interest-bearing securities.

ITEM 6. EXHIBITS

|Exhibit No. |  | Description                                                                                                                 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------
|31.1        |  | Certification of Chief Executive Officer.                                                                                   
|31.2        |  | Certification of Chief Financial Officer.                                                                                   
|32.1        |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
|32.2        |  | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

41

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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.

|                |  | GFI GROUP INC.
|--------------- |  | --------------
|August 15, 2005 |  | By:           
|Date            |  |               
|                |  |               

42

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Exhibit Index

|Exhibit No. |   | Description                                                                                                                                                                                  
|----------- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(31.1       | ) | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|(31.2       | ) | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|(32.1       | ) | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                            
|(32.2       | ) | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                            

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