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

FORM 10-K

ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                to


Commission file number: 000-51103

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.)55 Water Street, New York, NY(Address of principal executive offices)

10041(Zip Code)


(212) 968-4100(Registrant's telephone number, including area code)

Securities
registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registeredCommon Stock, $0.01 par value per share

The Nasdaq Stock Market LLC(Nasdaq Global Select Market)


Securities
registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ý    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes o    No ý

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o    No ý

As of June 30, 2008, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $601,190,151 based
upon the closing sale price of $9.01 as reported on the Nasdaq Global Select Market.

Indicate
the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

Class

Outstanding at February 13, 2009Common Stock, $0.01 par value per share

118,588,924 shares


DOCUMENTS INCORPORATED BY REFERENCE

Portions
of registrant's definitive proxy statement for its annual shareholders' meeting to be held on June 11, 2009 are incorporated by reference in this Annual Report on
Form 10-K in response to Part III, Items 10, 11, 12, 13 and 14.



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Table of Contents

TABLE OF CONTENTS



PagePART IItem 1.

Business

4Item 1A.

Risk Factors

22Item 1B.

Unresolved Staff Comments

38Item 2.

Properties

38Item 3.

Legal Proceedings

39Item 4.

Submission of Matters to a Vote of Security Holders

40PART IIItem 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

41Item 6.

Selected Financial Data

44Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

46Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

74Item 8.

Financial Statements and Supplementary Data

78Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

118Item 9A.

Controls and Procedures

118Item 9B.

Other Information

120PART IIIItem 10.

Directors, Executive Officers and Corporate Governance

120Item 11.

Executive Compensation

120Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

120Item 13.

Certain Relationships and Related Transactions, and Director Independence

120Item 14.

Principal Accounting Fees and Services

121PART IVItem 15.

Exhibits, Financial Statement Schedules

121Signatures

124


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Forward Looking Statements

Sections of this Annual Report on Form 10-K, including, but not limited to, "Legal Proceedings" under
Part IItem 3, "Management's Discussion & Analysis" and "Quantitative and Qualitative Disclosures About Market Risk" under
Part IIItem 7 & 7A, may contain "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 the headings "Item 7Managements Discussion and Analysis of Financial Condition and
Results of Operations" and "Item 7AQuantitative and Qualitative Disclosures About Market Risk" and elsewhere is this Annual Report on Form 10-K, may cause actual
results to differ
materially from such forward-looking statements. The information included herein is given as of the filing date of this Annual Report on Form 10-K with the Securities Exchange
Commission (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.

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PART I.

ITEM 1.    BUSINESS

Our Business

Introduction

We are a leading inter-dealer broker and vendor of related products and services in global markets for
over-the-counter ("OTC") derivative products and related securities. We founded our business in 1987 and were incorporated under the laws of the State of Delaware in 2001 to be
a holding company for our subsidiaries. We provide brokerage services, trading system software 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 have focused
historically on the more complex, and often less commoditized, markets for sophisticated financial instruments, primarily OTC derivatives, that offer an opportunity for higher commissions per
transaction than the markets for more standardized financial instruments. We have growing cash equity and cash bond brokerage businesses that complement our brokerage of OTC derivative products. We
have been recognized by various industry publications as a leading provider of inter-dealer brokerage services for various products in the credit, financial, equity and commodity markets on which we
focus.

We
offer our clients a hybrid brokerage approach, 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, and post-transaction services, such as straight-through processing
("STP") and transaction confirmations. We earn revenues for our brokerage services and charge fees for certain of our data, analytics and trading software products.

At
December 31, 2008, we employed 1,037 brokerage personnel (consisting of 860 brokers and 177 trainees and clerks) serving over 2,100 brokerage, software, analytics and market
data clients, including leading commercial and investment banks, corporations, insurance companies and hedge funds, through our principal offices in New York, Sugar Land (TX), Englewood (NJ), London,
Dublin, Paris, Singapore, Seoul, Tokyo, Hong Kong, Sydney, Cape Town, Dubai, Tel Aviv, Calgary and Santiago.

Based
on the nature of our operations in each geographic region, our products and services, customers and regulatory environment, we have three operating segments: Americas Brokerage;
Europe, the Middle East and Africa ("EMEA") Brokerage; and Asia Brokerage. Our brokerage operations provide brokerage services in four broad product categories: credit, financial, equity and
commodity. The All Other segment captures revenues and costs that are not directly assignable to one of the operating
business segments, primarily consisting of our corporate business activities and operations from trading systems software, analytics and market data. See Note 19 to the Consolidated Financial
Statements for further information on our revenues by segment and geographic region.

Unless
the context otherwise requires, the terms the "Company," "we," "us" and "our" mean GFI Group Inc. and its consolidated subsidiaries.

Website Access to Reports

Our Internet website address iswww.gfigroup.com. Through our Internet website, we make
available, free of charge, the following reports as soon as reasonably practicable after electronically filing them with, or furnishing them to, the SEC: our Annual Reports on
Form 10-K; our Quarterly Reports on Form 10-Q; and our Current Reports on Form 8-K; our proxy statements on Schedule 14A,
Forms 3, 4 and 5 filed on behalf of directors and executive officers; and amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").

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In
addition, you may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F. Street, N.E., Room 1580, Washington D.C. 20549. You
also may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that
contains our reports, proxy and information statements, and other information regarding the Company that we file electronically with the SEC at http://www.sec.gov.

Information
relating to our corporate governance is also available on our website, including information concerning our directors, board committees and 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. In addition, the Investor Relations page of our
website includes supplemental financial information that we make available from time to time.

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

Our Industry

On most business days, trillions of dollars in securities, commodities, currencies and derivative instruments are traded around the
world. These products range from standardized financial instruments, such as common equity securities and futures contracts, that are typically traded on exchanges, to more complex, less standardized
instruments, such as OTC derivatives, that are typically traded between institutional dealers, which are primarily global investment and money center banks and hedge funds. Buyers and sellers of
exchange-traded financial instruments benefit from the price transparency and enhanced liquidity provided by liquidity facilitators, such as market makers and specialists, who participate in those
markets. Buyers and sellers of many OTC instruments, on the other hand, frequently rely on an inter-dealer broker to facilitate liquidity by gathering pricing information and identifying
counterparties with reciprocal interests.

Market Evolution

We define a liquid financial market as one in which a financial instrument is easy to buy or sell quickly with minimal price
disturbance. The liquidity of a market for a particular financial product or instrument depends on several factors, including: the presence of a number of market participants and facilitators of
liquidity, the availability of pricing reference data, and the availability of standardized terms. Liquid markets are characterized by substantial price competition, efficient execution and high
trading volume. While markets for exchange-traded instruments are ordinarily liquid, some large OTC markets, such as the market for U.S. treasury securities, are also highly liquid. In such liquid OTC
markets, commissions are generally lower because there are often numerous, readily identifiable buyers and sellers causing the traditional telephonic brokerage services of inter-dealer brokers to be
less essential and to command less of a premium.

OTC
and exchange-traded markets have evolved in a similar manner over the past several years. Both markets have grown considerably as hedge funds proliferated and pre-trade
data and analytics, trading software and post-trade processing and clearing services have made trading more efficient. Additionally, both markets have witnessed considerable consolidation
and the OTC and exchange-traded markets have become less distinct.

Complex
financial instruments that are traded OTC are often less commoditized and are traded primarily by more sophisticated institutional buyers and sellers. In OTC derivative markets,
an inter-dealer broker can enhance the efficient execution of a trade by applying its market knowledge to locate bids and offers, thereby allowing buyers and sellers to find counterparties with which
to trade. This liquidity can be especially helpful for large or non-standardized transactions. An inter-dealer broker ordinarily accomplishes this by contacting potential counterparties
directly by telephone or electronic

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messaging
and, in an increasing number of cases, market participants post prices and may execute transactions via proprietary trading technology provided by the inter-dealer broker. In addition, in a
less liquid market with fewer participants, disclosure of the intention of a participant to buy or sell could disrupt the market and lead to poor pricing. By using an inter-dealer broker, the
identities of the transaction parties are not disclosed in many transactions until the trade is consummated and, therefore, market participants better preserve their anonymity. For all these reasons,
in a less commoditized market, an inter-dealer broker can offer important value to market participants.

As
a market for a particular financial instrument develops and matures, more buyers and sellers enter the market, generally resulting in more transactions and more pricing information.
In addition, the terms of such financial instruments tend to become more standardized, generally resulting in a more highly-liquid market. In this way, a relatively illiquid market for an instrument
may evolve over a period of time into a more highly-liquid market. As this evolution occurs, the characteristics of trading, the preferred mode of execution and the size of commissions that
inter-dealer brokers charge, may also change. In some cases, as the market matures, an inter-dealer broker may provide a client with an electronic screen or system that displays the most current
pricing information. In addition, a market may have some characteristics of both more liquid and less liquid markets, which requires an inter-dealer broker to offer integrated telephonic and
electronic brokering. We refer to this integrated service as hybrid brokerage. In some cases, hybrid brokerage involves coupling traditional telephonic brokerage services with various electronic
enhancements, such as electronic communications, price discovery tools and order entry. In other cases, hybrid brokerage involves full electronic execution supported by telephonic communication
between the broker and its clients. Further, some derivative products trade on both a traditional futures exchange and in the OTC market through inter-dealer brokers.

The Derivatives Market

Derivatives are used by financial institutions, hedge funds and large corporations to manage risk or take advantage of an anticipated
direction of a market by allowing holders to guard against gains or declines in the price of underlying financial assets, indices or other investments without having to buy or sell such underlying
assets, indices or other investments. The underlying asset, index or other investment may be, among other things, a physical commodity, an interest rate, a stock, an index or a currency. Derivatives
are commonly used to mitigate the risks associated with interest rate movements, equity ownership, changes in the value of foreign currency,
credit defaults by large corporate and sovereign debtors and changes in the prices of commodity products. OTC derivatives are generally structured as forwards, swaps or options. They derive their
value based on the inherent value of the underlying asset. A forward is an agreement between two parties to exchange assets or cash flows at a specified future date at a price agreed on the trade
date. A swap is an agreement between two parties to exchange cash flows or other assets or liabilities at specified payment dates during the agreed-upon life of the contract. An option is
an agreement that gives the buyer the right, but not the obligation, to buy or sell a specified amount of an underlying asset or security at an agreed upon price on, or until, the expiration of the
contract.

Derivatives
may be exchange traded or privately negotiated and traded in the OTC market. According to a recent report of the Bank for International Settlements, OTC derivatives accounted
for over 89% of the total outstanding global derivatives transactions as of June 2008 (as measured by notional amount). The liquidity of markets for particular OTC derivative instruments varies from
highly liquid, such as the market for Eurodollar interest rate derivatives, to illiquid, such as the market for certain customized credit derivatives that are structured to meet specific investor
needs.

The
International Swaps and Derivative Association, Inc. ("ISDA") reported in a recent survey of its members that in the first half of 2008, among the derivative instruments
surveyed, interest rate and currency derivatives and equity derivatives were the fastest growing segments of the derivatives market

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with
notional amounts outstanding growing 22% and 19%, respectively, over that six month period. The survey stated that at mid-year 2008, notional amounts outstanding of credit derivatives
decreased 12% over the first half of 2008 to approximately $54.6 trillion from approximately $62.2 trillion at year-end 2007, but increased 20% over mid-year 2007 notional
outstanding of $45.5 trillion. The decrease in notional outstanding for credit derivatives was the first six month decrease since ISDA first reported results in 2001. ISDA attributed this drop to
industry efforts to reduce risk by netting economically offsetting transactions.

Furthermore,
the number of different derivative instruments has grown as companies and financial institutions developed new and innovative derivative instruments to meet industry demands
for sophisticated risk management and complex financial arbitrage. In its 2008 annual survey, Risk magazine identified 126 categories of derivatives, excluding commodity derivatives. Novel derivative
instruments often have distinct terms and little or no trading history with which to estimate a price. Markets for new derivative instruments therefore require market intelligence and the services of
highly skilled and well-informed brokers and reliable market data and pricing tools.

Recent Derivative Market Developments

Deleveraging of hedge funds and dealers.In 2008, the financial markets experienced significant upheaval as the combination of
an ongoing credit
crisis, significant losses reported by banks and other market participants from mortgage-backed and other debt securities and a weak global economy all contributed to the loss of investor confidence.
The upheaval in the markets led to significant investor and dealer losses and significant deleveraging in the hedge fund and dealer community. We expect derivatives volume growth to be adversely
impacted by deleveraging as less capital is employed in the capital markets by dealers and hedge funds.

Increased government regulation is probable.2008 was marked by several high profile bankruptcies of financial service firms,
unprecedented
government intervention in the capital markets and continued consolidation in the dealer community. A perceived lack of transparency in the OTC derivative markets, especially the credit derivatives
markets, has been the focus of governments and regulators on a global basis. As a result, government representatives and regulators have called for increased regulation and transparency in the OTC
markets, particularly the credit derivatives market. We support these efforts and believe they may lead to renewed confidence in the derivatives markets and long-term stabilization. We
also believe it is probable that there will be increased regulation in certain OTC markets in 2009 and beyond.

Centralized clearing of certain OTC derivatives is probable.Since the bankruptcy of Lehman Brothers in September 2008, the
clearing of OTC
derivatives has been a focal point in both the U.S. and Europe as governments, regulators and market participants seek to improve the existing financial system. Governments and regulators globally
have pushed for the centralized clearing of credit derivatives and several exchanges and industry utilities are developing clearinghouses and platforms to clear certain credit derivatives and are
pursuing regulatory approvals and dealer commitment. We support central counter-party clearing of certain OTC derivatives, including credit derivatives, and believe that the clearing of certain credit
derivatives and other OTC derivatives is likely to occur in 2009.

The Cash Markets

Cash, or spot markets, exist across the credit, financial, equity and commodity product spectrum. The cash or spot markets are also
known as physical markets, because prices are settled in cash on the spot at current market prices, as opposed to forward prices. A cash market may be a self-regulated centralized market,
such as an equity or commodity exchange, or a decentralized OTC market where private transactions occur. The cash markets are often highly liquid, commoditized markets. Inter-

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dealer
brokers provide value in these markets through their ability to source liquidity from other market participants or transact large positions through their access to exchanges, electronic
communications networks or trading platforms with minimal price movement. Inter-dealer brokers may also provide traders with applicable market information and analysis.

Cash
markets for equity and certain commodities and debt securities exist on both exchanges and in the OTC markets, while cash foreign exchange products are traded principally in the OTC
markets. In cash transactions, market participants generally seek to purchase or sell a specified amount of securities, commodities or currencies at a specified price for cash, with settlement
occurring within a few days after the trade is executed. In certain cash OTC transactions, the broker executes the transaction and the transaction is then cleared by a third-party exchange or
clearinghouse on behalf of the parties to the trade. The clearing process eliminates the counterparty risk inherent in a bilateral OTC transaction as the clearinghouse becomes the buyer and seller in
the transaction, thereby guaranteeing the trade. For this service, the clearinghouse imposes margin requirements and charges a fee. We believe that central counterparty clearing will play an
increasing role in the future of both the cash and derivative OTC markets.

Our Market Opportunity

We believe the markets for financial instruments, especially the markets for derivative instruments, present us with the following
opportunities to provide value to our clients:

Need for efficient execution in both liquid and less liquid markets.While the use of execution technology is becoming more
common in the
inter-dealer brokerage industry, only certain highly liquid and standardized financial instruments may be fully traded electronically in an efficient manner. More
complex OTC products, such as derivatives, typically require some degree of telephonic brokerage to assist with price aggregation and discovery in order to aid the execution process. We believe that
inter-dealer brokers who provide a combination of telephonic and electronic brokerage services are better positioned to meet the particular needs of the markets in which they operate than competitors
that cannot offer this combination of services.

Need for expertise in the development of new markets.In order to better support their clients' evolving investment and risk
management strategies,
our dealer clients help create new products, including new derivative instruments. Dealers also modify their trading techniques in order to better support their clients' needs, such as by integrating
the trading of derivative instruments with the trading of related underlying or correlated financial assets, indices or other investments. We believe the markets for these new products and trading
techniques create an opportunity for those inter-dealer brokers who, through market knowledge and extensive client relationships, are able to identify these new product opportunities and to focus
their brokerage services appropriately.

Need for market intelligence.Inter-dealer brokers that execute a higher volume of trades of a particular financial product and
have access to more
market participants are better positioned to provide valuable pricing information than brokers who less frequently serve that market. In less commoditized financial markets, including markets for
novel and complex financial instruments, market leadership becomes more important because reliable pricing information is difficult to obtain. Market participants in these less liquid markets utilize
the services of the leading inter-dealer brokers in order to gain access to the most bids and offers for a particular product. Similarly, inter-dealer brokers who have a leading market share can offer
superior market data and analytics tools based on their access to the broadest selection of transaction and pricing information. For example, some market participants pursue trading strategies that
combine credit default swaps with convertible bonds or equity derivatives of the securities of a single issuer or a basket of issuers. Inter-dealer brokers that have high volumes of bids and offers in
the credit derivative markets and have access to technology which allows them to track such market data against activity in the bond and equity markets are well positioned to provide

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such
market participants with analytical insight into correlated movements in related securities of a single issuer or related issuers or indexes.

Increasing industry consolidation.Historically, the inter-dealer brokerage industry consisted of a number of small and
mid-sized private
firms that used traditional telephonic brokerage methods to serve their clients and to compete against each other in various product categories. The industry has begun to consolidate in recent years,
in part, due to the increasing importance of technology, including electronic execution, integrated trade processing and analytics and market data. Through acquisitions, larger inter-dealer brokers
with access to capital have been better positioned to make the investments
necessary to supply their clients with this technology. We believe that inter-dealer brokers with developed technology resources which enhance brokerage execution and pre-and
post-trade analysis and processing are better able to consistently meet the execution needs of their clients and recruit and retain the most capable brokers. Further, consolidation and
deleveraging in the dealer and hedge fund community combined with increased government regulation may lead to less trading in certain OTC markets. As a result of these trends, smaller inter-dealer
brokers may find it harder to compete and several have been acquired by larger inter-dealer brokers with developed technological capabilities and better access to capital. We believe that the
continued consolidation of the industry provides an opportunity for these larger inter-dealer brokers to strategically expand their businesses to better serve evolving client demands.

Our Competitive Strengths

We believe our principal competitive strengths are the following.

Strong Brand and Leading Position in Key Markets.We believe that over our twenty-two year history, we have successfully created
value in
our brand that our clients associate with high quality services in the markets on which we focus. Our leadership in these markets, such as the markets for certain credit and equity derivatives,
foreign exchange options and commodity products, has been recognized by rankings in industry publications such as Risk magazine, FX Week and Energy Risk magazine. Risk magazine has ranked us as a
leading broker in credit default swaps and numerous currency and equity derivative markets. Energy Risk magazine also listed GFI as a leading Energy Broker in 2008. In addition, GFI's
Fenics® FX option analysis product is a leading analytic tool in the foreign exchange markets, and our electronic trading platforms, Creditmatch®, GFI ForexMatch®
and, EnergyMatch®, and Trayport's GlobalVision products are recognized platforms in the markets in which they serve.

We
believe our leading positions in these markets provide us with greater access to market and pricing information, including a broad selection of proprietary market data that we are
able to provide to our clients. In addition, we believe that our leading market share in key OTC markets, such as credit derivatives, and our ability to use technology to track such market data,
enables us to provide market participants with better analytical insight into correlated movements in related securities of a single issuer, related issuers or indexes in the credit and equity
markets. In addition, we believe that, because of these leading market positions and differentiated technological capabilities, we are better positioned, compared to many of our inter-dealer
competitors, to serve the comprehensive needs of our clients.

Ability to Identify and Develop High Growth, Less Commoditized Markets.We focus on complex and innovative financial markets
where liquidity is
harder to achieve and, therefore, our services are more valuable to market participants. We believe these markets offer an opportunity for growth to inter-dealer brokers that move early to foster
liquidity. We seek to anticipate the development and growth of markets for evolving, innovative financial products in which we believe we can garner a leading market position and enjoy higher
commissions. For example, we entered the credit derivatives and currency derivatives markets in their early stages and have grown these businesses through the years. Similarly, we have been an early
entrant to the shipping, property and insurance derivatives markets, asset classes

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that
offer the potential for growth but are in their early stages of development. We believe our familiarity with the needs of such markets and our experience with complex product structures allow us
to better serve clients in less liquid markets than many of our competitors.

Hybrid Brokerage Platforms.We seek to tailor our use of electronic trading and other technology to the transactional nuances of
each specific
market. While certain more complex, less commoditized markets often require significant amounts of personal and attentive service from our brokers, some other markets may benefit from the introduction
of electronic brokerage platforms. Depending on the needs of the individual markets, we offer a hybrid approach to our clients that combines a range of electronic and telephonic trade execution
services. For example, our clients may choose between utilizing our CreditMatch®, GFI ForexMatch® or EnergyMatch® electronic trading platforms to trade a range of
credit derivatives, foreign exchange options or emission allowances entirely on screen or executing the same transaction over the telephone through our brokers. We also believe we add value for
clients who trade in complex financial markets by offering data and Fenics® analytics products for decision support. We seek to establish data communication and STP connections with our
clients' settlement, risk management and compliance operations in order to better serve their needs and to strengthen our relationships with them. Straight-through-processing generally involves the
use of technology to automate the processing of financial transactions, from execution to settlement, in order to minimize human error, reduce operational costs and time, and enhance transaction
information and reporting. We believe our hybrid brokerage approach provides us with a competitive advantage over competitors who do not offer this technology.

In
January 2008, we acquired Trayport Limited ("Trayport"), a provider of electronic trading software and services to the commodities, fixed income, currencies and equities markets.
Trayport's GlobalVision products have an industry leading position in supplying software to the European OTC energy markets including electric power, natural gas, coal, emissions and freight. Its
technology accommodates electronic trading, information sharing and STP capabilities in commodity and financial instruments. The acquisition of Trayport, with its leading position in the European OTC
energy markets and its trading and processing capabilities further enhances our hybrid brokerage model.

Quality Data and Analytics Products.We are one of the few inter-dealer brokers that offer a broad array of data and analytics
products to
participants in the complex financial markets in which we specialize. Our data products are derived from the trade data compiled from our brokerage services in our key markets. Our analytics products
benefit from the reputation of the Fenics® brand for reliability, ease of use and independence from any large dealer. Our Fenics® tools are used, not only by our traditional
brokerage clients, but also by their clients, such as national and regional financial institutions and large corporations worldwide. These products are designed to serve the needs of certain markets
for reliable data and trusted analytics tools and are leveraged to enhance our brokerage revenues across market products. We believe that our ability to offer these products helps to support our
leadership in our key markets.

Experienced Senior Management and Skilled Brokers and Technology Developers.We have a senior management team that is
experienced in identifying and
exploiting markets for evolving, innovative financial instruments. Our founder and chief executive officer, Michael Gooch, has over 25 years of experience in the derivatives markets and our
president, Colin Heffron, has been with our company since 1988 and, prior to becoming our president, was instrumental in developing a number of brokerage desks and leading the growth of our European
operations. Reporting to them is an experienced management team that includes senior market specialists in each of our product categories. We also employed 860 skilled and specialized brokers at
December 31, 2008, many of whom have extensive product and industry experience. Although the competition for brokers is intense, we have been able to effectively hire new brokers and establish
new brokerage desks in areas in which we seek to expand our operations. In addition, our in-house technology developers are experienced at developing electronic

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trading
platforms and commercial quality software that are tailored to the needs of certain select markets in which we focus. Our brokers utilize this technology and market information to provide
their clients with enhanced services. We believe that the combination of our experienced senior management, skilled brokers and technology developers gives us a competitive advantage in executing our
business strategy.

Diverse Product and Service Offerings.We offer our products and services in a diverse array of financial markets and geographic
regions.
Historically, the markets on which we focus have volume and revenue cycles that are relatively distinct from each other and have generally not been correlated to the direction of broad equity indices.
Further, our decision support products, including our market data, analytical tools and trading software give us an opportunity to leverage and expand our client base, providing revenue sources beyond
our traditional brokerage clients. We believe our diverse product and service offerings provide us with a competitive advantage over many of our competitors that may have more limited product and
service offerings and, therefore, may be more susceptible to downturns in a particular market or geographic region.

Our Strategy

We intend to continue to grow our business and increase our profitability by being a leading provider of brokerage services, data and
analytics and trading software to the markets on which we focus. We intend to employ the following strategies to achieve our goals.

Maintain and enhance our leading positions in key markets.We plan to continue leveraging the leading market share and brand
recognition that we have
developed for a range of derivative instruments and underlying securities in growing credit, financial, equity and commodity markets. We will continue deploying our specialized brokers in
higher-margin OTC markets and will seek to improve their productivity through technological innovation, such as state of the art electronic brokerage platforms. We intend to provide market
participants with analytical insight into correlated movements in related securities of a single issuer or related issuers or indexes in the credit derivative, corporate bond and equity markets. We
also intend to continue offering quality data and analytics products in certain select markets requiring reliable decision-support tools. Through these means, we seek to enhance our services in
existing markets and deepen long-standing relationships with our global institutional clients.

Leverage Technology and infrastructure to gain market share and improve margins.We intend to continue to invest in the use and
development of
technology, including the development of proprietary electronic trading platforms, to further enhance broker productivity, increase customer and broker loyalty and improve our competitive position and
market share. During 2008, we continued to see substantial use of our CreditMatch® electronic trading platform in Europe in both credit derivatives and cash bonds, and we enhanced the
functionality of GFI ForexMatch®, a browser-based electronic platform for foreign exchange products. We have also recently introduced EnergyMatch® to certain natural gas and
electric power markets in North America. We believe that as the usage of these systems becomes more widespread, we will be able to increase broker productivity and gain increased market share.
Moreover, where possible, we plan to continue to install STP connections with our clients' settlement, risk management and compliance operations, in order to better serve their needs and to provide us
with additional opportunities to increase our revenue. At the same time, we continue to work on ways to improve our ability to leverage our operations, infrastructure and other support areas, such as
our executive and finance departments, to create cost efficiencies and improve margins.

Continue to identify and develop new products and high-growth markets.Our brokerage personnel headcount at December 31,
2008 was
1,037. It is often our practice to establish new brokerage desks through the strategic redeployment of experienced brokers from established brokerage desks and through the selective hiring of new
brokers. Individual brokerage desks are separately tracked and

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monitored
in an effort to drive performance. We will continue to focus on identifying high growth markets where liquidity is more valuable, thereby yielding early-mover opportunities. We also intend
to continue to expand our presence globally in markets where we believe there are opportunities to increase our revenues. As part of this effort, in 2008, we commenced operations in Dublin, Tel Aviv,
Dubai and Santiago, and we acquired a minority interest in an inter-dealer broker in Argentina.

Continue to pursue new customers and diverse revenue opportunities.We offer our products and services in a diverse range of
financial markets and
geographic regions and to hundreds of institutional customers. We believe this diversity has and will continue to lessen the impact to us of a downturn in any particular market or geographic region.
We also intend to continue managing our business with the goal of maintaining the diversity of our revenues. On a geographic basis, approximately 53.2% of our total revenues for the year ended
December 31, 2008 were generated by our EMEA operations, 37.6% were generated by our Americas operations and 9.2% were generated by our operations in the Asia-Pacific region.
Additionally, for the year ended December 31, 2008, no one customer accounted for more than approximately 6.5% of our total revenues from all products, services and regions, and our largest
brokerage desk accounted for approximately 5.2% of total revenues.

Strategically expand our operations through business acquisitions.Historically, the inter-dealer brokerage industry was
fragmented and concentrated
mainly on specific country or regional specific marketplaces and discrete product sets, such as foreign exchange or energy products. Over time, however, the industry has experienced increasing
consolidation as larger inter-dealer brokers have sought to enhance their global brokerage services and offset client commission pressure in maturing product categories by acquiring smaller
competitors that specialized in specific product markets. In addition, some inter-dealer brokers have acquired technology focused companies which enhance brokerage execution and pre- and
post- trade analysis and processing. We plan to continue to selectively seek opportunities to expand our use of technology and grow our business in new or existing product areas through
the acquisition of complementary businesses.

In
January 2008, we acquired Trayport, a provider of electronic trading software to brokers, exchanges and trading firms in the commodities, fixed income, currencies and equities
markets, with particular strength in European OTC energy derivatives. This acquisition strengthens our electronic trading capabilities and bolsters our position in global energy derivatives.

In
September of 2008, we acquired a 49% interest in Premium Securities S.A., a small inter-dealer broker of fixed income, foreign exchange and derivative products located in
Buenos Aires, Argentina. We have the option to buy the remaining equity interest in future years. This transaction, along with our opening of an office in Santiago, Chile, highlights our strategy of
expanding our Latin American operations.

Our Market Focus

Our global brokerage operations focus on a wide variety of credit, financial, equity and commodity instruments, including both cash and
derivative products. Within these markets we have been successful, historically, in serving the more complex, less commoditized markets for sophisticated financial instruments, primarily OTC
derivatives. As the trading strategies of market participants continue to evolve and diversify, and the derivatives and cash markets continue to converge, an inter-dealer broker may be able to bridge
the gap between these markets and offer services in a number of related markets. As a result, we have recently expanded our operations in cash instruments, such as corporate fixed income and equities
products.

We
support and enhance our brokerage operations by providing a range of trading software, analytics and market data products and STP connections where applicable.

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We provide brokerage services to our clients through agency or principal transactions. In agency transactions, we charge a commission for connecting buyers and
sellers and assisting in the negotiation of the price and other material terms of the transaction. After all material terms of a transaction are agreed upon, we identify the buyer and seller to each
other and they then settle the trade directly. Commissions charged to our clients in agency transactions vary across the products for which we provide brokerage services.

We
generate revenue from principal transactions on the spread between the buy and sell price of the security that is brokered. Our principal transactions revenue is primarily derived
from matched principal transactions. In matched principal transactions, we act as a "middleman" by serving as counterparty for an identified buyer and an identified seller in matching reciprocal
back-to-back trades. These transactions are then settled through clearing institutions with which we have a contractual relationship. Because the buyer and seller each settle
their transactions through us rather than with each other, the parties are able to maintain their anonymity. A limited number of our brokerage desks are occasionally permitted to enter into unmatched
principal transactions in the ordinary course of business while brokering in illiquid markets or for the purpose of facilitating a customer's execution needs for transactions initiated by such
customers. These unmatched positions are intended to be held short term.

Credit Products.We provide brokerage services in a broad range of credit derivatives, bond instruments
and other related credit products. Our offices in New York, London, Sydney, Hong Kong, Singapore and Tokyo each provide brokerage services in a broad range of credit derivative products that may
include single-entity credit default swaps, emerging market credit default swaps, credit indices, options on single-entity credit default swaps, options on credit indices and credit index tranches. We
also provide brokerage services in markets for a range of non-derivative credit instruments, such as investment grade corporate bonds, high yield corporate bonds, emerging market
Eurobonds, European government bonds, bank capital preferred shares, asset-backed bonds and floating rate notes. We largely provide brokerage services for these non-derivative credit
products out of our London, New York, Paris, Singapore and Hong Kong offices.

We
support our credit brokerage with CreditMatch®, our electronic trading platform that provides trading, trade processing and STP functionality to our clients. Consistent
with our hybrid brokerage model, clients may choose between utilizing CreditMatch® to trade certain credit derivative products entirely on screen or executing the same transaction over the
telephone through our brokers. In Europe, our clients continue to use CreditMatch® to trade credit derivatives and bond products while our clients in the Americas and
Asia-Pacific still primarily prefer to execute transactions telephonically through our brokers.

As
part of our efforts to enhance our services in our key markets, in December 2006, we became a minority equity holder in The Clearing Corporation ("TCC"), a clearinghouse for
derivative instruments. TCC, in partnership with IntercontinentalExchange Inc. ("ICE"), is one of the parties in position to receive regulatory approval for the clearing of credit derivatives
in the U.S. In October 2008, ICE announced its intention to buy TCC. If this transaction is completed based on the terms that are currently proposed, we will hold an economic interest in the new
entity. We believe our hybrid electronic brokerage platforms and STP capabilities will compliment the movement to greater automation and centralized clearing in the OTC credit derivatives markets.
Ultimately, we believe that centralized clearing may expand the market for OTC derivative products through added settlement efficiency and reliability.

Financial Products.We provide brokerage services in a range of financial instruments, including foreign exchange options,
exotic options,
non-US Dollar interest rate swaps and options, repurchase agreements and certain government and municipal bond options. Exotic options include non-standard

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options
on baskets of foreign currencies, forward contracts and non-deliverable forward contracts, which are forward contracts that do not require physical delivery of the underlying
asset.

We
offer telephonic brokerage services in our New York, London, Hong Kong, Singapore and Sydney offices, augmented in select markets with our GFI ForexMatch® trading
platform. We also offer a STP capability that automatically reports completed telephonic and electronic transactions
directly to our clients' position-keeping systems and provides position updates for currency option trades executed through GFI's worldwide brokerage desks.

Our
New York office focuses on providing brokerage services for foreign exchange option trading among the U.S. Dollar, the Japanese Yen and the Euro, which are referred to as the G3
currencies, as well as foreign exchange options, forward contracts and non-deliverable forward contracts and non-U.S. Dollar interest rate swaps. Our New York office also
offers bond options, swap options and corporate and emerging market repo brokerage services. Our London office also covers foreign exchange option trading in the G3 currencies along with nearly all
European cross currencies, including the Russian Ruble and Eastern European currencies, for which we provide brokerage services for forwards and non-deliverable forwards. In addition, our
London office provides brokerage services for cross currency basis swaps, and non-US Dollar interest rate swaps and options. Our brokers in Singapore, Hong Kong and Seoul provide brokerage
services for foreign exchange currency options, non-deliverable forwards and non-U.S. Dollar interest rate swaps for regional and G3 currencies, while foreign exchange currency
options are also brokered out of Sydney. In 2008, we opened an office in Santiago, Chile that focuses on interest rate swaps and an office in Dubai that focuses on Islamic finance products.

Equity Products.We provide brokerage services in a range of cash-based and derivative equity products, including U.S. domestic
equity,
international equity, Global Depositary Receipts ("GDRs") and American Depositary Receipt ("ADRs") stocks and equity derivatives based on indices, stocks or customized stock structures. We offer
telephonic equity brokerage services from our brokerage desks in New York, London, Dublin, Paris, Tel Aviv, Hong Kong, Tokyo and Sydney and, where appropriate, our electronic trading platforms. Our
Dublin and Tel Aviv offices were opened in 2008. Through our various offices we broker trades in the OTC market as well as certain exchange-traded securities.

Our
New York office provides brokerage services in single stock cash equities, single stock options, index options, sector options, equity default swaps, variance swaps, total return
swaps, convertible bonds and ADRs. Our London office provides brokerage services in equity index options, single stock options, GDRs, Pan-European equities, Japanese equity derivatives and
structured equities. Our Paris office provides brokerage in Pan-European equities, structured equities, single stock and equity index options and financial futures. Our Hong Kong, Tokyo
and Sydney offices provide a varying degree of brokerage services in equity index and single stock options, while the Hong Kong office also provides brokerage services in ADRs and GDRs. Our Dublin and
Tel Aviv offices broker primarily Pan-European and international equities.

In
addition, through Christopher Street Capital Equities, a division of GFI Securities Limited, we operate a research driven brokerage business providing independent equity research that
is focused on the relationship between the credit and equity markets. Our research analyzes the relationship between the credit default swap and equity markets using our historic credit default swap
data. Christopher Street Capital focuses, in particular, on situations where credit default swap spreads and equity prices diverge outside their normal inverse relationship.

Commodity Products.We provide brokerage services in a wide range of cash-based and derivative commodity and energy products,
including
oil, natural gas, biofuel, electricity, wet and dry freight derivatives, dry physical freight, precious metals, coal, weather derivatives, property derivatives and emissions.

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Our
Trayport subsidiary is a leading provider of electronic trading software and services to the commodities, fixed income, currencies and equities markets. Trayport's GlobalVision
platform has an industry leading position in supplying software to the European OTC energy markets including electric power, natural gas, coal, emissions and freight. The GlobalVision platform
accommodates electronic trading, information sharing and STP capabilities in commodity and financial instruments. The 2008 acquisition of Trayport with its leading position in the European OTC energy
markets strengthens our global position in commodity products. In London, our telephonic brokerage capabilities are augmented with electronic brokerage capabilities we license from Trayport.

From
our New York area offices, we provide brokerage services in natural gas, oil and petroleum products, power (electricity) and insurance derivatives. In addition, as a result of our
October 2006 acquisition of the North American operations of Amerex, based in Sugar Land, Texas, we provide largely complementary brokerage services in natural gas, electric power, environmental
commodities and retail energy management. From our Calgary office we broker U.S. and Canadian natural gas. Our London office provides energy product brokerage services in many European national
markets, including for electric power, coal and emissions. The London office also provides brokerage services in property derivatives, dry freight derivatives, dry physical freight, and through a
partnership with A.C.M. Shipping Limited, wet freight derivatives. Our Singapore office brokers dry freight derivatives and dry physical freight. From brokerage desks in New York, London and Sydney,
we also serve the global precious metal markets with brokerage in spot, forward, swap and options contracts focusing on gold, silver, platinum and palladium.

In
2008, we added natural gas and certain electric power products to EnergyMatch®, our electronic trading platform for OTC energy derivatives. EnergyMatch® also
carries sulfur dioxide and nitrogen oxide emission products. We intend to add other emission types and energy products to EnergyMatch® in the future. We are also a member of
ConfirmHub, LLC, a company that has developed a system for electronic trade confirmations for the North American energy markets. Through this membership, we and other members of ConfirmHub are
able to offer electronic trade confirmations through a single secure connection in a standard format. Over sixty large energy trading companies currently subscribe to ConfirmHub.

Through
collaboration with certain divisions of CB Richard Ellis Group Inc., we provide and continue to develop brokerage services in European and U.S. property derivatives.
Property derivatives allow companies and other investors to hedge or speculate on the value of real estate, as measured by an industry index, without buying or selling actual properties. The
collaboration in the U.K. is now a leader in the growing property derivatives market. In addition, through a joint venture with Colliers International, we provide brokerage services in Hong Kong
property derivatives. Transactions typically take the form of a total return swap, exchanging the property return for a currency interest rate plus a fixed spread.

Through
a joint venture with A.C.M. Shipping Limited, we offer hybrid telephonic and electronic brokerage of wet freight derivatives in London, Singapore and New York. Wet freight
derivatives allow oil companies, ship owners and other users of wet freight cargo capacity to better manage volatile shipping costs for their products by effectively locking in the cost of shipping
future product.

Software, Analytics and Market Data.Our Trayport subsidiary licenses multi-asset class electronic trading and order management
software to brokers,
exchanges and traders. Trayport is a leading provider of trading software to the European energy market. Trayport software is licensed on a subscription basis and is marketed through a dedicated sales
staff. Trayport also receives consulting and maintenance fees to "white-label" or customize its products according to customer needs.

In
selected markets, we license Fenics® analytics products that are used to build pricing models, develop trading strategies and to manage, price and revalue derivative
portfolios. These products are sold on a subscription basis through a dedicated sales team. We currently offer our Fenics® analytics

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products
primarily for the foreign exchange option markets, and, to a lesser extent, for certain precious metals, credit derivatives, energy derivatives, property derivatives and wet and dry freight
markets. Fenics FX is a leading foreign exchange option pricing and analysis tool that is licensed for use at hundreds of sites globally. Fenics FX provides an array of tools, math models and
independent market data that permits clients to quickly and accurately price and revalue both standard and exotic foreign exchange options. Fenics FX can also be integrated with most aspects of a
client's trading infrastructure, and allows clients to control, monitor and more effectively oversee each stage of foreign exchange option trading.

We
license market data in the following product areas: foreign exchange options, credit derivatives, emerging market non-deliverable forwards, equity derivatives, interest
rate options and European and North American energy. We make our data available through a number of channels, including streaming web portals, file transfer protocol downloads, Fenics analytical tools
and data vendors, such as Reuters, Bloomberg and Quick, who license our data for distribution to their global
users. Revenue from market data products consists of up-front license fees and monthly subscription fees, royalties from third party market data vendors who re-license our data
and individual large database sales.

Our Clients

As of December 31, 2008, we provided brokerage services and data and analytics products to over 2,100 institutional clients,
including leading investment and commercial banks, large corporations, insurance companies and hedge funds. Notwithstanding our large number of clients, several dozen large financial institutions
generate the majority of our brokerage revenues. The dealers that are our principal brokerage clients are many of the leading financial institutions in the world, including: Barclays Bank, Citigroup,
Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Bank of America, Morgan Stanley, BNP Paribas and UBS. Despite the importance of these large financial institutions to our brokerage
business, no one client accounted for more than approximately 6.5% of our total revenues from all products and services globally for the year ended December 31, 2008.

Sales and Marketing

In order to promote new and existing brokerage, data and analytics software services, we utilize a combination of our own marketing and
public relations staff and external advisers in implementing selective advertising and media campaigns. We participate in numerous trade-shows to reach potential brokerage, data and technology
clients. We also utilize speaking opportunities to help promote key brokers and market specialists and our core products and services. Additionally, we market our brokerage services through the direct
interaction of our brokers with their clients. This direct interaction also permits our brokers to discuss new product and market developments with our clients. Our data, analytics and trading
software products are actively marketed through dedicated sales and support teams, including a dedicated sales and customer support staff for Trayport that markets its trading software to traders,
brokers and exchanges globally. As of December 31, 2008, we employed 85 sales, marketing and customer support professionals, consisting of 49 sales employees and executives, 5 marketing
employees and 31 customer support employees. Our data and analytics sales force calls on a broad range of clients including traders, risk managers, sales staff, treasurers, analysts and
e-commerce specialists at banks, hedge funds, fund managers, insurance companies and large corporations.

Technology

Brokerage Technology.We employ a technology development philosophy that emphasizes state-of-the-art technology
with cost efficiency in both our electronic trading platforms, such as CreditMatch®, GFI ForexMatch® EnergyMatch® and Globalvision® (a product of
Trayport®), and our data and analytics products. We take a flexible approach by developing in-house, purchasing or leasing technology products and services and by outsourcing
support and maintenance where appropriate to

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manage
technology expense more effectively. For each market in which we operate, we seek to provide the optimal mix of electronic and telephonic brokerage.

We
offer our products and services through a global communications network that is designed to ensure secure, reliable and timely access to the most current market information. We
provide our clients with a variety of means to connect to our brokers and trading platforms, including dedicated point-to-point data lines, virtual private networks and the
Internet.

We
are working with an increasing number of our clients to implement straight-through-processing between our trading platforms and the systems used by our clients to record, report and
store transaction data. These efforts seek to automate large parts of the trade reporting and settlement process, thereby reducing errors, risks and costs traditionally associated with
post-trade activities. We may also develop or customize trading systems for our customers.

Market Data and Analytics Products Technology.Our market data and analytics products are developed internally using advanced
development
methodologies and computer languages. Through years of developing Fenics products, our in-house software development team is experienced in creating simple, intuitive software for use with
complex derivative instruments.

Support and Development.At December 31, 2008, we employed a team of 306 computer, telecommunication, network, database,
client support,
quality assurance and software development specialists. We devote substantial resources to the continuous development and support of our electronic brokerage capabilities, the introduction of new
products and services to our clients and the training of our employees. Our software development capabilities allow us to be flexible in our decisions to either purchase or license technology from
third parties or to develop it internally.

Disaster Recovery.We have contingency plans in place to protect against major carrier failures, disruption in external services
(market data and
Internet service providers), server failures and power outages. All critical services are connected via redundant and diverse circuits and, where possible, we employ site diversity. Production
applications are implemented with a primary and back-up server, and all data centers have uninterruptible power source and generator back-up power. Our servers are
backed-up daily, and back-up tapes are sent off-site weekly. We have a limited number of reserved "seats" available to relocate key personnel in the event that we
were unable to use certain of our offices for an extended period of time. We intend to increase this number of seats, some of which may be shared with other companies, as part of our business
continuity plans.

Intellectual Property

We seek to protect our internally developed and purchased intellectual property through a combination of patent, copyright, trademark,
trade secret, contract and fair business practice laws. Our proprietary technology, including our Fenics software, is generally licensed to clients under written license agreements. Where appropriate,
we also license and incorporate software and technology from third parties that is protected by intellectual property rights belonging to those third parties.

We
pursue registration of some of our trademarks in the United States and in other countries. "GFI Group," "GFInet," "Fenics," "CreditMatch," "GFI ForexMatch," "EnergyMatch," "Amerex",
"Starsupply" and "Trayport" are registered trademarks in the United States and/or numerous overseas jurisdictions.

We
have applied for several patents related to our products and services. We believe that no single patent or application or group of patents or applications will be of material
importance to our business as a whole.

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Competition

Competition in the inter-dealer brokerage industry is intense. Our primary competitors with respect to our OTC brokerage services are
currently other inter-dealer brokers and a few electronic brokerage platforms. Additional competition may arise from securities and futures exchanges. Our primary competitors for our data and
analytics products are currently other inter-dealer brokers and data and technology vendors. Certain of our larger market data competitors offer electronic trading platforms for specific products.

Inter-Dealer Brokers.The current size of the wholesale inter dealer brokerage market is difficult to estimate as there is
little objective, external
data on the industry and several participants are private companies and do not publicly report revenues. Historically, the inter-dealer brokerage industry has been characterized by fierce competition
for clients and brokers. Over the past several years, the industry has been characterized by the consolidation of well-established, smaller firms into five principal, global inter-dealer
brokers: GFI Group Inc., ICAP plc, Tullett Prebon plc, Compagnie Financiere Tradition and Cantor Fitzgerald, and its subsidiary, BGC Partners Inc. We believe this
consolidation has resulted from a number of factors, including: the consolidation of primary institutional dealer clients; pressure to reduce brokerage commissions, particularly in more commoditized
products; greater dealer demand for technological capabilities and the need to leverage relatively fixed administrative and regulatory costs. We believe that consolidation should continue as volumes
contract due to the on-going credit crisis, the global recessionary environment, and the deleveraging of hedge fund and dealer portfolios. Nevertheless, a number of smaller, privately held
firms or consortia that tend to specialize in niche products or specific geographical areas remain in the market.

Exchange and Exempt Commercial Markets.In general, we do not compete directly with the major futures exchanges, such as the CME
Group Inc.
("CME"), the Chicago Board Options Exchange, Eurex and Euronext.liffe, and exempt commercial markets like the one operated by ICE. These exchanges allow participants to trade standardized futures and
options contracts. These contracts, unlike the less commoditized OTC products that we focus on, typically contain more standardized terms, and are typically traded in contracts representing smaller
notional amounts. Furthermore, the introduction of such standardized exchange-traded futures and options contracts has, in the past, generally been accompanied by continuing growth in the
corresponding OTC derivatives markets.

We
believe that exchanges will continue to seek to leverage their platforms and attempt to grow by introducing products designed to compete with certain products covered by inter-dealer
brokers in the OTC marketplace or through acquisitions. In 2008, the CME acquired CMA, a credit data specialist, and ICE acquired Creditex, a specialist inter-dealer broker of credit derivative
products.

Additionally,
governments and regulators in the U.S. and Europe have called for the centralized clearing of credit derivatives. Several exchanges and clearinghouses in the U.S. and
Europe have proposed solutions for the clearing of credit derivatives and are in various stages of development and regulatory approval. The CME, with its existing clearinghouse, has partnered with a
large hedge fund to provide an electronic trading platform to match buyers and sellers. This platform may be, to some extent, in direct competition with the inter-dealer brokers. In other cases,
certain exchanges are proposing a clearing solution that will accept derivative transactions executed by inter-dealer brokers. We expect that pressure on the financial community by regulators and
governments will lead to the clearing of certain credit derivatives in 2009, and we believe that multiple platforms will become available to market participants. We are involved in a number of these
initiatives.

Software, Analytics and Market Data.Several large market data and information providers compete for a presence on virtually
every trading desk in
our industry. Some of these entities currently offer varying forms of electronic trading of the types of financial instruments in which we specialize. Some of

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these
entities have announced their intention to expand their electronic trading platforms or to develop new platforms. In addition, these entities are currently competitors to, and in some cases
clients of, our data and analytical services. Further, we face competition for certain sales of our data products from our inter-dealer broker competitors and from data vendors, such as Markit, a
consortium of major financial institutions.

Regulation

Certain of our subsidiaries, in the ordinary course of their business, are subject to extensive regulation by government and
self-regulatory organizations both in the United States and abroad. As a matter of public policy, these regulatory bodies are responsible for safeguarding the integrity of the securities
and other financial markets. These regulations are designed primarily to protect the interests of the investing public generally and thus cannot be expected to protect or further the interests of our
company or our stockholders and may have the effect of limiting or curtailing our activities, including activities that might be profitable.

U.S. Regulation and Certain Clearing Arrangements.GFI Securities LLC, one of our subsidiaries, is registered as a
broker-dealer with the SEC,
and the State of New York, and is regulated by the Financial Industry Regulatory Authority ("FINRA"). GFI Securities LLC is subject to the regulations of FINRA and industry standards of
practice that cover many aspects of its business, including initial licensing requirements, sales and trading practices, safekeeping of clients' funds and securities, capital structure, record
keeping, supervision and the conduct of affiliated persons, including directors, officers and employees. GFI Securities LLC also operates an electronic trading platform that is regulated
pursuant to Regulation ATS under the Exchange Act.

Several
of GFI Securities LLC's equity and corporate bond brokerage desks have experienced issues relating to reporting trades to FINRA on a timely basis, which is required by
FINRA rules. This subsidiary has also paid fines for late trade reporting in recent years and is currently being reviewed by FINRA for similar issues relating to trade reporting. In addition, FINRA
has been conducting an inquiry into the activities of interdealer brokerage firms in connection with the determination of the commission rates paid to them by certain dealers for brokering
transactions in credit default swaps. GFI Securities LLC has been cooperating with the Staff in this inquiry by responding to requests for documents, testimony and other information. In January
2009, FINRA made a preliminary determination to recommend disciplinary action in connection with allegedly improper communications between certain of GFI Securities LLC's former credit
derivative brokers and one current employee and those at other interdealer brokers. In connection with its current examinations and this disciplinary action, FINRA may seek to impose fines on us or
seek to take other corrective action. See Item 3"Legal Proceedings" for additional details.

GFI
Securities LLC is also an introducing broker with the National Futures Association ("NFA"), and the Commodity Futures Trading Commission ("CFTC"). The NFA and CFTC require
their members to fulfill certain obligations, including the filing of quarterly and annual financial reports. Failure to fulfill these obligations in a timely manner can result in disciplinary action
against the firm. GFI Brokers LLC operates electronic trading platforms that are exempt from CFTC regulation either as an exempt board of trade (ForexMatch®) or as an exempt
commercial market (EnergyMatch®).

The
SEC, FINRA, CFTC and various other regulatory agencies within and outside of the United States have stringent rules and regulations with respect to the maintenance of specific levels
of net capital by regulated entities. Generally, a broker-dealer's capital is net worth plus qualified subordinated debt less deductions for certain types of assets. The Net Capital Rule under the
Exchange Act requires that at least a minimum part of a broker-dealer's assets be maintained in a relatively liquid form.

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If
these net capital rules are changed or expanded, or if there is an unusually large charge against our net capital, our operations that require the intensive use of capital would be
limited. A large operating loss or charge against our net capital could adversely affect our ability to expand or even maintain these current levels of business, which could have a material adverse
effect on our business and financial condition.

The
SEC and FINRA impose rules that require notification when net capital falls below certain predefined criteria. These rules also dictate the ratio of debt to equity in the regulatory
capital composition of a broker-dealer, and constrain the ability of a broker-dealer to expand its business under certain circumstances. If a firm fails to maintain the required net capital, it may be
subject to suspension or revocation of registration by the applicable regulatory agency, and suspension or expulsion by these regulators could ultimately lead to the firm's liquidation. Additionally,
the Net Capital Rule and certain FINRA rules impose requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC
and FINRA for certain capital withdrawals.

We
maintain clearing arrangements with selected financial institutions in order to settle our matched principal transactions and maintain deposits with such institutions in support of
those arrangements.

Foreign Regulation and Certain Clearing Arrangements.Our overseas businesses are also subject to extensive regulation by
various foreign governments
and regulatory bodies. In the United Kingdom, the Financial Services Authority ("FSA") regulates our subsidiaries, GFI Brokers Limited and GFI Securities Limited. Our U.K. regulated subsidiaries are
also subject to the European-wide Markets in Financial Instruments Directive ("MiFID"). Each of our subsidiaries subject to MiFID has taken the necessary steps in order to comply with
these requirements. The regulations are extensively and broadly similar to that described above for our U.S. regulated subsidiaries.

As
with those U.S. subsidiaries subject to FINRA rules, the ability of our regulated U.K. subsidiaries to pay dividends or make capital distributions may be impaired due to applicable
capital requirements. Our regulated U.K. subsidiaries are subject to "consolidated" regulation, in addition to being subject to regulation on a legal entity basis. Consolidated regulation impacts the
regulated entity and its parent holding companies in the U.K, including the regulated entity's ability to pay dividends or distribute capital. Effective January 1, 2008, we also became subject
to the European Union's Capital Adequacy Directive ("CRD"). This directive requires us to have an "Internal Capital Adequacy Assessment Process" as set forth in the CRD, which puts the responsibility
on firms subject to the directive to ensure they have adequate capital after considering their risks.

Our
regulated U.K. subsidiaries are also subject to regulations regarding changes in control similar to those described above for GFI Securities LLC. Under FSA rules, regulated
entities must obtain prior approval for any transaction resulting in a change in control of a regulated entity. Under applicable
FSA rules, control is broadly defined as a 10% interest in the regulated entity or its parent or otherwise exercising significant influence over the management of the regulated entity. As a result of
these regulations, our future efforts to sell shares or raise additional capital may be delayed or prohibited by the FSA.

GFI
Securities Limited is a member of Euroclear for the purpose of clearing certain debt and equity transactions. This membership requires GFI Securities Limited to deposit collateral or
provide a letter of credit to Euroclear so that Euroclear will extend a clearing line to GFI Securities Limited.

In
Hong Kong, the Securities and Futures Commission ("SFC") regulates our subsidiary, GFI (HK) Securities LLC, as a Securities Broker. The compliance requirements of the SFC
include, among other things, net capital requirements (known as the Financial Resources Rule) and stockholders'

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equity
requirements. The SFC regulates the activities of the officers, directors, employees and other persons affiliated with GFI (HK) Securities LLC and requires the registration of such
persons.

In
addition, GFI (HK) Brokers Ltd. is registered with and regulated by the Hong Kong Monetary Authority ("HKMA"). As part of this registration, GFI (HK) Brokers Ltd. is
required to maintain stockholders' equity of 5.0 million Hong Kong dollars.

In
Tokyo, the Japan Securities Dealers Association ("JSDA") regulates GFI Securities Limited's Japanese branch. The JSDA regulates the activities of the officers, directors, employees
and other persons affiliated with the branch. This branch is also subject to certain licensing requirements established by the Foreign Securities Firms Law (the "FSFL"). As part of
these requirements, GFI Securities Limited's Japanese branch is required to maintain "brought-in" capital, as defined, of 50 million Japanese Yen. The branch is also subject to the
net capital rule promulgated by the FSFL, which required that net worth plus "brought-in" capital exceed a ratio of 140.0% of relevant expenditure. In addition, GFI Securities Limited is
required to maintain a capital base of 1 billion Japanese Yen.

In
Paris, a branch of GFI Securities Limited was established through the exercise of its passport right to open a branch in an European Economic Area ("EEA") state. The establishment of
the branch was approved by the FSA and acknowledged by Banque de France in France. The branch is subject to the conduct of business rules of the Autorite Des Marches Financiers ("AMF") when dealing
with resident customers of France and is regulated, in part, by the FSA.

GFI
Group PTE Ltd is subject to the compliance requirements of the Monetary Authority of Singapore ("MAS"), which requires that GFI Group PTE Ltd, among other things,
maintain stockholders' equity
of 3.0 million Singapore dollars (or approximately $2.1 million), measured annually. However, at December 31, 2008, GFI Group PTE Ltd's stockholders' equity had fallen
below the required amount and therefore was not in compliance with this requirement. GFI Group PTE Ltd. discussed this matter with the MAS and increased its share capital to meet the
requirements subsequent to year-end. We do not expect to incur a penalty in connection with this period of non-compliance.

In
Sydney, our brokerage operations are conducted through a branch of GFI Brokers Limited. GFI Brokers Limited is registered as a foreign corporation in Australia and is conditionally
exempt from the requirement to hold an Australian financial services license under the Australian Securities and Investments Commission Corporations Act 2001 in respect of the financial services it
provides in Australia. This exemption applies to foreign companies regulated by the FSA in accordance with UK regulatory standards.

In
Korea, GFI Korea Money Brokerage Limited is licensed and regulated by the Ministry of Finance and Economy to engage in foreign exchange brokerage business, and is subject to certain
regulatory requirements under the Foreign Exchange Transaction Act and regulations thereunder. As a licensed foreign exchange brokerage company, GFI Korea Money Brokerage Limited is required to
maintain minimum requirement of paid-in-capital of 5 billion Korea Won.

Except
as discussed above regarding GFI Group PTE Ltd., at December 31, 2008, all of our subsidiaries that are subject to foreign net capital rules were, and currently are,
in compliance with those rules and have net capital in excess of the minimum requirements. We do not believe that we are currently subject to any foreign regulatory inquiries that, if decided
adversely, would have any material adverse effect on us and our subsidiaries taken as a whole. As we expand our foreign businesses, we will also become subject to regulation by the governments and
regulatory bodies in other countries. The compliance requirements of these different overseer bodies may include, but are not limited to, net capital or stockholders' equity requirements.

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Changes in Existing Laws and Rules.Additional legislation and regulations, changes in rules promulgated by the government,
regulatory bodies or
clearing organizations described above or changes in the interpretation or enforcement of laws and regulations may directly affect the manner of our operation, our net capital requirements or our
profitability. In addition, any expansion of our activities into new areas may subject us to additional regulatory requirements that could adversely affect our business, reputation and results of
operations.

Exchange Memberships.Through our various subsidiaries, we are members of the following exchanges: NASDAQ Stock Market,
International Securities
Exchange, Chicago Mercantile Exchange (non-member firm), London Stock Exchange, Eurex, Xetra, Euronext.liffe, Baltic Exchange, Ice Futures U.S., VirtX and European Energy Exchange.

Employees

At December 31, 2008, we employed 1,740 employees. Of these employees, 1,037 are brokerage personnel (consisting of 860 brokers
and 177 trainees and clerks), 306 are technology and telecommunications specialists and 85 comprise our software, analytics and market data sales, marketing and customer support professionals.
Approximately 39% of our employees are based in the Americas, 46% are based in EMEA and the remaining 15% are based in Asia-Pacific. None of our employees are represented by a labor union.
We consider our relationships with our employees to be good and have not experienced any interruption of operations due to labor disagreements.

ITEM 1A.    RISK FACTORS

Risks Related to Our Business and Competitive Environments.

Economic, political and market factors beyond our control could reduce trading volumes, securities prices and demand for our brokerage services, which could harm our
business and our profitability.

Difficult market conditions, economic conditions and geopolitical uncertainties have in the past adversely affected and may in the
future adversely affect our business and profitability. Our business and the brokerage and financial services industry in general are directly affected by national and international economic and
political conditions, broad trends in business and finance, the level and volatility of interest rates, substantial fluctuations in the volume and price levels of securities transactions and changes
in and uncertainty regarding tax and other laws. In each of the three years in the period ended December 31, 2008, over 94% of our revenues were generated by our brokerage operations. As a
result, our revenues and profitability are likely to decline significantly during periods of low trading volume in the financial markets in which we offer our services. The financial markets and the
global financial services business are, by their nature, risky and volatile and are directly affected by many national and international factors that are beyond our control. Any one of the following
factors, among others, may cause a substantial decline in the U.S. and global financial markets in which we offer our services, resulting in reduced trading volume. These factors
include:



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Declines in the volume of trading in the markets in which we operate generally result in lower revenue from our brokerage business. In addition, although less
common, some of our brokerage revenues are determined on the basis of the value of transactions or on credit spreads. Therefore, declines in the value of instruments traded in certain market sectors
or the tightening of credit spreads could result in lower revenue for our brokerage business. Our profitability would be adversely affected by a decline in revenue because a portion of our costs are
fixed. For these reasons, decreases in trading volume or declining prices or credit spreads could have an adverse effect on our business, financial condition or results of operations.

For
example, the systematic risk reduction in the markets that occurred in the latter half of fiscal 2007 continued to impact the financial markets through 2008. Continued concerns about
the impact of subprime loans caused the subprime-related and broader credit markets to deteriorate further, with lower levels of liquidity and price transparency for certain credit products. These
difficult market conditions have adversely affected global lending transactions, U.S. subprime and non-subprime residential mortgage products, commercial real estate products, structured
investment vehicles, financial services businesses and insurers. These general market conditions have had an adverse impact on our business and financial condition as customers or potential customers
have liquidated or consolidated, and the ongoing market volatility, deleveraging and recessionary concerns have caused individuals and institutional traders and other market participants to curtail or
forego trading activities.

We operate in a rapidly evolving business and technological environment and we must adapt our business effectively and keep up with rapid technological changes in order to
compete effectively.

The pace of change in our industry is extremely rapid. Operating in such a rapid business environment involves a high degree of risk.
Our ability to succeed and compete effectively will depend on our ability to adapt effectively to these changing market conditions and to keep up with rapid technological changes.

To
remain competitive, we must continue to enhance and improve the responsiveness, functionality, accessibility and other features of our electronic brokerage platform software, network
distribution systems and other technologies. The financial services industry is characterized by rapid technological change, changes in use and client requirements and preferences, frequent product
and service introductions employing new technologies and the emergence of new industry standards and practices that could render our existing practices, technology and systems obsolete. In more liquid
markets, development by our competitors of new electronic trade execution, STP, affirmation, confirmation or clearing functionalities or products that gain acceptance in the market could give those
competitors a "first mover" advantage that may make it difficult for us to overcome with our own technology. Our success will depend, in part, on our ability to:



The
development of proprietary electronic brokerage platforms and other technology to support our business entails significant technological, financial and business risks. Further, the
adoption of new Internet, networking or telecommunications technologies may require us to devote substantial resources to modify, adapt and defend our services. We may not successfully implement new
technologies or adapt our electronic brokerage systems and transaction-processing systems to client requirements or

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emerging
industry standards. We may not be able to respond in a timely manner to changing market conditions or client requirements or successfully defend any challenges to any technology we develop.
If we are unable to anticipate and respond to the demand for new services, products and technologies on a timely and cost-effective basis, and to adapt to technological advancements and
changing standards, we may be unable to compete effectively, which could negatively affect our business, financial condition or results of operations.

If we are unable to continue to identify and exploit new market opportunities, our ability to maintain and grow our business may be adversely affected.

When a new intermediary enters our markets or the markets become more liquid, the resulting competition or increased liquidity may lead
to lower commissions. This may result in a decrease in revenue in a particular market even if the volume of trades we handle in that market has increased. As a result, we seek to broker more trades
and increase market share in existing markets and to seek out new markets in which we can charge higher commissions. Pursuing this strategy may require significant management attention and broker
expense. We may not be able to attract new clients or successfully enter new markets. If we are unable to continue to identify and exploit new market opportunities on a timely and
cost-effective basis, our revenues may decline, which would adversely affect our profitability.

We face substantial competition that could negatively impact our market share and our profitability.

The financial services industry generally, and the inter-dealer brokerage businesses in which we are engaged in particular, are very
competitive, and we expect competition to continue to intensify in the future. Our current and prospective competitors include:



Some
of our competitors offer a wider range of services, have broader name recognition, have greater financial, technical, marketing and other resources than we have and have larger
client bases than we do. Some of them may be able to respond more quickly to new or evolving opportunities, technologies and client requirements than we can, and may be able to undertake more
extensive marketing activities. Our competitors may also seek to hire our brokers, which could result in a loss of brokers by us or in increased costs to retain our brokers. In addition to the
competitors described above, our large institutional clients may increase the amount of trading they do directly with each other rather than through us, or they may decrease their trading of certain
OTC products in favor of exchange-traded products. In either case, our revenues could be adversely affected. If we are not able to compete successfully in the future, our business, financial condition
and results of operations would be adversely affected.

We
have experienced intense price competition in our brokerage business in recent years. Some competitors may offer brokerage services to clients at lower prices than we are offering,
which may force us to reduce our prices or to lose market share and revenue. In addition, we focus primarily on providing brokerage services in markets for less commoditized financial instruments. As
the markets for these instruments become more commoditized, we could lose market share to other inter-dealer brokers, exchanges and electronic multi-dealer brokers who specialize in providing
brokerage services in more commoditized markets. We increasingly compete with exchanges for the execution of trades in certain products. If a financial instrument for which we provide brokerage
services becomes listed on

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an
exchange or if an exchange introduces a competing product to the products we broker in the OTC market, the need for our services in relation to that instrument could be significantly reduced.

Consolidation and layoffs in the banking and financial services industries could materially adversely affect our business, financial condition and results of operations
because it may reduce our customer base.

In recent years, there has been substantial consolidation and convergence among companies in the banking and financial services
industries, resulting in a decreased customer base. Further, in the wake of the recent economic turmoil, credit conditions have worsened considerably and the landscape of the U.S. financial services
industry changed dramatically. During 2008, many major U.S. financial institutions consolidated. For example, Bear Stearns was acquired by J.P. Morgan Chase, Lehman Brothers Holdings Inc.
declared bankruptcy and Bank of America Corp. acquired Merrill Lynch & Co., Inc.

These
and other financial services firms are our customers. Continued consolidation or significant layoffs in the financial services industry could result in a decrease in the number of
traders for whom we are able to provide brokerage services, which may reduce our trading volumes. In addition, continued consolidation could lead to the exertion of additional pricing pressure by our
customers and our competitors, impacting the commissions we generate from our brokerage services.

Further,
the recent consolidation among exchange firms, and expansion by these firms into derivative and other non-equity trading markets, will increase competition for
customer trades and place additional pricing pressure on commissions and spreads.

Because competition for the services of brokers is intense, we may not be able to attract and retain the highly skilled brokers we need to support our business or we may be
required to incur additional expense to do so.

We strive to provide high-quality brokerage services that allow us to establish and maintain long-term
relationships with our clients. Our ability to continue to provide these services and maintain these relationships depends, in large part, upon our brokers. As a result, we must attract and retain
highly qualified brokerage personnel. Competition for the services of brokers is intense, especially for brokers with extensive experience in the specialized markets in which we participate or may
seek to enter. If we are unable to hire highly qualified brokers, we may not be able to enter new brokerage markets or develop new products. If we lose one or more of our brokers in a particular
market in which we participate, our revenues may decrease and we may lose market share in that particular market.

We
may not be successful in our efforts to recruit and retain brokerage personnel. If we fail to attract new personnel or to retain and motivate our current personnel, or if we incur
increased costs associated with attracting and retaining personnel (such as sign-on or guaranteed
bonuses to attract new personnel or retain existing personnel), our business, financial condition and results of operations may suffer.

In
addition, recruitment and retention of qualified staff could result in substantial additional costs. We pursue our rights through litigation when competitors hire our employees who
are under contract with us. We also have been and are party to litigations involving competitors in connection with employee hires and claims from former employees in connection with the termination
of their employment. We are currently involved in several litigations and arbitrations with our competitors relating to the recruitment of employees. An adverse settlement or judgment related to these
or similar types of claims could have a material adverse effect on our financial condition or results of operations. Regardless of the outcome of these claims, we generally incur significant expense
and management time dealing with these claims.

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Financial or other problems experienced by our clients or third parties could affect the markets in which we provide brokerage services. In addition, any disruption in the
key derivatives markets in which we provide services could affect our brokerage revenues.

We generally provide brokerage services to our clients in the form of either agency or matched principal transactions. In agency
transactions, we charge a commission for connecting buyers and sellers and assisting in the negotiation of the price and other material terms of the transaction. After all material terms of a
transaction are agreed upon, we identify the buyer and seller to each other and leave them to settle the trade directly. We are exposed to credit risk for commissions we bill to clients for our agency
brokerage services. In executing matched principal transactions, we are exposed to the risk that one of the counterparties to a transaction may fail to fulfill its obligations, as described in further
detail in the Risk Factor captioned "The securities settlement process exposes us to risks that may impact our liquidity and profitability. In addition, liability for unmatched trades could adversely
affect our results of operations and balance sheet." Our clients may default on their obligations to us arising from either agency or principal transactions due to disputes, bankruptcy, lack of
liquidity, operational failure or other reasons. Any losses arising from such defaults could adversely affect our financial condition or results of operations.

We
have adopted policies and procedures to identify, monitor and manage our credit risk, in both agency and principal transactions, through reporting and control procedures and by
monitoring credit standards applicable to our clients. These policies and procedures, however, may not be fully effective. Some of our risk management methods depend upon the evaluation of information
regarding markets, clients or other matters that are publicly available or otherwise accessible by us. That information may not, in all cases, be accurate, complete, up-to-date
or properly evaluated. If our policies and procedures are not fully effective or we are not always successful in monitoring or evaluating the credit risks to which we are, or may, be exposed, our
financial condition or results of
operations could be adversely affected. In addition, our insurance policies may not provide coverage for these risks.

Problems
experienced by third parties could also affect the markets in which we provide brokerage services. In recent years, there have been an increasing number of financial
institutions that have reported losses tied to write-downs of mortgage and asset backed securities, structured credit products and other derivative instruments and investments. As a result, there is
an increased risk that one of our clients or counterparties could fail, shut down, file for bankruptcy or be unable to pay out their positions under certain derivative contracts. The failure of a
significant number of counterparties or a counterparty that holds a significant amount of derivatives exposure, or which has significant financial exposure to, or reliance on, the mortgage,
asset-backed or related markets, could have a material adverse effect on the trading volume and liquidity in a particular market for which we provide brokerage services or on the broader financial
markets. It is difficult to predict how long these conditions will continue, whether they will continue to deteriorate and which of our products and services may be adversely affected. As a result,
these conditions could adversely affect our financial condition and results of operations. In addition, in recent years, an increasing percentage of our business, directly or indirectly, results from
trading activity by hedge funds. Hedge funds typically employed a significant amount of leverage to achieve their results and, in the past, including 2008, certain hedge funds have had difficulty
managing this leverage, which has resulted in market-wide disruptions. Following the economic turmoil of 2008, many hedge funds have significantly decreased their leverage or have gone out
of business. If this deleveraging continues or one or more hedge funds that was a significant participant in a derivatives market experiences problems in the future, that derivatives market could be
adversely affected and, accordingly, our brokerage revenues in that market will likely decrease.

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Risks Related to Our Operations.

We operate in a highly regulated industry and we may face restrictions with respect to the way we conduct certain of our operations.

Our business is subject to increasingly extensive government and other regulation and our relationships with our broker-dealer clients
may subject us to increasing regulatory scrutiny. These regulations are designed to protect the interests of the investing public generally rather
than our stockholders. The SEC, FINRA, CFTC and other agencies extensively regulate the U.S. financial services industry, including certain of our operations in the United States. Some of our
international operations are subject to similar regulations in their respective jurisdictions, including rules made by the FSA in the United Kingdom, regulations overseen by the AMF in France, the SFC
in Hong Kong, the MAS in Singapore, the JSDA in Japan and the Ministry of Finance and Economy in Korea. These regulatory bodies are responsible for safeguarding the integrity of the securities and
other financial markets and protecting the interests of investors in those markets. Some aspects of our business are subject to extensive regulation, including:



If
we fail to comply with any of these laws, rules or regulations, we may be subject to censure, fines, cease-and-desist orders, suspension of business, suspensions of
personnel or other sanctions, including revocation of our registrations with FINRA, withdrawal of our authorizations from the FSA or revocation of our registrations with other similar international
agencies to whose regulation we are subject. For example, in the past, we have been fined in the U.S. for issues relating to late trade reporting. Additionally, in January 2009, FINRA made a
preliminary determination to recommend disciplinary action in connection with allegedly improper communications, between certain of GFI Securities LLC's former credit derivative brokers and one
current employee and those at other inter-dealer brokers. For more details, see "Item 1BusinessRegulation" and "Item 3Legal Proceedings."

Our
authority to operate as a broker in a jurisdiction is dependent on continued registration or authorization in that jurisdiction or the maintenance of a proper exemption from such
registration or authorization. Our ability to comply with all applicable laws and rules is largely dependent on our compliance, credit approval, audit and reporting systems and procedures, as well as
our ability to attract and retain qualified compliance, credit approval, audit and risk management personnel. Our systems and procedures may not be effective. In addition, the continued growth and
expansion of our business creates additional strain on our compliance systems and procedures and has resulted, and we expect will continue to result, in increased costs to maintain and improve these
systems.

In
addition, because our industry is heavily regulated, regulatory approval may be required prior to expansion of business activities. We may not be able to obtain the necessary
regulatory approvals for any desired expansion. Even if approvals are obtained, they may impose restrictions on our business or

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we
may not be able to continue to comply with the terms of the approvals or applicable regulations. The implementation of unfavorable regulations or unfavorable interpretations of existing regulations
by courts or regulatory bodies could require us to incur significant compliance costs or cause the development or continuation of business activities in affected markets to become impractical. For a
further description of the regulations which may limit our activities, see "Item 1BusinessRegulation."

Some
of our subsidiaries are subject to regulations regarding changes in control of their ownership. These regulations generally provide that regulatory approval must be obtained in
connection with any transaction resulting in a change in control of the subsidiary, which may include changes in control of
GFI Group Inc. As a result of these regulations, our future efforts to sell shares or raise additional capital may be delayed or prohibited in circumstances in which such a transaction would
give rise to a change in control as defined by the applicable regulatory body.

Broad changes in laws or regulations may affect our ability to conduct our business. Currently proposed initiatives for centralized clearing or exchange trading of certain
OTC derivatives, specifically credit derivatives, may adversely impact our business.

Changes in laws or regulations or in governmental policies could cause us to change the way we conduct our business, which could
adversely affect us. The government agencies that regulate us continuously review legislative and regulatory initiatives and may adopt new or revised laws and regulations and have broad powers to
investigate and enforce compliance and punish noncompliance with their rules, regulations and industry standards of practice. In light of current conditions in the U.S. financial markets and economy,
regulators have increased their focus on the regulation of the financial services industry. We are unable to predict whether any of these initiatives will be implemented or in what form, or whether
any additional or similar changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future. Any such action could affect us in substantial and
unpredictable ways and could have an adverse effect on our business, financial condition and results of operations.

Additionally,
governments and regulators in both the US and the UK have called for increased regulation and transparency in the OTC markets, particularly in the credit derivatives
market. In particular, portions of the credit default swap market may be required to be centrally cleared through an exchange or other clearing organization. Furthermore, it is possible that
regulators in some jurisdictions may also require that all or part of the credit default swap market to trade on regulated exchanges. Several exchanges and industry utilities are developing
clearinghouses and platforms to clear credit derivatives and are pursuing regulatory approvals and dealer commitment. In the event that government authorities or regulators were to mandate centralized
clearing or exchange trading for large portions of the credit derivative or OTC markets and we were unable to maintain our role as a provider of execution services in these markets or otherwise adapt
our business model accordingly, it would have a materially adverse effect on our business.

Our regulated subsidiaries are subject to risks associated with net capital requirements, and we may not be able to engage in operations that require significant capital.

The SEC, FINRA, FSA, JSDA and various other domestic and international regulatory agencies have stringent rules and regulations with
respect to the maintenance of specific levels of net capital by broker-dealers. Generally, a broker-dealer's net capital is defined as its net worth plus qualified subordinated debt less deductions
for certain types of assets. If we fail to maintain the required net capital, we may be subject to suspension or revocation of registration by FINRA or withdrawal of authorization from the FSA, which
would have a material adverse effect on our business. If these net capital rules are changed or expanded, or if there is an unusually large charge against net capital, operations that require the
intensive use of capital would be limited. Also, our ability to withdraw

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capital
from our regulated subsidiaries is subject to restrictions, which in turn could limit our ability to pay dividends, repay debt and redeem or purchase shares of our common stock. A large
operating loss or charge against net capital could adversely affect our ability to expand or even maintain our present levels of business, which could have a material adverse effect on our business.
In addition, we may become subject to net capital requirements in other foreign jurisdictions in which we currently operate or which we may enter. We cannot predict our future capital needs or our
ability to obtain additional financing. For a further discussion of our net capital requirements, see "Item 1BusinessRegulation."

Our investments in expanding our brokerage services, electronic brokerage systems and market data and analytics services may not produce substantial revenue or profit.

We have made, and expect to continue to make, significant investments in our brokerage and market data and analytics services,
including investments in personnel, technology and infrastructure, in order to pursue new growth opportunities. With respect to our brokerage services and electronic brokerage systems, we may not
receive significant revenue and profit from the development of a new brokerage desk or electronic brokerage system or the revenue we do receive may not be sufficient to cover the start-up
costs of the new desk or the substantial development expenses associated with creating a new electronic brokerage platform. Even when our personnel hires and systems are ultimately successful, there
is typically a transition period before these hires or systems become profitable or increase productivity. In some instances, our clients may determine that they do not need or prefer an electronic
brokerage system and the period before the system is successfully developed, introduced and adopted may extend over many months or years. The successful introduction of electronic brokerage system in
one market or country does not ensure that the same system will be used or favored by clients in similar markets or other countries. Our continued expansion of brokerage personnel and systems to
support new growth opportunities results in on-going transition periods that could adversely affect the levels of our compensation and expense as a percentage of brokerage revenue.

With
respect to our market data and analytics services, we may incur substantial development, sales and marketing expenses and expend significant management effort to create a new
product or service. Even after incurring these costs, we ultimately may not sell any or only small amounts of these products or services. Consequently, if revenue does not increase in a timely fashion
as a result of these expansion and development initiatives, the up-front costs associated with them may exceed the related revenue and reduce our working capital and income.

If we are unable to manage the risks of international operations effectively, our business could be adversely affected.

We provide services and products to clients globally through offices in London, Paris, Hong Kong, Seoul, Singapore, Tel Aviv, Dublin,
Dubai, Santiago, Sydney, Tokyo, Cape Town and Calgary and we may seek to further expand our operations in the future. On a geographic basis, approximately 53% and 48% of our total revenues for the
years ended December 31, 2008 and 2007, respectively, were generated by our European, Middle Eastern & African operations, 37% and 42%, respectively, were generated by our Americas
operations and 10% and 10%, respectively, were generated by our operations in the Asia-Pacific region. There are certain additional risks inherent in doing business in international
markets, particularly in the regulated brokerage industry. These risks include:



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Our
international operations also expose us to the risk of fluctuations in currency exchange rates. For example, a substantial portion of our revenue from our London office, our largest
international office, is received in Euros and U.S. Dollars, whereas many of our expenses from our London operations are payable in British Pounds. Our risk management strategies relating to exchange
rates may not prevent us from suffering losses that would adversely affect our financial condition or results of operations.

Our
international operations are also subject to the political, legal and economic risks associated with politically unstable and less developed regions of the world, including the risk
of war and other international conflicts and actions by governmental authorities, insurgent groups, terrorists and others. Our businesses and operations are increasingly expanding into new regions,
including emerging markets, and we expect this trend to continue. Various emerging market countries have experienced severe economic and financial disruptions, including significant devaluations of
their currencies, defaults or threatened defaults on sovereign debt, capital and currency exchange controls, and low or negative growth rates in their economies. These conditions could have an adverse
impact on our businesses and increased volatility in financial markets generally.

In
addition, we are required to comply with the laws and regulations of foreign governmental and regulatory authorities of each country in which we conduct business. These may include
laws, rules and regulations, including registration requirements. Our compliance with these laws and regulations may be difficult and time consuming and may require significant expenditures and
personnel requirements, and our failure to be in compliance would subject us to legal and regulatory liabilities. We may also experience difficulty in managing our international operations because of,
among other things, competitive conditions overseas, established domestic markets, language and cultural differences and economic or political instability. Any of these factors could have a material
adverse effect on the success of our international operations or limit our ability to grow our international operations and, consequently, on our business, financial condition and operating results.

If
we are unable to manage any of these risks effectively, our business could be adversely affected.

We may have difficulty managing our expanding operations effectively.

We have significantly expanded our business activities and operations over the last several years, which has placed, and is expected to
continue to place, a significant strain on our management and resources. Continued expansion into new markets and regions will require continued investment in management and other personnel,
facilities, information technology infrastructure, financial and management systems and controls and regulatory compliance control. We may not be successful in implementing all of the processes that
are necessary to support these initiatives, which could result in our expenses increasing faster than our revenues, causing our operating margins and profitability to be adversely affected.

The
expansion of our international operations, particularly our Asia-Pacific and South American operations, involves additional challenges that we may not be able to meet,
such as the difficulty in effectively managing and staffing these operations and complying with the increased regulatory requirements associated with operating in new jurisdictions. This expansion, if
not properly managed, could have a material adverse effect on our business.

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The securities settlement process exposes us to risks that may impact our liquidity and profitability. In addition, liability for unmatched trades could adversely affect our
results of operations and balance sheet.

Through our subsidiaries, we provide brokerage services by executing transactions for our clients. An increasing number of these
transactions are "matched principal transactions" in which we act as a "middleman" by serving as a counterparty to both a buyer and a seller in matching reciprocal back-to-back
trades. These transactions, which generally involve cash equities and bonds, are then settled through clearing institutions with whom we have a contractual relationship.

In
executing matched principal transactions, we are exposed to the risk that one of the counterparties to a transaction may fail to fulfill its obligations, either because it is not
matched immediately or, even if matched, one party fails to deliver the cash or securities it is obligated to deliver. Our focus on less commoditized markets exacerbates this risk for us because
transactions in these markets tend to be more likely not to settle on a timely basis. Adverse movements in the prices of securities that are the subject of these transactions can increase our risk. In
addition, widespread technological or communication failures, as well as actual or perceived credit difficulties or the insolvency of one or more large or visible market participants, could cause
market-wide credit difficulties or other market disruptions. These failures, difficulties or disruptions could result in a large number of
market participants not settling transactions or otherwise not performing their obligations. For example, we incurred a pre-tax charge of $9.6 million for losses from unsettled
trade activity directly related to the bankruptcy of Lehman Brothers, Inc. in the third quarter of 2008.

We
are subject to financing risk in these circumstances because if a transaction does not settle on a timely basis, the resulting unmatched position may need to be financed, either
directly by us or through one of our clearing organizations at our expense. These charges may be recoverable from the failing counterparty, but sometimes are not. Finally, in instances where the
unmatched position or failure to deliver is prolonged or widespread due to rapid or widespread declines in liquidity for an instrument, there may also be regulatory capital charges required to be
taken by us, which depending on their size and duration, could limit our business flexibility or even force the curtailment of those portions of our business requiring higher levels of capital.

In
the process of executing matched principal transactions, miscommunications and other errors by our clients or us can arise whereby a transaction is not completed with one or more
counterparties to the transaction, leaving us with either a long or short unmatched position. These unmatched positions are referred to as "out trades," and they create a potential liability for the
involved subsidiary of ours. If an out trade is promptly discovered and there is a prompt disposition of the unmatched position, the risk to us is usually limited. If the discovery of an out trade is
delayed, the risk is heightened by the increased possibility of intervening market movements prior to disposition. Although out trades usually become known at the time of, or later on the day of, the
trade, it is possible that they may not be discovered until later in the settlement process. When out trades are discovered, our policy is generally to have the unmatched position disposed of
promptly, whether or not this disposition would result in a loss to us. The occurrence of out trades generally rises with increases in the volatility of the market and, depending on their number and
amount, such out trades have the potential to have a material adverse effect on our financial condition and results of operations. In addition, the use of our fully electronic brokerage platforms,
such as CreditMatch®, GFI ForexMatch® and EnergyMatch®, can present these risks because of the potential for erroneous entries by our clients or brokers coupled
with the potential that such errors will not be discovered promptly.

We have market risk exposure from unmatched principal transactions entered into by some of our equity and credit product brokerage desks.

We allow certain of our brokerage desks to enter into a limited number of unmatched principal transactions in the ordinary course of
business while brokering in illiquid markets or for the purpose of

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facilitating
clients' execution needs for transactions initiated by such clients. As a result, we have market risk exposure on these unmatched principal transactions. Our exposure varies based on the
size of the overall positions, the terms and liquidity of the instruments brokered, and the amount of time the positions are held before we dispose of the position.

We
do not track our exposure to unmatched positions on an intra-day basis. These unmatched positions are intended to be held short term. Due to a number of factors, including
the nature of the position and access to the market on which it trades, we may not be able to match the position or effectively hedge our exposure and often may be forced to hold a position overnight
that has not been hedged. To the extent these unmatched positions are not disposed of intra-day, we mark these positions to market. Adverse movements in the securities underlying these
positions or a downturn or disruption in the markets for these positions could result in a substantial loss. In addition, any principal gains and losses resulting from these positions could on
occasion have a disproportionate effect, positive or negative, on our financial condition and results of operations for any particular reporting period.

In the event of employee misconduct or error, our business may be harmed.

There have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry
in recent years, and we run the risk that employee misconduct could occur. Employee misconduct could subject us to financial losses and regulatory sanctions and could seriously harm our reputation and
negatively affect our business. It is not always possible to deter employee misconduct and the precautions taken to prevent and detect employee misconduct may not always be effective. Misconduct by
employees could include engaging in unauthorized transactions or activities, failure to properly supervise other employees, engaging in improper or unauthorized activities on behalf of clients or
improperly using confidential information.

Employee
errors, including mistakes in executing, recording or reporting transactions for clients, could cause us to execute transactions with or for our clients that they disavow and
refuse to settle. In these situations, we are exposed to the risk of material losses or third-party claims unless the errors are detected and the transactions are unwound or reversed. If our clients
are not able to settle their transactions on a timely basis, the time in which employee errors are detected may be increased and our risk of material loss can be increased. As with any unsettled
transaction, adverse movements in the prices of the securities involved in these transactions before they are unwound or reversed can increase this risk. The risk of employee error or miscommunication
may be greater for products that are new or have non-standardized terms.

Brokerage services involve substantial risks of liability, therefore, we may become subject to risks of litigation.

Many aspects of our business, and the businesses of our clients, involve substantial risks of liability. Dissatisfied clients may make
claims regarding quality of trade execution, improperly settled trades, or mismanagement against us. We may become subject to these claims as the result of failures or malfunctions of electronic
trading platforms or other brokerage services provided by us, and third parties may seek recourse against us. We attempt to limit our liability to our customers
through the use of written or "click-through" agreements, but we do not have such agreements with many of our clients. We could incur significant legal expenses defending claims, even those without
merit. An adverse resolution of any lawsuits or claims against us could result in our obligation to pay substantial damages.

If we acquire other companies or businesses, or if we hire new brokerage personnel, we may have difficulty integrating their operations.

To achieve our strategic objectives, we have acquired or invested in, and in the future may seek to acquire or invest in, other
companies and businesses. We also may seek to hire brokers for new or

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existing
brokerage desks. These acquisitions or new hires may be necessary in order for us to enter into or develop new product areas or trading systems. Acquisitions and new hires entail numerous
risks, including:



If
we fail to manage these risks as we make acquisitions or make new hires, our profitability may be adversely affected, and we may never realize the anticipated benefits of the
acquisitions or hires. In addition, entering into new businesses may require prior approval from our regulators. Our ability to obtain timely approval from our regulators may hinder our ability to
successfully enter new businesses.

Seasonal fluctuations in trading may cause our quarterly operating results to fluctuate.

In the past, our business has experienced seasonal fluctuations, reflecting reduced trading activity during summer months, particularly
in August. We also generally experience reduced activity in December due to seasonal holidays. As a result, our quarterly operating results may not be indicative of the results we expect for the full
year. Our operating results may also fluctuate quarter to quarter due to a variety of factors beyond our control such as conditions in the global financial markets, terrorism, war and other economic
and political events. Furthermore, we may experience reduced revenues in a quarter due to a decrease in the number of business days in that quarter compared to prior years.

Computer systems failures, capacity constraints and breaches of security could increase our operating costs and cause us to lose clients.

We internally support and maintain many of our computer systems, trading platforms and networks. Our failure to monitor or maintain
these systems, trading platforms and networks or, if necessary, to find a replacement for this technology in a timely and cost-effective manner, would have a material adverse effect on our
ability to conduct our operations.

We
also rely and expect to continue to rely on third parties to supply and maintain various computer systems, trading platforms and communications systems, such as telephone companies,
online service providers, data processors, clearing organizations, software and hardware vendors and back-up services. Our systems, or those of our third party providers, may fail or
operate slowly, causing one or more of the following:



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We
may experience systems failures from power or telecommunications outages, acts of God, war, terrorism, human error, natural disasters, fire, sabotage, hardware or software
malfunctions or defects, computer viruses, intentional acts of vandalism or similar events. Additionally, our system backup or disaster recovery plans may not be effective. Any system failure that
causes an interruption in service or decreases the responsiveness of our service, including failures caused by client error or misuse of our systems, could damage our reputation, business and brand
name. In addition, if security measures contained in our systems are breached as a result of third-party action, employee error, malfeasance or otherwise, our reputation may be damaged and our
business could suffer.

If
systems maintained by us or third parties malfunction, our clients or other third parties may seek recourse against us. We could incur significant legal expenses defending these
claims, even those which we may believe to be without merit. An adverse resolution of any lawsuits or claims against us could result in our obligation to pay substantial damages and could have a
material adverse effect on our financial condition or results of operations.

We may not be able to protect our intellectual property rights or may be prevented from using intellectual property necessary for our business.

Our business depends in part on whether we are able to maintain the proprietary aspects of our technology and to operate without
infringing on the proprietary rights of others. We rely primarily on trade secret, contract, copyright, trademark and patent law to protect our proprietary technology. However, these protections may
not be adequate to prevent third parties from copying or otherwise obtaining and using our proprietary technology without authorization or otherwise infringing on our rights.

We
may also face claims of infringement that could interfere with our ability to use technology that is material to our business operations. We may face limitations or restrictions on
the distribution of some of the market data generated by our brokerage desks, which may limit the comprehensiveness and quality of the data we are able to distribute or sell.

In
addition, in the past several years, there has been proliferation of so-called "business method patents" applicable to the computer and financial services industries.
There has also been a substantial increase in the number of such patent applications filed. Under current law, U.S. patent applications remain secret for 18 months and may, depending upon where
else such applications are filed, remain secret until a patent is issued. In light of these factors, it is not economically practicable to determine in advance whether our products or services may
infringe the present or future patent rights of others. In addition, although we take steps to protect our technology, we may not be able to protect our technology from disclosure or from other
developing technologies that are similar or superior to our technology. Any failure to protect our intellectual property rights could materially and adversely affect our business and financial
condition.

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If we are unable to adequately protect our intellectual property rights or if we infringe on the rights of others, we could become involved in costly disputes and may be
required to pay royalties or enter into license agreements with third parties.

In the future, we may have to rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the
validity and scope of the proprietary rights of others or defend against claims of infringement or invalidity. This litigation could result from claims that we are violating the rights of others or
may be necessary to enforce our own rights. Any such litigation would be time consuming and expensive to defend or resolve and would result in the diversion of the resources and attention of
management, and the outcome of any such litigation cannot be accurately predicted. Any adverse determination in such litigation could subject us to significant liabilities or require us to pay
royalties or enter into license agreements with third parties, which we may not be able to obtain on terms acceptable to us or at all.

We depend on third-party software licenses. The loss of any of our key licenses could adversely affect our ability to provide our brokerage services.

We license software from third parties, some of which is integral to our electronic brokerage systems and our business. These licenses
are generally terminable if we breach our obligations under the licenses or if the licensor gives us notice in advance of the termination. If any of these relationships were terminated, or if any of
these third parties were to cease doing business, we may be forced to spend significant time and money to replace the licensed software. These replacements may not be available on reasonable terms, if
at all. A termination of any of these relationships could have a material adverse effect on our financial condition and results of operations.

Risks Related to Our Liquidity and Financing Needs.

We may not be able to obtain additional financing, if needed, on terms that are acceptable.

Our business is dependent upon the availability of adequate funding and sufficient regulatory and clearing capital. Clearing capital is
the amount of cash, guarantees or similar collateral that we must provide or deposit with our third party clearing organizations in support of our obligations under our contractual clearing
arrangements with these organizations. Historically, these needs have been satisfied from internally generated funds, investments from our stockholders and lines of credit made available by commercial
banking institutions. We believe that, based on current levels of operations and anticipated growth, our cash from operations, together with cash currently available, and available financing under our
Credit Agreement (as defined below), will be sufficient to fund our operations for the foreseeable future. However, if for any reason we need to raise additional funds, including for acquisitions or
meeting increased clearing capital requirements arising from growth in our brokerage business, we may not be able to obtain such additional financing on acceptable terms or on a timely basis, if at
all. If we cannot raise additional funds on acceptable terms, we may not be able to develop or enhance our business, take advantage of future opportunities or acquisitions or respond to competitive
pressure or unanticipated requirements and our ability to conduct our business may be adversely affected.

Our credit agreement and our senior notes each contain restrictive covenants which may limit our working capital and corporate activities.

We are a party to a credit agreement with Bank of America N.A. and certain other lenders which provides for maximum borrowings of
$265 million (the "Credit Agreement"). In addition, we have issued $60 million of senior secured notes (the "Senior Notes") which are due January 30, 2013. Our

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Credit
Agreement and our Senior Notes impose operating and financial restrictions on us, including restrictions which may, directly or indirectly, limit our ability to:



In
addition, our Credit Agreement and our Senior Notes contain covenants that require us to maintain specified financial ratios and satisfy specified financial tests. As a result of
these covenants and restrictions, we may be limited in how we conduct our business, and we may be unable to raise additional financing, to compete effectively or to take advantage of new business
opportunities. We may not be able to remain in compliance with these covenants in the future.

Our
Credit Agreement and our Senior Notes also provide for several events of default, including for non-payment, certain bankruptcy events, covenant or representation
breaches or a change in control.

Risks Related to Owning Our Stock

Jersey Partners has significant voting power and may take actions that may not be in the best interest of our other stockholders.

Jersey Partners Inc. ("JPI"), together with its subsidiaries, in which our chief executive officer and founder, Michael Gooch,
is the controlling shareholder, owns approximately 43% of our outstanding common stock. Our president, Colin Heffron, is also a minority shareholder of JPI. As a result, through JPI, Michael Gooch has
the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of
all or substantially all of our assets and other corporate transactions. This concentration of control could be disadvantageous to other stockholders with interests different from those of Michael
Gooch. This concentration of voting power may have the effect of delaying or impeding actions that could be beneficial to our other stockholders, including actions that may be supported by our Board
of Directors. The trading price for our common stock could be adversely affected if investors perceive disadvantages to owning our stock as a result of this significant concentration of share
ownership.

Provisions of our certificate of incorporation and bylaws, agreements to which we are a party, regulations to which we are subject and provisions of our equity incentive
plans could delay or prevent a change in control of our company and entrench current management.

Our second amended and restated certificate of incorporation and bylaws may be deemed to have an anti-takeover effect and
may delay, deter or prevent a change of control of us, such as a tender offer or takeover proposal that might result in a premium over the market price for our common stock. In addition, certain of
these provisions make it more difficult to bring about a change in the

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composition
of our board of directors, which could result in entrenchment of current management. For example, our second amended and restated certificate of incorporation and
bylaws:



Under
our Credit Agreement and our Senior Notes, a change in control may lead the lenders to exercise remedies such as acceleration of the loan and termination of their obligations to
fund additional advances under the revolving credit portion of that facility.

Our
brokerage businesses are heavily regulated and some of our regulators require that they approve transactions which could result in a change of control, as defined by the
then-applicable rules of our regulators. The requirement that this approval be obtained may prevent or delay transactions that would result in a change of control.

In
addition, our equity incentive plans contain provisions pursuant to which options or restricted stock units that are unexercisable or unvested may become exercisable or vested as of
the date immediately prior to certain change of control events. These provisions could have the effect of dissuading potential acquirers from pursuing merger discussions with us.

If we fail to maintain effective internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act, it may have an adverse effect on our
business and stock price.

We are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX") and the applicable SEC rules and
regulations that require our management to conduct an annual assessment and to report on the effectiveness of our internal controls over financial reporting. In addition, our independent registered
public accounting firm must issue an attestation report addressing the operating effectiveness of the Company's internal controls over financial reporting.

While
our internal controls over financial reporting currently meet all of the standards required by SOX, failure to maintain an effective internal control environment could have a
material adverse effect on our business, financial condition and results of operations and the price of our common stock. We cannot be certain as to our ability to continue to comply with the
requirements of SOX. If we are not able to continue to comply with the requirements of SOX in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory
authorities, including the SEC, PCAOB or FINRA. In addition, should we identify a material weakness, there can be no assurance that we would be able to remediate such material weakness in a timely
manner in future periods. Moreover, if we are unable to assert that our internal control over financial reporting is effective in any future period (or if our auditors are unable to express an opinion
on the effectiveness of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports, and incur significant expenses to restructure our internal
controls over financial reporting, which may have an a material adverse effect on our Company.

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We cannot provide assurance that we will continue to declare and pay dividends at all or in any particular amounts and we may elect not to pay dividends in the future.

Our Board of Directors has approved a policy of paying quarterly dividends, subject to available cash flow from operations, other
considerations and the determination by our Board of Directors of the amount. Our dividend policy may be affected by, among other things, our earnings, financial condition, future capital
requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends and our determination to make certain investments or acquisitions. Our ability to declare a
dividend is also subject to limits imposed by Delaware corporate law, our Credit Agreement and our Senior Notes.

The market price of our common stock may fluctuate in the future, and future sales of our shares could adversely affect the market price of our common stock.

The market price of our common stock has fluctuated in the past and may fluctuate in the future depending upon many factors, including
our actual results of operations and perceived prospects and the prospects of the financial marketplaces in general, differences between our actual financial and operating results and those expected
by investors and analysts, changes in analysts' recommendations or projections, seasonality, changes in general valuations for companies in our business segment, changes in general economic or market
conditions and broad market fluctuations.

Future
sales of our common stock also could adversely affect the market price of our common stock. If our existing stockholders sell a large number of shares, or if we issue a large
number of shares of our
common stock in connection with future acquisitions, strategic alliances, new or amended equity incentive plans or otherwise, the market price of our common stock could decline significantly.
Moreover, the perception in the public market that these stockholders, including JPI, might sell shares of common stock could depress the market price of our common stock.

As
of December 31, 2008, we had registered under the Securities Act of 1933, as amended (the "Securities Act"), an aggregate of 976,056 shares of our common stock which are
reserved for issuance upon the exercise of outstanding options under our 2000 and 2002 Stock Option Plans. In addition, as of December 31, 2008, we had registered under the Securities Act an
aggregate of 8,250,000 shares of our common stock available for issuance under our 2008 Equity Incentive Plan in connection with existing and new grants of restricted stock units, stock options or
similar types of equity compensation awards to our employees. Based on outstanding grants at December 31, 2008, there are 7,094,206 shares of our common stock available for future grants of
awards under the 2008 Equity Incentive Plan. These shares can be sold in the public market upon issuance, subject to any vesting requirements and restrictions under the securities laws applicable to
resales by affiliates. These sales might impact the liquidity of our common stock and might have a dilutive effect on existing stockholders making it more difficult for us to sell equity or
equity-related securities in the future at a time and price that we deem appropriate.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

Our executive headquarters are located at 55 Water Street, New York, New York 10041, where we occupy approximately 89,000 square feet
of leased space, pursuant to a lease that expires in December 2027. Our U.K. headquarters are located in London at 1 Snowden Street, EC2 2DQ, where we occupy approximately 44,000 square feet
pursuant to a lease that expires on March 31, 2015. We also lease in excess of 80,000 square feet of additional office space in the aggregate to support our global brokerage operations.

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In
connection with moving to our current headquarters, we terminated a portion of our lease at 100 Wall Street with respect to approximately 51,000 square feet, effective June 30,
2008. We remain liable for all of the obligations under the lease for the remaining approximately 37,000 square feet. In January 2009, we entered into a sublease for approximately 23,000 square feet
of the remaining leased space, which expires at the end of the lease in September 2013.

We
believe our facilities will be adequate for our operations for the next twelve months.

ITEM 3.    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 proceedings against our competitors in connection with employee hires, or claims from former employees in
connection with the termination of their employment from us. There is also potential for client claims alleging the occurrence of errors in the execution of brokerage transactions. We are also
currently and will, in the future, be involved, in examinations, investigations or proceedings by government agencies and self-regulatory organizations. These examinations or
investigations could result in substantial fines or administrative proceedings that could result in censure, the issuance of cease and desist orders, the suspension or expulsion of a broker dealer and
its affiliated persons, officers or employees or other similar consequences.

In
April 2008, Donald P. Fewer, formerly the head of our North American credit division resigned. Following Mr. Fewer's resignation, 22 of our credit brokerage staff resigned and
defected to a competitor, notwithstanding various contractual obligations and fiduciary duties. In connection with these actions, GFI Securities LLC has commenced two arbitration proceedings
before the Financial Industry Regulatory Authority ("FINRA") Dispute Resolution against two subsuduaries of Compagnie Financiere Tradition and certain of the departing employees asserting a number of
claims, including tortious interference with contract, breach of fiduciary duty, unfair competition, misappropriation of confidential and proprietary information and the violation of certain FINRA
rules of conduct and breach of contract. Certain former employees who are parties to the proceedings have also filed claims or counterclaims against GFI Securities LLC and the Company seeking
monetary damages for, inter alia, the alleged breach of their employment agreements and the covenant of good faith and fair dealing. They also seek declaratory judgments relating to the enforceability
of the restrictive covenants
in their employment or other agreements. All of the arbitration proceedings have now been consolidated into a single proceeding before FINRA with GFI as the claimant and the parties are filing new
pleadings. In the Supreme Court of the State of New York, Mr. Fewer has filed a lawsuit alleging the Company breached obligations to him, in which the Company has asserted counterclaims based
upon his breach of fiduciary duties. In connection with these various proceedings, the Company or its affiliates are seeking equitable relief and monetary damages in an amount to be determined in the
course of such proceedings. To the extent that it faces claims by former employees in the various proceedings, the Company or its affiliates will vigorously defend against such claims.

The
staff of the Market Regulation Department of FINRA (the "Staff") has been conducting an inquiry into the activities of interdealer brokerage firms in connection with the
determination of the commission rates paid to them by certain dealers for brokering transactions in credit default swaps. GFI Securities LLC has been cooperating with the Staff in this inquiry
by responding to requests for documents, testimony and other information. In January 2009, the Staff advised GFI Securities LLC that it has made a preliminary determination to recommend
disciplinary action in connection with allegedly improper communications, between certain GFI Securities LLC's brokers and those at other interdealer brokers, purportedly inconsistent with just
and equitable principles of trade and certain antifraud and supervisory requirements under FINRA rules and the federal securities laws. All but one of these brokers who made the allegedly improper
communications resigned in April 2008 to become employed by affiliates of Compagnie Financiere Tradition, as described above. We intend to vigorously

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contest
any such disciplinary action which, if brought and/or settled, could result in a censure, fine or other sanction.

Based
on currently available information, the outcome of these matters are not expected to have a material adverse impact on the Company's financial position. However, the outcome of
these matters may be material to the Company's results of operations or cash flows in a given period. 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.

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

None.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIES

Market Information

Common Stock

Our common stock has been traded on the Nasdaq Global Select Market ("Nasdaq") under the symbol "GFIG" since our initial public
offering on January 26, 2005. Prior to that time there was no established public trading market for our common stock. The closing share price for our common stock on February 13, 2009,
as reported by Nasdaq, was $3.49.

As
of February 13, 2009, we had approximately 23 holders of record of our common stock.

Set
forth below, for each of the last eight fiscal quarters, is the low and high sales prices per share of our common stock as reported on Nasdaq.

High

LowYear Ended December 31, 2008First Quarter(1)

$
24.31


$8.17Second Quarter


16.42


8.38Third Quarter


12.25


3.37Fourth Quarter


4.63


2.60




High

LowYear Ended December 31, 2007(1)First Quarter

$
17.12

$
13.89Second Quarter


19.47


16.38Third Quarter


22.01


16.42Fourth Quarter


25.79


20.21






Dividend Policy

Prior to 2008, we retained all earnings for investment in our business. In February 2008, our Board of Directors declared a special
cash dividend and approved a policy of paying quarterly dividends, subject to available cash flow from operations, other considerations and the determination by our Board of Directors of the amount.

Any
declaration and payment of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our earnings, financial condition, capital
requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends, and other considerations that our Board of Directors deems relevant. The Board's ability to
declare a dividend is also subject to limits imposed by Delaware corporate law. In addition, our subsidiaries are permitted to pay dividends to us subject to (i) certain regulatory restrictions
related to the maintenance of minimum net capital in those of our subsidiaries that are subject to net capital requirements imposed by the applicable governmental regulators, and (ii) general
restrictions imposed on dividend payments under the jurisdiction of incorporation or organization of each subsidiary. Finally, our Credit Agreement limits our ability to pay dividends over a certain
threshold without the approval of our lenders and any instruments governing our future indebtedness may also contain various covenants that limit our ability to pay dividends.

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Performance Graph

The following performance graph shows a comparison, from January 26, 2005 (the date our common stock commenced trading on
Nasdaq) through December 31, 2008, of the cumulative total return for our common stock, the Nasdaq Composite Stock Index (CCMP), the Nasdaq Other Financial Index (CFIN) and our peer group. The
peer group is comprised of ICAP plc, Collins Stewart Tullet plc from January 26, 2005 until December 14, 2006 and Tullet Prebon plc from December 15, 2006
through December 31, 2008 (each of which are listed in the U.K.), Cie Financiere Tradition (a Swiss listed company), MarketAxess Holdings Inc. (MKTX), Espeed Inc. (ESPD) from
January 25, 2005 through April 1, 2008 and BGC Partners Inc. from April 8, 2008 through December 31, 2008, the International Securities Exchange (ISE) from
March 8, 2005 (the date of its initial public offering) until December 19, 2007, Deutsche Boerse Group (which acquired ISE on December 19, 2007) from December 20, 2007
until December 31, 2008 and the Chicago Mercantile Exchange (CME).

On
April 1, 2008, Espeed Inc. merged with BGC Partners Inc. In future periods, our Peer Group will include the results of BGC Partners Inc.

The
performance graph assumes the value of the initial investment in the Company's common stock, each index and the peer group was $100 on January 26, 2005 and that all dividends
have been reinvested. Such returns are based on historical results and are not intended to suggest future performance. The returns of each company within the peer group have been weighted according to
their respective stock market capitalization for purposes of arriving at a peer group average.

GRAPHIC

Recent Sales of Unregistered Securities

For the year ended December 31, 2008, we granted a total of 1,978,364 restricted stock units ("RSUs") to officers, directors and
employees pursuant to our 2004 and 2008 Equity Incentive Plans. The grant prices of these RSUs ranged from $2.64 to $20.98. These RSUs will be converted into common stock to be issued to the
recipients as the RSUs vest, which is generally on an annual basis over three years. These RSUs were granted pursuant to exemptions from registration provided by Rule 701 and/or
Section 4(2) under the Securities Act.

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Purchase of Equity Securities

The table below sets forth the information with respect to purchases made by the Company of its common stock during the quarterly
period ended December 31, 2008.

Issuer Purchases of Equity Securities

Period

Total
Number of
Shares
Purchased

Average Price
Paid Per
Share

Total Number of
Shares Purchased
As Part of Publicly
Announced Plans
or Programs

Approximate
Number of Shares
that May Yet Be
Purchased Under
the Plans or
ProgramsOctoberStock Repurchase Program(a)


N/A


N/A

N/A


1,325,561Employee Transactions(b)


75,124

$
3.50

N/A


N/ANovemberStock Repurchase Program(a)


N/A


N/A

N/A


1,373,577Employee Transactions(b)


13,139

$
3.30

N/A


N/ADecemberStock Repurchase Program(a)


N/A


N/A

N/A


1,537,211Employee Transactions(b)


(5,162
)
$
3.17

N/A


N/ATotalStock Repurchase Program(a)


N/A


N/A

N/A


1,537,211Employee Transactions(b)


83,101

$
3.49

N/A


N/A


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ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial data for the five years ended December 31, 2008. This selected
consolidated financial data should be read in conjunction with "Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations" and with our
consolidated financial statements and the notes thereto contained in Part II-Item 8 in this Form 10-K.

For the Year Ended December 31,2008

2007

2006

2005

2004(dollars in thousands except share and per share data)Consolidated Statement of IncomeRevenuesBrokerage revenues:Agency commissions

$
757,310

$
749,223

$
557,895

$
391,583

$
262,039Principal transactions


206,669


188,254


151,220


114,417


101,339Total brokerage revenues

$
963,979

$
937,477

$
709,115

$
506,000

$
363,378Software, analytics and market data


51,250


19,522


18,651


17,395


16,081Contract revenues


86


215


6,973





Interest income


8,617


9,714


9,144


4,637


1,578Other income/(loss)


(8,429
)

3,613


3,300


5,560


3,983Total Revenues

$
1,015,503

$
970,541

$
747,183

$
533,592

$
385,020Expenses:Compensation and employee benefits


665,973


604,847


465,554


327,345


241,847Other expenses


266,553


214,956


179,832


121,958


100,019Total expenses


932,526


819,803


645,386


449,303


341,866Income before provision for income taxes


82,977


150,738


101,797


84,289


43,154Provision for income taxes


29,871


55,880


40,719


36,186


20,031Net income

$
53,106

$
94,858

$
61,078

$
48,103

$
23,123Earnings Per ShareBasic

$
0.45

$
0.81

$
0.54

$
0.45

$
0.25Diluted

$
0.44

$
0.80

$
0.52

$
0.43

$
0.24Weighted average number of shares outstanding(1)Basic


117,966,596


116,595,920


113,382,789


104,982,512


64,198,620Diluted


119,743,693


119,180,791


116,703,713


110,797,300


97,336,012


44

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For the Year Ended December 31,2008

2007

2006

2005

2004(dollars in thousands except share and per share data)Consolidated Statement of Financial Conditions Data:Cash and cash equivalents

$
342,375

$
240,393

$
181,484

$
144,148

$
105,161Total assets(2)

$
1,085,911

$
975,814

$
699,609

$
576,137

$
640,223Total debt, including current portion

$
223,823

$
55,291

$
90,253

$
31,247

$
58,841Redeemable convertible preferred stock

$


$


$


$


$
30,043Total stockholders' equity

$
476,963

$
452,193

$
330,469

$
238,252

$
53,369Selected Statistical Data:Brokerage personnel headcount(3)


1,037


1,037


932


777


560Employees


1,740


1,599


1,438


1,151


868Broker productivity for the period(4)

$
910

$
934

$
836

$
778

$
757Brokerage Revenues by Geographic Region:Americas

$
385,854

$
401,897

$
326,436

$
256,197

$
170,438Europe, Middle East & Africa


489,517


449,949


321,308


211,125


172,417Asia


88,608


85,631


61,371


38,678


20,523Total

$
963,979

$
937,477

$
709,115

$
506,000

$
363,378


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

The following discussion of our financial condition and results of operations should be read in conjunction
with our consolidated financial statements and the notes thereof in Part II-Item 8 hereof. This discussion contains forward-looking statements. Actual results could differ
materially from the results discussed in these forward-looking statements. Please see "Forward-Looking Statements" and "Risk Factors" for a discussion of some of the uncertainties, risks and
assumptions associated with these statements.

Business Environment

As an inter-dealer broker, our results of operations are impacted by a number of external market factors, including market volatility,
the organic growth of the derivative and other markets in which we provide our brokerage services, the particular mix of transactional activity in our various products, the competitive environment in
which we operate and, increasingly, the financial condition of the dealer and hedge fund communities. Outlined below are management's observations of these external market factors during the most
recent fiscal period. The factors outlined below are not the only factors that have impacted our results of operations for the most recent fiscal period, and additional or other factors may impact, or
have different degrees of impact, on our results of operations in future periods.

Market Volatility

As a general rule, our business typically benefits from volatility in the markets that we serve, as periods of increased volatility
often coincide with more robust trading by our clients and a higher volume of transactions. However, periods of extreme volatility may result in significant market dislocations that can also lead
certain clients to reduce their trading activity.

Market
volatility is driven by a range of external factors, some of which are market specific and some of which are correlated to general macro-economic conditions. During 2008, many of
the markets in which we operate experienced periods of heightened to extreme volatility as the global credit crisis and recessionary environment resulted in significant changes to the financial
industry, a substantial freezing of the credit markets and far-reaching government intervention. The combination of these and other factors led to consolidation in the financial industry
and deleveraging by many dealers and hedge funds. As a result, trading activity in many of our markets declined significantly in the fourth quarter following a period of significant growth in the
first half of 2008.

The
credit markets experienced periods of significant volatility in 2008 as large institutions, such as Lehman Brothers and Washington Mutual Inc., declared bankruptcy, other
primary dealers merged and governments in both the U.S. and Europe injected capital into financial firms following significant reported losses in mortgage and other debt instruments. The credit crisis
and global recessionary environment led to a loss of investor confidence and lending substantially froze as the U.S. stock market saw its steepest one-year drop since the 1930s. U.S.
investment grade and high-yield bond issuance in 2008 decreased 35% and 73%, respectively, while the dollar volume of new issues of stocks and bonds globally fell 38%, according to
Thompson Reuters. Governments implemented stimulus plans intended to revive economic growth. Investors fled riskier asset classes and invested in U.S. treasury securities, driving credit spreads up on
both investment grade and high-yield bonds. The spread on investment grade and high yield bonds tripled from
the beginning of the year. The large widening of these spreads is one indicator of the difficult credit environment at year-end 2008.

The
global equity markets experienced periods of heightened to extreme volatility throughout the year as demonstrated by historical price volatility on the Chicago Board Options Exchange
SPX and Dow Jones Industrial Average ("DJIA") volatility indices. Equity values were down considerably worldwide with the DJIA down 33.8%, the Dow Jones World Index, excluding the U.S., down 46.0% in
dollar terms, and the MSCI Emerging Market Index down 54.5%, in 2008. Latin American and other

46

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emerging
market equity markets were hit particularly hard in the second half of 2008 as a result of the global decline in demand for commodities. Chinese and Russian stock indices decreased by over
60% in 2008. Although many equity markets had gains in the first half of the year, the decline in values in the third and fourth quarter resulted in the worst annual decline in U.S. equity markets
since the 1930s.

Interest
rate and foreign exchange markets experienced heightened to extreme volatility during the year resulting from global economic uncertainty and aggressive monetary and fiscal
policy on the part of the U.S. Treasury, the U.S. Federal Reserve Bank and central banks worldwide. As the U.S. recession and credit crisis spread overseas in the second-half of 2008,
investors sought the safety of the U.S. Dollar and U.S. Treasury bonds. The U.S. Dollar strengthened 4.5% against the Euro, and 36.0% versus the British Pound, but fell 19% versus the Japanese Yen in
2008. The U.S. Dollar also strengthened significantly versus many Latin American currencies.

The
commodity markets were extremely volatile in 2008, as the global financial distress and the ongoing credit crisis led to significant price movements. Oil prices rose steadily through
the first half of the year as the requirements of emerging market countries such as China and India outweighed the recessionary pressures in the U.S. and drove prices to record levels, only to
collapse in the second half of 2008 as the economic recession spread globally. Oil fell 54% in 2008 to $44.60 a barrel, down $100.69 from its record price in early July 2008. The Dow
Jones-AIG Commodity Index, a broad benchmark, finished 2008 with a 37% loss, the worst year since the index was launched in 1998. Gold rose 5.8% on the year, although it was down
considerably from the high reached in first half of 2008.

Growth in Underlying Markets and New Product Offerings

Our business has historically benefited from growth in the OTC derivatives markets due to either the expansion of existing markets,
including increased notional amounts outstanding or increased transaction volumes, or the development of new products or classes
of products. The level of growth in these markets is difficult to measure on a quarterly basis as there are only a few independent, objective measures of growth in outstanding notional amount of OTC
derivatives, all of which are published retrospectively and do not measure transactional volumes. Therefore, to help gauge growth in any particular quarter, management also looks to the published
results of large OTC derivatives dealers and certain futures exchanges as potential indicators of transactional activity in the related OTC derivative markets.

The
International Swaps and Derivatives Association ("ISDA") released its Mid-Year 2008 Market Survey in September 2008 detailing growth in global notional outstanding
in various over-the-counter markets. The ISDA statistics indicated that there was growth in the notional outstanding for all derivative categories over the previous year's
first half results, including interest rate and currency derivatives, which were up 33.9%, credit default swaps, which were up 20.1%, and equity derivatives, which were up 18.7%. However, outstanding
notional amounts of credit default swaps decreased 12.2% from the Year-End 2007 Market Survey, its first sequential period decline. ISDA attributed this decline to the industry's
efforts to reduce risk through netting of offsetting transactions.

Despite
these indicators of growth in notional outstanding amount of OTC derivatives, there was a trend is toward lower trading volumes in the second half of 2008 in certain OTC
derivatives products as hedge funds deploy less trading capital due to investor redemptions and reduced borrowing capacity. Evidence of this trend can be seen in the reduced transaction volumes of
certain products traded on futures exchanges. For several years, exchange traded derivatives have exhibited generally similar growth rates to those of related OTC derivative markets. In the third and
fourth quarters, CME, excluding its New York Mercantile Exchange ("NYMEX") operations, reported 10% and 16% declines, respectively, in quarterly average daily volumes from the previous year, NYMEX
average daily volumes increased 2.9% in the fourth quarter of 2008. The International Securities Exchange ("ISE") reported

47

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declining
average daily trading volumes in November and December, while ICE reported fourth quarter results that indicated decreasing or flat average daily commissions for many OTC energy and credit
products.

In
addition, newer products and our expansion into growing markets and new geographical areas have historically contributed to the growth in our brokerage revenues. For example, in
recent years we have been a leading broker in developing product areas such as shipping, property and insurance derivatives, and our currency and interest rate derivatives brokerage businesses have
benefited from the growth of emerging markets in Eastern Europe, Asia and Latin America. While hedge fund deleveraging in the structured credit and high yield markets have recently led to lower
volumes in these products, transactional volumes in single name and index credit derivative products have held up better. Our recent expansion in Calgary, Santiago, Dubai and Tel Aviv seeks to
capitalize on regional growth opportunities.

Competitive Environment

Another major external market factor affecting our business and results of operations is competition, which may take the form of
competitive pressure on the commissions we charge for our brokerage services or competition for brokerage personnel with extensive experience in the specialized markets we serve. Competition for the
services of productive brokers was intense in 2008, as other inter-dealer brokers sought to bolster their derivative brokerage capabilities by hiring, or attempting to hire, certain of our key
brokerage personnel. In April of 2008, almost two dozen of our credit division personnel in New York defected to a competitor, notwithstanding that many of them did so in breach of contractual
obligations. Since this event, we have worked to re-staff our North American credit operations through the shifting of experienced internal staff and the hiring of external staff.

During
the second half of 2008, there was also consolidation and significant-layoffs in the dealer market and deleveraging in the hedge fund industry, which may lead to increased
competition to provide brokerage services to a smaller number of market participants.

Efforts
to regulate credit derivatives and to create a central clearinghouse for credit derivatives were prevalent in the second half of 2008, as the credit crisis and failure of Lehman
Brothers led to calls for better management of counterparty risk exposure. As a result, there may be increased competition from exchanges and other market participants as the credit markets in the
U.S. and Europe emphasize central clearing, automation and increased transparency.

Financial Overview

As more fully discussed below, our results of operations are significantly impacted by our revenue growth and the amount of
compensation and benefits we provide to our employees. The following factors had a significant impact on our revenues and employee costs during the three year period ended December 31,
2008:



48

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49

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Results of Consolidated Operations

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

Year ended December 31,2008

2007

2006(dollars in thousands)REVENUES:Brokerage revenues:Agency commissions

$
757,310

$
749,223

$
557,895Principal transactions


206,669


188,254


151,220Total brokerage revenues


963,979


937,477


709,115Software, analytics and market data


51,250


19,522


18,651Contract revenue


86


215


6,973Interest income


8,617


9,714


9,144Other income/(loss)


(8,429
)

3,613


3,300Total revenues


1,015,503


970,541


747,183EXPENSES:Compensation and employee benefits


665,973


604,847


465,554Communications and market data


47,810


44,622


37,300Travel and promotion


45,756


41,992


32,391Rent and occupancy


33,705


23,661


20,559Depreciation and amortization


31,390


24,686


19,021Professional fees


26,200


17,899


19,152Clearing fees


43,420


32,732


24,471Interest


14,334


7,076


6,818Other expenses


23,870


22,155


14,543Contract costs


68


133


5,819Lease termination costs to affiliate








(242
)Total expenses


932,526


819,803


645,386Income before provision for income taxes


82,977


150,738


101,797Provision for income taxes


29,871


55,880


40,719Net income

$
53,106

$
94,858

$
61,078


50

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

Year ended December 31,2008

2007

2006REVENUES:Brokerage revenues:Agency commissions


74.6
%

77.2
%

74.7
%Principal transactions


20.4


19.4


20.2Total brokerage revenues


95.0


96.6


94.9Software, analytics and market data


5.0


2.0


2.5Contract revenue








1.0Interest income


0.8


1.0


1.2Other income/(loss)


(0.8
)

0.4


0.4Total revenues


100.0
%

100.0
%

100.0
%EXPENSES:Compensation and employee benefits


65.6


62.3


62.3Communications and market data


4.7


4.6


5.0Travel and promotion


4.5


4.3


4.3Rent and occupancy


3.3


2.4


2.8Depreciation and amortization


3.1


2.5


2.5Professional fees


2.6


1.8


2.6Clearing fees


4.3


3.4


3.3Interest


1.4


0.7


0.9Other expenses


2.4


2.3


1.9Contract costs








0.8Lease termination costs to affiliate








0.0Total expenses


91.8
%

84.5
%

86.4
%Income before provision for income taxes


8.2
%

15.5
%

13.6
%Provision for income taxes


2.9


5.8


5.4Net income


5.2
%

9.8
%

8.2
%


Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007



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The
following table sets forth the changes in revenues for the year ended December 31, 2008 as compared to the same period in 2007 (dollars in thousands, except percentage data):

For the Year Ended December 31,2008

%*

2007

%*

Increase
(Decrease)

%**RevenuesBrokerage revenues:Credit

$
304,438


30.0
%
$
317,724


32.7
%
$
(13,286
)

(4.2
)%Equity


291,184


28.7


239,534


24.7


51,650


21.6Financial


171,935


16.9


184,704


19.0


(12,769
)

(6.9
)Commodity


196,422


19.3


195,515


20.1


907


0.5Total brokerage revenues


963,979


94.9


937,477


96.6


26,502


2.8Other revenues


51,524


5.1


33,064


3.4


18,460


55.8Total Revenues

$
1,015,503


100.0
%
$
970,541


100.0
%
$
44,962


4.6
%


---

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53

---





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Expenses

The following table sets forth the changes in expenses for the year ended December 31, 2008 as compared to the same period in
2007 (dollars in thousands, except percentage data):

For the Year Ended December 31,2008

%*

2007

%*

Increase
(Decrease)

%**ExpensesCompensation and employee Benefits

$
665,973


65.6
%
$
604,847


62.3
%
$
61,126


10.1
%Communications and market Data


47,810


4.7


44,622


4.6


3,188


7.1Travel and promotion


45,756


4.5


41,992


4.3


3,764


9.0Rent and occupancy


33,705


3.3


23,661


2.4


10,044


42.4Depreciation and amortization


31,390


3.1


24,686


2.5


6,704


27.2Professional fees


26,200


2.6


17,899


1.8


8,301


46.4Clearing fees


43,420


4.3


32,732


3.4


10,688


32.7Interest


14,334


1.4


7,076


0.7


7,258


102.6Other expenses


23,870


2.4


22,155


2.3


1,715


7.7Contract Costs


68


0.0


133


0.0


(65
)

48.9Total Expenses

$
932,526


91.8
%
$
819,803


84.5
%
$
112,723


13.8
%


---

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55

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Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

Net income for the year ended December 31, 2007 was $94.9 million as compared to net income of $61.1 million for
the year ended December 31, 2006, an increase of $33.8 million or approximately 55.3%. Total revenues increased by $223.3 million, or 29.9%, to $970.5 million for the year
ended December 31, 2007 from $747.2 million for the prior year. Our increased revenues were primarily due to increased brokerage revenues across each of our product categories. Total
expenses increased by $174.4 million, or 27.0%, to $819.8 million for the year ended December 31, 2007 from $645.4 million for the prior year. Expenses increased primarily
because of increased compensation expense for the year ended December 31, 2007, which was attributable to an increase in performance-based bonus expense as a result of higher revenues, as well
as higher sign-on bonus expense.

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The
following table sets forth the changes in revenues for the year ended December 31, 2007 as compared to the same period in 2006 (dollars in thousands):

For the Year Ended December 31,2007

%*

2006

%*

Increase
(Decrease)

%**RevenuesBrokerage revenues:Credit

$
317,724


32.7
%
$
252,797


33.8
%
$
64,927


25.7
%Equity


239,534


24.7


173,934


23.3


65,600


37.7Financial


184,704


19.0


156,267


20.9


28,437


18.2Commodity


195,515


20.1


126,117


16.9


69,398


55.0Total brokerage revenues


937,477


96.6


709,115


94.9


228,362


32.2Other revenues


33,064


3.4


38,068


5.1


(5,004
)

(13.1
)Total Revenues

$
970,541


100.0
%
$
747,183


100.0
%
$
223,358


29.9
%


---

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Expenses

The following table sets forth the changes in expenses from year ended December 31, 2007 as compared to the same period in 2006
(dollars in thousands):

For the Year Ended December 31,2007

%*

2006

%*

Increase
(Decrease)

%**ExpensesCompensation and employee benefits

$
604,847


62.3
%
$
465,554


62.3
%
$
139,293


29.9
%Communications and market data


44,622


4.6


37,300


5.0


7,322


19.6Travel and promotion


41,992


4.3


32,391


4.3


9,601


29.6Rent and occupancy


23,661


2.4


20,559


2.8


3,102


15.1Depreciation and amortization


24,686


2.5


19,021


2.5


5,665


29.8Professional fees


17,899


1.8


19,152


2.6


(1,253
)

(6.5
)Clearing fees


32,732


3.4


24,471


3.3


8,261


33.8Interest


7,076


0.7


6,818


0.9


258


3.8Other expenses


22,155


2.3


14,543


1.9


7,612


52.3Contract costs


133





5,819


0.8


(5,686
)

(97.7
)Lease termination costs to affiliate








(242
)




242


(100.0
)Total Expenses

$
819,803


84.5
%
$
645,386


84.5
%
$
174,417


27.0
%


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---



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59

---



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Results of Segment Operations

Our operations are managed along three operating segments: Americas Brokerage, Europe, Middle East & Africa ("EMEA") Brokerage
and Asia Brokerage. These operations provide brokerage services in four broad product categories: credit, financial, equity and commodity. We present our operating segments in four reportable
segments: Americas Brokerage, EMEA Brokerage, Asia Brokerage and "All Other". The All Other segment captures costs that are not directly assignable to any of the three brokerage segments and primarily
consists of our corporate business activities and results of operations from our software, analytics and market data businesses. In prior periods, Asia Brokerage was included within the All Other
segment as it did not meet the quantitative threshold for separate disclosure under SFAS 131. However, as a result of the growth experienced in Asia and the changes in the economic
characteristics of the Americas and the EMEA brokerage operations, for the year ended December 31, 2008, the Company has determined to change its reportable segments. Prior period results have
been adjusted to reflect the changes in the reporting structure.

The
following tables summarize our revenues, expenses and pre-tax income/(loss) by segment:

Year ended December 31,2008

2007

2006(dollars in thousands)Revenues:Americas Brokerage

$
387,549

$
403,235

$
328,545EMEA Brokerage


489,650


449,955


321,308Asia Brokerage


88,583


85,914


61,377All Other


49,721


31,437


35,953Total Consolidated Revenues

$
1,015,503

$
970,541

$
747,183




Year ended December 31,2008

2007

2006(dollars in thousands)Expenses:Americas Brokerage

$
276,813

$
279,623

$
232,009EMEA Brokerage


339,058


296,386


215,337Asia Brokerage


74,618


67,202


50,951All Other


242,037


176,592


147,089Total Expenses

$
932,526

$
819,803

$
645,386




Year ended December 31,2008

2007

2006(dollars in thousands)Pre-tax Income/(Loss):Americas Brokerage

$
110,736

$
123,612

$
96,536EMEA Brokerage


150,592


153,569


105,971Asia Brokerage


13,965


18,712


10,426All Other


(192,316
)

(145,155
)

(111,136
)Total Pre-Tax Income

$
82,977

$
150,738

$
101,797


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Segment Results for the Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007



61

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Segment Results for the Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006



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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, 2007 to
December 31, 2008. Results of any period are not necessarily indicative of results for a full year and may, in certain periods, be affected by seasonal fluctuations in our business.

Quarter EndedDecember 31,
2008

September 30,
2008

June 30,
2008

March 31,
2008

December 31,
2007

September 30,
2007

June 30,
2007

March 31,
2007(dollars in thousands)RevenuesBrokerage revenues:Agency commissions

$
143,556

$
182,591

$
192,074

$
239,089

$
186,827

$
198,405

$
179,466

$
184,525Principal transactions


50,272


43,771


53,532


59,094


51,366


46,467


42,044


48,377Total brokerage revenues


193,828


226,362


245,606


298,183


238,193


244,872


221,510


232,902Software, analytics and market data


12,800


14,034


13,157


11,259


4,850


4,855


4,491


5,326Contract revenue


28





45


13





11


204


Interest income


1,669


2,187


2,078


2,683


2,726


2,589


2,297


2,102Other income (loss)


(12,089
)

555


643


2,462


1,590


2,416


(380
)

(13
)Total revenues


196,236


243,138


261,529


314,600


247,359


254,743


228,122


240,317ExpensesCompensation and employee benefits


137,583


176,462


158,730


193,198


151,020


158,845


143,474


151,508Communications and market data


12,245


12,640


11,744


11,181


11,538


11,329


11,299


10,456Travel and promotion


8,897


11,845


13,291


11,723


13,057


9,929


10,170


8,836Rent and occupancy


5,363


14,969


6,759


6,614


6,132


6,439


5,529


5,561Depreciation and amortization


7,827


7,192


8,449


7,922


6,992


6,747


5,720


5,227Professional fees


6,081


7,756


7,351


5,012


5,539


4,459


4,332


3,569Clearing fees


9,706


12,026


10,486


11,202


10,200


8,063


6,940


7,529Interest


3,993


3,508


3,748


3,085


1,522


1,703


2,002


1,849Other expenses


4,847


7,317


4,620


7,086


6,023


4,574


6,909


4,649Contract costs


46





16


6





6


127


Total expenses


196,588


253,715


225,194


257,029


212,023


212,094


196,502


199,184(Loss) income before income taxes


(352
)

(10,577
)

36,335


57,571


35,336


42,649


31,620


41,133(Benefit from) provision for income taxes


(544
)

(3,861
)

12,687


21,589


10,128


16,746


12,553


16,453Net income (loss)

$
192

$
(6,716
)
$
23,648

$
35,982

$
25,208

$
25,903

$
19,067

$
24,680


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Table of Contents

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

Quarter EndedDecember 31,
2008

September 30,
2008

June 30,
2008

March 31,
2008

December 31,
2007

September 30,
2007

June 30,
2007

March 31,
2007(dollars in thousands)RevenuesBrokerage revenues:Agency commissions


73.2
%

75.1
%

73.4
%

76.0
%

75.5
%

77.9
%

78.7
%

76.8
%Principal transactions


25.6


18.0


20.5


18.8


20.8


18.2


18.4


20.1Total brokerage revenues


98.8


93.1


93.9


94.8


96.3


96.1


97.1


96.9Software, analytics and market data


6.5


5.8


5.0


3.6


2.0


1.9


2.0


2.2Contract revenue




















0.1


Interest income


0.9


0.9


0.8


0.9


1.1


1.0


1.0


0.9Other income (loss)


(6.1
)

0.2


0.3


0.8


0.6


0.9


(0.2
)

Total revenues


100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%ExpensesCompensation and employee benefits


70.1
%

72.6
%

60.7
%

61.4
%

61.1
%

62.4
%

62.9
%

63.0
%Communications and market data


6.2


5.2


4.5


3.6


4.7


4.4


5.0


4.4Travel and promotion


4.5


4.9


5.1


3.7


5.3


3.9


4.5


3.7Rent and occupancy


2.7


6.2


2.6


2.1


2.5


2.5


2.4


2.3Depreciation and amortization


4.0


3.0


3.2


2.5


2.8


2.6


2.5


2.2Professional fees


3.1


3.2


2.8


1.6


2.2


1.8


1.9


1.5Clearing fees


4.9


4.9


4.0


3.6


4.1


3.2


3.0


3.1Interest


2.0


1.4


1.4


1.0


0.6


0.7


0.9


0.8Other expenses


2.5


3.0


1.8


2.3


2.4


1.8


3.0


1.9Contract costs




















0.1


Total expenses


100.2
%

104.4
%

86.1
%

81.7
%

85.7
%

83.3
%

86.1
%

82.9
%(Loss) income before income taxes


(0.2
)

(4.4
)

13.9


18.3


14.3


16.7


13.9


17.1(Benefit from) provision for income taxes


(0.3
)

(1.6
)

4.9


6.9


4.1


6.5


5.5


6.8Net (loss) income


0.1
%

(2.8
)%

9.0
%

11.4
%

10.2
%

10.2
%

8.4
%

10.3
%


The tables below detail our brokerage revenues by product category in dollars and as a percentage of our total brokerage revenues for the
indicated periods.

Quarter EndedDecember 31,
2008

September 30,
2008

June 30,
2008

March 31,
2008

December 31,
2007

September 30,
2007

June 30,
2007

March 31,
2007(dollars in thousands)Brokerage Revenues:Credit

$
57,439

$
60,029

$
76,275

$
110,695

$
72,632

$
87,845

$
72,436

$
84,811Financial


28,051


45,542


46,322


52,020


44,540


49,298


45,865


45,001Equity


72,891


69,941


69,636


78,716


70,712


59,155


53,284


56,383Commodity


35,447


50,850


53,373


56,752


50,309


48,574


49,925


46,707Total brokerage revenues

$
193,828

$
226,362

$
245,606

$
298,183

$
238,193

$
244,872

$
221,510

$
232,902Brokerage revenues:Credit


29.6
%

26.5
%

31.0
%

37.1
%

30.5
%

35.9
%

32.7
%

36.4
%Financial


14.5


20.1


18.9


17.5


18.7


20.1


20.7


19.3Equity


37.6


30.9


28.4


26.4


29.7


24.2


24.1


24.2Commodity


18.3


22.5


21.7


19.0


21.1


19.8


22.5


20.1Total brokerage revenues


100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%


Liquidity and Capital Resources

Throughout the year ended December 31, 2008, we have financed our operations through cash flows from operations, borrowings
under our Credit Agreement and proceeds from the issuance of the Senior Notes. In January 2008, we amended our Credit Agreement with the Bank of America and

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certain
other lenders to increase the maximum permitted borrowing to $265.0 million and we completed a private placement of the Senior Notes. Our Credit Agreement expires on February 24,
2011 and our Senior Notes mature on January 30, 2013. See Note 9 to the Consolidated Financial Statements in Part II-Item 8 for further details on the amendment
to our Credit agreement and the private placement.

Cash
and cash equivalents consist of cash and highly liquid investments with maturities, when purchased, of three months or less. At December 31, 2008, we had
$342.4 million of cash and cash equivalents compared to $240.4 million and $181.5 million at December 31, 2007 and 2006, respectively. The changes to our cash and cash
equivalents balances for these periods are due to our operating, investing and financing activities as discussed below.

The
following table sets forth our cash flows from operating activities, investing activities and financing activities for the indicated periods.

For the Year Ended December 31,2008

2007

2006Cash provided by operating activities

$
179,134

$
136,034

$
72,567Cash used in investing activities


(192,857
)

(53,573
)

(109,397
)Cash provided by/(used in) financing activities


119,361


(23,402
)

73,944Effects of exchange rate changes on cash and cash equivalents


(3,656
)

(150
)

222Increase in cash and cash equivalents

$
101,982

$
58,909

$
37,336


Net
cash provided by operating activities increased to $179.1 million for the year ended December 31, 2008, compared with $136.0 million for 2007. The increase is
primarily due to the improvement in certain working capital items such as accrued commissions receivable, the net receivable from brokers, dealers and clearing organizations, and was partially offset
by a decrease in accrued compensation and other liabilities. The decrease in accrued commissions receivable balance is related to an improvement in the average number of days to collect receivables in
the second half of 2008 as compared to the prior year. The improvement in net cash provided by operating activities is also partially related to the increase in certain non-cash items such
as deferred compensation expense, depreciation and amortization, loss on foreign derivative contracts and tax expense (benefit) from share-based compensation. Additionally, net cash provided by
operating activities increased to $136.0 million for the year ended December 31, 2007, compared with $72.6 million for 2006. The improvement is primarily related to our increased
net income and the increase in certain non-cash items such as deferred compensation expense, depreciation and amortization and loss on foreign exchange derivative contracts. Additionally,
the increase is partially due to the improvement in certain working capital items such as accrued compensation, the net receivable/payables to brokers, dealers and clearing organizations and other
liabilities, which was partially offset by an increase in accrued commissions receivable. The increase in accrued commissions receivable balance is related to an increase in agency commission revenue,
which increased by 34% for the year ended December 31, 2007 as compared to the same period in the prior year. Additionally, the average number of days to collect receivables increased in the
second half of 2007 as compared to the prior year.

Net
cash used in investing activities for the year ended December 31, 2008 was $192.9 million compared to $53.6 million for 2007. The increase in cash used for
investing activities was primarily due to an increase in cash used for business acquisitions and capital expenditures, which was offset by a decrease in cash used in purchasing
available-for-sale securities and payments on foreign exchange derivative contracts. Net cash used in investing activities for the year ended December 31, 2007 decreased
by $55.8 million from 2006. The decrease was primarily related to the decrease in cash used for business acquisitions as compared to 2006.

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Net
cash provided by financing activities for the year ended December 31, 2008 was $119.4 million compared to $23.4 million used in 2007. The increase in cash
provided by financing activities was primarily due to an increase in net borrowings and issuance of long-term obligations, which was offset by an increase in cash used for repurchases of
common stock, cash dividends paid and a decrease in tax benefits related to share-based compensation. Net cash used in financing activities for the year ended December 31, 2007 was
$23.4 million compared to $73.9 million provided by for 2006. The increase in cash used in financing activities was primarily due to reduced short-borrowings, an increase in cash used
for repurchases of common stock, an increase in cash paid for taxes on vested restricted stock units, which was offset by an increase in tax benefits from share-based compensation.

Under
the Credit Agreement, loans will bear interest at the London Interbank Offered Rate ("LIBOR") plus a margin determined by our consolidated leverage ratio as defined in the Credit
Agreement. The Credit Agreement contains covenants which restrict, among other things, our ability to borrow, pay dividends, distribute assets, guarantee debts of others and lend funds to affiliated
companies and contains criteria on the maintenance of certain financial statement amounts and ratios, all as defined in the agreement. At December 31, 2008, there was $165.0 million in
outstanding borrowings and $7.2 million of outstanding letters of credit under our Credit Agreement. At December 31, 2008, we had $100 million of availability under the Credit
Agreement. During 2008, we borrowed $165.0 million to fund the acquisition of Trayport, of which $60.0 million was repaid with proceeds from the private placement of the Senior Notes
described above. See Note 9 to the Consolidated Financial Statements in Part II-Item 8 for details. We are currently in compliance with all of our obligations under
the Credit Agreement and the Senior Notes.

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, GFI (HK) Brokers Ltd. and GFI Group PTE Ltd. These operating subsidiaries are subject to minimum capital requirements and/or
licensing and financial requirements imposed by their respective market regulators that are intended to ensure general financial soundness and liquidity based on certain minimum capital, licensing and
financial requirements. U.S. and U.K. regulations prohibit a registered broker-dealer from repaying borrowings of its parent or affiliates, paying cash dividends, making loans to its parent or
affiliates or otherwise entering into transactions that result in a significant reduction in its regulatory net capital position without prior notification or approval from its principal regulator.
Our non-regulated subsidiaries are not subject to these restrictions. The capital structures of each of our broker-dealer subsidiaries are designed to provide each with capital and
liquidity consistent with its business and regulatory requirements.

Our
U.S. broker-dealer, GFI Securities LLC, is subject to the net capital rules under the Exchange Act and the Commodity Exchange Act. As of December 31, 2008, GFI
Securities LLC had Net Capital, as defined under the Exchange Act, of $26.4 million, which was $26.1 million in excess of its required minimum net capital of $0.3 million.

GFI
Securities Limited and GFI Brokers Limited are subject to the capital requirements of FSA in the United Kingdom. As of December 31, 2008, GFI Securities Limited had financial
resources, as defined by the FSA, of $40.4 million, which was $13.8 million in excess of its required financial resources of $26.6 million. As of December 31, 2008, GFI
Brokers Limited had financial resources, as defined by the FSA, of $88.5 million, which was $76.2 million in excess of its required financial resources of $12.3 million.

GFI
Securities Limited's Japanese branch is subject to certain licensing requirements established by the Foreign Securities Firms Law (the "FSFL") in Japan. As part of the
licensing requirements, GFI Securities Limited's Japanese branch is required to maintain "brought-in" capital, as defined under the FSFL, of 50.0 million Japanese Yen (approximately
$0.6 million). In addition, GFI Securities Limited is required to maintain a capital base of 1,000 million Japanese Yen (approximately $11.0 million). GFI Securities Limited's
Japanese branch is also subject to the net capital rule promulgated by the FSFL,

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which
requires that net worth, including "brought-in" capital, exceed a ratio of 140.0% of relevant expenditure. At December 31, 2008, GFI Securities Limited and its Japanese branch
were in compliance with these capital requirements.

GFI
Securities Limited's Dubai branch is registered with the Dubai Financial International Centre and is authorized by the Dubai Financial Services Authority ("DFSA") to provide
financial service activities. The branch is subject to the conduct of business rules of the DFSA and has been granted a waiver from prudential regulation by the DFSA.

GFI
Securities Limited's Paris branch was established through the exercise of its passport right to open a branch in an EEA state. The establishment of the branch was approved by FSA and
acknowledged by Banque de France in France. The branch is subject to the conduct of business rules of AMF when dealing with resident customers of France and is regulated, in part, by the FSA.

GFI
Securities Limited's Dublin branch was established through the exercise of its passport right to open a branch within a European Economic Area state. The establishment of the branch
was approved by FSA and acknowledged by the Irish Financial Services Regulatory Authority ("IFSRA") in Ireland. The branch is subject to all of the conduct of business rules of the IFSRA and is
regulated, in part, by the FSA.

GFI
Securities Limited's Tel Aviv branch is registered as a foreign corporation in Israel and is conditionally exempt from the requirement to hold a Securities License in accordance with
the Israeli Securities law. The branch is therefore not subject to any capital requirements.

GFI
Brokers Limited's Sydney branch is registered as a foreign corporation in Australia and is conditionally exempt from the requirement to hold an Australian financial services license
under the Australian Securities and Investments Commission Corporations Act 2001 in respect of the financial services it provides in Australia. This exemption applies to foreign companies regulated by
the FSA in accordance with U.K. regulatory standards.

GFI
(HK) Securities LLC is subject to the capital requirements of the SFC in Hong Kong. At December 31, 2008, GFI (HK) Securities LLC had net capital of
approximately $1.0 million, which was $0.6 million in excess of its required minimum net capital of $0.4 million.

GFI
(HK) Brokers Ltd. is registered with and regulated by the HKMA. As part of this registration, GFI (HK) Brokers Ltd. is required to maintain stockholders' equity of
5.0 million Hong Kong dollars (or approximately $0.7 million). At December 31, 2008, GFI (HK) Brokers Ltd. had stockholders' equity of 8.3 million Hong Kong dollars
(or approximately $1.1 million), which exceeds the minimum requirement by 3.3 million Hong Kong dollars (or approximately $0.4 million).

In
Singapore, the MAS regulates our subsidiary, GFI Group PTE Ltd. Our compliance requirements with the MAS include, among other things, maintaining stockholders' equity of
3.0 million Singapore dollars and monitoring GFI Group PTE Ltd.'s trading practices and business activities. However, at December 31, 2008, GFI Group PTE Ltd.'s
stockholders' equity had fallen below the required amount and therefore was not in compliance with this requirement. GFI Group PTE Ltd. discussed this matter with the MAS and increased its
share capital to meet the requirements subsequent to year-end. We do not expect to incur any penalties in connection with this period of non-compliance.

GFI
Korea Money Brokerage Limited is licensed and regulated by the Ministry of Finance and Economy to engage in foreign exchange brokerage business, and is subject to certain regulatory
requirements under the Foreign Exchange Transaction Act and regulations thereunder. As a licensed foreign exchange brokerage company, GFI Korea Money Brokerage Limited is required to maintain minimum
paid-in capital of 5.0 billion Korean Won. At December 31, 2008, GFI Korea Money Brokerage Limited met the minimum requirement for paid-in-capital of
5.0 billion Korean Won (or approximately $4.0 million).

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It is our expectation that from time to time we may purchase additional shares of our common stock on the open market in accordance with a stock repurchase
program authorized by the Board of Directors. See Note 11 to our Consolidated Financial Statements for further discussion of the stock repurchase program.

Prior
to 2008, we retained all earnings for investment in our business. In February 2008, our Board of Directors declared a special cash dividend and approved a policy of paying
quarterly dividends, subject to available cash flow from operations, other considerations and the determination of the amount by our Board of Directors. The cash dividends paid in 2008 were
approximately $30.0 million.

We
believe that, based on current levels of operations, our cash from operations, together with cash currently available and our ability to borrow additional funds under our Credit
Agreement, 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 December 31, 2008:

Payments Due by PeriodTotal

Less than
1 year

1-3 years

3-5 years

More than
5 years(in thousands)Contractual ObligationsOperating leases(1)

$
125,577

$
12,005

$
22,217

$
18,363

$
72,992Short-term borrowings(2)


164,553


164,553








Interest on Long-term obligations


22,059


6,945


9,804


5,310


Long-term obligations


60,000








60,000


Purchase obligations(3)


20,559


17,198


3,361





Total

$
392,748

$
200,701

$
35,382

$
83,673

$
72,992


---

As
disclosed in Note 10 to the Consolidated Financial Statements in Part IIItem 8, we have unrecognized tax benefits of approximately $7.2 million (net of the
federal benefit on state issues) after recognizing the impact of the adoption of Financial Accounting Standards Board

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Off-Balance Sheet Arrangements

The Company did not have any off-balance sheet arrangements at December 31, 2008.

Critical Accounting Policies and Estimates

General

This Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial
statements which have been prepared in accordance with U.S. generally accepted accounting principles, which require us to make estimates, judgments and assumptions that affect the reported amounts of
assets, liabilities, net revenue and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other factors that
we believe are reasonable under the circumstances. We believe that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ materially from these
estimates under different assumptions or conditions.

An
accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is
made; if different estimates reasonably could have been used; or if changes in the estimate that are reasonably likely to occur periodically could materially impact the financial statements. We
believe the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

Revenue Recognition

We provide brokerage services to our clients in the form of either agency or principal transactions. In agency transactions, we charge
commissions for executing transactions between buyers and sellers. We earn revenue from principal transactions on the spread between the buy and sell price of the security that is brokered. Our
principal transaction revenue is primarily derived from matched principal transactions. In matched principal transactions, we simultaneously agree to buy instruments from one party and sell them to
another. Certain of our brokerage desks enter into unmatched principal transactions in the ordinary course of business, primarily for the purpose of facilitating our clients' execution needs or to add
liquidity to certain illiquid markets. These unmatched positions are intended to be held short term. Brokerage revenues and related expenses from agency and principal transactions are recognized on a
trade date basis. We do not receive actual payment until
the specific account receivable is collected in an agency transaction or until we realize the net spread on the specific settlement date in a principal transaction.

We
evaluate the level of our allowance for doubtful accounts based on the length of time receivables are past due and our historical experience. Also, if we are aware of a client's
inability to meet its financial obligations, we record a specific provision for doubtful accounts in the amount of the estimated losses which will result from the inability of that client to meet its
financial obligation. The amount of the provision will be charged against the amounts due, reducing the receivable to the amount we reasonably believe will be collected. If the financial condition of
one of our clients were to deteriorate, resulting in an impairment of its ability to make payments, an additional provision could be required. Due to changing economic business and market conditions,
we review the provision monthly and make changes to the provision as appropriate. Our allowance for doubtful accounts at December 31, 2008 was $3.9 million.

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Fair Value of Financial Instruments

Substantially all of the Company's assets and liabilities are carried at fair value or contracted amounts that approximate fair value.
Assets and liabilities that are recorded at contracted amounts approximating fair value consist primarily of receivables from and payables to brokers, dealers and clearing organizations. These
receivables and payables are short term in nature and have subsequently substantially all settled at the contracted amounts. The Company's marketable equity securities are recorded at fair value based
on their quoted market price. The Company's investments accounted for under the cost and equity methods are in companies that are not publicly traded and for which no established market for their
securities exists. The fair value of these investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of
the investment. The Company's debt obligations are carried at historical amounts.

The
Company's financial assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with SFAS 157. In accordance with
SFAS 157, the Company has categorized its financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth
below.





Valuation
Techniques

The
Company uses the following valuation techniques in valuing the financial instruments:

The
Company evaluates its marketable securities in accordance with SFAS No. 115,Accounting for Certain Investments in Debt and Equity
Securities, and has determined certain of its holdings in marketable securities should be classified as trading securities or available-for-sale and
reported at fair value at December 31, 2008. The Company's trading and available-for-sale marketable securities were all categorized as Level I and the fair
values of these securities were based on quoted market prices.

The
Company uses foreign exchange derivative contracts, including forward contracts and foreign currency swaps, to reduce the effects of fluctuations in certain receivables, payables,
revenues and expenses denominated in foreign currencies. Fair value of the Company's foreign exchange derivative contracts is based on the indicative prices obtained from the banks that are
counter-parties to these foreign exchange derivative contracts and management's own calculations and analyses. At December 31, 2008, the Company's foreign exchange derivative contracts have
been categorized as Level 2.

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The
fair value of any corporate bonds held by the Company as a result of executing matched principal transactions is estimated using recently executed transactions and market price
quotations. At December 31, 2008, corporate bonds held by the Company were categorized as Level 2.

Software Development CapitalizationInternal-Use Software

We capitalize certain costs of software developed or obtained for internal use in accordance with the Statement of Position ("SOP")
98-1,Accounting for the Costs of Corporate Software Developed or Obtained for Internal Use. We capitalize software development costs when
application development begins and it is probable that the project will be completed and the software will be used as intended. Costs associated with preliminary project stage activities, maintenance
and all other post implementation stage activities are expensed as incurred. Our policy provides for the capitalization of certain payroll and payroll-related costs for employees who are directly
associated with internal use computer software projects, as well as external direct costs of materials and services associated with developing or obtaining internal use software. Capitalized personnel
costs are limited to time directly spent on such projects. Capitalized costs are ratably amortized, using the straight-line method, over the estimated useful lives which are typically over
three years. Our judgment as to which costs to capitalize, when to begin capitalizing such costs and what period to amortize the costs over, may materially affect our results of operations. If
management determines that the fair value of the software is less than the carrying value, an impairment loss would be recognized in an amount equal to the difference between the fair value and the
carrying value.

Goodwill and Intangible Assets

Under SFAS No. 142,Goodwill and Other Intangible Assets, management is required
to perform a detailed review, at least annually, of the carrying value of our intangible assets, which includes goodwill. In this process, management is required to make estimates and assumptions in
order to determine the fair value of our assets and liabilities and projected future earnings using various valuation techniques, including a discounted cash flow model. Management uses its best
judgment and information available to it at the time to perform this review. Because management's assumptions and estimates are used in projecting future earnings as part of the valuation, actual
results may differ. If management determines that the fair value of the intangible asset is less than its carrying value, an impairment loss would be recognized in an amount equal to the difference
between the fair value and the carrying value.

Contingencies

In the normal course of business, we 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. We accrue a liability for the estimated costs of adjudication or settlement of asserted and unasserted claims existing
as of the balance sheet date. We have 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. We disclose asserted claims when it is at least reasonably possible that an asset had been impaired or a liability had
been incurred as of the date of the financial statements and unasserted claims when it is considered probable that a claim will be asserted and there is a reasonable possibility that the outcome will
be unfavorable.

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Income Taxes

In accordance with SFAS No. 109,Accounting for Income Taxes, we provide for
income taxes using the asset and liability method under which deferred income taxes are recognized for the estimated future tax effects attributable to temporary differences and carry-forwards that
result from events that have been recognized either in the financial statements or the income tax returns, but not both. The measurement of current and deferred income tax liabilities and assets is
based on provisions of enacted tax laws. Valuation allowances are recognized if, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will
not be realized. Our interpretation of complex tax law may impact our measurement of current and deferred income taxes.

Effective
January 1, 2007, we adopted FIN 48. It is our policy to provide for uncertain tax positions and the related interest and penalties based upon management's
assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31, 2008 and 2007, we believe we have appropriately accounted for
any unrecognized tax benefits. To the extent we prevail in matters for which a liability for an unrecognized tax benefit is established or we are required to pay amounts in excess of the liability,
our effective tax rate in a given financial statement period may be affected.

We
are subject to regular examinations by the Internal Revenue Service, taxing authorities in foreign countries, and states in which we have significant business operations. We regularly
assess the likelihood of additional assessments in each taxing jurisdiction resulting from on-going and subsequent years' examinations. Included in our current tax expense are charges to
accruals for expected tax assessments in accordance with SFAS No. 5,Accounting for Contingencies. The resolution of these tax matters could have
a material impact on our effective tax rate.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157,Fair Value Measurements("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. SFAS 157 requires
companies to disclose the fair value of their financial instruments according to a fair value hierarchy, as defined. Additionally, companies are required to provide enhanced disclosure for certain
financial instruments within the hierarchy, including a reconciliation of the beginning and ending balances separately for each major category of assets and liabilities which are measured at fair
value using significant unobservable inputs. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued
FASB Staff Position No. FAS 157-2 ("FSP 157-2") which delays the effective date of SFAS 157 for all nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of FSP 157-2.
The Company adopted SFAS 157 on January 1, 2008 except as it applies to those nonfinancial assets and liabilities within the scope of FSP 157-2. The adoption of
SFAS 157 as it relates to the financial assets and liabilities did not have a material impact on our consolidated financial statements. We will adopt SFAS 157 for those nonfinancial
assets and liabilities as noted in FSP 157-2 on January 1, 2009. We do not expect the adoption of SFAS 157 for nonfinancial assets and liabilities to have a material impact
on its consolidated financial statements. In October 2008, the FASB issued FASB Staff Position No. FAS 157-3,Determining the Fair Value of a Financial Asset
When the Market for That Asset Is Not Active("FSP 157-3"). FSP 157-3 amends SFAS 157 by incorporating an example to illustrate key
considerations in determining the fair value of a financial asset in an inactive market. FSP 157-3 was effective upon issuance and applicable to prior periods for which financial
statements have not been issued. We adopted FSP 157-3 as of September 30, 2008. The adoption of FSP 157-3 did not have a material impact on our consolidated financial
statements. See Note 17 for further discussion of Financial Instruments.

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In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of
FASB Statement No. 115("SFAS 159"). SFAS 159 provides a "Fair Value Option" under which a company may irrevocably elect fair value as the initial and
subsequent measurement attribute for certain financial assets and liabilities. This Fair Value Option will be available on a contract-by-contract basis with changes in fair
value recognized in earnings as those changes occur. We adopted SFAS 159 on January 1, 2008 and did not elect to apply the Fair Value Option to any specific financial assets or
liabilities.

In
December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51("SFAS 160"). SFAS 160 requires reporting entities to present noncontrolling (minority) interests as equity (as opposed to as a liability or
mezzanine equity) and provides guidance on the accounting for transactions between an entity and noncontrolling interests. SFAS 160 is effective for financial statements issued for fiscal years
beginning after December 15, 2008 and we will adopt SFAS 160 on January 1, 2009. We do not expect the adoption of SFAS 160 to have a material impact on our consolidated
financial statements.

In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations (revised 2007)("SFAS 141(R)"). SFAS 141(R)
requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition);
establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; requires the expensing of most transaction and restructuring
costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination.
SFAS 141(R) applies to all transactions or other events in which the Company obtains control of one or more
businesses, including those sometimes referred to as "true-mergers" or "mergers of equals" and combinations achieved without the transfer of consideration, for example, by contract alone
or through the lapse of minority veto rights. SFAS 141(R) is effective for financial statements issued for fiscal years beginning after December 15, 2008 and we will be adopt
SFAS 141(R) on January 1, 2009. We do not expect the adoption of SFAS 141(R) to have a material impact on our consolidated financial statements.

In
March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities("SFAS 161").
SFAS 161 amends and expands the disclosure requirements of SFAS No. 133 and requires entities to provide enhanced qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair values and amounts of gains and losses on derivative contracts, and disclosures about credit-risk related contingent features in derivative
agreements. SFAS 161 is effective for fiscal years beginning after November 15, 2008 and we will adopt SFAS 161 on January 1, 2009. We do not expect the adoption
SFAS 161 to have a material impact on our consolidated financial statements.

In
April 2008, the FASB issued FSP 142-3,Determining the Useful Life of Intangible Assets("FSP 142-3").
FSP 142-3 amends the factors to be considered in determining the useful life of intangible assets. Its intent is to improve the consistency between the useful life of an intangible
asset and the period of expected cash flows used to measure such asset's fair value. FSP 142-3 is effective for fiscal years beginning after December 15, 2008 and we will adopt FSP
142-3 on January 1, 2009. We do not expect the adoption FSP 142-3 to have a material impact on our consolidated financial statements.

In
May 2008, the FASB issued SFAS No. 162,The Hierarchy of Generally Accepted Accounting Principles("SFAS 162").
SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles in the United States. It is effective 60 days following the SEC's approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With

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Generally Accepted Accounting Principles". SFAS 162 became effective in November 2008 and the adoption of SFAS 162 did not have a material impact on our
consolidated financial statements.

In
June 2008, the FASB issued FSP EITF 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based
payment transactions are participating securities prior to vesting and, therefore, need to be included in computing earnings per share under the two-class method described in SFAS
No. 128, "Earnings Per Share". FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008 and we will adopt FSP
EITF 03-6-01 on January 1, 2009. We do not expect
the adoption of FSP EITF 03-6-1 to have a material impact on our consolidated financial statements.

In
December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8,Disclosures by Public Entities (Enterprises) about
Transfers of Financial Assets and Interests in Variable Interest Entities. The purpose of FSP FAS 140-4 and FIN 46(R)-8 is to promptly
improve disclosures by public entities and enterprises until the pending amendments to FASB Statement No. 140 ("SFAS 140"), Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, and FASB Intepretation No. 46 (revised December 2003) ("FIN 46(R)), Consolidation of Variable Interest Entities, are finalized and approved by the Board.
FSP FAS 140-4 and FIN 46(R)-8 for public entities, FSP FAS 140-4 and FIN 46(R)-8 amends FAS 140 to require public
entities to provide additional disclosures about transfers of financial assets and variable interests in qualifying special purpose entities and also amends FIN 46(R) to require public
enterprises to provide additional disclosures about their involvement with variable interest entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for the first
reporting period (interim and annual) ending after December 15, 2008 with earlier earlier application encouraged. We adopted FAS 140-4 and FIN 46(R)-8 as
of December 31, 2008. The adoption of FAS 140-4 and FIN 46(R)-8 did not have a material impact on our consolidated financial statements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISLOSURE ABOUT MARKET RISK

In the normal course of business, we are exposed to foreign currency exchange rate fluctuations related to our international brokerage
operations, changes in interest rates which impact our variable-rate debt obligations, credit risk associated with potential non-performance by counterparties or customers and
market risk associated with our principal transactions. Our risk management strategy with respect to certain of these market risks includes the use of derivative financial instruments. We use
derivatives only to manage existing underlying exposures of the Company. Accordingly, we do not use derivative contracts for speculative purposes. Our market risks, risk management strategy, and a
sensitivity analysis estimating the effects of changes in fair values for exposures relating to foreign currency and interest rate exposures are outlined below.

Foreign Currency Exposure Risk

We are exposed to risks associated with changes in foreign exchange rates. As foreign currency exchange rates change, the U.S. Dollar
equivalent of revenues and expenses
denominated in foreign currencies change. Our U.K. operations generate a large majority of their revenues in U.S. Dollars and Euros but pay a significant amount of their expenses in British Pounds. We
enter into foreign exchange forward and foreign exchange collar contracts ("Foreign Exchange Derivative Contracts") to mitigate our exposure to foreign currency exchange rate fluctuations. Certain of
these Foreign Exchange Derivative Contracts were designated and qualified as foreign currency cash flow hedges under SFAS No. 133,Accounting for Derivative Instruments
and Hedging Activities, as amended. The gain or loss on derivatives designated as cash flow hedges is included in other comprehensive income in the period that changes in fair
value occur and is reclassified to income in the same period that the hedged item affects income. At December 31, 2008, we had no Foreign Exchange Derivative Contracts that were designated as
foreign currency cash flow hedges.

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We
are also exposed to counterparty credit risk for nonperformance of Foreign Exchange Derivative Contracts and in the event of nonperformance, to market risk for changes in currency
rates. The counterparties with whom we execute foreign exchange derivative contracts are major international financial institutions. We monitor our positions with, and the credit quality of, these
financial institutions and we do not anticipate nonperformance by the counterparties.

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 Euro strengthened against the U.S. Dollar by 10% and the British Pound weakened by 10% against the U.S. Dollar, the net impact to our net income would be a reduction of
approximately $8.5 million as of December 31, 2008.

Interest Rate Risk

We had $165.0 million in variable-rate debt outstanding at December 31, 2008. These debt obligations are
subject to fluctuations in interest rates, which impact the amount of interest we must pay. If variable interest rates were to increase by 0.50%, the annual impact to our net income would be a
reduction of approximately $0.5 million.

Credit Risk

Credit risk arises from potential non-performance by counterparties of our matched principal business, as well as from
nonpayment of commissions by customers of our agency brokerage business. We have established policies and procedures to manage our exposure to credit risk. We maintain a thorough credit approval
process to limit exposure to counterparty risk and employ stringent monitoring to control the market and counterparty risk from our matched principal business. Our brokers may only execute
transactions for clients that have been approved by our credit committee following review by our credit department. Our credit approval process includes verification of key financial information and
operating data and anti-money laundering verification checks. Our credit review process includes consideration of independent credit agency reports and a visit to the entity's premises, if
necessary. We have developed and utilize a proprietary, electronic credit risk monitoring system.

Credit
approval is granted by our credit committee, which is comprised of senior management and representatives from our compliance, finance and legal departments. Credit approval is
granted subject to certain trading limits and may be subject to additional conditions, such as the receipt of collateral or other credit support. Counterparties are reviewed for continued credit
approval on at least an annual basis, and the results are reviewed by the credit committee. Maintenance procedures include reviewing current audited financial statements and publicly available
information on the client, collecting data from credit rating agencies where available and reviewing any changes in ownership, title or capital of the client. For our agency business, our approval
process consists of the requisite anti-money laundering and know-your-customer verifications.

Principal Transactions

Through our subsidiaries, we execute matched principal transactions in which we act as a "middleman" by serving as counterparty to both
a buyer and a seller in matching back-to-back trades. These transactions are then settled through a third-party clearing organization. Settlement typically occurs within one to
three business days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. In a limited number of circumstances, we may
settle a principal transaction on a free of payment basis or by physical delivery of the underlying instrument.

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The
number of matched principal trades we execute has continued to grow as compared to prior years. Matched principal trades in the less liquid markets on which we focus are less likely
to settle on a timely basis than transactions in more liquid markets. Receivables from brokers, dealers and clearing organizations and payables to brokers, dealers and clearing organizations on our
Consolidated Statements of Financial Condition primarily represent the simultaneous purchase and sale of the securities associated with those matched principal transactions that have not settled as of
their stated settlement dates. Our experience has been that substantially all of these transactions ultimately settle.

Matched
principal transactions expose us to risks. In executing matched principal transactions, we are exposed to the risk that one of the counterparties to a transaction may fail to
fulfill its obligations, either because it is not matched immediately or, even if matched, one party fails to deliver the cash or securities it is obligated to deliver. Our focus on less liquid and
OTC markets exacerbates this risk for us because transactions in these markets are less likely to settle on a timely basis. Adverse movements in the prices of securities that are the subject of these
transactions can increase our risk. For example, we incurred a pre-tax charge of $9.6 million for losses from unsettled trades directly related to the bankruptcy of Lehman Brothers
Holdings, Inc. in third quarter of 2008. In addition, widespread technological or communication failures, as well as actual or perceived credit difficulties or the insolvency of one or more
large or visible market participants, could cause market-wide credit difficulties or other market disruptions. These failures, difficulties or disruptions could result in a large number of
market participants not settling transactions or otherwise not performing their obligations.

We
are subject to financing risk in these circumstances because if a transaction does not settle on a timely basis, the resulting unmatched position may need to be financed, either
directly by us or through one of our clearing organizations at our expense. These charges may be recoverable from the failing counterparty, but sometimes are not. Finally, in instances where the
unmatched position or failure to deliver is prolonged or widespread due to rapid or widespread declines in liquidity for an instrument, there may also be regulatory capital charges required to be
taken by us, which depending on their size and duration, could limit our business flexibility or even force the curtailment of those portions of our business requiring higher levels of capital. Credit
or settlement losses of this nature could adversely affect our financial condition or results of operations.

In
the process of executing matched principal transactions, miscommunications and other errors by our clients or us can arise whereby a transaction is not completed with one or more
counterparties to the transaction, leaving us with either a long or short unmatched position. These unmatched positions are referred to as "out trades," and they create a potential liability for us.
If an out trade is promptly discovered and there is a prompt disposition of the unmatched position, the risk to us is usually limited. If the discovery of an out trade is delayed, the risk is
heightened by the increased possibility of intervening market movements prior to disposition. Although out trades usually become known at the time of, or later on the day of, the trade, it is possible
that they may not be discovered until later in the settlement process. When out trades are discovered, our policy is generally to have the unmatched position disposed of promptly, whether or not this
disposition would result in a loss to us. The occurrence of out trades generally rises with increases in the volatility of the market and, depending on their number and amount, such out trades have
the potential to have a material adverse effect on our financial condition and results of operations.

In
addition, liability for unmatched trades could adversely affect our results of operations and balance sheet. We allow certain of our brokerage desks to enter into unmatched principal
transactions in the ordinary course of business, primarily for the purpose of facilitating clients' execution needs or to add liquidity to certain illiquid markets. As a result, we have market risk
exposure on these unmatched principal transactions. Our exposure varies based on the size of the overall positions, the terms of the instruments brokered, and the amount of time the positions are held
before we dispose of the position. We do not track our exposure to unmatched positions on an intra-day basis. These unmatched positions are intended to be held short term and we may
attempt to mitigate our market risk on such unmatched

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positions
by hedging our exposure. However, due to a number of factors, including the nature of the position and access to the market on which it trades, we may not be able to match or hedge the
position and we may be forced to hold a position overnight that has not been hedged. To the extent these unmatched positions are not disposed of intra-day, we mark these positions to
market.

Adverse
movements in the securities underlying these positions or a downturn or disruption in the markets for these positions could result in a substantial loss. In addition, principal
gains and losses resulting from these positions could on occasion have a disproportionate effect, positive or negative, on our financial condition and results of operations for any particular
reporting period.

We
also attempt to mitigate the risks associated with principal transactions through our credit approval and credit monitoring processes. We maintain a credit approval process as
described above under the discussion of "Credit Risk" as a means of mitigating exposure to counterparty risk. In addition, our credit risk department regularly monitors concentration of market risk to
financial instruments, countries or counterparties and regularly monitors trades that have not settled within prescribed settlement periods or volume thresholds. We have developed and utilize a
proprietary, electronic risk monitoring system, which provides management with twice daily credit reports that analyze credit concentration.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Table of Contents



Report of Independent Registered Public Accounting Firm

79Consolidated Statements of Financial Condition

80Consolidated Statements of Income

81Consolidated Statements of Comprehensive Income

82Consolidated Statements of Cash Flows

83Consolidated Statements of Changes in Stockholders' Equity

84Notes to Consolidated Financial Statements

85


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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 audited the accompanying consolidated statements of financial condition of GFI Group Inc. and subsidiaries (the "Company") as of December 31, 2008 and 2007, and the
related consolidated statements of income, comprehensive income, cash flows and changes in stockholders' equity for each of the three years in the period ended December 31, 2008. These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of GFI Group Inc. and subsidiaries as of
December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting
principles generally accepted in the United States of America.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2008, based on the criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 27, 2009 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/
Deloitte & Touche LLP
New York, New York
February 27, 2009

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

December 312008

2007ASSETSCash and cash equivalents

$
342,375

$
240,393Deposits with clearing organizations


8,492


8,462Accrued commissions receivable, net


111,923


169,119Receivables from brokers, dealers and clearing organizations


149,661


317,849Property, equipment and leasehold improvements, net


73,161


56,142Goodwill


209,507


93,709Intangible assets, net


44,439


11,981Other assets


146,353


78,159TOTAL ASSETS

$
1,085,911

$
975,814LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIESAccrued compensation

$
135,861

$
174,472Accounts payable and accrued expenses


51,497


40,287Payables to brokers, dealers and clearing organizations


104,840


194,736Short-term borrowings, net


164,328


55,291Long-term obligations, net


59,495


Other liabilities


92,927


58,835Total Liabilities

$
608,948

$
523,621Commitments and contingenciesSTOCKHOLDERS' EQUITYPreferred stock, $0.01 par value; 5,000,000 shares authorized, none outstanding at December 31, 2008 and 2007





Common stock, $0.01 par value; 400,000,000 shares authorized and 119,517,720 and 118,190,376(1) shares issued at December 31, 2008 and 2007,
respectively


1,195


1,182Additional paid in capital(1)


279,656


262,006Retained earnings


219,354


196,284Treasury stock, 996,236 and 400,000(1) common shares at cost at December 31, 2008 and 2007, respectively


(18,476
)

(7,076
)Accumulated other comprehensive loss


(4,766
)

(203
)Total Stockholders' Equity


476,963


452,193TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
1,085,911

$
975,814


---

See
notes to consolidated financial statements

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GFI GROUP INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME        (In thousands, except share and per share data)

Year Ended December 31,2008

2007

2006REVENUES:Brokerage revenues:Agency commissions

$
757,310

$
749,223

$
557,895Principal transactions


206,669


188,254


151,220Total brokerage revenues


963,979


937,477


709,115Software, analytics and market data


51,250


19,522


18,651Contract revenue


86


215


6,973Interest income


8,617


9,714


9,144Other income/(loss)


(8,429
)

3,613


3,300Total revenues


1,015,503


970,541


747,183EXPENSES:Compensation and employee benefits


665,973


604,847


465,554Communications and market data


47,810


44,622


37,300Travel and promotion


45,756


41,992


32,391Rent and occupancy


33,705


23,661


20,559Depreciation and amortization


31,390


24,686


19,021Professional fees


26,200


17,899


19,152Clearing fees


43,420


32,732


24,471Interest


14,334


7,076


6,818Other expenses


23,870


22,155


14,543Contract costs


68


133


5,819Lease termination costs to affiliate








(242
)Total Expenses


932,526


819,803


645,386INCOME BEFORE PROVISION FOR INCOME TAXES


82,977


150,738


101,797PROVISION FOR INCOME TAXES


29,871


55,880


40,719NET INCOME

$
53,106

$
94,858

$
61,078EARNINGS PER SHAREBasic

$
0.45

$
0.81

$
0.54Diluted

$
0.44

$
0.80

$
0.52WEIGHTED AVERAGE SHARES OUSTANDING BASIC(1)Common stock


117,966,596


116,595,920


113,382,789WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED(1)


119,743,693


119,180,791


116,703,713


---

See
notes to consolidated financial statements

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

Year Ended December 31,2008

2007

2006NET INCOME

$
53,106

$
94,858

$
61,078OTHER COMPREHENSIVE INCOME (LOSS):Unrealized gain on foreign derivative exchange contracts, net of tax








1,827Foreign currency translation adjustment, net of tax


(4,355
)

(150
)

222Unrealized (loss) gain on available-for-sale securities, net of tax


(208
)

75


COMPREHENSIVE INCOME

$
48,543

$
94,783

$
63,127


See
notes to consolidated financial statements

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

Year Ended December 31,2008

2007

2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
53,106

$
94,858

$
61,078Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


31,390


24,686


19,021Amortization of loan fees


416


224


238Provision for doubtful accounts


208


1,751


(27
)Deferred compensation


24,983


21,787


12,708Loss on disposal of fixed assets


223


148


182Provision for (benefit from) deferred taxes


14,913


124


(5,381
)Loss on foreign currency exchange for notes payable








1,381Loss on foreign exchange derivative contracts


16,729


12,558


5,156Lease termination payable to affiliate








(242
)Losses from equity method investments


2,102


698


135Tax expense (benefit) related to share-based compensation


2,136


(16,896
)

(11,705
)Other non-cash charges, net


237


(521
)

(35
)(Increase) decrease in operating assets:Deposits with clearing organizations


(30
)

(489
)

(149
)Accrued commissions receivable


65,597


(49,574
)

(20,578
)Receivables from brokers, dealers and clearing organizations


168,188


(143,155
)

34,245Other assets


(62,025
)

(2,163
)

(13
)Increase (decrease) in operating liabilities:Accrued compensation


(38,611
)

46,425


31,482Accounts payable and accrued expenses


6,054


8,890


8,256Payables to brokers, dealers and clearing organizations


(89,896
)

109,741


(80,771
)Other liabilities


(16,586
)

26,942


17,586Cash provided by operating activities


179,134


136,034


72,567CASH FLOWS FROM INVESTING ACTIVITIES:Net cash used for business acquisitions


(149,614
)

(2,754
)

(84,452
)Purchase of available-for-sale securities





(5,498
)

Purchases of other investments, net


(2,907
)

(3,854
)

(2,697
)Purchase of property, equipment and leasehold improvements


(38,807
)

(33,804
)

(21,310
)Payments on foreign exchange derivative contracts


(1,529
)

(7,663
)

(938
)Cash used in investing activities


(192,857
)

(53,573
)

(109,397
)CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of short-term borrowings


(174,500
)

(70,486
)

(70,000
)Proceeds from short-term borrowings


283,500


35,300


128,000Proceeds from issuance of long-term obligations


60,000





Repurchases of common stock


(11,400
)

(7,076
)

Cash dividend paid


(30,036
)




Payment of loan fees


(883
)




(613
)Proceeds from exercises of stock options and a warrant


578


8,382


8,428Cash paid for taxes on vested restricted stock units


(5,762
)

(6,418
)

(3,576
)Tax (expense) benefit related to share-based compensation


(2,136
)

16,896


11,705Cash provided by/(used in) financing activities


119,361


(23,402
)

73,944Effects of exchange rate changes on cash and cash equivalents


(3,656
)

(150
)

222INCREASE IN CASH AND CASH EQUIVALENTS


101,982


58,909


37,336CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


240,393


181,484


144,148CASH AND CASH EQUIVALENTS, END OF PERIOD

$
342,375

$
240,393

$
181,484SUPPLEMENTAL DISCLOSURE:Interest paid

$
11,678

$
6,869

$
6,076Income taxes paid, net of refunds

$
38,355

$
37,394

$
17,578


See notes to consolidated financial statements

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GFI GROUP INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY        (In thousands)

Common
Stock(1)

Additional
Paid In
Capital(1)

Treasury
Stock

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Income

TotalBALANCE, DECEMBER 31, 2005

$
1,118

$
194,521

$


$
44,790

$
(2,177
)
$
238,252Issuance of common stock for exercise of stock options and vesting of restricted stock units


32


8,396











8,428Withholding of restricted stock units in satisfaction of tax requirements





(3,751
)










(3,751
)Tax benefits associated with share-based awards





11,705











11,705Foreign currency translation adjustment














222


222Unrealized gains on foreign exchange derivative contracts














1,827


1,827Deferred compensation





12,708











12,708Net income











61,078





61,078BALANCE, DECEMBER 31, 2006


1,150


223,579





105,868


(128
)

330,469Purchase of shares of treasury stock








(7,076
)







(7,076
)Adoption of FIN 48











(4,442
)




(4,442
)Issuance of common stock for exercise of stock options and vesting of restricted stock units


32


8,352











8,384Withholding of restricted stock units in satisfaction of tax requirements





(8,608
)










(8,608
)Tax benefits associated with share-based awards





16,896











16,896Foreign currency translation adjustment














(150
)

(150
)Unrealized gains on securities, net of tax














75


75Deferred compensation





21,787











21,787Net income











94,858





94,858BALANCE, DECEMBER 31, 2007


1,182


262,006


(7,076
)

196,284


(203
)

452,193Purchase of shares of treasury stock








(11,400
)







(11,400
)Issuance of common stock for exercise of stock options and vesting of restricted stock units


13


576











589Withholding of restricted stock units in satisfaction of tax requirements





(5,773
)










(5,773
)Tax expense associated with share-based awards





(2,136
)










(2,136
)Foreign currency translation adjustment














(4,355
)

(4,355
)Unrealized gains on securities, net of tax














(208
)

(208
)Dividends











(30,036
)




(30,036
)Deferred compensation





24,983











24,983Net income











53,106





53,106BALANCE, DECEMBER 31, 2008

$
1,195

$
279,656

$
(18,476
)
$
219,354

$
(4,766
)
$
476,963


---

See
notes to consolidated financial statements.

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

1. ORGANIZATION AND BUSINESS

The consolidated financial statements include the accounts of GFI Group Inc. and its subsidiaries (collectively the "Company"). The Company, through its subsidiaries, provides
brokerage services, trading system software and market data and analytical software products to institutional clients in markets for a range of credit, financial, equity and commodity instruments. The
Company complements its brokerage capabilities with value-added services, such as market data and software systems and products for decision support, which it licenses primarily to companies in the
financial services industry. The Company's principal operating subsidiaries include: GFI Securities LLC, GFI Brokers LLC, GFI Group LLC, GFI Securities Limited, GFI Brokers
Limited, GFI (HK) Securities LLC, GFI (HK) Brokers Ltd., GFI Group PTE Ltd., GFI Korea Money Brokerage Limited, Amerex Brokers LLC, Fenics Limited ("Fenics") and Trayport
Limited ("Trayport"). As of December 31, 2008, Jersey Partners, Inc. ("JPI") owns approximately 43% of the Company's outstanding shares of common stock. The Company's chief executive
officer, Michael Gooch, is the controlling shareholder of JPI.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of PresentationThe Company's 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 consolidated financial statements. Management believes that the estimates utilized in the preparation of the consolidated financial statements are reasonable and prudent. Actual
results could differ materially from these estimates.

All
material intercompany transactions and balances have been eliminated.

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

Brokerage TransactionsThe Company provides brokerage services to its clients in the form of either agency or principal transactions. Principal
transactions revenues and related expenses are recognized on a trade date basis.

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. The Company earns revenue from
principal transactions on the spread between the buy and sell price of the security that is brokered. In matched principal transactions, the Company simultaneously agrees to buy instruments from one
customer and sell them to another customer. A limited number of brokerage desks are occasionally permitted to enter into unmatched principal transactions in the ordinary course of business while
brokering in illiquid markets or for the purpose of facilitating clients' execution needs for transactions initiated by such clients. These unmatched positions are intended to be held short term.

However,
from time to time, one of the counterparties to a principal transaction may fail to fulfill its obligations, either because it is not matched immediately or, even if matched,
one party fails to

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

deliver
the cash or securities it is obligated to deliver. Under these circumstances, if a transaction fails to settle on a timely basis or if a customer defaults on its obligations, the Company may
hold securities positions overnight or until such transaction is settled. These positions are marked to market on a daily basis. Principal transactions revenues and related expenses are recognized on
a trade date basis.

Software, Analytics and Market Data Revenue RecognitionSoftware revenue consists primarily of fees charged for Trayport electronic trading
software,
which are typically billed on a subscription basis ranging from one to five years. Software revenue is recognized on a straight-line basis over the term of the subscription period, which
ranges from one to five years. Analytics revenue consists primarily of fees for Fenics pricing tools. Analytics revenue consists primarily of fees for licenses of software products on a subscription
basis, which is generally over three years. Analytics revenue is recognized on a straight-line basis over the term of the subscription period, which is generally over three years. Market
data revenue primarily consists of subscription fees and fees from customized one-time sales. Market data subscription fees are recognized on a straight-line basis over the
term of the subscription period, which ranges from one to two years. Market data revenue from customized one-time sales is recognized upon delivery of the data.

The
Company markets its software, analytics and market data products through its direct sales force and, in some cases, indirectly through resellers. In general, the Company's license
agreements for such products do not provide for a right of return.

Property, Equipment and Leasehold ImprovementsProperty, equipment and leasehold improvements are stated at cost, less accumulated depreciation
and
amortization. Depreciation and amortization are calculated using the straight-line method generally over three to seven years. Property and equipment are depreciated over their estimated
useful lives. Leasehold improvements are amortized over the shorter of the remaining term of the respective lease to which they relate or the remaining useful life of the leasehold improvement.
Internal and external costs incurred in developing or obtaining computer software for internal use are capitalized in accordance with Statement of Position ("SOP") 98-1, Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use, and are amortized on a straight-line basis over the
estimated useful life of the software, generally three years. General and administrative costs related to developing or obtaining such software are expensed as incurred.

Long-Term Construction Type ContractDuring 2006, the Company was party to a long-term construction
type contract pursuant to which the Company developed an on-line currency trading system and customized it for the customer. The Company accounted for such contract using the
completed-contract method in accordance with Accounting Research Bulletin No. 45,Long-Term Construction-Type Contracts,"("ARB No. 45") and with the applicable guidance provided by SOP 81-1,Accounting for Performance of Construction Type and Certain Production Type
Contracts("SOP 81-1"). Under the completed contract method, the revenues and expenses are deferred and netted on the balance sheet until such time when the
project is substantially complete. SOP 81-1 states that a contract is considered substantially complete when only inconsequential actions remain incomplete, the remaining costs in
comparison to the total costs to be incurred are immaterial and the potential risk is insignificant in amount. During the second quarter of 2006, the contract was considered substantially complete and
the related revenues and expenses were recognized.

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Subsequent
to the completion of this long-term contract, the Company entered into contracts with the same customer to provide additional work on a time and materials basis.
The additional contracts are considered extensions of the long-term construction type contract and they are accounted for under the completed contract method as they are
short-term in nature.

Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price
allocation over the fair value of tangible and identifiable intangible net assets acquired. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Intangible Assets, 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. In the event the Company determines that the value of goodwill has become impaired, it will incur a charge for the
amount of impairment during the fiscal quarter in which such determination is made. 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.

Prepaid Bonuses and Forgivable Employee LoansPrepaid bonuses and forgivable loans to employees are stated at historical value net of amortization
when the contract between the Company and the employee provides for the return of proportionate amounts outstanding if employment is severed prior to the termination of the contract. Amortization is
calculated using the straight-line method over the term of the contract, which is generally over three years. These forgivable loans have interest rates of up to 7.5%. The Company expects
to fully recover the unamortized portion of prepaid bonuses and forgivable loans when employees voluntarily terminate their employment or if their employment is terminated for cause prior to the
expiration of the contract. The prepaid bonuses and forgivable loans are included in other assets in the Consolidated Statements of Financial Condition.

InvestmentsThe Company accounts for equity investments where it holds more than 20 percent of the outstanding shares of the investee's stock
under the equity method of accounting in accordance with Accounting Principles Board Opinion No. 18,The Equity Method of Accounting for Investments in Common
Stock("APB 18"). The Company initially records the investment at cost and adjusts the carrying amount each period to recognize its share of the earnings and losses of
the investee based on the percentage of ownership. The Company reviews its equity method investments periodically for indicators of impairment. At December 31, 2008 and 2007, the Company had
equity method investments with a carrying value of $4,629 and $3,984, respectively. Investments for which the Company holds less than 20% of the outstanding shares of the investee's stock or for which
the Company does not have the ability to exercise significant influence over operating and financial policies are accounted for using the cost method under APB 18. The Company monitors cost
basis investments for impairment periodically based on qualitative and quantitative information. The Company had cost method investments of $2,368 and $1,907 at December 31, 2008 and 2007,
respectively.

The
Company accounts for its marketable equity securities in accordance with SFAS 115,Accounting for Certain Investments in Debt and Equity
Securities. Trading securities are reported at fair value, with gains and losses resulting from changes in fair value recognized currently in other income. Investments
designated as available-for-sale are recorded at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income, net of
tax. The fair

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

value
of the Company's available-for-sale securities was $3,683 and $5,606 as of December 31, 2008 and 2007, respectively.

All
of the Company's investments are included in other assets in the Consolidated Statements of Financial Condition.

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. During 2008 and 2007, none of these contracts were designated as foreign currency cash flow hedges under SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended ("SFAS No. 133"). Contracts that are not designated as foreign currency
cash flow hedges are recorded at fair value and all realized and unrealized gains and losses are included in other income in the Consolidated Statements of Income. In prior periods, certain of the
Company's foreign exchange derivative contracts were designated and qualified as foreign currency cash flow hedges under SFAS No. 133. For those foreign exchange derivative contracts, the
Company reclassified the related gains and losses included in accumulated other comprehensive loss into earnings at the time the hedged transactions were recognized. The Company measured effectiveness
by assessing the changes in the expected future cash flows of the hedged items. The ineffective portion of the hedges, if any, was included in other income. There was no portion of the derivative
instruments' gains or losses excluded from the assessment of effectiveness.

Income TaxesIn accordance with SFAS No. 109,Accounting for Income Taxes, the Company provides
for income taxes using the asset and liability method under which deferred income taxes are recognized for the estimated future tax effects attributable to temporary differences and carry-forwards
that result from events that have been recognized either in the financial statements or the income tax returns, but not both. The measurement of current and deferred income tax liabilities and assets
is based on provisions of enacted tax laws. Valuation allowances are recognized if, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets
will not be realized. Effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48,Accounting for Uncertainty in
Income Taxes,an interpretation of SFAS No. 109("FIN 48"). It is the Company's policy to provide for uncertain
tax positions and the related interest and penalties based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.

Foreign Currency Translation Adjustments and TransactionsAssets and liabilities of foreign subsidiaries having non-U.S. dollar functional
currencies are translated at the period end rates of exchange, and revenue and expenses are translated at the average rates of exchange for the period. Gains or losses resulting from translating
foreign currency financial statements are reflected in 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 other income.

Share-Based CompensationThe Company's share-based compensation consists of stock options and restricted stock units ("RSUs"). The Company adopted
SFAS No. 123(R),Share-Based Payment("SFAS 123(R)") during the first quarter of 2006, using the modified prospective approach.
SFAS 123(R) revised the fair value-based method of accounting for share-based payment liabilities,

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

forfeitures
and modifications of stock-based awards and clarified guidance in several areas, including measuring fair value, classifying an award as equity or as a liability and attributing
compensation cost to service periods. Additionally, under SFAS 123(R), actual tax benefits recognized in excess of tax benefits previously established upon grant are reported as a financing
cash flow, as opposed to operating cash flows. In recent periods, the only share-based compensation issued by the Company has been RSUs. The Company records the fair value of the RSUs at the date of
grant as deferred compensation and amortizes it to compensation expense over the vesting period of the grants.

Other IncomeIncluded within Other Income on the Company's Consolidated Statements of Income are revaluations of foreign currency derivative
contracts, realized and unrealized transaction gains and losses on certain foreign currency denominated items.

Recent Accounting PronouncementsIn September 2006, the FASB issued SFAS No. 157,Fair Value
Measurements("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value
measurements. SFAS 157 requires companies to disclose the fair value of their financial instruments according to a fair value hierarchy, as defined. Additionally, companies are required to
provide enhanced disclosure for certain financial instruments within the hierarchy, including a reconciliation of the beginning and ending balances separately for each major category of assets and
liabilities which are measured at fair value using significant unobservable inputs. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15,
2007. In February 2008, the FASB issued FASB Staff Position No.
FAS 157-2 ("FSP 157-2"), which delays the effective date of SFAS 157 for all nonfinancial assets and liabilities, except those that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for
items within the scope of FSP 157-2. The Company adopted SFAS 157 on January 1, 2008 except as it applies to those nonfinancial assets and liabilities within the scope
of FSP 157-2. The adoption of SFAS 157 as it relates to the financial assets and liabilities did not have a material impact on the Company's consolidated financial
statements. The Company will adopt SFAS 157 for those nonfinancial assets and liabilities as noted in FSP 157-2 on January 1, 2009. The Company does not expect the
adoption of SFAS 157 for nonfinancial assets and liabilities to have a material impact on its consolidated financial statements. In October 2008, the FASB issued FASB Staff Position No.
FAS 157-3,Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active("FSP 157-3"). FSP 157-3 amends SFAS 157 by incorporating an example to illustrate key considerations in determining the fair value of a financial asset in
an inactive market. FSP 157-3 was effective upon issuance and applicable to prior periods for which financial statements have not been issued. The Company adopted
FSP 157-3 as of September 30, 2008. The adoption of FSP 157-3 did not have a material impact on the Company's consolidated financial statements. See
Note 17 for further discussion of Financial Instruments.

In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of
FASB Statement No. 115("SFAS 159"). SFAS 159 provides a "Fair Value Option" under which a company may irrevocably elect fair value as the initial and
subsequent measurement attribute for certain financial assets and liabilities. This Fair Value Option will be available on a contract-by-contract basis with changes in fair
value recognized in earnings as

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

those
changes occur. The Company adopted SFAS 159 on January 1, 2008 and did not elect to apply the Fair Value Option to any specific financial assets or liabilities.

In
December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51("SFAS 160"). SFAS 160 requires reporting entities to present noncontrolling (minority) interests as equity (as opposed to as a liability or
mezzanine equity) and provides guidance on the accounting for transactions between an entity and noncontrolling interests. SFAS 160 is effective for financial statements issued for fiscal years
beginning after December 15, 2008 and will be adopted by the Company on January 1, 2009. The Company does not expect the adoption of SFAS 160 to have a material impact on its
consolidated financial statements.

In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations (revised 2007)("SFAS 141(R)"). SFAS 141(R)
requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition);
establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; requires the expensing of most transaction and restructuring
costs; and requires the acquirer to disclose to investors and other users all of the information needed
to evaluate and understand the nature and financial effect of the business combination. SFAS 141(R) applies to all transactions or other events in which the Company obtains control of one or
more businesses, including those sometimes referred to as "true-mergers" or "mergers of equals" and combinations achieved without the transfer of consideration, for example, by contract
alone or through the lapse of minority veto rights. SFAS 141(R) is effective for financial statements issued for fiscal years beginning after December 15, 2008 and will be adopted by the
Company on January 1, 2009. The Company does not expect the adoption of SFAS 141(R) to have a material impact on its consolidated financial statements.

In
March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities("SFAS 161").
SFAS 161 amends and expands the disclosure requirements of SFAS No. 133 and requires entities to provide enhanced qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair values and amounts of gains and losses on derivative contracts, and disclosures about credit-risk related contingent features in derivative
agreements. SFAS 161 is effective for fiscal years beginning after November 15, 2008 and will be adopted by the Company on January 1, 2009. The Company does not expect the
adoption of SFAS 161 to have a material impact on its consolidated financial statements.

In
April 2008, the FASB issued FSP 142-3,Determining the Useful Life of Intangible Assets("FSP 142-3"). FSP 142-3 amends the factors to be considered in determining the useful life of intangible assets. Its intent is to improve the consistency between
the useful life of an intangible asset and the period of expected cash flows used to measure such asset's fair value. FSP 142-3 is effective for fiscal years beginning after
December 15, 2008 and will be adopted by the Company on January 1, 2009. The Company does not expect the adoption of FSP 142-3 to have a material impact on its
consolidated financial statements.

In
May 2008, the FASB issued SFAS No. 162,The Hierarchy of Generally Accepted Accounting Principles("SFAS 162").
SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles in the United

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

States.
It is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting Principles". SFAS 162 became effective in November 2008 and the adoption of SFAS 162 did not have
a material impact on the Company's consolidated financial statements.

In
June 2008, the FASB issued FSP EITF 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based
payment transactions are participating securities prior to vesting and, therefore, need to be included in computing earnings per share under the two-class method described in SFAS
No. 128, "Earnings Per Share". FSP
EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008 and will be adopted by the Company on January 1, 2009. The Company does not
expect the adoption of FSP EITF 03-6-1 to have a material impact on its consolidated financial statements.

In
December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8,Disclosures by Public Entities (Enterprises) about
Transfers of Financial Assets and Interests in Variable Interest Entities. The purpose of FSP FAS 140-4 and FIN 46(R)-8 is to promptly
improve disclosures by public entities and enterprises until the pending amendments to FASB Statement No. 140 ("SFAS 140"), Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, and FASB Intepretation No. 46 (revised December 2003) ("FIN 46(R)), Consolidation of Variable Interest Entities, are finalized and approved by the Board.
FSP FAS 140-4 and FIN 46(R)-8 for public entities, FSP FAS 140-4 and FIN 46(R)-8 amends FAS 140 to require public
entities to provide additional disclosures about transfers of financial assets and variable interests in qualifying special purpose entities and also amends FIN 46(R) to require public
enterprises to provide additional disclosures about their involvement with variable interest entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for the first
reporting period (interim and annual) ending after December 15, 2008 with earlier earlier application encouraged. The Company adopted FAS 140-4 and
FIN 46(R)-8 as of December 31, 2008. The adoption of FAS 140-4 and FIN 46(R)-8 did not have a material impact on the Company's
consolidated financial statements.

3. DEPOSITS WITH CLEARING ORGANIZATIONS

The Company maintains cash deposits at various clearing companies and organizations that perform clearing and custodial functions for the Company.

4. 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 other derivative brokerage transactions. In estimating the allowance for doubtful accounts, management considers the length of time receivables are past due and historical experience. In
addition, if the Company is aware of a client's inability to meet its financial obligations, a specific provision for doubtful accounts is recorded in the amount of the estimated losses that will
result from the inability of that client to meet its financial obligation. Accrued commissions receivable are presented net of allowance for doubtful accounts of approximately $3,854 and $4,173 as of
December 31, 2008 and 2007, respectively.

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

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

Amounts receivable from and payable to brokers, dealers and clearing organizations consisted of the following:

December 31,2008

2007Receivables from brokers, dealers and clearing organizations:Contract value of fails to deliver

$
105,732

$
272,885Balance receivable from clearing organizations and financial institutions


43,929


44,964Total

$
149,661

$
317,849Payables to brokers, dealers and clearing organizations:Contract value of fails to receive

$
101,052

$
185,404Balance payable to clearing organizations


341


450Payable to financial institutions


3,447


8,882Total

$
104,840

$
194,736


Substantially
all fail to deliver and fail to receive balances at December 31, 2008 and 2007 have subsequently settled at the contracted amounts.

6. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements consist of the following:

Year Ended
December 31,2008

2007Software

$
81,005

$
68,154Computer equipment


23,624


19,818Leasehold improvements


34,273


29,895Communications equipment


15,227


12,797Furniture and fixtures


6,614


5,049Automobiles


342


253Total


161,085


135,966Accumulated depreciation and amortization


(87,924
)

(79,824
)Property, equipment, and leasehold improvements less accumulated depreciation and amortization

$
73,161

$
56,142


During
2007, in connection with the Company's decision to move its headquarters to new office space in New York in the first half of 2008, the Company accelerated the depreciable lives
of certain assets to be abandoned at its current office space to their estimated useful lives. Total accelerated depreciation relating to the fixed assets to be abandoned is $5,602 (or approximately
$3,470 net of tax), of which $2,871 (or approximately $1,723 net of tax) was recorded during the year ended December 31,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

6. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Continued)

2007
and $2,731 (or approximately $1,747 net of tax) was recorded during the year ended December 31, 2008.

During
the years ended December 31, 2008 and 2007, the Company removed from its consolidated financial statements $13,934 and $843, respectively, of fully depreciated or almost
fully depreciated fixed assets that were no longer in use and the related accumulated depreciation. Depreciation and amortization expense for the years ended December 31, 2008, 2007 and 2006
was $22,034, $18,925 and $13,949, respectively.

7. GOODWILL AND INTANGIBLE ASSETS

On March 23, 2007, the Company completed the acquisition of all of the outstanding shares of Century Chartering (UK) Limited for approximately £2,306 (or approximately
$4,516), including cash acquired of $1,762 and incurred $46 of direct transaction costs related to the acquisition. This acquisition was accounted for as a purchase business combination. Assets
acquired were recorded at their fair value as of March 23, 2007. The results of the acquired company have been included in the consolidated financial statements since acquisition. Management
determined the fair value of the identifiable intangible assets acquired based upon an independent valuation model. The purchase price was allocated as follows:

Useful LifeAssets:Cash

$
1,762Intangible assets subject to amortization-Trademark and trade name


44

2 YearsCustomer relationships


349

6 YearsCovenants not to compete


89

2 YearsOther assets


784Goodwill


1,818Total assets acquired

$
4,846Liabilities:Accounts payable and accrued expense


249Other liabilities


81Total liabilities assumed


330Net Assets Acquired

$
4,516


Total
acquired intangible assets that are subject to amortization totaled $482 and have a weighted-average useful life of approximately 4.9 years.

On
January 31, 2008, the Company completed the acquisition of substantially all of the outstanding shares of Trayport, a leading provider of real-time electronic
trading software for brokers, exchanges and traders in the commodities, fixed income, currencies and equities markets, for approximately £85,428 (or approximately $169,780), including cash
acquired of £7,622 (or approximately $15,150) and incurred £1,387 (or approximately $2,745) of direct transaction costs related to the acquisition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

7. GOODWILL AND INTANGIBLE ASSETS (Continued)

Additionally,
£2,524 (or approximately $5,016) of the purchase price was paid in short-term loan notes, payable within one year. At December 31, 2008, these notes were
paid in full. Included as part of the purchase price is £7,287 (or approximately $10,503) that was deposited into an escrow account with a third-party escrow agent as collateral for the
indemnification obligations of certain of the former Trayport shareholders. Any amounts remaining in the escrow account at March 31, 2009 that are not subject to pending claims will be
distributed to the former Trayport shareholders. The purchase price is subject to final working capital adjustments, which are not expected to be material. The Company financed the transaction with
proceeds of the private placement of its Senior Notes and amounts drawn under its Credit Agreement, as defined in Note 9. See Note 9 below for further discussion of the Senior Notes and
the Company's Credit Agreement.

This
acquisition was accounted for as a purchase business combination. Assets acquired were recorded at their fair value as of January 31, 2008. The results of the acquired
company have been included in the consolidated financial statements since the acquisition. Management determined the fair value of the identifiable intangible assets acquired based upon an independent
valuation model. The purchase price allocation, as presented below, was translated into U.S. dollars based on the foreign exchange rate on January 31, 2008:

Useful LifeAssets:Cash

$
15,150Accounts receivable


8,704Property and equipment


469Software inventory


6,587Intangible assets subject to amortization-Trade name


3,657

10 YearsCustomer relationships


33,243

15 YearsNon compete agreement


839

4 YearsOther assets


481Goodwill


115,798Total assets acquired

$
184,928Total liabilities assumed


15,148Net Assets Acquired

$
169,780


Total
intangible assets acquired in the Trayport transaction that are subject to amortization totaled $37,739 and have a weighted-average useful life of approximately 14 years.

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

7. GOODWILL AND INTANGIBLE ASSETS (Continued)

Changes
in the carrying amount of the Company's goodwill for the years ended December 31, 2007 and 2008 were as follows:

Americas
Brokerage

EMEA
Brokerage

All Other

TotalBalance as of December 31, 2006

$
78,998

$


$
12,893

$
91,891Goodwill acquired during the year





1,818





1,818Balance as of December 31, 2007


78,998


1,818


12,893


93,709Goodwill acquired during the year








115,798


115,798Balance as of December 31, 2008

$
78,998

$
1,818

$
128,691

$
209,507


Based
on the results of its annual impairment tests that is required by SFAS 142, the Company determined that no impairment of goodwill existed as of January 1, 2009, 2008
and 2007. SFAS 142 prescribes a two step process for impairment testing whereby management first compares the fair value of each reporting unit with recorded goodwill to that reporting unit's
book value. If management determines, as a result of this first step, that the fair value of the reporting unit is less than its carrying value, a second step in the impairment test process would
require that the recorded goodwill at that business unit be written down to the value implied by the reporting unit's recent valuation. The Company will continue to evaluate goodwill on an annual
basis as of the beginning of each new fiscal year, and whenever events and changes in circumstances indicate that there may be a potential impairment.

Intangible
assets consisted of the following:

December 31,2008

2007Gross intangible assetsCustomer base/relationships

$
46,282

$
13,039Trade name


7,771


4,114Core technology


3,230


3,230Covenants not to compete


3,184


2,345Favorable lease agreements


620


620Proprietary knowledge


110


110Patent


31


32Total gross intangible assets


61,228


23,490Accumulated amortization


(16,789
)

(11,509
)Net intangible assets

$
44,439

$
11,981


Amortization
expense for the years ending December 31, 2008, 2007 and 2006 was $5,280, $3,332 and $2,478, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

7. GOODWILL AND INTANGIBLE ASSETS (Continued)

At
December 31, 2008, expected amortization expense for the definite lived intangible assets is as follows:

2009

$
5,4312010


5,3812011


5,1752012


4,0152013


2,679Total

$
22,681


8. OTHER ASSETS

Other assets consisted of the following:

December 31,2008

2007Prepaid bonuses

$
65,311

$
26,320Investments


11,149


12,747Forgivable employee loans and advances to employees


13,239


7,257Software inventory


11,871


3,938Other assets


44,783


27,897Total Other Assets

$
146,353

$
78,159


9. SHORT-TERM BORROWINGS AND LONG-TERM OBLIGATIONS

In January 2008, pursuant to a note purchase agreement with certain institutional investors (the "2008 Note Purchase Agreement"), the Company issued $60,000 in aggregate principal amount
of senior secured notes due in January 2013 (the "Senior Notes") in a private placement. The Senior Notes currently bear interest at 8.17%, payable semi-annually in arrears on the
30th of January and July, including a premium of 100 basis points due to a change in the risk based capital factor attributed to the Senior Notes by one of the purchasers of these
securities pursuant to generally applicable insurance regulations for U.S. insurance companies. The premium interest will cease to accrue if the risk based capital factor attributed to the Senior
Notes is subsequently reduced. The Company's obligations under the Senior Notes are secured by substantially all of the assets of the Company and certain assets of the Company's subsidiaries. The 2008
Note Purchase Agreement includes operational covenants with which the Company is required to comply, including among others, maintenance of certain financial ratios and restrictions on additional
indebtedness, liens and dispositions. At December 31, 2008, the Senior Notes were recorded net of deferred financing costs of $505.

The
Senior Notes contain certain financial and other covenants. The Company was in compliance with all applicable covenants at December 31, 2008.

In
January 2008, the Company amended the terms of its credit agreement with Bank of America, N.A. and certain other lenders (the "Credit Agreement"). The Credit Agreement, as amended,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

9. SHORT-TERM BORROWINGS AND LONG-TERM OBLIGATIONS (Continued)

provides
for maximum borrowings of $265,000, which includes up to $50,000 for letters of credit, and has an expiration date of February 24, 2011. Revolving loans may be either base rate loans
or currency rate loans. Currency rate loans and the letters of credit bear interest at the annual rate of LIBOR plus the applicable margin in effect for that interest period. Base rate loans bear
interest at a rate per annum equal to a base rate plus the applicable margin in effect for that interest period. As long as no default has occurred under the Credit Agreement, the applicable margin
for both the base rate and currency rate loans is based on a matrix that varies with a ratio of outstanding debt to EBITDA, as defined in the Credit Agreement. At December 31, 2008, the
applicable margin was 1.25% and the one-month LIBOR was 0.44%. Amounts outstanding under the Credit Agreement are secured by substantially all the assets of the Company and certain assets
of the Company's subsidiaries. The Credit Agreement provides for the Senior Notes to rank pari passu with the commitments under the Credit Agreement, in relation to the security provided.

The
Company had outstanding borrowings under its Credit Agreement as of December 31, 2008 and 2007 as follows:

As of December 31,2008

2007Loan Available(1)

$
265,000

$
160,000Loans Outstanding

$
165,000

$
56,000Letters of Credit Outstanding

$
7,172

$
7,193






The
weighted average interest rate of the outstanding loans was 2.93% and 5.84% for the years ended December 31, 2008 and 2007, respectively. At December 31, 2008 and 2007,
short-term borrowings under the Credit Agreement were recorded net of unamortized loan fees of $672 and $709, respectively.

The
Credit Agreement contains certain financial and other covenants. The Company was in compliance with all applicable covenants at December 31, 2008 and 2007, respectively.

In
certain previous periods' financial statements, we referred to short-term borrowings under our Credit Agreement as Notes Payable on our Consolidated Statements of
Financial Condition and Consolidated Statements of Cash Flows. To better distinguish obligations due under the Credit Agreement from long-term obligations due under our Senior Notes, we
now refer to borrowings under our Credit Agreement as "Short-term borrowings" in the Consolidated Statements of Financial Condition and Consolidated Statements of Cash Flows included in
these financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

10. INCOME TAXES

The provision for income taxes consists of the following:

Year Ended December 31,2008

2007

2006Current Provision:Federal

$
(19,554
)
$
8,984

$
11,332Foreign


39,127


42,281


29,961State and local


(4,615
)

4,491


4,807Total current provision


14,958


55,756


46,100Deferred Provision (Benefit):Federal


14,954


2,545


(1,289
)Foreign


(3,258
)

(3,179
)

(3,499
)State and local


3,217


758


(593
)Total deferred provision (benefit)


14,913


124


(5,381
)Total

$
29,871

$
55,880

$
40,719


The
Company had pre-tax income from foreign operations of $106,829, $116,477, and $79,451 for the years ended December 31, 2008, 2007 and 2006, respectively.
Pre-tax (loss) income from domestic operations was ($23,852), $34,261, and $22,346 for the years ended December 31, 2008, 2007 and 2006, respectively.

Deferred
income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

10. INCOME TAXES (Continued)

that
will be in effect when such differences are expected to reverse. Significant components of the Company's gross deferred tax assets (liabilities) are set forth below:

As of December 31,2008

2007Deferred tax assets:Deferred compensation

$
2,189

$
7,694Net operating/capital loss carryforwards


3,773


3,907Foreign deferred items


2,746


5,925Intangible amortization


1,418


1,791Unrealized loss on currency hedging


5,512


1,283Foreign tax credits


1,183


1,188Liability reserves


903


1,070Prepaid expenses


3,223


482Other, net


(734
)

225Valuation allowance


(4,956
)

(5,095
)Total deferred tax assets

$
15,257

$
18,470Deferred tax liabilities:Depreciation/amortization

$
(8,384
)
$
(8,319
)Goodwill amortization


(13,677
)

(3,270
)Prepaid compensation


(18,120
)

(3,176
)Total deferred tax liabilities

$
(40,181
)
$
(14,765
)Net deferred tax (liabilities) assets

$
(24,924
)
$
3,705


Cumulative
undistributed earnings of foreign subsidiaries were approximately $179,095 at December 31, 2008. No deferred U.S. federal income taxes have been provided for the
undistributed earnings to the extent that they are permanently reinvested in the Company's foreign operations. It is not practical to determine the amount of additional tax that may be payable in the
event these earnings are repatriated.

The
deferred tax assets relating to foreign deferred items listed above consist primarily of depreciation and amortization, deferred compensation and unpaid intra-group royalties and
interest. Additionally, the valuation allowance relates primarily to the ability to utilize net operating losses and foreign tax credits in various tax jurisdictions. During 2008, the valuation
allowance was decreased by $139, primarily due to a decrease in foreign net operating loss carry forwards. At December 31, 2008, the Company had U.S. net operating loss carryforward of $4,721
and foreign net operating loss of $9,680.
The U.S. amounts are subject to annual limitations on utilization and will begin to expire in various years after 2018. The foreign amounts are primarily Singapore and Hong Kong carryforwards that are
subject to annual limitations on utilization, but can be carried forward indefinitely. Further, the Company has $1,183 of foreign tax credit carryforwards at December 31, 2008 that will expire
in 2012.

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

10. INCOME TAXES (Continued)

The
corporate statutory U.S. federal tax rate was 35% for the three years presented. A reconciliation of the statutory U.S. federal income tax rate to the Company's effective income tax
rate is set forth below:

December 31,2008

2007

2006U.S. federal income tax at statutory rate


35.0
%

35.0
%

35.0
%U.S. state and local income taxes, net of federal tax benefit


(0.3
)

2.3


2.9Foreign operations


(5.9
)




1.3Non-deductible expenses


7.8


1.5


1.5General business credit





(0.3
)

(0.1
)Tax-Exempt Income


(1.4
)

(0.4
)

(0.6
)Other


0.8


(1.0
)

Effective income tax rate


36.0
%

37.1
%

40.0
%


Income
tax (expense) benefits of approximately $(2,136), $16,896, and $11,705 from the exercise of stock options and the vesting of restricted stock units was recorded directly to
additional paid-in capital in 2008, 2007 and 2006, respectively.

Effective
January 1, 2007, the Company adopted FIN 48. Upon adoption, the Company recognized a $4,442 increase to the accrual for uncertain tax positions. This increase was
accounted for as an adjustment to the beginning balance of retained earnings on the Consolidated Statements of Financial
Condition. After recognizing the impact of the adoption of FIN 48, the total unrecognized tax benefits (net of the federal benefit on state tax positions) were approximately $7,156, including
interest of $381, all of which could affect the effective income tax rate in any future periods. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Liability for
Unrecognized Tax
BenefitsUnrecognized tax benefits balance at January 1, 2007

$
7,510Gross increasescurrent period tax positions


515Lapse of statute of limitations


(1,515
)Unrecognized tax benefits balance at December 31, 2007

$
6,510Gross increasescurrent period tax positions


646Lapse of statute of limitations


Unrecognized tax benefits balance at December 31, 2008

$
7,156


The
Company is subject to U.S. federal income tax, state income tax and foreign income tax. The Company has substantially concluded all U.S. federal income tax matters for years through
2004, state and local tax matters through 2004 and foreign income tax matters through 2000.

In
the U.K., the Company is in discussion with tax authorities regarding whether certain compensation expenses were deductible by the Company in prior years. A portion of the
compensation

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

10. INCOME TAXES (Continued)

payment
is held by a trustee and the Company may request but not compel the trustee to use the money to offset the cost to the Company of the potential tax liability, if any, arising from the
disallowance of the deduction.

The
Company recognizes interest and penalties related to income tax matters in interest expense and other expense, respectively. As of December 31, 2008 and 2007, we had
approximately $381 of accrued interest related to uncertain tax positions, respectively.

The
Company is subject to regular examinations by the Internal Revenue Service, taxing authorities in foreign countries, and states in which the Company has significant business
operations. The Company regularly assesses the likelihood of additional assessments in each taxing jurisdiction resulting from on-going and subsequent years' examinations. Included in
current tax expense are charges to accruals for expected tax assessments. The resolution of these tax matters could have a material impact on the Company's effective tax rate.

11. STOCKHOLDERS' EQUITY

Common
Stock
Shares(1)Authorized (at December 31, 2008)


400,000,000Outstanding:December 31, 2006


114,794,020December 31, 2007


117,790,376December 31, 2008


118,521,484Par value per share

$
0.01






Share Issuance

During 2008 and 2007, the Company issued 1,327,344 and 3,396,356 shares of common stock, respectively, in connection with the exercise
of stock options and vesting of
RSUs. The Company received total cash proceeds of $578 and $8,382 in 2008 and 2007, respectively, in connection with the exercise of stock options.

Common Stock

Each holder of the Company's common stock is entitled to one vote per share on all matters submitted to a vote of stockholders. Subject
to the rights of holders of the Company's preferred stock, if any, the holders of shares of the Company's common stock are entitled to receive dividends when, as and if declared by the Company's Board
of Directors. On January 11, 2008, at a special meeting of stockholders, the stockholders of the Company approved an amendment to the Company's Second Amended and Restated Certificate of
Incorporation to increase the amount of Authorized Common Stock from 100,000,000 shares to 400,000,000 shares.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

11. STOCKHOLDERS' EQUITY (Continued)

In
October 2007, the Company's Board of Directors approved up to a four-for-one stock split. In February 2008, the Company determined that it would effect a
four-for-one stock split of the Company's common stock as of March 31, 2008. On March 31, 2008, the Company effected a four-for-one split
of the Company's common stock. Accordingly, three additional shares of common stock were issued to each holder of a share of the Company's common stock on the record date. Stockholders' equity was
restated to give retroactive recognition of the stock split. For all periods presented, the par value of the additional shares resulting from the split was reclassified from
additional-paid-in-capital to common stock.

On
March 31, 2008, the Company paid a special cash dividend of $0.125 per share, which, based on the number of shares outstanding on the record date for such dividend, totaled
$14,693. On May 15, 2008, the Company paid a quarterly cash dividend of $0.03 per share, which, based on the number of shares outstanding on the record date for such dividend, totaled $3,530.
On August 29, 2008, the Company paid a quarterly cash dividend of $0.05 per share which based on the number of shares outstanding on the record date for such dividend, totaled $5,895. On
November 28, 2008, the Company paid a quarterly cash dividend of $0.05 per share which based on the number of shares outstanding on the record date for such dividend, totaled $5,918. The
dividends were reflected as reductions of retained earnings in the Consolidated Statements of Financial Condition.

Preferred Stock

As of December 31, 2008 and 2007, the Company had one class of preferred stock with 5,000,000 shares authorized and none issued.

Treasury Stock

In August 2007, the Company's Board of Directors authorized the Company to implement a stock repurchase program to repurchase a limited
number of shares of the Company's common stock. Under the repurchase plan, the Board of Directors authorized the Company to repurchase shares of the Company's common stock on the open market in such
amounts as determined by the Company's management, provided, however, such amounts are not to exceed, during any calendar year, the number of shares issued upon the exercise of stock options plus the
number of shares underlying grants of RSUs that are granted or which management reasonably anticipates will be granted in such calendar year. In August 2007, the Company repurchased 400,000 shares of
common stock on the open market at an average price of $17.68 per share and a total cost of $7,076, including sales commissions. These repurchased shares were recorded, at cost, as treasury stock in
the Consolidated Statements of Financial Condition.

During
the year ended December 31, 2008, the Company repurchased 596,236 shares of its common stock on the open market at an average price of $19.11 per share and for a total cost
of $11,400, including sales commissions. These repurchased shares were recorded at cost as treasury stock in the Consolidated Statements of Financial Condition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

12. EARNINGS PER SHARE

Basic earnings per share for Common Stock is calculated by dividing net income available to common stockholders by the weighted average number of Common Stock outstanding during the
period. Diluted earnings per share is calculated by dividing net income by the sum of the weighted average number of shares outstanding plus outstanding stock options and RSUs using the "treasury
stock" method.

Basic
and diluted earnings per share for the years ended December 31, 2008, 2007 and 2006 were as follows:

December 31,2008

2007

2006Basic earnings per shareNet income applicable to stockholders

$
53,106

$
94,858

$
61,078Weighted average common shares outstanding


117,966,596


116,595,920


113,382,789Basic earnings per share

$
0.45

$
0.81

$
0.54Diluted earnings per shareNet income applicable to stockholders

$
53,106

$
94,858

$
61,078Weighted average common shares outstanding


117,966,596


116,595,920


113,382,789Effect of dilutive shares:Options, warrant and RSUs


1,777,097


2,584,871


3,320,924Weighted average shares outstanding and common stock equivalents


119,743,693


119,180,791


116,703,713Diluted earnings per share

$
0.44

$
0.80

$
0.52


For
the years ended December 31, 2008, 2007, and 2006, 2,153,635 RSUs and 52,490 options, 676,262 RSUs, and 503,944 RSUs, respectively, were excluded from the computation of
diluted earnings per share because their effect would be anti-dilutive.

13. SHARE-BASED COMPENSATION

The Company issues RSUs to its employees under the GFI Group Inc. 2008 Equity Incentive Plan (the "2008 Equity Incentive Plan"), which was approved by the Company's stockholders
on June 11, 2008. Prior to June 11, 2008, the Company issued RSU's under the GFI Group Inc. 2004 Equity Incentive Plan (the "2004 Equity Incentive Plan").

The
2008 Equity Incentive Plan permits the grant of non-qualified stock options, stock appreciation rights, shares of restricted stock, restricted stock units and performance
units to employees, non-employee directors or consultants. The Company issues shares from authorized but unissued shares, which are reserved for issuance upon the vesting of RSUs granted
pursuant to the 2008 Equity Incentive Plan. As of December 31, 2008, there were 7,094,206 shares of our common stock available for future grants of awards under this plan, which amount,
pursuant to the terms of the 2008 Equity Incentive Plan, may be increased for the number of shares subject to awards under the 2004 Equity Incentive Plan that are ultimately not delivered to
employees. The fair value of RSUs is

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

13. SHARE-BASED COMPENSATION (Continued)

based
on the closing price of the Company's common stock on the date of grant and is recorded as deferred compensation and amortized to compensation expense over the vesting period of the grants,
which is generally three years.

Modified
RSUs are reflected as cancellations and grants in the summary of RSUs below. During 2008, 2007 and 2006, the Company modified the vesting terms of certain RSUs for several
employees in connection with the termination of their employment. As a result of these modifications, the Company recorded compensation expense totaling $266, $688 and $1,727 during 2008, 2007 and
2006, respectively, representing the fair value of the RSUs on the date of modification.

The
following activity relating to the RSUs has occurred under the 2008 Equity Incentive Plan and the 2004 Equity Incentive Plan:

RSUs

Weighted-Average
Grant Date
Fair ValueOutstanding December 31, 2005


2,396,900

$
8.01Granted


2,141,948


13.88Vested


(860,440
)

8.63Cancelled


(186,996
)

8.96Outstanding December 31, 2006


3,491,412


11.41Granted


2,751,664


18.18Vested


(1,379,072
)

10.94Cancelled


(405,552
)

11.93Outstanding December 31, 2007


4,458,452


15.68Granted


1,978,364


8.96Vested


(1,814,359
)

14.22Cancelled


(661,147
)

16.09Outstanding December 31, 2008


3,961,310

$
12.95


The
weighted average fair value of RSUs granted during 2008 was $8.96 per unit, compared with $18.18 per unit for the same period in the prior year. Total compensation expense and
related income tax benefits recognized in relation to RSUs is as follows:

For the Year Ended
December 31,2008

2007

2006Compensation expense

$
24,865

$
21,664

$
12,228Income tax benefits

$
8,951

$
7,980

$
4,631


At
December 31, 2008, total unrecognized compensation cost related to the RSUs prior to the consideration of expected forfeitures was approximately $37,160 and is expected to be
recognized over a weighted-average period of 1.46 years. The total fair value of RSUs that vested during the year ended December 31, 2008, 2007 and 2006 was $25,800, $15,087 and $7,426,
respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

13. SHARE-BASED COMPENSATION (Continued)

As
of December 31, 2008, the Company had stock options outstanding under two plans: the GFI Group 2002 Stock Option Plan (the "GFI Group 2002 Plan") and the GFInet inc.
2000 Stock Option Plan (the "GFInet 2000 Plan"). No additional grants will be made under these plans. Under each plan: options were granted to employees, non-employee directors or
consultants to the Company; both incentive and non-qualified stock options were available for grant; options were issued with terms up to ten years from date of grant; and options were
generally issued with an exercise price equal to or greater than the fair market value at the time the option was granted. In addition to these terms, both the GFI Group 2002 Plan and the GFInet 2000
Plan contained events that had to occur prior to any options becoming exercisable. Under both plans, the options became exercisable upon the completion of the Company's initial public offering, which
occurred in January 2005. Options outstanding under both plans are exercisable for shares of the Company's common stock. The Company issues shares from the authorized but unissued shares reserved for
issuance under the GFI Group 2002 Plan or the GFInet 2000 Plan, respectively, upon the exercise of option grants under such plans.

During
2006, the Company modified certain stock options and the weighted average fair value of the modified stock options was $1.63. All repriced and modified options are reflected as
cancellations and grants in all the summaries below of stock option transactions.

A
summary of stock option transactions is as follows:

GFI Group 2002 Plan



GFInet 2000 PlanWeighted
Average
Contractual
Term

Weighted
Average
Contractual
TermOptions

Weighted
Average
Exercise Price

Options

Weighted
Average
Exercise PriceOutstanding December 31, 2005


3,813,748

$
3.44





2,634,648

$
2.97Granted


70,528


5.25








Exercised


(1,312,364
)

3.40





(1,340,408
)

2.91Cancelled


(85,268
)

4.97





(2,104
)

2.38Outstanding December 31, 2006


2,486,644


3.46





1,292,136


3.03Exercised


(1,649,564
)

3.48





(909,980
)

2.91Cancelled


(52,632
)

5.25








Outstanding December 31, 2007


784,448


3.30





382,156


3.32Granted














Exercised


(123,800
)

3.21





(43,884
)

4.10Cancelled


(9,000
)

2.97





(13,864
)

4.54Outstanding December 31, 2008


651,648

$
3.32


5.33


324,408

$
3.17


2.16Exercisable at December 31, 2008


651,648

$
3.32


5.33


324,408

$
3.17


2.16


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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

13. SHARE-BASED COMPENSATION (Continued)

Total
compensation expense and related income tax benefit recognized in relation to the stock options is as follows:

For the Year Ended
December 31,2008

2007

2006Compensation expense

$


$
123

$
480Income tax benefits

$


$
32

$
201


As
of December 31, 2008, there was no unrecognized compensation cost related to stock options.

The
total intrinsic value of options exercised for the year ended December 31, 2008, 2007 and 2006 was $1,648, $38,543, and $27,809, respectively. Additionally, the total
intrinsic value of options outstanding and exercisable at December 31, 2008 was $555, respectively.

14. COMMITMENTS AND CONTINGENCIES

Operating LeasesThe Company has non-cancelable operating leases for computer hardware and software,
communications equipment, and office space that expire on various dates through 2027. At December 31, 2008, the future minimum rental commitments under such leases are as follows:

2009

$
12,0052010


11,6432011


10,5742012


9,2742013


9,089Thereafter


72,992Total

$
125,577


Many
of the leases for office space contain escalation clauses that require payment of additional rent to the extent of increases in certain operating and other costs. In addition,
certain of the Company's leases grant a free rent period, which is amortized over the lease term. The accompanying Consolidated Statements of Income reflect all rent expense on a
straight-line basis over the term of the leases. Rent expense under the leases for the years ended December 31, 2008, 2007 and 2006 was $20,334, $11,299, and $8,999, respectively.

In
connection with moving the Company's headquarters in 2008, the Company terminated a portion of the former facility lease with respect to approximately 51,000 square feet, effective
June 30, 2008. The Company remains liable for all of the obligations under the lease for the remaining approximately 37,000 square feet. In January 2009, the Company entered into a sublease for
approximately 23,000 square feet of the remaining leased space. The Company will receive monthly payments of $55 until the sublease expires at the end of our lease in September 2013.

Purchase ObligationsThe Company has various unconditional purchase obligations. These obligations are for the purchase of
market data from a number of information service providers during the normal course of business. As of December 31, 2008, the Company had total purchase

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

14. COMMITMENTS AND CONTINGENCIES (Continued)

commitments
for market data of approximately $19,629, with $16,779 due within the next twelve months and $2,850 due between one to three years. Additionally, the Company has purchase commitments for
capital expenditures of $930 primarily related to network implementations in the U.K. All purchase commitments for capital expenditures 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 are, and have been in the past, named as defendants in various lawsuits and proceedings and are, and have been in the past, involved in certain regulatory examinations. Additional actions,
investigations or proceedings may be brought from time to time in the future. The Company is 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 reporting period.

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 tax assessments that may result from these examinations in each of the tax jurisdictions. A tax accrual has been established, which the Company believes to be adequate in
relation to the potential for additional tax assessments. Once established, the accrual may be adjusted based on new information or events. The imposition of additional tax assessments, penalties or
fines by a tax authority could have a material impact on the Company's effective tax rate.

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

In
April 2008, Donald P. Fewer, formerly the head of the Company's North American credit division resigned. Following Mr. Fewer's resignation, 22 of the Company's credit brokerage
staff resigned and defected to a competitor, notwithstanding various contractual obligations and fiduciary duties. In connection with these actions, GFI Securities LLC has commenced two
arbitration proceedings before the Financial Industry Regulatory Authority ("FINRA") Dispute Resolution against two subsidiaries of Compagnie Financiere Tradition and certain of the departing
employees asserting a number of claims, including tortious interference with contract, breach of fiduciary duty, unfair competition, misappropriation of confidential and proprietary information and
the violation of certain FINRA rules of conduct and breach of contract. Certain former employees who are parties to the proceedings have also filed claims or counterclaims against GFI Securities and
the Company seeking monetary damages for, inter alia, GFI's alleged breach of their employment agreements and the covenant of good faith and fair dealing. They also seek declaratory judgments relating
to the enforceability of the restrictive covenants in their employment or other agreements. All of the arbitration proceedings have now been consolidated into a single proceeding before FINRA with GFI
as the claimant and the parties are filing new pleadings. In the Supreme Court of the State of New York, Mr. Fewer has filed a lawsuit alleging the Company breached obligations to him, in which
the Company has asserted counterclaims based upon his breach of fiduciary duties. In connection with these various proceedings, the Company or its affiliates are seeking equitable relief and monetary

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

14. COMMITMENTS AND CONTINGENCIES (Continued)

damages
in an amount to be determined in the course of such proceedings. To the extent that it faces claims by the former employees in the various proceedings, the Company or its affiliate will
vigorously defend against such claims.

The
staff of the Market Regulation Department of FINRA (the "Staff") has been conducting an inquiry into the activities of interdealer brokerage firms in connection with the
determination of the commission rates paid to them by certain dealers for brokering transactions in credit default swaps. GFI Securities LLC has been cooperating with the Staff in this inquiry
by responding to requests for documents, testimony and other information. In January 2009, the Staff advised GFI Securities LLC that it has made a preliminary determination to recommend
disciplinary action in connection with allegedly improper communications, between certain GFI Securities LLC's brokers and those at other interdealer brokers, purportedly inconsistent with just
and equitable principles of trade and certain antifraud and
supervisory requirements under FINRA rules and the federal securities laws. All but one of these brokers who made the allegedly improper communications resigned in April 2008 to become employed by
affiliates of Compagnie Financiere Tradition, as described above. We intend to vigorously contest any such disciplinary action which, if brought and/or settled, could result in a censure, fine or
other sanction.

Based
on currently available information, the outcome of these matters are not expected to have a material adverse impact on the Company's financial position. However, the outcome of
these matters may be material to the Company's results of operations or cash flows in a given period. 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.

Risks and UncertaintiesThe Company primarily generates its revenues by executing and facilitating transactions for
counterparties. 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 clearing houses. Under the membership
agreements, members are generally required to guarantee certain obligations. To mitigate the performance risks of its members, the exchanges and clearing houses may, from time to time, 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 Consolidated Statements of Financial Condition
for these arrangements.

15. RETIREMENT PLANS

In the United States, the Company has established the GFI Group 401(k) plan, pursuant to the applicable laws of the Internal Revenue Code. It is available to all eligible U.S. employees
as stated in the plan document and is subject to the provisions of the Employee Retirement Income Security Act of 1974. Employees may voluntarily contribute a portion of their compensation, not to
exceed the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

15. RETIREMENT PLANS (Continued)

statutory
limit. The Company did not make any contributions to the plan for the years ended December 31, 2008, 2007, or 2006.

In
the U.K. the Company has established two defined contribution plans pursuant to the applicable laws in the U.K. Employees of the Company's U.K. subsidiaries may voluntarily designate
a portion of their monthly compensation to be contributed, which the Company matches up to a certain percentage. The GFI Group Personal Pension Plans are open to all U.K. employees after the
completion of three months of employment. Additionally, there is the Executive Pension Plan which is available only to senior employees and the Company matches contributions made under this plan up to
a certain percentage. The Executive Pension Plan replaced the Occupational Pension Plan in April 2006, which also had similar matching contributions up to a certain percentage. The Company has made
aggregate contributions of $1,606, $1,667, and $1,437 in 2008, 2007 and 2006, respectively, for the GFI Group Personal Pension Plans, Occupational Pension Plan and the Executive Pension Plan.

16. FINANCIAL INSTRUMENTS WITH MARKET AND CREDIT RISKS

The Company, through its subsidiaries, operates as an inter-dealer broker. Agency brokerage transactions facilitated by the Company are settled between the counterparties on a
give-up basis. In matched principal transactions, the Company is interposed between buyers and sellers and the transactions are cleared through various clearing organizations. In the event
of counterparty nonperformance, the Company may be required to purchase or sell financial instruments at unfavorable market prices, which may result in a loss to the Company. The Company does not
anticipate nonperformance by counterparties. The Company monitors its credit risk daily and has a policy of reviewing regularly the credit standing of counterparties with which it conducts business.

Unsettled
transactions (i.e., securities failed-to-receive and securities failed-to-deliver) are attributable to matched-principal
transactions executed by subsidiaries and are recorded at contract value. Cash settlement is achieved upon receipt or delivery of the security. In the event of nonperformance, the Company may purchase
or sell the security in the market and seek reimbursement for losses from the contracted counterparty.

17. FINANCIAL INSTRUMENTS

Derivative Financial InstrumentsThe Company is exposed to changes in the U.S. Dollar compared to the British Pound and the
Euro, among other currencies, for anticipated sales and expenses in those currencies. The risk management policy of the Company is to manage transactional foreign exchange exposure through the use of
foreign exchange forward and foreign exchange collar contracts ("Foreign Exchange Derivative Contracts"). As of December 31, 2007 and throughout 2008, the Company had no foreign exchange
derivative contracts that were designated as foreign currency cash flow hedges. During 2006, certain of these Foreign Exchange Derivative Contracts were designated and qualified as foreign currency
cash flow hedges under SFAS No. 133. The Foreign Exchange Derivative Contracts are recorded in the Consolidated Statements of Financial Condition at fair value in other assets and other
liabilities. Gains and losses on the effective portion of the hedges as well as on the underlying items being hedged are recorded to other income in the Consolidated Statements of Income. For the year
ended December 31, 2006, there was no hedge ineffectiveness. For the year ended December 31, 2006, unrealized gains before tax totaling $2,610 were recorded as other comprehensive
income. For Foreign

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

17. FINANCIAL INSTRUMENTS (Continued)

Exchange
Derivative contracts that do not qualify for hedge accounting, the Company records these at fair value and all unrealized gains and losses are included in other income in the Consolidated
Statements of Income.

The
Company generally does not hold or issue derivative financial instruments for trading purposes. The counterparties with whom the Company trades foreign exchange contracts are major
international financial institutions. The Company monitors its positions with and the credit quality of these financial institutions.

Fair Value of Financial InstrumentsSubstantially all of the Company's assets and liabilities are carried at fair value or
contracted amounts that approximate fair value. Assets and liabilities that are recorded at contracted amounts approximating fair value consist primarily of receivables from and payables to brokers,
dealers and clearing organizations. These receivables and
payables are short term in nature and have subsequently substantially all settled at the contracted amounts. The Company's marketable equity securities are recorded at fair value based on their quoted
market price. The Company's investments accounted for under the cost and equity methods are in companies that are not publicly traded and for which no established market for their securities exists.
The fair value of these investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. The
Company's debt obligations are carried at historical amounts. The fair value of the Company's Senior Notes was estimated using market rates of interest available to the Company for debt obligations of
similar types and was approximately $52,069 at December 31, 2008. The fair value of the Company's short term borrowings outstanding under the Credit Agreement approximated the carrying value at
December 31, 2008 and 2007.

For
the year ended December 31, 2008, the Company's financial assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance
with SFAS 157. In accordance with SFAS 157, the Company has categorized its financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a
three-level fair value hierarchy as set forth below.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

17. FINANCIAL INSTRUMENTS (Continued)



Valuation
Techniques

The
Company uses the following valuation techniques in valuing the financial instruments at December 31, 2008:

The
Company evaluates its marketable securities in accordance with SFAS No. 115,Accounting for Certain Investments in Debt and Equity
Securities, and has determined certain of its investments in marketable securities should be classified as trading securities or available-for-sale and
reported at fair value at December 31, 2008. The Company's trading and available-for-sale marketable securities were all categorized as Level I and the fair
values of these securities were based on quoted market prices.

The
Company uses foreign exchange derivative contracts, including forward contracts and foreign currency swaps, to reduce the effects of fluctuations in certain receivables, payables,
revenues and expenses denominated in foreign currencies. Fair value of the Company's foreign exchange derivative contracts is based on the indicative prices obtained from the banks that are
counter-parties to these foreign exchange derivative contracts and management's own calculations and analyses. At December 31, 2008, the Company's foreign exchange derivative contracts have
been categorized in Level 2 of the SFAS 157 fair value hierarchy.

The
fair value of corporate bonds owned as a result of matched principal transactions is estimated using recently executed transactions and market price quotations. At
December 31, 2008, corporate bonds held by the Company are categorized in Level 2 of the SFAS 157 fair value hierarchy.

Financial Assets and Liabilities Measured at Fair Value on a recurring basis as of December 31, 2008:

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable
Inputs
(Level 2)

Balance at
December 31,
2008Other assets

$
5,440

$
1,678

$
7,118Other liabilities

$
296

$
19,687

$
19,983


Other
assets include marketable securities that are accounted for either as trading or available-for-sale securities, corporate bonds and foreign exchange
derivative contracts. Other liabilities include marketable securities that are accounted for as trading securities and foreign exchange derivative contracts.

18. REGULATORY REQUIREMENTS

GFI Securities LLC is a registered broker-dealer with the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA). 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

18. REGULATORY REQUIREMENTS (Continued)

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. GFI Brokers Limited and GFI Securities Limited are subject to the capital requirements of the Financial Services Authority in the United Kingdom ("FSA"). 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 $387.

The
following table sets forth the minimum capital, as defined, that certain of the Company's subsidiaries must be maintained as of December 31, 2008:

GFI Securities
LLC

GFI Brokers
Limited

GFI Securities
Limited

GFI (HK)
Securities LLCNet Capital

$
26,416

$
88,500

$
40,412

$
1,012Minimum Net Capital required


250


12,260


26,576


387Excess Net Capital

$
26,166

$
76,240

$
13,836

$
625


In
addition to the minimum net capital requirements outlined above, certain of the Company's subsidiaries are subject to additional regulatory requirements.

GFI
Securities Limited's Japanese branch is subject to certain licensing requirements established by the Financial Instruments and Exchange Law (the "FIEL") in Japan. As
part of the licensing requirements, GFI Securities Limited's Japanese branch is required to maintain minimum "brought-in" capital and stockholders' equity of 50,000 Japanese Yen each
(approximately $551), as defined under the FIEL. In addition, GFI Securities Limited's Japanese branch is also subject to the net capital rule promulgated by the FIEL, which requires that net worth;
including "brought-in" capital, exceed a ratio of 140.0% of the risk equivalent amount including relevant expenditure. At December 31, 2008, GFI Securities Limited's Japanese branch
was in compliance with these capital requirements.

GFI
Securities Limited's Dubai branch is registered with the Dubai Financial International Centre and is authorized by the Dubai Financial Services Authority ("DFSA") to provide
financial service activities. The branch is subject to the conduct of business rules of the DFSA and has been granted a waiver from prudential regulation by the DFSA.

GFI
Securities Limited's Paris branch was established through the exercise of its passport right to open a branch in a European Economic Area state. The establishment of the branch was
approved by FSA and acknowledged by Banque de France in France. The branch is subject to the conduct of business rules of the Autorite Des Marches Financiers when dealing with resident customers of
France and is regulated, in part, by the FSA.

GFI
Securities Limited's Dublin branch was established through the exercise of its passport right to open a branch within a European Economic Area state. The establishment of the branch
was approved by FSA and acknowledged by the Irish Financial Services Regulatory Authority ("IFSRA") in Ireland.
The branch is subject to all of the conduct of business rules of the IFSRA and is regulated, in part, by the FSA.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

18. REGULATORY REQUIREMENTS (Continued)

GFI
Securities Limited's Tel Aviv branch is registered as a foreign corporation in Israel and is conditionally exempt from the requirement to hold a Securities License in accordance with
the Israeli Securities law. The branch is therefore not subject to any capital requirements.

GFI
Brokers Limited's Sydney branch is registered as a foreign corporation in Australia and is conditionally exempt from the requirement to hold an Australian financial services license
under the Australian Securities and Investments Commission Corporations Act of 2001 in respect of the financial services it provides in Australia. This exemption applies to foreign companies regulated
by the FSA in accordance with U.K. regulatory standards.

GFI
(HK) Brokers Ltd. is registered with and regulated by the Hong Kong Monetary Authority ("HKMA"). As part of this registration, GFI (HK) Brokers Ltd. is required to
maintain stockholders' equity of 5,000 Hong Kong dollars (or approximately $645). At December 31, 2008, GFI (HK) Brokers Ltd. had stockholders' equity of 8,313 Hong Kong dollars (or
approximately $1,072), which exceeded the minimum requirement by 3,313 Hong Kong dollars (or approximately $427).

GFI
Group PTE Ltd is subject to the compliance requirements of the Monetary Authority of Singapore ("MAS"), which requires that GFI Group PTE Ltd, among other things,
maintain stockholders' equity of 3,000 Singapore dollars (or approximately $2,087), measured annually. However, at December 31, 2008, GFI Group PTE Ltd.'s stockholders' equity had fallen
below the required amount and therefore was not in compliance with this requirement. GFI Group PTE Ltd. discussed this matter with the MAS and increased its share capital to meet the
requirements subsequent to year-end. We do not expect to incur a penalty in connection with this period of non-compliance.

GFI
Korea Money Brokerage Limited is licensed and regulated by the Ministry of Finance and Economy to engage in foreign exchange brokerage business, and is subject to certain regulatory
requirements under the Foreign Exchange Transaction Act and regulations thereunder. As a licensed foreign exchange brokerage company, GFI Korea Money Brokerage Limited is required to maintain minimum
paid-in capital of 5,000,000 Korean Won. At December 31, 2008, GFI Korea Money Brokerage Limited met the minimum requirement for paid-in-capital of 5,000,000
Korean Won (or approximately $3,969).

These
regulatory rules may restrict the Company's ability to withdraw capital from its regulated subsidiaries. With the exception of GFI Group PTE Ltd as outlined above, the
Company's regulated subsidiaries were in compliance with all minimum net capital requirements as of December 31, 2008.

19. SEGMENT AND GEOGRAPHIC INFORMATION

In accordance with SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information"("SFAS 131") and based
on the nature of the Company's operations in each geographic region, products and services, production process, customers and regulatory environment, the Company determined that it has three operating
segments: Americas Brokerage, Europe, Middle East and Africa ("EMEA") Brokerage and Asia Brokerage. The Company's brokerage operations provide brokerage services in four broad product categories:
credit, financial, equity and commodity. Additionally, in accordance with criteria in SFAS 131 the Company presents its operating segments as four reportable segments: Americas Brokerage, EMEA
Brokerage, Asia Brokerage and "All Other". The All Other segment captures costs that are not directly assignable to one of the operating segments, primarily

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

19. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)

consisting
of the Company's corporate business activities and operations from software, analytics and market data. In prior periods, Asia Brokerage was included within the All Other segment as it did
not meet the quantitative threshold for separate disclosure under SFAS 131. However, as a result of the growth experienced in Asia and the changes in the economic characteristics of the
Americas and the EMEA brokerage operations, for the year ended December 31, 2008, the Company has determined to change its reportable segments. Prior period results have been adjusted to
reflect the changes in the reporting structure.

The
accounting policies of the segments are the same as those described above in Note 2Summary of Significant Accounting Policies. The Company evaluates performance
of the operating segments based on pre-tax income, which it defines as revenues less direct expenses. Revenues within each brokerage segment include revenues that are directly related to
providing brokerage services along with interest and other income directly attributable to the operating segment. Direct expenses of the operating segments are those expenses that are directly related
to
providing brokerage services and include compensation expense related to brokerage management and staff, clearing fees, communication and market data, travel and promotion, and certain professional
fees, interest and other expenses that are directly incurred by the brokerage operations. However, the Company does not allocate to its operating segments certain expenses which it manages separately
at the corporate level. The unallocated costs include rent and occupancy, depreciation and amortization, professional fees, interest and other expenses and are included in the results below under "All
Other" in the reconciliation of operating results. Management generally does not consider the unallocated costs in its measurement of the three Brokerage segment's performance.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

19. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)

Selected
financial information for the Company's reportable segments is presented below for periods indicated:

Year ended December 31,2008

2007

2006(dollars in thousands)Revenues:Americas Brokerage

$
387,549

$
403,235

$
328,545EMEA Brokerage


489,650


449,955


321,308Asia Brokerage


88,583


85,914


61,377All Other


49,721


31,437


35,953Total Consolidated Revenues

$
1,015,503

$
970,541

$
747,183Interest Revenue:Americas Brokerage

$
20

$
56

$
1,839EMEA Brokerage


21


8


Asia Brokerage





1


All Other


8,576


9,649


7,305Total Consolidated Interest Revenues

$
8,617

$
9,714

$
9,144Interest Expense:Americas Brokerage

$
74

$
27

$
2,095EMEA Brokerage


1,886


1,898


567Asia Brokerage


14


27


77All Other


12,360


5,124


4,079Total Consolidated Interest Expense

$
14,334

$
7,076

$
6,818Depreciation and Amortization:Americas Brokerage

$


$


$
EMEA Brokerage








Asia Brokerage








All Other


31,390


24,686


19,021Total Consolidated Depreciation and Amortization

$
31,390

$
24,686

$
19,021Income before Provision for Income Taxes:Americas Brokerage

$
110,736

$
123,612

$
96,536EMEA Brokerage


150,592


153,569


105,971Asia Brokerage


13,965


18,712


10,426All Other


(192,316
)

(145,155
)

(111,136
)Total Consolidated Income before Provision for Income taxes

$
82,977

$
150,738

$
101,797


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

19. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)

In
addition, with the exception of goodwill, the Company does not identify or allocate assets by operating segment, nor does its chief operating decision maker evaluate operating
segments using discrete asset information. See Note 7 for goodwill by reportable segment.

For
the years ended December 31, 2008, 2007, and 2006, U.K. is the only individual foreign country that accounts for 10% or more of the total sales and total
long-lived assets. Information regarding revenue for the years ended December 31, 2008, 2007, and 2006, and information regarding long-lived assets (defined as property,
equipment, leasehold improvements and software inventory) in geographic areas as of December 31, 2008 and 2007 are as follows:

For the year ended December 31,2008

2007

2006Revenues:United States

$
375,928

$
408,348

$
352,976United Kingdom


436,449


380,330


279,821Other


203,126


181,863


114,386Total

$
1,015,503

$
970,541

$
747,183




As of December 31,2008

2007Long-lived Assets, as defined:United States

$
61,648

$
45,126United Kingdom


17,824


11,810Other


5,709


5,029Total

$
85,181

$
61,965


Revenues
are attributed to geographic areas based on the location of the relevant legal entities. Certain reclassifications have been made to the 2007 and 2006 geographic revenues and
long-lived assets to conform to current presentations.

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Table of Contents

GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

20. OTHER COMPREHENSIVE INCOME (LOSS)

For the year ended
December 31,2008

2007

2006Unrealized gain (loss) on foreign exchange derivative contractsCurrent Period Change:Before Tax Amount

$


$


$
2,610Tax Expense (Benefit)








(783
)After Tax Amount

$


$


$
1,827Foreign currency translation adjustmentBefore Tax Amount

$
(7,711
)
$
(314
)
$
400Tax Expense (Benefit)


3,356


164


(178
)After Tax Amount

$
(4,355
)
$
(150
)
$
222Unrealized (loss) gain on available-for-sale securitiesBefore Tax Amount

$
(272
)
$
107

$
Tax Expense (Benefit)


64


(32
)

After Tax Amount

$
(208
)
$
75

$



The
Company reclassified the following out of other comprehensive income into other income for each period noted:

For the year ended
December 31,2008

2007

2006Gross loss

$


$


$
4,807Net of tax








3,365


21. RELATED PARTY TRANSACTIONS

Office lease arrangements with affiliates

Jersey Partners Inc. is a guarantor of our obligations under our lease for office space at 100 Wall Street, New York, New York
10005, where we leased approximately 88,000 square feet of leased space, pursuant to a lease that expires on September 30, 2013, unless earlier terminated in accordance with the terms of the
lease. In June 2007, pursuant to the terms of the lease, we terminated the lease with respect to approximately 51,000 square feet, effective June 30, 2008.

Forgivable Loans to Employees

The Company periodically provides forgivable employee loans to employees when they enter into fixed term employment agreements with the
Company. See Notes 2 and 8 for further details.

22. SUBSEQUENT EVENTS

In February 2009, the Board of Directors declared a quarterly cash dividend of $0.05 per share payable on March 31, 2009 to shareholders of record on March 17, 2009.

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

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Disclosure Controls

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 (as defined in
Rule 13a-15(e) of the Exchange Act). 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 Form 10-K.

Management's Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision of the Company's
principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for
external purposes in accordance with generally accepted accounting principles.

The
Company's internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets
that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The
Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2008. In making this assessment, the Company's
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment and the COSO
criteria,
management believes that, as of December 31, 2008, the Company maintained effective internal control over financial reporting.

The
Company's independent registered public accounting firm has audited and issued an attestation report on the registrant's internal control over financial reporting as of
December 31, 2008. That report appears on Page 119 of this Form 10-K.

118

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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 audited the internal control over financial reporting of GFI Group Inc. and subsidiaries (the "Company") as of December 31, 2008, based on criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management's Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or
persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of financial condition of the Company
as of December 31, 2008 and the related consolidated statements of income, comprehensive income, cash flows and changes in stockholders' equity for the year ended December 31, 2008 and
our report dated February 27, 2009 expressed an unqualified opinion on those financial statements.

/s/
Deloitte & Touche LLP
New York, New York
February 27, 2009

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Change in Internal Controls

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 (as defined in Rule 13A-15(f) of the Exchange Act) and determined that there have been no changes in our internal controls over
financial reporting during the fourth quarter of 2008 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B.    OTHER INFORMATION

None.

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required to be furnished pursuant to this item will be set forth under the captions "Election of Directors" and
"Executive Officers" in the registrant's proxy statement (the "Proxy Statement") to be furnished to stockholders in connection with the 2009 Annual Meeting of Stockholders which we expect will be held
on June 11, 2009, and is incorporated herein by reference.

The
information required to be furnished pursuant to this item with respect to compliance with Section 16(a) of the Exchange Act will be set forth under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement, and is incorporated herein by reference.

We
have adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. We have also adopted a Code of Business Conduct and Ethics that is applicable
to the Company's senior financial and accounting officers (including the chief executive officer, chief financial officer and corporate controller). A copy of these codes are posted on the Company's
website,www.gfigroup.com, under the section "Investor RelationsCorporate Governance". In the event the Company substantively amends or
waives a provision of its Codes of Business Conduct and Ethics, the Company intends to disclose the amendment or waiver on the Company's website as well.

ITEM 11.    EXECUTIVE COMPENSATION

The information required to be furnished pursuant to this item will be set forth under the caption "Executive Compensation" in the
Proxy Statement, and is incorporated herein by reference.

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

The information required to be furnished pursuant to this item will be set forth under the captions "Security Ownership of Certain
Beneficial Owners", "Security Ownership of Directors and Executive Officers" and "Equity Compensation Plan Information" in the Proxy Statement, and is incorporated herein by reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required to be furnished pursuant to this item will be set forth under the caption "Certain Relationships and Related
Party Transactions and Director Independence" in the Proxy Statement, and is incorporated herein by reference.

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Table of Contents

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required to be furnished pursuant to this item will be set forth under the caption "Fees Paid to Independent Auditors"
in the Proxy Statement, and is incorporated herein by reference.

PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements.See Index to Financial Statements on page 78.

(a)(2) Financial Statement Schedules.We have included Schedule ICondensed Financial Information of GFI Group Inc.
(Parent
Company Only) on pages I-1 to I-8 and Schedule IIValuation and Qualifying Accounts on pages II-1. All other schedules are omitted
as they are not applicable, or the information required is included in the financial statements or notes thereto.

(a)(3) Exhibits.The following Exhibits are filed as part of this Report as required by Regulation S-K. Exhibits 10.6
through 10.17 and 10.23 to 10.30 are management contracts or compensatory plans or arrangements.

Number

Description3.1
*
Second Amended and Restated Certificate of Incorporation of the Registrant. (Filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K filed on March 31, 2005, File No. 000-51103).3.1.1
*
Certificate of Amendment to Certificate of Incorporation (Filed as Exhibit 3.1.1 to the Company's Annual Report on Form 10-K filed on February 29, 2008, File No. 000-51103)3.2
*
Second Amended and Restated Bylaws of the Registrant. (Filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K filed on March 31, 2005, File No. 000-51103)4.1
*
See Exhibits 3.1, 3.1.1 and 3.2 for provisions of the Second Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws of the Registrant defining the rights of holders of Common
Stock of the Registrant.4.2
*
Specimen Stock Certificate. (Filed as Exhibit 4.2 to Amendment No. 5 to the Company's Registration Statement on Form S-1 filed on January 24, 2005, File No. 333-116517)10.1
*
Amended and Restated Credit Agreement, dated February 24, 2006, among the Registrant and GFI Holdings Limited, as borrowers, subsidiaries of the Registrant named therein, as guarantors, Bank of America, N.A.,
 as administrative agent, Barclays Bank Plc, as syndication agent, the other lenders party thereto and Bank of America Securities LLC, as sole lead arranger and sole book running manager. (Filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K filed on February 28, 2006, File No. 000-51103)10.2
*
Lender Joinder Agreement, dated September 21, 2006, to the Credit Agreement among GFI Group Inc., GFI Holdings Limited, Bank of Montreal and Bank of America, N.A. (Filed as Exhibit 10.1.1 to the
Company's Quarterly Report on Form 10-Q filed on November 13, 2006, File No. 000-51103)10.3
*
Amended and Restated Domestic Security Agreement, dated February 24, 2006, by the Registrant, GFI Group LLC, GFInet inc., GFI Brokers LLC, Interactive Ventures LLC and Fenics
Software Inc. as grantors, in favor of Bank of America, N.A., as administrative agent. (Filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K filed on March 24, 2006, File No. 000-51103)


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Table of Contents

Number

Description10.4
*
Debenture, dated August 23, 2004, by GFI Holdings Limited and the other subsidiaries named therein, as chargors, in favor of Bank of America, N.A., as administrative agent. (Filed as Exhibit 10.3 to Amendment
No. 2 to the Company's Registration Statement on Form S-1 filed on September 17, 2004, File No. 333-116517)10.5
*
Supplemental Indenture, dated February 24, 2006, by GFI Holdings Limited and other subsidiaries named therein, as chargors, in favor of Bank of America, N.A., as administrative agent. (Filed as
Exhibit 10.3.2 to the Company's Annual Report on Form 10-K filed on March 24, 2006, File No. 000-51103)10.6
*
Disability Agreement, dated as of December 30, 2004, between the Registrant and Michael A. Gooch. (Filed as Exhibit 10.4 to Amendment No. 5 to the Company's Registration Statement on Form S-1 filed
on January 24, 2005, File No. 333-116517)10.7
*
Employment Agreement, dated as of November 18, 2002, between the Registrant and James A. Peers. (Filed as Exhibit 10.6 to Amendment No. 2 to the Company's Registration Statement on Form S-1
filed on September 17, 2004, File No. 333-116517)10.8
*
2002 Stock Option Plan. (Filed as Exhibit 10.7 to Amendment No. 2 to the Company's Registration Statement on Form S-1 filed on September 17, 2004, File No. 333-116517)10.9
*
2000 Stock Option Plan. (Filed as Exhibit 10.8 to Amendment No. 2 to the Company's Registration Statement on Form S-1 filed on September 17, 2004, File No. 333-116517)10.10
*
GFI Group Occupational Pension Plan. (Filed as Exhibit 10.9 to Amendment No. 2 to the Company's Registration Statement on Form S-1 filed on September 17, 2004, File No. 333-116517)10.11
*
Guardian Trust of GFI Brokers Limited. (Filed as Exhibit 10.10 to Amendment No. 2 to the Company's Registration Statement on Form S-1 file don September 17, 2004, File No. 333-116517)10.12
*
2004 Equity Incentive Plan. (Filed as Exhibit 10.12 to Amendment No. 3 to the Company's Registration Statement on Form S-1 filed on November 30, 2004, File No. 333-116517)10.13
*
Senior Executive Annual Bonus Plan. (Filed as Exhibit 10.13 to Amendment No. 3 to the Company's Registration Statement on Form S-1 filed on November 30, 2004, File No. 333-116517)10.14
*
Employment Agreement, dated as of August 20, 2008, between GFI Group Inc. and Ronald Daniel Levi. (Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 22, 2008,
File No. 000-51103)10.15
*
Employment Agreement, dated March 26, 2007, between GFI Group Inc. and Scott Pintoff (Filed as Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q filed on May 10, 2007, File
No. 000-51103)10.16
*
Employment Agreement, dated March 26, 2007, between GFI Group Inc. and J. Christopher Giancarlo (Filed as Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q filed on May 10, 2007,
File No. 000-51103)10.17
*
Employment Agreement, dated April 30, 2007, between GFI Group Inc. and Colin Heffron (Filed as Exhibit 10.1 to the Company's current report on Form 8-K filed on May 2, 2007, File
No. 000-51103)10.18
*
Third Amendment to Credit Agreement, dated as of January 29, 2008. (Filed as Exhibit 10.19 to the Company's Current Report on Form 8-K filed on January 29, 2008, File No. 000-51103)


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Table of Contents

Number

Description10.19
*
Note Purchase Agreement, dated as of January 30, 2008, between the Company and the Purchasers named in Schedule A thereto. (Filed as Exhibit 10.20 to the Company's Current Report on Form 8-K filed on
January 29, 2008, File No. 000-51103)10.20
*
Subsidiary Guaranty Agreement, dated as of January 30, 2008, in connection with the Company's 7.17% Senior Notes due January 30, 2013. (Filed as Exhibit 10.21 to the Company's Current Report on
Form 8-K filed on January 29, 2008, File No. 000-51103)10.21
*
Domestic Security Agreement, dated as of January 30, 2008, between the Company, the Subsidiary Guarantors and the Collateral Agent. (Filed as Exhibit 10.22 to the Company's Current Report on Form 8-K
filed on January 29, 2008, File No. 000-51103)10.22
*
Domestic Pledge Agreement, dated as of January 30, 2008, between the Pledgors and the Collateral Agent. (Filed as Exhibit 10.23 to the Company's Current Report on Form 8-K filed on January 29, 2008,
 File No. 000-51103)10.23
*
GFI Group Inc. 2008 Equity Incentive Plan (Filed as Exhibit 10.22 to the Company's Quarterly Report on Form 10-Q filed on August 8, 2008, File No. 000-51103)10.24
*
GFI Group Inc. 2008 Senior Annual Bonus Plan (Filed as Exhibit 10.23 to the Company's Quarterly Report on Form 10-Q filed on August 8, 2008, File No. 000-51103)10.25

Amendment No. 1 to Disability Agreement, dated December 31, 2008, between GFI Group Inc. and Michael Gooch.10.26

Amendment No. 1 to Employment Agreement, dated December 24, 2008, between GFI Group Inc. and James Peers.10.27

Amendment No. 1 to Employment Agreement, dated December 31, 2008, between GFI Group Inc. and Colin Heffron.10.28

Amendment No. 1 to Employment Agreement, dated December 31, 2008, between GFI Group Inc. and Ronald Levi.10.29

Amendment No. 1 to Employment Agreement, dated December 31, 2008, between GFI Group Inc. and Scott Pintoff.10.30

Amendment No. 1 to Employment Agreement, dated December 5, 2008, between GFI Group Inc. and J. Christopher Giancarlo.21.1

List of subsidiaries of the Registrant23.1

Consent of Independent Registered Public Accounting Firm.31.1

Certification of Principal Executive Officer.31.2

Certification of Principal Financial Officer.32.1

Written Statement of Chief Executive Officer Pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).32.2

Written Statement of Chief Financial Officer Pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).


---

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
Annual Report on Form 10-K for the fiscal year ended December 31, 2008 to be signed on its behalf by the undersigned, thereunto duly authorized, on the 2nd day of
March, 2009.

GFI GROUP INC.By:

/s/ JAMES A. PEERSName: James A. PeersTitle:Chief Financial Officer


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed by the following persons in the capacities and on the
dates indicated.

Signature

Title

Date/s/ MICHAEL GOOCH Michael Gooch

Chairman of the Board and Chief Executive Officer (principal executive officer)

March 2, 2009/s/ COLIN HEFFRON Colin Heffron

President and Director

March 2, 2009/s/ JAMES A. PEERS James A. Peers

Chief Financial Officer (principal financial and accounting officer)

March 2, 2009/s/ GEOFFREY KALISH Geoffrey Kalish

Director

March 2, 2009/s/ JOHN W. WARD John W. Ward

Director

March 2, 2009/s/ MARISA CASSONI Marisa Cassoni

Director

March 2, 2009


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Schedule I

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We
have audited the consolidated financial statements of GFI Group Inc. and subsidiaries (the "Company") as of December 31, 2008 and 2007, and for each of the three years
in the period ended December 31, 2008, and the Company's internal control over financial reporting as of December 31, 2008, and have issued our reports thereon dated February 27,
2009; such consolidated financial statements and reports are included in this 2008 Annual Report on Form 10-K. Our audits also included Schedule I listed in Item 15.
This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule,
when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/
Deloitte & Touche LLP
New York, New York
February 27, 2009

I-1

---





Table of Contents

GFI GROUP INC.        (Parent Company Only)        CONDENSED STATEMENTS OF FINANCIAL CONDITION        DECEMBER 31, 2008 AND 2007    
(In thousands, except share and per share data)

December 312008

2007Assets:Cash and cash equivalents

$
133

$
2,342Investments in subsidiaries, equity basis


272,029


264,663Advances to subsidiaries


422,129


235,971Other assets


10,085


5,678Total assets

$
704,376

$
508,654Liabilities and Stockholders' Equity:Short-term borrowings, net

$
164,328

$
55,291Long-term obligations, net


59,495


Other liabilities


3,590


1,170Total liabilities


227,413


56,461Preferred stock, $0.01 par value; 5,000,000 shares authorized, none outstanding at December 31, 2008 and 2007





Common stock, $0.01 par value; 400,000,000 shares authorized and 119,517,720 and 118,190,376(1) shares outstanding at December 31, 2008 and 2007,
respectively


1,195


1,182Additional paid in capital(1)


279,656


262,006Retained earnings


219,354


196,284Treasury stock, 996,236 and 400,000(1) common shares at cost at December 31, 2008 and 2007, respectively


(18,476
)

(7,076
)Accumulated other comprehensive loss


(4,766
)

(203
)Total Stockholders' Equity


476,963


452,193Total liabilities and stockholders' equity

$
704,376

$
508,654


---

See
Notes to Condensed Financial Statements.

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---





Table of Contents

GFI GROUP INC.        (Parent Company Only)        CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME        YEARS ENDED DECEMBER 31, 2008, 2007
AND 2006        (In thousands)

2008

2007

2006REVENUES:Interest income

$
147

$
247

$
361EXPENSES:Interest expense


11,195


3,999


2,142Other expenses


1,224


601


806Total expenses


12,419


4,600


2,948LOSS BEFORE BENEFIT FROM INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES


(12,272
)

(4,353
)

(2,587
)BENEFIT FROM INCOME TAXES


4,419


1,614


1,035LOSS BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES


(7,853
)

(2,739
)

(1,552
)Equity in earnings of subsidiaries, net of tax


60,959


97,597


62,630NET INCOME

$
53,106

$
94,858

$
61,078OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:Unrealized gain on foreign exchange derivative contracts, net of tax








1,827Foreign currency translation adjustments, net of tax


(4,355
)

(150
)

222Unrealized gain on available-for-sale security


(208
)

75


COMPREHENSIVE INCOME

$
48,543

$
94,783

$
63,127


See
Notes to Condensed Financial Statements.

I-3

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GFI GROUP INC.        (Parent Company Only)        CONDENSED STATEMENTS OF CASH FLOWS        YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006        (In thousands)

2008

2007

2006Cash flows from operating activitiesNet income

$
53,106

$
94,858

$
61,078Adjustments to reconcile net income to net cash used in operating activities:Income from equity method investments


(60,959
)

(97,597
)

(62,630
)Amortization of loan fees


416


224


238Deferred compensation


493


330


234Changes in operating assets and liabilities:Other assets


(4,407
)

474


(3,130
)Other liabilities


2,419


(564
)

498Cash used in operating activities


(8,932
)

(2,275
)

(3,712
)Investments in subsidiaries


49,030


(7,464
)

10,149Receipts from (advances to) subsidiaries


(169,566
)

6,987


(51,694
)Cash flows used in investing activities


(120,536
)

(477
)

(41,545
)Repayments of short-term borrowings


(174,500
)

(57,300
)

(70,000
)Proceeds from short-term borrowings


283,500


35,300


128,000Proceeds from issuance of long-term obligations


60,000





Repurchases of common stock


(11,400
)

(7,076
)

Cash dividend paid


(30,036
)




Payment of loan fees


(883
)




(613
)Proceeds from exercise of stock options


578


8,383


8,427Cash flows provided by (used in) financing activities


127,259


(20,693
)

65,814(Decrease) increase in cash and cash equivalents


(2,209
)

(23,445
)

20,557Cash and cash equivalents, beginning of year


2,342


25,787


5,230Cash and cash equivalents, end of year

$
133

$
2,342

$
25,787


See
Notes to Condensed Financial Statements.

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Table of Contents

GFI GROUP INC.        (Parent Company Only)        NOTES TO CONDENSED FINANCIAL STATEMENTS        YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006        (In thousands)

1. BASIS OF PRESENTATION

The accompanying condensed financial statements (the "Parent Company Financial Statements"), including the notes thereto, should be read in conjunction with the consolidated financial
statements of GFI Group Inc. and subsidiaries ("the Company") and the notes thereto.

The
Parent Company Financial Statements for the years ended December 31, 2008, 2007 and 2006 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 financial statements. Management believes that the estimates utilized in the preparation of the condensed financial statements are reasonable and prudent. Actual results could differ
materially from these estimates.

2. GUARANTEES

From time to time, the Company provides guarantees, on behalf of its subsidiaries, to clients for the purpose of providing credit enhancement for such clients. Such guarantees generally
provide that the Company will guarantee the performance of all liabilities, obligations and undertakings owed by such subsidiary with respect to matched principal transactions entered into by such
subsidiary with the relevant client. These guarantees are generally terminable on less than 30 days notice. The Company has not recorded any contingent liability in the condensed financial
statements for these indemnifications and believes that the occurrence of any events that would trigger payments under these guarantees is remote.

3. INVESTMENTS IN SUBSIDIARIES

GFI Group Inc. received dividends of $48,527 and $0 from its subsidiaries during the years ended December 31, 2008 and 2007, respectively. The dividends were reflected as a
return on investments in subsidiaries.

4. ADVANCES TO SUBSIDIARIES

As of December 31, 2008 and 2007, GFI Group Inc. had receivables from subsidiaries of $422,129 and $235,971 related primarily to the allocation of funds received, from
notes payable and the issuance of equity securities, to subsidiaries to fund working capital.

5. SHORT-TERM BORROWINGS AND LONG-TERM OBLIGATIONS

In January 2008, pursuant to a note purchase agreement with certain institutional investors (the "2008 Note Purchase Agreement"), the Company issued $60,000 in aggregate principal amount
of senior secured notes due in January 2013 (the "Senior Notes") in a private placement. The Senior Notes currently bear interest at 8.17%, payable semi-annually in arrears on the
30th of January and July, including a premium of 100 basis points due to a change in the risk based capital factor attributed to the Senior Notes by one of the purchasers of these
securities pursuant to generally applicable insurance regulations for U.S. insurance companies. The premium interest will cease to accrue if the

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Table of Contents

GFI GROUP INC.

(Parent Company Only)

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(In thousands)

5. SHORT-TERM BORROWINGS AND LONG-TERM OBLIGATIONS (Continued)

risk
based capital factor attributed to the Senior Notes is subsequently reduced. The Company's obligations under the Senior Notes are secured by substantially all of the assets of the Company and
certain assets of the Company's subsidiaries. The 2008 Note Purchase Agreement includes operational covenants with which the Company is required to comply, including among others, maintenance of
certain financial ratios and restrictions on additional indebtedness, liens and dispositions. At December 31, 2008, the Senior Notes were recorded net of deferred financing costs of $505.

The
Senior Notes contain certain financial and other covenants. The Company was in compliance with all applicable covenants at December 31, 2008.

In
January 2008, the Company amended the terms of its credit agreement with Bank of America, N.A. and certain other lenders (the "Credit Agreement"). The Credit Agreement, as amended,
provides for maximum borrowings of $265,000, which includes up to $50,000 for letters of credit, and has an expiration date of February 24, 2011. Revolving loans may be either base rate loans
or currency rate loans. Currency rate loans and the letters of credit bear interest at the annual rate of LIBOR plus the applicable margin in effect for that interest period. Base rate loans bear
interest at a rate per annum equal to a base rate plus the applicable margin in effect for that interest period. As long as no default has occurred under the Credit Agreement, the applicable margin
for both the base rate and currency
rate loans is based on a matrix that varies with a ratio of outstanding debt to EBITDA, as defined in the Credit Agreement. At December 31, 2008, the applicable margin was 1.25% and the
one-month LIBOR was 0.45%. Amounts outstanding under the Credit Agreement are secured by substantially all the assets of the Company and certain assets of the Company's subsidiaries. The
Credit Agreement provides for the Senior Notes to rank pari passu with the commitments under the Credit Agreement, in relation to the security provided.

The
Company had outstanding borrowings under its Credit Agreement as of December 31, 2008 and 2007 as follows:

As of December 31,2008

2007Loan Available(1)

$
265,000

$
160,000Loans Outstanding

$
165,000

$
56,000Letters of Credit Outstanding

$
7,172

$
7,193






At
December 31, 2008 and 2007, short-term borrowings under the Credit Agreement were recorded net of unamortized loan fees of $672 and $709 for years ended
December 31, 2008 and 2007, respectively. In addition, the Company guarantees borrowings under the Credit Agreement made by certain of its subsidiaries. As of December 31, 2008 and 2007,
there were no borrowings outstanding by a subsidiary subject to such guarantee.

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Table of Contents

GFI GROUP INC.

(Parent Company Only)

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(In thousands)

5. SHORT-TERM BORROWINGS AND LONG-TERM OBLIGATIONS (Continued)

The
Credit Agreement contains certain financial and other covenants. The Company was in compliance with all applicable covenants at December 31, 2008 and 2007, respectively.

In
certain previous periods' financial statements, we referred to short-term borrowings under our Credit Agreement as Notes Payable on our Condensed Statements of Financial
Condition and Condensed Statements of Cash Flows. To better distinguish obligations due under the Credit Agreement from long-term obligations due under our Senior Notes, we now refer to
borrowings under our Credit Agreement as "Short-term borrowings" in the Condensed Statements of Financial Condition and Condensed Statements of Cash Flows included in these financial
statements.

6. CONTINGENCIES

In April 2008, Donald P. Fewer, formerly the head of the Company's North American credit division resigned. Following Mr. Fewer's resignation, 22 of the Company's credit brokerage
staff resigned and defected to a competitor, notwithstanding various contractual obligations and fiduciary duties. In connection with these actions, GFI Securities LLC has commenced two
arbitration proceedings before the Financial Industry Regulatory Authority ("FINRA") Dispute Resolution against Tradition Asiel Securities, Inc., Standard Credit Securities Inc. and
certain of the departing employees asserting a number of claims, including tortious interference with contract, breach of fiduciary duty, unfair competition, misappropriation of confidential and
proprietary information and the violation of certain FINRA rules of conduct and breach of contract. Certain former employees who are parties to the proceedings have also filed claims or counterclaims
against GFI Securities and the Company seeking monetary damages for, inter alia, GFI's alleged breach of their employment agreements and the covenant of good faith and fair dealing. They also seek
declaratory judgments relating to the enforceability of the restrictive covenants in their employment or other agreements. All of the arbitration proceedings have now been consolidated into a single
proceeding before FINRA with GFI as the claimant and the parties are filing new pleadings. In the Supreme Court of the State of New York, Mr. Fewer has filed a lawsuit alleging the Company
breached obligations to him, in which the Company has asserted counterclaims based upon his breach of fiduciary duties. In connection with these various proceedings, the Company or its affiliates are
seeking equitable relief and monetary damages in an amount to be determined in the course of such proceedings. To the extent that it faces claims by the former employees in the various proceedings,
the Company or its affiliates will vigorously defend against such claims.

The
staff of the Market Regulation Department of FINRA (the "Staff") has been conducting an inquiry into the activities of interdealer brokerage firms in connection with the
determination of the commission rates paid to them by certain dealers for brokering transactions in credit default swaps. GFI Securities LLC has been cooperating with the Staff in this inquiry
by responding to requests for documents, testimony and other information. In January 2009, the Staff advised GFI Securities LLC that it has made a preliminary determination to recommend
disciplinary action in connection with allegedly improper communications, between certain GFI Securities LLC's brokers and those at other interdealer brokers, purportedly inconsistent with just
and equitable principles of trade and certain antifraud and supervisory requirements under FINRA rules and the federal securities laws. All but one

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Table of Contents

GFI GROUP INC.

(Parent Company Only)

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

(In thousands)

6. CONTINGENCIES (Continued)

of
these brokers who made the allegedly improper communications resigned in April 2008 to become employed by affiliates of Compagnie Financiere Tradition, as described above. The Company intends to
vigorously contest any such disciplinary action which, if brought and/or settled, could result in a censure, fine or other sanction.

Based
on currently available information, the outcome of these matters are not expected to have a material adverse impact on the Company's financial position. However, the outcome of
these matters may be material to the Company's results of operations or cash flows in a given period. 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.

7. SUBSEQUENT EVENTS

In February 2009, the Board of Directors declared a quarterly cash dividend of $0.05 per share payable on March 31, 2009 to shareholders of record on March 17, 2009.

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Table of Contents

GFI GROUP INC. AND SUBSIDIARIES    SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

Balance at
Beginning
of Period

Charged to
Cost/
Expense

Charged to
Other
Accounts

Deductions

Balance at
End of
Period(a)

(b)(in thousands)Allowance for Doubtful Accounts:Year ended December 31, 2008

$
4,173

$
208

$
122

$
(649
)
$
3,854Year ended December 31, 2007


3,547


1,751


5


(1,130
)

4,173Year ended December 31, 2006


3,202


(27
)

421


(49
)

3,547


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II-1

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