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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, 2009ORo

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes o    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 o

Accelerated filer ý

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, 2009, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $439,687,081 based
upon the closing sale price of $6.74 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 26, 2010Common Stock, $0.01 par value per share

118,733,168 shares


DOCUMENTS INCORPORATED BY REFERENCE

Portions
of registrant's definitive proxy statement for its annual shareholders' meeting to be held on June 10, 2010 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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PagePART IItem 1.

Business

5Item 1A.

Risk Factors

30Item 1B.

Unresolved Staff Comments

50Item 2.

Properties

50Item 3.

Legal Proceedings

50Item 4.

Submission of Matters to a Vote of Security Holders

51PART IIItem 5.

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

52Item 6.

Selected Financial Data

55Item 7.

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

57Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

88Item 8.

Financial Statements and Supplementary Data

92Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

134Item 9A.

Controls and Procedures

134Item 9B.

Other Information

136PART IIIItem 10.

Directors, Executive Officers and Corporate Governance

136Item 11.

Executive Compensation

136Item 12.

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

136Item 13.

Certain Relationships and Related Transactions, and Director Independence

136Item 14.

Principal Accounting Fees and Services

136PART IVItem 15.

Exhibits, Financial Statement Schedules

137Signatures

140


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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:



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The
foregoing risks and uncertainties, as well as those risks discussed under the headings "Item 7Management's 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.

WHERE YOU CAN FIND MORE INFORMATION.

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").

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.

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PART I.

ITEM 1.    BUSINESS

Throughout this Annual Report, unless the context otherwise requires, the terms "GFI", "Company", "we", "us"
and "our" refer to GFI Group Inc. and its consolidated subsidiaries.

Our Business

Introduction

We are a leading provider of wholesale brokerage, electronic execution and trading support products for global financial markets. 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, trade execution, market
data and trading platform and other software products to institutional customers in markets for a range of credit, financial, equity and commodity instruments. We provide execution services for our
institutional wholesale customers by either matching their trading needs with counterparties having reciprocal interests or directing their orders to an exchange or other trading venue. We have
focused historically on the more complex, and often less commoditized, markets for sophisticated financial instruments, primarily over-the-counter ("OTC") derivatives, that
offer an opportunity for higher commissions per transaction than the markets for more standardized financial instruments. In recent years, we have developed 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 institutional brokerage services for a broad
range of products in the credit, financial, equity and commodity markets on which we focus.

We
offer our customers a hybrid brokerage approach, combining a range of telephonic and electronic trade execution services, depending on the nature of the products and the needs of the
individual markets. We complement our hybrid brokerage capabilities with decision support services, such as value-added data and analytics products, real-time auctions and
post-transaction services, such as straight-through processing ("STP"), clearing links and trade and portfolio management services. We earn revenues for our brokerage services and charge
fees for certain of our data, analytics and trading system software products.

At
December 31, 2009, we employed 1,082 brokerage personnel (consisting of 902 brokers and 180 trainees and clerks) serving over 2,400 brokerage, software, analytics and market
data customers, including leading commercial and investment banks, corporations, insurance companies, asset managers and hedge funds, through our principal offices in New York, Sugar Land (TX),
Englewood (NJ), Calgary, Santiago, London, Dublin, Paris, Dubai, Tel Aviv, Shanghai, Singapore, Seoul, Tokyo, Hong Kong, Sydney and Cape Town.

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. We also have an All Other segment, which captures revenues and costs that are not directly assignable to one of the brokerage 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.

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Our Industry



Wholesale brokers (sometimes called "inter-dealer" brokers), such as us, operate in the center of wholesale financial markets by
aggregating prices and fostering transactional liquidity for financial institutions around the globe. Wholesale brokers provide highly sophisticated trade execution services, combining teams of
traditional "voice" brokers with sophisticated electronic trading systems that match institutional buyers and sellers in transactions for financial products that are listed on traditional exchanges or
transacted over-the-counter. We refer to this integration of voice brokers with electronic brokerage systems as 'hybrid brokerage'. Although wholesale brokers may provide their
institutional customers with access to traditional exchange products through their many STP links and electronic connections to exchanges and clearing firms, wholesale brokers do not generally provide
independent clearing and settlement services.

Wholesale
market trading institutions, such as major banks, investment banks, asset managers and broker-dealer firms, have long utilized the services of wholesale brokers to help them
identify complimentary trading parties for transactions in a broad range of equity, credit, financial and commodity products across the globe. These major trading firms pay brokerage commissions to
wholesale brokers in return for timely and valuable pricing information, strong execution capabilities and access to deep pools of trading liquidity for both exchange traded and OTC products.



Exchange-traded markets and OTC markets have generally developed and grown in parallel to each other over the past several years as
hedge funds proliferated and trading efficiency increased with the help of pre-trade data and analytics, trading software and
automated post-trade processing and clearing services. The relationship between exchange-traded and OTC markets generally has been complimentary as each market typically provides unique
services to different trading constituencies for products with distinctive characteristics and liquidity needs. Increasingly, wholesale brokers cross exchange traded products in the OTC market or
direct customer orders to an appropriate exchange or other electronic trading venue for execution. Additionally, transactions executed OTC by wholesale brokers are often exchanged for an
exchange-traded instrument after the initial OTC trade takes place.

Traditional
stock exchanges, such as NYSE Euronext, NASDAQ OMX and the London Stock Exchange and commodities exchanges, such as CME Group and Eurex, provide a trading venue for fairly
simple and commoditized instruments that are based on standard characteristics and single key measures or parameters. Exchange-traded markets rely on relatively active order submission by buyers and
sellers and generally high transaction flow. These markets allow a broad base of trading customers meeting relatively modest margin requirements to transact standardized contracts in a relatively
liquid market. Exchanges offer price transparency and transactional liquidity. Exchanges are often associated or tied to use of a central counterparty clearer ("CCP"), thereby providing a ready
utility for controlling counterparty credit risk.

In
comparison, OTC markets provide wholesale dealers and other large institutional traders with access to trading environments for individually negotiated transactions,
non-standardized products and larger-sized orders of both OTC and exchange cleared instruments. OTC markets generally serve counterparties that are professional trading institutions and
wholesale dealers. These professional counterparties often have in place bilateral arrangements to offset their contingent credit risk on each other by giving or taking collateral against that risk.
In some of the more significant OTC asset classes, such as U.S. treasury securities, equities, and equity and commodity derivatives, OTC trades are either "given up" to a third-party CCP, underwritten
by a clearing house or exchanged for exchange-traded instruments.

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The
existence of both exchange traded and OTC markets provides benefits for different sectors of the global financial marketplace. Exchange traded markets serve the needs of both major
and minor market participants for access to frequently traded, highly commoditized instruments. OTC markets, on the other hand, provide professional market participants and wholesale dealers with an
arena in which to execute larger-sized transactions in a broad range of non-standardized and standardized products that are less actively traded and, often, individually negotiated. OTC
markets are also conducive for trading large "block" transactions of actively traded standardized and centrally cleared instruments. Last, OTC markets often serve as incubators for new financial
products that originate as relatively inactively traded OTC products before achieving a significant level of trading activity among a broader spectrum of investors.



On most business days around the globe, wholesale brokers and other market intermediaries facilitate the execution of millions of
sophisticated transactions, either on exchanges or OTC, involving trillions of dollars of securities, commodities, currencies and derivative instruments. These products range from standardized
financial instruments, such as common equity securities, futures contracts and standardized OTC derivative contracts, to more complex, less standardized instruments, such as
non-standardized OTC derivatives, that are typically traded between wholesale dealers, money center banks, asset managers and hedge funds. Wholesale brokers serve professional traders in
these markets by assisting in market price discovery, fostering trading liquidity, preserving pre-trade anonymity, providing market intelligence and, ultimately, matching counterparties
with reciprocal interests or directing their orders to an exchange or other electronic trading venue.

The
essential role of a wholesale broker is to enhance trading liquidity. Liquidity is the degree to 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 number of market participants and facilitators of liquidity, the
availability of pricing reference data, the availability of standardized terms and the volume of trading activity. Liquid markets are characterized by substantial price competition, efficient
execution and high trading volume. Highly liquid markets exist for both commoditized, exchange-traded products and certain, more standardized instruments traded over the counter, such as the market
for U.S. treasury securities, equities and equity and commodity derivatives. In such highly liquid markets, the services of wholesale brokers assist market participants achieve best execution or
pricing, especially for larger transactions that may be privately negotiated.

In
contrast to the highly liquid markets for more commoditized instruments, less commoditized financial instruments and less liquid standardized transactions, such as high yield debt and
derivatives with longer maturities, are generally traded over the counter in markets with variable or non-continuous liquidity. In such markets, a wholesale broker can enhance the
efficient execution of a trade by applying its market knowledge to locate bids and offers and aggregate pools of liquidity in which such professional traders and dealers may meet counterparties with
which to trade. A wholesale broker ordinarily accomplishes this by contacting potential counterparties directly by telephone or electronic messaging and, in an increasing number of cases, via
proprietary trading systems provided by the broker through which market participants may post prices and execute transactions. Additionally, in a relatively 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 a broker, the identities of the transaction parties are often not disclosed
until the trade is consummated. In this way, market participants better preserve their anonymity. For all these reasons, in relatively less liquid markets for non-commoditized products, a
wholesale broker can provide professional traders and dealers with crucial liquidity enhancement through in-depth market knowledge, access to a range of potential counterparties and
singular focus and attention on efficient execution.

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Wholesale
brokers generally provide brokerage or execution services on either an agency (often called "name give-up") or matched principal (often called "riskless principal")
basis. In an agency transaction, which is the conventional method of brokerage for OTC derivatives, we simply match a buyer and a seller and do not take title or hold a position in the derivative
instrument, or the underlying security, instrument or asset, at any stage of the process. In a matched principal transaction, which is a conventional method of brokerage for cash products, such as
equities and corporate fixed income, we are the counterparty to both sides of the transaction and the trade is settled through a clearing organization. Third party clearing organization are able to
reduce our counterparty risk by matching the trade and assuming the legal counterparty risk for the trade. In some cases, principally in the OTC cash markets, a wholesale broker may temporarily take
unmatched positions for its own account, generally in response to customer demand, or enter into principal investing transactions in which the broker commits its own capital to facilitate customer
trading activities.



Generally, as a market for a particular financial instrument develops and matures, more buyers and sellers enter the market, generating
more transactions and pricing information. In addition, the terms of such financial instruments tend to become more standardized, generally resulting in a more liquid market. In this way, a relatively
illiquid market for an instrument may evolve over a period of time into a more liquid market. As this evolution occurs, the characteristics of trading, the preferred mode of execution and the size of
commissions that wholesale brokers charge, may also change. In some cases, as the market matures, a wholesale 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, requiring a wholesale broker to offer integrated telephonic and electronic
brokering. We refer to this integrated service as hybrid brokerage. Hybrid brokerage may range from coupling traditional voice brokerage services with various electronic enhancements, such as
electronic communications, price discovery tools and automated order entry, to full electronic execution supported by telephonic communication between the broker and its customers.

For
highly liquid OTC markets, such as certain U.S. Treasury and cash foreign exchange products, electronic marketplaces have emerged as the primary means of conducting transactions and
creating markets. In such electronic markets, many of the pre- and post-trade activities of market participants are facilitated through an electronic medium, such as a private
electronic network or over the Internet. These electronic capabilities reduce the need for actual voice-to-voice participant interaction for certain functions, such as
negotiation of specific terms, and allows voice brokers to focus on providing market intelligence and assistance in the execution process. For many professional traders, the establishment of
electronic
marketplaces has increased trading profits by leading to new trading methods and strategies, fostering new financial products and increasing market volumes.

Most
large exchanges worldwide, including certain exchanges in the United States, France, Canada, Germany, Japan, Sweden, Switzerland and the United Kingdom, are now partially or
completely electronic. Additionally, in an increasing number of OTC markets for less commoditized products, a voice broker will often implement the transaction electronically for the customer by
entering the customer's prices directly into the wholesale broker's trading systems at the request of the customer. In many of these markets, customers may benefit from a range of electronic
enhancements to liquidity, including pricing dissemination, interactive trading, post-trade processing and other technology services. As these OTC markets have adopted greater use of
technology, some market participants have sought to outsource the electronic distribution of their products and prices to qualified wholesale brokers in order to achieve optimal liquidity and to avoid
the difficulty and cost of developing and maintaining their own electronic solutions.

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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. Wholesale brokers, such as us,
provide value in these markets through the capacity to source liquidity from other market participants and efficiently transact large positions through their access to exchanges, electronic
communications networks and other trading counterparties and platforms with minimal price movement. Wholesale brokers may also provide traders in these markets with critical market information and
analysis.

Cash
markets for equities, 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. When we execute
transactions for certain cash products, our customers may have their own relationship with a CCP, either directly or through a third party clearing firm or prime broker. In these cases, our customers
are responsible for the margin payments and other CCP fees. Once we execute the transaction, our role is to collect a commission and step out of the trade. However, in most cleared markets,
predominantly equities and cash fixed income, we remain the counterparty until the trade is settled. We believe that central counterparty clearing will play an increasing role in the future of both
the cash and derivative OTC markets.



Derivatives are widely used 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. Derivatives
derive their value from the underlying asset, index or other investment that may be, among other things, a physical commodity, an interest rate, a stock, a bond, an index or a currency. Derivatives
enable mitigation of 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.

The
lower capital utilization of derivatives makes these products a more efficient and attractive medium for trading than cash markets for many professional market participants. For this
reason, trading volumes in derivatives are frequently a multiple of volumes in the equivalent underlying cash markets.

Derivatives
may be exchange traded or traded in the OTC market. Exchange-traded derivatives, including "options" and "futures," are highly commoditized instruments featuring standardized
terms, including delivery places and dates, volume, technical specifications, and trading and credit procedures. Exchange-traded derivatives are generally cleared through a CCP. Wholesale brokers,
like us, often cross exchange-traded derivatives as OTC transactions and the trades are then either exchanged for exchange-traded instruments, such as a futures contract, or "given up" to an exchange,
other third-party CCP or futures clearing merchant ("FCM") for clearing. We have relationships with FCMs through which we are able to give up our customer's exchange-traded futures and options
for clearing and

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settlement.
On a limited number of our desks focusing on exchange-traded or OTC derivatives, we act as principal and our FCM acts as our clearing agent. In theses cases, we are responsible for
providing the required collateral and margin payments.

OTC
derivatives, on the other hand, are bilateral, privately-negotiated agreements that range from the highly customizable derivative with a long maturity structured to a user's specific
needs to very liquid,
highly standardized derivatives with shorter maturities. OTC derivatives are generally structured as forwards, swaps or options. 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. Forwards have many of the same characteristics as exchange-traded futures and options. Swaps tend to be traded
exclusively OTC, but are increasingly being cleared by CCPs. OTC derivative transactions can be hedged and arbitraged against both cash and related exchange-traded instruments and vice versa. However,
a party generally cannot offset a position resulting from an OTC derivative against margin deposits or collateral held by an exchange.

OTC
derivatives provide investors and corporations with a wide variety of structures to address specific risk mitigation and trading strategies. In its 2009 annual survey, Risk magazine
identified 117 categories of derivatives, excluding commodity derivatives. As a result, corporations and other investors are able to offset unique types of business risks that can not be mitigated
using standardized, exchange traded derivatives. Indeed, while many large corporations hedge some risks using the relatively limited set of exchange-traded derivatives, such as futures contracts, they
often rely on the wide range of customizable OTC derivatives to hedge those risks for which there is no close match available on organized exchanges. Such specific hedging also allows such end users
to satisfy hedge accounting requirements.

The
number of different derivative instruments has grown as companies and financial institutions have developed new and innovative derivative instruments to meet industry demands for
sophisticated risk management and complex financial arbitrage. 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 reliable market data, market intelligence and pricing tools, as well as the services of highly skilled and well-informed brokers.

The
OTC derivatives markets are far larger than the exchange-traded derivatives markets. According to a recent report of the Bank for International Settlements (the "BIS"), OTC
derivatives accounted for over 90% of the total outstanding global derivatives transactions as of June 2009 (as measured by notional amount), with the remainder being exchange-traded derivatives. OTC
derivatives markets are generally less liquid than exchange traded derivatives markets and may range from hardly to highly liquid. In these large, variably liquid OTC derivatives markets, wholesale
brokers provide an essential service of liquidity aggregation and anonymous, efficient execution.



In the past few years, global OTC derivatives markets have decreased in size after several years of rapid growth. In its review of the
first half of 2009, the BIS reported that both the OTC and exchange-traded derivative markets had experienced contraction in the first half of 2009 compared to the same period in 2008. According to
the BIS, as of June 30, 2009, the latest period reported, the notional amount outstanding of all OTC derivatives was $604.6 trillion, down 11.6% compared to $683.8 trillion in June 2009, while
the notional amount outstanding for all exchange traded derivatives was $63.4 trillion on June 30, 2009 down 22.6% from $82.0 trillion on June 30, 2009. These declines compare to
compound annual growth rates of 32.2% and 16.5% for notional amount outstanding in OTC and exchange-traded derivative markets, respectively, from June 30, 2003 to June 30, 2008. All OTC

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product
categories were down in notional amount outstanding year-over-year in the study, including credit default swaps down 37.2%, commodities down 71.8%, equity linked
derivatives down 35.0%, foreign exchange derivatives down 22.6% and interest rate derivatives down 4.6%. Interest rate derivatives are the largest derivatives category with $437.2 trillion outstanding
as of June 30, 2009. Similarly, all exchange traded derivatives categories also realized significant declines in notional outstanding amount year-over-year. The declines
in notional outstanding amount of derivatives can be partially attributed to industry efforts to net derivative exposure, especially in credit derivatives, through bilateral and multilateral netting
arrangements and the advent of central clearing for certain derivatives.

The
decline in the notional outstanding amount of OTC derivatives is also a result, in part, of the recent financial crisis. The misuse of certain OTC derivatives has been cited as one
of several causes of the crisis or, at least, a factor that amplified its magnitude through widespread miscalculation by banks and investors of the level of risk inherent in certain derivatives,
including collateralized debt obligations and credit default swaps. The emergence of sub-prime loan losses in 2007 began the crisis and exposed other risky loans and
over-inflated asset prices. With loan losses mounting and the fall of Lehman Brothers in September 2008, a major panic broke out on the inter-bank loan market, all of which
caused dramatic volatility and pronounced trading activity in the OTC derivatives markets. As share and housing prices declined, many large and well established investment and commercial banks in the
United States and Europe endured increased calls for greater collateral from derivatives counterparties, suffered huge losses and even faced bankruptcy. This led to massive public financial assistance
to the banking sector alongside significant investor losses and capital withdrawals and significant deleveraging in the hedge fund trading community. The harm caused to the banking sector and the
deleveraging of hedge fund traders eventually led to a general slowdown in trading activity in the OTC derivatives markets in the course of 2009 and a relative shifting of trading activity to cash
markets.

Notwithstanding
contentions that certain OTC derivatives played a role in the financial crisis, the New York Federal Reserve Bank (the "NY Fed") has stated that OTC derivatives were not
a central cause of the crisis. However, the NY Fed does believe that weaknesses in the infrastructure of OTC derivatives markets exacerbated the financial crisis. The NY Fed, among others, believes
that some market participants took excessive risks using derivative instruments as a result of failures of risk management, corporate governance and management supervision. According to the NY Fed,
the complexity and limited transparency of the derivative markets reinforced the potential for excessive risk taking, as regulators did not have a clear view into how OTC derivatives were being
traded.

Against
this backdrop, the OTC derivatives markets in the U.S. and Europe have significantly improved certain inefficient systems and processes through the following developments of the
last few years:



Notwithstanding
these improvements, the NY Fed and most pending versions of federal legislation in the U.S. and Europe advocate some or all of the following additional measures to improve the OTC
derivatives market:



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In
the wake of the financial crisis, governments in the United States and Europe have proposed legislation and regulations to implement various combinations of the above proposals. In
December 2009, the U.S. House of Representatives approved a comprehensive financial regulatory reform proposal entitled "The Wall Street Reform and Consumer Protection Act" (the "House Bill"). Key
components of the legislation would require the clearing of certain OTC derivative products that are accepted by a registered clearing agency or derivatives clearing organization with exceptions for
certain
end users. The legislation would also require reporting to regulators of many derivative transactions. Further, the legislation would require certain OTC derivatives to be executed through a
registered exchange or "swap execution facility," a new classification that we believe would encompass the activities traditionally performed by wholesale brokers, such as us. The U.S. Senate is
considering separate legislation that contains several elements of the House Bill.

In
Europe, the European Commission issued a Communication Document in October 2009 entitled "Ensuring efficient, safe and sound derivative markets: Future policy actions," that addressed
many aspects of market operability and infrastructure and set out key milestones for the reform of the E.U. financial landscape. As such, there is the possibility that new comprehensive federal
frameworks for the regulation of the OTC derivatives markets in which we provide our services may be adopted in 2010. For additional discussion, see "Item 1ARisk
FactorsBroad changes in laws or regulations or in the application of such laws and regulations may have an adverse effect on our ability to conduct our business."

Our Market Opportunity

We believe the financial markets in which we operate present us with the following opportunities to provide value to our customers:

Growing Demand for Investment Hedging and Risk Management.In recent years, governments worldwide have issued billions of dollars
of sovereign debt
in order to fund financial system rescues and fiscal stimulus packages. As economic recovery takes hold, global corporate borrowings are also expected to increase. Investors in the sovereign and
corporate debt markets will need to utilize a range of derivatives products to effectively hedge their credit, interest rate and foreign exchange related risks. Additionally, the resumption in growth
of key emerging market countries, such as China and India, should lead to increased demand for basic commodities and a corresponding need for hedging instruments, such as energy and commodity futures
and derivatives. These hedging activities account for a growing proportion of the daily trading volume in derivative products. In the current financial environment, we believe wholesale brokers will
be needed to provide crucial liquidity aggregation and anonymous, efficient execution for those derivative products which are commonly used to hedge the risks associated with credit defaults by
sovereign and corporate debtors, equity ownership, fluctuations in the value of foreign currencies and energy and commodity price volatility. We believe that increasing familiarity with derivative
products and the growing global demand for hedging and risk management will continue to drive higher trading volumes in the financial products and markets in which we provide our execution, market
information and software services.

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Continuing Globalization of Financial Markets.The continuing globalization of trading is expected to propel long term growth in
trading volumes in a
wide array of financial and commodity products across the globe. We believe that the economic growth of emerging markets in South America, EMEA and Asia is fueling demand for the services of wholesale
brokers to foster liquidity in new and emerging markets. We believe that our presence in multiple international financial centers, including the expansion of our services in EMEA, South America and
Asia, positions us to capitalize on such demand.

Increased Centralized Clearing of OTC Derivatives.Increased clearing of certain OTC derivatives has been a focal point in both
the U.S. and Europe
as governments, regulators and market participants seek to improve global financial markets. International governments and regulators have pushed for the centralized clearing of credit derivatives and
several exchanges and industry utilities have launched, or are in the process of developing, clearinghouses and platforms to clear certain credit derivatives and interest rate swaps products. We were
a leader in initiatives to launch clearing of credit derivatives and believe that the increased central clearing of credit and other OTC derivatives products that we specialize in will be an important
driver of volume grown in future years.

Growing Market Demand for Superior Execution.Sophisticated market participants around the world require efficient and effective
execution of
transactions in increasingly complex financial markets. We believe that in certain highly liquid markets for cash products, such as corporate fixed income and equities, the services of wholesale
brokers are needed to achieve best execution, especially for larger transactions that may be privately negotiated. Wholesale brokers can source liquidity from other market participants or assess which
competing markets, market makers, or electronic communications networks offer the most favorable terms of execution and efficiently transact large positions with minimal price movement. In addition,
we believe that wholesale brokers, such as us, who provide hybrid brokerage services are better positioned to meet the particular needs in the broad range of markets in which we operate than
competitors that do not offer this combination of voice and electronic services. In the wake of the global financial crisis, we believe that there will be increased demand for superior hybrid
electronic execution facilities in certain wholesale OTC derivatives markets, such as the North American credit derivatives and OTC energy markets, that traditionally have under-utilized such systems.
Accordingly, we believe that there will be an increased need for our trade support technology, including our hybrid brokerage systems and Trayport GlobalVisionSM products.

Greater Importance of Product Expertise.Wholesale brokers provide important price discovery and liquidity aggregation services
in both liquid and
illiquid markets. The presence of a broker provides customers with market intelligence, enhanced liquidity and, ultimately, improved pricing and execution. Wholesale 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, and can offer superior market data and
analytics tools, than brokers who less frequently serve that market. In less commoditized financial markets, including markets for novel and complex financial instruments, where liquidity is
intermittent, market leadership becomes more important because reliable pricing information is difficult to obtain. Market participants in these less liquid markets utilize the services of leading
wholesale brokers in order to gain access to the most bids and offers for a particular product. 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. Wholesale brokers, such as us, who have high volumes of bids and offers in the credit derivative
and other specialized markets and who have access to technology that tracks such market data against activity in correlated markets, are well positioned to meet the growing needs of professional
market participants for analytical insight, price discovery and product expertise.

Increasing Benefits of Automated Trade Processing.The combination of hybrid execution with straight-through processing has
significantly improved
confirmation and settlement processes, resulting

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in
cost savings for customers. We expect to see continued demand in the wholesale markets for wholesale brokers that have the ability to couple superior execution with automated trade reporting,
confirmation and processing services. We believe this demand for automated trade processing will take
on increased importance if legislators and regulators adopt expected regulations that require full OTC transaction and position reporting. Additionally, as some of our largest customers reduce their
staffing levels in certain markets in which we operate, full-service wholesale brokers may see increased opportunities to be the outsourced provider of market intelligence, operational
expertise and price distribution for these customers.

Need for Expertise in the Development of New Markets.In order to better support their clients' evolving investment and risk
management strategies,
our dealer customers 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 wholesale brokers, such as us, who, through market knowledge and extensive client relationships, are able to identify these new product opportunities and to
focus their brokerage services appropriately.

Our Competitive Strengths

We believe that the following principal competitive strengths will enable us to enhance our position as a leading wholesale broker:

Strong Brand and Leading Position in Key Markets.We believe that over our twenty-two year history, we have successfully created
value in
several brands that our customers associate with high quality services in the markets on which we focus. Our leadership in multiple 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, Profit & Loss and Energy Risk magazine.
Risk magazine has ranked us as a leading broker in credit derivatives and numerous currency and equity derivative markets. Energy Risk magazine also listed GFI as a leading Commodity Broker in 2009,
with top positions in Coal, Freight and Emissions. We are also successfully building name recognition for our services in certain cash markets for corporate fixed income and equity securities under
our "Christopher Street Capital" brand. In addition, FENICS ProfessionalTM, GFI's pricing, trading and risk management platform, is a leading analytic and risk management tool in the
foreign exchange markets. Our electronic brokerage platforms, CreditMatch®, GFI ForexMatch® and, EnergyMatch®, as well as the Trayport GlobalVisionSM
products, are recognized platforms in the markets in which they serve. We believe that, because of our leading market positions, strong brands and differentiated technological capabilities, we are
better positioned than many of our competitors to serve the comprehensive needs of our customers in both exchange-traded and OTC markets.

Expertise in Liquidity Formation in OTC Cash and Derivative Markets.We believe we have expertise in fostering liquidity in OTC
markets for complex
and innovative financial products where liquidity is harder to achieve and expert brokerage services are therefore more valuable to market participants. We have long sought to anticipate the
development and growth of markets for evolving, innovative financial products in which we believe we can move early to foster liquidity, garner a leading market position and enjoy higher commissions.
For example, we fostered liquidity in the credit derivative and currency derivative markets in their early stages and have grown our services offerings for these markets through the years. Although
the credit derivatives market has contracted in the last year and a half, we have been involved in efforts to improve the transparency and standardization of this market as well as the development of
clearing mechanisms for credit derivatives. We have introduced hybrid execution and auction technology to the credit derivative market and we are investing in areas of risk recycling and

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compression.
Similarly, we were an early entrant to the shipping, property and emissions derivatives markets. Recently, we have successfully increased our brokerage services in certain cash markets
for corporate fixed income and equities. While these cash products are far more commoditized than the OTC derivatives products for which we are recognized, their trading activity is often correlated
to activities in the corresponding derivatives markets, in which we are active intermediaries. We believe that our expertise in fostering liquidity in certain derivatives markets gives us certain
advantages when providing brokerage services in correlated cash markets. It also allows us to extend the reach of our services to a broader clientele, such as larger institutional investors and hedge
funds, that are more active in cash markets than derivatives markets.

Ability to Build and Deploy Technology.We believe we have a strong ability to develop and deploy sophisticated trade execution
and support
technology that is tailored to the transactional nuances of each specific market. Depending on the needs of the individual markets, we deploy customized hybrid brokerage systems that leverage our
range of electronic and voice execution services that we call "hybrid brokerage." For example, our customers in certain of our more complex, less commoditized markets may choose between utilizing our
CreditMatch®, GFI ForexMatch® or EnergyMatch® electronic brokerage platforms to trade a range of credit derivatives, foreign exchange options, energy derivatives
and emission allowances entirely on screen or execute the same transaction through instant messaging devices or over the telephone with our brokers. In addition, our Trayport subsidiary is a provider
of electronic trading software and services to competing wholesale brokers, exchanges around the world and to energy trading desks across a broad swath of the European energy markets. Trayport
supplies critical exchange trading system technology to such commodities and stock exchanges as the Barbados Stock Exchange, Bayerische Borse, the Dutch Caribbean Stock Exchange, the International
Maritime Exchange, the Jakarta Stock Exchange and the New Zealand Stock Exchange. Trayport technology accommodates electronic trading, information sharing, STP capabilities and clearing links in
commodity and financial instruments. We have internally built or purchased most of our core trade execution and support technology. We believe this distinguishes us from our competitors as we are not
overly beholden to the licensing rights of third party vendors and can tailor our technology offerings to serve the unique needs of our diverse product markets and customers.

Quality Data and Analytics Products.We are one of the few wholesale 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 historic 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 customers, but also by their customers, such as national and regional financial institutions and large corporations worldwide. We have recently launched a service through Fenics, which will
allow approximately 250 bank, corporate and hedge fund customers around the world to have electronic access to tradable prices for currency derivatives provided by a group of global dealers using
"request for quote" technology.

Experienced Senior Management, Skilled Brokers and Technology Developers.We have a senior management team that is experienced
in identifying and
developing brokerage markets for evolving, innovative financial instruments. Our founder and chief executive officer, Michael Gooch, has over 30 years of experience in the brokerage industry.
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 over 900 skilled and specialized
brokers as of December 31, 2009, 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

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developing
electronic brokerage platforms and commercial grade 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 customers 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 providing us
with a balanced revenue stream. Historically, the markets on which we focus have volume and revenue cycles that are relatively distinct from each other and have generally been uncorrelated to and
independent of the direction of broad equity indices. While we primarily serve the wholesale and professional trader community, some of the markets in which we are active have seen new entrants from
the ranks of hedge funds and asset managers. We think this trend will allow us, in time, to serve a broader customer base. Further, our decision support products, including our market data, analytical
tools and trading system software give us an opportunity to further expand our customer base, providing revenue sources beyond our traditional brokerage
customers. 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 wholesale brokerage services,
data and analytics and trading system 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 building upon the leading market share and brand
recognition that we
have developed for a range of OTC derivative instruments and underlying cash securities in credit, financial, equity and commodity markets. We will continue deploying our specialized brokers in
markets where liquidity is harder to achieve and the skilled brokerage services that we provide are therefore more valuable to dealers and professional traders. Building on our strength in derivative
products, we plan to continue to build our brokerage capabilities in corporate bond and equity markets that have correlations to the underlying derivative markets in which we are well recognized. We
also intend to continue offering our quality brand data and analytics products in certain select markets requiring reliable decision-support tools. Through these means, we seek to enhance our strong
reputation and long-standing relationships in existing markets, while offering additional services and serving new customers in increasingly global financial and commodities markets.

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 brokerage platforms, to further enhance broker productivity, increase customer and broker loyalty and improve our competitive position
and market share. We intend to continue to develop and deploy technological innovations, such as state of the art electronic brokerage platforms, to improve our brokers' productivity and increase our
market share in key products. During 2009, we continued to see substantial use of our CreditMatch® electronic brokerage platform in Europe in both credit derivatives and cash bonds, and
have seen increasing use of CreditMatch® for electronic trading of credit derivatives in North America. We have also enhanced the functionality of GFI ForexMatch®, an
electronic brokerage platform for foreign exchange products and have integrated it with our Fenics® trader tools. We have also recently introduced EnergyMatch® to certain
natural gas and electric power markets in North America. We believe that in the wake of the global financial crisis there will be increased demand for our hybrid electronic brokerage platforms in
wholesale OTC derivatives markets, especially for North American credit derivatives and certain OTC energy products, that traditionally

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have
under-utilized such systems in the wholesale and inter-dealer broker environment. 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 customers' settlement, risk management and compliance operations, in
order to better serve their needs and to provide us with additional opportunities to increase our revenues.

Continue to identify and develop new products, and high-growth markets.Our brokerage personnel headcount as of December 31,
 2009
was 1,082. We plan to continue our practice of developing 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 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. At the same time, we plan to continue to develop our capabilities in selected cash equities and fixed income products where we can
leverage our expertise in the underlying derivatives products and long-standing relationships with the world's largest financial institutions. 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, we commenced operations in recent years in Dublin, Tel Aviv, Dubai and Santiago,
and we acquired a minority interest in a wholesale broker in Argentina.

Align our business with the goals of new regulation.Various U.S. and European legislative proposals for OTC derivatives would
require, among other
things, greater use of clearing facilities, transaction reporting, greater price transparency and mandatory execution of transactions by intermediaries such as ourselves. Over time, we believe that
these initiatives will further the growth and development of OTC
derivatives markets and be beneficial to our business prospects. Our business benefited from the introduction of clearing in the U.S. energy markets in the mid-2000's and we have long
supported greater use of clearing for credit derivatives. We believe that increased use of clearing will bring new entrants into our markets and increase trading volumes. Similarly, we have worked
with major industry participants to develop transaction confirmation and reporting protocols that will be utilized in enhanced regulatory trade warehousing. Although we already operate hybrid
brokerage systems that we believe will be able to meet any new regulatory requirements for mandatory trade intermediation, we intend to continue to invest in those areas of our business which will
serve the goals of expected regulation, including increased market transparency.

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 have been successful in expanding our wholesale brokerage customer base through new product offerings and the implementation of our
proprietary technology. At the end of 2007, approximately 71% of our revenues came from our traditional dealer bank customers. However, by the end of 2009, that percentage had dropped to approximately
62%. In cash markets for corporate fixed income and equities, as well as in certain energy and commodities markets, we are increasingly providing brokerage services to a broader range of customers
than our traditional clientele of large primary dealers. Our data, analytics and software products are already purchased by a broad range of customers outside of the dealer community. We intend to
increase the diversity of our customer base by expanding our services to the wider professional trader community since we believe a broader customer base has lessened, and will continue to lessen, the
impact on 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 geographic diversity of our revenues. On a
geographic basis, approximately 50% of our total revenues for the year ended December 31, 2009 were generated by our EMEA operations, 41% were generated by our Americas operations and 9% were
generated by our operations in the Asia-Pacific region. Additionally, for the year ended December 31, 2009, no one customer accounted for more than approximately 6.0% of our total
revenues from all products, services and regions, and our largest brokerage desk accounted for approximately 6.4% of total revenues.

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Strategically expand our operations and customer base through business acquisitions.Historically, the wholesale brokerage
industry was fragmented
and concentrated mainly on specific country or regional marketplaces and discrete product sets, such as foreign exchange or energy products. The industry was also predominately focused on executing
trades between large dealer banks and securities houses. Over time, however, the wholesale brokerage industry has experienced increasing consolidation as larger wholesale brokers have sought to
enhance their global brokerage services and offset customer commission pressure in maturing product categories by acquiring smaller competitors that specialized in specific product markets. At the
same time, inter-dealer brokers have expanded their customer base within the wholesale universe to include hedge funds, corporations and asset managers. In addition,
several wholesale brokers, such as us, 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 grow our customer base, further our operational and technological depth and breadth and to grow our business in new and existing product areas through the
acquisition of complementary businesses.

Continue to generate cash and return value to shareholders.Our brokerage, software, analytics and market data businesses have
generated significant
operating cash flows which have allowed us to invest in software development, open new brokerage or trading desks and otherwise re-position our business to suit current and future market
conditions. At the same time, we have been able to provide our shareholders with a consistent quarterly dividend stream since 2008. Despite the recent global financial crisis, over the past two years,
we generated in excess of $290 million of positive cash flow from operations and paid in excess of $53 million of dividends to our shareholders. In addition, we reduced our bank debt by
$50 million in 2009. We believe that our cash flows have additionally benefited from the recent shift in our product mix from derivatives to cash products, which we generally broker on a
matched principal basis. Matched principal transactions generally settle within three days and we receive our commission much sooner than we do when we execute a trade on an agency basis. We intend to
continue to invest in businesses that generate operating cash flows and to use these cash flows to continue to return value to our shareholders.

Overview of Our Products and Services

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, wholesale brokers like us can bridge the gap
between these markets and offer services in a number of related markets. As a result, over the past few years, we have expanded our services for cash instruments, such as corporate fixed income and
equities products.

We
support and enhance our brokerage operations by providing a range of trading system software, analytics and market data products to our customers. We also provide our customers with
STP links and electronic connections with exchanges and clearing firms where applicable.

We
provide brokerage services to our customers by executing transactions on either an agency or principal basis. 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 customers 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 or from an agreed commission rate that is built into the
pricing of the

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instrument.
Our principal transactions revenue is primarily derived from matched principal transactions. In matched principal transactions, we act as a "middleman" by serving as the counterparty on
one side of a customer trade and entering into an offsetting trade with another party relatively quickly (often within minutes and generally on the same trading day). 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.

We
may take unmatched positions for our own account generally in response to customer demand, primarily to facilitate the execution of existing customer orders or in anticipation that
future customer orders will become available to fill the other side of the transaction, and not primarily for directional purposes. In addition, although the significant majority of our principal
trading is done on a "matched principal" basis, we have recently authorized a limited number of our desks to enter into principal investing transactions in which we commit our capital within
predefined limits, either to facilitate customer trading activities or to engage in principal trading for our own account. For more information on these limits, see "Item 7A Quantitative and
Qualitative Disclosure About Market RiskMarket Risk". Most of our principal transactions are executed in the OTC cash trading markets, such as the fixed income and equity markets, or in
certain listed derivative markets. We intend to continue to expand both our matched principal and principal trading businesses, which currently are primarily for fixed income and equity securities,
but increasingly, for certain foreign exchange, commodities and listed derivative products.

Credit Products.We provide brokerage services in a variety 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 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 our services for these non-derivative credit products out of our New York, London, Paris, Singapore and Hong Kong
offices.

We
support our credit product execution services with CreditMatch®, our electronic brokerage platform that provides trading, trade processing and STP functionality to our
customers. Consistent with our hybrid brokerage model, customers may choose between utilizing CreditMatch® to trade certain credit derivative products entirely via an electronic platform
or executing the same transaction over the telephone, or via other messaging mediums, with our brokers. In Europe, our customers have used CreditMatch® over 50% of the time in 2009 when
using our services to trade certain credit derivative products, while customers in the Americas are just beginning to increase their use of CreditMatch® for the pricing and execution of
certain credit derivative products.

We
hold an economic interest in ICE Trust, a clearinghouse for derivative instruments formed as a result of IntercontinentalExchange Inc's March 2009 purchase of The Clearing
Corporation, a company in which we were a minority shareholder. In March 2009, ICE Trust became the first clearinghouse to clear credit derivatives. We believe that our hybrid electronic brokerage
systems 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.

Through
Christopher Street Capital, a division of GFI Securities LLC in New York and GFI Securities Limited in the UK, we offer traditional brokerage services to a broad range of
customers in

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the
cash bond markets, including investment grade and cross-over corporate debt, distressed debt, agencies, high yield debt, and asset backed securities.

Financial Products.We provide brokerage services in a range of financial instruments, including foreign exchange options,
exotic options,
non-U.S. Dollar interest rate swaps and options, repurchase agreements, forward and non-deliverable forward contracts and certain government and municipal bond options. Exotic
options include non-standard options on baskets of foreign currencies. Non-deliverable forward contracts are forward contracts that settle in cash and do not require physical
delivery of the underlying asset.

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

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 the Canadian Dollar and emerging market 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. Our offices in Santiago and Dubai focus on interest rate swaps and Islamic finance products, respectively.

Equity Products.We provide brokerage services in a range of cash-based and derivative equity products, including U.S. domestic
equity
and international equity stocks, Global Depositary Receipts ("GDRs"), American Depositary Receipts ("ADRs") and equity derivatives based on indices, stocks or customized stock structures.

We
offer voice broker assisted equity execution services from our brokerage desks in New York, London, Dublin, Paris, Tel Aviv, Hong Kong, Tokyo and Sydney and, where appropriate,
augmented with electronic and algorithmic trading capabilities. Through our various offices, we broker trades in the OTC market, as well as for certain exchange-traded securities and derivatives.

Our
New York office provides brokerage services in 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.

Through
Christopher Street Capital Equities, a division of GFI Securities Limited, we operate a research driven cash equities brokerage desk 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

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Street
Capital Equities focuses, in particular, on situations where credit default swap spreads and equity prices diverge outside their normal relationship.

In
addition, Octagon, a division of GFI Securities LLC in New York and GFI (HK) Securities LLC in Hong Kong, offers voice and electronic cash equities brokerage services
and corporate access for the Asian equity markets.

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, emissions, ethanol and soft
commodities.

We
offer telephonic brokerage supported by electronic platforms and post-trade STP and confirmation services in certain markets. Our Trayport subsidiary is a leading provider
of electronic trading software and services to the European OTC energy markets, including electricity, natural gas, coal, emissions and freight. Trayport's GlobalVisionSM platform
accommodates electronic trading, information sharing, STP capabilities in commodity and financial instruments and clearing links to NOS Clearing ASA, LCH Clearnet and CME ClearPort. In London, our
telephonic brokerage capabilities are augmented with electronic brokerage capabilities we license from our wholly-owned subsidiary Trayport. In North America, we offer EnergyMatch®, an
electronic brokerage platform for trading OTC energy derivatives which is currently used in varying degrees in certain electricity, natural gas and emissions markets. We intend to continue to expand
this platform to other energy markets. 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 EnergyMatch® and ConfirmHub, we offer STP capabilities and clearing links to CME ClearPort and other third party clearing providers.

From
our New York area offices, we provide brokerage services in natural gas, oil and petroleum products, electricity, dry freight derivatives and soft and agricultural commodities.
Through our Amerex subsidiary based in Sugar Land, Texas, we provide brokerage services in natural gas, electricity, environmental commodities and retail energy management. In addition, 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 electricity, coal, emissions and
gas. The London
office also provides brokerage services in property derivatives, dry and wet freight derivatives and dry physical freight. Our Singapore office brokers dry freight derivatives and dry physical
freight. Desks in our New York, London and Sydney offices also provide brokerage services for the global precious metal markets.

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. The
collaboration in the U.K. is a leader in the property derivatives market. In addition, through a joint venture with Colliers International, we provide brokerage services in Hong Kong property
derivatives.

Through
a joint venture with ACM Shipping Limited, we offer hybrid telephonic and electronic brokerage of wet freight derivatives in London, Singapore and New York.

Software, Analytics and Market Data.Our Trayport subsidiary licenses multi-asset class electronic trading and order management
software to brokers,
exchanges and traders in the commodities, fixed income, currencies and equities markets. Trayport's GlobalVisionSM products have an industry leading position in supplying software to the
European OTC energy markets, including electric power, natural gas, coal, emissions and freight. 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"

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or
customize its products according to customer needs. GlobalVisionSM provides customers with STP capabilities and clearing links to NOS Clearing ASA, LCH Clearnet and CME ClearPort.

Within
foreign exchange option markets, our GFI FENICS® division licenses FENICS® Professional, which provides customers with technology to control and monitor
the lifecycle of their foreign exchange options trades. Sold on a subscription basis through dedicated sales teams across the globe, FENICS® Professional is a suite of price discovery,
price distribution, trading, risk management and STP components. This array of modules permits customers to quickly and accurately price and revalue both vanilla and exotic foreign exchange options
using math models and independent market data. Our GFI FENICS® division has also recently launched a service through which approximately 250 bank, corporation and hedge fund customers
around the world will have electronic access to tradable prices for currency derivatives provided by a group of global dealers using "request for quote" technology.

We
license market data to third parties in the following product areas: foreign exchange options, credit derivatives, emerging market non-deliverable forwards and interest
rate swaps, equity index volatilities, interest rate options and European and North American energy. We make our data available through a number of channels, including streaming data feeds, file
transfer protocol
downloads, directly from FENICS® Professional and to data vendors, such as ThomsonReuters, 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 Customers

As of December 31, 2009, we provided brokerage services and data and analytics products to over 2,400 institutional customers,
including leading investment and commercial banks, large corporations, asset managers, insurance companies and hedge funds. Notwithstanding our large number of customers, we primarily serve the
wholesale and professional trader community that regularly transact in global capital markets, including many of the world's money-center banks and wholesale dealers such as Bank of America, Barclays
Bank, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS. Despite the importance of these large financial institutions to our brokerage
business, no single customer accounted for more than approximately 6.0% of our total revenues from all products and services globally for the year ended December 31, 2009. Customers using our
Fenics branded analytics products and our market data products and services include small and medium sized banks and investment firms, brokerage houses, asset managers, hedge funds, investment
analysts and financial advisors. We also license our Trayport trading systems to various financial markets participants, including our major wholesale brokerage competitors, exchanges and trading
firms.

Sales and Marketing

In order to promote new and existing brokerage, data and analytics and software services, we utilize a combination of our brokerage
personnel, internal marketing and public relations staff and external advisers in implementing selective advertising and media campaigns. Our brokerage services are primarily marketed through the
direct and fairly constant interaction of our brokers with their customers. This direct interaction permits our brokers to discuss new product and market developments with our customers and to
cross-sell our other products and services. We also participate in numerous trade-shows to reach potential brokerage, data and technology customers and utilize speaking opportunities to
help promote market specialists and trading technologies in our core products and services. 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, 2009, we

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employed
94 sales, marketing and customer support professionals, consisting of 48 sales employees and executives, 5 marketing employees and 41 customer support employees. Our data and analytics sales
force calls on a broad range of customers, including traders, risk managers, sales staff, treasurers, analysts and e-commerce specialists at banks, hedge funds, fund managers, insurance
companies and large corporations.

Technology

Pre-Trade Technology.Our brokers use a suite of pricing and analytical tools which have been developed both in-house and in
cooperation with specialist software suppliers. The pre-trade software suite combines proprietary market data, pricing and analytical tools, together with those outsourced from what we
believe to be the best-of-breed providers in the sector. In most cases, our brokerage desks publish indicative and tradable prices on our proprietary network, data vendor
pages, secure websites and trading platforms.

Hybrid Brokerage Platform Technology.We utilize several sophisticated proprietary electronic brokerage platforms to distribute
prices and offer
electronic trade execution to our customers. These platforms include our CreditMatch®, GFI ForexMatch® and EnergyMatch® electronic brokerage platforms. Price data
is transmitted over these platforms by our proprietary global private network and also by third-party providers of connectivity to the financial community. Our hybrid brokerage platforms and systems
operate on a technology platform and network that emphasizes scalability, performance, adaptability and reliability to provide our customers with a variety of means to connect to our brokers and
brokerage platforms, including dedicated point-to-point data lines, virtual private networks, proprietary application programming interfaces and the Internet. We are working
with an increasing number of our customers to implement straight-through-processing between our brokerage platforms and the systems used by our customers 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.

Post-Trade Technology.Our hybrid brokerage platforms automate previously paper- and telephone-based transaction processing,
confirmation
and other functions, substantially improving and reducing the cost incurred by many of our customers' back offices and enabling straight-through processing. In addition to our own system, confirmation
and trade processing is also available through third-party hubs including Markitwire, Reuters RTNS, ConfirmHub, EFETnet and direct straight-through processing in Financial Information eXchange (FIX)
Protocol for various banks. We have electronic connections to most mainstream clearinghouses, including The Depository Trust & Clearing Corporation (through third party clearing firms),
Continuous Linked Settlement, Euroclear, Clearstream, LCH.Clearnet, Eurex and the CME. We intend to expand the number of clearinghouses to which we connect in the future.

We
further provide data communication and STP connections with our customers' 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.

Systems Architecture.Our systems are implemented as a multi-tier hub and spoke architecture comprised of several components,
which
provide matching, credit management, market data distribution, position reporting, customer display and customer integration. The private network currently operates from concurrent data centers and
hub cities throughout the world acting as distribution points for all private network customers.

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In addition to our own network system, we also receive and distribute secure trading information from customers using the services of multiple, major Internet
service providers throughout the world. These connections enable us to offer our products and services via the Internet to our global customers.

Technology Development

We employ a technology development philosophy that emphasizes state-of-the-art technology with cost
efficiency in both our electronic brokerage 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 manage our technology expense more effectively. For each market in which we operate, we seek to provide the optimal mix of electronic and telephonic
brokerage.

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, 2009, we employed a team of 281 computer, telecommunication, network, database,
customer support,
quality assurance and software development specialists globally. We devote substantial resources to the continuous development and support of our electronic brokerage capabilities, the introduction of
new products and services to our customers 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 daily. 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 Trayport and Fenics software, is generally licensed to customers 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 filed a number of patent applications to further protect our proprietary technology and innovations, and have received patents for some of those applications. We believe that no
single patent

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or
application or group of patents or applications will be of material importance to our business as a whole.

Competition

Competition in the wholesale brokerage industry is intense. We encounter competition in all aspects of our businesses, for customers,
employees and acquisition candidates.

Inter-dealer Brokers.Our primary competitors with respect to dealer to dealer, or "inter-dealer", OTC brokerage services are
currently four firms:
ICAP plc, Tullett Prebon plc, BGC Partners, Inc (a publicly traded subsidiary of Cantor Fitzgerald) and Compagnie Financière Tradition (which is majority owned by
Viel & Cie), all of which are currently publicly traded companies. We also compete, to a lesser extent, with several electronic brokerage platforms and a number of smaller, privately held firms
or consortia that tend to specialize in niche products or specific geographical areas. The current size of the inter-dealer brokerage market is difficult to estimate as there is little objective
external data on the industry and several participants are private companies that do not publicly report revenues. Over the past several years, the industry has been characterized by the consolidation
of well-established smaller firms into the four firms mentioned above and ourselves. We believe this consolidation has resulted from a number of factors, including: the consolidation of
primary institutional dealer customers; 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.

Historically,
the inter-dealer brokerage industry has been characterized by fierce competition for customers and brokers. Significant factors affecting competition in the inter-dealer
brokerage industry are the qualities, abilities and relationships of professional personnel, the depth and level of liquidity of the market available from the broker, the quality of the technology
used to service and assist in execution on particular markets and the relative prices of services and products offered by the brokers and by competing markets and trading processes.

Broker-Dealers.In brokering certain cash equities and corporate fixed income products, we face competition from traditional
cash product
broker-dealers that include large, medium and smaller sized financial service firms.

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. However, we often cross exchange-traded derivatives as OTC transactions and the trades are then either exchanged for exchange-traded instruments, such as a
futures contract, or "given up" to one of the exchanges mentioned above or a third-party CCP or FCM for clearing. In a growing number of cases, our hybrid brokerage platforms are also competing
directly with the execution arms of those same exchanges.

We
believe that exchanges will continue to seek to leverage their platforms and attempt to grow by introducing products designed to compete with or compliment certain products covered by
wholesale brokers in the OTC marketplace or through acquisitions. Exchanges have also acquired wholesale brokers, such as ICE's acquisition of CreditEx, a specialist inter-dealer broker of credit
derivative products, in 2008. Most major exchanges have either begun or announced plans to clear many OTC

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financial
and derivative products. We generally believe that efforts by exchanges to provide clearing venues for the OTC markets are complimentary to our business and we expect that such efforts will
enable us to provide our services to a broader customer base.

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 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 customers of, our data and analytical
services. Our Trayport subsidiary competes against several independent providers of advanced financial technology and high-end trading systems. Further, we face competition for certain
sales of our data products from our inter-dealer and wholesale broker competitors and from data and technology vendors, such as Markit, a consortium of major financial institutions. In some cases, we
have entered into collaborations or joint venture agreements with these other entities with regard to our software, analytics and market data services in order to create a more
robust product, increase our distribution channels or, in some cases, white label our or their products through our respective distribution channels.

Overall,
we believe that we may also face future competition from other large computer software companies, market data and technology companies and some securities brokerage firms, some
of which are currently our customers, as well as from any future strategic alliances, joint ventures or other partnerships created by one or more of our potential or existing competitors.

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 regulations and industry standards of practice that cover
many aspects of its business, including initial licensing requirements, sales and trading practices, safekeeping of customers' 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 brokerage 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 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 inter-dealer 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 FINRA 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 brokerage firms. In connection with its current examinations and this

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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.

In
our futures and commodities related activities, our subsidiaries are also subject to the rules of the Commodity Futures Trading Commission ("CFTC"), futures exchanges of which they
are members and the National Futures Association ("NFA"), a futures self-regulatory organization. GFI Securities LLC is registered as an introducing broker with the NFA and the
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. Certain of our subsidiaries also operate electronic brokerage platforms that are exempt from CFTC regulation either as an exempt board of trade (GFI
ForexMatch® and Fenics®) or as an exempt commercial market (EnergyMatch®).

The
SEC, FINRA, CFTC and various other regulatory agencies within 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 defined as its 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.

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 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. These foreign regulations, particularly in the U.K., are broadly similar to that described above for our U.S. regulated subsidiaries.

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.

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 Requirements Directive ("CRD"). This directive requires us to have an "Internal Capital Adequacy

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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.

Our
U.K. regulated subsidiaries are subject to periodic review by the FSA. As a result of the latest periodic risk assessment, the FSA has requested that we enhance certain of our risk
and control functionality at our U.K. regulated subsidiaries, including governance procedures, to bring them in line with the FSA's current standards. The Company is undertaking a review of the
suggestions made by the FSA and intends to implement revised control procedures that are satisfactory to 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.

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.

In
Paris, a branch of GFI Securities Limited was established through the exercise of its passport right to open a branch in a 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
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
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.

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' 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 Financial Instruments and Exchange Law (the "FIEL") in
Japan. As part of the

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licensing
requirements, GFI Securities Limited's Japanese branch is required to maintain minimum "brought-in" capital and stockholders' equity of 50,000,000 Japanese Yen each (or
approximately $537,000), 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 120.0% of the risk equivalent amount including relevant expenditure. In addition, GFI Securities Limited is required to maintain a
capital base of 1 billion Japanese Yen (or approximately $10.7 million).

In
Singapore, 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. GFI Group PTE Ltd. is also required to regularly report
its financial condition.

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 Financial Supervisory Commission 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 (or approximately $4.3 million).

In
Chile, GFI Brokers (Chile) Argetes De Valores SpA is licensed and regulated by the Superintendencia de Valores y Seguros de Chile. As part of its licensing requirements, GFI Brokers
(Chile) is required to maintain minimum capital of 4,000 Unidades de Fomento (or approximately $165,000), which are units of measurement that are indexed to the Chilean Peso.

At
December 31, 2009, 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.

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.

The
government agencies that regulate us continuously review legislative and regulatory initiatives and may adopt new or revised laws and regulations. Additionally, governments and
regulators in both the U.S. and Europe have recently called for increased regulation in the OTC markets, particularly in the credit derivatives market. These initiatives may require, among other
things, greater use of centralized clearing, increased transparency and additional reporting obligations. For more information about the potential changes in regulations, see
Item 1"BusinessRecent Derivative Market Developments."

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Currently,
legislators in the U.S. and abroad are considering various forms of climate change legislation, including legislation that would seek to control emissions of greenhouse gas
through a program that would permit trading in emissions allowances (also known as cap and trade). Cap and trade is a system that establishes emissions allowances with the objective of reducing or
controlling pollution by providing economic incentives. Under a cap and trade system, companies that need to increase their emission allowance must buy credits from those who pollute less and are
therefore able to sell their excess allowances. Depending upon the specific design of the cap and trade system and the volume of trading that arises as a consequence of the cap and trade system,
markets may develop for the available emissions allowances on regulated exchanges and in over-the-counter markets. In Europe, cap and trade programs have been enacted into law
and as a result, emissions trading has grown significantly in past years on certain markets like the European Climate Exchange. Assuming any cap and trade program is designed and implemented
correctly, it should result in substantial increases in trading volumes of emissions allowances. On the other hand, trading volumes are not likely to increase substantially if a cap and trade system
is poorly designed or implemented, if no cap and trade system is established, or if an alternative approach (such as a carbon tax, for example) is adopted.

Our
commodities brokerage business depends in large part on trading volumes and volatility in commodity prices generally and energy markets in particular and could be impacted by
domestic and international climate change regulations. The impact that any proposed regulation might have on trading volumes or volatility is unknown at this time.

Exchange Memberships.Through our various subsidiaries, we are members of the following exchanges: Baltic Exchange, BATS,
Chicago Mercantile Exchange
(non-member firm), Chi-X, Deutsche Boerse (International Securities Exchange, Eurex and Xetra), European Energy Exchange, Intercontinental Exchange (ICE Futures U.S. and ICE
Futures Europe), London Metals Exchange (Associate Member), London Stock Exchange, SIX Swiss Exchange, NASDAQ OMX Group (The NASDAQ Stock Market and NASDAQ OMX Europe) and NYSE Arca.

Working Capital

For information regarding working capital items, see "Management's Discussion and Analysis of Financial Condition and Results of
OperationsLiquidity and Capital Resources" in Part II, Item 7 of this Form 10-K.

Employees

As of December 31, 2009, we employed 1,768 employees. Of these employees, 1,082 are brokerage personnel (consisting of 902
brokers and 180 trainees and clerks), 281 are technology and telecommunications specialists and 94 comprise our software, analytics and market data sales, marketing and customer support professionals.
Approximately 40% of our employees are based in the Americas, 47% are based in EMEA and the remaining 13% 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.

Our business has been and may continue to be adversely affected by conditions in the global financial markets and economic conditions generally.

Since mid-2007, the financial services industry and the securities markets generally were materially and adversely affected
by significant declines in the values of nearly all asset classes and by low levels of liquidity. This was initially triggered by declines in the values of subprime mortgages, but spread to

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all
mortgage and real estate asset classes, to leveraged bank loans and to nearly all asset classes, including equities. The global markets have been characterized by substantial increases in
volatility and short-selling and an overall loss of investor confidence, initially in financial institutions, but more recently in the broader markets. Declining asset values, defaults on mortgages
and consumer loans, and the lack of market and investor confidence, as well as other factors, have all combined to increase credit default swap spreads, to cause rating agencies to lower credit
ratings, and to otherwise increase the cost and decrease the availability of liquidity, despite very significant declines in central bank borrowing rates and other government actions. These market
conditions have adversely affected our business performance as transaction volumes and commission revenues declined, customers and potential customers deleveraged, consolidated and (in some cases)
liquidated and the price of our common stock fell. In addition, our operations may continue to suffer to the extent that ongoing market volatility causes institutional traders and other market
participants to curtail or forego trading activities.

In
2008 and 2009, governments, regulators and central banks in the United States and worldwide have taken numerous steps to increase liquidity and to restore investor confidence. While
asset values have generally increased in 2009, access to liquidity continues to be very limited. Overall, during fiscal 2009, the business environment was adverse for our business, and there can be no
assurance that these
conditions will improve in the near term. Until they do, we expect our results of operations to be adversely affected.

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, 2009, over 91% 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.

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 expenses to do so.

We strive to provide high-quality brokerage services that allow us to establish and maintain long-term
relationships with our customers. 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 litigation 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 legal proceedings 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.

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

The pace of change in our industry is extremely rapid. Operating in such a fast paced 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 technological innovation.

To
remain competitive, we must continue to enhance and improve the responsiveness, functionality, accessibility and other features of our hybrid brokerage systems, 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 or hybrid trade execution, STP, affirmation, confirmation or clearing functionalities or

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products
that gain acceptance in the market could give those competitors a "first mover" advantage that may be difficult for us to overcome. Our success will depend, in part, on our ability
to:



The
development of proprietary brokerage systems 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 hybrid brokerage systems and transaction-processing systems to meet our clients' requirements or 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.

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

The financial services industry generally, and the wholesale and 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 often 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.

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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 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 and our business, financial condition and results of operations could be adversely affected.

Consolidation and layoffs in the banking and financial services industries could materially adversely affect our business, financial condition and results of operations.

In recent years, there has been substantial consolidation and convergence among companies in the banking and financial services
industries, resulting in increased competition. 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. These developments have increased competition from firms with potentially greater access to capital resources than us.
Finally, consolidation among our competitors other than exchange firms could result in increased resources and product or service offerings for our competitors. If we are not able to compete
successfully in the future, our business, financial condition and results of operations could be materially adversely affected.

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 requires 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.

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

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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, an increasing number of financial institutions 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 further deteriorate and which of our products and services may be adversely
affected. As a result, such 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 employ a significant amount of leverage to achieve their results and, in the past, certain hedge funds have had
difficulty managing this leverage, which has resulted in market-wide disruptions. During the economic turmoil of the last few years, 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 regulations overseen by the FSA in the United Kingdom, the AMF in France, the SFC in Hong Kong, the MAS in Singapore, the JSDA in Japan, the Ministry of
Finance and Economy in Korea and the SVS in Chile. 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 brokerage firms. For more details, see "Item 1BusinessRegulation" and "Item 3Legal
Proceedings." In addition, at the conclusion of the latest FSA periodic risk assessment of our regulated entities in the United Kingdom, the FSA has requested that we enhance certain of our risk and
control functionality at these entities, including governance procedures, to bring them in line with the FSA's current standards.

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 growth and expansion of
our business may create 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.

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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 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 or in the application of such laws and regulations may have an adverse effect on our ability to conduct our business.

The financial services industry, in general, is heavily regulated. Proposals for legislation further regulating the financial services
industry are continually being introduced in the United States Congress, in state legislatures and by foreign governments. 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 proposals 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.

We
are also affected by the policies adopted by the Federal Reserve and international central banking authorities, which may directly impact our cost of funds for capital raising and
investment activities and may impact the value of financial instruments we hold. In addition, such changes in monetary policy may affect the credit quality of our customers. Changes in domestic and
international monetary policy are beyond our control and are difficult to predict.

Additionally,
governments and regulators in both the U.S. and the U.K. have called for increased regulation and transparency in the OTC markets, particularly in the credit derivatives
market. In particular, pending regulation in the U.S. requires portions of the credit default swap market to be centrally cleared. Furthermore, it is possible that regulators in some jurisdictions may
also require that all or part of certain derivative markets, including the credit default swap market, trade on regulated exchanges or other regulated intermediaries. Several exchanges and industry
utilities have developed clearinghouses and platforms to clear credit derivatives and other OTC swaps. 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 could have a materially adverse effect on our business.

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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.

Many aspects of our business are subject to significant capital requirements. 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. While we expect to continue to maintain levels of capital in excess of regulatory minimums, there
can be no assurance that this will be the case in the future. If we fail to maintain the required capital levels, we will be required to suspend our broker-dealer operations during any period in which
we are not in compliance with capital requirements, and may be subject to suspension or revocation of registration by the SEC and FINRA or withdrawal of authorization or other disciplinary action from
domestic and international regulators, 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 capital from our regulated subsidiaries is subject to restrictions, which in turn
could limit our ability to pay dividends, repay debt 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.

In
addition, we are required to maintain capital at clearing organizations of which we are a member. The amount of capital to be maintained is dependent on a number of factors, including
the rules established by the clearing organization, the types of products to be cleared and the volume and size of positions to be cleared. If we fail to maintain the capital required by these
clearing organizations, our ability to clear through these clearing organizations may be impaired, which may adversely affect our ability to process trades.

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" and Note 18 to the Consolidated Financial Statements.

Our risk-management policies might not be effective, which could harm our business.

To manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to
identify, monitor and control our exposure to financial, market, credit, legal, reputational and operational risks. For a description of our risk management approach, see "Item 7A. Quantitative
and Qualitative Disclosure About Market Risk." This risk management function requires, among other things, that we properly record and verify many
hundreds of thousands of transactions and events each day, and that we continuously monitor and evaluate the size and nature of our or our clients' positions and the associated risks. In light of the
high volume of transactions, it is impossible for us to review and assess every single transaction or to monitor at every moment in time our or our customers' positions and the associated risks.

We
must rely upon our analysis of information regarding markets, personnel, clients or other matters that is publicly available or otherwise accessible to us. That information may not in
all cases be accurate, complete, up-to-date or properly analyzed. Furthermore, we rely on a combination of technical and human controls and supervision that are subject to
error and potential failure, the challenges of which are exacerbated by the 24-hour-a-day, global nature of our business.

Our
risk-management methods are based on internally developed controls, observed historical market behavior and what we believe to be industry practices. However, our methods
may not adequately prevent future losses, particularly as they may relate to extreme market movements or

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events
for which little or no historical precedent exists or our risk management efforts may be insufficient. Thus, our risk-management methods may prove to be ineffective because of their
design, their implementation or the lack of adequate, accurate or timely information. Our risk management methods may also fail to identify a risk or understand a risk that might result in losses. If
our risk-management efforts are ineffective, we could suffer losses that could have a material adverse effect on our financial condition or operating results. Additionally, we could be
subject to litigation, particularly from our clients, and sanctions or fines from regulators.

The securities settlement process exposes us to risks that may impact our liquidity and profitability. In addition, liability for unmatched principal 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.

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 our
subsidiary involved in the trade. 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 (usually on the same day and generally within three days), 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 electronic brokerage platforms for products that we broker on a matched principal basis, such as CreditMatch®, can present these risks

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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 principal transactions entered into by some of our desks.

We generally execute orders on a matched-principal basis by entering into one side of a customer trade and entering into an offsetting
trade with another party relatively quickly (often within minutes and generally on the same trading day). However, we may take unmatched
positions for our own account generally in response to customer demand, primarily to facilitate the execution of existing customer orders or in anticipation that future customer orders will become
available to fill the other side of the transaction, and not primarily for directional purposes. While we seek to minimize our exposure to market risk by entering into offsetting trades or a hedging
transaction relatively quickly (often within minutes and generally on the same trading day), we may not always enter into an offsetting trade on the same trading day and any hedging transaction we may
enter into may not fully offset our exposure. Therefore, although any unmatched positions are intended to be held short term, we may not entirely offset market risk and may be exposed to market risk
for several days or more or to a partial extent or both. 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.

Although
the significant majority of our principal trading is done on a "matched principal" basis, we have recently authorized a limited number of our desks to enter into principal
investing transactions in which we commit our capital within predefined limits, either to facilitate customer trading activities or to engage in principal trading for our own account. These principal
positions may ultimately be matched against a customer order or through a market intermediary, either in the short term (such as the same trading day) or we may hold these positions for several days
or more. The number and size of these transactions may affect our results of operations in a given period and we may also incur losses from these trading activities due to market fluctuations and
volatility from quarter to quarter. To the extent that we own assets (i.e., have long positions) in any of those markets, a downturn in the value of those assets or in those markets could
result in losses from a decline in the value of those long positions. Conversely, to the extent that we have sold assets we do not own (i.e., have short positions) in any of those markets, an
upturn in those markets could expose us to significant losses as we attempt to cover our short positions by acquiring assets in a rising market. In addition, in the event that one of our desks enters
into principal transactions that exceed their authorized limit and we are unable to dispose of the position promptly, we could suffer losses that could have a material adverse effect on our financial
condition or operating results.

We
do not track our exposure to principal positions on an intra-day basis. Due to the factors described above, including the nature of the position and access to the market
on which it trades, we may not be able to match a position or effectively hedge our exposure and often may hold a position overnight or longer that has not been hedged. To the extent these principal
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 positive or negative effect, on
our financial condition and results of operations for any particular reporting period.

We
intend to continue to expand both our matched principal and principal trading businesses, primarily involving fixed income and equity securities, but increasingly, for certain foreign
exchange, commodities and listed derivative products.

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Our investments in expanding our brokerage services, hybrid 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 hybrid brokerage systems, we may not receive
significant revenue and profit from the development of a new brokerage desk or hybrid 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 hybrid brokerage system. 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 a hybrid 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 hybrid brokerage systems 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 14 offices in Europe, the Middle East, Africa, South America and Asia and
we may seek to further expand our operations in the future. On a geographic basis, approximately 50% and 53% of our total revenues for the years ended December 31, 2009 and 2008, respectively,
were generated by our operations in Europe, the Middle East and Africa (EMEA), 41% and 37%, respectively, were generated by our operations in the Americas, which include operations in South America,
and 9% 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:



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.

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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. 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 be exposed to risk from our operations in emerging market countries, including counterparty risks exposure.

Our businesses and operations are increasingly expanding into new regions, including emerging markets, and we expect this trend to
continue. We have entered into an increasing number of matched principal transactions with counterparties domiciled in countries in Latin America, Eastern Europe and Asia. Transactions with these
counterparties are generally in instruments or contracts of sovereign or corporate issuers located in the same country as the counterparty. This exposes us to a higher degree of sovereign or
convertibility risk than in more developed countries. In addition, these risks may be correlated risks. A correlated risk arises when the counterparty's inability to meet its obligations will also
correspond to a decline in the value of the instrument traded. In the case of a sovereign convertibility event or outright default, the counterparty to the trade may be unable to pay or transfer
payment of an instrument purchased out of the country when the value of the instrument has declined due to the default or convertibility event. 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. Through our risk management
procedures, we monitor the creditworthiness of emerging countries and counterparties on an ongoing basis and when the risk of inconvertibility or sovereign default is deemed to be too great,
correlated transactions or all transactions may be restricted or suspended. However, there can be no assurance that these procedures will be effective in controlling these risks.

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

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requirements
associated with operating in new jurisdictions. This expansion, if not properly managed, could have a material adverse effect on our business.

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

Employee misconduct or error could subject us to legal liability, financial losses and regulatory sanctions and could seriously harm
our reputation and negatively affect our business. Misconduct by employees could include engaging in improper or unauthorized transactions or activities, failing to properly supervise other employees
or improperly using confidential information. Employee errors, including mistakes in executing, recording or processing transactions for customers, could cause us to enter into transactions that
clients may disavow and refuse to settle, which could expose us to the risk of material losses even if 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 could be increased. The risk of employee error or
miscommunication may be greater for products that are new or have non-standardized terms. It is not always possible to deter employee misconduct or error, and the precautions we take to
detect and prevent this activity may not be effective in all cases.

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 our trading
systems 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 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:



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In
addition, we expect to face competition for acquisition targets and/or joint venture partners, which may limit the number of acquisitions and growth opportunities and could lead to
higher acquisition prices. We may not be able to successfully identify, acquire or manage profitably additional businesses or integrate businesses without substantial costs, delays or other
operational or financial difficulties.

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, brokerage platforms and networks. Our failure to monitor or maintain
these systems, brokerage platforms and networks or, if necessary, to find a replacement for this technology in a timely and cost-effective manner, could 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 business continuity 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.

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

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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 execution services, hybrid 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.

Our liquidity and financial condition could be adversely affected by U.S. and international markets and economic conditions.

Liquidity is essential to our business and is of particular importance to our trading business. Any perceived liquidity issues may
affect our clients' and counterparties' willingness to engage in brokerage transactions with us. In addition, our business is dependent upon the availability of adequate 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.

Our
liquidity could be impaired due to circumstances that we may be unable to control, such as a general market disruption or an operational problem that affects our clients, third
parties or us. Further, our ability to sell assets to generate liquidity may be impaired if other market participants are seeking to sell similar assets at the same time.

Our
ability to raise funding in the long-term or short-term capital markets or the equity markets has been and could continue to be adversely affected by
conditions in the U.S. and international markets and economy. Global market and economic conditions have been, and continue to be, disrupted and volatile. In particular, our cost and availability of
funding may be adversely affected by illiquid credit markets and wider credit spreads. As a result of concern about the stability of the markets generally and the strength of counterparties
specifically, many lenders and institutional investors have reduced and, in some cases, ceased to provide funding to borrowers. To the extent we need to raise additional funds, including for
acquisitions or meeting increased 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, respond to
competitive pressure or meet contractual, regulatory or other unanticipated requirements and as a result, our ability to conduct our business may be adversely affected.

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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
$175 million (the "Credit Agreement"). Our Credit Agreement matures in February 2011. In addition, we have issued $60 million of senior secured notes (the "Senior Notes") which are due
January 30, 2013. Our 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.

Our
Credit Agreement expires on February 24, 2011 and we are in the process of evaluating our options to either renew the Credit Agreement, replace it with a new credit agreement
or to seek alternative sources of capital. We currently expect to finalize this process prior to December 31, 2010. Our ability to renew the existing Credit Agreement, to successfully negotiate
a new bank credit agreement or to secure alternate sources of capital is dependent upon our future performance and may be affected in part by events beyond our control, including current and future
economic and financial market conditions. If we are not able to either renew the existing Credit Agreement, replace it with a new credit agreement or secure alternate sources of capital, our financial
condition and results of operations would be adversely affected.

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

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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 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 our Board may, in its discretion, determine to accelerate the vesting of outstanding options or restricted
stock units in the
event of a change of control. If the Board determines to accelerate the vesting of these unvested grants, it 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

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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.

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, 2009, we had registered under the Securities Act of 1933, as amended (the "Securities Act"), an aggregate of 955,008 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, 2009, we had registered under the Securities Act an
aggregate of 14,900,000 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, 2009, there are 6,871,863 shares of our common stock available for future grants of
awards under the 2008 Equity Incentive Plan.

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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.

We may be required to recognize impairments of our goodwill or other intangible assets, which could adversely affect our results of operations or financial condition.

Due to the general decline of the markets over the last few years, there has been an increased focus on testing for the impairment of
goodwill and intangible assets. While we have not recognized any impairments to date, any such non-cash charges in the future could have a material impact on our stockholders equity and
our results of operations.

The
determination of the value of goodwill and intangible assets requires management to make estimates and assumptions that affect our consolidated financial statements. We are required
to test goodwill for impairment annually, or in interim periods if certain events occur indicating that the carrying value may be impaired. We assess potential impairments to intangible assets when
there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Our judgments regarding the existence of impairment indicators and future
cash flows related to goodwill and intangible assets are based on several factors which include: the operational performance of any acquired businesses, management's current business plans which
factor in current market conditions, market capitalization, the trading price of our common stock and trading volumes, as well as other factors. Management uses discounted cash flow analysis in their
impairment assessments which involve the subjective selection and interpretation of data inputs, and given market conditions at the testing date, can include a very limited amount of observable market
inputs available in determining the model.

Changes
to our business plan, continued macroeconomic weakness, declines in operating results, and continued low market capitalization, may result in our having to perform an interim
goodwill impairment test or an intangible asset impairment test. These types of events and the resulting analysis could result in goodwill or intangible asset impairment charges in future periods.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

We have 20 offices in 14 countries. 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 largest office outside of the New York metropolitan area is our U.K. headquarters, which
is 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 90,000
square feet of additional office space in the aggregate to support our global brokerage operations.

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

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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.

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 of 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. 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 the Company's outstanding matters are not expected to have a material adverse impact on the Company's financial position.
However, the outcome of any such 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 the Company's outstanding matters will not significantly exceed any 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 26, 2010,
as reported by Nasdaq, was $5.51.

As
of February 26, 2010, we had approximately 19 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, 2009First Quarter

$
4.95

$
2.09Second Quarter


7.40


2.99Third Quarter


7.93


5.57Fourth Quarter


7.95


4.39




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


(1)For
comparative purposes, the historical stock prices from the first quarter of 2008 have been restated to reflect the four-for-one
stock split effected on March 31, 2008.


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 applicable law or regulation, 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, 2009, 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, 2009 (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 26, 2005 through April 1, 2008 and BGC Partners Inc. from April 8, 2008 through December 31, 2009, 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, 2009, IntercontinentalExchange Inc. from November 15, 2005 (the date of its initial public offering) and the CME Group Inc. (CME).

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, 2009, we granted a total of 8,423,013 restricted stock units ("RSUs") to officers, directors and
employees pursuant to our 2008 Equity Incentive Plan. The grant prices of these RSUs ranged from $2.35 to $7.66. 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, 2009.

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


7,119,754Employee Transactions(b)


26,687

$
7.13


N/A


N/ANovemberStock Repurchase Program(a)


231,511

$
4.49


231,511


6,975,956Employee Transactions(b)


13,562

$
4.85


N/A


N/ADecemberStock Repurchase Program(a)


89,858

$
4.49


89,858


7,006,770Employee Transactions(b)


83,555

$
4.68


N/A


N/ATotalStock Repurchase Program(a)


321,369

$
4.49


321,369


7,006,770Employee Transactions(b)


123,804

$
5.23


N/A


N/A


(a)In
August 2007, the 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 on the open market. 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. Any repurchases are also subject to compliance with
certain covenants under the Company's Credit Agreement.(b)Under
our 2008 Equity Incentive Plan, we allow employees to elect to have us withhold shares of common stock to satisfy minimum statutory tax withholding
obligations arising on the vesting and settlement of restricted stock units. When we withhold these shares, we are required to remit to the appropriate taxing authorities the market price of the
shares withheld, which could be deemed a purchase of the shares of our common stock by us on the date of withholding.


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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, 2009. 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 31,2009

2008

2007

2006

2005(dollars in thousands except share and per share data)Consolidated Statement of IncomeRevenuesBrokerage revenues:Agency commissions

$
481,326

$
757,310

$
749,223

$
557,895

$
391,583Principal transactions


270,378


206,669


188,254


151,220


114,417Total brokerage revenues

$
751,704

$
963,979

$
937,477

$
709,115

$
506,000Software, analytics and market data


54,347


51,250


19,522


18,651


17,395Interest income


1,043


8,617


9,714


9,144


4,637Other income/(loss)(1)


11,613


(8,343
)

3,828


10,273


5,560Total Revenues

$
818,707

$
1,015,503

$
970,541

$
747,183

$
533,592Expenses:Compensation and employee benefits


583,315


665,973


604,847


465,554


327,345Other expenses


212,122


266,553


214,956


179,832


121,958Total expenses


795,437


932,526


819,803


645,386


449,303Income before provision for income taxes


23,270


82,977


150,738


101,797


84,289Provision for income taxes


6,982


29,871


55,880


40,719


36,186Net income

$
16,288

$
53,106

$
94,858

$
61,078

$
48,103Earnings Per ShareBasic

$
0.14

$
0.45

$
0.81

$
0.54

$
0.45Diluted

$
0.13

$
0.44

$
0.80

$
0.52

$
0.43Weighted average number of shares outstanding(2)Basic


118,178,493


117,966,596


116,595,920


113,382,789


104,982,512Diluted


121,576,767


119,743,693


119,180,791


116,703,713


110,797,300


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For the Year Ended December 31,2009

2008

2007

2006

2005(dollars in thousands except share and per share data)Consolidated Statement of Financial Conditions Data:Cash and cash equivalents

$
342,379

$
342,375

$
240,393

$
181,484

$
144,148Total assets(3)

$
952,094

$
1,085,911

$
975,814

$
699,609

$
576,137Total debt, including current portion

$
173,688

$
223,823

$
55,291

$
90,253

$
31,247Redeemable convertible preferred stock

$


$


$


$


$
Total stockholders' equity

$
484,102

$
476,963

$
452,193

$
330,469

$
238,252Selected Statistical Data:Brokerage personnel headcount(4)


1,082


1,037


1,037


932


777Employees


1,768


1,740


1,599


1,438


1,151Broker productivity for the period(5)

$
705

$
910

$
934

$
836

$
778Brokerage Revenues by Geographic Region:Americas

$
325,359

$
385,854

$
401,897

$
326,436

$
256,197Europe, Middle East & Africa


364,752


489,517


449,949


321,308


211,125Asia


61,593


88,608


85,631


61,371


38,678Total

$
751,704

$
963,979

$
937,477

$
709,115

$
506,000


(1)Certain
software development contract revenues for the years ended December 31, 2008, 2007 and 2006 totaling $86, $215 and $6,973 were previously
presented in a line item called "Contract revenue" and have been combined into "Other income/(loss)" to conform with the current year's presentation. There were no software development contract
revenues for the year ended December 31, 2005.(2)Restated
to reflect the four-for-one stock split effected March 31, 2008.(3)Total
assets included receivables from brokers, dealers and clearing organizations of $87.7 million, $149.7 million, $317.8 million,
$174.7 million, and $208.9 million at December 31, 2009, 2008, 2007, 2006 and 2005, respectively. These receivables primarily represent securities transactions entered into in
connection with our matched principal business which have not settled as of their stated settlement dates. These receivables are substantially offset by the corresponding payables to brokers, dealers
and clearing organizations for these unsettled transactions.(4)Brokerage
personnel headcount includes brokers, trainees and clerks. As of December 31, 2009, we employed 1,082 brokers.(5)We
are presenting broker productivity to show the average amount of revenue generated per broker. Broker productivity is calculated as brokerage revenues
divided by average brokerage personnel headcount for the period.


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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 a wholesale broker, our results of operations are impacted by a number of external market factors, including market volatility, the
organic growth or contraction of the derivative and cash markets in which we provide our brokerage services, the particular mix of transactional activity in our various products, the competitive and
regulatory environment in which we operate and the financial condition of the dealers, asset managers, hedge funds and other market participants to whom we provide our services. 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.



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 result in
reduced trading volumes.

Market
volatility is driven by a range of external factors, some of which are market specific and some of which correlate to general macro-economic conditions. During 2009, many of the
markets in which we operate experienced lower volatility than in 2008, which was characterized by a global recession, a widespread credit crisis, the Lehman Brothers bankruptcy and the subsequent
government interventions to rescue the financial systems. In 2009, global stock markets rallied as the Federal Reserve and other
central banks kept interest rates low, the financial sector stabilized and the global recession appeared to ease; however, many market participants committed less capital in certain markets and
geographic regions, resulting in lower trading volumes in many of the markets in which we operate. In addition, many of the OTC derivative markets in which we provide our services experienced
relatively depressed trading activity as the legislative debate over how to regulate and possibly limit trading activity in certain OTC markets continued throughout the year and may have dampened
demand for such products.



Until the global credit crisis and recession of the last few years, our business historically benefited from growth in the OTC
derivatives markets due to either the expansion of existing markets, including increased notional amounts outstanding and transaction volumes, or the development of new products or classes of
products. The level of growth in these markets is difficult to measure for any period 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 period, 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.

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According
to the Bank of International Settlements ("BIS") market review for the first half of 2009, both the OTC and exchange-traded derivative markets experienced contraction in 2009
versus the same period in 2008. According to the BIS, as of June 30, 2009, the latest period reported, notional amounts outstanding for all OTC derivatives was $604.6 trillion, down 11.6%
compared to $683.8 trillion in June 2008, while the notional amounts outstanding for all exchange traded derivatives was $63.4 trillion on June 30, 2009, down 22.6% from $82.0 trillion on
June 30, 2008. These declines compare to compound annual growth rates of 32.2% and 16.5% for notional amounts outstanding in OTC and exchange-traded derivative markets, respectively, from
June 30, 2003 through June 30, 2008. All OTC product categories were down in notional amounts outstanding year-over-year according to the BIS study, with credit
default swaps down 37.2%, commodities down 71.8%, equity-linked derivatives down 35.0%, foreign exchange derivatives down 22.6% and interest rate derivatives down 4.6%. Interest rate derivatives
represent the largest product category with $437.2 trillion outstanding as of June 30, 2009. Similarly, all exchange-traded derivative categories also realized significant declines in notional
amounts outstanding year-over-year. We believe that the declines in notional amounts outstanding can be attributed, in large part, to macroeconomic and industry factors such as
the general global economic climate, the deleveraging undertaken by certain market participants and regulatory uncertainty. Additionally, industry efforts to net derivative exposure, especially in
credit derivatives, has been a significant factor in bringing down notional amounts outstanding.

Except
for energy related products, the same general trend was also evidenced by the reduced transactional volumes or slowing growth rate of certain products traded on futures exchanges.
For several years, exchange traded derivatives have exhibited similar growth rates to those of related OTC derivative markets. In 2009, the CME reported a year over year decline in average daily
volumes of 20% with interest rate product volumes down 30%, equity index products down 20%, metal products down 4% and energy products (including CME ClearPort) up 4%. Reflecting the increased
activity in energy-related products, ICE's OTC Energy average daily commissions were up 8% in 2009 compared to the prior year. We believe that the CME ClearPort and ICE products benefited from a shift
in trader focus towards the short-end of the maturity curve. ICE's OTC Credit (excluding credit derivative clearing) revenues were down 22.6% year over year.

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 2008
and 2009 we invested in our fixed income product brokerage capabilities as the markets shifted in favor of cash products following the credit crisis. Additionally, both our Chile and Dubai offices,
which were opened in 2008, showed significant growth year-over-year.



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 2009. 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. This event resulted in increased competition, legal expenses and costs related to restaffing our North American credit operations that continued into 2009. The
consolidation and personnel layoffs by dealers, hedge funds and other market participants that began in 2008 and continued into the first half of 2009 also led to increased competition to provide
brokerage services to a smaller number of market participants in the near term.

During
2009, there was a continuing effort to establish new regulations for the global OTC derivatives markets. We believe that the legislative and regulatory proposals for increased
transparency, position limits and collateral or capital requirements have caused uncertainty in these markets as

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market
participants await any final regulations. This increased uncertainty in the markets has led investors and banks to commit less capital to many OTC markets. Nevertheless, we are optimistic that
the regulatory solutions that are likely to emerge, including centralized clearing, increased transparency,
automation and electronic execution, will be generally beneficial to the long-term health of the broader financial markets. The proposed legislation in the U.S. would require certain OTC
derivatives to be executed through a registered exchange or "swap execution facility." We believe that we will be able to qualify as a swap execution facility and we believe that our expertise,
technology and scale makes us well-positioned to capture any newly created opportunities in these markets.

Financial Overview

Our results for the last three years reflect the challenging conditions in the financial markets over that time, including
unprecedented conditions in the world economy and the financial markets in which we provide our services. Our global and product diversification enabled us to take advantage of areas of market
strength over this period, even as certain OTC derivative markets were negatively affected by the financial crisis. As more fully discussed below, our results of operations are significantly impacted
by the amount of our revenues 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, 2009:



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The
most significant component of our cost structure is employee compensation and employee benefits, which includes salaries, sign-on bonuses, incentive compensation and
related employee benefits and taxes. Our employee compensation and employee benefits have decreased from $604.8 million for the year ended December 31, 2007 to $583.3 million for
the year ended December 31, 2009. The main factor contributing to the decline in the amount of employee compensation and employee benefits was lower brokerage revenues resulting in lower broker
performance bonuses, which was partially offset by a charge of $34.4 million primarily related to the renegotiation of certain employment agreements and severance in 2009.

Our
compensation and employee benefits for all employees have both a fixed and variable component. Base salaries and benefit costs are primarily fixed for all employees while bonuses
constitute the variable portion of our compensation and employee benefits. Within overall compensation and employee benefits, the employment cost of our brokerage personnel is the key component.
Bonuses for brokerage personnel are primarily based on the operating results of their related brokerage desk as well as their individual performance. Additionally, a portion of our bonus expense is
subject to contractual guarantees that may require us to make bonus payments to brokers regardless of their
performance in any particular period. For many of our brokerage employees, their bonus constitutes a significant component of their overall compensation. Broker performance bonuses decreased from
$335.3 million for the year ended December 31, 2007 to $241.9 million for the year ended December 31, 2009.

Further,
we grant sign-on bonuses for certain newly-hired brokers or for certain of our existing brokers who agree to long-term employment agreements. Expense
related to sign-on bonuses paid to brokerage personnel increased from $25.3 million for the year ended December 31, 2007 to $67.3 million for the year ended
December 31, 2009. The increase was largely due to charges related to the renegotiation of certain employment agreements in the fourth quarter of 2009 combined with the additional costs we
incurred to rebuild our North American credit operations following the defection of two dozen credit brokers to a competitor in April of 2008. Sign-on bonuses may be paid in the form of
cash, RSUs or forgivable loans and are typically amortized over the term of the related employment agreement, which is generally two to four years. These employment agreements typically contain
repayment or forfeiture provisions for unvested RSUs or all or a portion of the sign-on bonus and forgivable loan should the employee voluntarily terminate his or her employment or if the
employee's employment is terminated for cause during the initial term of the agreement.

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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 31,2009

2008

2007(dollars in thousands)REVENUES:Brokerage revenues:Agency commissions

$
481,326

$
757,310

$
749,223Principal transactions


270,378


206,669


188,254Total brokerage revenues


751,704


963,979


937,477Software, analytics and market data


54,347


51,250


19,522Interest income


1,043


8,617


9,714Other income/(loss)


11,613


(8,343
)

3,828Total revenues


818,707


1,015,503


970,541EXPENSES:Compensation and employee benefits


583,315


665,973


604,847Communications and market data


46,263


47,810


44,622Travel and promotion


33,819


45,756


41,992Rent and occupancy


20,325


31,452


21,941Depreciation and amortization


31,493


31,390


24,686Professional fees


18,402


26,200


17,899Clearing fees


30,354


43,420


32,732Interest


10,540


14,334


7,076Other expenses


20,926


26,191


24,008Total expenses


795,437


932,526


819,803Income before provision for income taxes


23,270


82,977


150,738Provision for income taxes


6,982


29,871


55,880Net income

$
16,288

$
53,106

$
94,858


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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 31,2009

2008

2007REVENUES:Brokerage revenues:Agency commissions


58.8
%

74.6
%

77.2
%Principal transactions


33.0


20.4


19.4Total brokerage revenues


91.8


95.0


96.6Software, analytics and market data


6.6


5.0


2.0Interest income


0.1


0.8


1.0Other income/(loss)


1.5


(0.8
)

0.4Total revenues


100.0
%

100.0
%

100.0
%EXPENSES:Compensation and employee benefits


71.2


65.6


62.3Communications and market data


5.7


4.7


4.6Travel and promotion


4.1


4.5


4.3Rent and occupancy


2.5


3.1


2.3Depreciation and amortization


3.8


3.1


2.5Professional fees


2.2


2.6


1.8Clearing fees


3.7


4.3


3.4Interest


1.3


1.4


0.7Other expenses


2.6


2.6


2.5Total expenses


97.1
%

91.8
%

84.5
%Income before provision for income taxes


2.9
%

8.2
%

15.5
%Provision for income taxes


1.0


2.9


5.8Net income


1.9
%

5.2
%

9.8
%


Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008



Net income for the year ended December 31, 2009 was $16.3 million as compared to net income of $53.1 million for
the year ended December 31, 2008, a decrease of approximately $36.8 million or 69.3%. Total revenues decreased by $196.8 million, or 19.4%, to $818.7 million for the year
ended December 31, 2009 from $1,015.5 million for 2008. Our decreased revenues were primarily due to decreased revenues across all brokerage product categories and
geographical regions due, in part, to dealer and hedge fund deleveraging, lower credit and equity market volatility, regulatory uncertainty in certain markets and a general trend away from derivative
instruments to cash products over the year. In addition, our revenues in Europe were negatively impacted by a weakening of the Euro and the British Pound Sterling relative to the U.S. Dollar. Also, we
were adversely affected by the full year effect of the defection of over two dozen of our credit brokers to a competitor in April 2008 and the expenses associated with rebuilding our North American
credit operations. Our total brokerage personnel headcount was 1,082 employees at December 31, 2009, compared to 1,037 at December 31, 2008.

Total
expenses decreased by $137.1 million, or 14.7%, to $795.4 million for 2009 from $932.5 million in 2008. Expenses decreased primarily because of decreased
compensation expense for the year-ended December 31, 2009, which was attributable to a decrease in performance-based bonus

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expense
as a result of lower brokerage revenues. This decrease was partially offset by a charge of $34.4 million primarily related to the renegotiation of certain employment agreements and
severance. Expenses related to rent and occupancy decreased in 2009, primarily due to $7.8 million in costs incurred in 2008 related to the abandonment of our offices at 100 Wall Street and our
move to 55 Water Street. Professional fees decreased $7.8 million in 2009 primarily due to the higher legal and professional fees incurred in 2008 related to the defection of credit personnel
and discontinued merger discussions with a competitor. In addition, clearing fees decreased to $30.4 million from $43.4 million in 2008, due to a decline in revenues from our cash
equities business.



The following table sets forth the changes in revenues for the year ended December 31, 2009, as compared to the same period in
2008 (dollars in thousands, except percentage data):

For the Year Ended December 31,2009

%*

2008

%*

Increase
(Decrease)

%**RevenuesBrokerage revenues:Credit

$
276,377


33.7
%
$
304,438


30.0
%
$
(28,061
)

(9.2
)%Equity


192,820


23.6


291,184


28.7


(98,364
)

(33.8
)Financial


129,131


15.8


171,935


16.9


(42,804
)

(24.9
)Commodity


153,376


18.7


196,422


19.3


(43,046
)

(21.9
)Total brokerage revenues


751,704


91.8


963,979


94.9


(212,275
)

(22.0
)Other revenues


67,003


8.2


51,524


5.1


15,479


30.0Total Revenues

$
818,707


100.0
%
$
1,015,503


100.0
%
$
(196,796
)

(19.4
)%


*Denotes
% of total revenues**Denotes
% change in 2009 as compared to 2008


Brokerage RevenuesWe offer our brokerage services in four broad product categories: credit, equity, financial, and commodity. Below is a
discussion
of our brokerage revenues by product category for the year ended December 31, 2009.



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Other Revenues

Other revenues is comprised of the following:

For the Year
Ended
December 31,
2009

For the Year
Ended
December 31,
2008Software, analytics and market data

$
54,347

$
51,250Remeasurement of foreign currency transactions and balances


3,767


4,620Net realized and unrealized gains (losses) from foreign currency hedges


3,519


(16,729
)Interest income


1,043


8,617Other


4,327


3,766Total other revenues

$
67,003

$
51,524


The
increase in other revenues in 2009 to $67.0 million from $51.5 million in 2008 was primarily related to a $20.2 million change in net realized and unrealized
gains (losses) from foreign currency hedges, which improved from a loss of $16.7 million in 2008 to a gain of $3.5 million in 2009. The improvement is attributable to gains we
experienced in 2009 on forward foreign exchange contracts entered into in order to hedge anticipated net foreign currency cash flows. In 2008, we experienced losses on forward foreign exchange
contracts entered into to hedge future foreign currency cash flows. In addition, software, analytics and market data revenues increased $3.1 million over 2008, primarily due to increased
revenue at our Trayport subsidiary, a provider of electronic trading software. These increases in other revenues were partially offset by a decrease in interest income in 2009, due to lower prevailing
interest rates on deposit balances.

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The following table sets forth the changes in expenses for the year ended December 31, 2009 as compared to the same period in
2008 (dollars in thousands, except percentage data):

For the Year Ended December 31,2009

%*

2008

%*

Increase
(Decrease)

%**ExpensesCompensation and employee Benefits

$
583,315


71.2
%
$
665,973


65.6
%
$
(82,658
)

(12.4
)%Communications and market Data


46,263


5.7


47,810


4.7


(1,547
)

(3.2
)Travel and promotion


33,819


4.1


45,756


4.5


(11,937
)

(26.1
)Rent and occupancy


20,325


2.5


31,452


3.1


(11,127
)

(35.4
)Depreciation and amortization


31,493


3.8


31,390


3.1


103


0.3Professional fees


18,402


2.2


26,200


2.6


(7,798
)

(29.8
)Clearing fees


30,354


3.7


43,420


4.3


(13,066
)

(30.1
)Interest


10,540


1.3


14,334


1.4


(3,794
)

(26.5
)Other expenses


20,926


2.6


26,191


2.6


(5,265
)

(20.1
)Total Expenses

$
795,437


97.1
%
$
932,526


91.8
%
$
(137,089
)

(14.7
)%


*Denotes
% of total revenues**Denotes
% change in 2009 as compared to 2008




The decrease in compensation and employee benefits of $82.7 million was primarily attributable to a decrease in brokerage
revenues and corresponding performance bonuses as well as the restructuring initiatives implemented since the second half of 2008. In 2009, we recorded a charge of $34.4 million primarily
related to the renegotiation of certain employment agreements and severance arrangements. In 2008, we recognized a pretax charge of $19.3 million relating to a front office restructuring and an
accrual for broker bonus compensation which was paid in cash rather than, as originally contemplated, in restricted stock units.



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



Net income for the year ended December 31, 2008 was $53.1 million as compared to net income of $94.9 million for
the year ended December 31, 2007, a decrease of approximately $41.8 million or 44.0%. Total revenues increased by $45.0 million, or 4.6%, to $1,015.5 million for the year
ended December 31, 2008 from $970.5 million for 2007. Our increased revenues were primarily due to increased equity brokerage revenues and the acquisition of Trayport, which was
partially offset by

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declines
in credit and financial brokerage revenues. Revenues declined in the second half of 2008 due to the defection of two dozen North American credit brokers to a competitor in April 2008,
deleveraging in the dealer and hedge fund community, the transfer of our global U.S. Dollar interest rate swap business to a third party in the first quarter of 2008, the brokerage desk restructuring
initiative announced in the third quarter 2008, losses from unsettled trades directly related to the Lehman Brothers bankruptcy, and uncertainty around the regulatory and operating environment of
certain OTC markets in the second half of 2008. Our total brokerage personnel headcount was 1,037 employees at December 31, 2008, equal to that at December 31, 2007. Our brokerage
headcount declined in the fourth quarter due to the front office restructuring launched in the third quarter.

Total
expenses increased by $112.7 million, or 13.8%, to $932.5 million for 2008 from $819.8 million in 2007. Expenses increased in large part due to higher
sign-on and retention bonus expenses and a higher salary base due to a greater average employee headcount as compared to the same period in 2007. In addition, we recorded a number of
non-recurring items in 2008. These items included a $12.9 million charge for severance and other expenses related to a front office restructuring initiative that involved closing
certain under-performing brokerage desks and reducing headcount by approximately 55 employees, a $6.4 million accrual for broker bonus compensation which were paid in cash rather than, as
originally contemplated, in restricted stock units, $7.8 million in costs related to the abandonment of our offices at 100 Wall Street and our move to 55 Water Street in New York, and expense
of $1.8 million related to discontinued merger discussions. We also wrote-off a $3.1 million investment in an unconsolidated affiliate which was deemed to be permanently
impaired. Clearing fees increased $10.7 million to $43.4 million for 2008 from $32.7 million in 2007, due in large part to the growth of matched principal brokerage revenues from
our
cash equities and cash bond businesses. Professional fees increased $8.3 million, or 46.4%, primarily due to legal fees regarding the credit broker departures and the discontinued merger
discussions.



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
%


*Denotes
% of total revenues**Denotes
% change in 2008 as compared to 2007


Brokerage RevenuesWe offer our brokerage services in four broad product categories: credit, equity, financial, and commodity. Below is a
discussion
on our brokerage revenues by product category for the year ended December 31, 2008.

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The increase in other revenues in 2008 to $51.5 million from $33.1 million in 2007 was primarily related to an increase
in software, analytics and market data revenues of $31.7. The increase in software, analytics and market data revenue was primarily attributable to the January 31, 2008 acquisition of Trayport,
a provider of electronic trading software, which provided software revenues of $28.3 million in 2008, and increased subscription revenues for our analytics and market data products. The
increase in other revenues was partially offset by a decrease in other income that was primarily attributable to a $14.6 million mark-to-market, non-cash
loss on forward foreign exchange contracts entered into in the fourth quarter of 2008 in order to hedge anticipated net foreign currency cash flows in 2009 and 2010. This non-cash
mark-to-market loss was recognized in the fourth quarter of 2008, and was due to considerable strengthening of the U.S. dollar versus the British Pound Sterling and the Euro in
the fourth quarter of 2008.

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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


31,452


3.1


21,941


2.3


9,511


43.3Depreciation 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


26,191


2.6


24,008


2.5


2,183


9.1Total Expenses

$
932,526


91.8
%
$
819,803


84.5
%
$
112,723


13.8
%


*Denotes
% of total revenues**Denotes
% change in 2008 as compared to 2007




69

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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 Accounting Standards Codification ("ASC") 280-10Segment
Reporting(formerly Statement of Financial Accounting Standard ("SFAS") No. 131,Disclosures about Segments of an Enterprise and Related
Information). 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 and thereafter, 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 31,2009

2008

2007(dollars in thousands)Revenues:Americas Brokerage

$
327,127

$
387,549

$
403,235EMEA Brokerage


364,761


489,650


449,955Asia Brokerage


61,603


88,583


85,914All Other


65,216


49,721


31,437Total Consolidated Revenues

$
818,707

$
1,015,503

$
970,541


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Year ended December 31,2009

2008

2007(dollars in thousands)Expenses:Americas Brokerage

$
284,822

$
276,813

$
279,623EMEA Brokerage


249,801


339,058


296,386Asia Brokerage


62,474


74,618


67,202All Other


198,340


242,037


176,592Total Expenses

$
795,437

$
932,526

$
819,803




Year ended December 31,2009

2008

2007(dollars in thousands)Pre-tax Income/(Loss):Americas Brokerage

$
42,305

$
110,736

$
123,612EMEA Brokerage


114,960


150,592


153,569Asia Brokerage


(871
)

13,965


18,712All Other


(133,124
)

(192,316
)

(145,155
)Total Pre-Tax Income

$
23,270

$
82,977

$
150,738


Segment Results for the Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008





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



73

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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, 2008 to
December 31, 2009. 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,
2009

September 30,
2009

June 30,
2009

March 31,
2009

December 31,
2008

September 30,
2008

June 30,
2008

March 31,
2008(dollars in thousands)RevenuesBrokerage revenues:Agency commissions

$
115,043

$
119,396

$
121,488

$
125,399

$
143,556

$
182,591

$
192,074

$
239,089Principal transactions


53,608


64,989


79,566


72,215


50,272


43,771


53,532


59,094Total brokerage revenues


168,651


184,385


201,054


197,614


193,828


226,362


245,606


298,183Software, analytics and market data


14,649


13,627


13,019


13,052


12,800


14,034


13,157


11,259Interest income


148


172


226


497


1,669


2,187


2,078


2,683Other income (loss)(1)


2,112


(5,938
)

10,367


5,072


(12,061
)

555


688


2,475Total revenues


185,560


192,246


224,666


216,235


196,236


243,138


261,529


314,600ExpensesCompensation and employee benefits


156,053


135,139


146,575


145,548


137,583


176,462


158,730


193,198Communications and market data


11,864


11,661


11,240


11,498


12,245


12,640


11,744


11,181Travel and promotion


9,509


8,280


8,550


7,480


8,897


11,845


13,291


11,723Rent and occupancy(2)


5,343


5,470


4,778


4,734


4,811


14,399


6,176


6,066Depreciation and amortization


7,959


7,680


8,015


7,839


7,827


7,192


8,449


7,922Professional fees


4,674


4,508


4,129


5,091


6,081


7,756


7,351


5,012Clearing fees


6,988


7,153


8,106


8,107


9,706


12,026


10,486


11,202Interest


2,645


2,769


2,657


2,469


3,993


3,508


3,748


3,085Other expenses(1),(2)


6,046


5,170


4,366


5,344


5,445


7,887


5,219


7,640Total expenses


211,081


187,830


198,416


198,110


196,588


253,715


225,194


257,029Income (loss) before income taxes


(25,521
)

4,416


26,250


18,125


(352
)

(10,577
)

36,335


57,571(Benefit from) provision for income taxes


(11,070
)

1,633


9,894


6,525


(544
)

(3,861
)

12,687


21,589Net income (loss)

$
(14,451
)
$
2,783

$
16,356

$
11,600

$
192

$
(6,716
)
$
23,648

$
35,982


(1)Certain
software development contract revenues were previously presented in a line item called "Contract revenue" and have been combined into "Other income
(loss)" to conform with the presentation for the three and twelve month periods ended December 31, 2009. Certain expenses related to these software development contracts were presented as
"Contract costs" in the consolidated statements of income and have been combined into "Other expenses" to conform with the presentation for the three and twelve month periods ended December 31,
2009. The amounts that were combined for the respective revenue and costs for each period presented above were as follows:


September 30,
2009

June 30,
2009

March 31,
2009

December 31,
2008

September 30,
2008

June 30,
2008

March 31,
2008(dollars in thousands)Contract Revenue

$


$
97

$
5

$
28

$


$
45

$
13Contract Costs

$


$
2

$


$
46

$


$
16

$
6


(2)Certain
amounts totaling $538, $519 and $416 related to insurance expense were previously presented in the "Rent and occupancy" line item in the
consolidated statements of income for the three month periods ended September 30, June 30 and March 31, 2009, respectively, but should have been presented in "Other expenses" in
the consolidated statements of income for those periods. These amounts have been properly reclassified to "Other expenses" for those periods. Certain amounts totaling $552, $570, $583 and $548 for the
three month periods ended December 31, September 30, June 30 and March 31, 2008, respectively, were also reclassified to conform to current year presentation.


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

Quarter EndedDecember 31,
2009

September 30,
2009

June 30,
2009

March 31,
2009

December 31,
2008

September 30,
2008

June 30,
2008

March 31,
2008(dollars in thousands)RevenuesBrokerage revenues:Agency commissions


62.0
%

62.1
%

54.1
%

58.0
%

73.2
%

75.1
%

73.4
%

76.0
%Principal transactions


28.9


33.8


35.4


33.4


25.6


18.0


20.5


18.8Total brokerage revenues


90.9


95.9


89.5


91.4


98.8


93.1


93.9


94.8Software, analytics and market data


7.9


7.1


5.8


6.0


6.5


5.8


5.0


3.6Interest income


0.1


0.1


0.1


0.2


0.9


0.9


0.8


0.9Other income (loss)


1.1


(3.1
)

4.6


2.4


(6.1
)

0.2


0.3


0.8Total revenues


100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%

100.0
%ExpensesCompensation and employee benefits


84.1
%

70.3
%

65.2
%

67.3
%

70.1
%

72.6
%

60.7
%

61.4
%Communications and market data


6.4


6.1


5.0


5.3


6.2


5.2


4.5


3.6Travel and promotion


5.1


4.3


3.8


3.5


4.5


4.9


5.1


3.7Rent and occupancy


2.9


2.8


2.1


2.2


2.5


5.9


2.4


1.9Depreciation and amortization


4.3


4.0


3.6


3.6


4.0


3.0


3.2


2.5Professional fees


2.5


2.3


1.8


2.4


3.1


3.2


2.8


1.6Clearing fees


3.8


3.7


3.6


3.7


4.9


4.9


4.0


3.6Interest


1.4


1.4


1.2


1.1


2.0


1.4


1.4


1.0Other expenses


3.3


2.7


2.0


2.5


2.8


3.2


2.0


2.4Total expenses


113.8
%

97.6
%

88.3
%

91.6
%

100.2
%

104.4
%

86.1
%

81.7
%Income (loss) before income taxes


(13.8
)

2.4


11.7


8.4


(0.2
)

(4.4
)

13.9


18.3(Benefit from) provision for income taxes


(6.0
)

0.8


4.4


3.0


(0.3
)

(1.6
)

4.9


6.9Net income (loss)


(7.8
)%

1.6
%

7.3
%

5.4
%

0.1
%

(2.8
)%

9.0
%

11.4
%


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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,
2009

September 30,
2009

June 30,
2009

March 31,
2009

December 31,
2008

September 30,
2008

June 30,
2008

March 31,
2008(dollars in thousands)Brokerage revenues:Credit

$
52,650

$
68,235

$
81,088

$
74,404

$
57,439

$
60,029

$
76,275

$
110,695Financial


31,469


33,166


33,405


31,091


28,051


45,542


46,322


52,020Equity


45,900


44,673


48,853


53,394


72,891


69,941


69,636


78,716Commodity


38,632


38,311


37,708


38,725


35,447


50,850


53,373


56,752Total brokerage revenues

$
168,651

$
184,385

$
201,054

$
197,614

$
193,828

$
226,362

$
245,606

$
298,183Brokerage revenues:Credit


31.2
%

37.0
%

40.3
%

37.7
%

29.6
%

26.5
%

31.0
%

37.1
%Financial


18.7


18.0


16.6


15.7


14.5


20.1


18.9


17.5Equity


27.2


24.2


24.3


27.0


37.6


30.9


28.4


26.4Commodity


22.9


20.8


18.8


19.6


18.3


22.5


21.7


19.0Total 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, 2009, we have financed our operations primarily through cash flows from operations. Our
debt consists of amounts outstanding under our Credit Agreement with Bank of America and certain other lenders, which expires on February 24, 2011, and pursuant to our Senior Notes, which
mature on January 30, 2013. In April 2009, we amended our Credit Agreement to reduce the maximum permitted borrowings to $175.0 million. In addition, we repaid $50 million of the
outstanding Credit Agreement balance during 2009. In January 2008, we completed a private placement of the Senior Notes. See Note 9 to the Consolidated Financial Statements in
Part II-Item 8 for further details on the amendment to our Credit Agreement and our Senior Notes.

Cash
and cash equivalents consist of cash and highly liquid investments with maturities, when purchased, of three months or less. At December 31, 2009, we had
$342.4 million of cash and cash equivalents compared to $342.4 million and $240.4 million at December 31, 2008 and 2007, 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 31,2009

2008

2007Cash provided by operating activities

$
113,801

$
179,134

$
136,034Cash used in investing activities


(27,671
)

(192,857
)

(53,573
)Cash (used in)/provided by financing activities


(87,986
)

119,361


(23,402
)Effects of exchange rate changes on cash and cash equivalents


1,860


(3,656
)

(150
)Increase in cash and cash equivalents

$
4

$
101,982

$
58,909


Net
cash provided by operating activities decreased to $113.8 million for the year ended December 31, 2009, compared with $179.1 million for 2008. The decrease is,
in part, attributable to the $36.8 million decline in our net income to $16.3 million for the year ended December 31, 2009, from $53.1 million for the year ended
December 31, 2008. Items which reconcile net income to net cash

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provided
by operating activities such as depreciation, amortization of deferred compensation, unrealized foreign currency gains and losses and other items decreased by $64.4 million as compared
to the year ended December 31, 2008. Offsetting these amounts, working capital employed in the business decreased by $35.9 million for the year ended December 31, 2009 relative to
the same period in 2008. The decrease in working capital used in the business is primarily related to a $129.7 million decrease in the change in other assets and a net increase in other
liabilities of $6.1 million offset by a $53.1 million decrease in the change in net receivables from and payables to brokers, dealers and clearing organizations and a $44.7 increase in
the change in commissions receivable. Additionally, 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.

Net
cash used in investing activities for the year ended December 31, 2009 was $27.7 million compared to $192.9 million for 2008. The decrease in cash used for
investing activities primarily related to a decrease in cash used for business acquisitions and capital expenditures, primarily associated with our January 31, 2008 acquisition of Trayport.
These decreases were slightly offset by an increase in payments on foreign exchange derivative contracts. Net cash used in investing activities for the year ended December 31, 2008 increased by
$139.3 million from 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 financing activities for the year ended December 31, 2009 was $88.0 million compared to $119.4 million cash provided by financing activities in
2008. This change was primarily due to our net repayment of $50 million of debt in 2009, as compared to the net borrowings of $169 million we made in 2008, as well as the decrease in the
amount of cash we used for repurchases of common stock and to pay cash dividends. Net cash used in financing activities for the year ended December 31, 2008 was $119.4 million compared
to $23.4 million provided by for 2007. The increase in cash provided by financing activities was primarily due to an increase in net borrowings under our Credit Agreement and the issuance of
the Senior Notes in 2008, which was offset by an increase in cash used for repurchases of common stock and cash dividends paid in 2007, and a decrease in tax benefits related to 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, 2009, there was $115.0 million in
outstanding borrowings and $7.2 million of outstanding letters of credit under our Credit Agreement. At December 31, 2009, we had $52.8 million of availability under the Credit
Agreement. During 2008, we borrowed $105.0 million under the Credit Agreement and issued $60.0 million of our Senior Notes to fund the acquisition of Trayport. 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.

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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 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, 2009, GFI
Securities LLC had Net Capital, as defined under the Exchange Act, of $41.2 million, which was $40.9 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, 2009, GFI Securities Limited had financial
resources, as defined by the FSA, of $53.0 million, which was $25.5 million in excess of its required financial resources of $27.5 million. As of December 31, 2009, GFI
Brokers Limited had financial resources, as defined by the FSA, of $106.6 million, which was $71.5 million in excess of its required financial resources of $35.1 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
$0.5 million). In addition, GFI Securities Limited is required to maintain a capital base of 1,000 million Japanese Yen (approximately $10.7 million). GFI Securities Limited's
Japanese branch is also subject to the net capital rule promulgated by the FSFL, which requires that net worth, including "brought-in" capital, exceed a ratio of 120.0% of relevant
expenditure. At December 31, 2009, GFI Securities Limited and its Japanese branch were in compliance with these capital requirements.

GFI
(HK) Securities LLC is subject to the capital requirements of the SFC in Hong Kong. At December 31, 2009, GFI (HK) Securities LLC had net capital of
approximately $1.9 million, which was $1.5 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 $0.6 million). At December 31, 2009, GFI (HK) Brokers Ltd. had stockholders' equity of 20.2 million Hong Kong dollars
(or approximately $2.6 million), which exceeds the minimum requirement by 15.2 million Hong Kong dollars (or approximately $2.0 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. At December 31, 2009, GFI Group PTE Ltd. had stockholders'
equity of 17.5 million Singapore dollars (or approximately $12.4 million), which exceeded the minimum requirement by approximately 14.5 million Singapore dollars (or approximately
$10.3 million).

GFI
Korea Money Brokerage Limited is licensed and regulated by the Financial Supervisory Commission to engage in foreign exchange brokerage business, and is subject to certain regulatory

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requirements
under the Capital Market and Financial Investment Business 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, 2009, GFI Korea Money Brokerage Limited met the minimum requirement for
paid-in-capital of 5.0 billion Korean Won (or approximately $4.3 million).

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. Cash dividends paid in 2009 were approximately
$23.6 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. Our Credit Agreement expires on February 24, 2011 and we are in the process of evaluating our options
to either renew the existing agreement, replace it with a new credit agreement or to seek alternative sources of capital. We currently expect to finalize this process by December 31, 2010. 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, 2009:

Payments Due by PeriodTotal

Less than 1 year

1-3 years

3-5 years

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

$
118,749

$
13,305

$
22,203

$
17,567

$
65,674Short-term borrowings(2)


115,000


115,000








Interest on Long-term obligations


17,157


4,902


9,804


2,451


Long-term obligations


60,000








60,000


Purchase obligations(3)


20,829


15,700


5,113


16


Total

$
331,735

$
148,907

$
37,120

$
80,034

$
65,674


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As
disclosed in Note 10 to the Consolidated Financial Statements in Part IIItem 8, we have unrecognized tax benefits of approximately $8.4 million (net of the
federal benefit on state issues) after recognizing the impact of the adoption of ASC 740-10 (formerly Financial Accounting Standards Board Interpretation No. 48, Uncertainty in Income Taxes, an interpretation of SFAS
No. 109("FIN 48")). Due to the uncertainty of the amounts to be ultimately paid as
well as the timing of such payments, all FIN 48 liabilities which have not been paid are excluded from the Contractual Obligations and Commitments table.

Off-Balance Sheet Arrangements

The Company did not have any off-balance sheet arrangements at December 31, 2009.

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. 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

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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, 2009 was $4.1 million.

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 ASC 820-10 Fair Value Measurements and Disclosures("ASC
820-10") (formerly SFAS No. 157,Fair Value
Measurements). In accordance with ASC 820-10, 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.





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

The
Company evaluates its marketable securities in accordance with ASC 320-10InvestmentsDebt and Equity
Securities(formerly 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, 2009 and
2008. Substantially all of the Company's trading and available-for-sale marketable securities were categorized as Level I and the fair values of these securities were
based on quoted market prices in active markets.

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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, 2009 and 2008, the Company's foreign exchange
derivative contracts have been categorized in Level 2 of the ASC 820-10 fair value hierarchy.

The
fair value of trading securities owned as a result of matched principal transactions is estimated using recently executed transactions and market price quotations. At
December 31, 2009 and 2008, the Company held corporate equities that were categorized in Level 1 and corporate bonds that were categorized in Level 2 of the ASC 820-10
fair value hierarchy.

Software Development CapitalizationInternal-Use Software

We capitalize certain costs of software developed or obtained for internal use in accordance with ASC 350, IntangiblesGoodwill and Other(formerly 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 ASC 350,IntangiblesGoodwill and Other(formerly 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

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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.

Income Taxes

In accordance with ASC 740,Income Taxes(formerly 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 ASC 740-10. 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, 2009 and 2008, 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 ASC 450,Contingencies(formerly 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 December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial
Statementsan amendment of ARB No. 51, which is now a sub-topic within ASC 810-10 Consolidation("ASC 810-10"). ASC 810-10 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. ASC 810-10 is effective for
financial statements issued for fiscal years beginning after December 15, 2008 and was adopted by us on January 1, 2009. The adoption of ASC 810-10 did not have a material
impact on our consolidated financial statements.

In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations (revised 2007), which is now a sub-topic
within ASC 805Business Combinations("ASC 805"). ASC 805 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. ASC 805 applies to all transactions or other events in which we

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obtain
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. ASC 805 was effective for financial statements issued for fiscal years beginning after December 15, 2008 and was
adopted by us on January 1, 2009. The adoption of ASC 805 did not have a material impact on our consolidated financial statements.

In
February 2008, the FASB issued FASB Staff Position No. FAS 157-2, which is now a sub-topic within ASC 820-10Fair
Value Measurements and Disclosures("ASC 820-10"). ASC 820-10 delayed the effective date of fair value measurements and disclosure requirements 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 ASC 820-10. We adopted ASC 820-10 for those nonfinancial assets and liabilities noted in FSP 157-2 on January 1,
2009. The adoption of ASC 820-10 for nonfinancial assets and liabilities did not 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, an amendment of FASB Statement
No. 133, which is now a sub-topic within ASC 815-10Derivatives and Hedging("ASC
815-10"). ASC 815-10 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. ASC 815-10 was effective for fiscal years beginning after November 15, 2008 and was adopted by us on January 1, 2009. See
Note 17 for disclosures on Financial Instruments.

In
April 2008, the FASB issued FSP 142-3,Determining the Useful Life of Intangible Assets, which is now a
sub-topic within ASC 350-30IntangiblesGoodwill and Other("ASC 350-30"). ASC 350-30 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. ASC 350-30 was effective for fiscal years beginning after December 15, 2008 and was adopted by us on January 1, 2009. The
adoption of ASC 350-30 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, which is now a sub-topic within ASC 260-10Earnings Per Share("ASC
260-10"). ASC 260-10 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, which is now a
sub-topic within ASC 260-10. ASC 260-10 was effective for fiscal years beginning after December 15, 2008 and was adopted by us on January 1, 2009. The
adoption of ASC 260-10 did not have a material impact on our consolidated financial statements.

In
April 2009, the FASB issued FSP FAS 141(R)-1,Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies, which is now a sub-topic within ASC 805Business Combinations("ASC 805"). ASC 805 addresses the
criteria and disclosures for recognition of an acquired asset or liability assumed in a business combination that arises from a contingency. ASC 805 was effective for fiscal years beginning after
December 15, 2008 and was adopted by us on January 1, 2009. The adoption of ASC 805 did not have a material impact on our consolidated financial statements.

In
April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2,Recognition and Presentation of
Other-Than-Temporary Impairments, which is now a sub-topic within ASC 320-10 InvestmentsDebt and Equity Securities(ASC "320-10"). ASC 320-10 amends the
other-than-temporary impairment guidance

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in
U.S. generally accepted accounting principles for debt securities to make the guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial statements. ASC 320-10 was effective for interim and annual reporting periods ending
after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. ASC 320-10 was adopted by us on April 1, 2009 and the adoption did not have
a material impact on our consolidated financial statements.

In
April 2009, the FASB issued FSP FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly, which is now a sub-topic within ASC 820-10Fair Value
Measurements and Disclosures("ASC 820-10"). ASC 820-10 provides additional guidance for estimating fair value, when the volume and level of activity
for the asset or liability have significantly decreased and also includes guidance on identifying circumstances that indicate a transaction is not orderly. ASC 820-10 was effective for
interim and annual reporting periods ending after June 15, 2009, and has been applied prospectively with early adoption permitted for periods ending after March 15, 2009. ASC
820-10 was adopted by us on April 1, 2009 and the adoption did not have a material impact on our consolidated financial statements.

In
May 2009, the FASB issued SFAS No. 165,Subsequent Events, which is now a sub-topic within ASC 855-10 Subsequent Events("ASC 855-10"). ASC 855-10
provides guidance for accounting for and disclosure of subsequent events that are
not addressed in other applicable generally accepted accounting principles. ASC 855-10 was effective for interim and annual reporting periods ending after June 15, 2009, and has
been applied prospectively by us. In February 2010, the FASB amended ASC 855-10 through the issuance of Accounting Standards Update No. 2010-09 ("ASU
2010-09"), Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removed the requirement for an SEC filer to disclose a date in both the issued and revised
financial statements and was effective upon issuance. See Note 21 for disclosures on Subsequent Events.

In
June 2009, the FASB issued SFAS No. 166,Accounting for Transfers of Financial Assets-an amendment of FASB Statement
No. 140("SFAS 166"). SFAS 166 amends FASB
Statement No. 140, which is now a sub-topic within ASC 860Transfers and Servicing. This guidance was codified by the FASB in
December 2009 through the issuance of Accounting Standards Update No. 2009-16 ("ASU 2009-16")Transfers and Servicing (Topic 860) Accounting for
Transfers of Financials Assets. ASU 2009-16 was issued to improve the information that a reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor's continuing involvement in transferred financial assets. ASU
2009-16 was effective as of the beginning of the first annual reporting period that begins after November 15, 2009, for interim periods within the first annual reporting period and
for interim and annual reporting periods thereafter. The adoption of ASU 2009-16 did not have a material impact on our consolidated financial statements.

In
June 2009, the FASB issued SFAS No. 167,Amendments to FASB Interpretation No. 46(R)("SFAS 167"). SFAS 167
amends certain requirements of FASB Interpretation No. 46(R),Consolidation of Variable Interest Entities, which is now a sub-topic
within ASC 810Consolidation.This guidance was codified by the FASB in December 2009 through the issuance of Accounting Standards Update
No. 2009-17 ("ASU 2009-17")Consolidations (Topic 810) Improvements to Financial Reporting by Enterprises Involved with Variable Interest
Entities. ASU 2009-17 was issued to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable
information to users of financial statements. ASU 2009-17 requires an enterprise to perform an analysis to determine whether the enterprise's variable interest or interests provide a
controlling financial interest in a variable interest entity. The determination is based on, among other things, the other entity's purpose and design and the reporting entity's ability to direct the
activities of a variable interest entity that most significantly impact the entity's economic performance. ASU 2009-17 was effective as of the beginning of the first annual reporting
period that begins after November 15, 2009,

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for
interim periods within the first annual reporting period and for interim and annual reporting periods thereafter. The adoption of ASU 2009-17 did not have a material impact on our
consolidated financial statements.

In
June 2009, the FASB issued SFAS No. 168,The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles, which is now a sub-topic within ASC 105-10Generally Accepted Accounting Principles("ASC
105-10"). ASC 105-10 establishes the codification as the source of authoritative generally accepted accounting principles recognized by the FASB to be applied by
nongovernmental entities and all guidance contained in the codification carries an equal level of authority. ASC 105-10 was effective for interim and annual reporting periods ending after
September 15, 2009. References to generally accepted accounting principles contained in our consolidated financial statements have been updated to reflect the new codification references as
required.

In
August 2009, the FASB issued Accounting Standards Update No. 2009-5 ("ASU 2009-5")Fair Value Measurements and Disclosures
(Topic 820) Measuring Liabilities at Fair
Value. ASU 2009-5 provides clarification in circumstances in which a quoted price in an active market for the identical liability is not available and provides
valuation techniques to be utilized by the reporting entity. ASU 2009-5 was effective for the first reporting period (including interim periods) beginning after issuance. The adoption of
ASU 2009-5 did not have a material impact on our consolidated financial statements.

In
October 2009, the FASB issued Accounting Standards Update No. 2009-13 ("ASU 2009-13")Revenue Recognition (Topic 605)
Multiple-Deliverable Revenue Arrangements. ASU 2009-13 establishes the accounting and reporting guidance for arrangements with multiple-revenue generating
activities. ASU 2009-13 addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting and provides a selling price
hierarchy for determining the selling price of a deliverable. ASU 2009-13 is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted but must be
retrospectively applied to the beginning of the fiscal year of adoption. We do not expect the impact of the adoption of ASU 2009-13 to have a material impact on our consolidated financial
statements.

In
October 2009, the FASB issued Accounting Standards Update No. 2009-14 ("ASU 2009-14")Software (Topic 985) Certain Revenue
Arrangements That Include Software Elements. ASU 2009-14 provides guidance on how to allocate arrangement consideration to deliverables in an arrangement that
includes both tangible products and software. ASU 2009-14 also provides additional guidance on how to determine which software, if any, relating to the tangible product would be excluded
from software revenue recognition. ASU 2009-14 is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted but must be retrospectively applied to
the beginning of the fiscal year of adoption. We do not expect the adoption of ASU 2009-14 to have a material impact on our consolidated financial statements.

In
January 2010, the FASB issued Accounting Standards Update No. 2010-01 ("ASU 2010-01")Equity (Topic 505) Accounting for
distributions to Shareholders with Components of Stock and Cash.ASU 2010-01 addresses diversity in practice related to the accounting for a distribution to
shareholders that offer them the ability to elect to receive their entire distribution in cash or shares of equivalent value with a potential limitation on the total amount of cash that shareholders
can elect to receive in the aggregate. Historically, some entities have accounted for the stock portion of the distribution as a new share issuance that is reflected in earnings per share ("EPS")
prospectively. Other entities have accounted for the stock portion of the distribution as a stock dividend by retroactively restating shares outstanding and EPS for all periods presented. The
amendments in ASU 2010-01 clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or shares with a potential limitation on the total
amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance. ASU 2010-01 was effective for interim and annual reporting

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periods
ending after December 15, 2009. The adoption of ASU 2010-01 did not have a material impact on our consolidated financial statements.

In
January 2010, the FASB issued Accounting Standards Update No. 2010-02 ("ASU 2010-02")Consolidation (Topic 810) Accounting and
Reporting for Decreases in Ownership of a Subsidiarya Scope Clarification.ASU 2010-02 provides clarification on the deconsolidation of a subsidiary
(or group of assets) in which any retained noncontrolling interest is measured at fair value with full (not partial) gain or loss recognized in earnings. In addition, transfers of a business to either
an equity method investee or a joint venture would also be in the scope of ASC 810Consolidationswith full gain or loss recognition. The scope of ASU
2010-02 excludes sales of in substance real estate and conveyances of oil and gas mineral rights. ASU 2010-02 was effective for interim and annual reporting periods ending
after December 15, 2009. The adoption of ASU 2010-02 did not have a material impact on our consolidated financial statements.

In
January 2010, the FASB issued Accounting Standards Update No. 2010-06 ("ASU 2010-06")Fair Value Measurements and Disclosures
(Topic 820) Improving Disclosures about Fair Value Measurements.ASU 2010-06 provides amendments to Subtopic 820-10 that require new disclosures
including the amounts of and reasons for transfers in and out of Levels 1 and 2 fair value measurements and reporting activity in the reconciliation of Level 3 fair value measurements on
a gross basis. ASU 2010-06 provides amendments that clarify existing disclosures regarding the level of disaggregation for providing fair value measurement disclosures for each class of
assets and liabilities. In addition, it clarifies existing disclosures about inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that
are required for either Level 2 or Level 3. ASU 2010-06 was effective for interim and annual reporting periods ending after December 15, 2009 except for the
disclosures about the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 31, 2010 and for interim periods within
those fiscal years. The adoption of ASU 2010-06 did not have a material impact on our consolidated financial statements and the adoption of ASU 2010-06 with respect to
disclosures of the roll forward of activity in Level 3 fair value measurements is not expected to have a material impact on our consolidated financial statements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISLOSURE ABOUT MARKET RISK

Risk Management

In the normal course of business, we are exposed to various risks, including foreign currency exposure risk, interest rate risk, credit
risk, market risk and operational risk. Top-level oversight of our risk management resides with the Risk Policy Committee of the Board of Directors. We also utilize several management
committees made up of key executives with responsibility for identifying and managing risk. Specialized risk functions, such as our credit risk, compliance, internal audit and Sarbanes-Oxley
compliance departments, perform regular monitoring and testing procedures to provide management with assurance regarding the design and operating effectiveness of risk control policies and procedures.
Finally, business managers play an integral role in risk management by maintaining the processes and control activities designed to identify, mitigate, and report risk.

The
various risks that may impact the Company, certain of our risk management procedures, 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 related to our international operations. 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

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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. At December 31, 2009 and 2008, we had no Foreign Exchange Derivative Contracts that were designated as foreign currency cash flow hedges. We do not use derivative contracts for
speculative purposes.

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 $7.4 million as of December 31, 2009.

Interest Rate Risk

We are exposed to changes in interest rates which impact our variable-rate debt obligations. At December 31, 2009,
we had $115 million in variable-rate debt outstanding. Fluctuations in interest rates, will impact the amount of interest we must pay on these debt obligations. If variable interest
rates were to increase by 0.50%, the annual impact to our net income would be a reduction of approximately $0.3 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 our 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 may include 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. Our credit risk department assists the credit
committee in the review of any proposed counterparty by conducting diligence on such party and by continuing to review such counterparties for continued credit approval on at least an annual basis.
These 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 includes the requisite anti-money laundering and know-your-customer verifications.

89

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Table of Contents

Market Risk

We are exposed to market risk associated with our principal transactions. Through our subsidiaries, we conduct both matched principal
and principal trading businesses, primarily involving fixed income and equity securities, but increasingly, for certain foreign exchange, commodities and listed derivative products

In
matched principal transactions, we act as a "middleman" by serving as counterparty on one side of a customer trade and entering into an offsetting trade with another party relatively
quickly (often within minutes and generally on the same trading day) 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 by physical delivery of the underlying instrument.

The
number of matched principal trades we execute has continued to grow as compared to prior years. 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. Certain of the less liquid and OTC markets in which we provide our services exacerbate 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. 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 pervasive 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 us or 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 (usually on the same
day and generally within three days), 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.

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Table of Contents

Liability
for unmatched trades could adversely affect our results of operations and balance sheet. Although the significant majority of our principal trading is done on a "matched
principal" basis, we may take unmatched positions for our own account generally in response to customer demand, primarily to facilitate the execution of existing customer orders or in anticipation
that future customer orders will become available to fill the other side of the transaction, and not primarily for directional purposes. While we seek to minimize our exposure to market risk by
entering into offsetting trades or a hedging transaction relatively quickly (often within minutes and generally on the same trading day), we may not always enter into an offsetting trade on the same
trading day and any hedging transaction we may enter into may not fully offset our exposure. Therefore, although any unmatched positions are intended to be held short term, we may not entirely offset
market risk and may be exposed to market risk for several days or more or to a partial extent or both.

Additionally,
we have recently authorized a limited number of our desks to enter into principal investing transactions in which we commit our capital within predefined limits, either to
facilitate customer trading activities or to engage in principal trading for our own account. These principal positions may ultimately be matched against a customer order or through a market
intermediary, either in the short term (such as the same trading day) or we may hold these positions for several days or more. The number and size of these transactions may affect our results of
operations in a given period and we may also incur losses from these trading activities due to market fluctuations and volatility from quarter to quarter. We are currently subject to covenants in our
Credit Agreement and our Senior
Notes which generally limit the aggregate amount of securities which we may trade for our own account to five percent of our consolidated capital. To the extent that we own assets, i.e., have
long positions, in any of those markets, a downturn in the value of those assets or in those markets could result in losses from a decline in the value of those long positions. Conversely, to the
extent that we have sold assets we do not own, i.e., have short positions, in any of those markets, an upturn in those markets could expose us to significant losses as we attempt to cover our
short positions by acquiring assets in a rising market. To the extent these securities 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.

In
addition to entering into offsetting trades or a hedging transaction, we also monitor market risk exposure from our matched principal and principal trading business, including
regularly monitoring concentration of market risk to financial instruments, countries or counterparties and regularly monitoring trades that have not settled within prescribed settlement periods or
volume thresholds. Additionally, market risks are monitored and mitigated by the use of our proprietary, electronic risk monitoring system, which provides management with daily credit reports in each
of our geographic regions that analyze credit concentration and facilitates the regular monitoring of transactions against key risk indicators.

Operational Risk

Operational risk refers to the risk of financial or other loss, or potential damage to our reputation, resulting from inadequate or
failed internal processes, people, resources, systems or from external events. We may incur operational risk across the full scope of business activities and support functions. We have operational
risk polices that are designed to reduce the likelihood and impact of operational incidents as well as to mitigate legal, regulatory and reputational risk. Primary responsibility for the management of
operational risk resides with the business managers, risk and control functions, and various management committees through the use of processes and controls designed to identify, assess, manage,
mitigate and report operational risk. For additional discussions of our operational risks, see "Item 1ARisks Related to Our Operations".

91

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Table of Contents



Report of Independent Registered Public Accounting Firm

93Consolidated Statements of Financial Condition

94Consolidated Statements of Income

95Consolidated Statements of Comprehensive Income

96Consolidated Statements of Cash Flows

97Consolidated Statements of Changes in Stockholders' Equity

98Notes to Consolidated Financial Statements

99


92

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Table of Contents

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, 2009 and 2008, 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, 2009. 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, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, 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, 2009, based on the criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated March 15, 2010 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/
Deloitte & Touche LLP
New York, New York
March 15, 2010

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Table of Contents

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

December 312009

2008ASSETSCash and cash equivalents

$
342,379

$
342,375Deposits with clearing organizations


11,065


8,492Accrued commissions receivable, net


87,354


111,923Receivables from brokers, dealers and clearing organizations


87,737


149,661Property, equipment and leasehold improvements, net


65,334


73,161Goodwill


210,758


209,507Intangible assets, net


40,123


44,439Other assets


107,344


146,353TOTAL ASSETS

$
952,094

$
1,085,911LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIESAccrued compensation

$
106,286

$
135,861Accounts payable and accrued expenses


48,845


51,497Payables to brokers, dealers and clearing organizations


68,131


104,840Short-term borrowings, net


114,069


164,328Long-term obligations, net


59,619


59,495Other liabilities


71,042


92,927Total Liabilities

$
467,992

$
608,948Commitments and contingenciesSTOCKHOLDERS' EQUITYPreferred stock, $0.01 par value; 5,000,000 shares authorized, none outstanding at December 31, 2009 and 2008





Common stock, $0.01 par value; 400,000,000 shares authorized and 120,860,100 and 119,517,720 shares issued at December 31, 2009 and 2008,
respectively


1,209


1,195Additional paid in capital(1)


296,430


279,656Retained earnings


212,059


219,354Treasury stock, 2,433,527 and 996,236 common shares at cost at December 31, 2009 and 2008, respectively


(22,901
)

(18,476
)Accumulated other comprehensive loss


(2,695
)

(4,766
)Total Stockholders' Equity


484,102


476,963TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
952,094

$
1,085,911


---

See
notes to consolidated financial statements

94

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Table of Contents

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

Year Ended December 31,2009

2008

2007REVENUES:Brokerage revenues:Agency commissions

$
481,326

$
757,310

$
749,223Principal transactions


270,378


206,669


188,254Total brokerage revenues


751,704


963,979


937,477Software, analytics and market data


54,347


51,250


19,522Interest income


1,043


8,617


9,714Other income/(loss)(1)


11,613


(8,343
)

3,828Total revenues


818,707


1,015,503


970,541EXPENSES:Compensation and employee benefits


583,315


665,973


604,847Communications and market data


46,263


47,810


44,622Travel and promotion


33,819


45,756


41,992Rent and occupancy(1)


20,325


31,452


21,941Depreciation and amortization


31,493


31,390


24,686Professional fees


18,402


26,200


17,899Clearing fees


30,354


43,420


32,732Interest


10,540


14,334


7,076Other expenses(1)


20,926


26,191


24,008Total expenses


795,437


932,526


819,803INCOME BEFORE PROVISION FOR INCOME TAXES


23,270


82,977


150,738PROVISION FOR INCOME TAXES


6,982


29,871


55,880NET INCOME

$
16,288

$
53,106

$
94,858EARNINGS PER SHAREBasic

$
0.14

$
0.45

$
0.81Diluted

$
0.13

$
0.44

$
0.80WEIGHTED AVERAGE SHARES OUSTANDING BASIC(2)Common stock


118,178,493


117,966,596


116,595,920WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED(2)


121,576,767


119,743,693


119,180,791


---

See
notes to consolidated financial statements

95

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Table of Contents

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

Year Ended December 31,2009

2008

2007NET INCOME

$
16,288

$
53,106

$
94,858OTHER COMPREHENSIVE INCOME (LOSS):Foreign currency translation adjustment, net of tax


1,506


(4,355
)

(150
)Unrealized (loss) gain on available-for-sale securities, net of tax


565


(208
)

75COMPREHENSIVE INCOME

$
18,359

$
48,543

$
94,783


See
notes to consolidated financial statements

96

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Table of Contents

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

Year Ended December 31,2009

2008

2007CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
16,288

$
53,106

$
94,858Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


31,493


31,390


24,686Amortization of loan fees


742


416


224Provision for doubtful accounts


3,617


208


1,751Deferred compensation


25,820


24,983


21,787Loss on disposal of fixed assets


8


223


148(Benefit from) provision for deferred taxes


(32,811
)

14,913


124(Gains) losses on foreign exchange derivative contracts


(3,519
)

16,729


12,558(Gains) losses from equity method investments


(1,552
)

2,102


698Tax expense (benefit) related to share-based compensation


5,577


2,136


(16,896
)Other non-cash charges, net


(462
)

237


(521
)(Increase) decrease in operating assets:Deposits with clearing organizations


(2,573
)

(30
)

(489
)Accrued commissions receivable


20,912


65,597


(49,574
)Receivables from brokers, dealers and clearing organizations


61,924


168,188


(143,155
)Other assets


67,694


(62,025
)

(2,163
)Increase (decrease) in operating liabilities:Accrued compensation


(29,575
)

(38,611
)

46,425Accounts payable and accrued expenses


(2,612
)

6,054


8,890Payables to brokers, dealers and clearing organizations


(36,709
)

(89,896
)

109,741Other liabilities


(10,461
)

(16,586
)

26,942Cash provided by operating activities


113,801


179,134


136,034CASH FLOWS FROM INVESTING ACTIVITIES:Net cash used for business acquisitions





(149,614
)

(2,754
)Purchase of available-for-sale securities








(5,498
)Issuance of notes receivable


(1,000
)




Proceeds from other investments


4,808


1,042


814Purchases of other investments


(2,158
)

(3,949
)

(4,668
)Purchase of property, equipment and leasehold improvements


(13,240
)

(38,807
)

(33,804
)Payments on foreign exchange derivative contracts


(16,081
)

(1,529
)

(7,663
)Cash used in investing activities


(27,671
)

(192,857
)

(53,573
)CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of short-term borrowings


(50,000
)

(174,500
)

(70,486
)Proceeds from short-term borrowings





283,500


35,300Proceeds from issuance of long-term obligations





60,000


Repurchases of common stock


(4,425
)

(11,400
)

(7,076
)Cash dividend paid


(23,583
)

(30,036
)

Payment of loan fees


(831
)

(883
)

Proceeds from exercises of stock options


70


578


8,382Cash paid for taxes on vested restricted stock units


(3,640
)

(5,762
)

(6,418
)Tax (expense) benefit related to share-based compensation


(5,577
)

(2,136
)

16,896Cash (used in)/provided by financing activities


(87,986
)

119,361


(23,402
)Effects of exchange rate changes on cash and cash equivalents


1,860


(3,656
)

(150
)INCREASE IN CASH AND CASH EQUIVALENTS


4


101,982


58,909CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


342,375


240,393


181,484CASH AND CASH EQUIVALENTS, END OF PERIOD

$
342,379

$
342,375

$
240,393SUPPLEMENTAL DISCLOSURE:Interest paid

$
9,532

$
11,678

$
6,869Income taxes paid, net of refunds

$
24,696

$
38,355

$
37,394


Non-Cash Investing Activity:

During 2009, the Company recorded a contingent liability of $2,400 within Other Liabilities in connection with a business
combination as described in Note 7.

See notes to consolidated financial statements

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Table of Contents

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 (loss)

TotalBALANCE, 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 loss 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
)

476,963Purchase of shares of treasury stock








(4,425
)







(4,425
)Issuance of common stock for exercise of stock options and vesting of restricted stock units


14


70











84Withholding of restricted stock units in satisfaction of tax requirements





(3,653
)










(3,653
)Tax expense associated with share-based awards





(5,577
)










(5,577
)Foreign currency translation adjustment














1,506


1,506Unrealized gains on securities, net of tax














565


565Dividends











(23,583
)




(23,583
)Deferred compensation





25,934











25,934Net income











16,288





16,288BALANCE, DECEMBER 31, 2009

$
1,209

$
296,430

$
(22,901
)
$
212,059

$
(2,695
)
$
484,102


(1)Restated
to reflect the four-for-one stock split effected on March 31, 2008


See notes to consolidated financial statements.

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Table of Contents

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, 2009, 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
intercompany transactions and balances have been eliminated.

Certain
amounts totaling $2,253 and $1,720 related to insurance expense were previously presented in the "Rent and occupancy" line item in the Consolidated Statements of Income for the
years ended December 31, 2008 and 2007, respectively, but should have been presented in "Other expenses" in the Consolidated Statements of Income for those years. These amounts have been
properly reclassified to "Other expenses" for those periods.

Certain
software development contract revenues for the years ended December 31, 2008 and 2007 totaling $86 and $215 were previously presented in a line item called "Contract
revenue" and have been combined into "Other income/(loss)" to conform with the current year's presentation. Certain expenses related to these software development contracts in the amount $68 and $133
were presented as "Contract costs" in the Consolidated Statements of Income for the years ended December 31, 2008 and 2007, respectively, and have been combined into "Other expenses" to conform
to current year presentation.

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.

99

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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)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 transactions revenue is primarily derived from matched principal and principal trading transactions. Principal
transactions revenues and related expenses are recognized on a trade date basis. 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.

In
the normal course of its matched principal and principal trading businesses, the Company holds securities positions overnight. These positions are marked to market on a daily 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 and is recognized ratably over the term of the subscription period, which ranges from one to five years. Analytics revenue consists primarily of
software license fees for Fenics pricing tools which are typically billed on a on a subscription basis, and is recognized ratably over the term of the subscription period, which is generally 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 Accounting Standards Codification ("ASC") 350 IntangiblesGoodwill and
Other("ASC 350") (formerly 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.

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 ASC 350 (formerly 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

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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)

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 agreement between the Company and the employee provides for the return of proportionate amounts of the bonus or loan outstanding
if employment is terminated in certain circumstances prior to the end of the term of the agreement. Amortization is calculated using the straight-line method over the term of the contract,
which is generally over three years, and is recorded in compensation and employee benefits. These forgivable loans have interest rates of up to 3.2%. The Company generally expects to 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 end of the term of the
agreement. 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 ASC 323-10,InvestmentsEquity Method and Joint Ventures("ASC
323-10") (formerly Accounting Principles Board Opinion No. 18,The Equity Method of Accounting for Investments in Common Stock). 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, 2009 and 2008, the Company had equity method investments with a carrying value of $4,012
and $4,629, 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 ASC 323-10. The Company monitors cost basis investments for impairment
periodically based on qualitative and quantitative information. The Company had cost method investments of $2,515 and $2,368 at December 31, 2009 and 2008, respectively.

The
Company accounts for its marketable equity securities in accordance with ASC 320-10,InvestmentsDebt and Equity
Securities(formerly SFAS No. 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 value of the Company's
available-for-sale securities was $4,864 and $3,683 as of December 31, 2009 and 2008, 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 2009, 2008 and 2007, none of these contracts were designated as foreign currency cash flow

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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)

hedges
under ASC 815,Derivatives and Hedging("ASC 815") (formerly SFAS No. 133,Accounting for Derivative Instruments
and Hedging Activities). 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.

Income TaxesIn accordance with ASC 740,Income Taxes(formerly 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 ASC
740-10 (formerly Financial Accounting Standards Board Interpretation No. 48,Accounting for Uncertainty in Income Taxes, an interpretation of SFAS
No. 109). 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. Net gains resulting from remeasurement of foreign currency transactions and balances for the years ended December 31, 2009, 2008 and 2007 were
$3,767, $4,620 and $11,696, respectively, and are included in other income.

Compensation and Employee BenefitsThe Company's compensation and employee benefits have both a fixed and variable component. Base salaries and
benefit costs are primarily fixed for all
employees while bonuses constitute the variable portion of our compensation and employee benefits. The Company may pay certain performance bonuses in restricted stock units ("RSUs") and accounts for
these RSUs in accordance with ASC 718CompensationStock Compensation("ASC 718") (formerly SFAS No. 123(R), Share-Based Payment). The Company
records the fair value of these RSUs at the grant date as deferred compensation and amortizes this cost to expense
over the vesting period of each grant. The Company also may grant sign-on and retention bonuses for certain newly-hired or existing employees who agree to long-term employment
agreements. These sign-on and retention bonuses are typically amortized using the straight-line method over the term of the respective agreements.

In
2009, the Company recorded a charge of approximately $34,400 primarily related to severance and the renegotiation of certain employment agreements.

Share-Based CompensationThe Company's share-based compensation consists of stock options and RSUs. The Company adopted ASC 718 during the first
quarter of 2006, using the modified prospective approach. ASC 718 revised the fair value-based method of accounting for share-based payment liabilities, forfeitures and modifications of stock-based
awards and clarified guidance in several

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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)

areas,
including measuring fair value, classifying an award as equity or as a liability and attributing compensation cost to service periods. Additionally, under ASC 718, 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 and employee benefits 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 and gains and losses on certain investments.

Recent Accounting PronouncementsIn December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in
Consolidated Financial Statementsan amendment of ARB No. 51, which is now a sub-topic within ASC 810-10 Consolidation("ASC 810-10"). ASC 810-10 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. ASC 810-10 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and was adopted by the Company on January 1, 2009. The
adoption of ASC 810-10 did not have a material impact on its consolidated financial statements.

In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations (revised 2007), which is now a sub-topic
within ASC 805Business Combinations("ASC 805"). ASC 805 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. ASC 805 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. ASC 805 was effective for financial statements issued for fiscal years beginning after December 15, 2008 and was adopted by the Company on
January 1, 2009. The adoption of ASC 805 did not have a material impact on its consolidated financial statements.

In
February 2008, the FASB issued FASB Staff Position No. FAS 157-2, which is now a sub-topic within ASC 820-10Fair
Value Measurements and Disclosures("ASC 820-10"). ASC 820-10 delayed the effective date of fair value measurements and disclosure requirements 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 ASC 820-10. The Company adopted ASC 820-10 for those nonfinancial
assets and liabilities noted in FSP 157-2 on January 1, 2009. The

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(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

adoption
of ASC 820-10 for nonfinancial assets and liabilities did not 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, an amendment of FASB Statement
No. 133, which is now a sub-topic within ASC 815-10Derivatives and Hedging("ASC
815-10"). ASC 815-10 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. ASC 815-10 was effective for fiscal years beginning after November 15, 2008 and was adopted by the Company on January 1, 2009.
See Note 17 for disclosures on Financial Instruments.

In
April 2008, the FASB issued FSP 142-3,Determining the Useful Life of Intangible Assets, which is now a
sub-topic within ASC 350-30IntangiblesGoodwill and Other("ASC 350-30"). ASC 350-30 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. ASC 350-30 was effective for fiscal years beginning after December 15, 2008 and was adopted by the Company on January 1,
2009. The adoption of ASC 350-30 did not have a material impact on its 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, which is now a sub-topic within ASC 260-10Earnings Per Share("ASC
260-10"). ASC 260-10 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, which is now a
sub-topic within ASC 260-10. ASC 260-10 was effective for fiscal years beginning after December 15, 2008 and was adopted by the Company on January 1,
2009. The adoption of ASC 260-10 did not have a material impact on its consolidated financial statements.

In
April 2009, the FASB issued FSP FAS 141(R)-1,Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies, which is now a sub-topic within ASC 805Business Combinations("ASC 805"). ASC 805
addresses the criteria and disclosures for recognition of an acquired asset or liability assumed in a business combination that arises from a contingency. ASC 805 was effective for fiscal years
beginning after December 15, 2008 and was adopted by the Company on January 1, 2009. The adoption of ASC 805 did not have a material impact on its consolidated financial statements.

In
April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2,Recognition and Presentation of
Other-Than-Temporary Impairments, which is now a sub-topic within ASC 320-10 InvestmentsDebt and Equity Securities("ASC 320-10"). ASC 320-10 amends the
other-than-temporary impairment guidance in U.S. generally accepted accounting principles for debt securities to make the guidance more operational and to improve the
presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. ASC 320-10 was effective for interim and
annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. ASC 320-10 was adopted by the Company on
April 1, 2009 and the adoption did not have a material impact on its consolidated financial statements.

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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)

In
April 2009, the FASB issued FSP FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly, which is now a sub-topic within ASC 820-10Fair Value
Measurements and Disclosures("ASC 820-10"). ASC 820-10 provides additional guidance for estimating fair value, when the volume and level of
activity for the asset or liability have significantly decreased and also includes guidance on identifying circumstances that indicate a transaction is not orderly. ASC 820-10 was
effective for interim and annual reporting periods ending after June 15, 2009, and has been applied prospectively with early adoption permitted for periods ending after March 15, 2009.
ASC 820-10 was adopted by the Company on April 1, 2009 and the adoption did not have a material impact on its consolidated financial statements.

In
May 2009, the FASB issued SFAS No. 165,Subsequent Events, which is now a sub-topic within ASC 855-10 Subsequent Events("ASC 855-10"). ASC 855-10
provides guidance for accounting for and disclosure of subsequent events that are
not addressed in other applicable generally accepted accounting principles. ASC 855-10 was effective for interim and annual reporting periods ending after June 15, 2009, and has
been applied prospectively by the Company. In February 2010, the FASB amended ASC 855-10 through the issuance of Accounting Standards Update No. 2010-09
("ASU 2010-09"),Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removed the requirement for
an SEC filer to disclose a date in both the issued and revised financial statements and was effective upon issuance. See Note 21 for disclosures on Subsequent Events.

In
June 2009, the FASB issued SFAS No. 166,Accounting for Transfers of Financial Assets-an amendment of FASB Statement
No. 140("SFAS 166"). SFAS 166 amends FASB Statement No. 140, which is now a sub-topic within ASC 860Transfers
and Servicing. This guidance was codified by the FASB in December 2009 through the issuance of Accounting Standards Update No. 2009-16
("ASU 2009-16")Transfers and Servicing (Topic 860) Accounting for Transfers of Financials Assets. ASU 2009-16 was
issued to improve the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor's continuing involvement in transferred financial assets. ASU 2009-16 was effective as of the beginning of the first annual reporting period
that begins after November 15, 2009, for interim periods within the first annual reporting period and for interim and annual reporting periods thereafter. The adoption of ASU
2009-16 did not have a material impact on the Company's consolidated financial statements.

In
June 2009, the FASB issued SFAS No. 167,Amendments to FASB Interpretation No. 46(R)("SFAS 167"). SFAS 167
amends certain requirements of FASB Interpretation No. 46(R),Consolidation of Variable Interest Entities, which is now a sub-topic
within ASC 810Consolidation.This guidance was codified by the FASB in December 2009 through the issuance of Accounting Standards Update
No. 2009-17 ("ASU 2009-17")Consolidations (Topic 810) Improvements to Financial Reporting by Enterprises Involved with Variable Interest
Entities. ASU 2009-17 was issued to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable
information to users of financial statements. ASU 2009-17 requires an enterprise to perform an analysis to determine whether the enterprise's variable interest or interests provide a
controlling financial interest in a variable interest entity. The determination is based on, among other things, the other entity's purpose and design and the reporting entity's ability to direct the
activities of a variable

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(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

interest
entity that most significantly impact the entity's economic performance. ASU 2009-17 was effective as of the beginning of the first annual reporting period that begins after
November 15, 2009, for interim periods within the first annual reporting period and for interim and annual reporting periods thereafter. The adoption of ASU 2009-17 did not have a
material impact on the Company's consolidated financial statements.

In
June 2009, the FASB issued SFAS No. 168,The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles, which is now a sub-topic within ASC 105-10Generally Accepted Accounting Principles("ASC
105-10"). ASC 105-10 establishes the codification as the source of authoritative generally accepted accounting principles recognized by the FASB to be applied by
nongovernmental entities and all guidance contained in the codification carries an equal level of authority. ASC 105-10 was effective for interim and annual reporting periods ending after
September 15, 2009. References to generally accepted accounting principles contained in the Company's consolidated financial statements have been updated to reflect the new codification
references as required.

In
August 2009, the FASB issued Accounting Standards Update No. 2009-5 ("ASU 2009-5")Fair Value Measurements and Disclosures
(Topic 820) Measuring Liabilities at Fair Value. ASU 2009-5 provides clarification in circumstances in which a quoted price in an active market for the identical
liability is not available and provides valuation techniques to be utilized by the reporting entity. ASU 2009-5 was effective for the first reporting period (including interim periods)
beginning after issuance. The adoption of ASU 2009-5 did not have a material impact on the Company's consolidated financial statements.

In
October 2009, the FASB issued Accounting Standards Update No. 2009-13 ("ASU 2009-13")Revenue Recognition (Topic 605)
Multiple-Deliverable Revenue Arrangements. ASU 2009-13 establishes the accounting and reporting guidance for arrangements with multiple-revenue generating
activities. ASU 2009-13 addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting and provides a selling
price hierarchy for determining the selling price of a deliverable.
ASU 2009-13 is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted but must be retrospectively applied to the beginning of the fiscal year of
adoption. The Company does not expect the impact of the adoption of ASU 2009-13 to have a material impact on its consolidated financial statements.

In
October 2009, the FASB issued Accounting Standards Update No. 2009-14 ("ASU 2009-14")Software (Topic 985) Certain Revenue
Arrangements That Include Software Elements. ASU 2009-14 provides guidance on how to allocate arrangement consideration to deliverables in an arrangement that
includes both tangible products and software. ASU 2009-14 also provides additional guidance on how to determine which software, if any, relating to the tangible product would be excluded
from software revenue recognition. ASU 2009-14 is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted but must be retrospectively applied to
the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2009-14 to have a material impact on its consolidated financial statements.

In
January 2010, the FASB issued Accounting Standards Update No. 2010-01 ("ASU 2010-01")Equity (Topic 505) Accounting for
distributions to Shareholders with Components of Stock and Cash.

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(In thousands except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

ASU 2010-01
addresses diversity in practice related to the accounting for a distribution to shareholders that offer them the ability to elect to receive their entire distribution in
cash or shares of equivalent value with a potential limitation on the total amount of cash that shareholders can elect to receive in the aggregate. Historically, some entities have accounted for the
stock portion of the distribution as a new share issuance that is reflected in earnings per share ("EPS") prospectively. Other entities have accounted for the stock portion of the distribution as a
stock dividend by retroactively restating shares outstanding and EPS for all periods presented. The amendments in ASU 2010-01 clarify that the stock portion of a distribution to
shareholders that allows them to elect to receive cash or shares with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a
share issuance. ASU 2010-01 was effective for interim and annual reporting periods ending after December 15, 2009. The adoption of ASU 2010-01 did not have a material
impact on the Company's consolidated financial statements.

In
January 2010, the FASB issued Accounting Standards Update No. 2010-02 ("ASU 2010-02")Consolidation (Topic 810) Accounting and
Reporting for Decreases in Ownership of a Subsidiarya Scope Clarification.ASU 2010-02 provides clarification on the deconsolidation of a subsidiary
(or group of assets) in which any retained noncontrolling interest is measured at fair value with full (not partial) gain or loss recognized in earnings. In addition, transfers of a business to either
an equity method investee or a joint venture would also be in the scope of ASC 810Consolidationswith full gain or loss recognition. The scope of ASU
2010-02 excludes sales of in substance real estate and conveyances of oil and gas mineral rights. ASU 2010-02 was effective for interim and annual reporting periods ending
after
December 15, 2009. The adoption of ASU 2010-02 did not have a material impact on the Company's consolidated financial statements.

In
January 2010, the FASB issued Accounting Standards Update No. 2010-06 ("ASU 2010-06")Fair Value Measurements and Disclosures
(Topic 820) Improving Disclosures about Fair Value Measurements.ASU 2010-06 provides amendments to Subtopic 820-10 that require new disclosures
including the amounts of and reasons for transfers in and out of Levels 1 and 2 fair value measurements and reporting activity in the reconciliation of Level 3 fair value measurements on
a gross basis. ASU 2010-06 provides amendments that clarify existing disclosures regarding the level of disaggregation for providing fair value measurement disclosures for each
class of assets and liabilities. In addition, it clarifies existing disclosures about inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value
measurements that are required for either Level 2 or Level 3. ASU 2010-06 was effective for interim and annual reporting periods ending after December 15, 2009 except
for the disclosures about the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 31, 2010 and for interim periods
within those fiscal years. The adoption of ASU 2010-06 did not have a material impact on the Company's consolidated financial statements and the adoption of ASU 2010-06 with
respect to disclosures of the roll forward of activity in Level 3 fair value measurements is not expected to 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.

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(In thousands except share and per share amounts)

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 $4,099 and $3,854 as of
December 31, 2009 and 2008, respectively.

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 31,2009

2008Receivables from brokers, dealers and clearing organizations:Contract value of fails to deliver

$
65,651

$
105,732Balance receivable from clearing organizations and financial institutions


22,086


43,929Total

$
87,737

$
149,661Payables to brokers, dealers and clearing organizations:Contract value of fails to receive

$
67,554

$
101,052Balance payable to clearing organizations





341Payable to financial institutions


577


3,447Total

$
68,131

$
104,840


Substantially
all fail to deliver and fail to receive balances at December 31, 2009 and 2008 have subsequently settled at the contracted amounts.

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(In thousands except share and per share amounts)

6. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements consist of the following:

Year Ended December 31,2009

2008Software

$
90,686

$
81,005Computer equipment


24,984


23,624Leasehold improvements


34,727


34,273Communications equipment


16,199


15,227Furniture and fixtures


7,362


6,614Automobiles


278


342Total


174,236


161,085Accumulated depreciation and amortization


(108,902
)

(87,924
)Property, equipment, and leasehold improvements less accumulated depreciation and amortization

$
65,334

$
73,161


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 was $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, 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, 2009 and 2008, the Company removed from its consolidated financial statements $81 and $13,934, 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, 2009, 2008 and 2007
was $21,059, $22,034 and $18,925, respectively.

7. GOODWILL AND INTANGIBLE ASSETS

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. 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 $11,778) 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 that are not subject to pending claims will be distributed to the former Trayport shareholders.
The Company financed the transaction with proceeds of the private placement of its Senior Notes and amounts drawn under its Credit

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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)

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.

On
November 1, 2009, the Company completed the acquisition of certain assets of a retail energy brokerage and consulting business for contingent consideration with an estimated
present value of $2,400. The purchase price will be paid out of the future collections of accounts receivable of the business over the next four years and such contingent payment has been recorded as
a liability within other liabilities. This contingent liability will be remeasured to fair value at each reporting date until the liability is settled and the change in fair value will be recognized
in earnings. This acquisition was accounted for as a purchase business combination. Assets acquired were recorded at fair value at November 1, 2009 and the results of the acquired company have
been included within the consolidated financial statements since the acquisition. The purchase price was allocated among intangible assets as follows: customer relationships of $1,010 with an
estimated useful life of 6 years, non compete agreement of $139 with an estimated useful life of 4 years and goodwill of $1,251. The weighted average amortization for the intangible
assets is 5.8 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, 2008 and 2009 were as follows:

Americas Brokerage

EMEA Brokerage

All Other

TotalBalance 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


209,507Goodwill acquired during the year


1,251








1,251Balance as of December 31, 2009

$
80,249

$
1,818

$
128,691

$
210,758


Based
on the results of its annual impairment tests that are required by ASC 350, the Company determined that no impairment of goodwill existed as of January 1, 2010, 2009 and
2008. ASC 350
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 31,2009

2008Gross intangible assetsCustomer base/relationships

$
47,292

$
46,282Trade name


7,771


7,771Core technology


3,230


3,230Covenants not to compete


3,323


3,184Favorable lease agreements


620


620Proprietary knowledge


110


110Patent


31


31Total gross intangible assets


62,377


61,228Accumulated amortization


(22,254
)

(16,789
)Net intangible assets

$
40,123

$
44,439


Amortization
expense for the years ending December 31, 2009, 2008 and 2007 was $5,465, $5,280 and $3,332, respectively.

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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)

At
December 31, 2009, expected amortization expense for the definite lived intangible assets is as follows:

2010

$
5,5852011


5,3782012


4,2182013


2,8762014


2,792Total

$
20,849


8. OTHER ASSETS

Other assets consisted of the following:

December 31,2009

2008Prepaid bonuses

$
29,417

$
65,311Investments


11,792


11,149Forgivable employee loans and advances to employees


8,247


13,239Software inventory, net


9,642


11,871Deferred tax assets


24,655


2,418Other assets


23,591


42,365Total Other Assets

$
107,344

$
146,353


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
Senior Notes include financial and other 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, 2009, the Senior Notes were recorded net of deferred financing costs of $381 and the Company was in compliance with all applicable
covenants.

In
April 2009, 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,
reduced

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

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

the
maximum borrowings from $265,000 to $175,000, 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, 2009, the
applicable margin was 2.5% and the one-month LIBOR was 0.2%. 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, 2009 and 2008 as follows:

As of December 31,2009

2008Loan Available(1)

$
175,000

$
265,000Loans Outstanding

$
115,000

$
165,000Letters of Credit Outstanding

$
7,172

$
7,172


(1)Amounts
available include up to $50,000 for letters of credit as of December 31, 2009 and 2008.


The
weighted average interest rate of the outstanding loans was 2.73% and 2.93% for the years ended December 31, 2009 and 2008, respectively. At December 31, 2009 and 2008,
short-term borrowings under the Credit Agreement were recorded net of unamortized loan fees of $931 and $672, respectively.

The
Credit Agreement contains certain financial and other covenants. The Company was in compliance with all applicable covenants at December 31, 2009 and 2008, 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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GFI GROUP INC. AND SUBSIDIARIES

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 31,2009

2008

2007Current Provision:Federal

$
5,505

$
(19,554
)
$
8,984Foreign


27,592


39,127


42,281State and local


6,696


(4,615
)

4,491Total current provision


39,793


14,958


55,756Deferred Provision (Benefit):Federal


(18,400
)

14,954


2,545Foreign


(3,480
)

(3,258
)

(3,179
)State and local


(10,931
)

3,217


758Total deferred provision (benefit)


(32,811
)

14,913


124Total

$
6,982

$
29,871

$
55,880


The
Company had pre-tax income from foreign operations of $70,990, $106,829, and $116,477 for the years ended December 31, 2009, 2008 and 2007, respectively.
Pre-tax (loss) income from domestic operations was ($47,718), ($23,852), and $34,261 for the years ended December 31, 2009, 2008 and 2007, 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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GFI GROUP INC. AND SUBSIDIARIES

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 31,2009

2008Deferred tax assets:Deferred compensation

$
6,279

$
2,189Net operating/capital loss carryforwards


11,096


3,773Foreign deferred items


5,210


2,746Intangible amortization





1,418Unrealized loss on currency hedging


2,439


5,512Foreign tax credits


1,703


1,183Liability reserves


4,718


903Prepaid expenses


9,431


3,223Other, net


4,501


(734
)Valuation allowance


(7,537
)

(4,956
)Total deferred tax assets

$
37,840

$
15,257Deferred tax liabilities:Depreciation/amortization

$
(19,784
)
$
(8,384
)Goodwill amortization


(9,785
)

(13,677
)Prepaid compensation


(1,528
)

(18,120
)Total deferred tax liabilities

$
(31,097
)
$
(40,181
)Net deferred tax (liabilities) assets

$
6,743

$
(24,924
)


Cumulative
undistributed earnings of foreign subsidiaries were approximately $227,394 at December 31, 2009. No deferred U.S. federal income taxes have been provided for the
undistributed earnings to the extent 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. The valuation allowance relates primarily to the ability to utilize net operating losses and foreign tax credits in various tax jurisdictions. During 2009, the valuation allowance was
increased by $2,581, primarily due to an increase in foreign net operating loss carryforwards and foreign tax credit carryforwards. At December 31, 2009, the Company had U.S. federal net
operating loss carryforwards of $4,000, U.S. state
and local net operating loss carryforwards of $70,127 and foreign net operating loss carryforwards of $23,442. The U.S. amounts are subject to annual limitations on utilization and will begin to
expire in 2018. The foreign amounts are subject to annual limitations on utilization and will generally begin to expire in 2011. Further, the Company has $1,703 of foreign tax credit carryforwards at
December 31, 2009 that will begin to 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 31,2009

2008

2007U.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


(11.7
)

(0.3
)

2.3Foreign operations


(0.4
)

(5.9
)

Non-deductible expenses


7.6


7.8


1.5General business credit


(2.1
)




(0.3
)Tax-Exempt Income


(0.2
)

(1.4
)

(0.4
)Other


1.8


0.8


(1.0
)Effective income tax rate


30.0
%

36.0
%

37.1
%


Income
tax (expense) benefits of approximately ($5,577), ($2,136), and $16,896 from the exercise of stock options and the vesting of restricted stock units was recorded directly to
additional paid-in capital in 2009, 2008 and 2007, respectively.

Effective
January 1, 2007, the Company adopted ASC 740-10. 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 ASC
740-10, the total unrecognized tax benefits (net of the federal benefit on state tax positions) were approximately $8,385, including interest of $105, 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

$
7,156Gross increasescurrent period tax positions


2,077Lapse of statute of limitations


(953
)Unrecognized tax benefits balance at December 31, 2009

$
8,280


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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
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
2005, state and local tax matters through 2005 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 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, 2009 and 2008, we had
approximately $105 and $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

Shares of
Common StockAuthorized (at December 31, 2009)


400,000,000Outstanding:December 31, 2007(1)


117,790,376December 31, 2008


118,521,484December 31, 2009


118,426,573Par value per share

$
0.01


(1)Restated
to reflect the four-for-one stock split effected on March 31, 2008


Share Issuance

During 2009 and 2008, the Company issued 1,342,380 and 1,327,344 shares of common stock, respectively, in connection with the exercise
of stock options and vesting of RSUs. The Company received total cash proceeds of $70 and $578 in 2009 and 2008, 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

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

11. STOCKHOLDERS' EQUITY (Continued)

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.

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, May 30, August 28, and November 27, 2009, the Company paid a cash dividend of $0.05 per share, which, based upon the number of shares outstanding
on the record date for such dividend, totaled $5,883, $5,891, $5,899 and $5,910 respectively. 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 and 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 $5,895 and $5,918, respectively. The dividends were reflected as reductions of retained earnings in the Consolidated Statements of Financial Condition.

Preferred Stock

As of December 31, 2009 and 2008, 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. During the year ended December 31, 2009, the
Company repurchased 1,437,291 shares of its common stock on the open market at an average price of $3.05 per share and for a total cost of $4,425, including sales commissions. 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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GFI GROUP INC. AND SUBSIDIARIES

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, 2009, 2008 and 2007 were as follows:

December 31,2009

2008

2007Basic earnings per shareNet income applicable to stockholders

$
16,288

$
53,106

$
94,858Weighted average common shares outstanding


118,178,493


117,966,596


116,595,920Basic earnings per share

$
0.14

$
0.45

$
0.81Diluted earnings per shareNet income applicable to stockholders

$
16,288

$
53,106

$
94,858Weighted average common shares outstanding


118,178,493


117,966,596


116,595,920Effect of dilutive shares:Options, warrant and RSUs


3,398,274


1,777,097


2,584,871Weighted average shares outstanding and common stock equivalents


121,576,767


119,743,693


119,180,791Diluted earnings per share

$
0.13

$
0.44

$
0.80


Excluded
from the computation of diluted earnings per share because their effect would be anti-dilutive were the following: 2,065,724 RSUs and 59,033 options for the year
ended December 31, 2009; 2,153,635 RSUs and 52,490 options for the year ended December 31, 2008; and 676,262 RSUs for the year ended December 31, 2007.

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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

The Company issues RSUs to its employees under the GFI Group Inc. 2008 Equity Incentive Plan, which was approved by the Company's stockholders on June 11, 2008, and amended
as approved by the Company's stockholders on June 11, 2009 (as amended, the "2008 Equity Incentive Plan"). Prior to June 11, 2008, the Company issued RSUs 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, 2009, there were 6,871,863 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 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 2009, 2008 and 2007, the Company modified the vesting terms of certain RSUs for several
employees in connection with the execution of a new employment agreement or the termination of employment. As a result of these modifications, the Company recorded compensation expense totaling $708,
$266 and $688 during 2009, 2008 and 2007, 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, 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


12.95Granted


8,423,013


4.04Vested


(1,934,751
)

13.09Cancelled


(241,387
)

13.00Outstanding December 31, 2009


10,208,185

$
5.57


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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)

The
weighted average fair value of RSUs granted during 2009 was $4.04 per unit, compared with $8.96 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 31,2009

2008

2007Compensation expense

$
25,820

$
24,865

$
21,664Income tax benefits

$
7,746

$
8,951

$
7,980


At
December 31, 2009, total unrecognized compensation cost related to the RSUs prior to the consideration of expected forfeitures was approximately $42,091 and is expected to be
recognized over a weighted-average period of 1.58 years. The total fair value of RSUs that vested during the year ended December 31, 2009, 2008 and 2007 was $25,326, $25,800 and $15,087,
respectively.

As
of December 31, 2009, 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.

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, 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


3.32Exercised


(123,800
)

3.21





(43,884
)

4.10Cancelled


(9,000
)

2.97





(13,864
)

4.54Outstanding December 31, 2008


651,648


3.32





324,408


3.17Exercised


(10,212
)

4.31





(10,836
)

2.52Outstanding December 31, 2009


641,436

$
3.31


4.16


313,572

$
3.19


0.85Exercisable at December 31, 2009


641,436

$
3.31


4.16


313,572

$
3.19


0.85


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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 31,2009

2008

2007Compensation expense

$


$


$
123Income tax benefits

$


$


$
32


As
of December 31, 2009, there was no unrecognized compensation cost related to stock options.

The
total intrinsic value of options exercised for the year ended December 31, 2009, 2008 and 2007 was $58, $1,648, and $38,543, respectively. Additionally, the total intrinsic
value of options outstanding and exercisable at December 31, 2009 was $1,326.

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, 2009, the future minimum rental commitments under such leases are as follows:

2010

$
13,3052011


11,9312012


10,2722013


9,7002014


7,867Thereafter


65,674Total

$
118,749


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, 2009, 2008 and 2007 was $13,114, $20,334, and $11,299, 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 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, 2009, 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 $18,673, with $14,324 due within the next twelve months and $4,349 due between one to three years. Additionally, the Company has purchase commitments for
capital expenditures of $1,712 primarily related to network implementations in the U.K., and $444 primarily related to hosting and software license agreements. Of these purchase commitments, capital
expenditures of approximately $1,050 and fees for hosting and software licensing agreements of approximately $326 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.

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 of 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. GFI Securities LLC 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 the Company's outstanding matters are not expected to have a material adverse impact on the Company's financial position.
However, the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

14. COMMITMENTS AND CONTINGENCIES (Continued)

outcome
of any such 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 the Company's outstanding matters will not significantly exceed any 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 statutory limit. The Company did not make any contributions to the plan for the years ended December 31, 2009, 2008, or 2007.

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 $1,215, $1,606, and $1,667 in 2009, 2008 and 2007, respectively, for the GFI Group Personal Pension Plans, Occupational Pension Plan and the Executive Pension Plan recorded
in compensation and employee benefits.

16. FINANCIAL INSTRUMENTS WITH MARKET AND CREDIT RISKS

The Company, through its subsidiaries, operates as a wholesale broker. The Company provides brokerage services to its customers through agency or principal transactions. 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

16. FINANCIAL INSTRUMENTS WITH MARKET AND CREDIT RISKS (Continued)

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. The Company may also enter into principal investing transactions in which the Company commits its capital within
predefined limits, either to facilitate customer trading activities or to engage in principal trading for the Company's own account. The Company is currently subject to covenants in its Credit
Agreement and its Senior Notes, which generally limit the aggregate amount of securities which the Company may trade for its own account to five percent of its consolidated capital. To the extent that
the Company owns assets (i.e. has long positions) in fluctuating markets, a downturn in the value of those assets or in those markets could result in losses from a decline in the value of those
long positions. Conversely, to the extent that the Company has sold assets that the Company does not own (i.e. has short positions) in any of those markets, an upturn in those markets could
expose the Company to significant losses as the Company attempts to cover our short positions in a rising market.

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

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 cash equivalents, receivables from and payables to brokers, dealers
and clearing organizations and accrued commissions receivable. These receivables and payables are short term in nature and subsequently have 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 carrying 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 $61,027 at December 31, 2009. The fair value of
the Company's short term borrowings outstanding under the Credit Agreement approximated the carrying value at December 31, 2009 and 2008.

The
Company's financial assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with ASC 820-10. In accordance
with ASC 820-10, 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, 2009:

The
Company evaluates its marketable securities in accordance with ASC 320-10, 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, 2009 and 2008. To the extent that the Company's trading and
available-for-sale marketable securities are based on quoted market prices in active markets, these securities were categorized as Level 1.

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, as well as management's own calculations and analyses, which are based upon period end forward and spot foreign exchange rates. At December 31, 2009 and 2008, the Company's foreign
exchange derivative contracts have been categorized in Level 2 of the ASC 820-10 fair value hierarchy.

The
fair value of trading securities owned as a result of matched principal transactions is estimated using recently executed transactions and market price quotations. At
December 31, 2009 and 2008, the Company held corporate equities that were categorized in Level 1 and corporate bonds that were categorized in Level 2 of the ASC 820-10
fair value hierarchy.

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

17. FINANCIAL INSTRUMENTS (Continued)

Financial
Assets and Liabilities Measured at Fair Value on a recurring basis as of December 31, 2009 and 2008:

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

Significant Other
Observable
Inputs
(Level 2)

Balance at
December 31,
2009Included within Other assets:Equity securities

$
5,110

$
154

$
5,264Corporate bonds





3,152


3,152Foreign exchange derivative contracts





818


818Included within Other liabilities:Foreign exchange derivative contracts

$


$
804

$
804




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

Significant Other
Observable
Inputs
(Level 2)

Balance at
December 31,
2008Included within Other assets:Equity securities

$
5,440

$


$
5,440Corporate bonds





1,576


1,576Foreign exchange derivative contracts





102


102Included within Other liabilities:Equity securities

$
296

$


$
296Foreign exchange derivative contracts





19,687


19,687


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 use foreign exchange derivative contracts, including forward contracts and foreign
currency swaps, to reduce the effects of fluctuations in certain assets and liabilities denominated in foreign currencies. The Company also hedges a portion of its foreign currency exposures on
anticipated foreign currency denominated revenues and expenses by entering into forward foreign exchange contracts. For the years ended December 31, 2009, 2008 and 2007, none of these contracts
were designated as foreign currency cash flow hedges under ASC 815-10. These contracts are recorded at fair value and all realized and unrealized gains and losses are included in other
income in the Consolidated Statements of Income.

The
Company does not hold or issue derivative financial instruments for trading or speculative 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.

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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

17. FINANCIAL INSTRUMENTS (Continued)

Fair
values of foreign exchange derivative contracts on a gross basis as of December 31, 2009 are as follows:

December 31, 2009Derivatives not designated as hedging instruments under ASC 815-10

Balance Sheet
Location

Fair Value

Balance Sheet
Location

Fair ValueForward Foreign Exchange Contracts

Other Assets

$
818

Other Liabilities

$
804


As
of December 31, 2009, the Company had outstanding forward foreign exchange contracts with a combined notional value of approximately $126.3 million. Approximately
$64.4 million of these forward foreign exchange contracts represents a hedge of euro-denominated balance sheet positions at December 31, 2009. The remaining contracts are
hedges of anticipated future cash flows.

The
following is a summary of the effect of foreign exchange derivative contracts on the Consolidated Statements of Income for the year ended December 31, 2009:

Amount of Gain (Loss)
Recognized in Income on
DerivativesDerivatives not designated as hedging instruments under ASC 815-10

Location of Gain (Loss)
Recognized in Income on
Derivatives

For the Year Ended
December 31, 2009Forward Foreign Exchange Contracts

Other income

$
3,519


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 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, 2009:

GFI Securities
LLC

GFI Brokers
Limited

GFI Securities
Limited

GFI (HK)
Securities LLCNet Capital

$
41,223

$
106,549

$
53,068

$
1,893Minimum Net Capital required


250


35,070


27,543


387Excess Net Capital

$
40,973

$
71,479

$
25,525

$
1,506


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GFI GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

18. REGULATORY REQUIREMENTS (Continued)

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 $537), 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 120.0% of the risk equivalent amount including relevant expenditure. At December 31, 2009, GFI Securities Limited's Japanese branch
was in compliance with these capital requirements.

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, 2009, GFI (HK) Brokers Ltd. had stockholders' equity of 20,155 Hong Kong dollars (or
approximately $2,600), which exceeded the minimum requirement by 15,155 Hong Kong dollars (or approximately $1,955).

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 $2,135), measured annually. At December 31, 2009, GFI Group PTE Ltd. had stockholders' equity of 17,464
Singapore dollars (or approximately $12,430, which exceeded the minimum requirement by approximately 14,464 Singapore dollars (or approximately $10,295).

GFI
Korea Money Brokerage Limited is licensed and regulated by the Financial Supervisory Commission to engage in foreign exchange brokerage business, and is subject to certain regulatory
requirements under the Capital Market and Financial Investment Business 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, 2009, GFI Korea Money Brokerage Limited met the minimum requirement for
paid-in-capital of 5,000,000 Korean Won (or approximately $4,288).

These
regulatory rules may restrict the Company's ability to withdraw capital from its regulated subsidiaries. The Company's regulated subsidiaries were in compliance with all minimum
net capital requirements as of December 31, 2009.

19. SEGMENT AND GEOGRAPHIC INFORMATION

In accordance with ASC 280-10,Segment Reporting("ASC 280-10") (formerly SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information") 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 ASC 280-10, the Company presents its operating segments as four reportable segments: Americas Brokerage, EMEA Brokerage, Asia

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

19. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)

Brokerage
and "All Other". The All Other segment captures costs that are not directly assignable to one of the operating segments, primarily 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 ASC 280-10. 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 and thereafter, the Company 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 31,2009

2008

2007(dollars in thousands)Revenues:Americas Brokerage

$
327,127

$
387,549

$
403,235EMEA Brokerage


364,761


489,650


449,955Asia Brokerage


61,603


88,583


85,914All Other


65,216


49,721


31,437Total Consolidated Revenues

$
818,707

$
1,015,503

$
970,541Interest Revenue:Americas Brokerage

$


$
20

$
56EMEA Brokerage


2


21


8Asia Brokerage








1All Other


1,041


8,576


9,649Total Consolidated Interest Revenues

$
1,043

$
8,617

$
9,714Interest Expense:Americas Brokerage

$
28

$
74

$
27EMEA Brokerage


540


1,886


1,898Asia Brokerage


13


14


27All Other


9,959


12,360


5,124Total Consolidated Interest Expense

$
10,540

$
14,334

$
7,076Depreciation and Amortization:Americas Brokerage

$


$


$
EMEA Brokerage








Asia Brokerage








All Other


31,493


31,390


24,686Total Consolidated Depreciation and Amortization

$
31,493

$
31,390

$
24,686Income before Provision for Income Taxes:Americas Brokerage

$
42,305

$
110,736

$
123,612EMEA Brokerage


114,960


150,592


153,569Asia Brokerage


(871
)

13,965


18,712All Other


(133,124
)

(192,316
)

(145,155
)Total Consolidated Income before Provision for Income taxes

$
23,270

$
82,977

$
150,738


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GFI GROUP INC. AND SUBSIDIARIES

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, 2009, 2008, and 2007, the 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, 2009, 2008, and 2007, and information regarding long-lived assets (defined as property,
equipment, leasehold improvements and software inventory) in geographic areas as of December 31, 2009 and 2008 are as follows:

For the year ended December 31,2009

2008

2007Revenues:United States

$
327,524

$
375,928

$
408,348United Kingdom


340,641


436,449


380,330Other


150,542


203,126


181,863Total

$
818,707

$
1,015,503

$
970,541




As of December 31,2009

2008Long-lived Assets, as defined:United States

$
56,348

$
61,648United Kingdom


14,139


17,824Other


4,489


5,709Total

$
74,976

$
85,181


Revenues
are attributed to geographic areas based on the location of the Company's relevant subsidiaries. Certain reclassifications have been made to the 2007 geographic revenues to
conform to current presentations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands except share and per share amounts)

20. OTHER COMPREHENSIVE INCOME (LOSS)

For the year ended December 31,2009

2008

2007Foreign currency translation adjustmentBefore Tax Amount

$
2,642

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


(1,136
)

3,356


164After Tax Amount

$
1,506

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

$
750

$
(272
)
$
107Tax Expense (Benefit)


(185
)

64


(32
)After Tax Amount

$
565

$
(208
)
$
75


The
Company did not reclassify any amounts out of other comprehensive income into the consolidated statements of income for the three years ended December 31, 2009.

21. SUBSEQUENT EVENTS

In February 2010, the Board of Directors declared a quarterly cash dividend of $0.05 per share payable on March 29, 2010 to shareholders of record on March 15, 2010.

On
February 28, 2010, the Company completed an acquisition of 40% of the outstanding membership interests of an independent brokerage firm with a proprietary trading platform. The
aggregate purchase price was comprised of $8,000 in cash and 414,938 shares of restricted stock. $6,000 of the cash portion of the purchase price was retained by the target for working capital. This
investment will be accounted for under the equity method. Additionally, the Company has committed to purchase the remaining membership interests in increments of 20% over the next 3 years,
subject to customary closing conditions. The purchase price for the remaining membership interests will be paid in cash and established by a formula based on the target's future results of operations.
Included in Other Assets at December 31, 2009 was a note receivable from the target in the amount of $1,000 which was forgiven by the Company and credited against the purchase price described
above.

Subsequent
events have been evaluated for disclosure in the notes to the Consolidated Financial Statements through the filing date of this Form 10-K.

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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 Securities Exchange Act of 1934. 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, 2009. 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, 2009, 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, 2009. That report appears on Page 135 of this Form 10-K.

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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, 2009, 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, 2009, 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, 2009 and the related consolidated statements of income, comprehensive income, cash flows and changes in stockholders' equity for the year ended December 31, 2009 of
the Company and our report dated March 15, 2010 expressed an unqualified opinion on those financial statements.

/s/
Deloitte & Touche LLP
New York, New York
March 15, 2010

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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 2009 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 2010 Annual
Meeting of Stockholders which we expect will be held on June 10, 2010, 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.

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.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements.See Index to Financial Statements on page 92.

(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)10.4
*
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)


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Number

Description10.5
*
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)10.19
*
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)


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Number

Description10.21
*
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. (Filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K filed on March 2,
2009, File No. 000-51103).10.26

Amendment No. 1 to Employment Agreement, dated December 24, 2008, between GFI Group Inc. and James Peers. (Filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K filed on March 2, 2009,
 File No. 000-51103).10.27

Amendment No. 1 to Employment Agreement, dated December 31, 2008, between GFI Group Inc. and Colin Heffron. (Filed as Exhibit 10.27 to the Company's Annual Report on Form 10-K filed on March 2,
2009, File No. 000-51103).10.28

Amendment No. 1 to Employment Agreement, dated December 31, 2008, between GFI Group Inc. and Ronald Levi. (Filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K filed on March 2, 2009,
 File No. 000-51103).10.29

Amendment No. 1 to Employment Agreement, dated December 31, 2008, between GFI Group Inc. and Scott Pintoff. (Filed as Exhibit 10.29 to the Company's Annual Report on Form 10-K filed on March 2,
2009, File No. 000-51103).10.30

Amendment No. 1 to Employment Agreement, dated December 5, 2008, between GFI Group Inc. and J. Christopher Giancarlo. (Filed as Exhibit 10.30 to the Company's Annual Report on Form 10-K filed on
March 2, 2009, File No. 000-51103).10.31

Amendment No. 2 to Employment Agreement, dated March 30, 2009, between GFI Group Inc. and Ronald Levi (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed May 11, 2009,
File No. 000-51103)10.32

Fourth Amendment to Credit Agreement, dated April 28, 2009 (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed May 11, 2009, File No. 000-51103)10.33

First Amendment to the GFI Group Inc. 2008 Equity Incentive Plan (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 10, 2009, File No. 000-51103)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).


*Previously
filed.


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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, 2009 to be signed on its behalf by the undersigned, thereunto duly authorized, on the 15th day of
March, 2010.

GFI GROUP INC.By:

/s/ JAMES A. PEERSName:  James A. Peers
Title: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 15, 2010/s/ COLIN HEFFRON Colin Heffron

President and Director

March 15, 2010/s/ JAMES A. PEERS James A. Peers

Chief Financial Officer (principal financial and accounting officer)

March 15, 2010/s/ JOHN W. WARD John W. Ward

Director

March 15, 2010/s/ MARISA CASSONI Marisa Cassoni

Director

March 15, 2010/s/ FRANK FANZILLI, JR. Frank Fanzilli, Jr.

Director

March 15, 2010/s/ RICHARD W. P. MAGEE Richard W. P. Magee

Director

March 15, 2010


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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, 2009 and 2008, and for each of the three years
in the period ended December 31, 2009, and the Company's internal control over financial reporting as of December 31, 2009, and have issued our reports thereon dated March 15,
2010; such consolidated financial statements and reports are included in this 2009 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 consolidated 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
March 15, 2010

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GFI GROUP INC.  (Parent Company Only)        CONDENSED STATEMENTS OF FINANCIAL CONDITION        DECEMBER 31, 2009 AND 2008        (In thousands,
except share and per share data)

December 312009

2008Assets:Cash and cash equivalents

$
8,153

$
133Investments in subsidiaries, equity basis


296,037


272,029Advances to subsidiaries


344,099


422,129Other assets


13,361


10,085Total assets

$
661,650

$
704,376Liabilities and Stockholders' Equity:Short-term borrowings, net

$
114,069

$
164,328Long-term obligations, net


59,619


59,495Other liabilities


3,860


3,590Total liabilities


177,548


227,413Preferred stock, $0.01 par value; 5,000,000 shares authorized, none outstanding at December 31, 2009 and 2008





Common stock, $0.01 par value; 400,000,000 shares authorized and 120,860,100 and 119,517,720 shares outstanding at December 31, 2009 and 2008,
respectively


1,209


1,195Additional paid in capital(1)


296,430


279,656Retained earnings


212,059


219,354Treasury stock, 2,433,527 and 996,236 common shares at cost at December 31, 2009 and 2008, respectively


(22,901
)

(18,476
)Accumulated other comprehensive loss


(2,695
)

(4,766
)Total Stockholders' Equity


484,102


476,963Total liabilities and stockholders' equity

$
661,650

$
704,376


---

See
notes to condensed financial statements.

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GFI GROUP INC.  (Parent Company Only)        CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME        YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
    (In thousands)

2009

2008

2007REVENUES:Interest income

$
5

$
147

$
247EXPENSES:Interest expense


9,567


11,195


3,999Other expenses


1,359


1,224


601Total expenses


10,926


12,419


4,600LOSS BEFORE BENEFIT FROM INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES


(10,921
)

(12,272
)

(4,353
)BENEFIT FROM INCOME TAXES


3,276


4,419


1,614LOSS BEFORE EQUITY IN EARNINGS OF SUBSIDIARIES


(7,645
)

(7,853
)

(2,739
)Equity in earnings of subsidiaries, net of tax


23,933


60,959


97,597NET INCOME

$
16,288

$
53,106

$
94,858OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:Foreign currency translation adjustments, net of tax


1,506


(4,355
)

(150
)Unrealized gain on available-for-sale security


565


(208
)

75COMPREHENSIVE INCOME

$
18,359

$
48,543

$
94,783


See
notes to condensed financial statements.

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GFI GROUP INC.  (Parent Company Only)        CONDENSED STATEMENTS OF CASH FLOWS        YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007        (In
thousands)

2009

2008

2007Cash flows from operating activitiesNet income

$
16,288

$
53,106

$
94,858Adjustments to reconcile net income to net cash used in operating activities:Income from equity method investments


(23,933
)

(60,959
)

(97,597
)Amortization of loan fees


742


416


224Deferred compensation


408


493


330Changes in operating assets and liabilities:Other assets


(3,276
)

(4,407
)

474Other liabilities


272


2,419


(564
)Cash used in operating activities


(9,499
)

(8,932
)

(2,275
)Investments in subsidiaries


1,996


49,030


(7,464
)Receipts from (advances to) subsidiaries


94,292


(169,566
)

6,987Cash flows provided by (used in) investing activities


96,288


(120,536
)

(477
)Repayments of short-term borrowings


(50,000
)

(174,500
)

(57,300
)Proceeds from short-term borrowings





283,500


35,300Proceeds from issuance of long-term obligations





60,000


Repurchases of common stock


(4,425
)

(11,400
)

(7,076
)Cash dividend paid


(23,583
)

(30,036
)

Payment of loan fees


(831
)

(883
)

Proceeds from exercise of stock options


70


578


8,383Cash flows (used in) provided by financing activities


(78,769
)

127,259


(20,693
)Increase (decrease) in cash and cash equivalents


8,020


(2,209
)

(23,445
)Cash and cash equivalents, beginning of year


133


2,342


25,787Cash and cash equivalents, end of year

$
8,153

$
133

$
2,342


See
notes to condensed financial statements.

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GFI GROUP INC.  (Parent Company Only)        NOTES TO CONDENSED FINANCIAL STATEMENTS        YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007    
(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, 2009, 2008 and 2007 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 $0 and $48,527 from its subsidiaries during the years ended
December 31, 2009 and 2008, respectively. The dividends were reflected as a return on investments in subsidiaries.

4. ADVANCES TO SUBSIDIARIES

As of December 31, 2009 and 2008, GFI Group Inc. had receivables from subsidiaries of $344,099 and $422,129 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 risk based capital factor attributed to the Senior
Notes is subsequently reduced. The Company's

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Table of Contents

GFI GROUP INC.
(Parent Company Only)

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(In thousands)

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

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 Senior Notes include financial and other
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, 2009, the Senior Notes were recorded net of deferred financing costs of $381 and the Company was in compliance with all applicable covenants.

In
April 2009, 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,
reduced the maximum borrowings from $265,000 to $175,000, 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,
2009, the applicable margin was 2.5% and the one-month LIBOR was 0.2%. 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, 2009 and 2008 as follows:

As of December 31,2009

2008Loan Available(1)

$
175,000

$
265,000Loans Outstanding

$
115,000

$
165,000Letters of Credit Outstanding

$
7,172

$
7,172


(1)Amounts
available include up to $50,000 for letters of credit as of December 31, 2009 and 2008.


At
December 31, 2009 and 2008, short-term borrowings under the Credit Agreement were recorded net of unamortized loan fees of $931 and $672 for years ended
December 31, 2009 and 2008, respectively. In addition, the Company guarantees borrowings under the Credit Agreement made by certain of its subsidiaries. As of December 31, 2009 and 2008,
there were no borrowings outstanding by a subsidiary subject to such guarantee.

The
Credit Agreement contains certain financial and other covenants. The Company was in compliance with all applicable covenants at December 31, 2009 and 2008, 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

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Table of Contents

GFI GROUP INC.
(Parent Company Only)

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(In thousands)

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

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

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 of 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. GFI Securities LLC 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 the Company's outstanding matters are not expected to have a material adverse impact on the Company's financial position.
However, the outcome of any such 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 the Company's outstanding matters will not significantly exceed any reserves accrued by the Company.

7. SUBSEQUENT EVENTS

In February 2010, the Board of Directors declared a quarterly cash dividend of $0.05 per share payable on March 29, 2010 to shareholders of record on March 15, 2010.

On
February 28, 2010, the Company completed an acquisition of 40% of the outstanding membership interests of an independent brokerage firm with a proprietary trading platform. The
aggregate purchase price was comprised of $8,000 in cash and 414,938 shares of restricted stock. $6,000 of the cash portion of the purchase price was retained by the target for working capital. This
investment will be accounted for under the equity method. Additionally, the Company has committed to purchase the remaining membership interests in increments of 20% over the next 3 years
subject to customary closing conditions. The purchase price for the remaining membership interests will be paid in cash and established by a formula based on the target's future results of operations.
At completion of the acquisition, a note receivable from the target in the amount of $1,000 was forgiven by the Company and credited against the purchase price described above.

Subsequent
events have been evaluated for disclosure in the notes to the Condensed Financial Statements through the filing date of this Form 10-K.

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Table of Contents

Schedule II

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

Balance at
Beginning of
Period

Charged to
Cost/
Expense

Charged to
Other
Accounts(a)

Deductions(b)

Balance at
End of
Period(in thousands)Allowance for Doubtful Accounts:Year ended December 31, 2009

$
3,854

$
3,617

$
214

$
(3,586
)
$
4,099Year ended December 31, 2008


4,173


208


122


(649
)

3,854Year ended December 31, 2007


3,547


1,751


5


(1,130
)

4,173


(a)For
all periods it includes the effects for exchange rate changes.(b)Net
adjustments to the reserve accounts for write-offs and credits issued during the years.


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