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

† the risks and other factors described under the heading "Risk Factors" and elsewhere in our 2008 Form 10-K;

† economic, political and market factors affecting trading volumes, securities prices or demand for our brokerage services;

† changes in laws and regulations governing our business and operations or permissible activities and our ability to comply with such laws and regulations;

† financial difficulties experienced by our customers or key participants in the markets in which we focus our brokerage services;

† the growth of our operations generally or of specific products or services;

† our ability to attract and retain key personnel, including highly qualified brokerage personnel;

† our entrance into new brokerage markets, including investments in establishing new brokerage desks;

† competition from current and new competitors;

† our ability to keep up with rapid technological change and to continue to develop and support our electronic brokerage systems in a cost effective manner;

† future results of operations and financial condition;

† the success of our business strategies;

† risks associated with potential acquisitions by us of businesses or technologies;

† the maturity of key markets and any resulting contraction of commissions;

† our ability to manage our international operations;

† uncertainties associated with currency fluctuations;

† our failure to protect or enforce our intellectual property rights;

† uncertainties relating to litigation; and

† changes in the availability of capital.

The foregoing risks and uncertainties, as well as those risks discussed under the headings ''Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations'' and ''Item 3-Quantitative and Qualitative Disclosures About Market Risk'' and elsewhere in this Quarterly Report, may cause actual results to differ materially from the forward-looking statements. The information included herein is given as of the filing date of this Form 10-Q with the SEC and future events or circumstances could differ significantly from these forward-looking statements. The Company does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Business Environment

As an inter-dealer broker, our results of operations are impacted by a number of 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, hedge funds and other market participants to whom we provide our services. Outlined below are management's observations of these external market factors during our most recent fiscal quarter. The factors outlined below are not exclusive and additional factors may impact, or have different degrees of impact, on our results of operations in future periods.

Market Volatility

As a general rule, our business typically benefits from volatility in the markets that we serve, as periods of increased volatility often coincide with more robust trading by our clients and a higher volume of transactions. However, extended 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 are correlated to general macro-economic conditions. During the third quarter of 2009 many of the markets in which we operate experienced lower volatility than the third quarter of 2008. The third quarter of 2009 was marked by uneventful trading activity, especially in August, and continued legislative debate in the U.S. and Europe over how to regulate and possibly limit trading activity in certain OTC markets, including certain credit and energy derivatives. While the global recessionary environment showed signs of abating in the third quarter of 2009, we believe certain dealers and hedge funds committed less capital in certain markets and geographical regions during the quarter than compared to the third quarter of 2008, which resulted in generally lower trading activity in many of our markets.

Growth in Underlying Markets and New Product Offerings

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

The International Swaps and Derivatives Association ("ISDA") released its Mid-Year 2009 Market Survey in September 2009 detailing growth in global notional amounts outstanding in various over-the-counter markets. Notional amounts outstanding include new transactions and those from previous periods. The ISDA statistics indicated that there was a decline in the notional outstanding for most derivative categories over the previous mid-year and year-end results, including credit default swaps, which were down 43% year over year and 19% sequentially from year-end 2008. Interest rate derivatives decreased 11% year over year but increased 3% sequentially, while equity derivatives declined 26% year over year and were relatively flat sequentially.

During the later stages of the credit crisis, many OTC derivatives products experienced lower trading volumes as market participants deployed less trading capital due to investor redemptions and reduced borrowing capacity. This trend toward lower trading volumes began to abate during the third quarter of 2009, as evidenced by the reported transaction volumes of certain products traded on futures exchanges. For several years, exchange traded derivatives have exhibited similar growth rates to those of the related OTC derivative markets. In the third quarter of 2009, the CME Group, Inc. ("CME") reported a 2% increase in average daily volumes, of its CME ClearPort (OTC) clearing business and IntercontinentalExchange, Inc. ("ICE") reported a 13% increase in average daily commissions of its OTC energy products businesses, each as compared to the third quarter of 2008. CME, however, reported overall average daily volumes down 23% year over year, including a 27% decrease in interest rate average daily trading volumes and a 31% decrease in equity index average daily trading volumes, while ICE reported that their revenues from OTC credit products (excluding credit derivative clearing revenues) were down 27%.

In addition, our business has historically benefited from the introduction of newer products and our expansion into growing markets and new geographical areas. 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.

Competitive and Regulatory Environment

Another major external market factor affecting our business and results of operations is competition, which may take the form of competitive pressure on the commissions we charge for our brokerage services or competition for brokerage personnel with extensive experience in the specialized markets we serve. Competition for the services of productive brokers remained intense in the third quarter of 2009. In addition, 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 the third quarter of 2009. The consolidation and personnel layoffs by dealers, hedge funds and other market participants during 2008 and the first half of 2009 has also led to increased competition to provide brokerage services to a smaller number of market participants in the near term.

During the third quarter of 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 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 automation and electronic execution, will be generally beneficial to the long-term health of the broader financial markets. In furtherance of this, competing bills recently passed by the US House Financial Services Committee and the US House Agriculture Committee require derivatives dealers and major swap participants to centrally clear standardized derivatives and execute a broad range of swaps and security-based swaps through the medium of a regulated exchange or a swap execution facility. Under the currently proposed legislation, we believe GFI would 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

As more fully discussed below, our results of operations are significantly impacted by our revenue growth and the amount of compensation and benefits we provide to our employees. The following factors had a significant impact on our revenues and employee costs during the three month period ended September 30, 2009:

Our revenues decreased 20.9% from $243.1 million for the three months ended September 30, 2008 to $192.2 million for the three months ended September 30, 2009. The main factors contributing to a decrease in our revenues compared to the three months ended September 30, 2008 were:

† Dealer and hedge fund deleveraging leading to less capital being deployed in certain markets;

† Reduced trading volumes in certain structured derivative and emerging markets in which we have a leading position;

† Uneventful trading activity as compared to the third quarter of 2008, which was marked by extreme volatility due to the credit crisis;

† The global recessionary environment, although showing recent signs of abating, has depressed share, index and asset values. These depressed values have negatively impacted our revenues, particularly in Europe, where certain product commissions are based on notional values;

† The strengthening of the U.S. Dollar adversely impacted our foreign currency revenues, particularly in Europe;

† Regulatory uncertainty as it relates to market structure and operations in OTC derivative markets; and

† Realized and unrealized loss of $6.4 million on foreign currency transactions and foreign currency hedges.

Partially offsetting this decrease were several factors benefiting our brokerage and other revenues, including:

† Substantial growth in our global cash fixed income business due, in large part, to our recent investments in this area;

†          Growth in our Chile and Dubai brokerage operations; and

†          New brokerage desks for certain equity, financial and commodity
products.

The most significant component of our cost structure is employee compensation and benefits, which includes salaries, sign-on bonuses, incentive compensation and related employee benefits and taxes. Our employee compensation and benefits decreased from $176.5 million for the three months ended September 30, 2008 to $135.1 million for the three months ended September 30, 2009. The main factors contributing to the decline in employee compensation and benefits were a decrease in performance bonuses for brokerage personnel, as well as the restructuring initiatives implemented since the end of the third quarter of 2008.

Our compensation and employee benefits for all employees have both a fixed and variable component. Base salaries and benefit costs are relatively fixed for all employees while bonuses constitute the variable portion of our compensation and employee benefits. Within this overall compensation and employee benefits, employment costs of our brokerage personnel are the primary component. Bonuses for brokerage personnel are primarily based on the operating results of their related brokerage desk as well as their individual performance. For many of our brokerage employees, their bonus constitutes a significant component of their overall compensation. Broker performance bonuses decreased from $75.7 million for the three months ended September 30, 2008 to $56.1 million for the three months ended September 30, 2009. 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.

Further, we pay sign-on bonuses to certain newly-hired brokers or for certain of our existing brokers who agree to long-term employment agreements. Sign-on bonuses may be paid in the form of cash, restricted stock units ("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. Expenses relating to sign-on bonuses decreased from $14.5 million for the three months ended September 30, 2008 to $11.3 million for the three months ended September 30, 2009. Sign-on bonus expense for the three months ended September 30, 2008 included the write-off of certain unamortized sign-on bonuses, in connection with the front office restructuring initiative implemented in that quarter.