Form 10-Q GFI Group Inc. For: Jun 30

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August 10, 2015 2:25 PM EDT

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File No: 001-34897

GFI GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware		80-0006224
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

55 Water Street, New York, NY		10041
(Address of principal executive offices)		(Zip Code)

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

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 x NO o

(Explanatory Note: Since June 1, 2015, the registrant has been a voluntary filer not subject to the filing requirements of Section 13 or 15(d) of the Exchange Act of 1934. As a voluntary filer, the registrant filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant would have been required to file such reports) as if it were subject to such filing requirements.)

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 x NO o

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. (Check one):

Large accelerated filer o		Accelerated filer o

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

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

The number of shares of registrant’s common stock outstanding on July 31, 2015 was 170,814,812.

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Table of Contents

Part I—Financial Information
		Page Number

Item 1.	Financial Statements

	Condensed Consolidated Statements of Financial Condition as of June 30, 2015 (unaudited) and December 31, 2014	4

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 (unaudited) and June 30, 2014 (unaudited)	5

	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2015 (unaudited) and June 30, 2014 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 (unaudited) and June 30, 2014 (unaudited)	7

	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the six months ended June 30, 2015 (unaudited)	9

	Notes to Condensed Consolidated Financial Statements (unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	66

Item 4.	Controls and Procedures	66

Part II—Other Information

Item 1.	Legal Proceedings	67

Item 1A.	Risk Factors	67

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67

Item 6.	Exhibits	68

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Available Information

Our Internet website address is www.gfigroup.com. Through our 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 Securities and Exchange Commission (the “SEC”): our Proxy Statements; Annual Reports on Form 10-K; Quarterly Reports on Form 10-Q; Current Reports on Form 8-K; Forms 3, 4 and 5 filed on behalf of our directors and executive officers; and any amendments to those reports filed or furnished pursuant to Section 13(a) of 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 website 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 the corporate governance of the Company is also available on the Investor Relations page of our website, including information concerning our directors, board committees, including committee charters, our corporate governance guidelines, 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 certain supplemental financial information that we make available from time to time.

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

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GFI GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

(In thousands, except share and per share amounts)

	June 30, 2015			December 31, 2014
Assets
Cash and cash equivalents	$	102,302		$	183,432
Cash and securities segregated under federal and other regulations	156			163
Accounts receivable, net of allowance for doubtful accounts of $1,520 and $1,900 at June 30, 2015 and December 31, 2014, respectively	88,064			82,748
Receivables from brokers, dealers and clearing organizations	450,107			507,601
Property, equipment and leasehold improvements, net of depreciation and amortization of $205,445 and $196,237 at June 30, 2015 and December 31, 2014, respectively	52,473			55,897
Goodwill	134,580			134,542
Intangible assets, net	27,615			30,905
Receivables from related parties	97,102			232
Other assets	199,533			172,721
Assets held for sale	—			193,701
TOTAL ASSETS	$	1,151,932		$	1,361,942

Liabilities and stockholders’ equity
LIABILITIES
Accrued compensation	$	111,322		$	88,590
Accounts payable and accrued expenses	45,081			31,791
Payables to brokers, dealers and clearing organizations	384,179			463,243
Short-term borrowings	50,000			10,000
Long-term debt	240,000			240,000
Other liabilities	70,820			70,270
Liabilities held for sale	—			161,914
Total Liabilities	$	901,402		$	1,065,808
Commitments and contingencies (Note 12)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 5,000,000 shares authorized, none outstanding at June 30, 2015 and December 31, 2014	—			—
Common stock, $0.01 par value; 400,000,000 shares authorized; 187,509,724 and 144,290,612 shares issued at June 30, 2015 and December 31, 2014, respectively, net of $430 for issuance of common stock for Note receivable	1,444			1,442
Additional paid in capital, net of $249,570 for issuance of common stock for Note receivable	379,069			399,774
Retained deficit	(52,752		)	(31,050		)
Treasury stock, 16,694,912 and 16,724,843 shares of common stock at cost, at June 30, 2015 and December 31, 2014, respectively	(73,367		)	(73,445		)
Accumulated other comprehensive loss	(6,212		)	(2,493		)
Total Stockholders’ Equity	248,182			294,228
Non-controlling interests	2,348			1,906
Total Equity	250,530			296,134
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,151,932		$	1,361,942

See notes to condensed consolidated financial statements

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GFI GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenues
Agency commissions	$	104,240		$	109,692		$	222,231		$	231,107
Principal transactions	41,068			45,948			88,078			97,637
Total brokerage revenues	145,308			155,640			310,309			328,744
Clearing services revenues	—			28,602			21,338			62,766
Interest income from clearing services	—			572			297			1,100
Equity in net earnings of unconsolidated businesses	679			1,493			2,243			4,047
Software, analytics and market data	25,171			25,595			50,927			51,360
Other income, net	2,465			6,203			20,031			10,827
Total revenues	173,623			218,105			405,145			458,844
Interest and transaction-based expenses
Transaction fees on clearing services	—			26,936			20,495			59,576
Transaction fees on brokerage services	5,482			4,655			10,765			10,158
Interest expense from clearing services	—			185			128			354
Total interest and transaction-based expenses	5,482			31,776			31,388			70,088
Revenues, net of interest and transaction-based expenses	168,141			186,329			373,757			388,756
Expenses
Compensation and employee benefits	119,511			130,003			266,728			267,700
Communications and market data	10,685			13,520			22,727			26,867
Travel and promotion	6,023			7,961			12,406			15,740
Rent and occupancy	6,812			7,890			13,739			15,976
Depreciation and amortization	6,808			8,797			14,129			17,393
Professional fees	3,449			10,107			21,885			16,278
Interest on borrowings	7,991			8,143			15,859			15,927
Impairment of goodwill	—			121,619			—			121,619
Merger termination fees	—			—			24,728			—
Other expenses	6,577			7,237			12,810			14,701
Total other expenses	167,856			315,277			405,011			512,201
Income (loss) before provision for (benefit from) income taxes	285			(128,948		)	(31,254		)	(123,445		)
Provision for (benefit from) income taxes	2,078			(31,277		)	(10,314		)	(30,183		)
Net loss before attribution to non-controlling stockholders	(1,793		)	(97,671		)	(20,940		)	(93,262		)
Less: Net (loss) income attributable to non-controlling interests	(14		)	125			762			531
GFI’s net loss	$	(1,779	)	$	(97,796	)	(21,702		)	$	(93,793	)

Loss per share available to common stockholders
Basic	$	(0.01	)	$	(0.78	)	$	(0.15	)	$	(0.76	)
Diluted	$	(0.01	)	$	(0.78	)	$	(0.15	)	$	(0.76	)
Weighted average shares outstanding
Basic	157,574,973			124,909,412			142,540,600			123,643,160
Diluted	157,574,973			124,909,412			142,540,600			123,643,160
Dividends declared per share of common stock	$	0.00		$	0.05		$	0.00		$	0.10

See notes to condensed consolidated financial statements

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GFI GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Net loss before attribution to non-controlling stockholders	$	(1,793	)	$	(97,671	)	$	(20,940	)	$	(93,262	)

Other comprehensive (loss) income:
Foreign currency translation adjustment	2,224			2,151			(4,026		)	4,392
Unrealized loss on available-for-sale securities, net of tax(1)	(10		)	—			(10		)	(1,069		)
Total other comprehensive (loss) income	2,214			2,151			(4,036		)	3,323

Comprehensive (loss) income including non-controlling stockholders	421			(95,520		)	(24,976		)	(89,939		)
Comprehensive income attributable to non-controlling stockholders	126			107			445			519
GFI’s comprehensive income (loss)	$	295		(95,627		)	(25,421		)	$	(90,458	)

(1) Amounts are net of provision for income taxes of $0 for the three months ended June 30, 2015 and 2014. Amounts are net of provision for (benefit from) income taxes of $0 and $(341) for the six months ended June 30, 2015 and 2014, respectively.

See notes to condensed consolidated financial statements

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GFI GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Six Months Ended June 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss before attribution to non-controlling stockholders	$	(20,940	)	$	(93,262	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	14,129			17,393
Deferred compensation	26,580			13,334
Tax (benefit) expense related to share-based compensation	(8		)	1,008
Amortization of prepaid bonuses and forgivable loans	9,680			12,564
Benefit from deferred taxes	(17,717		)	(39,555		)
Gains on foreign exchange derivative contracts, net	(3,486		)	(1,189		)
Earnings from equity method investments, net	(293		)	(422		)
Amortization of deferred financing fees	944			908
Mark-to-market of contingent consideration liabilities	115			(2,680		)
Impairment charges	—			122,230
Other non-cash charges, net	(382		)	426
(Increase) decrease in operating assets:
Cash and securities segregated under federal and other regulations	9,479			501
Accounts receivable	(7,064		)	(16,087		)
Receivables from brokers, dealers and clearing organizations	32,407			(370,956		)
Receivables from related parties	(1,852		)	—
Other assets	(21,890		)	(10,540		)
Increase (decrease) in operating liabilities:
Accrued compensation	(24,122		)	6,347
Accounts payable and accrued expenses	18,416			10,291
Payables to brokers, dealers and clearing organizations	(79,064		)	329,216
Payables to clearing services customers	10,244			34,082
Other liabilities	1,297			(2,287		)
Cash (used in) provided by operating activities	(53,527		)	11,322
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash delivered in disposition of consolidated subsidiaries, net of cash received	(5,633		)	—
Proceeds from disposition of interests in unconsolidated businesses	—			7,760
Return of capital from unconsolidated businesses	—			413
Proceeds from disposition of available-for-sale securities	—			5,882
Purchases of interests in unconsolidated businesses	(600		)	—
Purchases of property, equipment and leasehold improvements	(2,599		)	(5,244		)
Cash used for loans to related parties	(95,250		)	—
Capitalization of internally developed software	(3,261		)	(4,102		)
Proceeds on foreign exchange derivative contracts	4,607			748
Payments on foreign exchange derivative contracts	(1,220		)	(495		)
Other, net	(5		)	(92		)
Cash (used in) provided by investing activities	(103,961		)	4,870

See notes to condensed consolidated financial statements

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GFI GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)

(In thousands)

	Six Months Ended June 30,
	2015				2014
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings	90,000				$	102,000
Repayment of short-term borrowings	(50,000			)	(102,000			)
Cash dividends paid to common stockholders	—				(12,482			)
Shares withheld for taxes on vested restricted stock units	(572			)	(6,581			)
Tax benefit (expense) related to share-based compensation	8				(1,008			)
Other, net			(341)				462
Cash provided by (used in) financing activities			39,095				(19,609	)
Effects of exchange rate changes on cash and cash equivalents	(867			)	1,594
Decrease in Cash and cash equivalents classified as Held for sale	38,130				—
DECREASE IN CASH AND CASH EQUIVALENTS	(81,130			)	(1,823			)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			183,432				174,606
CASH AND CASH EQUIVALENTS, END OF PERIOD	$		102,302		$		172,783

SUPPLEMENTAL DISCLOSURE:
Cash paid for interest	$	14,841			$	15,256
Cash paid for income taxes	$	7,098			$	7,326
Cash received from income tax refunds	$	138			$	835

Non-Cash Investing and Financing Activities:
Purchase of property and equipment through seller financing arrangement	$	732			$	1,401
Issuance of common stock for Note receivable	$	250,000			$	—

See notes to condensed consolidated financial statements

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GFI GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

(In thousands)

	Common Stock		Additional Paid In Capital			Treasury Stock			Retained Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
Balance, January 1, 2015	$	1,442	$	399,774		$	(73,445	)	$	(31,050	)	$	(2,493	)	$	294,228		$	1,906		$	296,134
Issuance of treasury stock	—		(78		)	78			—			—			—			—			—
Issuance of common stock for vesting of restricted stock units and Note receivable(1)	2		(2		)	—			—			—			—			—			—
Withholding of restricted stock units in satisfaction of tax requirements	—		(572		)	—			—			—			(572		)	—			(572		)
Tax expense associated with share-based awards	—		8			—			—			—			8			—			8
Foreign currency translation adjustment	—		—			—			—			(3,709		)	(3,709		)	(317		)	(4,026		)
Unrealized loss on available for sale securities, net of tax	—		—			—			—			(10		)	(10		)	—			(10		)
Share-based compensation	—		3,276			—			—			—			3,276			—			3,276
Conversion of restricted stock units to deferred cash awards	—		(23,320		)	—			—			—			(23,320		)	—			(23,320		)
Other capital adjustments	—		(17		)	—			—			—			(17		)	(3		)	(20		)
Net (loss) income	—		—			—			(21,702		)	—			(21,702		)	762			(20,940		)
Balance, June 30, 2015	$	1,444	$	379,069		$	(73,367	)	$	(52,752	)	$	(6,212	)	$	248,182		$	2,348		$	250,530

(1) Changes in Common Stock and Additional Paid in Capital are net of $430 and $249,570, respectively, associated with the issuance of common stock for a Note receivable. See Notes 2 and 19 for further information.

See notes to condensed consolidated financial statements

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1. ORGANIZATION AND BUSINESS

The Condensed Consolidated Financial Statements include the accounts of GFI Group Inc. and its subsidiaries (collectively, “GFI” or the “Company”). The Company, through its subsidiaries, provides wholesale brokerage and trade execution services, clearing services and trading system software products to institutional clients in markets for a range of fixed income, financial, equity and commodity instruments. The Company complements its brokerage and trade execution capabilities with value-added services, such as market data and analytical software products for trader and back-office support, which it licenses primarily to companies in the financial services industry. The Company is majority-owned by, and operates as a division of BGC Partners, Inc. (together with its affiliates, “BGC”), which owned approximately 67% of the Company’s outstanding shares of common stock as of June 30, 2015. See Note 2 for further information on the acquisition by BGC. In addition, as of June 30, 2015, Jersey Partners, Inc. (“JPI”) owned approximately 27% of the Company’s outstanding shares of common stock. The Company’s executive chairman, Michael Gooch, is the controlling shareholder of JPI.

2. ACQUISITION BY BGC PARTNERS, INC. AND TERMINATION OF THE CME MERGER

On February 19, 2015, the Company, BGC and BGC Partners, L.P. entered into a Tender Offer Agreement pursuant to which BGC and BGC Partners, L.P. agreed to amend their previously commenced tender offer to purchase all of the outstanding shares of common stock of the Company for $6.10 per share. On February 26, 2015, BGC successfully completed the BGC Tender and on March 4, 2015 BGC Partners, L.P. paid for the 54,274,212 shares of Common Stock tendered pursuant to the BGC Tender for an aggregate purchase price of $331,073. The tendered shares, together with the 17,120,464 shares already owned by BGC, represented approximately 56% of the outstanding shares of the Company’s common stock.

As a result of the transaction, GFI became a controlled company of BGC and operates as a division of BGC. Going forward, BGC and GFI are expected to remain separately branded divisions.

On April 28 2015, the Company issued 43,029,260 shares (the “New Shares”) of its common stock to BGC at the closing price of $5.81 per share, for an aggregate purchase price of $250,000. The purchase price was paid to the Company in the form of a Note due on June 19, 2018 which bears an interest rate of LIBOR plus 200 basis points. Following the issuance of the New Shares, BGC owns approximately 67% of the Company’s outstanding common stock.

Prior to the completion of the tender offer, the Company was a party to a series of agreements, including an Agreement and Plan of Merger (the “CME Merger Agreement”) and a Purchase Agreement (the “IDB Purchase Agreement”), each dated as of July 30, 2014, as amended, with CME Group Inc. (“CME”) and certain of its affiliates, whereby the Company had agreed to merge with and into a wholly owned subsidiary of CME (the “CME Merger”) and, immediately following such merger, a private consortium of current GFI management would acquire the Company’s wholesale brokerage and clearing businesses from CME (such transactions collectively, the “CME Transaction”). In addition, CME, JPI and certain other stockholders of GFI, who collectively control approximately 38% of the outstanding shares of our common stock, entered into an agreement, dated as of July 30, 2014 (the “Support Agreement”), that provided for such stockholders to vote for the CME Transaction and vote against any alternative transaction and that prevented such stockholders from transferring their shares, including by tendering into the tender offer. The CME Merger Agreement and the CME Transaction were terminated on January 30, 2015. The restrictions in the Support Agreement continue until on or about January 30, 2016.

Pursuant to the terms of the CME Merger Agreement, the Company was required to reimburse CME for its expenses up to $7,065and such reimbursement was paid in February 2015. Additionally, the Company was required to pay CME a termination fee equal to $17,663 (which is the total termination fee of $24,728 less the expense reimbursement that has already been paid to CME) and such transaction fee was paid in March 2015. The termination fee was payable if within 12 months of such termination the Company consummated, or entered into a definitive agreement to consummate, a transaction in which (i) the Company, (ii) 20% or more of the fair value of the assets or of any class of equity or voting securities of the Company and its subsidiaries, (iii) the subsidiaries that were to be retained by CME in the CME Merger Agreement, (iv) Trayport or (v) Fenics was sold.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation— The Company’s Condensed Consolidated Financial Statements (Unaudited) are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingencies in the Condensed Consolidated Financial Statements. Certain estimates and assumptions relate to the accounting for acquired goodwill and intangible assets, fair value measurements, compensation accruals, tax liabilities and the potential outcome of litigation matters. Management believes that the estimates utilized in the preparation of the Condensed Consolidated Financial Statements are reasonable and prudent. Actual results could differ materially from these estimates.

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Certain amounts in the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation.

These Condensed Consolidated Financial Statements are unaudited and should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Form 10-K”). The condensed consolidated financial information as of December 31, 2014 presented in this Form 10-Q has been derived from audited Consolidated Financial Statements not included herein.

These unaudited Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year.

Consolidation Policies

General— The Condensed Consolidated Financial Statements include the accounts of the Company, its wholly-owned subsidiaries and subsidiaries that are treated as such and other entities in which the Company has a controlling financial interest. For consolidated subsidiaries that are less than wholly-owned, equity interests that are not owned by the Company are referred to as non-controlling interests. The portion of net income attributable to non-controlling interests for such subsidiaries is presented as Net income attributable to non-controlling interests on the Condensed Consolidated Statements of Operations, and the portion of the stockholders’ equity of such subsidiaries is presented as Non-controlling interests in the Condensed Consolidated Statements of Financial Condition and Condensed Consolidated Statement of Changes in Stockholders’ Equity. All intercompany transactions and balances have been eliminated.

Variable Interest Entities—The Company determines whether it holds any interests in entities deemed to be a variable interest entity (“VIE”). A VIE is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company has a controlling financial interest and will consolidate a VIE if it is the primary beneficiary.

The primary beneficiary is the party that has both (i) the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and (ii) the obligation to absorb losses of the entity that could be potentially significant to the VIE or the right to receive benefits from the entity that could be potentially significant. As of June 30, 2015, the Company holds interests in certain VIEs. One of these VIEs is consolidated because it was determined that the Company is the primary beneficiary of this VIE because (1) the Company provided the majority of the VIE’s start-up capital and (2) the Company has consent rights regarding those activities that the Company believes would most significantly impact the economic performance of the entity. The remaining VIEs are not consolidated as it was determined that the Company is not the primary beneficiary due to the level of equity ownership and voting power. The Company reassesses its evaluation of whether an entity is a VIE when certain events occur, such as changes in economic ownership and voting power. The Company reassesses its determination of whether it is the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances. See Note 16 for disclosures on Variable Interest Entities.

Cash and Cash Equivalents— Cash and cash equivalents consist of cash and highly liquid investments purchased with an original maturity of three months or less. Cash and cash equivalents are categorized within Level 1 of the fair value hierarchy.

Cash and Securities Segregated Under Federal and Other Regulations—The Company holds cash and securities representing funds received in connection with customer trading activities. The Company’s subsidiaries are required to satisfy regulations mandated by their primary regulators to segregate or set aside cash or equivalent securities to satisfy regulations, promulgated to protect customer assets.

Accounts Receivable —Accounts receivable largely represents commissions due from brokers, dealers, banks and other financial and nonfinancial institutions for the execution of securities, commodities, foreign exchange and other derivative brokerage transactions. Also, included within Accounts receivable are the billed portion of existing contracts from customers related to the licensing, support and maintenance of software, analytics and market data, as well as any unbilled but earned portion of any services provided to such customers. 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.

Receivables from and Payables to Brokers, Dealers and Clearing Organizations—Receivables from and payables to brokers, dealers and clearing organizations primarily represent: (i) principal transactions for which the stated settlement dates have not yet been reached, (ii) principal transactions which have not settled as of their stated settlement dates, (iii) cash, including deposits, held at clearing organizations and exchanges in support of the Company’s clearing business and to facilitate settlement and clearance of matched principal transactions and (iv) the spread on matched principal transactions that have not yet been remitted from/to clearing organizations and exchanges.

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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”), 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. The goodwill associated with each business combination is allocated to the related reporting units, which are determined based on how the Company’s businesses are managed and how they are reviewed by the Company’s chief operating decision maker. Other intangible assets are recorded at their fair value upon completion of a business combination or certain other transactions. Substantially all of the firm’s identifiable intangible assets are considered to have definite lives and are amortized on a straight-line basis over their estimated useful lives.

In accordance with ASC 350, goodwill is not amortized, but instead is periodically tested for impairment. The Company reviews goodwill for impairment on an annual basis as of November 1 of each fiscal year or whenever an event occurs or circumstances change that could reduce the fair value of a reporting unit below its carrying amount. See Note 6 for further information.

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 two to four years, and is recorded in Compensation and employee benefits. 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 Condensed Consolidated Statements of Financial Condition. At June 30, 2015 and December 31, 2014, the Company had prepaid bonuses of $13,404 and $16,523, respectively. At June 30, 2015 and December 31, 2014, the Company had forgivable employee loans and advances to employees of $12,599 and $15,072, respectively. Amortization of prepaid bonuses and forgivable employee loans for the six months ended June 30, 2015 and 2014 was $9,680 and $12,564, respectively and is included within Compensation and employee benefits.

Investments—When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for under the equity method of accounting in accordance with ASC 323-10, Investments—Equity Method and Joint Ventures (“ASC 323-10”). Significant influence generally exists when the Company owns 20% to 50% of the entity’s common stock or in-substance 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. At June 30, 2015 and December 31, 2014, the Company had equity method investments with a carrying value of $13,203 and $13,184, respectively, included within Other assets. The Company also provides administrative services to certain of these equity method investees.

Investments for which the Company does not have the ability to exert significant influence over operating and financial policies are generally accounted for using the cost method of accounting in accordance with ASC 325-10, Investments—Other (“ASC 325-10”). At June 30, 2015 and December 31, 2014, the Company had cost method investments of $1,558 and $1,688, respectively, included within Other assets. The fair value of the Company’s cost method investments are not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value. The Company monitors its equity and cost method investments for indicators of impairment each reporting period.

The Company accounts for its marketable equity securities and its debt securities in accordance with ASC 320-10, Investments—Debt and Equity Securities (“ASC 320-10”). Investments that are owned by the Company’s broker-dealer subsidiaries are recorded at fair value with realized and unrealized gains and losses reported in net (loss) income. Investments designated as available-for-sale that are owned by the Company’s non broker-dealer subsidiaries are recorded at fair value with unrealized gains or losses reported as a separate component of other comprehensive (loss) income, net of tax. The fair value of the Company’s available-for-sale securities was $89 and $0 as of June 30, 2015 and December 31, 2014, respectively, and is included within Other assets.

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Fair Value of Financial Instruments—In accordance with ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), the Company estimates fair values of financial instruments using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment in interpreting market data and, accordingly, changes in assumptions or in market conditions could adversely affect the estimates. The Company also discloses the fair value of its financial instruments in accordance with the fair value hierarchy as set forth by ASC 820-10. See Note 14 for further information.

Derivative Financial Instruments—The Company enters into derivative transactions for a variety of reasons, including managing its exposure to risk arising from changes in foreign currency, facilitating customer trading activities and, in certain instances, to engage in principal trading for the Company’s own account. Derivative assets and liabilities are carried on the Condensed Consolidated Statements of Financial Condition at fair value, with changes in the fair value recognized in the Condensed Consolidated Statements of Operations. Contracts entered into to manage risk arising from changes in foreign currency are recognized in Other income, net and contracts entered into to facilitate customer transactions and principal trading are recognized in Principal transactions. Derivatives are reported on a net-by-counterparty basis when management believes that a legal and enforceable right of offset exists under these agreements. See Note 15 for further information.

Payables to Clearing Services Customers—Payables to clearing services customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers.

Revenue Recognition

Brokerage Transactions—The Company provides brokerage services to its clients in the form of either agency or principal transactions. In agency transactions, the Company charges commissions for executing transactions between buyers and sellers. Agency commission revenues and related expenses are recognized on a trade date basis. These revenues are presented in “Agency Commissions”. 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. These revenues are presented in “Principal Transactions”. In the normal course of its matched principal and principal trading businesses, the Company may hold security positions overnight. These positions are marked to market on a daily basis.

Clearing Services Revenues—The Company charges fees to customers for clearing services provided for cash and derivative transactions. Clearing services revenues are recorded on a trade date basis as customer transactions occur and are presented net of any customer negotiated rebates.

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 are 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 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.

Other Income, net—Included within Other income, net on the Company’s Condensed Consolidated Statements of Operations 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, and interest income earned on short-term investments.

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 compensation and employee benefits. The Company has historically paid certain performance bonuses in restricted stock units (“RSUs”). All RSUs which were outstanding immediately prior to the completion of BGC’s tender offer were converted into the right to receive cash, subject to the terms of each award’s pre-existing vesting schedule. During the three and six months ended June 30, 2015, the Company paid certain performance bonuses in deferred cash awards. The Company also may grant sign-on and retention bonuses for certain newly-hired or existing employees who agree to long-term employment agreements.

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Share-Based Compensation—The Company’s share-based compensation had consisted of RSUs. The Company accounts for share-based compensation in accordance with ASC 718 Compensation— Stock Compensation (“ASC 718”). This accounting guidance requires measurement of compensation expense for equity-based awards at fair value and recognition of compensation expense over the service period, net of estimated forfeitures. In all periods presented, the only share-based compensation expense recognized by the Company has been RSUs. The Company determines the fair value of RSUs based on the number of units granted and the grant date fair value of the Company’s common stock, measured as of the closing price on the date of grant. As discussed in further detail in Note 11, during the first quarter of 2015, the Company converted all RSUs which were outstanding immediately prior to the completion of BGC’s tender offer into the right to receive cash, subject to the terms of each award’s pre-existing vesting schedule.

Deferred Cash Compensation—The Company accounts for deferred cash compensation in accordance with ASC 710 Compensation— General (“ASC 710”). This accounting guidance requires measurement of deferred compensation expense for non-equity-based awards based upon future amounts expected to be paid, and provides for recognition of compensation expense over the expected service period, net of estimated forfeitures. See Note 11 for further information.

Income Taxes— In accordance with ASC 740, Income Taxes (“ASC 740”), 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 carryforwards 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 assets and liabilities 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. Management applies the more likely than not criteria prior to recognizing a financial statement benefit for a tax position taken (or expected to be taken) in a tax return. The Company recognizes interest and/or penalties related to income tax matters in interest expense and other expense, respectively.

The Company recorded a provision for income taxes of $2,078 for the three months ended June 30, 2015, as compared to a benefit for income taxes of $31,277 for the three months ended June 30, 2014. The net increase in income tax expense during the second quarter of 2015 was largely due to an increase in pre-tax income during the three months ended June 30, 2015 compared with the same prior year period. The benefit from income taxes for the three months ended June 30, 2014 was primarily due to a discrete tax benefit of $29,151 attributable to non-cash goodwill impairment charges recorded in the U.S. during the second quarter of 2014. The effective tax rates for both periods were impacted by a geographical mix of pre-tax profits and losses.

The Company recorded a benefit from income taxes of $10,314 for the six months ended June 30, 2015, as compared to $30,183 for the six months ended June 30, 2014. The benefit from income taxes for the six months ended June 30, 2015 was primarily due to an allowable U.S. income tax deduction as a result of the merger termination fee paid to CME following the termination of the CME Merger Agreement in January 2015. The benefit from income taxes for the six months ended June 30, 2014 was primarily a result of a $29,151 discrete tax benefit attributable to non-cash goodwill impairment charges recorded during the second quarter of 2014. The net decrease in benefit from income taxes during the six months ended June 30, 2015 compared with six months ended June 30, 2014 was largely due to an increase in pre-tax income during the current year period. The effective tax rates for both periods were impacted by a geographical mix of pre-tax profits and losses.

Treasury Stock—The Company accounts for Treasury stock using the cost method. Treasury stock held by the Company may be reissued with respect to vested RSUs in qualified jurisdictions. The Company’s policy is to account for these shares as a reduction of Treasury stock on a first-in, first-out basis.

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 (loss) income and included in accumulated other comprehensive income in the Condensed Consolidated Statement of Changes in Stockholders’ Equity. The revaluation of asset and liability balances that are denominated in currencies other than the functional currency of the business unit involved in such transactions is reflected in Other Income, net in the Condensed Consolidated Statements of Operations. Net gains (losses) resulting from remeasurement of foreign currency transactions and balances were $(189) and $207 for the three months ended June 30, 2015 and 2014, respectively, and $(1,227) and $115 for the six months ended June 30, 2015 and 2014, respectively.

Recent Accounting Pronouncements— In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 changes the criteria for disposals to qualify as discontinued operations and requires new disclosures about disposals of both discontinued operations and certain other disposals that do not meet the new definition. The guidance was effective for the Company’s fiscal year beginning January 1, 2015. The adoption of ASU 2014-08 has not had a material impact on the Company’s Consolidated Financial Statements.

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In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 defines how companies report revenues from contracts with customers, and also requires enhanced disclosures. The guidance is effective beginning in the first quarter of fiscal 2017. The Company is currently evaluating the impact of the new guidance on the Company’s Consolidated Financial Statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 sets forth management’s responsibility to evaluate, each reporting period, whether there is substantial doubt about the Company’s ability to continue as a going concern, and if so, to provide related footnote disclosures. The guidance is effective for the Company’s 2016 annual financial statements. The Company is currently evaluating the impact of the new guidance on the Company’s Consolidated Financial Statements.

In November 2014, the FASB issued ASU No. 2014-17, Business Combinations (Topic 805) - Pushdown Accounting (“ASU 2014-17”). ASU 2014-17 provides an acquired entity the option of applying pushdown accounting in its stand-alone financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The Company adopted this guidance on November 18, 2014, the effective date of ASU 2014-17. In conjunction with the Company’s February 2015 acquisition by BGC, the Company has elected not to apply pushdown accounting on the Condensed Consolidated Financial Statements for the six months ended June 30, 2015, the reporting period in which the change-in-control event occurred.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 eliminates the deferral of certain consolidation standards for entities considered to be investment companies and modifies the consolidation analysis performed on certain types of legal entities. The guidance is effective beginning in the first quarter of fiscal 2017 and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its Condensed Consolidated Financial Statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be reported on the Consolidated Statements of Financial Condition as a direct deduction from the carrying amount of that debt liability. The guidance is effective for the Company retrospectively beginning in the first quarter of fiscal 2017 and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its Condensed Consolidated Financial Statements.

4. DISPOSALS AND ASSETS AND LIABILITIES HELD FOR SALE

On January 24, 2015, the Company entered into an agreement to sell 100% equity ownership of The Kyte Group Limited (“KGL”), which primarily included the Company’s clearing business. The Company determined that as of December 31, 2014, KGL met the criteria for classification as held for sale and, accordingly, its assets and liabilities were included in Assets held for sale and Liabilities held for sale on the Condensed Consolidated Statements of Financial Condition as of December 31, 2014, net of $4,061 of asset impairment, resulting from a write-down to the carrying value of its long-lived assets. The transaction was completed in March 2015. KGL’s operations prior to the completion of the transaction are included in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2015 and three and six months ended June 30, 2014 and included within the Clearing and Backed Trading reportable segment.

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The major classes of the total consolidated assets and liabilities of KGL that were classified as held for sale at December 31, 2014 were as follows:

	December 31,
	2014
Assets
Cash and cash equivalents	$	24,957
Cash and securities segregated under federal and other regulations	52,160
Accounts receivable, net	1,348
Receivables from brokers, dealers and clearing organizations	90,634
Property, equipment and leasehold improvements, net	1,944
Intangible assets, net	4,302
Other assets (1)	680
Asset impairment	(4,061		)
Total assets held for sale	$	171,964

Liabilities
Accrued compensation	1,545
Accounts payable and accrued expenses	849
Payables to clearing services customers (2)	142,108
Other liabilities	1,397
Total liabilities held for sale	$	145,899

(1) Excludes $570 of receivables from consolidated affiliates that has been eliminated for the purposes of presentation on the Consolidated Statement of Financial Condition.

(2) Excludes $12,499 of payables to consolidated affiliates that has been eliminated for the purposes of presentation on the Consolidated Statement of Financial Condition.

On February 3, 2015, the Company entered into an agreement to sell 100% equity ownership of Kyte Broking Limited (“KBL”). The Company determined that KBL met the criteria for classification as held for sale and, as a result, its assets and liabilities have been included in Assets held for sale and Liabilities held for sale on the Condensed Consolidated Statements of Financial Condition as of December 31, 2014. In May 2015, the Company completed the sale of KBL. The Company recorded a gain on the sale of $771, in addition to $420 of translation gain on the disposal of the entity, which were included within Other, net on the Condensed Consolidated Statements of Operations. KBL’s operations prior to the completion of the transaction are included in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014.

The major classes of the total consolidated assets and liabilities of KBL that were classified as held for sale at December 31, 2014 were as follows:

	December 31,
	2014
Assets
Cash and cash equivalents	$	13,172
Accounts receivable, net	7,398
Receivables from brokers, dealers and clearing organizations	659
Property, equipment and leasehold improvements, net	178
Other assets	330
Total assets held for sale	$	21,737

Liabilities
Accounts payable and accrued expenses	15,990
Other liabilities	25
Total liabilities held for sale	$	16,015

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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:

	June 30, 2015		December 31, 2014
Receivables from brokers, dealers and clearing organizations:
Contract value of fails to deliver	$	375,489	$	458,718
Receivables from and deposits with clearing organizations and financial institutions (1)	74,618		48,630
Net pending trades	—		253
Total	$	450,107	$	507,601
Payables to brokers, dealers and clearing organizations:
Contract value of fails to receive	$	373.115	$	462,747
Payables to clearing organizations and financial institutions	10,525		496
Net pending trades	539		—
Total	$	384,179	$	463,243

(1) Excluded from the December 31, 2014 balance is $91,293 of Receivables from and deposits with clearing organizations and financial institutions related to KGL and KBL. As discussed in Note 4, such amounts are included in Assets held for sale.

Substantially all fail to deliver and fail to receive balances at June 30, 2015 and December 31, 2014 have subsequently settled at the contracted amounts.

In addition to the balances above, the Company had Payables to clearing services customers of $142,108 at December 31, 2014 associated with the KGL clearing business, which was included in Liabilities held for sale. These amounts represented cash which had been payable to the Company’s clearing customers that was held with the Company’s third-party general clearing members and were included within Cash and cash equivalents, Cash and securities segregated under federal and other regulations or Receivables from brokers, dealers and clearing organizations as follows:

	December 31, 2014
Cash and cash equivalents	11,162
Cash segregated under federal and other regulations	52,160
Receivables from brokers, dealers, and clearing organizations	78,786
Total	$	142,108

As the transaction to sell KGL was completed in March 2015 the Company had no Payables to clearing service customers as of June 30, 2015. See Note 4 for further information on the sale of KGL.

6. GOODWILL AND INTANGIBLE ASSETS

Goodwill—Changes in the carrying amount of the Company’s goodwill for the six months ended June 30, 2015 were as follows:

	December 31, 2014		Goodwill acquired		Impairment charges		Adjustments		Foreign currency translation		June 30, 2015
Goodwill
All other	$	134,542	$	—	$	—	$	—	$	38	$	134,580

Goodwill is required to be tested for impairment at least annually and more frequently when indicators of impairment exist. All of the Company’s goodwill is allocated to its reporting units and the goodwill impairment tests are performed at the reporting unit level. The Company determined its reporting units to be Americas Brokerage; Europe, Middle East and Africa (“EMEA”) Brokerage; Asia Brokerage; Clearing and Backed Trading; Trayport; and Fenics.

No events or changes in circumstances which would indicate goodwill impairment occurred at the Trayport and Fenics reporting units, the Company’s reporting units with remaining goodwill balances, in the six months ended June 30, 2015.

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Intangible Assets—Intangible assets consisted of the following:

	June 30, 2015						December 31, 2014
	Gross amount		Accumulated amortization and foreign currency translation		Net carrying value		Gross amount		Accumulated amortization and foreign currency translation		Net carrying value (1)
Amortized intangible assets:
Customer relationships	$	62,334	$	41,648	$	20,686	$	62,334	$	39,203	$	23,131
Trade names	7,904		6,949		955		7,904		6,750		1,154
Core technology	8,697		4,456		4,241		8,697		4,105		4,592
Non-compete agreements	3,756		3,439		317		3,756		3,429		327
Patents	3,131		1,969		1,162		3,131		1,719		1,412
Other	647		393		254		647		358		289
Total	$	86,469	$	58,854	$	27,615	$	86,469	$	55,564	$	30,905

(1) Excluded from net carrying value as of December 31, 2014 is $3,715 of customer relationships, $576 of trade names and $11 of non-compete agreements with indefinite useful lives related to KGL that were held for sale. As discussed in Note 4, such amounts were included in Assets held for sale as of December 31, 2014 prior to the disposal of KGL during the first quarter of 2015.

Intangible amortization expense for the three months ended June 30, 2015 and 2014 was $1,644 and $2,448, respectively. Intangible amortization expense for the six months ended June 30, 2015 and 2014 was $3,302 and $4,917, respectively.

At June 30, 2015, expected amortization expense for the definite lived intangible assets is as follows:

2015	$	3,297
2016	6,087
2017	4,160
2018	3,342
2019	3,125
Thereafter	7,604
Total	$	27,615

7. OTHER ASSETS AND OTHER LIABILITIES

Other assets consisted of the following:

	June 30, 2015		December 31, 2014
Deferred tax assets	$	108,960	$	91,935
Investments accounted for under the cost method and equity method	14,761		14,872
Prepaid bonuses	13,404		16,523
Forgivable employee loans and advances to employees	12,599		15,072
Deferred financing fees	4,094		5,038
Software inventory, net	3,444		3,435
Financial instruments owned	2,444		3,865
Other	39,827		21,981
Total Other assets	$	199,533	$	172,721

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Other liabilities consisted of the following:

	June 30, 2015		December 31, 2014
Interest payable	$	12,516	$	12,457
Payroll related liabilities	12,001		12,522
Deferred revenues	9,044		7,993
Deferred rent liabilities	8,507		8,657
Unrecognized tax benefits	7,983		8,396
Income taxes payable	6,432		5,384
Deferred tax liabilities	4,308		4,726
Financial instruments sold, not yet purchased	912		1,387
Other	9,117		8,748
Total Other liabilities	$	70,820	$	70,270

8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

The Company’s outstanding debt obligations consisted of the following:

	June 30,		December 31,
	2015		2014

8.375% Senior Notes due 2018	$	240,000	$	240,000
Loans pursuant to Credit Agreement	50,000		10,000
Total	$	290,000	$	250,000

The Company’s debt obligations are carried at historical amounts. The fair value of the Company’s Long-term debt obligations, categorized within Level 2 of the fair value hierarchy, is measured primarily using pricing service data from external providers. The carrying amounts and estimated fair values of the Company’s Long-term debt obligations are as follows:

		June 30, 2015						December 31, 2014
		Carrying Amount			Fair Value			Carrying Amount			Fair Value

8.375% Senior Notes	$		240,000	$		271,200	$		240,000	$		272,568

8.375% Senior Notes

In July 2011, the Company issued $250,000 in aggregate principal amount of 8.375% Senior Notes (the “8.375% Senior Notes”) due 2018 in a private offering (the “Offering”) to qualified institutional buyers pursuant to Rule 144A and to certain persons in offshore transactions pursuant to Regulation S, each under the Securities Act of 1933, as amended (the “Securities Act”). The notes were priced to investors at 100% of their principal amount, and mature in July 2018. Interest on these notes is payable, semi-annually in arrears on the 19th of January and July. Transaction costs of approximately $9,100 related to the 8.375% Senior Notes were deferred and are being amortized over the term of the notes. On December 21, 2011, the Company completed an exchange offer for the 8.375% Senior Notes whereby it exchanged $250,000 in aggregate principal amount of the 8.375% Senior Notes for 8.375% Senior Notes that are registered under the Securities Act.

In March 2013, the Company repurchased $10,000 principal amount of its 8.375% Senior Notes on the open market for an aggregate purchase price of $9,602, including accrued interest and sales commissions. The Company funded the repurchase of these notes with borrowings under its Credit Agreement.

In April 2015, the Company’s Audit Committee authorized the Company to repurchase up to $50,000 of the Company’s common stock and 8.375% Senior Notes. During the three and six months ended June 30, 2015, and June 30, 2014 the Company did not repurchase any shares of its common stock or 8.375% Senior Notes. In addition, in July 2015, the Company’s Audit Committee authorized the Company to repurchase up to $240,000 of the Company’s 8.375% Senior Notes.

On January 18, 2013, Moody’s Investor Services (“Moody’s”) lowered its credit rating on the Company’s 8.375% Senior Notes two notches to B1, which increased the Company’s applicable per annum interest, effective January 19, 2013, by an additional 50 basis points. On April 19, 2013, Fitch Ratings, Inc. (“Fitch”) further lowered its credit rating on the Company’s 8.375% Senior Notes two notches to BB and revised its outlook from Stable to Negative. This credit rating downgrade by Fitch increased our applicable per annum interest by an additional 50 basis points, effective July 19, 2013. On June 26, 2013, Standard & Poor’s (“S&P”) further lowered its credit rating on the Company’s 8.375% Senior Notes one notch to B+ and revised its outlook from Negative to Stable. This credit rating downgrade by S&P increased the Company’s applicable per annum interest by an additional 25 basis points, effective July 19, 2013.

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Pursuant to the terms of the 8.375% Senior Notes, the cumulative effect of downgrades to the Company’s credit rating by rating agencies subsequent to the issuance of our 8.375% Senior Notes resulted in 200 basis points penalty interest, which is the maximum increase permitted under the indenture. The additional 200 basis points of interest equates to $4,800 in additional interest expense per annum, based on the aggregate amount of outstanding principal as of June 30, 2015.

On April 29, 2015, BGC announced the purchase of additional shares of the Company and gained the two-thirds ownership necessary to effect the full merger of GFI. See Notes 2 and 9 for further information on GFI’s issuance of shares to BGC. Following this announcement, the Company’s credit ratings were upgraded by both S&P and Fitch. On April 29, 2015, S&P raised its credit rating on the Company’s 8.375% Senior Notes four notches to BB+, and indicated its rating on the Company’s 8.375% Senior Notes remained on CreditWatch with positive implications. On May 6, 2015, Fitch increased its credit rating on the Company’s 8.375% Senior Notes four notches to BB+ and has also removed the Company’s 8.375% Senior Notes rating the from Rating Watch Positive and assigned a Positive Rating Outlook. See Note 20 on Subsequent Events for further information on upgrades from the rating agencies. At June 30, 2015 and December 31, 2014, unamortized deferred financing fees related to the 8.375% Senior Notes of $3,796 and $4,420, respectively, were recorded within Other assets and the Company was in compliance with all applicable covenants.

Credit Agreement

In March 2013, the Company entered into an amendment to its second amended and restated credit agreement (as amended, the “Credit Agreement”) with Bank of America, N.A. and certain other lenders. The Credit Agreement provided for maximum revolving loans of up to $75,000 until December 2013, at which time $18,750 of the lender commitments were due to mature and the remaining $56,250 of lender commitments were due to mature in December 2015.

In December, 2013, the various lenders under the Credit Agreement executed an assignment and assumption agreement pursuant to which the extending lenders under the Credit Agreement assumed the lender commitments of the non-extending lender and the Company has consented to the assignment. As a result, the borrowing capacity will remain at $75,000 until the Credit Agreement matures in December 2015. The Credit Agreement provides for up to $50,000 for letters of credit.

In February 2015, in connection with the transactions contemplated by the Tender Offer Agreement, the Company entered into a third amendment to the Credit Agreement to permit the transactions contemplated by the Tender Offer Agreement, including by amending the definition of “Change of Control” to permit BGC to acquire shares of the equity of the Company in excess of 35% without triggering a “Change of Control” under the Credit Agreement.

The Credit Agreement contains certain financial and other covenants. The financial covenants contained in our Credit Agreement require that we maintain minimum consolidated capital, as defined, of no less than $375,000 at any time. The amendment to the Credit Agreement executed in July 2014 reduced the required minimum amount of consolidated capital by any goodwill or asset impairment charge in an aggregate amount not to exceed $160,000 contained in our financial statements in any of the fiscal quarters ending June 30, 2014, September 30, 2014 or December 31, 2014. In April 2015, GFI entered into a fourth amendment to the Credit Agreement, whereby the minimum consolidated capital the Company is required to maintain was adjusted to $215,000. The Company was in compliance with all applicable covenants at June 30, 2015 and December 31, 2014.

Revolving loans may be either base rate loans or Eurocurrency rate loans. Eurocurrency rate loans bear interest at the annualized rate of one-month LIBOR plus the application margin and base rate loans bear interest at a rate per annum equal to a prime rate plus the applicable margin. Letter of credit fees per annum are equal to the applicable margin times the outstanding amount drawn under such letter of credit. As long as no default has occurred under the Credit Agreement, the applicable margin for base rate and Eurocurrency rate loans and letters of credit is based on a matrix that varies with a ratio of outstanding debt to EBITDA, as defined in the Credit Agreement.

The interest rate of the outstanding loan under the Credit Agreement was 5.75% at June 30, 2015. At June 30, 2015 and December 31, 2014, unamortized deferred financing fees related to the Credit Agreement of $298 and $618, respectively, were recorded within Other assets.

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9. STOCKHOLDERS’ EQUITY

On March 30, 2015, the Company filed a Form 25 with the Securities Exchange Commission (“SEC”) to voluntarily delist GFI’s common stock on the New York Stock Exchange (“NYSE”) and to terminate the registration of the common stock under the Exchange Act. The Company’s common stock was delisted on April 10, 2015. On June 1, 2015, the Company filed a Form 15 with the SEC to effect the deregistration of the common stock. The Company expects the deregistration of the common stock to become effective 90 days after filing the Form 15 with the SEC.

On April 28 2015, the Company issued 43,029,260 shares of its common stock to BGC at the closing price of $5.81 per share, for an aggregate purchase price of $250,000. The purchase price was paid to the Company in the form of a Note due on June 19, 2018 which bears an interest rate of LIBOR plus 200 basis points. The Company accounted for the transaction in accordance with the applicable provisions of ASC 505, Equity. Accordingly, as the Company does not expect the Note to be repaid within a reasonably short period of time, the Company has not classified the BGC Note as an asset and has offset the BGC Note and the value of the New Shares in stockholders’ equity.

The payment of quarterly dividends was suspended by the Company’s Board during the third quarter of 2014, in conjunction with the then-pending Amended CME Merger Agreement. Following the Company’s acquisition by BGC the payment of quarterly dividends continues to be suspended. Therefore, the Company did not pay a cash dividend during the first quarter of 2015. On March 28, 2014 the Company paid a cash dividend of $0.05 per share, which, based on the number of shares outstanding on the record date for such dividends, totaled $6,188.

10. LOSS PER SHARE

Basic (loss) earnings per share for common stock is calculated by dividing net (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted (loss) earnings per share is calculated by dividing net (loss) income by the sum of: (i) the weighted average number of shares outstanding, (ii) outstanding stock options and RSUs (using the “treasury stock” method when the impact of such options and RSUs would be dilutive), and (iii) any contingently issuable shares when dilutive.

Basic and diluted loss per share for the three and six months ended June 30, 2015 and 2014 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Basic (loss) earnings per share
GFI’s net loss	$	(1,779	)	$	(97,796	)	$	(21,702	)	$	(93,793	)
Weighted average common shares outstanding	157,574,973			124,909,412			142,540,600			123,643,160
Basic loss per share	$	(0.01	)	$	(0.78	)	$	(0.15	)	$	(0.76	)
Diluted (loss) earnings per share
GFI’s net loss	$	(1,779	)	$	(97,796	)	$	(21,702	)	$	(93,793	)
Weighted average common shares outstanding	157,574,973			124,909,412			142,540,600			123,643,160
Effect of dilutive options, RSUs, and other contingently issuable shares	—			—			—			—
Weighted average shares outstanding and common stock equivalents	157,574,973			124,909,412			142,540,600			123,643,160
Diluted loss per share	$	(0.01	)	$	(0.78	)	$	(0.15	)	$	(0.76	)

As discussed in Note 11 in further detail, all RSUs which were outstanding immediately prior to the completion of BGC’s tender offer were converted into the right to receive cash, subject to the terms of each award’s pre-existing vesting schedule, and therefore, were not subject to the computation of basic or diluted earnings per share for the three and six months ended June 30, 2015.

There were no options, RSUs or contingently issuable shares outstanding as of June 30, 2015.

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As a result of the net loss for the three and six months ended June 30, 2014, the following stock options, RSUs and contingently issuable shares outstanding were excluded from the computation of diluted loss per share for each respective period, as their inclusion would be anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,

	2014		2014
Stock Options	$	6,316	$	6,316
RSUs	16,193,862		16,193,862
Contingently issuable shares	1,171,879		1,171,879

11. DEFERRED COMPENSATION

Restricted Stock Units

Prior to the completion of BGC’s tender offer (as discussed in Note 2), the Company awarded bonuses in the form of equity awards pursuant to the Amended and Restated GFI Group Inc. 2008 Equity Incentive Plan, (“2008 Equity Incentive Plan”) which permitted the grant of non-qualified stock options, incentive stock options, stock appreciation rights, shares of restricted stock, restricted stock units and performance units to employees, non-employee directors or consultants. The Company issued shares from authorized but unissued shares and authorized and issued shares reacquired and held as treasury shares, which were reserved for issuance upon the vesting of RSUs granted pursuant to the 2008 Equity Incentive Plan. Following the acquisition by BGC, the Company filed post-effective amendments to its registration statements on Form S-8 de-registering any and all securities registered under the registration statements that remained unissued pursuant to its equity incentive and stock option plans and does not plan to issue any additional RSUs. Pursuant to the Tender Offer Agreement, each RSU of the Company outstanding immediately prior to the completion of BGC’s tender offer was converted into the right to receive an amount in cash equal to $6.10 per unit, the offer price with respect to each share underlying such award, with such cash payable on and subject to the terms and conditions of the original vesting schedule of each RSU.

The Company accounted for the conversion of RSUs into the right to receive cash as the modification of an equity award to a liability in accordance with the applicable provisions of ASC 718. Accordingly, the Company recorded incremental compensation cost on the previously recognized portion of any outstanding RSUs based upon the excess, if any, of the $6.10 per unit fair value of the modified award over the value of the original award immediately before its terms were modified. The total unrecognized compensation cost associated with those RSUs which were outstanding when the modification was effective, will be recognized based on each award’s pre-existing vesting schedule based upon the $6.10 per unit fair value of the modified award, net of estimated forfeitures.

The following is a summary of RSU transactions under the 2008 Equity Incentive Plan:

	RSUs		Weighted- Average Grant Date Fair Value
Outstanding December 31, 2014	14,282,789		$	4.02
Granted	—		—
Vested	(393,554	)	3.71
Cancelled	(64,724	)	3.81
Converted to deferred cash awards	(13,824,511	)	4.03
Outstanding June 30, 2015	—		—

There were no RSUs granted during the three and six months ended June 30, 2015.The weighted average grant-date fair value of RSUs granted for the six months ended June 30, 2014 was $3.56 per unit. Total compensation expense and related income tax benefits recognized in relation to RSUs are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015(1)		2014
Compensation expense	$	6,632	$	5,994	$	24,549	$	13,350
Income tax benefits	$	1,862	$	1,696	$	6,978	$	3,795

(1) Compensation expense for the 6 months ended June 30, 2015 includes $11,545 of incremental compensation costs on unvested RSUs related to the modification of the RSUs recorded during the first quarter of 2015.

At June 30, 2015, total unrecognized compensation cost related to the RSUs (which are to be settled in cash based on pre-existing vesting schedules) prior to the consideration of expected forfeitures was approximately $32,435 and is expected to be recognized over a weighted-average period of 1.17 years. The total fair value of RSUs vested during the six months ended June 30, 2015 and 2014 was $1,459 and $20,652, respectively.

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Deferred Cash Compensation

Separate from the modification of RSUs discussed above under “Restricted Stock Units”, the Company’s Deferred Cash Award Program, which was adopted on February 12, 2013, provides for the grant of deferred cash incentive compensation to eligible employees.

The Company may pay certain bonuses in the form of deferred cash compensation awards, which generally vest over a future service period. Total compensation expense recognized in relation to deferred cash compensation awards, not including the expense related to RSUs converted to deferred cash awards as described above, is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Compensation expense	$	1,561	$	7	$	1,886	$	14

At June 30, 2015, total unrecognized compensation cost related to deferred cash compensation prior to the consideration of expected forfeitures, not including the unrecognized portion of the RSUs converted to deferred cash awards as described above, was approximately $12,125 and is expected to be recognized over a weighted-average period of 2.59 years.

12. COMMITMENTS AND CONTINGENCIES

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 June 30, 2015, the Company had total purchase commitments for market data of approximately $16,882, with $13,545 due within the next twelve months and $3,337 due between one to three years. Additionally, the Company had $4,528 of other purchase commitments including $3,631 for hosting and software license agreements, and $897 primarily related to network upgrades. Of these other purchase commitments, approximately $2,666 is due within the next twelve months.

Contingencies—In the normal course of business, the Company and certain of its subsidiaries included in the Condensed Consolidated Financial Statements are, and have been in the past, involved in various lawsuits and legal proceedings and are, and have been in the past, involved in certain regulatory examinations. The Company’s unresolved legal proceedings and regulatory examinations are at varying stages of adjudication, arbitration or investigation and involve a variety of claims. In view of the inherent difficulty of predicting the outcome of such litigation and regulatory matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories, the Company generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties, if any, relating to each matter may be.

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. In accordance with applicable accounting guidelines, 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. Where a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.

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 contingencies related to the employer portion of National Insurance Contributions in the U.K.

Following the announcement of the CME Merger, nine putative class action complaints challenging the CME Merger were filed on behalf of purported stockholders of GFI (one of which also purported to be brought derivatively on behalf of GFI), two in the Supreme Court of the State of New York, County of New York, six in the Court of Chancery of the State of Delaware, and one in the United States District Court for the Southern District of New York. The complaints were captioned Coyne v. GFI Group Inc., et al., Index No. 652704/2014 (N.Y. Sup. Ct., filed September 4, 2014), Suprina v. GFI Group, Inc., et al., Index No. 652668/2014 (N.Y. Sup. Ct., filed August 29, 2014), Brown v. GFI Group Inc., et al., Civil Action No. 10082-VCL (Del. Ch., filed September 3, 2014), Hughes v. CME Group, Inc., et al., Civil Action No. 10103-VCL (Del. Ch., filed September 8, 2014), Al Ammary v. Gooch, et al., Civil Action No. 10125-VCL (Del. Ch., filed September 11, 2014), Giardalas v. GFI Group, Inc., Civil Action No. 10132-VCL (Del. Ch., filed September 15, 2014), City of Lakeland Employees’ Pension Plan v. Gooch, et al., Civil Action No. 10136-VCL (Del. Ch., filed September 16, 2014), Michocki v. Gooch., et al., Civil Action No. 10166-VCL (Del. Ch., filed September 25, 2014) and Szarek v. GFI Group Inc., et al., Case No. 14-CV-8228 (S.D.N.Y., filed October 14, 2014). On September 26, 2014, the Court of Chancery granted voluntary dismissal of the Giardalas action.

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On October 6, 2014, a consolidation order was entered by Vice Chancellor Laster, consolidating the Delaware cases into the Consolidated Delaware Action. The consolidation order designated the complaint filed in City of Lakeland Employees’ Pension Plan v. Gooch, et al., Civil Action No. 10136-VCL (Del. Ch.) as the operative complaint in the Consolidated Delaware Action.

The complaints named as Defendants various combinations of the Company, GFI Holdco Ltd. (“IDB Buyer”), the members of the Company’s board of directors, GFI managing director Nick Brown, CME, Commodore Acquisition Corp., Commodore Acquisition LLC, Cheetah Acquisition Corp., Cheetah Acquisition LLC, JPI and New JPI Inc. (“New JPI”). The complaints generally alleged, among other things, that the members of the Company’s board of directors breached their fiduciary duties to the Company’s stockholders during merger negotiations by entering into the CME Merger Agreement and approving the CME Merger, and that the Company, CME, Commodore Acquisition Corp., Commodore Acquisition LLC, IDB Buyer, Cheetah Acquisition Corp., Cheetah Acquisition LLC, JPI, and New JPI aided and abetted such breaches of fiduciary duties. The complaints further alleged, among other things, (i) that the merger consideration provided for in the CME Merger Agreement undervalued the Company, (ii) that the sales process leading up to the CME Merger was flawed due to the members of the Company’s board of directors’ and Jefferies’ conflicts of interest, and (iii) that certain provisions of the CME Merger Agreement inappropriately favored CME and precluded or impeded third parties from submitting potentially superior proposals.

In addition, the Hughes complaint asserted a derivative claim on behalf of the Company against the members of the Company’s board of directors for breaching their fiduciary duties of loyalty and care to the Company by negotiating and agreeing to the CME Merger and against Defendants Gooch and Heffron for usurping a corporate opportunity. The Michocki complaint alleged that the CME Merger is not a solitary transaction but a series of related transactions and further alleged that the IDB Transaction must be approved by an affirmative two-thirds vote of the Shares pursuant to the terms of the Charter.

The complaints sought, among other relief: (i) certification of the class, (ii) injunctive relief enjoining the CME Merger, (iii) a declaration that the members of the Company’s board of directors breached their fiduciary duties and that certain provisions of the CME Merger Agreement are unlawful, (iv) a directive to the members of the Company’s board of directors to execute their fiduciary duties to obtain a transaction in the best interest of the Company’s stockholders, (v) rescission of the CME Merger to the extent already implemented, (vi) granting of rescissory damages and an accounting of all of the damages suffered as a result of the alleged wrongdoing, (vii) and reimbursement of fees and costs. The Coyne and Suprina Plaintiffs also demanded a jury trial.

Certain Defendants moved to dismiss or, in the alternative, stay the Coyne and Suprina actions in favor of the Consolidated Delaware Action. A hearing was held on December 15, 2014 on (i) the Defendants’ motions to dismiss or stay the Coyne and Suprina actions; (ii) the Plaintiffs’ motion by order to show cause for consolidation and appointment of a leadership structure; and (iii) Plaintiff Suprina’s motion by order to show cause to compel and expedite discovery. In an order filed on January 30, 2015, the Court ordered the Suprina and Coyne cases consolidated as In re GFI Group Inc. Shareholder Litigation, Index No. 652668/2014. In another order filed that same day, the Court denied Plaintiff Suprina’s motion to compel and expedite discovery. On March 26, 2015, the Court issued a decision and order granting the Defendants’ motions to dismiss the Coyne and Suprina actions on forum non conveniens grounds and in favor of the Consolidated Delaware Action. The decision and order were entered in the office of the Clerk of the County of New York on March 27, 2015. The Court’s judgment dismissing the Coyne and Suprina complaints was entered in the office of the Clerk of the County of New York on April 29, 2015.

On November 18, 2014, the Delaware court entered a Revised Order Setting Expedited Discovery Schedule in the Consolidated Delaware Action. On December 19, 2014, the court entered a Further Revised Scheduling Order scheduling a preliminary injunction hearing for January 16, 2015. On December 29, 2014, Plaintiffs in the Consolidated Delaware Action filed a Motion for a Preliminary Injunction, and a brief in support thereof, seeking to enjoin enforcement of Article V of the Support Agreement and preliminarily enjoin the stockholder vote on the CME Merger until (i) certain additional disclosures were made and (ii) the Company’s stockholders were provided the opportunity to vote on the CME Merger, the JPI Merger and the IDB Transaction. On January 8, 2015, the parties agreed to move the preliminary injunction hearing from January 16, 2015 to January 20, 2015. On January 15, 2015, the preliminary injunction hearing (scheduled for January 20) was taken off the court’s calendar.

On January 15, 2015, Plaintiffs in the Consolidated Delaware Action filed a Supplement to the Verified Class Action Complaint. On January 30, 2015, Plaintiffs filed a Second Supplement to the Verified Class Action Complaint. On February 4, 2015, Plaintiffs filed a Motion for Expedited Proceedings and a brief in support thereof. On February 6, 2015, the Court scheduled a merits hearing for February 17 and 18, 2015. On February 7, 2015, Plaintiffs filed a Third Supplement to the Verified Class Action Complaint, seeking certain additional injunctive and declaratory relief. On February 11, 2015, the Court, with the consent of the parties, moved the merits hearing (scheduled for February 17 and 18, 2015) to the first available dates on the Court’s schedule after March 4, 2015.

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On February 20, 2015, Plaintiffs informed the Court that an expedited merits hearing was no longer necessary. On February 26, 2015, March 17, 2015, and March 18, 2015, the Court granted stipulations and orders extending the time for certain Defendants to answer, move, or otherwise respond to the operative complaint. On April 16, 2015, the Court granted a stipulation and order pursuant to which certain of the Defendants did not need to respond to the operative complaint or the supplements thereto and would have thirty days from the filing of an amended complaint to answer, move against, or otherwise respond to it. On May 20, 2015, the Court entered a third scheduling order, pursuant to which Plaintiffs would file an amended complaint by June 26, 2015; fact depositions will be completed by July 31, 2015; expert discovery will be completed by September 11, 2015; pre-trial briefs will be filed on October 30, 2015; a pre-trial conference will be held on November 2, 2015; and a trial will be held on November 9, 10, 12, and 13, 2015.

By agreement of the parties, Plaintiffs filed an amended complaint on July 13, 2015. The amended complaint asserts causes of action against Messrs. Gooch and Heffron, Ms. Cassoni, and CME, but not Messrs. Brown, Fanzilli, and Magee, the Company, IDB Buyer, Commodore Acquisition Corp., Commodore Acquisition LLC, Cheetah Acquisition Corp., Cheetah Acquisition LLC, JPI, or New JPI. Plaintiffs allege Messrs. Gooch and Heffron breached their fiduciary duties to stockholders by, among other things, (i) placing their interests ahead of stockholders’ interests, (ii) rejecting BGC’s offer to acquire the Company for $6.20 per share, (iii) entering into certain employment and non-competition agreements with BGC, (iv) delaying Board meetings to discuss recommendations made by the Special Committee concerning BGC’s offer, (v) disparaging BGC, and (vi) issuing false and misleading statements to stockholders. Plaintiffs allege Ms. Cassoni favored the interests of Messrs. Gooch and Heffron over stockholders’ interests and that CME aided and abetted the individual Defendants’ breaches of fiduciary duty.

In the New York Szarek action, the Court scheduled an initial pretrial conference for December 16, 2014, which the Court adjourned upon application of the parties until March 12, 2015 and adjourned again upon application of Plaintiff until May 21, 2015. On May 13, 2015, Plaintiff voluntarily dismissed his action without prejudice.

In addition to the foregoing litigation, on November 26, 2014, a putative class action complaint alleging violations of the federal securities laws, captioned Gross v. GFI Group, Inc., et al., was filed in the United States District Court for the Southern District of New York. The complaint named the Company, Colin Heffron, Michael Gooch and Nick Brown as Defendants. The complaint sought, among other relief: (i) certification of the class, (ii) compensatory damages for Defendants purported wrongdoing and (iii) reimbursement of costs and expenses.

On February 20, 2015, the Court in Gross v. GFI Group, Inc. granted Plaintiff’s unopposed motion for appointment as lead plaintiff and approved his selection of co-lead counsel on behalf of the putative class. The Court also extended Defendants’ time to respond to the complaint from February 23, 2015 to March 25, 2015; granted Plaintiff leave to file an amended complaint by March 16, 2015; and rescheduled the initial pre-trial conference to March 27, 2015. On March 10, 2015, Plaintiff requested additional time to file his amended complaint. On March 13, 2015, the Court extended Plaintiff’s deadline to file an amended complaint from March 16, 2015 to May 15, 2015; set a June 5, 2015 deadline for Defendants to respond to the amended complaint; and rescheduled the initial pre-trial conference for June 19, 2015.

On May 15, 2015, Plaintiff filed an amended complaint. The amended complaint named GFI Group Inc. and Messrs. Gooch and Heffron—but not Mr. Brown—as defendants. On June 5, 2015, the remaining Defendants requested a pre-motion conference in anticipation of a motion to dismiss. On June 15, 2015, the Court granted Defendants’ request and added Defendants’ proposed motion to dismiss to the agenda for the pre-trial conference on June 19, 2015. At the pre-trial conference, the Court gave Plaintiff permission to file a second amended complaint and gave Defendants permission to file a motion to dismiss. On June 22, 2015, the Court entered a scheduling order, pursuant to which Plaintiff was to file his second amended complaint by July 8, 2015; Defendants shall file their motion to dismiss by August 19, 2015; Plaintiff’s motion to dismiss opposition papers are due on September 30, 2015; Defendants’ reply papers in further support of their motion to dismiss are due on October 14, 2015; and oral argument will be held on October 30, 2015, at 11:00 a.m.

Plaintiff filed his second amended complaint on July 8, 2015. Like Plaintiff’s first amended complaint, the second amended complaint alleges certain violations of the federal securities laws against GFI Group Inc. and Messrs. Gooch and Heffron.

Defendants believe that the claims asserted against them are without merit and intend to defend the litigation vigorously.

Based on currently available information, the outcome of the Company’s outstanding legal proceedings 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.

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For a limited number of legal matters for which, a loss (whether in excess of a related accrued liability or where there is no accrued liability) is not probable but is reasonably possible in future periods, the Company is sometimes able to estimate a range of possible loss. In determining whether it is able to estimate a range of possible loss, the Company reviews and evaluates its material litigation and regulatory and other matters on an ongoing basis. In cases in which the Company is able to estimate a range of possible loss, the aggregate total of such estimated possible losses is disclosed below. There may be other matters for which a loss is probable or reasonably possible but for which a range of possible loss may not be estimable. For those matters for which a range of possible loss is estimable, management currently estimates the aggregate range of possible loss as $0 to approximately $10.0 million in excess of the accrued liability (if any) related to those matters. The estimated range of possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions and uncertainties. The matters underlying the estimated range will vary from time to time, and actual results may vary significantly from the current estimate. Management is generally unable to estimate a range of reasonably possible loss for matters other than those included in the estimate above, including where (i) actual or potential plaintiffs have not claimed an amount of monetary damages (unless management can otherwise determine an amount), (ii) the matters are in early stages, (iii) there is uncertainty as to the outcome of pending appeals or motions, (iv) there are significant factual issues to be resolved, (v) there are novel legal issues presented, among other reasons. Those matters for which an estimate is not possible are excluded from the estimated range above, therefore, the estimated range above does not represent the Company’s maximum loss exposure.

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 will likely vary based upon the trading volumes of the various securities, commodities, foreign exchange and other cash and derivative markets in which the Company provides its services.

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 Condensed Consolidated Statements of Financial Condition for these arrangements.

13. MARKET AND CREDIT RISKS

Disclosure regarding the Company’s financial instruments with market and credit risks are described in “Note 16—Market and Credit Risks” of the Notes to the Consolidated Financial Statements contained in the Company’s 2014 Form 10-K. There have been no material changes to these risks during the six months ended June 30, 2015.

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

Certain of the Company’s financial assets and liabilities are carried at fair value, and are measured at fair value on a recurring basis. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Financial instruments owned and Financial instruments sold, not yet purchased are recorded at fair value, and included in Other assets and Other liabilities, respectively. Contingent consideration, if any, is also recorded at fair value, and included in Other liabilities. The Company’s investments that are accounted for under the cost and equity methods are investments in companies that are not publicly traded and for which no established market for their securities exists. The fair value of these investments is only estimated if there are identified events or changes in circumstances that may have a significant adverse effect on the carrying value of the investment.

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.

Level 1—Financial assets and liabilities whose values are based on unadjusted quoted prices for identifiable assets or liabilities in an active market that the company has the ability to access at the measurement date (examples include active exchange-traded equity securities, listed derivatives, and most U.S. Government and agency securities).

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Level 2—Financial assets and liabilities whose values are based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:

· Quoted prices for identifiable or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently); and

· Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps).

Level 3—Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

Valuation Techniques

A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis are as follows:

U.S. Treasury Securities - U.S. Treasury securities are valued using quoted market prices. Valuation adjustments are not applied.

Accordingly, U.S. Treasury securities are generally categorized in Level 1 of the fair value hierarchy.

Equity Securities - Equity securities include mostly exchange-traded securities and are valued based on quoted market prices. Accordingly, exchange-traded equity securities are generally categorized in Level 1 of the fair value hierarchy. Non-exchange traded equity securities are measured primarily using broker quotations, pricing service data from external providers and prices observed for recently executed market transactions. Non-exchange traded equity securities are generally categorized within Level 2 of the fair value hierarchy.

Corporate Bonds — Corporate bonds are measured primarily using broker quotations, pricing service data from external providers and prices observed for recently executed market transactions. Corporate bonds are generally categorized in Level 2 of the fair value hierarchy.

Foreign government bonds — Foreign government bonds are mostly valued using quoted market prices. Accordingly, foreign government bonds are generally categorized in Level 1 or Level 2 of the fair value hierarchy.

Derivative Contracts — Derivative contracts include instruments such as foreign exchange, commodity, fixed income and equity derivative contracts.

Listed Derivative Contracts - Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy.

OTC Derivative Contracts — Over-the-counter (“OTC”) derivative contracts include forwards, swaps, and options contracts related to foreign currencies. Depending on the product and the terms of the transaction, the fair value of OTC derivative products can be either observed or modeled using a series of techniques and model inputs from comparable benchmarks, including closed-form analytic formulas, such as the Black-Scholes option-pricing model, and simulation models or a combination thereof. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets. In the case of more established derivative products, the pricing models used by the Company are widely accepted by the financial services industry. OTC derivative products valued by the Company using pricing models generally fall into this category and are categorized in Level 2 of the fair value hierarchy.

Equity warrants - Non-exchange traded equity warrants are classified within Level 3 of the fair value hierarchy and are measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price and maturity date.

Contingent Consideration — The category consists primarily of contingent consideration related to one of the Company’s acquisitions.

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On November 14, 2013, the Company completed the acquisition of Contigo Limited, a provider of trading, portfolio risk management and logistics software for the energy industry. This contingent liability, which was settled in cash during March 2015, had been remeasured at fair value principally based on the acquired business’ future financial performance, including revenues and operating margins, from May 1, 2014 through the settlement date.

The inputs used in estimating the fair value of these contingent considerations were both unobservable and significant to the overall fair value measurement of this liability, therefore the liability was categorized in Level 3 of the fair value hierarchy.

In the three and six months ended June 30, 2015 and 2014, the Company did not have any material transfers among Level 1, Level 2, and Level 3.

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Financial Assets and Liabilities measured at fair value on a recurring basis as of June 30, 2015 are as follows:

	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2015
Assets
Other assets: Financial instruments owned:
Equity securities	$	4		$	85	$	—	$	89
Derivative contracts:
Foreign exchange derivative contracts	$	3		$	1,647	$	—	$	1,650
Commodities derivative contracts	1,195			—		—		1,195
Netting (1)	(490		)	—		—		(490		)
Total derivative contracts	$	708		$	1,647	$	—	$	2,355
Total financial instruments owned	$	712		$	1,732	$	—	$	2,444
Total	$	712		$	1,732	$	—	$	2,444

Liabilities
Other liabilities: Financial instruments sold, not yet purchased:
Derivative contracts:
Foreign exchange derivative contracts	$	162		$	753	$	—	$	915
Commodities derivative contracts	487			—		—		487
Netting (1)	(490		)	$	—	$	—	$	(490	)
Total derivative contracts	$	159		$	753	$	—	$	912
Total financial instruments sold, not yet purchased	$	159		$	753	$	—	$	912
Total	$	159		$	753	$	—	$	912

(1) Represents the impact of netting on a net-by-counterparty basis.

Excluded from the table above is variation margin on long derivative contracts related to exchange traded futures in the amount of $459 included within Receivables brokers, dealers and clearing organizations.

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Financial Assets and Liabilities measured at fair value on a recurring basis as of December 31, 2014 are as follows:

	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2014
Assets
Other assets: Financial instruments owned:
Equity securities	$	—		$	232	$	—	$	232
Derivative contracts:
Foreign exchange derivative contracts	$	592		$	2,181	$	—	$	2,773
Commodities derivative contracts	1,198			—		—		1,198
Netting (1)	(338		)		—		—		(338	)
Total derivative contracts	$	1,452		$	2,181	$	—	$	3,633
Total financial instruments owned	$	1,452		$	2,413	$	—	$	3,865
Total	$	1,452		$	2,413	$	—	$	3,865

Liabilities
Other liabilities: Financial instruments sold, not yet purchased:
Derivative contracts:
Foreign exchange derivative contracts	$	—		$	1,387	$	—	$	1,387
Commodities derivative contracts	$	338		$	—	$	—	$	338
Netting (1)	(338		)	—		—		(338		)
Total derivative contracts	$	—		1,387		—		1,387
Total financial instruments sold, not yet purchased	$	—		$	1,387	$	—	$	1,387
Other liabilities: Contingent consideration	$	—		$	—	$	348	$	348
Total	$	—		$	1,387	$	348	$	1,735

(1) Represents the impact of netting on a net-by-counterparty basis.

Excluded from the table above is variation margin on long derivative contracts related to exchange traded futures in the amount of $256 included within Payables to brokers, dealers and clearing organizations.

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The Company did not have any Level 3 Financial Assets and Liabilities measured at fair value on a recurring basis during the three months ended June 30, 2015.

Changes in Level 3 Financial Assets and Liabilities measured at fair value on a recurring basis for the three months ended June 30, 2014 are as follows:

	Opening Balance		Total realized and unrealized gains (losses) included in Net loss (1)		Unrealized gains (losses) included in Other comprehensive income			Purchases		Issues		Sales		Settlements			Closing Balance at June 30, 2014		Unrealized gains (losses) for Level 3 Assets / Liabilities Outstanding at June 30, 2014
Liabilities
Other liabilities:
Contingent consideration:	$	4,372	$	2,710	$	(54	)	$	—	$	—	$	—	$	(197	)	$	1,519	$	(2,710	)

(1) Realized and unrealized gains (losses) are reported in Other income, net in the Condensed Consolidated Statements of Operations.

Changes in Level 3 Financial Assets and Liabilities measured at fair value on a recurring basis for the six months ended June 30, 2015 are as follows:

	Opening Balance		Total realized and unrealized losses included in Net loss (1)		Unrealized gains (losses) included in Other comprehensive loss		Purchases		Issues		Sales		Settlements			Closing Balance at June 30, 2015		Unrealized gains (losses) for Level 3 Assets / Liabilities Outstanding at June 30, 2015
Liabilities
Other liabilities:
Contingent consideration:	$	348	$	115	$	—	$	—	$	—	$	—	$	(463	)	$	—	$	—

(1) Realized and unrealized gains (losses) are reported in Other income, net in the Condensed Consolidated Statements of Operations.

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Changes in Level 3 Financial Assets and Liabilities measured at fair value on a recurring basis for the six months ended June 30, 2014 are as follows:

	Opening Balance		Total realized and unrealized gains (losses) included in Net loss (1)			Unrealized gains (losses) included in Other comprehensive income			Purchases		Issues		Sales		Settlements			Closing Balance at June 30, 2014		Unrealized gains (losses) for Level 3 Assets / Liabilities Outstanding at June 30, 2014
Assets
Other assets:
Financial instruments owned:
Equity derivative contracts	$	14	$	(14	)	$	—		$	—	$	—	$	—	$	—		$	—	$	—

Liabilities
Other liabilities:
Contingent consideration:	$	4,317	$	2,682		$	(81	)	$	—	$	—	$	—	$	(197	)	$	1,519	$	2,715

(1) Realized and unrealized gains (losses) are reported in Other income, net in the Condensed Consolidated Statements of Operations.

The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 Assets and Liabilities measured at fair value on a recurring basis, as of December 31, 2014:

	Fair Value as of December 31, 2014		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average) (a)
Liabilities
Contingent consideration	$	348	Present value of expected payments	Discount rate	17	%
				Forecasted financial information	(b)

(a) As December 31, 2014, contingent consideration consisted of one liability.

(b) The Company’s estimate of contingent consideration as of December 31, 2014was principally based on the acquired business’ projected future financial performance, including revenues and operating margins from May 1, 2014 through April 30, 2015.

Valuation Processes—Level 3 Measurements—Depending on the instrument, the Company utilizes a valuation technique, including discounted cash flow methods, option pricing methods and present value methods, as indicated above. Valuations are generally conducted by the Company, with consultation of a third-party valuation expert to develop the valuation model when the asset or liability is initially recorded. Each reporting period, the Company updates unobservable inputs utilizing relevant published information, where applicable. The Company has a formal process to review changes in fair value for satisfactory explanation.

Sensitivity Analysis—Level 3 Measurements

Contingent consideration — The significant unobservable inputs used in the fair value in the Company’s contingent consideration are the discount rate and forecasted financial information. Significant increases (decreases) in the discount rate would have resulted in a lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a higher (lower) fair value measurement.

For all significant unobservable inputs used in the fair value measurement of all Level 3 assets and liabilities, a change in one of the inputs would not necessarily result in a directionally similar change in the other.

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15. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses 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. As of June 30, 2015 and December 31, 2014, none of these contracts were designated as foreign currency cash flow hedges under ASC 815-10, Derivatives and Hedging (“ASC 815-10”).

The Company provides brokerage services to its customers for exchange-traded and OTC derivative products, which include futures, forwards and options contracts. The Company may enter into principal transactions for exchange-traded and OTC derivative products to facilitate customer trading activities or to engage in principal trading for the Company’s own account.

The Company monitors market risk exposure from its matched principal business and principal trading business by regularly monitoring both (i) its concentration of market risk to financial instruments, countries or counterparties and (ii) trades that have not settled within prescribed settlement periods or volume thresholds. Additionally, market risks are monitored and mitigated by the use of the Company’s proprietary, electronic risk monitoring system, which provides daily credit reports in each of the Company’s geographic regions that analyze credit concentration and facilitates the regular monitoring of transactions against key risk indicators.

For certain derivative contracts, the Company has entered into agreements with counterparties that allow for the netting of positions. The Company reports these derivative contracts on a net-by-counterparty basis when management believes that a legal and enforceable right of offset exists under these agreements.

Fair values of derivative contracts on a gross and net basis as of June 30, 2015 and December 31, 2014 are as follows:

	June 30, 2015						December 31, 2014
Derivatives not designated as hedging instruments under ASC 815-10 (1)	Derivative Assets(2)			Derivative Liabilities(3)			Derivative Assets(2)			Derivative Liabilities(3)
Foreign exchange derivative contracts	$	1,650		$	915		$	2,773		$	1,387
Commodity derivative contracts	1,195			487			1,198			338
Total fair value of derivative contracts	$	2,845		$	1,402		$	3,971		$	1,725
Counterparty netting	(490		)	(490		)	(338		)	(338		)
Total fair value	$	2,355		$	912		$	3,633		$	1,387

(1) Excluded from the above table is variation margin on open long and short futures contracts which is included in Receivables from brokers, dealers and clearing organizations and Payables to brokers, dealers and clearing organizations, on the Condensed Consolidated Statements of Financial Condition. See Note 14 for further details about variation margin balances on open long and short futures contracts as of June 30, 2015 and December 31, 2014. Gross notional amounts on these futures contracts are included in the table below which details outstanding long and short notional amounts of derivative financial instruments.

(2) Reflects options and forwards contracts within Other assets.

(3) Reflects options and forwards contracts within Other liabilities.

As of June 30, 2015 and December 31, 2014, the Company had outstanding forward foreign exchange hedge contracts with a combined notional value of $35,324 and $69,692, respectively. Approximately $11,142 and $20,568 of these forward foreign exchange contracts represent a hedge of Euro and British pound-denominated balance sheet positions at June 30, 2015 and December 31, 2014, respectively. The remaining outstanding forward foreign exchange contracts are hedges of anticipated future cash flows.

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In addition to the Company’s outstanding forward foreign exchange hedge contracts, the following table includes the outstanding long and short notional amounts on a gross basis of derivative financial instruments as of June 30, 2015 and December 31, 2014:

	June 30, 2015 (1)				December 31, 2014 (2)
	Long		Short		Long		Short
Foreign exchange derivative contracts	$	81,113	$	701	$	3,185	$	415,756
Commodity derivative contracts	941,022		938,576		675,686		692,855
Fixed income derivative contracts	8,244,027		8,413,000		7,124,375		7,911,965
Equity derivative contracts	2,415		2,433		2,758		2,871
Total derivative notional amounts	$	9,268,577	$	9,354,710	$	7,806,004	$	9,023,447

(1) Notional amounts include gross notionals on open long and short futures contracts of $9,267,032 and $9,353,907 respectively, as of June 30, 2015. These gross notional amounts primarily relate to positions held by a consolidated VIE for which the Company’s exposure to economic loss is approximately $5,762 as of June 30, 2015. See Note 16 for further information.

(2) Notional amounts include gross notionals on open long and short futures contracts of $7,804,981 and $9,023,087, respectively, as of December 31, 2014. These gross notional amounts primarily relate to positions held by a consolidated VIE for which the Company’s exposure to economic loss is approximately $5,298 as of December 31, 2014. See Note 16 for further information.

The following is a summary of the effect of derivative contracts on the Condensed Consolidated Statements of Operations for the three months ended June 30, 2015 an 2014:

	Location of Gain (Loss)	Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives not designated as hedging instruments under ASC 815-10	Recognized in Income on Derivatives	For the Three Months Ended June 30, 2015		For the Three Months Ended June 30, 2014
Foreign exchange derivative contracts	(1)	$	323	$	1,068
Commodity derivative contracts	Principal transactions	5,994		2,562
Fixed income derivative contracts	Principal transactions	1,346		1,745
Equity derivative contracts	Principal transactions	62		84

(1) For the three months ended June 30, 2015, approximately $115 of losses on foreign exchange derivative contracts were included within Other income, net and approximately $438 of gains on foreign currency options were included within Principal transactions. For the three months ended June 30, 2014, approximately $987 of gains on foreign exchange derivative contracts were included within Other income, net and approximately $81 of gains on foreign currency options were included within Principal transactions.

The following is a summary of the effect of derivative contracts on the Condensed Consolidated Statements of Operations for the six months ended June 30, 2015 and 2014:

	Location of Gain (Loss)	Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives not designated as hedging instruments under ASC 815-10	Recognized in Income on Derivatives	For the Six Months Ended June 30, 2015		For the Six Months Ended June 30, 2014
Foreign exchange derivative contracts	(1)	$	4,998	$	1,363
Commodity derivative contracts	Principal transactions	8,875		4,314
Fixed income derivative contracts	Principal transactions	2,933		4,875
Equity derivative contracts	(2)	226		91

(1) For the six months ended June 30, 2015, approximately $3,486 of gains on foreign exchange derivative contracts were included within Other income, net and approximately $1,512 of gains on foreign currency options were included within Principal transactions. For the six months ended June 30, 2014, approximately $1,189 of gains on foreign exchange derivative contracts were included within Other income, net and approximately $174 of gains on foreign currency options were included within Principal transactions.

(2) For the six months ended June 30, 2015, approximately $226 of gains on equity derivative contracts were included within Principal transactions. For the six months ended June 30, 2014, approximately $14 of losses on equity derivative contracts were included within Other income, net and approximately $105 of gains on equity derivative contracts were included within Principal transactions.

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The following is a summary of derivative contracts, by counterparty, including the gross amounts offset in the Condensed Consolidated Statements of Financial Position as of June 30, 2015:

			Gross Amount Offset in the			Net Amounts of Assets Offset in the		Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition
Counterparties (1)	Gross Amounts of Recognized Assets		Condensed Consolidated Statements of Financial Position			Condensed Consolidated Statements of Financial Position (2)		Derivatives (3)		Cash Collateral Received/ (Pledged)		Net Amount

Derivative Assets:
Counterparty A	$	922	$	—		$	922	$	—	$	—	$	922
Counterparty B	1,198		(490		)	708		—		—		708
Counterparty C	725		—			725		—		—		725
Total	$	2,845	$	(490	)	2,355		$	—	$	—	$	2,355

Derivative Liabilities:
Counterparty A	$	111	$	—		$	111	$	—	$	—	$	111
Counterparty B	649		(490		)	159		—		—		159
Counterparty C	642		—			642		—		—		642
Total	$	1,402	$	(490	)	$	912	$	—	$	—	$	912

(2) Derivative assets and derivative liabilities are reflected within Other assets and Other Liabilities, respectively.

(3) As of June 30, 2015, the Company does not have any derivative positions under a master netting agreement that are not netted.

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The following is a summary of derivative contracts, by counterparty, including the gross amounts offset in the Consolidated Statements of Financial Position as of December 31, 2014:

			Gross Amounts Offset in the			Net Amounts of Assets Offset in the		Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition
Counterparties (1)	Gross Amounts of Recognized Assets		Condensed Consolidated Statements of Financial Position			Condensed Consolidated Statements of Financial Position (2)		Derivatives (3)		Cash Collateral Received/ (Pledged)		Net Amount

Derivative Assets:
Counterparty A	$	1,630	$	—		$	1,630	$	—	$	—	$	1,630
Counterparty B	1,789		(338		)	1,451		—		—		1,451
Counterparty C	552		—			552		—		—		552
Total	$	3,971	$	(338	)	$	3,633	$	—	$	—	$	3,633

Derivative Liabilities:
Counterparty A	$	394	$	—		$	394	$	—	$	—	$	394
Counterparty B	$	338	$	(338	)	$	—	$	—	$	—	$	—
Counterparty C	993		—			993		—		—		993
Total	$	1,725	$	(338	)	$	1,387	$	—	$	—	$	1,387

(2) Derivative assets and derivative liabilities are reflected within Other assets and Other Liabilities, respectively.

(3) As of December 31, 2014, the Company does not have any derivative positions under a master netting agreement that are not netted.

16. VARIABLE INTEREST ENTITIES

Non-consolidated VIEs

The Company holds interests in certain VIEs that it does not consolidate. The Company has determined that it is not the primary beneficiary, mostly due to a lack of significant economic interest, voting power and/or power to direct the activities that would most significantly impact the economic performance of the VIE.

As of June 30, 2015 and December 31, 2014, the Company had certain variable interests in non-consolidated VIEs in the form of direct equity interests, a convertible note and a non-recourse loan. The carrying amount of these VIEs was $2,563 as of June 30, 2015 and $3,144 as of December 31, 2014, and was recorded within Other assets. These VIEs include a technology provider with a proprietary financial application, trading entities in which the Company has provided initial capital to fund trading activities, investment fund managers and a commodity pool operator. The Company also provides administrative services to certain of these non-consolidated VIEs. The maximum exposure to loss on these VIEs was $2,563 as of June 30, 2015 and $3,144 as of December 31, 2014, respectively.

The Company previously had certain variable interests in non-consolidated VIEs in the form of trading margin accounts in which the Company had an economic interest in profits and losses and has provided initial capital to fund trading activities. All such interests had been terminated as of June 30, 2015.

The Company has not recorded any liabilities with respect to non-consolidated VIEs.

Consolidated VIEs

In December 2010, Kyte invested in a limited company that is focused on developing a proprietary trading business. The limited company is a VIE and it was determined that the Company is the primary beneficiary of this VIE because the Company, through Kyte, was the provider of the majority of this VIE’s start-up capital and has the power to direct the activities of this VIE that most significantly impact its economic performance, primarily through its voting percentage and consent rights on the activities that would most significantly influence the entity. The consolidated VIE had total assets of $11,136 at June 30, 2015 and $9,956 as of December 31, 2014, which primarily consisted of clearing margin. There were no material restrictions on the consolidated VIE’s assets. The consolidated VIE had total liabilities of $3,034 at June 30, 2015 and $2,761 at December 31, 2014. The Company’s exposure to economic loss on this VIE is approximately $5,762 and $5,298 as of June 30, 2015 and December 31, 2014, respectively.

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17. REGULATORY REQUIREMENTS

Many of the Company’s material operating subsidiaries are subject to regulatory restrictions and minimum capital requirements, which may restrict the Company’s ability to withdraw capital from its subsidiaries.

Certain domestic subsidiaries of the Company are registered as a broker-dealer, swap execution facility (“SEF”) or introducing broker and therefore are subject to the applicable rules and regulations of the SEC and the Commodity Futures Trading Commission (“CFTC”). Certain foreign subsidiaries are also registered as introducing brokers with the CFTC. These rules contain uniform minimum net capital requirements, as defined, and also require a significant part of the registrants’ assets be kept in relatively liquid form. As of June 30, 2015, each of the Company’s subsidiaries that are subject to these regulations had net capital in excess of their minimum capital requirements.

Under rules adopted by the CFTC, all introducing brokers engaging in transactions with U.S. persons are required to register with the National Futures Association and either meet financial reporting and net capital requirements on an individual basis or obtain a guarantee agreement from a registered Futures Commission Merchant. In April 2015, Cantor Fitzgerald & Co. (“CF&Co”), an affiliate of BGC, the Company’s controlling stockholder, has entered into guarantees on the Company’s behalf and the Company is required to indemnify CF&Co for the amounts, if any, paid by CF&Co pursuant to this arrangement.

Certain of the Company’s European subsidiaries are regulated by the Financial Conduct Authority (“FCA”) and must maintain financial resources (as defined by the FCA) in excess of FCA’s total financial resources requirement. As of June 30, 2015, each of these European subsidiaries had financial resources in excess of their requirements.

Certain other subsidiaries of the Company are subject to similar regulatory and other requirements in the jurisdictions in which they operate and, as of June 30, 2015, each of these subsidiaries was in compliance with its regulatory capital requirements.

The regulatory requirements referred to above may restrict the Company’s ability to withdraw capital from its regulated subsidiaries. As of June 30, 2015, the Company had the following aggregate regulatory capital, in individually regulated entities, in each of its operating regions:

	Americas		EMEA		Asia
Regulatory capital	$	29,558	$	118,483	$	27,867
Minimum regulatory capital required	6,335		94,978		8,595
Excess regulatory capital	$	23,223	$	23,505	$	19,272

The regulatory requirements set forth in the table above include aggregated amounts held in individually regulated entities in each of the Company’s operating regions, calculated by entity, to comply with the requirements of various regulators for capital requirements in each of those entities. In situations where the Company is subject to the requirements of multiple regulators, the Company has included the more onerous capital requirement in the table above.

18. SEGMENT AND GEOGRAPHIC INFORMATION

In accordance with ASC 280-10, Segment Reporting (“ASC 280-10”) and based on the nature of the Company’s operations, products and services in each geographic region, the Company determined that it has four reportable segments: (i) Americas Brokerage, (ii) EMEA Brokerage, (iii) Asia Brokerage and (iv) Clearing and Backed Trading. The Company’s brokerage operations provide brokerage services in four broad product categories: fixed income, financial, equity and commodity. The Clearing and Backed Trading segment encompasses the Company’s clearing, risk management, settlement and other back-office services, as well as the capital we provide to start-up trading groups, small hedge funds, market-makers and individual traders. Information about other business activities is disclosed in an “All Other” category. All Other includes the results of the Company’s software, analytics and market data operations. All Other also includes revenues and expenses that are not directly assignable to one of the Company’s reportable segments, primarily consisting of indirect costs related to the Company’s brokerage segments as well as all of the Company’s corporate business activities.

The accounting policies of the segments are the same as those described above in Note 3—Summary of Significant Accounting Policies. The Company evaluates performance of the operating segments based on income (loss) before income taxes, which it defines as revenues less direct expenses.

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Revenues within each brokerage segment include revenues that are directly related to providing brokerage services along with interest and other income (loss) directly attributable to the operating segment. Revenues within the Clearing and Backed Trading segment primarily include revenues that are directly related to providing clearing services along with the Company’s share of profit (loss) on trading activity from capital investments. The Company’s Clearing and Backed Trading segment incurs exchange fees on behalf of its clients, which are reflected within Interest and transaction-based expenses. The reimbursement of these fees from the Company’s clients is reflected within Total Revenues. Therefore, the Company evaluates the top-line performance of its Clearing and Backed Trading segment using Revenues, net of interest and transaction-based expenses.

Direct expenses of the operating segments are those expenses that are directly related to providing the brokerage or clearing services and trading activities of the operating segments and include compensation expense related to the segment management and staff, communication and market data, travel and promotion, and certain professional fees and other expenses that are directly incurred by the operating segments. However, the Company does not allocate to its brokerage operating segments certain expenses that it manages separately at the corporate level. The unallocated costs include rent and occupancy, depreciation and amortization, professional fees, interest on borrowings and other expenses and are included in the All Other operating segment. Management generally does not consider the unallocated costs in its performance measurement of its reportable segments.

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

	Three Months Ended June 30, 2015
	Americas Brokerage		EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading		All Other			Total
Total revenues	$	54,908	$	72,311	$	17,151	$	2,362	$	26,891		$	173,623
Revenues, net of interest and transaction-based expenses	52,128		69,493		17,101		1,756		27,663			168,141
Income (loss) before income taxes	15,044		23,013		6,337		38		(44,147		)	285

	Three Months Ended June 30, 2014
	Americas Brokerage			EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading			All Other			Total
Total revenues	$	56,420		$	81,258	$	17,102	$	35,479		$	27,846		$	218,105
Revenues, net of interest and transaction-based expenses	53,807			79,086		16,956		7,999			28,481			186,329
(Loss) income before income taxes	(69,811		)	9,421		4,158		(24,629		)	(48,087		)	(128,948		)

	Six Months Ended June 30, 2015
	Americas Brokerage		EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading		All Other			Total
Total revenues	$	112,460	$	156,811	$	37,908	$	30,615	$	67,351		$	405,145
Revenues, net of interest and transaction-based expenses	107,054		151,147		37,764		8,973		68,819			373,757
Income (loss) before income taxes	31,524		50,635		13,996		1,339		(128,748		)	(31,254		)

	Six Months Ended June 30, 2014
	Americas Brokerage			EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading			All Other			Total
Total revenues	$	118,118		$	170,558	$	36,325	$	79,772		$	54,071		$	458,844
Revenues, net of interest and transaction-based expenses	112,559			165,513		36,059		19,139			55,486			388,756
(Loss) income before income taxes	(55,469		)	38,125		9,790		(23,698		)	(92,193		)	(123,445		)

In addition, with the exception for 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 6 for goodwill by reportable segment.

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For the three and six months ended June 30, 2015 and 2014, the U.K. is the only individual foreign country that accounts for 10% or more of the Company’s total revenues and total long-lived assets. Information regarding revenue for the three and six months ended June 30, 2015 and 2014, and information regarding long-lived assets (defined as property, equipment, leasehold improvements and software inventory) in geographic areas as of June 30, 2015 and December 31, 2014, are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenues:
United States	$	53,672	$	55,085	$	121,684	$	118,308
United Kingdom	74,904		114,026		183,008		237,348
Other	45,047		48,994		100,453		103,188
Total	$	173,623	$	218,105	$	405,145	$	458,844

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenues, net of interest and transaction-based expenses:
United States	$	52,683	$	54,235	$	119,867	$	116,341
United Kingdom	71,860		85,294		156,555		174,131
Other	43,598		46,800		97,335		98,284
Total	$	168,141	$	186,329	$	373,757	$	388,756

	June 30, 2015		December 31, 2014
Long-lived Assets, as defined:
United States	$	46,446	$	48,506
United Kingdom	6,760		6,976
Other	2,711		3,850
Total (1)	$	55,917	$	59,332

(1) Excluded from the December 31, 2014 balance is $2,122 of Property, equipment, leasehold improvements, net related to KGL and KBL. As discussed in Note 4, such amounts are included in Assets held for sale.

Revenues are attributed to geographic areas based on the location of the particular subsidiary of the Company which generated the revenues.

19. RELATED PARTIES

BGC

As of June 30, 2015, entities affiliated with BGC were the beneficial owners of approximately 67 % of the Company’s common stock. Therefore, GFI is a controlled company of BGC and operates as a division of BGC. See Note 2 for further information on BGC’s acquisition of the Company.

As of June 30, 2015, the Company had $97,102 of receivables from BGC, which primarily consisted of $95,250 of receivables for loans bearing interest at 3.75% per annum which were issued by the Company. Included within the loan receivable balance are loans of $40,000 and $20,000, which were issued during the first quarter of 2015. During the second quarter of 2015, the Company provided additional loans to BGC in the aggregate amount of $35,250. In addition, as of June 30, 2015, the interest receivable on these loans included within Receivables from related parties was $1,717.

On April 28 2015, the Company issued the New Shares of its common stock to BGC for an aggregate purchase price of $250,000, which was paid to the Company in the form of the BGC Note. See Notes 2 and 9 for further information.

In May 2015, the Company’s Audit Committee approved the retention of CF&Co to assist in the potential sale of the Company’s Trayport subsidiary.

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In addition, certain of the Company’s subsidiaries transact with BGC and its affiliated entities. As of June 30, 2015, the Company had approximately $2,074 and $4,824 of open receivables and payables to BGC and its affiliates related to matched principal transactions in which they were the counterparty. Such amounts are included within receivables from and payables to brokers, dealers and clearing organizations on the Condensed Consolidated Statements of Financial Condition. For the three and six months ended June 30, 2015 and 2014, the Company earned both software and brokerage revenues related to transactions with BGC and its affiliated entities. The revenues earned from BGC and its affiliated entities did not have a material impact on any of the periods presented in the Company’s Condensed Consolidated Financial Statements.

JPI

In May 2015, the Company purchased from JPI, a company controlled by Michael Gooch, its 3.636% equity interest in Advance Markets Holdings, LLC, a holding company whose operating subsidiaries deal in foreign currency transactions. The purchase price was $600.

20. SUBSEQUENT EVENTS

On July 2, 2015 the Company’s Audit Committee authorized the Company to enter into a short-term cash loan facility from BGC to the Company consistent with the cash loan facility approved by the Company’s Audit Committee in March 2015 with respect to loans from the Company to BGC. The terms approved in March 2015 were dependent on whether the Company’s current revolving credit facility (with a current interest rate of LIBOR plus 3.25%) was currently drawn. At that time, the Audit Committee had authorized the management of GFI to enter into arrangements to loan its excess cash from time to time to BGC at an interest rate of .5% over the revolving credit line rate if the line was drawn and 1% below the revolving credit line rate if the line was not currently drawn. The Company’s Audit Committee granted the authority for BGC to lend to the Company on the same terms as GFI and that the loan balances could be netted against each other.

On July 10, 2015, the Company and BGC entered into a guarantee (the “Guarantee”) pursuant to which BGC has guaranteed the obligations of the Company under the Company’s 8.375% Senior Notes in the remaining aggregate principal amount of $240,000 and the indenture, dated as of July 19, 2011 (the “Indenture”), between GFI and The Bank of New York Mellon Trust Company, N.A., as Trustee. The Company and BGC will share any cost savings, including interest and other costs, resulting from the credit enhancement provided by BGC.

Following the announcement of the Guarantee, the Company’s credit ratings were upgraded as follows. On July 13, 2015, S&P raised its credit rating on the Company’s 8.375% Senior Notes one notch to BBB- and assigned an outlook of Stable. In addition, on July 13, 2015, Fitch raised its credit rating on the Company’s 8.375% Senior Notes one notch to BBB- and maintained a Positive Rating Outlook. On July 17, 2015, Moody’s raised its credit rating on the Company’s 8.375% Senior Notes one notch to Ba3 and assigned an outlook of Positive.

These July 2015 upgrades from the rating agencies, along with the April 2015 upgrades discussed in Note 8, will lower the interest rate on the Company’s 8.375% Senior Notes by an aggregate of 175 basis points to 8.625%, effective July 19, 2015.

In July 2015, the Company’s Audit Committee authorized the Company to repurchase up to $240,000 of the Company’s 8.375% Senior Notes. See Note 8 for further information on the Company’s 8.375% Senior Notes.

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

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 this Form 10-Q and in our 2014 Form 10-K;

· economic, political and market factors affecting trading volumes, securities prices, or demand for our brokerage services, including recent conditions in the world economy and financial markets in which we provide our services;

· the extensive regulation of the Company’s business, changes in laws and regulations governing our business and operations or permissible activities and our ability to comply with such laws and regulations;

· our ability to obtain and maintain regulatory approval to conduct our business in light of certain proposed and recently adopted changes in laws and regulations in the U.S. and Europe and increased operational costs related to compliance with such changes in laws and regulations, including the laws and regulations governing the operation of swap execution facilities (“SEF”);

· the risks associated with the transition of cleared swaps to future contracts and our ability to continue to provide value-added brokerage and execution services to our customers pursuant to rules and regulations applicable to futures markets;

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

· our ability to keep up with rapid technological change and to continue to develop and support software, analytics and market data products, including hybrid brokerage and matching systems, that are desired and utilized by our customers;

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

· competition from current and new competitors;

· risks associated with our matched principal and principal trading businesses, including risks arising from specific brokerage transactions, or series of brokerage transactions, such as credit risk, market risk or the risk of fraud or unauthorized trading;

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

· our ability to assess and integrate acquisitions of businesses or technologies;

· the maturing of key markets and any resulting contraction in commissions;

· risks associated with the expansion and growth of our operations generally or of specific products or services, including, in particular, 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;

· liquidity and clearing capital requirements and the impact of the conditions in the world economy and the financial markets in which we provide our services on the availability and terms of additional or future capital;

· our ability to identify and remediate any material weakness in our internal controls that could affect our ability to prepare financial statements and reports in a timely manner;

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· the effectiveness of our risk management policies and procedures and the impact of unexpected market moves and similar events; future results of operations and financial condition; and

· the success of our business strategies.

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,” “Item 3—Quantitative and Qualitative Disclosures About Market Risk” and “Part II, Item 1A Risk Factors” and elsewhere in this Form 10-Q, 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 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.

Acquisition by BGC Partners, Inc. and Termination of the CME Merger

On February 26, 2015, BGC Partners Inc. (together with its affiliates, “BGC”) successfully completed its tender offer to acquire shares of our common stock for $6.10 per share in cash. On March 4, 2015, BGC Partners, L.P. paid for the 54.3 million shares of common stock of the Company tendered pursuant to the tender offer. The tendered shares, together with the 17.1 million shares already owned by BGC, represent approximately 56% of the outstanding shares of our common stock. As a result of the transaction, we are a controlled company of BGC and will operate as a division of BGC, reporting to Shaun Lynn, BGC’s President. Going forward, BGC and GFI are expected to remain separately branded divisions.

On April 28 2015, GFI issued 43.0 million shares (the “New Shares”) of our common stock to BGC at the closing price of $5.81 per share, for an aggregate purchase price of $250.0 million. The purchase price was paid to GFI in the form of a Note due on June 19, 2018 which bears an interest rate of LIBOR plus 200 basis points. Following the issuance of the New Shares, BGC owns approximately 67% of GFI’s outstanding common stock.

On February 19, 2015, we entered into a Tender Offer Agreement with BGC and BGC Partners, L.P. (the “Tender Offer Agreement”). Pursuant to the Tender Offer Agreement, our board of directors unanimously agreed to support the tender offer and to expand our board and to appoint BGC’s designees. The Tender Offer Agreement also contained an offer extension and a reduction to the minimum tender condition of the tender offer. On February 26, 2015, our board of directors was increased from five to eight members and, following the appointment of three of the individuals designated by BGC, Marisa Cassoni, Frank Fanzilli, Jr. and Richard Magee resigned as members of the board of directors and any and all committees thereof. BGC designated six directors to the expanded eight-member board of directors, including Howard Lutnick, BGC’s Chairman and Chief Executive Officer, Shaun Lynn, BGC’s President, Stephen Merkel, BGC’s Executive Vice President, General Counsel and Secretary, William J. Moran, a former Executive Vice President of JPMorgan Chase & Co. and a current director of BGC, Peter J. Powers, President and Chief Executive Officer of Powers Global Strategies LLC and a current director of BGC, and Michael Snow, Managing Member and Chief Investment Officer of Snow Fund One, LLC. Messrs. Moran, Powers and Snow are independent directors. The other conditions of the Tender Offer Agreement were met.

Our Executive Chairman, Michael Gooch, and Chief Executive Officer, Colin Heffron, have remained as employees and directors of GFI and have continued as Chairman and Chief Executive Officer, respectively, of the GFI division of BGC. Mr. Gooch also holds the title of Vice Chairman of BGC Partners, L.P. Mr. Heffron has entered into an amended and restated employment agreement which continues to provide him with certain annual cash and equity compensation and severance arrangements. Mr. Gooch has entered into a fixed term employment agreement which provides him with certain cash and equity compensation. Pursuant to the Tender Offer Agreement, BGC has agreed to promptly establish a Distributable Earnings Bonus Pool program (the “Pool”) in an amount equal to one times the average annual distributable earnings, as defined, of our inter-dealer brokerage business for the three successive 12-month periods beginning on July 1, 2015. The Pool will be in the form of an award of restricted equity units and preferred restricted equity units of BGC Holdings, L.P and will be allocated 35% to Mr. Gooch, 35% to Mr. Heffron and 30% to other GFI employees as mutually agreed by Messrs. Gooch and Heffron and BGC. As a condition to participation in the Pool, each participant (including Messrs. Gooch and Heffron) is required to enter into a non-competition and award agreement containing the terms and conditions of his or her participation, which terms include the participant’s continued employment through July 1, 2018 and certain conditions, obligations and covenants (including non-competition, non-solicitation, non-hire non-disclosure provisions).

Prior to the entry into the Tender Offer Agreement, we were a party to a series of agreements, including an Agreement and Plan of Merger (the “CME Merger Agreement”) and a Purchase Agreement (the “IDB Purchase Agreement”), each dated as of July 30, 2014, as amended, with CME Group Inc. (“CME”) and certain of its affiliates, whereby we had agreed to merge with and into a wholly owned subsidiary of CME (the “CME Merger”) and, immediately following such merger, a private consortium of current GFI management would acquire our wholesale brokerage and clearing businesses from CME (such transactions collectively, the “CME Transaction”).

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In addition, CME, Jersey Partners, Inc. (“JPI”) and certain other stockholders of GFI, who collectively control approximately 38% of the outstanding shares of our common stock, entered into an agreement, dated as of July 30, 2014 (the “Support Agreement”), that provided for such stockholders to vote for the CME Transaction and vote against any alternative transaction and that prevented such stockholders from transferring their shares, including by tendering into the tender offer. The CME Merger Agreement and the CME Transaction were terminated on January 30, 2015. The restrictions in the Support Agreement continue until on or about January 30, 2016.

Under the Tender Offer Agreement, JPI has the right to require, within the period of 21 days following the earlier of (x) the expiration or termination of the Support Agreement or (y) February 19, 2016, that BGC complete back-end mergers in which each remaining share of our common stock would be converted into $6.10, with holders of shares (other than JPI) receiving cash, and holders of JPI common stock receiving a mix of cash and shares of BGC’s Class A common stock (“BGC Stock”) valued at the closing price of BGC Stock on the date prior to the date of the Tender Offer Agreement in respect of each share indirectly owned by such holder through JPI. The amount of consideration to be received by Messrs. Gooch and Heffron, as holders of JPI common stock, in the back-end mergers is subject to reduction in certain circumstances, and our obligation to pay consideration to such holders in the back-end mergers is also subject to certain conditions, each as described in the Tender Offer Agreement.

Pursuant to the Tender Offer Agreement, we will execute certain ancillary agreements, including amendments to BGC’s existing administrative services agreements. Our employees holding restricted stock units will receive $6.10 per unit in cash based on their pre-existing vesting schedules. We and BGC have also agreed that we will establish a retention bonus pool for our employees, which may be payable in the forms of forgivable loans and equity or partnership awards of us or our affiliates.

Delisting and Deregistration of GFI common stock

On March 30, 2015, we filed a Form 25 with the SEC to voluntarily delist our common stock and notes on the New York Stock Exchange and to terminate the registration of the common stock under the Exchange Act. The common stock was delisted on April 10, 2015. On June 1, 2015, the Company filed a Form 15 with the SEC to effect the deregistration of the common stock. The Company expects the deregistration of the common stock to become effective 90 days after filing the Form 15 with the SEC. Upon the filing of the Form 15, the Company’s obligations to file certain reports with the SEC, including reports on Forms 10-K, 10-Q and 8-K, were immediately be suspended. However, the Company intends to make voluntary SEC filings with respect to its 8.375% Senior Notes due July 2018 in compliance with its obligations under the related indenture. The Company expects the deregistration of the common stock to become effective ninety (90) days after filing the Form 15 with the SEC.

Disposition of interests in Kyte

During the first quarter of 2015, we entered into a number of share purchase agreements to divest certain interests in Kyte (the “Kyte SPAs”). In March 2015, we completed a transaction to sell The Kyte Group Limited (“KGL”), which primarily included our clearing business. Following the closing of that transaction, the Company no longer offers clearing and settlement services. In May 2015, the Company completed the sale of Kyte Broking Limited (“KBL”).

Trayport

GFI and BGC are in the midst of the sales process of Trayport and expect to complete the transaction before the end of 2015. Numerous serious parties are participating in the process at a valuation that reflects its continuing growth in the year following last year’s announced transaction, its high margins, leading technology, and strategic importance in the global energy and commodities markets.

Business Environment

As a leading provider of wholesale brokerage services, clearing services and electronic execution and trading support products for global financial markets, our results of operations are impacted by a number of external market factors, including market volatility, transactional volumes and 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 the various jurisdictions and markets in which we operate and the commercial activity levels of the dealers, hedge funds, traders 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 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.

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Market Volumes and Volatility

Recent Activity in Underlying Markets. We believe overall market conditions have been mixed, with overall market volatility generally higher in the second quarter of 2015 than that of the same period in 2014, particularly in certain currencies markets. However, we also believe that the current environment with Eurozone uncertainties, specifically surrounding Greece, has tended to curb investor risk tolerance, as well as trading volume. In addition, we believe considerable volatility in the Chinese stock market negatively impacted investor confidence. Many dealer banks reported decreases in their fixed income, currencies and commodities revenues for the second quarter of 2015, as compared to the same prior year quarter.

The level of organic growth or contraction in the over-the-counter (“OTC”) derivatives markets we serve, as well as our market share within any particular market, has historically been difficult to measure on a timely basis, as there are only a few independent, objective measures of the outstanding notional amount of OTC derivatives, all of which are published retrospectively and do not measure transactional volumes. Therefore, to help gauge growth or contraction in any particular quarter or year, management has looked to the published results of large OTC derivatives dealers and certain futures and derivative exchanges as potential indicators of transactional activity in the related OTC derivative markets. In future periods, as SEFs and swap data repositories report their daily trading volumes on a more consistent basis pursuant to applicable Commodity Futures Trading Commission (“CFTC”) regulations, management expects such data to provide a better indication of overall market size and our relative market share within such derivative markets.

OTC market volumes were generally mixed across most asset classes during the second quarter of 2015, as compared to the same period in 2014. OTC markets continued to confront higher capital requirements and a low global short-term interest rate environment, with no clear indication on the timing of future interest rate changes. However, the level of the Chicago Board Options Exchange Volatility Index (“VIX”), on average, was approximately 8% higher during the second quarter of 2015 compared with the same period in the prior year. The Bank of America Merrill Lynch (“BAML”) Global Financial Stress Index was also higher during the second quarter of 2015 when compared to the same prior year period. We believe that these indexes provide valuable proxies for the overall volatility across our four brokerage product categories. However, it should be noted that volatility events can affect each of our product categories to varying degrees.

Fixed Income Volumes. Our fixed income product category is comprised of revenues related to the brokerage of cash and derivative fixed income products. Fixed income volumes typically correlate with fluctuations in interest rates, market volatility and the level of bond issuances. Interest rates remained low during the second quarter of 2015. Corporate bond issuances increased for the three months ended June 30, 2015 as compared to the same prior year period, with the Securities Industry and Financial Markets Association (“SIFMA”) reporting a 3% increase in corporate bond issuances, year over year. In addition, SIFMA reported a 6% increase in average daily volumes (“ADV”) for U.S. corporate debt, but also reported that the average gross notional outstanding for credit default swaps declined, year over year. Similarly, IntercontinentalExchange Inc. (“ICE”) reported an approximate 29% decline in credit default swap trade execution revenues compared with the same period in 2014. Furthermore, BrokerTec, an electronic trading platform in the fixed income market, reported decreased ADV for European fixed income products, while reporting an increase for U.S products. In comparison, our fixed income volumes decreased on the majority of our desks in the second quarter of 2015 from the same period in 2014. Overall, changes in our margins were mixed amongst desks in this product category. Our brokerage revenues from fixed income products declined 25% in the three months ended June 30, 2015, as compared to the same period in the prior year.

Interest Rate and Foreign Exchange Volumes. Our financial product category primarily consists of revenues related to the brokerage of foreign exchange and interest rate derivative products. Foreign exchange volumes generally increased in the second quarter of 2015, compared with the same quarter in 2014, predominately driven by increased volatility during the period. Global foreign exchange volatility, as measured by the Deutsche Bank FX Volatility Index, or CVIX, increased approximately 71% from the year-ago quarter. CME’s foreign exchange derivatives ADVs increased 42% in the second quarter of 2015, while EBS, an electronic trading platform for spot currencies, reported a 34% increase in volumes, year over year. Conversely, reported volumes for interest rate products generally decreased in the three months ended June 30, 2015, as compared to the same period in 2014, with CME reporting a 1% decrease in interest rate derivatives ADVs for the second quarter of 2015. In comparison, our volumes generally decreased in the financial products category in the second quarter of 2015 from the same prior year period, while changes in our margins were relatively evenly mixed amongst desks in this product category. Overall, our brokerage revenues from financial products increased by less than 1% in the three months ended June 30, 2015, as compared to the same period in the prior year.

Equity Volumes. Our equity product category consists of revenues related to the brokerage of cash equity and equity derivative products. Cash equity and equity derivative volume indicators in Europe and the U.S. were generally mixed in the second quarter of 2015 compared with the same prior year period. International Securities Exchange’s equity derivative volumes declined 3% in the second quarter of 2015 as compared to the same period in 2014, while Options Clearing Corporation reported a 3% decrease in cleared equity option contract volumes, year over year. However, Eurex European equity derivative volumes increased 24% over that same period.

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In addition, ADVs for NYSE’s U.S. cash products increased 11% during the second quarter of 2015, while ADVs for Euronext’s European cash products (the vast majority of which are cash equity products) increased 31%, year over year. In comparison, our overall volumes generally declined on our equity desks in the second quarter of 2015 as compared to the same prior year period, while changes in our margins were mixed amongst desks in this product category. Our brokerage revenues from all equity products declined 2% in the second quarter of 2015, as compared to the same period in the prior year.

Commodity Volumes. Our commodity product category consists of a wide range of energy products, and to a lesser extent, other commodity products. Energy derivatives volumes generally increased in the second quarter of 2015 as compared to the same period in 2014. CME’s Energy derivatives ADVs increased 20% in the three months ended June 30, 2015 compared with the same prior year period, while ICE’s Energy derivatives ADVs increased 10%, year over year. Conversely, ICE reported a decrease of approximately 3% in the quarterly rate per contract (“RPC”), while CME’s reported RPC declined approximately 2%. In comparison, the fluctuations in volumes and margins amongst our various energy product desks varied when comparing the second quarter of 2015 with the same prior year period. Our brokerage revenues from commodity products increased 2% in the second quarter of 2015, as compared to the same period in the prior year.

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 services or competition for qualified personnel with extensive experience in the specialized markets we serve. We currently compete for the services of skilled brokerage personnel with other wholesale market participants and, more broadly, we compete for the services of highly qualified technology development personnel. We believe that the demand for productive brokers has lessened in recent periods, as the wholesale brokerage industry has been impacted by lower trading volumes and sluggish trading conditions in certain markets we serve and due to the increased importance of technology. However, we believe that there continues to be increased competition to provide brokerage services to a smaller number of market participants in the near term as dealers have exited or reduced their proprietary trading operations.

In addition, we believe that the continued regulatory uncertainty in certain markets has resulted in lower trading volumes and fewer participants in these markets. GFI Swaps Exchange LLC, our SEF platform, was temporarily registered as a SEF by the CFTC in September 2013 and many of the rules governing the operation of a SEF for swaps in the U.S. became effective on October 2, 2013. The requirements for SEF trading are still developing and regulations are still being interpreted and analyzed, including their cross-border application. This continues to create uncertainty and depressed volumes, as market participants work to understand how to structure their global business and trading. Additionally, the SEC has not yet finalized its rules for security-based SEFs, nor has it published a timetable for the finalization and implementation of such rules. However, in the long run, we remain optimistic that the regulatory reform of recent years, including requirements for enhanced regulatory transparency, central clearing and efficient execution, will benefit and enable growth in the global derivatives markets.

Technology Development

Over the past few years, we have continued the expansion of our proprietary electronic trade execution capabilities for our SEF and non-SEF businesses, as well as the number of users of our hybrid electronic trading platforms. We continue to believe that our capabilities have provided us with a market leading position to address customer needs and service our markets in light of new regulatory requirements.

The provision of electronic trade execution requires increasingly complex systems and infrastructures and new regulations may require new business models. Our continued success will depend on our ability to enhance and improve our existing platforms and services, develop and/or license new products and technologies that address the increasingly sophisticated needs of the markets and respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis.

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Financial Overview

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-month period ended June 30, 2015:

Our total revenues decreased 20.4% to $173.6 million for the three months ended June 30, 2015 from $218.1 million for the three months ended June 30, 2014. The main factors contributing to this decrease in our revenues were:

· We had no clearing services revenues during the second quarter of 2015 due to the disposal of our Kyte clearing business during March 2015;

· The adverse impact the strengthening of the U.S. Dollar against the Euro and British Pound had on several of our revenue streams when comparing the second quarter of 2015 to the same prior year quarter;

· Lower trading volumes in certain fixed income markets in which we provide our services; and

· The reduction in broker personnel headcount.

Partially offsetting the above factors were the following positive factors that affected our brokerage and other revenues, including:

· Increased brokerage revenues from certain U.S. commodity markets in which we provide our services; and

· Higher volatility in certain currency markets, which contributed to increased financial product brokerage revenues in Asia.

The most significant component of our cost structure is employee compensation and benefits, which includes salaries, amortization of sign-on and retention bonuses, incentive compensation and related employee benefits and taxes. Our compensation and employee benefits expense decreased 8.1% to $119.5 million for the three months ended June 30, 2015 from $130.0 million for the three months ended June 30, 2014.

Our compensation and employee benefits for all employees have both a fixed and a variable component. Base salaries and benefit costs are primarily fixed for all employees, while performance 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 individual performance and/or the operating results of their related brokerage desk. For many of our brokerage employees, bonuses constitute a significant component of their overall compensation. Broker performance bonuses decreased to $36.0 million for the three months ended June 30, 2015 from $36.8 million for the three months ended June 30, 2014.

Further, we may pay sign-on bonuses to certain newly-hired brokers and retention bonuses to certain of our existing brokers who agree to long-term employment agreements. These bonuses may be paid in the form of cash, deferred cash, long term equity or forgivable loans, or a combination of the foregoing, and are typically expensed over the term of the related employment agreement for cash bonuses and forgivable loans and the related service period for deferred cash and long term equity, which is generally two to four years. These employment agreements typically contain provisions requiring the repayment of all or a portion of the cash payment or forgivable loan and forfeiture provisions for unvested deferred cash or equity 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. Sign-on and retention bonuses, when granted, also increase the fixed component of our compensation and employee benefits expense for the remainder of the term over which such bonus is earned by the employee. Compensation expense resulting from the amortization of broker sign-on and retention bonuses was $6.5 million for the three months ended June 30, 2015, as compared to $7.2 million for the three months ended June 30, 2014.

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Results of Consolidated Operations

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(dollars in thousands)
Revenues
Agency commissions	$	104,240		$	109,692		$	222,231		$	231,107
Principal transactions	41,068			45,948			88,078			97,637
Total brokerage revenues	145,308			155,640			310,309			328,744
Clearing services revenues	—			28,602			21,338			62,766
Interest income from clearing services	—			572			297			1,100
Equity in net earnings of unconsolidated businesses	679			1,493			2,243			4,047
Software, analytics and market data	25,171			25,595			50,927			51,360
Other income, net	2,465			6,203			20,031			10,827
Total revenues	173,623			218,105			405,145			458,844
Interest and transaction-based expenses
Transaction fees on clearing services	—			26,936			20,495			59,576
Transaction fees on brokerage services	5,482			4,655			10,765			10,158
Interest expense from clearing services	—			185			128			354
Total interest and transaction-based expenses	5,482			31,776			31,388			70,088
Revenues, net of interest and transaction-based expenses	168,141			186,329			373,757			388,756
Expenses
Compensation and employee benefits	119,511			130,003			266,728			267,700
Communications and market data	10,685			13,520			22,727			26,867
Travel and promotion	6,023			7,961			12,406			15,740
Rent and occupancy	6,812			7,890			13,739			15,976
Depreciation and amortization	6,808			8,797			14,129			17,393
Professional fees	3,449			10,107			21,885			16,278
Interest on borrowings	7,991			8,143			15,859			15,927
Merger termination fees	—			—			24,728			—
Impairment of goodwill	—			121,619			—			121,619
Other expenses	6,577			7,237			12,810			14,701
Total other expenses	167,856			315,277			405,011			512,201
Income (loss) before provision for (benefit from) income taxes	285			(128,948		)	(31,254		)	(123,445		)
Provision for (benefit from) income taxes	2,078			(31,277		)	(10,314		)	(30,183		)
Net loss before attribution to non-controlling stockholders	(1,793		)	(97,671		)	(20,940		)	(93,262		)
Less: Net (loss) income attributable to non-controlling interests	(14		)	125			762			531
GFI’s net loss	$	(1,779	)	$	(97,796	)	$	(21,702	)	$	(93,793	)

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The following table sets forth our condensed consolidated results of operations as a percentage of our revenues, net of interest and transaction-based expenses, for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenues
Agency commissions	62.0	%	58.9	%	59.5	%	59.5	%
Principal transactions	24.4		24.7		23.5		25.1
Total brokerage revenues	86.4		83.6		83.0		84.6
Clearing services revenues	0.0		15.4		5.7		16.1
Interest income from clearing services	0.0		0.3		0.1		0.3
Equity in net earnings of unconsolidated businesses	0.4		0.8		0.6		1.0
Software, analytics and market data	15.0		13.7		13.6		13.2
Other income, net	1.5		3.3		5.4		2.8
Total revenues	103.3		117.1		108.4		118.0
Interest and transaction-based expenses
Transaction fees on clearing services	0.0		14.5		5.5		15.3
Transaction fees on brokerage services	3.3		2.5		2.9		2.6
Interest expense from clearing services	0.0		0.1		0.0		0.1
Total interest and transaction-based expenses	3.3		17.1		8.4		18.0
Revenues, net of interest and transaction-based expenses	100.0	%	100.0	%	100.0		100.0	%
Expenses
Compensation and employee benefits	71.1		69.8		71.4		68.9
Communications and market data	6.4		7.2		6.1		6.9
Travel and promotion	3.6		4.3		3.3		4.0
Rent and occupancy	4.0		4.2		3.7		4.1
Depreciation and amortization	4.0		4.7		3.8		4.5
Professional fees	2.0		5.4		5.9		4.2
Interest on borrowings	4.8		4.4		4.2		4.1
Merger termination fees	0.0		0.0		6.6		0.0
Impairment of goodwill	0.0		65.3		0.0		31.3
Other expenses	3.9		3.9		3.4		3.8
Total other expenses	99.8	%	169.2	%	108.4		131.8	%
Income (loss) before provision for (benefit from) income taxes	0.2		(69.2	)	(8.4	)	(31.8	)
Provision for (benefit from) income taxes	1.2		(16.8	)	(2.8	)	(7.8	)
Net loss before attribution to non-controlling stockholders	(1.1	)	(52.4	)	(5.6	)	(24.0	)
Less: Net (loss) income attributable to non-controlling interests	(0.0	)	0.1		0.2		0.1
GFI’s net loss	(1.1	)	(52.5	)%	(5.8	)	(24.1	)%

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Three Months Ended June 30, 2015 Compared to the Three Months Ended June 30, 2014

Net Loss

GFI’s net loss was $1.8 million for the three months ended June 30, 2015 compared to net loss of $97.8 million for the same period in 2014. We generated total revenues of $173.6 million for the second quarter of 2015 compared with $218.1 million for the same period in the prior year. The net decrease in total revenues reflected lower clearing services revenues and lower brokerage revenues, principally due to the factors set forth above under heading “Financial Overview.”

Total interest and transaction-based expenses decreased by $26.3 million for the three months ended June 30, 2015 from the same quarter in 2014. The decrease was primarily a result of the elimination of interest expense and transaction fees on clearing services during the second quarter of 2015, due to the disposal of our Kyte clearing business during March 2015.

Total expenses, excluding interest and transaction-based expenses, were $167.9 million for the three months ended June 30, 2015 compared with $315.3 in the same prior year period. The decrease was largely attributable to aggregate non-cash goodwill impairment charges of $121.6 million and professional fees related to the then-pending CME Merger recorded during the second quarter of 2014, while similar one-time charges were not incurred during the second quarter of 2015. In addition, the decrease in Total expenses was also attributable to a decrease in compensation and employee benefits expense, primarily due to (i) lower salary expense and (ii) lower broker performance bonus expense resulting from lower brokerage revenues.

We recorded a provision for income taxes of $2.1 million for the three months ended June 30, 2015 as compared to a benefit from income taxes of $31.3 million for the three months ended June 30, 2014. The change was primarily due to the factors set forth below under the section “Income Taxes.”

Revenues

The following table sets forth the changes in revenues for the three months ended June 30, 2015 as compared to the same period in 2014 (dollars in thousands, except percentage data):

		For the Three Months Ended June 30,
		2015	%*			2014	%*			Increase (Decrease)		%**
Revenues
Brokerage revenues:
Fixed income	$	33,121	19.7	%	$	43,858	23.5	%	$	(10,737	)	(24.5	)%
Equity		25,090	14.9			25,687	13.8			(597	)	(2.3	)
Financial		47,060	28.0			46,659	25.1			401		0.9
Commodity		40,037	23.8			39,436	21.2			601		1.5
Total brokerage revenues		145,308	86.4			155,640	83.6			(10,332	)	(6.6	)
Clearing services revenues		—	0.0			28,602	15.4			(28,602	)	(100.0	)
Other revenues		28,315	16.8			33,863	18.1			(5,548	)	(16.4	)
Total revenues		173,623	103.3			218,105	117.1			(44,482	)	(20.4	)
Total interest and transaction-based expenses		5,482	3.3			31,776	17.1			(26,294	)	(82.7	)
Revenues, net of interest and transaction-based expenses	$	168,141	100.0	%	$	186,329	100.0	%	$	(18,188	)	(9.8	)%

* Denotes % of revenues, net of interest and transaction-based expenses

** Denotes % change of dollar amount of revenue for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014

Brokerage Revenues—We offer our brokerage services in four broad product categories: fixed income, equity, financial, and commodity. Below is a discussion of our brokerage revenues by product category for the three months ended June 30, 2015 as compared to the same period in 2014.

· Broker productivity (defined as total brokerage revenues during the period divided by average monthly brokerage personnel headcount for the period) across all product categories for the three months ended June 30, 2015 increased approximately 1%, as compared to the same prior year period.

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· Fixed income product brokerage revenues decreased $10.7 million, or 24.5%, for the three months ended June 30, 2015 compared to the same period in 2014. Revenues from fixed income cash and derivative products decreased approximately 28.1% and 17.4%, respectively, year over year. Our fixed income revenues decreased due, in part, to the continued low global interest rate environment, diminished trader risk appetite, and reduced brokerage personnel headcount in this product category. Our average monthly brokerage personnel headcount for fixed income products decreased by 28 to 252 employees for the three months ended June 30, 2015.

· Equity product brokerage revenues decreased $0.6 million, or 2.3%, for the three months ended June 30, 2015 compared with the same period in 2014, as overall revenues for both cash and derivative products declined. Equity revenues were impacted by reduced brokerage personnel headcount in this product category. Our average monthly brokerage personnel headcount for equity products decreased by 22 to 143 employees for the three months ended June 30, 2015.

· Financial product brokerage revenues increased $0.4 million, or less than 1%, for the three months ended June 30, 2015 compared with the same prior year period. Our average monthly brokerage personnel headcount for financial products decreased by 23 to 332 employees for the three months ended June 30, 2015.

· Commodity product brokerage revenues increased $0.6 million, or 1.5%, for the three months ended June 30, 2015 compared to the same prior year period. The increase was primarily attributable to an increase in our commodities brokerage revenues in the U.S.. This increase was nearly entirely offset by a decrease in our commodity brokerage revenues in Europe. Our average monthly brokerage personnel headcount for commodity products decreased by 11 to 260 employees for the three months ended June 30, 2015.

Clearing Services Revenue

· We did not have any clearing services revenues during the second quarter of 2015 due to the disposal of our Kyte clearing business during March 2015. Clearing services revenue was $28.6 million during the three months ended June 30, 2014.

Other Revenues

· Other revenues were comprised of the following (dollars in thousands):

	For the Three Months Ended June 30,
	2015			2014		Increase (Decrease)			%*
Software, analytics and market data	$	25,171		$	25,595	$	(424	)	(1.7	)%
Equity in net earnings of unconsolidated businesses		679			1,493		(814	)	(54.5	)
Remeasurement of foreign currency transactions and balances		(189	)		207		(396	)	(191.3	)
Net realized and unrealized gains (losses) from foreign currency hedges		(115	)		987		(1,102	)	(111.7	)
Interest income on short-term loans and investments		1,757			131		1,626		1,241.2
Interest income from clearing services		—			572		(572	)	(100.0	)
Other		1,012			4,878		(3,866	)	(79.3	)
Total other revenues	$	28,315		$	33,863	$	(5,548	)	(16.4

* Denotes % change of dollar amount of revenue for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014

Other revenues decreased by $5.5 million for the three months ended June 30, 2015 as compared to the same quarter in 2014. The decrease was primarily due to a net decrease in Other, largely as a result of (i) a gain during the second quarter of 2014 resulting from a decrease in our estimate of the contingent consideration liability associated with the acquisition of Contigo Limited and (ii) a reduction in certain revenues in the second quarter of 2015 due to the sale of our Kyte subsidiaries, both of which were slightly offset by the gain on the sale of KBL. The decrease in Other revenues was also due, in part, to an decrease in net realized and unrealized gains largely associated with foreign currency forward contracts used to hedge revenues and certain foreign currency assets, primarily driven by the weakening of the U.S. Dollar against the Euro. Slightly offsetting these decreases was an increase in Interest income on short-term loans and investments related to interest on loans to related parties recorded during the second quarter of 2015.

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In addition, the organic growth of our Trayport subsidiary, whose software revenues are included in Software, analytics and market data, was more than offset by the adverse impact the strengthening of the U.S. Dollar against the British Pound in the second quarter of 2014 compared with the same prior year quarter had on its reported revenues.

Interest and Transaction-Based Expenses

· The decrease in total interest and transaction-based expenses of $26.3 million in the three months ended June 30, 2015 as compared to the same period in 2014 was primarily a result of the elimination of interest expense and transaction fees on clearing services during the second quarter of 2015 due to the disposal of our Kyte clearing business during March 2015.

Expenses

The following table sets forth the changes in expenses for the three months ended June 30, 2015 as compared to the same period in 2014 (dollars in thousands, except percentage data):

	For the Three Months Ended June 30,
	2015		%*		2014		%*			Increase (Decrease)		%**
Expenses
Compensation and employee benefits	$	119,511	71.1	%	$	130,003	69.8	%	$	(10,492	)	(8.1	)%
Communications and market data		10,685	6.4			13,520	7.2			(2,835	)	(21.0	)
Travel and promotion		6,023	3.6			7,961	4.3			(1,938	)	(24.3	)
Rent and occupancy		6,812	4.0			7,890	4.2			(1,078	)	(13.7	)
Depreciation and amortization		6,808	4.0			8,797	4.7			(1,989	)	(22.6	)
Professional fees		3,449	2.0			10,107	5.4			(6,658	)	(65.9	)
Interest on borrowings		7,991	4.8			8,143	4.4			(152	)	(1.9	)
Impairment of goodwill		—	0.0			121,619	65.3			(121,619	)	(100.0	)
Other expenses		6,577	3.9			7,237	3.9			(660	)	(9.1	)
Total other expenses	$	167,856	99.8	%	$	315,277	169.2	%	$	(147,421	)	(46.8	)%

* Denotes % of revenues, net of interest and transaction-based expenses

** Denotes % change of dollar amount of expense for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014

Compensation and Employee Benefits

· The decrease in compensation and employee benefits expense of $10.5 million for the three months ended June 30, 2015, was predominantly attributable to (i) lower salary expense largely due to a reduced brokerage personnel headcount and the disposal of our Kyte subsidiaries and (ii) lower broker performance bonus expense resulting from lower brokerage revenues. Partially offsetting these decreases was a $1.9 million increase in severance and restructuring costs mostly as a result of the BGC acquisition.

· Total compensation and employee benefits as a percentage of revenues, net of interest and transaction-based expenses, increased to 71.1% for the three months ended June 30, 2015 compared to 69.8% for the same period in 2014.

· Performance bonus expense represented 35.5% and 34.1% of total compensation and employee benefits expense for the three months ended June 30, 2015 and 2014, respectively. This increase was largely driven by the increased monthly compensation costs associated with the modification of our RSUs. 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. Additionally, sign-on and retention bonus expense, which includes the amortization of cash sign-on and retention bonuses initially paid in prior periods, represented 6.0% of total compensation and employee benefits expense for the three months ended June 30, 2015 and 2014.

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All Other Expenses

· The decrease in professional fees of $6.7 million was primarily attributable to services provided to the Company related to the then-pending CME Merger during the second quarter of 2014.

· The decrease in communications and market data expense of $2.8 million was mainly associated with lower expenditures on price quotation systems, due, in part, to lower broker headcount.

· The decrease in depreciation and amortization expense of $2.0 million in the second quarter of 2015 was largely due to lower intangible amortization expense as a result of the disposal of the Kyte clearing business.

· The decrease in travel and promotion expense of $1.9 million was due, in large part, to the effect of cost savings initiatives.

· The decrease in rent and occupancy expense of $1.1 million was due to a combination of individually small items, including a decrease in rental obligations due to the disposal of the Kyte subsidiaries.

· During the second quarter of 2014, as a result of an interim impairment analysis we had conducted, we recorded non-cash, pre-tax charges of $121.6 million related to the impairment of goodwill in three of our reporting units: (i) $83.3 million recorded in Americas Brokerage, (ii) $14.8 million recorded in EMEA Brokerage and (iii) $23.5million recorded in our Clearing and Backed Trading. We did not record any goodwill impairment charges during the three months ended June 30, 2015. See Note 6 of the Condensed Consolidated Financial Statements for further information.

Income Taxes

· We recorded a provision for income taxes of $2.1 million for the three months ended June 30, 2015, as compared to a benefit for income taxes of $31.3 million for the three months ended June 30, 2014. The net increase in income tax expense during the second quarter of 2015 was largely due to an increase in pre-tax income during the three months ended June 30, 2015 compared with the same prior year period. The benefit from income taxes for the three months ended June 30, 2014 was primarily due to a discrete tax benefit of $29.2 million attributable to non-cash goodwill impairment charges recorded in the U.S. during the second quarter of 2014. The effective tax rates for both periods were impacted by a geographical mix of pre-tax profits and losses.

Six Months Ended June 30, 2015 Compared to the Six Months Ended June 30, 2014

Net Loss

GFI’s net loss was $21.7 million for the six months ended June 30, 2015 compared to $93.8 million for the same period in 2014. We generated total revenues of $405.1 million for the six months ended June 30, 2015 compared with $458.8 million for the same period in the prior year. The net decrease in total revenues reflected both lower clearing services revenues and lower brokerage revenues during the six months ended June 30, 2015.

Total interest and transaction-based expenses decreased by $38.7 million for the six months ended June 30, 2015 from the same period in 2014. The decrease was primarily due to a decline in transaction fees on clearing services as a result of the disposal of the Kyte clearing business during March 2015.

Total expenses, excluding interest and transaction-based expenses, were $405.0 million for the six months ended June 30, 2015 compared with $512.2 million in the same prior year period. The decrease was primarily related to aggregate non-cash goodwill impairment charges of $121.6 million recorded in the second quarter of 2014. Partially offsetting the decrease was the CME Merger termination fee recorded during the first quarter of 2015 and an increase in merger and acquisition related professional fees recorded during the six months ended June 30, 2015.

We recorded a benefit from income taxes of $10.3 million for the six months ended June 30, 2015 as compared to $30.2 million for the six months ended June 30, 2014. The change was primarily due to the factors set forth below under the section “Income Taxes.”

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Revenues

The following table sets forth the changes in revenues for the six months ended June 30, 2015 as compared to the same period in 2014 (dollars in thousands, except percentage data):

		For the Six Months Ended June 30,
		2015	%*			2014	%*			Increase (Decrease)		%**
Revenues
Brokerage revenues:
Fixed income	$	74,971	20.1	%	$	95,593	24.6	%	$	(20,622	)	(21.6	)%
Equity		51,301	13.7			55,730	14.3			(4,429	)	(7.9	)
Financial		102,095	27.3			98,198	25.3			3,897		4.0
Commodity		81,942	21.9			79,223	20.4			2,719		3.4
Total brokerage revenues		310,309	83.0			328,744	84.6			(18,435	)	(5.6	)
Clearing services revenues		21,338	5.7			62,766	16.1			(41,428	)	(66.0	)
Other revenues		73,498	19.7			67,334	17.3			6,164		9.2
Total revenues		405,145	108.4			458,844	118.0			(53,699	)	(11.7	)
Total interest and transaction-based expenses		31,388	8.4			70,088	18.0			(38,700	)	(55.2	)
Revenues, net of interest and transaction-based expenses	$	373,757	100.0	%	$	388,756	100.0	%	$	(14,999	)	(3.9	)%

* Denotes % of revenues, net of interest and transaction-based expenses

** Denotes % change of dollar amount of revenue for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014

Brokerage Revenues—We offer our brokerage services in four broad product categories: fixed income, equity, financial, and commodity. Below is a discussion of our brokerage revenues by product category for the six months ended June 30, 2015 as compared to the same period in 2014.

· Broker productivity (defined as total brokerage revenues during the period divided by average monthly brokerage personnel headcount for the period) across all product categories for the six months ended June 30, 2015 increased approximately 2%, as compared to the same prior year period.

· Fixed income product brokerage revenues decreased $20.6 million, or 21.6%, for the six months ended June 30, 2015 compared to the same period in 2014. Revenues from fixed income cash and derivative products decreased approximately 21.8% and 21.2%, respectively, year over year. The decrease in our fixed income revenues was due, in part, to the continued low global interest rate environment, diminished trader risk appetite, and reduced brokerage personnel headcount in this product category. Our average monthly brokerage personnel headcount for fixed income products decreased by 26 to 258 employees for the six months ended June 30, 2015.

· Equity product brokerage revenues decreased $4.4 million, or 7.9%, for the six months ended June 30, 2015 compared with the same prior year period. The decrease in revenues was largely attributable to reduced trading volumes for certain equity derivative products and reduced brokerage personnel headcount in this product category. Our average monthly brokerage personnel headcount for equity products decreased by 22 to 146 employees for the six months ended June 30, 2015.

· The increase in financial product brokerage revenues of $3.9 million, or 4.0%, for the six months ended June 30, 2015 compared with the same prior year period, was largely due to higher currency market volatility during 2015. Our average monthly brokerage personnel headcount for financial products decreased by 23 to 336 employees for the six months ended June 30, 2015.

· Commodity product brokerage revenues increased $2.7 million, or 3.4%, for the six months ended June 30, 2015 compared to the same prior year period. The increase was primarily attributable to an increase in our commodities brokerage revenues in the U.S., including an increase in revenues derived from certain energy derivative products. Our average monthly brokerage personnel headcount for commodity products increased by 5 to 262 employees for the six months ended June 30, 2015.

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Clearing Services Revenue

· Clearing services revenues decreased by $41.4 million, or 66.0%, for the six months ended June 30, 2015 compared to the same prior year period, due to the disposal of the Kyte clearing business during March 2015.

Other Revenues

· Other revenues were comprised of the following (dollars in thousands):

	For the Six Months Ended June 30,
	2015			2014		Increase (Decrease)			%*
Software, analytics and market data	$	50,927		$	51,360	$	(433	)	(0.8	)%
Equity in net earnings of unconsolidated businesses		2,243			4,047		(1,804	)	(44.6	)
Remeasurement of foreign currency transactions and balances		(1,227	)		115		(1,342	)	(1,167.0	)
Net realized and unrealized gains from foreign currency hedges		3,486			1,189		2,297		193.2
Interest income on short-term investments		1,835			255		1,580		619.6
Interest income from clearing services		297			1,100		(803	)	(73.0	)
Other		15,937			9,268		6,669		72.0
Total other revenues	$	73,498		$	67,334	$	6,164		9.2	%

* Denotes % change of dollar amount of revenue for the six months ended June 30, 2015 as compared to the six months ended June 30, 2015

Other revenues increased by $6.2 million for the six months ended June 30, 2015 as compared to the same period in 2014. The increase was primarily due to an increase in Other, as a result of a legal settlement gain during the first quarter of 2015. The increase in Other revenues was also due to (i) an increase in net realized and unrealized gains largely associated with foreign currency forward contracts used to hedge revenues and certain foreign currency assets, which was primarily driven by the strengthening of the U.S. Dollar against the Euro and (ii) an increase in Interest income on short-term loans and investments related to interest on loans to related parties recorded during 2015. Partially offsetting these increases was (i) a decrease in Equity in net earnings of unconsolidated businesses primarily as a result of the disposition of our interests in several of these businesses and (ii) an increase in losses on the remeasurement of foreign currency transactions and balances.

The organic growth of our Trayport subsidiary, whose software revenues are included in Software, analytics and market data, was more than offset by the adverse impact the strengthening of the U.S. Dollar against the British Pound during the first six months of 2015 compared with the same prior year period had on its reported revenues.

Interest and Transaction-Based Expenses

· The decrease in total interest and transaction-based expenses of $38.7 million in the six months ended June 30, 2015 as compared to the same period in 2014 was primarily due to the disposal of the Kyte clearing business during March 2015.

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Expenses

The following table sets forth the changes in expenses for the six months ended June 30, 2015 as compared to the same period in 2014 (dollars in thousands, except percentage data):

	For the Six Months Ended June 30,
	2015		%*		2014		%*			Increase (Decrease)		%**
Expenses
Compensation and employee benefits	$	266,728	71.4	%	$	267,700	68.9	%	$	(972	)	(0.4	)%
Communications and market data		22,727	6.1			26,867	6.9			(4,140	)	(15.4	)
Travel and promotion		12,406	3.3			15,740	4.0			(3,334	)	(21.2	)
Rent and occupancy		13,739	3.7			15,976	4.1			(2,237	)	(14.0	)
Depreciation and amortization		14,129	3.8			17,393	4.5			(3,264	)	(18.8	)
Professional fees		21,885	5.9			16,278	4.2			5,607		34.4
Interest on borrowings		15,859	4.2			15,927	4.1			(68	)	(0.4	)
Merger termination fees		24,728	6.6			—	0.0			24,728		100.0
Impairment of goodwill		—	0.0			121,619	31.3			(121,619	)	(100.0	)
Other expenses		12,810	3.4			14,701	3.8			(1,891	)	(12.9	)
Total other expenses	$	405,011	108.4	%	$	512,201	131.8	%	$	(107,190	)	(20.9	)%

* Denotes % of revenues, net of interest and transaction-based expenses

** Denotes % change of dollar amount of expense for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014

Compensation and Employee Benefits

· Compensation and employee benefits expense decreased $1.0 million for the six months ended June 30, 2015 as compared with the same prior year period. The decrease was predominantly due to (i) lower broker performance bonus expense resulting from lower brokerage revenues, (ii) lower broker salary expense on reduced brokerage personnel headcount and (iii) a decrease in amortization expense on previously paid sign-on and retention bonuses. Offsetting these decreases was (i) $11.5 million of incremental compensation costs related to the modification of outstanding RSUs recording during the first quarter of 2015 (as discussed in Note 11 of the Condensed Consolidated Financial Statements) and (ii) an $11.0 million increase in severance and restructuring costs mostly as a result of the BGC acquisition.

· Total compensation and employee benefits as a percentage of revenues, net of interest and transaction-based expenses, increased to 71.4% for the six months ended June 30, 2015 compared to 68.9% for the same period in 2014, though the increase was largely due to non-recurring charges, including incremental compensation costs related to the modification of outstanding RSUs and severance and restructuring costs related to the BGC acquisition.

· Performance bonus expense represented 39.2% and 36.7% of total compensation and employee benefits expense for the six months ended June 30, 2015 and 2014, respectively. This increase was primarily driven by the incremental compensation costs associated with the modification of our RSUs. Additionally, sign-on and retention bonus expense, which includes the amortization of cash sign-on and retention bonuses initially paid in prior periods, represented 5.1% and 6.2% of total compensation and employee benefits expense for the six months ended June 30, 2015 and 2014, respectively.

All Other Expenses

· As discussed in Note 2 to the Condensed Consolidated Financial Statements, pursuant to the terms of the CME Merger Agreement, we were required to pay CME a termination fee of $24.7 million (including reimbursement to CME of $7.1 million of its merger related expenses) during the first quarter of 2015.

· The increase in professional fees of $5.6 million was primarily attributable to an increase in merger and acquisition related expenses during the six months ended June 30, 2015.

· The decrease in communications and market data expense of $4.1 million was primarily attributable to lower expenditures on price quotation systems, due, in part, to lower broker headcount.

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· The decrease in travel and promotion expense of $3.3 million was due, in large part, to the effect of cost savings initiatives.

· The decrease in depreciation and amortization expense of $3.3 million for the six months ended June 30, 2015 was largely due to lower intangible amortization expense as a result of the disposal of the Kyte clearing business.

· The decrease in rent and occupancy expense of $2.2 million was due to a combination of individually small items, including a decrease in rental obligations due to the disposal of the Kyte subsidiaries.

· During the second quarter of 2014, as a result of an interim impairment analysis we had conducted, we recorded non-cash, pre-tax charges of $121.6 million related to the impairment of goodwill in three of our reporting units: (i) $83.3 million recorded in Americas Brokerage, (ii) $14.8 million recorded in EMEA Brokerage and (iii) $23.5million recorded in our Clearing and Backed Trading. We did not record any goodwill impairment charges during the six months ended June 30, 2015. See Note 6 of the Condensed Consolidated Financial Statements for further information.

Income Taxes

· We recorded a benefit from income taxes of $10.3 million for the six months ended June 30, 2015, as compared to $30.2 million for the six months ended June 30, 2014. The benefit from income taxes for the six months ended June 30, 2015was primarily due to an allowable U.S. income tax deduction as a result of the merger termination fee paid to CME following the termination of the CME Merger Agreement in January 2015. The benefit from income taxes for the six months ended June 30, 2014 was primarily a result of a $29.2 million discrete tax benefit attributable to non-cash goodwill impairment charges recorded during the second quarter of 2014. The net decrease in benefit from income taxes during the six months ended June 30, 2015 compared with six months ended June 30, 2014 was largely due to an increase in pre-tax income during the current year period. The effective tax rates for both periods were impacted by a geographical mix of pre-tax profits and losses.

Results of Segment Operations

Based on the nature of our operations, products and services in each geographic region, we determined that we have four reportable segments: (i) Americas Brokerage, (ii) Europe, Middle East and Africa (“EMEA”) Brokerage, (iii) Asia Brokerage and (iv) Clearing and Backed Trading. Our brokerage operations provide brokerage services in four broad product categories: fixed income, financial, equity and commodity. Our Clearing and Backed Trading segment encompasses our clearing, risk management, settlement and other back-office services, as well as the capital we provide to start-up trading groups, small hedge funds, market-makers and individual traders. All Other includes the results of our software, analytics and market data operations. All Other also includes revenues and expenses that are not directly assignable to one of our reportable segments, primarily consisting of indirect costs related to our brokerage segments as well as all our corporate business activities.

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Segment Results for the Three Months Ended June 30, 2015 Compared to the Three Months Ended June 30, 2014

The following tables summarize our Total revenues, Revenues, net of interest and transaction-based expenses, Other expenses and Income (loss) before income taxes by segment (dollars in thousands):


	Three Months Ended June 30, 2015
	Americas Brokerage		EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading		All Other			Total
Total revenues	$	54,908	$	72,311	$	17,151	$	2,362	$	26,891		$	173,623
Revenues, net of interest and transaction-based expenses	52,128		69,493		17,101		1,756		27,663			168,141
Other expenses	37,084		46,480		10,764		1,718		71,810			167,856
Income (loss) before income taxes	15,044		23,013		6,337		38		(44,147		)	285


	Three Months Ended June 30, 2014
	Americas Brokerage			EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading			All Other			Total
Total revenues	$	56,420		$	81,258	$	17,102	$	35,479		$	27,846		$	218,105
Revenues, net of interest and transaction-based expenses	53,807			79,086		16,956		7,999			28,481			186,329
Other expenses	123,618			69,665		12,798		32,628			76,568			315,277
Income (loss) before income taxes	(69,811		)	9,421		4,158		(24,629		)	(48,087		)	(128,948		)

Total Revenues

· Total revenues for EMEA Brokerage and Americas Brokerage decreased $8.9 million, or 11.0%, and $1.5 million, or 2.7%, respectively, for the second quarter of 2015. Total revenues for Asia Brokerage increased slightly for the three months ended June 30, 2015. Total revenues for our three brokerage segments in total decreased by $10.4 million, or 6.7%, to $144.4 million for the three months ended June 30, 2015. The decrease in total revenues for our brokerage segments was primarily due to the factors described above under “Three Months Ended June 30, 2015 Compared to the Three Months Ended June 30, 2014”.

· Total revenues for Clearing and Backed Trading decreased $33.1 million, or 93.3%, for the three months ended June 30, 2015. Due to the disposition of the Kyte clearing business during March 2015 we did not have any clearing services revenues during the second quarter of 2015. Revenues derived from our backed trading business decreased slightly for the three months ended June 30, 2015 compared with the same prior year period.

· Total revenues for All Other decreased by $1.0 million, or 3.4%, for the three months ended June 30, 2015. This decrease was primarily due to (i) a net decrease in Other income, net largely related to a gain during the second quarter of 2014 resulting from a decrease in our estimate of the contingent consideration liability related to the acquisition of Contigo Limited and (ii) a decrease in net realized and unrealized gains largely associated with foreign currency forward contracts used to hedge revenues and certain foreign currency assets, primarily driven by the weakening of the U.S. Dollar against the Euro.

Total interest and transaction-based expenses

· Total interest and transaction-based fees for our three brokerage segments decreased to $5.6 million for the three months ended June 30, 2015, as compared to $4.9 million for the same period in 2014.

· Total interest and transaction-based fees for Clearing and Backed Trading decreased by $26.9 million to $0.6 million for the three months ended June 30, 2015 from $27.5 million for the prior year second quarter, primarily due to the disposal of the Kyte clearing business during March 2015.

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Other Expenses

· Other expenses for Americas Brokerage, EMEA Brokerage and Asia Brokerage decreased $86.5 million, or 70.0%, $23.2 million, or 33.3%, and $2.0 million, or 15.9%, respectively, for the second quarter of 2015. The decrease for the Americas and EMEA brokerages was primarily a result of non-cash impairment charges related to goodwill of $83.3 and $14.8 million, respectively, recorded during the second quarter of 2014. In addition, the decrease in Other expenses for all three brokerage segments was partially due to a decrease in compensation and employee benefits expense. Total Other expenses for our three brokerage segments decreased by $111.8 million, or 54.2%, to $94.3 million for the three months ended June 30, 2015.

· For our brokerage segments, we record certain direct expenses, including compensation and employee benefits; however, we do not allocate certain expenses that are managed separately at the corporate level to these operating segments. The unallocated costs including rent and occupancy, depreciation and amortization, professional fees, interest and other expenses are included in the expenses for All Other described below. Management does not believe that allocating these costs to our brokerage segments is optimal for evaluating the performance of its brokerage segments.

· Other expenses for Clearing and Backed Trading decreased $30.9 million, or 94.7% for the three months ended June 30, 2014. The decrease was primarily as a result of the disposal of the Kyte clearing business during March 2015.

· Other expenses for All Other decreased by $4.8 million, or 6.2% for the three months ended June 30, 2015. The decrease was primarily attributable to services provided to the Company related to the then-pending CME Merger during the second quarter of 2014, partially offset by an increase in compensation and employee benefits expense during the second quarter of 2015.

Segment Results for the Six Months Ended June 30, 2015 Compared to the Six Months Ended June 30, 2014

The following tables summarize our Total revenues, Revenues, net of interest and transaction-based expenses, Other expenses and Income (loss) before income taxes by segment (dollars in thousands):

	Six Months Ended June 30, 2015
	Americas Brokerage		EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading		All Other			Total
Total revenues	$	112,460	$	156,811	$	37,908	$	30,615	$	67,351		$	405,145
Revenues, net of interest and transaction-based expenses	107,054		151,147		37,764		8,973		68,819			373,757
Other expenses	75,530		100,512		23,768		7,634		197,567			405,011
Income (loss) before income taxes	31,524		50,635		13,996		1,339		(128,748		)	(31,254		)

	Six Months Ended June 30, 2014
	Americas Brokerage			EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading			All Other			Total
Total revenues	$	118,118		$	170,558	$	36,325	$	79,772		$	54,071		$	458,844
Revenues, net of interest and transaction-based expenses	112,559			165,513		36,059		19,139			55,486			388,756
Other expenses	168,028			127,388		26,269		42,837			147,679			512,201
Income (loss) before income taxes	(55,469		)	38,125		9,790		(23,698		)	(92,193		)	(123,445		)

Total Revenues

· Total revenues for Americas Brokerage and EMEA Brokerage decreased $5.7 million, or 4.8%, and $13.7 million, or 8.1%, respectively, for the six months ended June 30, 2015. Total revenues for Asia Brokerage increased $1.6 million, or 4.4%, for the six months ended June 30, 2015. Total revenues for our three brokerage segments in total decreased by $17.8 million, or 5.5%, to $307.2 million for the six months ended June 30, 2015. The decrease in total revenues for our brokerage segments was primarily due to the factors described above under “Six Months Ended June 30, 2015 Compared to the Six Months Ended June 30, 2014”.

· Total revenues for Clearing and Backed Trading decreased $49.2 million, or 61.6%, for the six months ended June 30, 2015. The decrease was primarily due to the disposal of the Kyte clearing business in March 2015.

· Total revenues for All Other increased by $13.3 million, or 24.6%, for the six months ended June 30, 2015. This increase was primarily due to (i) a legal settlement gain during the first quarter of 2015 and (ii) net realized and unrealized gains largely associated with foreign currency forward contracts used to hedge revenues and certain foreign currency assets.

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Total interest and transaction-based expenses

· Total interest and transaction-based fees for our three brokerage segments decreased to $11.2 million for the six months ended June 30, 2015, as compared to $10.9 million for the same period in 2014.

· Total interest and transaction-based fees for Clearing and Backed Trading decreased by $39.0 million to $21.6 million for the six months ended June 30, 2015 from $60.6 million for the same prior year period, primarily due to the disposal of the Kyte clearing business in March 2015.

Other Expenses

· Other expenses for Americas, EMEA and Asia Brokerages decreased $92.5 million, or 55.0%, $26.9 million, or 21.1%, and $2.5 million, or 9.5%, respectively, for the six months ended June 30, 2015. The decrease for the Americas and EMEA brokerage segments was largely due to (i) non-cash impairment charges related to goodwill of $83.3 and $14.8 million, respectively, recorded during the second quarter of 2014. In addition, the decrease for the segments was due to a decrease in compensation and employee benefits expense resulting from (i) lower cash performance bonus expense on lower brokerage revenues and (ii) lower broker salary expense on reduced brokerage headcount. The decrease for the Asia brokerage segment was primarily due to a decrease in compensation and employee benefits expense resulting from lower broker salary expense on reduced brokerage headcount. Total Other expenses for our three brokerage segments decreased by $121.9 million, or 37.9%, to $199.8 million for the six months ended June 30, 2015.

· Other expenses for Clearing and Backed Trading decreased $35.2 million for the six months ended June 30, 2015. The decrease was primarily due to the disposal of the Kyte clearing business during March 2015.

· Other expenses for All Other increased by $49.9 million, or 33.8% for the six months ended June 30, 2015. The increase was primarily attributable to (i) the $24.7 million merger termination fee which we were required to pay to CME upon the termination of the merger in January 2015, (ii) $11.5 million of incremental compensation costs related to the modification of outstanding RSUs during the first quarter of 2015 and (iii) an increase in merger and acquisition related professional fees.

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Quarterly Results of Operations

The following table sets forth, by quarter, our unaudited statement of operations data for the period from April 1, 2013 to June 30, 2015. 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 Ended
	June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014			June 30, 2014			March 31, 2014		December 31, 2013			September 30, 2013
	(dollars in thousands)
Revenues
Agency commissions	$	104,240		$	117,991		$	111,194		$	112,303		$	109,692		$	121,415	$	103,278		$	109,365
Principal transactions	41,068			47,010			41,240			41,453			45,948			51,689		40,246			41,841
Total brokerage revenues	145,308			165,001			152,434			153,756			155,640			173,104		143,524			151,206
Clearing services revenues	—			21,338			26,359			26,373			28,602			34,164		28,911			32,722
Interest income from clearing services	—			297			550			579			572			528		570			455
Equity in net earnings of unconsolidated businesses	679			1,564			2,925			639			1,493			2,554		1,241			1,566
Software, analytics and market data	25,171			25,756			25,543			26,095			25,595			25,765		24,100			22,472
Other income, net	2,465			17,566			4,079			2,859			6,203			4,624		4,001			4,012
Total revenues	173,623			231,522			211,890			210,301			218,105			240,739		202,347			212,433
Interest and transaction-based expenses
Transaction fees on clearing services	—			20,495			24,102			24,786			26,936			32,640		27,213			31,620
Transaction fees on brokerage services	5,482			5,283			4,832			4,330			4,655			5,503		4,183			4,430
Interest expense from clearing services	—			128			261			206			185			169		180			143
Total interest and transaction-based expenses	5,482			25,906			29,186			29,322			31,776			38,312		31,576			36,193
Revenues, net of interest and transaction-based expenses	168,141			205,616			182,704			180,979			186,329			202,427		170,771			176,240
Expenses
Compensation and employee benefits	119,511			147,217			121,112			122,720			130,003			137,697		123,485			121,109
Communications and market data	10,685			12,042			12,620			13,335			13,520			13,347		12,798			13,747
Travel and promotion	6,023			6,383			8,341			7,184			7,961			7,779		7,555			7,380
Rent and occupancy	6,812			6,927			7,488			7,835			7,890			8,086		6,228			7,901
Depreciation and amortization	6,808			7,321			8,461			8,480			8,797			8,596		8,333			8,320
Professional fees	3,449			18,436			11,976			13,650			10,107			6,171		5,703			5,712
Interest on borrowings	7,991			7,868			7,905			8,466			8,143			7,784		7,822			7,612
Merger termination fees	—			24,728			—			—			—			—		—			—
Impairment of goodwill and long-lived assets	—			—			4,061			—			121,619			—		19,602			—
Other expenses	6,577			6,233			6,595			6,825			7,237			7,464		7,116			5,615
Total other expenses	167,856			237,155			188,559			188,495			315,277			196,924		198,642			177,396
(Loss) income before (benefit from) provision for income taxes	285			(31,539		)	(5,855		)	(7,516		)	(128,948		)	5,503		(27,871		)	(1,156		)
(Benefit from) provision for income taxes	2,078			(12,392		)	276			(56		)	(31,277		)	1,094		2,994			(1,127		)
Net (loss) income before attribution to non-controlling stockholders	(1,793		)	(19,147		)	(6,131		)	(7,460		)	(97,671		)	4,409		(30,865		)	(29		)
Less: Net income attributable to non-controlling interests	(14		)	776			428			231			125			406		37			432
GFI’s net (loss) income	$	(1,779	)	$	(19,923	)	$	(6,559	)	$	(7,691	)	$	(97,796	)	$	4,003	$	(30,902	)	$	(461	)

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The following table sets forth our quarterly results of operations as a percentage of our Revenues, net of interest and transaction-based expenses, for the indicated periods:

	Quarter Ended
	June 30, 2015		March 31, 2015		December 31, 2014		September 30, 2014		June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013
Revenues
Agency commissions	62.0	%	57.4	%	60.9	%	62.1	%	58.9	%	60.0	%	60.5	%	62.1	%
Principal transactions	24.4		22.9		22.6		22.9		24.7		25.5		23.6		23.7
Total brokerage revenues	86.4		80.3		83.5		85.0		83.6		85.5		84.1		85.8
Clearing services revenues	0.0		10.4		14.4		14.6		15.4		16.9		16.9		18.5
Interest income from clearing services	0.0		0.1		0.3		0.3		0.3		0.2		0.3		0.3
Equity in net earnings of unconsolidated businesses	0.4		0.8		1.6		0.3		0.8		1.3		0.7		0.9
Software, analytics and market data	15.0		12.5		14.0		14.4		13.7		12.7		14.1		12.7
Other income, net	1.5		8.5		2.2		1.6		3.3		2.3		2.4		2.3
Total revenues	103.3		112.6		116.0		116.2		117.1		118.9		118.5		120.5
Interest and transaction-based expenses
Transaction fees on clearing services	0.0		9.9		13.2		13.7		14.5		16.1		15.9		17.9
Transaction fees on brokerage services	3.3		2.6		2.6		2.4		2.5		2.7		2.5		2.5
Interest expense from clearing services	0.0		0.1		0.2		0.1		0.1		0.1		0.1		0.1
Total interest and transaction-based expenses	3.3		12.6		16.0		16.2		17.1		18.9		18.5		20.5
Revenues, net of interest and transaction based expenses	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Expenses
Compensation and employee benefits	71.1		71.6		66.3		67.8		69.8		68.0		72.3		68.7
Communications and market data	6.4		5.8		6.9		7.3		7.2		6.6		7.5		7.8
Travel and promotion	3.6		3.1		4.6		4.0		4.3		3.8		4.4		4.2
Rent and occupancy	4.0		3.4		4.1		4.3		4.2		4.0		3.6		4.5
Depreciation and amortization	4.0		3.6		4.6		4.7		4.7		4.3		4.9		4.7
Professional fees	2.0		9.0		6.6		7.5		5.4		3.1		3.3		3.3
Interest on borrowings	4.8		3.8		4.3		4.7		4.4		3.8		4.6		4.3
Merger termination fees	0.0		12.0		0.0		0.0		0.0		0.0		0.0		0.0
Impairment of goodwill and long-lived assets	0.0		0.0		2.2		0.0		65.3		0.0		11.5		0.0
Other expenses	3.9		3.0		3.6		3.8		3.9		3.7		4.2		3.2
Total other expenses	99.8	%	115.3	%	103.2	%	104.1	%	169.2	%	97.3	%	116.3	%	100.7	%
(Loss) income before (benefit from) provision for income taxes	0.2		(15.3	)	(3.2	)	(4.1	)	(69.2	)	2.7		(16.3	)	(0.7	)
(Benefit from) provision for income taxes	1.2		(6.0	)	0.2		0.0		(16.8	)	0.5		1.8		(0.6	)
Net (loss) income before attribution to non-controlling stockholders	(1.1	)	(9.3	)	(3.4	)	(4.1	)	(52.4	)	2.2		(18.1	)	(0.1	)
Less: Net income attributable to non-controlling interests	(0.0	)	0.4		0.2		0.1		0.1		0.2		0.0		0.2
GFI’s net (loss) income	(1.1	)%	(9.7	)%	(3.6	)%	(4.2	)%	(52.5	)%	2.0	%	(18.1	)%	(0.3	)%

Liquidity and Capital Resources

Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less. At June 30, 2015, we had $102.3 million of cash and cash equivalents compared to $183.4 million at December 31, 2014. Included in this amount are $37.1 million and $110.8 million of cash and cash equivalents held by subsidiaries outside of the United States at June 30, 2015 and December 31, 2014, respectively. Excluded from the preceding balance as of December 31, 2014 was $38.1 million of cash and cash equivalents classified within Assets held for sale on the Condensed Consolidated Statements of Financial Condition (See Note 4 to the Condensed Consolidated Financial Statements for further information). We have historically asserted the intent to indefinitely reinvest, with very limited exceptions, the unremitted profits of our foreign subsidiaries. We continue to assert that our historic profits earned in foreign subsidiaries are indefinitely reinvested, however, management has concluded that profits earned in certain overseas subsidiaries commencing from January 1, 2013 will ultimately be repatriated to the United States. For profits earned during the six months ended June 30, 2015 that are not permanently reinvested, the deferred tax liability for those earnings is zero due to the excess foreign tax credits that will be generated as a result of repatriation.

Included within Receivables from brokers, dealers and clearing organizations are cash, including deposits, held at clearing organizations and exchanges to facilitate settlement and clearance of matched principal transactions, and spreads on matched principal transactions that have not yet been remitted from clearing organizations and exchanges. We estimate that cash held at clearing organizations, net of amounts owed to our clearing customers and net of clearing customer cash included within Cash and cash equivalents, was $65.9 million and $44.4 million as of June 30, 2015 and December 31, 2014, respectively.

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The following table summarizes our cash position as of June 30, 2015 and December 31, 2014, respectively.

	June 30,		December 31,
	2015		2014
	(dollars in thousands)

Cash and cash equivalents	$	102,302	$	183,432
Cash held at clearing organizations, net of customer cash (1)	65,928		44,358
Cash included in Assets held for sale (2)	—		40,065
Total balance sheet cash	$	168,230	$	267,855

(1) As the transaction to sell KGL was completed in March 2015 there was no balance due to our clearing customers or any clearing customer cash as of June 30, 2015.

(2) As the transactions to sell KGL and KBL were completed in March 2015 and May 2015, respectively, there was no cash included in Assets held for sale as of June 30, 2015.

We believe that, based on current levels of operations, our cash from operations, together with our current cash holdings and available borrowings under our credit agreement with Bank of America N.A. and certain other lenders (the “Credit Agreement”), will be sufficient to fund our operations for at least the next twelve months. Poor financial results, unanticipated expenses or unanticipated acquisitions or 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.

Sources and Uses of Cash

Net cash used in operating activities was $53.5 million for the six months ended June 30, 2015 compared with net cash provided of $11.3 million for the six months ended June 30, 2014, a net increase in cash used of $64.8 million. This decrease was partly due to a $42.7 million increase in working capital employed in the business for the six months ended June 30, 2015. Such working capital changes include (i) payables to clearing service customers, (ii) receivables from/payables to brokers, dealers, and clearing organizations, (iii) accounts receivable and (iv) other assets and liabilities. In addition, this decrease was also attributable to a $94.5 million decrease in non-cash items that reconcile net loss to net cash (used in) provided by operating activities for the six months ended June 30, 2015, compared with the same prior year period. The decrease in non-cash items was primarily related to goodwill impairment charges of $121.6 million recorded during the second quarter of 2014, partially offset by a decrease in benefit for deferred taxes in the six months ended June 30, 2015.

Net cash used in investing activities for the six months ended June 30, 2015 was $104.0 million compared with $4.9 million of net cash provided by investing activities for the six months ended June 30, 2014, a net increase in cash used of $108.9 million. This increase in net cash used in investing activities was primarily due to (i) $95.3 million of loans provided to BGC during the six months ended June 30, 2015 and (ii) a decrease in proceeds from the disposition of interests in unconsolidated businesses and available-for-sale securities, year over year.

Net cash provided by financing activities for the six months ended June 30, 2015 was $39.1 million compared to $19.6 million of cash used during the six months ended June 30, 2014, an increase in cash provided of $58.7 million. This increase in net cash provided was primarily due an increase in net proceeds in short-term borrowings, and to a lesser extent, a decrease in cash dividends paid to shareholders during the first and second quarter of 2015.

Regulatory Requirements

Our liquidity and available cash resources are, in part, restricted by the regulatory capital requirements of certain of our material operating subsidiaries, including GFI Securities LLC, Amerex Brokers LLC, GFI Swaps Exchange LLC, GFI Securities Limited, GFI Brokers Limited, GFI (HK) Securities LLC, GFI (HK) Brokers Ltd, GFI Group PTE Ltd and GFI Korea Money Brokerage Limited. These operating subsidiaries are subject to minimum capital requirements and/or licensing and financial requirements imposed by their respective market regulators. In addition, these subsidiaries may be prohibited from repaying the borrowings of their parents or affiliates, paying cash dividends, making loans to their parent or affiliates or otherwise entering into transactions, in each case, that result in a significant reduction in their regulatory capital position without prior notification or approval from their principal regulator. See Note 17 to the Condensed Consolidated Financial Statements for further details on our regulatory requirements.

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Short and Long Term Debt

Our outstanding debt at June 30, 2015 consisted of $240.0 million of our 8.375% Senior Notes and $50.0 million of borrowings under our Credit Agreement. The unused borrowing capacity under our Credit Agreement at June 30, 2015 and December 31, 2014 was $25.0 million and $65.0 million, respectively. The 8.375% Senior Notes mature in July 2018 and the Credit Agreement matures in December 2015. See Note 8 to the Condensed Consolidated Financial Statements for further details on our debt.

The Credit Agreement contains certain financial and other covenants. The financial covenants contained in our Credit Agreement require that we maintain minimum consolidated capital, as defined, of no less than $375.0 million at any time. The amendment to the Credit Agreement executed in July 2014 reduced the required minimum amount of consolidated capital by any goodwill or asset impairment charge in an aggregate amount not to exceed $160.0 million contained in our financial statements in any of the fiscal quarters ending June 30, 2014, September 30, 2014 or December 31, 2014. In April 2015, GFI entered into a fourth amendment to the Credit Agreement, whereby the minimum consolidated capital the Company is required to maintain was adjusted to $215.0 million.

Failure to comply with this financial covenant would result in an event of default under our Credit Agreement unless waived by our lenders. An event of default under our Credit Agreement can result in the acceleration of our indebtedness under the facilities, which in turn would result in an event of default and possible acceleration of indebtedness under the agreements governing our debt securities as well. As of June 30, 2015, we were in full compliance with the financial covenant described above.

In February 2015, in connection with the transactions contemplated by the tender offer agreement, the Company entered into a third amendment to the Credit Agreement to permit the transactions contemplated by the tender offer agreement, including by amending the definition of “Change of Control” to permit BGC to acquire shares of the equity of the Company in excess of 35% without triggering a “Change of Control” under the Credit Agreement.

In July, 2015, GFI and BGC entered into a guarantee (the “Guarantee”) pursuant to which BGC has guaranteed the obligations of GFI under our 8.375% Senior Notes in the remaining aggregate principal amount of $240,000 and the indenture, dated as of July 19, 2011 (the “Indenture”), between GFI and The Bank of New York Mellon Trust Company, N.A., as Trustee. As discussed under the section “Credit Ratings”, the current interest rate on the 8.375% Senior Notes will be reduced effective July 19, 2015 as a result of the ratings increases following the Guarantee. The Company and BGC will share any cost savings, including interest and other costs, resulting from the credit enhancement provided by BGC.

In July, 2015 GFI’s Audit Committee authorized GFI to enter into a short-term cash loan facility from BGC to GFI consistent with the cash loan facility approved by GFI’s Audit Committee in March 2015 with respect to loans from GFI to BGC. The terms approved in March 2015 were dependent on whether GFI’s current revolving credit facility (with a current interest rate of LIBOR plus 3.25%) was currently drawn. At that time, the Audit Committee had authorized the management of GFI to enter into arrangements to loan its excess cash from time to time to BGC at an interest rate of .5% over the revolving credit line rate if the line was drawn and 1% below the revolving credit line rate if the line was not currently drawn. GFI’s Audit Committee granted the authority for BGC to lend to GFI on the same terms as GFI and that the loan balances could be netted against each other.

Credit Ratings

As of June 30, 2015, we maintained the following public long-term credit ratings:

		Rating
Moody’s Investor Services		B1
Standard & Poor’s		BB+
Fitch Ratings Inc.		BB+

Credit ratings and outlooks can be revised at any time if such rating agency decides the circumstances warrant a revision. In addition, a reduction in our rating may affect the availability of future debt financing and the terms that are available to us.

On January 18, 2013, Moody’s Investor Services (“Moody’s”) lowered its credit rating on our 8.375% Senior Notes two notches to B1, which increased our applicable per annum interest, effective January 19, 2013, by an additional 50 basis points. On April 19, 2013, Fitch lowered its credit rating on our 8.375% Senior Notes two notches to BB and revised its outlook from Stable to Negative. This credit rating downgrade by Fitch increased our applicable per annum interest, effective July 19, 2013, by an additional 50 basis points. On June 26, 2013, Standard & Poor’s (“S&P”) further lowered its credit rating on our 8.375% Senior Notes one notch to B+ and revised its outlook from Negative to Stable. This credit rating downgrade by S&P increased our applicable per annum interest by an additional 25 basis points, effective July 19, 2013.

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Pursuant to the terms of the 8.375% Senior Notes, the cumulative effect of downgrades to our credit rating by the various rating agencies during 2012 and 2013 increased the per annum interest rate on the 8.375% Senior Notes by 200 basis points over the original interest rate, which is the maximum increase permitted under the indenture. The increased interest rate equates to $4.8 million in additional interest expense per annum, based on the aggregate amount of outstanding principal as of December 31, 2014.

On June 19, 2014, S&P further lowered its credit rating on our 8.375% Senior Notes one notch to B. On June 24, 2014, Fitch further lowered its credit rating on our 8.375% Senior Notes one notch to BB-. The June 2014 downgrades did not have an impact on the per annum interest rate on our 8.375% Senior Notes, as the maximum interest rate increase permitted under the indenture has already been reached.

On July 30, 2014, Moody’s placed our 8.375% Senior Notes rating on review for upgrade following the announcement of the CME Merger. On October 23, 2014, Moody’s continued its review for upgrade following the announcement of BGC’s unsolicited conditional tender offer to purchase all outstanding shares of our common stock. On July 30, 2014, S&P placed our 8.375% Senior Notes rating on CreditWatch with positive implications following the announcement of the CME Merger. On October 29, 2014, S&P indicated its rating on our 8.375% Senior Notes remained on CreditWatch with positive implications following BGC’s unsolicited conditional tender offer to purchase all outstanding shares of our common stock. On July 31, 2014, Fitch placed our 8.375% Senior Notes rating on Rating Watch Positive following the announcement of the CME Merger. On September 11, 2014, Fitch indicated its rating on our 8.375% Senior Notes remains on Rating Watch Positive.

On February 3, 2015, Fitch further lowered its credit rating on our 8.375% Senior Notes two notches to B and placed the 8.375% Senior Notes rating on Rating Watch Evolving, following the termination of the CME Merger. On February 4, 2015, Moody’s placed our 8.375% Senior Notes rating on review for downgrade following the termination of the CME Merger. On February 5, 2015, S&P placed our 8.375% Senior Notes rating on CreditWatch Developing following the termination of the CME Merger.

On February 24, 2015, Moody’s continued its review for downgrade on our 8.375% Senior Notes after our Board of Directors unanimously agreed to support BGC’s tender offer for all of the outstanding shares of GFI common stock. On March 3, 2015, Fitch placed our 8.375% Senior Notes rating on Rating Watch Positive following the successful completion of BGC’s tender offer for GFI shares. On March 9, 2015, S&P placed our 8.375% Senior Notes rating on CreditWatch Positive following the successful completion of BGC’s tender offer for GFI shares.

On April 29, 2015, S&P raised its credit rating on our 8.375% Senior Notes four notches to BB+, and indicated its rating on our 8.375% Senior Notes remained on CreditWatch with positive implications. On May 6, 2015, Fitch increased its credit rating on our 8.375% Senior Notes four notches to BB+ and has also removed the Company’s 8.375% Senior Notes rating the from Rating Watch Positive and assigned a Positive Rating Outlook. The upgrades from both rating agencies followed the announcement that BGC purchased addition shares of GFI and gained the two-thirds ownership necessary to effect the full merger of GFI. See Note 2 of the Condensed Consolidated Financial Statements for further information on GFI’s issuance of shares to BGC. As the result of these upgrades the interest rate on our 8.375% Senior Notes will be reduced by100 basis points, effective July 19, 2015.

On July 13, 2015, S&P raised its credit rating on our 8.375% Senior Notes one notch to BBB- and assigned an outlook of Stable. In addition, on July 13, 2015, Fitch raised its credit rating on our 8.375% Senior Notes one notch to BBB- and maintained a Positive Rating Outlook. On July 17, 2015, Moody’s raised its credit rating on our 8.375% Senior Notes one notch to Ba3 and assigned an outlook of Positive. The upgrades from the rating agencies followed the announcement that BGC had guaranteed the Company’s 8.375% Senior Notes. As the result of these upgrades the interest rate on our 8.375% Senior Notes will be reduced by an additional 75 basis points, effective July 19, 2015.

The recent upgrades from the rating agencies will lower the interest rate on our 8.375% Senior Notes by an aggregate of 175 basis points to 8.625%, effective July 19, 2015.

Dividends Paid

Prior to 2008, we retained all earnings for investment in our business. In February 2008, our Board of Directors approved a policy of paying quarterly dividends, subject to available cash flow from operations, other considerations and the determination of the amount by our Board of Directors. The payment of quarterly dividends was suspended by the Company’s Board during the third quarter of 2014, in conjunction with the then-pending Amended CME Merger Agreement. Following the Company’s acquisition by BGC the payment of quarterly dividends continues to be suspended. Therefore, the Company did not pay a cash dividend during the six months ended June 30, 2015. Cash dividends paid for the six months ended June 30, 2014 were approximately $12.5 million.

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Common Stock

We may purchase additional shares of our common stock on the open market from time to time in accordance with a stock repurchase program authorized by our Board of Directors. See Note 9 to our Condensed Consolidated Financial Statements for further discussion of stock repurchases.

Contractual Obligations and Commitments

The following table summarizes certain of our contractual obligations as of June 30, 2015:

	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands)
Contractual Obligations
Operating leases	$	131,650	$	13,608	$	23,553	$	23,377	$	71,112
Short-term borrowings	50,000		50,000		—		—		—
Interest on Long-term debt (1)	79,950		23,700		45,000		11,250		—
Long-term debt	240,000		—		—		240,000		—
Purchase obligations (2)	21,411		16,211		5,176		24		—
Total	$	523,011	$	103,519	$	73,729	$	274,651	$	71,112

(1) The amounts listed under Interest on Long-term debt include a net increase to our applicable per annum interest on our 8.375% Senior Notes. The net increase is as a result of increases to our applicable per annum interest on our 8.375% Senior Notes effective as a result of downgrades to our credit rating by the various credit agencies in 2012 and 2013 and subsequent decreases to our applicable per annum interest effective as a result of upgrades to our credit rating by S&P and Fitch during the second quarter of 2015. In the event that our credit ratings are subsequently increased or decreased, the applicable per annum interest could change and the amounts disclosed in this table would change; provided, however, the applicable per annum interest rate cannot increase by more than 200 basis points over the original interest rate, which is the maximum increase permitted under the indenture. See Note 8 to the Condensed Consolidated Financial Statements for further details.

(2) The amounts listed under Purchase Obligations include agreements for quotes with various information service providers. Additionally, such amounts include purchase commitments for capital expenditures. See Note 12 to our Condensed Consolidated Financial Statements for further discussion.

We have unrecognized tax benefits (net of the federal benefit on state positions) of approximately $8.0 million, excluding interest of $1.3 million. Due to the uncertainty of the amounts to be ultimately paid as well as the timing of such payments, all liabilities for uncertain tax positions that have not been paid are excluded from the Contractual Obligations and Commitments table.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements at June 30, 2015 as defined in Item 303(A)(4)(ii) of SEC Regulation S-K.

Critical Accounting Policies and Estimates

We have disclosed in Note 3 to our Condensed Consolidated Financial Statements and in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2014 Form 10-K those accounting policies that we consider to be significant in determining our results of operations and financial condition. There have been no material changes to those policies that we consider to be significant since our 2014 Form 10-K. The accounting principles utilized by us in preparing our Condensed Consolidated Financial Statements conform in all material respects to generally accepted accounting principles in the United States of America.

Recent Accounting Pronouncements

Refer to Note 3 to our Condensed Consolidated Financial Statements for a discussion of new accounting pronouncements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our quantitative and qualitative disclosures about market risk are described in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 7A—Quantitative and Qualitative Disclosures about Market Risk” contained in the 2014 Form 10-K. Except as described below in this Form 10-Q, there have been no material changes to those market risks during the six months ended June 30, 2015.

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 British Pounds. We enter into foreign exchange forward contracts (“Foreign Exchange Derivative Contracts”) to mitigate our exposure to foreign currency exchange rate fluctuations. At June 30, 2015 and December 31, 2014, 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 Sterling weakened by 10% against the U.S. Dollar, the net impact to our net income would be a reduction of approximately $1.8 million as of June 30, 2015.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), were effective as of the end of the period covered by this report.

In addition, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated our 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 most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 12—“Commitments and Contingencies” to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated by reference herein.

ITEM 1A. RISK FACTORS

Except as set forth below, there have been no material changes in our risk factors from those disclosed in the 2014 Form 10-K. For a discussion of those risk factors affecting the Company, see “Risk Factors” in Part I, Item 1A of our 2014 Form 10-K.

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

Under our 2008 Equity Incentive Plan, we withheld shares of common stock to satisfy minimum statutory tax withholding obligations arising on the vesting and settlement of restricted stock units. When we withheld these shares, we were required to remit to the appropriate taxing authorities the market price of the shares withheld, which could have been deemed a purchase of the shares of our common stock by us on the date of withholding. Following the acquisition by BGC, the Company filed post-effective amendments to its registration statements on Form S-8 de-registering any and all securities registered under the registration statements that remained unissued pursuant to our 2008 Equity Incentive Plan. See Note 11 of the Condensed Consolidated Financial Statements for further information.

The Company did not purchase any of its common stock during the quarterly period ended June 30, 2015.

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ITEM 6. EXHIBITS

Exhibits:

Exhibit No.		Description
10.1		Non-Competition and DE Bonus Award Agreement, dated as of May 12, 2015, between BGC Partners, Inc. and Michael Gooch

10.2		Non-Competition and DE Bonus Award Agreement, dated as of May 12, 2015, between BGC Partners, Inc. and Colin Heffron

10.3		Guarantee Agreement, dated as of July 10, 2015, by and among GFI Group Inc., as Issuer, and BGC Partners, Inc., as Guarantor (incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on July 10, 2015)

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 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

32.2		Written Statement of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

(*) Filed with this Quarterly Report on Form 10-Q and included in Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Financial Condition as of June 30, 2015 and December 31, 2014, (ii) the Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2015 and 2014, (iii) the Condensed Consolidated Statements of Comprehensive Loss for the three months and six months ended June 30, 2015 and 2014, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (v) the Condensed Consolidated Statement of Changes in Stockholders’ Equity for the six months ended June 30, 2015 and (vi) Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 to be signed on its behalf by the undersigned, thereunto duly authorized, on the 10th day of August, 2015.

GFI GROUP INC.


	By:		/s/ JAMES A. PEERS
		Name:	James A. Peers
		Title:	Chief Financial Officer
			(principal financial and accounting officer)

Exhibit 10.1

NON-COMPETITION AND DE BONUS AWARD AGREEMENT

This Non-Competition and DE Bonus Award Agreement (this “Agreement”) is being executed and delivered as of May 12, 2015 by Michael Gooch (“Participant”), in favor and for the benefit of BGC Partners, Inc., a Delaware corporation (“BGCP”). For purposes of this Agreement, the term “BGCP Group” shall mean BGCP and each of its Affiliates, which shall include, without limitation, following the Offer Closing, GFI Group, Inc. (the “Company”) and any Affiliates thereof. This Agreement is being provided to Participant pursuant to the Tender Offer Agreement (as defined below). Capitalized terms not otherwise defined in the body of this Agreement are otherwise defined in Section 22 of this Agreement.

RECITALS

WHEREAS, BGCP, BGC Partners, L.P. (“Purchaser”) (an operating subsidiary of BGCP) and the Company have entered into a Tender Offer Agreement, dated as of February 19, 2015 (the “Tender Offer Agreement”), pursuant to which the parties thereto have agreed to make certain representations, warranties, covenants and agreements in connection with BGCP’s cash tender offer to purchase all of the outstanding shares of common stock of the Company (the “Offer”, and the acceptance for payment of shares of the Company’s common stock pursuant to and subject to the terms of the Offer upon expiration of the Offer, the “Offer Closing”).

WHEREAS, as of the date hereof, Participant is employed by the Company, and as a condition and mutual inducement to the Offer Closing, and to preserve the value and goodwill of, among other things, the GFI Brand being acquired by BGCP after the Offer Closing and to protect the trade secrets of the Company, the Tender Offer Agreement contemplates, among other things, that Participant and BGCP shall enter into this Agreement and that this Agreement shall become effective upon the Offer Closing.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises made herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, BGCP and Participant hereby agree as follows:

1. Effective Date. This Agreement is effective as of the date on which the Offer Closing occurs (the “Offer Closing Date”), subject to Participant’s employment with the Company on such date.

2. Determination of Distributable Earnings Bonus Pool.

(a) For purposes of this Agreement, “Distributable Earnings” for each Earnings Period shall (except as noted below) be based on the methodology described and reflected in BGCP’s quarterly or annual earnings releases, as applicable, with such releases and/or parts thereof filed with or furnished to (as the case may be) the United States Securities and Exchange Commission, used to determine what are designated “pre-tax distributable earnings” in such releases, in respect of the then most recent corresponding period (e.g., FY 2015 for Q3 and Q4 2015, and FY 2016 for Q1 and Q2 for 2016, for the first Earnings Period) as applied to the GFI Brand taken as a whole and not solely based on segment reporting (e.g., including allocations of corporate overhead such as executive management beyond any segment), and further as such results may be then further adjusted upward or downward, as applicable, to reflect: (i) any cash charges or other expenses or receipts that are not otherwise included in the calculation of Distributable Earnings that affect the cash flow of the GFI Brand (as described above) for a particular calculation period (e.g., litigation settlements), (ii) the fully-allocated cost or benefit of any employees, consultants, or independent contractors which are assigned to or moved from the GFI Brand, (iii) 50% of the amortization cost attributed to the awards pursuant to the Retention Bonus Pool established by GFI pursuant to Section 5.5(a) of the Tender Offer Agreement, (iv) cash capital charges for capital employed but only to the extent of capital in excess of that used by the GFI Brand immediately subsequent to the Offer Closing, (v) any adjustments of accruals to reflect any forfeiture, as a result of the failure to satisfy the conditions set forth in this Agreement, of a DE Bonus Award, (vi) any compensation (including deferred cash awards issued pursuant to Section 5.17 of the Tender Offer Agreement) of GFI Brand employees, consultants or independent contractors for which a charge has been taken in respect of the DE Measurement Period that is reversed in respect of the DE Measurement Period, solely to the extent that such charge was previously taken into account in respect of the DE Measurement Period for purposes of adjusting Distributable Earnings and (vii) with respect to each Earnings Period, a reduction of $5,000,000.

Distributable Earnings (A) shall include the fully allocated expenses associated with the GFI Brand taken as a whole and not solely based on segment reporting, (B) shall not include any amounts generated by the Trayport and FENICS businesses of the Company, other than the payment, if any, of net market data fees by such FENICS business to the IDB business of the GFI Brand with respect to market data as shall be produced by the IDB business of the GFI Brand and (C) shall not include any interest expense in respect of the Indenture dated as of July 19, 2011, between GFI and The Bank of New York Mellon Trust Company, N. A., as Trustee, relating to the Senior Notes due 2018, together with any supplemental indentures thereunder and including the terms and provisions of the Senior Notes due 2018.

(b) The amount of the Distributable Earnings Bonus Pool shall be determined no later than the ninetieth (90th) day after the end of the DE Measurement Period (the date of such determination, the “Determination Date”), and shall be reasonably determined by BGCP with an attestation report from BGCP’s independent auditor using agreed upon procedures that the amount of the Distributable Earnings Bonus Pool has been calculated consistent with the methodology set forth in Section 2(a).

3. DE Bonus Award Grant.

(a) Effective as of the Offer Closing, and subject to (i) Participant’s continued compliance with the terms and conditions of each of the restrictive conditions, obligations and covenants contained in Section 4 and 5 in accordance with the terms of this Agreement, and continued compliance with the terms and conditions of any other restrictive conditions, obligations and covenants (including the provision of remedies for BGCP and its Affiliates in the event that Participant fails to comply with any such conditions, obligations and covenants) that may be contained in any written employment or other written agreement duly executed by the parties thereto to which Participant is or becomes a party with BGCP or any of its Affiliates (including, without limitation, the Company) (which other conditions, obligations and covenants shall be in addition to, and not superseded by, the covenants contained in this Agreement) (all such conditions, obligations and covenants collectively, the “Covenants”), and (ii) the further terms and conditions of this Agreement, Participant is hereby granted a DE Bonus Award.

(c) Participant shall immediately forfeit his DE Bonus Award if Participant ceases to be employed by any member of the BGCP Group for any reason prior to the Determination Date, unless either (i) both the BGCP Group terminates Participant’s employment, and the Chairman of BGCP and the Chairman of the GFI Brand (or the senior executive of the GFI division) mutually agree that Participant’s termination of employment shall not result in Participant’s forfeiture of all or a portion of his DE Bonus Award, or (ii) Participant dies, in which case Participant’s estate shall remain eligible to receive a percentage of his DE Bonus Award based on the number of days of employment with the BGCP Group between the Offer Closing and the date of Participant’s death, relative to the number of days in the DE Measurement Period, provided, however, in no event shall such percentage be less than one-third of Participant’s DE Bonus Award.

(d) If Participant’s DE Bonus Award has not been forfeited prior to the Determination Date, then effective as of the first day of the first calendar quarter commencing after the Determination Date, Participant shall be granted the DE Partnership Awards, with respect to which, during the five-year period that immediately follows the Determination Date (the “Exchange Restriction Period”), such DE Partnership Awards shall be released, in equal installments on an annual basis, from the transfer and exchange restrictions otherwise applicable to such equity awards under the BGCH Partnership Agreement, in accordance with and pursuant to the terms of the BGCH Partnership Agreement, subject in all instances to Participant’s continued compliance with the Covenants through each applicable release date.

(e) In addition to the other forfeiture provisions contained in this Agreement, Participant shall immediately forfeit his DE Bonus Award and all rights to BGCH Partnership Awards upon the first to occur of any of the following events: (i) Jersey Partners, Inc. (“JPI”) fails to make an irrevocable Election during the Election Period (each such term as defined in the Tender Offer Agreement); (ii) following such Election, JPI fails to comply with all actions reasonably requested by BGCP to complete the Back-End Mergers on terms consistent with those set forth in Section 5.16 of the Tender Offer Agreement (it being agreed by BGCP that JPI shall not be required to make any representations or warranties regarding its business (as such term is defined in the Tender Offer Agreement) other than a representation and warranty by JPI that BGCP shall not assume any asset or liability of JPI or any of its Affiliates other than the Shares (as such terms are defined in the Tender Offer Agreement)) .

4. Restrictive Covenants.

(a) Participant covenants and agrees that he shall not, at all times while employed by any member of the BGCP Group, whether prior to, on or after the Determination Date, from the Offer Closing Date through the expiration of the Exchange Restriction Period, and for a period of seven (7) years following the expiration of the Exchange Restriction Period (all such periods, collectively, the “Restricted Period”), directly or indirectly, alone or by action in concert with others (including with or through any Representative):

(i) solicit, induce, or influence, or attempt to solicit, induce or influence, any partner, employee or consultant of BGCP or any of its Affiliates, or any member of the Cantor Group (as defined herein) to terminate their employment or other business arrangements with BGCP or any of its Affiliates or any member of the Cantor Group, or to engage in any Competing Business or hire, employ, engage (including as a consultant or partner) or otherwise enter into a Competing Business with any such Person;

(ii) solicit any of the customers of BGCP or any of its Affiliates, or any member of the Cantor Group (or any of their employees), induce such customers or their employees to reduce their volume of business with, terminate their relationship with or otherwise adversely affect their relationship with, BGCP or any of its Affiliates or any member of the Cantor Group;

(iii) do business (if such business would constitute a Competing Business) with any person who was a customer of BGCP or any of its Affiliates or any member of the Cantor Group during the twelve (12) month period prior to the applicable date during the Restricted Period on which a determination of whether any such activity constitutes a Competing Business is being made for purposes of this Agreement;

(iv) directly or indirectly engage in, represent in any way, or be connected with, any Competing Business, competing with the business of BGCP or any of its Affiliates or any member of the Cantor Group, whether such engagement shall be as an officer, director, owner, employee, partner, consultant, Affiliate, investor, creditor or other participant in any Competing Business;

(v) assist others in engaging in any Competing Business in the manner described in the foregoing clause (iv);

(vi) take any action that results directly or indirectly in revenues or other benefit for Participant or any third party that is or could be considered to be engaged in any activity of the nature set forth in clauses (ii) through (v) above;

(vii) make or participate in the making of (including through any of Participant’s Representatives) any comments to the media (print, broadcast, electronic or otherwise) that are disparaging regarding (A) BGCP, any member of the Cantor Group or any of their Affiliates, or (B) the senior executive officers of BGCP, any member of the Cantor Group or any of their Affiliates, or are otherwise contrary to the interests of BGCP, any member of the Cantor Group or any of their Affiliates, as determined by the General Partner in its sole and absolute discretion;

(viii) breach Participant’s duty of loyalty to the Partnership (as defined below); or

(ix) take advantage of, or provide another person with the opportunity to take advantage of, a “corporate opportunity” (as such term would apply to the Partnership if it were a corporation) including opportunities related to intellectual property, which for this purpose shall require granting BGC Partners, LLC (the “General Partner”) a right of first refusal for the General Partner to acquire any assets, stock or other ownership interest in a business being sold by Participant or any Affiliate of Participant, if an investment in such business would constitute a “corporate opportunity” (as such term would apply to the Partnership if it were a corporation), that has not been presented to and rejected by the General Partner or that the General Partner rejects but reserves for possible further action by the General Partner in writing, unless otherwise consented to by the General Partner in writing in its sole and absolute discretion; or

(x) otherwise take any action to harm, that harms, or that reasonably could be expected to harm BGCP or any of its Affiliates, or any member of the Cantor Group, including, without limitation, any breach of the provisions of Section 4(c) below.

(b) Notwithstanding the foregoing, nothing in this Section 4 shall prohibit Participant from acquiring or owning, in accordance with BGCP’s policies and procedures regarding personal securities transactions (for so long as Participant is an employee of BGCP or one of its Affiliates), less than one percent (1%) of the outstanding securities of any class of any corporation that are listed on a national securities exchange or traded in the over-the-counter market. The determination of whether Participant breaches the Covenants set forth in Section 4(a) or Section 4(c) shall be made in good faith by the Chairman of BGCP.

(i) In addition to any other obligations set forth in this Agreement, Participant recognizes that confidential information has been and will be disclosed to such Participant by the Partnership (as defined herein) and members of the BGCP Group (including but not limited to the Company and the GFI Brand). Participant expressly agrees, at all times on and after the date of this Agreement, whether or not at the time a member of the Partnership (a “Partner”) or providing services to the Partnership, any member of the BGCP Group (including, without limitation, as an employee of the Company and the GFI Brand), to (A) maintain the confidentiality of, and not disclose to any Person without the prior written consent of BGCP, any financial, legal or other advisor to BGCP, any information relating to the business, clients, affairs or financial structure, position or results of the Partnership or its Affiliates (including the Company and the GFI Brand) or any dispute that shall not be generally known to the public or the securities industry and (B) not to use such confidential information other than for the purpose of evaluating such Participant’s investment in the Partnership, if applicable, or in connection with the discharge of any duties to the Partnership or any member of the BGCP Group (including the Company and the GFI Brand) the Participant may have in such Participant’s capacity as an officer, director, employee or agent of any member of the BGCP Group (including the Company and the GFI Brand).

(ii) In the event that any third party requests information from Participant (whether during the period in which Participant is a Partner or otherwise during the Restricted Period), regarding any matter related to Participant’s employment by any member of the BGCP Group (including the Company and the GFI Brand) or Participant’s role as a Partner, as the case may be, Participant will promptly contact and notify the General Counsel of BGCP before responding to such requests for information, so that BGCP may take appropriate action to protect the Partnership’s and the BGCP Group’s interests. However, Participant shall not have any obligation to contact and notify the General Counsel of BGCP prior to any such timely discussions between Participant and his legal counsel or his certified public accountant.

(iii) In the event that Participant is subpoenaed, or asked, to testify as a witness or to produce documents in any legal or administrative or other proceeding related to the Partnership or any member of the BGCP Group (whether during the period in which Participant is a Partner or otherwise during the Restricted Period), or otherwise required by law to disclose confidential information, Participant will promptly notify the Partnership and BGCP of such subpoena or request and meet with Partnership Representatives for a reasonable period of time prior to any such appearance or production.

(iv) So long as Participant shall have complied with his obligations under clauses (ii) and (iii) of Section 4(c), if, after a reasonable period after Participant notifies the Partnership and BGCP of any request or subpoena, the Partnership and BGCP are not able to obtain a protective order or other appropriate protection of such information, then Participant may make such disclosures, notwithstanding any other restrictions contained in this Agreement.

(d) Definitions. For purposes of this Agreement, the following terms shall have the following meaning:

“Cantor Group” means, collectively, Cantor Fitzgerald, L.P., a Delaware limited partnership, its subsidiaries, and the limited and general partnerships, corporations or other entities owned, controlled by or under common control with BGCP or BGC Holdings, L.P., a Delaware limited partnership (the “Partnership”).

“Competing Business” means an activity that (w) involves the development and operations of voice, hybrid or electronic trading systems, (x) involves the conduct of the wholesale or institutional brokerage business, (y) consists of marketing, manipulating or distributing financial price or other information of a type supplied by BGCP or any of its Affiliates or any member of the Cantor Group to information distribution services or (z) competes with any other business conducted by BGCP or any of its Affiliates, or any member of the Cantor Group if such business was first engaged in by BGCP or any of its Affiliates or any member of the Cantor Group or BGCP or any of its Affiliates or any member of the Cantor Group took substantial steps in anticipation of commencing such business and prior to the applicable date during the Restricted Period that a determination of whether any such activity constitutes a Competing Business is being made for purposes of this Agreement; including, for the avoidance of doubt, on and after the Offer Closing Date, any business activity, wholly or partly, in the same or similar business operated by (including providing services or products similar to or that compete with the products and/or services offered or contemplated by) the Company and its Affiliates (including the GFI Brand), or any such business which is contemplated by the Company or its Affiliates for which the Company or any Affiliate has taken preparatory steps at the later of the Determination Date or the date Participant ceases to provide services to the BGCP Group (including without limitation the GFI Brand).

“Representatives” means, with respect to any Person, the Affiliates, directors, officers, employees, general partners, agents, accountants, managing member, employees, counsel and other advisors and representatives of such Person, including immediate family members.

5. Severability of Covenants. The Covenants contained in Section 4 shall be construed as a series of separate covenants. If, in any judicial proceeding, a court refuses to enforce any of such separate covenants (or any part thereof), then BGCP and Participant agree that such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of Section 4 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then BGCP and Participant agree that such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable law.

6. Participant Acknowledgements and Further Agreements.

(a) Participant acknowledges that (i) Participant has a substantial interest in the Company and is a key employee of the Company; (ii) the goodwill associated with the existing business, customers and assets of the Company prior to the Offer Closing is an integral component of the value of the Company to BGCP and is reflected in the consideration payable in connection with the Offer Closing; and (iii) Participant’s agreement as set forth herein is necessary to preserve the value of the Company for BGCP following the Offer Closing. Participant also acknowledges and agrees that the provisions of this Agreement, specifically including of Section 4, are reasonable in scope and duration and are necessary to protect the interests of BGCP and the Company, including, without limitation, because, among other things: (A) the Company and BGC are engaged in a highly competitive industry; (B) Participant has had unique access to the trade secrets and know-how of the Company, including, without limitation, the plans and strategy (and, in particular, the competitive strategy) of the GFI Brand; and (C) Participant believes that this Agreement provides no more protection than is reasonably necessary to protect BGCP’s legitimate interest in the goodwill, trade secrets and confidential information of the Company.

(b) Participant further acknowledges and agrees that BGCP may condition the receipt of any BGCH Partnership Award hereunder upon: (i) the execution of a release of claims against the BGCP Group, substantially in the form that Partners are required to execute pursuant to Section 12.02(k) of the BGCH Partnership Agreement; and (ii) the receipt of a certification, in form and substance reasonably acceptable to BGCP and consistent with any such certification required of any other Partner pursuant to Section 12.02(c)(vii) of the BGCH Partnership Agreement, that such Person has not engaged in any of the activities described in Section 4, and that Participant shall be liable for all damages (including any payments received in respect of any BGCH Partnership Award under the BGCH Partnership Agreement made as a result of a false certification) resulting from the inaccuracy of any such certification, consistent with the provisions of Section 12.02(c)(vii) of the BGCH Partnership Agreement. Participant further agrees that execution of this Agreement shall be deemed to constitute execution of the BGCH Partnership Agreement as a Partner, effective as of the Determination Date.

6A. Indemnification of Tender Offer Agreement Damages.

(a) Subject to terms of this Section 6A, from and after the Offer Closing Date, Participant shall indemnify, defend, save and hold harmless BGCP and its Affiliates (including GFI and its Subsidiaries), and each of the heirs, executors, successors and assigns of the foregoing (collectively, the “Indemnified Parties”), from and against (whether in connection with a third-party claim or a direct claim) any Damages to the extent resulting from, arising out of or relating to:

(i) any breach as of the Offer Closing Date of any representation or warranty (giving effect to any qualifications expressly set forth therein) of GFI set forth in the Tender Offer Agreement; and

(ii) the failure by GFI to perform any of its covenants or agreements contained in the Tender Offer Agreement to be performed as of or prior to the Offer Closing.

(b) The Parties agree that Participant shall bear only that percentage of Damages incurred by the Indemnified Parties that is equal to the aggregate percentage of outstanding common stock of GFI held by JPI as of the Offer Closing.

(c) The right to commence any claim with respect to the representations, warranties covenants and agreements set forth in the Tender Offer Agreement shall survive until the date that is three (3) months after the Offer Closing Date. Notwithstanding the foregoing, in the event written notice of any bona fide claim for indemnification under Section 6A(a) shall have been given in accordance herewith within the applicable survival period, the indemnification claim shall survive until such time as such claim is fully and finally resolved.

(d) As promptly as is reasonably practicable after becoming aware of a claim for indemnification under this Agreement, the Indemnified Party shall promptly notify Participant, in writing, indicating the nature of such claim and the basis therefor; provided, however, that any delay or failure by the Indemnified Party to give notice to the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. Such written notice (a “Claim Notice”) shall (i) indicate whether the claim for indemnification results from or arises out of a third-party claim (a “Third-Party Claim”) or a direct claim, (ii) include the facts and circumstances giving rise to such claim for indemnification, to the extent then known by the Indemnified Party and (iii) include a reference to the provisions of this Agreement in respect of which such Damages have been suffered or incurred or are expected to be suffered or incurred.

(e) The Indemnified Party shall not, without the prior consent of the Participant (such consent not to be unreasonably withheld, conditioned or delayed), settle a Third-Party Claim if the settlement imposes equitable remedies or other obligations on the Participant or requires an admission of criminal liability or culpability on the part of the Participant.

(f) In the event that any Indemnified Party shall be entitled to indemnification for any Damage pursuant to Section 6A(a), then the Indemnified Party shall be payable to an Indemnified Party solely as an offset against, or recoupment of, any amount paid or that could be payable to Participant pursuant to this Agreement, including any amount in respect of any DE Bonus Award, and Participant shall not be liable to any Indemnified Person pursuant to Section 6A(a) in amount in excess of the aggregate amount paid or that could be payable to Participant pursuant to the DE Bonus Awards.

(g) In no event shall Participant be liable to any Indemnified Person pursuant to Section 6A(a) for any speculative, exemplary, punitive damages or other damages that are not reasonably foreseeable, except to the extent included or payable in a third-party claim.

(h) In the event of any dispute or disagreement arising out of this Section 6A, the Parties agree that provisions of Section 11 shall apply.

7. Remedies. Participant and BGCP agree that any remedy at law for any breach of this Agreement is and will be inadequate, and in the event of a breach or threatened breach by Participant of any of the Covenants (to be determined in the good faith determination of the Chairman of BGCP), at any time during the Restricted Period, BGCP and its Affiliates shall be entitled to an injunction restraining Participant from breaching or otherwise violating any provision of this Agreement without proof of special damages or the posting of any bond or other security, as well as all other legal and equitable remedies. Participant agrees not to oppose the granting of injunctive or other equitable relief as a remedy and agrees to waive any requirement for the securing or posting of any bond in connection with such remedy. Nothing herein contained shall be construed as prohibiting BGCP or any of its Affiliates from pursuing any other remedies available to it for such breach or threatened breach during the Restricted Period, including, without limitation, the immediate termination by BGCP of all of Participant’s rights under this Agreement (including the forfeiture by Participant of any DE Partnership Awards delivered to Participant and immediate cessation of Participant as a Partner without consideration in respect thereof), the immediate return by Participant to BGCP of any DE Partnership Awards (or the value thereof) or cash or BGCP Shares transferred to Participant under this Agreement or the DE Partnership Awards (including pursuant to the BGCH Partnership Agreement), and the recovery of damages from Participant generally. In addition, if Participant is determined to have breached any of the Covenants at any time during the Restricted Period, Participant shall indemnify BGCP and its Affiliates for and pay any resulting attorney’s fees and expenses of BGGP and its Affiliates incurred to enforce any of the terms of this Agreement.

8. Non-Exclusivity. The rights and remedies of BGCP and its Affiliates hereunder are not exclusive of or limited by any other rights or remedies that BGCP and its Affiliates may have, whether at law, in equity, by contract or otherwise, all of which shall be cumulative (and not alternative). Without limiting the generality of the foregoing, the rights and remedies of BGCP and its Affiliates hereunder, and the obligations and liabilities of Participant hereunder, are in addition to their respective rights, remedies, obligations and liabilities under the law of unfair competition, misappropriation of trade secrets and the like. This Agreement does not limit Participant’s obligations or the rights of BGCP (or any Affiliate of BGCP) under the terms of any other agreement between Participant and BGCP (or any Affiliate of BGCP).

9. Notices. All notices, requests, claims, demands and other communications under this Agreement will be in writing and will be deemed to have been sufficiently given and delivered for all purposes when delivered by hand, by facsimile (with a written or electronic confirmation of delivery), five (5) days after being sent by certified or registered mail, postage and charges prepaid, return receipt requested, or two (2) days after being sent by overnight delivery providing receipt of delivery, to (or to such other address as may be specified by a party in writing from time to time by similar notice):

(i) if to BGCP or the Partnership, to:

BGC Partners, Inc.

499 Park Avenue

New York, NY 10022

Attn: General Counsel

Fax: (212) 829-4708

(ii) if to Participant, to the address then on file for Participant at the Company.

10. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision (or part thereof) of this Agreement shall be deemed prohibited or invalid under such applicable law, such provision (or part thereof) shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or the other provisions of this Agreement. The parties agree to replace such prohibited or void provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such prohibited or void provision.

11. Governing Law; Consent to Service of Process; Trial by Jury; Attorneys’ Fees. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of laws thereof. Any disputes, differences or controversies arising under this Agreement shall be heard solely in, and resolved by, a judge either in a court sitting in a New York County, City, or State, the State of Delaware, or in the county in which Participant’s assigned BGCP or Affiliate office is located, if such office location is outside of New York State. Wherever the dispute is resolved, Participant and BGCP agree and understand that any trial will not be before a jury, and both Participant and BGCP waive any jury trial right. To the maximum extent permitted by law, Participant and BGCP waive any right to seek any damages that are not solely compensatory in nature. This waiver includes waiver of damages that are not solely compensatory, whether special, exemplary, multiple (e.g., treble), or punitive damages or penalties, or amounts in the nature of special, exemplary, multiple, or punitive damages or penalties or by any other name. Participant and BGCP make this waiver regardless of the nature or form of the claim or grievance. If the law does not permit this waiver for a particular claim, then the law overrides this waiver, but only for a claim or damage where the law requires overriding this waiver. If an applicable statute or another agreement discusses awards of attorneys’ fees, such statute or agreement will apply. In addition, whether or not there is any such applicable statute, at any point either party may in writing offer to pay the other a stated amount of money, or partnership interests or stock in a BGC entity (the “Offeror”) to resolve the matter in return for a general release of the Offeror. The other party (“Offeree”) will have fourteen (14) calendar days from the day after the offer is sent to accept. If the Offeree does not unconditionally accept in writing within the fourteen (14) calendar days and, thereafter, is awarded less than the amount offered, the Offeror shall be awarded its attorneys’ fees and costs and disbursements from the date of the offer. Such amount shall be offset against any damages awarded to the Offeree, and, if greater than the damages awarded, the net deficit shall be entered as an award in favor of the Offeree.

12. Waiver. No failure on the part of any party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. No party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of the waiving party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

13. Entire Agreement. This Agreement, and the other agreements referred to herein, including any agreements containing Covenants, set forth the entire understanding of Participant and BGCP relating to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, between any of such parties relating to the subject matter hereof. Participant understands and agrees that he has had an opportunity to seek his own counsel in his review of this Agreement.

14. Amendments. This Agreement may not be amended, modified, altered, or supplemented other than by means of a written instrument duly executed and delivered on behalf of BGCP and Participant.

15. Assignment. This Agreement and all obligations hereunder are personal to Participant and BGCP and may not be transferred or assigned by Participant or BGCP at any time; provided, however, that BGCP may assign this Agreement or any of the rights, interests or obligations hereunder, in whole or in part, to an Affiliate or Affiliates thereof; provided that any such assignment shall not release BGCP of its obligations hereunder unless such assignment shall be made to an Affiliate having assets sufficient to satisfy BGCP’s obligations hereunder.

16. Third-Party Beneficiaries. Except as specifically provided in Section 7 above and in this Section 16, nothing in this Agreement, express or implied, is intended to or shall confer upon any person or entity, other than the Parties, any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement; provided, however, that the Parties acknowledge and agree that each of BGCP’s Affiliates, any successor in interest to BGCP or any of its Affiliates by merger, consolidation, reorganization, or otherwise, and each of their respective successors and permitted assigns are intended third party beneficiaries of this Agreement entitled to enforce the terms and conditions of this Agreement and entitled to all legal and equitable remedies in the event Participant breaches or threatens to breach, or otherwise violates, any of the Covenants or other provisions of this Agreement. For avoidance of doubt, for purposes of this Section 16, successors and permitted assigns shall be limited to those successors and permitted assigns provided for in Section 15 of this Agreement.

17. Binding Nature. This Agreement will be binding upon each of BGCP, Participant and their respective representatives, executors, administrators, estate, heirs, successors and assigns, and will inure to the benefit of BGCP and its successors and assigns.

18. Headings. The descriptive headings in this Agreement have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provision thereof or hereof.

19. Execution. This Agreement in unsigned form does not become an offer of any kind and does not become capable of acceptance until executed by Participant, and at such time, this Agreement is capable of contract formation by signature by a duly authorized officer of BGCP; this Agreement shall be effective only when executed by both Participant and a duly authorized officer of BGCP, and upon such shall be binding and enforceable. This Agreement may be executed by facsimile and .pdf and in counterparts, each of which shall be deemed an original and all of which when taken together shall constitute but one and the same instrument.

20. Miscellaneous. The DE Bonus Award shall not count toward, be substituted in lieu of, or be considered in determining, payments or benefits due to Participant under any other plan, program or agreement of BGCP or any of its Affiliates. Where applicable, grants of BGCH Partnership Awards, or any shares of BGCP Shares issued or issuable upon exchange thereof, shall be issued and administered pursuant to the BGC Participation Plan and the BGC LTIP Plan, as applicable.

21. Section 409A. This Agreement intended to comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended and the Department of Treasury Regulations and other interpretive guidelines issued thereunder (“Section 409A”), or an exemption thereto, and if the DE Bonus Award qualifies for the “short-term deferral” or “separation pay” exception it shall be paid under the applicable exception to the greatest extent possible. Notwithstanding any provision of this Agreement to the contrary, in the event that BGCP determines that any amounts payable hereunder will be immediately taxable to a Participant under Section 409A, BGCP reserves the right (without any obligation to do so or to indemnify a Participant for failure to do so) to (a) adopt such amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that BGCP determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and/or (b) take such other actions as BGCP determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder. No provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A to BGCP or any of its Affiliates, employees, or agents. Notwithstanding any provision to the contrary in this Agreement, to the extent required by Section 409A, any reference to a termination of employment shall be deemed to occur only if such termination constitutes a “separation from service” within the meaning of Section 409A, and for purposes of Section 409A, any right of a Participant who is a “specified employee” (within the meaning of Section 409A) to receive payment of deferred compensation within the meaning of Section 409A upon a separation from service shall be delayed for six months and one day, to the extent necessary for such form of payment to comply with the requirements of Section 409A.

22. Certain Definitions. As used in this Agreement, the following terms have the meanings specified in this Section 22.

(a) “Affiliate” means, with respect to any Person, at the time of determination, any other Person, whether now existing or hereafter arising, that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor or otherwise (which shall include, for the avoidance of doubt, any Subsidiary, and which after the Offer Closing shall include the Company).

(b) “BGC Holdings” means BGC Holdings, L.P.

(c) “BGC LTIP Plan” means the BGC Partners, Inc. Fifth Amended and Restated Long Term Incentive Plan, as amended from time to time.

(d) “BGC Participation Plan” means the BGC Holdings, L.P. Participation Plan, as amended from time to time.

(e) “BGCH Partnership Agreement” means that certain Agreement of Limited Partnership of BGC Holdings, amended and restated as of March 31, 2008, as amended from time to time.

(f) “BGCH Partnership Awards” means, collectively, a grant of REUs and PREUs, with the ratio of REUs and PREUs to be granted consistent with the ratio in which BGCP REUs and PREUs are distributed to BGCP senior executives based in the United States.

(g) “BGCP Shares” means shares of Class A common stock, par value $0.01 per share, of BGCP.

(h) “DE Bonus Award” means the right to receive a grant of a number of BGCH Partnership Awards.

(i) “DE Bonus Award Amount” means the gross amount (in U.S. dollars) equal to the product of (x) a Participant’s DE Bonus Pool Percentage and (y) the Distributable Earnings Bonus Pool.

(j) “DE Bonus Pool Percentage” means the percentage of the Distributable Earnings Bonus Pool that is allocated to a Participant as set forth on the signature page hereto.

(k) “DE Measurement Period” means the thirty-six (36)-calendar month period beginning on July 1, 2015.

(l) “Distributable Earnings Bonus Pool” will be an amount equal to one times the average of the annual Distributable Earnings of the GFI Brand for the Earnings Periods.

(m) “Earnings Period” means each of the three successive twelve (12)-month periods, with the first such period beginning on July 1, 2015.

(n) “GFI Brand” means, as applicable, (a) the IDB Business or (b) the IDB Business operating as a GFI-branded division of Purchaser or an Affiliate of Purchaser.

(o) “IDB Business” means the inter-dealer brokerage business, as conducted by the Company and the Company’s Subsidiaries.

(p) “Person” means individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, governmental entity or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

(q) “PREU” means a partnership unit of BGC Holdings designated as a PREU issued pursuant to and in accordance with the terms of the BGCH Partnership Agreement, the BGC Participation Plan and any applicable award agreement thereunder.

(r) “REU” means a partnership unit of BGC Holdings designated as an REU, issued pursuant to and in accordance with the terms of the BGCH Partnership Agreement, the BGC Participation Plan and any applicable award agreement thereunder.

(s) “Securities” means, with respect to any Person, any series of common stock or preferred stock, any ordinary shares or preferred shares and any other equity securities, capital stock, partnership, membership or similar interest of such Person, and any securities that are convertible, exchangeable or exercisable into any such stock or interests, however described and whether voting or non-voting.

(t) “Subsidiary” (and with the correlative meaning “Subsidiaries”), when used with respect to any Person, means any other Person, whether incorporated or unincorporated, of which (i) more than 50% of the Securities or other ownership interests or (ii) Securities or other interests having by their terms power to elect or appoint more than 50% of the board of directors or others performing similar functions with respect to such corporation or other organization, is directly owned or controlled by such Person or by any one or more of its Subsidiaries.

[Signature Page Follows]

In witness whereof, the undersigned have executed this Agreement as of the date first above written.

	BGCP PARTNERS, INC.


	By:
		Name:
		Title:



	PARTICIPANT



	Michael Gooch

DE Bonus Pool Percentage: 35%

[Signature Page to Non-Competition and DE Bonus Award Agreement

between Michael Gooch and BGC Partners, Inc., dated as of May 12, 2015]

Exhibit 10.2

NON-COMPETITION AND DE BONUS AWARD AGREEMENT

This Non-Competition and DE Bonus Award Agreement (this “Agreement”) is being executed and delivered as of May 12, 2015 by Colin Heffron (“Participant”), in favor and for the benefit of BGC Partners, Inc., a Delaware corporation (“BGCP”). For purposes of this Agreement, the term “BGCP Group” shall mean BGCP and each of its Affiliates, which shall include, without limitation, following the Offer Closing, GFI Group, Inc. (the “Company”) and any Affiliates thereof. This Agreement is being provided to Participant pursuant to the Tender Offer Agreement (as defined below). Capitalized terms not otherwise defined in the body of this Agreement are otherwise defined in Section 22 of this Agreement.

RECITALS

AGREEMENT

2. Determination of Distributable Earnings Bonus Pool.

3. DE Bonus Award Grant.

(b) Participant’s DE Bonus Award will include the number of BGCH Partnership Awards equal to (i) the DE Bonus Award Amount, divided by (ii) the arithmetic average of the daily volume-weighted average trading price of one BGCP Share on the NASDAQ (or any other securities exchange on which BGCP Shares are listed) during the regular trading session (and excluding pre-market and after-hours trading) over the ten (10) trading days immediately preceding July 1, 2018 (such resulting number of BGCH Partnership Awards that shall be granted shall be Participant’s “DE Partnership Awards”). On or promptly after the date on which this Agreement is fully executed, Participant shall receive an advance in respect of Participant’s DE Bonus Award in an amount equal to $5,000,000 (the “Advance Amount”), in the form of a forgivable note, subject to Participant’s prior execution of such note in the form attached hereto as Annex A (the “Note”), on terms consistent with those used for other employees of BGCP entities, which shall include the following terms: (i) the net amount Participant shall receive in cash will be equal to $3,750,000 (the “Net Amount”), (ii) such Note shall be forgiven on October 1, 2018, subject to (x) Participant’s continued employment with, and neither having given nor received notice of termination of employment with respect to, BGCP or an Affiliate thereof through such date and (y) Participant’s compliance with all obligations under this Agreement, the BGCH Partnership Agreement, and Participant’s employment agreement with the Company and Purchaser, including the Covenants, through such date, (iii) if such Note is forgiven pursuant to its terms, and the aggregate amount of all income and payroll taxes required to be withheld exceeds $1,250,000, then an amount equal to such excess (the “Excess Withholding Amount”) shall be deducted from Participant’s DE Bonus Award, and (iv) in the event of a breach by Participant of any Covenant or the BGCH Partnership Agreement after such Note has been forgiven, then Participant shall be obligated to repay BGCP or any Affiliate thereof an amount equal to the sum of (x) the Net Amount and (y) the amount of the tax benefit to Participant as a result of such repayment, if any (it being understood that Participant shall be obligated to claim a deduction in respect of such repayment if Participant is permitted to do so under applicable tax laws).

Such Note shall facilitate collection by BGCP or its Affiliate of the Advance Amount in the event of a breach by Participant of any Covenant or the BGCH Partnership Agreement, in addition to all other remedies for any such breach as otherwise provided in this Agreement or otherwise.

(c) Participant shall forfeit his DE Bonus Award if his employment is terminated by the Company for Cause (as defined in Participant’s employment agreement with the Company and BGC Partners, L.P. dated as of April 30, 2015) or by him for any reason, in each case prior to the Determination Date. For the avoidance of doubt, Participant shall not forfeit his DE Bonus Award merely as a result of a termination of his employment under other circumstances not described in the immediately prior sentence, provided, however, that, in all cases, Participant’s right to the DE Bonus Award remains subject to the other eligibility or forfeiture provisions contained in Sections 3, 6, and 7 of this Agreement and any related agreements and provisions referenced therein (including, without limitation, any restrictive covenants).

4. Restrictive Covenants.

(a) Participant covenants and agrees that he shall not, at all times while employed by any member of the BGCP Group, whether prior to, on or after the Determination Date, but in any event through the Determination Date and for a period of seven (7) years following the later of the Determination Date or the termination of Participant’s employment with the BGCP Group for any reason, which 7-year period, for the avoidance of doubt, may commence during or after the Exchange Restriction Period, (all such periods, collectively, the “Restricted Period”), directly or indirectly, alone or by action in concert with others (including with or through any Representative):

(v) assist others in engaging in any Competing Business in the manner described in the foregoing clause (iv);

(viii) breach Participant’s duty of loyalty to the Partnership (as defined below);

(d) Definitions. For purposes of this Agreement, the following terms shall have the following meaning:

6. Participant Acknowledgements and Further Agreements.

Without limiting the generality of the foregoing, the rights and remedies of BGCP and its Affiliates hereunder, and the obligations and liabilities of Participant hereunder, are in addition to their respective rights, remedies, obligations and liabilities under the law of unfair competition, misappropriation of trade secrets and the like. This Agreement does not limit Participant’s obligations or the rights of BGCP (or any Affiliate of BGCP) under the terms of any other agreement between Participant and BGCP (or any Affiliate of BGCP).

(i) if to BGCP or the Partnership, to:

BGC Partners, Inc.

499 Park Avenue

New York, NY 10022

Attn: General Counsel

Fax: (212) 829-4708

(ii) if to Participant, to the address then on file for Participant at the Company.

14. Amendments. This Agreement may not be amended, modified, altered, or supplemented other than by means of a written instrument duly executed and delivered on behalf of BGCP and Participant.

15. Assignment. This Agreement and all obligations hereunder are personal to Participant and BGCP and may not be transferred or assigned by Participant or BGCP at any time; provided, however, that BGCP may assign this Agreement or any of the rights, interests or obligations hereunder, in whole or in part, to an Affiliate or Affiliates thereof; provided that any such assignment shall not release BGCP of its obligations hereunder unless such assignment shall be made to an Affiliate having assets sufficient to satisfy BGCP’s obligations hereunder.

22. Certain Definitions. As used in this Agreement, the following terms have the meanings specified in this Section 22.

(b) “BGC Holdings” means BGC Holdings, L.P.

(c) “BGC LTIP Plan” means the BGC Partners, Inc. Fifth Amended and Restated Long Term Incentive Plan, as amended from time to time.

(d) “BGC Participation Plan” means the BGC Holdings, L.P. Participation Plan, as amended from time to time.

(e) “BGCH Partnership Agreement” means that certain Agreement of Limited Partnership of BGC Holdings, amended and restated as of March 31, 2008, as amended from time to time.

(g) “BGCP Shares” means shares of Class A common stock, par value $0.01 per share, of BGCP.

(h) “DE Bonus Award” means the right to receive a grant of a number of BGCH Partnership Awards.

(i) “DE Bonus Award Amount” means the gross amount (in U.S. dollars) equal to the product of (x) a Participant’s DE Bonus Pool Percentage and (y) the Distributable Earnings Bonus Pool, less the sum of (A) the Advance Amount and (B) if the Note is forgiven pursuant to its terms as described in Section 3(b) above, the Excess Withholding Amount, if any.

(j) “DE Bonus Pool Percentage” means the percentage of the Distributable Earnings Bonus Pool that is allocated to a Participant as set forth on the signature page hereto.

(k) “DE Measurement Period” means the thirty-six (36)-calendar month period beginning on July 1, 2015.

(l) “Distributable Earnings Bonus Pool” will be an amount equal to one times the average of the annual Distributable Earnings of the GFI Brand for the Earnings Periods.

(m) “Earnings Period” means each of the three successive twelve (12)-month periods, with the first such period beginning on July 1, 2015.

(n) “GFI Brand” means, as applicable, (a) the IDB Business or (b) the IDB Business operating as a GFI-branded division of Purchaser or an Affiliate of Purchaser.

(o) “IDB Business” means the inter-dealer brokerage business, as conducted by the Company and the Company’s Subsidiaries.

[Signature Page Follows]

In witness whereof, the undersigned have executed this Agreement as of the date first above written.

	BGCP PARTNERS, INC.


	By:
		Name:
		Title:



	PARTICIPANT



	Colin Heffron

DE Bonus Pool Percentage: 35%

[Signature Page to Non-Competition and DE Bonus Award Agreement
between Colin Heffron and BGC Partners, Inc., dated as of May 12, 2015]

Exhibit 31.1

Certification

I, Howard W. Lutnick, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of GFI Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2015

/s/ HOWARD W. LUTNICK
Howard W. Lutnick
Chairman of the Board and Chief Executive Officer

Exhibit 31.2

Certification

I, James A. Peers, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of GFI Group Inc.;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2015

/s/ JAMES A. PEERS
James A. Peers
Chief Financial Officer

Exhibit 32.1

Certification of Chief Executive Officer of GFI Group Inc.

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of GFI Group Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard W. Lutnick, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2015

/s/ HOWARD W. LUTNICK
Howard W. Lutnick
Chairman of the Board and Chief Executive Officer

Exhibit 32.2

Certification of Chief Financial Officer of GFI Group Inc.

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of GFI Group Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James A. Peers, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2015

/s/ JAMES A. PEERS
James A. Peers
Chief Financial Officer

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Form 10-Q GFI Group Inc. For: Jun 30

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