GFI Group (GFIG)

Year ended December 31, 2006 Compared to the Year Ended December 31, 2005

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Revenues



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Total revenues for Brokerage increased by $181.9 million or 38.9%, to $649.7 million for the year ended December 31, 2006 from $467.8 million for the year ended December 31, 2005. The increase in revenues was attributable to an increase in revenues generated from our four product areas. The factors that contributed to the increase in these product areas include the overall growth in the credit derivatives markets, the development of new products, our operations in the Paris office the full year impact of the acquisition of our Starsupply business, as well as the acquisition of the North American operations of Amerex Energy in the fourth quarter of 2006.



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Revenues for All Other primarily consisted of revenues generated from our brokerage operations in Asia and analytics and market data. Total revenues for All Other increased to $97.4 million for the year ended December 31, 2006 from $65.8 million for the year ended December 31, 2005. Revenues for our Asia brokerage operations increased by $21.9 million or 56.6%, to $60.6 million for the year ended December 31, 2006 from $38.7 million for the year ended December 31, 2005. Revenues for our analytics and market data increased by $1.3 million or 7.5%, to $18.7 million for the year ended December 31, 2006 from $17.4 million for the year ended December 31, 2005. The increase was primarily due to an increase in subscription fees for market data products and the licensing of analytical software, including Fenics Foreign Exchange.



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Expenses



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Total expenses for Brokerage increased by $133.6 million or 42.6%, to $447.3 million for the year ended December 31, 2006 from $313.7 million for the year ended December 31, 2005. The increase was primarily due to an increase in compensation and employee benefits, communications and market data, travel and promotion and clearing fees. See above for

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Consolidated Expenses for further discussion on these areas. Also see below for other expenses that were not allocated to the segments.

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Total expenses for All Other increased by $62.5 million or 46.1%, to $198.1 million for the year ended December 31, 2006 from $135.6 million for the year ended December 31, 2005. The increase was primarily due to an increase in rent and occupancy, depreciation and amortization, interest and other expenses. Additionally, we did not allocate these expenses and the provision for income taxes to the individual segment for internal reporting purposes, as we did not believe that allocating these expenses were beneficial in evaluating segment performance.

Year ended December 31, 2006 Compared to the Year Ended December 31, 2005

•

Revenues








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Total
revenues for Brokerage increased by $181.9 million or 38.9%, to $649.7 million for the year ended December 31, 2006 from $467.8 million for
the year ended December 31, 2005. The increase in revenues was attributable to an increase in revenues generated from our four product areas. The factors that contributed to the increase in
these product areas include the overall growth in the credit derivatives markets, the development of new products, our operations in the Paris office the full year impact of the acquisition of our
Starsupply business, as well as the acquisition of the North American operations of Amerex Energy in the fourth quarter of 2006.




•

Revenues
for All Other primarily consisted of revenues generated from our brokerage operations in Asia and analytics and market data. Total revenues for All Other increased
to $97.4 million for the year ended December 31, 2006 from $65.8 million for the year ended December 31, 2005. Revenues for our Asia brokerage operations increased by
$21.9 million or 56.6%, to $60.6 million for the year ended December 31, 2006 from $38.7 million for the year ended December 31, 2005. Revenues for our analytics and
market data increased by $1.3 million or 7.5%, to $18.7 million for the year ended December 31, 2006 from $17.4 million for the year ended December 31, 2005. The
increase was primarily due to an increase in subscription fees for market data products and the licensing of analytical software, including Fenics Foreign Exchange.







•

Expenses








•

Total
expenses for Brokerage increased by $133.6 million or 42.6%, to $447.3 million for the year ended December 31, 2006 from $313.7 million for
the year ended December 31, 2005. The increase was primarily due to an increase in compensation and employee benefits, communications and market data, travel and promotion and clearing fees.
See above for

55

Consolidated
Expenses for further discussion on these areas. Also see below for other expenses that were not allocated to the segments.










•

Total
expenses for All Other increased by $62.5 million or 46.1%, to $198.1 million for the year ended December 31, 2006 from $135.6 million for
the year ended December 31, 2005. The increase was primarily due to an increase in rent and occupancy, depreciation and amortization, interest and other expenses. Additionally, we did not
allocate these expenses and the provision for income taxes to the individual segment for internal reporting purposes, as we did not believe that allocating these expenses were beneficial in evaluating
segment performance.

Year ended December 31, 2006 Compared to the Year Ended December 31, 2005

Net income for the year ended December 31, 2006 was $61.1 million as compared to net income of $48.1 million for the year ended December 31, 2005, an increase of $13.0 million or approximately 27.0%. Total revenues increased by $213.6 million, or 40.0%, to $747.2 million for the year ended December 31, 2006 from $533.6 million for the prior year. Our increased revenues were primarily due to increased brokerage revenues across each of our product categories. Total expenses increased by $196.1 million, or 43.6% to $645.4 million for the year ended December 31, 2006 from $449.3 million for the prior year. Expenses increased primarily because of increased compensation expense for the year ended December 31, 2006, which was attributable to an increase in performance-based bonus expense as a result of higher revenues, as well as higher sign-on bonus expense.

Nine Months Ended September 30, 2006 Compared to the Nine Months Ended September 30, 2005

Net income for the nine months ended September 30, 2006 was $47.7 million as compared to net income of $36.7 million for the nine months ended September 30, 2005, an increase of $11.0 million or approximately 30.0%. Total revenues increased by $159.8 million, or 40.6%, to $553.1 million for the nine months ended September 30, 2006 from $393.3 million compared to the same period from the prior year. Our increased revenues were partially due to the continued growth in our brokerage personnel headcount in each of our product categories and organic growth in existing businesses. In addition, our increased revenues were also attributable to the acquisition of companies or desks, or the opening of desks in developing product areas. Our total brokerage personnel headcount increased by 163 to 827 employees at September 30, 2006 from 664 employees at September 30, 2005. Total expenses increased by $144.5 million, or 44.1% to $472.3 million for the nine months ended September 30, 2006 from $327.8 million for the same period from the prior year. Expenses increased primarily due to a higher number of brokerage personnel as compared with the corresponding period in 2005 and the resulting increase in performance related brokerage bonuses.

Six Months Ended June 30, 2006 Compared to the Six Months Ended June 30, 2005

Net income for the six months ended June 30, 2006 was $31.1 million as compared to net income of $25.8 million for the six months ended June 30, 2005, an increase of $5.3 million or approximately 20.5%. Total revenues increased by $110.6 million, or 42.1%, to $373.2 million for the six months ended June 30, 2006 from $262.6 million compared to the same period from the prior year. Our increased revenues were primarily due to increased brokerage revenues resulting from the continued growth in our brokerage personnel headcount in each of our product categories either through organic growth in existing businesses, the acquisition of companies or desks, or the opening of desks in developing product areas. Our total brokerage personnel headcount increased by 199 to 828 at June 30, 2006 from 629 at June 30, 2005. Total expenses increased by $103.1 million, or 47.6% to $319.6 million for the six months ended June 30, 2006 from $216.5 million for the same period from the prior year. Expenses increased primarily due to a higher number of brokerage personnel as compared with the corresponding period in 2005 and the resulting increase in performance related brokerage bonuses.

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Three Months Ended March 31, 2006 Compared to the Three Months Ended March 31, 2005

Net income for the three months ended March 31, 2006 was $17.0 million as compared to net income of $9.2 million for the three months ended March 31, 2005, an increase of $7.8 million or approximately 84.8%. Total revenues increased by $63.3 million, or 51.8%, to $185.6 million for the three months ended March 31, 2006 from $122.3 million compared to the same period from the prior year. Our increased revenues were primarily due to increased brokerage revenues resulting from the continued growth in our brokerage personnel headcount in each of our product categories. Our total brokerage personnel headcount increased by 211 to a total of 808 at March 31, 2006 from 597 at March 31, 2005. Total expenses increased by $50.6 million, or 47.9% to $156.3 million for the three months ended March 31, 2006 from $105.7 million for the same period from the prior year. Expenses increased primarily due to a higher number of brokerage personnel as compared with the corresponding period in 2005 and the resulting increase in performance related brokerage bonuses.

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