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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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.

Table of Contents

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

GFI Group Inc. 10-Q