99047--8/6/2007--NYFIX

related topics

{financial, litigation, operation}

{system, service, information}

{stock, price, share}

{regulation, government, change}

{capital, credit, financial}

{customer, product, revenue}

{cost, regulation, environmental}

{product, market, service}

{tax, income, asset}

{control, financial, internal}

{personnel, key, retain}

RISKS RELATED TO OUR BUSINESS We have been unprofitable in the past and we may not be profitable in the future. If we are required to record an impairment charge relating to our goodwill because we are not profitable, and such charge is sufficiently large, the impact on our consolidated financial statements could be material. We are highly reliant upon our computer and other electronic systems. A significant power or telecommunications failure, computer virus, increased order volume, software defects, or human error could cause us and our clients to lose revenue and subject us to liability for client losses. A slowdown in the operations of such services could also materially adversely affect our business and our clients. We depend on a limited number of network equipment and telecommunications suppliers and do not have supply contracts. Our inability to obtain necessary network equipment, technical support or other telecommunications services or being forced to pay higher prices for such equipment, support or services could materially adversely affect our business. We are subject to rapid changes in technology which could impact our profitability and our ability to compete effectively. Our clients may develop in-house networks or use network providers other than NYFIX and divert part or all of their data communications from our networks to their networks, which could have a material adverse effect on our business. A decline in subscription and maintenance revenue, our largest source of revenue, or transaction revenue, could have a material adverse effect on our business. We are exposed to clearance, settlement and credit risk that could materially adversely affect our business. Our ability to maintain or expand our brokerage business could be adversely impacted if we do not continue to have third-party assistance to access exchanges and other important trading venues. Our clients may not approve our broker-dealer subsidiaries as counterparties if we are unable to maintain certain levels of capital, fail to file our periodic reports in a timely fashion, fail to obtain Nasdaq relisting, or are the subject of charges resulting from the SEC and DOJ investigations, and we may not be able to expand into other securities businesses without increased capital. Our broker-dealer subsidiaries are at risk if their clients default on their trading obligations. The cost structure of our OMS business could negatively impact our profitability if large clients discontinue using our services. We might not be able to accommodate increased levels of trading activity and keep current with market data requirements. Regulation NMS and MiFID could significantly alter the market structure and the volume of trading of equities in the U.S. and in the EU which would adversely affect us if we are unable to provide competitive performance, functionality, and capacity. Our business could be adversely affected by our inability to attract and retain talented employees, including senior management professionals and software developers. If Warburg Pincus converts the Series B Preferred Stock and exercises the Warrant held by it, it could potentially acquire effective voting control of us. Its interests may or may not be aligned with those of our other stockholders. RISKS RELATING TO RESTATEMENTS AND RELATED PENDING LEGAL PROCEEDINGS Our internal review of our historical financial statements, the restatement of our consolidated financial statements, investigations by the SEC and related events have had, and will continue to have, a material adverse effect on us. We are the subject of several legal and administrative proceedings relating to our granting of stock options to certain of our employees, officers and directors. We are unable to predict the outcome of these proceedings and can give no assurances that the outcome of these proceedings will not have a material impact on us or that other proceedings will not be initiated. Many members of our senior management team and our Board of Directors have been and will be required to devote a significant amount of time on matters relating to the continuing SEC investigation, the restatement, our outstanding periodic reports, remedial efforts and related litigation. We have material weaknesses in our internal control over financial reporting, which could adversely affect our ability to report our financial condition and results of operations accurately and on a timely basis. Our stock is currently delisted from the Nasdaq National Market quotation system and the public float and trading volume of our common stock is limited. Our stock price may decline if current and former employees exercise outstanding options and sell the underlying shares in the market. RISKS RELATING TO THE BROKER-DEALER INDUSTRY REGULATIONS The securities brokerage industry is subject to extensive government and other regulation. If NYFIX Millennium, NTS, NYFIX Clearing or NYFIX International fail to comply with these regulations, they may be subject to disciplinary or other action by regulatory organizations. Changes in such regulations could increase our compliance costs. Our failure to meet Net Capital Rule Requirements, or adverse changes in the Net Capital rules, could restrict our business operations.

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99047--8/6/2007--NYFIX_INC