<PAGE>

                                                                  EXHIBIT (A)(2)

                            BKF CAPITAL GROUP, INC.

                             LETTER OF TRANSMITTAL

PARTICIPATION INSTRUCTIONS:

          COMPLETE THIS FORM, INCLUDING EXHIBIT A ATTACHED HERETO, SIGN IT, AND
     SEND IT, ALONG WITH AN EXECUTED DEFERRED STOCK AWARD AGREEMENT, TO NORRIS
     NISSIM IN PERSON OR BY MAIL TO BKF CAPITAL GROUP, INC., ATTN: NORRIS
     NISSIM, ONE ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020, THIS FORM MUST
     ARRIVE BEFORE 11:59 P.M., EASTERN STANDARD TIME, ON JANUARY 10, 2003. IF
     YOU ELECT TO DELIVER YOUR SIGNED LETTER OF TRANSMITTAL BY MAIL, THE COMPANY
     RECOMMENDS THAT YOU USE REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. FOR
     ANY METHOD USED, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE TIMELY
     DELIVERY.

     Name of Participant:
     ---------------------------------------------------------------------------

     Social Security Number:
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     I am a participant in the BKF Capital Group, Inc. 1998 Incentive
Compensation Plan (the "Plan") and currently employed by BKF Capital Group, Inc.
(the "Company"), or one of its subsidiaries. I have received and read the Offer
to Exchange from BKF Capital Group, Inc., and I am eligible to participate in
the offer described therein. I understand that I may elect to exchange the
eligible options (as defined in the Offer to Exchange) that were granted to me
under the Plan. I also understand that if I exchange any of my eligible options,
I must exchange all eligible options granted to me under the Plan. In return,
for the eligible options that I elect to exchange and that the Company accepts
for exchange, the Company will grant me shares of deferred stock, also referred
to as restricted stock units, each of which, as described further in the Offer
to Exchange, represents the right to receive one share of the Company's common
stock, PROVIDED THAT I AM STILL EMPLOYED BY THE COMPANY OR ONE OF ITS
SUBSIDIARIES ON THE OFFER'S EXPIRATION DATE. The number of restricted stock
units that I receive will be determined by dividing the number of eligible
options that I tendered by 3.0 and rounding the result to the nearest whole
share. The restricted stock units shall vest and be delivered as set forth in
the Offer to Exchange and are subject to forfeiture.

     I recognize that, under certain circumstances stated in the Offer to
Exchange, the Company may terminate or amend the offer and postpone its
acceptance and cancellation of any options elected for exchange. In any such
event, I understand that the options elected for exchange pursuant to this
Letter of Transmittal but not accepted for exchange will be returned to me.

     I have reviewed the list of all of my eligible options that the Company has
attached as Exhibit A to this Letter of Transmittal. I hereby give up my entire
ownership interest in all of my eligible options as set forth on Exhibit A, and
I understand that such options will become null and void on the date the Company
accepts my options for exchange. I acknowledge that this election is entirely
voluntary. I ALSO ACKNOWLEDGE THAT I WILL BE UNABLE TO REVOKE THE ELECTION
DESCRIBED IN THIS LETTER OF TRANSMITTAL AFTER 11:59 P.M., EASTERN STANDARD TIME,
ON JANUARY 10, 2003.

                 PLEASE TURN TO EXHIBIT A ON THE FOLLOWING PAGE
<PAGE>

                                                                       EXHIBIT A

[Insert Participant Name]

     I hereby make the following election with regard to all of my eligible
options granted under the Plan:

     - If you wish to ACCEPT this offer with respect to all of your eligible
       options set forth below, please check the box below.

     - If you do not wish to accept this offer with respect to all of your
       eligible options set forth below, do NOT check the box below. Your
       eligible options will NOT be exchanged for restricted stock units and you
       will retain your eligible options.

<Table>
<Caption>
----------------------------------------------------------------------------------------------
                                 SUMMARY OF ELIGIBLE OPTIONS
----------------------------------------------------------------------------------------------
          GRANT DATE                    EXERCISE PRICE            NUMBER OF ELIGIBLE OPTIONS
----------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
          12/13/2001                        $28.27
----------------------------------------------------------------------------------------------
</Table>

Check box to ACCEPT this offer   [ ]

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Signature of Holder

Print Name:
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Home Telephone: (   )
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Date:
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Address:
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