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ITG Reports Third Quarter 2004 Results

NEW YORK, NY, October 28, 2004 - Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based equity trading services, today announced that for the third quarter ended September 30, 2004, revenues were $86.3 million, net income was $10.6 million and diluted earnings per share were $0.25.

To ensure a clear understanding of these financial results, we are separately identifying certain non-recurring items pertaining to an unrealized gain on a security owned subsequent to its initial public offering, an asset impairment write-down, employee separation and lease abandonment costs. Excluding these items, third quarter 2004 revenues were $84.2 million with net income of $11.3 million and earnings per share of $0.27.

Commencing with the third quarter of 2004, the Company's clearing agent has adopted a calendar end of quarter for reporting periods, replacing its past practice of using the last Friday of the month for the first three quarters of each calendar year. As a result, there were 67 trading days in the third quarter of 2004 compared to 63 trading days in last year's comparable period. There will be 64 trading days in the fourth quarter of 2004 vs. 66 in 2003.

Revenues per trading day versus last year's third quarter grew 33% for Client Site Trading Products while declining 34% for POSIT and 7% for the Electronic Trading Desk. Compared to this year's second quarter, revenues per trading day increased 1% for Client Site Trading Products and declined 6% for POSIT and 4% for the Electronic Trading Desk.

"Overall, ITG's U.S. domestic volumes outperformed the market, with an encouraging pick up in volumes in September following the market's weak summer," said Raymond Killian, who returned from retirement in September to serve again as ITG's President and Chief Executive Officer. "We are undertaking a fundamental strategic review of the business and believe that there are a number of good opportunities for ITG to better position itself for future growth."

ITG's International business recorded revenues for the third quarter of $18.2 million, which reflects a 9% increase in revenues per trading day compared to last year's third quarter. These revenues of $18.2 million and pre-tax earnings of almost $1.0 million compared to revenues of $15.7 million and a pre-tax loss of $700,000 in 2003. Earnings per share were $0.01 for our International business in the third quarter of 2004, compared to a loss of $0.02 in the third quarter of 2003.

"We continue to enjoy good growth in our International business and are beginning to see a positive earnings stream with our first ever after tax operating profit for the third quarter" said Mr. Killian. "We achieved record pre-tax operating earnings in Europe, continued our consistent earnings stream in Canada and, for the third consecutive quarter, earned a small profit in our combined Australian/Asian operations."

In the U.S., ITG's trading volume for the third quarter of 2004 was 5.3 billion shares (averaging 79.0 million shares per trading day) compared to 5.0 billion shares in the third quarter of 2003 (averaging 79.6 million shares per trading day) and 5.0 billion in the second quarter of 2004 (averaging 80.8 million shares per trading day).

For ITG overall, pre-tax margins for the third quarter were 22.0% excluding non-recurring items, compared to 22.7% in 2003.

Year-to-Date Results

For the nine months ended September 30, 2004, revenues decreased 1% to $244.9 million, net income decreased 4% to $28.3 million and diluted earnings per share increased 6% to $0.66. Excluding non-recurring items, revenues decreased 3% to $240.4 million, net income decreased 7% to $27.5 million and diluted earnings per share increased 3% to $0.64.

Conference Call

ITG has scheduled a conference call today at 11:00 a.m. ET to discuss third quarter results. Those wishing to listen to the call should dial 1-800-475-3716 at least 10 minutes prior to the start of the call to ensure connection. A listen-only webcast will also be available on ITG's website at http://www.itginc.com/investor. For those unable to listen to the live broadcast of the call, a week-long replay will be available by dialing 1-888-203-1112 and entering the pass code 845536, and a two week-long replay will be available on ITG's website starting approximately 3 hours after the completion of the call.

About ITG

ITG is headquartered in New York with offices in Boston, Los Angeles, Dublin, Hong Kong, London, Melbourne, Sydney, Tel Aviv and Toronto. As a leading provider of technology-based equity-trading services and transaction research to institutional investors and brokers, ITG services help clients to access liquidity, execute trades more efficiently, and make better trading decisions. ITG generates superior trading results for its clients through three lines of business. POSIT, the world's largest equity matching system, allows clients to trade confidentially. The Electronic Trading Desk is recognized as one of the leading program trading operations in the U.S. ITG's leading-edge Client-Site Trading Products allow users to implement their own trading strategies by providing direct electronic access to most sources of market liquidity. For additional information, visit http://www.itginc.com.

In addition to historical information, this press release may contain "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995, that reflect management's expectations for the future. A variety of important factors could cause results to differ materially from such statements. These factors include the company's ability to achieve expected future levels of sales; the actions of both current and potential new competitors; rapid changes in technology; financial market volatility; general economic conditions in the United States and elsewhere; evolving industry regulation; cash flows into or redemption from equity funds; effects of inflation; customer trading patterns; and new products and services. These and other risks are described in greater detail in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and other documents filed with the Securities and Exchange Commission and available on the company's web site.

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