ITG Reports Third Quarter Revenues Per Trading Day - Revenues Per Day Increase 28%

New York, October 16, 2001— 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, 2001, revenues rose 20% over third quarter 2000 levels to $90.8 million, net income increased 3% to $15.9 million and diluted earnings per share were $0.49 in both periods. Last year's third quarter revenues included a non-operating gain of $2.3 million, or $0.04, from the sale of the remaining shares that ITG held in Versus Technologies, Inc.

ITG's revenues per trading day were up 28% to a record $1.54 million per day compared to $1.20 million per day in last year's third quarter.

ITG estimates that third quarter diluted earnings per share were reduced by approximately $0.11 due to the events of September 11. The primary impacts were ITG's contributions to The New York Times 9/11 Neediest Fund and the four-day closure of U.S. financial markets, which reduced the number of trading days in third quarter 2001 to 59 compared to 63 trading days in third quarter 2000.

Adding the 11-cent impact to third quarter 2001 results yields adjusted diluted earnings per share of $0.60, 22% above the comparable prior year period as reported and 33% above the prior year period excluding last year's non-operating gain on the Versus transaction.

“Our unique trading technology business model has performed strongly this year,” said Raymond L. Killian, Jr., ITG's Chairman, President and Chief Executive Officer. “Our daily trading volumes were robust in the two months of weak market volumes leading up to September 11 and have resumed their strong pace in recent weeks. The diversification built into our model continues to allow us to capture revenues under a variety of market conditions, both in the U.S. and increasingly overseas.”

All three of the company's business lines produced strong double-digit daily revenue growth. POSITÒ revenues per trading day increased 33%, Client Site Products 28% and Electronic Trading Desk 51%. POSIT represented 52% of ITG's third quarter revenues in 2001 compared to 50% in both the trailing quarter and third quarter 2000.

In the U.S., ITG's trading volume for the third quarter of 2001 was 5.4 billion shares (averaging 91.4 million shares per trading day) compared to 5.7 billion shares in the second quarter of 2001 (average of 90.3 million shares per trading day) and 4.0 billion shares in the third quarter of 2000 (average of 62.9 million shares per trading day). On a consolidated basis including international operations, total third quarter 2001 trading volume was approximately 7.6 billion shares.

For the company as a whole, pre-tax margins for the third quarter were 31% compared to 36% in last year's comparable period, reflecting the lower than expected revenues due to the loss of four trading days versus the relatively fixed costs of compensation, telecommunications and facilities. If we adjust for the events of September 11, pre-tax margins would have approximated last year's levels. Reduced margins were partially offset by the successful completion of negotiations which yielded lower-cost transaction processing arrangements that became effective August 1 and which the company expects will reduce its U.S. transaction processing costs as a percentage of revenues by approximately 1.5%.

International Operations

Strong performance from the company's expanding international operations helped mitigate some of the disruption to U.S. trading. Third quarter revenues in Europe of $5.6 million were more than double second quarter 2001 levels and Canadian revenues increased over the same period by 50% to $2.5 million.

“These businesses are still in the early stages of their growth resulting in wide profitability swings as the revenue stream builds,” said Mr. Killian. “But it was fortuitous for the international operations to have a big quarter. Both businesses demonstrated that their systems and infrastructure have the capacity to manage significant business growth efficiently. They also showed the leverage in the business model with these spikes in demand translating directly to bottom line results.”

Year-To-Date Results

For the nine months ended September 30, 2001, revenues rose 18% over year ago levels to a record $277.4 million, net income increased 14% to $56.1 million and diluted earnings per share increased 12% to $1.74. Adjusting for the events of September 11 and excluding ITG's one-time gain on the sale of its shares in the London Stock Exchange in the first quarter 2001, yields adjusted diluted earnings per share of $1.79, which is 21% above the comparable year ago period excluding the non-operating gain in 2000 from the Versus transaction.

Conference Call

ITG has scheduled a conference call today at 10:30 a.m. EDT to discuss third quarter results and the outlook for the balance of 2001. Those wishing to listen to the call should dial 800-289-0572 at least 10 minutes prior to the start of the call to ensure connection. For those unable to listen to the live broadcast of the call, a week-long replay will be available by dialing 888-203-1112 and entering the pass code 763615, and a two week-long replay will be available on ITG's website at starting approximately 2 hours after the completion of the call.

About ITG

ITG is headquartered in New York with offices in Boston, Los Angeles, Dublin, 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 products allow users to implement their own trading strategies by providing direct electronic access to most sources of market liquidity. For additional information, visit

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, internationally or nationally; 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 filings with the Securities and Exchange Commission including those on forms 10-K and 10-Q.

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