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Investment Technology Group Reports Third Quarter 2008 Results

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NEW YORK--(BUSINESS WIRE)--Oct. 30, 2008--Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based trading services and transaction research, today announced that for the third quarter ended September 30, 2008, net income was $27.2 million, down seven percent from net income of $29.2 million in the third quarter of 2007. Earnings were $0.62 per diluted share, down five percent versus earnings of $0.65 per diluted share in the third quarter of last year. ITG's total revenue for the third quarter of 2008 was $188.3 million, one percent less than total revenue of $189.8 million for the third quarter of 2007. Pre-tax margins in the third quarter were 24.2 percent in 2008, down from 26.0 percent realized in 2007.

"ITG's diversified product suite drove solid results in the third quarter, despite the combination of seasonality and unprecedented volatility that permeated the market," said Bob Gasser, ITG's Chief Executive Officer and President. "In this type of environment, clients rely on our agency model and broad product suite to help them manage and mitigate risk. We are confident in our ability to grow the business as clients increasingly turn to us for neutrality, technology and leadership in best execution."

ITG's non-US revenues were $47.2 million in the third quarter of 2008, a two percent decline over revenues of $48.3 million in the third quarter of 2007. Non-US pre-tax income decreased to $3.0 million in the third quarter of 2008 from $5.8 million in the third quarter of 2007.

"While current market conditions have not been favorable in Europe and Asia, ITG remains optimistic about our long term prospects for growth," said Mr. Gasser. "ITG's non-US businesses were able to maintain nearly flat sequential revenues in a difficult global environment where many markets were down double digits from the previous year."

Year to Date Results

For the nine months ended September 30, 2008, revenues increased seven percent from the prior year period to $572.9 million, net income increased six percent to $85.9 million and diluted earnings per share increased eight percent to $1.95.

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 1-866-713-8307 and enter the pass code 64892603 at least 10 minutes prior to the start of the call to ensure connection. The conference call and webcast will also be accessible through ITG's web site at www.itg.com. For those unable to listen to the live broadcast of the call, a replay will be available for one week by dialing 1-888-286-8010 and entering the pass code 35264997. The replay will be available starting approximately two hours after the completion of the conference call.

About ITG

Investment Technology Group, Inc. (ITG), is a specialized brokerage firm that partners with clients globally to provide innovative solutions spanning the entire trading process. A pioneer in electronic trading, ITG has a unique approach that combines pre-trade, order management, trade execution, and post-trade tools to provide continuous improvements in trading and cost efficiency. The firm is headquartered in New York and maintains offices in North America, Europe and the Asia Pacific regions. For additional information, visit www.itg.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, 2007, and other documents filed with the Securities and Exchange Commission and available on the company's web site.


                  INVESTMENT TECHNOLOGY GROUP, INC.
            Consolidated Statements of Income (unaudited)
               (In thousands, except per share amounts)

                                  Three Months Ended Nine Months Ended
                                    September 30,      September 30,
                                  ------------------ -----------------
                                    2008      2007     2008     2007
                                  --------- -------- -------- --------
Revenues:
  Commissions                      $162,083 $161,700 $491,527 $454,451
  Recurring                          21,958   21,122   65,888   61,255
  Other                               4,237    7,013   15,498   18,708
                                  --------- -------- -------- --------
   Total revenues                   188,278  189,835  572,913  534,414
                                  --------- -------- -------- --------

Expenses:
  Compensation and employee
   benefits                          64,640   63,754  194,038  184,381
  Transaction processing             24,421   29,188   73,103   78,844
  Occupancy and equipment            14,986   11,913   42,741   34,353
  Telecommunications and data
   processing services               14,026   10,937   39,214   29,971
  Other general and
   administrative                    23,004   22,105   69,537   60,582
  Interest expense                    1,637    2,579    5,593    8,028
                                  --------- -------- -------- --------
   Total expenses                   142,714  140,476  424,226  396,159
                                  --------- -------- -------- --------
Income before income tax expense     45,564   49,359  148,687  138,255
Income tax expense                   18,393   20,179   62,788   57,154
                                  --------- -------- -------- --------
Net income                         $ 27,171 $ 29,180 $ 85,899 $ 81,101
                                  ========= ======== ======== ========

Earnings per share:
Basic                              $   0.63 $   0.66 $   1.97 $   1.84
                                  ========= ======== ======== ========
Diluted                            $   0.62 $   0.65 $   1.95 $   1.81
                                  ========= ======== ======== ========

Basic weighted average number of
 common shares outstanding           43,463   44,100   43,598   44,171
Diluted weighted average number
 of common shares outstanding        43,869   44,813   44,122   44,884

                  INVESTMENT TECHNOLOGY GROUP, INC.
            Consolidated Statements of Financial Condition
                 (In thousands, except share amounts)
                                           September 30, December 31,
                                               2008          2007
                                           ------------- ------------
                                            (unaudited)
Assets
Cash and cash equivalents                  $     291,369 $    183,757
Cash restricted or segregated under
 regulations and other                            73,446       71,300
Deposits with clearing organizations              41,703       43,284
Securities owned, at fair value                    8,813        8,022
Receivables from brokers, dealers and
 clearing organizations                        1,487,293      551,059
Receivables from customers                       955,973      676,522
Premises and equipment, net                       46,557       45,886
Capitalized software, net                         63,706       50,892
Goodwill                                         424,246      422,774
Other intangibles, net                            32,035       31,318
Deferred taxes                                     2,595        2,282
Other assets                                      14,120       13,791
                                           ------------- ------------
Total assets                               $   3,441,856 $  2,100,887
                                           --------------------------

Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses      $     205,463 $    186,463
Short-term bank loans                             60,000      101,400
Payables to brokers, dealers and clearing
 organizations                                   929,558      497,124
Payables to customers                          1,342,923      457,105
Securities sold, not yet purchased, at
 fair value                                          584          859
Income taxes payable                              25,240       18,320
Deferred taxes                                     2,735        2,821
Long term debt                                   104,000      132,500
                                           ------------- ------------
  Total liabilities                            2,670,503    1,396,592
                                           ------------- ------------

Commitments and contingencies

Stockholders' Equity:
Preferred stock, $0.01 par value;
 1,000,000 shares authorized; no shares
 issued or outstanding                                --           --
Common stock, $0.01 par value; 100,000,000
 shares authorized; 51,582,306 and
 51,503,221 shares issued at September 30,
 2008 and December 31, 2007, respectively,
 and; 43,201,345 and 43,462,885 shares
 outstanding at September 30, 2008 and
 December 31, 2007, respectively                     516          515
Additional paid-in capital                       217,664      210,071
Retained earnings                                737,576      651,677
Common stock held in treasury, at cost;
 8,380,961 and 8,040,336 shares at
 September 30, 2008 and December 31, 2007,
 respectively                                   (194,188)    (177,928)
Accumulated other comprehensive income
 (net of tax)                                      9,785       19,960
                                           ------------- ------------
  Total stockholders' equity                     771,353      704,295
                                           ------------- ------------
Total liabilities and stockholders' equity $   3,441,856 $  2,100,887
                                           ============= ============

CONTACT:
Investor and Media Relations:
Investment Technology Group, Inc.
Alicia Curran, 212-444-6130

SOURCE: Investment Technology Group, Inc.

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