10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                to

Commission File Number 001-32722

INVESTMENT TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)

DELAWARE (State of incorporation)	95-2848406 (IRS Employer Identification No.)
380 Madison Avenue, New York, New York (Address of principal executive offices)	10017 (Zip Code)
(212) 588-4000 (Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Common Stock, $0.01 par value (Title of class)	New York Stock Exchange (Name of exchange on which registered)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act)

Yes o    No ý

Aggregate market value of the voting stock
held by non-affiliates of the
Registrant at June 30, 2010:
$681,998,194 Number of shares outstanding of the
Registrant's Class of common stock
at February 13, 2011:
41,590,485

DOCUMENTS INCORPORATED BY REFERENCE:

         Proxy Statement relating to the 2011 Annual Meeting of Stockholders (incorporated, in part, in Form 10-K Part III)

2010 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS

		Page
PART I
	Forward Looking Statements		ii
Item 1.	Business		1
Item 1A.	Risk Factors		9
Item 1B.	Unresolved Staff Comments		18
Item 2.	Properties		18
Item 3.	Legal Proceedings		19
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		20
Item 6.	Selected Financial Data		23
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		46
Item 8.	Financial Statements and Supplementary Data		49
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		95
Item 9A.	Controls and Procedures		95
Item 9B.	Other Information		97
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		97
Item 11.	Executive Compensation		97
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		97
Item 13.	Certain Relationships and Related Transactions, and Director Independence		97
Item 14.	Principal Accounting Fees and Services		97
PART IV
Item 15.	Exhibits, Financial Statement Schedules		98

        Investment Technology Group, ITG, the ITG logo, AlterNet, ITG Algorithms, ITG Channel, ITG Compliance, ITG Fair Value, ITG List-Based Algorithms, ITG Logic, ITG Matrix, ITG Net, ITG Opt, ITG Single-Stock Algorithms, ITG TCA, Macgregor XIP, POSIT, POSIT Alert, POSIT Marketplace, Radical, and Triton are registered trademarks or service marks of the Investment Technology Group, Inc. companies. Hedge Pro, ITG Alpha Capture, ITG Data Analytics, ITG Derivatives, ITG Post-Trade Analytics, ITG Smart Router, ITG Single Ticket Clearing, ITG Trade Ops and MATCH Now are trademarks or service marks of the Investment Technology Group, Inc. companies.

i

PRELIMINARY NOTES

        When we use the terms "ITG", the "Company", "we", "us" and "our", we mean Investment Technology Group, Inc. and its consolidated subsidiaries.

FORWARD-LOOKING STATEMENTS

        In addition to the historical information contained throughout this Annual Report on Form 10-K, there are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Private Securities Litigation Reform Act of 1995. All statements regarding our expectations related to our future financial position, results of operations, revenues, cash flows, dividends, financing plans, business and product strategies, competitive positions, as well as the plans and objectives of management for future operations, and all expectations concerning securities markets, client trading and economic trends are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may", "might", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or "continue" and the negative of these terms and other comparable terminology.

        Although we believe our expectations reflected in such forward-looking statements are based on reasonable assumptions and beliefs, and on information currently available to our management, there can be no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements herein include, among others, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, changes in commission pricing, potential impairment charges related to goodwill and other long-lived assets, evolving industry regulations, errors or malfunctions in our systems or technology, rapid changes in technology, cash flows into or redemptions from equity mutual funds, effects of inflation, ability to meet liquidity requirements related to the clearing of our customers' trades, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate companies we have acquired, changes in tax policy or accounting rules, fluctuations in foreign exchange rates, adverse changes or volatility in interest rates, our ability to attract and retain talented employees, as well as general economic, business, credit and financial market conditions, internationally and nationally.

        Certain of these factors, and other factors, are more fully discussed in Item 1A, Risk Factors, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 7A, Quantitative and Qualitative Disclosures about Market Risk, in this Annual Report on Form 10-K, which you are encouraged to read.

        We disclaim any duty to update any of these forward-looking statements after the filing of this report to conform our prior statements to actual results or revised expectations and we do not intend to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the filing of this report.

ii

PART I

Item 1.    Business

        Investment Technology Group, Inc. was formed as a Delaware corporation on July 22, 1983. Its principal subsidiaries include: (1) United States ("U.S.") broker-dealers under the names ITG Inc. (a self clearing broker-dealer of equity securities), AlterNet Securities, Inc. ("AlterNet") and ITG Derivatives LLC ("ITG Derivatives"), United States ("U.S.") broker-dealers, (2) Investment Technology Group Limited ("ITGL"), an institutional broker-dealer in Europe, (3) ITG Australia Limited ("ITG Australia"), an institutional broker-dealer in Australia, (4) ITG Canada Corp. ("ITG Canada"), an institutional broker-dealer in Canada, (5) ITG Hong Kong Limited ("ITG Hong Kong"), an institutional broker-dealer in Hong Kong, (6) ITG Software Solutions, Inc., our intangible property, software development and maintenance subsidiary in the U.S., and (7) ITG Solutions Network, Inc. ("ITG Solutions Network"), a holding company for ITG Analytics, Inc. ("ITG Analytics"), a provider of pre- and post- trade analysis, fair value and trade optimization services, ITG Investment Research, Inc. ("ITG Investment Research"), a provider of independent data-driven investment research, and The Macgregor Group, Inc. ("Macgregor"), a provider of trade order management technology and network connectivity services for the financial community.

        Our website can be found at http://www.itg.com. We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission ("SEC").

        ITG is an independent agency research broker that partners with asset managers globally to improve performance throughout the investment process. A leader in electronic trading since launching the POSIT crossing network in 1987, ITG takes a consultative approach in delivering the highest quality institutional liquidity, execution services, analytical tools and proprietary research insights grounded in data. Asset managers rely on ITG's independence, experience and intellectual capital to identify investment and trading opportunities, help mitigate risk, improve performance, and navigate increasingly complex markets. The firm is headquartered in New York with offices in North America, Europe, and the Asia Pacific region.

        Our reportable operating segments are: U.S. Operations, Canadian Operations, European Operations and Asia Pacific Operations (see Note 24, Segment Reporting, to the consolidated financial statements, which also includes financial information about geographic areas). The U.S. Operations segment provides trade execution, trade order management, network connectivity and research services to institutional investors, brokers, alternative investment funds and asset managers. The Canadian Operations segment provides trade execution, network connectivity and research services. The European Operations segment includes our trade execution, trade order management, network connectivity and research service businesses in Europe, as well as a technology research and development facility in Israel. The Asia Pacific Operations segment includes our trade execution, network connectivity and research service businesses in Australia and Hong Kong.

Products and Services

        ITG offers a wide range of solutions for asset managers which span the investment continuum. These offerings include investment research as well as solutions for portfolio management, pre-trade analytics, trading solutions and post-trade analytics and processing, and are summarized below. Each product is offered in the U.S. and certain other jurisdictions, as further described in the section entitled Non-U.S. Operations.

1

Investment Research

        ITG provides unique, unbiased, data-driven equity research through its ITG Investment Research subsidiary. This offering has expanded ITG's client relationships beyond the trading desk to chief investment officers, portfolio managers and analysts. Through the use of innovative data mining and analysis, ITG Investment Research specializes in identifying the key metrics that will influence a company's future performance. ITG Investment Research currently provides research on approximately 200 companies in 17 industry verticals.

Portfolio Management

        ITG provides market-leading tools to assist asset managers with portfolio decision-making tasks—from portfolio construction and optimization to the enterprise challenges of global, real-time portfolio compliance monitoring and the fair valuation of securities.

        ITG Compliance is a comprehensive monitoring, control and reporting solution that provides the ability to centrally manage global portfolio compliance activity. Pre-trade monitoring helps asset managers avoid potential violations, while end-of-day capabilities automate the process of determining daily compliance status across a wide range of investments, funds and mandates.

        ITG Fair Value is an independent service that helps mutual fund managers meet their obligations to investors and regulators to fairly price the securities within their funds, and helps minimize the impact of market timing.

        ITG Opt is an equity portfolio optimizer that allows portfolio managers to develop new portfolio construction strategies and solve complex optimization problems. ITG Opt allows users to accurately model tax liability, transaction costs and long/short objectives, while adhering to diverse portfolio-specific constraints.

Pre-Trade Analytics

        ITG's pre-trade analytics enable portfolio managers and traders to improve execution performance before the trade happens (pre-trade) by providing reliable portfolio analytics and risk models that help them perform predictive analyses, manage risk and reduce trading costs.

        ITG Logic is a pre-trade analysis tool that provides traders and portfolio managers with the means to effectively measure expected transaction and opportunity costs. Trading costs are affected by multiple factors, such as execution strategies, time horizon, volatility, spread, volume and order size. ITG Logic analyzes the effects of these factors and aids in the understanding of the trade-off between market impact and opportunity cost.

        ITG Data Analytics is a suite of transaction cost estimates, data analytics and a set of risk models to empower decision-making and improve performance. The data is available in a file format that is easily incorporated into optimizers, proprietary models and research applications. Clients use this data to mitigate risk across the investment process, increase productivity and generate higher levels of alpha (a measure of a portfolio's return in excess of the market return).

Trading Solutions

        ITG's trading solutions combine sophisticated functionality with global access, anonymity and flexibility. Our product suite ranges from broker-neutral Execution Management Systems ("EMSs") and POSIT crossing to market-leading algorithms, routers and other best execution tools.

2

Execution Management, Order Management and Connectivity

        ITG offers several EMSs to meet the needs of disparate trading styles. Triton is ITG's award-winning, multi-asset EMS, which brings a complete set of integrated execution and analytical tools to the user's desktop for global, list-based and single stock trading, as well as futures and options capabilities. Radical is a broker-neutral single-stock trading system that brings all the major North American and European equity and options markets directly to an active trader's desktop. ITG Matrix is a direct access EMS that provides traders with access to scalable, low-latency, multi-asset trading opportunities. Macgregor XIP is an Order Management System ("OMS") that combines portfolio management, compliance functionality (ITG Compliance), trading and post-trade processing (ITG Trade Ops) with ITG Net, a fully integrated and supported financial services communications network.

        ITG Channel provides traders with an integrated link to ITG liquidity from the trade blotter of most third-party EMSs and OMSs. ITG Channel sweeps uncommitted shares from an EMS or OMS blotter for execution in the POSIT suite, by ITG Algorithms or by the ITG Trading Desk. ITG Net is a global financial communications network that provides secure, reliable and fully supported connectivity between buy-side and sell-side firms for order routing and indication of interest messages through our more than 8,500 billable connections. ITG Net also integrates the trading products of third-party brokers and alternative trading systems ("ATSs") into our OMS and EMS platforms.

        ITG offers asset managers a full range of portfolio, single-stock, international, hedge fund and commission management trading services. ITG's specialists help customers gain access to the unique liquidity of POSIT, as well as major global markets, Electronic Communication Networks ("ECNs"), Multilateral Trading Facilities ("MTFs"), broker-dealers and third party ATSs. Other trading services include portfolio trading, self-directed trading and specialized services for broker-dealers. In addition, we execute certain broker-dealer and market center client orders on a net basis, whereby we enable these clients to execute trades in POSIT and other external market centers with the commission included in the execution price.

Algorithmic Trading

        ITG Algorithms and ITG Smart Router offer portfolio managers and traders a way to trade orders quickly, comprehensively and cost-efficiently from any ITG EMS or OMS, ITG's Trading Desk and certain third-party trading platforms. The algorithms tap into liquidity, while remaining anonymous, thereby lowering market impact costs and improving overall performance. ITG Algorithms also integrate with ITG pre-trade analysis and post-trade evaluation tools to create a feedback mechanism for greater execution efficiency.

        ITG Algorithms help users pursue best execution through two suites: ITG Single-Stock Algorithms and ITG List-Based Algorithms. ITG Single-Stock algorithms access ATS liquidity while simultaneously using scheduled or opportunistic strategies. ITG List-Based Algorithms manage dollar or sector imbalance, total trading risk or tracking error using automated portfolio trading with integrated ATS access.

        As part of the ITG Algorithm suite, ITG Smart Router offers an alternative to routing trades that can help capture blocks of liquidity with a combination of speed and confidentiality. Block routers continuously scan markets for liquidity with an emphasis on capturing the quote without posting the trade. Smart routers use a proprietary algorithm to quickly and directly exhaust all available quantities at the best available price level in all destinations before moving on to the next level.

POSIT Crossing

        ITG's POSIT was launched in 1987 as a scheduled electronic trade matching system. The POSIT suite provides anonymous matching of non-displayed equity orders to minimize market impact and may

3

provide opportunities for price improvement within the National Best Bid and Offer ("NBBO"). POSIT Marketplace provides access to rich, diverse liquidity, is useful for all trading styles and is especially valuable for trading large blocks and small, illiquid names. POSIT Marketplace is the single source to access POSIT liquidity, ITG Algorithms, the dark pools of other providers, and unplaced shares from the trading blotters of POSIT Alert participating clients. POSIT Marketplace uses dark pool aggregation technology to provide clients with simplified access to an expanded range of liquidity destinations and incorporates advanced liquidity filter technology to help ensure that clients are protected from gaming and are only interacting with quality liquidity. POSIT Alert leverages crossing opportunities in the trading systems of participating clients and has the ability to tap into trading opportunities before they enter the market. POSIT Alert, which uses the ITG Channel sweeping application, scans uncommitted shares on client trading systems. When a crossing opportunity is detected, the relevant POSIT Alert users are notified that an opportunity exists. POSIT Alert offers a way to tap into a reserve of hidden liquidity with minimal information leakage.

Commission Management Services

        ITG offers guidance, administration, and consolidation of client commission arrangements and commission sharing arrangements across the range of preferred brokerage and research providers of our clients using an automated Web-based commission management portal.

Post-Trade Solutions

        ITG offers a comprehensive suite of post-trade reporting and analytical tools to help improve investment performance. ITG's commitment to best execution also extends to the back-office, with broker-neutral operational services to help ensure that trades clear and settle efficiently, and tools to significantly lower the transaction costs associated with trade tickets.

Measurement & Analytics

        ITG Post-Trade Analytics offers unique measurement and reporting capabilities to analyze costs and performance across the trading continuum. Offerings include ITG TCA (Transaction Cost Analysis), which assesses trading performance and implicit costs under various market conditions, so users can adjust strategies, reduce costs and boost fund performance, and potentially improve a fund's ranking. ITG Alpha Capture measures cost at every point of the investment process and provides portfolio managers with quarterly analytical reviews, written interpretations and on-site consultative recommendations to enhance performance.

Post-Trade Processing

        ITG Trade Ops is a consolidated, outsourced service for global trade matching and settlement that provides connectivity to the industry's post-trade utilities, support for multiple, flexible settlement communications methods and a real-time process monitor.

        ITG Single Ticket Clearing is a broker-neutral service that aggregates executions across multiple destinations for settlement purposes. Single Ticket Clearing helps reduce the number of trade tickets and resulting charges imposed by custodians, reducing the growing costs of trade processing due to market fragmentation.

Non-U.S. Operations

        ITG has established a strong and growing presence in key financial centers around the world to serve the needs of global institutional investors. In addition to its New York headquarters and its Boston, Chicago, Los Angeles and San Francisco offices in the U.S., ITG has an additional North American office in Toronto, Canada. In Europe, ITG has offices in London, Dublin and Paris. ITG

4

also has a development center in Tel Aviv. In Asia Pacific, ITG has offices in Sydney, Melbourne, Hong Kong, and Singapore. Local representation in regional markets provides an important competitive advantage for ITG.

Canadian Operations

        ITG Canada was founded in 2000 and ranks in the Top 10 investment dealers in Canada. ITG Canada provides agency execution and portfolio trading services, ITG Algorithms, ITG Smart Router, Triton, Radical, ITG Matrix, ITG Channel, POSIT Alert, ITG Opt, ITG Logic, ITG Fair Value, ITG Data Analytics, ITG TCA, and Hedge Pro, a pair trading application, while connectivity is provided through ITG Net. ITG Canada also engages in principal trading activities. ITG Canada's customers include asset and investment managers, broker-dealers and hedge funds.

        In July 2007, ITG Canada launched MATCH Now, an alternative marketplace for Canadian-listed equities, operated by ITG's wholly-owned subsidiary, TriAct Canada Marketplace LP ("TriAct"). MATCH Now is Canada's largest dark pool, offering continuous execution opportunities within a fully confidential non-displayed book, providing automatic price improvement within the Canadian NBBO.

European Operations

        ITG Europe was established in 1998 as a broker-dealer focusing primarily on European equities and providing ITG's technologies across the European, Israeli and South African markets. In Europe, ITG operates POSIT and POSIT Alert, which currently offer the opportunity to trade in Austrian, Belgian, Cypriot, Czech, Danish, Dutch, Finnish, French, German, Greek, Hungarian, Irish, Italian, Norwegian, Portuguese, Spanish, Swedish, Swiss and UK equities as well as South African equities. Other execution systems and services available in Europe include ITG Algorithms, ITG Smart Router, Triton, Radical, ITG Channel, ITG Trade Ops and ITG's trading desk services. ITG's suite of analytical products and services, with a focus primarily on ITG TCA, ITG Alpha Capture, ITG Data Analytics, ITG Fair Value, ITG Logic and ITG Opt, are also available in Europe. Electronic connectivity options include ITG Net, FIX-protocol and other customized solutions.

Asia Pacific Operations

Australia

        In 1997, ITG launched ITG Australia, an institutional brokerage firm specializing in execution and analytics for Australian equities. ITG provides institutional investors in Australia with a range of ITG's products and services including trade execution, execution management through Triton and pre-and post-trade analysis through ITG TCA and ITG Logic. Connectivity is available through ITG Net.

Hong Kong

        In 2001, ITG formed ITG Hong Kong, an institutional broker-dealer focused on developing and applying ITG's technologies across the Asian markets. ITG Hong Kong manages global trading into a number of markets across the region including Hong Kong, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and New Zealand. Execution services are provided via an experienced trading services team and also through ITG Algorithms and Triton. Pre- and post-trade analysis tools, including ITG TCA and ITG Logic are also available across most Asian markets. Connectivity is available through ITG Net.

Singapore

        In 2010, ITG Singapore obtained a Capital Markets Services License from the Monetary Authority of Singapore. The license permits ITG Singapore to conduct the regulated activity of dealing in

5

securities in Singapore. ITG Singapore provides institutional investors in Singapore with a range of ITG's products and services including execution management through Triton and pre- and post-trade analysis through ITG TCA and ITG Logic.

Competition

        The financial services industry generally, and the institutional securities brokerage business in which we operate, are extremely competitive, and we expect them to remain so for the foreseeable future. Our extensive suite of products does not directly compete with a particular firm; however, individual products compete with various firms and consortia:

•

Our pre- and post-trade analytics and our research products compete with several sell side-affiliated and independent companies.

•

Our POSIT suite competes with various national and regional securities exchanges, ATSs, ECNs, MTFs, and systematic internalizers for trade execution services. These destinations have proliferated in recent years. These include traditional ATSs, as well as sell side consortia and exchange-sponsored crossing systems.

•

Our execution management systems, order management system and algorithmic trading products compete with offerings from independent vendors, agency-only firms and other sell side firms.

•

Our full range of portfolio, single-stock, international and hedge fund trading services compete with trading desks at large sell side firms.

•

Our ITG Net business competes with managed network providers, which include certain order management system providers as well as firms offering stand-alone managed network services.

•

Our ITG Investment Research offering competes with the research divisions of large and regional sell side firms as well as a number of independent research firms.

Regulation

        Certain of our U.S. and non-U.S. subsidiaries are subject to various securities regulations and capital adequacy requirements promulgated by the regulatory and exchange authorities of the countries in which they operate. In the U.S., the SEC is the federal agency responsible for the administration of the federal securities laws, with the regulation of broker-dealers primarily delegated to self-regulatory organizations ("SROs"), principally the Financial Industry Regulatory Authority ("FINRA") as well as other national securities exchanges. In addition to federal and SRO oversight, securities firms are also subject to regulation by state securities administrators in those states in which they conduct business. Furthermore, our non-U.S. subsidiaries are subject to regulation by central banks and regulatory bodies in those jurisdictions where each subsidiary is authorized to do business, as further discussed below. The SROs, central banks and regulatory bodies conduct periodic examinations of our broker-dealer subsidiaries in accordance with the rules they have adopted and amended from time to time.

        ITG's principal regulated subsidiaries are listed below. The principal self-regulator of all our U.S. broker-dealers is FINRA.

•

ITG Inc. is a U.S. broker-dealer registered with the SEC, FINRA, The NASDAQ Stock Market ("NASDAQ"), New York Stock Exchange, NYSE Arca, Inc. ("ARCA"), BATS Y-Exchange, Inc. ("BATSY"), BATS X-Exchange, Inc. ("BATSX"), Chicago Stock Exchange Inc., EDGA Exchange, Inc. ("EDGA"), EDGEX Exchange, Inc. ("EDGX"), International Securities Exchange ("ISE"), NASDAQ OMX BX, Inc. ("NASDAQ BX"), NASDAQ OMX PHLX, Inc. ("NASDAQ OMX PHLX"), National Stock Exchange, Ontario Securities Commission ("OSC"), all 50 states, Puerto Rico and the District of Columbia.

6

•

ITG Derivatives is a U.S. broker-dealer registered with the SEC, FINRA, ARCA, BATSX, BATSY, Boston Options Exchange, EDGA, EDGX, Chicago Board Options Exchange, C2 Options Exchange Incorporated, ISE, NASDAQ, NASDAQ OMX PHLX, NASDAQ Options Exchange, NYSE Amex, LLC, Commodities and Futures Trading Commission, National Futures Association and 28 states.

•

AlterNet is a U.S. broker-dealer registered with the SEC, FINRA, NASDAQ, EDGA, EDGX, and 13 states.

•

Blackwatch Brokerage, Inc. ("Blackwatch") is a U.S. broker-dealer registered with the SEC, FINRA and five states. Blackwatch enters into commission sharing arrangements with third-party broker-dealers.

•

ITG Canada is a Canadian broker-dealer registered as an investment dealer with the Investment Industry Regulatory Organization of Canada ("IIROC"), the OSC, the Autorité Des Marchés Financiers in Quebec, Alberta Securities Commission, British Columbia Securities Commission, Manitoba Securities Commission, New Brunswick Securities Commission, Nova Scotia Securities Commission and Saskatchewan Financial Services Commission. ITG Canada is also registered as a Futures Commission Merchant in Ontario and Manitoba and Derivatives Dealer in Quebec. ITG Canada is a member of the Toronto Stock Exchange ("TSX"), TSX Venture Exchange, the Canadian National Stock Exchange and the Montreal Exchange. TriAct operates MATCH Now, an ATS under National Instrument 21-101 and is registered as an investment dealer with IIROC, the OSC and the Alberta Securities Commission.

•

ITG Australia is a market participant of the Australian Stock Exchange ("ASX") and a holder of an Australian Financial Services License issued by the Australian Securities and Investments Commission ("ASIC"). ITG Australia's principal regulators are the ASX and ASIC.

•

ITG Europe refers to ITG Ventures Limited, ITGL and/or its wholly owned subsidiary Investment Technology Group Europe Limited ("ITGEL"). ITGL and ITGEL are authorized and regulated by the Central Bank of Ireland ("CBoL") under the European Communities (Markets in Financial Instruments) Regulations 2007. ITGL is a member of the London Stock Exchange ("LSE"), Deutsche Börse and Euronext and operates POSIT crossing systems in Europe as an MTF under Markets in Financial Instruments Directive ("MiFID"). ITGEL's London Branch is regulated by the Financial Services Authority for the conduct of investment business in the United Kingdom. ITGEL's Paris branch is regulated by the CBoL and is registered with the Banque de France.

•

ITG Hong Kong is a participating organization of the Hong Kong Stock Exchange and a holder of a securities dealer's license issued by the Securities and Futures Commission of Hong Kong ("SFC"), with the SFC acting as its principal regulator.

•

ITG Singapore is a holder of a Capital Markets Services License from the Monetary Authority of Singapore (MAS), with the MAS acting as its principal regulator.

        Broker-dealers are subject to regulations covering all aspects of the securities trading business, including sales methods, trade practices, investment research distribution, use and safekeeping of clients' funds and securities, capital structure, record-keeping and conduct of directors, officers and employees. Additional legislation, changes in the interpretation or enforcement of existing laws and rules may directly affect the mode of operation and profitability of broker-dealers. The SEC, SROs, state securities commissions and foreign regulatory authorities may conduct administrative proceedings, which can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer, its directors, officers or employees. The principal purpose of regulation and discipline of broker-dealers is the protection of investors and the securities markets, rather than the protection of creditors and stockholders of broker-dealers.

7

        ITG Inc., AlterNet, Blackwatch, and ITG Derivatives are required by law to belong to the Securities Investor Protection Corporation ("SIPC"). In the event of a U.S. broker-dealer's insolvency, the SIPC fund provides protection for client accounts up to $500,000 per customer, with a limitation of $100,000 on claims for cash balances. ITG Canada and TriAct are required by Canadian law to belong to the Canadian Investors Protection Fund ("CIPF"). In the event of a Canadian broker-dealer's insolvency, CIPF provides protection for client accounts up to CAD $1 million per customer. ITGL and ITGEL are required to be members of the Investor Compensation Protection Schemes which provides compensation to retail investors in the event of certain stated defaults by an investment firm. ITG Hong Kong is regulated by the SFC. The SFC operates the Investor Compensation Fund ("ICF") which provides compensation to retail investors. ITG Australia is obligated to contribute to the ACH Clearing Fund and/or the National Guarantee Fund if and when requested by the ASX. In the past twelve months, no such requests have been made of ITG Australia.

Regulation ATS

        Regulation ATS permits "alternative trading systems" such as POSIT to be operated in compliance with Regulation ATS by U.S. broker-dealers without having to register as a national securities exchange. Accordingly, POSIT is not registered with the SEC as an exchange. We continue to review and monitor POSIT's systems and procedures to ensure compliance with Regulation ATS.

Net Capital Requirement

        ITG Inc., AlterNet, ITG Derivatives and Blackwatch are subject to the Uniform Net Capital Rule (Rule 15c3-1) under the Exchange Act, which requires the maintenance of minimum net capital.

        ITG Inc. has elected to use the alternative method permitted by Rule 15c3-1, which requires that ITG Inc. maintain minimum net capital equal to the greater of $1.0 million or 2% of aggregate debit balances arising from customer transactions. AlterNet, ITG Derivatives and Blackwatch have elected to use the basic method permitted by Rule 15c3-1, which requires that they maintain minimum net capital equal to the greater of 6²/3% of aggregate indebtedness or $100,000, $1,000,000 and $5,000, respectively.

        For further information on our net capital position, see Note 19, Net Capital Requirement, to the consolidated financial statements.

Research and Product Development

        We devote a significant portion of our resources to the development and improvement of technology-based services. Important aspects of our research and development efforts include enhancements of existing software, the ongoing development of new software and services and investment in technology to enhance our efficiency.

        The amounts expensed for research and development costs for the years ended December 31, 2010, 2009 and 2008 are estimated at $49.1 million, $43.1 million and $39.3 million, respectively.

Intellectual Property

        Patents and other proprietary rights are important to our business. We also rely upon trade secrets, know-how, continuing technological innovations, and licensing opportunities to maintain and improve our competitive position. We review third-party proprietary rights, including patents and patent applications, as available, in an effort to develop an effective intellectual property strategy, avoid infringement of third-party proprietary rights, identify licensing opportunities, and monitor the intellectual property claims of others.

        We own a portfolio of patents that principally relate to financial services. We also own and maintain a portfolio of trademarks. Patents for individual products extend for varying periods according

8

to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained. The extent and duration of trademark rights are dependent upon national laws and use of the trademarks.

        While we consider our patents and trademarks to be valued assets, we do not believe that our competitive position is dependent on patent or trademark protection or that our operations are dependent upon any single patent or group of related patents.

        It is our practice to enter into confidentiality and intellectual property ownership agreements with our clients, employees, independent contractors and business partners, and to control access to, and distribution of, our intellectual property.

Clients

        For the years ended December 31, 2010, 2009 and 2008, no single client accounted for more than 5% of our consolidated revenue.

Employees

        As of December 31, 2010, the Company employed 1,186 staff globally, of which 836, 78, 177 and 95 staff were employed by the U.S., Canadian, European and Asia Pacific Operations, respectively.

Availability of Public Reports

        Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K are available without charge on our website at http://investor.itg.com. You may also obtain copies of our reports without charge by writing to: Investment Technology Group, Inc., 380 Madison Avenue, New York, NY 10017, Attn: Investor Relations.

Item 1A.    Risk Factors

Certain Factors That May Affect Our Financial Condition and Results of Operations

        While our management's long term expectations are optimistic, we face risks or uncertainties that may affect our financial condition and results of operations. The following conditions, among others, should be considered in evaluating our business and growth outlook.

Decreases in equity trading volumes by actively managed funds or securities prices could harm our business and profitability.

        Declines in the volume of equity securities traded by actively managed funds would generally result in lower revenues from our trading solutions, which generate the vast majority of our revenues globally. In addition, securities' price declines would adversely affect our non-North American trading commissions, which are based on the value of transactions. The demand for our trading solutions is directly affected by factors such as economic, regulatory and political conditions that may lead to decreased trading activity and prices in the securities markets in the U.S. and in all of the foreign markets we serve. Over the past several years, trading volumes and market values have fluctuated significantly and may continue to do so. Increased risk aversion brought about by the financial crisis of 2008, concerns over sovereign debt levels and the U.S. "flash crash" in May 2010 resulted in a significant flow of funds out of actively managed domestic equity funds, thereby curtailing their trading activity, which has weighed heavily on our average daily volumes and the use of our higher value services. The expected correlation between recovering share prices and the flow of money back into equity funds has not yet materialized.

9

Decreases in our commission rates and other transactional revenues could adversely affect our operating results.

        For the last several years, the institutional equities markets have experienced continued pricing pressure on commission rates, and we experienced a significant decrease in our average commission rate in recent years. We anticipate a continuation of the competitive commission pricing environment for the foreseeable future due to the proliferation of electronic execution firms and the bundling of commissions and other services. In addition, reduced activity from our actively managed fund manager clients has resulted in a shift in the mix of our business to include an increased portion from high turnover low rate clients. The amount of revenue capture we derive from clients who trade with us on a net basis can also be negatively impacted by extended periods of low market volatility. A significant decrease in commission rates or revenue capture could materially reduce our margins and harm our financial condition and operating results.

Our fixed costs may result in reduced profitability or losses.

        We incur significant operating and capital expenditures to support our business that do not vary directly, at least in the short term, with fluctuations in executed transaction volumes and revenues. In addition, changes in market practices have required us, and may require us in the future, to invest in additional infrastructure to increase capacity levels without a corresponding increase in revenues. To ensure that we have the capacity to process projected increases in transaction volumes, we have historically made substantial capital, operating and research expenditures in advance of such projected increases, including during periods of low revenues. In the event of a material reduction in trade executions and/or revenues, we may not be able to reduce such expenses quickly and, as a result, we could experience reduced profitability or losses. In the event that growth in executed volumes does not occur or we are not able to successfully implement and monetize our capital and research projects, including by failing to accurately forecast the demand for new products, the expenses related to such investments could cause reduced profitability or losses.

A further reduction in our profitability or in our share price may require us to record additional impairment charges related to goodwill and such charges may be large and have a material impact on our consolidated financial statements.

        At December 31, 2010, we had goodwill of $468.5 million on our consolidated balance sheet, representing 54% of our stockholders' equity. Goodwill is assessed annually for impairment in the fourth quarter and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. During 2010, indicators of potential impairment prompted us to perform goodwill impairment tests at the end of each quarterly interim period. These indicators included a prolonged decrease in our market capitalization, a decline in our recent operating results in comparison to prior years, and the significant near-term uncertainty related to both the global economic recovery and the outlook for our industry. As part of our June 30, 2010 interim test, we determined that $5.4 million of goodwill related to our Australian operations was impaired. If there is a further reduction in our profitability or in our share price, we may be required to record additional impairment charges on goodwill. Since goodwill comprises a substantial portion of our balance sheet, such charges could have a material impact on our consolidated financial statements.

10

A failure in the design, operation or configuration of our technology could adversely affect our profitability and reputation.

        A technological failure or error of one or more of our products or systems, including but not limited to POSIT Marketplace, our algorithms, smart routers, and order and execution management systems, could result in lost revenues and/or significant market losses. We operate complex trading systems, analytical products and algorithms that may fail to correctly model interacting or conflicting trading objectives, unusual market conditions, available trading venues and other factors, which may cause unintended results. Similarly, the operation and configuration of our systems can be quite complex and departure from standard procedures can result in adverse trading outcomes. Such problems could cause us to incur trading losses, lose clients or experience other reputational harm resulting in lost revenues and profits. While we put our products through rigorous quality assurance testing and certifications, we cannot test for all potential scenarios or ensure that the technology will function as designed and intended in all cases.

If we fail to keep up with rapid changes in technology and continue to provide leading products and services to our customers, our results of operations could be negatively impacted.

        The institutional brokerage industry is subject to rapid technological change and evolving industry standards. Our customers' demands become greater and more sophisticated as the dissemination of products and information to customers increases. If we are unable to anticipate and respond to the demand for new services, products and technologies, innovate in a timely and cost-effective manner and adapt to technological advancements and changing standards, we may be unable to compete effectively, which could have a material adverse effect on our business. Many of our competitors have significantly greater resources than we do to fund such technological advances. Moreover, the development of technology-based services is a complex and time-consuming process. New products and enhancements to existing products can require long development and testing periods. Significant delays in new product releases, failure to meet key deadlines or significant problems in creating new products could negatively impact our revenues and profits.

Insufficient system capacity, system operating failures, disasters or security breaches could materially harm our reputation, financial position and profitability.

        Our business relies heavily on the computer and communications systems supporting our operations, which must monitor, process and support a large volume of transactions across numerous execution venues in many countries and multiple currencies. As our business expands, we will need to expand our systems to accommodate an increasing volume of transactions across a larger client base and more geographical locations. In addition, certain changes in market practices may require us to invest in infrastructure to increase capacity levels. Unexpectedly high volumes or times of unusual market volatility could cause our systems to operate slowly, decrease output or even fail for periods of time, as could general power or telecommunications failures, natural disasters or other business disruptions. The presence of computer viruses can also cause failure within our systems. If any of our systems do not operate properly, are disabled or breached, we could incur financial loss, liability to clients, regulatory intervention or reputational damage. System failure, degradation or breach could adversely affect our ability to effectuate transactions and lead our customers to file formal complaints with industry regulatory organizations, initiate regulatory inquiries or proceedings, file lawsuits against us, trade less frequently through us or cease doing business with us.

        Our corporate headquarters and largest concentration of employees and technology is in the New York metropolitan area. Our other offices are also located in major cities around the globe. If a business system disruption were to occur, especially in New York, for any reason including widespread health emergencies, natural disasters or terrorist activities, and we were unable to execute our disaster

11

recovery plan, it could have a material effect on our business. Moreover, we have varying levels of disaster recovery plan coverage among our non-U.S. subsidiaries.

        Our business relies on the secure storage, processing and transmission of data, including our clients' confidential data, in our internal systems and through our vendor networks and communications infrastructure. Third parties who are able to breach our or our vendors' security systems may be able to cause system damage or failures or perform unauthorized trading that could result in significant losses. Although we take significant precautions and implement protective measures, which are updated and monitored regularly, there is no guarantee that our systems can prevent all unauthorized access or that our third party vendors will be able to secure their networks and systems. If our or one of our vendors' security is breached and unauthorized access is obtained to the confidential information of our clients, it could cause us reputational harm and our clients may then reduce or cease their use of our services, which would adversely impact our results of operations.

        Any system, operational or security failure or breach could result in regulatory or legal claims. We could incur significant costs in defending such regulatory or legal claims, even those without merit. Moreover, such failures could result in the need to remediate issues and repair or expand our networks and systems. Any obligation to expend significant resources to defend claims or repair and expand infrastructure could have an adverse effect on our financial condition and results of operations.

We are dependent on certain third party vendors for key services.

        We depend on a number of third parties to supply elements of our trading systems, computers, market and research data, data centers, FIX connectivity, communication network infrastructure, other equipment and related support and maintenance. We cannot be certain that any of these providers will be willing and able to continue to provide these services in an efficient and cost-effective manner or that they will be willing or able to meet our evolving needs. Moreover, we are dependent on our communications network providers for interconnectivity with our clients, markets and clearing agents to service our customers and operate effectively. If our vendors fail to meet their obligations, provide poor, inaccurate or untimely service, or we are unable to make alternative arrangements for the supply of these services, we may fail, in turn, to provide our services or to meet our obligations to our customers and our business, financial condition and our operating results could be materially harmed.

Our securities and clearing business exposes us to material liquidity risk.

        We are self-clearing in the U.S., Hong Kong and Australia. In those markets, we may be required to provide considerable additional capital to regulatory agencies or increase margin deposits with clearing and settlement organizations, such as the National Securities Clearing Corporation ("NSCC") or Depository Trust and Clearing Corporation ("DTCC") in the U.S., especially during periods of high market volatility. In addition, regulatory agencies may require these clearing and settlement organizations to increase the level of margin deposit requirements. We rely on our excess cash and certain established credit facilities to meet those demands. While we have historically met requests for additional margin deposits, there is no guarantee that our excess cash and our established credit facilities will be sufficient for future needs, particularly if there is an increase in requirements. There is also no guarantee that these established credit facilities will be extended beyond their expiration.

        In addition, each of our broker-dealer subsidiaries worldwide is subject to regulatory capital requirements promulgated by the applicable regulatory and exchange authorities of the countries in which they operate. The failure by any of these subsidiaries to maintain its required regulatory capital may lead to suspension or revocation of its broker-dealer registration and its suspension or expulsion by its regulatory body. Historically, all regulatory capital needs of our broker-dealers have been provided by cash from operations. However, if cash from operations, together with existing financing facilities are not sufficient, we cannot be assured that we would be able to obtain additional financing.

12

Our business exposes us to credit risk that could affect our operating results and profitability.

        We are exposed to credit risk from third parties that owe us money, securities or other obligations, including our customers and trading counterparties. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons, and we could be held responsible for such defaults. In addition, client trading errors for which they are unable to cover may cause us to incur financial losses. Volatile securities markets, credit markets and regulatory changes may increase our exposure to our customers' credit profiles, which could adversely affect our financial condition and operating results. While our broker-dealer subsidiaries that are not self-clearing have clearing agreements with their clearing brokers who review the credit risk of trading counterparties, we have no assurances that those reviews or our own are adequate to provide sufficient protection from this risk.

We may incur material losses on foreign exchange transactions entered into on behalf of clients and be exposed to material liquidity risk due to counterparty defaults or errors.

        We enable clients to settle cross-border equity transactions in their local currency through the use of foreign exchange contracts. These arrangements typically involve the delivery of securities or cash to a counterparty that is not processed through a central clearing facility in exchange for a simultaneous receipt of cash or securities. ITG may operate as either a principal or agent in these transactions. As a result, a default by one of our counterparties prior to the settlement of their obligation could materially impact our liquidity and have a material adverse affect on our financial condition and results of operations.

        In addition, we are exposed to operational risk. Employee and technological errors in executing, recording or reporting foreign exchange transactions may result in material losses due to the large size of such transactions and the underlying market risk in correcting such errors.

As a clearing member firm in certain jurisdictions we are subject to significant default risk.

        We are required to finance our clients' unsettled positions from time to time and we could be held responsible for the defaults of our clients. Default by our clients may also give rise to our incurring penalties imposed by execution venues, regulatory authorities and settlement systems. Although we regularly review our credit exposure, default risk may arise from events or circumstances that may be difficult to detect or foresee. In addition, concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions that could in turn adversely affect us.

Our operations in jurisdictions other than the U.S., Hong Kong and Australia are dependent on their clearing agents and any failures by such clearing agents could materially impact our business and operating results.

        Certain of our international operations are dependent on agents for the clearance and settlement of securities transactions. If our agents fail to properly facilitate the clearance and settlement of our customer trades, we could be subject to financial, legal and regulatory risks and costs that may impact our business and operating results. In addition, it could cause our clients to reduce or cease their trading with us, which would adversely affect our revenues and financial results.

        Moreover, certain of our agreements with clearing agents may be terminated upon short notice. There is no guarantee that we could obtain alternative services in a timely manner and any interruption of the normal course of our trading and clearing operations could have a material impact on our business and results of operations.

13

We may incur losses as a result of principal trading activities.

        A portion of our revenues is derived from principal trading for our own account where we incur risk. All such principal trading activity is conducted in accordance with applicable regulatory requirements, including those pertaining to the maintenance of information barriers. While the revenues from this trading activity are currently not material to our consolidated revenues and profits, changes in our business as well as in market practices may result in this activity increasing over time. Although we attempt to close out all of our positions by the end of the day, we may incur losses due to market fluctuations, with such losses having a disproportionate effect on our results.

The business in which we operate is extremely competitive worldwide.

        Many of our competitors have substantially greater financial, technical, marketing and other resources than we do, which, among other things, enable them to compete with the services we provide on the basis of price, including lowering prices for certain of our key services to gain business in their higher margin areas, and a willingness to commit their firms' capital to service their clients' trading needs on a principal, rather than on an agency basis. Many of them offer a wider range of services, have broader name recognition, and have larger customer bases than we do. Some of our competitors have long-standing, well-established relationships with their clients, and also hold dominant positions in their trading markets. Moreover, new entrants may enter the market with alternative methods of providing trade execution and related services, and existing competitors often launch new initiatives. Most recently, many of our competitors have undertaken measures to link various electronic trading systems and platforms in an effort to attract order flow to off-exchange venues and increase internal executions.

        Although we believe that our products and services have established certain competitive advantages, our ability to maintain these advantages will require continued enhancements to our products, investment in the development of our services, additional marketing activities and enhanced customer support services. There can be no assurance that we will have sufficient resources to continue to make this investment, that our competitors will not devote significantly more resources to competing services or that we will otherwise be successful in maintaining our market position. If competitors offer superior services, our market share would be affected and this would adversely impact our business and results of operations.

We face certain challenges and risks to our international business that may adversely affect our strategy.

        Global client coverage is a key component of our business plan. We have invested significant resources in our foreign operations and the globalization of our products and services. However, there are certain risks inherent in the operation of our business outside of the U.S., including but not limited to, additional regulatory capital requirements, less developed technology and infrastructure and higher costs for infrastructure. These risks may limit our ability to provide services to clients in certain markets. There also may be difficult processes for obtaining regulatory approvals. This could result in delays in our global business plans, difficulties in staffing foreign operations and adapting our products to foreign markets, practices and languages, exchange rate risks and the need to meet foreign regulatory requirements. Each of these could force us to alter our operational plans and this may adversely impact our strategy.

We incur risks related to our international business due to currency exchange rate fluctuations that could impact our financial results and financial position.

        A significant amount of our business is conducted in foreign currencies. Conducting business in currencies other than the U.S. Dollar subjects us to exchange rate fluctuations. These fluctuations can materially impact our financial results.

14

We are dependent on certain major customers and a decline in their use of our services could materially impact our revenues.

        Our customers may discontinue their use of our trading services at any time. The loss of any significant customer could have a material adverse effect on our results of operations.

        The chart below sets forth our dependence on our three largest clients individually, as well as on our ten largest clients in the aggregate, expressed as a percentage of total revenues:

	% of Total Consolidated Revenue
	2010			2009			2008
Largest customer		2.8	%		2.6	%		4.2	%
Second largest customer		2.0	%		2.1	%		2.2	%
Third largest customer		1.7	%		2.0	%		2.1	%
Ten largest customers		15.8	%		16.3	%		19.2	%

The securities markets and the brokerage industry in which we operate globally are subject to extensive, evolving regulation that could materially impact our business.

        We currently operate the POSIT suite in the U.S. under Regulation ATS, our European operations are subject to MiFID and we must comply with the requirements of the U.S. Patriot Act and its foreign equivalents for monitoring our customers and suspicious transactions. Moreover, most aspects of our broker-dealer operations are highly regulated, such as sales and reporting practices, operational compliance, capital requirements and licensure of employees. Accordingly, we face the risk of significant intervention by regulatory authorities in all jurisdictions in which we conduct business, such as the SEC and FINRA in the U.S. and their equivalents in other countries. As we expand our business, we may be exposed to increased and different types of regulatory requirements and it may be difficult for us to determine the exact requirements of local laws in every market.

        In the future, we may become subject to new regulations or changes in the interpretation or enforcement of existing regulations, which may adversely affect our business. Also, regulatory changes that impact how our customers conduct their business may impact our business and results of operations. The current U.S. administration and other members of the U.S. federal government and other governments outside of the United States have indicated that they are considering new regulatory requirements for the financial services industry. We cannot predict the extent to which any future regulatory changes can affect our business.

        In 2010, the SEC approved several rule amendments, including but not limited to, the short sale price test rule and the market access rule. In 2009, the SEC proposed additional regulatory obligations for operators of dark liquidity pools, which may have a material impact on our business model if approved by the SEC. In addition, new regulatory obligations have been proposed pertaining to markets outside of the United States which may have a material impact upon our business model, including proposed changes to MiFID (MiFID II). Last, the recent report by the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues included, among other things, a recommendation that U.S. regulators implement a version of a "trade-at" rule requiring that any non-exchange trade improve the market price by half a penny. If implemented as recommended, such "trade-at" rule could have a negative impact on our revenues generated from net executions.

If we are unable to obtain unique sources of data to create our differentiated research product we could see a reduction in revenues and profitability.

        Our investment research product leverages data derived from, among other sources, industry data providers and Web harvesting technology. If there is a limitation on the availability of data from these sources or if new regulations or laws restrict their use in investment research products, the quality of

15

our research product could be negatively impacted along with the amount of revenue and profitability we derive from this offering.

We could be subject to challenges by U.S. and foreign tax authorities that could result in additional taxes and penalties.

        We are subject to income and other taxes in each jurisdiction in which we operate. We are also subject to reviews and audits by U.S. and foreign tax authorities. Our determination of our tax obligations in each jurisdiction requires us and our advisers to make judgment calls and estimations. Our determination may differ, even materially, from the judgment of the tax authorities and therefore cause us to incur additional taxes and related interest and penalties, which could impact our financial results.

Inability to protect our intellectual property may result in increased competition, loss of business or other negative results on our business and financial condition.

        Our success is dependent, in part, upon our proprietary intellectual property. We generally rely upon patents, copyrights, trademarks and trade secrets to establish and protect our rights in our proprietary technology, methods, products and services. We cannot assure that any of the rights granted under any patent, copyright or trademark that we may obtain will protect our competitive advantages. A third party may still try to challenge, invalidate or circumvent the protective mechanisms that we select. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the U.S., so we cannot predict our ability to properly protect our intellectual property in those jurisdictions. Third parties operating in jurisdictions in which we have not filed for protection may obtain rights in intellectual property that we have protected in the U.S. and other jurisdictions or may be able to misappropriate our intellectual property with impunity.

        There can be no assurance that we will be able to protect our proprietary intellectual property from improper disclosure or use, or that others will not develop technologies that are similar or superior to our technology without violating our intellectual property. Violations of our intellectual property by third parties could have an adverse effect on our competitiveness and business. In addition, the cost of seeking to enforce our intellectual property rights could have an adverse effect on our financial results.

If we were to unknowingly infringe third party intellectual property or be accused of doing so without merit, we would bear significant costs of defense and litigation, which could impact our financial results.

        In the past several years, there has been a proliferation of patents applicable to the computer and financial services industries. Under current law, U.S. patent applications remain secret for 18 months and may, depending on how they are prosecuted, remain secret until the issuance of a patent. In light of these factors, it is not always possible to determine in advance whether any of our products or services may infringe the present or future patent rights of others. From time to time, we may receive notices from others of claims or potential claims of intellectual property infringement or we may be called upon to defend our product, customer, vendee or licensee against such third party claims. Responding to these kinds of claims, regardless of merit, could consume valuable time and result in costly litigation that could have a material adverse effect on us. Such claims could also result in our entering into royalty or licensing agreements with the third parties claiming infringement on terms that could have a material impact on our profitability.

16

Financial and operational problems with our acquisitions and strategic relationships could have a material impact on our results of operation.

        Over the last several years, we have undertaken several strategic acquisitions, including the acquisitions of Macgregor, RedSky Financial, LLC (now ITG Derivatives) and Majestic Research Corp. (now ITG Investment Research), as well as various strategic relationships. We intend to continue to pursue strategic acquisitions and strategic relationships. Acquisitions entail numerous risks, including but not limited to difficulties in valuing the acquired businesses, combining personnel and firm cultures, integrating acquired products, services and operations, achieving anticipated synergies that were inherent in our valuation assumptions, the assumption of unknown material liabilities of acquired companies and the potential loss of key clients or employees of acquired companies. We may also have clients, with whom we have established trading relationships that seek to utilize the products and services of acquired companies without increasing the amount of revenue they pay us. Strategic relationships may be important to our business prospects and we may not be able to successfully develop or maintain such relationships. If we are unable to successfully complete acquisitions and integrate the acquired businesses, if we suffer a material loss due to an acquired business or if we fail to develop or maintain strategic relationships, it may have a material effect on our operating results.

Our business could be adversely affected by our inability to attract and retain talented employees, including sales, technology and development professionals.

        Our business operations require highly specialized knowledge of the financial industry and of technological innovation as it applies to the financial industry. If we are unable to hire or retain the services of talented management, sales, research, technology and development professionals, we would be at a competitive disadvantage. In addition, recruitment and retention of qualified staff could result in substantial additional costs.

Misconduct and errors of our employees could cause us reputational and financial harm.

        Employee errors in recording or executing transactions for customers can cause us to enter into transactions that customers may disavow and refuse to settle. These transactions expose us to risk of loss, which can be material, until we detect the errors in question and unwind or reverse the transactions. As with any unsettled transaction, adverse movements in the prices of the securities involved in these transactions before we unwind or reverse them can increase this risk. We may incur losses as a result of these transactions that could materially impact our financial results.

        In addition to trading errors, other employee errors or misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation. It is not always possible to prevent employee errors or misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of customers or improper use of confidential information. Such misconduct could result in losses, litigation or other material adverse effects on the Company.

Our risk management policies and procedures may not be effective and may leave us exposed to unidentified or unexpected risks.

        We seek to monitor and control our risk exposure through a risk and control framework encompassing a variety of separate but complementary financial, credit, operational, technological, compliance and legal reporting systems, internal controls, management review processes and other mechanisms. Our policies, procedures and practices used to identify, monitor and control a variety of risks may fail to be effective. As a result, we face the risk of losses, including, for example, losses resulting from trading errors, customer defaults, fraud and money-laundering. Our risk management

17

methods rely on a combination of technical and human controls and supervision that are subject to error and failure.

        Internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As such, we could lose investor confidence in the accuracy and completeness of our financial reports, which may have a material adverse effect on our stock price.

Item 1B.    Unresolved Staff Comments

None

Item 2.    Properties

U.S. Operations

        Our principal offices are located at 380 Madison Avenue in New York, New York, where approximately 101,000 square feet of office space is currently being leased pursuant to coterminous leases expiring in January 2014. We occupy an additional 15,000 square feet of office space in New York City pursuant to lease agreements expiring in March 2012 and August 2013.

        A technology research, development, sales and technical support services facility is maintained in Los Angeles, California where we occupy approximately 79,000 square feet of office space. Approximately 25,000 square feet of office space is located at 600 Corporate Pointe. An additional 54,000 square feet of office space is located at 400 Corporate Pointe. Both leases expire in December 2016.

        We have a regional office in Boston, Massachusetts where approximately 58,600 square feet of office space is occupied pursuant to leases expiring in May 2011 and May 2021.

        We also have an additional regional office in Chicago, Illinois where we occupy approximately 10,800 square feet under a lease agreement expiring in October 2012, and in San Francisco where we occupy approximately 1,200 square feet under a lease agreement expiring in December 2011.

Canadian Operations

        ITG Canada has an office in Toronto where we occupy approximately 19,900 square feet of office space pursuant to a lease expiring in December 2016.

European Operations

        ITG Europe has offices in Dublin, Ireland and London, England where we occupy approximately 5,000 and 9,000 square feet of office space, respectively. The Dublin space is leased pursuant to an agreement that expires in February 2013, and the London space is leased pursuant to an agreement that expires in September 2013. ITG Europe also has a regional office in Paris, France.

        We also have a technology research facility in Tel Aviv, Israel where approximately 13,500 square feet of office space is occupied pursuant to a lease agreement that expires in February 2014.

18

Asia Pacific Operations

        ITG Australia has offices in Melbourne and Sydney, where we occupy approximately 8,800 and 4,300 square feet of office space, respectively pursuant to leases expiring in February 2011 and February 2013, respectively. We are currently finalizing the terms of a lease extension related to the space in Melbourne.

        ITG Hong Kong occupies approximately 7,500 square feet of office space in Hong Kong pursuant to a lease that expires September 2012.

Item 3.    Legal Proceedings

        On November 21, 2006, Liquidnet, Inc. filed a lawsuit against ITG Inc. and The Macgregor Group, Inc. in the United States District Court for the District of Delaware alleging infringement of U.S. Patent No. 7,136,834 (the "'834 patent") by the "Channel ITG" (now ITG Channel) and "Macgregor XIP" products. The '834 patent had issued on November 14, 2006. After learning that Liquidnet, Inc. did not own the '834 patent, Investment Technology Group, Inc., ITG Inc., ITG Solutions Network, Inc. and The Macgregor Group, Inc. (collectively "ITG") sued Liquidnet Holdings, Inc. ("Liquidnet") in the United States District Court for the Southern District of New York, seeking a declaratory judgment that the '834 patent was not infringed, was invalid, and was unenforceable. The Delaware lawsuit was later voluntarily dismissed by Liquidnet, Inc. In its counterclaims to the New York lawsuit, Liquidnet alleged that POSIT Alert, in addition to the products above, infringes the '834 patent. On February 13, 2008, the Court granted ITG's motion to amend its complaint, whereby ITG added allegations that Liquidnet committed fraud against the U.S. Patent and Trademark Office by, among other things, failing to disclose that Liquidnet derived the '834 patent from work done in 1997-1998 by third parties. The Court held a Markman hearing on December 16, 2009, and on January 19, 2010, issued a ruling construing the patent claim at issue. On December 21, 2010, the Court granted ITG summary judgment of non-infringement of the '834 patent and denied Liquidnet's motion for summary judgment of infringement. The Court also denied Liquidnet's motion for summary judgment on one of the grounds on which ITG claims that the '834 patent is unenforceable due to Liquidnet's inequitable conduct. Liquidnet has declared its intention to appeal summary judgment rulings. ITG intends to proceed to trial on its inequitable conduct claims.

        It is our position, now validated by the Court, that ITG does not infringe the '834 patent and that Liquidnet's claims are without merit. However, we plan to vigorously pursue our remaining claims in the declaratory judgment action. Intellectual property disputes are subject to inherent uncertainties and there can be no assurance that this lawsuit will be resolved favorably to us or that it will not have a material adverse effect on us.

19

PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Common Stock Data

        Our common stock trades on the NYSE under the symbol "ITG".

        The following table sets forth, for the periods indicated, the range of the high and low closing sales prices per share of our common stock as reported on the NYSE.

	High		Low
2009:
First Quarter		25.94		17.02
Second Quarter		27.93		18.31
Third Quarter		28.82		18.11
Fourth Quarter		28.38		17.92
2010:
First Quarter		21.22		16.27
Second Quarter		18.30		16.06
Third Quarter		15.79		13.29
Fourth Quarter		16.65		13.97

        On February 17, 2011, the closing sales price per share for our common stock as reported on the NYSE was $19.75. On February 17, 2011, we believe that our common stock was held by approximately13,252 stockholders of record or through nominees in street name accounts with brokers.

        On July 30, 2008, the Board of Directors re-authorized the purchase of shares of common stock remaining under a prior 2.0 million share authorization and authorized the purchase of an additional 2.0 million shares of common stock. In July 2010, ITG's Board of Directors authorized the repurchase of an additional 4.0 million shares. Both authorizations have no expiration date. As of December 31, 2010, there were 2.9 million shares available for repurchase under ITG's stock repurchase program.

        During 2010, the Company repurchased approximately 3.4 million shares of our common stock at a cost of approximately $54.4 million, which was funded from our available cash resources. Of these shares, 3.2 million were purchased under our Board of Directors' authorization for a total cost of $50.3 million (average cost of $15.95 per share). An additional 235,075 shares ($4.1 million) pertained solely to the satisfaction of minimum statutory withholding tax upon the net settlement of equity awards.

        The following table sets forth our stock repurchase activity during 2010, including the total number of shares purchased, the average price paid per share, the number of shares repurchased as part of a publicly announced plan or program, and the number of shares yet to be purchased under the plan or program.

20

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares (or Units) Repurchased (a)		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Repurchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
From: January 1, 2010
To: January 31, 2010		60,355	$	20.20		—		2,048,668
From: February 1, 2010
To: February 28, 2010		274,681		16.97		200,000		1,848,668
From: March 1, 2010
To: March 31, 2010		392,323		17.77		366,000		1,482,668
From: April 1, 2010
To: April 30, 2010		21,677		17.06		—		1,482,668
From: May 1, 2010
To: May 31, 2010		537,312		16.78		528,900		953,768
From: June 1, 2010
To: June 30, 2010		375,000		16.89		375,000		578,768
From: July 1, 2010
To: July 31, 2010		19,213		14.98		—		4,578,768
From: August 1, 2010
To: August 31, 2010		551,136		14.71		546,828		4,031,940
From: September 1, 2010
To: September 30, 2010		398,100		14.34		398,100		3,633,840
From: October 1, 2010
To: October 31, 2010		15,497		14.55		—		3,633,840
From: November 1, 2010
To: November 30, 2010		412,509		15.16		407,900		3,225,940
From: December 1, 2010
To: December 31, 2010		329,100		15.87		329,100		2,896,840
Total		3,386,903	$	16.06		3,151,828

(a)

This column includes the acquisition of 235,075 shares of common stock from employees in order to satisfy minimum statutory withholding tax requirements upon settlement of equity awards.

        We have not paid a cash dividend to stockholders during any period of time covered by this report. Our policy is to retain earnings to finance the operations and expansion of our businesses and to return capital to stockholders through repurchases. As a result, we currently have no intention of paying cash dividends on common stock.

21

Performance Graph

        The following line graph compares the total cumulative stockholder return on our common stock against the cumulative total return of the Russell 2000 index and the mean of the NASDAQ Other Finance Index and the AMEX Securities Broker/Dealer Index, for the five-year period ended December 31, 2010.

22

Item 6.    Selected Financial Data

        The selected Consolidated Statements of Income data and the Consolidated Statements of Financial Condition data presented below for each of the years in the five-year period ended December 31, 2010, are derived from our consolidated financial statements. Such selected financial data should be read in connection with the consolidated financial statements contained in this report.

	Year Ended December 31,
	2010		2009		2008		2007		2006
Consolidated Statements of Income Data: ($ in thousands, except per share amounts)
Total revenues	$	570,754	$	633,069	$	762,983	$	730,999	$	599,484
Total expenses		521,421		556,618		567,457		542,131		437,520
Income before income tax expense		49,333		76,451		195,526		188,868		161,964
Income tax expense		25,353		33,617		80,884		77,761		64,041
Net income	$	23,980	$	42,834	$	114,642	$	111,107	$	97,923
Basic earnings per share	$	0.56	$	0.98	$	2.64	$	2.52	$	2.26
Diluted earnings per share	$	0.55	$	0.97	$	2.61	$	2.48	$	2.21
Basic weighted average number of common shares outstanding (in millions)		42.8		43.5		43.5		44.0		43.4
Diluted weighted average number of common shares outstanding (in millions)		43.5		44.0		44.0		44.8		44.3
Consolidated Statements of Financial Condition Data: ($ in thousands)
Total assets	$	2,530,853	$	1,703,103	$	1,685,453	$	2,100,887	$	1,462,312
Cash and cash equivalents	$	317,010	$	330,879	$	352,960	$	183,757	$	321,298
Total debt	$	—	$	46,900	$	119,400	$	233,900	$	160,900
Total stockholders' equity	$	870,068	$	867,700	$	787,380	$	704,295	$	608,034

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion and analysis should be read in conjunction with our consolidated financial statements, including the notes thereto.

Overview

        ITG is an independent agency research broker that partners with asset managers globally to improve performance throughout the investment process. A leader in electronic trading since launching the POSIT crossing network in 1987, ITG takes a consultative approach in delivering the highest quality institutional liquidity, execution services, analytical tools and proprietary research insights grounded in data. Asset managers rely on ITG's independence, experience and intellectual capital to identify investment and trading opportunities, help mitigate risk, improve performance and navigate increasingly complex markets. The firm is headquartered in New York with offices in North America, Europe and the Asia Pacific region.

        Our reportable operating segments are: U.S. Operations, Canadian Operations, European Operations and Asia Pacific Operations. The U.S. Operations segment provides trade execution, trade order management, network connectivity and research services to institutional investors, brokers, alternative investment funds, asset managers and corporations. The Canadian Operations segment provides trade execution, network connectivity and research services. The European Operations segment provides trade execution, trade order management, network connectivity and research services

23

in Europe, and includes a technology research and development facility in Israel. The Asia Pacific Operations segment provides trade execution, network connectivity and research services in the Asia Pacific region.

Sources of Revenues

        Our revenues consist of commissions and fees, recurring and other.

        Commissions and fees are derived primarily from (i) commissions charged for trade execution services, (ii) income generated on net executions, whereby equity orders are filled at different prices within or at the National Best Bid and Offer ("NBBO") and (iii) commission sharing arrangements between ITG Net and third-party brokers and ATSs whose trading products are made available to our buy-side clients on our OMS and EMS applications. Because commissions are earned on a per-transaction basis, such revenues fluctuate from period to period depending on (a) the volume of securities traded through our services in the U.S. and Canada, (b) the contract value of securities traded in Europe and Asia Pacific and (c) our commission rates. Certain factors that affect our volumes and contract values traded include: (x) macro trends in the global equities markets that affect overall institutional equity trading activity, (y) competitive pressure, including pricing, created by a proliferation of electronic execution competitors and (z) potential changes in market structure in the U.S. and other regions. In addition to share volume, revenues from net executions are also impacted by the width of spreads within the NBBO. Trade orders are delivered to us from our OMS and EMS products and other vendors' products, direct computer-to-computer links to customers through ITG Net (our private value-added FIX-based financial electronic communications network) and third-party networks and phone orders from our customers.

        Recurring revenues are derived from the following primary sources: (i) connectivity fees generated through ITG Net for the ability of the sell-side to receive orders from, and send indications of interest to, the buy-side, (ii) software and analytical products and services, (iii) maintenance and customer technical support on our OMS and (iv) subscription revenue generated from the usage of our investment research.

        Other revenues include: (i) income from principal trading, (ii) the net interest spread earned on securities borrowed and loaned matched book transactions, (iii) non-recurring professional services, such as one-time implementation and customer training related activities, (iv) investment and interest income, (v) interest income on securities borrowed in connection with customers' settlement activities and (vi) market gains/losses resulting from temporary positions in securities assumed in the normal course of our agency trading business (including client errors and accommodations).

Expenses

        Compensation and employee benefits, our largest expense, consist of salaries and wages, incentive compensation, share-based compensation and related employee benefits and taxes. Incentive compensation fluctuates based on revenues, profitability and other measures, taking into account the increasingly competitive landscape for key talent.

        Transaction processing expense consists of costs to access various third-party execution destinations and to process, clear and settle transactions. These costs tend to fluctuate with share and trade volumes, the mix of trade execution services used by clients and the rates charged by third parties.

        Occupancy and equipment expense consists primarily of rent and utilities related to leased premises, office equipment and depreciation and amortization of fixed assets and leasehold improvements.

        Telecommunications and data processing expenses primarily consist of costs for obtaining market data, telecommunications services and systems maintenance.

24

        Other general and administrative expenses primarily include software amortization, consulting, business development and professional fees.

        Interest expense consists primarily of costs associated with outstanding debt and credit facilities.

Executive Summary for the Year Ended December 31, 2010

Consolidated Overview

        2010 was a challenging year for our business as market activity for equity trading was significantly lower than in 2009 due to the continued risk aversion by U.S. investors and economic uncertainty in Europe stemming from the sovereign debt crisis. Our net income for the year was $24.0 million, or $0.55 per diluted share, compared to $42.8 million, or $0.97 per diluted share, in 2009. Excluding the non-recurring charges described below, adjusted net income was $38.1 million, or $0.88 per diluted share in 2010 compared to $59.2 million, or $1.34 per diluted share in 2009 (see Non-GAAP Financial Measures). Consolidated revenues were down 10% to $570.8 million compared to $633.1 million in 2009.

        Due to the lack of visibility as to when market conditions will improve, we took major steps in 2010 to expand our addressable market and manage costs. With more than half of the available U.S. equity commission pool dedicated for research and advisory services according to Greenwich Associates, we see an opportunity to grow our share of trading volumes by providing unbiased research which is differentiated in its approach. This strategy fundamentally expands our client relationships beyond the trading desk to chief investment officers, portfolio managers and analysts. Our most significant step in this direction was our October 2010 acquisition of Majestic Research Corp. ("Majestic"), which became the foundation of our ITG Investment Research offering. The Majestic acquisition provides ITG Investment Research with a scalable platform through data-driven research on approximately 200 companies in 17 industry verticals. With ITG Investment Research, we established a flexible and expandable platform for transforming our business model into one where our independent research offering becomes a major driver of commission allocations to ITG. One of our key areas of focus over the course of 2011 will be to expand our research platform with additional industry and geographic coverage areas.

        Following the restructuring plan we enacted in the fourth quarter of 2009, we continued to take measures in 2010 to manage costs. In the second quarter, we implemented a plan to close our on-shore operations in Japan to lower costs and reduce capital requirements. The annual expenses for the on-shore Japanese operations approximated $4 million while the amount of regulatory capital deployed in Japan exceeded $20 million. In the fourth quarter of 2010, we decided to close our Westchester, NY office and relocate the staff, primarily sales traders and support staff, to our New York City office. Related cost savings for 2011 are estimated at $0.8 million. In addition to these restructurings, we continued to manage our headcount throughout 2010. Our total headcount at year-end was essentially unchanged from year-end 2009 at 1,186 despite the addition of approximately 80 employees from the Majestic acquisition.

        Consolidated expenses for the year of $521.4 million were down 6% compared to $556.6 million in 2009. In the U.S., expenses were $340.7 million, down $42.6 million, or 11%, compared to 2009. Excluding the non-recurring charges noted below, adjusted U.S. expenses were down $31.8 million, or 9% in 2010 due primarily to cost reductions from the fourth quarter 2009 restructuring and ongoing efforts throughout 2010 to manage expenses (see Non-GAAP Financial Measures). Our non-U.S. expenses grew 4% in 2010 to $180.7 million. Excluding the impact of the non-recurring charges described below and the impact of foreign currency translations, our adjusted non-U.S. expenses were 2% lower (see Non-GAAP Financial Measures).

25

        During 2010, we incurred a number of non-recurring charges which impacted our reported results. In the U.S., we wrote-off $6.1 million of capitalized software and we incurred $2.4 million of costs related to the Majestic acquisition and a restructuring charge of $2.3 million to close our Westchester, NY office. We also reversed $0.3 million of the U.S. restructuring reserve recorded in the fourth quarter of 2009. In the Asia Pacific region, we incurred a restructuring charge of $2.1 million, net of offsetting foreign exchange gains, to close our on-shore Japanese operations and we recorded a $5.4 million impairment charge for goodwill related to our Australian operations. On an after-tax basis, these charges reduced net income for 2010 by $14.1 million. In the fourth quarter of 2009, we incurred $25.4 million of costs associated with a restructuring plan to reduce costs that were focused largely on the U.S. business. On an after-tax basis, this charge reduced net income for 2009 by $16.3 million.

Segment Discussions

        While the U.S. equity markets have rebounded significantly since the 2009 lows, the historical correlation between recovering share prices and the flow of money into domestic equity funds has failed to materialize, indicating a higher sense of risk aversion in this market cycle. After a small reprieve earlier in 2010, the exodus from domestic equity funds accelerated in May, with approximately $95 billion being withdrawn from domestic equity funds (according to the Investment Company Institute) in the last eight months of 2010, eclipsing the $40 billion of outflows in all of 2009. This ongoing redirection of funds from domestic equities into other asset classes, primarily bond funds, further reduced the equity trading activity of our core institutional client base. During 2010, our average daily executed volumes declined by 12% to 177.8 million shares per day, slightly more than the 11% decline in the overall combined average daily market volume of NYSE and NASDAQ-listed securities. Our average commission rate remained under pressure during the year as a greater percentage of our business continued to originate from higher turnover, lower rate clients, including the sell-side. As a result, we saw further rate compression in the U.S. resulting in an overall decline in commissions and fees of 19% compared to 2009. While we have seen some stabilization of fund flows in early 2011, it is still too early to determine whether this is indicative of an emerging turnaround. In this environment, we have made significant strides in reducing our cost base, as evidenced by the 9% reduction in recurring U.S. expenses. While our current results reflect the unfavorably leveraged effects of our largely fixed cost structure, our now leaner cost structure is positioned to provide more positive leverage when commission revenue flows recover.

        In Canada, our revenues increased 11% over 2009 driven largely by the strength of the Canadian Dollar. Excluding the foreign currency impact (see Non-GAAP Financial Measures), our Canadian revenues were essentially flat compared to the prior year as an increase in our core client commissions was largely offset by reduced principal trading revenue. The increased presence of high frequency traders, narrowing of spreads and the reduction in the number of inter-listed securities has combined to reduce principal trading opportunities in the Canadian marketplace.

        Revenues from our European Operations declined 3% compared to 2009 to $73.3 million driven primarily by a reduction in the amount of European institutional trading activity and currency translation. A higher percentage of trades executed in lower cost venues and cost saving initiatives implemented for our clearance and settlement activities significantly reduced transaction processing costs and helped preserve profitability. There is considerable uncertainty surrounding the economic climate in the region which could have an impact on our near-term results.

        Due to a strong finish to 2010, our Asia Pacific operations posted record revenues of $33.3 million for the year, a 13% increase over 2009. We continue to view Asia Pacific as a significant opportunity for ITG as our POSIT Marketplace gains traction in the Hong Kong marketplace, which ranks among the highest of all equity markets in the developed world for trading costs. As a result of the improved revenues and various cost savings initiatives throughout 2010, we were able to reduce our pre-tax loss in the region by 24%, exclusive of the non-recurring items noted above.

26

Capital Resource Allocation

        In 2010, we redeployed about $146.1 million of cash: $46.9 million was used to pay off our remaining long-term debt, $48.9 million (net of acquired cash) was strategically invested in acquisitions and $50.3 million was returned to stockholders in the form of stock repurchases. In 2010, stock repurchases represented 132% of adjusted net income.

        During 2010, we expanded our stock loan capabilities. In addition to generating net spread revenue on matched book transactions, this function has also provided additional liquidity to our U.S. broker-dealer clearance and settlement operations to help finance temporary positions held in connection with non-standard settlements and delivery failures. More than $50 million of additional liquidity within our U.S. broker-dealer was made available in 2010 as a result of this expanded capability.

        On January 31, 2011, we entered into a $150 million three-year revolving credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as Administrative Agent. The credit agreement includes an accordion feature that allows for potential expansion of the facility up to $250 million. Depending on the borrowing base, availability under the credit agreement is limited to either (i) a percentage of the clearing deposit required by the NSCC, or (ii) a percentage of the market value of temporary positions pledged as collateral.

        Going forward, we expect to leverage our enhanced balance sheet flexibility to invest strategically in growth initiatives and to continue to return value to stockholders through stock repurchases.

Results of Operations

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

U.S. Operations

		Year Ended December 31,
$ in thousands		2010			2009			Change			% Change
Revenues:
	Commissions and fees	$	310,924		$	384,280		$	(73,356	)		(19	)
	Recurring		71,948			69,643			2,305			3
	Other		2,818			3,491			(673	)		(19	)
Total revenues			385,690			457,414			(71,724	)		(16	)
Expenses:
	Compensation and employee benefits		140,829			160,725			(19,896	)		(12	)
	Transaction processing		46,183			52,763			(6,580	)		(12	)
	Other expenses		148,596			145,999			2,597			2
	Acquisition related costs		2,409			—			2,409			—
	Restructuring charges		2,002			21,314			(19,312	)		(91	)
	Interest expense		671			2,511			(1,840	)		(73	)
Total expenses			340,690			383,312			(42,622	)		(11	)
Income before income tax expense		$	45,000		$	74,102		$	(29,102	)		(39	)
Pre-tax profit margin			11.7	%		16.2	%		(4.5	)%

        The results for our U.S. Operations include the operations of Majestic (now ITG Investment Research) following the October 25, 2010 acquisition date.

        Our U.S. trading volumes decreased 12%, slightly more than the 11% decline in overall U.S. equity volumes (as measured by the combined share volume in NYSE and NASDAQ-listed securities),

27

however, commissions and fees declined 19% reflecting a lower average revenue capture rate as a greater percentage of our trading business came from high turnover lower rate clients, including the sell-side.

	Year Ended December 31,
U.S. Operations: Key Indicators*	2010		2009		Change			% Change
Total trading volume (in billions of shares)		44.8		51.0		(6.2	)		(12	)
Trading volume per day (in millions of shares)		177.8		202.4		(24.6	)		(12	)
U.S. market trading days		252		252		—			—

*

Excludes activity from ITG Derivatives and ITG Net commission share arrangements.

        Recurring revenues increased as ITG Investment Research generated $5.0 million since the acquisition date, which more than offset reductions from cancellations of order management subscriptions and from the discontinuation of certain analytical product offerings. Going forward, ITG Investment Research's revenues will continue to be reflected in recurring revenues if clients pay for this service through hard dollars or through soft dollar arrangements (including through ITG), or will be recognized as commission income if research obligations are satisfied in the form of an overall commission arrangement.

        Other revenues decreased primarily due to lower investment income, which was driven by lower interest rates and average invested balances.

        Total expenses in the U.S. in 2010, which were down 11% compared to 2009, included certain non-recurring items described in more detail below consisting of (i) $6.1 million to write-off of certain capitalized software initiatives, (ii) $2.0 million for restructuring charges related to the closure of our Westchester, NY office, net of a $0.3 million reversal of the 2009 restructuring reserve, and (iii) $2.4 million of costs related to the Majestic acquisition. 2009 expenses included a restructuring charge of $21.3 million for a restructuring plan focused on reducing our cost base. Excluding these non-recurring costs, total expenses in the U.S. were down 9% compared to 2009 (see Non-GAAP Financial Measures).

        Compensation and employee benefits declined 12%, resulting from a 14% decrease in average headcount (largely attributable to our restructuring activities in the fourth quarter of 2009), lower incentive compensation and an $8.5 million net reduction in employee severance (unrelated to our restructuring plans). These savings were partially offset by compensation for ITG Investment Research staff, including stock-based compensation for incentive and retention awards granted to the Majestic management as part of the acquisition. In 2011, we expect the costs for these awards to approximate $3 million. While most of our compensation related costs are fixed, incentive compensation fluctuates based on revenues, profitability and other measures, taking into account the increasingly competitive landscape for key talent.

        Transaction processing costs decreased 12% in-line with the reduction in executed volumes.

        Other expenses were driven higher by (i) a $6.1 million write-off of certain capitalized software initiatives, (ii) a $2.3 million increase in capitalized software amortization related to new product releases, (iii) the 2009 recovery of doubtful account provisions which resulted in comparatively higher expenses in 2010 of $1.6 million, (iv) a $2.0 million contingency reserve for certain general taxes and (v) $1.5 million of operating expenses incurred by ITG Investment Research following the acquisition date, including $0.2 million to amortize intangibles recorded as part of the acquisition cost. This additional intangible amortization expense is expected to be $1.0 million in 2011. These incremental costs were largely offset by savings from our cost reduction efforts in areas such as (i) network connectivity costs from the consolidation of our third-party network providers and elimination of

28

redundant services, (ii) consulting costs, (iii) business development and (iv) facilities and equipment costs, primarily related to the closure of leased premises in December 2009 as well as a reduction in depreciation expense from lower capital spending.

        The capitalized software write-off related to our ongoing assessment of our product development priorities. As part of our fourth quarter 2009 restructuring, we made certain changes to our product priorities and wrote-off $2.4 million of capitalized development initiatives that were not yet deployed. As our product development plan continued to evolve in the first quarter of 2010, we determined that additional capitalized amounts were not likely to be used and a further $6.1 million was written off.

        Acquisition related costs were incurred in connection with the Majestic acquisition and consist of professional services, severance costs and stock-based compensation expenses for accelerated employee awards. In connection with the integration of ITG Investment Research, we decided to close our Westchester, NY office and relocate the staff, primarily sales traders and support, to our New York City office. This decision resulted in a restructuring charge of $2.3 million during the fourth quarter of 2010, which was partially offset by a $0.3 million reduction to the 2009 restructuring reserve. Related cost savings for 2011 are estimated at $0.8 million.

        Interest expense declined due to a significantly lower outstanding balance on our long-term debt, lower LIBOR-based interest rates and the expiration of economically unfavorable interest rate swaps on March 31, 2009.

Canadian Operations

		Year Ended December 31,
$ in thousands		2010			2009			Change			% Change
Revenues:
	Commissions and fees	$	68,845		$	59,749		$	9,906			15
	Recurring		4,062			2,568			1,494			58
	Other		5,572			8,450			(2,878	)		(34	)
Total revenues			78,479			70,767			7,712			11
Expenses:
	Compensation and employee benefits		21,926			18,785			3,141			17
	Transaction processing		15,173			14,224			949			7
	Other expenses		20,277			18,505			1,772			10
	Restructuring charges		(16	)		2,636			(2,652	)		—
Total expenses			57,360			54,150			3,210			6
Income before income tax expense		$	21,119		$	16,617		$	4,502			27
Pre-tax profit margin			26.9	%		23.5	%		3.4	%

        Currency translation increased total Canadian revenues and expenses by $7.4 million and $5.3 million, respectively, resulting in a $2.1 million increase to pre-tax income.

        Share volumes across Canadian equity markets grew 9.3% in 2010. ITG Canada's daily client trading volume outpaced this with a nearly 16% gain in 2010. Pricing pressure continued however, as average revenue per share fell 11%. Canadian commission and fees increased 15% over 2009; however, the actual growth rate was only 4% when excluding the favorable currency impact of the stronger Canadian Dollar (see Non-GAAP Financial Measures), reflecting the decline in average commission rates.

29

        Recurring revenues benefited from growth in the number of billable network connections in our ITG Net connectivity business, new customers utilizing our analytical products and favorable currency impact ($0.4 million).

        Revenues from principal trading (included in other revenues) were lower in 2010 as the expanded presence of high frequency trading firms has significantly reduced the spread to be earned and thus limited principal trading opportunities available.

        Compensation and employee benefits costs were driven higher by currency translation ($2.0 million), share-based compensation and costs associated with a new retirement plan in Canada.

        Transaction processing costs were higher due to the impact of currency translation ($1.5 million). When excluding currency translation, the expense decreased by $0.6 million (see Non-GAAP Financial Measures) due to an increased proportion of executions occurring on cheaper venues and savings from the migration to a new clearing broker which more than offset increases driven by product mix and fewer shares per trade executed. As a percentage of revenue, these costs were down slightly from 20.1% in 2009 to 19.3% in 2010.

        The increase in other expenses primarily reflects (i) unfavorable exchange rate translation, (ii) higher equipment and data center related costs, (iii) higher depreciation expense and (iv) higher capitalized software amortization expense related to recent product releases. These increases were partially offset by the effect of currency transaction losses incurred in 2009 from holding a non-Canadian Dollar denominated asset.

European Operations

		Year Ended December 31,
$ in thousands		2010			2009			Change			% Change
Revenues:
	Commissions and fees	$	58,893		$	59,862		$	(969	)		(2	)
	Recurring		14,721			14,989			(268	)		(2	)
	Other		(337	)		592			(929	)		(157	)
Total revenues			73,277			75,443			(2,166	)		(3	)
Expenses:
	Compensation and employee benefits		32,959			34,345			(1,386	)		(4	)
	Transaction processing		16,467			21,761			(5,294	)		(24	)
	Other expenses		19,808			14,606			5,202			36
	Restructuring charges		—			69			(69	)		—
Total expenses			69,234			70,781			(1,547	)		(2	)
Income before income tax expense		$	4,043		$	4,662		$	(619	)		(13	)
Pre-tax profit margin			5.5	%		6.2	%		(0.7	)%

        Currency translation reduced our total European revenues and expenses by $1.0 million and $0.3 million, respectively, resulting in a $0.7 million decrease to pre-tax income.

        The global credit and European sovereign debt crises have caused investors to lose confidence in European markets, with market turnover down substantially from the 2007 pre-crisis level. While market turnover increased over 2009 levels, the incremental turnover is not reflective of increased institutional activity as a significantly larger portion of current market turnover is driven from high frequency trading. Despite this very challenging environment, our European operations achieved pre-tax profits of $4.0 million, benefitting from ongoing efforts to reduce transaction processing costs as well as higher POSIT revenues.

30

        European commissions and fees decreased $1.0 million but were essentially flat excluding currency translation impact (see Non-GAAP Financial Measures). POSIT revenues increased 33% reflecting our increased focus on maximizing crossing opportunities; however, this was substantially offset by reduced European portfolio trading activity from our U.S. clients.

        The reduction in recurring revenue was due to the shift in the attribution of $1.5 million of ITG Net connectivity revenue for Asia Pacific clients from Europe to Asia Pacific and unfavorable currency translation impact of $0.2 million, partially offset by the growth in connectivity revenue from European clients. Other revenues fell due to an increase in trade processing errors and client accommodations and a decrease in consulting fees from our order management systems.

        Compensation and employee benefits expenses reflect lower incentive compensation and share-based compensation as well as a reduction in employee severance costs of $2.0 million due to a management reorganization in 2009. This savings was partially offset by the continued investment in staff to support the growing business and diversified product range.

        Transaction processing costs declined 24% as we benefited from the increased use of POSIT to internally cross trades, as well as the migrations to a single settlement agent and to an in-house solution for our settlement books and records. We also improved our routing strategies and decreased the amount of trading we do with the more costly primary exchanges.

        Other expenses increased due to investments in infrastructure to support the growing product range and improve system capacity and resilience as well for our in-house solution for our settlement books and records. We also had additional market data costs related to the expansion of our self-directed client business, higher software development amortization costs associated with new product releases and lower foreign currency transaction gains than in 2009.

Asia Pacific Operations

		Year Ended December 31,
$ in thousands		2010			2009			Change			% Change
Revenues:
	Commissions and fees	$	30,343		$	28,107		$	2,236			8
	Recurring		2,455			283			2,172			767
	Other		510			1,055			(545	)		(52	)
Total revenues			33,308			29,445			3,863			13
Expenses:
	Compensation and employee benefits		20,172			21,663			(1,491	)		(7	)
	Transaction processing		7,564			6,870			694			10
	Other expenses		18,950			18,417			533			3
	Goodwill impairment		5,375			—			5,375			—
	Restructuring charges		2,076			1,425			651			46
Total expenses			54,137			48,375			5,762			12
Loss before income tax expense		$	(20,829	)	$	(18,930	)	$	(1,899	)		(10	)
Pre-tax profit margin			(62.5	)%		(64.3	)%		1.8	%

        Currency translation, primarily from the stronger Australian dollar, increased total Asia Pacific revenues and expenses by $1.6 million and $2.7 million, respectively, reducing pre-tax income by $1.1 million.

        Total market turnover in Hong Kong, Australia and Singapore improved over 2009 by a range of 10% to 18%, thereby expanding the overall value-based commission revenue pool in those venues,

31

while turnover in Japan, Korea and Taiwan lagged behind. Within the mixed turnover in the region's major markets, our commissions and fees grew $2.2 million, or 8%, due primarily to the stronger Australian Dollar and a shift in the attribution of ITG Net revenues for commission share from Europe to Asia Pacific. These gains were offset in part by lower commission rates.

        The increase in recurring revenues was primarily attributable to a shift in the attribution of ITG Net connectivity revenue for Asia Pacific clients from Europe to Asia Pacific.

        The decrease in compensation and employee benefits costs reflects lower headcount levels (resulting from our restructuring activities in both the fourth quarter of 2009 and second quarter of 2010) partially offset by unfavorable currency translation of $1.2 million.

        Transaction processing costs increased due to an increase in the value of trades executed as well as a higher proportion of trades being executed in costlier venues such as Indonesia, Singapore and Malaysia, where our clearing and execution costs are significantly higher than in the Hong Kong and Australia markets. Unfavorable currency translation also contributed to the increase.

        The increase in other expenses include unfavorable currency translation, additional connectivity and market data fees related to business growth offset by lower depreciation and a decrease in foreign currency transaction losses.

        The restructuring charges include costs related to employee severance, contract termination costs and non-cash write-offs of fixed assets and capitalized software in connection with closing our on-shore Japanese operations. These costs were partially offset by the reclassification of historical currency translation gains into operations upon the substantial liquidation of our Japanese subsidiary. The goodwill impairment charge relates to the write-off of the entire balance of goodwill in our Australia reporting unit.

Consolidated income tax expense

        Our effective tax rate was 51.4% in 2010 compared to 44.0% in 2009. The increase in the 2010 effective tax rate is primarily attributable to significant pre-tax losses in the Asia Pacific region where we have ceased recognizing tax benefits for net operating losses since the fourth quarter of 2009 in accordance with U.S. GAAP (and to a lesser degree in Ireland beginning in 2010), together with the decline in U.S. pre-tax income. Specifically, the losses in the Asia Pacific region in 2010 included significant non-recurring items of $2.1 million in restructuring charges and a goodwill impairment charge of $5.4 million. The comparatively higher tax rate is also due to the net benefit of $2.5 million recognized in 2009 related to the resolution of uncertain tax provisions pertaining to the 2001-2007 tax years. Our overall tax rate was also pushed higher by the impact of nondeductible expenses incurred in the U.S. during the fourth quarter related to the Majestic acquisition. Our consolidated effective tax rate varies from period to period depending on, among other factors, the geographic and business mix of our earnings.

32

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

U.S. Operations

		Year Ended December 31,
$ in thousands		2009			2008			Change			% Change
Revenues:
	Commissions and fees	$	384,280		$	488,522		$	(104,242	)		(21	)
	Recurring		69,643			80,784			(11,141	)		(14	)
	Other		3,491			2,006			1,485			74
Total revenues			457,414			571,312			(113,898	)		(20	)
Expenses:
	Compensation and employee benefits		160,725			184,702			(23,977	)		(13	)
	Transaction processing		52,763			44,774			7,989			18
	Other expenses		145,999			153,595			(7,596	)		(5	)
	Restructuring charges		21,314			—			21,314			—
	Interest expense		2,511			7,253			(4,742	)		(65	)
Total expenses			383,312			390,324			(7,012	)		(2	)
Income before income tax expense		$	74,102		$	180,988		$	(106,886	)		(59	)
Pre-tax profit margin			16.2	%		31.7	%		(15.5	)%

        Overall U.S. equity volumes were up 7% in 2009 as compared to 2008 (measured by the combined share volume in NYSE and NASDAQ-listed securities) primarily due to the increase in high frequency trading. In contrast, our average daily volume in the U.S. on our core commission trading activity declined 12% in 2009 compared to 2008. As described above, we experienced a reduction in volumes from our actively managed fund clients due to the shift in investment allocations out of domestic equity funds as evidenced by net outflows of $40 billion from these funds in 2009. The reduction in volumes from our actively managed fund clients also changed the mix of clients and services provided, reducing our average commission rate during 2009 by 18%. Offsetting the decline in our core customer trading activity were the growing fees from net executions.

	Year Ended December 31,
U.S. Operations: Key Indicators*	2009		2008		Change			% Change
Total trading volume (in billions of shares)		51.0		53.9		(2.9	)		(5	)
Trading volume per day (in millions of shares)		202.4		213.0		(10.6	)		(5	)
U.S. market trading days		252		253		(1	)		—

*

Excludes activity from ITG Derivatives and ITG Net commission share arrangements.

        Recurring revenues declined following the assignment in October 2008 of certain customer agreements for our OMS and ITG Net services with approximate annual revenues of $12.3 million (along with associated costs) to our European Operations. Also contributing to this decline were the cancellations of subscriptions for OMS, ITG Net and analytical products due in part to clients internally consolidating the use of our applications and client merger activity.

        Other revenue growth from stock borrow interest was partially offset by significantly lower investment income as the impact of the extremely low interest rates more than offset increases in invested funds.

        Compensation and employee benefits savings were achieved through significantly reduced incentive compensation levels and lower headcount (which also included the above mentioned transfer of certain

33

OMS and ITG Net staff). These savings were partially offset by non-restructuring related separation costs which increased by $5.5 million and share-based compensation which increased by $3.5 million.

        Transaction processing costs rose due to higher business activity in our options trading business (where transaction processing costs are higher than our core equity business), SEC Section 31 fees on increased net executions, which also had an increase in rate effective April 1, 2009, and increased interest costs on stock loan transactions. The higher stock loan interest costs were more than offset by the related stock borrow interest revenues on our offsetting matched-book positions.

        Other expenses decreased slightly year over year due to the benefits of certain cost control measures taken during 2009. Savings were achieved through lower spending levels in areas such as business development, legal, recruiting and consulting, as well as improved receivable collections which offset the impact of higher: (i) capitalized software amortization expense related to new product releases, (ii) network connectivity and market data fees and (iii) equipment related costs, including depreciation and software subscription and maintenance costs. In addition, in 2008, we wrote down the value of our shares of common stock in NYSE Euronext, Inc. by $1.5 million as it was determined that the impaired market value was other-than-temporary and we wrote-off capitalized software costs of $1.7 million related to the discontinuation of certain non-core products. As described above, restructuring charges include costs related to employee separation, consolidation of leased facilities and the write-offs of capitalized software and certain intangible assets primarily due to changes in product priorities.

        Interest expense declined significantly due to a lower average outstanding balance on our long term debt and significantly lower LIBOR-based interest rates. Additionally, interest rate swaps which were economically unfavorable due to the drop in interest rates after their inception in 2006 expired on March 31, 2009.

Canadian Operations

		Year Ended December 31,
$ in thousands		2009			2008			Change			% Change
Revenues:
	Commissions and fees	$	59,749		$	65,283		$	(5,534	)		(8	)
	Recurring		2,568			1,556			1,012			65
	Other		8,450			16,512			(8,062	)		(49	)
Total revenues			70,767			83,351			(12,584	)		(15	)
Expenses:
	Compensation and employee benefits		18,785			24,881			(6,096	)		(25	)
	Transaction processing		14,224			13,508			716			5
	Other expenses		18,505			19,233			(728	)		(4	)
	Restructuring charges		2,636			—			2,636			—
Total expenses			54,150			57,622			(3,472	)		(6	)
Income before income tax expense		$	16,617		$	25,729		$	(9,112	)		(35	)
Pre-tax profit margin			23.5	%		30.9	%		(7.4	)%

        Currency translation reduced total Canadian revenues and expenses by $5.1 million and $4.0 million, respectively, resulting in a $1.1 million decrease to pre-tax income.

        2009 was a challenging year for our Canadian Operations characterized by ongoing pricing pressure and a noticeable slowdown in activity with a number of clients who continued to proceed with a heightened degree of caution. Our total client share volume executed on all venues in 2009 was

34

virtually flat as compared to 2008 after several years of growth. Additionally, the strengthening U.S. Dollar reduced commissions and fees by $4.3 million.

        Revenues from principal trading (included in other revenues) were down in 2009 compared to 2008. Aside from an unfavorable foreign exchange impact of $0.6 million, the reduction was attributable to several factors including lower market volatility and the expanding presence of high frequency participants (which has narrowed spreads and therefore reduced profitable trading opportunities). In contrast, our Canadian recurring revenues grew as our ITG Net connectivity business nearly doubled its Canadian revenue base following a significant expansion in the number and usage of our network connections.

        Compensation and employee benefits cost savings were achieved through reduced incentive compensation and favorable exchange rate translation.

        Canadian transaction processing costs were higher as we executed more trades as takers of liquidity, which in late 2008 began to incur higher costs. This was primarily attributable to the increasing presence of high frequency traders employing passive arbitrage strategies. As liquidity takers, we pay full cost on the active side rather than earning a passive rebate as liquidity providers.

        The reductions in other expenses reflect favorable exchange rate translation, as well as our cost control efforts in areas such as consulting and business development. We also incurred restructuring costs related to employee separation as part of our plan to re-align the organization for the future.

European Operations

		Year Ended December 31,
$ in thousands		2009			2008			Change			% Change
Revenues:
	Commissions and fees	$	59,862		$	72,691		$	(12,829	)		(18	)
	Recurring		14,989			5,566			9,423			169
	Other		592			(505	)		1,097			217
Total revenues			75,443			77,752			(2,309	)		(3	)
Expenses:
	Compensation and employee benefits		34,345			30,420			3,925			13
	Transaction processing		21,761			30,671			(8,910	)		(29	)
	Other expenses		14,606			19,277			(4,671	)		(24	)
	Restructuring charges		69			—			69			—
Total expenses			70,781			80,368			(9,587	)		(12	)
Income (loss) before income tax expense		$	4,662		$	(2,616	)	$	7,278			278
Pre-tax profit margin			6.2	%		(3.4	)%		9.6	%

        Currency translation reduced total European revenues and expenses by $13.8 million and $14.5 million, respectively, resulting in a $0.7 million increase to pre-tax income.

        While European markets rallied during 2009, volumes and share prices were substantially lower than in 2008, resulting in lower share values on which European commissions and fees are dependent. Despite these challenging circumstances, our European Operations returned to profitability in 2009, achieving both higher market share and successful cost control.

        European commissions and fees were adversely affected by a nearly $11.0 million currency translation impact. Excluding currency translation (see Non-GAAP Financial Measures), commissions and fees fell only 3%, despite significantly lower share values in the market. Enhancements made to

35

crossing products and the continued growth of our self-directed client business offset much of the impact of lower levels of client portfolio trading and the market downturn.

        Higher recurring revenues reflect the assignment in October 2008 of certain customer agreements for our OMS and ITG Net services with annual revenues of $12.3 million (along with associated costs) from our U.S. Operations, as well as an increase in analytical product sales. These increases were partially offset by unfavorable currency translation of $2.7 million.

        Compensation and employee benefits expense reflects an increase of $2.6 million in non-restructuring related employee separation costs, the transfer of certain OMS and ITG Net support staff to the region and the continued investment in staff to support the growing business and diversified product range, partially offset by favorable currency translation.

        Transaction processing cost savings outpaced the decline in commission revenue due to modifications made to our order routing strategy increasing the use of MTFs, where costs are generally lower than traditional exchanges, as well as increased crossing using POSIT. We also had lower clearing and settlement costs from settlement market netting and obtaining agent discounts.

        Other expenses reflect favorable currency exchange translation and savings achieved through cost management efforts, which more than offset our higher infrastructure investment costs. During 2009, we invested in infrastructure to support the growing product range and improve system capacity and resilience. We also incurred additional connectivity and market data costs related to the expansion of self-directed client business and connectivity to new venues, as well as software development costs associated with product rollout. These additional costs were offset by reduced consulting, reduced travel and entertainment, improved collection efforts and foreign currency transaction gains from holding multiple European currencies and the Australian Dollar.

Asia Pacific Operations

		Year Ended December 31,
$ in thousands		2009			2008			Change			% Change
Revenues:
	Commissions and fees	$	28,107		$	28,393		$	(286	)		(1	)
	Recurring		283			85			198			233
	Other		1,055			2,090			(1,035	)		(50	)
Total revenues			29,445			30,568			(1,123	)		(4	)
Expenses:
	Compensation and employee benefits		21,663			16,508			5,155			31
	Transaction processing		6,870			6,125			745			12
	Other expenses		18,417			16,510			1,907			12
	Restructuring charges		1,425			—			1,425			—
Total expenses			48,375			39,143			9,232			24
Loss before income tax expense		$	(18,930	)	$	(8,575	)	$	(10,355	)		(121	)
Pre-tax profit margin			(64.3	)%		(28.1	)%		(36.2	)%

        Overall, currency translation reduced total Asia Pacific revenues and expenses by $0.7 million and $0.8 million, respectively, increasing pre-tax income by $0.1 million.

        Asia Pacific regional stock market indices were higher in 2009, with the Nikkei 225, Hang Seng and ASX 200 indices up 19%, 52% and 31%, respectively. However, total market turnover lagged behind 2008, thereby reducing the overall commission revenue pool (as Asia Pacific commissions are value-based).

36

        Despite the declines in turnover in the region's major markets ranging from 11% to 36% as compared to 2008, commissions and fees declined only 1% as our market share gains offset much of the negative effect of the contraction in market turnover. Excluding the $0.7 million unfavorable currency translation effect (see Non-GAAP Financial Measures), commissions and fees levels slightly exceeded 2008.

        The increase in our compensation and employee benefits cost level reflects the increased staffing level required to support the growing self-directed trading businesses, a greater emphasis on our trading desk and the hiring of a regional manager. Higher incentive and share-based compensation also contributed to the year over year increase. These costs were partially offset by favorable currency translation.

        Transaction processing costs increased primarily due to the higher proportion of trades executed in costlier venues such as Japan and Korea, where clearing costs are significantly higher than the Hong Kong and Australia markets where we self-clear. This increase was partially offset by favorable currency translation.

        Other expenses include higher costs for exchange data, additional connectivity fees related to business growth and currency transaction losses on assets held in U.S. Dollars, partially offset by the impact of certain cost control measures taken. Restructuring charges of $1.4 million primarily relate to employee separation costs.

Consolidated income tax expense

        Our effective tax rate was 44.0% in 2009 compared to 41.4% in 2008 as we recorded a valuation allowance of $3.9 million against our deferred tax assets, primarily for net operating losses in both 2009 and previous years in our Asia Pacific Operations, in accordance with the guidance in U.S. GAAP following historical pre-tax losses. The effect of this valuation allowance was partially offset by the resolution during 2009 of uncertain tax positions in the U.S. pertaining to the 2001-2007 tax years.

Liquidity and Capital Resources

Liquidity

        Our primary source of liquidity is cash provided by operations. Our liquidity requirements result from our working capital needs, which include clearing and settlement activities, as well as our regulatory capital needs. A substantial portion of our assets are liquid, consisting of cash and cash equivalents or assets readily convertible into cash. Cash is principally invested in U.S. government money market mutual funds and other money market mutual funds. At December 31, 2010, unrestricted cash and cash equivalents totaled $317.0 million.

        As a self-clearing broker-dealer in the U.S., we are subject to cash deposit requirements with clearing organizations that may be large in relation to total liquid assets and may fluctuate significantly based upon the nature and size of customers' trading activity and market volatility. At December 31, 2010, we had interest-bearing security deposits totaling $14.2 million with clearing organizations in the U.S. for the settlement of equity trades. In the normal course of our settlement activities, we may also need to temporarily finance customer securities positions for short settlements or delivery failures. This financing may be funded from existing cash resources, borrowings under stock loan transactions or short-term bank loans.

        On January 31, 2011, we entered into a $150 million three-year revolving credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as Administrative Agent. As described in more detail below, this credit agreement is specifically designed to meet liquidity needs of our U.S. broker-dealer clearance and settlement operations.

37

        We self-clear equity trades in Hong Kong and Australia and maintain restricted cash deposits of $25.7 million to support overdraft facilities. In Europe, we maintain $25.6 million in restricted cash deposits supporting working capital facilities primarily in the form of overdraft protection for our European clearing and settlement.

Capital Resources

        Capital resource requirements relate to capital purchases, as well as business investments and are generally funded from operations. When required, as in the case of a major acquisition, our strong cash generating ability has historically allowed us to access U.S. capital markets.

Operating Activities

        As compared to 2009, 2010 cash flows provided by operating activities reflect the net change in broker and customer related activity as we expanded our stock loan capabilities in the U.S. and externally financed more of our clients' non-standard settlement activity.

        The table below summarizes the effect of the major components of operating cash flow.

	Year Ended December 31,
(in thousands)	2010		2009			2008
Net income	$	23,980	$	42,834		$	114,642
Non-cash items included in net income		90,283		89,077			79,398
Effect of changes in receivables/payables from/to customers and brokers		58,588		(861	)		153,609
Effect of changes in other working capital and operating assets and liabilities		3,258		(33,616	)		32,213
Net cash provided by operating activities	$	176,109	$	97,434		$	379,862

        In the normal course of clearing and settlement operations worldwide, cash is typically used to fund restricted or segregated cash accounts (under regulations or other), broker and customer fails to deliver/receive, securities borrowed, deposits with clearing organizations and net activity related to receivables/payables from/to customers and brokers. The cash requirements vary from day to day depending on volume transacted and customer trading patterns.

Investing Activities

        Net cash used in investing activities of $102.1 million includes our acquisition of Majestic, our investments in capitalizable software development projects and computer hardware, software and facilities, as well as a strategic investment in Disclosure Insight, Inc., a provider of independent fundamental research and diligence to the investment community.

Financing Activities

        During 2010, net cash used in financing activities included $46.9 million for the remaining principal repayments on long term debt (see Note 15, Borrowings, to the consolidated financial statements) compared with $47.6 million and $38.0 million in 2009 and 2008, respectively, and $50.3 million to fund repurchases of ITG common stock.

        On January 31, 2011, we entered into a $150 million three-year revolving credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as Administrative Agent. The credit agreement includes an accordion feature that allows for potential expansion of the facility up to $250 million. Under the credit agreement, interest accrues at a rate equal to (a) a base rate, determined by reference

38

to the higher of the (1) federal funds rate or (2) the one month Eurodollar LIBOR rate, plus (b) a margin of 2.50%. Available but unborrowed amounts under the credit agreement are subject to an unused commitment fee of 0.50%. The purpose of this credit line is to provide liquidity for our U.S. brokerage operations to satisfy clearing margin requirements and to finance temporary positions from delivery failures and non-standard settlements. As a result, we will have additional flexibility with our existing cash and future cash flows from operations to strategically invest in growth initiatives and to return capital to stockholders. Depending on the borrowing base, availability under the credit agreement is limited to either (i) a percentage of the clearing deposit required by the NSCC or (ii) a percentage of the market value of temporary positions pledged as collateral. Among other restrictions, the terms of the credit agreement include negative covenants related to (a) liens, (b) maintenance of a consolidated leverage ratio (as defined) and a liquidity ratio (as defined), as well as maintenance of minimum levels of tangible net worth (as defined) and regulatory capital (as defined), and (c) restrictions on investments, dispositions and other restrictions customary for financings of this type.

        During 2010, we repurchased approximately 3.4 million shares of our common stock at a cost of approximately $54.4 million, which was funded from our available cash resources. Of these shares, 3.2 million were purchased under our Board of Directors' authorization for a total cost of $50.3 million (average cost of $15.95 per share). An additional 235,000 shares repurchased ($4.1 million) pertained solely to the satisfaction of minimum statutory withholding tax upon the net settlement of equity awards. In July 2010, ITG's Board of Directors authorized the repurchase of an additional 4.0 million shares. This authorization has no expiration date. The total remaining number of shares currently available for repurchase under ITG's stock repurchase program is 2.9 million. The specific timing and amount of repurchases will vary based on market conditions and other factors.

Regulatory Capital

        Under the SEC's Uniform Net Capital Rule, our U.S. broker-dealer subsidiaries are required to maintain at least the minimum level of net capital required under Rule 15c3-1 at all times. Dividends or withdrawals of capital cannot be made from these entities if the capital is needed to comply with regulatory requirements.

        Our net capital balances and the amounts in excess of required net capital at December 31, 2010 for our U.S. Operations are as follows (dollars in millions):

U.S. Operations	Net Capital		Excess Net Capital
ITG Inc.	$	90.6	$	89.6
AlterNet		6.2		6.0
Blackwatch		3.2		3.1
ITG Derivatives		5.7		4.7

        As of December 31, 2010, ITG Inc. had a $10.8 million cash balance in a Special Reserve Bank Account for the exclusive benefit of customers and brokers under the Customer Protection Rule pursuant to SEC Rule 15c3-3, Computation for Determination of Reserve Requirements.

        In addition, the Company's Canadian, European and Asia Pacific Operations have subsidiaries with regulatory requirements. The net capital balances and the amount of regulatory capital in excess of the

39

minimum requirements applicable to each business as of December 31, 2010, are summarized in the following table (dollars in millions):

Canadian Operations	Net Capital		Excess Net Capital
Canada	$	49.2	$	48.7
European Operations
Europe	$	30.7	$	10.1
Asia Pacific Operations
Australia	$	11.2	$	6.5
Hong Kong		28.9		15.2
Singapore		0.4		0.2

Liquidity and Capital Resource Outlook

        Historically, our working capital, stock repurchase and investment activity requirements have been funded from cash from operations and short-term loans, with the exception of our Macgregor and Plexus Group Inc. acquisitions, which required long term financing. We believe that our cash flow from operations, existing cash balances and our available credit facilities will be sufficient to meet our ongoing operating cash and regulatory capital needs, while also complying with the terms of our 2011 revolving credit agreement (see Financing Activities). However, our ability to borrow additional funds may be inhibited by financial lending institutions' ability or willingness to lend to us on commercially acceptable terms.

Non-GAAP Financial Measures

        To supplement our financial information presented in accordance with U.S. GAAP, management uses certain "non-GAAP financial measures" as such term is defined in SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company's operating performance, financial position or cash flows that excludes or includes amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with U.S. GAAP. For example, non-GAAP measures may exclude the impact of certain unique and/or non-recurring items such as acquisitions, divestitures, restructuring charges, large write-offs or items outside of management's control, such as foreign currency exchange rates. Management believes that the following non-GAAP financial measures provide investors and analysts useful insight into our financial position and operating performance.

        Disclosures of commissions and fees and overall revenues excluding currency translation, which exclude the impact of fluctuations in foreign currency exchange rates, are provided to facilitate relevant period-to-period comparisons of the underlying growth in commissions and fees and overall revenues by excluding these fluctuations outside of management's control that impact the overall comparability. Underlying commissions and fees and overall revenues should be viewed in addition to, and not as an alternative to, commissions and fees and overall revenues as determined in accordance with U.S. GAAP.

        Adjusted operating expense and adjusted net income disclosures excluding goodwill impairment, restructuring charges, write-off of capitalized software development and acquisition costs are provided to facilitate the relevant period-to-period comparison of expenses and net income by excluding these unusual items that impact overall comparability. These non-GAAP measures should be viewed in addition to, and not as an alternative to, expenses and net income as determined in accordance with U.S. GAAP.

40

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Off-Balance Sheet Arrangements

        The Company is a member of various U.S. and non-U.S. exchanges and clearing houses that trade and clear equities and/or derivative contracts. Associated with its membership, the Company may be required to pay a proportionate share of financial obligations of another member who may default on its obligations to the exchanges or the clearing house. While the rules governing different exchange or clearinghouse memberships vary, in general, the Company's guarantee obligations would arise only if the exchange had previously exhausted its resources. The maximum potential payout under these memberships cannot be estimated. The Company has not recorded any contingent liability in the consolidated financial statements for these agreements and believes that any potential requirement to make payments under these agreements is remote.

Aggregate Contractual Obligations

        As of December 31, 2010, our contractual obligations and other commercial commitments amounted to $103.6 million in the aggregate and consisted of the following (dollars in millions):

	Payments due by period
Contractual obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Purchase of goods and services	$	30,335	$	19,399	$	9,930	$	1,006	$	—
Operating lease obligations		66,170		14,060		23,967		17,697		10,446
Minimum payments under certain employment arrangements		7,111		7,111		—		—		—
Total	$	103,616	$	40,570	$	33,897	$	18,703	$	10,446

        The above information excludes $12.4 million of unrecognized tax benefits discussed in Note 14, Income Taxes, to our consolidated financial statements because it is not possible to estimate the time period when, or if, it might be paid to tax authorities.

        As part of the $150 million, three-year credit agreement we entered into on January 31, 2011, we are required to pay a commitment fee of 0.50% on any unborrowed amounts.

Critical Accounting Estimates

        Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the U.S. In many instances, the application of such principles requires management to make estimates or to apply subjective principles to particular facts and circumstances. A change in the estimates or a variance in the application, or interpretation of accounting principles generally accepted in the U.S. could yield a materially different accounting result. Below is a summary of our critical accounting estimates where we believe that the estimations, judgments or interpretations that we made, if different, would have yielded the most significant differences in our consolidated financial statements. In addition, for a summary of all of our significant accounting policies see Note 2, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements.

Goodwill

        We obtained goodwill and intangible assets as a result of the acquisitions of subsidiaries. Goodwill represents the excess of the cost over the fair market value of net assets acquired. In accordance with Accounting Standards Codification ("ASC" or "FASB Codification") 350, Intangibles—Goodwill and Other, we test goodwill for impairment annually and when an event occurs or circumstances change

41

that would more likely than not reduce the fair value of a reporting unit below its carrying value. Goodwill is tested for impairment using a two-step process.

•

Step one—the fair value of each reporting unit is compared to its carrying value in order to identify potential impairment. If the fair value of a reporting unit exceeds the carrying value of its net assets, goodwill is not considered impaired and no further testing is required. If the carrying value of the net assets exceeds the fair value of a reporting unit, potential impairment is indicated and step two of the impairment test is performed in order to determine the implied fair value of the reporting unit's goodwill and measure the potential impairment loss.

•

Step two—when potential impairment is indicated in step one, we compare the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. Determining the implied fair value of goodwill requires a valuation of the reporting unit's tangible and intangible assets and liabilities in a manner similar to the allocation of the purchase price in a business combination. Any excess of the value of a reporting unit over the amounts assigned to its assets and liabilities is referred to as the implied fair value of goodwill. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

        The impairment assessment requires management to make estimates regarding the fair value of the reporting unit to which goodwill has been assigned. The fair values of our reporting units are determined by considering the income approach, and where appropriate, a combination of the income and market approaches to valuation.

        Under the income approach, the fair value of the reporting unit is estimated based on the present value of expected future cash flows. The income approach is dependent on a discounted cash flow model for each of our reporting units which incorporates a cash flow forecast plus a terminal value (a commonly used methodology to capture the present value of perpetual cash flows assuming an estimated sustainable long term growth rate). Such forecasts consider business plans, historical and anticipated future results based upon our expectations for future product offerings, our market opportunities and challenges and other factors. The discount rates used to determine the present value of future cash flows are based upon an adjusted version of the Capital Asset Pricing Model ("CAPM") to estimate the required rate of return on equity capital. The CAPM measures the rate of return required by investors given a company's risk profile. Significant revisions to any of these estimates could lead to an impairment of all or a portion of goodwill in future periods.

        Under the market approach, the fair value is based upon multiples which are (i) based upon operating data of similar guideline companies, (ii) evaluated and adjusted based on the strengths and weaknesses of our company compared to the guideline companies and (iii) applied to our company's operating data to arrive at an indication of value. We also consider prices paid in recent transactions that have occurred in our industry or related industries. In the latter case, valuation multiples based upon actual transactions are used to arrive at an indication of value. Under the market approach, we make certain judgments about the selection of comparable guideline companies, comparable recent company and asset transactions and transaction control premiums. Although we have based the fair value estimate on assumptions we believe to be reasonable, those assumptions are inherently unpredictable and uncertain and actual results could differ from the estimate.

        Prior to our annual impairment test in the fourth quarter of 2010, indicators of potential impairment since our last annual test caused us to perform interim impairments tests on a quarterly basis. Those indicators included a prolonged decrease in market capitalization below book value, a decline in recent operating results in comparison to prior years and the significant near-term uncertainty on both the global economic recovery and the outlook for our industry. Our interim impairment tests applied the same valuation technique, sensitivity analyses and risk profile attributes used in our prior annual impairment test to our updated quarterly cash flow forecasts.

42

        Based on the results of our quarterly interim testing, no step one goodwill impairment was indicated for our U.S., European and Hong Kong reporting units, as the fair value of each of these units was determined to be in excess of its carrying value. Each interim test employed a revised quarterly forecast and none of the outcomes of the sensitivity analyses performed impacted the step one conclusions. In contrast, our Australian reporting unit failed its step one impairment testing at June 30, 2010 as its fair value was determined to be below its carrying value. Our step two analysis determined the implied fair value of its goodwill to be fully impaired, resulting in a $5.4 million non-cash charge against earnings in the second quarter.

        We performed our annual impairment testing using carrying values as of October 1, 2010. The carrying value of each reporting unit includes the assets and liabilities necessary to operate as a business and generate the cash flows used to determine the fair value of the reporting unit. The sum of the carrying values for all the reporting units equals the reported book value of the consolidated Company.

        A summary of our goodwill by reporting unit, as well as other critical assumptions used, is as follows:

		Goodwill ($ in thousands)		% of Total			Discount Rate			Terminal Growth Rate			% Reporting Unit Fair Value Exceeds its Carrying Value
U.S. Operations		$	439,294		94	%		12.0	%		5	%		25	%
European Operations			28,484		6	%		12.0	%		5	%		57	%
Asia Pacific Operations:
	Hong Kong		701		0	%		11.5	%		5	%		164	%
Total		$	468,479		100	%

        In our impairment testing, we also examined the sensitivity of the fair values of our reporting units by reviewing other scenarios relative to the initial assumptions we used to see if the resulting impact on fair values would have resulted in a different step one conclusion. Accordingly, we performed sensitivity analyses based on more conservative terminal growth scenarios and higher discount rates in which the fair values of these reporting units were recalculated. In the first sensitivity analysis, we lowered our terminal growth rate assumption to 3% (holding all other critical assumptions constant), while in our second sensitivity analysis, we increased each reporting unit's discount rate by 2 percentage points (holding all other critical assumptions constant). None of the outcomes of the sensitivity analyses performed impacted our step one conclusions.

        As a corroborative source of information, we reconcile our estimated fair value to within a reasonable range of our market capitalization, which includes an assumed control premium (an adjustment reflecting an estimated fair value on a control basis), to verify the reasonableness of the fair value of our reporting units obtained through the aforementioned methods. The control premium is estimated based upon control premiums observed in comparable market transactions. We also monitor movement in the price of our common shares subsequent to our annual goodwill impairment testing date. ITG common shares closed at $14.29 and $16.37 per share on October 1 and December 31, 2010, respectively, and have continued to trend higher in 2011. The forecast used to calculate fair value assumes our current expectation for the realization of synergies with ITG Investment Research in 2011 and improvements in the U.S. economy that we expect will positively impact our business in 2011 and forward. We have rolled our impairment analysis forward to December 31, 2010 using the same forecast assumptions and updated amounts for discount rate and control premium factors and carrying values and have concluded that there is no impairment of goodwill or intangible assets at December 31, 2010.

43

        While we have determined the estimated fair values of our reporting units to be appropriate based on the forecasted level of revenue growth, net income and cash flows, in the current market environment it is a reasonable possibility that one of our reporting units may become impaired in future periods as there can be no assurance that our estimates and assumptions made for purposes of our goodwill impairment testing as of October 1, 2010 and December 31, 2010 will prove to be accurate predictions of the future. Our use of the term "reasonable possibility" refers to a potential occurrence that is more than remote, but less than probable in our judgment. If our assumptions regarding forecasted revenue or net income growth rates are not achieved, or if our market capitalization declines further below our reported book value, we may be required to record goodwill impairment charges in future periods, whether in connection with our next annual impairment testing on October 1, 2011 or prior to that, if any indications of potential impairment are present outside of the quarter from when the annual goodwill impairment test is performed. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

Intangible Assets Subject to Amortization

        Intangible assets with definite useful lives are subject to amortization and are evaluated for recoverability when events or changes in circumstances indicate that an intangible asset's carrying amount may not be recoverable in accordance with ASC 360, Property, Plant, and Equipment. If such an event or change occurs, we estimate cash flows directly associated with the use of the intangible asset to test its recoverability and assess its remaining useful life. The projected cash flows require assumptions related to revenue growth, operating margins and other relevant market, economic and regulatory factors. If the expected undiscounted future cash flows from the use and eventual disposition of a finite-lived intangible asset or asset group are not sufficient to recover the carrying value of the asset, we then compare the carrying amount to its current fair value. We estimate the fair value using market prices for similar assets, if available, or by using a discounted cash flow model. We then recognize an impairment loss for the amount by which the carrying amount exceeds its fair value. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.

Share-Based Compensation

        In accordance with ASC 718, Compensation—Stock Compensation, share-based payment transactions require the application of a fair value methodology that involves various assumptions. The fair value of options awarded is estimated on the date of grant using the Black-Scholes option valuation model that uses the following assumptions: expected life of the option, risk-free interest rate, expected volatility of our common stock price and expected dividend yield. We estimate the expected life of the options using historical data and the volatility of our common stock is estimated based on a combination of the historical volatility and the implied volatility from traded options. The fair value of restricted share awards with a market condition is estimated on the date of grant using a Monte Carlo model. A Monte Carlo simulation is an iterative technique designed to estimate future payouts by taking into account our current stock price, the volatility of our common stock, risk-free rates, and a risk-neutral valuation methodology.

        Although both models meet the requirements of ASC 718, the fair values generated by the model may not be indicative of the actual fair values of the underlying awards, as it does not consider other factors important to those share-based compensation awards, such as continued employment, periodic vesting requirements and limited transferability.

        ASC 718 requires us to estimate forfeitures at grant date (rather than recognizing forfeitures as incurred). For the year ended December 31, 2010, a 10% change (increase or decrease) in estimated forfeitures would result in a change to our pre-tax income of under $0.1 million.

44

Fair Value

        Securities owned, at fair value, and securities sold, not yet purchased, at fair value in the Consolidated Statements of Financial Condition are carried at fair value or amounts that approximate fair value, with the related unrealized gains or losses recognized in our results of operations (except for available-for-sale securities, for which unrealized gains or losses are reported in accumulated other comprehensive income unless we believe there is an other-than-temporary impairment in their carrying value). The fair value of these instruments is the amount at which these instruments could be exchanged in a current transaction between willing parties, other than in a forced liquidation. Where available, we use the prices from independent sources such as listed market prices or broker/dealer quotations. For investments in illiquid and privately held securities that do not have readily determinable fair values, we use estimated fair values as determined by management.

Income Taxes and Uncertain Tax Positions

        ASC 740, Income Taxes, establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity's financial statements or tax returns. A valuation allowance may be recorded against deferred tax assets if it is more likely than not that such assets will not be realized. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Fluctuations in the actual outcome of these future tax consequences could materially impact our financial position or results of operations.

        We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate resolution. We consider many factors when evaluating and estimating our tax positions and tax benefits. Such estimates involve interpretations of regulations, rulings, case law, etc. and are inherently complex. Our estimates may require periodic adjustments and may not accurately anticipate actual outcomes as resolution of income tax treatments in individual jurisdictions typically would not be known for several years after completion of any fiscal year. The impact of our reassessment of uncertain tax positions in accordance with ASC 740 did not have a material impact on the results of operations, financial condition or liquidity.

Recently Adopted Accounting Standards

        In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2010-06, Fair Value Measurement and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements. The ASU requires new disclosures including significant transfers in and out of Level 1 and Level 2 fair value measurements and a reconciliation of Level 3 fair value measurements including purchases, sales, issuances and settlements on a gross basis. The ASU also amends ASC Subtopic 820-10 to clarify certain existing disclosures regarding the level of disaggregation at which fair value measurements are provided for each class of assets and liabilities (instead of major category) and disclosures about inputs and valuation techniques used to measure fair value for both recurring and non-recurring fair value measurements that fall in either Level 2 or Level 3. The majority of the provisions of this update, including those applicable to us, were effective for annual and interim periods beginning after December 15, 2009, with the remainder being effective for interim and annual reporting periods beginning after December 15, 2010. Early adoption is permitted. The adoption of the guidance effective in the first quarter of 2010 did not have a material impact on our Company's disclosures nor do we expect the adoption of the remaining guidance in the first quarter of 2011 to impact our disclosures.

45

        In May 2009, the FASB issued ASC 855-10, Subsequent Events. ASC 855-10 establishes principles and requirements for the reporting of events or transactions that occur after the balance sheet date, but before financial statements are issued or are available to be issued. The standard requires the disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or were available to be issued. It became effective with interim and annual financial periods ending after June 15, 2009. In February 2010, the FASB modified this guidance through the issuance of ASU 2010-09 Subsequent Event (Topic 855): Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removes the requirement for companies that file with the SEC to indicate the date through which they have analyzed subsequent events. This updated guidance became effective immediately upon issuance and was adopted in the first quarter of 2010 without any material impact.

Accounting Standards Not Yet Adopted

        In October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements, providing guidance relating to revenue recognition in multiple element arrangements. The new guidance requires entities to allocate consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices (the relative-selling-price method) and eliminates the use of the residual method of allocation. The relative-selling-price method requires that the determination for each deliverable be consistent with the objective of determining vendor-specific evidence of fair value (the price at which each element would be sold on a stand-alone basis), and requires the use of a hierarchy designed to maximize the use of available, objective evidence to support its selling price.

        In October 2009, the FASB issued ASU 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements, providing guidance relating to revenue arrangements that include software elements. Currently, if the software is considered more than incidental to the product or services, the entire arrangement is accounted for under ASC 985-605, Software—Revenue Recognition. Under the new guidance many of these arrangements will be accounted for as multiple element arrangements as follows: (i) the tangible element of the product will always be outside the scope of ASC 985-605, (ii) the software elements of tangible products are outside the scope of ASC 985-605 when the software elements and non-software elements function together to deliver the products essential functionality and (iii) undelivered elements in the arrangement related to the non-software components are excluded from the software revenue recognition guidance.

        The above guidance must be adopted no later than the first fiscal year beginning on or after June 15, 2010. Adoption may be prospective, in which case the guidance is applied to arrangements entered into, or materially modified, after the effective date through retrospective application to all revenue arrangements for all periods presented. If an entity adopts the guidance prospectively, the guidance must be applied to all new arrangements entered into, or materially modified, during the fiscal year of adoption.

        The adoption of these standards and amendments is not expected to have a material impact on our consolidated results of operations or financial condition.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

        Market risk refers to the potential for adverse changes in the value of a company's financial instruments as a result of changes in market conditions. We are exposed to market risk associated with changes in interest rates, foreign currency exchange rates and equity prices. We do not hold or issue financial instruments for trading purposes on a long-term basis. We continually evaluate our exposure to market risk and oversee the establishment of policies, procedures and controls to ensure that market risks are identified and analyzed on an ongoing basis.

46

        We have performed sensitivity analyses on different tests of market risk as described in the following sections to estimate the impacts of a hypothetical change in market conditions on the U.S. Dollar value of non-U.S. Dollar-based revenues associated with our Canadian, European and Asia Pacific Operations. Estimated potential losses assume the occurrence of certain adverse market conditions. Such estimates do not consider the potential effect of favorable changes in market factors and also do not represent management's expectations of projected losses in fair value. We do not foresee any significant changes in the strategies we use to manage interest rate risk, foreign currency risk or equity price risk in the near future.

Interest Rate Risk

        Our exposure to interest rate risk relates primarily to interest-sensitive financial instruments in our investment portfolio and our revolving credit facility. Since our new $150.0 million credit facility is specifically earmarked for limited short-term borrowings to support U.S. brokerage clearing operations, the impact of any adverse change in interest rates on this facility should not be material. Interest-sensitive financial instruments in our investment portfolio will decline in value if interest rates increase. Our interest-bearing investment portfolio primarily consists of short-term, high-credit quality money market mutual funds. The aggregate fair market value of our portfolio including restricted cash was $366.7 million and $379.4 million as of December 31, 2010 and 2009, respectively. Our interest-bearing investments are not insured and because of the short-term high quality nature of the investments are not likely to fluctuate significantly in market value.

Foreign Currency Risk

        We currently operate and continue to expand globally, principally through our operations in Canada, Europe and Asia Pacific as well as through the development of specially tailored versions of our services to meet the needs of our clients who trade in international markets. Additionally, we maintain a technology development facility in Israel. Our investments and development activities in these countries expose us to currency exchange rate fluctuations primarily between the U.S. Dollar and the British Pound Sterling, Euro, Australian Dollar, Canadian Dollar, Hong Kong Dollar and Israeli New Shekel. When the U.S. Dollar strengthens against these currencies, the U.S. Dollar value of non-U.S. Dollar-based revenue decreases. To the extent that our international activities recorded in local currencies increase in the future, our exposure to fluctuations in currency exchange rates will correspondingly increase. We have not engaged in derivative financial instruments as a means of hedging this financial statement risk. Non-U.S. Dollar cash balances held overseas are generally kept at levels necessary to meet current operating and capitalization needs. The Company may at times hedge small amounts of the Non-U.S. dollar cash balances to mitigate exposure.

        Approximately 32% and 28% of our revenues for the years ended December 31, 2010 and 2009, respectively, were denominated in non-U.S. Dollar currencies. For the years ended December 31, 2010 and 2009, respectively, we estimate that a hypothetical 10% adverse change in the above mentioned foreign exchange rates against the U.S. Dollar would have resulted in a decrease in net income of $1.2 million and $2.0 million, respectively.

Equity Price Risk

        Equity price risk results from exposure to changes in the prices of equity securities on positions held due to trading errors, including client errors and our own errors, and from principal trading activities, primarily on an intra-day basis. Equity price risk can arise from liquidating all such principal positions. Accordingly, we maintain policies and procedures regarding the management of our principal trading accounts, which require review by a supervisory principal. It is our policy to attempt to trade out of all positions by the end of the day. However, at times, we hold positions overnight if we are unable to trade out of positions during the day. In addition, certain positions may be liquidated over a

47

period of time in an effort to minimize market impact, and we may incur losses relating to such positions. We may also have positions in exchange traded funds ("ETFs") with offsetting positions in the underlying securities as part of an ETF creation and redemption service that we provide to clients.

        We manage equity price risk associated with open positions through the establishment and monitoring of trading policies and through controls and review procedures that ensure communication and timely resolution of trading issues. In addition, our operations and trading departments review all trades that are open at the end of the day.

Cash Management Risk

        Our cash management strategy seeks to optimize excess liquid assets by preserving principal, maintaining liquidity to satisfy capital requirements, minimizing risk and maximizing our after-tax rate of return. Our policy is to invest in high quality credit issuers, limit the amount of credit exposure to any one issuer and invest in tax efficient strategies. Our first priority is to reduce the risk of principal loss. We seek to preserve our invested funds by limiting default risk, market risk, and re-investment risk. We attempt to mitigate default risk by investing principally in U.S. government money market mutual funds and other short-term government debt-based instruments.

        For working capital purposes, we invest only in money market instruments. Cash balances that are not needed for normal operations may be invested in a tax efficient manner in instruments with appropriate maturities and levels of risk to correspond to expected liquidity needs. To the extent that we invest in equity securities, we ensure portfolio liquidity by investing in marketable mutual fund securities with active secondary or resale markets. We do not use derivative financial instruments in our investment portfolio. At December 31, 2010 and 2009, our unrestricted cash and cash equivalents and mutual fund securities owned were $322.1 million and $336.1 million, respectively.

48

Item 8.    Financial Statements and Supplementary Data

	Pages
Report of Independent Registered Public Accounting Firm	50
Consolidated Statements of Financial Condition	51
Consolidated Statements of Income	52
Consolidated Statements of Changes in Stockholders' Equity	53
Consolidated Statements of Cash Flows	54
Notes to Consolidated Financial Statements	55

49

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Investment Technology Group, Inc.:

        We have audited the accompanying consolidated statements of financial condition of Investment Technology Group, Inc. and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Investment Technology Group, Inc. and subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Investment Technology Group, Inc.'s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 28, 2011, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP

New York, New York
February 28, 2011

50

INVESTMENT TECHNOLOGY GROUP, INC.

Consolidated Statements of Financial Condition

(In thousands, except par value and share amounts)

		December 31,
		2010			2009
Assets
Cash and cash equivalents		$	317,010		$	330,879
Cash restricted or segregated under regulations and other			68,965			95,787
Deposits with clearing organizations			14,235			14,891
Securities owned, at fair value			25,789			6,768
Receivables from brokers, dealers and clearing organizations			865,251			364,436
Receivables from customers			606,256			298,342
Premises and equipment, net			34,790			41,437
Capitalized software, net			62,507			68,913
Goodwill			468,479			425,301
Other intangibles, net			36,784			27,263
Income taxes receivable			5,561			13,897
Deferred taxes			4,902			2,910
Other assets			20,324			12,279
Total assets		$	2,530,853		$	1,703,103
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses		$	195,109		$	209,496
Payables to brokers, dealers and clearing organizations			1,139,958			248,664
Payables to customers			272,027			299,200
Securities sold, not yet purchased, at fair value			19,362			31
Income taxes payable			16,215			14,113
Deferred taxes			18,114			16,999
Long term debt			—			46,900
	Total liabilities		1,660,785			835,403
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; 51,790,608 and 51,682,153 shares issued at December 31, 2010 and 2009, respectively			518			517
Additional paid-in capital			246,085			233,374
Retained earnings			833,133			809,153
Common stock held in treasury, at cost; 10,524,757 and 7,891,717 shares at December 31, 2010 and 2009, respectively			(220,161	)		(182,743	)
Accumulated other comprehensive income (net of tax)			10,493			7,399
	Total stockholders' equity		870,068			867,700
Total liabilities and stockholders' equity		$	2,530,853		$	1,703,103

See accompanying Notes to the Consolidated Financial Statements.

51

INVESTMENT TECHNOLOGY GROUP, INC.

Consolidated Statements of Income

(In thousands, except per share amounts)

			Year Ended December 31,
			2010		2009		2008
Revenues:
	Commissions and fees		$	469,005	$	531,998	$	654,889
	Recurring			93,186		87,483		87,991
	Other			8,563		13,588		20,103
		Total revenues		570,754		633,069		762,983
Expenses:
	Compensation and employee benefits			215,886		235,518		256,511
	Transaction processing			85,387		95,618		95,078
	Occupancy and equipment			59,905		59,950		57,816
	Telecommunications and data processing services			53,473		54,549		53,243
	Other general and administrative			94,253		83,028		97,556
	Goodwill impairment			5,375		—		—
	Restructuring charges			4,062		25,444		—
	Acquisition related costs			2,409		—		—
	Interest expense			671		2,511		7,253
		Total expenses		521,421		556,618		567,457
Income before income tax expense				49,333		76,451		195,526
Income tax expense				25,353		33,617		80,884
Net income			$	23,980	$	42,834	$	114,642
Earnings per share:
	Basic		$	0.56	$	0.98	$	2.64
	Diluted		$	0.55	$	0.97	$	2.61
Basic weighted average number of common shares outstanding				42,767		43,538		43,503
Diluted weighted average number of common shares outstanding				43,496		44,018		43,987

See accompanying Notes to the Consolidated Financial Statements.

52

INVESTMENT TECHNOLOGY GROUP, INC.
Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2010, 2009 and 2008
(In thousands, except share amounts)

		Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings		Common Stock Held in Treasury			Accumulated Other Comprehensive Income/(Loss)			Total Stockholders' Equity
Balance at December 31, 2007		$	—	$	515	$	210,071		$	651,677	$	(177,928	)	$	19,960		$	704,295
Net income			—		—		—			114,642		—			—			114,642
Other comprehensive income:
	Currency translation adjustment		—		—		—			—		—			(26,195	)		(26,195	)
	Net change in securities available-for-sale (net of tax)		—		—		—			—		—			(54	)		(54	)
	Unrealized gain on hedging instruments (net of tax)		—		—		—			—		—			210			210
Comprehensive income																	$	88,603
Issuance of common stock for stock options (202,083 shares), restricted share awards (147,223 shares) and employee stock unit awards (157,449 shares), including excess tax benefit of $2.8 million			—		—		(2,957	)		—		10,921			—			7,964
Issuance of common stock for the employee stock purchase plan (79,085 shares)			—		1		2,317			—		—			—			2,318
Purchase of common stock (698,737 shares)			—		—		—			—		(23,020	)		—			(23,020	)
Shares withheld for net settlements of share-based awards (105,804 shares)												(3,179	)					(3,179	)
Share-based compensation			—		—		10,399			—		—			—			10,399
Balance at December 31, 2008		$	—	$	516	$	219,830		$	766,319	$	(193,206	)	$	(6,079	)	$	787,380
Net income			—		—		—			42,834		—			—			42,834
Other comprehensive income:
	Currency translation adjustment		—		—		—			—		—			13,278			13,278
	Net change in securities available-for-sale (net of tax)		—		—		—			—		—			(69	)		(69	)
	Reclassification adjustment for losses recognized in net income (net of tax)		—		—		—			—		—			269			269
Comprehensive income																	$	56,312
Issuance of common stock for stock options (214,445 shares), restricted share awards (183,513 shares) and employee stock unit awards (168,248 shares), including tax benefit shortfall of $1.5 million			—		—		(5,545	)		—		13,115			—			7,570
Issuance of common stock for the employee stock purchase plan (99,847 shares)			—		1		1,832			—		—			—			1,833
Shares withheld for net settlements of share-based awards (119,801 shares)												(2,652	)					(2,652	)
Share-based compensation			—		—		17,257			—		—			—			17,257
Balance at December 31, 2009		$	—	$	517	$	233,374		$	809,153	$	(182,743	)	$	7,399		$	867,700
Net income			—		—		—			23,980		—			—			23,980
Other comprehensive income:
	Currency translation adjustment		—		—		—			—		—			2,939			2,939
	Net change in securities available-for-sale (net of tax)		—		—		—			—		—			155			155
Comprehensive income																		27,074
Issuance of common stock for stock options (125,268 shares), restricted share awards (317,489 shares) and employee stock unit awards (311,106 shares), including tax benefit shortfall of $2.2 million			—		—		(9,925	)		—		16,961			—			7,036
Issuance of common stock for the employee stock purchase plan (108,454 shares)			—		1		1,650			—		—			—			1,651
Majestic acquisition replacement awards			—		—		2,994			—		—			—			2,994
Purchase of common stock (3,151,828 shares)			—		—		—			—		(50,284	)		—			(50,284	)
Shares withheld for net settlements of share-based awards (235,075 shares)												(4,095	)					(4,095	)
Share-based compensation			—		—		17,992			—		—			—			17,992
Balance at December 31, 2010		$	—	$	518	$	246,085		$	833,133	$	(220,161	)	$	10,493		$	870,068

See accompanying Notes to the Consolidated Financial Statements.

53

INVESTMENT TECHNOLOGY GROUP, INC.
Consolidated Statements of Cash Flows
(In thousands)

		Year ended December 31,
		2010			2009			2008
Cash Flows from Operating Activities:
Net income		$	23,980		$	42,834		$	114,642
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization		62,373			60,746			54,180
	Deferred income tax (benefit) expense		(4,315	)		8,501			12,603
	Loss on securities owned		—			—			1,519
	Provision for doubtful accounts		178			(1,689	)		697
	Share-based compensation		18,006			15,983			10,399
	Capitalized software write-off		6,091			—			—
	Non-cash restructuring charges, net		1,461			5,536			—
	Goodwill impairment		5,375			—			—
Changes in operating assets and liabilities:
	Cash restricted or segregated under regulations and other		25,843			(18,479	)		(5,676	)
	Deposits with clearing organizations		656			28,350			4,405
	Securities owned, at fair value		(18,058	)		(363	)		43
	Receivables from brokers, dealers and clearing organizations		(503,140	)		(11,099	)		169,228
	Receivables from customers		(290,031	)		26,807			304,609
	Accounts payable and accrued expenses		(31,995	)		(15,865	)		37,199
	Payables to brokers, dealers and clearing organizations		889,457			1,513			(211,586	)
	Payables to customers		(37,698	)		(18,082	)		(108,642	)
	Securities sold, not yet purchased, at fair value		18,347			(2,452	)		1,631
	Income taxes receivable/payable		10,446			(24,823	)		3,120
	Excess tax benefit from share-based payment arrangements		—			(274	)		(2,787	)
	Other, net		(867	)		290			(5,722	)
	Net cash provided by operating activities		176,109			97,434			379,862
Cash Flows from Investing Activities:
Acquisition of subsidiaries and minority interests, net of cash acquired			(48,926	)		(1,937	)		(5,714	)
Acquisition of patent			—			(450	)		—
Capital purchases			(14,697	)		(15,231	)		(26,206	)
Capitalization of software development costs			(38,480	)		(42,841	)		(40,956	)
Proceeds from sale of investments			—			—			2,815
	Net cash used in investing activities		(102,103	)		(60,459	)		(70,061	)
Cash Flows from Financing Activities:
Repayments of short-term bank loans			—			(24,900	)		(76,500	)
Repayments of long term debt			(46,900	)		(47,600	)		(38,000	)
Excess tax benefit from share-based payment arrangements			—			274			2,787
Common stock issued			10,896			10,934			7,496
Common stock repurchased			(50,284	)		—			(23,020	)
Shares withheld for net settlements of share-based awards			(4,095	)		(2,652	)		(3,179	)
	Net cash used in financing activities		(90,383	)		(63,944	)		(130,416	)
Effect of exchange rate changes on cash and cash equivalents			2,508			4,888			(10,182	)
	Net (decrease) increase in cash and cash equivalents		(13,869	)		(22,081	)		169,203
Cash and cash equivalents—beginning of year			330,879			352,960			183,757
Cash and cash equivalents—end of year		$	317,010		$	330,879		$	352,960
Supplemental cash flow information:
	Interest paid	$	1,343		$	6,478		$	11,117
	Income taxes paid	$	19,345		$	51,930		$	62,808
	Majestic acquisition replacement awards	$	2,994			—			—

See accompanying Notes to the Consolidated Financial Statements.

54

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)   Organization and Basis of Presentation

        Investment Technology Group, Inc. was formed as a Delaware corporation on July 22, 1983. Its principal subsidiaries include: (1) ITG Inc. (a self clearing broker-dealer of equity securities), AlterNet Securities, Inc. ("AlterNet") and ITG Derivatives LLC ("ITG Derivatives"), United States ("U.S.") broker-dealers, (2) Investment Technology Group Limited ("ITGL"), an institutional broker-dealer in Europe, (3) ITG Australia Limited ("ITG Australia"), an institutional broker-dealer in Australia, (4) ITG Canada Corp. ("ITG Canada"), an institutional broker-dealer in Canada, (5) ITG Hong Kong Limited ("ITG Hong Kong"), an institutional broker-dealer in Hong Kong, (6) ITG Software Solutions, Inc., our intangible property, software development and maintenance subsidiary in the U.S., and (7) ITG Solutions Network, Inc. ("ITG Solutions Network"), a holding company for ITG Analytics, Inc. ("ITG Analytics"), a provider of pre- and post- trade analysis, fair value and trade optimization services, The Macgregor Group, Inc. ("Macgregor"), a provider of trade order management technology and network connectivity services for the financial community and ITG Investment Research, Inc. ("ITG Investment Research"), a provider of independent data driven investment and market research.

        ITG is an independent agency research broker that partners with asset managers globally to improve performance throughout the investment process. A leader in electronic trading since launching the POSIT crossing network in 1987, ITG takes a consultative approach in delivering the highest quality institutional liquidity, execution services, analytical tools and proprietary research insights grounded in data. Asset managers rely on ITG's independence, experience and intellectual capital to help mitigate risk, improve performance, and navigate increasingly complex markets. The firm is headquartered in New York with offices in North America, Europe, and the Asia Pacific region.

        The Company's reportable operating segments are: U.S. Operations, Canadian Operations, European Operations and Asia Pacific Operations (see Note 24, Segment Reporting, to the consolidated financial statements, which also includes financial information about geographic areas). The U.S. Operations segment provides trade execution, trade order management, network connectivity and research services to institutional investors, brokers, alternative investment funds and asset managers. The Canadian Operations segment provides trade execution, network connectivity and research services. The European Operations segment provides trade execution, trade order management, network connectivity and research service businesses in Europe and includes a technology research and development facility in Israel. The Asia Pacific Operations segment provides trade execution, network connectivity and research services in Australia and Hong Kong.

        The consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"). The consolidated financial statements reflect all adjustments, which are in the opinion of management, necessary for the fair presentation of results.

(2)   Summary of Significant Accounting Policies

Principles of Consolidation

        The consolidated financial statements represent the consolidation of the accounts of ITG and its subsidiaries in conformity with U.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation. Investments in unconsolidated companies (generally 20 to 50 percent ownership), in which the Company has the ability to exercise significant influence but has neither a controlling interest nor is the primary beneficiary, are accounted for under the equity method.

55

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investments in entities in which the Company does not have the ability to exercise significant influence are accounted for under the cost method. Under certain criteria indicated in ASC 810, Consolidation, a partially-owned affiliate would be consolidated when it has less than a 50% ownership if the Company was the primary beneficiary of that entity. At the present time, there are no interests in variable interest entities.

Use of Estimates

        The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets, liabilities, revenues and expenses. Actual results could differ from those estimates.

Revenue Recognition

        Transactions in securities, commissions and fees and related expenses are recorded on a trade date basis.

        Commissions and fees are derived primarily from (1) commissions charged for trade execution services, (2) income generated from net executions, whereby orders are filled at different prices within or at the National Best Bid and Offer and (3) commission sharing arrangements.

        Recurring revenues are derived from the following primary sources: (1) connectivity fees, (2) software and analytical products and services, (3) maintenance and customer technical support on the Company's order management system and (4) subscription revenue generated from the usage of investment research.

        Substantially all of the Company's recurring revenue arrangements do not require significant modification or customization of the underlying software. Accordingly, the vast majority of software revenue is recognized pursuant to the requirements of ASC 985, Software. Specifically, revenue recognition from subscriptions, maintenance, customer technical support and professional services commences when all of the following criteria are met: (1) persuasive evidence of a legally binding arrangement with a customer exists, (2) delivery has occurred, (3) the fee is deemed fixed or determinable and free of contingencies or significant uncertainties and (4) collection is probable. Where software is provided under a hosting arrangement, revenue is accounted for as a service arrangement since the customer does not have the contractual right to take possession of the software at any time during the hosting period without significant penalty (or it is not feasible for the customer to run the software on either its own hardware or third party hardware).

        Subscription agreements for software products generally include provisions that, among other things, allow customers to receive unspecified future software upgrades for no additional fee, as well as the right to use the software products with maintenance for the term of the agreement, typically one to three years. Under these agreements, once all four of the above noted revenue recognition criteria are met, revenue is recognized ratably over the term of the subscription agreement. If a subscription agreement includes an acceptance provision, revenue is not recognized until the earlier of the receipt of written acceptance from the customer or, if not notified by the customer to cancel the license agreement, the expiration of the acceptance period.

        Other revenues include: (1) income from principal trading, (2) the net interest spread earned on securities borrowed and loaned matched book transactions, (3) non-recurring professional services, such as one-time implementation and customer training related activities, (4) investment and interest

56

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

income, (5) interest income on securities borrowed in connection with customers' settlement activities and (6) market gains/losses resulting from temporary positions in securities assumed in the normal course of agency trading (including client errors and accommodations).

        Revenues from professional services, which are sold as a multiple-element arrangement with the implementation of software, are deferred until go-live (or acceptance, if applicable) of the software and recognized in the same manner as the subscription over the remaining term of the initial contract. Professional services that are not connected with the implementation of software are recognized on a time and material basis as incurred.

Cash and Cash Equivalents

        The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Fair Value of Financial Instruments

        Substantially all of the Company's financial instruments are carried at fair value or amounts approximating fair value. Cash and cash equivalents, securities owned and securities sold, not yet purchased and certain payables are carried at market value or estimated fair value.

Securities Transactions

        Receivables from brokers, dealers and clearing organizations include amounts receivable for fails to deliver, cash deposits for securities borrowed, amounts receivable on open transactions from clearing organizations and non-U.S. broker-dealers and commissions and fees receivable. Payables to brokers, dealers and clearing organizations include amounts payable for fails to receive, amounts payable on open transactions to clearing organizations and non-U.S. broker-dealers, securities loaned and execution cost payables. Receivables from customers consist of customer fails to deliver, amounts receivable on open transactions from non-U.S. customers, commissions and fees earned and receivables billed for research services, net of an allowance for doubtful accounts. Payables to customers primarily consist of customer fails to receive and amounts payable on open transactions to non-U.S. customers. Commissions and fees and related expenses for all securities transactions are recorded on a trade date basis.

        Securities owned, at fair value consist of common stock and mutual funds. Securities sold, not yet purchased, at fair value consist of common stock. Marketable securities owned are valued using market quotes from third parties. Unrealized gains and losses are included in other revenues in the Consolidated Statements of Income, except for unrealized gains and losses on available-for-sale securities which are reported in other accumulated comprehensive income unless there is an other than temporary impairment in their carrying value.

Securities Borrowed and Loaned

        Securities borrowed and securities loaned transactions are reported as collateralized financings. Securities borrowed transactions require the Company to deposit cash, letters of credit, or other collateral with the lender. With respect to securities loaned, the Company receives collateral in the form of cash or other collateral in amounts generally in excess of the fair value of securities loaned. The Company monitors the fair value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as necessary. Securities borrowed and securities loaned

57

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

transactions are recorded at the amount of cash collateral advanced or received adjusted for additional collateral obtained or received.

        The Company engages in securities borrowed and securities loaned transactions as part of its U.S. self-clearing process primarily to facilitate customer transactions, including shortened or extended settlement activities and for failed settlements. On these transactions, interest income for securities borrowed is recorded in other revenue while interest expense from securities loaned is recorded in transaction processing expense on the Consolidated Statements of Income.

        The Company also operates a matched book business where securities are borrowed from one party for the express purpose of loaning such securities to another party, generating a net interest spread. The Company records the net interest earned on these transactions in other revenue on the Consolidated Statements of Income.

Client Commission Arrangements

        Institutional customers are permitted to allocate a portion of their gross commissions to pay for research products and other services provided by third parties. The amounts allocated for those purposes are commonly referred to as client commission arrangements. The cost of independent research and directed brokerage arrangements is accounted for on an accrual basis. Commission revenue is recorded when earned on a trade date basis. Payments relating to client commission arrangements are netted against the commission revenues. Prepaid research, net of allowance is included in receivables from customers and receivables from brokers, dealers and clearing organizations, while accrued research payable is classified as accounts payable and accrued expenses in the Consolidated Statements of Financial Condition.

        Client commissions allocated for research and related prepaid and accrued research balances for the years ended December 31, 2010, 2009 and 2008 were as follows (dollars in millions):

	2010			2009			2008
Client commissions	$	155.8		$	180.3		$	189.3
Prepaid research, gross	$	4.6		$	5.3		$	4.6
Allowance for prepaid research		(0.4	)		(0.5	)		(1.0	)
Prepaid research, net of allowance	$	4.2		$	4.8		$	3.6
Accrued research payable	$	41.6		$	39.0		$	44.3

Capitalized Software

        Software development costs are capitalized when the technological feasibility of a product has been established. Technological feasibility is established when all planning, designing, coding and testing activities that are necessary to establish that the product can be produced to meet design specifications are completed. All costs incurred to establish technological feasibility are expensed as incurred. Capitalized software costs are amortized using the straight-line method over a three year period beginning when the product is available for general release to customers.

Research and Development

        All research and development costs are expensed as incurred. Research and development costs are included in other general and administrative expenses and compensation and employee benefits in the

58

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Consolidated Statements of Income are estimated at $49.1 million, $43.1 million and $39.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.

Business Combinations, Goodwill and Other Intangibles

        Assets acquired and liabilities assumed are recorded at their fair values on the date of acquisition. The cost to be allocated in a business combination includes consideration paid to the sellers, including cash and the fair values of assets distributed and the fair values of liabilities assumed. Both direct (e.g., legal and professional fees) and indirect costs of the business combination are expensed as incurred. (Prior to January 1, 2009, direct costs of business combinations were recognized as part of the cost of the acquired entity.) Certain agreements to acquire entities include potential additional consideration that is payable contingent on the acquired company maintaining or achieving specified earnings levels in future periods. For acquisitions that took place prior to January 1, 2009 the fair value of the consideration issued or issuable is recorded as an additional cost of the acquired entity when the contingency is resolved and additional consideration is distributable. For acquisitions occurring after January 1, 2009, the fair value of any contingent consideration would be recognized on the acquisition date with subsequent changes in that fair value reflected in income. The consolidated financial statements and results of operations reflect an acquired business from the date of acquisition.

        An intangible asset is recognized as an asset apart from goodwill if it arises from contractual or other legal rights or if it is separable (i.e. capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged). Goodwill represents the excess of the cost of each acquired entity over the amounts assigned to the tangible and identifiable intangible assets acquired and liabilities assumed.

        The judgments that are made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following a business combination. Traditional approaches used to determine fair value include the income, cost and market approaches. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach or combination of approaches ultimately selected is based on the characteristics of the asset and the availability of information.

        Goodwill is assessed no less than annually for impairment. The fair values used in our impairment testing are determined by the discounted cash flow method (an income approach) and where appropriate, a combination of the discounted cash flow method and the guideline company method (a market approach). An impairment loss is indicated if the estimated fair value of a reporting unit is less than its net book value. In such a case, the impairment loss is calculated as the amount by which the carrying value of goodwill exceeds its implied fair value. In determining the fair value of each of the Company's reporting units, the discounted cash flow analyses employed require significant assumptions and estimates about the future operations of each reporting unit. Significant judgments inherent in these analyses include the determination of appropriate discount rates, the amount and timing of expected future cash flows and growth rates. The cash flows employed in the Company's 2010 discounted cash flow analyses were based on financial forecasts, which in turn were based on the 2011 annual budget developed internally by management. The Company's discount rate assumptions are based on a determination of its required rate of return on equity capital.

59

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Other intangibles with definite lives are amortized over their useful lives. All other intangibles are assessed at least annually for impairment. If impairment is indicated, an impairment loss is calculated as the amount by which the carrying value of an intangible asset exceeds its estimated fair value.

Premises and Equipment

        Furniture, fixtures and equipment are carried at cost and are depreciated using the straight-line method over the estimated useful lives of the assets (generally three to seven years). Leasehold improvements are carried at cost and are amortized using the straight-line method over the lesser of the estimated useful lives of the related assets or the non-cancelable lease term.

Impairment of Long-Lived Assets

        Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is generally based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition, as well as specific appraisal in certain instances. Measurement of an impairment loss for long-lived assets that management expects to hold and use is based on the fair value of the asset as estimated using a cash flow model. Long-lived assets to be disposed of are reported at the lower of carrying amount of fair value less costs to sell.

Income Taxes

        Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded against deferred tax assets if it is more likely than not that such assets will not be realized. Contingent income tax liabilities are recorded when the criteria for loss recognition have been met. An uncertain tax position is recognized based on the determination of whether or not a tax position is more likely than not to be sustained upon examination based upon the technical merits of the position. If this recognition threshold is met, the tax benefit is then measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

Taxes Collected from Customers and Remitted to Governmental Authorities

        Taxes assessed by a governmental authority that are directly imposed on a revenue producing transaction between the Company and its customers, including but not limited to sales, use, value added and some excise taxes are presented in the consolidated financial statements on a net basis (excluded from revenues).

Earnings per Share

        Basic earnings per share is determined by dividing earnings by the average number of shares of common stock outstanding, while diluted earnings per share is determined by dividing earnings by the average number of shares of common stock adjusted for the dilutive effect of common stock equivalents by application of the treasury stock method.

60

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Share-based Compensation

        Share-based compensation expense requires measurement of compensation cost for share-based awards at fair value and recognition of compensation cost over the vesting period, net of estimated forfeitures. For awards with graded vesting schedules that only have service conditions, the Company recognizes compensation cost evenly over the requisite service period for the entire award using the straight-line attribution method. For awards with both service and performance conditions, the Company recognizes compensation cost on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards.

        The fair value of stock options granted is estimated using the Black-Scholes option-pricing model, which considers, among other factors, the expected term of the award and the expected volatility of the Company stock price. Although the Black-Scholes model meets the requirements of ASC 718, the fair values generated by the model may not be indicative of the actual fair values of the underlying awards, as it does not consider other factors important to those share-based compensation awards, such as continued employment, periodic vesting requirements and limited transferability.

        The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2010, 2009 and 2008:

	2010			2009			2008
Dividend yield		0.0	%		0.0	%		0.0	%
Risk free interest rate		1.5	%		2.3	%		3.0	%
Expected volatility		44	%		49	%		36	%
Expected life (years)		4.00			4.00			3.94

        The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected option life is based on historical experience of employee exercise behavior. Expected volatility is based on historical volatility, implied volatility, price observations taken at regular intervals and other factors deemed appropriate. Expected dividend is based upon the current dividend rate.

        The fair value of restricted share awards is based on the fair value of the Company's common stock on the grant date.

        Certain restricted stock awards granted have both service and market conditions. Awards with market conditions are valued based on (a) the grant date fair value of the award for equity-based awards or (b) the period-end fair value for liability based awards. Fair value for market condition based awards is determined using a Monte Carlo simulation model to simulate a range of possible future stock prices for the Company's common stock. Compensation costs for awards with market conditions are recognized on a graded vesting basis over the estimated service period calculated by the Monte Carlo simulation model.

        Phantom stock awards are settled in cash and are therefore classified as liability awards. The fair value of the liability is remeasured at each reporting date until final settlement using the fair value of the Company's common stock on that date.

        Cash flows related to income tax deductions in excess of the compensation cost recognized on share-based awards exercised during the period presented (excess tax benefit) are classified in financing cash flows in the Consolidated Statements of Cash Flows.

61

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign Currency Translation

        Assets and liabilities denominated in non-U.S. currencies are translated at rates of exchange prevailing on the date of the Consolidated Statements of Financial Condition, and revenues and expenses are translated at average rates of exchange during the fiscal year. Gains or losses on translation of the financial statements of a foreign operation, where the functional currency is other than the U.S. Dollar, together with the after-tax effect of exchange rate changes on intercompany transactions of a long-term investment nature, are reflected as a component of accumulated other comprehensive income in stockholders' equity. Gains or losses on foreign currency transactions are included in other general and administrative expenses in the Consolidated Statements of Income.

Derivative Financial Instruments

        The Company uses derivative financial instruments to economically hedge certain foreign currency exposure. It does not use derivative financial instruments for speculative purposes. See Note 5, Derivative Instruments, for a full description of derivative financial instrument activities and related accounting policies.

(3)   Restructuring Charges

        In connection with the integration of ITG Investment Research, in the fourth quarter of 2010 the Company decided to close its Westchester, NY office and relocate the staff, primarily sales traders and support, to its New York City office and incurred a one-time restructuring charge of $2.3 million, consisting of lease abandonment ($2.2 million) and employee severance ($0.1 million). Payments against these accrued costs will begin in 2011 and are expected to continue through 2016. Related cost savings for 2011 are estimated at $0.8 million.

        In the second quarter of 2010, the Company implemented a plan to close its on-shore operations in Japan to lower costs and reduce capital requirements. The annual expenses for the on-shore Japanese operations were approximately $4 million and the amount of regulatory capital deployed exceeded $20 million. In connection with this move, a one-time charge of $2.1 million was recorded for employee severance, contract termination costs and non-cash write-offs of fixed assets and capitalized software, net of a partial offset for cumulative translation gains that were reclassified to operations following the substantial liquidation of the Japanese subsidiary.

        The following table summarizes the pre-tax charges incurred by the Asia Pacific Operations segment during 2010 (dollars in thousands). These charges are classified as restructuring charges in the Consolidated Statements of Income.

		2010
Employee separation and related costs		$	1,282
Contract termination charges			160
Asset write-offs:
	Capitalized software		690
	Fixed assets		240
	Other assets		146
Reclassification of cumulative translation gain			(442	)
Total restructuring charges		$	2,076

62

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Employee separation and related costs pertain to the termination of 15 employees. The contract termination charges primarily consist of charges to terminate a lease agreement.

        Activity and liability balances recorded as part of the Asia Pacific restructuring plan through December 31, 2010 are as follows (dollars in thousands):

	Employee separation and related costs			Contract termination charges			Asset write-offs			Currency Translation Gain			Total
Restructuring charges recognized	$	1,282		$	160		$	1,076		$	(442	)	$	2,076
Cash payments		(1,253	)		(160	)		—						(1,413	)
Asset write-offs/translation gain		—			—			(1,076	)		442			(634	)
Acceleration of share-based compensation in additional paid-in capital		(29	)		—			—						(29	)
Other		—			11			—						11
Ending liability balance	$	—		$	11		$	—		$	—		$	11

        Virtually all of the remaining accrued costs (included in accounts payable and accrued expenses) are expected to be paid during the first quarter of 2011.

        In the fourth quarter of 2009, the Company committed to a restructuring plan (aimed primarily at its U.S. Operations) to reengineer its operating model to focus on a leaner cost structure and a more selective deployment of resources towards those areas of our business that provide a sufficiently profitable return. As a result, a $25.4 million restructuring charge was recorded, which included costs related to employee separation, the consolidation of leased facilities and write-offs of capitalized software and certain intangible assets primarily due to changes in product priorities. Employee separation and related costs pertain to the termination of 144 employees primarily from the U.S. Operations. The consolidation of leased facilities charges relate to non-cancelable leases which were vacated.

        The following table summarizes the changes in the Company's liability balance related to the 2009 restructuring plan included in accounts payable and accrued expenses in the Consolidated Statements of Financial Condition (dollars in thousands):

		Employee separation and related costs			Consolidation of leased facilities			Total
Balance at December 31, 2009		$	16,451		$	1,568		$	18,019
	Utilized—cash		(16,083	)		(715	)		(16,798	)
	Non-cash adjustment		(291	)		—			(291	)
Balance at December 31, 2010		$	77		$	853		$	930

        Virtually all the remaining accrued costs are expected to be paid during 2011 except for payments related to the leased facilities and the settlement of restricted share awards which will continue through April 2012.

(4)   Fair Value Measurements

        Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value,

63

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

various methods are used including market, income and cost approaches. Based on these approaches, certain assumptions that market participants would use in pricing the asset or liability are used, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable firm inputs. Valuation techniques that are used maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, fair value measured financial instruments are categorized according to the fair value hierarchy prescribed by ASC 820. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

•

Level 1: Fair value measurements using unadjusted quoted market prices in active markets for identical, unrestricted assets or liabilities.

•

Level 2: Fair value measurements using correlation with (directly or indirectly) observable market-based inputs, unobservable inputs that are corroborated by market data, or quoted prices in markets that are not active.

•

Level 3: Fair value measurements using inputs that are significant and not readily observable in the market.

        Level 1 consists of financial instruments whose value is based on quoted market prices such as exchange-traded mutual funds and listed equities.

        Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models are primarily standard models that consider various assumptions including time value, yield curve and other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category include non-exchange-traded derivatives such as currency forward contracts.

        Level 3 is comprised of financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are generally less readily observable.

64

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Fair value measurements for those items measured on a recurring basis are as follows (dollars in thousands):

December 31, 2010		Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
	Tax free money market mutual funds	$	5,061	$	5,061	$	—	$	—
	U.S. government money market mutual funds		192,617		192,617		—		—
	Money market mutual funds		7,971		7,971		—		—
Securities owned, at fair value:
	Trading securities		19,051		19,051		—		—
	Available-for-sale securities		1,662		1,662		—		—
	Equity index mutual funds		3,402		3,402		—		—
	Bond mutual funds		1,674		1,674		—		—
Total		$	231,438	$	231,438	$	—	$	—
Liabilities
Accounts payable and accrued expenses:
	Currency forward contracts	$	9	$	—	$	9	$	—
Securities sold, not yet purchased, at fair value:
	Common stock		19,362		19,362		—		—
Total		$	19,371	$	19,362	$	9	$	—

December 31, 2009		Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
	Tax free money market mutual funds	$	8,938	$	8,938	$	—	$	—
	U.S. government money market mutual funds		207,133		207,133		—		—
	Money market mutual funds		4,514		4,514		—		—
Securities owned, at fair value:
	Trading securities		125		125		—		—
	Available-for-sale securities		1,403		1,403		—		—
	Equity index mutual funds		3,357		3,357		—		—
	Bond mutual funds		1,883		1,883		—		—
Total		$	227,353	$	227,353	$	—	$	—
Liabilities
Accounts payable and accrued expenses:
	Currency forward contracts	$	3	$	—	$	3	$	—
Securities sold, not yet purchased, at fair value:
	Common stock		31		31		—		—
Total		$	34	$	31	$	3	$	—

        Cash and cash equivalents other than bank deposits are measured at fair value and include U.S. government money market mutual funds.

65

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Securities owned, at fair value and securities sold, not yet purchased, at fair value include common stocks, equity index mutual funds and bond mutual funds, all of which are exchange traded.

        Currency forward contracts are valued based upon forward exchange rates and approximate the credit risk adjusted discounted net cash flow that would have been realized if the contracts had been sold at the balance sheet date.

        Certain items are measured at fair value on a non-recurring basis. The table below details the portion of those items that were measured at fair value during 2010 and the resultant loss recorded (dollars in thousands):

			Fair Value Measurements Using
	Total		Level 1		Level 2		Level 3		Total Losses
Capitalized software	$	—	$	—	$	—	$	—	$	6,781
Goodwill—ITG Australia		—		—		—		—		5,375
Fixed assets		—		—		—				240
Total	$	—	$	—	$	—	$	—	$	12,396

        The three items detailed above, after giving effect to the fair value measurement, had zero balances at December 31, 2010.

        Following the 2009 restructuring (see Note 3, Restructuring Charges), the Company continued to evolve its product development plan in the first quarter of 2010, and as a result determined that additional capitalized development initiatives of $6.1 million were not likely to be used. Included in other general and administrative expense on the Consolidated Statements of Income for 2010 is a charge of $6.1 million to write-off these amounts.

        As part of the restructuring of the Asia Pacific Operations (see Note 3, Restructuring Charges) non-cash write-offs of fixed assets and capitalized software ($0.9 million) were recorded and included in restructuring charges on the Consolidated Statements of Income as of the second quarter of 2010.

        ITG Australia goodwill with a carrying value of $5.4 million was written down to its implied fair value of zero, resulting in an impairment charge of $5.4 million in the second quarter of 2010 (see Note 7, Goodwill and Other Intangibles).

(5)   Derivative Instruments

Derivative Contracts

        All derivative instruments are recorded on the Consolidated Statements of Financial Condition at fair value in other assets or accounts payable and accrued expenses. Recognition of the gain or loss that results from recording and adjusting a derivative to fair value depends on the intended purpose for entering into the derivative contract. Gains and losses from derivatives that are not accounted for as hedges under ASC 815, Derivatives and Hedging, are recognized immediately in income. For derivative instruments that are designated and qualify as a fair value hedge, the gains or losses from adjusting the derivative to its fair value will be immediately recognized in income and, to the extent the hedge is effective, offset the concurrent recognition of changes in the fair value of the hedged item. Gains or losses from derivative instruments that are designated and qualify as a cash flow hedge will be recorded on the Consolidated Statements of Financial Condition in accumulated other comprehensive income

66

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

("OCI") until the hedged transaction is recognized in income. However, to the extent the hedge is deemed ineffective, the ineffective portion of the change in fair value of the derivative will be recognized immediately in income. For discontinued cash flow hedges, prospective changes in the fair value of the derivative are recognized in income. Any gain or loss in accumulated OCI at the time the hedge is discontinued will continue to be deferred until the original forecasted transaction occurs. However, if it is determined that the likelihood of the original forecasted transaction is no longer probable, the entire related gain or loss in accumulated OCI is immediately reclassified into income.

Cash Flow Hedges

        In 2006, the Company entered into interest rate swaps to hedge the risk related to the variability of LIBOR-based interest payments that we believed were likely to occur over the next three years. The interest rate swaps, which were designated as hedging instruments in a cash flow hedge, matured on March 31, 2009. During 2009, the final settlement of these swaps increased interest expense by approximately $0.5 million.

Economic Hedges

        The Company enters into three month forward contracts to sell Euros and buy British Pounds to economically hedge against the risk of currency movements on Euro deposits held in banks across Europe for equity trade settlement. When a contract matures, an assessment is made as to whether or not the contract value needs to be amended prior to entering into another, to ensure continued economic hedge effectiveness. As these contracts are not designated as hedges, the changes to their fair value are recognized immediately in income. The related counterparty agreements do not contain any credit-risk related contingent features. There were no open three month forward contracts outstanding at December 31, 2010.

        When clients request trade settlement in a currency other than the currency in which the trade was executed, the Company enters into foreign exchange contracts in order to close out the resulting foreign currency position. The foreign exchange deals are executed the same day as the underlying trade. As these contracts are not designated as hedges, the changes to their fair value are recognized immediately in income. These foreign exchange contracts are reflected in the tables below.

Fair Values and Effects of Derivatives Held

        Asset derivatives are included in other assets while liability derivatives are included in accounts payable and accrued expenses on the Consolidated Statements of Financial Condition. The following table summarizes the fair values of derivative instruments at December 31 (dollars in thousands). There were no derivatives designated as hedging instruments in either period.

		Asset/(Liability) Derivatives Fair Value
Derivatives not designated as hedging instruments:		December 31 2010			December 31, 2009
Currency forward contracts		$	(9	)	$	(3	)
	Total derivatives not designated as hedging instruments		(9	)		(3	)
	Total derivatives	$	(9	)	$	(3	)

        All currency forward contracts open at December 31, 2010 matured in January 2011.

67

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        The following table summarizes the impact the effective portion of derivative instruments had on the results of operations (dollars in thousands) at December 31. Losses were reclassified from accumulated other comprehensive income into interest expense on the Consolidated Statements of Income (see Note 16, Other Comprehensive Income).

		Gain/(Loss) Recognized in OCI (Effective Portion)				Gain/(Loss) Reclassified from OCI into Income (Effective Portion)
		2010		2009		2010		2009
Interest rate swaps		$	—	$	—	$	—	$	(450	)
	Total	$	—	$	—	$	—	$	(450	)

        As of December 31, 2010 and 2009, no derivative instruments were deemed ineffective; therefore no gain or loss was recognized in the Consolidated Statements of Income.

        The following table summarizes the impact that derivative instruments not designated as hedging instruments under ASC 815 had on the results of operations, which are recorded in other general and administrative expense in the Consolidated Statements of Income at December 31 (dollars in thousands).

		Gain/(Loss) Recognized in Income
Derivatives Not Designated as Hedging Instruments		2010		2009
Currency forward contracts		$	144	$	270
	Total	$	144	$	270

(6)   Acquisitions

Majestic Research Corp.

        On October 25, 2010, the Company acquired Majestic Research Corp. ("Majestic"), a privately held, independent provider of data-driven equity research for the institutional investment community for $56.1 million. Majestic (now ITG Investment Research) helps investors gain independent perspectives on companies and their sectors based on proprietary data sources and rigorous analysis, providing coverage of 17 industry sectors as well as macroeconomics and customized research reports to institutional investors and corporate clients. This acquisition is part of the Company's strategy to expand its addressable market and compete for research driven commissions.

        The results of ITG Investment Research have been included in the Company's consolidated financial statements since its acquisition date. The $56.1 million purchase price for Majestic is comprised of $53.1 million in cash and $3.0 million in converted equity awards. In connection with the acquisition, the Company also incurred approximately $2.4 million of acquisition related costs, including legal fees and other professional fees, accelerated employee equity awards and severance costs, which were classified as acquisition related costs in the Consolidated Statements of Income.

68

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        The assets and liabilities of Majestic were recorded as of the acquisition date, at their respective fair values, under business combination accounting. The preliminary purchase price allocation is based on estimates of the fair value of assets acquired and liabilities assumed as follows:

Cash	$	7,151
Accounts receivable, net		3,194
Customer related intangible assets		12,500
Deferred tax assets		4,027
Other assets		1,133
Accounts payable and accrued liabilities		(10,098	)
Deferred revenue		(5,093	)
Deferred tax liabilities		(5,182	)
Other liabilities		(134	)
Goodwill		48,573
Total purchase price	$	56,071

        The above purchase price allocation is based upon preliminary calculations and valuations and our estimates and assumptions are subject to change as we obtain additional information for our estimates during the measurement period. The primary area subject to change is the finalization of a purchase price adjustment which would impact the final calculation of residual goodwill.

        The goodwill and customer related intangible asset were assigned to the U.S. Operations segment. The goodwill is not deductible for tax purposes. The acquired customer related intangible asset of $12.5 million has a 12 year useful life. The pro forma results of the Majestic acquisition would not have been material to the Company's result of operations.

Block Alert, LLC

        On August 16, 2006, the Company entered into a 50% joint venture agreement with Merrill Lynch to form Block Alert, LLC ("BLOCKalert"), a global block order crossing service providing a liquidity pool for block orders utilizing its anonymous and independent POSIT crossing system. On July 30, 2008, the Company acquired the remaining shares of the BLOCKalert joint venture (now POSIT Alert LLC) that it did not already own for $10.0 million, bringing its ownership interest to 100% and resulting in the consolidation of all assets and liabilities in the accompanying Consolidated Statements of Financial Condition. The purchase price has been allocated to assets acquired and liabilities assumed based upon an allocation of historical book values and estimated fair market values at the date of acquisition and includes an intangible asset (proprietary software) of $2.8 million. The $1.7 million excess of the investment cost over the estimated fair value of the net assets acquired was allocated to goodwill. The goodwill and intangible assets were assigned to the U.S. Operations segment. The goodwill is deductible for tax purposes. Prior to its becoming a wholly owned subsidiary on July 30, 2008, the Company accounted for the initial 50% interest in the BLOCKalert joint venture under the equity method.

RedSky Financial, LLC

        On July 31, 2007, the Company acquired 100% of RedSky Financial, LLC (now ITG Derivatives) for $22.5 million and incurred acquisition costs of $0.4 million. In 2009, a contingent payment of $2.5 million was made in accordance with the purchase agreement, of which $1.9 million was included

69

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

in the $22.9 million purchase price and $0.6 million was recognized as expense over the appropriate period since the acquisition date as it was considered to be compensatory.

        Pursuant to the purchase agreement, a guaranteed payment of $7.5 million is payable in 2011, of which $5.6 million was included in the purchase price of $22.9 million. The remaining $1.9 million is considered compensatory and was recognized as expense over the appropriate period through December 31, 2010. However, due to employee terminations resulting in payout forfeitures, the $1.9 million was adjusted down by $0.1 million to $1.8 million. As a result, a guaranteed payment of $7.4 million was made in January 2011.

        The purchase agreement provided for additional contingent payments of up to $12.5 million based on 2008 to 2010 cumulative results, with approximately $7.0 million of such payments to be recognized as expense in the appropriate periods as this amount was considered to be compensatory. Based on the three year cumulative results ending December 31, 2010, we do not anticipate that the above noted contingent payments will be required.

(7)   Goodwill and Other Intangibles

Goodwill

        The following table presents the changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2010 and 2009 (dollars in thousands):

	U.S. Operations			European Operations			Asia Pacific Operations			Total
Gross goodwill at December 31, 2008	$	389,079		$	28,524		$	6,293		$	423,896
Accumulated impairment losses		—			—			—			—
Net goodwill at December 31, 2008	$	389,079		$	28,524		$	6,293		$	423,896
2009 Activity:
ITG Derivatives purchase price adjustment		1,937			—			—			1,937
Currency translation adjustment		(295	)		(57	)		(180	)		(532	)
Gross goodwill at December 31, 2009	$	390,721		$	28,467		$	6,113		$	425,301
Accumulated impairment losses		—			—			—			—
Net goodwill at December 31, 2009	$	390,721		$	28,467		$	6,113		$	425,301
2010 Activity:
Impairment losses		—			—			(5,375	)		(5,375	)
Acquisition of Majestic Research Corp.		48,573			—			—			48,573
Currency translation adjustment		—			17			(37	)		(20	)
Gross goodwill at December 31, 2010	$	439,294		$	28,484		$	6,076		$	473,854
Accumulated impairment losses		—			—			(5,375	)		(5,375	)
Net goodwill at December 31, 2010	$	439,294		$	28,484		$	701		$	468,479

        Goodwill is assessed no less than annually for impairment (see Note 2, Summary of Significant Accounting Policies). During 2010, indicators of potential impairment prompted the Company to perform goodwill impairment tests at the end of each quarterly interim period. These indicators included a prolonged decrease in the Company's market capitalization, a decline in the Company's recent operating results in comparison to prior years, and the significant near-term uncertainty related

70

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

to both the global economic recovery and the outlook for the Company's industry. As part of the June 30, 2010 interim test, it was determined that $5.4 million of goodwill related to the Company's Australian operations was impaired, as its fair value was determined to be below its carrying value, resulting in a $5.4 million non-cash charge against earnings in the second quarter. If there is a further reduction in profitability or in ITG's share price, the Company may be required to record additional impairment charges on goodwill. Since goodwill comprises a substantial portion of its balance sheet, such charges could have a material impact on the Company's consolidated financial statements.

Other Intangible Assets

        Acquired other intangible assets consisted of the following at December 31, 2010 and 2009 (dollars in thousands):

		2010				2009
		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Useful Lives (Years)
Trade names		$	10,400	$	1,036	$	10,400	$	780		5.0
Customer related intangibles			20,901		2,571		8,401		1,919		7.1
Proprietary software			20,876		12,001		20,876		9,930		17.6
Trading rights			165		—		165		—		—
Other			50		—		50		—		—
	Total	$	52,392	$	15,608	$	39,892	$	12,629

        During 2010, we recorded a $12.5 million customer related intangible asset with a useful life of 12 years related to the acquisition of Majestic.

        At December 31, 2010, indefinite-lived intangibles not subject to amortization amounted to $8.6 million, of which $8.4 million related to the POSIT trade name. Amortization expense for definite-lived intangibles was $3.0 million, $3.3 million and $3.1 million for the years ended December 31, 2010, 2009 and 2008, respectively and was included in other general and administrative expense in the Consolidated Statements of Income.

        The Company's estimate of future amortization expense for acquired other intangibles that exist at December 31, 2010 is as follows (dollars in thousands):

Year		Estimated Amortization
2011		$	3,812
2012			3,812
2013			3,812
2014			3,257
2015			1,907
Thereafter			11,571
	Total	$	28,171

        The Company performed its annual impairment testing as of October 1 and determined that there was no impairment of the carrying values of goodwill or other intangible assets in the periods presented.

71

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(8)   Cash Restricted or Segregated Under Regulations and Other

        Cash restricted or segregated under regulations and other represents (i) funds on deposit for the purpose of securing working capital facilities for clearing and settlement activities in Hong Kong, (ii) a special reserve bank account for the exclusive benefit of customers and brokers ("Special Reserve Bank Account") maintained by ITG Inc. in accordance with Rule 15c3-3 of the Exchange Act ("Customer Protection Rule"), (iii) funds relating to the securitization of a letter of credit and a bank guarantee supporting two Macgregor leases, (iv) funds on deposit for European trade clearing and settlement activity, (v) segregated balances under a collateral account control agreement for the benefit of certain customers (vi) funds relating to the securitization of bank guarantees supporting Australian and Israeli leases and (vii) funds relating to the securitization of a letter of credit supporting an ITG Investment Research lease.

(9)   Securities Owned and Sold, Not Yet Purchased

        The following is a summary of securities owned and sold, not yet purchased at December 31 (dollars in thousands):

		Securities Owned				Securities Sold, Not Yet Purchased
		2010		2009		2010		2009
Corporate stocks—trading securities		$	19,051	$	125	$	19,362	$	31
Corporate stocks—available-for-sale			1,662		1,403		—		—
Mutual funds			5,076		5,240		—		—
	Total	$	25,789	$	6,768	$	19,362	$	31

        Trading securities owned and sold, not yet purchased primarily consists of temporary positions obtained in the normal course of agency trading activities, including positions held in connection with the creation and redemption of exchange traded funds on behalf of clients.

Available-for-Sale Securities

        Unrealized holding gains and losses for available-for-sale securities, net of tax effects, which are reported in accumulated other comprehensive income until realized, are as follows as of December 31 (dollars in thousands):

		After-Tax Unrealized Holding Gain/(Loss)
		2010		2009
Positions with net gains		$	86	$	—
Positions with net (losses)			—		(69	)
	Total gain/(loss)	$	86	$	(69	)

        There were no sales of available-for-sale securities during 2010 or 2009.

72

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Receivables and Payables

Receivables from and Payables to Brokers, Dealers and Clearing Organizations

        The following is a summary of receivables from and payables to brokers, dealers and clearing organizations (dollars in thousands):

		Receivables from						Payables to
		2010			2009			2010		2009
Broker-dealers		$	246,560		$	303,072		$	403,432	$	196,042
Clearing organizations			413			5,401			108,526		2
Securities borrowed			618,662			56,266			—		—
Securities loaned			—			—			628,000		52,620
Allowance for doubtful accounts			(384	)		(303	)		—		—
	Total	$	865,251		$	364,436		$	1,139,958	$	248,664

Receivables from and Payables to Customers

        The following is a summary of receivables from and payables to customers (dollars in thousands):

		Receivables from						Payables to
		2010			2009			2010		2009
Customers		$	607,286		$	299,189		$	272,027	$	299,200
Allowance for doubtful accounts			(1,030	)		(847	)		—		—
	Total	$	606,256		$	298,342		$	272,027	$	299,200

        The Company maintains an allowance for doubtful accounts based upon estimated collectibility of receivables. The allowance was increased by $0.2 million in 2010, following a decrease of $1.7 million in 2009 and an increase of $0.7 in 2008. Total write-offs against the allowance of $0.1 million, $0.3 million and $1.0 million were recorded during 2010, 2009 and 2008, respectively.

Securities Borrowed and Loaned

        As of December 31, 2010, securities borrowed as part of the Company's matched book operations with a fair value of $596.9 million were delivered for securities loaned. The gross amounts of interest earned on cash provided to counterparties as collateral for securities borrowed, and interest incurred on cash received from counterparties as collateral for securities loaned, and the resulting net amount included in other revenue on the Consolidated Statements of Income for 2010 were as follows (dollars in thousands):

	2010
Interest earned	$	4,994
Interest incurred		(3,540	)
Net	$	1,454

73

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Premises and Equipment

        The following is a summary of premises and equipment at December 31 (dollars in thousands):

		2010		2009
Furniture, fixtures and equipment		$	123,321	$	116,985
Leasehold improvements			30,928		29,841
			154,249		146,826
Less: accumulated depreciation and amortization			119,459		105,389
	Total	$	34,790	$	41,437

        Depreciation and amortization expense relating to premises and equipment amounted to $21.2 million, $23.0 million and $21.8 million during the years ended December 31, 2010, 2009 and 2008, respectively, and is included in occupancy and equipment expense in the Consolidated Statements of Income.

(12) Capitalized Software

        The following is a summary of capitalized software costs at December 31 (dollars in thousands):

		2010		2009
Capitalized software costs		$	140,410	$	129,616
Less: accumulated amortization			77,903		60,703
	Total	$	62,507	$	68,913

        Software costs totaling $38.5 million and $42.8 million were capitalized in 2010 and 2009, respectively, related to the continued development of new features and functionalities across the entire ITG product line. This includes development of the new Triton Black product, as well as new enhancements to the algorithmic trading suite, and the adding of new liquidity sources to the POSIT Marketplace. The Company also continued to develop new features for pre and post trade product offerings as well as other products and tools that are designed to enhance and improve the customers' trading capabilities. ITG is also continuing to capitalize software related to its efforts to globalize product lines to serve international markets. During 2010, capitalized software costs and related accumulated amortization were each reduced by $21.1 million for fully amortized costs that are no longer in use. In 2010, $6.1 million of capitalized software that was not yet deployed was written off to other general and administrative expense due to changes in product priorities. This follows a $2.4 million write-off in 2009 of capitalized software not yet deployed as part of the fourth quarter restructuring.

        Capitalized software costs of $6.5 million and $7.7 million were not subject to amortization as of December 31, 2010 and 2009, respectively, as the underlying products were not yet available for release. Other general and administrative expenses in the Consolidated Statements of Income included $38.2 million, $34.5 million and $29.3 million related to the amortization of capitalized software costs in 2010, 2009 and 2008, respectively.

74

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(13) Accounts Payable and Accrued Expenses

        The following is a summary of accounts payable and accrued expenses at December 31 (dollars in thousands):

		2010		2009
Accrued compensation and benefits		$	63,423	$	64,054
Accrued research payables			41,569		39,027
Trade payables			24,235		19,924
Deferred compensation			16,531		24,952
Deferred revenue			15,852		12,625
Acquisition payment obligation			9,314		6,981
Accrued transaction processing			3,336		4,621
Accrued restructuring			3,196		18,019
Other			17,653		19,293
	Total	$	195,109	$	209,496

(14) Income Taxes

        Income tax expense consisted of the following components (dollars in thousands):

		2010			2009		2008
Current:
	Federal	$	18,524		$	14,946	$	41,180
	State		5,026			3,160		16,537
	Foreign		6,118			7,010		10,564
			29,668			25,116		68,281
Deferred:
	Federal		(4,289	)		7,224		8,936
	State		(766	)		664		4,404
	Foreign		740			613		(737	)
			(4,315	)		8,501		12,603
Total		$	25,353		$	33,617	$	80,884

        Income before income taxes consisted of the following (dollars in thousands):

	2010		2009		2008
U.S.	$	45,000	$	74,102	$	180,988
Foreign		4,333		2,349		14,538
Total	$	49,333	$	76,451	$	195,526

75

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Deferred income taxes are provided for temporary differences in reporting certain items. The tax effects of temporary differences that gave rise to the net deferred tax liability at December 31 were as follows (dollars in thousands):

		2010			2009
Deferred tax assets:
	Deferred compensation	$	13,999		$	12,716
	Net operating loss and capital loss carry forward		14,804			14,407
	Share-based compensation		12,455			10,385
	Allowance for doubtful accounts		569			598
	Tax benefits on uncertain tax positions		2,459			2,229
	Depreciation		1,868			2,068
	Other		4,373			4,067
Total deferred tax assets			50,527			46,470
	Less: valuation allowance		12,674			14,289
Total deferred tax assets, net of valuation allowance			37,853			32,181
Deferred tax liabilities:
	Goodwill and other intangibles		(29,615	)		(21,573	)
	Capitalized software		(20,122	)		(23,428	)
	Other		(1,328	)		(1,269	)
Total deferred tax liabilities			(51,065	)		(46,270	)
Net deferred tax liabilities		$	(13,212	)	$	(14,089	)

        At December 31, 2010, the Company believes that it is more likely than not that future reversals of our existing taxable temporary differences and the results of future operations will generate sufficient taxable income to realize the deferred tax assets, net of valuation allowance. Since 2009, the Company has maintained a full valuation allowance against Asia Pacific net operating losses and in 2010, a partial valuation allowance against European net operating losses in Ireland was recorded.

        Net operating loss carry forwards expire as follows (dollars in thousands):

	Amount		Years remaining
Hong Kong, Australia and Ireland operating losses	$	59,037	Indefinite
United States		5,826	14 - 19 years
	$	64,863

        The effective tax rate varied from the U.S. federal statutory income tax rate due to the following:

	2010			2009			2008
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal income tax effect		6.0			3.9			6.9
Foreign tax impact, net		9.8			5.9			(0.3	)
Non-deductible acquisition costs		1.1			—			—
Other, net		(0.5	)		(0.8	)		(0.2	)
Effective income tax rate		51.4	%		44.0	%		41.4	%

76

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Current taxes payable was reduced by $2.8 million at December 31, 2008, relating to the exercise of employee stock options and the issuance of employee restricted share awards, while related tax shortfalls increased current taxes payable by $2.2 million and $1.5 million in 2010 and 2009, respectively. For further discussion, see Note 21, Employee and Non Employee Director Stock and Benefit Plans.

Tax Uncertainties

        Under ASC 740, a tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

        During 2010, uncertain tax positions in the U.S. were resolved for the 2006 and 2008 fiscal years resulting in a decrease in our liability of $0.8 million and the related deferred tax asset of $0.3 million. As a result of this, we recognized a net tax benefit of $0.1 million.

        A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (dollars in thousands):

Uncertain Tax Benefits	2010			2009			2008
Balance, January 1	$	10,999		$	18,376		$	15,271
Additions based on tax positions related to the current year		2,088			2,551			4,290
Additions based on tax positions of prior years		897			731			5,082
Reductions for tax positions of prior years		(35	)		(678	)		(2	)
Reductions due to settlements with taxing authorities		(758	)		(9,767	)		(4,876	)
Reductions due to expiration of statute of limitations		(811	)		(214	)		(1,389	)
Balance, December 31	$	12,380		$	10,999		$	18,376

        Included in the balance at December 31, 2010, 2009 and 2008, are $10.8 million, $9.4 million and $13.6 million, respectively, of unrecognized tax benefits which, if recognized, would affect the Company's effective tax rate.

        With limited exception, the Company is no longer subject to U.S. federal, state, local or foreign income tax audits by taxing authorities for years preceding 2007. The Internal Revenue Service ("IRS") is currently examining the Company's U.S. federal income tax returns for 2007 and 2008. Certain state and local returns are also currently under various stages of audit. The Company does not anticipate a significant change to the total of unrecognized tax benefits within the next twelve months.

        At December 31, 2010, interest expense of $2.1 million, gross of related tax effects of $0.9 million, was accrued related to unrecognized tax benefits. As a continuing policy, interest accrued related to unrecognized tax benefits is recorded as income tax expense. During 2010, 2009 and 2008, the Company recognized $0.5 million, $0.2 million and $1.7 million, respectively, of tax related interest expense. Penalties of $0.1 million were recognized in 2010 and 2009 as a component of income tax expense. No such penalties were incurred during 2008.

77

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(15) Borrowings

Short Term Bank Loans

        The Company's U.S. securities clearance and settlement operations are funded with operating cash, securities loaned or with short-term bank loans. At December 31, 2010, the Company had an uncommitted pledge facility with JPMorgan Chase Bank, N.A. for this purpose. At December 31, 2010 and 2009, there were no short-term bank loans under these pledge facilities outstanding.

        On January 31, 2011, the Company established a committed $150 million three-year revolving credit agreement to support its U.S. securities clearance and settlement operations (see Note 26, Subsequent Event).

        The Company also has working capital facilities with various banks in the form of overdraft protection in Europe and Hong Kong, which are primarily used to support clearance and settlement activities. At December 31, 2010, there was no outstanding balance under these facilities.

2006 Credit Agreement

        On January 3, 2006, the Company entered into a $225 million credit agreement fully underwritten by a syndicate of banks. The credit agreement consisted of a five-year term loan in the amount of $200 million ("Term Loan") and a five-year revolving facility (expiring on December 31, 2010) in the amount of $25 million ("2006 Revolving Credit Facility"). The Term Loan and Revolving Credit Facility were secured by substantially all of the Company's assets. The Term Loan was utilized on January 3, 2006, to partially finance the Macgregor and Plexus Group Inc. acquisitions while the 2006 Revolving Credit Facility was available for working capital purposes. Interest on the Term Loan was based upon the Three-Month London Interbank Offered Rate ("LIBOR") plus an applicable margin.

        As of December 31, 2010, the Company had fully repaid the debt after making principal payments of $46.9 million during 2010. Principal payments on the Term Loan were $47.6 million during 2009. Interest expense on the credit facility, including amortization of debt issuance costs and net settlement payments on interest rate swaps, totaled $0.7 million, $2.5 million and $7.3 million in 2010, 2009 and 2008, respectively.

(16) Other Comprehensive Income

        The components and allocated tax effects of other comprehensive income for the periods ended December 31, 2010 and 2009 are as follows (dollars in thousands):

		Before Tax Effects			Tax Effects			After-Tax Effects
December 31, 2010
Currency translation adjustment		$	10,407		$	—		$	10,407
Unrealized holding gain on securities, available-for-sale			144			(58	)		86
	Total	$	10,551		$	(58	)	$	10,493
December 31, 2009
Currency translation adjustment		$	7,468		$	—		$	7,468
Unrealized holding loss on securities, available-for-sale			(115	)		46			(69	)
	Total	$	7,353		$	46		$	7,399

78

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        In 2006, the Company entered into interest rate swaps to hedge the risk related to the variability of the LIBOR-based interest payments that were deemed probable to occur over the next three years. The interest rate swaps, which were designated as hedging instruments in a cash flow hedge, matured on March 31, 2009. During 2009, an after tax loss of $0.3 million was reclassified out of accumulated other comprehensive income and into interest expense.

        Deferred taxes have not been provided on the cumulative undistributed earnings of foreign subsidiaries or the cumulative translation adjustment related to those investments since such amounts are expected to be reinvested indefinitely.

(17) Related Party Transactions

        In April 2010, the Company made a strategic minority investment in Disclosure Insight, Inc., a provider of independent fundamental research and diligence to the investment community. As part of the investment, the Company obtained certain distribution rights with respect to Disclosure Insight's products. During 2010, ITG paid Disclosure Insight, Inc. $0.2 million for this research.

        Prior to the purchase of BLOCKalert on July 30, 2008 (see Note 6, Acquisitions, for further details), the Company contracted with BLOCKalert to provide it with the use of technology and other services. The Company earned approximately $2.0 million for these services provided to BLOCKalert during 2008. Additionally, the Company paid BLOCKalert approximately $0.1 million for the use of the software during 2008.

(18) Off-Balance Sheet Risk and Concentration of Credit Risk

        The Company is a member of various U.S. and non-U.S. exchanges and clearing houses that trade and clear equities and/or derivative contracts. The Company also accesses certain clearing houses through the memberships of third-parties. Associated with these memberships and third-party relationships, the Company may be required to pay a proportionate share of financial obligations of another member who may default on its obligations to the exchanges or the clearing houses. While the rules governing different exchange or clearinghouse memberships vary, in general the Company's obligations would arise only if the exchanges and clearinghouses had previously exhausted other remedies. The maximum potential payout under these memberships cannot be estimated. The Company has not recorded any contingent liability in the condensed consolidated financial statements for these agreements and believes that any potential requirement to make payments under these agreements is remote. In the ordinary course of business, the Company guarantees obligations of subsidiaries which may arise from third-party clearing relationships and trading counterparties. The activities of the subsidiaries covered by these guarantees are included in the Company's consolidated financial statements.

        The Company's customer financing and securities settlement activities may require the Company to pledge customer securities as collateral in support of various secured financing transactions such as bank loans. In the event the counterparty is unable to meet its contractual obligation to return customer securities pledged as collateral, the Company may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy its customer obligations. The Company controls this risk by monitoring the market value of securities pledged on a daily basis and by requiring adjustments of collateral levels in the event of excess market exposure.

        Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, securities owned, at fair value, receivables from brokers, dealers

79

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and clearing organizations and receivables from customers. Cash and cash equivalents and securities owned, at fair value are deposited with high credit quality financial institutions.

(19) Net Capital Requirement

        ITG Inc., AlterNet, Blackwatch Brokerage Inc. ("Blackwatch") and ITG Derivatives are subject to the SEC's Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital. ITG Inc. has elected to use the alternative method permitted by Rule 15c3-1, which requires that ITG Inc. maintain minimum net capital equal to the greater of $1.0 million or 2% of aggregate debit balances arising from customer transactions, as defined. AlterNet, ITG Derivatives and Blackwatch have elected to use the basic method permitted by Rule 15c3-1, which requires that they maintain minimum net capital equal to the greater of 6²/3% of aggregate indebtedness or $100,000, $1.0 million and $5,000, respectively. Dividends or withdrawals of capital cannot be made if capital is needed to comply with regulatory requirements.

        Net capital balances and the amounts in excess of required net capital at December 31, 2010 for the U.S. Operations are as follows (dollars in millions):

	Net Capital		Excess Net Capital
U.S. Operations
ITG Inc.	$	90.6	$	89.6
AlterNet		6.2		6.0
Blackwatch		3.2		3.1
ITG Derivatives		5.7		4.7

        As of December 31, 2010, ITG Inc. had a $10.8 million cash balance in a Special Reserve Bank Account for the exclusive benefit of customers and brokers under the Customer Protection Rule pursuant to SEC Rule 15c3-3, Computation for Determination of Reserve Requirements.

        In addition, the Company's Canadian, European and Asia Pacific Operations have subsidiaries with regulatory capital requirements. The net capital balances and amount of regulatory capital in excess of the minimum requirements applicable to each business as of December 31, 2010, is summarized in the following table (dollars in millions):

	Net Capital		Excess Net Capital
Canadian Operations
Canada	$	49.2	$	48.7
European Operations
Europe		30.7		10.1
Asia Pacific Operations
Australia		11.2		6.5
Hong Kong		28.9		15.2
Singapore		0.4		0.2

(20) Stockholders' Equity

        The Company presently does not pay cash dividends on common stock as its policy is to retain earnings to finance the operations and expansion of its businesses and return capital to stockholders through repurchases. On July 30, 2008, the Board of Directors re-authorized the purchase of shares remaining under a prior 2.0 million share authorization and authorized the purchase of an additional

80

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.0 million shares of common stock. In July 2010, ITG's Board of Directors authorized the repurchase of an additional 4.0 million shares. Both authorizations have no expiration date. As of December 31, 2010, there were 2.9 million shares available for repurchase.

        During 2010, the Company repurchased approximately 3.4 million shares of ITG common stock at a cost of approximately $54.4 million, which was funded from the Company's available cash resources. Of these shares, 3.2 million were purchased under the Company's Board of Directors' authorization for a total cost of $50.3 million (average cost of $15.95 per share). An additional 235,075 of shares repurchased ($4.1 million) pertained solely to the satisfaction of minimum statutory withholding tax upon the net settlement of equity awards.

        During 2009, the Company repurchased approximately 0.1 million shares of our common stock at a cost of approximately $2.7 million solely to satisfy the minimum statutory employee withholding tax upon the net settlement of equity awards.

        During 2008, the Company repurchased 0.8 million shares of common stock at a cost of $26.2 million, which was funded from available cash resources. A total of 0.7 million ($23.0 million) of these shares were purchased under the above authorizations and the remaining 80,000 ($3.2 million) shares were repurchased solely to satisfy the minimum statutory employee withholding tax upon the net settlement of equity awards.

(21) Employee and Non Employee Director Stock and Benefit Plans

        The 2007 Omnibus Equity Compensation Plan (the "2007 Plan") was approved by the Company's stockholders and became effective on May 8, 2007 (the "Effective Date") and was last amended and restated effective May 11, 2010. As of the Effective Date, the Investment Technology Group, Inc. Non-Employee Directors' Stock Option Plan (the "Non-Employee Directors' Stock Option Plan"), the Amended and Restated 1994 Stock Option and Long-term Incentive Plan (the "1994 Plan"), the Company's prior equity plan for its employees, the Stock Unit Award Program Subplan, as amended and restated (the "SUA"), the Amended and Restated Investment Technology Group, Inc. Directors' Retainer Fee Subplan (the "Directors' Retainer Fee Subplan"), and the Amended and Restated Investment Technology Group, Inc. Directors' Equity Subplan (the "Directors' Equity Subplan", and collectively with the SUA and the Directors' Retainer Fee Subplan, the "Subplans") were merged with and into the 2007 Plan. No additional grants have been, or will be, made after the Effective Date under the Non-Employee Directors' Stock Option Plan or the 1994 Plan. Outstanding grants under such plans as of the Effective Date will continue in effect according to their terms as in effect on the Effective Date (subject to permitted amendments as the compensation committee determines appropriate) and the shares with respect to such outstanding grants will be issued or transferred under the 2007 Plan. Since the Effective Date, the Subplans (except for the SUA which was frozen on January 1, 2009 as described below) have continued to be, and shall continue to be, in effect as subplans of the 2007 Plan and grants and/or deferrals may continue to be made under the Directors' Equity Subplan and the Directors' Retainer Fee Subplan. In October 2008, the compensation committee adopted the Equity Deferral Award Program, another subplan under the 2007 Plan (the "EDA").

        Under the 2007 Plan, 8,386,208 shares of the Company's common stock are authorized. Shares of common stock which are attributable to awards which have expired, terminated, cash settled or been canceled or forfeited during any calendar year are generally available for issuance or use in connection with future awards. Options that have been granted under the 2007 Plan are exercisable on dates ranging through November 2015. The 2007 Plan will remain in effect until May 7, 2017, unless terminated, or extended, by the Board of Directors with the approval of the Company's stockholders.

81

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

After this date, no further awards shall be granted pursuant to the 2007 Plan, but previously granted awards shall remain outstanding in accordance with their applicable terms and conditions.

        In January 2006, the Board of Directors adopted the Directors' Equity Subplan which became effective January 1, 2006 and merged into the 2007 Plan as referenced above. The Directors' Equity Subplan was amended and restated on February 7, 2008 to reflect certain modifications necessary to comply with the requirements of Section 409A of the Internal Revenue Code. The Directors' Equity Subplan provides for the grant of options and restricted stock unit awards to non-employee directors of the Company. Under the Directors' Equity Subplan, a newly appointed non-employee director will be granted (a) stock options valued at $100,000 and (b) restricted stock unit awards valued at $100,000 at, or shortly after, the time of appointment to the Board of Directors. In addition, non-employee directors will be granted (a) stock options valued at $36,000 and (b) restricted stock unit awards valued at $36,000 annually, on the forty fifth (45th) day following each of the Company's annual meetings of stockholders. All stock options are non-qualified options, generally will expire five years after the date of grant and will have an exercise price equal to the fair market value of the Company's stock at the time of grant. All stock options and restricted stock unit awards will vest in three equal annual installments, beginning on the first anniversary of the date of grant.

        Under the 1994 Plan, the Company was, and under the 2007 Plan the Company is, permitted to grant performance-based stock options, in addition to time-based option awards to employees, however the Company did not grant any performance-based option awards under the 2007 Plan or the 1994 Plan during the three years ended December 31, 2009. Time-based option awards either vest in full on the third anniversary of the grant or in three equal annual installments, beginning on the first anniversary of the date of grant, in each case, if the employee has remained continuously employed from the grant date to the applicable vesting date. The Company recognizes share-based compensation expense (see Note 2, Summary of Significant Accounting Policies) for time-based option awards over the vesting period.

        In conjunction with the acquisition of Majestic, the Company assumed certain outstanding incentive stock options to purchase shares of common stock of Majestic under the Majestic Research Corp. 2005 Stock Option Plan. Such stock options became exercisable to purchase ITG Common Stock, subject to appropriate adjustments to the number of shares of Common Stock issuable with respect to such options and the exercise price of such options.

82

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        The tables below summarize the Company's stock options as of December 31, 2010, 2009 and 2008 and changes during the years then ended:

Options Outstanding		Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2007			922,193		$	24.86
	Granted		270,880			45.64
	Exercised		(202,083	)		14.66
	Forfeited		(42,489	)		42.50
Outstanding at December 31, 2008			948,501			32.18
	Granted		31,143			20.09
	Exercised		(214,445	)		14.67
	Forfeited		(61,732	)		40.16
Outstanding at December 31, 2009			703,467			36.28
	Granted		305,677			5.59
	Exercised		(125,268	)		2.69
	Forfeited		(316,913	)		27.08
Outstanding at December 31, 2010			566,963		$	32.30
Amount exercisable at December 31,
	2010		347,798		$	30.35
	2009		489,456			33.22
	2008		568,517			23.23

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$1.79 - 15.83		130,603		0.80	$	3.92		111,792	$	1.91
15.84 - 44.22		181,608		2.29		32.91		110,693		41.37
44.23 - 45.30		115,484		1.15		45.22		79,000		45.30
45.31 - 47.25		66,427		1.87		47.18		46,313		47.15
47.26 - 47.59		72,841		2.00		47.59		—		—
		566,963		1.63	$	32.30		347,798	$	30.35

        For the years ended 2010, 2009 and 2008 the Company recorded share-based compensation expense of $2.2 million (of which $0.7 million relates to the acquisition of Majestic), $1.9 million and $2.6 million, respectively, related to the Company's outstanding stock options, which were offset by related income tax benefits of approximately $0.6 million, $0.8 million and $1.1 million, respectively.

        The weighted average remaining contractual term of stock options currently exercisable is 1.6 years.

        The provision for income taxes excludes excess current tax benefits related to the exercise of stock options. These benefits totaled $0.2 million and $2.0 million for the years ended December 31, 2009 and 2008, respectively and are reflected as increases in stockholders' equity. During 2010, a tax shortfall of $1.1 million occurred, which was the result of the tax deduction being less than the cumulative book compensation cost. This is reflected as a decrease in additional paid-in capital.

83

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        The following table summarizes information about stock options at December 31, 2010, 2009 and 2008:

($ in thousands, except per share amounts)	2010		2009		2008
Total intrinsic value of stock options exercised	$	1,577	$	1,770	$	5,313
Weighted average grant date fair value of stock options granted during period, per share*		6.06		8.09		14.83
Cash received from stock option exercises		0.3		3.1		3.0

*

Excludes incentive stock options assumed in the acquisition of Majestic

        The total intrinsic value of outstanding and exercisable stock options at December 31, 2010 was $9.3 million and $5.7 million, respectively.

        As of December 31, 2010, there was $0.6 million of total unrecognized compensation costs related to outstanding stock options. These costs are expected to be recognized ratably over a weighted average period of approximately 1.7 years.

        Stock option exercises are settled from issuance of shares of the Company's common stock held in treasury to the extent available.

        Under the 1994 Plan, the Company was, and under the 2007 Plan is, permitted to grant restricted share awards to employees. Generally, and except for awards granted under the EDA, restricted share awards granted since 2007 vest in one of the following manners: (a) cliff vest on the third anniversary of the grant date so long as the award recipient is employed on such date, (b) cliff vest in whole or in part only if the consolidated cumulative pre-tax operating income of the Company reaches certain levels and (c) serial vest on each of the second, third and fourth anniversaries of the date of grant so long as the award recipient is employed on the applicable vesting date and the 90-day average of the Company's common stock price on each of the vesting dates is higher than the 90-day average of the Company's common stock price preceding the grant date (i.e. in the case of (b) and (c), performance-based restricted stock units). Accordingly, not all restricted shares awarded will vest and be delivered. The Company recognizes share-based compensation expense (see Note 2, Summary of Significant Accounting Policies) over this three-year period.

        Under the EDA, each eligible participant is granted a number of basic stock units on the date the year-end cash bonus would otherwise be paid to the participant equal to (i) the amount by which the participant's variable compensation is reduced as determined by the compensation committee, divided by (ii) the fair market value of a share of the Company's common stock on the date of grant. In addition, each participant is granted an additional number of matching stock units on the date of grant equal to 20% of the number of basic stock units granted. Basic stock units vest in equal annual installments on each of the first, second and third anniversaries of the date of grant, if the participant remains continuously employed by the Company on each applicable vesting date, and will be settled in shares of ITG common stock within 30 days after each applicable vesting date. Matching stock units will vest 100% on the third anniversary of the date of grant, if the participant remains continuously employed by the Company through such vesting date, and will be settled in shares of ITG common stock within 30 days after the date on which such matching stock units vest.

        In conjunction with the acquisition of Majestic, the Company granted "employment inducement awards" under Section 303A.08 of the New York Stock Exchange Listed Company Manual to certain Majestic employees. Approximately half of such stock units granted vest in equal installments on each

84

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

of the first four anniversaries of the grant date of the awards. The remaining stock units vest over the first four anniversaries of the award grant dates, but based upon achievement of certain performance metrics as of the first and second anniversaries of the award grant dates.

        The Company recorded share-based compensation expense of $15.4 million ($0.4 million of which was recorded in severance and restructuring charges), $14.6 million ($1.7 million of which was recorded in restructuring charges) and $7.1 million for the years ended December 31, 2010, 2009 and 2008, respectively, related to restricted share awards which were offset by related income tax benefits of approximately $6.2 million, $5.8 million and $2.9 million, respectively.

        A summary of the status of the Company's restricted share awards as of December 31, 2010, 2009 and 2008 and changes during the years then ended are presented below:

		Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2007			358,830		$	36.38
	Granted		284,576			45.75
	Vested		(147,223	)		27.07
	Forfeited		(30,656	)		42.70
Outstanding at December 31, 2008			465,527			44.64
	Granted		999,554			22.47
	Vested		(178,783	)		43.66
	Forfeited		(61,841	)		37.78
Outstanding at December 31, 2009			1,224,457			27.03
	Granted		2,193,239			16.26
	Vested		(317,489	)		25.91
	Forfeited		(164,884	)		21.02
Outstanding at December 31, 2010			2,935,323		$	19.44

        As of December 31, 2010, there was $30.2 million of total unrecognized compensation cost related to outstanding restricted share awards. These costs are expected to be recognized over a weighted average period of approximately 2.3 years. During 2010, restricted shares with a grant date fair value of approximately $8.2 million vested.

        The provision for income taxes excludes excess current tax benefits related to the vesting of restricted share awards. While there were tax shortfalls of $1.1 million and $1.7 million related to the vesting of restricted share awards for the year ended December 31, 2010 and 2009, respectively, for the year ended December 31, 2008, those benefits totaled approximately $0.8 million. Such benefits are reflected as an increase in stockholders' equity. The tax shortfall that occurred in 2010 and 2009 is the result of the tax deduction being less than the cumulative book compensation cost and is reflected as a decrease in additional paid-in capital.

        Under the 2007 Plan and the EDA, the Company is permitted to grant phantom share awards. Phantom share awards vest like any other award granted under the EDA as described above and are settled in cash. The Company recognizes share-based compensation expense (see Note 2, Summary of Significant Accounting Policies) over a three-year period. For the years ended December 31, 2010 and 2009, the Company recorded share-based compensation expense of $1.1 million and $0.6 million,

85

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

respectively related to phantom share awards offset by related tax benefits of $0.4 million and $0.2 million, respectively.

        A summary of the status of the Company's phantom share awards as of December 31, 2010, and changes during the year then ended are presented below:

		Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2008			—		$	—
	Granted		92,387			23.45
	Vested		—			—
	Forfeited		(1,374	)		23.45
Outstanding at December 31, 2009			91,013			23.45
	Granted		212,047			16.96
	Vested		(25,285	)		23.45
	Forfeited		(18,405	)		18.25
Outstanding at December 31, 2010			259,370		$	18.51

        As of December 31, 2010, there was $2.7 million of total unrecognized compensation cost related to grants of phantom share awards. These costs are expected to be recognized over a weighted average period of approximately 2.1 years.

ITG Stock Unit Award Program

        Effective January 1, 1998, selected members of senior management and other key employees participated in the SUA, a mandatory tax-deferred compensation program established under the 1994 Plan which was later merged into the 2007 Plan as referenced above. Under the SUA, selected participants of the Company were required to defer receipt of (and thereby defer taxation on) a graduated portion of their total cash compensation for units representing common stock equal in value to 115% of the compensation deferred. The units were to be settled on or after the third anniversary of the date of grant.

        Effective June 30, 2003, the SUA was amended prospectively to include mandatory participation for all employees earning total cash compensation per annum of $200,000 and greater. The amended plan also deferred receipt of (and thus taxation on) a graduated portion of participants' total cash compensation for units representing the Company's common stock equal in value to 130% of the compensation deferred. The units representing 100% of the total compensation deferred are at all times fully vested and non-forfeitable; however the units are restricted to settlement to common shares half of which are to be distributed on the third anniversary of the deferral and the remaining half on the sixth anniversary of the deferral. The match representing 30% of the compensation deferred is contingent only on employment with the Company and vests 50% on the third anniversary of the deferral and the remaining 50% on the sixth year of the deferral.

        Effective January 1, 2006, the SUA was amended to make participation in the plan among eligible participants (employees earning total cash compensation per annum of $200,000 and greater) elective, rather than mandatory. In addition, beginning January 1, 2006, the plan deferred receipt of (and thus taxation on) a graduated portion of participants' total cash compensation for units representing the

86

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company's common stock equal in value to 120% of the compensation deferred. The units representing 100% of the total compensation deferred are at all times fully vested and non-forfeitable; however the units are restricted to settlement to common shares distributed in whole on the third anniversary of the deferral. The match representing 20% of the compensation deferred is contingent only on employment with the Company and vests 100% on the third anniversary of the deferral.

        Effective January 1, 2009, the SUA was further amended and restated. The amendment froze the SUA such that it did not apply to compensation earned for any calendar year after calendar year 2008 and provided participants with a special transition election with respect to cessation of participation in the SUA for bonus payments for calendar year 2008 that were due after December 31, 2008 and on or before March 15, 2009. Certain other amendments were made to the SUA in order to comply with section 409A of the Internal Revenue Code.

        The Company recorded additional share-based compensation costs (relating to a pro rata portion of all unvested SUA employer matches) of $0.5 million, $1.3 million and $1.0 million for the years ended December 31, 2010, 2009, and 2008, respectively, as well as related income tax benefits of approximately $0.2 million, $0.5 million, and $0.4 million, respectively.

        A summary of activity under the SUA is as follows:

		Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2007			910,371		$	28.35
	Granted		124,666			34.11
	Vested		(157,449	)		20.72
	Forfeited		(17,420	)		29.80
Outstanding at December 31, 2008			860,168			30.56
	Granted		6,743			22.65
	Vested		(168,248	)		35.61
	Forfeited		(21,284	)		27.71
Outstanding at December 31, 2009			677,379			29.32
	Granted		—			—
	Vested		(311,106	)		28.67
	Forfeited		(2,106	)		32.54
Outstanding at December 31, 2010			364,167		$	29.82

        Of the 364,167 units outstanding, 323,933 are non-forfeitable as of December 31, 2010.

        As of December 31, 2010, there was $0.2 million of total unrecognized compensation cost related to grants under the SUA. These costs are expected to be recognized over a weighted average period of approximately 0.8 years. Shares issued under the SUA are from common shares held in treasury, to the extent available.

ITG Employee and Non Employee Director Benefit Plans

        All U.S. employees are eligible to participate in the Investment Technology Group, Inc. Retirement Savings Plan ("RSP"). The RSP applies to all eligible compensation up to the Internal Revenue Service annual maximum, which is $245,000. Prior to January 1, 2011, the RSP's features included a guaranteed

87

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company contribution of 3% of eligible compensation, a discretionary Company contribution between 0% and 8% of eligible compensation based on consolidated Company profits for the year and a 66²/3% Company matching contribution which is applied to a maximum of 6% of eligible compensation per year. Effective as of January 1, 2011, the guaranteed Company contribution of 3% was eliminated, and the Company matching contribution will apply to 50% of voluntary employee contributions, on a maximum of 6% of eligible compensation per year. The Company may still make discretionary contributions based on consolidated profits. Most of the Company's international employees are eligible to participate in similar defined contribution plans. The costs for these benefits were approximately $10.2 million, $10.8 million and $7.9 million in 2010, 2009 and 2008, respectively, and are included in compensation and employee benefits in the Consolidated Statements of Income.

        Since 2006, non-employee directors received an annual retainer fee of $60,000, with the exception of the external lead director and chairman who received, until August 2008, $90,000, and who, since August 2008, receives $160,000 under the Directors' Retainer Fee Subplan, which was adopted in 2002. This retainer fee is payable, at the election of each director, either in (i) cash, (ii) Company common stock with a value equal to the retainer fee on the grant date or (iii) under a deferred compensation plan which provides deferred share units with a value equal to the retainer fee on the grant date which convert to freely sellable shares when the director retires from our Board of Directors. Directors who chose common stock or deferred share units, in the aggregate, received 16,819 units or shares, 13,699 units and 6,429 units in 2010, 2009 and 2008, respectively. The cost of the Directors' Retainer Fee Subplan was approximately $647,000, $716,000 and $634,000 in 2010, 2009 and 2008, respectively, and is included in other general and administrative expenses in the Consolidated Statements of Income.

        In November 1997, the Board of Directors approved the ITG Employee Stock Purchase Plan ("ESPP"), an employee stock purchase plan qualified under Section 423 of the Internal Revenue Code. The ESPP became effective February 1, 1998 and allows all full-time employees to purchase shares of ITG common stock at a 15% discount through automatic payroll deductions. In accordance with the provisions of ASC 718, the ESPP is compensatory. The Company recorded share-based compensation expense related to the ESPP of $394,000, $765,000 and $783,000 for the years ended December 31, 2010, 2009 and 2008, respectively. Shares distributed under the ESPP are newly issued shares.

(22) Earnings Per Share

        The following is a reconciliation of the basic and diluted earnings per share computations for the years ended December 31 (dollars in thousands, except per share amounts):

		2010		2009		2008
Net income for basic and diluted earnings per share		$	23,980	$	42,834	$	114,642
Shares of common stock and common stock equivalents:
	Weighted average shares—basic		42,767		43,538		43,503
	Effect of dilutive securities		729		480		484
	Weighted average shares—diluted		43,496		44,018		43,987
Earnings per share:
	Basic	$	0.56	$	0.98	$	2.64
	Diluted	$	0.55	$	0.97	$	2.61

88

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        At December 31, 2010, 2009 and 2008, approximately 590,000, 677,000 and 456,000 share equivalents, respectively, were not included in the computation of diluted earnings per share because their effects would have been anti-dilutive.

(23) Commitments and Contingencies

Legal Matters

        The Company is periodically involved in litigation and various legal matters that arise in the normal course of business, including proceedings relating to regulatory matters. Such matters are subject to many uncertainties and outcomes that are not predictable. At the current time, the Company does not believe that any of these matters will have a material adverse effect on its financial position or future results of operations. The Company is currently involved in an intellectual property dispute with Liquidnet. Intellectual property disputes are subject to inherent uncertainties and there can be no assurance that this lawsuit will be resolved favorably to us or that the lawsuit will not have a material adverse effect on us. The Company has not recorded any liability with respect to this matter as an occurrence of loss is not deemed probable nor can the amount of any loss be reasonably estimated.

Lease Commitments

        The Company has entered into lease and sublease agreements with third parties for certain offices and equipment, which expire at various dates through 2021. Rent expense for each of the years ended December 31, 2010, 2009 and 2008 was $14.0, $14.1 million and $14.1 million, respectively, and is recorded in occupancy and equipment expense in the Consolidated Statements of Income. The Company recognizes rent expense for escalation clauses, rent holidays, leasehold improvement incentives and other concessions using the straight-line method over the minimum lease term. Minimum future rental commitments under non-cancelable operating leases follow (dollars in thousands):

Year Ending December 31,
2011		$	14,060
2012			13,091
2013			10,876
2014			6,119
2015			5,769
2016 and thereafter			16,255
	Total	$	66,170

Other Commitments

        Pursuant to employment arrangements, the Company is obligated to pay certain employees aggregate minimum compensation of $7.1 million as of December 31, 2010. In the event of termination of employment without cause prior to their respective expiration, these arrangements require the Company to pay separation payments totaling the lower of $7.1 million or the remaining minimum compensation due, net of payments made through the termination date.

        Pursuant to contracts expiring through 2015, the Company is obligated to purchase market data, maintenance and other services totaling $30.3 million.

89

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(24) Segment Reporting

        The Company is organized into four operating segments through which the Company's chief operating decision makers manage the Company's business. The U.S. Operations segment provides trade execution, trade order management, network connectivity and research services to institutional investors, brokers, alternative investment funds and asset managers. The Canadian Operations segment provides trade execution, network connectivity and research services. The European Operations segment provides trade execution, trade order management, network connectivity and research services in Europe, and includes a technology research and development facility in Israel. The Asia Pacific Operations segment provides trade execution, network connectivity and research services in the Asia Pacific region.

        The accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies. The Company allocates resources to, and evaluates the performance of, its reportable segments based on income or loss before income tax expense. Consistent with the Company's resource allocation and operating performance evaluation approach, the effects of inter-segment activities are eliminated except in limited circumstances where certain technology related costs are allocated to a segment to support that segment's revenue producing activities. Commissions and fees revenue for trade executions and commission share revenues are principally attributed to each segment based upon the location of execution of the related transaction. Recurring revenues are principally attributed based upon the location of the client using the respective service.

90

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        A summary of the segment financial information is as follows (dollars in thousands):

	U.S. Operations		Canadian Operations		European Operations			Asia Pacific Operations			Consolidated
2010
Total revenues	$	385,690	$	78,479	$	73,277		$	33,308		$	570,754
Income (loss) before income tax expense (1) (2)		45,000		21,119		4,043			(20,829	)		49,333
Identifiable assets		1,486,022		113,356		404,789			526,686			2,530,853
Capital purchases		10,889		1,724		1,660			424			14,697
Depreciation and amortization		50,089		2,425		8,169			1,690			62,373
Share-based compensation		14,336		1,344		1,380			946			18,006
2009
Total revenues	$	457,414	$	70,767	$	75,443		$	29,445		$	633,069
Income (loss) before income tax expense (3)		74,102		16,617		4,662			(18,930	)		76,451
Identifiable assets		951,015		199,875		334,667			217,546			1,703,103
Capital purchases		9,570		1,822		2,948			891			15,231
Depreciation and amortization		50,256		1,898		6,720			1,872			60,746
Share-based compensation		13,327		695		1,562			399			15,983
2008
Total revenues	$	571,312	$	83,351	$	77,752		$	30,568		$	762,983
Income (loss) before income tax expense (4)		180,988		25,729		(2,616	)		(8,575	)		195,526
Identifiable assets		967,540		203,242		317,510			197,161			1,685,453
Capital purchases		19,443		1,845		3,487			1,431			26,206
Depreciation and amortization		45,090		1,610		5,578			1,902			54,180
Share-based compensation		8,987		343		1,064			5			10,399

(1)

Income before income tax expense for the U.S. Operations for 2010 includes the impact of a $6.1 million charge to write-off certain capitalized software initiatives, restructuring charges of $2.3 million related to closing the Company's Westchester, NY office, and $2.4 million of acquisition related charges associated with the purchases of Majestic.

(2)

Loss before income tax expense for the Asia Pacific Operations for 2010 includes the impact of a $5.4 million impairment charge related to Australian goodwill and a restructuring charge of $2.1 million to close the Company's on-shore Japanese operations.

(3)

Income (loss) before income tax expense in 2009 includes the impact of a $25.4 million restructuring charge to reduce costs. The segment breakdown of this charge is as follows: U.S. Operations—$21.3 million, Canadian Operations—$2.6 million, European Operations—$0.1 million and Asia Pacific Operations—$1.4 million.

(4)

Income before income tax expense for the U.S. Operations in 2008 includes a $1.5 million unrealized loss on an available for sale security that was deemed other than temporary.

91

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Long-lived assets, classified by the geographic region in which the Company operates, are as follows (dollars in thousands):

		2010		2009		2008
Long-lived Assets at December 31,
United States		$	554,879	$	502,612	$	510,183
Canada			7,237		6,576		5,051
Europe			42,121		43,581		41,043
Asia Pacific			3,132		10,283		10,511
	Total	$	607,369	$	563,052	$	566,788

        The Company's long-lived assets primarily consist of premises and equipment, capitalized software, goodwill, other intangibles and debt issuance costs.

(25) Supplementary Financial Information (unaudited)

        The following tables set forth certain unaudited financial data for our quarterly operations in 2010 and 2009. The following information has been prepared on the same basis as the annual information presented elsewhere in this report and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for

92

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the quarterly periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

		(Unaudited) December 31, 2010									(Unaudited) December 31, 2009
$ in thousands, expect per share amounts		Fourth Quarter		Third Quarter		Second Quarter		First Quarter			Fourth Quarter			Third Quarter		Second Quarter		First Quarter
Total revenues		$	138,346	$	130,396	$	155,322	$	146,690		$	150,999		$	158,438	$	167,965	$	155,667
Expenses:
	Compensation and employee benefits		57,208		50,627		54,587		53,464			59,685			56,758		58,897		60,178
	Transaction processing		21,746		19,401		23,581		20,659			23,568			24,204		24,916		22,930
	Occupancy and equipment		15,316		14,423		14,969		15,197			15,254			14,958		14,900		14,838
	Telecommunications and data processing services		14,108		12,759		12,971		13,635			13,497			13,770		13,312		13,970
	Other general and administrative		22,516		21,652		21,928		28,157			22,323			20,307		21,357		19,041
	Goodwill impairment		—		—		5,375		—			—			—		—		—
	Restructuring charges		1,812		—		2,337		(87	)		25,444			—		—		—
	Acquisition related costs		2,409		—		—		—			—			—		—		—
	Interest expense		83		158		206		224			291			407		601		1,212
Total expenses			135,198		119,020		135,954		131,249			160,062			130,404		133,983		132,169
Income before income tax expense			3,148		11,376		19,368		15,441			(9,063	)		28,034		33,982		23,498
Income tax expense			1,318		5,166		11,860		7,009			(1,270	)		10,556		13,671		10,660
Net income		$	1,830	$	6,210	$	7,508	$	8,432		$	(7,793	)	$	17,478	$	20,311	$	12,838
Basic earnings per share		$	0.04	$	0.15	$	0.17	$	0.19		$	(0.18	)	$	0.40	$	0.47	$	0.30
Diluted earnings per share		$	0.04	$	0.14	$	0.17	$	0.19		$	(0.18	)	$	0.40	$	0.46	$	0.29
Basic weighted average number of common shares outstanding			41,636		42,407		43,226		43,827			43,716			43,627		43,470		43,337
Diluted weighted average number of common shares outstanding			42,538		42,941		43,704		44,415			43,716			44,126		43,824		43,606

93

INVESTMENT TECHNOLOGY GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Earnings per share for quarterly periods are based on the weighted average common shares outstanding in individual quarters; thus, the sum of earnings per share of the quarters may not equal the amounts reported for the full year.

	(Unaudited) December 31, 2010												(Unaudited) December 31, 2009
As a percentage of Total Revenues	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Expenses:
Compensation and employee benefits		41.3			38.8			35.1			36.4			39.5			35.8			35.1			38.7
Transaction processing		15.7			14.9			15.2			14.1			15.6			15.3			14.8			14.7
Occupancy and equipment		11.1			11.1			9.6			10.4			10.1			9.4			8.9			9.5
Telecommunications and data processing services		10.2			9.8			8.4			9.3			8.9			8.7			7.9			9.0
Other general and administrative		16.3			16.6			14.1			19.2			14.8			12.8			12.7			12.2
Goodwill impairment		—			—			3.5			—			—			—			—			—
Restructuring charges		1.3			—			1.5			(0.1	)		16.9			—			—			—
Acquisition costs		1.7			—			—			—			—			—			—			—
Interest expense		0.1			0.1			0.1			0.2			0.2			0.3			0.4			0.8
Total expenses		97.7			91.3			87.5			89.5			106.0			82.3			79.8			84.9
Income before income tax expense		2.3			8.7			12.5			10.5			(6.0	)		17.7			20.2			15.1
Income tax expense		1.0			4.0			7.6			4.8			(0.8	)		6.7			8.1			6.8
Net income		1.3	%		4.7	%		4.9	%		5.7	%		(5.2	)%		11.0	%		12.1	%		8.3	%

(26) Subsequent Event

        On January 31, 2011, ITG Inc., as borrower, and Investment Technology Group, Inc., as guarantor, entered into a $150 million three-year revolving credit agreement (the "Credit Agreement") with a syndicate of banks and JPMorgan Chase Bank, N.A., as Administrative Agent. The Credit Agreement includes an accordion feature that allows for potential expansion of the facility up to $250 million. Under the Credit Agreement, interest accrues at a rate equal to (a) a base rate, determined by reference to the higher of the (1) federal funds rate or (2) the one month Eurodollar LIBOR rate, plus (b) a margin of 2.50%. Available but unborrowed amounts under the Credit Agreement are subject to an unused commitment fee of .50%. The purpose of this credit line is to provide liquidity for ITG Inc.'s brokerage operations to satisfy clearing margin requirements and to finance temporary positions from delivery failures or non-standard settlements. As a result, the Company will have additional flexibility with its existing cash and future cash flows from operations to strategically invest in growth initiatives and to return capital to stockholders. Depending on the borrowing base, availability under the Credit Agreement is limited to either (i) a percentage of the clearing deposit required by the National Securities Clearing Corporation, or (ii) a percentage of the market value of temporary positions pledged as collateral. Among other restrictions, the terms of the Credit Agreement include negative covenants related to (a) liens, (b) maintenance of a consolidated leverage ratio (as defined) and a liquidity ratio (as defined), as well as maintenance of minimum levels of tangible net worth (as defined) and regulatory capital (as defined), and (c) restrictions on investments, dispositions and other restrictions customary for financings of this type.

        The events of default under the Credit Agreement include, among others, payment defaults, cross defaults with certain other indebtedness, breaches of covenants, loss of collateral, judgments, changes in control and bankruptcy events. In the event of a default, the Credit Agreement requires ITG Inc. to pay incremental interest at the rate of 2.0% and, depending on the nature of the default, the commitments will either automatically terminate and all unpaid amounts immediately become due and payable, or the lenders may in their discretion terminate their commitments and declare due all unpaid amounts outstanding.

94

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        There were no changes in, or disagreements with, accountants reportable herein.

Item 9A.    Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

        Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Changes in Internal Control over Financial Reporting

        There were no changes in the Company's internal control over financial reporting that occurred during the quarter ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management's Report on Internal Control Over Financial Reporting

        The management of ITG is responsible for establishing and maintaining adequate internal control over financial reporting. ITG's internal control over financial reporting is a process designed under the supervision of ITG's chief executive and chief financial officers, and effected by ITG's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of ITG's financial statements for external reporting purposes in accordance with U.S. GAAP and includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of ITG, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of ITG are being made only in accordance with authorizations of ITG's management and directors and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of ITG's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

        Management assessed the effectiveness of ITG's internal control over financial reporting as of December 31, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on its assessment and those criteria, management has concluded that ITG maintained effective internal control over financial reporting as of December 31, 2010.

        Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting. Their report follows.

95

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Investment Technology Group, Inc.:

        We have audited Investment Technology Group, Inc.'s (the Company) internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, Investment Technology Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial condition of Investment Technology Group, Inc. and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2010, and our report dated February 28, 2011 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

New York, New York

February 28, 2011

96

Item 9B.    Other Information

        None.

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

        Information with respect to this item is contained in the Proxy Statement for the 2011 Annual Meeting of Stockholders, which is incorporated herein by reference.

Item 11.    Executive Compensation

        Information with respect to this item is contained in the Proxy Statement for the 2011 Annual Meeting of Stockholders, which is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

        Information with respect to this item is contained in the Proxy Statement for the 2011 Annual Meeting of Stockholders, which is incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

        Information with respect to this item is contained in the Proxy Statement for the 2011 Annual Meeting of Stockholders, which is incorporated herein by reference.

Item 14.    Principal Accounting Fees and Services

        Information with respect to this item is contained in the Proxy Statement for the 2011 Annual Meeting of Stockholders, which is incorporated herein by reference.

97

PART IV

Item 15.    Exhibits, Financial Statement Schedules

(a)(1) Financial Statements

        Included in Part II of this report:

	Page
Report of Independent Registered Public Accounting Firm	50
Consolidated Statements of Financial Condition	51
Consolidated Statements of Income	52
Consolidated Statements of Changes in Stockholders' Equity	53
Consolidated Statements of Cash Flows	54
Notes to Consolidated Financial Statements	55

(a)(2)  Schedules

        Schedules are omitted because the required information either is not applicable or is included in the financial statements or the notes thereto.

98

(a)(3)    Exhibits

Exhibits Number			Description
	2.1		Agreement and Plan of Merger, dated July 12, 2005 by and among the Company, Macgregor, and Hedgehog Acquisition Inc., a wholly owned subsidiary of ITG, and Steven D. Levy, as representative of the security holders of Macgregor (incorporated by reference as Exhibit 2.1 to Form 8-K dated July 18, 2005).
	3.1		Certificate of Incorporation of the Company (incorporated by reference as Exhibit 3.1 to the Annual Report on Form 10-K for the year ended December 31, 1999).
	3.2		Amended and Restated By-laws of the Company (incorporated by reference as Exhibit 3 to the Form 8-K dated February 15, 2007).
	4.1		Form of Certificate for Common Stock of the Company (incorporated by reference as Exhibit 4.1 to the Annual Report on Form 10-K for the year ended December 31, 1999).
	10.1		Credit Agreement, dated January 3, 2006 by and among the Company, Bank of America, N.A., as syndication agent, U.S. Bank, National Association, as documentation agent, JPMorgan Chase Bank, N.A., as administrative agent, and the several banks and other financial institutions who become parties thereto as lenders (incorporated by reference as Exhibit 1.1 to Form 8-K dated January 9, 2006).
	10.2	*×	Credit Agreement, dated January 31, 2011 by and among ITG Inc., Investment Technology Group, Inc., the several banks and other financial institutions or entities from time to time parties thereto as lenders, Bank of America, N.A., as syndication agent, Bank of Montreal as document agent, and JPMorgan Chase Bank, N.A. as administrative agent.
	10.3		Amended and Restated 1994 Stock Option and Long-Term Incentive Plan (incorporated by reference as Exhibit A to the 1997 Definitive Proxy Statement).
	10.3.1		Investment Technology Group, Inc. Amended and Restated 1994 Stock Option and Long-Term Incentive Plan effective May 8, 2007 (incorporated by reference as Exhibit 10.2 to Form 10-Q dated November 8, 2007).
	10.4		Amended and Restated Non-Employee Directors' Stock Option Plan (incorporated by reference as Exhibit 10.3.2 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.4.1		Amendment to Amended and Restated Non-Employee Directors' Stock Option Plan (incorporated by reference as Exhibit 10.1 to Form 8-K dated August 11, 2006).
	10.5		Investment Technology Group, Inc. Directors' Equity Subplan (incorporated by reference as Exhibit 1.1 to Form 8-K dated January 25, 2006).
	10.5.1		Amendment to Investment Technology Group, Inc. Directors' Equity Subplan (incorporated by reference as Exhibit 10.3 to Form 8-K dated August 11, 2006).
	10.5.2		Amended and Restated Investment Technology Group, Inc. Directors' Equity Subplan (incorporated by reference as Exhibit 10.5 to Form 10-Q dated November 11, 2007).
	10.5.3		Amended and Restated Investment Technology Group, Inc. Directors' Equity Subplan (incorporated by reference as Exhibit 10.5.3 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.6		Form of Stock Option Agreement between the Company and Non Employee Directors of the Company (2006) (incorporated by reference as Exhibit 10.4 to Form 8-K dated August 11, 2006).
	10.6.1		Form of Amendment to Non-Employee Directors' Stock Option Agreements (incorporated by reference as Exhibit 10.2 to Form 8-K dated August 11, 2006).

99

Exhibits Number		Description
	10.7	Form of Restricted Share Unit Agreement between Investment Technology Group, Inc. and Non-Employee Directors of the Company (2006) (incorporated by reference as Exhibit 10.3 to Form 10-Q dated November 9, 2006).
	10.8	Form of Stock Option Agreement between the Company and certain employees of the Company (2005) (incorporated by reference as Exhibit 10.3.5 to Annual Report on Form 10-K for the year ended December 31, 2005).
	10.9	Form of Restricted Share Agreement between the Company and certain employees of the Company (2006) (incorporated by reference as Exhibit 10.3.16 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.10	Form of Amended and Restated Change in Control Agreement (incorporated by reference as Exhibit 10.10 to the Annual Report on Form 10-K for the year ended December 31, 2010).
	10.11	Stock Option Agreement dated October 4, 2006 between Investment Technology Group, Inc. and Robert C. Gasser (incorporated by reference as Exhibit 10.1 to Form 10-Q dated November 9, 2006).
	10.12	Restricted Share Agreement dated October 4, 2006 between Investment Technology Group, Inc. and Robert C. Gasser (incorporated by reference as Exhibit 10.2 to Form 10-Q dated November 9, 2006).
	10.12.1	Amended and Restated Restricted Share Agreement dated August 6, 2008 between Investment Technology Group, Inc. and Robert C. Gasser, (incorporated by reference as Exhibit 10.2 to Form 10-Q dated August 7, 2008).
	10.13	Amended and Restated Investment Technology Group, Inc. Pay-For-Performance Incentive Plan (incorporated by reference as Exhibit 10.13.2 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.14	Sixth Amended and Restated Stock Unit Award Program (incorporated by reference as Exhibit 10.3.21 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.14.1	Amended and Restated Investment Technology Group, Inc. Stock Unit Award Program (incorporated by reference as Exhibit 10.3 to Form 10-Q dated November 8, 2007).
	10.14.2	Amended and Restated Investment Technology Group, Inc. Stock Unit Award Program (incorporated by reference as Exhibit 10.14.2 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.14.3	Amended and Restated Investment Technology Group, Inc. Stock Unit Award Program Subplan (incorporated by reference as Exhibit 10.2 to the Form 8-K dated October 14, 2008).
	10.15	Employee Stock Purchase Plan (incorporated by reference as Exhibit 10.3.1A to the Annual Report on Form 10-K for the year ended December 31, 1997).
	10.15.1	First Amendment to Investment Technology Group, Inc. Employee Stock Purchase Plan (incorporated by reference as Exhibit 10.3.6 to the Annual Report on Form 10-K for the year ended December 31, 2004).
	10.15.2	Second Amendment to Investment Technology Group, Inc. Employee Stock Purchase Plan (incorporated by reference as Exhibit 10.8 to Form 10-Q dated November 8, 2007).
	10.15.3	Amended and Restated Investment Technology Group, Inc. Employee Stock Purchase Plan (incorporated by reference as Exhibit 10.3 to the Quarterly Report on Form 10-Q dated November 5, 2009).

100

Exhibits Number		Description
	10.16	Investment Technology Group, Inc. Deferred Compensation Plan, dated as of January 1, 1999 (incorporated by reference as Exhibit 10.4.7 to the Annual Report on Form 10-K for the year ended December 31, 1999).
	10.17	Amended and Restated Employee Advisor Agreement, dated May 30, 2008, between Investment Technology Group, Inc. and Raymond L. Killian, Jr. (incorporated by reference as Exhibit 10.1 to Form 10-Q dated August 7, 2008).
	10.18	Amended and Restated Employment Agreement, dated April 20, 2010, between Investment Technology Group, Inc. and Robert C. Gasser (incorporated by reference as Exhibit 10.1 to the Quarterly Report on Form 10-Q dated May 10, 2010).
	10.19	Amended and Restated Investment Technology Group, Inc. Directors' Retainer Fee Subplan (incorporated by reference as Exhibit 10.19.2 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.20	Lease, dated July 11, 1990, between AEW/LBA Acquisition Co. LLC (as successor to 400 Corporate Pointe, Ltd.) and Integrated Analytics Corporation, as assigned by Integrated Analytics Corporation to the Company (incorporated by reference as Exhibit 10.3.3 to Registration Statement).
	10.20.1	First Amendment to Lease, dated as of June 1, 1995, between AEW/LBA Acquisition Co. LLC (as successor to 400 Corporate Pointe, Ltd.) and the Company (incorporated by reference as Exhibit 10.5.7 to Annual Report on Form 10-K for the year ended December 31, 1996).
	10.20.2	Second Amendment to Lease, dated as of December 5, 1996 between Arden Realty Limited Partnership and the Company (incorporated by reference as Exhibit 10.5.2 to the Annual Report on Form 10-K for the year ended December 31, 1997).
	10.20.3	Third Amendment to Lease, dated as of March 13, 1998 between Arden Realty Finance Partnership, L.P. and the Company (incorporated by reference as Exhibit 10.5.3 to the Annual Report on Form 10-K for the year ended December 31, 1999).
	10.20.4	Fourth Amendment to Lease, dated as of February 29, 2000 between Arden Realty Finance Partnership, L.P. and the Company (incorporated by reference as Exhibit 10.5.4 to the Annual Report on Form 10-K for the year ended December 31, 1999).
	10.20.5	Fifth Amendment to Lease, dated June 29, 2000 between Arden Realty Finance Partnership, L.P. and the Company (incorporated by reference as Exhibit 10.4.5 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.20.6	Sixth Amendment to Lease, dated August 28, 2001 between Arden Realty Finance Partnership, L.P. and the Company (incorporated by reference as Exhibit 10.4.6 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.20.7	Seventh Amendment to Lease, dated December 15, 2004 between Arden Realty Finance Partnership, L.P. and the Company (incorporated by reference as Exhibit 10.4.7 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.20.8	Eighth Amendment to Lease, dated November 29, 2005 between Arden Realty Finance Partnership, L.P. and the Company (incorporated by reference as Exhibit 10.4.8 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.21	Lease, dated as of February 29, 2000 between Arden Realty Finance IV, L.L.C. and the Company (incorporated by reference as Exhibit 10.5.5 to the Annual Report on Form 10-K for the year ended December 31, 1999).

101

Exhibits Number		Description
	10.21.1	First Amendment to Lease, dated as of April 1, 2000 between Arden Realty Finance IV, L.L.C. and the Company (incorporated by reference as Exhibit 10.5.6 to the Annual Report on Form 10-K for the year ended December 31, 2001).
	10.21.2	Second Amendment to Lease, dated December 15, 2004 between Arden Realty Finance IV, L.L.C. and the Company (incorporated by reference as Exhibit 10.4.11 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.21.3	Third Amendment to Lease, dated November 29, 2005 between Arden Realty Finance IV, L.L.C. and the Company (incorporated by reference as Exhibit 10.4.12 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.22	Lease, dated October 4, 1996 between Spartan Madison Corp. and the Company (incorporated by reference as Exhibit 10.5.3 to the Annual Report on Form 10-K for the year ended December 31, 1997).
	10.22.1	First Supplemental Agreement, dated as of January 29, 1997 between Spartan Madison Corp. and the Company (incorporated by reference as Exhibit 10.5.4 to the Annual Report on Form 10-K for the year ended December 31, 1997).
	10.22.2	Second Supplemental Agreement, dated as of November 25, 1997 between Spartan Madison Corp. and the Company (incorporated by reference as Exhibit 10.5.5 to the Annual Report on Form 10-K for the year ended December 31, 1997).
	10.22.3	Third Supplemental Agreement, dated as of September 29, 1999 between Spartan Madison Corp. and the Company (incorporated by reference as Exhibit 10.5.9 to the Annual Report on Form 10-K for the year ended December 31, 1999).
	10.22.4	Fourth Supplemental Agreement, dated as of February 21, 2006 between TAG 380, LLC and the Company (incorporated by reference as Exhibit 10.4.17 to the Annual Report on Form 10-K for the year ended December 31, 2006).
	10.23	Form of Investment Technology Group, Inc. Nonqualified Stock Option Agreement for Employees (incorporated by reference as Exhibit 10.24 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.24	Form of Investment Technology Group, Inc. Stock Unit Grant Agreement for Employees (incorporated by reference as Exhibit 10.25 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.25	Form of Investment Technology Group, Inc. Performance Stock Unit Grant Agreement for Employees (incorporated by reference as Exhibit 10.26 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.26	Investment Technology Group, Inc. Amended and Restated 2007 Omnibus Equity Compensation Plan (incorporated by reference as Exhibit 10.1 to the Quarterly Report on Form 10-Q dated August 5, 2010).
	10.27	Form of Investment Technology Group, Inc. Stock Unit Grant Agreement for Non-Employee Directors (incorporated by reference as Exhibit 10.4 to Form 10-Q dated November 8, 2007).
	10.28	Form of Investment Technology Group, Inc. Non-Qualified Stock Option Grant Agreement for Non-Employee Directors (incorporated by reference as Exhibit 10.7 to Form 10-Q dated November 8, 2007).
	10.29	Lease, dated as of August 15, 2000 between Boston Wharf Co. and The Macgregor Group, Inc. (incorporated by reference as Exhibit 10.30 to the Annual Report on Form 10-K for the year ended December 31, 2007).

102

Exhibits Number			Description
	10.29.1		Consent to Assignment of Lease, dated as of March 31, 2006 between W2005 BWH III Realty, L.L.C., The Macgregor Group, Inc. and Investment Technology Group, Inc. (incorporated by reference as Exhibit 10.30.1 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.30		Lease, dated as of March 10, 1995 between Boston Wharf Co. and Investment Technology Group, Inc. (incorporated by reference as Exhibit 10.31 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.30.1		Assignment of Lease, dated as of April 27, 1999 between Boston Wharf Co. and Investment Technology Group, Inc. (incorporated by reference as Exhibit 10.31.1 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.30.2		Amendment to Lease, dated as of July 23, 2003, between Boston Wharf Co. and Investment Technology Group, Inc. (incorporated by reference as Exhibit 10.31.2 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.31		Office Lease Agreement, between MA-100 High Street, L.L.C., and Investment Technology Group, Inc., dated July 24, 2009 (incorporated by reference as Exhibit 10.1 to Form 10-Q dated November 5, 2009).
	10.31.1	*	Amendment to Office Lease Agreement, between MA-100 High Street, L.L.C., and Investment Technology Group, Inc., dated July 22, 2010.
	10.31.2	*	Second Amendment to Office Lease Agreement, MA-100 High Street, L.L.C., and Investment Technology Group, Inc., dated September 20, 2010.
	10.32		Lease, dated February 7, 2007 and effective January 8, 2007 between Mizuho Corporate Bank Ltd and Investment Technology Group Europe Limited (incorporated by reference as Exhibit 10.32 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.33		Lease, dated August 17, 1998 between Industrial Development Agency (Ireland) (with assignment to Joseph Cosgrave, Peter Cosgrave and Michael Cosgrave) and Investment Technology Group Limited (incorporated by reference as Exhibit 10.33 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.33.1		License, dated January 10, 2007 between Joseph Cosgrave, Peter Cosgrave and Michael Cosgrave and Investment Technology Group Limited (incorporated by reference as Exhibit 10.33.1 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.34		Employment Agreement, dated as of November 17, 1998 between Investment Technology Group Europe Limited and Alasdair Haynes (incorporated by reference as Exhibit 10.35 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.35		Form of Non-Qualified Stock Option Grant Agreement between Investment Technology Group, Inc and Robert C. Gasser (incorporated by reference as Exhibit 10.36 to the Annual Report on Form 10-K for the year ended December 31, 2007).
	10.36		Investment Technology Group, Inc. Stock Unit Grant Agreement, dated March 24, 2008 between the Company and Robert C. Gasser (as incorporated by reference as Exhibit 10.1 to the Form 10-Q dated May 9, 2008).
	10.37		Investment Technology Group, Inc. 2007 Omnibus Equity Compensation Plan Equity Deferral Award Program Subplan.
	10.38		Form of Grant Notice under the Investment Technology Group, Inc. Equity Deferral Award Program Subplan between the Company and certain employees of the Company (2010).

103

Exhibits Number			Description
	10.39	+	Separation Agreement, dated February 12, 2009 between Alasdair Haynes and Investment Technology Group, Inc. on behalf of Investment Technology Group Europe Limited, (as incorporated by reference as Exhibit 10.40 to the Annual Report on Form 10-K for the year ended December 31, 2009).
	10.40	>	Employment Agreement, dated as of February 14, 2005 between Investment Technology Group Europe Ltd. and David Stevens (incorporated by reference as Exhibit 10.2 to the Quarterly Report on Form 10-Q dated May 10, 2010).
	10.41		Form of KEEP Grant Notice under the Investment Technology Group, Inc. Equity Deferral Award Program Subplan between the Company and certain employees of the Company (2010) (incorporated by reference as Exhibit 10.3 to the Quarterly Report on Form 10-Q dated May 10, 2010).
	10.42		Form of Amendment to Change in Control Agreement (incorporated by reference as Exhibit 10.4 to the Quarterly Report on Form 10-Q dated May 10, 2010).
	10.43	*	Form of Grant Notice under the Investment Technology Group, Inc. Equity Deferral Award Program Subplan between the Company and certain employees of the Company (2011).
	10.44	*	Form of KEEP Grant Notice under the Investment Technology Group, Inc. Equity Deferral Award Program Subplan between the Company and certain employees of the Company (2011).
	10.45		Offer letter dated December 21, 2009 between Steven R. Vigliotti and Investment Technology Group, Inc. (incorporated by reference as Exhibit 10.40 to the Annual Report on Form 10-K for the year ended December 31, 2010).
	10.46	^	Separation Agreement dated as of February 3, 2010 between Howard C. Naphtali and Investment Technology Group, Inc. (incorporated by reference as Exhibit 10.41 to the Annual Report on Form 10-K for the year ended December 31, 2010).
	10.47		Transition Services Agreement dated February 3, 2010 between Howard C. Naphtali and Investment Technology Group, Inc. (incorporated by reference as Exhibit 10.42 to the Annual Report on Form 10-K for the year ended December 31, 2010).
	21.1	*	Subsidiaries of Company.
	23.1	*	Consent of KPMG LLP.
	31.1	*	Rule 13a-14(a) Certification.
	31.2	*	Rule 13a-14(a) Certification.
	32.1	*	Section 1350 Certification.

*

Filed herewith

+

Portions of this agreement have been omitted pursuant to a request for confidential treatment filed on February 27, 2009.

^

Portions of this agreement have been omitted pursuant to a request for confidential treatment filed on February 26, 2010.

>

Portions of this agreement have been omitted pursuant to a request for confidential treatment filed on May 10, 2010.

×

Portions of this agreement have been omitted pursuant to a request for confidential treatment filed on February 28, 2011.

        See list of exhibits at Item 15(a)(3) above and exhibits following.

104

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INVESTMENT TECHNOLOGY GROUP, INC.
By:	/s/ STEVEN R. VIGLIOTTI Steven R. Vigliotti Chief Financial Officer and Duly Authorized Signatory of Registrant

Dated: February 28, 2011

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ MAUREEN O'HARA Maureen O'Hara	Chairman of Board of Directors	February 28, 2011
/s/ ROBERT C. GASSER Robert C. Gasser	Chief Executive Officer, President and Director	February 28, 2011
/s/ STEVEN R. VIGLIOTTI Steven R. Vigliotti	Managing Director and Chief Financial Officer (Principal Financial Officer)	February 28, 2011
/s/ ANGELO BULONE Angelo Bulone	Managing Director and Controller (Principal Accounting Officer)	February 28, 2011
/s/ J. WILLIAM BURDETT J. William Burdett	Director	February 28, 2011
/s/ MINDER CHENG Minder Cheng	Director	February 28, 2011
/s/ CHRISTOPHER V. DODDS Christopher V. Dodds	Director	February 28, 2011
/s/ TIMOTHY L. JONES Timothy L. Jones	Director	February 28, 2011
/s/ KEVIN J.P. O'HARA Kevin J.P. O'Hara	Director	February 28, 2011
/s/ STEVEN S. WOOD Steven S. Wood	Director	February 28, 2011

105

EX-10.2

Exhibit 10.2

EXECUTION COPY

The material marked by asterisks within brackets ([**]) on pages 2, 12, 39 and 40 of this document has been omitted pursuant to a request for confidential treatment from the Commission in accordance with 17 CFR §240.24b-2.

$150,000,000

CREDIT AGREEMENT

among

ITG INC.,

as Borrower,

INVESTMENT TECHNOLOGY GROUP, INC.

as Guarantor,

The Several Lenders from Time to Time Parties Hereto,

BANK OF AMERICA, N.A.,

as Syndication Agent,

BANK OF MONTREAL,

as Documentation Agent

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as of January 31, 2011

J.P. MORGAN SECURITIES LLC, MERRILL LYNCH, PIERCE, FENNER & SMITH

INCORPORATED and BMO CAPITAL MARKETS

as Joint Lead Arrangers and Joint Bookrunners

TABLE OF CONTENTS

		Page
SECTION 1.             DEFINITIONS		1
1.1	Defined Terms	1
1.2	Other Definitional Provisions	17
SECTION 2.             AMOUNT AND TERMS OF COMMITMENTS		18
2.1	Revolving Commitments	18
2.2	Procedure for Revolving Loan Borrowing	18
2.3	Swingline Loans	19
2.4	Procedure for Swingline Borrowing; Refunding of Swingline Loans	19
2.5	Commitment Fees, etc.	21
2.6	Termination or Reduction of Revolving Commitments	22
2.7	Optional Prepayments	22
2.8	Daily Calculation of Loan Value; Mandatory Prepayments	22
2.9	Interest Rates and Payment Dates	23
2.10	Computation of Interest and Fees	23
2.11	Pro Rata Treatment and Payments	23
2.12	Requirements of Law	24
2.13	Taxes	25
2.14	Change of Lending Office	28
2.15	Replacement of Lenders	28
2.16	Defaulting Lenders	28
2.17	Incremental Commitments	29
SECTION 3.             REPRESENTATIONS AND WARRANTIES		30
3.1	Financial Condition	30
3.2	No Change	30
3.3	Existence; Compliance with Law	30
3.4	Power; Authorization; Enforceable Obligations	31
3.5	No Legal Bar	31
3.6	Litigation	31
3.7	No Default	31
3.8	Ownership of Property; Liens	31
3.9	Intellectual Property	32
3.10	Taxes	32
3.11	Federal Regulations	32
3.12	ERISA	32
3.13	Membership in FINRA; Registration, etc.	33
3.14	Subsidiaries	33
3.15	Use of Proceeds	33
3.16	Environmental Matters	33
3.17	Accuracy of Information, etc.	34

3.18	Security Documents	34
SECTION 4.             CONDITIONS PRECEDENT		35
4.1	Conditions to Closing Date	35
4.2	Conditions to Each Extension of Credit	36
SECTION 5.             AFFIRMATIVE COVENANTS		36
5.1	Financial Statements	37
5.2	Certificates; Other Information	37
5.3	Payment of Obligations	38
5.4	Maintenance of Existence; Compliance	38
5.5	Maintenance of Property; Insurance	38
5.6	Inspection of Property; Books and Records; Discussions	38
5.7	Notices	39
5.8	Compliance with Regulatory Requirements	39
SECTION 6.             NEGATIVE COVENANTS		39
6.1	Financial Condition Covenants	39
6.2	Liens	40
6.3	Fundamental Changes	41
6.4	Disposition of Property	42
6.5	Restricted Payments	43
6.6	Capital Expenditures	43
6.7	Investments	43
6.8	Transactions with Affiliates	44
6.9	Changes in Fiscal Periods	44
6.10	Lines of Business	44
SECTION 7.             GUARANTEE		44
7.1	Guarantee	44
7.2	No Subrogation	45
7.3	Amendments, etc. with respect to the Obligations	45
7.4	Guarantee Absolute and Unconditional	45
7.5	Reinstatement	46
7.6	Payments	46
SECTION 8.             EVENTS OF DEFAULT		46
SECTION 9.             THE AGENTS		49
9.1	Appointment	49
9.2	Delegation of Duties	49
9.3	Exculpatory Provisions	49
9.4	Reliance by Administrative Agent	49

9.5	Notice of Default	50
9.6	Non-Reliance on Agents and Other Lenders	50
9.7	Indemnification	50
9.8	Agent in Its Individual Capacity	51
9.9	Successor Administrative Agent	51
9.10	Syndication Agent; Documentation Agent	51
SECTION 10.             MISCELLANEOUS		51
10.1	Amendments and Waivers	51
10.2	Notices	53
10.3	No Waiver; Cumulative Remedies	54
10.4	Survival of Representations and Warranties	54
10.5	Payment of Expenses	54
10.6	Successors and Assigns; Participations and Assignments	55
10.7	Adjustments; Set-off	57
10.8	Counterparts	58
10.9	Severability	58
10.10	Integration	58
10.11	GOVERNING LAW	58
10.12	Submission To Jurisdiction; Waivers	58
10.13	Acknowledgements	59
10.14	Releases of Guarantees and Liens	59
10.15	Confidentiality	59
10.16	WAIVERS OF JURY TRIAL	60
10.17	USA PATRIOT Act	60

SCHEDULES:

1.1A	Commitments
1.1B	Broker-Dealer Licenses and Memberships
1.1C	Broker-Dealer Subsidiaries
3.1	Guarantee Obligations
3.4	Consents, Authorizations, Filings and Notices
3.12	ERISA
3.14	Subsidiaries
3.18(a)	UCC Filing Jurisdictions
6.2(f)	Existing Liens
6.6	Exempt Capital Expenditures
6.7(h)	Existing Investments

EXHIBITS:

A	Form of Security Agreement
B	Form of Compliance Certificate
C	Form of Closing Certificate
D	Form of Assignment and Assumption
E	Form of Exemption Certificate
F	Form of Borrowing Request
G	Form of Pledged Eligible Assets Notice
H	Form of Borrowing Base B Limit Notice

CREDIT AGREEMENT (this “Agreement”), dated as of January 31, 2011, among ITG INC., a Delaware corporation (the “Borrower”), INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the “Guarantor”), the several banks and other financial institutions or entities from time to time parties to this Agreement (including, for the avoidance of doubt, any Incremental Lender, the “Lenders”), BANK OF AMERICA, N.A., as syndication agent (in such capacity, the “Syndication Agent”), BANK OF MONTREAL, as documentation agent (in such capacity, the “Documentation Agent”) and JPMORGAN CHASE BANK, N.A., as administrative agent.

The parties hereto hereby agree as follows:

SECTION 1.    DEFINITIONS

1.1           Defined Terms.  As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“Administrative Agent”:  JPMorgan Chase Bank, N.A., together with its affiliates, as the arranger of the Commitments and as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors.

“Affiliate”:  as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.  For purposes of Section 6.8, “Affiliate” shall also include a Person with the power, directly or indirectly, to vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person.

“Agent Indemnitee”: as defined in Section 9.7.

“Agents”:  the collective reference to the Administrative Agent, the Syndication Agent and the Documentation Agent.

“Agreement”:  as defined in the preamble hereto.

“Applicable Margin”:  2.50%.

“Applicable Percentage”:  as to any Lender at any time, the percentage which such Lender’s Commitment then constitutes of the Total Commitments or, at any time after the Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender’s Revolving Loans then outstanding constitutes of the aggregate principal amount of all Revolving Loans then outstanding.

“Approved Fund”:  as defined in Section 10.6(b).

“Assignee”:  as defined in Section 10.6(b).

“Assignment and Assumption”:  an Assignment and Assumption, substantially in the form of Exhibit D.

“Available Commitment”:  as to any Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Commitment then in effect over (b) such Lender’s Revolving Extensions of

Credit then outstanding; provided, that in calculating any Lender’s Revolving Extensions of Credit for the purpose of determining such Lender’s Available Commitment pursuant to Section 2.5(a), the aggregate principal amount of Swingline Loans then outstanding shall be deemed to be zero.

“Bankruptcy Event”: with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdicti on of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Benefited Lender”:  as defined in Section 10.7(a).

“Board”:  the Board of Governors of the Federal Reserve System of the United States (or any successor).

“Borrower”:  as defined in the preamble hereto.

“Borrowing”: Revolving Loans made or continued by the Lenders, or Swingline Loans made or continued by the applicable Swingline Lenders, in either case on the same date.

“Borrowing Base A Loans”: any Loans which are secured by Pledged Eligible Assets.

“Borrowing Base B Limit”: at any time, an amount equal to [**]% of the excess, if any, of the Eligible NSCC Margin Deposits at such time over the Eligible NSCC Margin Deposits in effect as at the close of business on the day in the prior calendar month (or, if the certificate for such prior calendar month with respect to Eligible NSCC Margin Deposits has not been delivered pursuant to Section 5.2(c), the preceding calendar month) that was the day having the 10th lowest Eligible NSCC Margin Deposits during such calendar month.

“Borrowing Base B Limit Notice”: as defined in Section 2.2(a).

“Borrowing Base B Loans”: any Loans the purpose and use of which is to satisfy NSCC Deposit Requirements.

“Borrowing Date”:  any Business Day specified by the Borrower as a date on which the Borrower requests the Lenders to make Loans hereunder.

“Borrowing Request”: as defined in Section 2.2(a).

“Broker-Dealer Licenses and Memberships”:  (a) the memberships of each Broker Dealer Subsidiary that is a Domestic Subsidiary with NSCC, DTC and FINRA, (b) the other memberships listed on Schedule 1.1B of each Broker-Dealer Subsidiary, (c) the licenses with Governmental Authorities listed on Schedule 1.1B of each Broker-Dealer Subsidiary.

2

“Broker-Dealer Registrations”:  the registrations of each Broker-Dealer Subsidiary with the SEC and all other Governmental Authorities which require registration and have jurisdiction over such Broker-Dealer Subsidiary.

“Broker-Dealer Subsidiaries”: the Subsidiaries of the Guarantor listed on Schedule 1.1C and any other Subsidiary of the Guarantor that becomes a registered broker-dealer after the date hereof.

“Business”:  as defined in Section 3.16(b).

“Business Day”:  a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, provided, that with respect to determinations of the Eurodollar Rate, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

“Capital Expenditures”:  for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of furniture, fixtures and equipment (including replacements, capitalized repairs and improvements during such period) that should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.

“Capital Lease Obligations”:  as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

“Capital Stock”:  any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

“Cash Equivalents”:  (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank

3

satisfying the requirements of clause (b) of this definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (1) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (2) are rated AAA by S&P and Aaa by Moody’s and (3) have portfolio assets of at least $5,000,000,000 or (i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in Euros or any other foreign currency comparable in credit quality and tenor to those referred to above and commonly used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidia ry organized in such jurisdiction.

“Closing Date”:  the date on which the conditions precedent set forth in Section 4.1 shall have been satisfied, which date shall not be later than January 31, 2011.

“Code”:  the Internal Revenue Code of 1986, as amended from time to time.

“Collateral”:  all property and assets of the Borrower with respect to which a Lien is purported to be granted in favor of the Administrative Agent pursuant to a Security Document.

“Commitment”:  as to any Lender, the obligation of such Lender to make Revolving Loans and participate in Swingline Loans in an aggregate principal amount not to exceed the amount set forth under the heading “Commitment” opposite such Lender’s name on Schedule 1.1A, in the Assignment and Assumption pursuant to which such Lender became a party hereto, or in the Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Incremental Commitment, as the same may be changed from time to time pursuant to the terms hereof.  The original amount of the Total Commitments is $150,000,000.

“Commitment Fee Rate”:  0.50% per annum.

“Commitment Period”:  the period from and including the Closing Date to the Termination Date.

“Commonly Controlled Entity”:  an entity, whether or not incorporated, that is under “common control” with any Loan Party within the meaning of Section 4001 of ERISA or is part of a group that includes any Loan Party and that is treated as a single employer with any Loan Party under Section 414 of the Code.

“Compliance Certificate”:  a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.

“Confidential Information Memorandum”:  the Confidential Information Memorandum dated October 2010 and furnished to certain Lenders.

“Consolidated EBITDA”:  for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, excluding any items in this clause (b) attributable to Excluded Debt, (c) depreciation and amortization expense, excluding amortization expense attributable to Excluded Debt, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary or nonrecurring or unusual charges, expenses or losses, (f) non-recurring fees, expenses or charges related to any offering of e quity interests, Investments permitted hereunder, Permitted

4

Acquisitions or Indebtedness permitted hereunder (in each case, whether or not successful), (g) any net after-tax loss from discontinued operations and any net after-tax losses on disposal of discontinued operations; (h) any net after-tax losses, or any subsequent charges or expenses, attributable to business dispositions or asset dispositions having occurred at any time other than in the ordinary course of business, (i) any non-cash impairment charges or asset write-off resulting from the application of Statement of Financial Accounting Standards No. 142 or No. 144 and the amortization of intangibles arising pursuant to Statement of Financial Accounting Standards No. 141; (j) any non-cash expense realized or resulting from any employee benefit plans, post-employment benefit plans, deferred stock compensation plan or grants of stock appreciation or similar rights, stock option s, restricted stock or other rights to officers, directors and employees of such Person or any of its Subsidiaries; (k) non-cash losses and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 and fair value accounting pursuant to customary securities industries practices; (l) non-cash charges for deferred tax asset valuation allowances and (m) any amortization or depreciation or any one-time non-cash charges resulting from purchase accounting in connection with any Permitted Acquisition that is consummated hereafter and minus, the sum of (a) to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business), (ii)  ;income tax benefits (to the extent not netted from income tax expense), (iii) any other non-cash income, (iv) any net after-tax income from discontinued operations and any net after-tax gains on disposal of discontinued operations, (v) any net after-tax gains attributable to business dispositions or asset dispositions having occurred at any time other than in the ordinary course of business, (vi) any non-cash gains resulting from the application of Statement of Financial Accounting Standards No. 142 or No. 144 and (vii) non-cash gains or income resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 and fair value accounting pursuant to customary securities industries practices and (b) any cash payments made during such period in respect of items described in clause (j) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of Consolidat ed Net Income, all as determined on a consolidated basis.  For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of the Consolidated Leverage Ratio, (i) if at any time during such Reference Period the Guarantor or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisitio n occurred on the first day of such Reference Period.  As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) involves the payment of consideration by the Guarantor and its Subsidiaries in excess of $1,000,000; and “Material Disposition” means any Disposition of property or series of related Dispositions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business of the Guarantor and/or its Subsidiaries or constitutes all or substantially all of the common stock of any Subsidiary and (b) yields gross proceeds to the Guarantor or any of its Subsidiaries in excess of $1,000,000.

“Consolidated Leverage Ratio”:  at any date, the ratio of (a) Consolidated Total Debt on such date to (b) Consolidated EBITDA for the four fiscal quarters of the Guarantor most recently ended on or prior to such date.

5

“Consolidated Net Income”:  for any period, the consolidated net income (or loss) of the Guarantor and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Guarantor or is merged into or consolidated with the Guarantor or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of the Guarantor) in which the Guarantor or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Guarantor or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Guarantor to the extent that the declaration or payment of dividends or similar di stributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary; provided, further, that clause (c) above shall not exclude the undistributed earnings of any Subsidiary in situations where the only restriction on the ability of such Subsidiary to declare or pay dividends or make similar distributions arises from regulatory restrictions (or Contractual Obligations relating to compliance with law or regulatory restrictions).

“Consolidated Tangible Net Worth”:  at any date, all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of the Guarantor and its Subsidiaries under stockholders’ equity at such date minus the amount of all intangible items included therein, including, without limitation, goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service marks, brand names and write-ups of assets (but only to the extent that such items would be included on a consolidated balance sheet of the Guarantor and its Subsidiaries in accordance with GAAP).

“Consolidated Total Debt”:  at any date, the aggregate principal amount of all Indebtedness of the Guarantor and its Subsidiaries at such date, determined on a consolidated basis (to the extent such Indebtedness would be included on a balance sheet prepared in accordance with GAAP) but excluding Excluded Debt.

“Continuing Directors”:  the directors of the Guarantor on the Closing Date, and each other director, if, in each case, such other director’s nomination for election to the board of directors of the Guarantor is recommended by at least a majority of the then Continuing Directors.

“Contractual Obligation”:  as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Credit Party”: the Administrative Agent, the Swingline Lenders or any other Lender.

“Default”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“Defaulting Lender”: any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Swingline Loans or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or pu blic statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other

6

agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Swingline Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

“Deficiency”: as defined in Section 2.8(a).

“Deficiency Notice”: as defined in Section 2.8(a).

“Disposition”:  with respect to any property, any sale, lease, Sale/Leaseback Transaction, assignment, conveyance, transfer or other disposition thereof.  The terms “Dispose” and “Disposed of” shall have correlative meanings.

“Diversified Pool”: at any time, all Pledged Eligible Assets not included at such time in the Non-Diversified Pool.

“Documentation Agent”: as defined in the preamble hereto.

“Dollars” and “$”:  dollars in lawful currency of the United States.

“Domestic Subsidiary”:  any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.

“DTC”: The Depository Trust Company and its successors and assigns.

“Eligible Assets”: at any time, common and preferred equity securities, ADRs and exchange-traded funds that are then listed on the NYSE, NASDAQ or Amex (regardless of the venue used to execute trades with respect to such securities); provided, in any event, that “Eligible Assets” shall not include warrants or options; and provided further that (i) for purposes of determining the Loan Value of the Pledged Eligible Assets in the Diversified Pool, securities issued by any single issuer and its affiliates (other than Eligible ETFs) shall constitute “Eligible Assets” only to the extent that the Market Value of such securities of such single issuer and its affiliates does not exceed 20% of the aggregate Market Value of all Pledged Eligible Assets in the Diversified Pool at such time and (ii) for purposes of determining t he Loan Value of the Pledged Eligible Assets in the Non-Diversified Pool, securities issued by any single issuer and its affiliates (other than Eligible ETFs) shall constitute “Eligible Assets” only to the extent that the Market Value of such securities of such single issuer and its affiliates does not exceed $30,000,000 at such time.

“Eligible ETFs”: any reasonably diversified exchange-traded funds that the Borrower requests be considered an “Eligible ETF” for purposes hereof, subject to the consent of the Administrative Agent to such exchange-traded fund being considered an “Eligible ETF” (such consent not to be unreasonably withheld or delayed).  For the avoidance of doubt, leveraged exchange-traded funds shall not constitute “Eligible ETFs”.

“Eligible NSCC Margin Deposits”: NSCC Margin Deposits, other than any such deposits relating to individual transactions that are outstanding for more than five Business Days.   The amount of Eligible NSCC Margin Deposits at any time shall not exceed the NSCC Deposit Requirements applicable to the Borrower at such time.

7

“Environmental Laws”:  any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

“ERISA”:  the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Eurocurrency Reserve Requirements”:  for any day, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

“Eurodollar Base Rate”:  for any day, the rate per annum determined on the basis of the rate for deposits in Dollars for an interest period of one month commencing two Business Days thereafter appearing on Reuters Page LIBOR01 (or any successor or substitute page which displays an average British Bankers Association Interest Settlement Rate) as of 11:00 A.M., London time, on such day (or, if such day is not a Business Day, the preceding Business Day).  In the event that such rate does not so appear, the “Eurodollar Base Rate” shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 11:00 A .M., New York City time, on such day (or, if such day is not a Business Day, the preceding Business Day) in the London interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on such day for an interest period of one month commencing two Business Days thereafter.

“Eurodollar Rate”:  for any day, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

Eurodollar Base Rate

1.00 - Eurocurrency Reserve Requirements

“Event of Default”:  any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“Exchange Act”: as defined in Section 8(k)(i).

“Excluded Debt”: Indebtedness incurred (a) in the ordinary course of business by or on behalf of any Broker-Dealer Subsidiary that is (i) secured by marketable securities under customary terms (including, without limitation, all Borrowing Base A Loans) or (ii) unsecured but where such Subsidiary holds, or will have the right to hold pursuant to pending securities transactions and in accordance with applicable laws and regulations, unencumbered marketable securities sufficient, at the time of the securities transaction which gave rise to any such Indebtedness, to refinance such Indebtedness in the ordinary course of business on a secured basis using such securities as collateral or (b) by the Borrower pursuant to this Agreement in connection with Borrowing Base B Loans.

“Excluded Taxes”: as defined in Section 2.13(a).

8

“FATCA”: Sections 1471 through 1474 of the Code as of the date hereof and any existing or future regulations or official interpretations thereof.

“Federal Funds Effective Rate”: for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by interbank Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three interbank Federal funds brokers of recognized standing selected by it.

“Federal Funds Rate”: for any day for any Borrowing, a rate per annum equal to the greater of (a) the rate of interest per annum which is the average of the rates on the offered side of the Federal funds market quoted by three interbank Federal funds brokers at the approximate time of such Borrowing (for the first day of such Borrowing and until the next Business Day) and 12:00 Noon (New York City time) (for each subsequent Business Day while such Borrowing is outstanding and until the next Business Day), selected by the Administrative Agent, for Federal Funds and (b) the Eurodollar Rate for such day.  For the avoidance of doubt, the Federal Funds Rate shall be determined on each Business Day on which a Borrowing of Loans is requested or outstanding, as provided herein.

“Fee Payment Date”:  (a) the third Business Day following the last day of each March, June, September and December and (b) the last day of the Commitment Period.

“FINRA”:  the Financial Industry Regulatory Authority, Inc., or any other self-regulatory body which succeeds to the functions of the Financial Industry Regulatory Authority, Inc.

“FOCUS Report”: the Financial and Operational Combined Uniform Single Report on Form X-17A-15. A “Part II FOCUS Report” is a report filed on Form X-17A-5 Part II.

“Funding Default”: means the failure by a Defaulting Lender to fund any portion of its Loans as of the time required to be funded by it hereunder or to acquire participating interests in Swingline Loans in accordance with Section 2.4.

“Funding Office”:  the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

“GAAP”:  generally accepted accounting principles in the United States as in effect from time to time, except that (i) for purposes of Section 6.1, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements referred to in Section 3.1 and (ii) right-to-use assets and lease commitment liabilities arising from lease-related Accounting Changes effected at any time after the Closing Date, to the extent such assets and liabilities would not have been classified or recognized as assets or liabilities under GAAP as in effect as of the Closing Date, shall not be given effect for any purpose under this Agreement.  In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then, at the request of the Borrower or the Administrative Agent, the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial

9

covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

“Governmental Authority”:  any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

“Group Members”:  the collective reference to the Guarantor and its Subsidiaries.

“Guarantee Obligation”:  as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purcha se or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteei ng person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

“Guarantor”:  as defined in the preamble hereto.

“Increased Amount Date”: as defined in Section 2.17(a).

“Incremental Amount” shall mean, at any time, the excess, if any, of (a) $100 million over (b) the aggregate amount of all Incremental Commitments established prior to such time pursuant to Section 2.17.

“Incremental Assumption Agreement”: an Incremental Assumption Agreement in form and substance reasonably satisfactory to the Administrative Agent, among the Borrower, the Administrative Agent and one or more Incremental Lenders.

“Incremental Commitment”: any increased or incremental Commitment provided pursuant to Section 2.17.

10

“Incremental Lender”: a Lender with a Commitment or an outstanding Revolving Loan as a result of an Incremental Commitment.

“Indebtedness”:  of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than (i) trade payables incurred in the ordinary course of such Person’s business and (ii) earn-out obligations until such obligations become a liability on the balance sheet of such Person in accordance with GAAP), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all mandatorily redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, (j) for the purposes of Section 8(e) only, all obligations of such Person in respect of Swap Agreements and (k) for the p urposes of Section 8(e) only, all obligations or liabilities of such Person arising from a Repo Transaction; provided, that the term “Indebtedness” shall not include (A) payments with respect to deferred employee compensation and (B) agreements providing for indemnification, for the adjustment of purchase price or for similar adjustments in connection with a Permitted Acquisition or a Disposition permitted by Section 6.4.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

“Indemnified Liabilities”: as defined in Section 10.5.

“Indemnitee”: as defined in Section 10.5.

“Insolvency”:  with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent”:  pertaining to a condition of Insolvency.

“Intellectual Property”:  the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“Interest Payment Date”:  (a) as to any Revolving Loan, the last day of each March, June, September and December to occur while such Loan is outstanding, the date of a termination of all of the outstanding Commitments under Section 2.6 and the final maturity date of such Loan and (b) as to any Swingline Loan, the day that such Loan is required to be or is repaid.

11

“Investments”:  as defined in Section 6.7.

“IRS”: as defined in section 2.13(f).

“Lenders”:  as defined in the preamble hereto.

“Lien”:  any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

“Limited Permitted Liens”: as defined in the Security Agreement.

“Liquidity Ratio”:  at any time, the ratio of (a) the sum of (i) unencumbered marketable securities (after taking into account prudent and customary financing haircuts) and cash and Cash Equivalents held by the Borrower that would not be reflected as “restricted” or “segregated” on a consolidated balance sheet of the Borrower and its Subsidiaries and (ii) Eligible NSCC Margin Deposits (solely to the extent of the lesser of (x) the excess, if any, of the Borrowing Base B Limit at such time over the aggregate amount of all Borrowing Base B Loans outstanding on such date and (y) the Available Commitments) to (b) the sum of the aggregate principal amount of its unsecured Indebtedness and accrued compensation liabilities, excluding (i) liabilities for intercompany advances funded by the Guarantor or one of its Subsi diaries with long-term capital and (ii) all Loans under this Agreement.

“Loan”:  any loan made by any Lender pursuant to this Agreement.

“Loan Documents”:  this Agreement, the Security Documents, the Notes and any amendment, waiver, supplement or other modification to any of the foregoing.

“Loan Parties”:  the Borrower and the Guarantor.

“Loan Value”: (a) as to the Pledged Eligible Assets in the Diversified Pool at any time, the product of (i) [**]% and (ii) the aggregate Market Value of all Pledged Eligible Assets as most recently determined by the Administrative Agent and (b) as to the Pledged Eligible Assets in the Non-Diversified Pool at any time, the product of (i) [**]% and (ii) the aggregate Market Value of all Pledged Eligible Assets as most recently determined by the Administrative Agent.

“Market Value”: as to any Pledged Eligible Asset, the market value determined by the Administrative Agent in its usual and customary manner for loans to broker-dealers based on pricing information with respect to such Pledged Eligible Asset reasonably available to the Administrative Agent from one or more pricing services selected by the Administrative Agent in its reasonable discretion.

“Material Adverse Effect”:  a material adverse effect on (a) the business, property, operations or financial condition of the Guarantor and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.  For the avoidance of doubt, any non-cash writedown of goodwill or other intangible assets shall not in and of itself be a Material Adverse Effect for purposes hereof.

“Material Group Member”: the Borrower, the Guarantor or any Material Subsidiary.

12

“Material Subsidiary”: any Subsidiary of the Guarantor that, as of the last day of the most recently ended fiscal quarter of the Guarantor, had assets or revenues (on a consolidated basis including its Subsidiaries) with a value in excess of 2.0% of the consolidated assets of the Guarantor or 2.0% of the consolidated revenues of the Guarantor; provided, that in the event Subsidiaries that would otherwise not be Material Subsidiaries shall in the aggregate account for a percentage in excess of 5.0% of the consolidated assets of the Guarantor or 5.0% of the consolidated revenues of the Guarantor as of the end of and for the most recently completed fiscal year, then one or more of such Subsidiaries as designated by the Guarantor (or, if the Guarantor shall make no designation, one or more of such Subsidiaries in descending order based on their respective contributions to t he consolidated assets of the Guarantor), shall be included as Material Subsidiaries to the extent necessary to eliminate such excess.

“Materials of Environmental Concern”:  any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

“Minimum TNW”: as defined in Section 6.1.

“Multiemployer Plan”:  a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Capital”: as defined in paragraph (c)(2) of Rule 15c3-1 of the Exchange Act.

“Non-Diversified Pool”: at any time, the Pledged Eligible Assets as noted in a notice by the Borrower to the Administrative Agent as being included in the “Non-Diversified Pool” at such time.

“Non-Consenting Lender”: as defined in section 2.15(b).

“Non-Excluded Taxes”:  as defined in Section 2.13(a).

“Non-U.S. Lender”:  as defined in Section 2.13(f).

“Notes”:  the collective reference to any promissory note evidencing Loans.

“NSCC”:  the National Securities Clearing Corporation.

“NSCC Deposit Requirements”:  cash collateral requirements established by NSCC in connection with securities clearing services provided by NSCC, as such requirements may be adjusted from time to time.

“NSCC Margin Deposits”:  deposits made by the Borrower with NSCC in connection with securities clearing services provided to it by NSCC.

“Obligations”:  the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document or any other document made, delivered or given in connection herewith or therewith, whether on account of principal,

13

interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

“Other Taxes”:  any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document (but not Excluded Taxes).

“Participant”:  as defined in Section 10.6(c).

“Participant Register”: as defined in Section 10.6(c).

“Patriot Act”: as defined in Section 10.17.

“PBGC”:  the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

“Permitted Acquisition”: any acquisition  by any Group Member of all or substantially all the assets of, or shares or other equity interests in, a Person or division or line of business of a Person, provided that (a) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (b) the Guarantor and the Subsidiaries shall be in compliance, on a pro forma basis after giving effect to such acquisition, with the covenants contained in Section 6.1 recomputed as at the last day of the most recently ended fiscal quarter of the Guarantor and the Subsidiaries as if such acquisition and related financings or other transactions had occurred on the first day of each relevant period for testing such compliance.

“Permitted Liens”: as defined in the Security Agreement.

“Person”:  an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“Plan”:  at a particular time, any employee benefit plan that is covered by ERISA and in respect of which a Loan Party or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pledged Eligible Assets”: Eligible Assets that have been pledged to the Administrative Agent for the benefit of the Lenders to secure the obligations of the Borrower in respect of Borrowing Base A Loans pursuant to the terms of the Security Agreement.

“Pledged Eligible Assets Notice”: as defined in Section 2.2(a).

“pro forma”:  all pro forma computations required to be made hereunder giving effect to any acquisition, investment, sale, disposition, merger or similar event shall reflect on a pro forma basis such event and, to the extent applicable, the historical earnings and cash flows associated with the assets acquired or disposed of and any related incurrence or reduction of Indebtedness, and may also reflect (x) any projected synergies or similar benefits expected to be realized as a result of such event to the extent such synergies or similar benefits would be permitted to be reflected in financial statements prepared in compliance with Article 11 of Regulation S-X under the Securities Act of 1933, as amended, and (y) any

14

other demonstrable cost-savings and other synergies and adjustments not included in the foregoing clause (x) that are reasonably anticipated by the Borrower to be achieved in connection with any such event for the 12-month period following the consummation of such event, which the Borrower determines are reasonable and as set forth in a certificate of the chief financial officer of the Borrower; provided, that the aggregate additions to Consolidated EBITDA, for any period being tested, pursuant to this clause (y) shall not exceed 15% of the amount which could have been Consolidated EBITDA in the absence of the adjustment pursuant to this clause (y).

“Properties”: as defined in Section 3.16(a).

“Proposed Change”: as defined in Section 2.15(b).

“Quarterly Condensed Consolidated Financial Statements”: the unaudited condensed consolidated balance sheet of the Borrower and the related statements of income and cash flows and the related notes, disclosures, and other narrative materials provided to FINRA on a quarterly basis.

“Refunded Swingline Loans”: as defined in Section 2.4.

“Register”:  as defined in Section 10.6(b).

“Regulation U”:  Regulation U of the Board as in effect from time to time.

“Reorganization”:  with respect to any Multiemployer Plan, the condition that such Plan is in reorganization within the meaning of Section 4241 of ERISA.

“Repo Transaction”: any of the following: repurchase agreements, reverse repurchase agreements, sell buy backs and buy sell backs agreements, securities lending and borrowing agreements and any other agreement or transaction similar to those referred to above in this definition.

“Reportable Event”:  any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived as of the date hereof under PBGC Reg. § 4043.

“Required Lenders”:  at any time, Lenders holding more than 50% of the Total Commitments then in effect or, if all of the Commitments have been terminated, the Total Extensions of Credit then outstanding, subject to Section 2.16.

“Requirement of Law”:  as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. Notwithstanding anything in this Agreement to the contrary, any reference in this Agreement to the adoption of or a change in a Requirement of Law after the date hereof (or substantially similar reference) shall be deemed to include the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, regardless of the date enacted, adopted or issued.

“Responsible Officer”:  the chief executive officer, president, chief financial officer, treasurer, controller or head of operations), but in any event, with respect to financial matters, the chief financial officer or controller of such Loan Party.

15

“Restricted Payments”:  as defined in Section 6.5.

“Revolving Extensions of Credit”:  as to any Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding and (b) such Lender’s Applicable Percentage of the aggregate principal amount of Swingline Loans then outstanding.

“Revolving Loans”:  as defined in Section 2.1(a).

“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by any Group Member whereby such Group Member transfers such property to a Person and a Group Member leases it from such Person, other than leases among Group Members.

“SEC”:  the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.

“Security Agreement”: the Security Agreement dated as of the date hereof among the Borrower and the Administrative Agent, for the benefit of the Lenders, substantially in the form of Exhibit A, as the same may be amended, supplemented or otherwise modified from time to time.

“Security Documents”:  the collective reference to the Security Agreement and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.

“Single Employer Plan”:  any Plan other than a Multiemployer Plan that is subject to Title IV of ERISA.

“Subsidiary”:  as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Guarantor.

“Supermajority Lenders”:  at any time, Lenders holding more than 75% of the Commitments then in effect, or, if all of the Commitments have been terminated, the Total Extensions of Credit then outstanding, subject to Section 2.16.

“Swap Agreement”:  any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries shall be a “Swap Agreement”.

“Swingline Lenders”:  each Lender designated as such by the Borrower, with the consent of such Lender, in a written or telephonic notice to the Administrative Agent for one or more Borrowings of Swingline Loans in an aggregate amount as so consented to by such Lender.

16

“Swingline Loans”:  as defined in Section 2.3.

“Swingline Participation Amount”:  as defined in Section 2.4.

“Syndication Agent”:  as defined in the preamble hereto.

“Termination Date”:  January 31, 2014.

“Total Commitments”:  at any time, the aggregate amount of the Commitments then in effect.

“Total Extensions of Credit”:  at any time, the aggregate amount of the Revolving Extensions of Credit of the Lenders outstanding at such time.

“Transferee”:  any Assignee or Participant.

“United States”:  the United States of America.

“U.S. Lender”: as defined in section 2.13(f).

“Wholly Owned Subsidiary”:  as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

1.2           Other Definitional Provisions.  (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

(b)  As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP (provided that, notwithstanding anything to the contrary herein, all accounting or financial terms used herein shall be construed, and all financial computations pursuant hereto shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar effect) to value any Indebtedness or other liabilities of any Group Member at “fair value”, as defined therein), (ii) the words “include”, “includes” and “inclu ding” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.

(c)  The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

17

(d)  The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

SECTION 2.    AMOUNT AND TERMS OF COMMITMENTS

2.1           Revolving Commitments.  (a)   Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (“Revolving Loans”) to the Borrower from time to time on any Business Day during the Commitment Period, at such times as the Borrower may request in accordance with Section 2.2, in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Applicable Percentage of the aggregate principal amount of Swingline Loans then outstanding, does not exceed the amount of such Lender’s Commitment; provided, however, that (i) no Revolving Loan shall be made to the extent the aggregate unpaid principal amount of all Loans would exceed the Total Commitments, (ii) no Borrowing Base A Loans shall be made to the extent that the aggregate unpaid principal amount of all Borrowing Base A Loans would exceed  the aggregate Loan Value of the Pledged Eligible Assets (including the Pledged Eligible Assets referred to in Section 2.2(a)(ii) with respect to such Revolving Loan) and (iii) no Borrowing Base B Loans shall be made to the extent that the aggregate amount of all Borrowing Base B Loans would exceed the Borrowing Base B Limit; provided further that Borrowing Base B Loans may not be borrowed on any date in any rolling period of 90 consecutive days if Borrowing Base B Loans have already been outstanding for 30 days during such period.  During the Commitment Period, the Borrower may borrow, prepay the Revolving Loans in whole or in part, and reborrow, all in accordance with the terms and conditions hereof.

(b)  The Borrower shall repay all outstanding Revolving Loans on the Termination Date.

(c)  The failure of any Lender to make any Revolving Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Revolving Loans as required.

2.2           Procedure for Revolving Loan Borrowing.   (a)  The Borrower may borrow Revolving Loans during the Commitment Period on any Business Day, provided that the Borrower shall deliver to the Administrative Agent, no later than 3:00 P.M., New York City time, on the requested Borrowing Date, (i) irrevocable notice in substantially the form of Exhibit F hereto (a “Borrowing Request”), specifying (A) the amount of Revolving Loans to be borrowed, (B) whether such Loans are to be Borrowing Base A Loans or Borrowing Base B Loans or a combination thereof and (C) the requested Borrowing Date and (ii) (A) in the case of Borrowing Base A Loans, a notice in substantially the form of Exhibit G (a “Pledged Eligible Assets Notice”) detailing the Pledged Eligible Assets that will secure the requested Loans and (B) in the case of Borrowing Base B Loans, a notice substantially in the form of Exhibit H (a “Borrowing Base B Limit Notice”) detailing the Borrowing Base B Limit, after giving effect to the borrowing of the Borrowing Base B Loans requested thereby and application of the proceeds thereof as Eligible NSCC Margin Deposits (which shall not be less than the aggregate principal amount of the Borrowing Base B Loans to be outstanding after giving effect to the Borrowing Base B Loans requested in the related Borrowing Request).  The Borrowing Request and Pledged Eligible Assets notice, if applicable, shall be delivered by facsimile transmission (with any such transmission deemed delivered upon receipt by Borrower of a facsimile transmission confirmation) to the Loan & Agency and IB Loan Operations Departments of the Administrative Agent at the addresses set forth in Section 10.2.   The Borrower shall give notification, by telephone, to the Administrative Agen t that the Borrowing Request and Pledged Eligible Assets Notice, if applicable, have been delivered to the Administrative Agent.  Upon its receipt of a Pledged Eligible Assets Notice, the Administrative Agent shall calculate the Loan Value of the Eligible Assets identified therein, including those referred to in clause (ii), and promptly notify the Borrower if the requirements of Section 2.1(a)(ii) are not satisfied.

18

(b)   Each borrowing under the Commitments shall be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then aggregate Available Commitments are less than $5,000,000, such lesser amount); provided, that each Swingline Lender may request, on behalf of the Borrower, borrowings under the Commitments in other amounts pursuant to Section 2.4.  Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Lender thereof.  Each Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the Funding Office promptly, but in any event prior to 5:00 P.M., New York City time, on the Borrowing Date requested by the Borrower, in funds immediately available to the Administrative Agent.  Such bo rrowing (or, in the case of a borrowing of Borrowing Base A Loans, the portion thereof which is covered by the Loan Value of the Eligible Assets identified in the applicable Pledged Eligible Assets Notice as calculated by the Administrative Agent pursuant to Section 2.2(a)) will then be made available to the Borrower by the Administrative Agent by its transferring the aggregate amount made available to the Administrative Agent by the Lenders (or the relevant portion thereof) and in like funds as received by the Administrative Agent to a settlement bank for the Borrower or to DTC or NSCC or otherwise as directed by the Borrower, in either case on behalf of the Borrower and as directed by it.  Notwithstanding anything to the contrary contained in this Agreement, the Administrative Agent shall transfer the proceeds of any Borrowing Base A Loans as set forth above prior to the related pledge of Eligible Assets being confirmed, so long as such Eligible Assets have been identified by the Borrower in a Pledged Eligible Assets Notice as being due to be delivered to it or otherwise become available through DTC on the same day as such Pledged Eligible Assets Notice, in each case in accordance with the terms of the Security Agreement.

2.3           Swingline Loans.  (a)  Subject to the terms and conditions hereof, the Swingline Lenders may, in their sole discretion, agree to make a portion of the credit otherwise available to the Borrower under the Commitments from time to time during the Commitment Period by making swing line loans (“Swingline Loans”) to the Borrower; provided that (i) the Borrower shall not use the proceeds of any Swingline Loan to refinance or repay any outstanding Swingline Loan and (ii) the Borrower shall not request, and the Swingline Lenders shall not make, any Swingline Loans if, after giving effect to the making of such Swingline Loans, the aggregate amount of the Available Commitments would be less than zero; provided, however, that (i) no Swingline Loan shall be made to the extent the agg regate unpaid principal amount of all Loans would exceed the Total Commitments (ii) no Swingline Loan that is a Borrowing Base A Loan shall be made to the extent that the aggregate unpaid principal amount of all Borrowing Base A Loans would exceed the aggregate Loan Value of the Pledged Eligible Assets (including the Pledged Eligible Assets referred to in Section 2.4(a)(ii) with respect to such Swingline Loan) and (iii) no Swingline Loan that is a Borrowing Base B Loan shall be made to the extent that the aggregate principal amount of all Borrowing Base B Loans would exceed the Borrowing Base B Limit; provided further that Borrowing Base B Loans may not be borrowed on any date in any rolling period of 90 consecutive days if Borrowing Base B Loans have already been outstanding on 30 days during such period.  During the Commitment Period, the Borrower may borrow, repay the Swingline Loans in whole or in part and reborrow, all in accordance with the terms and conditions hereof.

(b)  The Borrower shall repay to the Swingline Lenders the then unpaid principal amount of any Swingline Loans on the earlier of the Termination Date and the fourth Business Day after such Swingline Loans are made.

(c)  For the avoidance of doubt, the provision of Swingline Loans by any Swingline Lender shall be in addition to, and shall not relieve such Lender from, its obligation to make Revolving Loans ratably in proportion to the amount of, its Commitment.

2.4           Procedure for Swingline Borrowing; Refunding of Swingline Loans.  (a)  The Borrower may borrow Swingline Loans during the Commitment Period on any Business Day, subject to

19

the consent of the applicable Swingline Lender or Swingline Lenders, provided that the Borrower shall deliver to the Administrative Agent, no later than 4:00 P.M. (or such later time as agreed by such Swingline Lender), New York City time, on the requested Borrowing Date, (i) a Borrowing Request specifying (A) the amount of Swingline Loans to be borrowed and the Swingline Lender or Lenders that agreed to make such Swingline Loans (and the respective amounts thereof to be made by them), (B) whether such Loans are to be Borrowing Base A Loans or Borrowing Base B Loans or a combination thereof and (C) the requested Borrowing Date (which shall be a Business Day during the Commitment Period) and (ii) in the case of Borrowing Base A Loans, a Pledged Eligible Assets Notice and in the case of Borrowing Base B Loans, a Borrowing Base B Limit Notice; provided further that Borrowing Base B Loans may not be borrowed on any date in any rolling period of 90 consecutive days if Borrowing Base B Loans have already been outstanding on 30 days during such period.  The Borrowing Request and Pledged Eligible Assets Notice, if applicable, shall be delivered by facsimile transmission (with any such transmission deemed delivered upon receipt by the Borrower of a facsimile transmission confirmation) to the Loan & Agency and IB Loan Operations Departments of the Administrative Agent at the addresses set forth in Section 10.2, with a copy to each applicable Swingline Lender.   The Borrower shall give notification, by telephone, to the Administrative Agent that the Borrowing Request has been delivered to the Administrative Agent.  Each Swingline Lender that has agreed to make Swingline Loans covered by such request shall promptly confirm such agreement to the Administrative Agent.  Upon its receipt of a Pledged Eligible Assets Notice, the Administrative Agent shall calculate the Loan Va lue of the Pledged Eligible Assets, including those referred to in clause (ii), and promptly notify the Borrower and each applicable Swingline Lender if the requirements of Section 2.1(a)(ii) are not satisfied.

(b)  Each borrowing of Swingline Loans shall be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall be made by the applicable Swingline Lender or Lenders.  Not later than 5:00 P.M. (or, if earlier, within one hour following the Borrowing Request with respect thereto) on the Borrowing Date specified in a notice in respect of Swingline Loans, each Swingline Lender participating in such Swingline Loans shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the amount of such Swingline Loans to be made by such Swingline Lender.  The Administrative Agent shall make the proceeds of such Swingline Loan (or, in the case of a Borrowing of Borrowing Base A Loans, the portion thereof which is covered by the Loan Value of the Pledged Eligible Assets as calculated by the Administrativ e Agent pursuant to Section 2.4(a)) available to the Borrower on such Borrowing Date by its transferring the aggregate amount made available to the Administrative Agent by such Swingline Lenders and in like funds as received by the Administrative Agent to a settlement bank for the Borrower or to DTC or NSCC or otherwise as directed by the Borrower, in either case on behalf of the Borrower and as directed by it.  Notwithstanding anything to the contrary contained in this Agreement, the Administrative Agent shall transfer the proceeds of any Swingline Loans that are Borrowing Base A Loans as set forth above prior to the related pledge of Eligible Assets being confirmed, so long as such Eligible Assets have been identified by the Borrower in a Pledged Eligible Assets Notice as being due to be delivered to it or otherwise become available through DTC on the same day as such Pledged Eligible Assets Notice, in each case in accordance with the terms of the Security Agreement.

(c)  Each Swingline Lender, at any time and from time to time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs each Swingline Lender to act on its behalf), on notice given by such Swingline Lender on any Business Day no later than 3:00 P.M., New York City time to the Administrative Agent, which will in turn promptly notify each Lender, request each Lender to make, and each Lender hereby agrees to make, a Revolving Loan, in an amount equal to such Lender’s Applicable Percentage of the aggregate amount of the Swingline Loans (the “Refunded Swingline Loans”) outstanding on the date of such notice, to repay the Swingline Lenders.  Each Lender shall make the amount of such Revolving Loan available to the Administrative Agent at the Funding Office in immediately available funds promptly, but in any event prior to 5:0 0 P.M., New York City time,

20

on the date of such notice.  The proceeds of such Revolving Loans shall be immediately made available by the Administrative Agent to the Swingline Lenders on a ratable basis for application by the Swingline Lenders to the repayment of the Refunded Swingline Loans.  The Borrower irrevocably authorizes each Swingline Lender to charge the Borrower’s accounts with the Administrative Agent (up to the amount available in each such account) in order to immediately pay the amount of such Refunded Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay in full such Refunded Swingline Loans (with the proceeds of any such charge to be shared on a ratable basis with the other Swingline Lender in a manner consistent with the procedures described in Section 10.7(a)).

(d)  If prior to the time a Revolving Loan would have otherwise been made pursuant to Section 2.4(c), one of the events described in Section 8(f) shall have occurred and be continuing with respect to the Borrower or if for any other reason, as determined by any Swingline Lender in its sole discretion, Revolving Loans may not be made as contemplated by Section 2.4(c), each Lender shall, on the date such Revolving Loan was to have been made pursuant to the notice referred to in Section 2.4(c), purchase for cash an undivided participating interest in the then outstanding Swingline Loans by paying to the Administrative Agent for distribution to the applicable Swingline Lenders on a ratable basis an amount (the “Swingline Participation Amount”) equal to (i) such Lender’s Applicable Percentage times (ii) the sum of the aggregate principal amount of Swingline Loans t hen outstanding that were to have been repaid with such Revolving Loans.

(e)  Whenever, at any time after a Swingline Lender has received from any Lender such Lender’s Swingline Participation Amount in respect of the Swingline Loans made by such Swingline Lender, a Swingline Lender receives any payment on account of the Swingline Loans, such Swingline Lender will distribute to such Lender through the Administrative Agent its Swingline Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all Swingline Loans by such Swingline Lender then due); provided, however, that in the event that such payment rec eived by such Swingline Lender is required to be returned, such Lender will return to such Swingline Lender any portion thereof previously distributed to it by such Swingline Lender.

(f)  Each Lender’s obligation to purchase participating interests pursuant to Section 2.4(d) shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such Lender or the Borrower may have against a Swingline Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 4, (iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Lender or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

2.5           Commitment Fees, etc.  (a)  The Borrower agrees to pay to the Administrative Agent for the account of each Lender (subject to Section 2.16) a commitment fee for the period from and including the date hereof to the last day of the Commitment Period, computed at the Commitment Fee Rate on the average daily amount of the Available Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on each Fee Payment Date, commencing on the first such date to occur after the date hereof.

21

(b)  The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any agreements with the Administrative Agent and to perform any other obligations contained therein.

2.6           Termination or Reduction of Revolving Commitments.  The Borrower shall have the right, upon not less than three Business Days’ notice to the Administrative Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments; provided that no such termination or reduction of Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans and Swingline Loans made on the effective date thereof, the Total Extensions of Credit would exceed the Total Commitments.  Any such reduction shall be in an amount equal to $5,000,000, or a whole multiple of $1,000,000 in excess thereof, and shall reduce permanently the Commitments then in effect.

2.7           Optional Prepayments.  The Borrower may at any time prior to 3:00 P.M., New York City Time, on any Business Day (or, in the case of prepayments of Borrowing Base A Loans, 4:00 P.M., New York City Time, on any Business Day), prepay the Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent  no later than 1:00 P.M., New York City time, on the date of such prepayment, which notice shall specify the date and amount of prepayment and whether the prepayment is of Borrowing Base A Loans or Borrowing Base B Loans.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.  If any such notice is given, the amount specified in such notice shall be due and payable on the date specified th erein.  Partial prepayments of Revolving Loans shall be in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof.  Partial prepayments of Swingline Loans shall be in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof.

2.8           Daily Calculation of Loan Value; Mandatory Prepayments; Release of Pledged Eligible Assets.

(a)  At or prior to 11:00 A.M., New York City time, on each Business Day on which any Borrowing Base A Loans shall remain outstanding, the Administrative Agent shall calculate the Loan Value of the Pledged Eligible Assets (which calculation shall be made as of the close of business on the previous Business Day) and shall promptly provide such calculation to the Borrower.  In the event that the Administrative Agent determines that the aggregate principal amount of Borrowing Base A Loans outstanding on such Business Day exceeds the Loan Value of such Pledged Eligible Assets (a “Deficiency”), the Administrative Agent shall promptly notify the Borrower of such Deficiency in writing (any such notice, a “Deficiency Notice”).  In the event of a Deficiency, the Borrower shall, within one Business Day of receipt of a Deficiency Notice, either prepa y Borrowing Base A Loans in an amount at least equal to such Deficiency or pledge additional Eligible Assets with a Loan Value at least equal to such Deficiency.

(b)  At or prior to 10:00 A.M., New York City time, on each Business Day on which any Borrowing Base B Loans shall remain outstanding, the Borrower shall deliver to the Administrative Agent a Borrowing Base B Limit Notice as of such Business Day.  In the event that the aggregate principal amount of outstanding Borrowing Base B Loans exceeds the Borrowing Base B Limit, the Borrower shall, on such Business Day, prepay Borrowing Base B Loans in an amount sufficient to cure such deficiency.  The Borrower shall also prepay the Borrowing Base B Loans in full on the first Business Day on which Borrowing Base B Loans have been outstanding for more than 30 days in any rolling period of 90 consecutive days.

22

(c)  Any Pledged Eligible Asset shall be released from the pledge thereof in favor of the Lenders promptly upon the request of the Borrower; provided that (i) no Event of Default has occurred and is continuing at such time and (ii) a Deficiency would not be in existence after giving effect to such release and the anticipated receipt anytime on the date of such release of any cash proceeds to be used for the prepayment of Borrowing Base A Loans or additional Eligible Assets identified by the Borrower to be used as substitute Pledged Eligible Assets.    For the avoidance of doubt, if the requirements in clauses (i) and (ii) above are satisfied, the Administrative Agent shall release Pledged Eligible Assets prior to its receipt of the cash proceeds relating to the settlement of a sale of such Pledged Eligible Assets or the confirmation of a pledge to it of substitute Eligible Assets, so long as such cash proceeds or substitute Eligible Assets (including the source thereof) have been identified by the Borrower to the Administrative Agent as being due to be received by it on the same day.

(d)  Any prepayment made pursuant to this Section 2.8 shall be accompanied by a notice delivered to the Administrative Agent specifying the date and amount of such prepayment and whether such prepayment is of Borrowing Base A Loans or Borrowing Base B Loans.

2.9           Interest Rates and Payment Dates.  (a)   Each Loan shall bear interest at a rate per annum equal to the Federal Funds Rate plus the Applicable Margin.

(b)  (i) If any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to the Loans plus 2% from the date of such non-payment until such amount is paid in full (as well after as before judgment) and (ii) if any Eligible Assets referred to in the last sentence of Section 2.2(b) are not pledged prior to the close of the DTC free pledge process on the same day as the Pledged Eligible Assets Notice relating to such Eligible Assets, if an Event of Default specified in Section 8 (c)(ii) shall occur and be continuing, the portion of the Borrowing Base A Loans then outstanding not covered by the Loan Value of the Pledged Eligible Assets shall bear interest at a rate per annum equal to the rate then applicable to the Loans plus 2%.

(c)  Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (b) of this Section shall be payable from time to time on demand.

2.10         Computation of Interest and Fees.  (a)   Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Federal Funds Rate.  Any change in the interest rate on a Loan shall become effective as of the opening of business on the day on which such change becomes effective.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.

(b)  Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error.  The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.11(a).

2.11         Pro Rata Treatment and Payments.  (a)   Each borrowing of Revolving Loans by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee and any reduction of the Commitments of the Lenders shall be made pro rata according to the Applicable  Percentages of the Lenders at the time thereof.

23

(b)  Subject to Section 2.16, each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Lenders.

(c)  All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall, except as otherwise provided herein, be made prior to 3:00 P.M., New York City time (or, in the case of payments in respect of Borrowing Base A Loans, prior to 4:00 P.M. New York City time), on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds.  Subject to Section 2.16, the Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received.  If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day.  In the case of any extensi on of any payment of principal pursuant to the preceding sentence, interest thereon shall be payable at the then applicable rate during such extension.

(d)  Unless the Administrative Agent shall have been notified in writing by any Lender prior to its receipt of a Borrowing Request with respect to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance wit h banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Administrative Agent.  A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error.  If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Loans, on demand, from the Borrower.

(e)  Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount.  If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Fu nds Effective Rate.  Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

2.12         Requirements of Law.  (a)   If any Lender shall have determined that the adoption of or any change in any Requirement of Law, including regarding capital adequacy or required or targeted reserves or special deposits, or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive, including regarding capital adequacy or required or targeted reserves or special deposits (whether or not having the force of law), from any Governmental Authority, made subsequent to the date hereof shall have the effect of reducing

24

the rate of return on such Lender’s or such corporation’s capital or assets as a consequence of its obligations or Loans hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction.  This Section 2.12 shall not apply with respect to any (i) Excluded Taxes, (ii) Non-Excluded Taxes imposed (x) on or with respect to any payments pursuant to this Agreement or any other Loan Document, or (y) on gross or net income, profits, or revenue (including franchise taxes imposed in lieu of net income taxes or value-added or similar taxes), or (iii) Other Taxes, in each case, whether or not Borrower is responsible for such taxes pursuant to Section 2.13 (for the absence of doubt, the Borrower’s responsibility for any taxes pursuant to this Section 2.12 shall be without duplication of any additional amounts paid pursuant to Section 2.13).

(b)  A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error.  Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than nine months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided that, if the circumstances giving rise to such claim have a retroactive effect, then such nine-month period shall be extended to include the period of such retroactive effect.  The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.13         Taxes.  (a)  Except as otherwise provided by law, all payments made by or on account of the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding any such amounts resulting from (A) net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender (or Transferee) or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder as a result of a present or former connection between the Administrative Agent or such Lender (or Trans feree) or any other recipient and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document), (B) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction described in clause (A) above, (C) any taxes to the extent such taxes are imposed as a result of a Lender not providing the proper forms or other documentation described in paragraph (e) or (f) of this Section, (D) United States withholding taxes imposed pursuant to a Requirement of Law in effect (treating FATCA as in effect on and as of the date hereof) at the time such Lender (or Assignee) becomes a party to this Agreement, except to the extent that such Lender’s assign or (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such withholding taxes pursuant to this paragraph or (E) any taxes that are imposed as a result of any relocation of a Lender’s office to which payment by the Borrower is made and which relocation occurs after the Lender becomes a Lender (such excluded items, “Excluded Taxes”); provided that, if any taxes, levies, imposts, duties, charges, fees, deductions or withholdings other than Excluded Taxes (“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the

25

Administrative Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement as if no such deductions or withholdings had been made.

(b)  In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)  Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent a certified copy of an original official receipt received by the Borrower showing payment thereof or, if such receipt is not available from the Governmental Authority, other documentary evidence reasonably acceptable to the Administrative Agent.  Without duplication of any additional amounts paid pursuant to Section 2.13(a), if (i) the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority (and after having had the ability to contest in good faith the payment of such taxes), (ii) fails to remit to the Administrative Agent the required receipts or other required documentary evidence or (iii) any Non-Excluded Taxes or Other Taxes are directly imposed o n the Administrative Agent or any Lender, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure or direct imposition, whether or not such Non-Excluded Taxes, Other Taxes, incremental taxes, interest or penalties were correctly or legally imposed or assessed by the relevant Governmental Authority; provided however that the Administrative Agent or Lender provides proper documentation of the amount owing to such Governmental Authority.

(d)  Each Lender shall indemnify the Administrative Agent for the full amount of any taxes, levies, imposts, duties, charges, fees, deductions, withholdings or similar charges imposed by any Governmental Authority that are attributable to such Lender and that are payable or paid by the Administrative Agent, together with all interest, penalties, reasonable costs and expenses arising therefrom or with respect thereto, as determined by the Administrative Agent in good faith. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.

(e)  Each Lender that is entitled to an exemption from or reduction of any applicable withholding tax with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate; provided that such Lender is legally entitled to complete, execute and deliver such documentation and, with respect to any non-U.S. withholding taxes, in such Lender’s judgment the completion, execution or submission of any such documentation prescribed by the applicable law of such jurisdiction (other than any documentation prescribed by the applicable law of the jurisdic tion in which such Lender is organized or its lending office is located) would not materially prejudice the legal position of such Lender or subject such Lender to any material unreimbursed cost.

(f)  Without limiting the generality of Section 2.13(e) above, each Lender that is not a “United States Person” as defined in Section 7701(a)(30) of the Code (a “Non-U.S. Lender” and any other lender, a “U.S. Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service (“IRS”) Form W-8BEN or Form W-8ECI, as applicable, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit E and an IRS Form W-8BEN, or any subsequent versions the reof or successors thereto, in each

26

case, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by or on behalf of the Borrower under this Agreement and the other Loan Documents; provided, however, that any initial Lender that is a Non-U.S. Lender shall deliver to the Borrower and the Administrative Agent such forms described above claiming complete exemption from U.S. federal withholding tax on all payments by or on behalf of the Borrower under this Agreement and the other Loan Documents.  Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation).  In the case of a Non-U.S. Lender that does not act (or ceases to act) for its own account with respect to any p ortion of any sums paid or payable to such Lender under this Agreement, including a Non-U.S. Lender that is treated as a partnership for U.S. federal income tax purposes, such Non-U.S. Lender shall deliver to the Borrower and the Administrative Agent two properly completed and duly executed copies of IRS Form W-8IMY, together with the appropriate IRS Form W-8BEN, W-8ECI or W-8IMY, W-9 and/or non- bank certificate with respect to each beneficial owner, and any other certificate or statement of exemption required under the Code or the regulations thereunder, to establish that such Non-U.S. Lender is not acting for its own account with respect to any portion of any such sums payable to such Non-U.S. Lender and to establish that any such amounts may be received without deduction for, or at a reduced rate of, United States federal withholding tax,  In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S . Lender.  Each Non-U.S. Lender shall promptly notify the Borrower and the Administrative Agent at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose).  Each U.S. Lender shall deliver to the Borrower and the Administrative Agent (or in the case of a Participant, to the Lender from which the related Participation shall have been purchased) two copies of IRS Form W-9 certifying such U.S. Lender is exempt from U.S. withholding tax.  Notwithstanding any other provision of this paragraph, a Lender shall not be required to deliver any form pursuant to this paragraph that such Lender is not legally able to deliver.  If a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (includi ng those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower or the Administrative Agent to comply with its obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.

(g)  If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.13, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.13 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the B orrower (plus any penalties, interest (to the extent accrued from the date such refund is paid over to the Borrower) or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender to make

27

available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

(h)  The agreements in this Section 2.13 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.14         Change of Lending Office.  Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.12 or 2.13(a) with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 2.12 or 2.13(a).

2.15         Replacement of Lenders.  (a)    The Borrower shall be permitted to replace, or terminate the Commitment of, any Lender that (A) requests or becomes entitled to (and does not waive) reimbursement for amounts owing pursuant to Section 2.12 or 2.13(a) or (B) becomes a Defaulting Lender; provided that (x) in the case of a replacement (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) prior to any such replacement, such Lender shall have taken no action under Section 2.14 that has eliminated the continued need for payment of amounts owing pursuant to Section 2.12 or 2.13, (iv) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) the replacement financial institution shall be reasonably satisfactory to the Administrative Agent and each Swingline Lender, if any, that holds Swingline Loans outstanding at the time of such replacement (such approvals not to be unreasonably withheld or delayed), (vi) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 10.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), and (vii) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.12 or 2.13, as the case may be, and (y) any such replacement or termination shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

(b)  If, in connection with any proposed amendment, modification, waiver or termination pursuant to Section 10.1 (a “Proposed Change”) requiring the consent of all affected Lenders, the consent of the Required Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in this clause (b) being referred to as a “Non-Consenting Lender”), then, a Person or Persons designated by the Borrower and reasonably acceptable to the Administrative Agent and each Swingline Lender, if any, that holds Swingline Loans at such time, shall have the right (but shall have no obligation) to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon the Borrower’s request, sell and assign to such Person or Persons, all of the Loans and Commitments of such Non-Consenting Lenders for an amount equal to the principal balance of all Loans held by the Non-Consenting Lenders and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated at par pursuant to an Assignment and Assumption; provided that such Person shall not be the Borrower or any of its Affiliates.

2.16         Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

28

(a)  fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.5;

(b)   the Commitment and Loans of such Defaulting Lender shall not be included in determining whether all Lenders, the Supermajority Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 10.1), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender disproportionately when compared to other affected Lenders shall require the consent of such Defaulting Lender;

(c)  unless otherwise agreed by the Administrative Agent and the Borrower, any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise) shall, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by the Administrative Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder, (ii) second, to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent, and (iii) third, to such Defaulting Lender or as otherwise directed by a court of competent jurisdictio n.

The rights and remedies against a Defaulting Lender under this Section 2.16 are in addition to all other rights and remedies which the Borrower may have against such Defaulting Lender with respect to any Funding Default and which the Administrative Agent or any Lender may have against such Defaulting Lender with respect to any Funding Default.

2.17         Incremental Commitments.

(a)  The Borrower may, by written notice to the Administrative Agent from time to time, request Incremental Commitments in an amount not to exceed the Incremental Amount from one or more Incremental Lenders (which may include any existing Lender) willing to provide such Incremental Commitments, as the case may be, in their own discretion; provided, that (i) each Incremental Lender shall be subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld or delayed) unless such Incremental Lender is a Lender, and (ii) each Incremental Commitment shall be on the same terms as the existing Commitments and in all respects shall become a part of the Commitments hereunder on such terms; provided, that, the Applicable Margin and Commitment Fee Rate applicable to the then-existing Commitments shall automatically be increased (but in n o event decreased) to the extent necessary to cause any Incremental Commitment to comply with this clause (ii).  Such notice shall set forth (i) the amount of the Incremental Commitments being requested (which shall be in minimum increments of $5 million and a minimum amount of $25 million or equal to the remaining Incremental Amount), (ii) the aggregate amount of Incremental Commitments, which shall not exceed the Incremental Amount, and (iii) the date on which such Incremental Commitments are requested to become effective (the “Increased Amount Date”).

(b)  The Borrower and each Incremental Lender shall execute and deliver to the Administrative Agent an Incremental Assumption Agreement.  Each of the parties hereto hereby agrees that upon the effectiveness of any Incremental Assumption Agreement, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to increase the Commitments by the amount of the Incremental Commitments evidenced thereby.  Any such deemed amendment may be memorialized in writing by the Administrative Agent with the Borrowers’ consent (not to be unreasonably withheld) and furnished to the other parties hereto.

29

(c)  Notwithstanding the foregoing, no Incremental Commitment shall become effective under this Section 2.17 unless (i) on the date of such effectiveness, the conditions set forth in paragraphs (c) and (d) of Section 4.2 shall be satisfied and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Responsible Officer of the Borrower, and (ii) the Administrative Agent shall have received legal opinions, board resolutions and other closing certificates and documentation to the extent reasonably required by the Administrative Agent, in each case consistent with those delivered on the Closing Date under Section 4.1 and such additional documents and filings as the Administrative Agent may reasonably require to assure that the Revolving Loans in respect of Incremental Commitments are secured by the Collatera l ratably with all other Revolving Loans.

(d)  Each of the parties hereto hereby agrees that the Administrative Agent may take any and all action as may be reasonably necessary to ensure all Revolving Loans in respect of Incremental Commitments, when originally made, are included in each Borrowing of outstanding Revolving Loans on a pro rata basis.

SECTION 3.   REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans, each Loan Party hereby represents and warrants to the Administrative Agent and each Lender that:

3.1           Financial Condition.  The audited consolidated balance sheets of each Loan Party and its respective Subsidiaries as at December 31, 2007, December 31, 2008 and December 31, 2009, and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from KPMG LLP, present fairly the consolidated financial condition of each Loan Party and its respective Subsidiaries as at such date, and the consolidated results of their operations and consolidated cash flows for the respective fiscal years then ended.  The unaudited consolidated balance sheets of each Loan Party and its respective Subsidiaries as at September 30, 2010, the unaudited consolidated statements of income and cash flows for the Guarantor and its Subsidiaries for the nine-month period ended on such date and the Quarterly Condensed Consolidated Financial Statements for the Borrower and its Subsidiaries for its fiscal quarter ended September 30, 2010, present fairly the consolidated financial condition of each Loan Party and its respective Subsidiaries as at such date, and the consolidated results of their operations and consolidated cash flows for the nine- or three-month, as the case may be, period then ended (subject to normal year-end audit adjustments).  All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein).  As of the Closing Date, the Guarantor and its Subsidiaries, taken as a whole, have no material Guarantee Obligations, material contingent liabilities or material liabilities for taxes, or any long-term leases or unusu al forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph, referred in the notes thereto or described under the heading “Legal Proceedings” of the Guarantor’s Form 10-Q, filed November 9, 2010 (for the period ended September 30, 2010) or listed on Schedule 3.1 hereto.

3.2           No Change.  Since December 31, 2009, there has been no development or event that has had or would reasonably be expected to have a Material Adverse Effect.

3.3           Existence; Compliance with Law.  Each Material Group Member (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it

30

operates as lessee and to conduct the business in which it is currently engaged, (c) in the case of each Broker-Dealer Subsidiary, has obtained the Broker-Dealer Licenses and Memberships and Broker-Dealer Registrations, which, in each case, are the licenses, memberships and registrations necessary in the normal conduct of its business, (d) is duly qualified as a foreign corporation or other organization and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification and (e) is in compliance with all Requirements of Law, except, in the case of clauses (c), (d) and (e) above, to the extent that the failure to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

3.4           Power; Authorization; Enforceable Obligations.  Each Loan Party has the power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to obtain extensions of credit hereunder.  Each Loan Party has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement.  No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority, FINRA or any other Person is required in connection with the extensions of credit hereunder or with the execution, delivery, performance, validity or enforceabil ity of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 3.4, which consents, authorizations, filings and notices have been obtained or made and are in full force and effect, (ii) the filings referred to in Section 3.18 or (iii) such other consents, authorizations, filings and notices the failure to receive or make would not reasonably be expected to have a Material Adverse Effect.  Each Loan Document has been duly executed and delivered on behalf of each Loan Party party thereto.  This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general eq uitable principles (whether enforcement is sought by proceedings in equity or at law).

3.5           No Legal Bar.  The execution, delivery and performance of this Agreement and the other Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any material Contractual Obligation of any Group Member and will not result in, or require, the creation or imposition of any material Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such material Contractual Obligation (other than the Liens created by the Security Documents).

3.6           Litigation.  Except for matters described under the heading “Legal Proceedings” of the Guarantor’s Form 10-Q, filed November 9, 2010 (for the period ended September 30, 2010), no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority or FINRA is pending or, to the knowledge any Loan Party, threatened by or against any Group Member or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that would reasonably be expected to have a Material Adverse Effect.

3.7           No Default.  No Group Member is in default under or with respect to any of its Contractual Obligations in any respect that would reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred and is continuing.

3.8           Ownership of Property; Liens.  Each Group Member has title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other property, except in each case as would not reasonably be expected to have a Material Adverse

31

Effect, and none of such property of the Guarantor is subject to any Lien except as permitted by Section 6.2.

3.9Intellectual Property.  Each Material Group Member owns, or is licensed to use, all Intellectual Property necessary for the conduct of its business as currently conducted, except as may have been disclosed in a Loan Party’s filings with the SEC prior to the date hereof, no claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does any Loan Party know of any valid basis for any such claim, and the use of Intellectual Property by each Material Group Member does not infringe on the rights of any Person in any respect, except in each case as would no t reasonably be expected to have a Material Adverse Effect.

3.10Taxes.  Each Group Member has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority other than (a) any taxes the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the relevant Group Member or (b) except in the case of filing consolidated Federal income tax returns, to the extent that the failure to do so would not reasonably be expected to result in a Material Adverse Effect.  To the knowledge of any Loan Party, no material tax lien (other than any lien described in Section 6.2(a)) has been filed with respect to any such tax, fee or other charge.

3.11Federal Regulations.  (a)  The Borrower is an “exempted borrower” within the meaning of such quoted term under Regulation U, and no part of the proceeds of any Loans, and no other extensions of credit hereunder, will be used for any purpose that violates the provisions of the Regulations of the Board.

(b)  Each Broker-Dealer Subsidiary that is a Domestic Subsidiary is a broker and dealer subject to the provisions of Regulation T of the Board.  Each Broker-Dealer Subsidiary that is a Domestic Subsidiary maintains procedures and internal controls reasonably designed to ensure that such Broker-Dealer Subsidiary does not extend or maintain credit to or for its customers other than in accordance with the provisions of Regulation T, and members of each Broker-Dealer Subsidiary that is a Domestic Subsidiary regularly supervise its activities and the activities of members and employees of such Broker-Dealer Subsidiary to insure that such Broker-Dealer Subsidiary does not extend or maintain credit to or for its customers other than in accordance with the provisions of Regulation T, except for occasional inadvertent failures to comply with Regulation T in connection with transactions which are not material either in number or amount.

3.12ERISA. Except as set forth on Schedule 3.12, neither a Reportable Event nor a failure to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code.  No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Single Employer Plan has arisen, during such five-year period.  The present value of all accrued benefits under each Single Employer Plan (based on those assum ptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made, exceed the value of the assets of such Plan allocable to such accrued benefits by a material amount and there has been no determination that any Single Employer Plan is in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA).  No Loan Party or Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that

32

has resulted or would reasonably be expected to result in a material liability under ERISA, and no Loan Party or any Commonly Controlled Entity would become subject to any material liability under ERISA if any such Loan Party or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made.  No such Multiemployer Plan is in Reorganization or Insolvent, and no Loan Party or Commonly Controlled Entity has received a notice of a determination that any Multiemployer Plan is in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA).

3.13Membership in FINRA; Registration, etc.  Each Broker-Dealer Subsidiary that (a) is a Domestic Subsidiary is a member in good standing of FINRA and is duly registered as a broker-dealer with the SEC and in each state where the conduct of a material portion of its business requires such registration and (b) is not a Domestic Subsidiary is duly registered as a broker-dealer with the applicable governing body where the conduct of its business requires such registration.  Each Loan Party is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.  ; No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to borrow Loans under the provisions hereof.

3.14Subsidiaries.  Except as disclosed to the Administrative Agent by the Borrower in writing from time to time after the Closing Date, (a) Schedule 3.14 sets forth the name and jurisdiction of incorporation of each Subsidiary of a Loan Party and, as to each such Subsidiary, the percentage of issued Capital Stock owned by any Loan Party or any Subsidiary of a Loan Party and (b) all of the issued and outstanding shares of capital stock or other ownership interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable.

3.15Use of Proceeds.  (a) The proceeds of the Borrowing Base A Loans shall be used to meet the liquidity needs of the Borrower arising as a result of or in connection with (i) financing security positions arising from non-standard settlements, (ii) financing security positions arising from disruptions caused by a default of a depositary or the rejection of securities deliveries in connection with executed trades or due to problems with the Fed Wire or other money transfer system, (iii) financing failed settlements, (iv) clearing fund deposit requirements or (v) other working capital purposes.

(b) The proceeds of the Borrowing Base B Loans shall only be used to satisfy NSCC Deposit Requirements.

3.16Environmental Matters.  Except as, in the aggregate, would not reasonably be expected to have a Material Adverse Effect:

(a)  the facilities and properties owned, leased or operated by any Group Member (the “Properties”) do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations or under circumstances that constitute or constituted a violation of, or could give rise to liability under, any Environmental Law;

(b)  no Group Member has received or is aware of any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the business operated by any Group Member (the “Business”), nor does any Loan Party have knowledge or reason to believe that any such notice will be received or is being threatened;

33

(c)  Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location that could give rise to liability under, any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law;

(d)  no judicial proceeding or governmental or administrative action is pending or, to the knowledge of any Loan Party, threatened, under any Environmental Law to which any Group Member is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business;

(e)  there has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of any Group Member in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws;

(f)  the Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the Business; and

(g)  no Group Member has assumed any liability of any other Person under Environmental Laws.

3.17Accuracy of Information, etc.  No statement or information contained in this Agreement, any other Loan Document, the Confidential Information Memorandum or any other document, certificate or statement furnished by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or any of them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, taken as a whole, contained as of the date such statement, information, document or certificate was so furnished (or, in the case of the Confidential Information Memorandum, as of the date of this Agreement), any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein not misleading; provided, that the projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount.

3.18Security Documents.  The Security Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof.  In the case of the Collateral described in the Security Agreement, when financing statements and other filings specified on Schedule 3.18(a) in appropriate form are filed in the offices specified on Schedule 3.18(a), the Security Agreement shall create a fully perfected Lien on, and security interest in, all right, title and interest of the Borrower in such Collateral and the proceeds thereof, as security for the Obligations (as defin ed in the Security Agreement), in each case to the extent perfection can be obtained by filing Uniform Commercial Code financing statements or such other filings specified on Schedule 3.18(a)), in each case prior and superior in right to any other person (other than Permitted Liens).  In the case of the Collateral described in the

34

Security Agreement a Lien on which can be perfected by control, when the Administrative Agent has control of such Collateral, the Security Agreement shall create a fully perfected Lien on, and security interest in such Collateral and the proceeds thereof, in each case prior and superior in right to any other Person (except for Limited Permitted Liens), except to the extent otherwise provided in the Uniform Commercial Code.

SECTION 4.   CONDITIONS PRECEDENT

4.1Conditions to Closing Date.  The effectiveness of this Agreement and the obligation of each Lender to make Loans hereunder is subject to the satisfaction of the following conditions precedent (if not otherwise waived in accordance with Section 10.1) on the Closing Date:

(a)Credit Agreement; Security Agreement.  The Administrative Agent shall have received (i) this Agreement, executed and delivered by the Administrative Agent, the Borrower, the Guarantor and each Person listed on Schedule 1.1A and (ii) the Security Agreement, executed and delivered by the Borrower.

(b)Financial Statements.  The Administrative Agent shall have received the financial statements referred to in Section 3.1 (it being understood that any public filing of such financials with the SEC shall constitute delivery of such financials).

(c)Approvals.  All governmental and third party approvals (including shareholder approvals, if any) necessary in connection with the continuing operations of the Group Members and the transactions contemplated hereby shall have been obtained and be in full force and effect.

(d)Lien Searches.  The Administrative Agent shall have received the results of a recent lien search in each of the jurisdictions and offices in the United States where liens on material assets of the Borrower are required to be filed or recorded.

(e)Fees.  The Lenders and the Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Closing Date.

(f)Closing Certificate; Certified Certificate of Incorporation; Good Standing Certificates.  The Administrative Agent shall have received (i) a certificate of each Loan Party, dated the Closing Date, substantially in the form of Exhibit C, with appropriate insertions and attachments, including the certificate of incorporation of each Loan Party that is a corporation certified by the relevant authority of the jurisdiction of organization of such Loan Party, and (ii) a long form good standing certificate for each Loan Party from its jurisdiction of organization.

(g)Legal Opinions.  The Administrative Agent shall have received the following executed legal opinions:

(i)the legal opinion of Wachtell, Lipton, Rosen & Katz, counsel to the Borrower and its Subsidiaries, in form and substance reasonably acceptable to the Administrative Agent; and

(ii)the legal opinion of P. Mats Goebels, general counsel of the Guarantor and its Subsidiaries, in form and substance reasonably acceptable to the Administrative Agent.

35

(h)Filings, Registrations and Recordings.  Each document (including any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 6.2), shall be in proper form for filing, registration or recordation.

(i)Patriot Act and Anti-Money Laundering Legislation.  The Administrative Agent and the Lenders  shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” rules and the Patriot Act reasonably requested by such Person at least two Business Days prior to the Closing Date in writing.

4.2Conditions to Each Extension of Credit.  The agreement of each Lender to make any extension of credit requested to be made by it on any date is subject to the satisfaction of the following conditions precedent:

(a)Borrowing Notices.  The Administrative Agent and, in the case of Swingline Loans, the Swingline Lender or Swingline Lenders, shall have received a Borrowing Request and a Pledged Eligible Assets Notice or a Borrowing Base B Limit Notice, as applicable and each required telephonic notice provided in Sections 2.2(a) and 2.4(a), as applicable.

(b)DTC Pledge.  With respect to Borrowing Base A Loans, the Borrower shall have instructed DTC to credit the Eligible Assets contemplated to be delivered pursuant to Section 2.1 or 2.3, as applicable, as identified in the applicable Pledged Eligible Assets Notice to the pledgee account of the Administrative Agent with DTC upon, if necessary, delivery of such Eligible Assets to the Borrower or payment by it therefor.

(c)Representations and Warranties.  Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date or, if such representation and warranty relates to a specific date, then as of such date; and, in the case of a Borrowing Base A Loan to be secured with Pledged Eligible Assets from a Non-Diversified Pool, such Pledged Eligible Assets are designated to be delivered by the Borrower pursuant to a purchase or sale transaction at an agreed price.

(d)No Default.  No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 4.2 have been satisfied.

SECTION 5.   AFFIRMATIVE COVENANTS

Each Loan Party hereby agrees that, so long as the Commitments remain in effect or any Loan or other amount (other than contingent indemnification obligations for which no claim has been made) is owing to any Lender or the Administrative Agent hereunder, such Loan Party shall and shall cause each of its Subsidiaries to:

36

5.1Financial Statements.  Furnish to the Administrative Agent (which will promptly furnish such information to the Lenders):

(a)not later than the earlier of (x) 90 days after the end of each fiscal year of the Guarantor and (y) the date on which the same is required to be filed with the SEC, (i) a copy of the audited consolidated balance sheets of the Guarantor and its Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year and (ii) a copy of the audited consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such year and the related audited consolidated statements of income and cash flows for such fiscal year, in each case reported on without a “going concern” or like qualification or excep tion, or qualification arising out of the scope of the audit, by KPMG LLP or other independent certified public accountants of nationally recognized standing; and

(b)(i) not later than the earlier of (x) 45 days after the end of each of the first three quarterly periods of each fiscal year of the Guarantor and (y) the date on which the same is required to be filed with the SEC, the unaudited consolidated balance sheets of the Guarantor and its Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer of the Guarantor as being fairly stated in all material respects (subject to normal year-end audit adjustments), and (ii) not later than 45 days after the end of each qu arterly period of each fiscal year of the Borrower, the Part II FOCUS Report of the Borrower for such quarter.

All such financial statements (other than Part II FOCUS Reports) shall fairly present in all material respects the financial condition and results of operations of each Loan Party to which such financial statements relate and such Loan Party’s respective consolidated Subsidiaries and shall be prepared in reasonable detail and in accordance with GAAP applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods, where applicable.  All such Part II FOCUS Reports shall fairly present in all material respects the financial condition and results of operations of the Borrower and shall be prepared in reasonable detail.  Documents required to be delivered pursuant to this Section 5.1 (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered by posting such documents electronically with notice to the Administrative Agent and each Lender thereof and if so posted, shall be deemed to have been delivered on the date (i) on which such Loan Party posts such documents, or provides a link thereto on the Internet at the Guarantor’s website address at www.itg.com; or (ii) on which such documents are posted on such Loan Party’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).

5.2Certificates; Other Information.  Furnish to the Administrative Agent and each Lender (or, in the case of clause (d), to the relevant Lender):

(a)concurrently with the delivery of any financial statements pursuant to Section 5.1, (i) a certificate of a Responsible Officer of the Guarantor stating that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) in the case of quarterly or annual financial statements, (x) a Compliance Certificate containing all information and calculations necessary for determining compliance by each Group Member with the provisions of this Agreement referred to therein as of the last day of the fiscal

37

quarter or fiscal year of the Borrower, as the case may be, and (y) to the extent not previously disclosed to the Administrative Agent, a description of any change in the jurisdiction of organization of any Loan Party;

(b)within five Business Days after the same are sent, copies of all financial statements and reports that the Guarantor sends to the public holders of any class of its debt securities or public equity securities, to the extent not otherwise provided on the Internet at the Guarantor’s website address at www.itg.com;

(c)within five Business Days after the end of each calendar month, a certificate of a Responsible Officer of the Borrower indicating the Eligible NSCC Margin Deposits in effect for each Business Day in the most recently ended calendar month; and

(d)promptly, such additional financial and other information as any Lender may from time to time reasonably request through the Administrative Agent.

5.3Payment of Obligations.  Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature (including taxes), except where (a) the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the relevant Group Member or (b) such failure would not reasonably be expected to have a Material Adverse Effect.

5.4Maintenance of Existence; Compliance.  (a)(i)  Preserve, renew and keep in full force and effect its organizational existence and (ii) take all reasonable action to maintain all rights, privileges, Broker-Dealer Licenses and Memberships, Broker-Dealer Registrations and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 6.3 or Section 6.4(e) and except to the extent (other than with respect to the preservation of the existence of the Loan Parties) that failure to do so would not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligat ions and Requirements of Law except to the extent that failure to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.5Maintenance of Property; Insurance.  (a)  Keep all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect and (b) maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business.

5.6Inspection of Property; Books and Records; Discussions.  (a)  Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all material dealings and transactions in relation to its business and activities and (b) upon reasonable prior notice to the Loan Parties, permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records and to discuss the business, operations, properties and financial and other condition of the Group Members with officers and employees of the Group Members and with their independe nt certified public accountants, all at any reasonable time during normal business hours and so often as may reasonably be desired.

38

5.7Notices.  Promptly give notice to the Administrative Agent and each Lender of (to the extent not promptly delivered on the Internet at the Guarantor’s website address at www.itg.com):

(a)the occurrence of any Default or Event of Default;

(b)any litigation or proceeding affecting any Group Member (i) in which the amount involved is $5,000,000 or more and not covered by insurance or (ii) which relates to any Loan Document;

(c)the following events, as soon as possible and in any event within 30 days after any Loan Party knows or has reason to know thereof:  (i) the occurrence of any Reportable Event with respect to any Plan, the determination that any Single Employer Plan is in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA), the creation of any Lien in favor of the PBGC or a Single-Employer Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or determination that any Multiemployer Plan is in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA), or (ii) the institution of proceedings by the PBGC , any Loan Party, any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from or Reorganization or Insolvency of any Multiemployer Plan, the termination of any Single-Employer Plan, or determination that any Multiemployer Plan is in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA);  and

(d)any development or event that, in the reasonable judgment of any Loan Party, has had or would reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section 5.7 shall be accompanied by a statement of a Responsible Officer of the Guarantor setting forth details of the occurrence referred to therein and stating what action the relevant Group Member proposes to take with respect thereto.

5.8Compliance with Regulatory Requirements.  The Borrower will, and the Guarantor will cause each Broker-Dealer Subsidiary to comply with all material rules and regulations of the SEC and FINRA applicable to it (including such rules and regulations dealing with net capital requirements); except where the failure to so comply is immaterial non-compliance with such rules and regulations.

SECTION 6.   NEGATIVE COVENANTS

Each Loan Party hereby agrees that, so long as the Commitments remain in effect or any Loan or other amount (other than contingent indemnification obligations for which no claim has been made) is owing to any Lender or the Administrative Agent hereunder, such Loan Party shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

6.1Financial Condition Covenants.

(a)  Maximum Consolidated Leverage Ratio.  Permit the Consolidated Leverage Ratio at any time of the Guarantor and its Subsidiaries to exceed [**] to [**].

(b)  Minimum Consolidated Tangible Net Worth.  Permit Consolidated Tangible Net Worth at any time to be less than (i) with respect to the Borrower, $[**] or (ii) with respect to the Guarantor, $[**] (in each case, the “Minimum TNW”); provided that the Minimum TNW of the Guarantor shall be reduced by [**]% of the sum of (x) the value of goodwill (net of any impairment)

39

acquired in connection with Permitted Acquisitions as determined in accordance with GAAP as of the time of any such Permitted Acquisition and (ii) the consideration paid in effecting any repurchases of Capital Stock of the Guarantor by the Guarantor since the Closing Date; provided further that in no event shall the Minimum TNW of the Guarantor be reduced below $[**].

(c)  Minimum Regulatory Capital.  Permit the Net Capital of the Borrower at any time to be less than $[**] in excess of the minimum amount of Net Capital required by the Exchange Act.

(d)  Minimum Liquidity Ratio. Permit the Liquidity Ratio of the Borrower at any time to be less than [**] to [**].

6.2Liens.  Create, incur, assume or suffer to exist any Lien upon any property of the Guarantor, whether now owned or hereafter acquired, except:

(a)Liens for taxes not yet due or that are being contested in good faith; provided that, to the extent required, adequate reserves with respect thereto are maintained on the books of the Guarantor in conformity with GAAP;

(b)carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings;

(c)pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation;

(d)deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(e)easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Guarantor;

(f)Liens in existence on the date hereof listed on Schedule 6.2(f) and Liens incurred to secure any Indebtedness to refinance Indebtedness secured by such Liens; provided that no such Lien is spread to cover any additional property after the Closing Date (other than (A) after-acquired property that is related to the property covered by such Lien and (B) proceeds and products of such property) and that the principal amount of Indebtedness secured thereby is not increased;

(g)Liens on fixed or capital assets acquired, constructed or improved by the Guarantor; provided that (i) such security interests are incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement, (ii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (iii) such security interests shall not apply to any other property of the Guarantor (other than (A) after-acquired property that is related to the property covered by such Lien and (B) proceeds and products of such property);

(h)Liens created pursuant to the Security Documents;

40

(i)any interest or title of a lessor under any lease entered into by the Guarantor in the ordinary course of its business and covering only the assets so leased;

(j)any Lien existing on any property or asset prior to the acquisition thereof by the Guarantor; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition, (ii) such Lien shall not apply to any other property or assets of the Guarantor and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof as of such date;

(k)Liens incidental to the conduct of its business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit, and which do not in the aggregate detract from the value of its property or assets or impair the use thereof in the operation of its business;

(l)Liens securing judgments for the payment of money not constituting an Event of Default under Section 8(h) or securing appeal or other surety bonds relating to such judgments;

(m)Liens securing Indebtedness of the Guarantor; provided that such Indebtedness is stated to mature after (and includes no fixed repayment or repurchase obligations other than customary amortization and customary mandatory prepayments or redemptions for similar Indebtedness prior to) the date that is 180 days after the Termination Date;

(n)Liens securing Indebtedness of the Guarantor if the obligations of the Guarantor under Section 7 are secured equally and ratably with or senior to the Liens securing such Indebtedness; provided that if requested by the Borrower with respect to such Liens, the Administrative Agent shall (and is hereby authorized to), on behalf of itself and the Lenders, enter into an intercreditor agreement reasonably satisfactory to the Administrative Agent providing that such new Liens will be secured equally and ratably with, or junior to (as directed by the Borrower) the Liens granted in respect of the Obligations, on customary terms;

(o)Liens on fixed assets owned by and leaseholds of the Guarantor; provided that the aggregate principal amount at any time outstanding of obligations secured by such Liens incurred pursuant to this clause (o) shall not exceed $30,000,000; and

(p)any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in clauses (f), (g) and (j); provided that (i) the obligations secured thereby shall be limited to the obligations secured by the Lien so extended, renewed or replaced (and, to the extent provided in the foregoing clauses, extensions, renewals and replacements thereof) and (ii) such Lien shall be limited to all or a part of the assets that secured the Lien so extended, renewed or replaced (and any (A) after-acquired property that is related to the property covered by such Lien and (B) proceeds and products of such property).

6.3Fundamental Changes.  Merge, consolidate or amalgamate, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its property or business, except that:

(a)the Guarantor or any of its Subsidiaries may merge, amalgamate or consolidate with any Person; provided that (A) in the case of any merger, amalgamation or consolidation involving the Borrower, the Borrower shall be the continuing or surviving corporation and (B) in the case of any merger or consolidation involving the Guarantor, the Guarantor shall be the surviving Person;

41

(b)any Subsidiary of the Guarantor (other than the Borrower) may Dispose of all or substantially all of its assets (i) to the Guarantor or any Subsidiary or (ii) pursuant to a Disposition permitted by Section 6.4;

(c)any Investment expressly permitted by Section 6.7 may be structured as a merger, consolidation or amalgamation; and

(d)any Subsidiary of the Guarantor (other than the Borrower) may liquidate, wind up or dissolve if the Guarantor determines in good faith that such liquidation or dissolution is in the best interests of the Loan Parties and the Borrower and is not materially disadvantageous to the Lenders.

6.4Disposition of Property.  Dispose of any of its property, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:

(a)the Disposition of obsolete or worn out property in the ordinary course of business;

(b)the sale of inventory and other assets (including securities and derivatives) in the ordinary course of business;

(c)Dispositions permitted by clause (i) of Section 6.3(b);

(d)the sale or issuance of the Capital Stock of any Subsidiary of the Guarantor to any Group Member

(e)(i) the sale by any Loan Party of its property or assets to another Loan Party, (ii) the sale by any Subsidiary of the Guarantor (other than the Borrower) of its property or assets to another Group Member.

(f)any Restricted Payment or Investment that is permitted to be made, and is made, under Section 6.5 or 6.7, respectively;

(g)the lease, assignment or sublease of any real or personal property in the ordinary course of business;

(h)sales or grants of licenses or sublicenses to use the Guarantor’s or any of its Subsidiaries’ trademarks, patents, trade secrets, know-how or other intellectual property and technology to the extent that such sale, license or sublicense does not prohibit the licensor from using such trademark, patent, trade secret, know-how, technology or other intellectual property and is in the ordinary course of business;

(i)the sale by the Guarantor or any of its Subsidiaries of computer and other similar equipment not to exceed $30,000,000 in the aggregate;

(j)any Disposition of property or issuance or sale of any shares of the Capital Stock of any Subsidiary of the Guarantor (other than the Borrower) so long as (i) no Default shall have occurred and be continuing or would exist after giving effect thereto (ii) such Disposition to a Person that is not a Group Member is for consideration at least equivalent to the fair market value of such property or Capital Stock and (iii) the Guarantor shall be in compliance, on a pro forma basis after giving effect to such Disposition, with the covenants contained in Section 6.1

42

recomputed as at the last day of the most recently ended fiscal quarter of the Guarantor and the Subsidiaries as if such Disposition had occurred on the first day of each relevant period for testing such compliance; and

(k)the Disposition of any property in a Sale/Leaseback Transaction within six months of the acquisition of such property.

6.5Restricted Payments.  Declare or pay any dividend (other than dividends payable solely in common stock of the Person making such dividend) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of the Guarantor, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Guarantor (collectively, “Restricted Payments”), except that the Guarantor may make Restricted Payments so long as no Default shall have occurred and be continuing or would exist after giving effect thereto.

6.6Capital Expenditures.  Make or commit to make any Capital Expenditure, except (a) Capital Expenditures described on Schedule 6.6 hereto and (b) Capital Expenditures of the Guarantor and its Subsidiaries in the ordinary course of business not exceeding $40,000,000 per fiscal year; provided, that such amount referred to above, if not so expended in the fiscal year for which it is permitted, may be carried over for expenditure in any succeeding fiscal year.

6.7Investments.  Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or make any other investment in, any other Person (all of the foregoing, “Investments”), except:

(a)extensions of trade credit in the ordinary course of business;

(b)investments in Cash Equivalents (and other Investments in the ordinary course of a broker-dealer business);

(c)Guarantee Obligations incurred in the ordinary course of business by the Guarantor or any of its Subsidiaries of obligations of the Guarantor or any Subsidiary;

(d)loans and advances to employees of any Group Member in the ordinary course of business (including for travel, entertainment and relocation expenses) in an aggregate amount for all Group Members not to exceed $1,000,000 at any one time outstanding;

(e)other Investments constituting Permitted Acquisitions;

(f)intercompany Investments by any Group Member in another Group Member;

(g)Investments consisting of extensions of credit entered into or made or that are received in the ordinary course of business in accordance with normal practice and Investments in Swap Agreements;

(h)Investments existing on the date hereof and set forth on Schedule 6.7(h) and any modification, replacement, renewal, reinvestment or extension thereof; provided that the amount of the original Investment is not increased except by the terms of such Investment or as otherwise permitted by this Section 6.7; and

43

(i)in addition to Investments otherwise expressly permitted by this Section, any Investment by the Guarantor or any of its Subsidiaries so long as (i) no Default shall have occurred and be continuing or would exist after giving effect thereto and (ii) the Guarantor shall be in compliance, on a pro forma basis after giving effect to such Investment, with the covenants contained in Section 6.1 recomputed as at the last day of the most recently ended fiscal quarter of the Guarantor and the Subsidiaries as if such Investment had occurred on the first day of each relevant period for testing such compliance.

6.8Transactions with Affiliates.  Enter into any transaction, including any purchase, sale, lease or exchange of property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than any other Group Member) unless such transaction is (a) (i) otherwise permitted under this Agreement, (ii) in the ordinary course of business of the relevant Group Member, or (iii) upon fair and reasonable terms no less favorable to the relevant Group Member than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate or (b) a Restricted Payment permitted by Section 6.5.

6.9Changes in Fiscal Periods.  Permit the fiscal year of a Loan party to end on a day other than December 31 or change a Loan Party’s method of determining fiscal quarters.

6.10Lines of Business.  Enter into any business (including, for the avoidance of doubt, through any Investment permitted by Section 6.7), either directly or through any Subsidiary, except for those businesses in which the Guarantor and its Subsidiaries are engaged on the Closing Date and businesses similar, ancillary, complementary or otherwise reasonably related thereto or that are a reasonable extension, development or expansion thereof.

SECTION 7.   GUARANTEE

7.1Guarantee.  (a) The Guarantor hereby unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Lenders, and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

(b)  Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of the Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by the Guarantor under applicable federal and state laws relating to the insolvency of debtors.

(c)  The Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of the Guarantor hereunder without impairing the guarantee contained in this Section 7 or affecting the rights and remedies of the Administrative Agent or any Lender hereunder.

(d)  The guarantee contained in this Section 7 shall remain in full force and effect until all the Obligations (other than contingent indemnification obligations for which no claim has been made) and the obligations of the Guarantor under the guarantee contained in this Section 7 shall have been satisfied by payment in full and the Commitments shall be terminated, notwithstanding that from time to time during the term of this Agreement the Borrower may be free from any Obligations.

(e)  No payment made by the Borrower, the Guarantor or any other Person or received or collected by the Administrative Agent or any Lender from the Borrower, the Guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or

44

from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by the Guarantor in respect of the Obligations or any payment received or collected from the Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of the Guarantor hereunder until the Obligations are paid in full and the Commitments are terminated.

7.2No Subrogation.  Notwithstanding any payment made by the Guarantor hereunder or any set-off or application of funds of the Guarantor by the Administrative Agent or any Lender, the Guarantor shall not be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against the Borrower or any collateral security or guarantee or right of offset held by the Administrative Agent or any Lender for the payment of the Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower in respect of payments made by the Guarantor hereunder, until all amounts owing to the Administrative Agent and the Lenders by t he Borrower on account of the Obligations (other than contingent indemnification obligations for which no claim has been made) are paid in full and the Commitments are terminated.  If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Obligations (other than contingent indemnification obligations for which no claim has been made) shall not have been paid in full, such amount shall be held by the Guarantor in trust for the Administrative Agent and the Lenders, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Administrative Agent in the exact form received by the Guarantor (duly indorsed by the Guarantor to the Administrative Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine.

7.3Amendments, etc. with respect to the Obligations.  The Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment of any of the Obligations made by the Administrative Agent or any Lender may be rescinded by the Administrative Agent or such Lender and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, increased , amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any Lender, and this Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders, the Supermajority Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Lender for the payment of the Obligations may be sold, exchanged, waived, surrendered or released.  Neither the Administrative Agent nor any Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for the guarantee contained in this Section 7 or any property subject thereto.

7.4Guarantee Absolute and Unconditional.  The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon the guarantee contained in this Section 7 or acceptance of the guarantee contained in this Section 7; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended, increased or waived, in reliance upon the guarantee contained in this Section 7; and all dealings between the Borrower and the Guarantor, on the one hand, and the Administrative Agent and the Lend ers, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 7.  The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or the Guarantor with respect to the

45

Obligations.  The Guarantor understands and agrees that the guarantee contained in this Section 7 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of this Agreement or any other Loan Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower or any other Person against the Administrative Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or the Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Obligations, or of the Guarantor under the guarantee contained in this Section 7, in bankruptcy or in any other instance.  When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against the Guarantor, the Administrative Agent or any Lender may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Lender to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower or any other Person or any such collateral security, guarantee or right of offset, shall not relieve t he Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any Lender against the Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

7.5Reinstatement.  The guarantee contained in this Section 7 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

7.6Payments.  The Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the Funding Office.

SECTION 8.   EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a)the Borrower shall fail to pay any principal of any Loan when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan or any other amount payable hereunder or under any other Loan Document, within five days after any such interest or other amount becomes due in accordance with the terms hereof; or

(b)any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate (including any certification of any financial statement) furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or

(c)(i) any Loan Party shall default in the observance or performance of any agreement contained in Section 6 hereof or (ii) the Borrower shall fail to cure the Deficiency, if any, arising

46

as a result of its failure to effect a DTC pledge of any Eligible Assets referred to in the last sentence of Section 2.2(b) prior to the close of the DTC free pledge process on the same day as the Pledged Eligible Assets Notice relating to such Eligible Assets has been furnished to the Administrative Agent (it being understood that any such Deficiency shall be deemed cured upon repayment by the Borrower to the Administrative Agent of an amount equal to such Deficiency by 4:00 P.M. New York City time on such date); or

(d)any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice to the Borrower from the Administrative Agent or the Required Lenders; or

(e)any Material Group Member shall (i) default in making any payment of any principal of any Indebtedness (including any Guarantee Obligation, but excluding the Loans and the Guarantee Obligations with respect thereto described in Section 7 hereof) on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause (with all applicable grace periods having expired), with the giving of notice if required, such Indebtedness to become due prior to its stated maturity (or, in the case of any Swap Agreement, other than in accordance with its terms); provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $25,000,000; or

(f)(i) any Material Group Member shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any Material Group Member shall make a general assignment for the benefit of its creditors; or (ii) the re shall be commenced against any Material Group Member any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed or undischarged for a period of 60 days; or (iii) there shall be commenced against any Material Group Member any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) any Material Group Member shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Material Group Member shall generally

47

not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

(g)(i) any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any failure to satisfy the minimum funding standards (as defined in Sections 412 or 430 of the Code or 302 of ERISA), whether or not waived, shall exist with respect to any Plan, any Single Employer Plan shall be determined to be in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA), or any Lien in favor of the PBGC or a Single-Employer Plan shall arise on the assets of any Loan Party or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Single Employer Plan under Title IV of ERISA, (iv) any Single Employer Plan shall terminate under Title IV of ERISA, (v) any Loan Party or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or a determination that such Multiemployer Plan is, or the determination that a Multiemployer Plan is expected to be, in “endangered” or “critical status” (within the meaning of Section 432 of the Code or Section 305 of ERISA), or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i)&nb sp;through (vi) above, such event or condition, together with all other such events or conditions, if any, would reasonably be expected to have a Material Adverse Effect; or

(h)one or more judgments or decrees shall be entered against any Material Group Member involving in the aggregate a liability (not paid or to the extent not covered by insurance) of $25,000,000 or more, and all such judgments or decrees shall not have been waived, vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or

(i)except as expressly permitted hereunder or thereunder, any of the Security Documents shall cease, for any reason, to be in full force and effect, or any Loan Party shall so assert in writing, or any Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby; or

(j)except as expressly permitted hereunder or thereunder, the guarantee contained in Section 7 of this Agreement shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or

(k)(i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 35% of the outstanding common stock of the Guarantor; or (ii) the board of directors of the Guarantor shall cease to consist of a majority of Continuing Directors;

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken:  (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required

48

Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable.  Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

SECTION 9.   THE AGENTS

9.1Appointment.  Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto.   Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

9.2Delegation of Duties.  The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care.

9.3Exculpatory Provisions.  Neither any Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder.  The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.

9.4Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, email, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Loan Parties), independent accountants and other experts selected by the Administrative Agent.  The

49

Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent.  The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Requ ired Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

9.5Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received notice from a Lender or a Loan Party referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified b y this Agreement, all Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

9.6Non-Reliance on Agents and Other Lenders.  Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender.  Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates.  Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to pr ovide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

9.7Indemnification.  The Lenders agree to indemnify each Agent and its officers, directors, employees, affiliates, advisors and controlling persons (each, an “Agent Indemnitee”) (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Applicable Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with

50

such Applicable Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent Indemnitee in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent Indemnitee under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent Indemnitee’s gross negligence or willful misconduct.  The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

9.8Agent in Its Individual Capacity.  Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent.  With respect to its Loans made or renewed by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

9.9Successor Administrative Agent.  The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrower.  If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8(a) or Section 8(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent sh all succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans.  If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.  After any retiring Administrative Agent’s resignation as Administrativ e Agent, the provisions of this Section 9 and Section 10.5 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

9.10Syndication Agent; Documentation Agent.  Neither the Syndication Agent nor the Documentation Agent shall have any duties or responsibilities hereunder in its capacity as such.

SECTION 10.   MISCELLANEOUS

10.1Amendments and Waivers.  Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1.  The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent and each

51

Loan Party party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that, subject to Section 2.15(b), no such waiver and no such amendment, supplement or modification shall (i) forgive the principal amount or extend the final scheduled date of maturity of any Loan, reduce the stated rate of any interest or fee payable hereunder (except (x) in connection with the waiver of applicability of any post-default increase in interest rates (which waiver shall be effective with the consent of the Required Lenders) and (y) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (i)) or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Lender’s Commitment, in each case without the written consent of each Lender directly affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this Section 10.1 without the written consent of such Lender; (iii) reduce any percentage specified in the definitions of Required Lenders or Supermajority Lenders or consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release any Collateral (except as provided for in the Loan Documents) or release the Guarantor from its obligations under the guarantee contained in Section 7 of this Agreement, in each case without the written consent of all Lenders; (iv) amend, modify or waive any provisions in Section 2.11(a), (b) and (c) without the written consent of each Lender adversely affected thereby; (v) amend or modify the definitions of “Eligible Assets” or “Loan Value”, to the extent such amendment or modification would result in a less restrictive standard than set forth in such definitions, in each case without the written consent of  the Supermajority Lenders (provided that, for the avoidance of doubt, notwithstanding the foregoing clause (v), exchange-traded funds (other than leveraged exchange-traded funds) shall be considered “Eligible ETFs” upon the request of the Borrower and with the consent of the Administrative Agent (such consent not to be u nreasonably withheld or delayed));  (vi) amend, modify or waive any provision of Section 9 without the written consent of the Administrative Agent; (vii) amend, modify or waive any of the rights or duties of the Swingline Lenders without the written consent of each Swingline Lender, if any, that holds a Swingline Loan that is outstanding at the time that such amendment, modification or waiver becomes effective or (viii) amend, modify or waive any provision of Section 2.16 or the definition of the term “Defaulting Lender” without the written consent of the Administrative Agent or, if any Swingline Loans are outstanding at such time, the applicable Swingline Lender or Swingline Lenders (for the avoidance of doubt, this clause (viii) shall be the only clause in this proviso applicable to any such amendment, modification or waiver of Section 2.16 or the definition of the term “Defaulting Lender”).  Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Administrative Agent and all future holders of the Loans.  In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.  Notwithstanding the foregoing, the Administrative Agent shall be authorized and directed to enter into an intercreditor agreement on the terms described in Section 6.2(n) without the consent of any of the Lenders.  Notwithstanding the foregoing, technical and conforming modifications to the Loan Documents may be made with the consent of the Borrower and the Administrative Agent to the extent necessary to inte grate any Incremental Commitments on substantially the same basis as the Loans (including, for the avoidance of doubt, the amendments contemplated by the proviso of Section 2.17(a)(ii)).

52

10.2Notices.  All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

Borrower:	Investment Technology Group, Inc. 380 Madison Avenue New York, New York  10017
	Attention:  General Counsel
	Telecopy:  212-444-6494
	Telephone:  212-588-4000
	with a copy to:
	Investment Technology Group, Inc. 380 Madison Avenue New York, New York  10017
	Attention:  Chief Financial Officer
	Telecopy:  212-444-4151
	Telephone:  212-588-4000
Administrative Agent:	JPMorgan Chase Bank, N.A. 1111 Fannin Street Houston, TX  77002
	Attention:  Carla Kinney
	Telecopy:  (713) 374-4312 Telephone:  (713) 750-3560
	with a copy to: JPMorgan Chase Bank, N.A. (MC: DE3-5000) 500 Stanton Christiana Road Newark, Delaware 19713 Attention:  Marc Sendra Telecopy:  (917) 464-9985 Telephone:  (302) 552-0835

provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.

Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

53

10.3No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

10.4Survival of Representations and Warranties.  All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

10.5Payment of Expenses.  The Borrower agrees (a) to pay or reimburse the Administrative Agent and its Affiliates (without duplication) for all of their reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, the syndication of the credit facilities provided for herein and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to the Administrative Agent and filing and recor ding fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or such other periodic basis as the Administrative Agent shall deem appropriate, (b) to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including the fees and disbursements of counsel (including the allocated reasonable fees and expenses of in-house counsel) to each Lender and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and the Administrative Agent and their respective officers, directors, employees, affiliates, agents, advisors and controlling persons (each, an “Indemnitee”) harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncomplia nce with or liability under, any Environmental Law applicable to the operations of any Group Member or any of the Properties and the reasonable fees and expenses of legal counsel (limited to not more than one counsel, plus, if necessary, one local counsel per jurisdiction (unless a conflict exists, in which case the reasonable fees and expenses of one additional legal counsel (plus one local counsel per jurisdiction, if necessary) for each group of affected Lenders that is, as among themselves, not conflicted, shall be covered) and except for allocated costs of in-house counsel) in connection with claims, actions or proceedings by any Indemnitee against any Loan Party under any Loan Document (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”), regardless of whether any Indemnitee is a party thereto, provided, that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liab ilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the bad faith, gross negligence or willful misconduct of such

54

Indemnitee.  Without limiting the foregoing, and to the extent permitted by applicable law, the Guarantor agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee.  All amounts due under this Section 10.5 shall be payable not later than 10 days after written demand therefor.  Statements payable by the Borrower pursuant to this Section 10.5 shall be submitted to the attention of the General Counsel of the Borrower (Telephone No. 212-588-4000) (Telecopy No. 212-444-6494) with a copy to the attention of the Chief Financial Officer of the Borrower (Telephone No. 212-588-4000) (Telecopy No. 212-444-4151), both at the address of the Borrower set forth in Section 10.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent.  The agreements in this Section 10.5 shall survive the termination of this Agreement and the repayment of the Loans and all other amounts payable hereunder.

10.6Successors and Assigns; Participations and Assignments.  (a)  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

(b)(i)  Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent of:

(A) the Borrower (such consent not to be unreasonably withheld), provided that no consent of the Borrower shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default has occurred and is continuing, any other Person;

(B) the Administrative Agent (such consent not to be unreasonably withheld); and

(C) each Swingline Lender that holds any Swingline Loan outstanding at the time such assignment is consummated (such consent not to be unreasonably withheld).

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;

(B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

55

(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire.

For the purposes of this Section 10.6, “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 2.12 or 2.13).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that d oes not comply with this Section 10.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv)  The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v)  Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c)(i)  Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall re tain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment,

56

modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 10.1 and (2) directly affects such Participant.  Subject to paragraph (c)(iii) of this Section, the parties hereto agree that each Participant shall be entitled to the benefits of Sections 2.12 and 2.13, and in the case of Section 2.13(e) and (f) subject to the same obligations, to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.7(b) as though it were a Lender, provided such Participant shall be subject to Section 10.7(a) as though it were a Lender.

(ii) Each Lender that sells a participation, acting solely for this purpose as an agent of the Borrower, shall maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations . The entries in the Participant Register shall be conclusive, and such Lender and the Administrative Agent shall treat each person whose name is recorded in the Participant Register pursuant to the terms hereof as the owner of such participation for all purposes of this Agreement, notwithstanding notice to the contrary.

(iii)  A Participant shall not be entitled to receive any greater payment under Section 2.12 or 2.13 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  Any Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 2.13 unless such Participant complies with Sections 2.13(e) and (f).

(d)  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

(e)  The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

10.7Adjustments; Set-off.  (a)  Except to the extent that this Agreement expressly provides for payments to be allocated to a particular Lender, if any Lender (a “Benefited Lender”) shall receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such Benefited Lender shall purchase for cash from the other Lenders a pa rticipating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase

57

shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

(b)  In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower, as the case may be.  Each Lender agrees promptly to notify the Borrower and the Adminis trative Agent after any such setoff and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such setoff and application.

10.8Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.  A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

10.9Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.10Integration.  This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

10.11GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

10.12Submission To Jurisdiction; Waivers.  Each Loan Party hereby irrevocably and unconditionally:

(a)submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York in Manhattan, the courts of the United States for the Southern District of New York in Manhattan, and appellate courts from any thereof;

(b)consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or

58

proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c)agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower, as the case may be at its address set forth in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(d)agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(e)waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

10.13Acknowledgements.  Each Loan Party hereby acknowledges that:

(a)it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(b)neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c)no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Loan Parties and the Lenders.

10.14Releases of Guarantees and Liens.  (a)  Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender except as expressly required by Section 10.1) to take any action requested by the Borrower having the effect of releasing any Collateral or guarantee obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan Document (including, for the avoidance of doubt, in the circumstances described in Section 2.8(c) hereof) or that has been consented to in accordance with Section&n bsp;10.1 or (ii) under the circumstances described in paragraph (b) below.

(b)  At such time as the Loans and the other Obligations under the Loan Documents (other than obligations under or in respect of contingent indemnification obligations for which no claim has been made) shall have been paid in full and the Commitments have been terminated, the Collateral shall be released from the Liens created by the Security Documents, and the Security Documents and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Loan Documents (including the Obligations) shall terminate, all without delivery of any instrument or performance of any act by any Person.

10.15Confidentiality.  Each of the Administrative Agent and each Lender agrees to keep, and to cause its Affiliates to keep, confidential all non-public information provided to it by any Loan Party, the Administrative Agent or any Lender pursuant to or in connection with this Agreement that is designated by the provider thereof as confidential; provided that nothing herein shall prevent the

59

Administrative Agent or any Lender from disclosing any such information (a) to the Administrative Agent or any other Lender, (b) subject to an agreement to comply with the provisions of this Section, to any actual or prospective Transferee or any direct or indirect counterparty to any Swap Agreement (or any professional advisor to such counterparty), (c) to its Affiliates, its and its Affiliates employees, directors, officers and agents, including accountants, legal counsel and other advisors or to any other Lender or Participant (it being understood that such disclosure will be made only to such Persons who have the need to know such information and only if the Persons to whom such disclosure is made are informed of the confidential nature of such Information, instructed to keep such information confidential and receive such information in connection with (i) their evaluation of the ability of t he Borrower to repay the Loans and perform their other obligations under the Loan Documents, (ii) administering the Obligations under this Agreement, (iii) servicing the Borrowings hereunder, (iv) protecting their interests under this Agreement or (v) performing any similar function in connection with any other extension of credit by the Lenders to the Guarantor or a Subsidiary (excluding any transaction in any public security of the Guarantor or a Subsidiary), (d) upon the request or demand of any Governmental Authority, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed other than as a result of a known breach of any requirement to keep such information confidential, (h) to the National Association of Insurance Commissioners or any similar organiza tion or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, or (i) in connection with the exercise of any remedy hereunder or under any other Loan Document.

10.16WAIVERS OF JURY TRIAL.  THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

10.17USA PATRIOT Act.  Each Lender subject to the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is hereby required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act. The Borrower shall provide all documentation and information that each Lender reasonably requests (a) in order to satisfy such Lender’s obligations under the Patriot Act or (b) that i s required by bank regulatory authorities under applicable “know your customer” rules and regulations.

[Remainder of Page Intentionally Left Blank]

60

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

ITG INC.
By:	/s/ Steven Vigliotti
	Name:	Steven Vigliotti
	Title:	Chief Financial Officer
By:	/s/ Bob Gasser
	Name:	Bob Gasser
	Title:	Chief Executive Officer
INVESTMENT TECHNOLOGY GROUP, INC.
By:	/s/ Steven Vigliotti
	Name:	Steven Vigliotti
	Title:	Chief Financial Officer
By:	/s/ Bob Gasser
	Name:	Bob Gasser
	Title:	Chief Executive Officer

Signature Page to the ITG Inc. Credit Agreement

JPMORGAN CHASE BANK, N.A., as Administrative Agent and as a Lender
By:	/s/ Henry E. Stuart
	Name:	Henry E. Stuart
	Title:	Executive Director
		JP Morgan Chase Bank, N.A.

Signature Page to the ITG Inc. Credit Agreement

	BANK OF AMERICA, N.A., as Syndication Agent and as a Lender
By:	/s/ Matthew C. White
	Name:	Matthew C. White
	Title:	Vice President

Signature Page to the ITG Inc. Credit Agreement

BANK OF MONTREAL, as Documentation Agent and as a Lender
By:	/s/ Linda C. Haven
	Name:	Linda C. Haven
	Title:	Managing Director

Signature Page to the ITG Inc. Credit Agreement

U.S. Bank National Association, as a Lender
By:	/s/Robert L. Barrett
	Name:	Robert L. Barrett
	Title:	Senior Vice President

Signature Page to the ITG Inc. Credit Agreement

Chang Hwa Commercial Bank Ltd., as a Lender
By:	/s/ Dawn Cheng
	Name:	Dawn Cheng
	Title:	AVP & AGM

Signature Page to the ITG Inc. Credit Agreement

EX-10.31.1

Exhibit 10.31.1

AMENDMENT TO LEASE

THIS AMENDMENT TO LEASE (this “Amendment”) is entered into as of the 22 day of July, 2010 (the “Effective Date”), by and between MA-100 HIGH STREET, L.L.C., a Delaware limited liability company, with a notice address of c/o Equity Office, 125 Summer Street, 17th Floor, Boston, Massachusetts 02110, Attn: Property Manager (the “Landlord”) and Investment Technology Group, Inc., a Delaware corporation, with a notice address of Attn: General Counsel, 380 Madison Avenue, New York, New York 10017 (the “Tenant”).

Recitals

A.Reference is made to that certain Office Lease Agreement dated as of July 24, 2009, and entered into between Landlord, as landlord, and Tenant, as tenant, with respect to certain premises located in a building known as and numbered 100 High Street, Boston, Massachusetts (the “Lease”); and

B.Landlord and Tenant desire to amend the Lease as more particularly set forth below.

NOW, THEREFOR, for valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, Landlord and Tenant hereby agree as follows:

Agreements

1.Capitalized Terms. Each capitalized term appearing but not defined herein shall have the meaning, if any, ascribed to such term in the Lease.

2.Recitals. The recitals above set forth are true and complete and are incorporated herein by reference.

3.Amendments. As of the Effective Date, the Lease is hereby amended by deleting Exhibit L thereof and replacing it with Exhibit L attached hereto.

4.Ratification of Lease Provisions. Except as otherwise expressly amended, modified and provided for in this Amendment, Tenant hereby ratifies all of the provisions, covenants and conditions of the Lease, and such provisions, covenants and conditions shall be deemed to be incorporated herein and made a part hereof and shall continue in full force and effect.

5.Entire Amendment. This Amendment contains all the agreements of the parties with respect to the subject matter hereof and supersedes all prior dealings between the parties with respect to such subject matter.

6.Authority. Landlord and Tenant each warrant to the other that the person or persons executing this Amendment on its behalf has or have authority to do so and that such execution has fully obligated and bound such party to all terms and provisions of this Amendment.

7.Binding Amendment. This Amendment shall be binding upon, and shall inure to the benefit of the parties hereto, and their respective successors and assigns.

8.Severability. If any clause or provision of this Amendment is or should ever be held to be illegal, invalid or unenforceable under any present or future law applicable to the terms hereof, then and in that event, it is the intention of the parties hereto that the remainder of this Amendment shall not be affected thereby, and that in lieu of each such clause or provision of this Amendment that is illegal, invalid or unenforceable, such clause or provision shall be judicially construed and interpreted to be as simil ar in substance and content to such illegal, invalid or unenforceable clause or provision, as the context thereof would reasonably suggest, so as to thereafter be legal, valid and enforceable.

9.No Reservation. Submission of this Amendment for examination or signature is without prejudice and does not constitute a reservation, option or offer, and this Amendment shall not be effective until execution and delivery by all parties.

10.Counterparts. This Amendment may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[SIGNATURES ON FOLLOWING PAGE]

2

IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal as of the date and year first above written.

LANDLORD:
MA-100 HIGH STREET, L.L.C., A Delaware limited liability company
By:	/s/ Andrew Maher
	Name:	Andrew Maher
	Title:	Managing Director
		Boston Leasing
TENANT:
INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation
By:	/s/ P. Mats Goebels
	Name:	P. MATS GOEBELS
	Title:	managing director
		general counsel and secretary

3

EXHIBIT L

OUTLINE AND LOCATION OF GENERATOR AREA AND FUEL TANK AREA

This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between MA-100 HIGH STREET, L.L.C., a Delaware limited liability company (“Landlord”) and INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (“Tenant”) for space in the Building located at 150 Federal Street, Boston, Massachusetts 02110, which address is expected to be changed to 100 High Street, Boston, Massachusetts 02110 after the execution of this Lease.

4

EX-10.31.2

Exhibit 10.31.2

SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE (this “Amendment”) is entered into as of the 20th day of September, 2010 (the “Effective Date”), by and between MA-100 HIGH STREET, L.L.C., a Delaware limited liability company, with a notice address of c/o Equity Office, 125 Summer Street, 17th Floor, Boston, Massachusetts 02110, Attn: Property Manager (the “Landlord”), and Investment Technology Group, Inc., a Delaware corporation, with a notice address of Attn: General Counsel, 380 Madison Avenue, New York, New York 10017 (the “Tenant”).

Recitals

A.Reference is made to that certain Office Lease Agreement dated as of July 24, 2009, and entered into between Landlord, as landlord, and Tenant, as tenant, with respect to certain premises located in a building known as and numbered 100 High Street, Boston, Massachusetts (the “Building”), as affected by that certain Amendment to Lease dated as of July 22, 2010, by and between Landlord, as landlord, and Tenant, as tenant (as amended, the “Lease”); and

B.Landlord and Tenant desire to amend the Lease as more particularly set forth below.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, Landlord and Tenant hereby agree as follows:

Agreements

1.Capitalized Terms. Each capitalized term appearing but not defined herein shall have the meaning, if any, ascribed to such term in the Lease.

2.Recitals. The recitals above set forth are true and complete and are incorporated herein by reference.

3.Amendments. As of the Effective Date, the Lease is hereby amended as follows:

a.Premises. Section 1.02 of the Lease is hereby amended by deleting the fourth sentence thereof and replacing it with the following:

“After the Commencement Date for the Additional Premises, the “Rentable Square Footage of the Premises” shall be deemed and agreed to be 54,378 rentable square feet.”

b.Additional Premises. Section 1.04 of the Lease is hereby deleted in its entirety and replaced with the following:

“1.04 “Additional Premises” shall be deemed and agreed to be 18,531 rentable square feet located on the 18th floor of the Building, as more particularly shown on Exhibit A-4 attached hereto.”

c.Base Rent. In Section 1.05 of the Lease, the subsection thereof in which the Monthly Base Rent for the Additional Premises is defined is hereby deleted and replaced with “$67,174.88”.

d.Exhibit A-4. The Lease is hereby amended by deleting Exhibit A-4 attached thereto and replacing it with Exhibit A-4 attached to this Amendment.

4.Tenant’s Pro Rata Share. As of the Effective Date, Tenant’s Pro Rata Share shall be deemed and agreed to be 9.8381%.

5.Initial Alterations Allowance. For purposes of clarity in Section 4.03 of the Lease, Landlord shall not be obligated to disburse more than Three Million Five Hundred Thirty-Four Thousand Five Hundred Seventy and 00/100 ($3,534,570.00) Dollars for the Initial Alterations Allowance, which amount represents the sum of (i) Two Million Three Hundred Thirty Thousand Fifty-Five and 00/100 ($2,330,055.00) Dollars, the portion of the Initial Alterations Allowance applicable to the Initial Premises, and (ii)  One Million Two Hundred Four Thousand Five Hundred Fifteen and 00/100 ($1,204,515.00) Dollars, the portion of the Initial Alterations Allowance applicable to the Additional Premises as defined in this Amendment.

6.IT Allowance. For purposes of clarity in Section 4.04 of the Lease, Landlord shall not be obligated to disburse more than Five Hundred Forty-Three Thousand Seven Hundred Eighty and 00/100 ($543,780.00) Dollars for the IT Allowance, which amount represents the sum of (i) Three Hundred Fifty-Eight Thousand Four Hundred Seventy and 00/100 ($358,470.00) Dollars, the portion of the IT Allowance applicable to the Initial Premises, and (ii) One Hundred Eight Five Thousand Three Hundred Ten and 00/100 ($185 ,310.00) Dollars, the portion of the IT Allowance applicable to the Additional Premises as defined in this Amendment.

7.Generator Reimbursement. In accordance with Section 32.11 of the Lease, Tenant shall reimburse Landlord $210,015.00 of the Generator Costs within thirty (30) days of Tenant’s receipt of a proper invoice from Landlord for such amount.

8.Ratification of Lease Provisions. Except as otherwise expressly amended, modified and provided for in this Amendment, Tenant and Landlord each hereby ratifies all of the provisions, covenants and conditions of the Lease, and such provisions, covenants and conditions shall be deemed to be incorporated herein and made a part hereof and shall continue in full force and effect.

9.Entire Amendment. This Amendment contains all the agreements of the parties with respect to the subject matter hereof and supersedes all prior dealings between the parties with respect to such subject matter.

10.Authority. Landlord and Tenant each warrant to the other that the person or persons executing this Amendment on its behalf has or have authority to do so

2

and that such execution has fully obligated and bound such party to all terms and provisions of this Amendment.

11.Binding Amendment. This Amendment shall be binding upon, and shall inure to the benefit of the parties hereto, and their respective successors and assigns.

12.Severability. If any clause or provision of this Amendment is or should ever be held to be illegal, invalid or unenforceable under any present or future law applicable to the terms hereof, then and in that event, it is the intention of the parties hereto that the remainder of this Amendment shall not be affected thereby, and that in lieu of each such clause or provision of this Amendment that is illegal, invalid or unenforceable, such clause or provision shall be judicially construed and interpreted to be as similar in substance and content to such illegal, invalid or unenforceable clause or provision, as the context thereof would reasonably suggest, so as to thereafter be legal, valid and enforceable.

13.No Reservation. Submission of this Amendment for examination or signature is without prejudice and does not constitute a reservation, option or offer, and this Amendment shall not be effective until execution and delivery by all parties.

14.Counterparts. This Amendment may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[SIGNATURES ON FOLLOWING PAGE]

3

IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal as of the Effective Date first above written,

LANDLORD:
MA-100 HIGH STREET, L.L.C., a Delaware limited liability company
By:	/s/ Andrew Maher
	Name:	Andrew Maher
	Title:	Managing Director
		Boston Leasing
TENANT:
INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation
By:	/s/ P. Mats Goebels
	Name:	P. MATS GOEBELS
	Title:	managing director
		general counsel and secretary

4

EXHIBIT A-4

OUTLINE AND LOCATION OF ADDITIONAL PREMISES

This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between MA-100 HIGH STREET, L.L.C., a Delaware limited liability company (“Landlord”) and INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (“Tenant”) for space in the Building located at 150 Federal Street, Boston, Massachusetts 02110, which address is expected to be changed to 100 High Street, Boston, Massachusetts 02110 after the execution of this Lease.

[See attached plan for 18th floor.]

5

EX-10.43

Exhibit 10.43

INVESTMENT TECHNOLOGY GROUP, INC.

2007 OMNIBUS EQUITY COMPENSATION PLAN

EQUITY DEFERRAL AWARD PROGRAM SUBPLAN

GRANT NOTICE

Investment Technology Group, Inc. (the “Company”), pursuant to Section 6 of its Equity Deferral Award Program Subplan (the “Program”), hereby grants to you as a Participant under the Program, Stock Units representing a generally nontransferable right to receive one share of Company Stock with respect to each underlying Stock Unit at a specified future date together with a right to Dividend Equivalents on Basic Units as specified in the Program (the “Grant”), subject to all of the terms and conditions as set forth herein, the Program and the Investment Technology Group, Inc. 2007 Omnibus Equity Compensation Plan (the “Plan”).(1)  All capitalized terms herein that are not otherwise defined shall have the meanings ascribed to such terms in the Program or Plan, as applicable.

Participant:

Date of Grant:

Number of Basic Stock Units subject to Grant:

Number of Matching Stock Units subject to Grant:

Vesting Schedule: The Basic Units subject to this Grant shall vest in equal annual installments on each of the first, second and third anniversaries of the Date of Grant if the Participant remains continuously employed by the Company on each applicable vesting date. The Matching Units granted with respect to the Basic Units subject to this Grant shall vest 100% on the third anniversary of the Date of Grant if the Participant remains continuously employed by the Company through such date.  The Participant shall receive shares of Company Stock in settlement of the Basic Units and Matching Units in accordance with the terms of the Program, subject to the collection of applicable taxes in connection with the issuance of Company Stock.

Acknowledgements: You acknowledge receipt of this Grant Notice, the Program, the Plan and the Plan prospectus.(1)  You further acknowledge that this Grant is made under, and governed by the terms and conditions of, the Plan and the Program and you agree to be bound by such terms.  The Compensation Committee of the Board of Directors of the Company (the “Board”), or any other committee appointed by the Board to administer the Program, has the authority to interpret and construe this Grant pursuant to the terms of the Program and the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

Recoupment Policy:  You agree that you will be subject to any compensation clawback or recoupment policies that may be applicable to you as an employee of the Company or any of its affiliates, as in effect from time to time and as approved by the Board or the Compensation Committee of the Board, whether or not approved before or after the Date of Grant.

INVESTMENT TECHNOLOGY GROUP, INC.	PARTICIPANT
By:	By:
Name:	Brokerage Name:
Title:	Brokerage Account Number:
Date:	Date:

(1)   The Plan, Plan prospectus, and Program are available on the Company’s Intraweb; provided that paper copies of the Plan, Plan prospectus and Program are available upon request by contacting the Legal Department of the Company at ITG_Legal or 212.444.6378.

EX-10.44

Exhibit 10.44

INVESTMENT TECHNOLOGY GROUP, INC.

2007 OMNIBUS EQUITY COMPENSATION PLAN

EQUITY DEFERRAL AWARD PROGRAM SUBPLAN

GRANT NOTICE (KEEP)

Investment Technology Group, Inc. (the “Company”), pursuant to its Equity Deferral Award Program Subplan (the “Program”), hereby grants to you as a Participant under the Program, Stock Units representing a generally nontransferable right to receive one share of Company Stock with respect to each underlying Stock Unit at a specified future date together with a right to Dividend Equivalents on Basic Units as specified in the Program (the “Grant”), subject to all of the terms and conditions as set forth herein, the Program and the Investment Technology Group, Inc. 2007 Omnibus Equity Compensation Plan (the “Plan”).(1)  Notwithstanding anything set forth in the Program, Participant shall not be entitled to any Matching Units in connection with this Grant. All capitalized terms herein that are not otherwise defined shall have the mean ings ascribed to such terms in the Program or Plan, as applicable.

Participant:
Date of Grant:
Number of Basic Stock Units subject to Grant:	[Insert Number of Units] (which number of units represents $[Insert Dollar Amount granted] divided by the Fair Market Value of a share of Company Stock on the Date of Grant)
90 Day Average Price on Date of Grant:	$

Vesting Schedule: The Basic Units subject to this Grant shall vest in equal annual installments on each of the second, third and fourth anniversaries of the Date of Grant if the Participant remains continuously employed by the Company on each applicable vesting date and the average of the Company’s common stock price for the 90 calendar days preceding, and including, each of the vesting dates is higher than the average of the Company’s common stock price for the 90 calendar days preceding, and including, the Date of Grant (as set forth above). The Participant shall receive shares of Company Stock in settlement of the Basic Units in accordance with the terms of the Program, subject to the collection of applicable taxes in connection with the issuance of Company Stock.

Acknowledgements: You acknowledge receipt of this Grant Notice, the Program, the Plan and the Plan prospectus.(1)  You further acknowledge that this Grant is made under, and governed by the terms and conditions of, the Plan and the Program except as otherwise set forth herein and you agree to be bound by such terms.  The Compensation Committee of the Board of Directors of the Company (the “Board”), or any other committee appointed by the Board to administer the Program, has the authority to interpret and construe this Grant pursuant to the terms of the Program and the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

Recoupment Policy:  You agree that you will be subject to any compensation clawback or recoupment policies that may be applicable to you as an employee of the Company or any of its affiliates, as in effect from time to time and as approved by the Board or the Compensation Committee of the Board, whether or not approved before or after the Date of Grant.

INVESTMENT TECHNOLOGY GROUP, INC.	PARTICIPANT
By:	By:
Name:	Brokerage Name:
Title:	Brokerage Account Number:
Date:	Date:

(1)   The Plan, Plan prospectus, and Program are available on the Company’s Intraweb; provided that paper copies of the Plan, Plan prospectus and Program are available upon request by contacting the Legal Department of the Company at ITG_Legal or 212.444.6378.

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE COMPANY

Name	Jurisdiction of Incorporation/Organization
ITG Inc.	Delaware
AlterNet Securities, Inc.	Delaware
Hoenig Group Inc.	Delaware
ITG Capital, Inc.	Delaware
ITG Software Solutions, Inc.	Delaware
ITG Global Trading Incorporated	Delaware
ITG Solutions Network, Inc.	Delaware
ITG Analytics, Inc.	Delaware
ITG Investment Research, Inc.	Delaware
The Macgregor Group, Inc.	Delaware
Blackwatch Brokerage Inc.	Delaware
ITG Derivatives LLC	Illinois
Investment Technology Group International Limited	Ireland
ITG Ventures Limited	Ireland
Investment Technology Group Limited	Ireland
Investment Technology Group Europe Limited	Ireland
ITG Investment Technology Group (Israel) Ltd.	Israel
ITG Australia Limited	Australia
ITG Canada Corp.	Nova Scotia
TriAct Canada Marketplace LP	Ontario
ITG Hong Kong Limited	Hong Kong
Hoenig (Far East) Limited	Hong Kong

Note: Certain subsidiaries were omitted from this list in accordance with Regulation S-K Item 601(b)(21)(ii).

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Investment Technology Group, Inc.:

        We consent to the incorporation by reference in the registration statements (No. 333-78309, No. 333-42725, No. 333-50804, No. 333-89290, No. 333-99087, No. 333-26309, No. 333-159271, No. 333-156634, No. 333-166855 and No. 333-170116) on Form S-8 of Investment Technology Group, Inc. of our reports dated February 28, 2011, with respect to the consolidated statements of financial condition of Investment Technology Group, Inc. and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2010, and the effectiveness of internal control over financial reporting as of December 31, 2010, which reports appear in the December 31, 2010 Annual Report on Form 10-K of Investment Technology Group, Inc.

/S/ KPMG LLP

New York, New York
February 28, 2011

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert C. Gasser, certify that:

1.

I have reviewed this annual report on Form 10-K of Investment Technology Group, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 28, 2011
	/s/ ROBERT C. GASSER Robert C. Gasser Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Steven R. Vigliotti, certify that:

1.

I have reviewed this annual report on Form 10-K of Investment Technology Group, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 28, 2011
	/s/ STEVEN R. VIGLIOTTI Steven R. Vigliotti Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Under Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C., Section 1350)

        In connection with the Annual Report on Form 10-K of Investment Technology Group, Inc. (the "Company") for the year ended December 31, 2010, as filed with the SEC on the date hereof (the "Report"), Robert C. Gasser, as Chief Executive Officer of the Company, and Steven R. Vigliotti, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. §1350, that to his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ROBERT C. GASSER
Robert C. Gasser
Chief Executive Officer
February 28, 2011
/s/ STEVEN R. VIGLIOTTI
Steven R. Vigliotti
Chief Financial Officer
February 28, 2011

        The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.