8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

August 11, 2006 (August 7, 2006)
Date of Report (Date of earliest event reported)

INVESTMENT TECHNOLOGY GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-32722	95-2848406
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation)

380 Madison Avenue New York, New York	10017
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (212) 588-4000.

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01   Entry into a Material Definitive Agreement.

From the date of its original adoption, Investment Technology Group, Inc.’s (the “Company”) Non-Employee Directors’ Stock Option Plan provided that each option granted under the plan would become fully exercisable three months after the date of grant.  The Board of Directors previously determined that, effective for options granted after March 19, 2003, the options granted to non-employee directors should become exercisable in equal installments over three years, beginning on the first anniversary of the date of grant.  Accordingly, Options granted after such date in 2003, 2004 and 2005 under the Plan have so provided.

Options granted prior to March 19, 2003, all of which became fully exercisable three months after the date of grant, did not provide for accelerated exercisability upon a change in control of the Company due to the short delay between grant and full exercisability.  However, in the case of options which become exercisable over a three year period, the Board of Directors believes that it is appropriate to accelerate exercisability upon a change in control of the Company.  Accordingly, the Stock Option Agreements for grants made during 2004 and 2005 (options granted to non-employee directors in 2003 have vested in full) have been amended to provide for accelerated exercisability upon a change in control of the Company.  The Board of Directors also adopted an amendment to the Non-Employee Directors’ Stock Option Plan clarifying that options can be granted under the plan that become exercisable over a period longer than three months from the date of grant.

Stock Options granted to non-employee directors beginning January 1, 2006 were granted pursuant to the Company’s Directors’ Equity Subplan which was implemented under the Company’s 1994 Stock Option and Long-Term Incentive Plan, as amended and restated.  The Director’s Equity Subplan provides for annual grants of stock options to non-employee directors (as well as initial option grants to nonemployee directors upon their first election or appointment to the Board) which will vest and become exercisable in three equal annual installments, beginning on the first anniversary of the date of grant.  The Directors’ Equity Subplan also provides for annual grants of restricted share units to nonemployee directors (as well as initial grants of restricted share units to nonemployee directors upon their first election or appointment to the Board) that vest in three equal annual installments, beginning on the first anniversary of the date of grant.  The Directors’ Equity Subplan was amended to clarify that, upon a change in control of the Company, options will vest and become exercisable in full and restricted share units will vest in full.

Copies of the form of Amendment to Amended and Restated Non-Employee Directors’ Stock Option Plan, the Amendment to the Non-Employee Directors’ Stock Option Agreements, the Amendment to the Investment Technology Group, Inc. Directors’ Equity Subplan, the Form of Stock Option Agreement between the Company and Non Employee Directors of the Company (2006), and the Form of Restricted Share Agreement between the Company and Non Employee Directors of the Company (2006) are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4, and 10.5 respectively, and they are incorporated by reference herein.

Item 9.01   Financial Statements and Exhibits.

(d)Exhibits

10.1Amendment to Amended and Restated Non-Employee Directors’ Stock Option Plan

10.2Amendment to Non-Employee Directors’ Stock Option Agreements

10.3Amendment to Investment Technology Group, Inc. Directors’ Equity Subplan

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10.4Form of Stock Option Agreement between the Company and Non Employee Directors of the Company (2006)

10.5 Form of Restricted Share Agreement between the Company and Non Employee Directors of the Company (2006)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INVESTMENT TECHNOLOGY GROUP, INC.
Dated: August 11, 2006	By:	/s/ P. Mats Goebels
		P. Mats Goebels
		Managing Director, General Counsel, Secretary and
		Duly Authorized Signatory of Registrant

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1	Amendment to Amended and Restated Non-Employee Directors’ Stock Option Plan
10.2	Amendment to Non-Employee Directors’ Stock Option Agreements
10.3	Amendment to Investment Technology Group, Inc. Directors’ Equity Subplan
10.4	Form of Stock Option Agreement between the Company and Non Employee Directors of the Company (2006)
10.5	Form of Restricted Share Agreement between the Company and Non Employee Directors of the Company (2006)

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EX-10.1

Exhibit 10.1

AMENDMENT TO
AMENDED AND RESTATED
INVESTMENT TECHNOLOGY GROUP, INC.
NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

The Amended and Restated Investment Technology Group, Inc. Non-Employee Directors’ Stock Option Plan (the “Plan”) is amended, effective as of March 19, 2003, by adding the following sentence at the end of Section 6(c) thereof:

“Notwithstanding the foregoing, the Board of Directors of the Company may provide in an applicable Option agreement that the Option will become exercisable on a date (or dates) later than the date set forth above.”

EX-10.2

Exhibit 10.2

AMENDMENT TO NON-EMPLOYEE DIRECTORS’
STOCK OPTION AGREEMENTS

This Amendment to Non-Employee Directors’ Stock Option Agreements is entered into this ___ day of August, 2006 between Investment Technology Group, Inc., a Delaware corporation (the “Company”) and __________, a member of the Board of Directors of the Company (the “Participant”).

WHEREAS, pursuant to the Company’s Non-Employee Directors Stock Option Plan (the “Plan”), the Participant was granted, on ____________ and _____________, options to purchase __________ and _________ shares of the Company’s common stock, respectively (the “Options”); and

WHEREAS, the terms of the Options are set forth in stock option agreements dated ___________  and _______________(the “Stock Option Agreements”); and

WHEREAS, the parties hereto wish to amend the Stock Option Agreements to provide that the Options shall become immediately exercisable in full upon a Change in Control of the Company.

NOW THEREFORE, the parties agree as follows:

1.     The following is added at the end of the first sentence of Section 2.2 of the Stock Option Agreements, and Exhibit A attached hereto is also attached to the Stock Option Agreements.

“provided, however, that the Option will vest and become immediately exercisable in full upon a Change in Control (as defined in Exhibit A hereto).”

2.     Except as amended herein, the Stock Option Agreements shall continue in full force and effect.

3.     For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterpart.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

INVESTMENT TECHNOLOGY GROUP, INC.
By:
	Name
	Title
	Director

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EXHIBIT A

“Change in Control” means and shall be deemed to have occurred:

(i)           if any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Company or a Related Party, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 35% percent or more of the total voting power of all the then-outstanding Voting Securities; or

(ii)          if the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”), together with those who first become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of the date hereof or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or

(iii)         upon consummation of a merger, consolidation, recapitalization or reorganization of the Company, reverse split of any class of Voting Securities, or an acquisition of securities or assets by the Company other than (i) any such transaction in which the holders of outstanding Voting Securities immediately prior to the transaction receive (or retain), with respect to such Voting Securities, voting securities of the surviving or transferee entity representing more than 50 percent of the total voting power outstanding immediately after such transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction, or (ii) any such transaction which would result in a Related Party beneficially owning more than 50 percent of the voting securities of the surviving or transferee entity outstanding immediately after such transaction; or

(iv)        upon consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets, other than any such transaction which would result in a Related Party owning or acquiring more than 50 percent of the assets owned by the Company immediately prior to the transaction; or

(v)         if the stockholders of the Company approve a plan of complete liquidation of the Company.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, an estate, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

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“Related Party” means (a) a Subsidiary of the Company; (b) an employee or group of employees of the Company or any Subsidiary of the Company; (c) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned Subsidiary of the Company; or (d) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of Voting Securities.

“Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (a) if a corporation, fifty (50) percent or more of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or combination thereof; or (b) if a partnership, limited liability company, association or other business entity, fifty (50) percent or more of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes of this definition, a Person or Persons will be deemed to have a fifty (50) percent or more ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons are allocated fifty (50) percent or more of partnership, limited liability company, association or other business entity gains or losses or control the managing director or member or general partner of such partnership, limited liability company, association or other business entity.

“Voting Securities or Security” means any securities of the Company which carry the right to vote generally in the election of directors.

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EX-10.3

Exhibit 10.3

AMENDMENT TO
INVESTMENT TECHNOLOGY GROUP, INC.
DIRECTORS’ EQUITY SUBPLAN

The Investment Technology Group, Inc. Directors’ Equity Subplan (the “Subplan”) implemented under the 1994 Stock Option and Long-Term Incentive Plan, as amended and restated, of Investment Technology Group, Inc. is amended, effective August 7, 2006, as follows:

1.          The following is added at the end of the first sentence of Section 4(e) of the Subplan:

“; provided, however, that each Option will vest and become immediately exercisable in full upon a Change in Control (as defined in Exhibit A hereto)”

2.          The following is added at the end of the first sentence of Section 5 (c) of the Subplan:

“; provided, however, that the Restricted Share Units will become immediately vested in full upon a Change in Control (as defined in Exhibit A hereto).”

3.          Exhibit A attached hereto is also attached as Exhibit A to the Subplan.

EXHIBIT A

“Change in Control” means and shall be deemed to have occurred:

(i)           if any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Company or a Related Party, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 35% percent or more of the total voting power of all the then-outstanding Voting Securities; or

(ii)          if the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”), together with those who first become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of the date hereof or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or

(iii)         upon consummation of a merger, consolidation, recapitalization or reorganization of the Company, reverse split of any class of Voting Securities, or an acquisition of securities or assets by the Company other than (i) any such transaction in which the holders of outstanding Voting Securities immediately prior to the transaction receive (or retain), with respect to such Voting Securities, voting securities of the surviving or transferee entity representing more than 50 percent of the total voting power outstanding immediately after such transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction, or (ii) any such transaction which would result in a Related Party beneficially owning more than 50 percent of the voting securities of the surviving or transferee entity outstanding immediately after such transaction; or

(iv)        upon consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets, other than any such transaction which would result in a Related Party owning or acquiring more than 50 percent of the assets owned by the Company immediately prior to the transaction; or

(v)         if the stockholders of the Company approve a plan of complete liquidation of the Company.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, an estate, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

“Related Party” means (a) a Subsidiary of the Company; (b) an employee or group of employees of the Company or any Subsidiary of the Company; (c) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned

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Subsidiary of the Company; or (d) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of Voting Securities.

“Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (a) if a corporation, fifty (50) percent or more of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or combination thereof; or (b) if a partnership, limited liability company, association or other business entity, fifty (50) percent or more of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes of this definition, a Person or Persons will be deemed to have a fifty (50) percent or more ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons are allocated fifty (50) percent or more of partnership, limited liability company, association or other business entity gains or losses or control the managing director or member or general partner of such partnership, limited liability company, association or other business entity.

“Voting Securities or Security” means any securities of the Company which carry the right to vote generally in the election of directors.

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EX-10.4

Exhibit 10.4

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Agreement”) is entered into as of                    (“Grant Date”), among Investment Technology Group, Inc., a Delaware corporation (the “Company”) and ____________, a member of the Board of Directors of the Company (the “Participant”).

WHEREAS, the Board of Directors of the Company has approved the Company’s Non-Employee Directors’ Equity Subplan (the “Plan”), pursuant to which members of the Board of Directors who are not employed by the Company or by any subsidiary or parent of the Company are entitled to receive certain automatic grants of options to purchase shares of the Company’s Common Stock.

WHEREAS, the Participant is a member of the Board of Directors who is not employed by the Company or a subsidiary or parent of the Company and is not otherwise ineligible to participate in the Plan.

NOW THEREFORE, the parties agree as follows:

Section 1.  Grant of Option.

1.1  The Company hereby grants to the Participant a nonqualified stock option (the “Option”) to purchase        shares of the Company’s Common Stock (the “Stock”), for a price per share of $        (the “Option Price”).  The Option is intended to be a nonqualified stock option and shall not be treated as an incentive stock option under the provisions of the Code.

1.2.  The Option is granted under the Plan.  All of the terms and conditions of the Plan, as applicable to the award of stock options thereunder, are hereby incorporated by reference in this Agreement as though fully set forth herein.  Terms defined in the Plan but not in this Agreement shall have the meanings set forth in the Plan.  To the extent of any conflict between the provisions of this Agreement and those of the Plan, the provisions of the Plan applicable to the award of stock options thereunder shall govern.  The Participant acknowledges receipt of a copy of the Plan, accepts the Option subject to the terms and conditions set forth in the Plan and this Agreement and consents to and agrees to comply with such terms and conditions.

1.3.  This Option is granted for no consideration other than the services of the Participant as a member of the Board of Directors and the Participant’s agreements set forth herein.

1.4.  It is intended that the grant of the Option be exempt from the provisions of Section 16(b) of the Exchange Act pursuant to the provisions of Rule 16b-3.

Section 2.  Terms of Option.

2.1.  The Option (to the extent not earlier exercised or forfeited) will expire at 5:00 p.m., Eastern time on  {five years after the date of grant}; provided, however, if the Participant ceases to serve as a Director of the Company prior to such date, except as otherwise

provided in Section 2.5, the Option will expire as follows: (i) if the Participant ceases to serve as a Director of the Company due to death, disability or retirement at or after age 65, the date 12 months after such cessation of service, but in no event later than {five years after the date of grant}; and (ii) if the Participant ceases to serve as a Director of the Company for any reason other than due to death, disability or retirement at or after age 65, at the date 60 days after such cessation of service, but in no event later than  {five years after the date of grant}.

2.2.  The Option will vest and become exercisable in three equal annual installments, beginning on the first anniversary of the Grant Date; provided, however, that the Option will vest and become immediately exercisable in full upon a Change in Control (as defined in Section 2.6).  Except as otherwise provided in Section 2.5 below, in the event the Participant ceases to serve as a Director of the Company by reason of death or disability, the Option shall become vested and exercisable in full at the time of such termination.  In the event the Participant ceases to serve as a Director of the Company for any other reason not described or provided for herein, that portion of the Option that has not yet vested shall be forfeited.

2.3.  Written notice of exercise of the Option shall be given to the Secretary of the Company and shall be deemed to have been received either when delivered personally to the office of the Secretary or at 11:58 p.m. on the date of any U.S. Postal Service postmark on the notice, whichever is earlier.  Such notice shall be irrevocable and must be accompanied by the payment of the purchase price as provided in Section 2.4 below.  Upon the exercise of the Option, the Company will transfer or will cause to be issued a certificate or certificates for the Common Stock being purchased as promptly as practicable.

2.4.  The purchase price of Stock purchased by the Participant upon exercise of the Option (the “Option Shares”) shall be paid in full to the Company at the time of such exercise in cash (including by check) or by the surrender of Stock (including the surrender of Option Shares) or a combination thereof; provided, however, that Stock held for less than six months may be surrendered in payment or partial payment of the purchase price only with the approval of the Board of Directors.

2.5   If the Participant ceases serving as a Director and, immediately thereafter, he or she is employed by the Company or any subsidiary, then, solely for the purposes of Sections 2.1 and 2.2, Participant will not be deemed to have ceased service as a Director at that time, and his or her continued employment by the Company or any subsidiary will be deemed to be continued service as a Director.

2.6.  Definitions.

(i)           For the purposes hereof, “Change in Control” means and shall be deemed to have occurred:

(A)          if any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Company or a Related Party, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),

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directly or indirectly, of Voting Securities representing 35% percent or more of the total voting power of all the then-outstanding Voting Securities; or

(B) if the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”), together with those who first become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of the date hereof or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or

(C) upon consummation of a merger, consolidation, recapitalization or reorganization of the Company, reverse split of any class of Voting Securities, or an acquisition of securities or assets by the Company other than (i) any such transaction in which the holders of outstanding Voting Securities immediately prior to the transaction receive (or retain), with respect to such Voting Securities, voting securities of the surviving or transferee entity representing more than 50 percent of the total voting power outstanding immediately after such transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction, or (ii) any such transaction which would result in a Related Party beneficially owning more than 50 percent of the voting securities of the surviving or transferee entity outstanding immediately after such transaction; or

(D) upon consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets, other than any such transaction which would result in a Related Party owning or acquiring more than 50 percent of the assets owned by the Company immediately prior to the transaction; or

(E) if the stockholders of the Company approve a plan of complete liquidation of the Company.

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(ii)          “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, an estate, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

(iii)         “Related Party” means (a) a Subsidiary of the Company; (b) an employee or group of employees of the Company or any Subsidiary of the Company; (c) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned Subsidiary of the Company; or (d) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of Voting Securities.

(iv)        “Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (a) if a corporation, fifty (50) percent or more of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or combination thereof; or (b) if a partnership, limited liability company, association or other business entity, fifty (50) percent or more of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes of this definition, a Person or Persons will be deemed to have a fifty (50) percent or more ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons are allocated fifty (50) percent or more of partnership, limited liability company, association or other business entity gains or losses or control the managing director or member or general partner of such partnership, limited liability company, association or other business entity.

(v)         “Voting Securities or Security” means any securities of the Company which carry the right to vote generally in the election of directors.

Section 3.  Adjustments.  The number and kind of shares purchasable upon exercise of the Option, and other terms of the Option, shall be appropriately adjusted in accordance with Section 6(e) of the Plan, in order to prevent dilution or enlargement of the rights of the Participant.

Section 4.  Representations of Participant.  The Participant represents and warrants that the Participant is acquiring the Option for his own account and not with a view to distribution of this Option or the Option Shares. As a condition to the exercise of the Option, and in the event that the Option Shares have not yet been registered under the Securities Act of 1933, as amended (the “Act”) at the time they are issued, the Company may require the Participant to make any representation and/or warranty to the Company as may, in the judgment of counsel to the Company, be required under any applicable law or regulation, including but not limited to a representation and warranty that the Option Shares are being acquired only for investment and without any present intention to sell or distribute such shares

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if, in the opinion of counsel for the Company, such a representation is required under the Act or any other applicable law, regulation or rule of any governmental agency.

Section 5.   Nontransferability.  Neither the Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey the Option, which Option is, and all rights under this Agreement are, expressly declared to be unassignable and nontransferable, other than by will or under the laws of descent and distribution.  No part of the Option shall be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, nor be transferable by operation of law in the event of the Participant’s or any other person’s bankruptcy or insolvency.

Section 6.  Miscellaneous.

6.1  Neither the Participant nor any other person shall acquire by reason of the Option or the Option Shares any right in or title to any assets, funds or property of the Company whatsoever including, without limiting the generality of the foregoing, any specific funds or assets which the Company, in its sole discretion, may set aside in anticipation of a liability.  No trust shall be created in connection with or by the granting of the Option or the purchase of any Option Shares, and any benefits which become payable hereunder shall be paid from the general assets of the Company.  The Participant shall have only a contractual right to the amounts, if any, payable pursuant to this Agreement, unsecured by any asset of the Company or any of its affiliates.

6.2.  Shares issued pursuant to exercise of the Option shall be shares of Stock, the issuance of which is registered under the Act.

6.3.  The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Participant and the Company.

6.4.  In any action at law or in equity to enforce any of the provisions or rights under this Agreement, including any arbitration proceedings to enforce such provisions or rights, the unsuccessful party to such litigation or arbitration, as determined by the court in a final judgment or decree, or by the panel of arbitrators in its award, shall pay the successful party or parties all costs, expenses and reasonable attorneys’ fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys’ fees shall be included as part of the judgment.

6.5.  The Participant agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws.

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6.6.  For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts.

6.7.  This Agreement, together with the Plan, sets forth the entire agreement between the parties with reference to the subject matter hereof, and there are no agreements, understandings, warranties, or representations, written, express or implied, between them with respect to the Option other than as set forth herein or therein, all prior agreements, promises, representations and understandings relative thereto being herein merged.

6.8.  Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof.

6.9.  This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance.  Any such written instrument must be approved by the Board of Directors to be effective as against the Company.  The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same.  No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

6.10.  Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, addressed to it at 380 Madison Avenue, Fourth Floor, New York, New York 10017, Attention: Secretary, and, if to the Participant, addressed to him at the address set forth below his signature hereto, or to such other address of such party as that party may designate by written notice to the other.

6.11.  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.

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IN WITNESS WHEREOF, the parties hereto have executed this Stock Option Agreement as of the date first above written.

INVESTMENT TECHNOLOGY GROUP, INC.
By:
	Name: Raymond L. Killian, Jr.
	Title: Chairman
	{Insert Name of Director}
	Address for Notices:

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EX-10.5

Exhibit 10.5

INVESTMENT TECHNOLOGY GROUP, INC.
RESTRICTED SHARE AGREEMENT

THIS AGREEMENT, dated as of                 between Investment Technology Group, Inc. (the “Company”), a Delaware corporation, and                  , a member of the Board of Directors of the Company (the “Director”).

WHEREAS, the Director has been granted the following award under the Company’s Non-Employee Directors’ Equity Subplan (the “Plan”);

WHEREAS, the Director is not employed by the Company or a subsidiary or parent of the Company and is not otherwise ineligible to participate in the Plan.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the parties hereto agree as follows.

1.             Award of Shares.  Pursuant to the provisions of the Plan, the terms of which are incorporated herein by reference, the Director is hereby awarded  Restricted Shares (the “Award”), subject to the terms and conditions of the Plan and those herein set forth.  The Award is granted as of               (the “Date of Grant”).  Capitalized terms used herein and not defined shall have the meanings set forth in the Plan.  In the event of any conflict between this Agreement and the Plan, the Plan shall control.

2.             Terms and Conditions.  It is understood and agreed that the Award of Restricted Shares evidenced hereby is subject to the following terms and conditions:

(a) Vesting of Award.  Subject to the terms and conditions of this Agreement, this Award shall become vested in three equal annual installments, beginning on the first anniversary of the Date of Grant; provided, however, that the Award shall become immediately vested in full (i) upon a Change of Control of the Company or (ii) in the event that the Director ceases to serve as  Director of the Company due to the Director’s death or permanent and total disability (as defined in Section 22(e)(3) of the Code).  Unless otherwise provided by the Committee, all dividends and other amounts receivable in connection with any adjustments to the Common Stock under Section 5 of the 1994 Stock Option and Long-Term Incentive Plan, as incorporated within the Plan, shall be subject to the vesting schedule in this Section 2(a).

(b) Termination of Service.  Except as otherwise provided in Section 2(c) below, in the event that the Director ceases to serve as a Director for any reason not described or provided for in Section 2(a)(ii) above, that portion of the Award that has not yet vested shall be forfeited.

(c) Continued Service.  If the Director ceases serving as a Director and, immediately thereafter, he or she is employed by the Company or any subsidiary, then, solely for the purposes of Sections 2.(a) and (b), Director will not be deemed to have ceased service as a Director at that time, and his or her continued employment by the Company or any subsidiary will be deemed to be continued service as a Director.

(d)  Certificates.  Any certificate or other evidence of ownership issued in respect of Restricted Shares awarded hereunder shall be deposited with the Company, or its designee, together with, if requested by the Company, a stock power executed in blank by the Director, and shall bear a legend disclosing the restrictions on transferability imposed on such Restricted Shares by this Agreement (the “Restrictive Legend”).  Upon the vesting of Restricted Shares pursuant to Section 2(a) hereof, the certificates evidencing such vested Common Stock, not bearing the Restrictive Legend, shall be delivered to the Director or other evidence of vested Common Stock shall be provided to the Director.

(e)  Rights of a Stockholder.  Prior to the time a Restricted Share is fully vested hereunder, the Director shall have no right to transfer, pledge, hypothecate or otherwise encumber such Restricted Share.  During such period, the Director shall have all other rights of a stockholder, including, but not limited to, the right to vote and to receive dividends (subject to Section 2(a) hereof) at the time paid on such Restricted Shares.

(f)  Definitions.

(i)  For purposes hereof, “Change of Control” means and shall be deemed to have occurred:

(A)          if any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Company or a Related Party, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 35% percent or more of the total voting power of all the then-outstanding Voting Securities; or

(B) if the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”), together with those who first become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of the date hereof or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or

(C) upon consummation of a merger, consolidation, recapitalization or reorganization of the Company, reverse split of any class of Voting Securities, or an acquisition of securities or assets by the Company other than (i) any such transaction in which the holders of outstanding Voting Securities immediately prior to the transaction receive (or retain), with respect to such Voting Securities, voting securities of the surviving or transferee entity representing more than 50 percent of the total voting power

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outstanding immediately after such transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction, or (ii) any such transaction which would result in a Related Party beneficially owning more than 50 percent of the voting securities of the surviving or transferee entity outstanding immediately after such transaction; or

(D) upon consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets, other than any such transaction which would result in a Related Party owning or acquiring more than 50 percent of the assets owned by the Company immediately prior to the transaction; or

(E) if the stockholders of the Company approve a plan of complete liquidation of the Company.

(ii)       “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, an estate, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

(iii)      “Related Party” means (a) a Subsidiary of the Company; (b) an employee or group of employees of the Company or any Subsidiary of the Company; (c) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned Subsidiary of the Company; or (d) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of Voting Securities.

(iv)     “Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (a) if a corporation, fifty (50) percent or more of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or combination thereof; or (b) if a partnership, limited liability company, association or other business entity, fifty (50) percent or more of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes of this definition, a Person or Persons will be deemed to have a fifty (50) percent or more ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons are allocated fifty (50) percent or more of partnership, limited liability company, association or other business entity gains or losses or control the managing director or member or general partner of such partnership, limited liability company, association or other business entity.

(v)      “Voting Securities or Security” means any securities of the Company which carry the right to vote generally in the election of directors.

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3.             Transfer of Common Stock.  The Common Stock to be delivered hereunder, or any interest therein, may be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part, only in compliance with the terms, conditions and restrictions as set forth in the governing instruments of the Company, applicable federal and state securities laws or any other applicable laws or regulations and the terms and conditions hereof.

4.             Expenses of Issuance of Common Stock.  The issuance of stock certificates hereunder shall be without charge to the Director.  The Company shall pay, and indemnify the Director from and against any issuance, stamp or documentary taxes (other than transfer taxes) or charges imposed by any governmental body, agency or official (other than income taxes) by reason of the issuance of Common Stock.

5.             References.  References herein to rights and obligations of the Director shall apply, where appropriate, to the Director’s legal representative or estate without regard to whether specific reference to such legal representative or estate is contained in a particular provision of this Agreement.

6.             Notices.  Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or by courier, or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such changed address as such party may subsequently by similar process give notice of:

If to the Company:

Investment Technology Group, Inc.
380 Madison Avenue

New York, NY 10017

Attn.: General Counsel

If to the Director:

At the Director’s most recent address shown on the Company’s corporate records, or at any other address at which the Director may specify in a notice delivered to the Company in the manner set forth herein.

7.             Costs.  In any action at law or in equity to enforce any of the provisions or rights under this Agreement, including any arbitration proceedings to enforce such provisions or rights, the unsuccessful party to such litigation or arbitration, as determined by the court in a final judgment or decree, or by the panel of arbitrators in its award, shall pay the successful party or parties all costs, expenses and reasonable attorneys’ fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the

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successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys’ fees shall be included as part of the judgment.

8.             Further Assurances.  The Director agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws.

9.             Counterparts.  For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts.

10.           Governing Law.  This Agreement shall be construed and enforced in accordance with Section 6(h) of the Plan.

11.           Entire Agreement.  This Agreement, together with the Plan, sets forth the entire agreement between the parties with reference to the subject matter hereof, and there are no agreements, understandings, warranties, or representations, written, express, or implied, between them with respect to the Award other than as set forth herein or therein, all prior agreements, promises, representations and understandings relative thereto being herein merged.

12.           Amendment; Waiver.  This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance.  Any such written instrument must be approved by the Committee to be effective as against the Company.  The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same.  No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

13.           Severability.  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.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

Investment Technology Group, Inc.

By:

Name: Raymond L. Killian, Jr.

Title: CEO and President

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