8-K

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 2, 2007
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 incorporation or organization)	(Commission file number)	(I.R.S. Employer Identification No.)

380 Madison Avenue

New York, New York 10017

(Address of principal executive offices)

(212) 588-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

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:

oWritten communication pursuant to Rule 425 under the Securities Act (17. CFR 230.425)

oSoliciting material pursuant to Rule 14a-2 under the Exchange Act (17. CFR 240.14a-12)

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

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

Item 2.02 Results of Operations and Financial Condition

On August 2, 2007 Investment Technology Group, Inc. issued a press release announcing financial results for the quarter ended June 30, 2007.  A copy of this press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

99.1         Press release issued by Investment Technology Group, Inc. on August 2, 2007.

SIGNATURE

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.
		(Registrant)
Date:	August 2, 2007	By:	/s/ Howard C. Naphtali
			Howard C. Naphtali
			Chief Financial Officer and
			Duly Authorized Signatory of Registrant

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release by Investment Technology Group, Inc., dated as of August 2, 2007.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Investment Technology Group Reports
Second Quarter 2007 Results

Reports Record Operating Results for Non-US Operations

NEW YORK, NY, August 2, 2007 — Investment Technology Group, Inc. (NYSE: ITG), a leading provider of technology-based trading services and transaction research, today announced that for the second quarter ended June 30, 2007, ITG’s total revenues were $175.7 million, compared to total revenues of $153.6 million for the second quarter of 2006. ITG’s net income was $27.2 million, compared to net income of $27.9 million in the second quarter of 2006, when ITG had a one-time after-tax gain of $3.2 million. Earnings were $0.60 per diluted share, versus earnings of $0.63 per diluted share including the aforementioned one-time gain in the second quarter of last year.

Excluding the impact of non-recurring items in last year’s results related to the sale of our Canadian joint venture, KTG Technologies Corp., second quarter 2007 pro forma operating revenues of $175.7 million increased by 19 percent from second quarter 2006 pro forma operating revenues of $148.1 million. ITG’s pro forma operating income was $27.2 million, up 11 percent from pro forma operating net income of $24.6 million in the second quarter of 2006. In the second quarter of 2007, pro forma operating earnings per share of $0.60 increased seven percent versus pro forma operating earnings of $0.56 per diluted share in the second quarter of last year. Pro forma pre-tax operating margins in the second quarter of 2007 were 26.5 percent, down from 28.2 percent in the second quarter of 2006.

“In the second quarter of 2007, ITG maintained steady US domestic volumes despite a quarter characterized by a volatile equity market,” said Bob Gasser, ITG’s Chief Executive

Officer and President. “We began realizing benefits from our self-clearing initiative, and announced the addition of multi-asset class capabilities with the acquisition of RedSky.”

ITG’s non-U.S. operating revenues were a record $42.2 million in the second quarter of 2007, 50 percent higher than revenues of $28.2 million in the second quarter of 2006. Excluding the impact of non-recurring items in last year’s second quarter results, international pre-tax income increased 161 percent in the second quarter of 2007 to $5.8 million.

“ITG’s growth continued in the second quarter, due in part to the record performance of our non-US businesses, where our momentum with clients is building due to our expanded product suite,” said Mr. Gasser. “We have added products in Canada, Europe and Asia as we move forward with our globalization strategy.”

Year to Date Results

For the six months ended June 30, 2007, revenues increased 15 percent from the prior year period to $344.6 million, net income decreased four percent to $51.9 million and diluted earnings per share decreased six percent to $1.16.  Excluding non-recurring items in 2006, pro forma operating revenues increased 20 percent, pro forma net operating income increased 13 percent and pro forma diluted earnings per share increased 10 percent.

Conference Call

ITG has scheduled a conference call today at 11:00 a.m. ET to discuss second quarter results. Those wishing to listen to the call should dial 1-866-831-6272 and enter the pass code 39020316 at least 10 minutes prior to the start of the call to ensure connection.  The conference call and webcast will also be accessible through ITG’s web site at http://www.itg.com.  For those unable to listen to the live broadcast of the call, a replay will be available for one week by dialing 1-888-286-8010 and entering the pass code 47858783. The replay will be available starting approximately two hours after the completion of the conference call.

ABOUT INVESTMENT TECHNOLOGY GROUP

Investment Technology Group, Inc. (NYSE:ITG), is a specialized agency brokerage and technology firm that partners with clients globally to provide innovative solutions spanning the entire investment

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 process.  A pioneer in electronic trading, ITG has a unique approach that combines pre-trade analysis, order management, trade execution, and post-trade evaluation to provide clients with continuous improvements in trading and cost efficiency.  The firm is headquartered in New York with offices in North America, Europe and the Asia Pacific regions. For more information on ITG, please visit www.itg.com.

In addition to historical information, this press release may contain “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995, that reflect management’s expectations for the future. A variety of important factors could cause results to differ materially from such statements. These factors include the company’s ability to achieve expected future levels of sales; the actions of both current and potential new competitors; rapid changes in technology; financial market volatility; general economic conditions in the United States and elsewhere; evolving industry regulation; cash flows into or redemption from equity funds; effects of inflation; customer trading patterns; and new products and services. These and other risks are described in greater detail in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and other documents filed with the Securities and Exchange Commission and available on the company’s web site.

Investor and Media Relations Contact:

Alicia Curran

(212) 444-6130

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
Revenues:
Commissions	$	148,603	$	125,904	$	292,116	$	243,482
Recurring	20,951		18,206		40,133		35,870
Other	6,097		9,449		12,330		20,449
Total revenues	175,651		153,559		344,579		299,801
Expenses:
Compensation and employee benefits	59,630		50,749		118,145		102,726
Transaction processing	24,330		19,738		49,656		37,581
Occupancy and equipment	11,220		9,586		22,440		18,069
Telecommunications and data processing services	9,900		7,702		19,034		14,597
Other general and administrative	21,353		15,347		40,959		29,255
Interest expense	2,664		3,157		5,449		6,180
Total expenses	129,097		106,279		255,683		208,408
Income before income tax expense	46,554		47,280		88,896		91,393
Income tax expense	19,343		19,428		36,975		37,134
Net income	$	27,211	$	27,852	$	51,921	$	54,259
Earnings per share:
Basic	$	0.61	$	0.64	$	1.17	$	1.26
Diluted	$	0.60	$	0.63	$	1.16	$	1.23
Basic weighted average number of common shares outstanding	44,338		43,304		44,207		43,153
Diluted weighted average number of common shares outstanding	45,047		44,265		44,940		44,034

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INVESTMENT TECHNOLOGY GROUP, INC.
Consolidated Statements of Financial Condition
(In thousands, except share amounts)

	June 30, 2007			December 31, 2006 (1)
	(unaudited)
Assets
Cash and cash equivalents	$	296,339		$	321,298
Cash restricted or segregated under regulations and other	27,612			13,610
Securities owned, at fair value	14,436			6,540
Receivables from brokers, dealers and clearing organizations	679,702			196,227
Receivables from customers	916,417			393,833
Investments	7,163			9,299
Premises and equipment, net	38,952			34,740
Capitalized software, net	43,122			32,203
Goodwill	406,410			405,754
Other intangibles, net	28,195			29,366
Deferred taxes	2,277			7,426
Other assets	10,702			12,016
Total assets	$	2,471,327		$	1,462,312
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	159,030		$	152,049
Short-term bank loans	74,000			—
Payables to brokers, dealers and clearing organizations	509,376			118,251
Payables to customers	868,137			414,794
Securities sold, not yet purchased, at fair value	13,338			137
Income taxes payable	15,123			8,147
Deferred taxes	2,783			—
Long term debt	146,700			160,900
Total liabilities	1,788,487			854,278
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; 51,472,053 and 51,443,560 shares issued at June 30, 2007 and December 31, 2006, respectively and 44,378,364 and 43,809,993 shares outstanding at June 30, 2007 and December 31, 2006, respectively	515			514
Additional paid-in capital	206,350			198,419
Retained earnings	592,491			540,570
Common stock held in treasury, at cost; 7,093,689 and 7,633,567 shares at June 30, 2007 and December 31, 2006, respectively	(133,977		)	(144,173		)
Accumulated other comprehensive income (net of tax)	17,461			12,704
Total stockholders’ equity	682,840			608,034
Total liabilities and stockholders’ equity	$	2,471,327		$	1,462,312

(1) Certain reclassifications and format changes have been made to prior period amounts to conform to the current period presentation, as a result of ITG Inc. commencing self-clearing of equity trades in May 2007.  Receivables previously included in receivables from brokers, dealers and others are now divided among the following two accounts: (i) receivables from brokers, dealers and clearing organizations and (ii) receivables from customers.  Similarly, payables previously included in payables to brokers, dealers and others are now divided among the following two accounts: (i) payables to brokers, dealers and clearing organizations and (ii) payables to customers.  Additionally, certain payables to brokers for clearance and execution costs previously included in accounts payable and accrued expense were reclassified to payables to brokers, dealers and clearing organizations.

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INVESTMENT TECHNOLOGY GROUP, INC.

Reconciliation of US GAAP Results to Pro Forma Operating Results (unaudited)

In evaluating the Company’s financial performance, management reviews results from operations which excludes non-operating or one-time charges.  Pro forma earnings per share is a non-GAAP (generally accepted accounting principles) performance measure, but the Company believes that it is useful to assist investors in gaining an understanding of the trends and operating results for the Company’s core businesses. Pro forma earnings per share should be viewed in addition to, and not in lieu of, the Company’s reported results under US GAAP.

The following is a reconciliation of US GAAP results to pro forma results for the periods presented (in thousands except per share amounts):

	Three Months Ended June 30,					Six Months Ended June 30,
	2007		2006			2007		2006
Total revenues	$	175,651	$	153,559		$	344,579	$	299,801
Less:
Non-recurring revenue (1)	—		(5,453		)	—		(13,230		)
Pro forma operating revenues	175,651		148,106			344,579		286,571
Total expenses	129,097		106,279			255,683		208,408
Income before income tax expense	46,554		47,280			88,896		91,393
Effect of pro forma adjustments	—		(5,453		)	—		(13,230		)
Pro forma operating income before income tax expense	46,554		41,827			88,896		78,163
Income tax expense	19,343		19,428			36,975		37,134
Tax effect of pro forma adjustments	—		(2,219		)	—		(5,111		)
Pro forma operating income tax expense	19,343		17,209			36,975		32,023
Net income	27,211		27,852			51,921		54,259
Net effect of pro forma adjustments	—		(3,234		)	—		(8,119		)
Pro forma operating net income	$	27,211	$	24,618		$	51,921	$	46,140
Diluted earnings per share	$	0.60	$	0.63		$	1.16	$	1.23
Net effect of pro forma adjustments	—		(0.07		)	—		(0.18		)
Pro forma diluted operating earnings per share	$	0.60	$	0.56		$	1.16	$	1.05

Notes:

(1)  In 2006, non-recurring revenues relate to:

a)  our ownership of two memberships on the New York Stock Exchange (“NYSE”) that  as part of their merger with Archipelago Holdings, Inc. (“Archipelago”) were combined under a new holding company named NYSE Group, Inc. in which  each NYSE member received compensation consisting of cash and restricted shares of NYSE Group, Inc. common stock.  Accordingly, consideration received for our memberships in First Quarter 2006 consisted of 157,202 restricted shares of NYSE Group, Inc. common stock resulting in gains of approximately $6.9 million in cash and approximately $1.0 million in dividends, which was recorded as dividend income.  In Second Quarter 2006, we were able to sell a portion of the shares received and recorded an additional gain of approximately $80,000, and

b)  our sale in Second Quarter 2006 of our remaining interests in a Canadian joint venture that we entered into in 2004 with IRESS Market Technology Limited (“IRESS”), to IRESS resulting in a gain of $5.4 million.

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