Exhibit
10.1


INVESTMENT TECHNOLOGY GROUP, INC.


STOCK
OPTION AGREEMENT


THIS STOCK OPTION
AGREEMENT (the “Agreement”) is entered into as of October 4, 2006, between
INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the “Company”) and
Robert C. Gasser, an employee of the Company (“Employee”).


WHEREAS,
the parties have entered into an Employment Agreement (the “Employment
Agreement”) and Employee has this date commenced employment with the Company.


WHEREAS, pursuant to the
Employment Agreement, the Employee is entitled to receive a non-qualified stock
option to purchase shares of the Company’s common stock (the “Common
Stock”).


WHEREAS, the Company desires
to grant the Employee this option under the Investment Technology Group, Inc.
1994 Stock Option and Long-term Incentive Plan, as Amended and Restated (the “Plan”),
in order to satisfy its obligation under the Employment Agreement.


WHEREAS, the Employee agrees
that this option grant satisfies the Company’s obligation under the Employment
Agreement.


NOW THEREFORE, the
parties agree as follows:


1.1.          The Company has granted to the
Employee a nonqualified stock option (the “Option”) to purchase 69,856 shares
of Common Stock, for a price per share equal to $44.22 per share (the “Option
Price”).  The date of grant of the Option
is October 4, 2006 (“Grant Date”).  This
Option is intended to be a nonqualified stock option and shall not be treated
as an incentive stock option under the provisions of the Internal Revenue Code
of 1986, as amended.


1.2.          The Option is granted under Section
6.1 of the Plan.  All of the terms and conditions
of the Plan 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 shall govern.  Employee
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.



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1.3.          This Option is granted for no
consideration other than the services of Employee and Employee’s agreements set
forth herein.


1.4.          The grant of the Option is exempt from
the provisions of Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange
Act”) pursuant to the provisions of Rule l6b-3, all of the requirements of
which have been satisfied.


2.1.          The Option shall become exercisable on the following dates, if the Employee
is employed by, or providing service to the Company (including all
subsidiaries) on the applicable date:


	
  Date

  	
   

  	
  Shares for Which the

  Option is Exercisable

  	
   

  
	
  First
  Anniversary of Date of Grant

  	
   

  	
  33 1/3%

  	
   

  
	
  Second
  Anniversary of Date of Grant

  	
   

  	
  33 1/3%

  	
   

  
	
  Third Anniversary of
  Date of Grant

  	
   

  	
  33 1/3%

  	
   

  



 


The exercisability of the Option is cumulative, but shall not exceed
100% of the shares subject to the Option. 
If the foregoing schedule would produce fractional shares, the number of
shares for which the Option becomes exercisable shall be rounded down to the
nearest whole share.


2.2.          In the event of termination of
Employee’s employment with the Company (including all subsidiaries) by reason
of death or Permanent Disability (as defined in the Employment Agreement), the
Option shall become vested and exercisable in full at the time of such
termination and shall remain exercisable until the earlier of the one-year
period following the termination of employment or the expiration of the Option
term.


2.3           In the event of
termination of Employee’s employment with the Company (including all
subsidiaries) for Good Reason (as defined in the Employment Agreement) or not
for Cause (as defined in the Employment Agreement) prior to a Change in Control
(as defined in the Employment Agreement) and Employee executes (and does not
revoke) a Release (as defined in the Employment Agreement), (a) the vested
portion of the Option as of the termination date shall remain exercisable until
the earlier of the first anniversary of the termination date or the expiration
of the option term and (b) the unvested portion of the Option as of the
termination date shall continue to vest as if Employee had remained employed by
the Company through the first anniversary of the termination date and any
portion of the Option that vests during the one-year period following the
termination date shall remain exercisable until the earlier of the one-year
period following the applicable vesting date or the expiration of the Option
term.


2.4           In the event of a Change in Control
at a time when the Employee is an employee of the Company (including all
subsidiaries), the Option will be exercisable until 5:00 p.m., Eastern time, on
the fifth anniversary of the Grant Date, without regard to whether the



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Employee’s
employment with the Company or any of its subsidiaries continues after such
Change in Control.


2.5           In the event of termination of
Employee’s employment with the Company (including all subsidiaries) for any
reason other than those outlined in Sections 2.2 or 2.3, the vested portion of
the Option as of the termination date shall remain exercisable until the earlier
of 60 days after the date of such termination or the expiration of the Option
term and any unvested portion of the Option as of the termination date shall be
forfeited.


2.6.          The Option shall have a term of five
years from the Grant Date and shall terminate at the expiration of that period,
unless it is terminated at an earlier date pursuant to the provisions of this
Agreement or the Plan.  Notwithstanding
anything in this Agreement to the contrary, in no event may the Option be
exercised after the date that is immediately before the fifth anniversary of
the Grant Date.


3.1.          To the extent the Option is
exercisable under the provisions of Section 2 hereof, the Option may be
exercised by giving written notice of exercise of the Option to the Secretary
of the Company, and it 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 (the “Exercise
Date”).  Such notice shall be irrevocable
and must be accompanied by the payment of the purchase price as provided in Section
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.


4.1.          The purchase price of Common Stock
purchased by the Employee 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 Common Stock of the Company or a
combination thereof, in accordance with Section 9.3 of the Plan, provided that
Common Stock held for less than six months may be surrendered only with the
approval of the Committee.


5.1.          In the event of circumstances
described in Section 5.5. of the Plan, the number and kind of shares purchasable
upon exercise of the Option, and other terms of the Option, shall be
appropriately adjusted by the Committee in accordance with Section 5.5 of the
Plan, in order to prevent dilution or enlargement of the rights of the Employee.


6.1.          The Employee represents and warrants
that the Employee is acquiring the Option for his/her 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 Employee to make any representation and/or warranty to
the Company as may, in the judgment of counsel to the Company, be



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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 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.


7.1.          Neither the Employee 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 or any amounts payable pursuant to the provisions of this Agreement,
which Option and amounts are, 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 or such amounts payable shall be subject to seizure
or sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by the Employee or any other person, nor be transferable by
operation of law in the event of the Employee’s or any other person’s
bankruptcy or insolvency.


8.1.          Neither the Employee 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 Employee 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.


9.1.          Nothing herein will limit the Company’s
right to issue Common Stock, or options or other rights to purchase Common
Stock, to its employees, subject to vesting, expiration and other terms and
conditions deemed appropriate by the Company and its affiliates.


10.1.        The Employee authorizes the Company to
withhold, in accordance with any applicable law, from any compensation payable
to him/her any taxes required to be withheld by federal, state or local law
upon the issuance of Option Shares or the payment of money pursuant to the
exercise of the Option.  The Employee may
elect to have the Company withhold Option Shares to pay any applicable
withholding taxes resulting from the exercise of the Option, in accordance with
any rules or regulations of the Committee then in effect.


11.1.        Shares issued pursuant to exercise of
the Options shall be shares of Common Stock, the issuance of which is
registered under the Act.


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



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13.1.        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.


14.1.        The Employee 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.


15.1.        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.


16.1.        This Agreement shall be construed and
enforced in accordance with Section 10 of the Plan.


17.1.        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.


18.1.        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.


19.1.        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.



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20.1.        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,
New York, New York 10017, Attn: General Counsel, and, if to the Employee,
addressed to him/her at the address set forth in his/her offer letter, or to
such other address of such party as that party may designate by written notice
to the other.


21.1.        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.


22.1         Neither this Agreement nor any action
taken hereunder shall be construed as giving Employee the right to be retained
in the employ of the Company (or any of its subsidiaries) nor shall it
interfere in any way with the right of the Company (or any of its subsidiaries)
to terminate Employee’s employment at any time.


[SIGNATURE PAGE FOLLOWS]



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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:

  	
  /s/ Raymond L. Killian, Jr.

  	
   

  
	
   

  	
  Name:

  	
  Raymond L. Killian, Jr.

  
	
   

  	
  Title:

  	
  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert C.
  Gasser

  	
   

  
	
   

  	
  Robert C. Gasser

  
						



 



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