<PAGE>

                                                                  Exhibit 10.4.7


                        INVESTMENT TECHNOLOGY GROUP, INC.
                           DEFERRED COMPENSATION PLAN


               The Investment Technology Group, Inc. Deferred Compensation Plan
is effective as of January 1, 1999 (the "Effective Date").

                                    SECTION 1

                                   DEFINITIONS


               When used herein, the following terms shall have the following
meanings:

               "Account" means the bookkeeping account maintained by the Company
for the Participant which is credited with Benefits and earnings (or debited to
reflect losses) attributable to the Investment Options selected by the
Participant in respect of his Benefits, and which is debited to reflect
distributions.

               "Account Balance" means the total amount credited to the
Participant's Account at any time.

               "Affiliate" means any company controlling, controlled by, or
under common control with, the Company.

               "Beneficiary" means the beneficiary or beneficiaries designated
in accordance with Section 9 to receive the amount, if any, payable upon the
death of the Participant.

               "Benefits" means the benefits described in Section 3.1 of the
Plan.

               "Board of Directors" means the Board of Directors of the Company.

               "Code" means the Internal Revenue Code of 1986, as amended.

               "Committee" means the Compensation Committee of the Board of
Directors.

               "Company" means Investment Technology Group, Inc. a Delaware
corporation, or any successor under the provisions of Section 10.1.

               "Investment Option" means the measure of investment return
pursuant to which Benefits credited to the Participant's Account shall be
further credited with earnings (or charged with losses) from the date such
Benefits are originally credited. The Investment Options available under the
Plan shall be determined from time to time by the Committee.


<PAGE>
                                      -2-


               "Participant" means Raymond L. Killian, Jr.

               "Plan" means the Investment Technology Group, Inc. Deferred
Compensation Plan as set forth herein and as amended from time to time.

               "Plan Year" means the 12-month period commencing each January 1
and ending on December 31.

                                    SECTION 2

                                  PARTICIPATION


               2.1. PARTICIPATION. The Participant shall participate in the
Plan, beginning as of the Effective Date, and no other person shall be entitled
to participate in the Plan.

                                    SECTION 3

                                    BENEFITS


               3.1. BENEFITS. Subject to the provisions of Section 5, for each
Plan Year the following Benefits shall be credited to the Account of the
Participant:

               (i) The amount of the Participant's benefits under the Jefferies
          Group Inc. Capital Accumulation Plan which were assumed by the
          Company, credited as of the date of the assumption;

               (ii) The amount of the Participant's bonus for calendar year 1998
          which was deferred by the Board of Directors, credited as of the date
          of deferral;

               (iii) Any other amount of salary, bonus or other incentive
          compensation payable to the Participant which is deferred by the Board
          of Directors or any committee thereof and directed by the Board of
          Directors or such committee to be payable pursuant to the terms of
          this Plan, credited as of the date of deferral; and

               (iv) earnings or losses attributable to the Investment Options
          for the Participant's Account Balance pursuant to Section 4 below.


<PAGE>
                                      -3-


                                    SECTION 4

                                    EARNINGS


               4.1. CREDITING OF EARNINGS. Earnings shall be credited (or losses
shall be charged) to a Participant's Account based on the Investment Option or
Options to which the Participant's Account has been allocated from the date the
Benefits are credited to the Participant's Account. Any amount distributed from
a Participant's Account shall be credited with earnings (or charged with losses)
through the day on which the distribution is made. The Investment Options shall
be determined and communicated to the Participant by the Committee; PROVIDED,
HOWEVER, that the Investment Options may not be changed retroactively. Earnings
will be credited quarterly or at such other intervals as the Committee shall
determine.

               4.2. SELECTION OF INVESTMENT OPTIONS. The amounts credited to the
Participant's Account under this Plan shall be allocated among the Investment
Options as elected in writing from time to time by the Participant. The
Participant may allocate and reallocate his Account Balance among the Investment
Options no more than once per calendar quarter by written notice from the
Participant to the Company not less than two weeks prior to the beginning of the
calendar quarter in which the change will be effective (or otherwise in
accordance with the procedures established from time to by the Committee).

                                    SECTION 5

                               VESTING AND PAYMENT


               5.1. VESTING. The Participant's Benefits will be vested in full
at all times.

               5.2. DISTRIBUTION OPTIONS. Except as otherwise provided in this
Section 5, Benefits shall be paid to the Participant, in accordance with his
election pursuant to Section 5.3 hereof, either:

               (i) in a single cash lump sum as soon as practicable after the
          first date on which the Participant is no longer employed by the
          Company or any subsidiary or Affiliate of the Company (with the
          payment including all deemed earnings or losses calculated in
          accordance with the Investment Options through such date); or


<PAGE>
                                      -4-


               (ii) in annual, monthly or quarterly cash installments for up to
          ten years following termination of the Participant's employment, as
          elected by the Participant in accordance with the provisions of
          Section 5.3. The first such installment shall be payable as soon as
          practicable following the first date on which the Participant is no
          longer employed by the Company or any subsidiary or Affiliate of the
          Company. The amount of each such installment shall be determined by
          dividing the Participant's Account Balance under the Plan at such date
          (including all deemed earnings or losses, calculated in accordance
          with the Investment Options, credited through such date) by the number
          of installments remaining to be paid.

               5.3. ELECTION. The Participant may elect to be paid under the
Plan in accordance with one of the alternatives set forth in Section 5.2 above.
Such an election must be made in the form designated by the Committee from time
to time, must be made within 30 days after the Participant first becomes
eligible to participate in the Plan, and shall be irrevocable once filed with
the Company; PROVIDED, HOWEVER, that the Participant may file a new election as
to the form of payment if such election is filed at least six months in advance
of termination of the Participant's employment. In the absence of a timely
election by the Participant pursuant to this Section 5.3, the Participant shall
be deemed to have elected to be paid in a lump sum at termination of employment
under Section 5.2(i).

               5.4. BENEFICIARY PAYMENTS. Upon the death of the Participant, the
Participant's Account Balance shall be paid in a single lump sum to the
Participant's Beneficiary as soon as practicable following the Participant's
death.

                                   SECTION 6

                               SOURCE OF PAYMENT

               6.1. GENERAL COMPANY FUNDS. All payments provided for under the
Plan shall be paid in cash from the general funds of the Company. To the extent
that the Participant or any Beneficiary acquires a right to receive payments
from the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.

                                    SECTION 7

                  ADMINISTRATION AND INTERPRETATION OF THE PLAN

               7.1. COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall have full discretion, power and authority to interpret,
construe and administer the Plan, to provide for claims review procedures, and
to review claims for benefits under the Plan. The Committee's interpretations
and constructions of the Plan and the actions taken


<PAGE>
                                      -5-


thereunder by the Committee shall be binding and conclusive on all persons and
for all purposes.

               7.2. ADVISORS. The Committee shall establish and maintain Plan
records and may arrange for the engagement of such accounting, actuarial or
legal advisors, who may be advisors to the Company, and make use of such agents
and clerical or other personnel as it shall require or may deem advisable for
purposes of the Plan. The Committee may rely upon the written opinion of such
advisors engaged by the Committee. The Committee may appoint a subcommittee to
assist it in carrying out its administrative duties under the Plan.

               7.3. HOLD HARMLESS. To the maximum extent permitted by law, no
member of the Board of Directors, the Committee or any subcommittee appointed
pursuant to Section 7.2 hereof shall be personally liable by reason of any
contract or other instrument executed by him or her or on his or her behalf in
his or her capacity as a member of the Board of Directors, the Committee or such
subcommittee nor for any mistake of judgment made in good faith, and the Company
shall indemnify and hold harmless, directly from its own assets (including the
proceeds of any insurance policy the premiums of which are paid from the
Company's own assets), each member of the Board of Directors, the Committee, and
any subcommittee appointed pursuant to Section 7.2 hereof and each other
officer, employee, or director of the Company to whom any duty or power relating
to the administration or interpretation of the Plan or to the management or
control of the assets of the Plan may be delegated or allocated, against any
cost or expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Company) arising out of any act
or omission to act in connection with the Plan unless arising out of such
person's own fraud or bad faith.

                                    SECTION 8

                            AMENDMENT AND TERMINATION


               8.1. AMENDMENT AND TERMINATION. The Plan may be amended,
suspended or terminated, in whole or in part, by the Board of Directors, but no
such action shall retroactively impair or otherwise adversely affect the rights
of any person to benefits under the Plan which have accrued prior to the date of
such action, as determined by the Board of Directors.


<PAGE>
                                      -6-


                                    SECTION 9

                          DESIGNATION OF BENEFICIARIES


               9.1. BENEFICIARY DESIGNATION. The Participant shall file with the
Company a written designation of one or more persons or trusts as the
Beneficiary who shall be entitled to receive the amount, if any, payable under
the Plan upon his death. The Participant may, from time to time, revoke or
change his Beneficiary designation without the consent of any prior Beneficiary
by filing a new designation with the Company. The last such designation received
by the Company shall be controlling; PROVIDED, HOWEVER, that no designation, or
change or revocation thereof, shall be effective unless received by the Company
prior to the Participant's death, and in no event shall it be effective as of a
date prior to such receipt.

               9.2. ESTATE. If no such Beneficiary designation is in effect at
the time of the Participant's death, or if no designated Beneficiary survives
the Participant, or if such designation conflicts with law, the Participant's
estate shall be deemed to have been designated his Beneficiary and shall receive
the payment of the amount, if any, payable under the Plan upon his death. If the
Committee is in doubt as to the right of any person to receive such amount, the
Committee may retain such amount until the rights thereto are determined, or the
Committee may pay such amount into any court of appropriate jurisdiction and
such payment shall be a complete discharge of the liability of the Plan and the
Company therefor.

                                   SECTION 10

                               GENERAL PROVISIONS


               10.1. BINDING ON SUCCESSORS. This Plan shall be binding upon and
inure to the benefit of the Company, its subsidiaries and Affiliates, and their
successors and assigns and the Participant, his Beneficiary or designees and his
estate. Nothing in this Plan shall preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of its assets to,
another corporation which assumes this Plan and all obligations of the Company
hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term "Company" shall refer to such other corporation and this
Plan shall continue in full force and effect.

               10.2. NO RIGHT OF EMPLOYMENT. Neither the Plan nor any action
taken hereunder shall be construed as giving to the Participant or any employee
the


<PAGE>
                                      -7-


right to be retained in the employ of the Company or any subsidiary or Affiliate
of the Company or as affecting the right of the Company or such a subsidiary or
Affiliate to dismiss the Participant with or without cause.

               10.3. WITHHOLDING. The Company may provide for the withholding
from any benefits payable under this Plan all Federal, state, city or other
taxes as shall be required pursuant to any law or governmental regulation or
ruling.

               10.4. NOT ASSIGNABLE. No right to any amount payable at any time
under the Plan may be assigned, transferred, pledged, or encumbered, either
voluntarily or by operation of law, except as provided expressly herein as to
payments to a Beneficiary or as may otherwise be required by law.

               10.5. INCAPACITY. If the Committee shall find that any person to
whom any amount is or was payable hereunder is unable to care for his or her
affairs because of illness or accident, or has died, then the Committee, if it
so elects, may direct that any payment due him or her or his or her estate
(unless a prior claim therefore has been made by a duly appointed legal
representative) or any part thereof be paid or applied for the benefit of such
person or to or for the benefit of his or her spouse, children or other
dependents, an institution maintaining or having custody of such person, any
other person deemed by the Committee to be a proper recipient on behalf of such
person otherwise entitled to payment, or any of them, in such manner and
proportion as the Committee may deem proper. Any such payment shall be in
complete discharge of the liability therefor of the Company, the Plan or the
Committee or any member, officer or employee thereof.

               10.6. COMMUNICATIONS TO COMMITTEE. All elections, designations,
requests, notices, instruction, and other communications from a Participant,
Beneficiary or other person to the Committee or the Company pursuant to the Plan
shall be in such form as is prescribed from time to time by the Committee, shall
be mailed by first-class mail or delivered to such location as shall be
specified by the Committee, and shall be deemed to have been given and delivered
only upon actual receipt thereof at such location.

               10.7. OTHER BENEFITS. Except as otherwise expressly provided, the
benefits payable under this Plan shall be in addition to all other benefits
provided for employees of the Company.

               10.8. CAPTIONS. The captions preceding the sections and articles
hereof have been inserted solely as a matter of convenience and in no way define
or limit the scope or intent of any provisions of the Plan.


<PAGE>
                                      -8-


               10.9. GOVERNING LAW. To the extent not preempted by Federal law,
this Plan shall be governed by the laws of the State of New York, without regard
to the principles of conflict of laws thereof, as from time to time in effect.