Investment Technology Group
Encyclopedia
Investment Technology Group, Inc. is a United States-based multinational
agency broker
age and financial market
s technology firm aimed at a hedge fund
and asset management clientele. One of the first suppliers of electronic trading
services, ITG launched the industry’s second anonymous electronic trade matching system
, POSIT, in 1987 (Instinet
Cross was launched in 1986). ITG has since expanded its business to include tools for portfolio management, pre-trade analysis
, order management, trade execution
, and post-trade evaluation.
ITG is headquartered in New York City and has in locations including Boston, Los Angeles, Toronto
, Chicago, London, Dublin, Tel Aviv
, Madrid
, Sydney, Melbourne, Hong Kong and Tokyo.
to institutional investor
s. That year, the company introduced POSIT, an anonymous electronic trade matching system
, in conjunction with Barra. POSIT remains among the most widely-used matching systems.
In 1990, ITG launched QuantEX, a high-end trading system for institutional traders integrating analytics, routing, and trade management. ITG began to provide clients with pre- and post-trade tools and analytics in 1992.
ITG became a publicly traded company
in 1994, listed on NASDAQ
. The ITG Australia office opened in 1997, giving regional investors POSIT equity crossing. The firm expanded into Europe in 1998. In 1999, ITG completed its spin-off from Jefferies, giving it full independence.
In 2000, the company’s Canada office opened. In 2002, ITG moved into the hedge fund
market by acquiring Hoenig, a provider of trade execution
and research
services to alternative investment fund
s. The firm then opened an office in Hong Kong.
ITG completed its purchase of Radical Corporation, a provider of direct access trading
to the institutional brokerage and hedge fund community, in 2004. The firm then opened a Japan office in 2005. The company moved to increase its transaction cost
analysis offering when it acquired Plexus Group from JPMorgan Chase in 2006. That same year, ITG acquired Macgregor, a provider of trade order management system
s, for $230 million. In 2007, it acquired RedSky Financial, a developer of futures
and options
trading technology.
In 2007 the company came under pressure from activist
hedge fund
D. E. Shaw to either sell off some of its assets or initiate a share buyback
. Shaw has since reduced its stake, citing satisfaction with ITG's RedSky purchase and an announced $50 million stock repurchase program.
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
agency broker
Broker
A broker is a party that arranges transactions between a buyer and a seller, and gets a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal...
age and financial market
Financial market
In economics, a financial market is a mechanism that allows people and entities to buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect supply and demand.Both general markets and...
s technology firm aimed at a hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
and asset management clientele. One of the first suppliers of electronic trading
Electronic trading
Electronic trading, sometimes called etrading, is a method of trading securities , foreign exchange or financial derivatives electronically...
services, ITG launched the industry’s second anonymous electronic trade matching system
Crossing network
A crossing network is an ATS that matches buy and sell orders electronically for execution without first routing the order to an exchange or other displayed market, such as an ECN , which displays a public quote...
, POSIT, in 1987 (Instinet
Instinet
Instinet is an institutional, agency-only broker. As such, it executes trades for roughly 1,500 “buyside” clients such as asset management firms, hedge funds, insurance companies, mutual funds and pension funds...
Cross was launched in 1986). ITG has since expanded its business to include tools for portfolio management, pre-trade analysis
Financial analyst
A financial analyst, securities analyst, research analyst, equity analyst, or investment analyst is a person who performs financial analysis for external or internal clients as a core part of the job.-Job:...
, order management, trade execution
Trader (finance)
A trader is someone in finance who buys and sells financial instruments such as stocks, bonds, commodities and derivatives. A broker who simply fills buy or sell orders is not a trader, as they are merely executing instructions given to them. According to the Wall Street Journal in 2004, a managing...
, and post-trade evaluation.
ITG is headquartered in New York City and has in locations including Boston, Los Angeles, Toronto
Toronto
Toronto is the provincial capital of Ontario and the largest city in Canada. It is located in Southern Ontario on the northwestern shore of Lake Ontario. A relatively modern city, Toronto's history dates back to the late-18th century, when its land was first purchased by the British monarchy from...
, Chicago, London, Dublin, Tel Aviv
Tel Aviv
Tel Aviv , officially Tel Aviv-Yafo , is the second most populous city in Israel, with a population of 404,400 on a land area of . The city is located on the Israeli Mediterranean coastline in west-central Israel. It is the largest and most populous city in the metropolitan area of Gush Dan, with...
, Madrid
Madrid
Madrid is the capital and largest city of Spain. The population of the city is roughly 3.3 million and the entire population of the Madrid metropolitan area is calculated to be 6.271 million. It is the third largest city in the European Union, after London and Berlin, and its metropolitan...
, Sydney, Melbourne, Hong Kong and Tokyo.
History
ITG was founded in 1987 as a division of Jefferies to provide automated equity tradingElectronic trading
Electronic trading, sometimes called etrading, is a method of trading securities , foreign exchange or financial derivatives electronically...
to institutional investor
Institutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets...
s. That year, the company introduced POSIT, an anonymous electronic trade matching system
Crossing network
A crossing network is an ATS that matches buy and sell orders electronically for execution without first routing the order to an exchange or other displayed market, such as an ECN , which displays a public quote...
, in conjunction with Barra. POSIT remains among the most widely-used matching systems.
In 1990, ITG launched QuantEX, a high-end trading system for institutional traders integrating analytics, routing, and trade management. ITG began to provide clients with pre- and post-trade tools and analytics in 1992.
ITG became a publicly traded company
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
in 1994, listed on NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
. The ITG Australia office opened in 1997, giving regional investors POSIT equity crossing. The firm expanded into Europe in 1998. In 1999, ITG completed its spin-off from Jefferies, giving it full independence.
In 2000, the company’s Canada office opened. In 2002, ITG moved into the hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
market by acquiring Hoenig, a provider of trade execution
Trader (finance)
A trader is someone in finance who buys and sells financial instruments such as stocks, bonds, commodities and derivatives. A broker who simply fills buy or sell orders is not a trader, as they are merely executing instructions given to them. According to the Wall Street Journal in 2004, a managing...
and research
Securities research
Securities research is a discipline within the financial services industry. Securities research professionals are known most generally as "analysts," "research analysts," or "securities analysts;" all the foregoing terms are synonymous...
services to alternative investment fund
Collective investment scheme
A collective investment scheme is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group...
s. The firm then opened an office in Hong Kong.
ITG completed its purchase of Radical Corporation, a provider of direct access trading
Direct access trading
Direct access trading is a technology which allows stock traders to trade directly with market makers or specialists, rather than trading through stock brokers....
to the institutional brokerage and hedge fund community, in 2004. The firm then opened a Japan office in 2005. The company moved to increase its transaction cost
Transaction cost
In economics and related disciplines, a transaction cost is a cost incurred in making an economic exchange . For example, most people, when buying or selling a stock, must pay a commission to their broker; that commission is a transaction cost of doing the stock deal...
analysis offering when it acquired Plexus Group from JPMorgan Chase in 2006. That same year, ITG acquired Macgregor, a provider of trade order management system
Order management system
An order management system, or OMS, is a computer software system used in a number of industries for order entry and processing.- Electronic commerce and catalogers :...
s, for $230 million. In 2007, it acquired RedSky Financial, a developer of futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
and options
Option (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...
trading technology.
In 2007 the company came under pressure from activist
Activist shareholder
An activist shareholder uses an equity stake in a corporation to put public pressure on its management. The goals of activist shareholders range from financial to non-financial...
hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
D. E. Shaw to either sell off some of its assets or initiate a share buyback
Share repurchase
Stock repurchase is the reacquisition by a company of its own stock. In some countries, including the U.S. and the UK, a corporation can repurchase its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity; that is, cash is exchanged...
. Shaw has since reduced its stake, citing satisfaction with ITG's RedSky purchase and an announced $50 million stock repurchase program.
Offerings
ITG's offerings span the following capabilities:- Portfolio Management – tools to assist portfolio managers in optimizing investment performance as well as maintaining complianceCompliance (regulation)In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Regulatory compliance describes the goal that corporations or public agencies aspire to in their efforts to ensure that personnel are aware of and take steps to comply with relevant laws and...
with global regulatory, client and firm mandates. - Pre-Trade – tools to manage trading riskRiskRisk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
, increase efficiency, and improve performance. - Trade – electronic trading services which include broker-neutral, multi-asset execution management systems (EMS) and order management systemOrder management systemAn order management system, or OMS, is a computer software system used in a number of industries for order entry and processing.- Electronic commerce and catalogers :...
s (OMS), algorithms and routers, POSIT crossing, FIX connectivity, and traditional desk services for the trading of single stocks, lists and programs, international securities, and specialized hedge fundHedge fundA hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
services. - Post-Trade – post-trade processing tools for trade matching, settlement notification and clearing and analysis tools for trading cost evaluation.
- Trading Research - Transaction cost analysis and consulting.
- Investment Research - Fundamental, data-driven equity research.
- Market Research - Healthcare and telecommunications primary research.
- POSIT Alert – industry-leading tool that alerts traders to block crossing opportunities and delivers them directly to desktops from order flow in POSIT® and ITG Algorithms.