Exhibit 10.1

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (“ Agreement ”) dated as of September 15, 2006 between Investment Technology Group, Inc., a Delaware corporation (the “ Company ”), and Robert C. Gasser (the “ Executive ”).

The parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

SECTION 1.01.  Definitions .  For purposes of this Agreement, the following terms have the meanings set forth below:

“ Board ” mean the Board of Directors of the Company.

“ Cause ” means the occurrence of any one or more of the following: (i) the Executive’s willful failure to substantially perform his duties with the Company (other than any such failure resulting from the Executive’s Disability), after a written demand for substantial performance is delivered to the Executive that specifically identifies the manner in which the Company believes that the Executive has not substantially performed his duties, and the Executive has failed to remedy the situation within fifteen (15) business days of such written notice from the Company; (ii) gross negligence in the performance of the Executive’s duties which results in material financial harm to the Company; (iii) the Executive’s conviction of, or plea of guilty or nolo contendere to, any crime involving the personal enrichment of the Executive at the expense of the Company, or any felony; (iv) the Executive’s willful engagement in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise; or (v) the Executive’s willful violation of any material provision of the Company’s code of conduct.  For purposes of this definition, no act or failure to act, on the part of the Executive, shall be considered “ willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that his action or omission was in the best interests of the Company, or the Executive is grossly negligent.

“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 thirty-five percent (35%) 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, 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 (A) 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 fifty percent (50%) 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 (B) any such transaction which would result in a Related Party beneficially owning more than fifty percent (50%)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 fifty percent (50%) 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.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Confidential Information ” means information that is not generally known to the public and that was or is used, developed or obtained by the Company or its Subsidiaries in connection with their business and which constitutes trade secrets or information which the Company has made reasonable efforts to protect.  It shall not include information (i) required to be disclosed by court or administrative order; (ii) lawfully obtainable from other sources or which is in the public domain through no fault of the Executive; or (iii) the disclosure of which is consented to in writing by the Company.

“ Good Reason ” means as follows:

(a)           Prior to a Change in Control, “ Good Reason ” means, without the Executive’s written consent, (i) the material diminution of the Executive’s duties, responsibilities, powers or authorities, including the assignment of any duties and responsibilities inconsistent with his position as President and Chief Executive Officer; (ii) the removal of the Executive from his office as Chief Executive Officer; (iii) the failure to obtain a written assumption of the employment agreement by any person acquiring all or substantially all of the assets of the Company, whether effected by purchase of shares, purchase of assets, merger or otherwise, prior to such acquisition; (iv) a reduction by the Company of the Executive’s Base Salary in effect on the date hereof, or as the same shall be increased from time to time, unless such reduction applies on substantially the same percentage basis to all executive officers of the Company generally, (v) written notice to Executive from the Company to stop the automatic renewal of the Employment Period pursuant to Section 2.01 hereof, (vi) breach by the Company of its material obligations under the terms of this Agreement, or (vii) relocation of the Executive’s principal place of business to a location more than fifty (50) miles from its current location;

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provided , however, that for any of the foregoing to constitute Good Reason, the Executive must provide written notification of his intention to resign within sixty (60) days after the Executive knows or has reason to know of the occurrence of any such event, and, except in the case of (ii) and (v) above for which no opportunity to cure need be given, the Company shall have had thirty (30) business days from the date of receipt of such notice to effect a cure of the condition constituting Good Reason and shall have failed to do so. In the event of a cure of such event by the Company, such event shall no longer constitute Good Reason.

(b)           On or after a Change in Control, “ Good Reason” means, without the Executive’s express written consent, the occurrence on or after a Change in Control of the Company and any one or more of the following:

(i)            (A) the removal of the Executive from his office as Chief Executive Officer, or (B) a material reduction of the Executive’s primary functional authorities, duties, or responsibilities as President and Chief Executive Officer of the Company from those in effect immediately prior to the Change in Control or the assignment of duties to the Executive inconsistent with those of President and Chief Executive Officer of the Company, other than an insubstantial and inadvertent reduction or assignment that is remedied by the Company promptly after receipt of notice thereof given by the Executive; provided, however, that any reduction in authorities, duties or responsibilities resulting merely from the acquisition of the Company and its existence as a subsidiary or division of another entity shall not be sufficient to constitute Good Reason;

(ii)           the Company’s requiring the Executive to be based at a location in excess of fifty (50) miles from the location of the Executive’s principal job location or office immediately prior to the Change in Control;

(iii)          a reduction by the Company of the Executive’s Base Salary in effect on the date hereof, or as the same shall be increased from time to time, unless such reduction applies on substantially the same percentage basis to all employees of the Company generally; provided , however, that a reduction in the Executive’s Target Annual Compensation (as defined in the Company’s standard Change in Control Agreement) in excess of ten percent (10%) shall constitute Good Reason;

(iv)          the failure of the Company to continue in effect, or the failure to continue the Executive’s participation on substantially the same basis in, any of the Company’s annual incentive compensation plans in which the Executive participates prior to the Change in Control unless such failure applies to all plan participants generally; provided, however, that a reduction in the Executive’s Target Annual Compensation (as defined in the Company’s standard Change in Control Agreement) in excess of ten percent (10%) shall constitute Good Reason; and

(v)           the failure of the Company to obtain the assumption of the obligations contained herein by any successor;

(vi)          breach by the Company of its material obligations under the terms of this Agreement;

(vii)         written notice to Executive from the Company to stop the automatic renewal of the Employment Period pursuant to Section 2.01 hereof; or

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(viii)        the Executive’s submission of a notice of resignation during the thirty (30) day period immediately following the six month anniversary of a Change in Control for any reason or no reason;

provided , however, that for any of the foregoing (i) through (vii) to constitute Good Reason, the Executive must provide written notification of his intention to resign within sixty (60) days after the Executive knows or has reason to know of the occurrence of any such event, and, except in the case of (i)(A) and (vii) above for which no opportunity to cure need be given, the Company shall have had fifteen (15) business days from the date of receipt of such notice to effect a cure of the condition constituting Good Reason and shall have failed to do so. In the event of a cure of such event by the Company, such event shall no longer constitute Good Reason.

“ 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.

“ Permanent Disability ” means those circumstances under which the Executive is determined to be eligible to receive disability benefits under the Company’s long-term disability plan or program, or, in the absence of such a plan or program, “ Disability ” will be as defined in Section 22 of the Code.

 “Related Party” means (i) a Subsidiary of the Company; (ii) an employee or group of employees of the Company or any Subsidiary of the Company; (iii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned Subsidiary of the Company; or (iv) 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 (i) if a corporation, fifty percent (50%) 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 (ii) if a partnership, limited liability company, association or other business entity, fifty percent (50%) 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 percent (50%) or more ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons are allocated fifty percent (50%) 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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ARTICLE 2

EMPLOYMENT

SECTION 2.01.  Employment.  The Company shall employ the Executive, and the Executive shall accept employment with the Company, upon the terms and conditions set forth in this Agreement for the period beginning on October 4, 2006 (the “ Start Date ”) and ending as provided in Section 5.01 (the “ Employment Period ”); provided that the Employment Period shall automatically be extended for periods of one-year unless either party gives written notice to the other party at least 90 days prior to the end of the Employment Period or at least 90 days prior to the end of any one-year renewal period that the Employment Period shall not be further extended.

ARTICLE 3

POSITION AND DUTIES

SECTION 3.01.  Position and Duties.  During the Employment Period, the Executive shall serve as Chief Executive Officer and President of the Company and shall have all duties, authority and responsibilities normally incident to such position.  In such capacity, the Executive shall report to the Board and shall have such responsibilities, powers and duties as may from time to time be prescribed by the Board; provided that such responsibilities, powers and duties are substantially consistent with those customarily assigned to individuals serving in such position at comparable companies.  During the Employment Period the Executive shall devote substantially all of his working time and efforts to the business and affairs of the Company and its Subsidiaries.  The Executive shall not directly or indirectly render any services of a business, commercial or professional nature to any other person or for-profit organization not related to the business of the Company or its Subsidiaries, whether for compensation or otherwise, without prior written consent of the Board, such consent not to be unreasonably withheld; provided that the foregoing shall not be construed as preventing the Executive from serving on civic, educational, philanthropic or charitable boards or committees, maintaining his personal investments, or, serving with the prior written consent of the Board, in its sole discretion, on corporate boards.

SECTION 3.02.  Board Seat.   On the Start Date, the Company shall cause the Executive to be elected to the Board, and the Executive will serve as a member of the Board.  Thereafter, the Company shall use its best efforts to cause the Executive to be nominated and reelected to the Board.

SECTION 3.03.  Executive Representations. The Executive hereby represents and warrants to the Company that he is not subject or a party to any employment agreement, non-competition covenant, non-disclosure agreement or other agreement, covenant, understanding or restriction of any nature whatsoever which would prohibit the Executive from executing this Agreement and performing fully his duties and responsibilities hereunder, or which would in any manner, directly or indirectly, limit or affect the duties and responsibilities which may now or in the future be assigned to the Executive by the Company.  Further, the Company expects the Executive not to, and the Executive hereby acknowledges and agrees that he will not, use any proprietary or confidential information of any prior employer in the performance of his duties for the Company.

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ARTICLE 4

BASE SALARY, BONUS AND BENEFITS

SECTION 4.01.  Base Salary.  During the Employment Period, the Executive’s base salary will be $750,000 per annum (the “ Base Salary ”); provided that for the period from the Start Date through December 31, 2006, the Executive shall be paid an aggregate of $250,000.  The Executive’s Base Salary shall be reviewed periodically for increase, but not decrease, by the Compensation Committee of the Board (the “Committee”) pursuant to the Committee’s normal performance review policies for senior level executives; provided that no provision of this Agreement shall prohibit a reduction in the Executive’s Base Salary as part of an across the board reduction in the base salaries of executive officers generally, so long as such reduction applies on substantially the same percentage basis to all executive officers of the Company generally.  The Base Salary will be payable in accordance with the normal payroll practices of the Company.

SECTION 4.02.  Bonuses.  In addition to the Base Salary, during the Employment Period, the Executive shall be eligible to receive bonus payments as follows: (a) For the period from the Start Date through December 31, 2006, the Executive shall receive a guaranteed bonus of $520,000; (b) For the 2007 calendar year, the Executive shall be eligible to receive a performance bonus of up to a maximum of $1,575,000 based upon attainment of performance objectives to be established by the Committee in accordance with Exhibit B hereto; (c) For the 2008 calendar year, the Executive shall be eligible to receive a performance bonus based upon attainment of performance objectives to be established by the Committee in accordance with Exhibit B hereto with $1,575,000 payable at target,  and (d) For each calendar year during the Employment Period after the 2008 calendar year, the Executive shall be eligible to receive a performance bonus based upon attainment of performance objectives to be established by the Committee with the amount payable at target set by the Committee based upon Company-appropriate market competitive pay practices.  The foregoing performance bonus amounts shall be subject to and paid in accordance with the Company’s Amended and Restated Pay-for-Performance Incentive Plan, as may be further amended, or under any replacement or successor plan and the requirements (if any) to qualify as “performance-based” compensation under section 162(m) of the Code. In addition, the Executive shall be eligible to receive such other performance-based, discretionary or other bonuses as the Committee may determine, in its sole and absolute discretion.  The Executive’s guaranteed bonus hereunder will be paid not later than December 31, 2006.  Performance bonuses, if any, shall be paid not later than March 15 of the calendar following the calendar year for which the performance bonus is earned.

SECTION 4.03.  Equity Awards .

(a)           Contemporaneously with the Executive’s Start Date, the Executive shall be granted 31,250 restricted stock units (“RSUs”), which number of RSUs represents 6,250 RSUs for the period October 4, 2006 through December 31, 2006 and 25,000 RSUs for the 2007 calendar year.  The foregoing RSUs shall vest in three equal annual installments commencing on the first anniversary of the date of grant; provided that the performance objective established by the Committee in accordance with Exhibit B hereof is satisfied.  The RSUs shall be subject in all respects to terms of the Restricted Share Agreement by and between the Company and the Executive to be dated as of the Start Date and in substantially the form pro-

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vided to the Executive as of the date hereof and Company’s 1994 Stock Option and Long-Term Incentive Plan, as amended and restated.

(b)           Contemporaneously with the Executive’s Start Date, the Executive shall be granted a nonqualified stock option to purchase a number of shares of the Company’s common stock equal to a Black Scholes value for the option of $1,156,000, which represents $231,000 for the period October 4, 2006 through December 31, 2006 and $925,000 for the 2007 calendar year.  The foregoing option shall become exercisable in three equal annual installments commencing on the first anniversary of the date of grant and shall be subject in all respects to the terms of the Stock Option Agreement by and between the Company and the Executive to be dated as of the Start Date and in substantially the form provided to the Executive as of the date hereof and the Company’s 1994 Stock Option and Long-Term Incentive Plan, as amended and restated.

(c)           As soon as reasonably practicable following the beginning of the 2008 calendar year, the Executive shall receive an additional grant of RSUs representing a number of shares of the Company’s common stock equal to $925,000 and an additional nonqualified stock option grant representing a number of shares of the Company’s common stock equal to a Black Scholes value for the option of $925,000, in each case based on the current stock price of a share of Company common stock on the date of grant.  The foregoing RSU grant shall vest according to performance objectives established by the Committee in a manner similar to the performance objectives established with respect to the RSUs described in Section 4.03(a) above and in accordance with the requirements of section 162(m) of the Code relating to the “performance-based” compensation (if any) and shall be subject to terms of the agreement pursuant to which it is granted (which shall reflect the provisions hereof) and the Company’s 1994 Stock Option and Long-Term Incentive Plan, as amended and restated.  The foregoing nonqualified stock option grant shall vest and become exercisable, as applicable, in equal annual installments over the three-year period commencing on the first anniversary of the date of grant and shall be subject in all respects to terms of the agreement pursuant to which it is granted (which agreement shall reflect the provisions hereof) and the Company’s 1994 Stock Option and Long-Term Incentive Plan, as amended and restated, or under any replacement or successor plan.

(d)           For calendar years during the Employment Period following the 2008 calendar year, the Executive shall be eligible to receive equity awards as and when equity awards are granted to senior officers generally, with the amount and terms of such awards determined on the same bases as awards granted to senior officers generally.

(e)           All equity awards granted to the Executive shall be subject in all respects to the Company’s Net Share Retention Program.

SECTION 4.04.  Benefits.  The Executive shall be eligible for the following benefits during the Employment Period:

(a)           participation in such retirement, medical, life insurance and disability insurance coverages and fringe benefit plans and programs as are, or may during the Employment Period be, made available generally for other senior executive officers of the Company, subject

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in all respects to the terms of the applicable plans and programs, as in effect from time to time;

(b)           participation in the Company’s Stock Unit Award Plan, pursuant to which the Executive may elect to defer a part of his Base Salary and bonus compensation, subject in all respect to the terms of the plan; and

(c)           up to a maximum of five (5) weeks of paid vacation annually during the Employment Period, in accordance with the Company’s vacation policy.

SECTION 4.05.  Expenses.  The Company shall reimburse the Executive for all reasonable expenses incurred by him in the course of performing his duties under this Agreement which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses (“ Reimbursable Expenses ”), subject to the Company’s requirements with respec