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Itg investor presentation_21march16


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Investor Presentation

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Itg investor presentation_21march16

  1. 1. Subtitle Q4 2013 Earnings 1/30/14 Subtitle © 2016 Investment Technology Group, Inc. All rights reserved. Not to be reproduced or retransmitted without permission. #31816-9991 ITG Investor Overview March 2016
  2. 2. SubtitleSubtitleITG is an independent broker and financial technology firm that helps improve the efficiency and execution quality of institutional trading International and Multi-Asset Growth • ITG is expanding product offerings and market share in Europe, Canada and Asia Pacific • Positive trends: unbundling of research from execution and growing electronification of trading • Expansions to FX, Corporates, Futures & Options offer new revenue opportunities Robust Capital Position Competitive Core Business Strong Operating Leverage Potential • Operating model and disciplined expense management provide attractive opportunities for increased profitability • Pre-tax margins on incremental revenue exceed 50% across all regions • Unique liquidity, market-leading execution, platform and analytics assets. Technology is being deployed to boost scale and gain market share • ITG consistently ranks at or near the top of industry analyst surveys (Greenwich, Tabb, Aite) for products and client service • Total cash and equivalents of $331 million and $110 million of excess cash as of December 31, 2015 • Only $13 million in long-term debt • Active share buyback program: $231 million in repurchases since 1Q10 have reduced share count, net of issuances, by more than 24% • $0.07 quarterly dividend paid since 2Q15. 1
  3. 3. Subtitle Global Product Groups 2 18% 9% 51% 22% Platforms Analytics Electronic Brokerage Research S&T 2015 Adjusted Revenues $527m* *Excludes gain on energy research business sale in late Dec. 2015. Source: ITG 12% 9% 54% 25% Canada Asia Pac US Europe 2015 Revenues by Region* Data-driven research in Consumer, Macro and TMT sectors Energy research under license from RS Energy High Touch and Portfolio Trading Corporate Access services POSIT® dark crossing in 36 countries ITG Algorithms® in 40 countries ITG Smart Routing and Direct Market Access (DMA) POSIT® FI and POSIT® FX in beta Triton® broker- neutral execution management ITG Order Management System and ITG Position Manager™ OMS for Hedge Funds ITG Net® FIX connectivity to 650+ destinations ITG RFQ-hub for OTC connectivity and trading ITG TCA® is the global market leader Available for equities and foreign exchange, fixed income TCA in development Pre-, real-, and post-time trade analytics PLATFORMS Triton® broker-neutral execution management ITG Order Management System and ITG Position Manager™ for Hedge Funds ITG Net® FIX connectivity to 650+ destination ITG RFQ-hub for OTC connectivity and trading ELECTRONIC BROKERAGE POSIT® dark crossing in 36 countries ITG Algorithms® in 40 countries ITG Smart Routing POSIT® FI and POSIT® FX launched ANALYTICS ITG TCA® is the global market leader Available for equities and foreign exchange, fixed income TCA in development Pre-, real-, and post-time trade analytics RESEARCH Data-driven research in Consumer, TMT, and Macro sectors Energy research through partnership with RS Energy Group High Touch and Portfolio Trading Corporate Access services
  4. 4. Subtitle • 1,037 employees worldwide • Offices in 9 countries including 9 trading desks • 250 awards and honors over last 6 years across Electronic Brokerage, Analytics, and Platforms 3 Global Presence, Local Expertise
  5. 5. SubtitleSubtitle 95%+ of clients who suspended trading with ITG post-SEC settlement in 3Q15 have resumed trading. Trading activity and market share improving sequentially in all operating regions. 0 100 200 300 400 500 600 700 800 4Q15 Jan-Feb 16 4Q15 Jan-Feb 16 4Q15 Jan-Feb 16 4Q15 Jan-Feb 16 Average Daily Trading Comms ($ thousands) Canada EMEA Asia PacificUS 4 Client Recovery Underway Source: ITG
  6. 6. SubtitleSubtitle Sizing the Opportunity Upside Potential from Market Share Gains 0 50 100 150 200 250 300 350 400 450 500 North America (#15) Europe (#20) Asia Pacific (#21) Revenue Gap to #10 Broker ITG Cash Commissions ($M) ITG cash equity commissions and broker rankings in FY15. Source: McLagan. Excludes all sell-side commissions and some buyside clients not in McLagan reporting universe. 5
  7. 7. Subtitle Rising Electronification A Key Growth Opportunity 6 46 47 48 49 50 51 52 53 2014 2015 2018e Canadian Electronic Equity Trading Electronic Trading (Algo, Portolio Trading, Crossing) as % of total trading. 2018 forecasts based on buyside trader surveys. Source: Greenwich Associates US Electronic Equity Trading 0 5 10 15 20 25 30 35 2014 2015 2018e 46 48 50 52 54 56 58 2014 2015 2018e EU Electronic Equity Trading 32 33 34 35 36 37 38 39 40 41 2014 2015 2018e Asia Pacific Electronic Equity Trading
  8. 8. Subtitle 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15 7 • Consistent capital return program has reduced outstanding shares by >24% since 1Q 2010. • Dividend payout since 2Q 2015 of approximately $2mm/quarter. • Sale of Energy Research group increased available free cash to $110mm at Dec 31, 2015. • ITG is well capitalized to take advantage of investment opportunities. *Cash over and above the amount needed for regulatory capital, clearing margin, compensation accruals and other liabilities. Source: ITG Basic Shares Outstanding (millions) 0 20 40 60 80 100 120 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15 Available Excess Cash* ($millions) Strong Capital Position
  9. 9. SubtitleSubtitle Core Business Strength Europe • Ranked #1 for Electronic Trading Quality and Best Portfolio Trading • POSIT had over 14% share of European dark trading in 2015, a new record • Full suite of ITG products now available in Europe; Algo trading and POSIT access in 21 EMEA markets Canada • Top 10 institutional broker by market share • Ranked #1 by Greenwich in electronic trading, portfolio trading, algos and CSAs • Operates MATCH NowSM broker neutral crossing system, Canada’s largest dark pool US • Ranked #1 US Equity Brokerage by Elkins McSherry and #1 among pension funds in Greenwich survey • Named top CSA provider among large institutions by Greenwich and #1 for pre- and post-trade analytics Asia • POSIT crossing available in Hong Kong, Australia, Japan, India, Taiwan, Korea, Malaysia, Indonesia, Singapore and the Philippines • Named Best Agency Broker by Asian Investor, ranked #1 in Electronic Trading Quality by Greenwich • Move towards unbundling trading gaining traction with TCA research and CSAs 8
  10. 10. SubtitleSubtitle *Offerings in red currently in development/planning Equities ETFs Derivatives FX Fixed Income Triton global broker neutral portfolio trading execution management system Global ETF Trading from Triton RFQ Hub integration Expand to cover Global Futures & Options trading from Triton RFQ Hub integration Global algorithms, smart routing and trading desk services POSIT Alert 20+ markets POSIT crossing 30+ markets US Futures algorithms, smart routing and DMA High touch options trading Index Futures Post Trade Analytics FX TCA Pre Trade Analytics Real Time Analytics Platforms Liquidity Analytics Global algorithms, smart routing and trading desk services POSIT Alert 20+ markets POSIT crossing 30+ markets Triton for FX FX Connect integration FX algorithms POSIT FX POSIT Fixed Income (global coverage) Pre Trade Analytics Real time Analytics Post Trade Analytics Pre Trade Analytics Real time Analytics Post Trade Analytics Triton for Fixed Income including RFQ Hub Fixed Income TCA Multi-Asset Opportunities 9
  11. 11. SubtitleSubtitle ITG at a Glance • Unique, market-leading assets for execution, liquidity, platforms and analytics • Strong international business with favorable macro trends and ample room for market share gains • Solid balance sheet to fund organic and inorganic growth initiatives • Strong cash flow generation, active buyback program and quarterly dividend • Disciplined expense management increases operating leverage: 50%+ incremental pre-tax margins 10
  12. 12. Subtitle Appendices Product Offerings 11
  13. 13. SubtitleSubtitle Electronic Brokerage Featuring: ITG Algorithms® POSIT® Large pool of accessible dark liquidity. Average US Daily Volume of 75m shares in 2015 ITG Algorithms® Sophisticated strategies for equities and futures ITG Smart Routing One-point high-speed connection to liquidity ITG Net® Global FIX connectivity with trading insights ITG Trading Services Global expertise across asset classes Featuring: POSIT Alert® • High-quality block crossing opportunities with average US trade size (ex-algos) >30,000 shares. • POSIT Alert available in 36 countries • #1 for Dark Pool Access, The Trade • #1 for Best Anonymity in a Dark Pool, Greenwich Associates • Algo trading available in 40 countries. Offer algorithms for equities, futures and options • ITG Dynamic Open named best algo by Wall Street Letter 12
  14. 14. SubtitleSubtitle Featuring: Triton® Platforms Featuring: ITG Net® • FIX connectivity and management to more than 650 global destinations • Industry-leading tools for pre-, intra-day, and post-trade cost estimating • Execution transparency to evaluate trading and broker performance against the market and your peers • Sophisticated, broker-neutral EMS with global connectivity, aligned to clients’ interests and trading styles • Alternative Trading System of the Year, Asian Banker, ITG Execution Management Systems Global, broker-neutral and multi-asset EMSs ITG Order Management Systems ITG OMS: Global, multi-asset enterprise OMS ITG Position Manager: Dedicated Hedge Fund OMS ITG Net® Providing EMS and OMS FIX connectivity with approximately 9,000 global connections ITG RFQ-hub Multi-asset platform for global listed and OTC assets 13
  15. 15. SubtitleSubtitle Analytics Featuring: ITG TCA® • The leader in assessing trading performance to reduce costs and improve fund rankings. Includes competitive comparisons through ITG Peer Analysis™. • Named Top TCA provider by Waters and The Trade ITG Trading Analytics Alpha preservation throughout the trading process ITG Portfolio Analytics Portfolio modeling, optimization, and pricing ITG Analytics Services Investment process consulting to improve execution • Dynamic, interactive tool set to view real-time market data, identify outliers, and forecast long-term costs to improve performance during a trade’s lifecycle Featuring: ITG Smart Trading Analytics 14
  16. 16. SubtitleSubtitle Featuring: ITG Portfolio TradingITG Industry Investment Research Data-driven insights on more than 300 companies in 20+ sectors in Consumer, Macro, Internet and TMT areas. Energy research through partnership with RS Energy Group. ITG High Touch and Portfolio Trading High touch traders provide expert execution coupled with ITG Investment Research insights. Seasoned portfolio traders provide high-touch and electronic list trading globally. ITG Corporate Access Experienced team offers individual and group events with corporate decision makers at companies across a range of industries. • Ranked #1 for US Portfolio Trading by Greenwich • Global coverage: 7500+ names in 40+ countries and 200 execution venues • Regular index research and analysis Research, Sales & Trading 15
  17. 17. SubtitleSubtitle Disclaimers These materials are for informational purposes only, and are not intended to be used for trading or investment purposes or as an offer to sell or the solicitation of an offer to buy any security or financial product. The information contained herein has been taken from trade and statistical services and other sources we deem reliable but we do not represent that such information is accurate or complete and it should not be relied upon as such. No guarantee or warranty is made as to the reasonableness of the assumptions or the accuracy of the models or market data used by ITG or the actual results that may be achieved. These materials do not provide any form of advice (investment, tax or legal). ITG Inc. is not a registered investment adviser and does not provide investment advice or recommendations to buy or sell securities, to hire any investment adviser or to pursue any investment or trading strategy. All functionality described herein is subject to change without notice. Broker-dealer products and services are offered by: in the U.S., ITG Inc., member FINRA, SIPC; in Canada, ITG Canada Corp., member Canadian Investor Protection Fund (“CIPF”) and Investment Industry Regulatory Organization of Canada (“IIROC”); in Europe, Investment Technology Group Limited, registered in Ireland No. 283940 (“ITGL”) and/or Investment Technology Group Europe Limited, registered in Ireland No. 283939 (“ITGEL”) (the registered office of ITGL and ITGEL is First Floor, Block A, Georges Quay, Dublin 2, Ireland and ITGL is a member of the London Stock Exchange, Euronext and Deutsche Börse). ITGL and ITGEL are authorised and regulated by the Central Bank of Ireland; in Asia, ITG Hong Kong Limited (SFC License No. AHD810), ITG Singapore Pte Limited (CMS Licence No. 100138-1), and ITG Australia Limited (AFS License No. 219582). All of the above entities are subsidiaries of Investment Technology Group, Inc. MATCH NowSM is a product offering of TriAct Canada Marketplace LP (“TriAct”), member CIPF and IIROC. TriAct is a wholly owned subsidiary of ITG Canada Corp. This document and the presenter’s comments relating hereto may contain forward-looking statements that reflect management’s expectations for the future. A variety of important factors could cause results to differ materially from such statements. These factors are noted throughout ITG’s Form 10-K and in its Form 10-Qs and include, but are not limited to, general economic, business, credit and financial market conditions, internationally and nationally, financial market volatility, fluctuations in market trading volumes, effects of inflation, adverse changes or volatility in interest rates, fluctuations in foreign exchange rates, evolving industry regulations, changes in tax policy or accounting rules, the actions of both current and potential new competitors, changes in commission pricing, potential impairment charges related to goodwill and other long-lived assets, rapid changes in technology, errors or malfunctions in our systems or technology, cash flows into or redemptions from equity mutual funds, ability to meet liquidity requirements related to the clearing of our customers’ trades, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate companies we have acquired, our ability to attract and retain talented employees and our ability to achieve cost savings from our cost reduction plans. Disclaimers 16