Knight to Return as Designated Market Maker Next Week, NYSE Says

Knight Capital Group Inc. received a $400 million cash infusion through the sale of convertible securities after last week’s software malfunction drove the market maker to the brink of bankruptcy. Photographer: Jin Lee/Bloomberg

Bloomberg News

Knight to Return as Designated Market Maker Next Week

By Nina Mehta
August 07, 2012

Companies Mentioned

  • KCG

    Knight Capital Group Inc

    • $3.67 USD
    • -0.01
    • -0.27%
  • NYX

    NYSE Euronext

    • $39.64 USD
    • -0.17
    • -0.43%
  • AMTD

    TD Ameritrade Holding Corp

    • $22.39 USD
    • 0.07
    • 0.31%
Market data is delayed at least 15 minutes.

Knight Capital Group Inc. (KCG), the firm that almost went out of business after a $440 million trading loss, will resume its duties as a designated market maker on the New York Stock Exchange on Aug. 13, the exchange said.

NYSE Euronext (NYX) said in a statement today that all of the firm’s securities, staff, operations and systems will return to Knight after being temporarily reassigned to Getco LLC yesterday. The exchange had shifted responsibility for about 680 stocks that Knight handled as a primary market maker to Getco so the broker could focus on shoring up its finances after incurring losses during a software malfunction on Aug. 1.

“Knight and Getco have demonstrated outstanding commitment and leadership in serving the best interests of investors, our listed issuers and market stability,”Larry Leibowitz, chief operating officer of NYSE Euronext, said in the statement. “We applaud the teamwork and collaboration by all parties involved to ensure smooth, efficient and seamless transitions.”

Automated trading firm Getco, which oversees activity in 896 companies listed on the New York Stock Exchange and NYSE MKT, was using its own technology and capital to trade the shares that Knight makes a market in, Larry Leibowitz, chief operating officer at NYSE Euronext, said in a statement yesterday. The Chicago-based firm took over an additional 524 stocks listed on the Big Board and 156 on NYSE MKT, formerly known as NYSE Amex, from Knight, according to NYSE.

Knight received a $400 million cash infusion through the sale of convertible securities after last week’s software malfunction drove the market maker to the brink of bankruptcy. Getco, Blackstone Group LP, brokerages Stifel Nicolaus & Co. and TD Ameritrade Holding Corp. (AMTD), as well as Stephens Inc. and Jefferies Group Inc. invested in the rescue funding, Knight said in a statement yesterday.

To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

Business Exchange: What your peers are reading.

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

blog comments powered by Disqus