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Knight Capital Group

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Knight Capital Group

Knight Capital Group
Subsidiary
Traded as KCG, until July 1, 2013
Industry Financial Services
Fate Acquired by Getco LLC in 2013, forming KCG Holdings
Founded 1995
Headquarters Jersey City, New Jersey, USA
Key people Thomas Joyce, Chairman and Chief Executive Officer
Products Market making and trading
Revenue $1.404 billion USD (2011)
Net income $115.2 million USD (2011)
Employees 1,418 (2012)
Website www.knight.com

The Knight Capital Group was an American global financial services firm engaging in market making, electronic execution, and institutional sales and trading.[1] With its high-frequency trading algorithms Knight was the largest trader in U.S. equities, with a market share of 17.3% on NYSE and 16.9% on NASDAQ.[2] After suffering a trading error in August 2012 that cost it $460 million, in December 2012 the company agreed to be acquired by Getco LLC. The merger was completed in July 2013, forming KCG Holdings.

Company

Knight was formerly known as Knight/Trimark Group, Inc. and Knight Trading Group, Inc. Initially, Knight Trading group had multiple offices located in the United States and in other cities around the world. Knight's Asset Management offices were headquartered in Minnetonka, Minnesota, with offices in Hong Kong, China, and London.

Activities

Knight's largest business is market making in U.S. equities.[3] Its Electronic Trading Group (ETG) covers more than 19,000 U.S. securities with an average daily trading volume of more than 21 billion dollars (May 2012).[4] Furthermore, Knight makes markets in U.S. options and European equities.

In 2002, Knight paid $1.5 million to settle regulatory charges of violations such as not respecting posted quotes. Knight neither admitted nor denied the allegations.[5] In 2011, the company was worth $1.5 billion and employed approximately 1450 people.[6] In 2004, the company paid a $79 million settlement to customers whom they had overcharged.[7] In 2008, Knight traded an average of 3.97 billion shares per day.[8]

Offices

Knight is headquartered in Jersey City, New Jersey. It has many offices in other US locations, as well as in the UK, Germany, Switzerland, China, and Singapore.[9]

Operating Subsidiaries

Knight Capital Group operates in three segments: equities, fixed income, currencies and commodities, and corporate. Current operating business subsidiaries include Knight Capital Americas, L.P., Knight Execution & Clearing Services LLC, Knight Capital Europe Limited and Hotspot FX Holdings, Inc. [10] Knight Capital Group discontinued operations of its asset management segment in 2009 when its subsidiary, Deephaven Capital Management, sold most of its assets to Stark & Roth, LLC. [11]

2012 stock trading disruption

On August 1, 2012 Knight Capital's trading activities caused a major disruption in the prices of 148 companies listed at the New York Stock Exchange, thus, for example, shares of Wizzard Software Corporation went from $3.50 to $14.76. This caused Knight Capital's stock price to collapse. Knight Capital took a pre-tax loss of $440m sending shares lower by over 70% from before the announcement. The nature of the Knight Capital's unusual trading activity was described as a "technology breakdown". [12][13]

On Sunday Aug. 5 the company managed to raise around $400 million from half a dozen investors led by

The incident was embarrassing for Knight CEO Thomas Joyce, who was an outspoken critic of Nasdaq's handling of Facebook's IPO.[15] On the same day the company's stock plunged 33 percent, to $3.39; by the next day 75 percent of Knight's equity value had been erased.[16]

See also

References

External links

  • Official website
  • SEC report on the 2012 trading error
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