Knight Capital Group Inc.(NYSE:KCG), which spooked the markets last week with its trading system sending out erroneous trades in 150 stocks at bizarre prices, is set to resume its duties as a market maker on the NYSE.
In a statement on Tuesday, the company said it would resume its responsibilities as a designated market maker on next Monday.
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While Knight Capital was attending to its errant software, that created mayhem on Tuesday for 45 minutes at the start of trading, the stock exchange had temporarily the duties as a market maker to Getco.
Knight suffered losses of nearly $400 million as a result of the transactions, which is about for times of what it earned in the whole of 2011. It wiped out the company and it had to negotiate with a clutch of companies to recapitalise it.
The company involved in the emergency funding of the trading company were Getco, Jefferies Group, Blackstone Group, TD Ameritrade Holding, Stifel Nicolaus and Stephens Inc.
About 73 percent of the ownership of Knight Capital will now be in the hands of these companies.
Market makers have the responsibility to buy and sell shares for clients and provide liquidity in scrips, by using their own capital.
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Large brokerages and financial institutions route a part of their portfolios through such market makers.
Despite the mess that Knight Capital got into, most of its high-profile clientle closed ranks and affirmed their faith in the company and its ability to resume operations.
Knight Capital had to work over the weekend to get the required emergency funding which was needed not only to recapitalise the bank but also for its day-to-day operations that would ensure its survival.