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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Investors React To The Firm’s Recent Turmoil, Get Free Report
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.
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