Friday, August 3, 2012

Knight Capital Group (NYSE:KCG) Showing Relief Rally, Recovers 28%

Trading firm and market maker Knight Capital Group Inc.(NYSE:KCG) staged a comeback rally on Friday on a report that it has told brokers on Friday morning that it had got a line of credit allowing it to operate for the day.

Shares recovered more than 8percent on Friday and were trading at $3.31 in late morning trades..

Should Investors Buy KGC Now? Get Trend Analysis 

The Wall Street Journal carried a report on the line of credit, quoting sources but said details such as the source of the credit and the terms of financing were not available.

It said Knight Capital did not immediately respond to request for comments.

Knight Capital shares fell more than 60 percent on Thursday and 33% on Wednesday, a day after a technical glitch in its trading software caused a deluge of unnatural trades through its system causing a loss of $400 million to the firm.

The company immediately went into damage mode and asked many of its clients to look at other alternatives to place their trades. Some firms like Citibank and Ameritrade have suspended routing their trades through the company.

Knight Capital has already said that it is looking at strategic and financial alternatives to keep its operations running.

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Some analysts have created a potential bankruptcy scare if the firm was unable to get adequate financing in time though analysts and other stakeholders are reassuring investors on the credit worthiness of the company.

Knight Capital earnings in 2011 were of the order of $115.2 million, nearly a fourth of the losses it suffered from Wednesday’s trading mess. 

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