Knight Capital Group, Inc.
) is nearing a deal to sell its credit-brokerage division to
Stifel Financial Corp.
). Through this deal, the company will sell its U.S. and
Europe-based investment-grade, high-yield, asset-backed and
mortgage-backed debt brokers.
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The deal could be announced publicly as soon as Feb 25, 2013.
Bank of America Corporation
) acted as advisor to Knight Capital on the sale.
Earlier, in Dec 2012, The Global Electronic Trading Company or
Getco LLC agreed to acquire the troubled automated trading firm
for $1.4 billion. The cash-and-stock deal is expected to close in
the first half of this year.
N.J.-based Knight Capital is a financial services company,
executing buy and sell orders in stocks and options through
Computer models. They account for roughly 10% of the U.S. equity
trading volume. Chicago-based Getco is one of the biggest
high-frequency trading firms.
Knight Capital - considered as one of the most advanced trading
platforms - lost nearly $461.1 million owing to a software
malfunction in August this year. The malfunction sent umpteen
numbers of accidental orders to the market over a 45-minute
period, leaving the company in a precarious financial position
Consequently, Knight Capital had to seek rescue financing to the
tune of $400 million. A group of investors, including Getco LLC,
TD Ameritrade Holding Corporation
), Stifel and Stephens Inc., provided the finance in exchange of
over 70% stake in the company.
We believe the deal between Knight Capital and Stifel will result
in a more powerful trading platform. This will help the market
participants to avail better facilities and make trading much
Currently, Knight Capital carries a Zacks Rank #2 (Buy).