Knight Capital Group, Inc.
) is set to slash jobs as a part of its restructuring initiative
to reduce operating expenses and boost financial performance.
This was unveiled by the company in its latest regulatory filing.
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The main intention behind the streamlining program is to merge
Knight Capital's full service and electronic institutional
equities sales teams, while ceasing correspondent clearing
Knight Capital disclosed that nearly 5% of its global work-force
will lose their jobs. As of Dec 31, 2012, the company had 1,524
full-time employees. Employees who came under the unsafe zone
have already been informed and will be provided with severance
payments and specified benefits.
Under the initiative, Knight Capital expects to incur a pre-tax
charge in the range of $9-$11 million in the first quarter of
2013. Of this, employee severance and other employee benefit
expenses will be about $8-$10 million. Further, the company
anticipates extra charges related to the closing of its
correspondent clearing unit.
Knight Capital was forced to undertake restructuring initiatives
and additional capital infusion after a software glitch on Aug 1,
2012 led the company to record trading losses of nearly $440
million. The company - then on the verge of bankruptcy - was
rescued through $400 million of capital from a group of
investors, which included Getco LLC,
The Blackstone Group LP
), Stifel Nicolaus & Co.,
TD Ameritrade Holding Corporation
), Stephens Inc. and
Jefferies Group Inc.
Later in Dec 2012, Getco announced that it will acquire Knight
Capital for $1.4 billion. The cash-and-stock deal is expected to
close in the first half of 2013. Under the terms of the deal,
both the companies will combine to form a new publicly-traded
Overall, we believe the abovementioned cost saving measures will
go a long way in improving the company's performance. Further,
the impending merger between Knight Capital and Getco will result
in a more powerful trading platform and help the market
participants to avail better facilities and make trading much
Currently, Knight Capital retains a Zacks Rank #2 (Buy).