Knight Introduces Algorithmic Pairs Trading Capabilities

JERSEY CITY, N.J., Feb. 9 /PRNewswire-FirstCall/ -- Knight Capital Group, Inc. (Nasdaq: NITE) today announced the introduction of algorithmic pairs trading capabilities for institutions designed to increase fulfillment rates through improved liquidity sourcing and a flexible, easy-to-use interface.

Knight's pairs trading capabilities include the following:

• Access to Knight's liquidity in addition to displayed and dark markets using FAN technology
• Intuitive, easy-to-use front end to improve the trader experience
• Flexibility for traders to easily create their own strategies
• Support for complex pairs trading strategies, including multiple combinations of single securities, inverse pairs and set-up and unwind functionality in a single pair
• Low-latency, high-volume capabilities through robust server-side architecture vs. processing via the front-end

"The market environment in 2010 is ideally positioned for pairs trading strategies," said Joseph Wald, Managing Director, Knight Direct. "After the turmoil of the last several years, investors are more interested than ever in managing risk by taking a market neutral approach while residual uncertainty remains. At the same time, merger and acquisition activity is expected to continue to rise due to a reinvigorated investment banking market, while robust issuance of preferred stocks has created more opportunities to pair preferreds with their common stock counterparts. Knight has the algorithmic pair trading technology to help institutional traders make the most of these opportunities."

Traders use pairs trading strategies to capture the spread between two or more related securities, keeping risk low by remaining market neutral. Knight has combined pairs trading capabilities with FAN, Knight's innovative aggregation technology that sweeps and posts orders simultaneously in displayed and dark markets. FAN employs smart order execution technology to adapt to real-time trade executions and re-circulate an order to destinations where trade executions are taking place.

"One of the greatest challenges in executing pairs is that the market can move away in the time it can take to find liquidity in the multiple securities included in a strategy," Mr. Wald said. "The application of FAN to pairs trading helps locate disparate liquidity quickly and anonymously, improving the likelihood that an execution can take place and those strategies can be completed to a trader's satisfaction."

Knight's pairs trading and algorithmic suite are available through Knight Direct EMS™, a broker-neutral electronic trading platform covering multiple asset classes, via a direct FIX connection, or major OMS and trading system providers. Knight Direct's EdgeTrade strategies empower clients to maintain market anonymity and reduce overall transaction costs, while achieving their trading objectives. These agency smart order execution strategies leverage real-time and historical data to help clients execute orders by seeking out available liquidity among fragmented displayed and non-displayed markets. Solutions include FAN, Oasis, Covert and Sumo. Knight Direct also offers VWAP and participation algorithms. The EdgeTrade algorithmic suite is offered through Knight Direct LLC and Knight Equity Markets, L.P., members FINRA & SIPC and subsidiaries of Knight Capital Group. The Knight Direct EMS™ is offered through Knight Direct LLC.

About Knight

Knight Capital Group, Inc. (Nasdaq: NITE) is a global capital markets firm that provides market access and trade execution services across multiple asset classes to buy- and sell-side firms. Knight's hybrid market model features complementary electronic and voice trade execution services in global equities and fixed income as well as foreign exchange, futures and options. The firm is consistently ranked as the leading source of off-exchange liquidity in U.S. equities. Knight also provides capital markets services to corporate issuers. Knight is headquartered in Jersey City, NJ with a growing global presence across North America, Europe and the Asia-Pacific region. For more information, please go to www.knight.com.

Certain statements contained herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with changes in market structure, legislative or regulatory rule changes, the costs, integration, performance and operation of businesses recently acquired or developed organically, or that may be acquired in the future, by the Company and risks related to the costs and expenses associated with the Company's exit from the Asset Management business. Since such statements involve risks and uncertainties, the actual results and performance of the Company may turn out to be materially different from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made herein. Readers should carefully review the risks and uncertainties disclosed in the Company's reports with the U.S. Securities and Exchange Commission (SEC), including, without limitation, those detailed under the headings "Certain Factors Affecting Results of Operations" and "Risk Factors" in the Company's Annual Report on Form 10-K for the year-ended December 31, 2008, and in other reports or documents the Company files with, or furnishes to, the SEC from time to time. This information should also be read in conjunction with the Company's Consolidated Financial Statements and the Notes thereto contained in the Company's Annual Report on Form 10-K for the year-ended December 31, 2008, and in other reports or documents the Company files with, or furnishes to, the SEC from time to time.

SOURCE Knight Capital Group