UPDATE 1-KCG merger costs make up bulk of Getco, Knight losses
Aug 7 (Reuters) - Trading companies Getco Holding Co and Knight Capital Group, which merged in July to create KCG Holdings Inc, recorded second-quarter losses, mainly due to deal costs, though the low-volume, low-volatility trading environment also hurt.
KCG said on Wednesday that Getco, which was a private company until it took over Knight, had a loss of $72.9 million in the quarter, compared with year-earlier earnings of $3.8 million. The loss included $60.7 million in pretax merger-related charges.
Knight lost $30.8 million, or 9 cents a share, compared with a year-earlier profit of $3.3 million, or 4 cents a share. Knight's loss included $76.5 million in pretax merger-related expenses.
Last August, a software glitch at Knight caused thousands of unintended trades to flood the market, eventually costing Knight $461 million, and leading to its sale to Getco for $1.4 billion.
Getco had also been under pressure, with its 2012 profit plunging 90 percent from 2011, as trading volumes and market volatility declined.
In the latest quarter, Getco's revenue fell to $118.1 million from $141.1 million a year earlier as trading volumes and volatility remained muted.
Knight's revenue totaled $315.4 million, up from $252.1 million in the second quarter of 2012, which included a trading loss of $35.4 million related to the glitch-ridden market debut of Facebook inc on Nasdaq OMX Group's exchange.
The combined company trades equities, fixed income, currencies and commodities through both voice and automated execution, and includes an agency brokerage and off-exchange trading platforms. It is also one of the largest U.S. market-making firms.
Shares of KCG closed at $8.61 on Tuesday.