GO
Loading...

After Tense Freeze, Knight Clients Come Back Online

Friday, 3 Aug 2012 | 4:26 PM ET
Traders work at a Knight Capital Group Inc. post on the floor of the New York Stock Exchange.
Jin Lee | Bloomberg | Getty Images
Traders work at a Knight Capital Group Inc. post on the floor of the New York Stock Exchange.

After a series of potentially devastating events befell Knight Capital Group, the market-making titan finally got a piece of good news on Friday: two key brokerage partners were back online.

TD Ameritrade and Scottrade, two of the nation’s largest online brokers, said that, following a trading freeze, they had resumed routing through Knight Capital.

Those decisions mark a significant victory for the market-maker, who, after being hit with $440M in losses following a trading glitchon Wednesday morning, has been struggling to get its core business up and running.

The company has been scrambling to put a deal together with potential suitorsor lenders as it rushes to shore up its capital positions.

Scottrade, which typically relies on Knight to route more than 30% of its client orders for NYSE and Nasdaq listed securities, said it had decided to resume business with the firm “on a limited basis” as of approximately 1:30PM/ET. TD Ameritrade said in a statement that “after considerable review and discussion” it had resumed its order routing relationship with Knight.

A Knight's Tale
Knight Capital is getting a line of credit and some big clients back today, report CNBC's Kayla Tausche & Mary Thompson.

Another big Knight client, Vanguard, said in a statement that it continues to "closely monitor the situation at Knight. And we are heartened by the significant support Knight has reportedly been receiving from the financial community."

Knight informed some key clients on Friday that it lined up a source of financingto keep it afloat for the day – which was critical in convincing the brokers to come back online, according to a person familiar with the matter.

It remained unclear if other brokerage firms were also planning to undo their trading freezes with Knight.

The stock has rebounded since Thursday’s collapse, rallying roughly 60% through late afternoon trading. (Click here for latest stock quote)

A spokesperson for Knight was not immediately available for comment.

—By CNBC’s Jesse Bergman and Kayla Tausche.

Follow Jesse on Twitter @JBergmanCNBC

  Price   Change %Change
AMTD
---

Banks

  • Discussing loan growth in financials and the drag of litigation on Bank of America's earnings, with Gerard Cassidy, RBC Capital Markets lead banking analyst.

  • Ken Moelis, Moelis & Company founder and CEO, discusses the public debut of his company on the NYSE and explains his boutique investment banking model. "Clients will want the flexibility of an independent, unconflicted advisor," Moelis says.

  • Discussing how to buy in volatile market conditions and the investment banking market, David Katz, Matrix Asset Advisors CIO, and Charles Bobrinskoy, Ariel Investments vice chairman & portfolio manager.