Knight Capital suffers huge profit loss after volume drop

Michael Bow
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ELECTRONIC trading firm Knight Capital posted a dismal set of figures yesterday, with an 84 per cent drop in earnings and 16 per cent decline in revenue.

The firm, which stood on the brink of collapse last summer after a trading glitch delivered a $460m (£291m) loss to the business, is currently being taken over by rival Getco in a $1.8bn deal.

Yesterday the firm, which uses algorithmic programmes to trade, said net income for the last three months of 2012 fell to $6.5m, down from $40.2m last year.

Revenues of $287.7m were also 16 per cent lower.

Chief executive Tom Joyce said: “The financial results for the quarter were negatively impacted by the steep year-over-year declines in consolidated US equity volume and market volatility as well as the writedown of an investment and heightened professional fees.”

The company has felt the force of declining fee volumes.

It said it traded an average of 41.2bn exchange-listed shares every day in the fourth quarter, a drop from 51bn in the same period in 2011.

But there were reasons for cheers in its institutional sales and trading division, which leapt to a $9.4m profit in the quarter, compared with a $17.1m loss in the previous year.