Knight Capital to sell credit brokerage unit to Stifel - source

NEW YORK Sun Feb 24, 2013 10:02pm GMT

Knight Capital traders work at the company's kiosk on the floor of the New York Stock Exchange, August 6, 2012. REUTERS/Brendan McDermid

Knight Capital traders work at the company's kiosk on the floor of the New York Stock Exchange, August 6, 2012.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - Knight Capital Group (KCG.N), which recently agreed to be bought for $1.4 billion by Getco Holding Co, has struck a deal to sell its credit-brokerage unit to Stifel Financial Corp (SF.N), according to a person familiar with the matter.

The terms of the deal were not known. But Stifel will be picking up investment-grade, high-yield, asset-backed and mortgage-backed debt brokers in the U.S. and Europe through the deal the source said.

The deal could be announced as soon as Monday, according to the source, who spoke on the condition of anonymity because the sale has not yet been made public. The news was previously reported by Bloomberg News earlier on Sunday.

Bank of America (BAC.N) advised Knight Capital on the sale, the source said.

Knight Capital declined to comment on the sale. Stifel, Getco and Bank of America could not be immediately reached for comment.

Knight is a top U.S. market maker, using computer models to match buy and sell orders in stocks and options, executing around 10 percent of U.S. equity trading volume. Getco also has market making operations, and is one of the biggest high-frequency trading firms.

The company was forced to take on additional investors and re-examine its entire business following a software problem in August that led to millions of unintentional orders flooding into the market over a 45-minute period, leaving Knight with a huge position it had to unload at a loss of $461.1 million.

Following the glitch, Knight secured $400 million in rescue financing - in exchange for a more than 70 percent stake in the company - from a group of investors that included Chicago-based Getco and was led by Jefferies Group Inc JEF.N.

Jefferies later helped finance Getco's proposed acquisition of Knight, which is expected to close in the first half of 2013.

(Reporting By Michael Erman and Jonathan Stempel; Editing by Bernard Orr)

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