Blackstone Group LP and Genpact Ltd. are among companies that moved eight securities listed on the New York Stock Exchange away from market-maker Knight Capital Group Inc. after the broker-dealer’s rescue earlier this month.
The Asia Tigers Fund Inc., Blackstone/GSO Senior Floating Rate Term Fund, and DDR Corp. are among securities that were transferred from Knight to Goldman Sachs Group Inc., according to data compiled by NYSE Euronext. The changes are in keeping with NYSE rules about avoiding conflicts of interest in the relationship between public companies and their designated market maker at the exchange.
Knight received a $400 million cash infusion this month by selling convertible securities to a group of investors including Jefferies Group Inc., Blackstone and Getco LLC after a $440 million trading loss depleted its capital. The six investors bought preferred stock that convert to 73 percent of Knight.
“Designated market makers do not trade stocks of their companies or their owners to avoid conflicts of interest and potential securities law issues,” NYSE Euronext said in an e-mailed statement. “This is a standard and common practice, and nothing is being done differently in this case.”
Jonathan Mairs, a spokesman for Jersey City, New Jersey-based Knight, declined to comment on the changes.
Blackstone, the world’s largest private-equity firm, shifted market making in the Blackstone/GSO Senior Floating Rate Term Fund and Blackstone/GSO Long-Short Credit Income Fund from Knight to Goldman Sachs on Aug. 7, according to the NYSE Euronext website. The funds each traded less than 50,000 shares a day on average this year, data compiled by Bloomberg show.
Peter Rose, a spokesman for Blackstone, declined to comment.
The Asia Tigers Fund Inc., a closed-end fund, switched to Goldman Sachs from Knight on Aug. 22. The fund changed management from Blackstone to Aberdeen Asset Management Plc last year and has an average daily volume of less than 8,000 shares this year, data compiled by Bloomberg show.
DDR Corp., a real-estate investment trust based in Beachwood, Ohio, moved its stock and three preferred securities to Goldman Sachs on Aug. 13. DDR and Blackstone announced a partnership earlier this year to buy 46 U.S. shopping centers for $1.43 billion. DDR traded 3.2 million shares a day this year on average.
Genpact Ltd., which helps companies manage business processes, switched to Goldman Sachs on Aug. 13. General Atlantic LLC, a private equity firm with a stake in Getco, owned 20.1 percent of Genpact, according to a July 1 government filing. General Atlantic named a director to Knight’s board yesterday. The stock traded a daily average of about 640,000 shares, data tracked by Bloomberg show.
Gail Marold, a spokeswoman for Genpact, confirmed in an e-mail that the reason for the switch in market makers was NYSE’s rule about conflicts of interest.