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Knight Capital in Talks to Sell Market-Making Unit, WSJ Says

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Nov. 24 (Bloomberg) -- Knight Capital Group Inc. is in talks to sell its market-making unit, the Wall Street Journal reported, citing unnamed people familiar with the matter.

The trading firm may get proposals for the division from Getco LLC and Virtu Financial LLC next week, the newspaper said. Kara Fitzsimmons, a spokeswoman for Knight, said the company doesn’t comment on rumors and speculation. Sophie Sohn, a spokeswoman for Getco, and Chris Concannon, executive vice president at Virtu, declined to comment.

Knight dodged bankruptcy in August after six Wall Street firms including Getco provided cash to preserve the company’s solvency after a $457 million trading error. Getco said in a filing last week that it will consider transactions with Jersey City, New Jersey-based Knight such as buying or selling shares.

Knight’s capital was depleted after it bombarded U.S. equity exchanges with erroneous orders on Aug. 1 in the wake of improperly installed software that malfunctioned, according to Chief Executive Officer Thomas Joyce. The trading caused volume to surge and prices to swing in dozens of securities listed on the New York Stock Exchange and NYSE Arca.

Chicago-based Getco would own 15.6 percent of Knight’s 364.7 million common shares if all the preferred stock holders converted their shares, according to the Securities and Exchange Commission filing last week. Virtu, based in New York, does not have an existing stake in Knight.

To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net