Thomas Joyce, who built Knight Capital Group Inc. into one of the biggest U.S. market making firms only to see it driven to the brink of bankruptcy and then into a suitor’s arms, is leaving the company.
KCG Holdings Inc., the company created when Getco LLC completed the acquisition of Knight this week, announced the resignation in an e-mailed statement. Joyce had been executive chairman. KCG named Stephen Schuler, a Getco founder, as non-executive chairman, according to the statement.
While Joyce steered Knight through a decade of growth in which revenue more than doubled, he will also be remembered for being chief executive officer when a computer malfunction caused the company to lose more than $450 million on a single day in August through erroneous trades. The Harvard College graduate was able to keep the firm out of insolvency by arranging a cash bailout a week later and in December sold Knight to Getco LLC in a deal valued at about $1.4 billion.
“He did a fabulous job,” said Buzzy Geduld, chief executive officer of Cougar Trading in New York, who worked with Joyce when they were both at Merrill Lynch. “He was forced to do a deal in 48 hours or so and he navigated that in a wonderful way and a professional way. The doors opened and the company stayed in business.”
Knight’s computers flooded markets with unintended trades on Aug. 1, 2012, sending dozens of stocks into spasms. The fault caused shares to swing as much as 151 percent and left the firm with $450 million trading loss that would have sent it into bankruptcy hadn’t a group of Wall Street firms bought a commensurate amount of convertible securities a week later.
“Technology breaks,” Joyce said in an Aug. 2 interview. “It ain’t good. We don’t look forward to it.”
Getco put its chief executive officer, Daniel Coleman, in charge of the combined firm. A government filing in December showed Joyce was poised to collect a $7.5 million retention payment that would come due when Getco, the Chicago-based high-frequency trading firm, completed the deal. An employment contract was scheduled to end when the acquisition was finalized or the last day of 2014, whichever is sooner, the filing said.
The takeover by Getco ended the 17-year independence of Jersey City, New Jersey-based Knight, a company propelled by the explosion in electronic trading in American stock markets. While joining with Getco preserved Knight’s listing and expanded its reach, both companies are contending with U.S. stock trading that has contracted for three straight years.
Knight hired Joyce, 58, just as regulations that had concentrated trading in U.S. stocks on the biggest venues were changing to promote competition. Joyce boosted profit and sales by expanding the market-making business and pushing it toward electronic trading, relying on computers that could execute transactions more cheaply than humans on the floor of the 220-year-old Big Board.
Knight was founded in 1995 and grew during the bull market of the late 1990s into one of the biggest traders of technology stocks. It hired Joyce in May 2002 after annual revenue plunged 46 percent during the prior year. It had 1,423 employees at the end of 2011, according to a regulatory filing, growing through more than 15 mergers and acquisitions since 2000.
Joyce expanded the firm’s market-making business and taking advantage of regulations that spread trading across more than 50 venues including electronic communications networks and dark pools. Revenue reached a record $1.36 billion in 2011, more than doubling in nine years, while earnings increased to $115.6 million.
Joyce, known as TJ, grew up in Weymouth, Massachusetts, where his father worked as a lineman at Boston Edison, and his mother was a homemaker. He graduated from Harvard College in 1977 with a degree in economics. At Harvard, he was captain of the baseball team and a linebacker in football, earning him induction into the college’s athletic hall of fame.
He serves on the board of directors of Special Olympics of Connecticut and Alfred E. Smith Memorial Foundation. He joined the Ronald McDonald House New York board of directors in October 2010, according to Knight’s website.