Founded in 1995 by Kenneth Pasternak and Walter Raquet, Knight Capital Group was a market maker and trade execution provider headquartered in Jersey City, New Jersey, across the Hudson river from Wall Street. The companys bold insight was that the human-centered model of exchange trading was going to be fundamentally transformed by computers. Its primary customers were large broker-dealers, electronic discount brokers, hedge funds, and other institutional investors. Born in the crucible of the IT advances of the 1990s and uplifted by the related growth of the technology-weighted NASDAQ stock market, Knight grew rapidly to become the single largest market maker of stocks listed on the NASDAQ (17%) and NYSE (16%). In July 1998, Knight raised $145 million in capital through its own Initial Public Offering (IPO) with a share price of $14.50 and market capitalization of $725 million. By the end of 1999, Knights share price had soared above $150, and its market cap had surged to $8 billion. A number of factors contributed to the increase in trading volumes on both the NASDAQ and NYSE markets including the flood of cash flows into equity-based mutual funds, historic high returns in US equity markets, the increasing number of companies going public, the emergence and market acceptance of electronic discount brokers, and multiple technological innovations such as the Internet, World Wide Web, and Personal Computer reducing transaction costs.

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