Knight buys stake in Track Data, shares surge

Track Data Corp. (Nasdaq: TRAC) surged 18 percent Monday after it announced that Knight Trading Group Inc. (Nasdaq: NITE) has agreed to acquire one million shares of Track common stock for $1.25 million. Knight also received a three-year option to acquire an additional two million shares of Track stock for $3.5 million.

Shares jumped 18 percent to $1.18 shortly after the market opened.

The companies also announced they have signed a non-binding letter of intent to operate a joint venture that will cater to the trading needs of institutional investors. The companies said they believe that the order management needs of institutional investors are underserved by the systems currently available in the securities marketplace.

A joint venture will provide a front-end order management system that will meet institutions' securities order handling and routing needs. Knight will provide liquidity and content to the new operation, while Track will add functionality and control.

Track said the vote of confidence from Knight will provide them with a great opportunity to expand online trading and market data system for institutions.