Knight/Trimark Group, Inc. (Nasdaq: NITE) was making strong gains again Tuesday as it announced a deal with OptiMark Technologies, Inc. which will improve its services, and potentially lead to a majority ownership stake in the company over the course of the three-year alliance.
Knight shares were up 2 9/16 to 31 1/16, or 9 percent, continuing Monday's steep rise. Shares had plummeted after the company reported a solid third quarter, but warned growth would be nearly half what analysts were expecting due to declining trading volumes.
The OptiMark Trading System is the largest wholesale market marker in U.S. equity securities. The alliance will give Knight the ability to create block trades through the aggregation of its retail orders, and its willingness to commit capital will facilitate a market for large institutional orders in the OptiMark Trading System.
The agreement also gives Knight the opportunity to earn warrants in OptiMark Technologies stock based on its trade volume through the OptiMark Trading System. Over the three-year alliance, Knight could thus potentially earn the largest ownership stake in OptiMark.
Privately held OptiMark Technologies offers matching facilities for markets and exchanges globally, in order to benefit buyers and sellers in all markets by increasing efficiency and fairness while lowering the cost of trading. OptiMark Trading Systems currently works with the Pacific Stock Exchange and the Nasdaq. OptiMark's major shareholders include General Atlantic Partners, Softbank, American Century, Goldman Sachs, Merrill Lynch and PaineWebber.
Knight will give OptiMark the critical mass required to improve its system's matching ability, said Kenneth D. Pasternak, president and chief executive officer of Knight/Trimark Group. ``In turn, Optimark's strong desk-top presence among institutions and advanced trading system will deepen our growing presence in the institutional market. The alliance will also bolster our ability to continually refine our best execution capabilities,'' he added.