Is it time to jump Knight Capital’s sinking ship?
With rumors of a bankruptcy or sale of beleaguered Knight Capital swirling, the fate of the market maker’s 1,418 employees remains in serious question. Knight Capital’s personnel are furiously making calls for new jobs, according to a report from FOX Business. Knight Capital reported a $440 million loss after a technology glitch caused Knight to send erroneous orders in NYSE-listed securities during the August 1 open on the NYSE. But just what firms are likely to hire Knight’s employees?
The obvious choices—Jeffries, Goldman Sachs, Interactive Brokers, and Cowen Group—are probably not in the market for boosting headcount to a large degree. Despite aggressive hiring at Jeffries in the past few years, the company recently announced plans to slow recruiting. Goldman Sachs is focusing on new hires in Salt Lake City, far from its Wall Street location and Knight Capital’s stomping grounds.
Given the drop in market volume and recent hiring patterns, it’s unlikely that Interactive Brokers and Cowen Group are looking to swoop up large numbers of Knight’s people either. Interactive Brokers had 885 employees as of March 31, 2012—a very modest increase from 860 employees as of March 31, 2011. Cowen Group went through a round of restructuring in 2011, including a headcount reduction of 15 percent in the fourth quarter of 2011. Average headcount in the second quarter 2012 decreased by 6 percent compared to the prior year period.
With the SEC peering into Knight Capital’s operations, concerns about risk management are once again taking the forefront. Times are sure to be difficult for the folks in IT and risk management at Knight looking for a new role outside of the firm.
According to a company press release, Knight Capital is “actively pursuing its strategic and financing alternatives to strengthen its capital base”. With confidence shrinking in Knight, the nail in the coffin just might be the announcement that Citigroup, Vanguard, and TD Ameritrade pulled routed orders from the market maker.