KCG Holdings (KCG)

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-- TD Ameritrade , Scottrade resume sending orders to Knight
--Firms still avoiding Knight include Fidelity, E*Trade
--Knight shares leap 61% in Friday trading
(Adds details throughout on TD Ameritrade and Scottrade resuming routing of customer orders to Knight.)
By Brett Philbin and Liz Moyer
Online brokerages TD Ameritrade Holding Corp. (AMTD) and Scottrade Inc. resumed routing customer orders to Knight Capital Group (KCG), reversing their stance of the past three days, sending shares of the embattled Knight up 61% Friday.
Other financial institutions continued to shun Knight, including Fidelity Investments , E*Trade Financial Corp. (ETFC) and LPL Financial Holdings Inc. ( LPLA).
Knight shares began to rise sharply in premarket trading Friday after The Wall Street Journal , citing people familiar with the matter, reported the firm received a line of credit that will allow it to operate for the day. Representatives of Knight have called trading-desk executives, encouraging them to route orders to the firm as usual, these people said. Still, with the stock trading around $4.08 a share, it is sharply below $10.33 , its Tuesday closing price.
In a statement, TD Ameritrade Chief Executive Fred Tomczyk said, "After considerable review and discussion, we are resuming our order-routing relationship with Knight," adding Knight "has long been a good and trusted partner."
TD Ameritrade , along with several banks and brokerages, had been sending orders to other market-markers since Knight Capital disclosed a technology issue Wednesday that cost it $440 million and severely dented market confidence in the Jersey City, N.J. , firm. TD Ameritrade had been testing its systems over the past two days to ensure the routing process would run properly.
Knight Capital executives held meetings with TD Ameritrade and communicated to brokers it had received new financing, CNBC reported earlier Friday.
TD Ameritrade routed approximately 4% of its total customer orders to Knight Capital , while Scottrade sent 30% of its trades in NYSE -listed securities and 37% of its trades in Nasdaq securities through Knight as of the end of June, according to a regulatory filings.
A Scottrade spokeswoman said the online brokerage "began routing orders on limited basis to Knight at 12:30 p.m. Central Standard Time ," adding "we have confidence in the execution services provided by Knight."
A spokesman for Vanguard didn't immediately respond to a request for comment after the news some trading partners had returned to Knight. Earlier Friday, he said Vanguard wasn't trading with the firm. As of June, Vanguard routed 26% of its customer orders in NYSE Euronext -listed securities to Knight, according to a regulatory filing.
E*Trade continues to send its trades to firms other than Knight, a spokesman said.
Fidelity also wasn't routing customer orders to Knight Friday, according to a person familiar with the matter. It sent 33% of orders to Knight as of the end of June.
Knight has been exploring ways to shore up its capital position, including outside financing or potential deals, after the technology glitch Wednesday raised questions about the reliability of highly automated equity trading.
CNBC said Goldman Sachs Group Inc. (GS) helped Knight Capital unwind its unintended stock purchases late Wednesday, buying Knight's unwanted positions in one block sale, citing people familiar with the situation.
CNBC reported Knight has three business days to settle the trades.
Write to Brett Philbin at [e-mail]
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(END) Dow Jones Newswires
08-03-12 1538ET
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