Knight Capital Group Inc. (KCG) agreed Thursday to buy the market-making units of Kellogg Capital Markets at the New York Stock Exchange, broadly expanding Knight's participation at the Big Board.

The deal, which will see Knight responsible for making markets in more than 1,100 stocks and exchange-traded funds listed on NYSE Euronext (NYX) markets, is the second major effort this year by an electronic trading firm to expand its role at the exchange.

Chicago-based electronic trading firm Getco LLC in February moved to take on a key role on the floor of the NYSE following the exit of LaBranche & Co. Inc. (LAB), once among the biggest market makers on Wall Street.

Market makers are central to exchange trading, serving as the buyers to investors seeking to sell stock and sellers to those who want to buy. Knight is among the biggest electronic market makers in U.S. stocks, and in June initiated a role at the NYSE making markets in 207 Nasdaq-listed stocks now trading on NYSE Euronext's Amex platform.

Thursday's deal will see Knight take over responsibility for trading in about 800 NYSE and NYSE Amex-listed securities, as well as 322 exchange-traded funds listed on NYSE Euronext's electronic Arca exchange.

"The Kellogg acquisition is a natural extension of two of our already successful businesses: electronic market making and ETF trading," said Thomas Joyce, chief executive of Knight, which earlier this year shifted its listing to NYSE Euronext from Nasdaq OMX Group Inc. (NDAQ).

The move also represents Kellog's exit from its market-making roles at NYSE Euronext, said Kirk Kellogg, chief executive of the broker-dealer, speaking in a statement.

Knight's effort to expand its market-making presence comes as regulators scrutinize rules for firms that provide liquidity to U.S. markets in the wake of the May 6 "flash crash." Some of that afternoon's price volatility was attributed to the exit of major trading firms, which was seen reducing the number of participants able to buy and sell shares.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com
Labranche (NYSE:LAB)
Historical Stock Chart
From Jun 2024 to Jul 2024 Click Here for more Labranche Charts.
Labranche (NYSE:LAB)
Historical Stock Chart
From Jul 2023 to Jul 2024 Click Here for more Labranche Charts.