Attempting to Avoid Bankruptcy, Knight Capital Secures Last Minute Lifeline

Steven Anfield, Benzinga Staff Writer

August 03, 2012 11:03 AM

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Originally published on Fox Business

Knight Capital Group (KCG: 3.44, +0.86, +33.33%) told brokers Friday morning that the embattled market maker has received a badly-needed line of credit, raising hopes the firm reeling from a $440 million trading loss can survive the weekend without a bankruptcy filing.

Shares of Knight Capital, the largest handler of stock orders for U.S. retail brokerages, surged as much as 33% on the news, which FOX Business's Charlie Gasparino confirmed. However, the company's shares remain off more than 65% since Tuesday's close of $10.33.

It's not clear which lender or lenders are providing the line of credit, which is seen as a stop gap to replace losses from an erroneous trade, but Knight had been in talks with J.P. Morgan Chase (JPM: 36.06, +0.89, +2.53%) over an emergency loans.

Thanks to the line of credit, Knight executives have told trading firms to route trades through the firm as usual.

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Originally posted here.

Posted in: Markets, Trading Ideas