WSJ: Knight Capital Staring at Bleak Deal Environment

Knight shares opened down 50% to $3.50 following Wednesday’s 33% plunge. The company has now lost over $660 million in market value in the past two days.

“If they don’t get an investor within the next 48 to 72 hours, I think Knight’s going to have a hard time surviving,” said David Simon, chief executive of hedge fund firm Twin Capital Management LLC. “When a financial firm is in trouble, it can feed on itself.”

Knight’s technology stumble provided investors a fresh reminder of the pitfalls that electronic trading groups navigate on a daily basis. Analysts saw the rapid downdraft in Knight’s shares casting a further pall over privately held companies, such as high-frequency trading groups and automated trade-routers, that have weighed tapping the public markets.

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