After the trading errors caused due to software glitches in August 2012, Knight Capital, a brokerage firm in New Jersey, offered itself up for acquisition. The company is reaching out for financial rescue as the software errors cost them a whopping $450 million, reported Wall Street Journal.
Two rival firms, Getco LLC and Virtu Financial LLC have been bidding to acquire Knight Capital. Both companies have bid a sum of $1 billion to take over Knight Capital's operations and assets. However, Knight's board members have yet to come to a decision. They are expected to meet Monday, Dec. 17 to arrive at a conclusion, reported Wall street journal.
Layoffs are expected in Knight's staff if Getco LLC takes over, as Knights gets to remain a public trading company. "If they remain a public company, they don't get a breather. They need to perform right away," Larry H. Lattig, president of Mesirow Financial Consulting told eFinancial Careers.
If Virtu LLC takes over Knights, the company would turn into a private trading firm which would prove to be less risky for Knight's employees, reported eFinancial Careers.
Knight had previously announced a restructuring of its trading and sales division and job cuts in 2011.
"Regardless which firm acquires Knight, institutional staffers should be worried about losing their jobs." Chris Allen, an analyst with Evercore Partners, told eFinancial Careers.
"At the end of the day, the institutional business is not profitable. I could see another massive restructuring or even a shutdown coming," he added.
Either company would have to face some heavy difficulties after the acquisition, which would include the task of assimilating Knight's 1500 employees, reported Wall street Journal.
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