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Knight & Trimark

Traders Magazine, April 1998

John A. Byrne

The success of Jersey City's Knight Securities, and its affiliated Trimark Securities in White Plains, N.Y., bodes well for a hot initial public offering by the firms' parent. The preliminary prospectus, however, raises important considerations. One is that a large percentage of the company's growth in Nasdaq and third-market trading is due to retail-sized order flow. Narrowing spreads have encouraged the company to penetrate the institutional market.

At the same time, the company has changed its payment-for-order-flow arrangements, paying broker dealers only for orders providing a profit opportunity. Limit orders do not receive rebates. Payment for order flow, in fact, decreased 10.3 percent to $16.3 million for the three months ending March 31, 1998, from $18.1 million for the comparable period in 1997.

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