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Spoofing, Surveillance and Supervision

Jay Biondo, Product Manager - Surveillance at Trading Technologies, co-authored an article along with James Lundy and Nicholas Wendland, both of Drinker Biddle & Reath LLP, reviewing the CFTC's regulations and expanding efforts, 21st century surveillance and supervision, as well as strategic recommendations.

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July 31, 2001

Shining Knight's Armour

By Gregory Bresiger

Knight Trading Group, a large market maker under siege, has changed leadership, elevating Peter S. Hajas to the positions of president and chief operating officer. He replaces Kenneth Pasternak, who will continue as Knight's chief executive and chairman. Hajas is chief executive of Knight Financial Products.

Knight, the largest Nasdaq market maker, recently fell on hard times. Its stock has been in retreat, dropping from $25 to $10. Investors have been spooked by earnings, which recently crashed. They were down by 94 percent in the last quarter. Bad news has fueled the takeover rumors, with analysts saying Knight's true value is at least $15 a share.

The company's says it is promoting from within to obtain better performance here and abroad. "We are applying our management bench strength to focus and fortify each of our business operations... Peter has hands-on experience building companies from the ground up and building companies overseas," according to a company statement.

But the big issue for Knight is whether the current problems are a blip - the result of temporary pressure on market maker profits - or part of a structural problem in which market making business is no longer highly profitable. Analysts are divided. Raymond James & Associates says Knight is a sell, predicting profits will continue to go down over the next year. But David Katz, of Matrix Asset Advisors, says those who buy Knight now will obtain value because it is, "an excellent long-term franchise."