JERSEY CITY, N.J., July 5 /PRNewswire/ -- Knight Trading Group, Inc. today announced that it will post lower than expected earnings due to a difficult market environment during the second quarter. Knight will post a Q&A by 10:30 A.M. Eastern Time today to its Web site (http://www.knighttradinggroup.com) that discusses the second quarter.

Knight will release its official second quarter results on Wednesday, July 18, 2001 at 6:00 a.m. Eastern Time (ET). The Company will conduct its second quarter earnings conference call for analysts, investors and the media at 9:00 a.m. (ET) that same day. The conference call will be Webcast live at 9:00 a.m. (ET) for all investors and interested parties on Knight's Web site (http://www.knighttradinggroup.com).

During Knight's first quarter earnings conference call with analysts, investors and the media on April 18, 2001, the Company gave second quarter guidance that, if the Nasdaq Composite Index ranged between 1700 and 2000, Knight would target projected revenues of $150 - $180 million, with a projected earnings per share range of $0.15 to $0.20. This projected EPS guidance range would be inclusive of quarterly international expansion costs of approximately $0.08 - $0.10.

Overall, the markets were difficult during the second quarter, evidenced by a slow-down in trading and a decline in capital raising activities. Also impacting Knight's earnings were changes in market structure brought about by the implementation of a one-penny Minimum Price Variation (MPV), which took effect for Nasdaq/OTC issues on April 9th. In addition, trading during the Russell Index rebalancing on June 29th was disrupted by technological problems on the Nasdaq's trading platform. Historically, the Russell rebalance is the second quarter's most influential trading day.

Excluding the non-recurring charge, Knight now expects to announce second quarter earnings per share in the range of $0.07 to $0.10. This EPS range includes international expansion costs but excludes the non-recurring charge. The non-recurring charge of $0.06 - $0.08 per share reflects a combination of severance costs related to Knight's already announced employee reductions and one-time asset writedowns.

''Although Knight was fully prepared for the impact of decimalization,'' stated Kenneth D. Pasternak, Chairman, Chief Executive Officer and President of Knight Trading Group, ''the concurrent implementation of a one-penny MPV resulted in changes in trading dynamics which were difficult to assess until they were actually in effect. With ten weeks of operational experience in a one-penny MPV environment, we believe we have found a base from which to fine-tune our trading algorithms and inventory management to adapt successfully to these new dynamics.

''Knight's benefits of scale, technology and analytical trading methodologies become increasingly important as we navigate through this transitional period,'' continued Mr. Pasternak. ''Knight is firmly committed to serving our clients by providing liquidity to the marketplace across the broadest range of issues. Leveraging our advanced trading algorithms and adjusting our product offerings allows us to continue as the market leader and price risk properly while still remaining profitable.

''Already, Knight's competitive advantage has been evidenced by increases in our market share since the implementation of decimalization and the one-penny MPV,'' concluded Mr. Pasternak. ''We expect difficult market conditions, coupled with market structure changes, will result in a rapid consolidation in the wholesale market-making sector.''

Knight is the liquidity center that offers superior execution services to its broker-dealer and institutional clients in over-the-counter (OTC) and listed equity securities, and in equity derivatives. By utilizing Knight's execution solutions, broker-dealers and institutions can meet their fiduciary obligation of obtaining best execution for the securities orders that they place on behalf of their customers. Knight also maintains an asset management business for institutional investors and high net worth individuals through Deephaven Capital Management.

Knight has the power to commit capital for market orders, and also maintains one of the largest limit order books in the OTC market. It is one of the largest destinations for stock orders placed via the Internet. Knight traded 112 billion shares in 2000, a volume behind only those posted by the Nasdaq and the New York Stock Exchange (NYSE). Knight was ranked this year as a Fortune 1000 company. Ultimately, Knight plans to enable the global trading village to trade all types of equity securities and options at anytime, from anywhere in the world. More information about Knight can be obtained at http://www.knighttradinggroup.com.

CONTACT: Margaret Wyrwas, Senior Vice President, Corporate Communications and Investor Relations, 201-557-6954, mwyrwas@knight-sec.com, or Judy Pirro, Manager, Investor and Shareholder Relations, 201-356-1548, judy_pirro@knight-sec.com, or Kara Fitzsimmons, Manager, Corporate Communications, 201-356-1523, kara_fitzsimmons@knight-sec.com, all of Knight Trading Group, Inc.