Company earned $0.05 per diluted share from the sale of a portion of its investment in the International Securities Exchange

Excluding the ISE gain, operating results from the company's three segments,

Equity Markets, Asset Management and Corporate, were essentially flat in challenging market conditions

Board of Directors approved a $70 million increase in the company's share repurchase program

JERSEY CITY, N.J., April 20 /PRNewswire-FirstCall/ -- Knight Trading Group, Inc. (Nasdaq: NITE) today reported GAAP earnings of $5.9 million, or $0.05 per diluted share, for the first quarter of 2005.

For the first quarter of 2004, the company reported GAAP earnings of $31.8 million, or $0.26 per diluted share, which included net income from continuing operations of $25.9 million, or $0.21 per diluted share, and income from discontinued operations of $5.9 million, net of tax, or $0.05 per diluted share.

"Continuing operations" includes the company's Equity Markets and Asset Management operating business segments as well as a Corporate segment, encompassing corporate investments and overhead expenses. Amounts reported as "discontinued operations" include the company's former Derivative Markets business segment, the sale of which was completed to Citigroup for $237 million in cash at the close of business December 9, 2004. In accordance with generally accepted accounting principles, the results of the Derivative Markets segment, as well as the gain on the sale of this business, have been included within discontinued operations for all periods presented. The final purchase price was subject to adjustment based on the final determination of the book value of the Derivative Markets business at the time the deal closed. The results of this adjustment and other expenses related to the sale resulted in a loss from discontinued operations, net of tax, of $266,000 in the first quarter of 2005.

Revenues from continuing operations for the first quarter of 2005 were $137.6 million, compared to $198.3 million from continuing operations for the first quarter of 2004.

"Gains by our Asset Management segment and proceeds from a portion of our investment in the International Securities Exchange led to Knight's modestly positive results in the first quarter," said Thomas M. Joyce, Chairman and Chief Executive Officer of Knight Trading Group. "Additionally, industry statistics indicate that our share of the institutional market continued to climb. Our Equity Markets segment essentially broke even during the quarter, despite the poor trading environment and our historically low revenue capture. While market and competitive pressures continue to challenge us, Knight is taking steps to improve the business over the long term, including a reorganization of our equities operations announced in early April."

                                                          Q1 2005      Q1 2004

    Revenues ($)                                      137,556,870  198,319,470
    Net income from continuing operations ($)           6,124,955   25,946,686
    (Loss) income from discontinued operations,
     net of tax ($)                                      (265,927)   5,867,771
    Net income ($)                                      5,859,028   31,814,457
    Diluted EPS from continuing operations ($)               0.05         0.21
    Diluted EPS from discontinued operations ($)               --         0.05
    Diluted EPS ($)                                          0.05         0.26
    U.S. equity dollar value traded (in $ millions)       470,676      504,615
    U.S. equity trades executed (in thousands)             52,849       59,592
    Average daily U.S. equity trades (in thousands)           866          961
    Nasdaq and Listed equity shares traded (in millions)   29,099       40,927
    OTC Bulletin Board and Pink Sheet shares traded
     (in millions)                                        295,799      320,555
    Average revenue capture per U.S.
     equity dollar value traded (bps)                         1.7          2.8
    Average month-end balance of assets under management
     ($ millions)                                         3,478.9      1,965.1
    Quarterly fund return to investors*                      0.8%         2.0%

     * Quarterly fund return represents the blended quarterly return across
       all assets under management in the Deephaven funds

Equity Markets

During the first quarter of 2005, the Equity Markets business segment, which consists of both domestic and international equity market-making and institutional sales operations, generated total revenues of $108.0 million, compared to $177.9 million during the first quarter of 2004. In the first quarter of 2005, the Equity Markets business segment reported a net loss of approximately $380,000, which represents net income of approximately $510,000 from domestic equity markets and a net loss of $890,000 from our London operations.

On April 4, 2005, Knight issued two news releases regarding its Equity Markets segment. The company announced an agreement to acquire the business of Direct Trading Institutional, Inc., a direct market access firm. That same day, the company also announced the reorganization of its Equity Markets segment into three primary groups: Broker-Dealer, Electronic Services and Institutional.

"We reorganized our equities operations to both improve service for our clients and returns for our shareholders," Mr. Joyce said. "By sharpening our focus on each type of client, we can better understand their needs for capital commitment, sales trading and electronic services. We believe our Broker-Dealer Group will respond well to efforts to increase efficiencies through automation and cost-cutting measures while preserving our high level of client service. At the same time, we look forward to exploring new opportunities through our Electronic Services Group and continuing to grow our Institutional Group.

"Our effort to produce more consistent returns is aided by our considerable trading volume and our technology," Mr. Joyce continued. "We have the size and the balance sheet strength needed to adjust our business quickly in response to competitive pressures and market structure changes, and to pursue new offerings. The acquisition of direct access capabilities is the first of many strategic moves we expect to make to support our new structure and leverage our trading platform."

Asset Management

During the first quarter of 2005, the Asset Management business segment, Deephaven Capital Management, generated $17.9 million in asset management fees, compared to $13.9 million in the same period a year ago. Asset Management had approximately $3.5 billion under management at March 31, 2005, down slightly from the $3.6 billion under management at December 31, 2004, and up from $2.2 billion at March 31, 2004.

Corporate

The company's investment in the Deephaven funds was slightly less than breakeven during the first quarter of 2005, down from pre-tax earnings of $4.8 million in the first quarter of 2004. At the end of the first quarter of 2005, the company had $315.2 million invested in the Deephaven funds.

On January 1, 2005, the company made an additional short-term investment in the Deephaven funds of $100 million, a portion of its proceeds from the sale of the Derivative Markets segment. This investment was redeemed by the company on April 1, 2005, thereby reducing the company's total corporate investment in the Deephaven funds to $215 million.

In conjunction with the initial public offering of the International Securities Exchange in March 2005, the company sold approximately 30% of its original equity ownership stake of 2.48 million common shares. As a result of the transaction, the company recognized a gain of $5.6 million, net of taxes, or $0.05 per diluted share. The company currently owns 1.73 million common shares of the ISE.

The company had $833.8 million in stockholders' equity as of March 31, 2005, equivalent to a book value of $7.42 per diluted share. As of March 31, 2005, the company had $232.6 million in cash and cash equivalents and a $315.2 million investment in funds managed by Deephaven, its Asset Management business segment.

During the first quarter of 2005, the company repurchased 6.6 million shares for approximately $68 million under the company's $250 million stock repurchase program. To date, the company has repurchased 28.3 million shares for $219 million. At its April 19, 2005 meeting, the Board of Directors authorized a $70 million increase in the size of its repurchase program to $320 million from $250 million. The company cautions that there are no assurances that any further repurchases may actually occur.

                                    * * *

Copies of this earnings release and other information on the company can be obtained at the company's Web site, http://www.knight.com. The company will conduct its first quarter 2005 earnings conference call for analysts, investors and the media at 9:00 a.m. Eastern Daylight Time (EDT) today, April 20, 2005. The conference call will be Webcast live at 9:00 a.m. EDT for all investors and interested parties on Knight's Web site. In addition, the company will release its monthly volume statistics for March 2005 on its Web site before the start of trading today.

                                    * * *

About Knight Trading Group

Knight is a leading provider of comprehensive trade execution and asset management services. Our Equity Markets business offers institutions and broker-dealers high quality trade execution and capital commitment across the depth and breadth of the equity market. Our Asset Management business, Deephaven Capital Management, is a market-neutral investment manager focused on delivering risk-adjusted returns with low volatility for institutions and high net worth individuals. Knight strives to be a valued partner by providing superior service and continually enhancing its offering to meet client needs. More information about Knight can be obtained at http://www.knight.com.

Presentation of Information in this Press Release

Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Since such statements involve risks and uncertainties, the actual results and performance of the Company may turn out to be materially different from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made herein; however, readers should carefully review reports or documents the Company files from time to time with the Securities and Exchange Commission including, without limitation, the risks and uncertainties detailed under the headings "Certain Factors Affecting Results of Operations" and "Risks Affecting our Business" in the Company's Annual Report on Form 10-K.

     KNIGHT TRADING GROUP, INC.
     CONSOLIDATED STATEMENTS OF OPERATIONS*
     (Unaudited)
                                         For the three months ended March 31,
                                                2005              2004
    REVENUES
    Net trading revenue                        $37,421,828       $100,727,855
    Commissions and fees                        70,116,011         76,637,524
    Asset management fees                       17,880,667         13,932,132
    Interest and dividends, net                  2,339,800            857,962
    Investment income and other                  9,798,564          6,163,997
     Total revenues                            137,556,870        198,319,470

    EXPENSES
    Employee compensation and benefits          56,857,441         65,103,791
    Execution and clearance fees                23,546,783         37,762,298
    Soft dollar and commission recapture
     expense                                    15,484,575         15,775,915
    Payments for order flow                      7,404,075         13,018,439
    Communications and data processing           7,813,959          6,753,777
    Depreciation and amortization                4,250,398          3,870,824
    Occupancy and equipment rentals              3,996,041          4,435,070
    Professional fees                            3,776,416          3,353,024
    Business development                         1,293,336          2,042,971
    Other                                        2,653,746          2,749,333
     Total expenses                            127,076,770        154,865,442

    Income from continuing operations before
     income taxes                               10,480,100         43,454,028
    Income tax expense                           4,355,145         17,507,342

    Net income from continuing operations        6,124,955         25,946,686
    (Loss) income from discontinued operations,
     net of tax                                   (265,927)         5,867,771
    Net income                                  $5,859,028        $31,814,457

    Basic earnings per share from continuing
     operations                                      $0.06              $0.23
    Diluted earnings per share from continuing
     operations                                      $0.05              $0.21
    Basic earnings per share from discontinued
     operations                                         $-              $0.05
    Diluted earnings per share from discontinued
     operations                                         $-              $0.05
    Basic earnings per share                         $0.05              $0.28
    Diluted earnings per share                       $0.05              $0.26

    Shares used in computation of basic earnings
     per share                                 108,858,845        113,473,360
    Shares used in computation of diluted
     earnings per share                        112,409,158        121,988,464

     * Certain prior period amounts have been reclassified to conform to the
       current period presentation.


     KNIGHT TRADING GROUP, INC.
     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
     (Unaudited)

                                              March 31, 2005 December 31, 2004
    ASSETS
      Cash and cash equivalents                 $232,633,119     $445,539,282
      Securities owned, held at clearing
       brokers, at market value                  279,860,044      254,473,209
      Receivable from brokers and dealers        443,635,264      244,881,065
      Investment in Deephaven sponsored funds    315,157,464      215,329,959
      Fixed assets and leasehold improvements
       at cost, less accumulated depreciation
       and amortization                           62,953,966       54,024,186
      Strategic investments                       67,996,445       29,266,796
      Goodwill                                    19,182,248       19,182,248
      Intangible assets, less accumulated
       amortization                               11,391,111       11,546,528
      Other assets                                67,326,039      117,305,578

        Total assets                          $1,500,135,700   $1,391,548,851

    LIABILITIES & STOCKHOLDERS' EQUITY
    Liabilities
      Securities sold, not yet purchased,
       at market value                          $226,027,863     $221,420,569
      Payable to brokers and dealers             330,744,844       88,480,788
      Accrued compensation expense                49,226,779      123,664,383
      Accrued expenses and other liabilities      60,321,008      103,485,220

        Total liabilities                        666,320,494      537,050,960

    Stockholders' equity
      Class A common stock                         1,381,199        1,339,655
      Additional paid-in-capital                 463,946,314      427,451,712
      Retained earnings                          596,307,811      590,448,783
      Treasury stock, at cost                   (216,604,389)    (147,636,413)
      Accumulated other comprehensive income,
       net of tax                                 23,886,641               -
      Unamortized stock-based compensation       (35,102,370)     (17,105,846)

        Total stockholders' equity               833,815,206      854,497,891

        Total liabilities and stockholders'
         equity                               $1,500,135,700   $1,391,548,851

SOURCE Knight Trading Group, Inc. -0- 04/20/2005 /CONTACT: Margaret Wyrwas, Senior Managing Director, Corporate Communications & Investor Relations, +1-201-557-6954, mwyrwas@knight.com, or Kara Fitzsimmons, Vice President, Corporate Communications, +1-201-356-1523, kfitzsimmons@knight.com, or Greta Morley, Vice President, Marketing Communications & Public Relations, +1-201-557-6948, gmorley@knight.com, or Molly McDowell, Analyst, Corporate Communications & Investor Relations, +1-201-356-1723, mmcdowell@knight.com, all of Knight Trading Group, Inc./ /Web site: http://www.knight.com / (NITE)