GAAP earnings include $0.03 per diluted share of non-operating real estate charges recorded within the company's Equity Markets segment; excluding this charge, third quarter 2005 operating earnings from continuing operations were $0.26 per diluted share

Equity Markets business segment led financial performance improvement, with adjustments to broker-dealer operations gaining traction and institutional business remaining on track

Asset Management business segment made an important contribution to earnings, with strong performance across Deephaven's strategies Knight Board of Directors approved a $25 million increase in the company's share repurchase program

JERSEY CITY, N.J., Oct 19, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- Knight Capital Group, Inc. (Nasdaq: NITE) today reported GAAP earnings of $24.4 million, or $0.23 per diluted share, for the third quarter of 2005. For the third quarter of 2005, the company recorded charges of $3.2 million, net of tax, or $0.03 per diluted share, relating to the costs associated with excess real estate capacity in Jersey City. Excluding this charge, third quarter 2005 operating earnings from continuing operations were $27.2 million, or $0.26 per diluted share.

For the third quarter of 2004, the company reported a GAAP loss of $1.3 million, or a loss of $0.01 per diluted share, which included a net loss from continuing operations of $6.6 million, or a loss of $0.06 per diluted share, and income from discontinued operations of $5.3 million, net of tax, or $0.05 per diluted share.

"Continuing operations" include the company's two operating business segments, Equity Markets and Asset Management. Continuing operations also include 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 at the close of business on December 9, 2004.

Revenues for the third quarter of 2005 were $184.1 million, compared to $101.8 million from continuing operations for the third quarter of 2004.

"Knight experienced its best results from continuing operations since the first quarter of 2004," said Thomas M. Joyce, Chairman and Chief Executive Officer of Knight Capital Group. "Our Equity Markets business segment led the way as internal efforts, particularly in our broker-dealer operations, drove solid consecutive and year-over-year third quarter improvement in our financial performance. We believe our institutional business fared better than many in a sluggish institutional market, with modest revenue and earnings increases. Asset Management was an important contributor in the third quarter, as Deephaven's strategies benefited from improving market conditions, including sustained M&A activity and increased global volatility led by Asia."

Q3 2005           Q3 2004

    Revenues ($)                               184,096,509       101,817,123
    Net income (loss) from continuing
     operations ($)                             23,963,640        (6,605,568)
    Income from discontinued operations,
     net of tax ($)                                387,934         5,343,961
    Net income (loss) ($)                       24,351,574        (1,261,607)
    Diluted EPS from continuing operations ($)        0.23             (0.06)
    Diluted EPS from discontinued operations ($)         -              0.05
    Diluted EPS ($)                                   0.23             (0.01)
    U.S. equity dollar value traded
     (in $ millions)                               467,658           333,103
    U.S. equity trades executed (in thousands)      50,780            41,572
    Average daily U.S. equity trades (in
     thousands)                                        793               650
    Nasdaq and Listed equity shares traded
     (in millions)                                  25,710            22,546
    OTC Bulletin Board and Pink Sheet shares
     traded (in millions)                          131,690           294,237
    Average revenue capture per U.S. equity
     dollar value traded (bps)                         2.0               2.2
    Average month-end balance of assets
     under management ($ millions)                 3,374.6           3,415.5
    Quarterly fund return to investors*                5.5%             -0.5%

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


                                                 YTD 2005          YTD 2004

    Revenues ($)                               433,326,452       440,172,751
    Net income (loss) from continuing
     operations ($)                             24,367,681       (32,225,312)
    Income from discontinued operations,
     net of tax ($)                                122,007        14,948,350
    Net income (loss) ($)                       24,489,688       (17,276,962)
    Diluted EPS from continuing operations ($)        0.23             (0.29)
    Diluted EPS from discontinued
     operations ($)                                    -                0.13
    Diluted EPS ($)                                   0.23             (0.15)
    U.S. equity dollar value traded (in $
     millions)                                   1,384,141         1,254,516
    U.S. equity trades executed (in thousands)     151,780           150,222
    Average daily U.S. equity trades (in
     thousands)                                        803               799
    Nasdaq and Listed equity shares
     traded (in millions)                           80,172            92,708
    OTC Bulletin Board and Pink Sheet shares
     traded (in millions)                          581,539           990,647
    Average revenue capture per U.S. equity
     dollar value traded (bps)                         1.7               2.6
    Average month-end balance of assets
     under management ($ millions)                 3,372.2           2,756.4
    Year-to-date fund return to investors*             5.2%              1.6%

    * Year-to-date fund return represents the blended return across all
      assets under management in the Deephaven funds


    Equity Markets

During the third quarter of 2005, the Equity Markets business segment generated total revenues of $129.4 million, compared to $95.4 million in the third quarter of 2004. In the third quarter of 2005, the Equity Markets business segment reported net operating earnings of $14.3 million, compared to a net operating loss of $1.8 million in the third quarter of 2004.

"Knight made substantial adjustments to its broker-dealer operations beginning in the second quarter, and we had the full three months of the third quarter to affirm our strategy," Mr. Joyce said. "These changes made an impact on profitability, which was heightened by an increase in retail trading. We refined our structure with new talent across management, sales, service, trading and electronic trading. With enhancements to our trading algorithms and increased automation, today we process more broker-dealer order flow on an automated basis than ever before, allowing for greater efficiency and scale. Knight continues to invest in compliance and technology so that our broker- dealer clients can provide high quality trade execution to their retail customers. Finally, Knight completed its first full quarter with a revised client offering that includes new rebate schedules, resulting in overall lower payment for order flow.

"Our combination of client service, strength in small- and mid-cap stocks and consistency of our execution quality continued to drive institutional business during a quarter that, while better than usual for the cyclical summer season, was still slow," Mr. Joyce added. "Bright points included our London institutional sales office, which finally achieved profitability, and progress cross-selling Donaldson & Co., Direct Trading Institutional and other offerings. With the launch of Direct Edge ECN and other efforts slated for the coming months, Knight is focused on becoming more visible, emphasizing our value to a greater number of clients, and solidifying our position as a premier provider of trading solutions for our clients in today's market."

Asset Management

During the third quarter of 2005, the Asset Management business segment, Deephaven Capital Management, generated $42.0 million in asset management fees, compared to $6.8 million in the same period a year ago. In the third quarter of 2005, the Asset Management business segment reported net operating earnings of $9.6 million, compared to a net operating loss of approximately $300,000 in the third quarter of 2004. Asset Management had approximately $3.4 billion under management at September 30, 2005, down slightly from the $3.5 billion under management at September 30, 2004.

Corporate

In the third quarter of 2005, the Corporate segment reported net operating earnings of $3.2 million, compared to a net operating loss of $4.0 million in the third quarter of 2004.

The company's investment in the Deephaven funds earned $8.5 million, net of tax, during the third quarter of 2005, compared to a loss of approximately $920,000, net of tax, during the third quarter of 2004. At the end of the third quarter of 2005, the company had $281.8 million invested in the Deephaven funds.

The company had $780.8 million in stockholders' equity as of September 30, 2005, equivalent to a book value of approximately $7.53 per diluted share. As of September 30, 2005, the company had $183.6 million in cash and cash equivalents and a $281.8 million investment in funds managed by Deephaven, its Asset Management business segment.

During the third quarter of 2005, the company repurchased 5.3 million shares for approximately $43.9 million under the company's $320 million stock repurchase program. To date, the company has repurchased 37.6 million shares for $295.9 million. At its October 18, 2005 meeting, the Board of Directors authorized a $25 million increase in the size of its repurchase program to $345 million from $320 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 third quarter 2005 earnings conference call for analysts, investors and the media at 9:00 a.m. Eastern Daylight Time (EDT) today, October 19, 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 September 2005 on its Web site before the start of trading today.

About Knight Capital 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 multi-strategy 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

In an effort to provide investors with additional information regarding the Company's results as determined by generally accepted accounting principles (GAAP), the Company also discloses certain non-GAAP information which management believes provides useful information to investors. Within this press release, the Company has disclosed its net income (loss) amounts for certain reporting periods before charges, writedowns and discontinued operations to assist the reader in understanding the impact of these charges, writedowns and discontinued operations on the Company's financial results, thereby facilitating more useful period-to-period comparisons of the Company's businesses.

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 CAPITAL GROUP, INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS*
    (Unaudited)
                        For the three months ended  For the nine months ended
                               September 30,             September 30,
                            2005          2004       2005            2004
    REVENUES
    Commissions and fees $74,860,136  $58,598,744  $212,998,365  $203,804,800
    Net trading revenue   52,348,902   35,906,795   116,821,896   197,869,499
    Asset management
     fees                 41,983,284    6,804,928    67,900,813    28,843,815
    Interest and
     dividends, net        1,763,330    1,198,974     6,319,167     2,828,891
    Investment income
     and other            13,140,857     (692,318)   29,286,211     6,825,746
        Total revenues   184,096,509  101,817,123   433,326,452   440,172,751

    EXPENSES
    Employee
     compensation and
     benefits             68,267,912   50,108,698   173,319,157   168,463,224
    Execution and
     clearance fees       24,584,539   22,042,725    71,479,360    88,487,337
    Soft dollar and
     commission
     recapture expense    15,902,532   14,309,230    46,036,887    44,321,999
    Payments for order
     flow                  3,857,048    4,555,323    14,843,211    27,416,779
    Communications and
     data processing       7,969,419    7,867,254    23,934,639    21,583,633
    Depreciation and
     amortization          4,209,028    3,390,310    12,245,859    10,870,338
    Occupancy and
     equipment rentals     3,238,952    4,144,040    10,186,066    12,880,850
    Professional fees      6,056,274    4,265,149    14,388,019    11,572,279
    Business development   1,616,485    2,053,578     4,617,599     5,921,960
    Writedown of assets
     and lease loss
     accrual               5,509,360      874,275    10,055,252     3,498,261
    Regulatory charges
     and related matters         -            -       2,000,000    79,200,000
    Other                  2,784,784     (820,487)    8,864,251     4,118,364
        Total expenses   143,996,333  112,790,095   391,970,300   478,335,024

    Income (loss) from
     continuing
     operations before
     income taxes         40,100,176  (10,972,972)   41,356,152   (38,162,273)
    Income tax expense
     (benefit)            16,136,536   (4,367,404)   16,988,471    (5,936,961)

    Net income (loss)
     from continuing
     operations           23,963,640   (6,605,568)   24,367,681   (32,225,312)
    Income from
     discontinued
     operations, net of
     tax                     387,934    5,343,961       122,007    14,948,350
    Net income (loss)    $24,351,574  $(1,261,607)  $24,489,688  $(17,276,962)

    Basic earnings per
     share from
     continuing
     operations                $0.24       $(0.06)        $0.23        $(0.29)
    Diluted earnings per
     share from
     continuing
     operations                $0.23       $(0.06)        $0.23        $(0.29)
    Basic and diluted
     earnings per share
     from discontinued
     operations                 $-          $0.05          $-           $0.13
    Basic earnings per
     share                     $0.24       $(0.01)        $0.23        $(0.15)
    Diluted earnings per
     share                     $0.23       $(0.01)        $0.23        $(0.15)

    Shares used in
     computation of
     basic earnings per
     share               101,264,048  112,012,941   104,791,642   112,816,260
    Shares used in
     computation of
     diluted earnings
     per share           103,724,202  112,012,941   107,955,922   112,816,260

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


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

                                              September 30,     December 31,
                                                  2005              2004
    ASSETS
      Cash and cash equivalents               $183,558,099      $445,539,282
      Securities owned, held at clearing
       brokers, at market value                376,380,649       254,473,209
      Receivable from brokers and dealers      256,258,445       244,881,065
      Investment in Deephaven sponsored
       funds                                   281,848,158       215,329,959
      Fixed assets and leasehold improvements
       at cost, less accumulated depreciation
       and amortization                         65,523,628        54,382,503
      Strategic investments                     59,907,552        29,266,796
      Goodwill                                  39,929,678        19,182,248
      Intangible assets, less accumulated
       amortization                             30,500,694        11,546,528
      Other assets                              95,519,062       119,418,725

        Total assets                        $1,389,425,965    $1,394,020,315

    LIABILITIES & STOCKHOLDERS' EQUITY
    Liabilities
      Securities sold, not yet purchased,
       at market value                        $343,619,605      $221,420,569
      Payable to brokers and dealers            94,369,941        88,480,788
      Accrued compensation expense              95,506,562       123,664,383
      Accrued expenses and other
       liabilities                              75,119,665       109,252,681

        Total liabilities                      608,615,773       542,818,421

    Stockholders' equity
      Class A common stock                       1,386,977         1,339,655
      Additional paid-in-capital               466,431,469       427,451,712
      Retained earnings                        611,642,474       587,152,786
      Treasury stock, at cost                 (294,168,558)     (147,636,413)
      Accumulated other comprehensive
       income, net of tax                       19,919,914               -
      Unamortized stock-based compensation     (24,402,084)      (17,105,846)

        Total stockholders' equity             780,810,192       851,201,894

        Total liabilities and stockholders'
         equity                             $1,389,425,965    $1,394,020,315


    KNIGHT CAPITAL GROUP, INC.
    RECONCILIATION OF GAAP TO NON-GAAP DISCLOSURES*
    Amounts in millions, except per share data
    (Unaudited)

                             For the three months ended September 30, 2005

                          Equity     Asset                Discontinued
                          Markets  Management  Corporate   Operations   Total

    GAAP NET INCOME        $11.1      $9.6       $3.2         $0.4      $24.4
    Adjustments, net of
     tax:
      Writedown of assets
       and lease loss
       accrual               3.2         -          -            -        3.2
      (Income) from
       discontinued
       operations              -         -          -         (0.4)      (0.4)
      Net impact of
       adjustments           3.2         -          -         (0.4)       2.8
    NET OPERATING INCOME
     FROM CONTINUING
     OPERATIONS            $14.3      $9.6       $3.2           $-      $27.2


    GAAP NET INCOME PER
     DILUTED SHARE         $0.11     $0.09      $0.03        $0.00      $0.23
    Adjustments, net of
     tax:
      Writedown of assets
       and lease loss
       accrual              0.03         -          -            -       0.03
      (Income) from
        discontinued
        operations             -         -          -        (0.00)     (0.00)
      Net impact of
       adjustments          0.03         -          -        (0.00)      0.03
    NET OPERATING
     INCOME FROM
     CONTINUING
     OPERATIONS PER
     DILUTED SHARE         $0.14     $0.09       $0.03          $-      $0.26


                             For the three months ended September 30, 2004

                          Equity     Asset                Discontinued
                          Markets  Management  Corporate   Operations   Total

    GAAP NET (LOSS)
     INCOME                $(2.3)    $(0.3)      $(4.0)       $5.3      $(1.3)
    Adjustments, net
     of tax:
      Writedown of assets
       and lease loss
       accrual               0.5         -           -           -       0.5
      (Income) from
        discontinued
        operations             -         -           -        (5.3)     (5.3)
      Net impact of
       adjustments           0.5         -           -        (5.3)     (4.8)
    NET OPERATING
     (LOSS) FROM
     CONTINUING
     OPERATIONS            $(1.8)    $(0.3)      $(4.0)         $-     $(6.1)


    GAAP NET (LOSS)
     INCOME PER DILUTED
     SHARE                $(0.02)   $(0.00)     $(0.04)      $0.05    $(0.01)
    Adjustments, net
     of tax:
      Writedown of assets
       and lease loss
       accrual              0.00         -           -           -      0.00
      (Income) from
       discontinued
       operations              -         -           -       (0.05)    (0.05)
      Net impact of
       adjustments          0.00         -           -       (0.05)    (0.04)
    NET OPERATING
     (LOSS) FROM
     CONTINUING
     OPERATIONS
     PER DILUTED SHARE    $(0.02)   $(0.00)     $(0.04)         $-    $(0.05)

    * Totals may not add due to rounding.


    KNIGHT CAPITAL GROUP, INC.
    RECONCILIATION OF GAAP TO NON-GAAP DISCLOSURES*
    Amounts in millions, except per share data
    (Unaudited)

                             For the nine months ended September 30, 2005

                          Equity     Asset                Discontinued
                          Markets  Management  Corporate   Operations   Total

    GAAP NET INCOME         $6.9     $10.7        $6.7        $0.1      $24.5
    Adjustments, net
     of tax:
      Writedown of assets
       and lease loss
       accrual               5.8         -           -           -        5.8
      Regulatory charges
       and related
       matters                 -       1.5           -                    1.5
      (Income) from
       discontinued
       operations              -         -           -        (0.1)      (0.1)
      Net impact of
       adjustments           5.8       1.5           -        (0.1)       7.2
    NET OPERATING INCOME
     FROM CONTINUING
     OPERATIONS            $12.7     $12.2        $6.7          $-      $31.7




    GAAP NET INCOME
     PER DILUTED SHARE     $0.06     $0.10       $0.06       $0.00      $0.23
    Adjustments, net
     of tax:
      Writedown of assets
       and lease loss
       accrual              0.05         -           -           -       0.05
      Regulatory charges
       and related
       matters                 -      0.01           -           -       0.01
      (Income) from
       discontinued
       operations              -         -           -       (0.00)     (0.00)
      Net impact of
       adjustments          0.05      0.01           -       (0.00)      0.07
    NET OPERATING INCOME
     FROM CONTINUING
     OPERATIONS PER DILUTED
     SHARE                 $0.12     $0.11       $0.06          $-      $0.29


                             For the nine months ended September 30, 2004

                          Equity     Asset                Discontinued
                          Markets  Management  Corporate   Operations   Total

    GAAP NET (LOSS)
     INCOME               $(26.9)     $4.6       $(9.9)      $14.9     $(17.3)
    Adjustments, net
     of tax:
      Writedown of
       assets and lease
       loss accrual          2.0         -            -          -        2.0
      Regulatory charges
       and related
       matters              56.4         -            -          -       56.4
      (Income) from
       discontinued
       operations              -         -            -      (14.9)     (14.9)
      Net impact
       of adjustments       58.5         -            -      (14.9)      43.5
    NET OPERATING INCOME
     (LOSS) FROM
     CONTINUING
     OPERATIONS            $31.5      $4.6        $(9.9)        $-      $26.2


    GAAP NET (LOSS)
     INCOME PER DILUTED
     SHARE                $(0.24)    $0.04        $(0.09)    $0.13     $(0.15)
    Adjustments, net
     of tax:
      Writedown of assets
       and lease loss
       accrual              0.02         -             -         -       0.02
      Regulatory charges
       and related
       matters              0.50         -             -         -       0.50
      (Income) from
       discontinued
       operations              -         -             -     (0.13)     (0.13)
    Net impact
     of adjustments         0.52         -             -     (0.13)      0.39
    NET OPERATING INCOME
     (LOSS) FROM
     CONTINUING
     OPERATIONS PER
     DILUTED SHARE         $0.28     $0.04        $(0.09)       $-      $0.23

    * Totals may not add due to rounding.

SOURCE Knight Capital Group, Inc.

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 Capital Group, Inc.