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Operating Business Segments
Organization and Description of the Business
Knight Capital Group, Inc. and its subsidiaries (the “Company”) have two operating
business segments, Asset Management and Global Markets, as well as a Corporate segment.
As of June 30, 2006, the Company’s operating business segments from continuing operations
comprised the following operating subsidiaries:
Asset Management
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Deephaven Capital Management LLC (“Deephaven”) is the investment adviser to
and sponsor of the Deephaven investment funds (the “Deephaven Funds”). Deephaven
also has a U.K. registered investment adviser subsidiary, which is regulated by the
Financial Services Authority (“FSA”) in the U.K., and a Hong Kong registered
investment adviser subsidiary, which is regulated by the Hong Kong Securities
and Futures Commission.
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Global Markets
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Knight Equity Markets, L.P. (“KEM”) operates as a market-maker in over-the-counter
(“OTC”) equity securities, primarily those traded in The Nasdaq Stock Market and on
the OTC Bulletin Board. KEM also operates the Company’s domestic institutional sales
business. Additionally, Donaldson & Co. (“Donaldson”), a division of KEM, offers soft
dollar and commission recapture services. KEM is a broker-dealer registered with the
Securities and Exchange Commission (“SEC” or “Commission”) and is a member of the
Nasdaq Stock Exchange, the National Association of Securities Dealers (“FINRA”), the
National Stock Exchange, the Pacific Stock Exchange and the National Futures
Association (“NFA”).
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Knight Capital Markets LLC (“KCM”) operates as a market-maker in the Nasdaq Intermarket™,
the over-the-counter market for New York Stock Exchange and American Stock Exchange listed
securities. KCM is a broker-dealer registered with the SEC and is a member of the Nasdaq
Stock Exchange and the FINRA.
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Knight Equity Markets International Limited (“KEMIL”) is a U.K. registered broker-dealer
that provides execution services for institutional and broker-dealer clients in U.S.,
European and international equities. KEMIL is authorized and regulated by the FSA and is
a member of the London Stock Exchange, Deutsche Börse AG, Euronext N.V. (incorporating
Euronext Amsterdam, Euronext Brussels, Euronext Lisbon and Euronext Paris), Borsa Italiana,
OMX (incorporating the Copenhagen Stock Exchange, Helsinki Exchange and Stockholm
Stock Exchange), Oslo Børs and virt-x.
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Direct Trading Institutional, L.P. (“Direct Trading”) provides institutions with direct
market access trading through an advanced electronic platform. The business of Direct Trading
was acquired in June 2005. Direct Trading is a broker-dealer registered with the SEC and is a
member of the Nasdaq Stock Exchange, the FINRA and the NFA.
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Direct Edge ECN LLC (“Direct Edge”) operates as an electronic communications network (“ECN”).
Direct Edge is a liquidity destination offering the ability to match trades in Nasdaq National
Market and Nasdaq SmallCap securities by displaying orders in the
FINRA Alternative Display Facility. The business of Direct Edge was acquired in October 2005.
Direct Edge is a broker-dealer registered with the SEC and is a member of the Nasdaq Stock
Exchange, the FINRA and the National Stock Exchange.
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Hotspot FX, Inc. and its subsidiaries (“Hotspot”) provide institutions and dealers with
spot foreign exchange executions through an advanced, fully electronic platform. Hotspot
was acquired effective April 1, 2006. One Hotspot subsidiary is regulated by the FSA and
another Hotspot subsidiary is a Futures Commission Merchant registered with the Commodity
Futures Trading Commission and is a member of the NFA.
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Knight BondPoint delivers a centralized electronic trading platform to the U.S. bond market and a suite of
front-end applications for retail advisors and their clients. The business of ValuBond, Inc. was acquired in October 2006
and changed its name to Knight BondPoint in January 2008.
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Advisory services offered by Knight Portfolio Access, LLC. Securities may be offered by Managed Account Services, LLC, member of FINRA and SIPC. Knight Portfolio Access is a joint venture between Knight Capital Group, Inc. and Clearbrook Financial, LLC. Managed Account Services is an affiliate of Clearbrook Financial.
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