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|NEW ANALYSIS BY MARKIT REVEALS ADVANTAGES FOR INVESTORS UTILIZING KCG'S DIRECT-TO-CLIENT MARKET MAKING OFFERING, "ACKNOWLEDGE EQ"|
NEW ANALYSIS BY MARKIT REVEALS ADVANTAGES FOR INVESTORS UTILIZING KCG'S DIRECT-TO-CLIENT MARKET MAKING OFFERING, "ACKNOWLEDGE EQ"
NEW YORK - (BUSINESS WIRE) In the first third party analysis of direct-to-client market making liquidity, Markit, a leading global provider of financial information services, finds benefits for investors accessing securities firm KCG's client market making offering, Acknowledge EQ. The report "KCG Acknowledge Order Impact Analysis" is being made available publicly via KCG's website.
Greg Tusar, who heads the direct-to-client businesses at KCG, said: "When we launched KCG Acknowledge, we said that accountability and transparency have become more important than ever, which is fundamental to the vision behind this business. We also pledged: 'KCG Acknowledge enables clients to tap into unique liquidity that is often hard to find in today's fragmented market.' But when we put ourselves in our clients' shoes, we realized that talking about this commitment is one thing, demonstrating it is quite another. So we decided that we should put our commitment to the ultimate test and see if the data can speak for itself. We're pleased to discover that yes, it can."
The research, which was sponsored by KCG and conducted by Markit, analyzed six months of order and execution data from 2015 in order to assess the degree of execution quality, potential impact, and original liquidity being delivered by KCG's direct-to-client equity market making liquidity offering, KCG Acknowledge EQ, ("ACK EQ"). Markit's report concluded that there was "statistically significant data that clients of Acknowledge EQ benefited from sending orders to the venue as part of their routing strategy. This is based on two findings in the data. First, ACK EQ provided price improvement on executions vis a vis the NBBO." The data demonstrated that orders which were executed with ACK EQ received prices better than the NBBO more than 35% of the time. "Second, the orders which were executed created less information leakage than orders which did not execute, determined by the difference in adverse price movement in subsequent time periods." Market also found "no significant correlation between the unexecuted orders sent to Acknowledge EQ and outbound orders from the market making desk at KCG."
Dave Weisberger, MD of Trading Services at Markit and one of the report authors, said: "We developed a testable hypothesis to determine whether ACK EQ provides unique liquidity in excess of what is displayed on the consolidated tape from all stock exchanges. Our analysis confirmed that this hypothesis was in fact true. The results showed that KCG ACK EQ executions resulted in reduced market impact, and is strongly suggestive that KCG ACK EQ provides significant unique liquidity. Our belief is that empirical evidence, such as the type provided in this study, is what investors should use when evaluating how and where they source liquidity and is more meaningful than the qualitative information that most venues provide."
Certain statements contained herein and the documents incorporated by reference containing the words "believes," "intends," "expects," "anticipates," and words of similar meaning, may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These "forward-looking statements" are not historical facts and are based on current expectations, estimates and projections about KCG's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Any forward-looking statement contained herein speaks only as of the date on which it is made. Accordingly, 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 including, without limitation, risks associated with: (i) the inability to manage trading strategy performance and sustain revenue and earnings growth; (ii) the sale of KCG Hotspot, including the receipt of additional payments that are subject to certain contingencies; (iii) changes in market structure, legislative, regulatory or financial reporting rules, including the increased focus by Congress, federal and state regulators, the SROs and the media on market structure issues, and in particular, the scrutiny of high frequency trading, alternative trading systems, market fragmentation, colocation, access to market data feeds, and remuneration arrangements such as payment for order flow and exchange fee structures; (iv) past or future changes to KCG's organizational structure and management; (v) KCG's ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by KCG's customers and potential customers; (vi) KCG's ability to keep up with technological changes; (vii) KCG's ability to effectively identify and manage market risk, operational and technology risk, cybersecurity risk, legal risk, liquidity risk, reputational risk, counterparty and credit risk, international risk, regulatory risk, and compliance risk; (viii) the cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings; (ix) the effects of increased competition and KCG's ability to maintain and expand market share; (x) the announced plan to relocate KCG's global headquarters from Jersey City, NJ to New York, NY; and (xi) KCG's ability to complete the sale or disposition of any or all of the assets or businesses that are classified as held for sale. The list above is not exhaustive. Because forward looking statements involve risks and uncertainties, the actual results and performance of KCG may materially differ from the results expressed or implied by such statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, KCG 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. Readers should carefully review the risks and uncertainties disclosed in KCG's reports with the U.S. Securities and Exchange Commission ("SEC"), including those detailed in "Risk Factors" in Part I, Item 1A of KCG's Annual Report on Form 10-K for the year ended December 31, 2015, "Legal Proceedings" in Part I, Item 3, under "Certain Factors Affecting Results of Operations" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7, in "Quantitative and Qualitative Disclosures About Market Risk" in Part II, Item 7A, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time. This information should be read in conjunction with KCG's Consolidated Financial Statements and the Notes thereto contained in its Form 10-K, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time.