Knight acquired ValuBond, a privately-held fixed income ECN and provider of front-end fixed income trading applications for retail brokerage firms, in July 2006. The relaunch follows the completion of several initiatives including technology upgrades, product enhancements and team additions as well as the full integration with Knight's comprehensive market access and trade execution services.

"Given the growth in demand among retail investors for fixed income securities, brokerage firms are under pressure to reduce manual processes and provide clients with quality trade executions," said James P. Smyth, Executive Vice President of Knight Capital Group. "Knight BondPoint was developed to provide retail brokerage firms with access to centralized liquidity and cost- efficient, electronic trade execution services."

Knight BondPoint operates an effective fixed income marketplace and automates trading, thereby increasing operational efficiencies for firms, facilitating trading and lowering related transaction costs. Knight BondPoint operates a fixed income ECN - a centralized, electronic inter-dealer, cross- matching system - connecting more than 200 retail brokerage firms. In addition, Knight BondPoint also provides a fully customizable front-end application allowing financial advisors and brokers to easily search, analyze and execute trades for municipals, corporates, agencies, treasuries, medium term notes, structured products, auction rate securities and certificates of deposit.

"Knight BondPoint's product suite provides our clients with tools that take a lot of the inefficiencies out of fixed income trading in smaller, retail-size lots," said Marshall A. Nicholson, Director of Knight BondPoint. "Our fixed income trading solutions can be integrated into both proprietary and third party systems, enabling our clients to automate trading, compliance, clearing and other processes."

Recent Initiatives

In 2007, Knight relocated ValuBond's data center to its Jersey City, NJ headquarters and also upgraded disaster recovery facilities. Recent Knight BondPoint enhancements include compliance functionality, consisting of exception reporting, trade execution documentation and archival. Further, Knight BondPoint expanded its dedicated sales team and implemented cross selling initiatives with Knight that has resulted in a number of new clients from the firm's sell-side client base.

"As a result of the technology integration, we have not only added scale to our solutions, but also offer new and cost efficient ways to access Knight BondPoint by leveraging Knight Capital Group's extensive connectivity infrastructure," added Nicholson.

Planned enhancements to Knight BondPoint include upgrades to Knight BondPoint's structured products module and also workflow and execution solutions for auction rate securities and unit investment trusts.

The U.S. Fixed Income Market

The U.S. fixed income market is one of the largest securities markets in the world with more than $29.2 trillion in outstanding debt according to SIFMA as of September 31, 2007. The average daily dollar value traded rose from $274.0 billion in 1996 to $508.9 billion in 2001 and $889.8 billion in 2006. According to industry analysts, the retail fixed income market accounts for approximately 70 percent of the total fixed income transactions and is expected to expand as 75+ million baby boomers enter retirement and begin shifting investment assets from growth to preservation strategies.