Fitch: Knight Capital exposure among counterparties "manageable"

NEW YORK Fri Aug 3, 2012 12:08pm EDT

NEW YORK (Reuters) - Fitch Ratings on Friday said that it believes exposure among large rated counterparties to Knight Capital Group Inc is manageable, as the beleaguered market maker scrambles to save itself.

Embattled Knight Capital has obtained a credit line that will allow the brokerage to operate for the day, but major customers were still not sending trades to the company on Friday.

A software glitch on Wednesday flooded the New York Stock Exchange with unintended orders for scores of stocks, boosting some shares by more than 100 percent and leaving the largest U.S. retail market maker with a trading loss of $440 million, imperiling its survival.

"The large trading losses suffered by Knight Capital Group (KCG) since Wednesday's software glitch may ultimately lead to a structural change in the equity market-making business, but Fitch Ratings believes exposure to KCG, among large rated counterparties, is moderate and manageable," the ratings agency said in a statement.

"As a result, even in a bankruptcy scenario, we do not expect any major rated institutions to suffer large losses linked to KCG's difficulties."

(Reporting by Luciana Lopez; Editing by James Dalgleish)