Knight rejected a $500 million rescue-loan offer from Citadel LLC on Aug. 5, said two people with knowledge of the matter. The loan terms would have given Citadel a minority stake in Knight's stock and an interest in its HotSpot foreign-exchange subsidiary, said the people, who spoke on condition of anonymity because the talks were private. Citadel, the $12.5 billion hedge fund run by billionaire Ken Griffin, competes with Knight's market-making and electronic-trading business.
NYSE Euronext said in a statement yesterday that Knight will resume its duties as a designated market maker on the New York Stock Exchange on Aug. 13. The exchange said that all of the firm's securities, staff, operations and systems will return to Knight after being temporarily reassigned to Getco earlier this week.
Designated market makers are traders on the floor of the NYSE who buy and sell specific stocks to help increase liquidity in the market, performing many of the tasks of what used to be known as specialists.