Market Making Segment
We make markets primarily in global equities, futures, options, fixed income,
currencies and commodities. We are an active participant on all major global
equity and futures exchanges. As a market maker, we commit capital on a principal
basis by offering to buy securities from, or sell securities to, broker dealers,
banks and institutions. Principal trading in the Market Making segment primarily
consists of direct-to-client and non-client exchange-based electronic market
making in equity securities quoted and traded on the NYSE, Nasdaq Stock Market,
OTC market, NYSE Amex, NYSE Arca and several European exchanges. We are connected
to a large number of external market centers including exchanges, ECNs, ATSs,
dark liquidity pools, alternative display facilities (“ADF”), multilateral
trading facilities (“MTF”) and other broker dealers.
The majority of revenues for this segment are derived from direct-to-client
electronic market making in U.S. equities. As a complement to electronic market
making, our cash trading business handles specialized orders and also transacts
on the OTC Bulletin Board, marketplaces operated by the OTC Markets Group Inc.,
and the AIM. We also provide trade executions as an equities DMM on the NYSE
and NYSE Amex and will continue to do so until the completion of our sale of
this business as noted above.
The majority of market making activity is conducted on a principal basis through
the use of automated quantitative models. In direct-to-client market making,
we derive revenues from the difference between the amount paid when securities
are bought and the amount received when the securities are sold. In non-client,
exchange-based market making, we generally derive revenues from pricing and
arbitrage opportunities from financial instruments within the marketplace.
Global Execution Services Segment
We provide agency execution services and trading venues for agency-based, execution-only
trading in global equities, fixed income, futures and options to institutions,
banks and broker dealers. We are an active participant on all major global equity,
futures and options exchanges. We generally earn commissions and commission-equivalents
as an agent between principals for transactions, however, we will commit capital
on behalf of clients as needed. We are connected to a large number of external
market centers including exchanges, ECNs, ATSs, dark liquidity pools, ADFs,
MTFs and other broker dealers.
The majority of revenues for this segment are derived from agency-based, execution-only
trading encompassing algorithmic trading and order routing in global equities;
institutional sales traders executing program, block and riskless principal
trades in global equities and ETFs; a fixed income ECN that also offers trading
applications (KCG BondPoint); and an ATS for global equities (KCG MatchIt).
As previously noted, in November 2014, we sold our FCM business, which was part
of this segment and whose results, through the date of sale, are included within
this segment. Additionally, in March 2015 we sold our KCG Hotspot business,
whose results, through the date of sale, are included within this segment.
Corporate and Other Segment
Our Corporate and Other segment contains investments principally in strategic
financial services-oriented opportunities; manages the deployment of capital
across the organization; houses executive management functions; and maintains
corporate overhead expenses and all other income and expenses that are not attributable
to our other segments. Our Corporate and Other segment contains functions that
support our other segments, such as self-clearing services, including stock
lending activities. We self-clear substantially all of our domestic and international
equity, ETF and equity option order flow.