Leading American financial services firm Knight Capital Group, engaged in market making, electronic execution, and institutional sales and trading, is reportedly in talks with rival firms Getco and Virtu for sale of its market making business unit.

While Knight Capital is seemingly considering the sale of its largest business unit to resurrect its business following near bankruptcy earlier this year, the company's Chief Executive Tom Joyce has apparently stated in an internal memo that any sale would only be governed by the twin objectives of enhancing shareholder value and improving the offerings to the company's clients.

Joyce has in fact stated that the company is well capitalized at this stage and any decision to sell out its market making business unit will not be governed by its setbacks in August this year.

Knight Capital's market-making operation uses computer models to match buy and sell orders in stocks and options, executing an estimated 10 percent of US volume. The company handles stock trading orders from major brokers like TD Ameritrade and E-Trade and it routes the orders to exchanges including the New York Stock Exchange.

On August 1, the business unit experienced a software glitch in its systems which resulted in a flood of orders to the New York Stock Exchange. Knight Capital ended up with a massive position that it had unload at a debilitating loss of around $460 million. In October, the company recorded a third-quarter loss of $389.9 million. But the company has greatly recovered from the reversal.

Pertinent to note that Getco was one of the firms involved in the $400 million rescue of Knight Capital in August, led by Jefferies Group. Blackstone Group LP, Stephens Inc, and financial services companies TD Ameritrade Holding Corp and Stifel Financial were among the others involved in the rescue effort. Subsequently, Getco investor General Atlantic, as well as Blackstone and TD Ameritrade, were given seats on Knight's board.

There is no official confirmation from Knight Capital or Getco and Virtu regarding the talks and the outcome.