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Market Making
The Market Making segment encompasses direct-to-client and non-client, exchange-based market making across multiple asset classes and is an active participant in all major cash, options and futures markets in the U.S., Europe and Asia. During the first quarter of 2016, the segment generated total revenues of $258.9 million and pre-tax income of $75.5 million. Included in first quarter revenues is a $2.9 million gain from the sale of assets related to retail U.S. options market making.

In the first quarter of 2016, the market selloff to start the year contributed to a 7 percent rise in consolidated U.S. equity dollar volume, a widening of spreads and higher realized volatility for the S&P 500 year-over-year. In addition, the market produced seasonally strong retail trading activity and a 31 percent increase in U.S. equity futures contracts. Outside of U.S. equities, results were affected by the rise in market volumes of U.S. Treasuries and Asian equities year-over-year, offset in part by the declines in market volumes of European equities and foreign exchange as well as the continued deterioration in prices of commodities. For the quarter, revenues for the Market Making segment rose 15.3 percent year over year.

Mr. Coleman commented, "Despite the difficulties presented by the market selloff in the first half of January and heightened competition for retail order flow, market making in U.S. equities generated a substantial contribution to KCG`s first quarter results. We continued to focus on strategic clients as well as develop the pipeline of new strategies and enhance currently deployed models. The results from global equities and FICC rebounded from the previous quarter. KCG Acknowledge FI more than doubled client market making volume in U.S. Treasuries year over year. In Asia, trading during the quarter was led by Japan and Singapore."

In the fourth quarter of 2015, the segment generated total revenues of $168.2 million and a pre-tax loss of $5.1 million. Excluding charges related to asset writedowns of $14.2 million, the segment generated non-GAAP pre-tax income of $9.1 million.

During the first quarter of 2015, the segment generated total revenues of $224.5 million and pre-tax income of $39.3 million.

Select Trade Statistics: U.S. Equity Market Making

Global Execution Services
The Global Execution Services segment comprises agency execution services and trading venues. During the first quarter of 2016, the segment generated total revenues of $76.4 million and pre-tax income of $6.3 million.

In the first quarter of 2016, institutional trading activity drove the heightened U.S. equity market volumes and volatility to start the year. The deleveraging in January shifted to rebalancing which prolonged the high levels of trading through February. KCG Institutional Equities grew volumes of U.S. equities year over year from algorithmic trading and high touch sales trading in single stocks, ETFs and programs. KCG BondPoint set a new quarterly record for fixed income par value traded, which was attributable to market share gains compounded by increased market volumes of corporate and municipal bonds. The decline in revenues for the Global Execution Services segment year over year is attributable to the sale of KCG Hotspot, which was completed on March 13, 2015.

Mr. Coleman commented, "During the first quarter, KCG Algorithmic Trading grew U.S. equity share volume from the 25 largest U.S. asset managers 67 percent year over year. KCG`s ETF trading team posted strong results from facilitating standard orders, risk markets for blocks, NAV-based executions, and creations and redemptions. In addition, KCG BondPoint grew trade volumes from a combination of new and existing retail broker clients."

In the fourth quarter of 2015, the segment generated total revenues of $70.2 million and a pre-tax loss of $1.1 million. Excluding a writedown of goodwill of $0.9 million, the segment generated a non-GAAP pre-tax loss of $0.2 million.

In the first quarter of 2015, excluding the gain of $385.0 million on the sale of KCG Hotspot and related professional and compensation expenses totaling $11.2 million, the segment generated non-GAAP total revenues of $79.2 million and pre-tax income of $7.2 million.

Select Trade Statistics: Agency Execution and Trading Venues

1. KCG Institutional Equities average daily U.S. National Market System (NMS) equity share volume represents trading on behalf of clients covering algorithmic trading and high touch sales trading in single stocks, ETFs and programs. In 2016, KCG modified the reporting of trading volumes within the Global Execution Services segment to remove internal volume generated by KCG trading desks and add volume from sales trading. Prior periods have been recast for this new presentation.

Corporate and Other
The Corporate and Other segment includes strategic investments and corporate overhead expenses. During the first quarter of 2016, the segment generated total revenues of $10.1 million and a pre-tax loss of $21.8 million. Included in first quarter revenues are a $3.7 million gain from KCG`s repurchase of a portion of its 6.875 percent Senior Secured Notes and a $2.8 million net gain primarily tied to a distribution from an investment.

In the fourth quarter of 2015, the segment generated total revenues of $25.6 million and pre-tax income of $1.8 million. Excluding gains on sales and writedowns of investments of $19.8 million and $3.2 million, respectively and a $1.0 million writedown of an intangible asset, the segment generated a non-GAAP pre-tax loss of $13.7 million.

In the first quarter of 2015, the segment generated total revenues of $7.3 million and a pre-tax loss of $14.3 million.

Financial Condition
As of March 31, 2016, KCG had $647.1 million in cash and cash equivalents. Total outstanding debt was $451.9 million. KCG had $1.48 billion in stockholders` equity, equivalent to a book value of $16.42 per share and tangible book value, which includes the value of its assets of businesses held for sale, of $15.30 per share based on total shares outstanding of 90.4 million, including restricted stock units.

During the first quarter of 2016, KCG repurchased 1.8 million shares for approximately $20.5 million, $1.0 million in warrants and $35.0 million par value of its 6.875 percent Senior Secured Notes for $31.2 million.

KCG`s headcount was 972 full-time employees at March 31, 2016, compared to 1,006 at December 31, 2015.

Subsequent Events
On April 15, 2016, shares of Bats Global Markets, Inc. common stock began trading on the BATS BZX Exchange under ticker symbol BATS. As part of the initial public offering, KCG sold 2.6 million shares for approximately $46 million after commissions and will recognize a pre-tax gain of approximately $33 million in the second quarter of 2016 on this sale. Following the offering, KCG`s ownership stake in Bats was reduced to approximately 13.7 percent.

On April 20, 2016, KCG`s Board of Directors authorized an expanded share repurchase program of up to $200 million of KCG common stock and warrants (including the remaining capacity under the previously authorized repurchase program), subject to compliance with the covenants contained in the company`s debt indenture. Under the program, the company may repurchase shares of common stock or warrants from time to time in open market transactions, accelerated stock buyback programs, tender offers, privately-negotiated transactions or by other means. Repurchases of shares may also be made under a Rule 10b5-1 plan. The timing and amount of repurchase transactions will be based on market conditions, share price, legal requirements and other factors. The program has no expiration date and may be suspended, modified or discontinued at any time without prior notice. There are no assurances that any repurchases of shares of common stock or warrants may actually occur.

Conference Call
KCG will hold a conference call to discuss first quarter 2016 financial results starting at 9:00 a.m. Eastern Time today, April 21, 2016. To access the call, dial 800-344-6698 (domestic) or 785-830-7979 (international) and enter passcode 5948540. In addition, the call will be webcast at http://edge.media-server.com/m/p/kbqkwypj. Following the conclusion of the call, a replay will be available by selecting a number based on country of origin from a list posted at: https://replaynumbers.conferencinghub.com/index.aspx?confid=5948540&passcode=5948540 and entering passcode 5948540.

Additional information for investors, including a presentation of the first quarter financial results, can be found at http://investors.kcg.com.

Non-GAAP Financial Presentations
KCG believes that certain non-GAAP financial presentations, when taken into consideration with the corresponding GAAP financial presentations, are important in understanding operating results. Selected financial information is included in the non-GAAP financial presentations for the three months ended December 31, 2015 and March 31, 2015. KCG believes the presentations provide a meaningful summary of revenues and results of operations for each of the three month periods. Reconciliations of GAAP to non-GAAP results are included in the schedules in Exhibit 4.

About KCG
KCG is a leading independent securities firm offering investors a range of services designed to address trading needs across asset classes, product types and time zones. The firm combines advanced technology with specialized client service across market making, agency execution and venues and also engages in principal trading via exchange-based market making. KCG has multiple access points to trade global equities, fixed income, options, currencies and commodities via voice or automated execution. www.kcg.com

Certain statements contained herein and the documents incorporated by reference containing the words "believes," "intends," "expects," "anticipates," and words of similar meaning, may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These "forward-looking statements" are not historical facts and are based on current expectations, estimates and projections about KCG`s industry, management`s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Any forward-looking statement contained herein speaks only as of the date on which it is made. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with: (i) the inability to manage trading strategy performance and sustain revenue and earnings growth; (ii) the sale of KCG Hotspot, including the receipt of additional payments that are subject to certain contingencies; (iii) changes in market structure, legislative, regulatory or financial reporting rules, including the increased focus by Congress, federal and state regulators, the SROs and the media on market structure issues, and in particular, the scrutiny of high frequency trading, alternative trading systems, market fragmentation, colocation, access to market data feeds, and remuneration arrangements such as payment for order flow and exchange fee structures; (iv) past or future changes to KCG`s organizational structure and management; (v) KCG`s ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by KCG`s customers and potential customers; (vi) KCG`s ability to keep up with technological changes; (vii) KCG`s ability to effectively identify and manage market risk, operational and technology risk, cybersecurity risk, legal risk, liquidity risk, reputational risk, counterparty and credit risk, international risk, regulatory risk, and compliance risk; (viii) the cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings; (ix) the effects of increased competition and KCG`s ability to maintain and expand market share; (x) the announced plan to relocate KCG`s global headquarters from Jersey City, NJ to New York, NY; and (xi) KCG`s ability to complete the sale or disposition of any or all of the assets or businesses that are classified as held for sale. The list above is not exhaustive. Because forward looking statements involve risks and uncertainties, the actual results and performance of KCG may materially differ from the results expressed or implied by such statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, KCG also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made herein. Readers should carefully review the risks and uncertainties disclosed in KCG`s reports with the U.S. Securities and Exchange Commission ("SEC"), including those detailed in "Risk Factors" in Part I, Item 1A of KCG`s Annual Report on Form10-K for the year ended December 31, 2015, "Legal Proceedings" in Part I, Item 3, under "Certain Factors Affecting Results of Operations" in "Management`s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7, in "Quantitative and Qualitative Disclosures About Market Risk" in Part II, Item 7A, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time. This information should be read in conjunction with KCG`s Consolidated Financial Statements and the Notes thereto contained in its Annual Report on Form 10-K, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time.

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: KCG Holdings, Inc. via GlobeNewswire
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