Knight Capital is reported to be close to reaching a $400 million rescue deal with a group of investors, which would allow it to open its doors on Monday.
An IT glitch on Wednesday caused its trading to go haywire, losing it $440 million.
Knight Capital is a major market-maker on the New York Stock Exchange (NYSE), which means it helps make sure there is a market for particular shares if investors want to buy or sell.
The rescuers are reported to include Blackstone Group and TD Ameritrade.
The Chicago-based market-maker Getco and financial services companies Stifel Nicolas, Jefferies Group and Stephens Inc are also reported to be involved.
The consortium is expected to end up owning between 70% and 75% of Knight Capital.
TD Ameritrade is the biggest volume brokerage in the US, carrying out much of its futures, foreign exchange and bond trading through Knight Capital’s systems, which means it would be very inconvenient for it if Knight were to stop trading.
But even if the trader manages to resume operations on Monday, it will still have to persuade clients to return to it.
TD Ameritrade and Scottrade said they would be returning their business to Knight, but others such as Vanguard said they were not yet ready to trade with Knight again.
The market-maker may also face legislation from its shareholders, who have seen the value of their holdings plummet since Wednesday and will probably have to put up with further dilution if the rescue goes ahead.
Knight Capital said that a faulty upgrade to its trading software had caused numerous erroneous trades to be sent.
It is thought that the firm racked up its loss, equivalent to half of the value of its equity, in the space of just a few minutes.
The software glitch is thought to have affected Knight’s trading algorithms, which are computer programmes that automatically and speedily send out buy and sell orders based on market data and client requests.
