August 2014

Board of Directors of KCGand large KCGshareholders:

After reviewing the earnings press release, listening to an abysmal Town Hall and watching the CEOand ,management both before and after the merger, we can no longer stay silent. It is now past theone year anniversary of the merger of GETCOand Knight and it is difficult to state that the mergerhas been a successeither from a stock price, earnings or management view. In fact, the reality is thatalmost all of the GETCObusinesses are performing poorly, the CEOand management haveperformed terribly and the Company's corporate culture is in disarray with employees close to openrebellion and fleeing in droves (especially once they get significantly lower bonuses this year). It isour view that the Company's Board of Directors and large shareholders must take action immediatelyto protect the shareholders. .

In one year the stock price has done nothing and remains near the merger price. This is despite thepaydown of $500 million in debt, the achievement of merger synergies and solid performance by theKnight ETGgroup and the Knight agency execution businesses. One would think the stock pricewould be much higher but that has not been the case. It is fair to say that market conditions havenot been favorable for several of the quarters since the merger but there are other underlyingreasons for KCG'slack of stock price movement. First, investors and analysts are well aware that theex-GETCObusinesses have performed poorly for an extended period of time and management hastaken limited action to fix these failing businesses. For whatever reason, Daniel Coleman seems morefocused on dismantling or negatively impacting performing Knight businesses rather than having toaddress the struggling GETCObusinesses.Through his actions, KCG'srevenues have declinedconsiderably while the impact from these non-performing GETCObusinesses has hada huge dragon earnings. Rather than admit that decisions must be made regarding these businesses and ourinfrastructure (subpar microwave networks and excessive Chicago space), he repeatedly states toanalysts, investors and employees that these businesses are doing better which we all know is notthe case. It is clear that he does not want to admit that his poor management of these businessesover the last two years has led to the current dire situation (which is compounded by the fact thatthe old Knight businesses have performed well and contributed to most of the earnings during thelast year). Coleman's lack of action and his statements have hurt his credibility both inside andoutside KCG.

Second, actions taken by Coleman have not engendered the confidence of analysts, investors oremployees. For example, Coleman's first major action was to get rid of the ETFmanagers resulting inthe unexpected loss of the entire ETFdesk and significant revenues. Although these managers hadgenerous pay packages, the reality is that this team was the best on the street and the companymade money on the business. Having just completed the merger, one would think that the focuswould have been on integrating the firm and trying to fix non-performing businesses. InsteadColeman took a business with large revenues and positive profits and replaced it with a group thatwas subpar and unprepared, resulting in a payout of $15 million to the former managers andsignificant trading losses incurred by the new ETFteam. Current performance of the new ETFteam isnow being helped by the recent decision to move the retail ETFbusiness away from the OTCBBgroup to the ETFteam in an effort to improve their numbers. Even if the new ETFteam becomesprofitable, it will take several years to recoup the losses from this action (and don't forget the clients

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that were lost}. Meanwhile, Reggie Browne was recently profiled on the cover of Bloombergmagazine as the godfather of ETF'sand Cantor Fitzgerald is getting great publicity and new clients.

Another example is the client relationship fiasco with UBS. Has Coleman informed the Board of this?Basically,his actions in hiring UBSemployees resulted in UBScutting off order flow to us sinceJanuary. Since UBSis a very large client of the ETGbusiness, this lowered our order flow volumes andreduced profit opportunities at a time when market volumes were already low. As the client ETGbusiness is KCG'smain source of earnings, one would think there would be a concerted effort not tonegatively impact this business. Although some volume is now coming back, it remains to be seen ifthe relationship has permanently changed.

There are many other decisions that can be highlighted which have caused a decline in revenues. Inthe end, getting rid of the ETFdesk, selling Urban, losing the UBSorder flow and a continued declinein the legacy GETCObusinesses is not a way to show revenue growth. Rumors are rampant on thefloor that Coleman wants to sell Hotspot. Why would the Board sell Hotspot and eliminate additionalrevenues and profits at this time? Wouldn't the Company want to keep its winners and sell off itslosers?What are Coleman's plans to increase revenues and grow the company? The stock price willnot rise nor will our numbers get better if revenues do not grow.

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As to expenses,we constantly hear of cost control from Coleman, particularly in regards tocompensation expense. However, the reality is that there has been significant money wasted in othernon-compensation expense areas.The monies spent on branding and advertising, consultants inevery aspect of our business, microwave networks that are slo'jVerthan vendor solutions, newineffective hires, management committee compensation for 14 members, excessive travel expensesand a Chicago infrastructure that is way too large are just a handful of examples. Now it is apparentthat significant monies will be spent to move the Jersey City of ice to New York which is puzzling tomost employees as everyone knows our expenses will rise. The irony is that is it doubtful that most ofthis management team will still be at KCGby the time the actJal move occurs. In the end, this failureto control non-compensation expenses means he will reduce f' xpenses by significantly loweringcompensation. The departure of our top most marketable pea Ie will follow.

In addition to the poor decision-making by Coleman, his lead rship ability is severely in question. Itis shocking to many of us that after engineering the acquisition of Knight in fairly dramatic fashionthat the new owners would cast their lot with him. He has no leadership qualities to speak of and is aterrible public speaker. In addition, he is not qualified to run KCG.His stint at running GETCOwasunsuccessful and he has continued in a similar manner at KCG. He has had over two years to fix thehigh frequency GETCObusinesses and the results seem to be getting worse. It is difficult for peopleto accept someone like that as their leader when he has proven incapable of fixing his own businessand then wants to change successful businesses. It is no wonder that there is very little volume orenthusiasm in KCGstock.

Coleman's selections of his management team also raise questions as to his ability to lead. Having aManagement Committee of 14 members is excessive.There was a general belief that the old Knightmanagement team was very large and it only had 9 members. The current management team is notcohesive, lacks public company experience, is generally unqualified for their roles and lacks socialskills. In fact Coleman's decisions on the management team make you question him as they have

proven to be poor. Most legacy GETCOand Knight employees have a very negative view of seniormanagement and there is a huge lack of distrust.

Coleman's personality is also a real negative. He has pretty much alienated most of the workforceand has few supporters in the organization, except for the UBShires he brought in and certainmanagement committee members. He makes limited effort to interact with the workforce and wouldrather hide out in the NYC office then be seen in JerseyCity. When he does speak, it usually goespoorly or is awkward. Coleman has an amazing tendency to make statements or projections that areway off base. Either he is way too optimistic and wearing rose-colored glasses or he is not telling thetruth. He does not follow the phrase "underpromise and overdeliver" and actually seems to do theopposite. His many inaccurate statements to, and interactions with, the employees has led to the ,-

7,view of many that he is insincere and untrustworthy which is not something you want your CEOto beknown for. Is this the leader the Board wants to lead KCGand be its public face?

From a culture perspective, Coleman and his team have effectively destroyed both the Knight andGETCOcultures without creating a new KCGculture. The lack of a culture and identity will ultimatelylead to a failure of this organization if the Board allows it to continue. Both GETCOand Knight hadstrong cultures which have now been wiped out by puzzling decisions since the merger. Trying tomake KCGlike UBS,a global bank, shows a complete lack of understanding. Employees have sufferedthrough many changes with the latest indignation to many people being the elimination ofcorporate titles (they can say otherwise but thatwill be the outcome) and the lack of clarity as to howpromotions will occur. It is ironic that they wish to eliminate a hierarchy structure while over the last13 months an incredible amount of bureaucracy has been added, similar to that of a global bank.What use to be fairly flat separate organizations is now one bureaucratic organizationwheredecisions are made in a vacuum and people impacted and knowledgeable on the issue are rarelyincluded or listened to. Moreover, constructive feedback is stifled and viewed negatively whenreceived. This environment has not been well-received by the employees which is evident by thehigh turnover rates at GETCOand now at KCGand a current workforce teetering on the edge ofopen rebellion. This has led to a completely demoralized workforce hoping for the Board to fire theleadership team or sell the company.

As you can see, there is real and valid concern over the future of this firm. Morale is at an all-timelow and seems to be sinking every day. Most people are waiting and hoping for the Board and thecompany's large shareholders to take action soon. We don't understand how smart investors, likeGeneral Atlantic and Jefferies, would sit on their hands and let the merger which had a lot of promiseat the outset become eroded and devalued. We urge the Board and the company's largeshareholders to review the performance of the legacy GETCObusinesses and that of Daniel Coleman,and make appropriate changes, before it is too late. Otherwise, the Board will see a mass exodus ofemployees (especially in the profitable businesses) and the stock price and company performancewill suffer.

Sincerely,

KaseyG and fellow employees