Knight Equity Markets L.P. has established a strategic relationship with S3 Asset Management to provide hedge funds with balance sheet management solutions.

S3, based in New York, trades collateral on an agency basis, provides financing services and structures funding programs for its hedge fund clients. Knight Equity Markets, L.P. is a subsidiary of Knight Trading Group, Inc.

Thomas M. Joyce, Chairman, Chief Executive Officer and President of Knight, said: "The effective management of financing and funding costs is a priority for absolute return-oriented funds, and Knight's relationship with S3 Asset Management adds this key component to the suite of products and services we offer to our institutional clients."

He added: "We recognize that institutional managers are increasingly interested in outsourcing, allowing them to tap the best expertise in the business in a cost-efficient manner. With this agreement, our hedge fund clients now have access to superior portfolio financing and asset funding services, in addition to the unbundled trade execution products and services they already seek from Knight."

Robert Sloan, Managing Partner of S3 Asset Management, said: "Increasingly for hedge funds, effective portfolio financing is becoming as important as trade execution. The current market environment for volatility and interest rates makes it more important than ever for hedge funds to focus on their financing and funding needs."