Knight Capital Group said its earnings dropped by two-thirds in the second quarter, hurt by lower volume and volatility in stock trading.

Knight, which provides trading firms and corporations with access to stock, bond and other securities markets, said it earned $17.6 million, or $0.19 per share, in the second quarter of 2011. That compares to earnings of $54.4 million, or $0.58 per share a year ago.

Revenue was $326.0 million, down from $366.3 million from continuing operations in the second quarter of 2010.

The company generated two thirds, or $236.4 million, of that revenue from stocks, along with pre-tax income of $32.9 million. That is down decidedly from a year ago, when revenue from stock-related activities was $305.0 million and pre-tax income was $111.3 million.

“Knight's financial results were impacted by a 30 percent decrease in overall U.S. equity market volumes and considerably lower volatility year over year," said chairman and chief executive Thomas M. Joyce. 

But the firm expanded options market making and said its Knight Direct service saw its average daily share volume nearly match the second quarter of 2010. This, despite a decline in institutional trade volumes.

Its fixed-income, currencies and commodities business gained 46 percent, to $88.4 million in revenue and pre-tax income of $13.9 million. Last year, the business reported total revenues of $60.4 million and pre-tax income of $0.9 million.

Also a strong performer was Knight subsidiary Urban Financial Group which is provider of reverse mortgages.