Virtu Financial made an unsolicited offer to buy rival trading firm KCG Holdings for $18.50 to $20 a share in cash, KCG said in a news release.
KCG said its board is reviewing the proposal from Virtu that values KCG at $1.3 billion.
Officials at Virtu did not respond to a request for comment.
If the deal goes through, it would be the latest consolidation in the trading markets. KCG was created in 2013 from the merger of Knight Capital and GETCO, after a computer glitch at Knight in August 2012 cost the company as much as $460 million in erroneous trading orders.
Since then, KCG sold its institutional spot foreign-exchange network Hotspot FX to Bats Global Markets in January 2015 for $365 million in cash. Bats itself was acquired by CBOE Holdings, the parent company of the Chicago Board Options Exchange, for $3.2 billion in stock and cash in a deal that closed March 1.
Virtu issued an initial public offering of its stock in April 2015, raising $314 million. Last August, the firm announced it will provide J.P. Morgan Chase with technology and market access to help the bank trade in U.S. Treasuries.
KCG stock closed Thursday at $17.98.
