EMPLOYMENT AGREEMENT

AGREEMENT by and between KBW, Inc. (the Company) and Thomas B. Michaud (the Executive), dated as of the 1st of November, 2006.

WHEREAS, the Company is desirous of continuing to employ the Executive in an executive capacity on the terms and conditions, and for the consideration, hereinafter set forth, and the Executive is desirous of being employed by the Company on such terms and conditions and for such consideration.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1.             Employment Period. The Company hereby agrees to continue to employ the Executive, and the Executive hereby agrees to continue to serve the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date (as defined below) and ending on the third anniversary thereof, subject to earlier termination in accordance with the provision of Section 3 hereof (the Employment Period). Effective Date shall mean the date immediately prior to the date on which the registration statement filed by the Company under the Securities Act of 1933, as amended, registering the initial public offering of the common stock of the Company, par value $0.01, is effective.

2.             Terms of Employment.

(a)           Position and Duties. (i)  During the Employment Period, the Executive shall serve as Vice Chairman, Chief Operating Officer, President of the Company, with such duties and responsibilities as are commensurate and consistent with such title and position, report directly and exclusively to the Chief Executive Officer of the Company and perform his services at the headquarters of the Company in New York, New York. In addition, the Company shall cause the Executive to be appointed as a member of the Board of Directors of the Company (the Board of Directors), and shall nominate the Executive for election and re-election to the Board of Directors as and when the Executives term expires while the Executive remains employed under this Agreement.

(ii)           During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executives reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Executive to serve on corporate, civic or charitable boards or committees, deliver lectures, fulfill speaking engagements or teach at educational institutions and manage personal investments, so long as such activities do not significantly interfere with the performance of the Executives responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto)