03 August 2012 09:51

Knight Capital fingers tech glitch for stock market chaos; faces $440m pre-tax loss

 

Knight Capital issued a statement that a "technology issue" at its market making unit was behind the volatile price movements in 140 shares yesterday that forced Nyse Euronext to cancel trades.

In early morning trading prices in dozens of stocks went haywire, reviving memories of the May 210 flash crash. After reviewing 140 stocks, Nyse Euronext eventually cancelled orders in six.

With the finger of blame pointing at it and a faulty algorithm, Knight Capital confirmed that it was behind the chaos, saying: "This morning, a technology issue occurred in Knight's market-making unit related to the routing of shares of approximately 150 stocks to the Nyse."

The Securities and Exchange Commission has confirmed it will be looking at the issue, saying: "As is our practice, we are closely monitoring the situation and in continuous contact with the Nyse and other market participants."

Shares in Knight - which, according to Bloomberg, helped execute almost $20 billion of equity transactions a day in June - closed yesterday just shy of 33% down, at $6.94.

In a statement on Thursday, Knight says: "As previously disclosed, Knight experienced a technology issue at the open of trading at the Nyse yesterday, August 1st. This issue was related to Knight's installation of trading software and resulted in Knight sending numerous erroneous orders in Nyse-listed securities into the market. This software has been removed from the company's systems.

"Clients were not negatively affected by the erroneous orders, and the software issue was limited to the routing of certain listed stocks to Nyse.

"Knight has traded out of its entire erroneous trade position, which has resulted in a realized pre-tax loss of approximately $440 million. Although the company's capital base has been severely impacted, the company's broker/dealer subsidiaries are in full compliance with their net capital requirements. Knight will continue its trading and market making activities at the commencement of trading today. The company is actively pursuing its strategic and financing alternatives to strengthen its capital base."

Post comment

Related debate

  • 1 week
  • 1 month
  • 1 Year
26 Oct
VWS
Fra tid til anden lytter jeg til Solveig Bjørnestad’s P1 Business. Hun er dygtig til at lave en 360 ..
36
27 Oct
VWS
Normal 0 21 false false false DA X-NONE X-NONE ..
26
28 Oct
I:SP500
Det ser grundlæggende ganske fint ud makroøkonomisk, hvilket ikke er det samme som at der ikke finde..
16
26 Oct
BAVA
Jeg synes du skulle lade være med at bekymre dig om kortsigtede udsving, og ganske enkelt gå lang i ..
16
29 Oct
VWS
Hej Pokerchamp, det du kalder 'amatør-detektiv'-arbejde er langt mere informativt end dine ukonstruk..
14
28 Oct
VWS
 Fredag d. 3. okt. i år var den norske Olie- og energiminister Tord Lien og næstformand for det nors..
14
30 Oct
VWS
Jeg sad ellers lige og kiggede endnu en ordre i Polen   34 MW Postolin Wind Farm   Den ordre må være..
13
29 Oct
FING-B
Swift - det er jo fuldkommen ligegyldigt hvad vi siger eller gør så synes du og dit slæng det er for..
12
31 Oct
 
Hej alle,   Hermed en lille service mail til alle jer udbytte investorer (ligesom mig selv). Herunde..
11
30 Oct
DANSKE
Og pludselig savner jeg alligevel den der "røde tommel ned"  der endgang var her på EI 
11

Tech Companies Send Criticism Along With NSA-Related Data -- Update

04/02/2014 00:06:00
By Danny Yadron Technology companies including Google Inc. and Microsoft Corp. released new figures on the amount of data requests they received from U.S. ..

U.S. Hot Stocks: Hot Stocks to Watch

03/02/2014 14:07:00
Among the companies with shares expected to actively trade in Monday's session is Herbalife Ltd. (HLF). Herbalife Ltd. (HLF) raised its fourth-quarter outl..

Pfizer Study Meets Primary Endpoints

03/02/2014 13:05:00
Pfizer Inc. (PFE) said Monday that a Phase 2 trial of its advanced breast cancer treatment met its primary endpoint. Pfizer said a study comparing the effec..

Most read news

  • 24 hours
  • 48 hours
  • 1 week
1
HEINEKEN majority owned subsidiaries Nigerian Breweries plc and Consolidated Breweries plc issue notice of Extraordinary General Meeting regarding Scheme of Merger
2
USG People acquires stake in Blue Carpet
3
Novartis BNP Paribas Primary New Issues : Stabilisation Notice
4
Biogen Idec and Sobi announce European Medicines Agency validates Elocta(TM) (rFVIIIFc) Marketing Authorisation Application for review
5
Christian Dior : Notice of availability of the financial annual report as of June 30, 2014
Euroinvestor around the globe: Euroinvestor.dk | Euroinvestor.se | Euroinvestor.no | Euroinvestor.fr | Forexinvestor.com| Wisselkoersen.nl | Valuta.se | Valutaveksel.no | Divisas.es | Valute.it
Copyright Euroinvestor A/S 2014   Disclaimer and Terms of Use
Quote information is delivered by Interactive Data.
Data is delayed 15-20 minutes according to the distribution agreements set by the different exchanges.
 
01 November 2014 05:17:16
(UTC) Dublin, Edinburgh, Lisbon, London
Version: LiveBranchBuild_20141028.2 - EUROWEB6 - 2014-11-01 06:17:16 - 2014-11-01 05:17:16 - 1000 - Website: OKAY