Another trading firm going belly up..awwwwww

[dixiegrrrrl]

The Bloomberg article is a bit dense, so here are the snippets:

Knight Capital Group Inc,one of the biggest traders of technology stocks, ran into a couple of back to back problems, resulting in possible bankruptcy if it cannot get more funding.

One of the issues was its reliance on High Frequency Trading ( HFT) via computers.
"Errors related to trading software on Aug. 1 caused losses of $440 million and Knight, whose market-making unit executes about 10 percent of U.S. share volume, saw its stock plunged 75 percent in two days."

and
"The company had already suffered from technology mishaps, losing $35.4 million from trading Facebook Inc. shares after the social-networking service’s initial public offering in May was marred by delays and malfunctions. "

Looks like the over reliance on computers has created some significant problems, as Facebook found out during its IPO.

Here is the very detailed story:
http://www.bloomberg.com/news/2012-08-03/joyce-faces-knight-extinction-as-computers-erase-profit.html

[xchrom]

1. Du rec. Nt

[hatrack]

2. Crying here. Really.

[Ruby the Liberal]

3. We need transaction taxes on trades.

That is the only thing that will slow these HFT algos down. Make it $0.01 per trx and we will solve the deficit AND unrig one aspect of the casino to boot.

Knight's algos auto-executed a $5bn trade in minutes this week that was 'supposed' to be phased over 5 days. I'll see if I can find that link.

Story at: http://www.businessinsider.com/gasparino-reveals-the-trade-that-doomed-knight-capital-2012-8

[dixiegrrrrl]

5. I predict that much needed tax will be enacted

right after criminal arrests and trials of any significant bankers.
yup, real soon...
any day now....

[nc4bo]

4. Casino Royale.

“His main criticism of Nasdaq was that not only did they bungle it, they tried to make their customers eat the losses,” James Angel, a finance professor at Georgetown University’s business school in Washington, said in a telephone interview. “It is one of those little ironies in the business that these glitches could happen to anyone. It’s happened to Nasdaq, it’s happened to Knight.”

Software glitches. Faulty software installations. Big Bug. It took 30 minutes to stop the bleeding. So much to read about this on the net.

$440 million!!

JUMP.

[cbdo2007]

6. KCG isn't going belly up.

They have plenty of credit and funding in place.

[dixiegrrrrl]

7. Is there a link that says that?

I posted what info I had from the Bloomberg link.