Trading firm lost $10 million a minute because of computer glitch
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Newly installed trading software caused a 32 percent free fall on Wednesday.
Did you catch the scary swings in the market yesterday? Turns out they were caused by a computer glitch that ended up costing a single trading firm $440 million. The Jersey City-based firm Knights Capital Group just owned up to the epic fail this morning and the firm's shares are down 60 percent on top of a 32 percent free fall on Wednesday. Dealbook's Nathaniel Popper has the details:
The problem on Wednesday led the firm’s computers to rapidly buy and sell millions of shares in over a hundred stocks for about 45 minutes after the markets opened. Those trades pushed the value of many stocks up, and the company’s losses appear to have occured when it had to sell the over valued shares back into the market at a lower price.
The company said the problems happened because of new trading software that had been installed. The event was the latest to draw attention to the potentially destabilizing affect of the computerized trading that has increasingly dominated the nation’s stock markets.
All told, the software error ended up costing the firm $10 million a minute—a loss that has Knight Capital scrambling to pursue "alternatives" like financing or strategic business moves to "strengthen its capital base." And, as The Wall Street Journal's Jenny Strasburg and Jacob Bunge note, this isn't some rinky dink firm: it's "one of the biggest players in the U.S. stock market."
Read more at The Atlantic Wire.
Read more at The Atlantic Wire.
(Image via stoupa /Shutterstock.com)
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