As an engineer that runs Automated Systems... It completely blows my mind that limits were not set... That would have aborted Algos X% away from the market... Nor was there a KILL switch to just cancel ALL activity. Wait, there's more... This went on for 30-40 minutes before someone shut it down... When it was apparent within 30 seconds something was VERY wrong. Even a basic retail platform like TWS... Is set to require manual overrides for potentially erroneous orders. Knight is effectively bankrupt... Whoever ran the Systems department... Was probably frog-marched out the door.
They aren't bankrupt. They lost 400MM and got someone to give them 400MM in exchange for most of the equity. It's BUA now except some loss of credibility and the old shareholders now get 30 cents on every dollar of earnings vs the full dollar before. They could have been bankrupt if no one stepped up to buy a stake.
Human error. Much worse things have happened than a 400 million trading loss. Nuclear power stations have melted down because humans can unintentionally by pass the limits and fail safes.
That's exactly right. Someone, likely an outsourced programmer, mistakenly or purposely installed the TEST version of the market making software. That version lacked the requisite checks and balances. It remains to be seen whether the PRODUCTION version had the necessary circuit breakers to kill all open orders and to close all existing positions. Knight isn't saying....and likely we'll never know for sure. I do know that one of the Knight executives responsible for this debacle is no longer with the firm. It has been said that at one tech conference he boasted about the money he "saved" from his outsourcing initiative.
Did anybody read the article????? I may be the Devil's right hand man and would like to take credit for this loss..... But this error/glitch/bitch slap was due to the old software not being uninstalled properly and the new code was conflicting with the old software! Just a FYI this seems to be the new excuses for trading losses.... It goes something like this: Hey Mr Chairman we just lost our shirts. What are we going tell our investors and shareholders? Just tell them it was a software glitch! We will get more money because someone will think we have the holy grail! Where else can you gamble with other peoples money and get paid no matter what the outcome is... Suckers!
It doesn't matter...that's what they SAID happened. That's not necessarily the truth. Almost to-a-tee, any recent disaster related to outsourcing and software has been a huge cover-up. Mariott Corp, BATS, Nasdaq FB, etc...there have been so many this year alone ! You'd have to beat the CEO of these corps to a pulp to get the story straight. Remember, outsourcing is corporate America's dirty little secret. They're not giving it up...easily.