Knight CEO Comments On Algo Failure Which Has Cost Him 70% Of His Market Cap In One Day

Here are the choice highlights from the interview with Knight CEO Tom Joyce, who is
inexplicably on Bloomberg TV without any clear point, purpose or spin,
and nothing to tell anyone and restore confidence.

• TECHNOLOGY BREAKS. WHAT HAPPENS NEXT IS HOW YOU ESCALATE IT. WE'RE PROUD OF THE FACT THAT WE ESCALATED TO IT DIRECTLY TO OUR CLIENTS AND GOT THEM OUT OF HARM'S WAY. THERE ARE TWO THINGS WE TAKE GREAT PRIDE IN WHICH IS OUR CLIENTS' FOCUS AND OUR CULTURE WHICH IS INVOLVED WITH COMPLIANCE. WE HAVE A CULTURE OF COMPLIANCE AND CLIENT FOCUS AND WE ASSERTED BOTH OF THOSE THINGS YESTERDAY.
• IF YOU GET INVOLVED IN THE DAY TO TAKE MINUTIA, THIS WILL GIVE YOU A HEADACHE OCCASIONALLY
• IT DOES AFFECT THOSE WHO MIGHT LOOK TO BUY KNIGHT CAPITAL STOCK. WOULD YOU BE INTERESTED IN BUYING SHARES OF A COMPANY THAT WITHIN -- WITHIN A DAY OR TWO COULD GET WIPED OUT?
• OF COURSE NOT, THIS IS AN ANOMALY. YOU CANNOT KEEP PEOPLE FROM DOING STUPID THINGS WHETHER IT IS WRITING IN PERFECT CODA BUYING THE WRONG SOFTWARE AT THE WRONG TIME. THAT IS WHAT HAPPENS WHEN YOU HAVE A CULTURE OF RISK.
• YOU STAY AWAY FROM THE DAY- TO-DAY MINUTIA AND LOOK FOR THE LONG TERM, AS AN EQUITY INVESTOR, IT WILL WORK OUT.
• WE'RE OPEN FOR BUSINESS. WE GOT RID OF THE BAD TRADES AND FREE UP A LOT OF CAPITAL. WE HAVE EXCESS CAPITAL RIGHT NOW.
• JOYCE SAYS 'WE ARE OPEN FOR BUSINES,' 'WE'RE REASONABLY BUSY'

And the kicker:

• WE NEED TO DO A BETTER JOB ON OUR TESTING ENVIRONMENT.

Translation: we are shopping ourselves right now and unless someone pick us up by end of trading when the margin calls come in, tomorrow's open may be a little problematic. Of course, JPM will mysteriously step up in the last minute and provide a DIP-like loan in the process onboarding all the "segregated" accounts.

• KNIGHT BONDS FALL 13.125 CENTS TO 70 CENTS ON DOLLAR

Quite soon we may find out what it means to trade in a market which has just lost one of its key market makers, responsible for up to 15% of overall liquidity.

Comments

[SokPOTUS]

Upgraded to Software Version Fail 2.0

[guasilas]

"Quite soon we may find out what it means to trade in a market which has just lost one of its key market makers, responsible for up to 15% of overall liquidity"

 You might get an honest trade?

[warezdog]

Big fish eat little fish, in this case the we know who the little fish is, any guess on the big fish, JPM?

[Doublescythe]

Who's next on the hit list?

This move was pure genius by the hackers that took Knight down...

[Karlus]

Whats really sick is this dude prob got caught with his pants down. What would be really interesting is to have their CIO on to explain what is going on, how they messed up their web.config to reverse buy/sell...etc.

Think we will get some time with Sadoff, or will he just be shown the door?

[warezdog]

Guess we know who the big fish is now.

[soopy]

Ignore the day to day minutiae?  Like your firm's stock plunging 56%?  ok

[Miss Expectations]

Do you suppose that a code-writing malcontent left a little time bomb wrapped in an algo before he departed seeking new challenges?

[css1971]

Hey look give the man a break, it could happen to anyone. A plus here a minus there, anyone could make that kind of mistake.   

[unnamed enemy]

Stop loss is for the little people

lately i like to call it guaranteed loss

[unnamed enemy]

Stop loss is for the little people

lately i like to call it guaranteed loss