Final Berserk Algo Bill To Knight - $440 Million; Stock Implodes

Tyler Durden's picture

While JPMorgan thought it was $170mm, we said last night the number was notably higher - and sure enough, via Bloomberg:

  • *KNIGHT SAYS TRADING OUT OF POSITION YIELDED $440M PRETAX LOSS
  • *KNIGHT SEEKS OPTIONS TO BOOST 'SEVERELY' HURT CAPITAL POSITION
  • *KNIGHT CAPITAL PURSUING STRATEGIC, FINANCING ALTERNATIVES

KCG is down another 50% this morning to $3.45! And here is what we explicitly warned yesterday: "In  other words, with  Knight losing about $300 million in market cap today,  investors are  speculating that the net loss to the firm will be just  that as it has  to foot the bill. Considering the volume and breadth of  the impaired  universe, this will likely be very big underestimation of  just what the  final bill will be to Knight." Sure enough...

Knight Capital Group Provides Update Regarding August 1st Disruption To Routing In NYSE-listed Securities

PR Newswire

JERSEY CITY, N.J., Aug. 2, 2012

JERSEY CITY, N.J., Aug. 2, 2012 /PRNewswire/ -- Knight Capital Group, Inc. (NYSE Euronext: KCG) today provided an update on the August 1, 2012 disruption to routing in NYSE-listed securities.

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.