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Final Berserk Algo Bill To Knight - $440 Million; Stock Implodes
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.
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KCG - kamikaze Capital Group Bitchezz!!!
Oh come on.....even Muppets get mulligans.
ecblive
http://www.ecb.int/press/tvservices/webcast/html/webcast_120802.en.html
Go on without me.....let me know what happens.
Fucking Out Of Control CASINO ???
WHERE Are the Fecking Regulators ???
MDB, Robo? Come on make me laugh...one sec.....MUWHAHAHAHAHAHAAAA
Down nearly 60%:
2.82 -4.12 (-59.37%)
what a knightmare
ZH has the best financial reporting on the web. But if you do a Google search for Knight Capital, try to find ZH. What else is Google blacking out? Fuck you Google.
Knight has lost 60% of its market cap. As ET would say, ouuuuuuch.
He who lives by the algo, dies by the algo.
Who’s next?
"There has been a disturbance in the Casino..."
knighty night niggaz!
Those KCG puts are up 18x since I bought them after watching that damn ZH video with those guys saying, "whoever is doing this is losing hundreds of millions of dollars". Thanks guys...fahking awesome.
@whstlblwr: ...try to find ZH...
...the bottom of the 5th page of search returns:
"
The Dark Pool Knight Capital Plummets | ZeroHedge www.zerohedge.com/news/dark-pool-knight-falls1 day ago – Forget Bane, Knight is going dark:*KNIGHT CAPITAL EXPERIENCING DELAY IN PROCESSING STOCK ORDERS*KNIGHT CITES ...
"
.
They are investigating bureaucratmidgettrannygoatsex.com quite thoroughly.
The regulators are too busy raiding raw milk suppliers. Now THAT'S fraud!
Can't have people eating something that might improve their health and doesn't come in a chargable pill form. We also need to crackdown on medical marijuana, as it might challenge some other pills, even if people in a "democracy" "voted" for it in an open election. America is big on only offering two choices on an issue: big agricuture or starve, pills or death, republican or democrat.
P.S. Raw milk is AWESOME! Get some.
China hacked into Knight and well the rest is history....
not---IT guys watching porn for 45 mins and not watching the tape---lol
Front running routine choked.
V. (Vlad the Virtual) Lenin was spot on about given enough digital rope that Capitalism (divorced from Socialism completely) will invent algos and stuxnet themselves.
I believe he said "The Capitalists will sell us the Cat5e cable with which we will hang them"
This had nothing to do I suppose with the coincidentally kaput cyber bill in Congress?
In A.D. 2012
War was begining
CEO: What Happen ?
IT Head: Somebody set us up the bomb.
www.youtube.com/watch?v=qltugh-fFgg
BWAAAAAAAAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!! Serves the bastards right. Chalk one up for the humans against Skynet. John Connor will teach us how to smash those metal motherfuckers!!!!!!
"and were gonna smomke an ounce to that....G's up, Knights down...."
What better way to thin the market making herd than by attacking Knight. Surely the hit was put out by Goldman or the morgue. The less players, the more control.
Knight had just recently acquired another dud (Penson's futures unit), so this is pretty interesting, particularly in light of other futures firms taking a gigantic fucking dump on our collective heads. Interesting that they're being systematically wiped out.
J P M looses billions, but don't worry-everythings OK!
Deploy the Squid, prepare the Morgue.
The Dark Knight..."retroactively" shits its pants.
HA! HA!
Maybe this will loosen the Fed's bowels.
Old Faithful Colonic.
Providing liquidity!
42 and dropping like it's hot......but who's counting?
This is beautiful.....another fraud blow up....just get this main stage so people finally wake up.
Ban the bots....
Are they contemplating options for their severely damaged credibility? Oh yeah. No one gives fuck about that when it comes to other people's money.
Welcome to America's capital markets.
Home of the do-over.
holy shit they lost money faster then MF Global
Time to move to France!
Correction: Like Corzine, time to hide in the Hamptons.
I'm pretty sure Eric Holder doesn't even know where the Hamptons are.
Looks like Knight is about to be Corzined.
Good night Jon-boy.
good one...lol
Good night, Erin. Good night, everybody!
they will have to steal a bunch of sub-pennies to make that back
stuxnet.
Skynet: I'll be back.
Another example of how/why the capital markets are completely broken.
its a great firm. i worked there. nothing like squid or mf global. high integrity and no bs firm. its a shame.
Sly was cool. Others, not.
Sounds like a good enough reason to be a target.
Great firm no matter when the game changes to HFT Russian Roulette. How many humans does it take to turn off the server? The failure came after the first few seconds when a veteran could see the balls awry in the air. Big heads cut all the same I hear.
Call me cynical, but is this a cover for 'raided segregated accounts'.
Just wondering?
Lawsuit for software author/installer too....
Sooo sowwy but we no weesponsible, we over here in china, you no sue me here.
Hirarious!
Doubre rucky number 88 two times hirarious, because Knight instarred software with no reading ricense agreement containing ironcrad indemnity for software company in case of caramity.
ROR!
At $440m in losses, who is going to be able to shoulder that one? What insurance company is going to be able to shoulder that one? Can't be too many names out there. My guess is that whoever did it (presuming no deep pocketed parent company) doesn't have the wherewithal. If they had gone with a "trusted" software, then they probably would have had to pay big cheese (presuming it was even available) and it probably wouldn't have taken a big shit...
Any company that doesn't have the ability to test its system before properly bringing it online (official story), probably doesn't have the means to pay for these losses. Just spitballing.
Turnip = no lawsuit.
Who? TARP II?
oooh kay.....got it.
At first without knowing jack, I thought it was a rouge client of Knight sending in orders through them and their bot went bezerk.
Hint to Knight.....TEST THE FUCKING SOFTWARE BEFORE YOU IMPLEMENT IT FUCK-WADS........JUST a suggestion...
hell, looks like you wont need to debug the software.....no use for it anymore!
Too small to Bail, Bitchez .
TSTS Too Small To Save there, fixed it
Thinking they did test the software, proceeded to crap on the programmers, and the programmers made 1 minor change which reversed how the system operated.
The Indian power grid blackout prevented a last minute software update. Oopsies.
can't they just have the machine on for 30 min and then they'll be even?
A very, very expensive 30 minutes on the morning of August 1st.
That was fun......can we do it again!!!
Cant you get refunds?
14 day money back guarantee or something like that?
Perfect self-suicide.
Self Suicide? doesn't suicide imply "Self"? I think it's redundant, sorta like saying "bad-banker" or evil-wall streeter, or corrupt politician.
come to think of it, I'd like Merriam Webster to officially change the word "politician" to "corruptician". Then, we can elected our own swindlers, nepotists and racketeers. Enough of this "representative government" crap.
No, this was more an inept act of terror...like accidentally killing yourself with <thing you shouldn't wikipedia here> while trying to dispense it on <form of public transpo>.
Judge Scalia finds that free corporate speech is representative...not clear of which voter though.
Calling Jamie Dimon... We have these extra "customer funds" we would like to secure.
Their explination is funny...new software..blah blah blah.....bob piss on me said it was a thousands of 100 share trades....now why do you need software for 100 share trades.....to cheat the market that is why....this is legal theft....when is the SEC finnaly going to get the balls to stop this crap...I know..its never...
I like that. Maybe they thought it was just a dry run.
There are already dozens of rules in place for manipulation of price, dislocation of price and the like. However, the SEC/FINRA only applies those to a human trading.
If you have a 1mil share order to buy IBM and you break it up into 10,000 100 share orders and then just release those all at once you are busted, or group them into flurries to manipulate price one way or another - busted
If you decide to put in 100s of fake large offers to try to drive price down to your bid, you are busted.
Likewise if you take it into 50k chuncks and repeatedly send it at market to jam the price way up you are busted.
BUT not if a computer does it. They pretty much get a pass for everything. Anything goes and there is no accountability.
the termites are now eating through the drywall
Must have programmed in metric as opposed to imperial units.
All I can think of right now is the ORIGINAL KARATE KID movie....
"GET HIM A BODY BAG MAN!"
hehehehe
Dark Knight indeed.
Dark Knight swims with the Dark fishes in the Dark Pool and nobody is left to care but the white sheep.
Dark Swan Algo Systems...sorry, at this time nobody is available to take your call. Remember, you can always hit any key to cancel your order.
http://www.youtube.com/watch?v=gugbMw4LigY
This is what is bound to happen when the complexity of the code is combined with IT basically running your trading minute by minute and then you try to cull costs down to the point where the code-builders are long gone...you see it in every industry but it is catastrophic in energy, financial and tech...
Oh wait...there's more.
KCG and ALL the algo trading houses across the planet use the same piece of COTS product. Same one with a contract arrangement to detail and customize the package. Same guy wrote it as well and sell the services. I could name maybe four people on the planet that has enough knowledge in the Algo dark arts to be of any use in fixing this issue. And they work for that one guy. Anyone know who it is?
Is the answer Jesus?
I worked for the company that installed their dark fiber on Washington St. What if they had a 30 minute, all hands, in house demo of the new software and pulled the wrong outgoing patchcord?
it would be funny if the janitor knocked loose some cables while mopping and plugged them back in worng.
Everything is a ring configuration. If one side goes open, the switch will go into "protect" and transmit the other way. An alarm will immediately sound at their NOC.
free sergey. oh wait, he's out, never mind
Ding dong the witch is dead
the wicked witch, that silly bitch
Ding dong the wicked witch is dead
Unfortunately, she isn't. My ex is still around and jonesing for bucks and hassle.
Sadly Knight's losses are everyone else's gains and will only encourage the hiring of the latest crop of physics PhDs to do the stupid work of combing thru trading data attempting to find the next kandy ass programming/installation snafu.
The music will only stop if the regulators step on the cock-a-roaches.
What about the Berserk Algo-Politican bill that has been foisted upon the American people? The untold financial and social losses will not go unpunished forever. Millions of good men, active-duty military, patriots, gun owners, veterans, reservists, police, federal marhalls, oath keepers, and so on have been silently observing, taking notes, and positioning themselves. The MASS ARRESTS are coming. Sure as the sun will cross the sky, they are coming... http://tinyurl.com/cd5cyjo/
That's what NDAA, 30k drones etc is all about. We're coming for them and they know it.
That's right... only they don't have to worry about "preppers" and nutbag militiamen coming to get them... it's their generals, their admirals, their pilots, their paid mercenaries, their aides, and the people the cook their food and take out their trash who have the real daggers up their sleeves.
Wasn't David Wilcock running for his life under death threats from space aliens or men in black or illuminati or something. And you're posting a link to him. Be careful they are watching everything you do.
Listen to the message, don't discount it because of the messenger.
Time to buy hand over fist
Let us know how that all works out.
So was this software 'glitch' an accident. Or insider revenge?
Or insider revenge?...
Or outside attack? Quick, get a couple nsa agents on this right away.
Nah, they'll probably end up arresting Tyler because he reported it.
Serves the bastards right. I wonder if anyone got fired over this?
would be curious to have a look at KCGs latest slide deck titled "information technology cost savings measures"
And now the die is shaken, now the die must fall.
There aint a winner in the game, he don't go home with all.
Not with all.
Zerohedge please help us keep track what will they do to the CTO and who are the genius software engineers pulling off this corporate suicide.
Thank you
Scary to think that these are suppose to be the best and brightest while those who don't make the cut work at our nuclear power plants.
Yeah, I'm betting this kicks off many many code reviews from nervous suits used to letting the autopilots engage suddenly feeling "that clench".
"Knight pursuing taxpayer dollars to stay in business"
Fixed it.
Please excuse the novice... but how do you go long glitches?
www.tradewithdave.com
JPM is pissed. I will guess they estimated the loss by figuring they are 50% of the market, they sucked only $85M (of $170M) of $440M potential profits. I mean it helped with the bottom line (is it gonna get a special line in the reports?), but someone was skimming alot of their profits.
Did every stock that was affected get its price reset to where it was before the algo struck? Apple, IBM, MCD and the others didn't get reset after the beserk gatormouth algo a few weeks ago that left them all much higher.
If a stock ends up 10% higher or 10% lower because of a bogus algo, that really has an effect on the market. You could make or lose a lot of money on a stock for no reason at all. Prices are being set by computers with no rationale behind their moves.
I would say this invalidates all pricing in the stock market and all automated computerized trading must be stopped. How can you justify gains created by a program trading in a way it wasn't meant to?
Sadly I don't think it will stop until a rogue algo takes Apple stock to $50 wiping out over $500 billion in one day.
With apologies to Monty Python's Black Knight, but what could be more apropos: http://www.youtube.com/watch?v=mjEcj8KpuJw
Brings to mind the insane trading before 9/11
http://911research.wtc7.net/mirrors/guardian2/september-eleven/put-options.htm
Years from now, after the MASS ARRESTS clean house (http://tinyurl.com/cd5cyjo/), after the FED is dissolved, after the NWO is routed, and after the Constitution is restored, financial crimes and mass murder crimes like this will be documented and displayed in a museum for our children to wonder at and learn from.
As I have said repeatedly any time something fishy like this happens: reelection campaigns don't finance themselves bitches.
It was oil for the last election, I wonder when they will get around to gold? Patiently waiting....
Maybe ya'll should consider the possibility that Knight pissed off some really big people?
http://www.youtube.com/user/BrotherJohnF?feature=mhee
Mr. David S. Lehmann is Senior Managing Director, Head - Electronic Execution Services of Knight Capital Group, Inc. He oversees the Company’s electronic execution offerings. He has over 25 years of experience in the securities industry. Mr. Lehmann was named Head of Electronic Execution Services in November 2011. Prior thereto, he was the Head of Institutional Sales since April 2011. From November 2002 to April 2011, Mr. Lehmann headed the Company’s institutional sales office in Chicago. He previously worked at Montgomery Securities, Salomon Brothers and Merrill Lynch & Co. Mr. Lehmann received a B.S. in Business Administration from the University of Illinois, Champaign/Urbana in 1984 and an M.B.A. in Finance from Columbia University in 1986.
Nice post Ex. So he was sales for his whole career and that qualified him to become Head of Electronic Execution??? Took him less than 10 months to blow the place sky high. Night, Night, Knight
He executed all right. He damn near executed the whole firm.
Oh, and likely this guy too:
Sadoff, Steven Brief BiographyMr. Steven J. Sadoff is Executive Vice President, Global Head of Operations, Services & Technology of Knight Capital Group, Inc. He oversees the Operations, Service and Technology Group which handles the operations, facilities, infrastructure, electronic services and technology functions throughout the Company’s global locations. Mr. Sadoff has been with the Company since April 2002 and was named Executive Vice President in January 2009. Prior to joining the Company, Mr. Sadoff was the Chief Information Officer for BondBook, responsible for global oversight, strategy, purchasing and implementation of technology. From 1995 until 2000, he was with Merrill Lynch & Co. where for the last two years, he was a director responsible for technology for the Global Liquidity and Credit businesses, in addition to e-commerce initiatives. For the first three years he was with Merrill Lynch Japan, responsible for front office technology and infrastructure. From 1990 to 1995, Mr. Sadoff was with Lehman Brothers, most recently as a Vice President. Mr. Sadoff currently serves on the Board of Managers of Direct Edge Holdings LLC, the advisory board for Corvil Ltd., the Technology/Operations Customer Advisory Board for Thomson Reuters, the board of Pico Quantitative Trading LLC, and as a member of the SIFMA Operations & Technology Steering Committee. Mr. Sadoff holds a B.S. in Computer Science, an M.S. in Electrical Engineering, and a D.Sc. in Computer Science, all from Washington University in St. Louis.
Steven J Sadoff...
Works for Knight Capital Group...
Worked for Lehman Brothers...
What's the J stand for - Jonah ?;o)
Knight trying to make all money today first go up stop all shorts and now sink and who knows where will be close price .
Depend if "night" make all money back , what a joke of market Emini become or maybe I just didn;t notice was like that last 20 years
I can picture this. Upper managers driving the IT serfs 24/7 with no respect for the technical complexity of the project. The only thing the fucking managers are thinking about is the money they are going to make.
An engineering team tries show the difficulty and the need to test more, but there is no limit to the delusion of the money masters and they shout get it fucking done now or you are fired.
so who ended up with the $440mil or was it just disbursed into the racket?
"There's never been a better time to buy Knight."
I think I'd wait to see if they have any clients left by COB tomorrow.
Some fucking traders they are. If only they had the foresight to short the shit out of their own stock on Tuesday.
when did Corzine become the CEO of Knight ?
I think they stopped paying tech guys and they stopped caring. Heard it was a real problem across the street - the fear of losing one's job is getting replaced with a resentment of high stress long hours and no pay. Folks used to getting paid much more for less time spent are simply burning out after 4 years of crap with no end in sight. It applies to all support functions - I am having a tough time getting my support folks to do anything on time these days. They leave home way way too early. Just a thought.
Delivering timely properly working software does result eventually in being terminated because you aren't needed anymore. You are in fact punished for being good.
I never solved that when I worked in IT so that's the reason I left the industry.
Maybe next time they should roll out their software to five stocks and not 150. If they had used Facebook, no one would have noticed that they had a problem. Everyone would have thought that it was .. well. Facebook
I honestly believe they were HACKED! by the highest order...no proof just gut feeling...they didn't playball with Nasdaq or somebody and they were taken down...
Could be the next HFT trading strategy silently taking over the street - flash crash, which was not a hack created an enourmous opportunity for an enterprising firm with pirate's code of ethics.
I honestly believe they were HACKED! by the highest order...no proof just gut feeling...they didn't playball with Nasdaq or somebody and they were taken down...
Maybe they stiffed an outside consultant, and chased him out the door before he had a chance to check that there were no errant bits flipped, or signs inverted. That would be a shame.
Nah...just too stupid to properly implement things.
Found this one on Linkedin.
http://www.linkedin.com/pub/pranith-ramamurthy/14/366/3aa
[
Specialties• Languages : C, C++, Java, Python( beginner)
• Operating systems : Linux, Windows.
• Web Technologies : XML , PHP, CSS, HTML, SOAP, REST.
• Database Systems : MySql, MS Access, Sqlite.]
Good knight and good luck...
"Why so serious?"
Hehehe...I couldn't stop myself.
.....after years of gaining confidence from his employer, Goldman's sleeper mole was finally admitted to the ranks of of the algo handlers at Knight.....Loyd's earlier directive was in the front of his mind:"Make it look like some nerd screwed up..."
Captain Obvious but good read none the less
Markets Are Broken
http://finance.townhall.com/columnists/jeffcarter/2012/08/02/markets_are_broken/page/full/
They startted to use the new version of "robort trader"?
Ha ha ha ha ha ha...
They could make a movie about this called "The Dark Knight Crashes".
What? Too soon?
Stock assisted suicide?
FRIGHT KNIGHT! It's a financial horror film.