Scary, Scary Knight: Prime Brokers Start Pulling Cash

Tyler Durden's picture

Update 2: and spreads some more: Sterne Agee Not Routing Trades to Knight Capital

Update: it spreads: Fidelity Investments Not Routing Orders Through Knight: Reuters

Earlier, when interviewed by Bloomberg TV, Knight Capital CEO refused to say, prudently under advice of counsel, if any counterparties have cut off their lines to the fallen Knight. Well now we can confirm with 100% certainty that at least one Prime Broker has terminated all funding to and fro the firm which may not have much time left. We are certain it is not the only one. And now the scramble for a deal is on. If Lehman and MF Global are any indication, the odds are good to quite good. Inversely of course, just like Knight's berserk algo yesterday.

And now for some Don McLean meditation:

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ACP's picture

It's just a flesh wound!

A flesh wound? Your arm's off!

5880's picture

concept capital?



iDealMeat's picture

 Know your Prime Brokers

The directory of prime brokerage firms is currently in alphabetical order, starting in January 2010.

ADM Investor Services     
Alaris Trading     
Altegris Investments     
Banc of America Securities
Barclays Capital    

Beverly Hills Capital     
BMO Capital Markets     
BNP Paribas     
Brewin Dolphin
Carlin Financial     
Caylon Financial     
CIBC World Markets     
Citi AI
CL King     
Concept Capital     
Conifer Securities     
Credit Suisse     
Currenex Inc.
Cuttone & Co.     
Davis Securities LLC     
Deutsche Bank     
Dundee Securities Corp.     
E. Larkin Company
Electronic Brokerage Systems     
Etech Securities
Fidelity Prime Services     
Fimat International Banque SA     
First Clearing LLC
First Southwest Co.     
Fortis Prime Services     
Garwood Securities     
Goldman Sachs Prime Services     
Grace Financial
Greenwich Prime Services     
Interactive Brokers     
Inventure Growth Securities     
Investec Prime Services     ITG Inc.
Jefferies & Co.     
Jesup & Lamont     
JP Morgan     
KBC Clearing     
Legent Clearing LLC
Lek Securities     
Lighthouse Prime Services     
LPL Financial Services     
Marex Financial     Merlin Securities
Merrill Lynch Prime Services     
Mesirow Financial     
MF Global     
Morgan Stanley     
MS Howells & Co.
MVP Financial LLC     
National BankFinancial     
Natixis Bleichroeder     
Neuberger / Berman Prime     
NewEdge Group
Nomura Prime Services     
Nordea Prime Services     
Northpoint Trading Partners     
Northern Trust Prime Services     
Numis Prime Services
Penson Worldwide Inc.     
Pershing Prime Brokerage     
Piper Jaffray Prime Brokerage     
ProTrade Financial     
Prudential Bache
Raymond James & Assoc. Inc.     
RBC Capital Markets     
RBC Correspondant Services     
RBC Deixa Services     
RBS Prime Brokerage
RCM Prime Services     
Ridge Clearing Solutions     
S3 Asset Management     
Sanford C. Bernstein Co.     
Saratoga Prime Services
Scotia Capital     
SEB Prime Services     
Shoreline Trading Group     
Silver Q Partners     
SIP Prime Brokerage
Sloan Securites Prime services     
Southwest Securities     
Sterne Agee Clearing Inc.     
TD Securites Prime Brokerage     
Terra Nova Financial
Trade Desk America     
Trading Screen Inc.     
Trance Consulting Services     
Triad Securities     

UBS Prime Brokerage
Vanthedge Point Group     
Wedbush Morgan Securities     
Ziv Investments           


The Big Ching-aso's picture



Whatever you do don't walk around skyscrapers today.

MsCreant's picture

Oh shit, it's raining brokers!

Dr. Richard Head's picture

Hallelujah, hallelujah, hallelujah, hallelujah, halleeeeeeeeeeeeeeeeeeeeluuuuuuuuuuuuujahhhhhhhhhhhhhhh!!!

redpill's picture

Anyone checked on the segregated accounts lately?

cougar_w's picture

As per industry best practices, client segregated accounts are held at JPMorgan.

Buck Johnson's picture

Don't walk around them tomorrow.

ArrestBobRubin's picture

Thing looks like a pretty good start for RICO indictments

NotApplicable's picture

Okay, I was doing some searching and ran across an article in May stating that Knight was buying Penson Futures, and that it was expected to close in the 2nd quarter.

Does anybody know if this deal closed?

Given that people on this very board were stating the Penson is the next MFG/PFG, well, this doesn't pass the sniff test.

NotApplicable's picture

Interesting. The deal not only closed, but Penson had $411M in customer funds transferred.

emersonreturn's picture

asp: tis nothing, my trading arm is fine, t'was the other, and without the left side i shan't bother so much with unseemly self servicing.  oh, but am i imagining it, or is it getting darker...?

Turd Ferguson's picture

Hmmmm. What is the likelihood that The Morgue is custodian of Knight's customer funds?

The Big Ching-aso's picture



Yes, they do.   And they also shit in boardrooms.


Dr. Richard Head's picture

Pope shits in the woods and the bear is Catholic.

walküre's picture

at least ONE representative of the Morgue on this board knows that is true

LeonardoFibonacci's picture

Couldn't have happened to a better bunch of crooks.  With audited statements from the accounting firm of Dewey, Screwem & Howe.

OpenThePodBayDoorHAL's picture

c'mon, the Car Talk guys deserve the right quote; Dewey, Cheatem, and Howe

dow2000's picture

ICAP cut their line also

Fish Gone Bad's picture

Doesn't Knight have one of those unicorns that shit out gold coins and rainbows?

fockewulf190's picture

Comex bought that creature recently. Where did you think they get the gold to settle their contracts with?

walküre's picture

where's the dude that told us here yesterday he was buying the dip in KCG at $8 ??


Forget BTFD. It is GYMON ===== Get Your Money Out Now.

MsCreant's picture


Acronym aquired.

banksterhater's picture


bdc63's picture

GAWD, I am LOVING every minute of this story ... it's the gift that just keeps on giving ...

 Everyone needs to take note -- you criticize the Nasdeq (... or the FED, or the Squid ...), expect an inexplicable 'black swan' in your future.

Dr. Richard Head's picture

And all the FED's horses and all the FED's men couldn't put Knight back together again.

LawsofPhysics's picture

Where is my fucking money Lebowski?!?!?!

Godisanhftbot's picture

 the real nail in the coffin is the time it took for those anii to pull the plug.

 pack of idiots, deserve to dissapear.


 that algo should have been pulled within minutes.


 no excuse. assholes.


bdc63's picture

It's August ... they were all in the Hamptons.  The systems were fying on auto-pilot.  Good thing the maintence guy showed up and pulled the plug or this thing coulda gotten out of hand ...

MsCreant's picture

"The systems were fying on auto-pilot."

fying should be "frying," correct? 

earleflorida's picture

out of carbonite hands maybe [good/ bad?]... but certainly in the ethereal field of a electronic pulse orgasm has this algo shot it's last load 

Godisanhftbot's picture

 someone from nite logged in and negged my earlier post.

Vagabond's picture

Agreed, If the story is to be believed, the amount of idiocy required is enormous. First, some idiot wrote an ultimate bad-idea algorithm.  2nd, Their test environment was so bad that it managed to get through to production.  3rd, they left the algo running for 45 minutes as it lost hundreds of thousands of dollars a second.

I have a really hard time believing that story.  More likely someone on the inside programmed it purposely to take them down, or some how an outside entity fucked them...

madcows's picture

That would be awesome.  Some programmer goes rogue and takes out the RoboTrader.  Power to the People.

NotApplicable's picture

No way. Rogue programmer most likely received an offer he couldn't refuse from Don Dimon.

SokPOTUS's picture

Yep.  This sounds like sabotage to me.  Likeliest explanation.

Jay Gould Esq.'s picture

Frankly, considering the multi-level negligence/incompetence displayed, the answer is quite likely as simple as Knight it the Michael Bolton Unified "Office Space" Principle:

"I must've put a decimal point in the wrong place or something. Shit, I always do that. I always mess up some mundane detail !"

walküre's picture

Obama shouldn't have shut down that Iranian drone.

Now the Iranian intelligence service hacked into NITE.

aerojet's picture

I have this image of Scarlett Johansson infiltrating the company as an intern and setting the bad algo running.  That would be so cool!  Why aren't we taking down these HFT idiots like that?  

Precious's picture

Dude, your fucking affected personality creeps me out.

mvsjcl's picture

Nothing about this incident passes the smell test.

NotApplicable's picture

Perhaps it's providing the storyline for an even bigger false-flag attack on Wall St., where GS & JPM clear out the accounts of everyone else under the fog of "war?"