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Scary, Scary Knight: Prime Brokers Start Pulling Cash
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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It's just a flesh wound!
A flesh wound? Your arm's off!
concept capital?
lol
hacks
Know your Prime Brokers
The directory of prime brokerage firms is currently in alphabetical order, starting in January 2010.
ABN AMRO
ADM Investor Services
Alaris Trading
Altegris Investments
Banc of America Securities
Barclays Capital
Beverly Hills Capital
BMO Capital Markets
BNP Paribas
Brewin Dolphin
BTIG
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
Whatever you do don't walk around skyscrapers today.
Oh shit, it's raining brokers!
Hallelujah, hallelujah, hallelujah, hallelujah, halleeeeeeeeeeeeeeeeeeeeluuuuuuuuuuuuujahhhhhhhhhhhhhhh!!!
http://www.youtube.com/watch?v=usfiAsWR4qU
Anyone checked on the segregated accounts lately?
As per industry best practices, client segregated accounts are held at JPMorgan.
Don't walk around them tomorrow.
Thing looks like a pretty good start for RICO indictments
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.
http://www.futuresmag.com/2012/05/29/knight-capital-group-to-buy-penson-...
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.
Interesting. The deal not only closed, but Penson had $411M in customer funds transferred.
http://in.reuters.com/article/2012/08/02/knightcapital-regulators-idINL2...
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...?
Hmmmm. What is the likelihood that The Morgue is custodian of Knight's customer funds?
Does a bear shit in the woods?
Yes, they do. And they also shit in boardrooms.
Pope shits in the woods and the bear is Catholic.
at least ONE representative of the Morgue on this board knows that is true
Classic scene with the Black Knight:
http://www.youtube.com/watch?v=zKhEw7nD9C4
Couldn't have happened to a better bunch of crooks. With audited statements from the accounting firm of Dewey, Screwem & Howe.
c'mon, the Car Talk guys deserve the right quote; Dewey, Cheatem, and Howe
ICAP cut their line also
Doesn't Knight have one of those unicorns that shit out gold coins and rainbows?
Comex bought that creature recently. Where did you think they get the gold to settle their contracts with?
where's the dude that told us here yesterday he was buying the dip in KCG at $8 ??
LOL
Forget BTFD. It is GYMON ===== Get Your Money Out Now.
GYMON
Acronym aquired.
CUT THEIR HEAD OFF ! DRIVE THE ASSHOLES TO BK !
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.
And all the FED's horses and all the FED's men couldn't put Knight back together again.
Where is my fucking money Lebowski?!?!?!
I don't troll on the sabbas...
Here's what happens
http://www.youtube.com/watch?v=PztgWdMEJdg
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.
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 ...
"The systems were fying on auto-pilot."
fying should be "frying," correct?
+100
This is funny!!
That was how I read it.
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
What?
someone from nite logged in and negged my earlier post.
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...
That would be awesome. Some programmer goes rogue and takes out the RoboTrader. Power to the People.
No way. Rogue programmer most likely received an offer he couldn't refuse from Don Dimon.
Yep. This sounds like sabotage to me. Likeliest explanation.
Frankly, considering the multi-level negligence/incompetence displayed, the answer is quite likely as simple as Knight claims...call 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 !"
Obama shouldn't have shut down that Iranian drone.
Now the Iranian intelligence service hacked into NITE.
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?
Dude, your fucking affected personality creeps me out.
Nothing about this incident passes the smell test.
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?"
Ding Ding Ding I think we have a winner.
If only the FED could die so fast.
It just might. Can't say until it happens.
Harry Reid who in the 90's called for auditing the FED and now he's gonna block it. Our elections have boiled down to vote out the one you hate rather than voe in who you like.
I'm sure Dirty Harry is receiving significant financial support from the FED,,, as are all the Dems that voted against the audit. Ask yourself, why would all but one republican vote for the audit, and only Half of the Dems? The Fed and Dems are obviously connected at teh hip.
There have been discussions from time to time that there should be 2 boxes for each candidate on a ballot. So as a quick example this year's ballot would have:
Vote FOR Obama
Vote AGAINST Obama
Vote FOR Romney
Vote AGAINST Romney
You can only select 1 and the winner is the one with the most For votes after deducting their Against votes.
Dude, I am plussing you UP on that one. Hella yeah! All for it, voting for the lesser of two evils is still voting for evil. I for one like the idea of having a politician free day, week, month, year, whatever! K would think the I/we would be able to figure things out without them around. Just saying.
Look carefully at the choices AND the math again. There is no NOTA on that ballot. Evil still wins.
You only want "NOTA" on the ballots so that, when NOTA gets a majority of the vote, you can point to this post and claim that NOTA is shorthand for "NotApplicable", and therefore you should be declared the winner.
You are obviously brilliant and have my full support.
The Fed's errors will never be known since everything is veiled in secrecy.
Go, Ron Paul!
I think they will eventually be known, but it's going to come about the same way as the the secrets of the east German stasi were -- savvy looters and protestors going through the rubble of a collapsed Fed. Of course this won't happen until after the current federal government is replaced and anyone within 50 miles of DC that has a net worth over 20M has relocated to Paraguay.
It will never be known, as there won't be enough legitimate evidence to connect the dots.
In my own little part of the world, for instance, I just learned about a discrepancy that has grown to around $300k in the last five years within a bank acct that is used by accts payable. Yet, the external auditors have signed off on it every year. Internally? They just ignore it, while blaming others, occassionaly making up an entry to balance it all out.
So, are we having fun yet?
years of robbing retail, G*D has punished them in the end. amen.
I agree. As a day trader, I cannot count how many times NITE has f*cked me over on so many trades.
It was similar to getting hosed on trades by MADF.
The best execution, guaranteed!
You just didn't expect to be the one being executed though, I'm guessing.
their clients doubtless got corzined
At least the Fed correctly diagnosed the system as unstressed and stable. I am glad they chose hyper inflation through debt default rather than mega inflation through printing. Lets get this over with.
...and, it's only a "default" if they say it is...
The August 1st Knight Bid-Offer GigSaw Massacre.
hello amanda, i want to play a game... [/gigsaw killer]
Knight Capital has lots of long exposure in Gold futures which are bound to be hypothecated? Yzm?
Knight is a market maker and is supposed to hold no positions.
Stop it! You're killing me!
Jamie Dimon had the Fed to bail him out by buying some crap off his balance sheet at inflated prices to counter the massively stupid trading losses a month ago. Knight is all alone.
I was very pleased to see robo trading software take down a market maker.
That it was their own creation makes it even better.
However, I doubt anyone else using software for trading will take precautions.
I hope not, this is fun.
Critical Lessons From The Facebook Scam: A Blast From The Past
After you read this article, I highly recommend that you read the 5-part series on Facebook (Part 1 Part 2 Part 3 Part 4 Part 5) because it contains additional critically important points that all users of Facebook should be aware of. As well, it contains some very valuable lessons about the investment process that I can guarantee you will not see, hear or read about elsewhere.
I thought those links would prove to be insightful and interesting but instead they're nothing but a horrific moral diatribe.
They had some HFT traders on CNBC....man were they full of shit trying to explain how their HFT´s "help" the market...right...it helps them steal money...and it is just that ...stealing...they should put a $1 charge on all orders....all orders whether filled or cancelled....it will stop it right away...
One dollar ? These locusts churn so much, one mil would suffice.
good bye berneke put, the black swan is here, black as knight biatchez
"The company is actively pursuing its strategic and financing alternatives to strengthen its capital base,"
Translation - We are currently trying to figure out how to pass this loss on to someone else.
More like "we are currently trying to figue out how to steal all the money that is left before we declare bankruptcy"
'Millipennies on the dollar' assets....LOL
Now Fido is staying clear of KCG.
Buyer by close or they don't open tomorrow morning.
Fact. The chopper is idling on the rooftop. If they open at all, it will be so the CEO can thank the employees for their hard work and dedication.
Thankyou and Good Knight
Institutional Investor just named Sadoff (Global Head of Ops/Services/Tech for Knight) one of their 50 "Difference Makers" in financial technology leadership. See cover story of July/Aug magazine. II should move him up from #47 to #1 as I don't think anyone could possibly make a bigger difference to their firm than Sadoff.
Sure that wasn't Madoff?
Someone is sitting in an office somewhere and they are shitting bricks.
And these bricks ain't gold.
The ivory towers of finance are full of MBA idiots who can only make money when there is absolutely no way to lose it. They have no idea what is happening to their world. They have no means to cope. They'll be drinking themselves blind by 10AM and sleeping in the lobby at 9PM, flat broke.
The whole industry is headed this way. As a class, they have no clue. The only clue you will ever see is on ZH, when one of them comes clean and admits the whole thing is a house of mirrors.
Like Grandpa used to say, "Stupid should hurt!"
dont forget to turn out the lights on the way out----
def destroy_prime_broker(liquidate):
capital = 1,000,000,000
while capital > 1:
buy on ask
sell on bid
BREAK
You think they use Python? Not Haskell or Erlang...?
Java in a big fat J2EE whale with a nice fat and slow oracle.
This has a "midnight at Lehman" feel to it. If there is now a panic looming and everyone starts mistrusting each other, their ball of string is going to come unwound.
Watch for soothing words from the SEC to the tune of: "Markets are stable and the industry is working to increase trust between parties. The SEC will continue to make sure the markets remain efficient."
That's when their shit will come unwired. They say that, and you can give them 24 hours to live.
Agreed.
Sunday evening is the likely time frame for an "announcement," a la Lehman. Come Monday morn, the ticker "KCG" ( and its underlying entity ) will be no more.
The next question is who do they owe...
"Cash and short term investments rose 55 percent to $7.5 billion in the second quarter of 2012, and the company’s debt amounted to 46.4 times total assets."
http://www.bloomberg.com/news/2012-08-02/knight-says-losses-from-trading-breakdown-are-440-million.html
The bloomberg numbers don't seem to check out: http://www.knight.com/investorRelations/pressReleases2.asp?compid=105070...
That said, if Knight's balance sheet is honest (ha!) that means they've burned at least 1/3 of their equity in a single bad day, and close to two quarter's worth of expenses. Ouch.
My guess is this fuckup is going to expose that their books are bogus, but I don't think the numbers are big enough to trigger a Lehman. Maybe if it fucks someone upstream.
Lehman 2.0 in the making. If Knight evaporates client money into JPMorgan, or screws a bunch of counter-parties, or if their books are revealed to be utter fictions, then people are gonna start to connect the dots.
Thx for the link Seek. Perhaps Bloomberg used a bad algo in its calculations. :-).
the Reaper always knocks on the door on Fridays......Going to be a long weekend upcoming
Speaking of scary, that situation in Uganda is not getting prettier... I wonder what the population of that prison is?
http://www.cnn.com/2012/08/02/health/uganda-ebola-virus/
Maybe the robo's are finally becoming self aware and taking down the masters.
BERNANKE AND GEITHNER WILL BAIL THEM OUT
i think this was all caused by an Indian programmer; serves them right for hiring an H1-B
The original Knight event did go down during the India power outage didn't it?
Maybe that Indian programmer never touched these shores.
Hmmmm......
IS IT SAFE? http://youtu.be/lg1vzeuCVh4
What about MGIC?
Magic Investment Corp?
(Mortgage Guarantee Insurance Corp)
Robotarder, should I BTFD?
That list is a bit too long, time to pare it down a bit.
I think the upshot is that everyone on that list is very busy right now trying to get themselves off it.
Maybe Knight Capital's co. losses are already covered by JPM and this is just a decoy to draw attention away from a more sinister project test involving... total casino control.
G $$$
Bullish!
Go long JPM, GS, MS, C, BAC, and buy U.S. Treasuries!
All you need is the right algo!
Last but not least... King Dollar!
/sarc