Knight’s future dark after trading diaster

Knight Capital Group Inc, a major trading firm in the US, fought for survival on Thursday after a $440 million trading loss caused by a software glitch wiped out much of its capital, forcing it to seek new funding as its shares plunged as much as 80% in two days.

Knight Capital Group Inc, a major trading firm in the US, fought for survival on Thursday after a $440 million trading loss caused by a software glitch wiped out much of its capital, forcing it to seek new funding as its shares plunged as much as 80% in two days.

HT Image

Many of the company’s biggest customers, including TD Ameritrade, the No 1 US retail brokerage by trading volume, and fund giants Vanguard and Fidelity Investments, stopped routing orders through Knight. One of the biggest fears is that the company will collapse, landing trading clients and creditors with losses.

"They have about 48 hours to shore up confidence," said James Koutoulas, head of an advocacy group for former customers of failed brokerages MF Global and Peregrine

Financial.

Knight said it is “actively pursuing its strategic and financing alternatives,” raising the likelihood the firm will be sold or face bankruptcy because of the loss, which is about four times its annual net earnings.