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Nanex ~ 01-Aug-2012 ~ Knightmare on Wall Street | 189 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Software Install/Upgrade, executed large orders too quickly, paid too much.
Authored by: Anonymous on Saturday, August 04 2012 @ 11:44 PM EDT
Beyond that, it's called a "Technology Issue" or a "Software
Bug". That's as deep as a simple Google search will get you.

Should show up in "The risk factor" blog in a few days. Doesn't
*sound* like it depended on the OS.

But it turns out Knight is fungible, and has lost beaucoup customers -->
grim/bankrupt future. Corporate Darwin Award, anyone? (shades of Arthur
Andersen)
(Christenson)

[ Reply to This | Parent | # ]

Nanex ~ 01-Aug-2012 ~ Knightmare on Wall Street
Authored by: JimDiGriz on Sunday, August 05 2012 @ 12:24 AM EDT
http://www.nanex.net/aqck2/3522.html

What Really Happened, or How to Test Your New Market Making Software and Lose a
Pile of Money, Fast

On August 1, 2012, starting at market open (9:30 EDT), our monitoring software
alarms went off on hundreds of symbols. Looking closer at the data, we found and
reported (at 9:38am) that many NYSE stocks had extremely high trade rates:
several sustaining over 100 trades per second.

What follows should strike you as crazy. If it doesn't, read it again, because
it is.

[ Reply to This | Parent | # ]

Knight Capital Group - what happened there, really?
Authored by: DCFusor on Monday, August 06 2012 @ 07:26 PM EDT
As usual, ZeroHedge is the first with detailed bad news.
http://www.zerohedge.com/news/explaining-knightmare

Evidently, they put the wrong software online. The stuff they used to test the
real software. So it bought at the offer, and sold at the bid, as fast as it
could - it was test software to test the real stuff and make sure it didn't fall
for that. So they say. More here - on my site.
http://www.coultersmithing.com/forums/viewtopic.php%3ff=51&t=328&p=3925#p3
924

The software didn't flag the errors or the money loss, as it wasn't supposed to
ever go online - it was used to test the real stuff in a situation where there
was no money involved. It was the test harness!

The movie there brightened up an otherwise dull day of trading. Interesting,
since Knight isn't TBTF, and did step on NSYE's toes hard, about their messing
up the FB IPO, NYSE isn't busting most of the trades, and the alert humans who
took advantage of it - like myself - get to keep our profits since we work fair
and square. Only we have judgement, unlike their algos...and can jump on a
ridiculous price move we just know is going to revert to mean trend. Made a
month's income that day...

---
Why guess, when you can know? Measure it!

[ Reply to This | Parent | # ]

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