Software Glitch Costs Global Trading Firm $440m In 45 Minutes

Financial services firm Knight Capital lost $US440 million in a flash on Wednesday, when newly installed trading software went haywire. That's nearly double the company's second quarter revenue, and it could be enough to sink Knight for good.

You know all the concerns about automated high-speed trading on the stock market? This.

So how does a screw-up this colossally epic happen? According to the New York Times, the company "accidentally sold all of the stocks it bought on Wednesday morning". Seriously:

The problem on Wednesday led the firm's computers to rapidly buy and sell millions of shares in over a hundred stocks for about 45 minutes after the markets opened. Those trades pushed the value of many stocks up, and the company's losses appear to have occurred when it had to sell the overvalued shares back into the market at a lower price.

Oopsies! What? How the hell does that happen by accident? This isn't the first time a computer error has caused massive losses on the stock market — in fact Knight took it on the chin during the NASDAQ Facebook IPO fiasco as well — and it's just going to keep happening if the industry isn't better regulated.

Financial institutions hate regulation, but as this case plainly proves, the rules aren't just there to protect us plebs. They can save billionaire arses as well. [New York Times]

Image: Mark Lennihan/AP




    Can't say I'm sympathetic... suck it up boys! Off to the soup kitchen for dinner!

    That's funny, but isn't it similar in nature to a banking error? Isn't there an "undo button" for this sort of thing?

      Nope...... once the trade has been executed.... you're fucked!!!

      Nope because by the time they probably realised there had probably been thousands of counter parties who took the ask bids in good faith and based their strategy off this.

    once you make a trade that's it. it's done.

    i feel sorry for these guys because it was a softwear error. i also dislike the comments above haten on the traders


      Yeah we be haten!

      Tough titties! Test your software first before rolling it out. For something this important, test test test!

      Actually -- just a thought -- is this a first move in a cyberwar? They should check for viruses.

    Oh man this is gold. I can't stop laughing!

    Skynet making the first move........

    So people are laughing that a company loss a lot of money which unless it has already gone under will have to significantly downsize their staff leaving many people &/or families with one less income-earner. Bravo, fantastic thought people.. let's hope your job loses millions then you're out of a job as well.

    I would never in a million years consider writing software that does this. It would be a nightmare. There are a whole bunch of areas that many wise developers stay well away from.

    More regulation is NOT needed here as the author automatically assumes. A software glitch like this would hurt the reputation of the providers. They would be scrutinised by a vast network of investors, banks, current and potential customers. More would be invested in solutions that don't cause losses and drive industry innovation. The end result is a better product, better performance from your fund managers, and more capital growth for anyone who has put their savings in a fund.

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