High-Speed Trader Knight's Debacle

A new software almost obliterated the existence of Knight Capital Group and put the focus squarely on high-speed trading on August 1, 2012 as erroneous trading orders for some 140 stocks roiled the stock market for almost 45 minutes, and the high-speed brokerage hod lost almost $440 million. Knight is a trading firm that takes orders from the big firms such as TD Ameritrade and E-Trade, and then funnels them to the markets such as NYSE. One of the roles played by Knight is that of a "designated market maker", who are responsible for keeping trading of stocks they oversee orderly. Knight is responsible for trading of 524 NYSE-listed stocks, a sizable proportion of a total of roughly 2,300. On August 6, 2012, Knight secured a rescue package of $400 million from a  group of financial firms led by Jefferies Group that had also included Blackstone; trading firm Getco, owned by private equity firm General Atlantic; Stephens; Stifel Financial and TD Ameritrade. Knight represents a new generation of traders who are specialized in stock transactions using Mathematical algorithms in lightening speed with a span of milliseconds.