Knight Capital faces a $440 million pre-tax loss and its stock opened 53% lower at today’s open after an algorithmic glitch sent almost 150 stocks wild at yesterday’s open.
Yesterday the stock plunged 32.82%, or $3.39, to end at $6.34 a share. Knight said that problem came from new software ” in the company’s market-making unit related to the routing of shares of approximately 150 stocks to the NYSE.” The NYSE announced that it could cancel 6 different trades related to the glitch.
Today, Knight’s press release says that the company’s capital base has been “severely impacted” but that “the company’s broker/dealer subsidiaries are in full compliance with their net capital requirements.”
Investors are obviously worried, and Knight even acknowledges (also in the press release) that it’s “actively pursuing its strategic and financing alternatives to strengthen its capital base.”
The CEO will be on Bloomberg at 10:00 AM, we’ll be covering that so stay tuned.
Here’s the press release from Knight.
JERSEY CITY, N.J., Aug. 2, 2012 /PRNewswire/ — Knight Capital Group, Inc. (NYSE Euronext: KCG) today provided an update on the August 1, 2012 disruption to routing in NYSE-listed securities.
As previously disclosed, Knight experienced a technology issue at the open of trading at the NYSE yesterday, August 1st. This issue was related to Knight’s installation of trading software and resulted in Knight sending numerous erroneous orders in NYSE-listed securities into the market. This software has been removed from the company’s systems.
Clients were not negatively affected by the erroneous orders, and the software issue was limited to the routing of certain listed stocks to NYSE.
Knight has traded out of its entire erroneous trade position, which has resulted in a realised pre-tax loss of approximately $440 million. Although the company’s capital base has been severely impacted, the company’s broker/dealer subsidiaries are in full compliance with their net capital requirements. Knight will continue its trading and market making activities at the commencement of trading today. The company is actively pursuing its strategic and financing alternatives to strengthen its capital base.