Knight's Trading Error Sucked A Huge Amount Of Volume Out Of The Nasdaq

As traders rushed to take advantage of Knight’s erroneous orders hitting the tape on August 1st, another major market took a hit: the Nasdaq.

“It wasn’t only Knight trading,” Eric Scott Hunsader of Nanex says.

Nanex broke down trading over the first 30 minutes of the trading day from July 30 through August 7. 

As quotes and trades surged on NYSE and NYSE ARCA stocks — which Knight is a designated market-maker of — volume on the Nasdaq actually declined.

“It probably got all the sharks not looking at Nasdaq stocks and feasting on Knight,” Hunsader said of massive orders from Knight hitting the tape on August 1st.

Nanex Nasdaq Knight Capital

Photo: Nanex

The big drop you’ll notice on August 6th is likely due to two things: it was a Monday (trading had just started up in New York) and there were no economic announcements that day that would have driven trading.

Trading also declined across both exchanges on the 6th, indicating it was not related to a single index or trade.

SEE ALSO: A beautiful visualisation of the Knight trading debacle >

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.