Knight Capital Shuts Down Trading on Electrical Outage
Published: October 31, 2012 / Author: Joe Deaux
The following is an excerpt from an article in The Street that quotes Finance Professor Robert Battalio about closing the market during Hurricane Sandy. To read the entire article visit: Knight Capital Shuts Down Trading on Electrical Outage
Knight Capital(KCG), the financial services firm that triggered a trading glitch in August that cost it some $440 million, shut down trading Wednesday because of an electrical outage.
The news comes after a two-day closure of major U.S. stock markets due to Hurricane Sandy’s drubbing of the East Coast.
Knight told clients in a memo that it was experiencing “power issues” and asked them to trade equities elsewhere, according to Bloomberg News.
“The SEC gets bashed a lot, but it made the right decision to coordinate the market closures,” Robert Battalio, a finance professor at University of Notre Dame, wrote in an email about the two-day closure. “Closing the exchange means there were a lot of bad trades that didn’t happen. … Computers can’t be programmed for every contingency; there is still a need for people to ‘babysit’ trading.”