Shares in trading firm Knight Capital Group Inc. (NYSE:KCG) rose
on Tuesday on reports that the company has identified the reason for the
software glitch that shook the market earlier this month and created losses
worth $400 million for it.
Bloomberg television reported that when the company
was loading new software into its system, an outdated version had become
accidentally triggered and resulted in hundreds of errant trades being placed.
The report, citing sources, said that the glitch
multiplied the firm’s stock orders by 1000.
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Knight's losses wiped out its net worth entirely and
in order to prevent a collapse and keep its operations running it had to
scramble to raise money from several financial institutions in deals that saw
more than 70 percent of its stake holding being placed with them.
Knight's shares fell to an intra-day low of $2.72 on
Tuesday before recouping to close at $2.99, up 5.3 percent. In after-hours
trading the stock was up marginally at $3.
Its market-making metrics showed a decline in the
month of July, according to data released by the company.
Its U.S. equity market-making volume fell to $19.04
billion in July, off 17% from a year ago. This data does not take into account
the software trading glitch.
Knight said average daily trades in its market-making
business fell to 2.97 million, from 3.13 million a year-ago.
Total daily share volume of those trades averaged 3.34
million a day versus 3.69 million a year ago.
The average number of shares traded in all the
market-making transactions each day was 215.9 million, up from 168.9 million a
year ago.
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However shares of KCG are down 6.35% to $2.80 in the
pre-market session.
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