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Bloomberg television reported that when the company was loading new software into its system, an outdated version had become accidentally triggered and resulted in hundreds of errant trades being placed.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.