Thursday, August 2, 2012

Knight Capital Group Inc.(NYSE:KCG) Estimates Loss on Erroneous Trades at $440 mln

Trading firm and market maker Knight Capital Group Inc.(NYSE:KCG)  has estimated the losses from Wednesday's technical glitch that led to unusual trades in some 140 stocks, at $440 million,

Shares of the company shaved off about half their value in early trades on Wall Street. It was trading down 45 percent at $3.84 at 9.52 a.m. having fallen about 33 percent on the previous day.

The company continued its trading and market making activities even as it said that it would look at other alternatives especially with regard to shoring up its capital base.

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A problem with its trading software resulted in numerous orders being places at wildly fluctuating prices, sending some stocks skyrocketing while others nose-dived.

“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 said. “The company is actively pursuing its strategic and financing alternatives to strengthen its capital base.”

The estimated loss is several times higher than the $115.2 million net income reported by the company in 2011, on revenue of $1.4 billion.

The NYSE has cancelled the trades in those stocks which saw a price swing of 30 percent either way in the initial 45 minutes of trade.

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