Citigroup Inc. (NYSE:C), Ameritrade (AMTD) Suspend Transactions Through Knight Capital Group Inc. (NYSE:KCG)

Large financial institutions such as Citigroup Inc.(NYSE:C), TD Ameritrade Holding Corp.(NYSE:AMTD) and Scottrade Inc., have stopped routing their transactions via Knight Capital Group Inc.(NYSE:KCG), following a request from the latter, Bloomberg reported on Thursday quoting an unidentified person with knowledge of developments.

On Wednesday a technical glitch in the trading software of market maker Knight Capital saw a large number of trades being placed at the start of the trading day, at crazy prices that. The loss for Knight Capital has been estimated at 4400 million, nearly four time its earnings in 2011.

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The Jersey City, New Jersey-based company removed the faulty software, and clients resumed their dealings by the end of that day after Knight initially told them to go elsewhere, Bloomberg quoted Chief Executive Officer Thomas Joyce as saying.

“We’ve got to make sure that we work with our counterparties, our clients, to get the answers they want,” Joyce said on Thursday in an interview on Bloomberg Television. “So we have work to do and we’re doing it right now.”

Some of the largest retail brokerage firms such as Wells Fargo, Fidelity Investments and Bank of America Corp route their trades through Knight Capital, that handled about 24 percent of their market-price orders on the NYSE, Bloomberg reported.

Others who are keeping away from Knight Capital for the time being include Vanguard Group Inc. and Scottrade, the online discount brokerage, the news report said.

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However Morgan Stanley(NYSE:MS), the sixth biggest bank in the .S. has already resumed trading with Knight, Bloomberg said quoting a source.

Shares of KCG tumbled 63% to $2.58 on Thursday and hit a new multi year low of $2.27. The stock has lost 3/4^th of its value in just couple of trading sessions.