One of the largest US market makers is on the edge of bankruptcy after its poor performance on the stock market due to the technology failure.
by Dagmar Benesova
WBP Online Correspondent in Washington D.C.
Knight Capital Group, one of the biggest US market makers, said it lost $440 million of the firm's capital in a trading disruption which messed up the market.
The latest development raised questions and concerns of computerized trading on Wall Street. The outcry on the market was caused by the problems in new software that send "numerous erroneous orders in NYSE-listed securities into the market".
NYSE recognized irregular trading in 148 stocks, as the US Securities and Exchanging Commission is reviewing the problems and monitors the situation.
After the chaos, Knight removed the software from its systems and announced that none of its clients were affected.
However, the credibility of Knight Capital Group plummeted on Wednesday and the decline has also been continuing during Thursday as Knight's stock tumbled 63.26% to $2.517 at 7:37pm GMT on Thursday.
The failure cost Knight Capital Group $440 million in comparison to net income of $115.2 million in 2011 on revenue of $1.4 billion.
Direct implications are that some of the company's biggest customers, including TD Ameritrade, are not routing orders through Knight. Smaller customers also reconsider their options.
The worries about the potential failure of the firm in the future are discouraging traders from doing business with Knight Capital Group.
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