Knight Capital Explores Options After $440m Trading Loss

Knight Capital said losses from yesterday’s trading breakdown are $440m, more than some analysts had estimated, and the firm is exploring strategic and financial alternatives. Its stock plunged.

Bloomberg reports that Knight said it will continue its trading and market-making today as it considers its options. Yesterday’s issue was related to the installation of trading software and resulted in the company sending 'numerous erroneous orders', the Jersey City, New Jersey-based firm said today. The stock tumbled 60 percent to $2.75 at 8:32 a.m. New York time today.

Shares of Knight, one of the largest U.S. market makers, plunged 33% in record volume yesterday as investors speculated on how much the breakdown that sent stocks swinging as much as 151% will cost the company. Analysts at JPMorgan Chase & Co. estimated yesterday that Knight’s loss would be as much as $170m, while Raymond James & Associates Inc. said the amount could be 'hundreds of millions'.

'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 today. 'The company is actively pursuing its strategic and financing alternatives to strengthen its capital base'.

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Knight Explores Options on $440 Million Trade-Error Loss