Knight Capital was an American financial service company based in Jersey City. You might have already guessed what a single bug did to them since I used a past tense in the opening line 😀
But just in case you got interested to know more, here we go.
At it’s time in 2012 Knight was the most substantial trader in U.S. equities, with a market share of 17.3% on NYSE and 16.9% on NASDAQ. And that means a lot of money. They based their success on high-frequency trading algorithms they developed and deployed on the market.
On August the 1st, one of their eight servers was updated with a single-flag misconfiguration related to a legacy function known as the “Power Peg.” In 45 minutes a chain reaction in the system had resulted in 4 million executions in 154 stocks for more than 397 million shares.
When released into production, Knight’s trading activities caused a significant disruption in the prices of 148 companies listed on the New York Stock Exchange. According to Wikipedia, for example, shares of Wizzard Software Corporation went from $3.50 to $14.76 instantly.
Knight Capital lost $440 million that day and never recovered. Getco LLC acquired the company in December 2012. The end of story.
Want to reproduce an incident as impressive as this? It’s easy. Start a habit of overlooking the trivial things today. Time and chance will do the rest.
Source: ministry of testing
What a single bug can do to a business?