Reliving the Knightmare: Where were the Risk controls?

摘要

In the latest market debacle, Knight Capital Group admitted that a "technology issue" in its market-making unit affected the routing of orders in about 148 stocks to the New York Stock Exchange, wreaking havoc in the markets on the morning of Aug. 1 and rattling already nervous investors. Although stock prices in the recent fiasco violently swung up and down more than 10 percent in early trading, the incident - blamed on a rogue algorithm and a glitch in apparently untested software meant to take advantage of the NYSE's new liquidity rebate program - was reminiscent of the 2010 Flash Crash, which temporarily wiped out almost $1 trillion as the market plummeted in minutes.