The Jersey City electronic market making firm had a technical glitch that affected owners of 140 different stocks. Initially, in premarket trading, analysts expected the damages to total $140 million. Knight executed about $20 billion a day in trades in June.
Investors are still trying to figure out how Knight managed their positions after their systems crashed for 45 minutes on Wednesday. This is just another example on how algo-driven trading can lose a lot of money.
David Cornes holds a degree in economics from the University of Montana.
