‘Technology issue’ causes $440 million loss on NYSE

‘Technology issue’ causes $440 million loss on NYSE

An amazing story has been developing over the last few days, after some wild share price swings on the NYSE on Wednesday, which in the end were due to problems with a new system being implemented by Knight Capital. The problems are said to have cost Knight Capital $440 million, who blamed it on a ‘technology issue’.

The problem seems to have been in a High Frequency Trading algorithm, which bought and sold shares at high frequency, with the aim of making a profit per trade, but  actually made a small loss per trade. In one trade instance that’s not a lot, but at high frequency that can soon develop into a massive loss.

Whatever the exact cause, sounds like they should have done a lot more testing. (The stable door is open and the horse has well and truly bolted)

 

2017-01-10T21:29:25+00:00August 3rd, 2012|Categories: News, Problems, Software Testing|Tags: , , , , |