Knight Capital Group (KCG) rose more than 9% this morning, spiking after Bloomberg reported that the company has discovered the cause of its software glitch that distorted trading in hundreds of stocks and has threatened Knight’s role as a market-maker.
Two sources told Bloomberg that Knight Capital inadvertently triggered an old software program as it was implementing a new program — the mistake multiplied trades by 1,000 times and flooded the market with orders. NYSE cancelled trades affecting six securities, but the glitch appeared to affect trading in more than 100 stocks including big names like General Electric (GE) and AIG (AIG). Knight Capital lost $440 million on the trades and had to be rescued by a group of investment firms including Blackstone (BX) and Jefferies Group (JEF).
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