|Source: Google Finance|
"A software glitch caused Knight Capital to erroneously buy $5 billion of stock in a trade that was intended to be executed over five weeks but ultimately took place in just 20 minutes, FOX Business’s Charlie Gasparino reported." (via Charlie Gasparino at Fox Business)
It could have been a 1-5 day trade instead (via Doug Kass and FT at Business Insider). It's insane how quick these brokerage/trading firms can fall to zero, or near zero, and affect 1,423 jobs. According to Bloomberg, Citigroup stopped doing business with Knight temporarily:
"Citigroup Inc. (C), the third-largest U.S. bank, is among firms temporarily refraining from routing some trades through Knight Capital Group Inc. (KCG) as the market maker recovers from software errors, according to a person with direct knowledge of the matter."
And Charlie Gasparino reported that Citadel is one of the most likely buyers for Knight. We'll see what happens. $KCG is down another 17.8% in after hours trading at $2.12 after closing down 62.8%. The KCG August $2.50 put was trading at $0.50 when 42,640 already traded. I see that it closed at $0.70 with 68,223 puts traded. Here's an update from Zero Hedge: Knight Considering Bankruptcy, Looking At 363 Asset Sale. According to data at Bloomberg.com, Knight Capital Group has $4.273 billion in debt (2.85 debt/equity [4.273/1.496 Billion], why the hell does Yahoo Finance have a 335 debt/equity ratio?) and its stock closed at 16.9% [253.3 million/1.496 billion] of book value (mrq). Here come the advisers.
BREAKING: Knight Capital said to work with Goldman, Sandler as advisers
— Bloomberg News (@BloombergNews) August 2, 2012