Knight Capital Case Study
The result – it ended up with an immediate pre-tax loss of $440 million. And on the 2nd of August, the very next day after the debacle, the company found itself looking for a buyer. Its shares sank...
The Knight Capital Group was an American global financial services firm engaging in market making, electronic execution, and institutional sales and trading. With its high-frequency trading algorithms
Knight Capital Group
entering orders for equity securities that exceeded pre -set capital threshold s for the firm , in the aggregate, as required under Rule 15c3- 5(c)(1)(i). In particular, Knight failed to link accounts to firm -wide capital thresholds , and Knight relied on financial risk controls that were not capable of preventing the entry of orders ;