Knight Capital (NYSE:
) shares fell 58 percent in premarket trading to near $3 a share
Thursday after it reported a pretax $440 million loss on a trading
error to start the month and is now exploring financing
The market-maker acknowledged that the loss has "severely
impacted" its capital base.
The trading loss is larger than the $365 million in cash and
equivalents the company had on hand at the end of June. It's more
than 100 times what it earned in the second quarter.
Knight's valuation had been more than $1 billion ahead of the
trading debacle; it is now valued at less than $400 million -
significantly less than its smaller rival by revenue, Interactive
As it disclosed Wednesday, Knight sent multiple bad stock trade
orders due a glitch installing new trading software. The software
has since been removed from the company's systems, Knight said in a
The glitch appeared to affect dozens of NYSE-listed stocks
including Goodyear Tire (NYSE:
), GameStop (NYSE:
), Manitowoc (NYSE:
), Pandora Media (NYSE: ), Level 3 Communications (NYSE: ),
Corelogic (NYSE: ), Allegiant Travel (NASDAQ: ) and NuSkin (NYSE:
Clients were not affected; Knight said it has since traded out
of the erroneous positions.
Although the company's capital base has been severely impacted,
Knight's broker/dealer subsidiaries are in full compliance with net
capital requirements, the company said.
Knight plans to continue its trading and market-making business
at the start of U.S. trading at 9:30 am EST.
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