No Off Switch

What’s more astonishing – the fact that Knight Capital Group ($KCG), one of the most integral players in the modern trading universe, could almost be wiped out as a result of testing a new software program…or the fact that business went on as usual and no one seems fazed?

This whole thing is jarring to me, the fragility and the speed with which a foundational player in the markets can almost disappear in a day.

Knight’s not saying much but the DealBook crew have a story this morning that takes us through what we know…

Several market insiders said that they were bewildered, because in a market where trading losses can pile up in seconds, executives typically have a simple command that can immediately halt trading.

“Even just a minute or two would have been surprising to me. On these time scales, that is an eternity,” said David Lauer, a trader at a high-speed firm until a year ago. “To have something going on for 30 minutes is shocking.”

If 30 minutes can almost kill one of the biggest participants on the NYSE, what would an hour do?  How about 90 minutes?  What are we doing with our markets?  Is it basically technology in place of common sense going forward?

Source:

Trading Program Ran Amok, With No ‘Off’ Switch (DealBook)