Which U.S. firm’s trading error helped cause the 2012 Knight Capital stock-market disruption?

Knight Capital Group’s trading error helped cause the 2012 Knight Capital stock-market disruption.

On 1 August 2012, faulty software at Knight Capital sent millions of unintended orders into the U.S. equity market. The system bought and sold shares at high speed, creating disorder in numerous stocks. Knight accumulated a loss of about $440 million in roughly 45 minutes.

The problem came from a software deployment in which an old test function was accidentally activated on one server. The incident was not a conventional market crash like 1929 or 1987, because it was concentrated in a short-lived algorithmic-trading malfunction rather than a broad collapse in investor confidence.

Knight Capital was unable to absorb the loss on its own and received a capital infusion from investors. It was later acquired by Getco Holdings in 2013. Knight Ridder was a newspaper company and is unrelated, while the other listed firms were major banks rather than the company responsible for this incident.