Algo Error Damage Apparent as Knight Releases Q3 Results
![thomasjoyceknight thomasjoyceknight](/sites/default/files/styles/landscape_750_463/public/import/IMG/824/229824/thomasjoyceknight-580x358.jpg.webp?itok=WQrWoOw2)
The well-publicized error, which saw Knight initiate an IBM review of its processes and development as well as a substantial shakeup of its executive and risk management structure, is now said to have to cost the firm $461.1 million in total, rather than the $440 million previously estimated. Within that number, the August 1st trading losses, themselves, account for $457.6 million.
"Obviously, consolidated financial results were negatively impacted by the trading losses, related expenses and subsequent non-cash write-downs. We are gratified though that, if one backs out these items, we made a small profit on an operating basis," says Tom Joyce, Knight's CEO.
That was apparent in a deeper drill-down of the firm's Q3 numbers. Its electronic execution business, for example, which includes Knight Direct, Hotspot FX, and Bondpoint services, posted positive income and year-over-year market share gains. Unsurprisingly, the largest losses came in market-marking and institutional sales and trading.
Knight's new consortium of shareholders, which bought 70% of the firm as it seemed headed for bankruptcy, are surely hoping the negative numbers are a one-off.
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