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From what I read about this crash the most important lesson was to have a kill switch. The biggest problem Knight Capital had was that they could not switch the
by fmstephe 13y ago
From what I read about this crash the most important lesson was to have a kill switch. The biggest problem Knight Capital had was that they could not switch the system off quickly. It was roughly 45 minutes (according most accounts) between Knight realising something was wrong to ceasing trading.
That there was a bug in some code isn't surprising. That it was so hard to stop their trading is really surprising.
- chollida1 13y agoIn Knights defense they aren't just a high frequency hedge fund that trades their own book to make a profit. They have legitimate customers that they put orders out on behalf of and allow clients to trade through them. Part of the reason why it took so long to shut the system down is that if they had just shut the system down, then they'd be in breach of contract for those clients. So shutting down was more of a business decision that a technical one.
- brazzy 13y agoIIRC there were indications that they restarted the system twice in those 45 minutes, to no avail. Presumably it took that long to get someone with the authority to make a decision to switch it off entirely to decide to do so.