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The week after this we had a trader in our office who had a meeting at Knight on the morning it happened. He said he saw the whole dev team just power off and

The week after this we had a trader in our office who had a meeting at Knight on the morning it happened. He said he saw the whole dev team just power off and go home at 11am, followed quickly by the rest of the employees. At that point, there was nothing they could do. The craziest thing is that it went on for so long. No one caught it until their own traders so it come across Bloomberg and CNBC. They actually thought it was a rival HFT and tried to play against it. The only people that came out of this ahead were aggressive algos on the other side and a few smart individual traders. A lot of retail guys had stop losses blown through that normally would never have been hit. After trading was halted they set the cap at 20% loss for rolling back trades. So if you lost 19% of your position in that short period of craziness, tough luck.

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ycombobreaker 13y ago
> After trading was halted they set the cap at 20% loss for rolling back trades. FYI, NYSE rolled back transactions based on predetermined price rules. There were no discretionary rollbacks associated with Knight's "big day". > The only people that came out of this ahead were aggressive algos on the other side Don't forget the other market makers; they took the other side of those Knight trades and made the spread every time Knight lost the spread.
- donpdonp 13y ago
  is there more information on what rollbacks did happen and what the price rules are?
  - jzwinck 13y ago
    Search for "clearly erroneous" and the name of your favorite exchange. The policies are often spelled out fairly clearly, though most (all) will include an exchange discretion clause.
jbrechtel 13y ago
They left at 11am because they realized how bad the problem was and just gave up? Or left at 11am as a normal thing (e.g. before they noticed the problem) ?
- seldo 13y ago
  My understanding is that by 11am Knight was clearly bankrupt, so there was no further point in staying at the office.
- meddlepal 13y ago
  I think he meant in the sense that nothing could be done. You might as well go home have a drink and prep that resume.
chollida1 13y ago
I dont' want to call your friend a liar, but this is most likely false. > The week after this we had a trader in our office who had a meeting at Knight on the morning it happened. > He said he saw the whole dev team just power off and go home at 11am, followed quickly by the rest of the employees. 1) Dev and Trading/Sales happen at different physical locations. 2) I actually know someone who spent their day cleaning this up and according to someone who was on the tech team and working that day no one went home early. Think about it, the firm just lost a shit load of money due to an IT issue. Dev's were frantically searching the code for the bug, Sys admins were rifling through server logs. No one had nothing to do:) > After trading was halted they set the cap at 20% loss for rolling back trades. So if you lost 19% of your position in that short period of craziness, tough luck. This is just plain false. The normal procedures for busting trades were followed. There was no 20% "cap" for losses, how would you even determine what a 20% loss is?
- adambratt 13y ago
  I really have no reason to doubt this guy as he's a pretty prolific trader. That said...traders are rather known for hyperbole. Per the 20%, I forget what it was but I know trades were rolled back and there was some kind of threshold for them. When I first wrote this, 20% losses was what I remembered. There's an article on it somewhere with the actual amounts. I think it had to do with how far stop limits were off from the open price of the stock.
- deleted 13y ago
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- icu 13y ago
  I don't know about Knight but in the big London trading desks developers and traders are in the same building for just this reason. As you can imagine traders can be quite demanding when things go wrong. Also plugs will get pulled if things are going horribly wrong.

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ycombobreaker 13y ago

> After trading was halted they set the cap at 20% loss for rolling back trades. FYI, NYSE rolled back transactions based on predetermined price rules. There were no discretionary rollbacks associated with Knight's "big day". > The only people that came out of this ahead were aggressive algos on the other side Don't forget the other market makers; they took the other side of those Knight trades and made the spread every time Knight lost the spread.

donpdonp 13y ago
is there more information on what rollbacks did happen and what the price rules are?
- jzwinck 13y ago
  Search for "clearly erroneous" and the name of your favorite exchange. The policies are often spelled out fairly clearly, though most (all) will include an exchange discretion clause.

jbrechtel 13y ago

They left at 11am because they realized how bad the problem was and just gave up? Or left at 11am as a normal thing (e.g. before they noticed the problem) ?

seldo 13y ago
My understanding is that by 11am Knight was clearly bankrupt, so there was no further point in staying at the office.
meddlepal 13y ago
I think he meant in the sense that nothing could be done. You might as well go home have a drink and prep that resume.

chollida1 13y ago

I dont' want to call your friend a liar, but this is most likely false. > The week after this we had a trader in our office who had a meeting at Knight on the morning it happened. > He said he saw the whole dev team just power off and go home at 11am, followed quickly by the rest of the employees. 1) Dev and Trading/Sales happen at different physical locations. 2) I actually know someone who spent their day cleaning this up and according to someone who was on the tech team and working that day no one went home early. Think about it, the firm just lost a shit load of money due to an IT issue. Dev's were frantically searching the code for the bug, Sys admins were rifling through server logs. No one had nothing to do:) > After trading was halted they set the cap at 20% loss for rolling back trades. So if you lost 19% of your position in that short period of craziness, tough luck. This is just plain false. The normal procedures for busting trades were followed. There was no 20% "cap" for losses, how would you even determine what a 20% loss is?

adambratt 13y ago
I really have no reason to doubt this guy as he's a pretty prolific trader. That said...traders are rather known for hyperbole. Per the 20%, I forget what it was but I know trades were rolled back and there was some kind of threshold for them. When I first wrote this, 20% losses was what I remembered. There's an article on it somewhere with the actual amounts. I think it had to do with how far stop limits were off from the open price of the stock.
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icu 13y ago
I don't know about Knight but in the big London trading desks developers and traders are in the same building for just this reason. As you can imagine traders can be quite demanding when things go wrong. Also plugs will get pulled if things are going horribly wrong.