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The quite common lack of a kill switch is something that never fails to amaze me. Especially in large scale deployments with all kinds of distributed processes

The quite common lack of a kill switch is something that never fails to amaze me. Especially in large scale deployments with all kinds of distributed processes where you cannot simply turn off "the" server. Everybody is worried about downtime, but downtime is rarely the worst that can happen. Things turning to shit fast and not being able to stop it is both much more common and much harder to recover from. So many organizations have dutifully implemented a single command deployment but don't even have a playbook for simply pulling the plug.

hft_throwaway 12y ago
That's very true in this case. The issue here was that Knight isn't just trading for its own account. They're a broker where they likely have some SLA-ish agreement with clients, or face repetitional risk at the very least. As a registered market-maker they're obligated to quote two-way prices. Shutting down costs them money and exposes them to regulatory risk.
- hga 12y ago
  And if you read between the lines, loss of reputation is what killed them: "In 2012 Knight was the largest trader in US equities with market share of around 17% on each the NYSE and NASDAQ. Knight’s Electronic Trading Group (ETG) managed an average daily trading volume of more than 3.3 billion trades daily, trading over 21 billion dollars…daily." This was for others, per the preceding sentence. "Knight only has $365 million in cash and equivalents. In 45-minutes Knight went from being the largest trader in US equities and a major market maker in the NYSE and NASDAQ to bankrupt. They had 48-hours to raise the capital necessary to cover their losses (which they managed to do with a $400 million investment from around a half-dozen investors). Knight Capital Group was eventually acquired by Getco LLC (December 2012) and the merged company is now called KCG Holdings." Per https://news.ycombinator.com/item?id=7652573 https://news.ycombinator.com/item?id=7652573 afterwords "they were getting round 10% of their normal order volume" Losing 90% of their business "overnight" tends to be fatal. Per a link from the article the above links to, "An equities trader explained that Knight was the "last place" he would go to execute a trade. Others expressed befuddlement and the firm's inability to rectify the trading error for a full 45 minutes." Now all that was immediately after the screwup, but it's hard to imagine it getting better without a perception that the people managing their operations were replaced with people worthy of trust.
  - kasey_junk 12y ago
    Knight (and most big HFT firms) trade for others or sell their execution platforms. They also have proprietary trading arms, of which their market making strategies were assumedly a part. The way they were able to raise the funds they needed was to go to existing stakeholders for the money. This lead directly to their merger with Getco a bother huge HFT firm.

hft_throwaway 12y ago

That's very true in this case. The issue here was that Knight isn't just trading for its own account. They're a broker where they likely have some SLA-ish agreement with clients, or face repetitional risk at the very least. As a registered market-maker they're obligated to quote two-way prices. Shutting down costs them money and exposes them to regulatory risk.

hga 12y ago
And if you read between the lines, loss of reputation is what killed them: "In 2012 Knight was the largest trader in US equities with market share of around 17% on each the NYSE and NASDAQ. Knight’s Electronic Trading Group (ETG) managed an average daily trading volume of more than 3.3 billion trades daily, trading over 21 billion dollars…daily." This was for others, per the preceding sentence. "Knight only has $365 million in cash and equivalents. In 45-minutes Knight went from being the largest trader in US equities and a major market maker in the NYSE and NASDAQ to bankrupt. They had 48-hours to raise the capital necessary to cover their losses (which they managed to do with a $400 million investment from around a half-dozen investors). Knight Capital Group was eventually acquired by Getco LLC (December 2012) and the merged company is now called KCG Holdings." Per https://news.ycombinator.com/item?id=7652573 https://news.ycombinator.com/item?id=7652573 afterwords "they were getting round 10% of their normal order volume" Losing 90% of their business "overnight" tends to be fatal. Per a link from the article the above links to, "An equities trader explained that Knight was the "last place" he would go to execute a trade. Others expressed befuddlement and the firm's inability to rectify the trading error for a full 45 minutes." Now all that was immediately after the screwup, but it's hard to imagine it getting better without a perception that the people managing their operations were replaced with people worthy of trust.
- kasey_junk 12y ago
  Knight (and most big HFT firms) trade for others or sell their execution platforms. They also have proprietary trading arms, of which their market making strategies were assumedly a part. The way they were able to raise the funds they needed was to go to existing stakeholders for the money. This lead directly to their merger with Getco a bother huge HFT firm.