Knight Capital Confirms 'Technical Issue' As Insider Trading Persists
Knight Capital Group Inc. (NYSE:KCG), which helps execute billion-dollar equity deals, told some of its clients on Wednesday that its system was having a "technical issue," and suggested they route orders around their system.
This was the second time in two weeks the company said technical issues resulted in distorted trading, with the most recent mishap causing the company's stock to fall more than 10 percent in one day. Since the technical problems began, the stock has fallen 26 percent.
The incident is fodder for those that say the American trading system relies too heavily on computers, and that these machines may have become too complex to control in the investing space. However, measures that were put into place after the May 2010 equity crash helped keep stocks calm today, experts say.
"All of a sudden, there was choppy trading and some stocks were halted," Arthur Hogan, a strategist at Lazard Capital Markets LLC, told Bloomberg. "People were scratching their heads, but it wasn’t a sense of panic. It was more curious. There’s got to be some human error here."
Interestingly, Knight Capital insiders sold off $249,070 worth of shares in the weeks leading up to the two mishaps.
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