|
Knight Capital fiasco software testing lessons
It took only one defect in a trading algorithm for Knight Capital to lose $440 million in about 30 minutes. That $440 million is three times the company's annual earnings. The shock and sell-off that followed caused Knight Capital's stock to lose 75 percent of its value in two business days. The loss of liquidity was so great that Knight Capital needed to talk on an addition $400 million line of credit, which, according to the Wall Street Journal , effectively shifted control of the company from the management group to its new creditors.
Knight Capital was regulated by the Securities and Exchange Commission, routinely audited and PCI complaint. If that bug could affect Knight, it could happen to any company. At least that's what Knight Capital CEO Thomas Joyce seemed to imply in an interview with Bloomberg Television. "Technology breaks. It ain't good. We don't look forward to it," he says, adding, "It was a software bug�.It happened to be a very large software bug." |
