Knights Volume Drops 34.5% in August
September 18, 2012
Knight Capital said trading in its market making business fell 34.5% in August, the month that started with the firm sending a flood of erroneous orders onto the New York Stock Exchange and other markets in the first 45 minutes.
The company, which serves as the designated market maker in about 690 securities listed on the NYSE, said its market making volume in the month was $12.5 billion, down $19.0 billion in July 2012.
That also is about one-third of its $36.4 billion in August 2011. Trading in August 2011 was jacked up by reaction to the first-ever downgrade of U.S. debt, from the Standard Poor’s rating agency.
National stock exchanges, on average, saw their trading volume dip 47.4% in August 2012, from August a year ago.
Knight said its daily market making trade volume in August 2012 was 1.9 million transactions, down roughly 35.0% from 3.0 million in July 2012, and off 62.7% from 5.2 million in August 2011.
Share volume in August was 2.5 billion, down 24.2% from 3.3 billion in July 2012, and 38.5% from 4.1 billion in August of last year
Last month, Knight chief executive officer Thomas Joyce said “a large bug” in the company’s trading software caused the huge stream of errant orders that flooded the nation’s equity exchanges at the opening of trading on August 1.
The firm’s stock lost 63% of its value, after the firm disclosed it would take a $440 million charge for the errant activity. The stock remains nearly 80 percent off the level at which it traded a year ago.
The company brought in new investors, to make up for the loss. The company’s shareholders gave up 73% of their stake, in the process.