Knight Capital Group Inc is fighting for its survival after a $440 million (£283m) trading loss caused by a software glitch which has wiped out much of its capital, forcing Knight to seek new funding as its shares plunged as much as 80% in two days.
Many of the company's biggest customers, including TD Ameritrade, the No 1 US retail brokerage by trading volume, and fund giants Vanguard and Fidelity Investments, stopped routing orders through Knight. One of the biggest fears is that the company will collapse, landing trading partners with losses.
As one of the leading market makers in US stocks, Knight is among the firms that are critical to smooth, orderly trading. Market makers match orders from buyers and sellers and often provide liquidity by stepping into the market themselves. Knight Capital Group in crisis after $440m trading loss | World news | guardian.co.uk