Exchange robot in 45 minutes led to a loss of $ 440 million
Now we live in a world of high technology that allows you to transmit and receive data at a very high speed. In addition, computer systems make life very easy for all of us. Including, and exchange brokers. Software systems, “robots”, which allow you to automate the purchase / sale process, operate on various exchanges.
Thus, the Knight Capital Group exchange “robot” began to uncontrollably buy shares of various companies, including RadioShack, Ford Motor Company and American Airlines. The trading orgy of the machine lasted only 45 minutes. After that, the company tried to sell unwanted blocks of shares as quickly as possible. After calculating the cost of buying shares, and then the proceeds from the sale, the company missed $ 440 million. A little later, the company announced that its customers' assets were not affected. The reason for such "successful" bidding, according to representatives of the company, is the new software that has recently been installed.
This is four times the profit earned by the company in 2011. The losses are so great that the company is experiencing serious difficulties with further business. It is worth noting that previously the Knight Capital Group company has repeatedly spoken out for the use of exchange robots and other software systems in exchange trading. Moreover, the leadership of this company can be called a group of enthusiasts who promoted the idea of automating exchange trading. Company management believed that automation would help Knight Capital Group surpass all of its competitors.
Now experts from a body such as the US Securities and Exchange Commission are investigating the incident. But, even if an error is found, the company is unlikely to get its money back. The incident may lead to an administrative restriction on the use of exchange robots at the auction. By the way, this is not an isolated case of trading robots error. Only recently, on June 23 this year , roughly the same thing happened .