Knight’s future in balance after trading disaster
By Edward Krudy and Jed Horowitz and John McCrank
NEW YORK | Thu Aug 2, 2012 7:49pm EDT



(Reuters) – Knight Capital Group Inc fought for survival on Thursday after a $440 million trading loss caused by a software glitch wiped out much of its capital, forcing Knight to seek new funding as its shares plunged as much as 80 percent in two days.


Many of the company’s biggest customers, including TD Ameritrade, the No. 1 U.S. 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.


"They have about 48 hours to shore up confidence," said James Koutoulas, head of an advocacy group for former customers of failed brokerages MF Global and Peregrine Financial.


Knight said it is "actively pursuing its strategic and financing alternatives," raising the likelihood the firm will be sold or face bankruptcy because of the loss and subsequent damage to business.
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