Knight Capital America LLC was founded in 1995 and was “built on the idea that the self-directed retail investor would desire a better, faster, and more reliable way to access the market”(Joyce, 2012). Knight was a broker dealer; market maker that handled and submitted proposed trades on behalf of others. In terms of volume on major stock markets, Knight was the largest and had clients from more than, 5,000 of the worlds largest institutions and financial services. The company included “superior trade executions in a cost effective way for a wide spectrum of clients in multiple asset classes, including; equities (domestic and foreign securities), fixed income securities, derivatives and currencies” (Joyce, 2012). Knight executed more than 10 million trades by 2012 with a volume that exceeded 20 billion shares. The company enjoyed and worked vigorously to promote themselves as the leader in trading technology. In June 2012, CEO Thomas M. Joyce advised the U.S Congress on how to promote efficient stock markets. Joyce at the same time promoted Knights IT capabilities …show more content…
In order to perform pilot testing of the new software, Knight installed the new code in a limited number of servers instead of all eight servers that ran SMARS. When the new code functioned on the small number of servers to their satisfaction, the Knight staff deployed the new software to all servers, however, missed one. The eighth server did not have the new software installed on it, and the staff also forgot to delete the dead Power Peg code from the eight servers. The company was not aware of the mistakes and had no written procedures that required them to double check. On the morning of August 1, 2012 the computer systems of Knight began sending emails to employees referencing “SMARS”. Recipients of the email would be notified of a “Power Peg disable error”, however most of the emails went unread and no prompted action was