Knight Capital Debacle: The Latest High-Frequency Nightmare

As reported by Mark Gongloff, maybe this is the fastest way to get high-frequency trading robots to stop ruining our stock market: Have them destroy each and every trading company that operates them.

It might take that sort of carnage to get the attention of market regulators, who have done little to stop the freakish market meltdowns, from the Flash Crash to the Facebook IPO, that have made investors hate the stock market forever.

And now there’s the latest train wreck, which the Wall Street Journal has dubbed, for the win, The Knightmare On Wall Street.

That’s Knightmare, as in Knight Capital, the New Jersey trading firm whose trading algorithms went haywire on Wednesday, causing crazy trades in about 150 different stocks and costing the firm $440 million.

Just like that, the company is teetering on the edge of destruction, saying it is “actively pursuing its strategic and financing alternatives,” which is PR-speak for “Holy crap, we need money fast.”

The company’s stock price has plunged to $3.40, down 67 percent from Tuesday’s close. Analysts are talking bankruptcy.

How does a company get itself into so much trouble so quickly? Easy. Turn on the robots and watch them go.

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