“We paid a big price for a better outcome,” Tom Joyce, who is also Knight’s chairman, told a Barclays financial services conference in New York.
Knight’s Aug. 1 trading debacle showed how operational risk, not “regulatory risk,” is the biggest threat facing firms as stock trading has become faster and more computerized, Joyce said.
Knight will soon announce the appointment of a new risk officer, he added.
On Aug. 1, newly installed trading software at Knight accidentally sent a slew of errant trades into the stock market, costing the firm $440 million. Knight, a New Jersey-based brokerage and a major behind-the-scenes force on Wall Street, needed rescue financing to stave off collapse.
At the Tuesday morning conference, Joyce blamed the faulty trading on software that was somehow activated when the new trading program went live.
“In effect, we kicked the beehive,” Joyce said.