Nowhere was the danger of high-frequency trading more apparent in 2012 than in the near-death experience of Knight Capital Group. The firm barely escaped bankruptcy after a trading malfunction bombarded U.S. exchanges with unintended orders in August, causing Knight to lose more than $450 million and forcing it to seek emergency financing from outside firms.
Knight's value, which peaked at $4.8 billion in 2000, plunged to $253 million on Aug. 2, a day after the malfunction, according to Bloomberg data. But a silver lining of sorts emerged last month when Getco, a Chicago-based high-frequency trader, offered to buy Knight for cash and stock worth, you guessed it, about $1 billion. Knight is weighing competing offers.
With assistance from Danielle Kucera and Brian Womack.
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