Preventing Crashes

Lessons for the SEC from the Airline Industry

by Chris Clearfield, András Tilcsik, and Benjamin Berman
A small error on August 1, 2012 nearly bankrupted the Knight Capital Group. Code from a discontinued software component was accidentally reused after nine years, and in just 45 minutes Knight’s automated order router had flooded the market with millions of unintended orders. Knight lost $460 million when it sold back the inadvertently traded stocks—a staggering $10 million dollars per minute.