Knight's stock has mostly been in free-fall since a massive computer error in its systems last Wednesday sent huge numbers of erroneous orders flooding into the market, causing dozens of stocks to swing wildly in heavy volume. Knight said the foul-up would cost the firm $440 million as it paid for stock positions it mistakenly bought. Knight's stock took another pounding Monday, closing down 24.2 percent, or 98 cents, at $3.07. It closed last Tuesday at $10.33.
Knight's CEO Thomas Joyce, speaking in an interview on CNBC, said that only Knight, and not its clients, were hurt by Wednesday's problem.
"This was an isolated situation," Joyce said. "We screwed up. We paid the price."
Joyce said his firm was still doing a postmortem on the technical blunder and still didn't have a full understanding of what went wrong. He characterized the error as a "large" but "simple" breakdown on trading technology.
Knight Capital, based in Jersey City, N.J., is a trading firm that takes orders from big brokers like TD Ameritrade and E*Trade. It then routes them to the exchanges where stocks are traded, like the New York Stock Exchange.
Even with the cash infusion, it's not yet clear that Knight will regain the trust of other key players in the stock market to carry on and survive as a firm. Some of Knight's trading partners have said they would suspend routing trades through it until the situation settles.
Ten minutes before stock trading opened Monday morning, the New York Stock Exchange issued a news release saying it was temporarily reassigning Knight's responsibilities of trading 524 NYSE-listed stocks to Getco, a rival firm and also one of Knight's new owners.
In another troubling sign of financial market malfunction, trading on Madrid's stock exchange was suspended for five hours Monday because of a technical glitch.