Knight shuts down stock trading after backup power failure

Knight Capital Group Inc., one of the largest U.S. market makers, shut down trading of equities today after backup power failed at its headquarters in Jersey City, New Jersey, amid a blackout following Hurricane Sandy.

No new orders for stock trades are being accepted, according to a memo from Knight, which almost went bankrupt in August after a computer error flooded the market with unintended orders. The broker stopped handling client business in its institutional sales and trading unit and market-making group in all exchange-listed and over-the-counter stocks and in options, spokeswoman Kara Fitzsimmons said by phone.

“Power went down at about 11:45,” Fitzsimmons said. “Other regional offices are trading,” including Knight’s institutional fixed-income business in Greenwich, Connecticut, according to Fitzsimmons. When asked when Knight would resume normal operations, she said, “I don’t have that timing.”

Knight is one of dozens of Wall Street firms affected by power outages after Hurricane Sandy flooded parts of New York and New Jersey on Oct. 29. Citigroup Inc., the third-largest U.S. bank, said its office at 111 Wall St. in Manhattan will be unusable for weeks and that a building housing senior capital- markets executives lost power.

Backup Power

Knight said in a statement after the market closed that it had also asked customers using its Knight Direct, Hotspot FX and BondPoint services to send orders elsewhere until the company regained a power supply. Trading through these systems has resumed, the statement e-mailed by Fitzsimmons said.

U.S. equity markets opened today after the storm forced exchanges to shut for the first two days of the week, the only back-to-back closures related to weather since 1888. The New York Stock Exchange’s trading floor is running on backup power and will do so through Friday if necessary, Joe Mecane, head of U.S. equities for NYSE Euronext, said in a phone interview.

Nasdaq OMX Group Inc.’s data center in Carteret, New Jersey, is operating on backup power, according to a notice disseminated earlier today. The exchange company can refill the generators, which have 72 hours worth of fuel, every evening and has a backup data center in Ashburn, Virginia, Robert Madden, a company spokesman, said by phone.

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