I do not work in finance, but surely every trading company has had an algorithm go wild at some point. Just becomes a matter of how fast someone can pull the circuit breaker before the expensive failure becomes public.

We have circuit breakers for that very purpose. Everyone on the street does. It's just that theirs seems to have failed for some reason.

Theirs didn't fail, and they did have one. The circuit breaker they had that would have worked was a big red button that killed all of their trading processes, which would have meant spending the rest of the day figuring out and unwinding their positions.

Ihey were unwilling to push that button in the short time they had. If you read the reports to the SEC or the articles about it, you will note that. The follow-ups recommended that all firms adopt a big red button that is less catastrophic.

Gotcha, thanks for correcting me, I need to read up more about the incident.

> surely every trading company has had an algorithm go wild at some point.

You would think so.

Cynical me.

But no. When money is at stake much more care is taken than when lives are at stake.

Shamelessly plugging my own blog post on this: https://specbranch.com/posts/knight-capital/

The TL;DR of Knight is that Knight had several things go wrong at the same time, and had no circuit breaker for the problem that did not stop trading for the whole firm for the day. Most trading firms have had things go badly, but the holes in the Swiss cheese aligned for Knight (and they were larger than many other firms). This all comes from a sort of culture of carelessness.

I always thought the Swiss cheese model was used to suggest that no one party could possibly be responsible for a bad thing that happened. Interesting to see the company’s culture blamed for the cheese itself.

Personally, I think there are too many things in modern American society that involve diffusion of responsibility, presumably so that people avoid negative consequences. If you're going to suggest that a system gives 1/10th of the responsibility to 10 different people, the one who made the system is the enabler of that and IMO should suffer the consequences.

The Swiss cheese model fits better as a rebuttal when the cheese comprises both the finger-pointer and the finger-pointee. Think: sure, our software had a bug that said up was down, but what about all of your own employees who used the software, had certifications, and should have known better than to accept its conclusions?

Your usage, in assigning blame rather than diffusing it, was novel to me.