[30thElement]

A kill switch wouldn't have saved them. What killed Knight wasn't the $400 million loss, it was the lack of confidence all other firms had in them afterwards. Brokers can't just shut down in the middle of the trading day.

They managed to raise the money to cover the loss, but afterwards they were getting round 10% of their normal order volume [1].

Somewhat ironically, the closest thing they had to a kill switch, backing out the code, actually made the situation worse as it made all 8 servers misbehave instead of just the first one[2].

The full SEC report in [2] is an interesting read, just skip the parts about "regulation 5c-15...".

[1] http://www.businessinsider.com/look-how-knight-capitals-trad...

[2] http://www.sec.gov/litigation/admin/2013/34-70694.pdf

[personZ]

Note that the loss of confidence was because a) it went on for 45 minutes, b) the financial loss was large enough that it seriously threatened the ongoing business of the firm. A kill switch would absolutely have helped them as it would have solved both a and b. No, they shouldn't stop fulfilling orders (which, incidentally, happens with order fulfillment. Outages and glitches happen), but the alternative was clearly much, much worse.

And to the backout, they reverted the code on the 7 servers while erroneously leaving the revised configuration, so it wasn't really a kill switch at all. It was frantic fumbling that made things worse.

They would have been better off just shutting the servers down at the first hint of trouble.