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Two Months After Staggering Loss, Knight Capital Hunts for New CTO

In a series of moves aimed at preventing a repeat of its $440 million trading error, Knight Capital says Steven Sadoff is no longer overseeing its technology.

Knight Capital Group is shuffling its deck nearly two months after it was nearly put out of business by a rogue algorithm.

The firm said it's shifting Steven Sadoff – who oversaw the firm's operations and technology prior to the costly computer glitch – to a role where he will focus on building Knight's correspondent clearing, prime brokerage, and futures businesses. Sadoff had led a number of crucial initiatives for Knight, including the building of its trading floor technology, networking infrastructure, and clearing operations.

But now Knight says it's on the hunt for a new chief technology officer, noting that it will consider both internal and external candidates during its search. In the meantime, the company said managing director Michael Tobin – a 12-year veteran at the firm – will serve as the interim CTO.

As part of the restructuring, Knight also said that chief financial officer Steven Bigsay will take on the added responsibility of chief operating officer, effective immediately. The firm said that Bigsay had previously overseen the development of its financial infrastructure, the acquisition of numerous businesses and the establishment of internal auditing and reporting functions. But now he will be responsible for all financial and operational aspects of the firm, Knight said, including accounting, finance, treasury, risk management, operations and technology.

"After careful consideration, we concluded it was best to consolidate responsibility for all financial, operational, and technology risk under a single executive," chief executive Tom Joyce said in a statement. "Knight is better situated to pursue growth from a stronger foundation."

Bloomberg Businessweek noted that Knight Capital's shares are down 75 percent since the Aug. 1 trading error that cost the firm $440 million after flooding the nation's stock exchanges with incorrect orders.

As a result of that error, and other high-profile mishaps that have damaged confidence in the markets, the Securities and Exchange Commission is holding a market technology roundtable next month, which is looking to find ways for participants to prevent mistakes like Knight Capital's from occurring, and to establish guidelines on how to manage such crises in real-time. As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio

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