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CHAPTER SEVEN | TWIN STORMS
In August 2012, Knight Capital launched a new computer program that contained an errant code. The program was supposed to route orders to the markets, but instead made Knight Capital the buyer on every security that was offered for sale. Michael Bodson had just taken on the president and CEO role at DTCC and was leading his first staff meeting when a board member called to warn of an impending crisis. The trades generated by the errant code extended Knight Capital well beyond its ability to pay, but it was a major firm, so shutting it down would have had a severe ripple effect throughout the entire stock market. DTCC worked with regulators, Knight Capital’s management and its board members to keep Knight Capital solvent while it wound down its positions—a move that provided stability to the market during a moment of crisis. DTCC staff knew just what to do. “The lesson I learned as a CEO is, you need to empower people and trust them to do their jobs well,” Bodson said.
In August 2012, Michael Bodson, who had just been named DTCC president and CEO, experienced some of the most challenging moments in his career, as market-making firm Knight Capital launched a new software that was later found to have an errant code. The software glitch caused Knight Capital to extend itself beyond its ability to make payments, which would have created massive ripple effects throughout Wall Street had DTCC not stepped in to provide certainty to safeguard the markets. (Photo by Aditya Vyas courtesy of Unsplash.)
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