The National Association of Securities Dealers in the US has levied $1.5 million in fines on Knight Trading for "wide-ranging" market violations from July 1997 through May 2001.
NASD Regulation says the violations included failure to honor posted quotes, to promptly display limit orders and to timely and accurately report thousands of trades. The regulatory arm of the US industry association indicated that rapid expansion at Knight had overtaken the firm's IT and compliance capabilities.
Knight responded by blaming structural deficiencies in the Nasdaq securities market, an unexpected surge in trading volumes and market volatility and the two-year delay in introducing the SuperSoes electronic trading system.
In a statement, the company says: "Knight Securities firmly believes it had the best internal systems in terms of capacity, technology and software compared to any other order handling and execution system in the Nasdaq marketplace during the time period. In addition, Knight Securities (and a majority of other market participants) used the best industry technology available at the time."