An article in The Register explains what happened in the Aug 1 2012 Wall Street glitch that cost Knight Capital $440M, resulted in a $12M fine, nearly bankrupted Knight Capital (and forced them to merge with someone else). In short, there were 8 servers that handled trades; 7 of them were correctly upgraded with new software, but the 8th was not. A particular type of transaction triggered the updated code, which worked properly on the upgraded servers. On the non-upgraded server, the transaction triggered an obsolete piece of software, which behaved altogether differently. The result was large numbers of incorrect “buy” transactions.
Bottom line is that the cause of the failure was lack of careful procedures in how the software was deployed, coupled with a poor design choice that allowed a new feature to reuse a previously used obsolete option, which meant that the trigger (instead of being ignored of causing an error) caused an unanticipated result.
So what does this have to do voting? [Read more...]