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Knight Capital Shuts Down Trading on Electrical Outage

NEW YORK ( TheStreet) -- Knight Capital (KCG - Get Report), the financial services firm that triggered a trading glitch in August that cost it some $440 million, shut down trading Wednesday because of an electrical outage.

The news comes after a two-day closure of major U.S. stock markets due to Hurricane Sandy's drubbing of the East Coast.

Knight told clients in a memo that it was experiencing "power issues" and asked them to trade equities elsewhere, according to Bloomberg News.

"Due to a building emergency power issues ... all computer interfaces with Knight will be shut down with no new orders, both by phone or electronic, being accepted at this time," the memo said, which Bloomberg confirmed with a company spokeswoman.

A worry before Hurricane Sandy hit was for an electrical malfunction to occur at the New York Stock Exchange or Nasdaq.

"The SEC gets bashed a lot, but it made the right decision to coordinate the market closures," Robert Battalio, a finance professor at University of Notre Dame, wrote in an email about the two-day closure. "Closing the exchange means there were a lot of bad trades that didn't happen. ... Computers can't be programmed for every contingency; there is still a need for people to 'babysit' trading."

Shares of Knight were shedding 3.6% after the news broke on Wednesday.

-- Written by Joe Deaux in New York.

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