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UPDATE 1-Fidelity not routing orders through Knight Capital
BOSTON Aug 2 (Reuters) - Fidelity Investments' brokerage arm on Thursday was not routing customer orders through Knight Capital Group Inc, one of its top market makers, after a trading glitch wiped out $440 million of the firm's capital, according to people familiar with the situation.
Knight's stock has plummeted over the past two days after the trading problem was disclosed.
Fidelity, meanwhile, is not having any trouble routing orders as it moves the Knight traffic to other market makers, according to people briefed on the matter on Thursday. They declined to disclose their names because they are not authorized to speak publicly about the situation.
Fidelity had 18.3 million brokerage accounts in the first quarter. Its businesses averaged nearly 400,000 daily commissionable trades during the first three months of the year.
Fidelity's National Financial Services LLC unit, which provides trade clearing and custody services to more than 300 broker-dealers across the United States, recently disclosed that during the second quarter Knight received nearly 13 percent of its non-directed orders for securities listed on the New York Stock Exchange.
And for Nasdaq non-directed orders, Knight received 11 percent of National Financial's orders, according to U.S. regulatory filings.
For non-directed orders, National Financial selects the execution venue on behalf of its customers.
TD Ameritrade also is not currently routing orders through Knight as it tests the systems after the wholesale market maker suffered a technical error on Wednesday that caused ripples through the stock market and cost it massive amount of capital.
Published reports indicate Knight is scrambling to get a quick capital infusion to stabilize a crisis situation.
When liquidity is not naturally present in the stock market, Knight might offer capital to clients to help them complete their trades.
Knight shares were down 56 percent at $3.03 in afternoon trading on the New York Stock Exchange
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