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Knight Capital says business as usual after power issue resolved

A Knight Capital logo is seen on a trader's jacket on the floor of the New York Stock Exchange August 1, 2012. REUTERS/Brendan McDermid
A Knight Capital logo is seen on a trader's jacket on the floor of the New York Stock Exchange August 1, 2012. REUTERS/Brendan McDermid

By John McCrank

NEW YORK (Reuters) - Knight Capital Group said on Thursday it was processing stock orders as usual after resolving a backup power generator issue that forced the brokerage to instruct its clients to route orders elsewhere for part of Wednesday.

The Jersey City, New Jersey-based company's backup generators went down at around 11:45 a.m. on Wednesday after running low on fuel, according to an internal memo seen by Reuters.

The company's critical trading systems then switched to battery power, which continued until the generators were restored at around 2 p.m., the memo said.

"Out of an abundance of caution and to protect our clients, a decision was made to instruct clients to route away," the memo said.

Knight, a top U.S. market maker - a brokerage that buys and sells stocks for clients and ensures orderly trading - said its fuel-related issues had been addressed "for the foreseeable future."

Like many other companies in the New York metro area, the company was operating on backup energy after the massive storm Sandy hit late on Monday, knocking out power for millions.

All U.S. stock markets were shut on Monday and Tuesday in response to firms worried about employee safety during the storm, as well as concerns about markets functioning effectively on contingency plans with light staffing in place. It was the first time in 27 years that exchanges closed because of bad weather.

It was the second time in three months Knight has had to ask clients to route orders elsewhere.

On August 1, Knight was forced to route orders to other brokerages due to a software glitch that sent a deluge of unintentional trades into the market, leaving it with a massive position it had to unload at a loss of more than $400 million. Knight had to take on new investors to avoid bankruptcy.

The problem on Wednesday was unrelated. (Reporting By John McCrank; Editing by Steve Orlofskyt)

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