> The blame here lies squarely with the developers--the code was written in a non-backwards-compatible way.
The blame completely lies with the risk management team.
The market knew there was a terrible problem, Knight knew there was a problem, yet it took 45 minutes of trying various hotfixes before they ceased trading. Either because they didn't have a kill switch, or because no one was empowered to pull the kill switch because of the opportunity cost (perhaps pulling the switch at the wrong time costs $500k in opportunity).
I worked for a competitor to Knight at the time, and we deployed terrible bugs to production all the time, and during post mortems we couldn't fathom the same thing happening to us. A dozen automated systems would have kicked in to stop individual trades, and any senior trader or operations person could have got a kill switch pulled with 60 seconds of dialogue, and not feared the repercussions. Actually, we made way less of Knight's $400m than we could have because our risk systems kept shutting strategies down because what was happening was "too good to be true".