Knight tried to minimize its losses arising from a huge trading shortfall by paring the total position to about $4.6 billion by the end of the trading day, the Journal said.

The position led to a $440 million loss that forced Knight to secure a $400 million bailout from a group of independent investors in exchange for a 73 percent stake.

The exposure would have prevented the brokerage from opening for business the next day due to lack of capital required by regulators to offset risks from holding the stocks, the newspaper reported.

Additional safeguards have been put in place in recent days to guard against more trades going off-course, according to a note sent to clients sent by Chief Executive Thomas Joyce, the Journal said.

"We are in discussions with external advisers in an effort to effectively assess the situation, in addition to our internal review," Joyce wrote in the email sent late Tuesday, according to the newspaper.

A spokeswoman for Knight also said that the brokerage had not reached a decision yet on an outside firm coming in to review the technology problem that drove the wayward trading, the Journal reported.

Knight Capital could not immediately be reached for comment.

(Reporting by Juhi Arora in Bangalore; Editing by Chris Gallagher)

• A Permanent Economic Emergency