NEW YORK (CNN/Money) - Knight Trading Group, whose shares slumped more than 50 percent in pre-market trading Monday morning, said a software glitch caused the unusual activity in the stock.

Knight -- a key U.S. share dealer -- fell to $3 from $6.35 in pre-market trade before Nasdaq halted trading pending an announcement. Shares of Knight (NITE: down $0.53 to $5.82, Research, Estimates) slipped about 10 percent after trading resumed around noon ET.

The company said the glitch, which affected only its stock and not its client business, generated a large series of sell limit orders in Knight's stock.

In a press release, Knight also stated that it is confident about its business strategy and that its balance sheet remains strong.

Thomas Price, Knight Trading CEO and president, said called it a "completely isolated" incident, saying that "there are no corporate developments at the company to warrant the unusual trading this morning."

"Unfortunately, all the stars aligned in a very bad pattern in one terminal. It reared its ugly head and generated these phantom orders," Joyce said.

Knight had a change of leadership recently when Kenneth Pasternak, founder of the Jersey City, N.J.-based company, left last January. Joyce last Thursday was named Knight's chief, replacing interim CEO Anthony Sanfilippo.

Knight was also hurt by the recent switch to quoting stock prices in decimals rather than fractions. Decimalization has wiped out trading spreads. Stock dealers, like Knight, generated revenue by buying shares at the low end of spreads and selling to customers at the high end.

The company has been scrambling for ways to make money, including cutting commissions and costs.

Shares of Knight, which reported a loss in the first quarter of the year, have tumbled from a peak of more than $80 in late 1999, when equity markets were booming.