Breaking Trades ?

Discussion in 'Trading' started by SethArb, May 2, 2002.

  1. how long can a party decide if they want to break a trade done
    outside of market hours?

    Do they have to let their ECN / Broker within 30 minutes?

    Within the same trading day?

    Before Settlement ?
    ( T + 3 or is it now T + 1 ) ?

  2. this am

    I saw trades go in a listed stock pre market about 1 % off where

    they should have been trading.

    I was able to offset 100 shares I was long overnight

    and then decided to sell a few hundred more when I saw

    the higher price that I saw still being bid

    I asked my broker to let me know if the trades need to
    be adjusted or busted.

    in the meantime I am slowly offsetting my small position
    and considering hedging with options to cover my remaining
    shares until I find out if the trades stand.

    If anyone has experience and authority on these matters
    I would appreciate any feedback

    (the profit here is only a few hundred $)

  3. metal1


    trades should be firm just like during the regular trading day
  4. i know that on instinet, it depends on the courtesy of
    instinet and their counterparty (call them via phone)
    if a mistrade (e.g. INTC: 26.02, 26.05, _27.10_, 26.05) can be broken, however, it is done in
    about 60-80% of all cases.
  5. <a mistrade (e.g. INTC: 26.02, 26.05, _27.10_, 26.05) can be broken, however, it is done in
    about 60-80% of all cases.>

    do you mean in 60 - 80 % of the time the trade at the bad price
    stands as done if it is not clearly erroneous trade?


    If you go to each company's website (Island, Inca, Redi etc.) they post their rules as to what is an erroneus print and whether or not it can be broken.
    That being said, the rules are thrown out the window if you work for a known "daytrading" firm and the other side of the print is one of the larger institutions....
  7. In my experience, the amount of time the other party has to break a trade depends on how erroneous the erroneous quote was. Normally, the other party has to call their broker within 30 minutes of the fill. However, for trades that are obviously typos, the other party can succesfully request a bust several days afterwards. I have never had any busts happen to me past settlement day, but I have had some busts happen several days after I got a great fill (i.e., clearly a typo).

    That being said, I've noticed that if I want to request a bust and I don't call within the 30 minute window, then I am hosed no matter how bad my fill was. Furthermore, any fill that you get on INSTINET, BRUT, or BTRADE that is even slightly erroneous is usually busted. If you yourself try to request a bust on INSTINET, BRUT, or BTRADE, you never get it. Apparently these ECNs view retail traders as the lowest scum on earth and try to screw them whenever possible. Other ECNs seem to be more fair in terms of busting (i.e., ISLAND, ARCHIPELAGO, and REDIBOOK).

    Generally, when it comes to busting I always expect the worst outcome. If by some miracle the worst outcome doesn't happen, then I thank the trading gods.

    Good luck,
  8. You usually have to be way outside the market. Did you really mean 1%? I have only busted trades (for clients) on Island, but they were WAY outside the market, more than 5 or 10 points.
  9. Some jackass busted an ISLD trade of mine the other day. I think it was for 50 shares on a $3 stock , maybe 40 cents too low. This was pre market. Chisler.

    That said, I've done many many trades away from the market, and have had none broken that were not some kind of system error.
  10. I had a busted trade using Selectnet, it is only 30 cents away.
    10 min later immediately got a call from the broker say MM made a mistake.

    During the bull market, I had SNET FBCO $1 away from the best price, and no phone call. I guess thing has changed a lot lately.
    #10     May 3, 2002