Has anybody ever had a trade that has later been broken? If so, what's the procedure for doing so and does it need to be mutual agreement on both sides? This week, IB called me and asked to if I wanted to break a premarket trade. I said no, so it wasn't. But I'm concerned that maybe this might happen again in the future.
I've never been asked if I wanted to bust a trade. I wonder how this really works. Does that mean that if you said 'yes' the counterpart(s) would have their trades cancelled as well? It would seem that in most cases one party would have made a good trade and the other a bad one - how could they in general agree on when to bust a trade?
The ISLAND ECN , Selectnet and other exchanges may break trades that are out side the Bid-Ask spread and entered by traders in error. Usually on the Island ECN, these are trades entered by a trader $1.00 above or below the Bid-Ask spread in error. If you do enter a trade in error, you must report the trade to your introducing broker, who will contact ISLAND and submit a request to break the trade. ISLAND will usually break trades out of accepted Bid-Ask parameters within 30minutes. If you are in a "fast" market, the ISLAND ECN may not accept your request to break a trade. Please be aware, your introducing Broker or clearing firm may not be able to break trades with an exchange or ECN even if the trade is entered in error. The ECN or exchange usually has the last say. You could possibly appeal the ECN or exchange decision , but this could be a long and involved process. A word to the wise, check all prices on your orders before sending them to an exchange, ECN or Market Maker. Your direct access software may have a built in price checking features, however, I always check my orders before sending them . Gene Weissman Managing Member Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
So then both sides don't have to agree for a trade to be busted? Say the other side of a trade had already executed another trade to exit the position. Then if their initial trade was broken, they are now left with an unintended open position.
Earlier this year, I had a trade busted. It was on slr. Someone put in an island bid way above market, and I smacked it and covered immediately fora 56k profit. About 10 mins later, cyber calls me and tells me that island wants the trade broken. I said no. Cyber called back 3 mins later and said that if i didn't get it broken, island would probably break it anyway, but by breaking it, i was gonna get 40c a share from the other party. I then broke it and tlook like a k for breaking the trade by the other party, in the meantime, I lost 2500 on the open long position I had put on. Go figure. That's just my story.
I have also had a trade busted but it was not due to any input error. I had an open short in JDSU and news broke after the bell and the stock was halted. But I had covered just a few seconds after the halt. I called my broker and they said that the trade would automatically be busted since it was after the halt. It ended up OK with me because the stock tanked, but this "busting" scenario can be a bit scary, though uncommon.
. "Usually on the Island ECN, these are trades entered by a trader $1.00 above or below the Bid-Ask spread in error. " Most of the time when you see a bad tick on the chart it will be $1.00 above the current price. I always wince because I know some poor guy hit the wrong key
I've had it happen to me and I've requested it. I once had a limit sell on a multi-day long position and got hit, eventhough the price was getting close to my stop. IB called me and said that Nasdaq had asked that the trade be busted because it created a high for the day. I said no, I'm not giving up my profit because some other guy made a mistake. They then said OK, but wanted it taken off the tape, which was no problem for me. Don't remember where that one was executed. More recently, I wanted to buy JNJ and get the opening price, so I had a market order ready to go and transmited it right at 9:30. All of a sudden, I was filled on Instinet $3 above the opening print. I was livid and called IB right away. They took a couple of hours to get an answer from Instinet and the best they could do was adjust the price to 0.75 above the price I should have paid. That trade never showed up on the tape either. Now I always send orders for listed stocks to nyse, not 'best price'.
I had a option trade busted. I bought 5 OEX calls and then sold them 15-20 minutes later for a nice profit. My broker calls me up and tells me the trade (selling my 5 calls) has been broken by the exchange, because it occurred outside the best bid & ask. There went my profit and now I'm long again in 5 calls that are starting to tank. :eek:
Wow interesting I've seen alot of this going on on super small caps say price is 0.004 and frequently see people messing up and entering 0.040...... or 0.05 and buys going thru at 0.50...... especially happens when the stock is taking off and people are trying to leap in...like BIKO a while back If i'm not in sell mode i'll always leave a sell sitting up there for the fluke factor of getting filled. Looks like if it happens you take the phone off the hook huh.