Can I close a somewhat erroneous execution now?

Discussion in 'Order Execution' started by ggoom, May 24, 2006.

  1. ggoom


    One of my order sitting in the INET was erroneously executed in my favor (about 80 cents) this morning about 90 minutes ago.

    Can I close it now? IB rep says "NO IDEA"
    Thanks for your help!

  2. to be sure wait until next day.
  3. qazmax


    NASDAQ is providing general guidance on when transactions may be deemed erroneous under Rule 11890 . This guidance is not a mandate of the rule but is information on how NASDAQ generally applies the terms of the rule (at NASDAQ’s discretion) to determine whether an execution is clearly erroneous.
    NASDAQ generally considers a transaction to be clearly erroneous when the print is substantially inconsistent with the current and recent historical trading pattern of the security. In making such a determination, NASDAQ takes into account the circumstances at the time of the transaction, the preservation of the integrity of the market and the maintenance of a fair and orderly market place. Simple assertion by a firm that it made a mistake in entering an order or a quote, or that it failed to pay attention or to update a quote, may not be sufficient to establish that a transaction was clearly erroneous.

    Filing Deadline
    An erroneous complaint must be transmitted via facsimile to NASDAQ MarketWatch within a certain time period, depending on when the alleged erroneous trade was executed. Specifically, transactions executed between 9:30 a.m. and 10:00 a.m., Eastern Time (ET), must be received by 10:30 a.m., ET, while transactions executed at all other times (i.e., outside the 9:30 a.m. to 10:00 a.m., ET, time window) must be received by NASDAQ MarketWatch within 30 minutes of execution.

    Transactions after 6:30 p.m., ET
    If you are filing for Erroneous Trade adjudication after 6:30 p.m., ET, please fax your request to 301.978.8511. (A phone call is not necessary prior to filing.) All faxed requests must be received by MarketWatch within 30 minutes of trade execution to be eligible for review. MarketWatch personnel will contact you immediately upon receipt of any requests sent after 6:30 p.m., ET.

    Documentation is Required for Filing a Complaint
    A complaint must include the following information:
    Approximate time of transaction(s)
    Security symbol(s)
    Number of shares executed
    Price(s) or range of filing
    Contra broker(s), if transaction(s) are not anonymous
    NASDAQ system used to execute the transaction(s) (i.e., NASDAQ, Brut, INET)
    Reason the review is being sought
    If NASDAQ receives a complaint that does not contain all the required supporting information, NASDAQ will immediately notify the filer that the complaint is deficient. NASDAQ encourages market participants to use the complaint filing form found on this website, which lists all the required information. While it is not mandatory, this form assists both the initiator of the complaint and NASDAQ in its adjudication of the petition.

    Minimum Price Deviation Thresholds for Seeking a Review
    Rule 11890 establishes minimum price deviation thresholds for determining transactions’ eligibility for review. For transactions in NASDAQ-listed securities, the deviation applies for trades executed between 9:30 a.m. and 4:00 p.m., ET. For non-NASDAQ-listed securities, the deviation applies from the point after 9:30 a.m., ET, when the primary listing exchange posts a two-sided quote until 4:00 p.m., ET. A transaction not meeting the minimum price threshold is not considered clearly erroneous. A transaction price meeting the minimum price threshold does not automatically trigger a clearly erroneous determination. It only means the transaction is eligible for review. A transaction must equal or exceed the minimum thresholds below:

    Inside Price Minimum Threshold
    $0 - $0.99 $0.02 + (.10 x inside price)
    $1.00 - $4.99 $0.12 + (0.07 x (inside price - $1.00))
    $5.00 - $14.99 $0.40 + (0.06 x (inside price - $5.00))
    $15 or more $1.00

    For transactions to buy or sell a NASDAQ-listed security, the inside price is the best offer or best bid in NASDAQ at the time of execution of the first share of the order resulting in the disputed trade.

    For transactions to buy or sell a non-NASDAQ-listed security, the inside price is the national best offer or best bid at the time of execution of the first share of the order resulting in the disputed trade. Rule IM-11890-3 provides an example to assist market participants in understanding the minimum price deviation thresholds.

    Complaints Failing to Meet Documentation Requirements
    Market participants failing to meet the minimum documentation requirements or failing to meet the minimum price deviation parameters are not eligible to maintain an action under Rule 11890. NASDAQ staff will notify the complainant immediately of any deficiencies in the filing so the complainant can revise and resubmit documentation, if possible, within the 30-minute time frame established by the rule.
    In cases where a market participant’s claim is not eligible for review because the trade does not meet the minimum price deviation thresholds or because the complaint does not include the required documentation, the market participant may appeal to the Market Operations Review Committee (MORC) by alleging a mistake of material fact upon which it believes the NASDAQ officer’s determination was based. The MORC will not substantively review an appeal of a determination that does not allege a mistake of material fact. If the MORC finds the determination was based on a mistake of material fact, the MORC remands the matter to the NASDAQ officer for adjudication. If the MORC finds the determination was not based on a mistake of material fact, the determination is final and binding.

    Factors Considered in Clearly Erroneous Rulings
    Clearly Erroneous rulings are made by a NASDAQ Officer who considers, among other things, the following factors:
    Percentage the execution(s) are away from the NASDAQ BBO prevailing at the time of the execution
    The price of the security
    The session during which the allegedly erroneous trade occurred (prior to market open, 9:30 a.m. to 4:00 p.m., ET, and after market close)
    System malfunctions or disruptions
    News related to the security
    Recent trading or corporate actions in the security
    The primary market’s opening quote or indications.
    Other factors and circumstances as the situation may warrant.
    NASDAQ also notes that if a party that believes it has made an error resulting in an allegedly clearly erroneous trade knows the contra party to that trade, the parties should attempt a reconciliation or adjustment of the terms of the trade between themselves. In attempting a reconciliation in such circumstance, the parties should bear in mind that unjust enrichment by one because of another’s mistake may not be fair and honorable and that in such unjust enrichment circumstances, the parties should make a good faith effort to resolve their differences. Such a good faith effort does not preclude a simultaneous filing under Rule 11890. Furthermore, a good faith resolution effort is not grounds for tolling the time frames set out in Rule 11890.

    Firms should also review NASD's Notice To Members 04-66 which reminds firms of their obligations to ensure the accuracy and integrity of information entered into order-routing and execution systems.

    NASDAQ reiterates this is only guidance and recognizes that there may be circumstances beyond this policy that warrant a review of transactions.

    Appeal of Clearly Erroneous Rulings
    An appeal must be faxed within 30 minutes after the person making the appeal is given notification of the determination being appealed.

    Once a written appeal has been received, the counterparty to the trade will be notified of the appeal, and both parties can submit any additional supporting written information until the time the appeal is considered by the appropriate committee.

    Either party to a disputed trade may request the written information provided by the other party during the appeal process.

    An appeal shall not operate as a stay of the determination being appealed, and the scope of the appeal shall be limited to trades to which the person making the appeal is a party.

    Once a party has appealed a determination to the appropriate committee, the determination shall be reviewed and a decision rendered, unless both parties to the transaction agree to withdraw the appeal prior to the time a decision is rendered, or the party filing the appeal withdraws its appeal prior to the notification of counterparties.

    Upon consideration of the record, the MORC shall affirm, modify, reverse or remand the determination.

    The decision of a committee pursuant to an appeal, or a determination by a NASDAQ officer that is not appealed, shall be final and binding upon all parties and shall constitute final action on the matter. Any determination by a NASDAQ officer or any decision by a committee shall be rendered without prejudice as to the rights of the parties to the transaction to submit their dispute to arbitration.