No it doesn't. It says that if Eurex or CME closed a market due to trading irregularities, they would announce any busted trades *before* the reopen of trading. That way people are 100% sure what their positions are, and an orderly and fair market can be maintained after the resumption.
Thanks for the maths lesson. Maybe when return on margin becomes remotely relevant as a performance measure, I'll start paying attention to it.
Are you going to now try and tell me that the capital that you use for your COCO trading is something that is done for "investment" purposes and not daytrading? Daytrading capital is daytrading capital. It is on the MARGIN. Period!
In defense of those who trade stocks over futures, most trader's who bought COCO today were looking for a scalp. By buying the monster offer, they were expecting an extremely quick move back up once the offer was taken/pulled. This was a fairly low risk trade with a short anticipated time commitment. Most people know you get considerably more leverage trading futures or currencies, but the COCO trade should have been a layup. Nobody is saying that $1000 put to work in the stock market would make more than $1000 leveraged in the futures. Furthermore, the CBOT and CME have broken trades based on errant order entry in the past. Oftentimes, depending on how the breaks pan out, one can be left with zero profits, or worse--one losing leg of the trade still on. Nasdaq sunk to a low today by allowing a stock to reopen before making a decision to break trades. They amplified an existing problem and shifted the loss from the party who made the error, to everyone BUT them. There should never have been a trade break in the first place. In my memory, it is unprecedented. Clearly the desk that made the error was a member firm, and nasdaq was willing to get them off the hook at the expense of looking like complete jackasses in the process. Clearly, they didn't think things through, or didn't care. There were reports that the desk that made the error was Bear Stearns. If a hedge fund had their own order desk and hadn't sent the order to an institutional desk, the hedgies would have been been stuck with the trades. But, since Bear would have been liable for the error, nasdaq pulled the scummiest move I have ever seen. A little over a month ago, a very similar situation occurred in NIHD. Someone sent an INCA market sell order for 500K shares and the stock tanked about 10 sticks--which is what you would expect to happen with an offer of that size. Nasdaq(correctly) refused to break the trades, stating that the market was orderly, and thus there were no grounds to break the trades. Instinet was left, unsuccesfully, trying to negotiate voluntary givebacks of all the shares sold on behalf of the client that made the error. Is there any doubt that such opposite outcomes could occur, has everything to do with who made the error, and what connections to nasdaq they have? Using nasdaq's recent NIHD decision as evidence of inconsitency and misfeasance, I expect the lawsuit brought on by this debacle will be a slam dunk.
All I am saying is that my IB account, like all my trading accounts, is funded sufficiently such that my position size is limited by my risk tolerance, not the exchange margin requirements. As such, my COCO trade would have remained exactly the same size, regardless of whether the margin was 100% or 1%. In any case, my "4 points" post was meant jokingly, so let's not get anyone's knickers in a twist
I agree wholeheartedly with your post! The NASDAQ should have made the firm that errantly put in the trade on COCO to eat it, rather than screw everyone else. I was simply referring to the absurd statement that Cutten made, "Let me know next time the T-bond moves 4 points in one day" implying that the futures markets did not have the kind of range and/or leverage that stocks do. My heart goes out to everyone that got screwed by the NASDAQ. I think that this is just one more example of why equity daytraders are migrating over to the ES and ZB. Peace.
kungfoo, Great points. I guess a lot of us had thought by using ecn's we could avoid the corruption that seems to permeate Nasdaq. Looks like we were wrong. I guess they were due. We've had corporate managements, the NYSE, specialists, investment bank underwritng and research, hedge funds and mutual funds all be the subject of some horrifying corruption or abuse this year. Can't let Nasdaq slip through unscathed.