Exchange trade call back

Discussion in 'Order Execution' started by jvasto, Feb 3, 2003.

  1. jvasto



    I'm not a full time trader as of yet but am preparing for that time. One question that nags (OK scares the cr#p out of me) is the issue of a trade being called back by the exchange it was traded on. Is this common? To me the greatest fear associated with trading, particularly large lots, is the fear that a trade, although comfirmed by the broker, can later be voided, leaving you with potentially severe loses. Has this happened to anyone? if so what can be done about it? Or am I concerned for nothing.
    I ask this after reading all the contracts IB has you fill before joining.

  2. It happens most of the time in the options market. I have yet to see it happen in equities. It also happens all the time in open outcry markets when they take a print down if a floor broker's market got violated. Part of the risk. unfortunately. But in options it almost downright thievery on their part. Cry babies !!
  3. I think you're worrying too much. I've been trading for over 2yrs, never had that happen...never even heard of that happening to anyone I know.
    Only time I've ever heard of it happening is when a stock gets halted, but someone get sa trade on an ECN or something.
  4. Nordic


    Its an options event, (busts) mainly. Especially with the CBOE
  5. qdz2


    happened to me with one of the brokers who sponsors this website. took large loss.

    so nowadays, whenever I have unconfirmed fill, cancellation, or weired fill, I stop trading.

    but there are still substantial risk associated with this kind of crap. it doesn't matter you stop or continue. the risk is there. basically, some brokers made you to admit it is all your fault. They will never admit it's their fault and correct their problems.

  6. jvasto


    What broker was that? may I ask
  7. qdz2


    I'd rather not to say. But the commissions for the transaction that exchange calls back is even higher.


  8. If trading during market hours, I don't see much if any risk of a trade getting reversed. What has happened occassionally to me (I'm going to guess perhaps 1 in every 500 trades) is a corrected price. It's never more than a few cents a share and it has gone both ways. So unless to get a trade that is clearly out of the trading range, I wouldn't worry about it.
  9. I have had traders in my office who had trades busted by the Exchange, and I have gotten trades busted.

    A few years ago, when the first LU bankruptcy scare occurred, the specialist printed from $5.50 to $6.70 . He meant $5.70. I got the buy price corrected. Over 1 mill traded at the wrong price.

    I have had what appeared to be correct trades busted as erroneous. I don't have a NYSE rule book in front of me, but there is a rule known as the "half point error guarantee." Someone should find it and post it up. I believe that if the trade was in error by less than $.50, you can force the specialist to honor it.
  10. no one wants to lose money on a stupid trade

    especially the ones that cried and complained to break the trade

    but there are always people who want their mistakes to go away unfortunately the ones that profitted on their mistake end up paying for it

    too bad the exchange does not tell who made the erroneous trade and then busted it

    some day trading will be perfect and erroneous trades will be solid and everyone who jumped on the opportunity will actually profit on a mistake

    I mean is that not what the market is all about? profiting on bad decisions?
    #10     Feb 4, 2003