Sorry for your experience. Interesting thread. I don't think you were jobbed by a "market maker". Your cancel request was DOA. Here's what likely happened: E*Trade routed your order (I assume a DAY order) before the close to either a regional stock exchange or a "third market" - an agency broker who trades order flow. Search "order routing" on E*Trade's website, click the active trading link, and look at their quarterly 606 report - that tells you where they route orders and to what percentage. To my knowledge, E*Trade is not an NYSE member firm, and does not route directly to the NYSE. Regardless, no specialist, market maker, or trader has responsibility for a cancel requested on an expired DAY order. DAY orders expire at the end of the regular trading session. Your cancel is a request to cancel the order - E*Trade's system waits for a "UR OUT" message from the exchange or other counterparty before it moves from a "pending" state to cancelled. In other words, your cancel is not instantaneous - it must be acknowledged by the destination which received your order. This is actually a fairly common practice - during volatile times in the market, many orders are partialled or filled and a rapid-fire penny chaser could quite easily get a TLTC (too late to cancel) execution, which would result in reinstating the original order, and disregarding the cancel request entirely - can be a messy chain of events. Check with E*Trade to see if your cancel was actually sent to the exchange or third market, or if they stop sending order messages after the close. Even if sent, it was probably unprocessed by the recipient, since it was sent after the close. In any event, with the market closed, this probably resulted in what you call "frozen". The E*Trade rep most probably manually "OUTed" your cancel. Most exchanges and other venues close their regular session at 1600 hours and open a separate "after hours" session. Not all destinations allow you to specify an order which is valid for all or multiple sessions during a given day. You will have to check with E*Trade if this is accommodated by their trading partners or not. You will also have to check whether this option is available to you via their software - I do not use them as a broker. After the regular session closes, most venues run a batch process which sweeps their order book and sends "ADDS and OUTS". ADDS are GTC orders added to the book today. OUTS are expired DAY orders. Since your order was received prior to the close, and not executed, then it probably was sent on the OUTS section of this recap. Check with E*Trade. It can easily take up to 20 minutes for all of this activity to be received and processed by E*Trade - that's not entirely under their control, either, they are dependent upon the time their trading partners take to complete this process. E*Trade's system has a rules engine to prevent inadvertant (or illegal) short sales from occuring. Your long position was paired off with your sell order, resulting in a "net zero" position ("I did not own the shares to sell"), which was why you could not enter another SELL order. (I wonder if you could have entered SELL SHORT, and "beaten the system", but those are also probably manually reviewed. You obviously would not be short overnight and E*Trade might have had some funny looking ledgers which they'd have to clean up themselves.) The upshot is, your cancel was in no-mans-land. E*Trade's system considered your order (which was technically expired if DAY) still in effect, which disallowed any other SELL activity. My credibility? E*Trade once used a system I wrote for all of their order processing. I wrote the links to their system and to all of the exchanges, market makers, and agency brokers, as well as the order matching engine. I can't state with assurance that my explanation above is gospel, since they no longer are a client of my firm's services, but that's how these events are commonly sequenced in the market. It will be up to you to determine whether E*Trade is culpable or not. Markets have defined hours of trading, and some post the rules regarding these trading sessions on their websites. Your best course of action, in my opinion, is to ask E*Trade what their recommended procedure is for a customer to perform when this condition occurs. If they cannot give you an answer (which is different than an "explanation"), then you may have a valid claim that their software is not suited to the clients they court (you drive commission dollars into them). Advise them that post-market-hours cancels on regular-session orders should be either disallowed, with the original order marked "expired", or immediately "OUTed", so that your desired order can be placed. Good luck with your claim. Please post your result.
tosasports, Great explanation. Most of us have learned these lessons the hard way. The brokers do a terrible job of explaining this sort of pitfall. I have little doubt that your explanation is correct, but I doubt Etrade will tell a customer he lost 2500 because his order fell into a no-man's land their software creates.
Hey tradermike88, I guess I didn't read this closely enough: "E*Trade Financial follows common industry practice to expire orders 20-25 minutes after the close of the market. This is done in the event that an order was executed but had a delay in the reporting. You may call us before the order is expired to request that we manually remove the order, but that is the responsibility of the customer. No adjustment is due on order 108, and we cannot offer any compensation for orders that were rejected correctly." Let's parse this logically. How can they possibly allow manual "removal" of an order, if they are waiting for a possible execution "in the event that an order was executed but had a delay in the reporting"? What would they do then? Get a complete explanation of what "rejected correctly" means. See my previous post. Don't fall for this one.
Interesting explanation tosasports, but I see you are coming around to my gut reaction that this is essentially bullcrap. I am aware of some delay in getting a cancel from a NYSE order placed in the last few minutes, as the spec prepares the closing print. Other than that, there is no reason for a 20 minute or even a 5 minute delay in order placed with other venues. Other than giving them an opportunity to game your order. The same infrastructure that is able to execute IMMEDIATELY during the day, can certainly manage to issue an out on unexecuted day orders, OR respond to a CANCEL request. If they don't do this now, it's because it's some kind of cash cow.
You probably had a better chance keeping it over night than paying the spread 20 minutes after close...
We had a problem with a "delay" in december on NYSE... for some reason the specialists went offline 10 minutes before market close, we even called several ECNs [INET RASH, Merryll Lynch, Millenium Passthrough] and they could only say that they where unable to communicate with the specialists. At the end we got filled on a buch of positions after the bell and had to pay the spread [since we cant hold any over nights in swift due to policies from our clearing firm]
I once got the similiar answer from Etrade. If this is true, everybody is fighting for a market maker.
Take it easy, I have filed tons of trade disuputes with Etrade and got similiar answers like you. Now I just use Etrade for swing trading instead of daytrading.