Time limit for someone to claim erroneous trade.

Discussion in 'Trading' started by stock777, Aug 26, 2002.

  1. i have never been involved in a trade that someone wanted to bust, or a trade at a price that was "clearly erroneous." but i would suggest the simple mantra of "do unto others as you would have them do unto you." if you mistype a price and get filled instantly, and it costs you thousands of dollars, would your attitude really be "oh well, cest la vie! better be more careful next time!" do the other guy a favor and agree to break the trade.. if there was a software glitch and the confirm was erroneous or something, cut the guy some slack and break it, rather than "finders, keepers!! neener neener neener!"

    on the other hand if there is a 30 min rule i feel its more legitimate to not agree to break it, because you have a responsibility to look at your own confirms for crying out loud!
    #11     Aug 26, 2002
  2. Still sitting on the shares. No word.

    Will wait till T+3. If still nothing, then I'll call the broker and get an opinion on how to proceed.
    #12     Aug 26, 2002
  3. You say this, but it has been my experience that other parties never willingly bust trades in the case you have a typo. To extend that courtesy to them when they won't for you would trully be noble, but foolhardy.

    I used to think like you, but after experiencing firsthand how unfair the busting process is, I now think "I double-check my prices before entering my orders, what are these morons thinking - they deserve to lose their money." The Bill Lipschutz interview of the New Market Wizards comes to mind - "I don't give any quarter, and I don't expect any quarter."

    #13     Aug 26, 2002
  4. my policy is to do whats fair, even if its not in my personal best interest. you cant control other peoples actions, only your own. granted, i havent been in the position yet and i may change my tune when staring at a big lump of cash :)
    #14     Aug 26, 2002


    Some ECN's will break a trade DAYS later...depending on who was on the other side (Institutions get what they want). Do not cover for at least three or four trading days (if it is as bad a print as it sounds.)
    As for the previous post about cutting slack for someone putting in a wrong price, I have to say..."F**K THEM." I personally had an erroneous print through Selectnet a few years ago. The scumbag "trader's" at their chop shops (Tucker Anthony and Hillenbrand) refused to break the trade. My loss would have been enough for a down payment on a nice house (literally).
    So all I can say is ...GOOD FOR YOU, I hope they never find out. Go and do something good with your (their) money.:) :) :)
    #15     Aug 26, 2002
  6. rs7


    Since there is no "market price" during non trading hours, all trades are done and agreed to by the participants. So yes, you could, in theory, but a $50 stock for a penny. Take a look at an Instinet terminal and you will see absurdly low bids and high offers all the time. (these may also show on level 3, but I never look at one...I would think they do, or should however).

    I don't know where to tell you to look for the info. Try NASD.com for starters. I do know it is talked about in series 55 study materials. But I assure you, this is how it is.

    I once was saved from a bad trade. But it was during market hours. I sold 3000 shares of YHOO for $48 instead of $148. But it was during market hours. The trade was busted. Good thing someone noticed. $300K difference. Would have ruined my day for sure!

    Another reason I like NOT trading my own money from home. If I had been, I wouldn't have realized it until it was too late. (of course I wouldn't have had the $ to make the trade in the first place:()

    #16     Aug 26, 2002
  7. "But if it was done prior to or after regular trading hours, then the trade stands unless you agree to break it.

    not true.been there done that.here are the rules.every ecn has there own rules:

    Island requests that subscribers submit requests to review transactions within 15 minutes from the time the questioned trade was executed and provide Island with a fax containing the relevant details within 30 minutes. Island may consider requests received after such time period depending on the facts and circumstances surrounding such request. Island will make a final determination within an hour except under exceptional circumstances. In all cases, however, Island will make a final determination prior to the open of the next trading day. In addition, the complainant will receive a written determination from Island.

    heres instanet:

    heres redi:
    #17     Aug 26, 2002
  8. Just as a reference, I have rarely had trades busted.

    One of the rare events was some clown PRE Market, that didn't like my picking off his 50 shares of a $3 stock, maybe 50 cents away from the prev days close.

    One bust out of hundreds like that is not bad, but just goes to show you what is possible.
    #18     Aug 26, 2002
  9. We take busts daily; the rules never seem to matter ...
    #19     Aug 26, 2002
  10. Although the rules are linked in posts above, metoxx is correct. The general rules don't necessarily matter. It depends upon all the facts and circumstances. Virtually all of the "clearly erroneous" policies contain an "out" allowing the ecn or NASD to bust the trade. There is also an appeals process.

    How about this: Getting a bust from the NYSE because the Specialist made a mistake. Been there, done that. Traded against it? Well, maybe you'll get an adjustment so you don't lose money.

    The NYSE has a "half-point error guarantee" rule that is supposed to guarantee a good fill from the Spec. if he makes a mistake up to that amount. This obviously could still totally screw you if it was part of an "arb" trade with another stock.

    Earlier this month, I bought, pre-market , 4,000 shares of an NYSE stock 3 points below the previous close. The stock opened up. Nobody ever called.

    If it were me, I'd trade against the position to establish a profit.
    #20     Aug 26, 2002