so far I don't see any of the short etfs I traded yesterday in the list (whew!) like FAZ/TZA/SDS etc... I don't like the idea of trades being arbitrarily busted using some arbitrary 60% rule just because they were volatile.... yesterday was great for trading
If somebody bought a stock for $1... then sold it at $10.... and then the stock closed at $30, if trades are busted are they short at $10 now or would both buy and sell orders be busted and would they be flat??
Both busted. If you would have sold it at 13, you'd be short from 13! Although what about IRA's? You aren't allowed to be short in IRA's!
If the cuttoff for busted trades is <$10, yes, they are short @$10 and would have to buy it back @$30 when closing it out. Major loser. That's the way the exchanges do it and it is 'not appealable'. I was fortunate yesterday but knew it was a huge risk, so I didn't take any profits to avoid getting stuck short.
Canceling trade isn't fair to most market participation. If you don't like the price, you don't have to trade with it. why building the market in the first place, you can reset the price you don't like?
I believe there was an incident a few years back involving one of the education stocks (maybe CECO or APOL?). Lots of people bought the stock on a huge dip (fat finger error), then sold as the stock was recovering. Later, the exchanges came back with a bust percentage that screwed over a ton of people and some of those people had bought in their IRAs. I believe some people sued the exchanges saying they could not legally be short in their IRAs but I don't know what happened to that case. I assume that they were forced to cover their positions at a loss and that they probably didn't win.
I don't understand why trade prices aren't simply adjusted to fit within the ranged deemed acceptable instead of busting them altogether. Some double digit stocks traded down to something like $.11...obvious price adjustments needed...but if the actual volume isn't erroneous, just bad prices, keep the trades and positions, just adjust the darn prices. These 'subjective' rulings can be unbearable at times.
Update http://www.globenewswire.com/newsroom/news.html?d=191286 UPDATE -- The NASDAQ Stock Market Names Stocks With Cancelled Trades The NASDAQ Stock Market Had No Technology or System Issues Associated With Yesterday's Trading Between 2:00 and 3:00 p.m. Eastern Time NEW YORK, May 7, 2010 (GLOBE NEWSWIRE) -- The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ), the world's largest exchange company, announced that The NASDAQ Stock Market had no technology or system issues associated with the trading that occurred between 2:00 and 3:00 p.m. ET yesterday. The NASDAQ Stock Market operated continuously and its close process ran successfully. In addition, there is no indication at this time that a NASDAQ market participant experienced a technological failure in connection with this event. NASDAQ has coordinated a process among US Exchanges and therefore, pursuant to rule 11890(b), NASDAQ, on its own motion, will cancel all trades executed between 14:40:00 and 15:00:00 greater than or less than 60% away from the consolidated last print in that security at 14:40:00 or immediately prior. This decision cannot be appealed. NASDAQ has coordinated this decision with all other UTP Exchanges. NASDAQ will be canceling trades on the participant's behalf. The stocks affected and the break points are posted on the following website: http://media.primezone.com/cache/6948/file/8212.pdf