There's probably a tonne of history behind this that I'm ignorant of, but look at it from a couple angles. 1) Busted Trades are a moral hazard. They remove market punishment for reckless or stupid behavior, encouraging it to happen again. 2) They punish innocent counter-parties Why should the guy who plays by the rules and trades honestly, pay for the mistake of some idiot who makes a fat finger by selling 1 billion shares at bid, or can't babysit their algo? 3) They destroy market confidence and erode liquidity The more frequent busted trades are in any market, the less honest traders will trade those markets. Who wants to trade US equities, now that mini-flash crashes are the norm and trades are busted in individual stocks on a routine basis? This is nonsense. Busted trades really seem to be a get-out-of-jail-free card, offered by exchanges to their biggest clients to keep their business at the exchange. The exchange and the big traders collude to screw other participants for their own mistakes. If both parties agree to bust a trade, sure. It's consensual, right? What about all those traders that got cleaned out during the flash crash on Proctor and Gamble et al? How fair is that? If you hit the offer to buy 1 million shares and need to get out, why shouldn't you have to sell your position, like everyone else?