I just had some premarket trades broken by ARCA, at a very reasonable level (2% above yesterday's close on a 2x leveraged note). My Broker (IB) argued with the exchange as to why the trades were broken and they said that any pre/postmarket trade that breaks a new high will be broken if they receive a filing. It's all laid out here: https://usequities.nyx.com/sites/usequities.nyx.com/files/nyse_arca_rule_710_cee.pdf See the section about 52 week highs, and then it will refer you to 7.10(c)(3) in which case it falls under "Opening and Late Session executions" and they'll break it for you. My broker says that the rule is set by FINRA, and is followed by all exchanges.
The exchange is allowed to break trades they feel are way outside the market, but they have rules that govern when they can take place, and in this case, the rule is set so that any pre/post market trade that hits a new high can be cancelled just because you don't like the result.
Does the exchange pick which trades to bust or does the trader have any control. If it's the latter, there are arbitrage opportunities here.
From the sounds of it, if it's a 52 week low/high AND pre/post market trade, they have to bust the trade if you make the request. You do have a limited amount of time to file, which I believe is laid out in the pdf I attached.
I've made quite a bit of money back in a day off erroneous trades. You have no control over anything at any time. It's all up to exchange and the guy with bigger balls/wallet. I've seen trades that been busted WEEK later, against all exchange own rules AT loss for other party. Go figure rationale in that
Exactly. I've been on the losing side of "clearly erroneous" trades a bunch of times after hours and they very rarely were broken. The supposed "rules" mean nothing especially when they say that "there was news on the stock" so the rules don't apply. Funny, because when I pick them off on "news" the clearly erroneous rules always apply. They rule for the big guys 9 out of 10 times regardless of the situation.
yep..another 'funny' example is a flash crash. rules regarding what is erroneous where clear and very well defined and established for years,yet exchanges choose to go against they own made rules and pick imo some random ass number right out of their ass. this thing alone (60% and more-busted)make me very very suspicious about whole thing. why not 5%(as it suppose to) or 20 or 50%? why 60%? 2 years committee have no answer for this very simple question.SEC,exchanges and that committee 'actions' are pathetic..