exactly, the party who made the error is the one who walked away without a scratch. most everyone else got screwed. already contacted lawyers who feel there is a good case for some recourse. i'm not counting on it but it won't cost me a retainer so what the hell. whatever i get is a bonus.
Any recourse for COCO?
- Thread starter Toonces
- Start date
exactly, the party who made the error is the one who walked away without a scratch. most everyone else got screwed. already contacted lawyers who feel there is a good case for some recourse. i'm not counting on it but it won't cost me a retainer so what the hell. whatever i get is a bonus.
never has worked that way. they have to have some way to correct for errors. the only problem i see is they resumed trading and then decided to bust trades. i dont think that has ever happened before. had they followed standard procedure and announced a bust before they reopened the stock little damage would have been done.
rumor has it that etg trade is behind this thing? anyone know any more?
The thing with all these trade busts is that they are actually opening a door for more abuse.
Consider a team of 3-4 trades at XYZ firm. After a while 3 leave to join or or form their own funds. They agree that the remaining one will have fat fingers on ABC stock this week - the hedgies then sit on big short positions in all the comps. Like some grand heist, they all get togethor at some point later and split the bootie.
The exchanges are going to need to set up some type of breakers to prevent this, or I may end up organizing some 'plumbers' and offshore entities to exploit this flaw myself.
Consider a team of 3-4 trades at XYZ firm. After a while 3 leave to join or or form their own funds. They agree that the remaining one will have fat fingers on ABC stock this week - the hedgies then sit on big short positions in all the comps. Like some grand heist, they all get togethor at some point later and split the bootie.
The exchanges are going to need to set up some type of breakers to prevent this, or I may end up organizing some 'plumbers' and offshore entities to exploit this flaw myself.
I am suspicious of any claims that attribute the cause of this error to a software malfunction. I am fairly confident that the order was entered directly on Bloomberg. Not long ago, an erroneous market sell order was placed in NIHD for half a million shares on INCA. If my memory serves me correctly, on an instinet terminal, if you want to sell 100 shares, you type in 1. To sell 5000, you would enter 50. By incorrectly typing in 5000, a sell order for 500K would be generated. I don't know if instinet terminals are even in use anymore, but the gr8trade portal may have been engineered to accept order entry in the same way.
Never having traded from a Bloomberg terminal, I can't say for certain, but based on how antiquated the display looks, I'd guess that they operate the same way. I imagine an inexperienced trader at an institutional desk meant to sell 10K shares but instead of typing in 100, typed in 10000. Thus, the million shares that everyone saw. I believe this is why errors are usually a factor of 100. Anyone that trades from a Bloomberg, that can confirm or refute, your input is appreciated. Regardless of why the error happened, the fault should lie with the firm that entered the order. There is no reason that an alert shouldn't have been triggered, at the time of order entry and during the duration of the order. I can't conceive of a situation where it makes sense to legitimately display that much size on the bid or offer, unless it is one of the most liquid stocks, because it will certainly move the market unfavorably. The party that made the error is guilty of negligence at the very least, for not having a system in place that would prevent such ridiculous orders from being entered in the first place. Sadly, a deal was probably made with nasdaq, to accept a small fine in exchange for getting out of jail free.
Never having traded from a Bloomberg terminal, I can't say for certain, but based on how antiquated the display looks, I'd guess that they operate the same way. I imagine an inexperienced trader at an institutional desk meant to sell 10K shares but instead of typing in 100, typed in 10000. Thus, the million shares that everyone saw. I believe this is why errors are usually a factor of 100. Anyone that trades from a Bloomberg, that can confirm or refute, your input is appreciated. Regardless of why the error happened, the fault should lie with the firm that entered the order. There is no reason that an alert shouldn't have been triggered, at the time of order entry and during the duration of the order. I can't conceive of a situation where it makes sense to legitimately display that much size on the bid or offer, unless it is one of the most liquid stocks, because it will certainly move the market unfavorably. The party that made the error is guilty of negligence at the very least, for not having a system in place that would prevent such ridiculous orders from being entered in the first place. Sadly, a deal was probably made with nasdaq, to accept a small fine in exchange for getting out of jail free.
What I can't understand is why large firms can't implement simple checks at their order entry terminals? I understand that an order has to get out quickly sometimes, but surely some software program can look at an entry that is way beyond a typical standard deviation than what is normally placed.
However, if these firms don't have those safeguards in place *AND* an institutional trader is poorly trained, then that is a fault that should rest with the large firm. Perhaps they would need a 50 million dollar loss occasionally to tighten up their procedures and spend a little more money on better training and terminal entry systems.
Aren't exchanges regulated by the SEC or some other agency? Surely there must be some standard that these exchanges are held to? An order entry mistake is NOT a valid excuse to bust a trade -- and a large sized trade is not a valid exception, either. I sat in ES all night with a contract because I made a mistake and I paid for it.
What happened today was horseshit.
However, if these firms don't have those safeguards in place *AND* an institutional trader is poorly trained, then that is a fault that should rest with the large firm. Perhaps they would need a 50 million dollar loss occasionally to tighten up their procedures and spend a little more money on better training and terminal entry systems.
Aren't exchanges regulated by the SEC or some other agency? Surely there must be some standard that these exchanges are held to? An order entry mistake is NOT a valid excuse to bust a trade -- and a large sized trade is not a valid exception, either. I sat in ES all night with a contract because I made a mistake and I paid for it.
What happened today was horseshit.