Exchange Problems

N

naifwonder

I trade using my own automated systems. While trading today, I noticed that my systems were getting errors when trying to cancel orders. As a result, I manually canceled everything. I received confirmation on my platform that all orders were canceled.

While calling my broker to inquire if anything was wrong, the account incurred a short position about 2 points below where the market was. By the time I got through to the trade desk, and all was said and done, the position was closed with a 2.5 pt loss (ES/-$125.00).

I want to find out the following:

I never sent that short order. The only short order I ever sent at that price for the day was canceled, and confirmed canceled on my end. The trade desk informed me that there was an error on Globex's part. As such, is the exchange liable for this loss? I am aware of the electronic risk agreement, and the matter is being investigated to determine if I was actually the one that sent the order (I know I did not). Since they can ask this proof of me, can I hold them liable if they cannot prove that they did not send the order on their own? What security do we traders have against such a scenario?

In the time that I was unable to send orders, my system made about +9 pts (I trade high frequency systems) Added to that this loss, I ended the day around 11.5 pts less than what I was supposed to have. I still ended the day up by 3.5 pts, but the principle of the matter remains.
 
I don't really trade futures, I trade equities, but it sounds to me that you would have to call the exchange and ask them to break the trade, if the mistake was on their end. No broker will eat a mistake that wasn't their fault. 99% of brokers won't eat mistakes that are their fault.
 
Quote from naifwonder:

I trade using my own automated systems. While trading today, I noticed that my systems were getting errors when trying to cancel orders. As a result, I manually canceled everything. I received confirmation on my platform that all orders were canceled.

While calling my broker to inquire if anything was wrong, the account incurred a short position about 2 points below where the market was. By the time I got through to the trade desk, and all was said and done, the position was closed with a 2.5 pt loss (ES/-$125.00).

I want to find out the following:

I never sent that short order. The only short order I ever sent at that price for the day was canceled, and confirmed canceled on my end. The trade desk informed me that there was an error on Globex's part. As such, is the exchange liable for this loss? I am aware of the electronic risk agreement, and the matter is being investigated to determine if I was actually the one that sent the order (I know I did not). Since they can ask this proof of me, can I hold them liable if they cannot prove that they did not send the order on their own? What security do we traders have against such a scenario?

In the time that I was unable to send orders, my system made about +9 pts (I trade high frequency systems) Added to that this loss, I ended the day around 11.5 pts less than what I was supposed to have. I still ended the day up by 3.5 pts, but the principle of the matter remains.
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It's going to depend on your broker. If you have a confirmed cancel, they should go to the Exchange for you. Be sure you have all the details on the trade entered and the corresponding cancel (to be sure that you maybe entered the trade twice, check order numbers etc.).

FWIW,

Don
 
My internet connection was stable.. there were no interruptions at the time that this happened. The exchange had a problem with those trading on their Channel B system. I hear that everyone is being switched over to Channel A. This also happened last week. Good thing I was not trading any large positions, or this could have gotten ugly.

The exchange is EXTREMELY stringent on not compensating for losses in cases such as this, but I will still be giving it a shot, just so its on record in case it ever happens again.
 
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