I've been robbed

Is there any variation in the rules for busting trades among the different routes and exchanges?

Is this 60% rule meant to become an established thing? So - will stocks become effectively 'limit down' at -60%?

If so, does that mean I should turn over any trades above and below the 60% mark?

i.e. if I snag some ACN at .01, should I do a quick sell/buy of my ill-gotten ACN at $23 (60% of $38) and then I won't be busted but I'll still make money?
 
I think what's going on here: high frequency boxes naked short the markets constantly. They did so especially during the crash last week, which dropped share prices down to pennies, in some stocks.

Naked shorting is still legal, so long as the short party buys back the position before settlement date.

This is the big cover-up, in my opinion. Lebowitz (head of the NYSE) said he "didn't know" who initiated those massive sell positions when he's head of the exchange that clears them. Then, there's a gigantic papertrail that lists time, volume, price, party, counter-party, which leaves a chain back to the bank, trader or brokerage etc that imitated the trade.

The guy is lying.

I think Lebowitz doesn't want to lay blame where it's due (HFT naked shorting), lest more restrictive rules come back, hard locates are required (only regular shorting allowed), HFT volumes dry up, and thus NYSE commissions.

I could be wrong, but that's my take.

As for Busted Trades - they scare the crap outta me. A card laid is a card played. Do overs for the big guys, at my expense. I suspect the bust notification lag is used as a lethal trump card to bankrupt profitable scalpers/intraday guys who earn the ire of loser banks.
 
Quote from achilles28:

I think what's going on here: high frequency boxes naked short the markets constantly. They did so especially during the crash last week, which dropped share prices down to pennies, in some stocks.

Naked shorting is still legal, so long as the short party buys back the position before settlement date.

This is the big cover-up, in my opinion. Lebowitz (head of the NYSE) said he "didn't know" who initiated those massive sell positions when he's head of the exchange that clears them. Then, there's a gigantic papertrail that lists time, volume, price, party, counter-party, which leaves a chain back to the bank, trader or brokerage etc that imitated the trade.

The guy is lying.

I think Lebowitz doesn't want to lay blame where it's due (HFT naked shorting), lest more restrictive rules come back, hard locates are required (only regular shorting allowed), HFT volumes dry up, and thus NYSE commissions.

I could be wrong, but that's my take.

As for Busted Trades - they scare the crap outta me. A card laid is a card played. Do overs for the big guys, at my expense. I suspect the bust notification lag is used as a lethal trump card to bankrupt profitable scalpers/intraday guys who earn the ire of loser banks.
More...


Sponsored direct market access may become the focus as investigators dig deeper into the trading action. Often referred to as "naked" or "unfiltered" access, these arrangements allow regulated broker-dealers to lease out their access to the exchanges to unregulated clients. This system has been under scrutiny for months by the SEC, which started the process of effectively prohibiting the arrangements in January because of the potential for erroneous trades.
Sponsored direct market access may been a factor in the unusual trading in shares of Procter & Gamble(PG) that appear to have played a role in the stock market crash on May 6, according to a person familiar with the situation who declined to be identified.
The scenario outlined for TheStreet is that a large sell order in P&G stock came into the NYSE through a channel associated with Chicago-based broker-dealer, Terra Nova Financial(TNFG), according to the person, who spoke under the condition of anonymity. The order is thought to have moved through Terra Nova's direct "pipe" to NYSE Arca from a customer using Terra Nova's sponsored direct market access solutions.
http://www.thestreet.com/story/1075...hole-may-hold-key-to-crash.html?kval=dontmiss
 
Quote from Free Thinker:

Sponsored direct market access may become the focus as investigators dig deeper into the trading action. Often referred to as "naked" or "unfiltered" access, these arrangements allow regulated broker-dealers to lease out their access to the exchanges to unregulated clients. This system has been under scrutiny for months by the SEC, which started the process of effectively prohibiting the arrangements in January because of the potential for erroneous trades.
Sponsored direct market access may been a factor in the unusual trading in shares of Procter & Gamble(PG) that appear to have played a role in the stock market crash on May 6, according to a person familiar with the situation who declined to be identified.
The scenario outlined for TheStreet is that a large sell order in P&G stock came into the NYSE through a channel associated with Chicago-based broker-dealer, Terra Nova Financial(TNFG), according to the person, who spoke under the condition of anonymity. The order is thought to have moved through Terra Nova's direct "pipe" to NYSE Arca from a customer using Terra Nova's sponsored direct market access solutions.
http://www.thestreet.com/story/1075...hole-may-hold-key-to-crash.html?kval=dontmiss
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Sounds like a dirty cop that rents out his badge.

Even the 2009 rule that "banned" naked short selling, did no such thing.

Just cover a naked short before settlement. Case closed.

There's no way a drop like could manifest without naked shorting. The locate on stocks of that size, is impossible. The margin to borrow enough shares to effect a price drop of that size, is impossibly huge.

The culprit here is naked short selling done by high frequency traders. That's a goldmine for investment banks, broker/dealers and exchanges that reap the commissions from it. Which is why answers are not forthcoming. There's a papertrail. Lebowitz won't share, tho.
 
Quote from drukes1234:

I think this thread really shows the ignorance of traders on ET, busted trades happen all the time, if you sold your longs and thought that there wasn't a possibility of your trades from ridiculous prices being busted then get back to paper trading because you're not ready for the big show.
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+1

If you're going to play the game you have to know the rules. The rules are clearly spelled out on every ecn's website. Though a normal bust range is 10-20% not 60%.
 
Quote from Red_Ink_inc:

+1

If you're going to play the game you have to know the rules. The rules are clearly spelled out on every ecn's website. Though a normal bust range is 10-20% not 60%.
More...

Forgive my ignorance. I don't trade equities.

How is the "bust range" defined? 10-20% off the last printed trade?

So if a stock trades at 50$, then the next print is 40$, trades at or below 40$ are busted?
 
Wow that is pretty brutal OP but you got no real case since the price was just so out of whack. We arent talking about prices just from a crash but ones that are clearly wrong and a mistake.
 
Quote from achilles28:

Forgive my ignorance. I don't trade equities.

How is the "bust range" defined? 10-20% off the last printed trade?

So if a stock trades at 50$, then the next print is 40$, trades at or below 40$ are busted?
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Yes it is usually the last printed trade.

Only clearly erroneous trades are broken. Case in point, over a year ago in pre market I accidently offered either 5 or 10k of DNDN at $5 on INET. The stock was trading at $20+. Since my order didn't route to any other venues I swept the INET book all the way down to $5.

I contacted my firm and requested a bust. Most of it was busted but I had to eat everything within a certain range which I believe was 10%. Which totalled something like $3500.

It was my fault (I hit the offer key which is supposed to offer at the current best offer but for some reason it went in at $5 offer and I failed to notice before sending the order) and I took my medicine like a grown up.
 
Quote from Red_Ink_inc:

Yes it is usually the last printed trade.

Only clearly erroneous trades are broken. Case in point, over a year ago in pre market I accidently offered either 5 or 10k of DNDN at $5 on INET. The stock was trading at $20+. Since my order didn't route to any other venues I swept the INET book all the way down to $5.

I contacted my firm and requested a bust. Most of it was busted but I had to eat everything within a certain range which I believe was 10%. Which totalled something like $3500.

It was my fault (I hit the offer key which is supposed to offer at the current best offer but for some reason it went in at $5 offer and I failed to notice before sending the order) and I took my medicine like a grown up.
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Thanks for posting.

So what happened to resting limit orders above 5$ that, theoretically, were triggered to buy/sell at the next best bid or offer?

I imagine the exchanges have a way to filter out the after-effects?

But last week, it didn't appear to be a case that someone offered Proctor at 40$ when it was trading at ~65$. Seemed more like legitimate buying and selling, all the way down and up.

A fat finger would just appear as an instantaneous spike on the chart. Whereas, last week, it was continued selling and buying, all the way up and down. Or am I mistaken?
 
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