Law: Can a brokerage firm suddenly stop submitting orders to the exchange?

thecoder

thecoder

Can a brokerage firm decide on its own to halt trading in a title if it detects big anomalies
(ie. manipulations) in the trading either originating at the exchange or originating by one or more clients of that brokerage?

Ie. if brokerage firm does not make trading possible then the firm can be sued by its clients for damages.
The question is: what if the firm thinks there are good reasons to stop submitting orders to the exchange (for a while, for the rest of the day, etc.)?

This very question was inspired by the following news article about the oil price manipulations on April 20:
https://www.elitetrader.com/et/thre...ers-accused-ofmanipulating-oilmarkets.350217/
 
In 87 the lawsuit against the CBOE alleged the inability to maintain a "Fair and Orderly" market.
If the broker and exchange had an F and O standard and back up rules they could advise customers as such and restrict order submission with proper notification - until the situation was remedied. Depends a lot on the bylaws of the existing exchange and what alternative venues - if any - were, if any, available.
 
ajacobson said:
In 87 the lawsuit against the CBOE alleged the inability to maintain a "Fair and Orderly" market.
If the broker and exchange had an F and O standard and back up rules they could advise customers as such and restrict order submission with proper notification - until the situation was remedied. Depends a lot on the bylaws of the existing exchange and what alternative venues - if any - were, if any, available.
More...

Lawyers win the day.
 
If the firms want to stop trading they will tell you that their systems went down. Then they will tell you to read the fine print of the broker customer agreement.
 
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