Nasdaq to Cancel Trades

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VoodooMMI

Nasdaq to cancel trades 05/06 06:29 PM



NEW YORK (Reuters) - Nasdaq Operations said it will cancel all trades executed between 2:40 p.m. to 3 p.m. greater or less than 60 percent away from the consolidated last print in that security at 2:40 p.m or immediately prior.
Nasdaq said the stocks affected and break points will be disseminated soon.
(Reporting by Chuck Mikolajczak; Editing by Andrew Hay)
 
how would that work if equities trades are busted, and futures trades are not for the same time period......how do they seperate the cause from the effects on correlated markets?
 
Quote from BlueStreek:

how would that work if equities trades are busted, and futures trades are not for the same time period......how do they seperate the cause from the effects on correlated markets?
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this is why I trade futures. big boyz only. Retail gonna get scammed on this cancel-a-thon.

Nasdaq to Cancel All Trades of Stocks Moving More Than 60%
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By Michael P. Regan

May 6 (Bloomberg) -- Nasdaq OMX Group Inc. said it will cancel all trades of stocks at prices that were 60 percent above or below the last price at 2:40 p.m. or immediately prior.

The exchange operator said in a statement it will cancel all trades "greater than or less than 60 percent away from the consolidated last print in that security at 14:40:00 or immediately prior."

Nasdaq said it coordinated the decision with all other exchanges.

Last Updated: May 6, 2010 18:14 EDT
 
Quote from trom:

Greater than or less than 60%? That doesn't make sense. I assume they mean greater than or equal to...
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i think it means 60% above or 60% below...last price....
 
Quote from BlueStreek:

how would that work if equities trades are busted, and futures trades are not for the same time period......how do they seperate the cause from the effects on correlated markets?
More...

They don't separate it.

IMO this is not too bad a decision - anyone buying 60% away from the recent print knows it's a good chance of being a trade error. At least they didn't fuck people by cancelling things 10-20% away.

A superior option would be to remove trade busts altogether, and replace them with trade adjustments to the high or low of the day. I.e. if you bought at 70% down, and they "bust" 60% down or lower, then your trade gets reset to 60% down. Otherwise it's unfair as i) it creates catastrophic short exposure to anyone who bought at 61% down and sold at 50% down; and totally fucks shorts who covered at 61% down ii) it penalizes people who took risk during a crash by submitting low bids when it could have been a terrorist attack, accounting fraud, or other legitimate reason for a huge crash iii) it arbitrarily rewards people who bought just above the bust limit instead of just below it.

Trade busting is a stupid policy overall.
 
Ahh yeah...like a 60% envelope. It didn't occur to me that anything was actually going up at that point in time...
 
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