Nasdaq to Cancel Trades

[The Big D]

Quote from Ghost of Cutten:

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.

I think you're on to something here. The possibility of waking up one morning to an open leveraged position I closed out the day before gives me the fucking shivers.

I think the right policy moves money to square it up, but leaves the net positions where they were at the end of the day.

 

[number22]

Quote from SCI new york:

i believe the HFT and auto algorithms are a very bad idea, but they're still out there

if anyone was doing something illegal, there is a court for that matter, Canceling trades isn't fair to most participant.

 

[optionsgirl]

I want to cancel my sell orders in 2009. I really meant to sell it last month....

 

[One]

Any word on options traded during the time period?

Ghost's idea is interesting and I would prefer it for my trading - has it been considered by exchanges? Any idea is a compromise though, and I'm sure that any stops that were hit below the cutoff prefer the current remedy rather than having sold at a negotiated low of the day.

 

[hippie]

Quote from Cdntrader:

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

Traders who shorted just before a stock felt 60%, and covered when it has felt more than 60% are now screwed - esp when the stock might recovered over 90% of the loss!!

Same goes for those who long when it was 61 % down, showed it for some gains above 60% cut off. if they long trade is canceled, and when the stock is sold, that trade is considered valid. Now the stock has almost fully recovered by these traders are holding a net short position due to their long trade being canceled by the exchange.

 

[jeffers_mz]

I think this partial do-over is a response to delayed trade executions brought on by system overload.

Oh man...we already had the burnt about to howl like singed cats, as the drop triggered stops but the instant re-flation left the losers out in the cold, now we have...no...not a complete do-over, cancelling gains and mitigating losses, but only a partial do-over.

EVERYbody is going to be pissed.

That's on TOP of the uncertainty due to Greek riots tomorrow.

Will the exchanges even open tomorrow?

 

[Cdntrader]

Quote from One:

Any word on options traded during the time period?

Ghost's idea is interesting and I would prefer it for my trading - has it been considered by exchanges? Any idea is a compromise though, and I'm sure that any stops that were hit below the cutoff prefer the current remedy rather than having sold at a negotiated low of the day.

MM's ran away like babies when market was at it's lows.

 

[jprad]

Quote from The Big D:

I think you're on to something here. The possibility of waking up one morning to an open leveraged position I closed out the day before gives me the fucking shivers.

Any time you were trading in or near a market outlier event you've gotta stick around for the AH session so you can get out of a busted trade.

IMHO, that's much safer than waiting for the next day.

 

[Ghost of Cutten]

Quote from One:

Any word on options traded during the time period?

Ghost's idea is interesting and I would prefer it for my trading - has it been considered by exchanges? Any idea is a compromise though, and I'm sure that any stops that were hit below the cutoff prefer the current remedy rather than having sold at a negotiated low of the day.

Of course they prefer that in hindsight. But they chose to sell at the *market* - not at the price of their choosing. It is completely unfair that the people who sold at the worst prices - demanding liquidity at the worst possible time - get to avoid any losses, whilst the people who sold earlier get hosed, and worst still, the people who stepped up to the plate to buy get screwed and are not only out huge $$$ but are naked short from -59%. Imagine losing 59% of your capital in 30 minutes because you bought the low of the day when no one else provided liquidity - just because some pen pushing bureaucrat let a precious algo trader or I-bank desk monkey sweet talk him.

The people who used stops and got bad fills? Fuck them, they caused this crash with their dumb trading.

All I can say is I feel lucky that I actually read exchange regulations so I know i) what the bustout ranges are ii) to never close out a position that you got outside the bustout ranges, until they confirm at the exchange that it's not being busted.

This is corrupt as fuck basically.

 

[krazykarl]

Quote from jeffers_mz:

I think this partial do-over is a response to delayed trade executions brought on by system overload.

Oh man...we already had the burnt about to howl like singed cats, as the drop triggered stops but the instant re-flation left the losers out in the cold, now we have...no...not a complete do-over, cancelling gains and mitigating losses, but only a partial do-over.

EVERYbody is going to be pissed.

That's on TOP of the uncertainty due to Greek riots tomorrow.

Will the exchanges even open tomorrow?

The first 10 minutes tomorrow are going to be nuts.