Please explain busted trades

B

Briand7035

Can someone give some input to a beginning trader. My broker busted a trade I made on island. I placed an order to sell 1/2 pt. above the current spread on one of my positons anticipating a move. (I had to leave so i couldn't watch the price moves) The move never materialized but someone came in just after the close and took my offer and then the retail broker called to ask if I would voluntarily bust the trade. He then said the trade would most likely be busted by the review board at Island as an error because the bid ask at the time of sales wasn't close to the price the trade was executed at. I also was compensated a few cents a share for the problem. Is this the usual thing if someone spaz's out and hits the wrong ask.

thanks in advance for any replies

Brian
 
Yeap.

Back in the old days, I SNETed market makers with price 30 cents higher than the current ask. He sold me, minutes later, got a call, and trade is busted.
 
I've had a few busted trades. I believe the rule is, if a trade is not within 20% of prevailing prices, it will be automatically busted. You say it was 1/2 point away; what was the exact price of the stock you were trading?
 
A few weeks ago I made a typing error and placed a limit exit that was $2 above the highest ask. I got filled $1.50 above the spread. It was a listed stock so I called TS and asked them to bust the trade. The guy at TS basically told me "tough shit." I thought about it for a few minutes and called back. The second time a new guy offered to try to get the trade busted. He was successful and I made several hundred $, despite having made the original error.
In this case my order was routed to an ECN which picked it up. The trade didn't even print as the high of the day, despite being well outside the stock's trading range.
 
1. If you are a retail trader and you get a great fill, then the trade will be busted.

2. If you are a retail trader and you make a typo, the trade will not be busted (unless it was executed on ISLAND or ARCHIPELAGO - then you might have an outside shot of a bust).

3. If you are a non-retail trader and you get a great fill, then the trade won't be busted, especially if it is against a retail trader.

4. If you are a non-retail trader and you make a typo, you will always get a bust.

That has been my experience.

Carl
 
huh...that's odd.

i actually get filled outside the mkt quite a bit, during mkt hours and after, the outer range being anywhere from .50 to 2.50, and i've never had a trade busted, and i'm retail.

next time they ask you to "voluntarily" bust the trade, tell them to go @#!$$! themselves...

i can't believe they called and asked you to voluntarily surrender profits. i'd probably laugh hysterically and hang up if that happened to me.

read "looking out for #1" - it'll help you in this business. don't take shit from anybody.
 
Originally posted by bungrider
huh...that's odd.

i actually get filled outside the mkt quite a bit, during mkt hours and after, the outer range being anywhere from .50 to 2.50, and i've never had a trade busted, and i'm retail.

next time they ask you to "voluntarily" bust the trade, tell them to go @#!$$! themselves...

i can't believe they called and asked you to voluntarily surrender profits. i'd probably laugh hysterically and hang up if that happened to me.

read "looking out for #1" - it'll help you in this business. don't take shit from anybody.
More...

It depends on the situation, but most of the time when I get a great fill from Instinet, BRUT, or BTRADE, I just don't bother closing it because I know it is going to be busted. And the bust is not optional - IB calls and just says "Instinet busted it." I wish I could look out for #1, but I am powerless in these situations.

Note, that in one particular week a few months back I got a great fill that was 10 points outside the market. It was later busted by Instinet because it was "clearly erroneous". Then the next day I accidentally sent in an order that was 10 points outside the market and I got filled immediately. I tried busting the trade, but Instinet would not bust it. Note that in both cases 10 points was about 25% off the real price of the stock at that particular time. That is why I am bitter about the busting process. Seems that heads I lose and tails I lose.

Carl
 
bungrider,

I was intrigued that you get (and get to keep) outside-the-market fills. I've only had a couple of such pleasant trades myself (thankfully, neither busted) and was wondering who trade with?

Traden4Alpha
 
since isld is the one i get busted the most i have researched the rules:
Island Clearly Erroneous Policy

Trades Executed on the Island ECN If a subscriber receives an execution on an order that was entered in error (e.g. in terms of price, quantity or symbol), the subscriber may contact Brokerage Support and request that the transaction be reviewed pursuant to the Island ECN Clearly Erroneous Policy. In the event that Island staff determines that a material term of such transaction is clearly erroneous, Island may break the transaction.

Island requests that subscribers submit requests to review transactions within 15 minutes from the time the questioned trade was executed and provide Island with a fax containing the relevant details within 30 minutes. Island may consider requests received after such time period depending on the facts and circumstances surrounding such request. Island will make a final determination within an hour except under exceptional circumstances. In all cases, however, Island will make a final determination prior to the open of the next trading day. In addition, the complainant will receive a written determination from Island.

Trades Executed Via SelectNet If a subscriber's order was executed against a non-subscriber accessing Island through the SelectNet linkage, such transaction is subject to being broken pursuant to the Nasdaq Clearly Erroneous Policy. In order for a subscriber to break such transactions, the subscriber must contact Island within 15 minutes from the time the trade in question was executed to provide Island personnel sufficient time to forward the request to Nasdaq Market Operations for resolution within the applicable Nasdaq time period.

Rules Applicable to All Clearly Erroneous Requests Only the disadvantaged party (as determined by Island), based on the market at the time the questioned trade was executed, may request that a trade be broken pursuant to the Island Clearly Erroneous Policy. Each request will be considered on a case-by-case basis. Once a request is filed, it cannot be withdrawn without the consent of both parties.

It is the duty of the Subscriber to notify its personnel, who may be in multiple branch offices, as to the terms of the policy.

Trades Outside of the Prevailing Market The Subscriber understands that it is possible for orders to be executed outside the Nasdaq National Best Bid/Offer
 
You must log in or register to reply here.
Back
Top