Sorry for your experience. Interesting thread. I don't think you were jobbed by a "market maker". Your cancel request was DOA.
Here's what likely happened:
E*Trade routed your order (I assume a DAY order) before the close to either a regional stock exchange or a "third market" - an agency broker who trades order flow. Search "order routing" on E*Trade's website, click the active trading link, and look at their quarterly 606 report - that tells you where they route orders and to what percentage. To my knowledge, E*Trade is not an NYSE member firm, and does not route directly to the NYSE. Regardless, no specialist, market maker, or trader has responsibility for a cancel requested on an expired DAY order.
DAY orders expire at the end of the regular trading session.
Your cancel is a request to cancel the order - E*Trade's system waits for a "UR OUT" message from the exchange or other counterparty before it moves from a "pending" state to cancelled. In other words, your cancel is not instantaneous - it must be acknowledged by the destination which received your order. This is actually a fairly common practice - during volatile times in the market, many orders are partialled or filled and a rapid-fire penny chaser could quite easily get a TLTC (too late to cancel) execution, which would result in reinstating the original order, and disregarding the cancel request entirely - can be a messy chain of events. Check with E*Trade to see if your cancel was actually sent to the exchange or third market, or if they stop sending order messages after the close. Even if sent, it was probably unprocessed by the recipient, since it was sent after the close. In any event, with the market closed, this probably resulted in what you call "frozen". The E*Trade rep most probably manually "OUTed" your cancel.
Most exchanges and other venues close their regular session at 1600 hours and open a separate "after hours" session. Not all destinations allow you to specify an order which is valid for all or multiple sessions during a given day. You will have to check with E*Trade if this is accommodated by their trading partners or not. You will also have to check whether this option is available to you via their software - I do not use them as a broker.
After the regular session closes, most venues run a batch process which sweeps their order book and sends "ADDS and OUTS". ADDS are GTC orders added to the book today. OUTS are expired DAY orders. Since your order was received prior to the close, and not executed, then it probably was sent on the OUTS section of this recap. Check with E*Trade. It can easily take up to 20 minutes for all of this activity to be received and processed by E*Trade - that's not entirely under their control, either, they are dependent upon the time their trading partners take to complete this process.
E*Trade's system has a rules engine to prevent inadvertant (or illegal) short sales from occuring. Your long position was paired off with your sell order, resulting in a "net zero" position ("I did not own the shares to sell"), which was why you could not enter another SELL order. (I wonder if you could have entered SELL SHORT, and "beaten the system", but those are also probably manually reviewed. You obviously would not be short overnight and E*Trade might have had some funny looking ledgers which they'd have to clean up themselves.)
The upshot is, your cancel was in no-mans-land. E*Trade's system considered your order (which was technically expired if DAY) still in effect, which disallowed any other SELL activity.
My credibility? E*Trade once used a system I wrote for all of their order processing. I wrote the links to their system and to all of the exchanges, market makers, and agency brokers, as well as the order matching engine. I can't state with assurance that my explanation above is gospel, since they no longer are a client of my firm's services, but that's how these events are commonly sequenced in the market.
It will be up to you to determine whether E*Trade is culpable or not. Markets have defined hours of trading, and some post the rules regarding these trading sessions on their websites. Your best course of action, in my opinion, is to ask E*Trade what their recommended procedure is for a customer to perform when this condition occurs. If they cannot give you an answer (which is different than an "explanation"), then you may have a valid claim that their software is not suited to the clients they court (you drive commission dollars into them). Advise them that post-market-hours cancels on regular-session orders should be either disallowed, with the original order marked "expired", or immediately "OUTed", so that your desired order can be placed.
Good luck with your claim. Please post your result.
Here's what likely happened:
E*Trade routed your order (I assume a DAY order) before the close to either a regional stock exchange or a "third market" - an agency broker who trades order flow. Search "order routing" on E*Trade's website, click the active trading link, and look at their quarterly 606 report - that tells you where they route orders and to what percentage. To my knowledge, E*Trade is not an NYSE member firm, and does not route directly to the NYSE. Regardless, no specialist, market maker, or trader has responsibility for a cancel requested on an expired DAY order.
DAY orders expire at the end of the regular trading session.
Your cancel is a request to cancel the order - E*Trade's system waits for a "UR OUT" message from the exchange or other counterparty before it moves from a "pending" state to cancelled. In other words, your cancel is not instantaneous - it must be acknowledged by the destination which received your order. This is actually a fairly common practice - during volatile times in the market, many orders are partialled or filled and a rapid-fire penny chaser could quite easily get a TLTC (too late to cancel) execution, which would result in reinstating the original order, and disregarding the cancel request entirely - can be a messy chain of events. Check with E*Trade to see if your cancel was actually sent to the exchange or third market, or if they stop sending order messages after the close. Even if sent, it was probably unprocessed by the recipient, since it was sent after the close. In any event, with the market closed, this probably resulted in what you call "frozen". The E*Trade rep most probably manually "OUTed" your cancel.
Most exchanges and other venues close their regular session at 1600 hours and open a separate "after hours" session. Not all destinations allow you to specify an order which is valid for all or multiple sessions during a given day. You will have to check with E*Trade if this is accommodated by their trading partners or not. You will also have to check whether this option is available to you via their software - I do not use them as a broker.
After the regular session closes, most venues run a batch process which sweeps their order book and sends "ADDS and OUTS". ADDS are GTC orders added to the book today. OUTS are expired DAY orders. Since your order was received prior to the close, and not executed, then it probably was sent on the OUTS section of this recap. Check with E*Trade. It can easily take up to 20 minutes for all of this activity to be received and processed by E*Trade - that's not entirely under their control, either, they are dependent upon the time their trading partners take to complete this process.
E*Trade's system has a rules engine to prevent inadvertant (or illegal) short sales from occuring. Your long position was paired off with your sell order, resulting in a "net zero" position ("I did not own the shares to sell"), which was why you could not enter another SELL order. (I wonder if you could have entered SELL SHORT, and "beaten the system", but those are also probably manually reviewed. You obviously would not be short overnight and E*Trade might have had some funny looking ledgers which they'd have to clean up themselves.)
The upshot is, your cancel was in no-mans-land. E*Trade's system considered your order (which was technically expired if DAY) still in effect, which disallowed any other SELL activity.
My credibility? E*Trade once used a system I wrote for all of their order processing. I wrote the links to their system and to all of the exchanges, market makers, and agency brokers, as well as the order matching engine. I can't state with assurance that my explanation above is gospel, since they no longer are a client of my firm's services, but that's how these events are commonly sequenced in the market.
It will be up to you to determine whether E*Trade is culpable or not. Markets have defined hours of trading, and some post the rules regarding these trading sessions on their websites. Your best course of action, in my opinion, is to ask E*Trade what their recommended procedure is for a customer to perform when this condition occurs. If they cannot give you an answer (which is different than an "explanation"), then you may have a valid claim that their software is not suited to the clients they court (you drive commission dollars into them). Advise them that post-market-hours cancels on regular-session orders should be either disallowed, with the original order marked "expired", or immediately "OUTed", so that your desired order can be placed.
Good luck with your claim. Please post your result.
