Why do most of busted fills rip you off?
- Thread starter NoMoreOptions
- Start date
I had bought 100 shares MU (which traded at 45) for a penny on ISLD, there wasn't much trading on ECN's for listed stocks at the time and there was nobody bidding on the book, the trade was busted. Last year I have seen a lot of 0.01 offers on isld right before the stock opened on the NYSE.
Have sold 200 shares of a 50 dol. stock for 100 dol., the guy was sending these 100 dol. limit orders to the specialist (you could see him on the book), and once he made a mistake and popped on the ISLD, just for a second, and cancelled it, the second time he made the same mistake and bid 100 on isld, I hit him, but got that trade broken too.
The other trade worth mentioning was when some idiot was bidding 3000 shares of some 10 dol. stock 3.5 points above the previous day's close on a stock with no news, for some reason I got scared to hit the whole bid, and only took 1000 shares, the stock opened flat, the trade never got busted.
Have sold 200 shares of a 50 dol. stock for 100 dol., the guy was sending these 100 dol. limit orders to the specialist (you could see him on the book), and once he made a mistake and popped on the ISLD, just for a second, and cancelled it, the second time he made the same mistake and bid 100 on isld, I hit him, but got that trade broken too.
The other trade worth mentioning was when some idiot was bidding 3000 shares of some 10 dol. stock 3.5 points above the previous day's close on a stock with no news, for some reason I got scared to hit the whole bid, and only took 1000 shares, the stock opened flat, the trade never got busted.
Non market hour trades stand, unless agreed to be busted by both sides of the trade.
Market hour trades are busted in a case like Optional's .... he didn't specify, but if that happened during market hours, the seller for 1 penny had the right to break the trade for 30 or 60 minutes (forgot my series 55 stuff pretty much the day I took it).
I know I benefited from this. I sold YHOO for $45 instead of $145.
Fortunately, someone in my firm noticed my p&l dropped $200k real fast. Truth is, I did not. So it was possible that I could have taken the hit. But unlikely. I like to think I would have noticed within the allotted time.
Peace,
Rs8.5
Market hour trades are busted in a case like Optional's .... he didn't specify, but if that happened during market hours, the seller for 1 penny had the right to break the trade for 30 or 60 minutes (forgot my series 55 stuff pretty much the day I took it).
I know I benefited from this. I sold YHOO for $45 instead of $145.
Fortunately, someone in my firm noticed my p&l dropped $200k real fast. Truth is, I did not. So it was possible that I could have taken the hit. But unlikely. I like to think I would have noticed within the allotted time.
Peace,
Rs8.5After hours? I am sure they do during hours if there is a glaring mistake. But I am pretty sure the RULE is that the trade CAN stand if not contested within a specific time period. ECN's of course will break a blatant mis-trade during hours if they are aware of it. They have NO UPSIDE to let the trade stand and let someone get totally screwed.
Rules and reality are not always synonymous. In cases like you are talking about, the ECN's are living up to their responsibilities, not their legal obligation. (Of course, maybe the rules have changed. I took the 55 quite a few years ago..)
Unfortunately there is not one all-encompassing rule.
All market centres have their own error trade rules, and parameters for busting trades.
Some market centres will make the decision themselves, others will wait until it is initiated by one of the parties of the trade within a specified period of time - which in some cases can be as short as 10 minutes.
Best to check out the relevant exchange/ecn websites for the latest rules.
All market centres have their own error trade rules, and parameters for busting trades.
Some market centres will make the decision themselves, others will wait until it is initiated by one of the parties of the trade within a specified period of time - which in some cases can be as short as 10 minutes.
Best to check out the relevant exchange/ecn websites for the latest rules.