NASDAQ Cancelling Trades After Crazy Day in The Market

Trying to figure out what to think about this: (from BusinessWeek)

The Nasdaq said after markets closed that it will cancel all trades of stocks that moved more than 60 percent from their price at, or immediately prior to, 2:40 p.m., when the slide started. The cancellation applies to trades executed between 2:40 p.m. and 3 p.m.

Were there true “errors” leading to these trades (e.g. running trades that weren’t placed, or trades triggered because a stocks price was listed incorrectly)? Or were there just a bunch of people with stop losses and automated programs setup to sell sell sell?

I get the sense that some folks with trigger fingers on the sell button are getting a chance to renege since the market ended up down “only” 3.2%. If I was one of those guys with a standing order to buy QQQQ when it was down 30% or whoever was on the buying end of things as the market tanked… and NASDAQ reversed my trades… I’d be pissed.

Should we have a market that steps in and slows things down or puts a halt on things when there is a panic? Maybe. I guess these things are almost due to an “error” and we don’t want to compound misinformation. But part of me things we’re letting some folks off the hook when stuff like this happens. You shouldn’t be able to have it both ways… have your automated algorithms buying and selling, but then vrwvrwvritvrit-reverse when you accidentally sell too soon.

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