Canceling trades disincentivizes traders to fill the dry side of the order book during a liquidity crisis. That alone makes cancellations bad policy. If you'r

Canceling trades disincentivizes traders to fill the dry side of the order book during a liquidity crisis. That alone makes cancellations bad policy. If you're worried about so-called erroneous trades, you should disallow market orders; make all traders provide an explicit buy or sell price and there is no such thing as a bad trade except in the event of systems failures.