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at the end .. its just money going from one account to another right? Its not like some physical thing that has perished and cant be brought back. Why is it dif

at the end .. its just money going from one account to another right? Its not like some physical thing that has perished and cant be brought back. Why is it difficult to reverse the transactions?

ceejayoz 4y ago
Because those transactions cause other transactions, which cause others, and so on and so forth. You'd have to reset the market for the day. Imagine how pissed you'd be if you made money off Knight's mistake and it all just disappeared the next day.
- strgcmc 4y ago
  Except, well, cancelling transactions obviously does happen, sometimes: https://www.reuters.com/business/lme-suspends-nickel-trading-day-after-prices-see-record-run-2022-03-08/ https://www.reuters.com/business/lme-suspends-nickel-trading... Knight was probably too messy to rollback cleanly, but that just means it's a matter of cost/complexity/politics... if you're a big enough player, then the exchange will do you favors, like in the LME case. Free markets, lol
  - rubyskills 4y ago
    This is much easier to do in a centralized futures market. I can't imagine a rollback in stocks being easy or possible.
  - bfm 4y ago
    From the OP Rules were established after the “flash crash” of May 2010 to govern when trades should be canceled. Knight’s buying binge did not drive up the price of the purchased stocks by more than 30 percent, the cancellation threshold, except for six stocks. Those transactions were reversed. In the other cases, the trades stood.
  - ceejayoz 4y ago
    > The LME announced that all trades will be voided from midnight until 8:15 a.m. on Tuesday when trading stopped and added that it was considering a closure of several days. > "People will be asking if this really a functioning market... This is meant to be a market of last resort and people can't get inventories to deliver against positions," said Colin Hamilton, managing director of commodities research at BMO Capital Markets. There’s gonna be a pretty high threshold for this sort of thing. Higher than “one company fucked up and wants a do-over”.
- rubyskills 4y ago
  Exactly this. If you're a market maker, likely your trades impact your own trades too. As you accumulate a position, your average price is going up with it. Trades should not just roll back because one large hedge fund screwed up. Imagine being a retail trader with that expectation. Would be nice!
anamax 4y ago
> Why is it difficult to reverse the transactions? Why should the transactions be reversed? If things had gone according to plan, Knight would have made several million dollars that day, some likely because of a mistake by someone else or an unavoidable circumstance, just like it did on other days. Those other people weren't made whole, so why should Knight be any different?
seoaeu 4y ago
Because the people those transactions were with didn’t want them reversed, and there was no rule or law that required it.
- sumedh 4y ago
  Didnt the exchanges cancel the trades during the flash crash in 2010. I am sure the buyers of those transactions which were able to buy shares of good companies for pennies would not want to reverse those transactions. Knight was not a big player so the exchanges had no reason to keep them happy.

at the end .. its just money going from one account to another right? Its not like some physical thing that has perished and cant be brought back. Why is it difficult to reverse the transactions?

ceejayoz 4y ago

Because those transactions cause other transactions, which cause others, and so on and so forth. You'd have to reset the market for the day. Imagine how pissed you'd be if you made money off Knight's mistake and it all just disappeared the next day.

strgcmc 4y ago
Except, well, cancelling transactions obviously does happen, sometimes: https://www.reuters.com/business/lme-suspends-nickel-trading-day-after-prices-see-record-run-2022-03-08/ https://www.reuters.com/business/lme-suspends-nickel-trading... Knight was probably too messy to rollback cleanly, but that just means it's a matter of cost/complexity/politics... if you're a big enough player, then the exchange will do you favors, like in the LME case. Free markets, lol
- rubyskills 4y ago
  This is much easier to do in a centralized futures market. I can't imagine a rollback in stocks being easy or possible.
- bfm 4y ago
  From the OP Rules were established after the “flash crash” of May 2010 to govern when trades should be canceled. Knight’s buying binge did not drive up the price of the purchased stocks by more than 30 percent, the cancellation threshold, except for six stocks. Those transactions were reversed. In the other cases, the trades stood.
- ceejayoz 4y ago
  > The LME announced that all trades will be voided from midnight until 8:15 a.m. on Tuesday when trading stopped and added that it was considering a closure of several days. > "People will be asking if this really a functioning market... This is meant to be a market of last resort and people can't get inventories to deliver against positions," said Colin Hamilton, managing director of commodities research at BMO Capital Markets. There’s gonna be a pretty high threshold for this sort of thing. Higher than “one company fucked up and wants a do-over”.
rubyskills 4y ago
Exactly this. If you're a market maker, likely your trades impact your own trades too. As you accumulate a position, your average price is going up with it. Trades should not just roll back because one large hedge fund screwed up. Imagine being a retail trader with that expectation. Would be nice!

anamax 4y ago

> Why is it difficult to reverse the transactions? Why should the transactions be reversed? If things had gone according to plan, Knight would have made several million dollars that day, some likely because of a mistake by someone else or an unavoidable circumstance, just like it did on other days. Those other people weren't made whole, so why should Knight be any different?

seoaeu 4y ago

Because the people those transactions were with didn’t want them reversed, and there was no rule or law that required it.

sumedh 4y ago
Didnt the exchanges cancel the trades during the flash crash in 2010. I am sure the buyers of those transactions which were able to buy shares of good companies for pennies would not want to reverse those transactions. Knight was not a big player so the exchanges had no reason to keep them happy.