I sold a stock yesterday on what appeared to be a PPS "spike" . . . a very common occurrence in pinky-land. Today my broker informed me that the sale was cancelled by the Market Maker because the MM "made a mistake" by allowing the sale at my sale price. Interesting that the stock traded many times at the same price before dipping back to normal today.
My questions are: Has anyone suffered the same experience? If so, is there any way to recover my money? My broker says he "cannot do anything" because the MM made a legitimate mistake.
It appears that MM's can make their own rules if they make a mistake.
-------------------- Everything I say is only my opinion ... right or wrong. Posts: 2152 | From: Ohio | Registered: Sep 2004
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posted
It is possible to contest a market makers actions. I'm not sure how to do it, though.
Posts: 352 | From: Marietta, GA | Registered: Nov 2005
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posted
I was half a million dollars richer one day a few weeks ago for about one minute due to a spike. Then I returned to being the low life that I am after that. It was sure nice being a half a millionaire for that one minute but wished it would lasted 2 minutes longer.
-------------------- "NEVER UNDERESTIMATE THE POWER OF THE U.S./CHINA CONNECTION"
posted
Bottomliner, Are you talking about a spike where the stock is trading at say .001 and a sale goes through at .01? Something like that?
Posts: 5729 | From: Wisconsin | Registered: Sep 2003
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quote:Originally posted by Skyman: It is possible to contest a market makers actions. I'm not sure how to do it, though.
I only made a couple hundred, so it isn't the money . . . it's my concern that MMs do what they want, which is pretty much what my broker told me. I am sure that is not the total truth, but apparently MMs have some "escape clauses" if they don't like the outcome of a trade.
Thanks, everyone. It's done . . . back to business.
-------------------- Everything I say is only my opinion ... right or wrong. Posts: 2152 | From: Ohio | Registered: Sep 2004
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quote:Originally posted by DWE: Spikes happen often with microcaps but I believe they're 99% mistakes from MMs with overblown fatty fingers.
DWE The stock opened normally, then spiked up ... which I initially thought was a simple "fat finger" mistake. But then many small trades went through at a price close to mine most of the day, so this wasn't an isolated trade. I spent considerable time looking for the cause of the spike before deciding to take my money and run. I actually think "fat finger" trades should be corrected. But this stock stayed at my sale price most of the day, and I made two separate sales, so it wasn't just a momentary bad quote.
But like I say, no big deal ... just another strike against MMs in my mind.
-------------------- Everything I say is only my opinion ... right or wrong. Posts: 2152 | From: Ohio | Registered: Sep 2004
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quote:Originally posted by Upside: Bottomliner, Are you talking about a spike where the stock is trading at say .001 and a sale goes through at .01? Something like that?
Upside Not really. Although the PPS did spike straight up, it wasn't an isolated trade because it stayed at that level all day and many trades were made at that price. The current price is about a third of my sale price, so I could sell now and still make a few bucks, assuming the MM "lets me". LOL.
As I understand it, the original role of an MM was to make an orderly market for small cap stocks. However, they discovered they could become successful daytraders since they control buy and sale prices. Gee ... sounds like a great deal to me.
-------------------- Everything I say is only my opinion ... right or wrong. Posts: 2152 | From: Ohio | Registered: Sep 2004
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posted
I would consider doing this: request the name of the MM firm from your broker...they're supposed to tell who sells you a stock, so maybe they'll tell who bought and reneged...
Then file a complaint with NASD...be interesting just to get the response...
sure, legitimate mistakes should be able to be corrected, but trading for hours as you say? sounds wrong, somewhere...
quote:Originally posted by BuyTex: I would consider doing this: request the name of the MM firm from your broker...they're supposed to tell who sells you a stock, so maybe they'll tell who bought and reneged...
Then file a complaint with NASD...be interesting just to get the response...
sure, legitimate mistakes should be able to be corrected, but trading for hours as you say? sounds wrong, somewhere...
posted
NASD complaint page; you will have to specify a broker/dealer; recommend NOT listing your broker, who make take offense--that's why I say get the MM firm's name:
quote:Originally posted by BuyTex: NASD complaint page; you will have to specify a broker/dealer; recommend NOT listing your broker, who make take offense--that's why I say get the MM firm's name:
Thanks, Tex ... and everyone else who has provided some advice. I am allowing my broker another chance to explain how this "error" occurred. After much thought, I do not accept his initial response that the MM entered a bad price by error. And I have asked if all trades were reversed ... or just the ones adversely affecting the MM (I wonder if any shares owned by the MM were sold at the inflated price and if those trades were also reversed?).
Anyway, I'm pursuing this ... if nothing else, I might learn how the MM system really works. LOL.
-------------------- Everything I say is only my opinion ... right or wrong. Posts: 2152 | From: Ohio | Registered: Sep 2004
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I'd be real interested to hear what your broker/NAS has to say. Good luck Bottomliner!
The Bigfoot
-------------------- No longer eligible for government service due to lack of tax issues. Posts: 5178 | From: Up North | Registered: Dec 2005
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quote:Originally posted by LEO: Good luck Bottomliner, I hope you share with us what you learn.
Thanks, LEO, I will report anything I find out. But I really don't expect to discover any MM secrets, nor do I expect to get any financial recovery. I just like jousting at windmills.
-------------------- Everything I say is only my opinion ... right or wrong. Posts: 2152 | From: Ohio | Registered: Sep 2004
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posted
Never know...you might end up skewering a giant evil knight.
The Bigfoot
-------------------- No longer eligible for government service due to lack of tax issues. Posts: 5178 | From: Up North | Registered: Dec 2005
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quote:Originally posted by Bottomliner: Need some advice.
I sold a stock yesterday on what appeared to be a PPS "spike" . . . a very common occurrence in pinky-land. Today my broker informed me that the sale was cancelled by the Market Maker because the MM "made a mistake" by allowing the sale at my sale price. Interesting that the stock traded many times at the same price before dipping back to normal today.
My questions are: Has anyone suffered the same experience? If so, is there any way to recover my money? My broker says he "cannot do anything" because the MM made a legitimate mistake.
It appears that MM's can make their own rules if they make a mistake.
Usually on stock spikes you have a misprint usually offby a decimal place. I have never heared of anyone who was able to sell any shares at the glitch price. Not to mention if you have a limit order at .001 to sell on the ask and someone prints .01 no way anyone would put a large enough order to take all your shares at that price. That's 1,000% higher then the price you were looking to sell at. Usually misprints are done when someone at the firm makes a boo boo on the price of the stock and the transaction. Only because the misprint was made does it reflect on everyone's account as a huge profit being made. Only because it was a human error would they take the funds back from you. Also if you are selling at .001 and .01 is printed and someone was trying to buy at .001 being a limit order is placed the buyer would not be able to fill above .001 anyway. He would have to fill at that price or lower. And the seller would fill at that price or better(Best price for either buyer or seller) Talking about Glitches in a system I know one where you can make alot of money off the market makers every morning. =) And wit this one no MM will call and ask for the money back . Posts: 162 | From: Kentucky | Registered: Dec 2005
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quote:Originally posted by Bottomliner: [QUOTE]Originally posted by LEO: [qb] Good luck Bottomliner, I hope you share with us what you learn.
LEO My broker has told me that NITE was the MM who made the "error" (which I do not believe was an error). He then referred me to a website that explains NASDAQ rules for trading errors. I found this information interesting but totally worthless:
"NASDAQ generally considers a transaction to be clearly erroneous when the print is substantially inconsistent with the current and recent historical trading pattern of the security."
Which tells me that PPS "spikes" can be negated if the MM chooses to do so ... probably when they have been adversely affected.
The other point I found interesting (actually pretty disgusting) is the limited time given to file a complaint:
"An erroneous complaint must be transmitted via facsimile to Nasdaq MarketWatch within ... 30 minutes of execution."
Considering that I was not informed of the "error" until the next day, and was not able to contact my broker for several more hours, the 30-minute rule appears to be a bit tight ... but it sure protects the MMs from any formal adverse action.
Sorry for being so "upset" by a minor incident, but I've had many concerns about the MM system recently, and this just confirms for me that my concerns are valid. But as the old saying goes, "it's the only game in town" ... so I either play by their rules or walk away.
My bigger concern now is whether future trades will be reversed due to PPS spikes which are "substantially inconsistent with the current and recent historical trading pattern of the security".
-------------------- Everything I say is only my opinion ... right or wrong. Posts: 2152 | From: Ohio | Registered: Sep 2004
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quote:Originally posted by Pital: Talking about Glitches in a system I know one where you can make alot of money off the market makers every morning. =) And wit this one no MM will call and ask for the money back .
Can you elaborate on this? Thanks.
-------------------- Life is like a roll of toilet paper. The closer it gets to the end, the faster it goes.
posted
Well Bottomliner, it looks like they'll get you coming and going if they so choose. The cards are stacked in their favor on several levels, not unlike a casino. Thanks for bringing that info back Bottomliner, good stuff to know.
Posts: 1235 | From: Anacortes, WA | Registered: Apr 2005
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quote:Originally posted by LEO: Well Bottomliner, it looks like they'll get you coming and going if they so choose. The cards are stacked in their favor on several levels, not unlike a casino. Thanks for bringing that info back Bottomliner, good stuff to know.
LEO I guess so, although I've had very few complaints against the system in the past. And my brokers have usually been fair with me, even to the point of correcting some minor errors at their expense. He might even do it this time if I scream loud enough, but I'm still "discussing" the situation with him. As I said, I'm more concerned about MM activity than I am about financial recovery, which is only a few dollars.
By the way, I meant to post the link for the website my broker referred me too. It's long, so I've broken it into two parts. Just put the two lines together to make it work.
posted
B-liner, I believe (ie, not sure) those rules re "market particpant" are for broker/dealers...ie, NITE would be bound by the 30-minute rule...not you. iow, you de facto could *not* be limited to a 30-minute rule: you're not the one seeking reversal of a "clearly erroneous" trade...make sense?
I suspect here's your "catch":
quote:Minimum Price Deviation Thresholds for Seeking a Review
Rule 11890 establishes minimum price deviation thresholds for determining transactions’ eligibility for review. A transaction executed during market hours (9:30 a.m. to 4:00 p.m.) not meeting the minimum price threshold is not considered clearly erroneous. A transaction price meeting the minimum price threshold does not automatically trigger a clearly erroneous determination. It only means the transaction is eligible for review. A transaction must equal or exceed the minimum thresholds below:
For transactions to buy (sell) a NASDAQ-listed security, the inside price is the best offer (best bid) in NASDAQ at the time of execution of the first share of the order resulting in the disputed trade.
For transactions to buy (sell) an exchange-listed security, the inside price is the national best offer (best bid) at the time of execution of the first share of the order resulting in the disputed trade.
from the url you cited...
don't recall your pps structure, but the error (supposedly) must be *within* those parameters to be eligible for reversal consideration...
Now that you know NITE was the B/D, you can file NASD complaint against NITE, without naming your brokerage....
quote:Originally posted by BuyTex: B-liner, I believe (ie, not sure) those rules re "market particpant" are for broker/dealers...ie, NITE would be bound by the 30-minute rule...not you.
Thanks, Tex. Good info. And I believe you are correct about the 30-minute rule. Seemed too tight to be usable by an investor. Not sure if I will pursue this ... not worth much more of my time. But I've learned a lot so far, so it wasn't wasted time.
-------------------- Everything I say is only my opinion ... right or wrong. Posts: 2152 | From: Ohio | Registered: Sep 2004
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