Clearly Erroneous Transactions

What this video covers

• The critical distinction between a firm-level trade error (handled with cancel/rebill) and a clearly erroneous transaction (declared null and void by FINRA or the exchange)
• Why a firm or supervisor cannot unilaterally break a clearly erroneous trade, and why only a Financial Industry Regulatory Authority (FINRA) officer or the exchange has that power
• How the reference price is used to measure deviation, and the inverse relationship between stock price and threshold width (10% for $0.01 to $25, 5% for $25.01 to $50, 3% for over $50)
• Why outside-normal-trading-hours thresholds double to 20%, 10%, and 6% due to thinner, more volatile markets
• The 30-minute ordinary deadline for a FINRA officer to act on exchange-listed securities, and the next-day deadline for OTC equities
• How multi-stock events work: the 10% flat threshold for 5-19 securities, and the coordinated 30% threshold for 20 or more securities in a market-wide failure
• Why OTC equity securities have significantly wider thresholds, and why FINRA normally expects private resolution unless unusual circumstances exist