📘 Trade Type Explanation: Errored
What is it?
An Errored trade type refers to a transaction that has been identified as containing an error or invalid information, but has not yet been corrected or cancelled.
When does it occur?
This trade type occurs when a problem is detected in a reported trade, such as incorrect price, volume, or other critical information, and the trade is flagged for review and potential correction.
Key characteristics:
- Indicates a known problem with the trade
- Requires further action (correction or cancellation)
- May be excluded from certain calculations or reports until resolved
Impact on trading data:
- Volume: May be excluded from volume calculations until resolved
- Price: Typically not used to update high, low, open, or close prices
- Other: Flags potential issues in trading data that need to be addressed
Why it matters:
Errored trades are crucial for maintaining the integrity of market data. They allow for the identification and subsequent correction of problematic trades, ensuring that market data remains as accurate as possible.
Accessibility and restrictions:
- Retail investors: Generally not directly involved, but may be affected if errors impact their trades
- Institutional investors: Need to be aware of and address errored trades promptly
- Restrictions: Often triggers internal review processes and may require reporting to exchanges or regulators
- Broker-specific considerations: Procedures for handling errored trades may vary between brokers
Example:
A trade for 1,000 shares of XYZ stock is reported with a price of $10,000 instead of $100. This trade would be flagged as Errored until it can be corrected or cancelled.
Technical details:
- SIP Mapping: May have specific codes to denote errored trades in some systems
- Reporting requirements: Must be identified and addressed promptly, with correct information submitted as soon as possible
Related trade types:
- Correction: Often follows an Errored trade to rectify the issue
- Cancelled: May be used if an Errored trade cannot be corrected
Common misconceptions:
Some may think Errored trades always indicate system failures or fraud. However, they often result from simple human errors or minor technical glitches.
Historical context:
The use of Errored trade flags has become more important with the increasing speed and complexity of electronic trading systems, allowing for quicker identification and resolution of issues.
Regulatory considerations:
Prompt identification and resolution of Errored trades is crucial for compliance with regulatory requirements for accurate trade reporting and market data integrity.