Rogue order
A rogue order is a trade order made in error. This can be caused by data-input errors, but as computerized surveillance has increased at exchanges, rogue orders have decreased.
In February 2012, U.S. regulators took a closer look at the chances of rogue orders as a part of electronic trading. The U.S. Securities and Exchange Commission's (SEC) final rules surrounding credit and risk controls[1] prompted the Financial Industry Regulatory Authority (FINRA) to examine 20 to 30 cases of erroneous trading at that time.
Authorities warn that an error in an automated strategy trade, like the buying and selling shares of a benchmark index, could develop into a major market-moving event and could even impact other electronic trading strategies. These fears stem partly from the May 2010 flash crash, which led to transaction cancellation and void standards being set by U.S. stock market operators.[2]
References
- ↑ SEC Adopts New Rule Concerning Risk Management Controls for Broker-Dealers with Market Access. Katten Muchin Rosenman LLP.
- ↑ US Regulators Take Aim At Trades Made In Error. Fox Business.
