|
|
This inquiry was prompted by the recognition that error trade policy can affect market integrity and users’ confidence in the markets. In addition, the surveillance of erroneous trades and their resolution is material to detecting and deterring market abuse.
However, this Report makes no recommendations as to the appropriate scope of error trade policies. While this Report encourages the adoption of error trade policies, it is not intended to mandate a particular application of trade cancellation policies.
In February 2004, the IOSCO Technical Committee approved a project specification on error trades and instructed the Standing Committee on the Regulation of Secondary Markets (SC2) to examine the policies of organized securities and derivatives exchanges that require regulatory authorization (exchanges or markets), and of their regulators, concerning the resolution of transactions that are executed in error either due to the actions of a market user or through malfunction of a trading system (error trades).
This Report adopts for purposes of discussion the following broad, inclusive definition of “error trades”: “transactions that are executed in error either due to the actions of a market user or through malfunction of a trading system.”
Comments are to be sent by 18 May 2005