As current ECN/Exchange trade cancellation policy stands, the ECN’s/Exchanges will generally not rule to cancel transactions between customers of the same brokerage firm unless the transaction is substantially outside the bounds of reasonability. As a result, IB will, whenever possible, apply the ECN/Exchange policy to such trades as the situation warrants. Note that trade cancellation policies are highly subjective and vary between ECN’s/Exchanges. Therefore, rather than trying to interpret highly subjective criteria, IB has adopted the following policy, in order to provide a level of certainty and predictability for our customers.

IB will make a determination only when an ECN/Exchange refuses to rule on a trade. IB will abide by the trade cancellation policies of the respective exchange whenever possible. Please consult the website of the respective exchange for specific trade cancellation policies. Decisions involving trades not specifically defined in the respective exchange’s trade cancellation policy will be made on a case by case basis. If an exchange does not have a clear policy for a specific execution in question, or refuses to rule on an execution between two IB Customers, IB will evaluate a range of data including, but not necessarily limited to, the considerations outlined below. We will review all information considered to be relevant in determining the nature of a fair and orderly market and on those grounds, we will make a decision on a specific execution on a best efforts basis:

  1. Timeliness of Notification: Requests for trade cancellations must be made within the time limits set by the relevant exchange. Many equity exchanges have a notification period of 30 minutes or less. Derivative exchanges have notification periods as short as 5 minutes. Requests for trade cancellations should be made by telephone (no email or other non-realtime method) to PTI ProDirect within 15 minutes of the erroneous transaction. IB requires sufficient time to prepare the necessary information required by the exchanges and this time is included in the exchange-specified reporting period. Requests for cancellation are always handled on a best-efforts basis and IB cannot guarantee the reporting time requirements.
  2. Company or industry specific news/events.
  3. Recent volatility of stock.
  4. Change in broad market indicators at time of execution.
  5. We will consider the length of time the order was live before execution. IB may be more inclined to break a trade if the order hits/lifts an existing bid/ask and less inclined to break if the order becomes the best bid/ask before execution.
  6. Time of order submission and subsequent execution. (Pre/Post market vs. during the Trading Day).
  7. Opening Indication.
  8. Adjacent Transaction Reports or Indications: Example: Previous Day’s Close Previous reported trade price, subsequent reported trade price Last Prints.
  9. Next consecutive prints.
  10. Liquidity Issues.

Timeliness of Notification
One of the single most important factors in the consideration of trade cancellations is the timeliness of the reporting. It is extremely important that requests for trade cancellations be communicated as quickly and efficiently as possible to the Help Desk. Transactions that might be considered within a reasonable period of time may not be considered outside of that reasonable period of time. In general, requests for trade cancellation should be made, by telephone, within 30 minutes of the transaction in question. Please note that many exchanges have a notification period considerably shorter than 30 minutes.
 
Guidelines for Trade Reasonability
  1. Stocks under $10.00
    a. Outside of Regular Trading Hours* - < 10% away from prevailing market**
    b. Regular Trading Hours* - < 5% away from prevailing market
  2. Stocks $10.00 and above
    a. Pre & post market - < 5% away from prevailing market
    b. During market hours - < 3% away from prevailing market
 
Trade Cancellation Guidelines for Forex trades
  1. Trades executed greater than 3% away from the Fair Market Value at the time of the execution will be considered for cancellation or price adjustment.
  2. Trades executed greater than ½% away from the Fair Market Value at the time of the execution may be considered for cancellation or price adjustment.
  3. Trades executed less than ½% away from prevailing prices are not usually considered for cancellation.
  4. With all trade cancellation requests, it is extremely important to contact PTI ProDirect as soon as possible. Requests should be communicated by phone or by chat; email communication is not recommended for this or any issue requiring real-time response and we will only consider the time of notification to be when the email is processed, not when it was sent. In the event that a trade meets the price guidelines for cancellation but there is a delay in reporting/requesting the cancellation, IB may deny the request for cancellation or may apply other algorithms to determine a price adjustment, for example, taking into account the trading range of the instrument in the time interval from execution to cancellation request.

*Regular Trading Hours (RTH) may be defined by region, by exchange or by product. As an example, RTH for US equity markets is defined as 9:30 am EST to 4:00 pm EST. Note that for issues other than trade cancellation requests, these hours may or may not reflect the actual trading hours for a specific product. Pre & post market times for listed products are defined as outside of the official trading hours on the primary exchange. As an example, for US markets, listed pre & post market times are defined as outside of official opening trade on primary exchange and after 4:00pm EST.

**Prevailing market is defined as last trade, last relevant National Best Bid/Offer (NBBO) (1 bid, at 99 doesn’t count), or opening indication. If no trades have yet taken place or no relevant market is displayed, then the previous day closing price may be used.

The guidelines outlined above are designed to provide a level of protection for our customers. However, no policy can anticipate every conceivable situation. IB reserves the right to make determinations in the interest of maintaining a fair and orderly market.
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