Study On Error Trades Cancellation Of Securities

Errors in securities trading especially clearly erroneous ones have huge impact on the securities market. Main stock exchanges around the world have established their policies on error trades in the form of exchanges rules. In recent years, error trades occurred in China’s securities market from time to time. However, lack of rules made the exchanges feel hard in handling such errors. This essay first discusses about the important issues of policies on error trades, and then introduces the policies on error trades in United States, England, Singapore and Hong Kong. At last, this essay puts forward some suggestions about establishing policies of error trades in China. The concrete content includes the following four parts:The first part is about the necessity and practicability of establishing the system of error trades cancellation of securities in China. In recent years, error trades occurred in China’s securities market from time to time. However, because of the shortcomings of existing rules about unusual trades, those error trades cannot be settled properly. Therefore, it is necessary to establish the policies on error trades of securities. Canceling the error trades does not violate provisions in the Securities Law. On the contrary, it complies with the relevant provisions of the Contract Law.The second part is about some basic theoretical issues of error trades, which includes the definition of error trades, the theoretical basis and the principles of error trades cancellation. About the first issue, this essay discusses the definition of error trades, as well as the difference between error trades and unusual trades. As for the second issue, this essay holds that the concerns with error trades cancellation are fairness and market order. And there are three principles in error trade cancellation: comprehensiveness, transparency and timeliness.The third part is about policies on error trades of the main stock exchanges around the world. In this part, I introduce and analyze the policies on error trades of the New York Stock Exchange(“NYSE”), the NASDAQ Stock Market, the National Stock Exchange, the London Stock Exchange and the Singapore Exchange(“SGX”) as well as Hong Kong Futures Exchange in details.The fourth part is about suggestions on establishing our system of error trades cancellation of securities. Based on the previous analysis and discusses, this essay puts forward some suggestions about the establishment of the policies on error trades cancellation. First, we should set up the policies on error trades cancellation formally. Second, the policies should be in harmony with the existing trade rules. And at last we should make the liabilities of exchanges clearly.