A Land Where Typos Still Exist
Paul Daley, Managing Director, BondWave’s Information Lab
When it comes to trade reporting in equities the current debate centers on whether certain high speed trading firms have microsecond advantages over other market participants because they purchase trade report feeds directly from exchanges rather than waiting for the slower, consolidated feed from the SIP (Securities Information Processor). No one debates the accuracy of the reported trades (though they may debate the order), just the speed. The accuracy is taken for granted because there are a number of processes in place to ensure the accuracy. Exchanges have “clearly erroneous” trade review procedures that remove obvious outliers within minutes of their occurrence. There is also a connection between reported trades and trade settlement such that if a trade is reported wrong, one of the two sides will have a strong economic incentive to ensure the trade report is corrected.