Because those transactions cause other transactions, which cause others, and so on and so forth. You'd have to reset the market for the day.
Imagine how pissed you'd be if you made money off Knight's mistake and it all just disappeared the next day.
Imagine how pissed you'd be if you made money off Knight's mistake and it all just disappeared the next day.
Knight was probably too messy to rollback cleanly, but that just means it's a matter of cost/complexity/politics... if you're a big enough player, then the exchange will do you favors, like in the LME case.
Free markets, lol
Rules were established after the “flash crash” of May 2010 to govern when trades should be canceled. Knight’s buying binge did not drive up the price of the purchased stocks by more than 30 percent, the cancellation threshold, except for six stocks. Those transactions were reversed. In the other cases, the trades stood.> "People will be asking if this really a functioning market... This is meant to be a market of last resort and people can't get inventories to deliver against positions," said Colin Hamilton, managing director of commodities research at BMO Capital Markets.
There’s gonna be a pretty high threshold for this sort of thing. Higher than “one company fucked up and wants a do-over”.