Fidelity: Lava Error Triggered NYSE Halts

The process took longer than just canceling the "bad" trades, because corresponding sell orders -- including 10 million for Wyeth -- came in prior to the open as the initial erroneous trades had Wyeth as indicated to open higher by $24.

The NYSE informed those would-be sellers that the buy orders were in error in the hope that the sales would be canceled; if not, those sales would have created an imbalance on their own. In addition, the stocks were trading off the exchange on electronic platforms.

Nasdaq Trades Canceled

Sources say the Nasdaq has canceled trades of 2.5 million shares of Wyeth that traded "off market" prior to the NYSE halt. The Nasdaq has invoked rule 11890, which refers to "Clearly Erroneous Transactions."

A Nasdaq spokesman referred me to its trader alert, which states: "Pursuant to UPC Rule 11890, Nasdaq, on its own motion, has decided to break any and all trades in WYE, executed in Nasdaq, from 9:30:00 a.m. to 10:26:00 a.m., Eastern Time (ET), at a price at or above $58.55."

The statement says UTP Operating Committee participants, which include the Amex, International Securities Exchange (ICE Quote) and regional exchanges, "have agreed to use the same terms for breaking trades that affected their markets."