Trade Error FAQ

A list of frequently asked questions about trade errors.

What is a “Trade Error”?

A “trade error” is a situation where a Paradigm User makes a good faith mistake in the terms of a trade (e.g., a trader is working with multiple open trades, and confuses one trade with another). “Trade errors” are not (1) Buyer’s / seller’s remorse, such as where the market moves against a trader’s position (particularly in volatile markets) or (2) lack of care in trading / entering Message Data.

Each User is responsible for their usage and their Authorized Users’ usage of the Paradigm system, as described in your signed Paradigm User Agreement, including all Message Data sent through the Paradigm system. The Paradigm system is designed solely for institutional investors and traders, and as such both Paradigm and other parties using the Paradigm system reasonably expect that each User will carefully monitor and ensure the correctness of its usage and its Authorized User’s usage of the Paradigm system. Thus, “trade errors” will occur only in exceptional and limited circumstances.

Paradigm is NOT liable nor financially responsible for any “trade errors,” as covered in your signed Paradigm User Agreement.

What should I do if I think a “trade error” has occurred and the trade has not yet been submitted to an exchange for clearance and settlement?

If you know the counterparty you traded with, reach out to them directly and immediately start discussing a possible solution. Immediacy is key! As market conditions may change then price bands may move and no longer fit, or deltas might have been hedged and a reversal is not possible anymore. If fees paid on the trade are the concern, they can be discussed AFTER the principal risk on the trade is reversed.

As with any trading engagement, Paradigm encourages all parties to act reasonably as this is a trusted network.

What should I do if I think a “trade error” has occurred and the trade has already been submitted to an exchange for clearance and settlement?

Be familiar with the policy of the exchange to which your trade sent for execution and settlement:

Derbit and do not have trade busting and price adjustment rules. For that reason, Users should consider entering into an offsetting trade on that exchange to close out their position.

CME has rules relating to Trade Cancelations and Price Adjustments. Those rules can be found here. Users should comply with those CME rules.

What should I do if my counterparty is anonymous, and I made a “trade error”?

Please reach our immediately via your Telegram or WeChat group for assistance. If you are not in a channel with Paradigm staff, we encourage you to reach out via our Client Solutions Telegram Channel. As a courtesy to our Users, in Paradigm’s sole discretion, we may attempt to reach out to the anonymous counterparty and explain the situation. We may endeavor to either have the counterparty come out of anonymity to discuss the trade with you or agree to reverse trade out of the “trade error” while remaining anonymous.

Can Paradigm cancel a trade where a “trade error” occurs?

No. Trades are bilateral and Paradigm is not a party to the trade. Paradigm thus does not have an ability to cancel a trade. Paradigm expects that Users will act in a commercially reasonable manner where “trade errors” occur. The counterparty is well within their right to decline and may choose to NOT reverse the transaction.

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