Reversing or amending a single "fat finger" trade happens all the time and the exchange generally has procedures for this that don't involve a regulator.
Even in the most controversial recent example - LME cancelling a day's worth of nickel trades [0]- I understand it was their call and not any external regulator. That said, while I'd count LME as a "highly developed exchange", it's the Wild West compared to the US NMS.
As I understand, the LME nickel trade reversal was to prevent total meltdown due to multiple counterparties going bankrupt at the same time. To me, it was a classic case of exchange limits and poor risk control. "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem. -J. Paul Getty (of course, add some zeroes for today's world)
Also, can you explain more about what this phrase means? "it's the Wild West compared to the US NMS" Are you saying the risk limits and controls on LME are much worse that US markets?
> [...] the exchange generally has procedures for this that don't involve a regulator.
That's part of why I vaguely referred to 'the authorities' in my original comment. I wasn't quite sure who's doing the amending and reversing, and it wasn't too important.
Even in the most controversial recent example - LME cancelling a day's worth of nickel trades [0]- I understand it was their call and not any external regulator. That said, while I'd count LME as a "highly developed exchange", it's the Wild West compared to the US NMS.
[0] https://www.bloomberg.com/news/articles/2022-03-14/inside-ni...