Cancellation

AAA

DEFINITION of 'Cancellation'

Notice by a broker informing his or her client that an erroneous trade was made and that the situation is being addressed. For example, if a broker purchased 3,000 shares in the Acme Widget Company and the order was supposed to be for 2,000 shares, the broker will need to sell the additional shares at his or her expense. Thereafter, the broker will need to inform his or her client of the transaction.

INVESTOPEDIA EXPLAINS 'Cancellation'

Even in this era of electronic trading, mistakes get made. And when they do, it is important for the broker that made the mistake to quickly rectify the situation. Naturally, everything is recorded and statements are sent, showing the cancellation to ensure that the broker in question is not improperly handling the account.

RELATED TERMS
  1. Order

    An investor's instructions to a broker or brokerage firm to purchase ...
  2. Bank Reconciliation Statement

    A form that allows individuals to compare their personal bank ...
  3. 90-Day Letter

    An IRS notice sent after an audit stating that there was a discrepancy ...
  4. Broker

    1. An individual or firm that charges a fee or commission for ...
  5. Clowngrade

    An upgrade or downgrade of a security for reasons considered ...
  6. Valium Picnic

    A market holiday or a slow trading day.
RELATED FAQS
  1. What is the interest rate offered on a typical margin account?

    Interest rates on margin accounts vary according to the size of the loan and the brokerage firm being used. Generally, interest ... Read Full Answer >>
  2. What is the cost of a share purchase?

    When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged ... Read Full Answer >>
  3. What is the difference between fee-based advisors and commission-based advisors?

    The difference between a fee-based adviser and a commission-based adviser is that the former collects a flat fee for investment ... Read Full Answer >>
  4. What is the difference between a custodian bank and a mutual fund custodian?

    Custodian banks and mutual fund custodians, commonly known as mutual fund corporations, perform very similar roles for different ... Read Full Answer >>
  5. How does an insurance broker make money?

    An insurance broker makes money off commissions from selling insurance to individuals or businesses. Most commissions are ... Read Full Answer >>
  6. What does the variance between the bid and ask price of a stock mean?

    The variance between a security's bid price and its ask price, also known as the bid-ask spread, represents the different ... Read Full Answer >>
Related Articles
  1. Personal Finance

    Does Your Investment Manager Measure Up?

    These key stats will reveal whether your advisor is a league leader or a benchwarmer.
  2. Investing Basics

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  3. Retirement

    7 Common Investor Mistakes

    Find out how to avoid - or fix - these frequent investing errors.
  4. Retirement

    Choosing A Compatible Broker

    We go over the factors that determine different investing personalities, and the services that best suit them.
  5. Options & Futures

    Don't Let Brokerage Fees Undermine Your Returns

    Smart investors don't give away more money than necessary in commissions and fees. Find out how to save.
  6. Insurance

    Four Big Investor Errors

    These simple lessons can cut your losses.
  7. Forex Education

    10 Tips For Choosing An Online Broker

    Investing online is cheaper, safer and easier than ever before. Find out how to choose the broker that will help you get the most for your money.
  8. Investing Basics

    Shareholders: Vote Your Proxy and Be Heard

    Voting shares, in person or via proxy ballot, is a right every shareholder should exercise. Here's why.
  9. Professionals

    What Does a Broker Do?

    In the investment world, broker is a term used to refer to an individual or entity that helps facilitate trading in financial securities.
  10. Economics

    What is Joint Tenants with Right of Survivorship?

    A type of brokerage account where a surviving member inherits the other member's share of account assets upon the death of that other member.

You May Also Like

Hot Definitions
  1. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  2. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  3. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  4. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  5. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  6. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!