cancellation

Cancellation

A notice informing a customer of the cancellation of an erroneous trade that has been credited to his or her account by the broker.

Investopedia Commentary

Even stock brokers are subject to human error. When an error is made, set guidelines must be followed to rectify the situation.

For example, if a broker mistakenly over-purchases 100 shares of Cory's Tequila Corporation for your account, he or she must sell the 100 shares and bear any losses in his or her internal account. Each transaction is properly recorded and you will be sent statements showing the changes to your account. The procedure is done to ensure that the broker is not improperly trading for your account.

See also: 90 Day Letter, Bank Reconciliation Statement, Broker, Order

cancellation

A broker's notice to a customer that an erroneous trade credited to the customer has been voided. For example, if a brokerage firm mistakenly purchases 200 shares of stock for an account when the customer has entered an order for only 100 shares, the firm will send the customer a cancellation for the 200-share trade to void the original confirmation and then will send a new confirmation showing the correct trade.