NYX Nyse Euronext

U.S. stock exchanges are shielded from any liability for investor losses tied to the thousands of trades canceled on May 6, a senior Nasdaq OMX Group Inc. (NDAQ) executive said Wednesday.

Chief Financial Officer Adena Friedman said exchanges have "regulatory immunity" because the final decision on "busting" trades was made with the blessing of regulators.

"The answer is no, we don't have liability," said Friedman when asked about the potential financial fallout at an industry conference.

"When we made the decision around the [trade] breaks, that was made with all the exchanges and the [Securities and Exchange Commission] on the phone," said Friedman.

Exchange leaders held an emergency conference call with regulators late on May 6 to address fallout from the dramatic market swings.

Nasdaq OMX said Tuesday it had canceled more than 10,000 trades at the height of last Thursday's market volatility, when the Dow Jones Industrial Average fell almost 1,000 points before quickly regaining much of its losses.

The New York Stock Exchange broke no trades after triggering a so-called "slow mode" to calm price volatility. No tally was available for trades canceled on NYSE Arca, the electronic platform run by NYSE Euronext (NYX).

BATS Global Markets busted 540 trades made between 2:40 p.m. and 3:00 p.m. EDT Thursday. Direct Edge canceled transactions in 286 symbols, according to a spokesman, with no final number immediately available.

Representatives for BATS, Direct Edge and NYSE Euronext declined comment Wednesday as to their potential liability for voided transactions.

Representatives of the SEC and major U.S. exchanges met after the close on May 6 to decide which trades would be allowed to stand in the aftermath of the so-called "flash crash."

The decision was made to cancel all trades executed at prices that were more than 60% above or below those printed before 2:40 p.m. EDT.

The 60% cutoff rankled some investors, who saw it as arbitrary. Some lost money on trades made amid the market swoon.

Chris Nagy, managing director of order routing, sales and strategy at retail brokerage firm TD Ameritrade Holding Corp. (AMTD), said in an interview Tuesday that the 60% figure was discouraging and "artificially derived."

"To our clients, that was not a positive," he said. "It would've saved our clients a lot of money had that number gone to 30%."

On Tuesday, NYSE Euronext Chief Operating Officer Lawrence Leibowitz said that his exchange had received no appeals yet contesting busted trades.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com

(Kristina Peterson contributed to this article.)

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