Traders must honor quoted prices for roughly two seconds regardless of error.

Evidence

For example, traders’ initiating questions have to be uttered in a neutral way that does not disclose the caller’s intent (i.e., to buy or to sell), to receive a fair price response; callers, unlike clients discussing options with a salesperson, presumably have formed such an intention. The responding trader is constrained to respond by indicating a price for both (buy and sell) options. Another important rule—and one whose violation will incur sanctions—is that traders commit themselves to the price that they indicate. They are bound to honor it even if they have made a mistake—as long as the caller’s response comes within the understood time frame of approximately 2 seconds and as long as the trader has not regained the turn by an interrupt, to invalidate the price. — Karin Knorr Cetina & Urs Bruegger, Global Microstructures, 114

Another important rule—and one whose violation will incur sanctions—is that traders commit themselves to the price that they indicate. They are bound to honor it even if they have made a mistake—as long as the caller’s response comes within the understood time frame of approximately 2 seconds and as long as the trader has not regained the turn by an interrupt, to invalidate the price. — Karin Knorr Cetina & Urs Bruegger, Global Microstructures, 114

Categorization

• DEFINE: Clarifies the lex mercatoria’s commitment rule; the 2-second window is a striking empirical micro-mechanism.
• SHARE: The 2-second binding price window is exactly the kind of fact my colleague building market-microstructure simulations would want.
• corroborated: 2 independent passages support this claim — Karin Knorr Cetina & Urs Bruegger, Global Microstructures: The Virtual…, 114