That's a bit of a mischaracterization I think. Exchanges have well-defined rules for clearly erroneous executions, and these are not the same in the equities (Knight) and options (Goldman) markets. If anyone else had made the options trades that Goldman did that day, their trades would have been busted as well.
> Exchanges have well-defined rules for clearly erroneous executions,
I'd disagree with this statement.
it's true that each exchange does have its own rules and that they do set some guidelines but as far as I know they all have rule that state that they carry final veto power over what trade do and don't get broken.
For instance from Nasdaq
> Nasdaq is providing general guidance on when transactions may be deemed erroneous under Rule 11890. This guidance is not a mandate of the rule but is information on how Nasdaq generally applies the terms of the rule (at Nasdaq2019s discretion) to determine whether an execution is clearly erroneous.
