Shouldn't both trades be broken, though? Breaking just one sounds like the kind of behaviour that would be a strong disincentive to trade at all in the first place.
Under current market rules, no. Besides, this would quickly become a combinatorial disaster. Think of your counterparty who bought at $35 and sold at $36 - now one leg of his trade gets broken, and he has a short position. Or maybe we break both of his trades? Where does the chain end?
And of course, this still hurts people doing stat arb. If you want to go long accenture, short IBM, and your accenture trade is broken, you find yourself with an unhedged IBM short.
Breaking just one sounds like the kind of behaviour that would be a strong disincentive to trade at all in the first place.
This is why HFT's pull out of the market under circumstances where broken trades become likely. Most of the HFT's that stayed in the market during the flash crash made huge money - volatility rocks.