Nasdaq considers trading discount due to Facebook IPO glitches
Reports claim that the exchange will make an announcement today regarding compensation
By Derek du Preez | Computerworld UK | Published 19:17, 06 June 12
Nasdaq is considering offering discounted trading fees to the financial firms that collectively suffered over $100 million (£65 million) worth of losses as a result of the technical glitches that occurred during Facebook’s much anticipated IPO.
According to reports in the Wall Street Journal, Nasdaq has thus far only earmarked $13.7 million (£8.8 million) for the traders’ losses, and the discounts idea is one of a range of options the exchange group is considering to make up the deficit.
Last month, Facebook’s much IPO was riddled with technical problems, which led to a delay of 30 minutes. The problem stemmed from NASDAQ’s IPO Cross, a pre-IPO auction process that the exchange put in place in 2006 that allows traders to place orders and agree on an IPO price before the stock is officially launched, which couldn’t handle the trading demand.
Rik Turner, senior financial services analyst at Ovum said that the companies were not only making losses from losing out on half an hour of trading, but because they were not receiving up to date information.
“The losses by these companies is estimated to be at approximately $100 million to $150 million, but I’d say these estimates are conservative. My suspicion is that they may go higher,” said Ferguson.
He added: “There was also apparently a problem whereby the turnaround time of processing orders expanded from three milliseconds to five milliseconds. Because of those two milliseconds that were not accounted for or factored into the process, these firms were not getting up-to-date information about what their position was. They were effectively trading in the dark.”
Nasdaq is planning to file the first part of its compensation with the US Securities and Exchange Commission today.
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