How Will Nasdaq Pay for the Facebook Screw-Up?
Nasdaq OMX Group Inc. (NASDAQ:NDAQ) may offer discounted trading fees to financial firms that lost money in Facebook’s (NASDAQ:FB) public debut due to technical glitches that caused the exchange to botch their trades, people familiar with the matter told the Wall Street Journal.
The discounts are only one on a list of potential options the exchange group is weighing to repay the more than $13.7 million it has already earmarked for traders’ losses, which have been estimated above $100 million, the people said.
Nasdaq OMX will reportedly file the first piece of its compensation plan with the Securities and Exchange Commission on Wednesday.
Problems with Nasdaq OMX’s exchange systems handling delayed Facebook’s hugely anticipated debut by 30 minutes, leaving brokers with millions of shares’ worth of unconfirmed trades. Firms didn’t learn the results of their orders until more than two hours after the stock opened on May 18, and some were caught by surprise when Nasdaq notified them of unexpected positions in Facebook’s newly-listed stock.
The exchange group has been slow to resolve investors’ claims and compensate them for losses related to their own mishandling of the market debut. Facebook shares have fallen 32 percent since the offering, only making things worse for Nasdaq.
Nasdaq, under existing exchange rules, is capped at paying out $3 million a month to brokers and traders who have suffered due to problems with its own systems. Beyond that, Nasdaq aims to add $10.7 million it gained on May 18 after closing out of a position on Facebook shares it took on to help resolve the problem created by technical glitches during the stock’s opening. Any additional payouts would have to come from the exchange group’s coffers, hurting profits.