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Nasdaq plans to submit new plans to the SEC to compensate early Facebook investors after technical glitches marred the companies IPO, the Wall Street Journal’s Jacob Bunge and Brett Philbin report. Click here for updates >
Sources tell the Journal that Nasdaq will use the $10.7 million it gained its own positions in Facebook, as well as $3 million the exchange sets aside for losses associated to system outages.
Losses at banks and firms trading in Facebook are estimated at $100 million because of those first day glitches.
Shares in Facebook are now more than 30 per cent below its $38 pricing.
The First Trading Day
During the launch of Facebook shares, Nasdaq suffered a number of outages that ended communication between the exchange and traders after the stock officially began trading.
Although Nasdaq gave the go-ahead for orders at 11:30, a delay from the original 11:00 a.m. trading start time, the entire exchange suffered from a radio outage between 11:29:52 and 11:30:09 — which kept trades from printing across all Nasdaq listed securities.
When shares began trading, they were erratic: rallying at first before falling.
Between 11:50 and 11:54 a.m., rolling quiet periods hit the Nasdaq radio, as the exchange stopped quoting prices. After 11:54 a.m., all trades from the Nasdaq on Facebook went quiet, and stayed that way until 1:50 p.m. when the group began pricing and confirming trades again.
But the exchange released a torrent of trades at that moment, more than 12,000 executed in one second. Not only did those trades cause several outages, it also hit Facebook’s share price by a dollar.
After 2:00 p.m., trading became substantially less erratic — but shares continued to test the $38 barrier Facebook had priced at.
Over the following days, Facebook’s share price has collapsed, which many firms blamed on Nasdaq’s handling of the IPO (although news that Morgan Stanley’s equity research analyst cut his estimate on the firm is also largely credited with the decline).