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Saturday, May 19, 2012

Nasdaq & ( $FB ) trading problems on IPO opening on ( $OMX ) ?

Nasdaq OMX Group Inc. (NDAQ) late Friday scrambled to address frustration among brokers and traders, who sought clarity on whether some trades in the newly issued shares of Facebook Inc. (FB) had gone through.
However, a late-day process meant to resolve the matter was seen drawing limited participation from brokers who were impacted by the trading issues, and Nasdaq OMX told traders in a later notice that the effort "resulted in nothing done."
Stock market regulators, meanwhile, planned to review Nasdaq OMX's handling of the Facebook initial public offering, in what a Securities and Exchange Commission spokesman said was in line with standard practices.
The glitches that dogged the Facebook offering marred the biggest IPO on record in terms of valuation at the time of the offering, and one that was hotly anticipated by both retail and institutional investors.
Facebook's debut was also to be a point of pride for Nasdaq OMX, burnishing the exchange's reputation as the venue of choice for a new breed of Internet companies.
Technical problems with the Facebook flotation, however, cropped up ahead of the shares' opening for live trading Friday, as brokers and investors found themselves unable to cancel or alter trades that began to be placed for the shares earlier in the morning.
Nasdaq OMX delayed the Facebook IPO's open for 30 minutes before the stock eventually began to trade at 11:30 a.m. EDT. Shares in the social media heavyweight, priced at $38 in the IPO, jumped to $45 before easing back to close at $38.23.
Representatives for Nasdaq OMX didn't respond to requests for comment.
Brokers on Friday afternoon were focused on orders for Facebook shares placed after the IPO was delayed at 11:05 a.m. but before the 11:30 a.m. open, some of which were later returned without being filled.
Some brokerage officials said they felt their customers, including institutional investors, were owed fills on those orders, because Nasdaq OMX acknowledged the orders before Facebook shares opened for trading and never told customers that orders sent after the delay wouldn't be honored.
Nasdaq OMX officials told traders in a notice late Friday afternoon that the exchange would resolve the matter through an "offline matching process" for which affected firms needed to sign up.
"If at the end of that process, a firm continues to have questions or concerns, the firm needs to submit a formal accommodation request to us through the normal channels," exchange officials wrote in the notice.
That process, Nasdaq OMX officials told traders in a later notice, "resulted in nothing done." Customers were reminded that "accommodation" requests must be turned in in writing by noon on Monday, May 21.
A spokesman for the SEC said "as is our practice, staff will review the incident with Nasdaq to determine its cause and steps that will be taken to address it."
Meanwhile retail traders and other investors remained in the dark for hours as to the status of orders placed earlier in the day, left without confirmation after making changes to the price or size of standing trades, or trying to withdraw them altogether.
"I've had headaches [trading], but never this bad," said Joseph Cohn, a website software developer based in Suffern, N.Y.
Cohn, who said he maintains a retail investment account through Fidelity Investments, placed two orders for Facebook shares Friday and later canceled them both, but hours later remained unsure whether the orders had been filled or not.
Cohn said he waited on hold for 35 minutes with Fidelity before a representative told him that the problem was Nasdaq's responsibility. "This is ridiculous," he said.
Fidelity alerted clients to what it called "FB order execution slowness."
"Marketplaces and other broker/dealers experienced severe slowness this morning, and unfortunately, those issues impacted our customers," said Stephen Austin, a spokesman for Fidelity, in a statement. "But Fidelity's systems operated normally. We continue to work closely with the marketplaces to ensure that impacted orders for Facebook are resolved as soon as possible."
Mark Turner, co-head of sales trading at electronic brokerage Instinet, said he could not recall such a hiccup striking previous IPOs, and called it a "black eye" for Nasdaq OMX.
Nasdaq OMX had conducted multiple tests of its IPO systems over the past week and took the unusual step of holding a two-hour, market-wide conference call around the time of the Facebook flotation Friday.
The exchange group's chief executive Bob Greifeld, told The Wall Street Journal in an interview early Friday that Nasdaq had "changed system capabilities based on the expected flow of orders" for Facebook shares in its IPO, and that Nadsaq OMX has been double-checking systems for weeks.
Nasdaq OMX's own share price suffered as the delay in rolling out Facebook's stock dragged on, and traders waited to get confirmations of their business in the stock.
The exchange group's stock closed 4.4% lower at $21.99, while other U.S. exchange stocks ended the day higher.

-By Jacob B.
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