After the technical glitches in Facebook’s initial public offering, Nasdaq is offering $40 million in compensation to affected member firms. Many traders were not able to tell if their orders had gone through for about two hours after Facebook started trading.
Reuters reports that these glitches meant that “the top four market makers in the Facebook IPO – UBS, Citigroup, Knight Capital, and Citadel Securities – together lost upward of $115 million.” Pending approval by regulators, Nasdaq will pay $13.7 million to its member firms and “the balance would be credited to members to reduce trading costs, with all benefits expected to be awarded within six months.”
Not everyone, however, is pleased with the idea of compensation. Some of Nasdaq’s rivals told Reuters that “we view that as inconsistent with the Exchange Act, discriminatory, unfair, whatever you want to call it.”
Reuters previously reported that Nasdaq’s plan to pay back brokers has been slowed by regulatory questions centered on exchange’s ability to compensate customers.