There is much to ponder about Nasdaq’s slow-moving plans to compensate the people it screwed by taking its time confirming trades on the day Facebook opened.* Here’s a fun thing I didn’t quite understand, from Reuters:
Nasdaq’s liabilities for a trading glitch are limited through regulation and a contract with its customers to $3 million per month. The exchange has applied to the SEC to increase the amount to $13.7 million to include a gain of $10.7 million it made from the Facebook IPO through the sale of so-called “phantom shares” it was left holding in the IPO.
So, that’s kind of odd? Somehow Nasdaq got fake shares worth $10.7mm, and when it realized it had these fake shares, it was like “huh, interesting, we don’t really need these” and sold them to investors and will put the money toward compensation? That seems … unlikely. For context here is May 18; the blank spot on the left is where Nasdaq was embarrassing itself:
The New York Post has perhaps a more comprehensible explanation combined, of course, with a whiff of scandal: Read more »
Is that how it is? Read more »
The Facebook IPO left some investors seething. For Jared White, it left him feeling very lucky. “I seriously got struck by lightning and survived,” the 31-year-old Austin, Texas, trader said of his experiences amid the confusion that engulfed one of the highest-profile initial public offerings ever. At around 10:45 a.m. Friday, Mr. White says, he placed an order to buy 30,000 Facebook shares, setting as his limit price $43 a share, at the opening of trading on the Nasdaq Stock Market, scheduled for 11 a.m. But the opening was delayed, and at 11:08 a.m., Mr. White accidentally canceled his orders through his firm’s electronic trading system. He pushed the wrong button on his computer, Mr. White explained, when he meant to cancel orders for a different stock. Mr. White realized what he had done at 11:13. He quickly re-entered his order, saw an indication that it was accepted by Nasdaq and settled in front of his screen to watch the action when trading finally started at 11:30 a.m…At around 1:50 p.m., the traders finally got confirmations from Nasdaq on their original orders—except for Mr. White, whose account in the Great Point system showed zero shares. He felt like he had dodged a bullet, but he was confused. “What? How?” Mr. White asked his technical-operations manager, who had been on the phone with Nasdaq all morning. He soon learned why he didn’t have any shares: Across the market, orders that had been placed between 11:11 a.m. and 11:30 a.m. had fallen into some kind of a black hole. That meant Mr. White’s re-entered order was never recognized. About the same time, revelations were hitting other traders across the market, surprising some who held shares they thought they had sold. Trading volume surged as orders flooded Nasdaq, causing a steep drop in Facebook’s price. The shares never really recovered and fell most of the rest of the day, closing at $38.23 at 4 p.m. “I was utterly relieved,” Mr. White said of his phantom trade. [WSJ]
They just got a late start. Evidence of their hard work after the jump and yes, it’s most certainly NOT SAFE FOR WORK, unless you work at a firm where looking at women sans tops is cool.
**Shoveling snow, posing with shovels, same diff no diff. Read more »
Executives from the nation’s various trading venues convened are holding meetings in Washington today to devise new rules that aim to prevent the dramatic 1,000-point drop in the Dow that shocked the markets last week.
Early reports from the meeting indicate that exchanges, including NYSE Euronext and Nasdaq, are planning to institute uniform circuit breaker rules that slow trading during volatile market swings. The rules are meant to apply across most major trading systems, but it’s unclear how regulators can impose the rules on banks’ internal order flow. Read more »
When you were younger the world was probably pretty flexible. Someone wasn’t with you all the time to see if you looked both ways when you crossed the street. Perhaps you ate a few extra cookies from the cookie jar here or there. But then there was that kid you knew from school who lived down the block. He never looked when he crossed the street. He never paid attention to dietary restrictions. He talked back whenever he felt like it and he never took off his shoes when he came over. Your mom hated that kid. Let me tell you, that kid was probably Bob Greifeld, CEO of NASDAQ OMX.
See, if your stock price slips under $1.00, NASDAQ generally de-lists you. But, well, rules were meant to be broken. And it’s just easier for Bob this way, see?
Nasdaq overlooks own rule to rescue bruised stocks [Reuters]
…for all the cross-dressing enthusiasts in the audience (survey says 37 percent). Oscar De La Hoya will be ringing the closing bell at the NASDAQ this Thursday. Will he play it safe in a standard issue silk shorts and robe combo (the appearance is to promote pretty boy’s May 3rd fight), or sate all your appetites with something more appropriate, like fishnets and high heels? Stay tuned.
Oscar De La Hoya to Ring the NASDAQ Stock Market Closing Bell [Yahoo! Finance]