Facebook float tests Nasdaq resilience as stock opening delayed
18 May 2012 | 6317 views | 0
Trading in Facebook shares on the Nasdaq was delayed for 30-minutes after the opening bell, as the Exchange's systems struggled to keep pace with massive retail-led demand for the stock.
Shares in the social networking site eventually opened at $42, following a 30-minute snafu at Nasdaq. But as the stock drifted down to $40 within ten minutes of opening, market watchers were pointing to a huge backlog of unmatched trades clogging up the Exchange's pipes.
During the first 30 seconds of trading, the stock registered 2.7 million shares per second.
The delay in one of the most highly-anticipated IPOs in history is a major embarrassment for Nasdaq, which has been adding capacity and performing dummy runs for weeks in advance in order to avert a major tech meltdown.
Nasdaq was keen to avoid the public humiliation which followed the failed stockmarket debut of rival exchange Bats, which pulled its float after a software bug in the open auction process sent prices spiralling downwards.
Postscript: Nasdaq chief Robert Greifeld admitted Sunday that unforeseen technology problems at the Exchange had contributed to the snarl-up. "This was not our finest hour," Greifeld told the Wall Street Journal. The main problem, he said, was a malfunction in the trading-system's design for processing order cancellations. Extensive testing Nasdaq had performed ahead of the deal failed to unearth the problem.
Angry investors are pressing the Exchange for a refund on improperly-processed trades. Nasdaq will use an "accommodation pool" to pay back investors that should have received executions in the opening auction, based on the decisions of a third-party reviewer, Greifeld said. It may total $13m, he said.