Nasdaq OMX revises Facebook refund scheme
Nasdaq OMX has withdrawn plans to reimburse investors disadvantaged by the botched Facebook IPO by discounting trading fees, opting instead to pay all compensation in cash.
The US exchange operator has
filed with the Securities and Exchange Commission to offer a renewed voluntary
accommodation programme for those market participants that lost money participating in the IPO on 18 May.
Similar to the first
compensation plan announced 6 June, Nasdaq OMX will refund members if, during
the Facebook IPO, cross sells priced at US$42 or less did not execute or
executed at an inferior price, or if buys executed were not adequately
confirmed. Buys that executed but were not confirmed and were attempted to be
cancelled have also been added as a class of order eligible for reimbursement
under the revised plan.
The exchange has also amended
its previous plan by increasing the accommodation’s fund by US$22 million to
US$62 million – all of which will be paid in cash – and prioritising customers
Under the initial US$40
million compensation plan, US$13.7 million would been paid in cash, with the
remainder offered in trading fee credits, a feature that had come under fire
from rival exchanges.
tantamount to forcing the industry to subsidise Nasdaq’s missteps and would
establish a harmful precedent that could have far reaching implications for the
markets, investors and the public interest,” read a statement from NYSE
Euronext on Nasdaq OMX’s initial plan.
Following regulatory approval
of the new programme, affected members will have seven days to lodge a claim.
All claims will be reviewed by the Financial Industry Regulatory Authority, an
independent securities watchdog.
18 May, the first day of trading in Facebook’s stock was delayed for around 25
minutes because of an error which prevented Nasdaq OMX from creating an opening
"We deeply regret the
problems encountered during the initial public offering of Facebook," said
Robert Greifeld, chief executive officer and president of Nasdaq OMX. "We
failed to meet our own high standards based on our long history of providing
outstanding technology to our members and exchange customers. We have learned
from this experience and we will continue to improve our trading platforms.''