Nasdaq Investigating Facebook Trading Instruction Issue
May 18, 2012
The Nasdaq Stock Market posted a market system status message at noon saying that it was checking out an issue in delivering trade execution messages involving Facebook shares.
Trading was to begin at 11 a.m. in the first day of the social network giant as a public company. Facebook shares at 12:43 pm were trading at $40.98, up nearly $3 from its open at $38.
The status message said:
NASDAQ is investigating an issue in delivering trade execution messages from the IPO Cross in symbol FB. NASDAQ is working to deliver these executions back to customers as soon as possible. NASDAQ will advise.
IPO Cross is designed to provide “fair executions” at a single price, maximizing volume in a stock and reflecting supply and demand. It also is designed to create an “open process in which all investors have the ability to enter orders” and participate as shares find their eventual price on the Nasdaq market itself.
Nasdaq had not yet responded with comment as this story was posted.
The investigation of the IPO Cross issue comes after technical issues caused another highly watched IPO on Nasdaq, that for a “big data” firm known as Splunk, suffered a volatility interruption last month and BATS Global Markets wholly failed to take its own stock public on its own exchange early this year, due to a software bug.
The Nasdaq Stock Market on Thursday afternoon completed its testing of order entry procedures, in order to get ready for Friday morning’s initial offering of stock to the public by Facebook.
In order to avoid any technical fallout, Nasdaq has emulated its process, the IPO Cross, with a test security, using a fake symbol. Quoting began at 12:45 p.m. Thursday and shares were released at 1 p.m.
Similar tests were conducted by Nasdaq last week and earlier this week.
The New York Stock Exchange said that it had not experienced any issues, as of 12:23 p.m.