Nasdaq Admits Design Flaws Led To Glitches In Facebook Trading
By J.J. McGrath | May 21, 2012 9:46 AM EST
Nasdaq is "humbly embarrassed" by the technical issues that plagued trading in shares of Facebook Inc. (Nasdaq: FB) on Friday, Robert Greifeld, CEO of Nasdaq OMX Group Inc. (Nasdaq: NDAQ), told reporters on a conference call on Sunday.
"This was not our finest hour," Greifeld said. He told reporters Nasdaq's board met on Saturday to discuss the Facebook offering and that the exchange plans to make changes to the IPO auction process because of the Facebook problems, the Wall Street Journal reported.
Greifeld explained that computer systems designed to determine an opening price were overwhelmed by the order cancellations as the "biggest IPO cross in the history of mankind" was happening, Bloomberg News said. As a result, Nasdaq's system fell into a "loop" that kept the exchange from opening the shares on schedule.
Nasdaq conducted tests ahead of the highly anticipated IPO, but they failed to detect the problem, according to Greifeld.
Still, Greifeld characterized the first day of trading in Facebook's shares as "successful." He also contended the exchange's technical problems were unrelated to the lackluster performance of the social-networking company's share price.
Greifeld's public remarks were the first made on the matter by Nasdaq since the open of trading in Facebook shares was delayed by 30 minutes on Friday.
Nasdaq's glitches with the Facebook IPO last week were reminiscent of Bats Global Markets Inc.'s issues with its very own IPO in March.
The U.S. Securities and Exchange Commission told Bloomberg News on Friday it will be examining the circumstances surrounding the snafu. "As is our practice, staff will review the incident with Nasdaq to determine its cause and steps that will be taken to address it," John Nester, an SEC representative, wrote via email.
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