Are Facebook Losses Bigger Than Initially Thought?
Reports of investment firms facing losses on glitches associated with trading of Facebook (NASDAQ:FB) shares on the stock’s opening day keep growing. The market-making arms of UBS (NYSE:UBS) and Citigroup (NYSE:C) are now said to have lost as much as $30 million and $20 million on the trading, respectively.
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Earlier estimates of the Wall Street losing a total of close to $100 million because of the technical problems now seem like an underestimation. Citadel Trading and Knight Capital Group (NYSE:KCG) have already been reported to have lost about $35 million each, while E-Trade Financial (NASDAQ:ETFC) faced a smaller loss of about $1 million.
Citigroup’s Automated Trading Desk unit and a similar division at UBS execute retail investors’ stock orders, and were among those hardest hit by the errors. Nasdaq’s system crashed on Friday under the barrage of high trading on Facebook’s market debut. Attempted transactions during a 20-minute period in the day on Friday went unconfirmed for hours.
Some firms have already asked the stock exchange’s holding company, Nasdaq OMX Group (NASDAQ:NDAQ), for compensation. The board of Nasdaq OMX has reportedly set aside only about $13 million for damage control as of now and will make a final decision on compensation after a review of requests by the Financial Industry Regulatory Authority.
Eric Noll, Nasdaq OMX’s head of transaction services, told brokers this week on a conference call that it was not certain whether losses would be fully covered.
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