Nasdaq’s Facebook malfunctions caused UBS & Citigroup to lose $50M
This past week about $50 million dollars of combined loss was indepted by the market-manufacturing group of UBS and Citigroup on their recent trades just this Friday which apparently was a result of several glitch-stricken listings of Facebook on the Nasdaq Stock Market as reports of this anomaly spread over the stock exchange sector. Citigroup’s loses hit rock-bottom due to the awkward and sudden break-in of Facebook’s stock with loses estimated to be well over $20 million while at the same time according to reliable resources, UBS lost an roughly $30 million.
The banks reported revelation resulted to the heightened financial disaster from Facebook among brokers who have made trade above $100 million, following to even bigger losses from this week from wholesale market-making firms which includes Knight Capital Group and Citadel LLC. Such market-making trades that includes; Citigroup’s Automated Trading Desks unit a relatively minor division at UBS and several route retail investors’ stock orders were among Wall Street’s badly hit trading operations by glitches from Facebook.
The alleged lofty retail interest in the Facebook Market left many individual traders trapped by the Nasdaq anomalies and incited many retail brokers to turn to wholesale market-making like big wholesale market players like Citadel, Knight and Citigroup in order to cover their loses to a minimum. Several groups have already appealed to Nasdaq OMX Group to reimburse them for their heavy losses. The Nasdaq OMX has mark down $13 million to somehow equalise the damage done by the said glitches, however many remain cynical leading to speculations that the allocated cost could possibly go higher. Nasdaq’s OMX head of operation services, Eric Noll made tentative statements to brokers that the losses might not be fully compensated.
Aside from UBS and Citigroup, Knight Capital Group have also incurred losses close between $30 million to $35 million. Citadel also fell to a similar loss however some firms such as E-trade Financial Corp took smaller losses compared to the former.
The board of Nasdaq OMX still hasn’t made final decisions on how much the exchange company will be compensating equity traders. The Financial Industry Regulatory Authority is already under its way in investigating the said problem and will be submitting a report to Nasdaq OMX as soon as possible. Nasdaq OMX executives have pointed that an influx of order cancellations resulted to an unforeseen interference of matching up buy and sell interest in Facebook’s shares to form the preliminary trade leading to a 20-minute limbo of attempted transactions that went unconfirmed for several hours leading to such tremendous losses.