Econintersect: Trading problems at the attempted opening of trading of the new Facebook shares after the 421.2 million share IPO this morning had some unexplained delays. Secondary trading in Facebook (NASDAQ:FB) did not start until 11 am because the Nasdaq exchange was apparently unable to guarantee a proper trade clearing process or relaible reporting of the trades. The start of trading was 30 minutes later than had been planned. Why this occured was not immediately explained but it may simply have been a result of not being able to handle a massive number of orders. It is likely that Nasdaq will provide a complete explanation of the failure to open FB later.
Follow up:Because of the delays the price of the new shares came under pressure and threatened to fall below the $38 IPO price. According to Bloomberg, the underwriters of the IPO had to intervene and buy stock to support the price at $38. For the day the price range was $38 to $45. The stock closed at $38.18 and was trading even lower but still slightly above $38 in early after-market trading.
Investigation by the SEC Securities and Exchange Commission) cannot be ruled out in this matter. The oversight of proper market operations technically falls under their purview.
From Securities Technology Monitor:
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.
The black eye of mishandling the start of trading for Facebook has been expensive for the Nasdaq OMX exchange (NASDAQ:NDAQ). The stock traded down as much as 4.7% during the day before closing at $21.99, down $1.01 (-4.39%).
- Nasdaq Investigating Facebook Trading Instruction Issue (Tom Steinert-Threlkeld, Securities Technology Monitor, 18 May 2012)
- Nasdaq Manages Facebook IPO Amid Trade Confirmation Delays (Nina Mehta, Bloomberg, 18 May 2012)