One of the largest wholesale trading funds, Knight Capital claimed that it had lost nearly $35m as it did not receive trading confirmations when Nasdaq suffered technical glitch in handling the first trades in Facebook stock.
According to an estimate, the market players suffered more than $100m on 18 May 2012, but the brokers called the compensation plan deeply inadequate.
Nasdaq OMX board had approved a "one-time voluntary accommodations programme" that would pay $13.7m in cash to Nasdaq member firms, while remaining will be credited to qualified claimants "to reduce trading costs" over six months.
Compensation proposal will require approval from the Securities and Exchange Commission, and the independent Financial Industry Regulatory Authority will evaluate claims from the brokers.
Due to overwhelming response of the Facebook’s IPO, Nasdaq’s systems suffered a software problem, which delayed the opening trading by half-hour majorly affecting investors and brokers.
Raising objections to Nasdaq’s plan, NYSE Euronext said that the proposal cannot be allowed to permit an unjust and anti-competitive situation.
"We believe it would be wholly inconsistent with fair practice and an undue burden on competition to allow Nasdaq to use pricing and other machinations as a guise for fairly compensating those impacted by the Facebook IPO issues," it added.
