The highly publicised listing of the social networking company,
), on the Nasdaq Stock Market cost
) millions, according to a
Wall Street Journal
report. A technical glitch cropped up with the Facebook IPO
and as a result, the market making unit of Citi incurred losses of
around $20 million.
Besides Citi, the market-making unit of
) also suffered a loss of $30 million. In addition, claims came
from Citadel LLC and
Knight Capital Group Inc.
) who suffered losses of around $30 million to $35 million
E-Trade Financial Corp.
) too is said to have incurred losses but of a smaller amount.
There was a problem with the
Nasdaq OMX Group Inc.
) system while dealing with the Facebook IPO. A flood of order
cancellations hindered the procedure of matching of buy and sell
interest in the Facebook stock for the initial trade.
This led to a delay of around 20 minutes and during this period
the transactions that were attempted were not confirmed for hours.
As a result of the delay in orders, significant losses were
incurred by investors and traders when the stock price fell.
The Way Out
Firms have demanded compensation for their losses associated
with the trading of Facebook stock from Nasdaq. They have been
asked to provide their loss estimates. The Financial Industry
Regulatory Authority is scrutinising the trades and will make a
report on the losses in the coming weeks.
We believe that such technical glitches will cost Nasdaq several
million dollars. Moreover, such litigation issues will also consume
time and the extent to which Citi's losses will be covered also
remains a concern.
Citi currently retains its Zacks #3 Rank, which translates into
a short-term Hold rating. Considering its fundamentals, we also
have a long-term Neutral recommendation on the stock.
CITIGROUP INC (C): Free Stock Analysis Report
E TRADE FINL CP (ETFC): Free Stock Analysis
FACEBOOK INC-A (FB): Free Stock Analysis Report
KNIGHT CAP GP (KCG): Free Stock Analysis Report
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
UBS AG (UBS): Free Stock Analysis Report
To read this article on Zacks.com click here.