Knight Capital Group Inc. (KCG) (KCG) estimated that it lost about $30 million to $35 million trading Facebook Inc. (FB) (FB) because of technical problems at Nasdaq OMX Group Inc. (NDAQ) (NDAQ) related to the social-media company’s initial public offering. The brokerage and market maker said that while it submitted claims to Nasdaq, “there are no assurances that the company will be able to recover any of its losses resulting from the numerous issues and problems at Nasdaq,” according to a filing today with the U.S. Securities and Exchange Commission. Knight, based in Jersey City, New Jersey, said it’s “evaluating all remedies available under law.” Knight Chief Executive Officer Thomas Joyce told CNBC on May 21 that he “wouldn’t be shocked” if total brokerage losses ... Continue reading →

The Depository Trust & Clearing Corp. is commissioning a study on whether the U.S. securities industry should cut the time it takes to process transactions, a shift that may reduce risk and compel brokers and asset managers to spend more on further updating their systems. The New York-based company that handles and guarantees trades in U.S. stocks, corporate bonds and municipal securities hired the Boston Consulting Group Inc. to assess the costs and benefits of settling trades in fewer than three days, the current standard, Elena Staloff, a vice president at DTCC, said in a phone interview. A shorter cycle would mean firms could post less capital to the clearing fund run by DTCC subsidiary National Securities Clearing Corp. to cover a defaulting broker’s obligations ... Continue reading →

Nasdaq CEO Says ‘Poor Design’ in IPO Software Delayed Facebook By Nina Mehta - 2012-05-20T21:11:07Z Enlarge image Nasdaq CEO Robert Greifeld Nasdaq OMX Group Inc. Chief Executive Officer Robert Greifeld. Nasdaq OMX Group Inc. Chief Executive Officer Robert Greifeld. Photographer: Scott Eells/Bloomberg “Poor design” in Nasdaq OMX Group Inc. (NDAQ)’s software driving auctions for initial public offerings delayed Facebook Inc.’s first day of trading, the exchange operator’s chief executive officer said. Computer systems designed to establish an opening price were overwhelmed by order cancellations and updates as the “biggest IPO cross in the history of mankind” was occurring, Nasdaq CEO Robert Greifeld said today in a conference call with reporters. Nasdaq’s systems fell into a “loop” that prevented the second-largest U.S. stock venue operator from ... Continue reading →

Enlarge image Nasdaq Manages Facebook IPO Amid Trade Confirmation Delays Spencer Platt/Getty Images The window at Nasdaq as Facebook shares go public on May 18, 2012 in New York. The window at Nasdaq as Facebook shares go public on May 18, 2012 in New York. Photographer: Spencer Platt/Getty Images Facebook Inc.’s (FB) debut on the Nasdaq Stock Market turned into another setback for American equity exchanges, with the $16 billion initial public offering plagued by delays in trade confirmations, crossed quotes and signs that orders were mishandled. The pricing of the first transaction took a half hour longer than Nasdaq planned. About 30 minutes later, the second- largest U.S. equities exchange operator reported an issue confirming trades from the opening auction with the brokerages that ... Continue reading →

Enlarge image Facebook Said Near to Pricing IPO for at Least $38 a Share David Paul Morris/Bloomberg The Facebook Inc. logo is displayed on a computer screen and reflected in water droplets in San Francisco. The Facebook Inc. logo is displayed on a computer screen and reflected in water droplets in San Francisco. Photographer: David Paul Morris/Bloomberg Facebook Inc. (FB)’s initial public offering will be the biggest test of a rule introduced in 2011 to protect investors and curb volatility on the first day a company trades. The Financial Industry Regulatory Authority reminded more than 4,400 member firms on May 15 that they shouldn’t accept buy requests known as market orders until trading begins. Such transactions are authorizations to purchase at the best available price, ... Continue reading →

Nasdaq Stock Market (NDAQ) (NDAQ) plans to compete with brokers by offering tactics for executing larger stock orders as a way to boost its share of U.S. equities trading. The exchange will provide three algorithms, or computer- driven strategies that chop larger orders into smaller pieces based on a stock’s volume and trading characteristics, in a bid to increase its market share by between 3 percent and 7 percent, said Eric Noll, executive vice president for transaction services at Nasdaq OMX Group Inc. The venture requires approval from the Securities and Exchange Commission. The provision of algorithms, a service most brokers offer to institutional clients, is part of a plan to bring more equity orders to the New York-based company’s three exchanges. Nasdaq OMX will ... Continue reading →

Enlarge image Exchanges Plan Mini Contracts Amid Record Share Prices Traders work on the floor of the New York Stock Exchange. Traders work on the floor of the New York Stock Exchange. Photographer: Scott Eells/Bloomberg Exchanges seeking to feed demand for options after trading reached a ninth straight annual record are asking regulators to approve smaller contracts, concerned the highest stock prices on record make some of them too expensive. Apple Inc. (AAPL)’s 40 percent gain this year to $568.18 yesterday meant it cost $2,455 to buy a call expiring in June with a strike price of $565, data compiled by Bloomberg show. Google Inc. (GOOG)’s $612.79 share price required a $2,060 investment for one contract giving the right to buy 100 shares at $610 ... Continue reading →