Nasdaq OMX Group Inc. plans to provide $40 million rebates to reimburse clients that were affected by the Face book’s IPO crisis.
Following the approval of the plan by the regulators, NASDAQ announced that 13.7 million will go to the affected firms, while the rest will be offered as credit to all members in order to lower the cost of trading, and all benefits will be awarded within a period of six months.
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The four major components of Facebook- UBS, Knight Capital, Citadel Securities and Citigroup, incurred losses totaling $115 million following technical problems which made it hard for them to determine if their orders had sailed through after Facebook started trading.
This idea of compensation has raised a lot of concerns at various exchanges. NASDAQ rivals said that the whole idea of rebates is going to force brokers to focus more on NASDAQ, which will make the market less competitive. They therefore argue that the idea is contrary to the Exchange act.