Reports: UBS and Citi Suffer £32m Loss Due to NASDAQ Glitch During Facebook IPO

Approximately 30 million shares were affected during the problematic offering
By Derek du Preez
News May 29th 2012

The market making arms of UBS and Citigroup suffered combined losses of approximately $50 million (£31.8 million) during Facebook's initial public offering on NASDAQ's stock market, according to reports in the Wall Street Journal.

This raises the financial losses amongst brokers above $100 million (£63.7 million), following larger reported losses this week from other market making firms, including Citadel and Knight Capital Group.

Earlier this month Facebook's much anticipated IPO was riddled with technical problems, which led to a delay of 30 minutes. The problem stemmed from NASDAQ's IPO Cross, a pre-IPO auction process that exchange put in place in 2006 that allows traders to place orders and agree on an IPO price before the stock is officially launched, which couldn't handle the trading demand.

Rik Turner, senior financial services technology analyst at Ovum spoke said that companies were not only making losses from losing out on half an hour of trading, but because they were not receiving up-to-date information.

"The losses by these companies is estimated to be at approximately $100 million to $150 million, but I'd say these estimates are conservative. My suspicion is that they may go higher," said Ferguson.