SEC Could Force Nasdaq to Upgrade Systems After Facebook IPO Debacle

The regulator is reportedly considering forcing the exchange to revamp its processes for developing, changing, testing and implementing computer code.
By Derek du Preez
News Jul 1st 2012

The Securities and Exchange Commission (SEC) is considering taking action against Nasdaq's performance during the much anticipated Facebook IPO last month by forcing the exchange to upgrade its trading systems.

The IPO was riddled with technical problems, which led to a delay of 30 minutes on share trades being processed. The problem stemmed from Nasdaq's IPO Cross, a pre-IPO auction process that the 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.

This led to a number of brokerages suffering financial losses after losing out on half an hour of trading and not receiving up-to-date information, including UBS, which is said to have suffered losses of as much as $350 million (£225 million).