10 Trading Glitches That Stopped The Markets
3. Nasdaq’s Facebook IPO SnafuThe world seemed to be sitting and waiting for the year’s (maybe the decade's) most anticipated initial public offering, Facebook. The social network of the people might also be the stock of the people, so not only did the ticker “FB” stir up strong opinions in Wall Street, but also Main Street. With all eyes on the market on May 19, 2012, the day of its IPO, the exchange that handled the listing, Nasdaq OMX ... well, let's just say they dropped the ball.
Nasdaq’s technical malfunction in its software and infrastructure caused delays in trading, which confused traders and investors, as well as the broker dealers trying to execute their clients’ trades. According to Nasdaq, it ran into problems when it was attempting to end the quoting period and execute the IPO Cross, matching buyers and sellers, and print the opening trade.
Further aggravating the confusion, Zuckerberg symbolically pressed the "IPO" button at 9:30 a.m, the stock began trading at 11:05, but was further delayed until 11:30am. "The delay appears to be related to Nasdaq's computer systems not being able to handle what seems to be historic levels of demand and historic levels of trading volumes for one stock in a small amount of time," commented Scott Sellers, CEO of Azul Systems.
The glitch resulted in more than $500 million in trading losses across major trading firms. Nasdaq has since fortified and tested the systems responsible.
Following the Facebook IPO, Tabb Group's "IPO Survey: Market Barometer" found that the impact of Facebook's IPO on investor confidence was almost as great as the Flash Crash. In addition, the survey found that 31 percent of participants said their confidence level in the US equity markets was weak or very weak and that the confidence level of respondents was lower than a similar survey TABB conducted in the wake of May 6 Flash Crash.