Nasdaq stock market acknowledged on Sunday that technical issues had marred the debut of Facebook as a public company on Friday, but contended that the missteps had not affected the performance of the company’s shares.
While the executive, Robert Greifeld, called the initial public offering an imperfect success, others were disappointed by a first day of trading in which Facebook closed at $38.23, barely above its offer price of $38 a share. Among the mishaps were an unexpected delay at the start of trading, missing trade execution messages and, at one point, orders that were filled by hand.
“It was quite successful, but clearly we’re not happy with our performance,” he said.
Mr. Greifeld said that nothing in Nasdaq’s data indicated that the exchange’s technical issues had any effect on how Facebook’s shares had traded. He said that the firm’s own data showed that the morning’s delay had no impact on the opening price, and that Facebook’s trading had correlated with other stocks in the market.
“It would lead a reasonable person to conclude that it didn’t have an impact on the stock price,” he said.
A Facebook spokesman declined to comment.
Mr. Greifeld’s comments — his first since the trading woes emerged — highlighted issues facing both his exchange and its most prominent new customer.
For Nasdaq, the missteps raise questions about its ability to compete for prominent new listings. Mr. Greifeld also said his company was seeking ways to help out investors whose orders had been wrongly canceled.
The missteps also raise concerns about how electronic exchanges have handled recent initial offerings. Two months ago, for example, the exchange operator BATS Global Markets was forced to withdraw its initial public offering on its own market after being plagued by software errors.
And for Facebook, questions still remain about how to value the company. Despite Friday’s mishaps, the social network is still valued at nearly $105 billion, making it one of the most valuable corporations in the country. Its I.P.O. was the third-biggest in the United States, according to Thomson Reuters.
Mr. Greifeld said in a conference call with reporters on Sunday that Nasdaq’s board had been briefed about the system errors. When asked if his job was secure, he responded, “I certainly hope so.”
Since Friday morning, however, Nasdaq has drawn an inordinate amount of scrutiny for what investors and analysts said was a botched job on the most highly anticipated stock sales in years.
Investors had thought that Facebook, like many Internet companies, would have increased over its offering price on the first day of trading.
But what many instead confronted was chaos, with many shareholders unsure of whether their orders had even been processed by Nasdaq.
And instead of gaining a big bounce, Facebook shares quickly slid from their early rise, to $42.05. Traders at Facebook’s lead underwriter, Morgan Stanley, were called upon several times during the day to prop up their client’s shares above the all-important offer price.
Mr. Greifeld defended his team, saying Nasdaq had done “a remarkable job” of responding to errors that he said had arisen out of an unprecedented volume of trade. More than 571 million Facebook shares changed hands on Friday.
But Nasdaq officials were unprepared for a high number of order cancellations that came in as Nasdaq was seeking to calculate Facebook’s opening price.
Electronic exchanges like Nasdaq rely on complex software programs to put together what it calls the “cross,” the process of completing initial orders. Mr. Greifeld argued that his team had conducted a rigorous battery of tests that had prepared for virtually every conceivable situation.
But the exchange’s systems were overwhelmed by a high number cancellations. By 11:13 a.m., Nasdaq warned market participants that it was experiencing a delay in delivering the opening price. That was because its software was having trouble setting an opening price: As cancellation orders kept coming in, Nasdaq’s systems were forced into a loop that essentially reset the system.
By 11:30 a.m., Nasdaq overrode its program and allowed Facebook’s stock to begin trading at $42.05 a share. Still, the exchange was forced to sift through a number of individual orders, and was unable to deliver some trade execution messages until 1:50 p.m.
That left some traders without confirmation of their bids until after 2:30 p.m. In all, up to 30 million orders may have been affected, Mr. Greifeld said.
To many market participants, the inability to know whether their orders had been filled may have significantly hampered trading. Some traders speculated that people unsure of their order status tried canceling outstanding bids. Other investors may have ended up placing additional orders, only to be forced to sell when they discovered that their original bids had been filled.
The Securities and Exchange Commission said on Friday that it had begun looking into the Facebook trading.
Larry Tabb, the chief executive of the Tabb Group, a financial research firm, said that Nasdaq traditionally had performed well in handling initial public offerings. He also lent support to Mr. Greifeld’s contention that Nasdaq’s woes had not affected Facebook’s stock price, saying that investors could have taken their orders to other exchanges to be processed.
But Mr. Tabb added that Nasdaq was likely to take a hit all the same. “Nasdaq’s reputation is going to be a little tarnished,” he said. “This may impact its ability to attract large I.P.O.’s in the future.”
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