NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) has received criticism from all the corners ever since it screwed up with the Facebook Inc (NASDAQ:FB) IPO. Criticizing the $40 million payout plan by Nasdaq to compensate the investors and brokers, Thomas Joice, the CEO of Knight Capital Group Inc. (NYSE:KCG) said that the total losses are close to $200 million.
Thomas further added that he was “disappointed that Nasdaq’s compensation fund does not come close to covering reported losses from broker-dealers. Their proposed solution to this problem is simply unacceptable.”
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
“Nasdaq made decisions that created this problem that the industry suffered through, and it’s up to Nasdaq to create a solution. Nasdaq has got to go back to the drawing and come back with something sensible.” Bloomberg reported him saying.
Knight Capital Group Inc. (NYSE:KCG) is one of the top four market makers in the Facebook IPO, the other three being Citigroup, UBS and Citadel Securities. They together lost over $115 million due to the technical problems that kept them for two hours from knowing whether their orders have been processed.
On the other hand, Nasdaq firmly defended its decision to pay out the firms that lost money due to technical problems. Nasdaq CEO, Bob Greifeld stressed that Nasdaq’s decision to pay back loss-making firms is a voluntary move, and the exchange has no legal obligation to do so. “We stand by our analysis, and there is no emotion to it.”
Apparently, Knight Capital CEO Thomas Joice and Nasdaq top gun Bob Greifeld were speaking at the same conference – Sandler O’Neill & Partners LP Global Exchange and Brokerage Conference in New York.