By Jacob Bunge
Nasdaq OMX Group Inc. (NDAQ) has pushed back the date by which brokers and traders that lost money in the stock-market debut of Facebook Inc. (FB) must submit requests for the exchange group to make up some losses.
Firms were previously told to submit trading information by June 20, but on Wednesday Nasdaq OMX told traders in a notice that the date was postponed to allow regulators to review its proposal to compensate members that lost money due to problems opening Facebook's stock.
Nasdaq OMX unveiled the plan two weeks ago, proposing to address about $40 million in losses through a combination of cash and discounted trading fees. The idea quickly drew rebukes from other exchanges, which saw the plan as a way for Nasdaq OMX to draw more trading business, and brokers, who raised concerns that the sum wouldn't fully cover their losses.
The collective financial hit sustained by Wall Street firms due to unconfirmed trades in Facebook shares has been estimated in the hundreds of millions of dollars.
Nasdaq has yet to submit its compensation plan to the Securities and Exchange Commission, which must approve it. Executives of other exchange operators, including NYSE Euronext (NYX) and Direct Edge Holdings LLC, have pledged to register formal objections with regulators.
Firms that suffered losses during the May 18 listing of Facebook shares on Nasdaq OMX's market submitted documentation of the losing trades to exchange officials within three days of the session.
Nasdaq OMX soon tapped the Financial Industry Regulatory Authority, or Finra, to look through the trading and deliver a report to Nasdaq OMX to help parcel out compensation, and asked firms to again submit data for that purpose. That information was due to be submitted Wednesday, but the date now has been postponed "until further notice," according to exchange officials.
"The new deadline will be identified in the rule filing establishing the Program," Nasdaq OMX officials told traders Wednesday in a notice. "Nasdaq will communicate more information as it becomes available."
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