UPDATE: Facebook Volume On Track To Set New IPO Record

Frenzied trading in shares of Facebook Inc. (FB) had slowed to a mere rush by midday Friday, as the social-media giant remained on track to have the most heavily traded IPO ever.

More than 375 million Facebook shares changed hands in the first three hours of trading, and more than 100 million of those were traded in just the first three minutes of the stock's offering.

Market watchers will be keeping an eye on the final volume figure for Facebook, which had its initial public offering Friday, after markets close at 4 p.m. The current holder of the record for most shares changing hands in a single day is Citigroup Inc. (C), which saw 3.8 billion shares trade on Dec. 17, 2009. That was in the depths of the financial crisis, when panic selling was rampant and Citi was in sharp decline.

The record for most shares traded on the day of an IPO is held by General Motors Co. (GM), at 458 million.

Facebook is poised to beat those levels easily, which would be a shot in the arm to trading desks that have been seeing anemic volumes all year.

Facebook accounted for 6.8% of the total U.S. stock market volume at 1 p.m. EST, and 21.6% of trading in the Nasdaq composite. The major U.S. markets had seen 4.8 billion shares of stock trade.

The Facebook trades were clustered around a few different price levels. Close to 25% of the shares traded around $42, around 16% traded around $40, and nearly 11% traded around $38. Just under 4% of the stock's trading has occurred at the $38 offering price.

Other social-media companies saw a volume halo effect from the offering, although they didn't see any benefits to their share prices. The Global X Social Media Index exchange-traded fund doesn't own Facebook yet, but nevertheless saw more than five times its average trading volume. LinkedIn Corp. (LNKD) and Zynga Inc. (ZNGA) saw higher-than-average volumes as well. All three stocks were down more than 3% by midday Friday.

This injection of volume came to many traders as a welcome boost, if just for the short term, for what has been anemic trading in the U.S. stock market.

The first quarter of 2012 saw the lowest average volume since 2007; it fell 14.5% from the same quarter the prior year. Last month was better, but not by much. April trading volume fell 7.6% year-over-year, according to Credit Suisse Trading Strategy.

The lower overall volume has come amid fewer initial public offerings. IPO levels are roughly one-sixth of where they were in the 1990s, according to Credit Suisse. According to data from Ipreo Capital Markets, they are still in decline. Deals fell year-over-year for the January-through-April period. Last month saw $3.9 billion raised in nine deals, down from the $5.6 billion raised by 20 deals in April 2011. But Facebook's offering should juice the May figure. Thanks to this deal, the month will show the first monthly increase in IPO proceeds this year. In the first weeks of May, 12 IPOs have raised $18.6 billion. Last year, for the entire month of May, 21 IPOs raised $6.9 billion.

Chris Hempstead, a director with WallachBeth Capital, said he doesn't think the Facebook IPO will provide a lasting boost to stock volume, however.

"I do not expect Facebook to create or take away, in any material way, from the trading of other securities," he said. "The company has been around for some time, and its arrival as a publicly traded company simply adds one more stock for fund managers to choose from."

-By Alexandra Scaggs, Dow Jones Newswires; 212-416-4125; alexandra.scaggs@dowjones.com

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