Washington, June 8 : Rival stock exchange firms have slammed Nasdaq's 40 million dollar plan to compensate investors affected by Facebook''s botched initial public offering, saying American regulators are unlikely to approve it.
Nasdaq recently proposed to earmark 40 million dollars to make up losses driven by its technical glitches during Facebook stock offering, with about 27 million dollars of that coming through discounted transaction fees targeted at firms that were hit by the event.
The plan, however, quickly drew criticism from rival exchanges, which saw it as a ploy to grab more market share in stock trading, and was rejected by some firms that lost money in the Facebook IPO trading as too low.
According to The New York Post, Direct Edge Holdings Chief Executive William O''Brien said the proposal to discount trading fees for banks and trading firms that lost millions in the Facebook stock seemed "illegal" and was a "shameless attempt to turn a big investor confidence-eroding event into a competitive advantage."
"I think Nasdaq''s going to have to go back to the drawing board," O''Brien said.
"We''re going to vigorously object in any form we can," he added.
Meanwhile, Nasdaq CEO Robert Greifeld defended his plan at the Sandler O''Neill conference.
Greifeld said that saying the exchange company had done an extensive study of the trading in Facebook shares to determine the parameters of its compensation plan.
"We stand by that analysis. There''s no emotion to it," the paper quoted him, as saying. (ANI)