Nasdaq offers $40m over Facebook losses Nasdaq OMX has agreed to pay up to $40m to cover broker losses stemming from its software glitch during the botched Facebook public offering, in part by forgoing Facebook-related revenues but also by cutting trading costs. The move may help mollify furious wholesale trading firms who took big losses because they were trading blindly on Facebook's first day, because of Nasdaq's technical problems. They are some of the exchange's biggest customers. But it could also spark a fight with rival groups, such as NYSE Euronext, who will argue that Nasdaq should not be allowed to offer customers discounts that could boost its share of trading. The plan is to be filed with the Securities and Exchange Commission on Wednesday, but it is not known whether the SEC will immediately allow Nasdaq to implement the remedies or whether it will seek comment from the industry first as part of a review. Nasdaq's trading glitch is at the centre of a series of controversies around Facebook's $16bn offering, which has turned into a regulatory matter after its stock fell more than 30 per cent in less than three weeks, a historic pace of decline for such a big IPO. The SEC is reviewing Nasdaq's decision to open trading on the morning of Facebook's debut. Nasdaq has said that it was an unexpected glitch, and does not believe it shares blame for Facebook's stock price continuing to tumble days after the IPO. Overall, investors have lost $33bn in market value since Facebook went public. Facebook's shares were up 0.8 per cent at midday on Wednesday, at $26.07. But that is still more than 30 per cent below its offer price of $38, which placed its value at $104bn. Among the biggest victims were wholesale trading firms, such as Knight Capital, Citadel, and units of Citigroup and UBS, who trade on behalf of retail brokerages. These firms collectively suffered trading losses of $100m. In the immediate aftermath of the IPO, Nasdaq offered to make its standard $3m fund for trading losses related to glitches available for remedies, as well as $10.7m that collected in the exchange's "error account" because of trades it was forced to make to complete Facebook's first-day auction. In its formal plan announced on Wednesday, Nasdaq said it will pay the $13.7m, in cash, pending SEC approval. Nasdaq and the Financial Industry Regulatory Authority have established a procedure for submitting and evaluating claims. Nasdaq said that traders must show they were directly disadvantaged before 11:30am, when trading began 25 minutes late, and had "uncertainty regarding their" IPO auction trades. Nasdaq has now also offered up to $7m, which are the revenues it would gain from Facebook's listing over the next 5 years, plus an additional $20m from its own cash. That $27m will be paid in the form of credits "to members to reduce trading costs, with all benefits expected to be achieved within six months for the vast majority of firms," Nasdaq said. The $40m will cover a larger portion of brokerage losses, though it may not settle the matter for Nasdaq, even if under SEC rules there is no more action required. Knight Capital has said that it would pursue other legal avenues for recuperating the $30m-$35m it said it lost. This will also most likely raise the ire of other exchanges, who have in the past said that Nasdaq's remedies following a trading glitch last year, which coincided with a temporary trading cost reduction for some customers, delivered ill-gotten market share gains. NYSE Euronext will lobby the SEC to prevent Nasdaq from offering credits, people close to the exchange said.