Is Nasdaq Lying About What It Knew On FaceBook IPO Day?

Tyler Durden's picture




 

Any investor who can get shares of the Facebook IPO should purchase as many shares as possible, Jim Cramer said on CNBC’s “Mad Money.”

 

                 -Mad Money, CNBC

 

Minutes ago we reported that as the WSJ broke an hour ago, the Nasdaq has pronounced a retroactive mea culpa, claiming that had it known back then what it knows now, namely the plethora of technical glitches plaguing its systems, that it would have simply called the whose FaceBook IPO off. Yet we wonder: is the NASDAQ lying? The reason why we are suspicious that the exchange knew all too well just how badly it was overloaded, is the following stunning report from, who else, Nanex, which shows that for a period of 17 seconds, just around the time the FaceBook IPO launched for trade, all "quotes and trades from reporting exchange NASDAQ for all NYSE, AMEX, ARCA and Nasdaq listed stocks completely stopped." In other words: full radio silence. Or, as Nanex wonders, did "Nasdaq panic and reboot major systems to gain control over High Frequency Trading, just before the FB open of trading?" If so, not only was Nasdaq fully aware of the fully technical glitchiness of its systems, but it may well have precipitated even more confusion and more trading errors, resulting in the two hour trade confirm delays first reported on Zero Hedge, all in a mad dash and epic scramble to avoid reputational and monetary damage at the expense of investors.

From Nanex:

Nanex ~ 22-May-2012 ~ Nasdaq Radio Silence

On May 18, 2012 beginning at 11:29:52 and continuing for almost 17 seconds until 11:30:09, quotes and trades from reporting exchange Nasdaq for all NYSE, AMEX, ARCA, and Nasdaq listed stocks completely stopped. In exchange-speak, 17 seconds is 17,000,000 microseconds - an eternity by HFT standards. It's amazing no one noticed.

This was immediately before Facebook began trading.

The charts below show traffic rates for quotes and trades by reporting exchange for all listed stocks in the U.S. carried on the CQS, CTA, UQDF and  UTDF. CQS carries quote traffic and CTA carries trade reports for NYSE, AMEX, and ARCA listed stocks. UQDF carries quote traffic and UTDF carries trade reports for all Nasdaq listed stocks. Facebook (and Apple) quotes would have been carried on UQDF, and trades on UTDF.

Chart 1. CQS (100 ms) showing quote rate from reporting exchange Nasdaq only.

Note how often Nasdaq sends 100,000 quotes per second. Going to zero for even 1 second during trading hours would indicate a problem.

e Nasdaq only.

Chart 3. CQS (100 ms) showing quote rate from all reporting exchanges.

Chart 4. UQDF (100 ms) showing quote rate from all reporting exchanges.

Chart 5. CQS (25 ms) showing quote rate from reporting exchange Nasdaq only. (Zoom of Chart 1)

Chart 6. UQDF (25 ms) showing quote rate from reporting exchange Nasdaq only. (Zoom of Chart 2)

Chart 7. CTA (100 ms) showing trade rate from reporting exchange Nasdaq only.

Chart 8. UTDF (100 ms) showing trade rate from reporting exchange Nasdaq only.

 

The question: did Nasdaq, in its scramble for bragging rights, and of course, exchange fees, rush out and stumble in order to get Facebook out of the gate as soon as possible, without regard for a properly functioning post-IPO market, just to avoid the reptuational (and monetary) damage associated with pulling a "market conditions?"

We don't know - but we are 100% certain that many lawyers will be asking just that question in the days and weeks to come.

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Tue, 05/22/2012 - 18:57 | 2453151 SHEEPFUKKER
SHEEPFUKKER's picture

No muppets. No dice. 

Tue, 05/22/2012 - 19:02 | 2453168 CrazyCooter
CrazyCooter's picture

I love the smell of napalm in the morning!

Regards,

Cooter

Tue, 05/22/2012 - 19:10 | 2453193 Xkwisetly Paneful
Xkwisetly Paneful's picture

Two functions of an exchange are price discovery and insuring counter party risk.

Between this and MFA it makes me wonder whether these things should be called exchanges anymore. They are not fulfilling the basic functions, how can they be considered exchanges?

Tue, 05/22/2012 - 19:57 | 2453353 Winston Smith 2009
Winston Smith 2009's picture

Exactly.  The should now be called casinos.

Wed, 05/23/2012 - 04:21 | 2454167 Karl von Bahnhof
Karl von Bahnhof's picture

Casinos, no music, no free potato chips, no large breasted waitresses ... 

Tue, 05/22/2012 - 20:28 | 2453447 slewie the pi-rat
slewie the pi-rat's picture

yup!

i mean, nope!

Wed, 05/23/2012 - 02:30 | 2454091 The Proletariat
The Proletariat's picture

The first rule (actually the 2nd rule also) of Project Mayhem is, "you do not ask questions"......

Tue, 05/22/2012 - 19:09 | 2453194 SilverTree
SilverTree's picture

Let us all bow our heads for 17 seconds of silence. 

Tue, 05/22/2012 - 19:17 | 2453219 Max Fischer
Max Fischer's picture

 

 

I think it's important to post the ENTIRE Jim Cramer quote, not just the out-of-context portion.

"In short, stay the heck away from Facebook on Friday. The moment the market opens, Facebook will immediately enter a no buying zone.”  - Jim Cramer

MF

Tue, 05/22/2012 - 19:19 | 2453231 vast-dom
vast-dom's picture

back to your facile shitty moovie!

Tue, 05/22/2012 - 19:21 | 2453236 Max Fischer
Max Fischer's picture

 

 

How did you get an up arrow at the exact moment of your posting?

MF

Tue, 05/22/2012 - 19:22 | 2453241 vast-dom
vast-dom's picture

same way u just got a red one -- back to ur facile moovie!

Tue, 05/22/2012 - 19:23 | 2453248 Max Fischer
Max Fischer's picture

 

 

and another one!

*LOL*

MF

Tue, 05/22/2012 - 19:50 | 2453333 ChrisFromMorningside
ChrisFromMorningside's picture

Harry Potter vs. a big-headed black-and-white version of Charlie from "It's Always Sunny". Get a room you two.

Tue, 05/22/2012 - 19:23 | 2453250 Global Hunter
Global Hunter's picture

You and your Harry Potter avatar self need to stop taking the arrows personally.

Tue, 05/22/2012 - 19:28 | 2453264 Max Fischer
Max Fischer's picture

 

 

Take it personally?  If I did, I certainly wouldn't keep posting.  I get more red than anyone.

I just wanted to make sure the other poster is aware that it's exceedingly obvious when he green-arrows himself within seconds of his comment being posted. 

Maybe he's not aware of how those arrows are suppose to be used?? 

MF

Tue, 05/22/2012 - 19:37 | 2453294 Global Hunter
Global Hunter's picture

I just gave you a green one...mind you I'm not aware of how those arrows are supposed to be used.

Tue, 05/22/2012 - 20:00 | 2453361 Alea Iactaest
Alea Iactaest's picture

You only get more red than anyone b/c MDB and Robo are gone. And Trav. But you really aren't in their league.

Tue, 05/22/2012 - 20:13 | 2453405 I am a Man I am...
I am a Man I am Forty's picture

i green arrow my own comments, only the ones i am especially proud of though, which thus far, is all of them

Tue, 05/22/2012 - 20:26 | 2453445 jomama
jomama's picture

hate to break it to you, but you're not even the best of the worst.

Tue, 05/22/2012 - 22:24 | 2453739 samwell
samwell's picture

JIIIIIIM is that you?

Tue, 05/22/2012 - 21:37 | 2453534 bobola
bobola's picture

Any investor who buys shares of the Facebook IPO, based on Cramer's recommendation, will understand why he is generally ignored by the average investor.  

              Leonard the wonder monkey

Tue, 05/22/2012 - 19:25 | 2453258 Everybodys All ...
Everybodys All American's picture

Let me be the first to point out that JC is crooked and any defense of this jerk is reprehensible. You might be a nice fellow yourself but defending Cramers calls willl not buy you any friendship here.

Tue, 05/22/2012 - 19:47 | 2453321 ChrisFromMorningside
ChrisFromMorningside's picture

Cramer is a clown. He himself has pointed out that, like over-the-phone psychics, his song-and-dance routine is for entertainment purposes only.

He actually said to BUY the IPO if you had access, but to stay away once trading began. Anyone who took his advice and bought at the IPO price has already lost over 10% of their value so he is still a complete dolt, despite the clarification on his quote.

Tue, 05/22/2012 - 20:03 | 2453376 jackinrichmond
jackinrichmond's picture

my favourite cramer video http://youtu.be/gMShFx5rThI    

shows you what a true dirtbag he really is.

Tue, 05/22/2012 - 23:24 | 2453843 realtick
realtick's picture

scumbag also

Tue, 05/22/2012 - 22:23 | 2453736 samwell
samwell's picture

Jim is that you?

Tue, 05/22/2012 - 19:09 | 2453188 vast-dom
vast-dom's picture

¡SHORT NASDAQ NOW! YOU MOTHERFUCKING MUPPET BITCHES!

 

Tue, 05/22/2012 - 19:14 | 2453209 rocker
rocker's picture

If everybody who reads ZH shorted 1000 shares of the QQQ it would be a sure bet that they go up 100 points tomorrow.

That's how it works. That's what HFTs do.  But as my Scottrade broker said. They are investors too.  LOL

 

Tue, 05/22/2012 - 19:38 | 2453299 malikai
malikai's picture

They are. They invest in sucker termination.

Tue, 05/22/2012 - 20:21 | 2453428 Bastiat
Bastiat's picture

It's the anti-Cramer !!!

Tue, 05/22/2012 - 19:30 | 2453271 JohnKozac
JohnKozac's picture

'If you can't trust Wall Street, who can you trust?'

Wed, 05/23/2012 - 01:23 | 2454031 Darth..Putter
Darth..Putter's picture

And Nixon needed a full 18minute for shenanigans.  Ah sweet technological progress.

Tue, 05/22/2012 - 18:58 | 2453153 Trimmed Hedge
Trimmed Hedge's picture

BREAKING: MRS. ZUCKERBERG FILING FOR DIVORCE

 

WTF??

Tue, 05/22/2012 - 19:00 | 2453160 francis_sawyer
Tue, 05/22/2012 - 19:01 | 2453165 Rainman
Rainman's picture

A MegaMillions winner...like getting hit by white lightning !

Tue, 05/22/2012 - 18:58 | 2453155 Sam Clemons
Sam Clemons's picture

It doesn't take a brain trust to figure out why FacePlant is crashing.  It is a FREE website that is going to become increasingly annoying.

Tue, 05/22/2012 - 19:09 | 2453190 Caviar Emptor
Caviar Emptor's picture

...Annnd...Zuckerberg got married. Kiss 'o Death. Look what happened to Gates post wed: smiling philanthropist and kitchen table philosopher...walked away from Vista train-wreck. These companies work for as long as the BSD is hungry. It's all over once they're fat and nice and they start talking about their little brown brothers...

Tue, 05/22/2012 - 19:19 | 2453232 Global Hunter
Global Hunter's picture

I wouldn't refer to Gates as a philanthropist, he's the guy who pays for the NWO program of vaccines and sterilization drugs for people with dark skin.

Tue, 05/22/2012 - 19:23 | 2453245 Sam Clemons
Sam Clemons's picture

Who doesn't want monkey fetus cancer cells injected into their body to prevent a disease that has been erradicated through increases in living standards?

Wed, 05/23/2012 - 01:04 | 2454003 Oh regional Indian
Oh regional Indian's picture

Sam, hope you saw my prognostication. 

ori

Tue, 05/22/2012 - 19:28 | 2453265 Joe The Plumber
Joe The Plumber's picture

Good for him. Egypt is already a stinky, poor, overcrowded welfare case. Whats it gonna be like with double or triple the population?

Bangladesh.... Dont forget them either. Make those brown fuckers stop after two kids like refined civilized people do

Tue, 05/22/2012 - 19:35 | 2453285 Global Hunter
Global Hunter's picture

I hope that is sarcasm Joe!  If not poisoning people and taking away their reproductive abilities on false pretenses and promises should be the job of no man.

Tue, 05/22/2012 - 20:29 | 2453339 francis_sawyer
francis_sawyer's picture

on a long enough timescale... (Waddell & Reed get their mitts into everything)...

Tue, 05/22/2012 - 19:23 | 2453249 Trimmed Hedge
Trimmed Hedge's picture

The Gates marriage will last their lifetimes.

The Zuckerberg marriage will not.

 

BOOKMARK IT, BITCHEZ!!!

Wed, 05/23/2012 - 07:42 | 2454295 amanfromMars
amanfromMars's picture

And now for something completely different, although hardly any less controversial in the gender game.

I wonder if the bride had to sign a romantic pre-nuptial which denies her access to a lioness's half share of her hubby's fortune should things not work out as they might have planned and/or expected? 

Not that I would be at all interested, but it is surely something which many would be wondering if Mark thought was necessary.

Tue, 05/22/2012 - 19:33 | 2453281 ChrisFromMorningside
ChrisFromMorningside's picture

My only question is ... When's the Twitter IPO? They've got revenues of $150 million. That means the IPO should be valued at a cool $200 billion. Then maybe Morgan Stanley can roll out the Tumblr IPO for $300 billion.

Damn ... Sorry, our culture is completely tapped out of creativity if these web-fluff companies that don't even generate profits are the best thing going for the U.S. economy. They're just variations on ad-serving mediums.

I guess the real tragedy is that they're not the best thing going. There are a lot (okay, maybe not A LOT, but a decent number) of capable individuals out there with good ideas (that are centered on, you know, actual physical commodities and services ... instead of eyeball-counts) but they're going nowhere when we have hundreds of billions of dollars in capital being misallocated into these fluff companies for no real reason other than pathetic media hype. Shame.

Tue, 05/22/2012 - 22:33 | 2453758 BooMushroom
BooMushroom's picture

Sad as fuck. Unfortunately, the Internet is the least regulated industry in the US, so that's where the creative people are going.

Tue, 05/22/2012 - 22:40 | 2453775 Common_Cents22
Common_Cents22's picture

FACEPALM has an every growing mobile base with zero revenue.   smart phones and tablets running on phoneOS hurt.    Come up with a way for Facepalm to monetize mobile and you too can be a billionaire.

Tue, 05/22/2012 - 18:58 | 2453157 resurger
resurger's picture

i dont trust teh lawyers either ...

Fuckfacebook

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