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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No muppets. No dice. 

CrazyCooter's picture

I love the smell of napalm in the morning!



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?

Winston Smith 2009's picture

Exactly.  The should now be called casinos.

Karl von Bahnhof's picture

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

The Proletariat's picture

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

SilverTree's picture

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

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


vast-dom's picture

back to your facile shitty moovie!

Max Fischer's picture



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


vast-dom's picture

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

Max Fischer's picture



and another one!



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.

Global Hunter's picture

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

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?? 


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.

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.

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

jomama's picture

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

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

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.

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.

jackinrichmond's picture

my favourite cramer video    

shows you what a true dirtbag he really is.

vast-dom's picture



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


malikai's picture

They are. They invest in sucker termination.

Bastiat's picture

It's the anti-Cramer !!!

JohnKozac's picture

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

Darth..Putter's picture

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

Trimmed Hedge's picture




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.

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...

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.

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?

Oh regional Indian's picture

Sam, hope you saw my prognostication. 


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

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.

francis_sawyer's picture

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

Trimmed Hedge's picture

The Gates marriage will last their lifetimes.

The Zuckerberg marriage will not.



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.

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.

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.

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.

resurger's picture

i dont trust teh lawyers either ...