Knight Capital Lances Nasdaq's Facebook Fix

As Nasdaq scrambles to soothe frayed nerves from its botched Facebook IPO, clients are fuming.

Some powerful folks are not happy with Nasdaq's plan to reimburse customers who lost money on the botched Facebook IPO last month.

As Reuters reported yesterday, Nasdaq OMX Group said it will dole out $40 million in cash and rebates to clients harmed by its mishandling of Facebook's stock market debut.

In an interview with CNBC earlier this week, Reuters reports this quote from Nasdaq CEO Robert Greifeld: "We have been embarrassed and certainly we apologized to the industry, but the important thing we have to do is focus on the future."

Nasdaq competitor NYSE Euronext was, expectedly, having none of it:

"This is tantamount to forcing the industry to subsidize Nasdaq's missteps and would establish a harmful precedent that could have far reaching implications for the markets, investors and the public interest," NYSE Euronext, Nasdaq's main competitor, said in a statement Wednesday afternoon.
"We intend to strongly press our views that Nasdaq's proposal cannot be allowed to permit an unjust and anti-competitive situation."

And Nasdaq clients are not please, either. In the words of Knight Capital Group CEO Thomas Joyce, whose firm experienced troubles during the IPO, "Nasdaq created this problem, Nasdaq needs to come up with a solution to this problem and they're not even in the ballpark with what they're proposing."

View the CNBC video interview with Knight Capital's CEO for the whole car wreck.

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Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio