Individual investors were left guessing for more than two hours on Friday about whether their buy and sell orders for newly issued Facebook shares had been actually executed.
The Nasdaq Stock Market, where Facebook is listed, had problems sending electronic messages back to the brokerages that handle orders from individual, or "retail," investors, according to people with direct knowledge of the situation.
Because the electronic acknowledgements didn't come back from the exchange, the brokers were unable to tell their clients that trades had been executed. Such acknowledgements usually occur almost instantaneously.
"Nasdaq's delay in passing back executions is causing a lot of heartburn on the Street," said one source. "We had to tell clients we didn't get the print back," said another.
In a note to traders, exchange operator Nasdaq OMX Group said at 1:57 p.m. Eastern time that trade execution messages were finally delivered to brokers and market makers. The stock started trading about 11:30 a.m.
Nasdaq was not immediately available to comment.
Earlier in the day, the exchange said it was "investigating an issue in delivering trade execution messages" from the Facebook IPO. Once begun, it took about 10 minutes for the execution messages to fully filter back to the brokers.
"There are massive problems here that are going to require the Street to spend a significant amount of time to clean up, particularly the market makers and the order-sending firms," said one of the sources, who requested anonymity.
After an initial 83 million Facebook shares crossed the tape in the first minute of trading, volume naturally declined, but investors said some traders might have backed away due to the lack of news on executions from Nasdaq.
As the share price dipped to the $38 level, where Facebook was initially priced, volume ticked up.
Traders cited support from underwriters, including lead underwriter Morgan Stanley, as the stock neared $38. More than 7 million shares traded at 11:49 a.m. as the stock fell to $38.03, the busiest one-minute period up to that point, excluding the opening minute of trading. Volume stayed elevated while the stock hit a floor.
It was quite possible that the Nasdaq's problems were behind the price movement, said one of the sources. "There was definitely some uncertainty around the open because people didn't have their positions," the source said.
(Additional reporting by David Gaffen; Editing by Steve Orlofsky)