New York Stock Exchange Gets Ready for Twitter IPO with Tests, Facebook IPO Error Not Happening
The New York Stock Exchange (NYSE) performed a test run of Twitter's highly anticipated initial public offering to avoid a repeat of the problems encountered during Facebook's market debut on rival market Nasdaq.
The NYSE's Big Board performs systems checks regularly during weekends but this was the first time the board has run a simulated IPO at the request of its member firms. Most of the companies who requested a test run for Twitter also participated in Facebook's debut in 2012 on NASDAQ OMX Group's stock exchange.
The NYSE performed the test run to check if its systems can manage the anticipated high message traffic that might come in due to Twitter's IPO. It also wanted to make sure that systems were in place to receive reports and report to firms that their orders were promptly placed.
Some reports said that NYSE is locked in a constant struggle for supremacy with Nasdaq in listing technology companies. Both of the stock exchange markets were competing for Twitter's IPO. According to analysts, Facebook's trading interruption at Nasdaq had gone in the favour of the New York Stock Exchange. The NYSE has been trying to become the market of choice for tech companies.
Twitter plans to sell 70 million shares priced between $17 and $20 per share. The popular micro-blogging platform is scheduled to hold the biggest tech IPO since Facebook on Nov. 7. Facebook's IPO sold 421 million shares at $38 per share.
On the day of Facebook's IPO, a glitch in Nasdaq's system prevented the order confirmations of many traders. The system may have broken down due to the sheer volume of orders on the first day of trading. Traders were left uncertain for many hours while some reported losses for days. Reports indicated that major traders lost $500 million collectively in Facebook's IPO.
Nasdaq CEO Robert Greifeld was absent during the system meltdown which magnified the criticism on Facebook's IPO. The US Securities and Exchange Commission fined Nasdaq with $10 million as compensation.