* TD Ameritrade CEO says IPO problems hurt confidence
* Brokerage's May trading levels missed expectations
NEW YORK, June 7 The mishandling of Facebook's
initial public offering in May has rattled the confidence
of retail investors, who were already leery of financial markets
following a string of crises over the past several years, Fred
Tomczyk, chief executive of TD Ameritrade, said on
Trading glitches on Nasdaq OMX Group Inc's exchange
led to a 30-minute delay in Facebook's highly anticipated market
debut on May 18, after which market makers - who facilitate
trades for brokers - failed to receive confirmations of their
opening orders for about two hours, leading to more than $100
million of losses.
In early trading on Thursday, shares were down 0.8 percent
at $26.56, significantly lower than its $38 a share IPO pricing
and the $42 it opened at on its debut trading day. The steep
drop in the company's share price has triggered questions over
its lofty IPO pricing.
Tomczyk said TD Ameritrade came out of the Facebook IPO
"pretty clean" because the firm's market maker, which he would
not name, covered the trades. However, he said the IPO was
"It's another one of those things that destroys confidence
versus helping it," he said on the sidelines of Sandler
O'Neill's brokerage and exchanges conference in New York.
As stocks began to recover following the financial crisis,
the "flash crash" in May 2010, when $1 trillion in shareholder
equity was temporarily wiped out in a matter of minutes, shook
investor confidence in the equity markets, where trading is
Add to that the debt problems of the United States and
ongoing fiscal crisis in Europe, and it's no wonder investors
are cautious, Tomczyk said.
TD Ameritrade is the No. 1 U.S. retail brokerage by trading
volumes and is often considered a proxy for retail investor
The Omaha, Nebraska-based firm said on Thursday its daily
average revenue trades in May were down around 4 percent from a
year earlier, at 370,000. Tomczyk has said in the past that the
firm would like to see average daily trading levels at around
JMP Securities analyst David Trone said he was expecting
430,000 trades a day for the month.
"May's soft results follow April's disappointing number and
with increasing macro uncertainty and the summer doldrums, we
see little reason for activity to surge near-term," he said in a
note to clients.
Nasdaq said on Wednesday it will offer $40 million in cash
and rebates to clients harmed by its mishandling of Facebook's
The proposed compensation, subject to approval by
regulators, was criticized by rival exchanges for its use of
rebates, and by clients claiming losses far bigger than the
amount offered by Nasdaq.
The top four market makers in the $16 billion Facebook IPO -
UBS, Citigroup, Knight Capital, and
Citadel Securities - together lost more than $115 million due to
the technical problems, sources have told Reuters.