The top executives of Nasdaq OMX Group Inc. (NDAQ) and NYSE Euronext (NYX) won’t get to face off before lawmakers next week over how brokers affected by Facebook Inc. (FB)’s botched initial public offering should be compensated.
Nasdaq Chief Executive Officer Robert Greifeld declined an invitation to testify June 20 at a House Financial Services capital markets subcommittee hearing, according to two people with knowledge of the plans. The decision means Greifeld won’t have to spend several hours sitting at the same table as NYSE Euronext CEO Duncan Niederauer, who has led the fight against Nasdaq’s compensation plan for customers affected by the glitch.
Representative Scott Garrett, the New Jersey Republican who is chairman of the subcommittee, called the hearing to discuss market-structure issues. The Facebook IPO, however, might have dominated the hearing had Greifeld and Niederauer appeared before the panel together.
Joseph Christinat, a Nasdaq spokesman, and Richard Adamonis, a spokesman for NYSE, declined to comment.
“Congressman Garrett will use this as an opportunity to speak with market participants about how we can increase competition, foster innovation and facilitate additional capital for small companies,” Ben Veghte, a spokesman for Garrett, said in an e-mail.
Executives from Direct Edge Holdings LLC, Knight Capital Group Inc. (KCG), Invesco Ltd (IVZ) and GETCO LLC have also received invitations to testify, according to one of the people, who wasn’t authorized to speak publicly about the planning.
Nasdaq’s computer systems used to establish the opening price for Facebook were overwhelmed on May 18 by order cancellations and updates for the IPO. After the exchange repaired the problem, order updates for 30 million shares didn’t participate in the auction because of an error, Nasdaq said in a May 20 conference call with reporters.
The exchange operator is seeking approval from the U.S. Securities and Exchange Commission to set aside $40 million for brokers whose orders were mishandled. Nasdaq would pay qualified brokers $13.7 million in cash with the rest credited through lower trading fees for members who took losses.
NYSE, along with smaller exchange operators such as Bats Global Markets Inc. and Direct Edge, have called the plan unfair because it might boost Nasdaq’s market share at the expense of competitors.
“This proposal just doesn’t cut the mustard,” Niederauer told Bloomberg Television on June 8.
Nasdaq’s Greifeld told CNBC on June 6 that the discounted trades won’t increase his exchanges’ market share.
“We are offering this to our customers that transact with us every day,” he said. “They do not have to give us one incremental share for them to earn this payment.”
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