By Jacob Bunge
Citadel LLC urged U.S. regulators to approve a controversial
plan by Nasdaq OMX Group Inc. (NDAQ) to make good on some losses
sustained by trading firms in the stock market debut of Facebook
Inc. (FB)
The $62 million proposal, which Nasdaq OMX retooled last month
following outcry from brokers and rival exchanges, is "objective
and fair," according to a letter submitted Tuesday by Citadel to
the Securities and Exchange Commission.
Citadel, known for its hedge funds, ranks among the biggest
handlers of stock and options orders flowing out of retail
brokerage firms. Such wholesale market-makers, which trade on some
individual investors' orders and pass others on to rival firms or
exchanges, were among the hardest hit by the glitch-ridden debut of
Facebook shares May 18.
On an average day, Citadel estimates that it accounts for about
10% of all trading in U.S. listed stocks, and more than 20% of the
volume in domestic stock options.
Citadel lost $30 million to $35 million trading the newly minted
shares, according to persons with knowledge of the transactions.
Rival Knight Capital Group Inc. (KCG) disclosed that it lost $35.4
million, while banking group UBS AG (UBS) lost more than $350
million.
The Chicago-based firm's letter on the Nasdaq OMX compensation
plan represents Citadel's first public comments on the Facebook
IPO.
-Write to Jacob Bunge at jacob.bunge@dowjones.com
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