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NASDAQs Facebook compensation plan to be rolled out next week

Nasdaq aims to file a plan next week with the United States Securities and Exchange Commission detailing how it will compensate market makers who lost money during the botched trading debut of Facebook, the world’s largest initial public offering this year, according to a person familiar with the matter.

The losses were caused at least in part by Nasdaq’s technical problems and a communications breakdown that prevented market makers from knowing for hours if their orders had gone through.

Nasdaq’s four largest market makers in the social networking site’s US$16 billion IPO – UBS, Knight Capital, Citadel Securities, and Citigroup – estimated they lost US$200 million from Facebook trades entered in the debut session.