NYSE Euronext's much-respected reputation is on the line in the wake of the problems with rival exchange Nasdaq's systems that delayed timely order confirmations for many first-day Facebook traders. The Securities and Exchange Commission charged Nasdaq with securities law violations and fined it an exchange record $10 million.
Concerns about Wall Street's trading systems have been magnified by other highly-publicized failures for U.S. exchanges. An August breakdown paralyzed trading in Nasdaq-listed stocks for three hours. And the 2010 "Flash Crash" saw the Dow Jones industrial average boomerang down nearly 1,000 points and back up within just a few minutes.
NYSE officials prepared for Twitter by staging a first-ever weekend test IPO on Oct. 26. Member firms submitted very large trading orders to determine whether the exchange could handle high message volume and quickly notify traders their orders had been executed.
The test was successful, said Scott Cutler, the exchange's global head of listings. Moreover, the exchange handled 10 IPOs last week without a hitch — and has six, including Twitter, slated this week, he said. Although Twitter's IPO is expected to raise about $2 billion, that falls short of the then-record setting $17.86 billion trading debut of Visa that the exchange handled in March 2008.
"This is what we do every single day," said Cutler, referring to data that shows the exchange hosted roughly 70% of this year's top tech IPOs before Twitter's much-anticipated debut. "We're ready to handle this type of high volume in the normal course of business."
Nanex CEO Eric Scott Hunsader, whose firm supplies market data to the financial industry, said he'd be surprised if the exchange had IPO-related problems Thursday. Still, Hunsader cautioned that some NYSE stoc! k quotes were delayed for seconds at a time during Monday's trading, a likely sign the exchange's "systems were stressed."
Any reprise of Facebook's IPO snags isn't likely Thursday, partly because Twitter is expected to raise roughly one-eighth the $16 billion raised by its social media rival, said Kathleen Smith, principal of IPO fund manager Renaissance Capital.
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Demand for Twitter shares could also be comparatively lower because investors "have become more cautious after seeing the Facebook IPO fall below its IPO price," she said.
"Already in 2013 we have had two larger $2 billion-plus IPOs that have had no problem getting done successfully," said Smith.
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