Citadel Securities' market-making business lost around $30 million due to Facebook Inc's botched initial public offering on Nasdaq OMX Group Inc's U.S. stock exchange, a source with knowledge of the situation said on Thursday.
The losses at Citadel Securities, which has assets under management of around $1 billion, are in line with losses at Knight Capital Group, which said on Wednesday in a regulatory filing it suffered a pre-tax loss of $30 million to $35 million.
Knight demanded Nasdaq compensate it for its losses and said it would take legal action against the exchange if necessary.
It was not clear if Citadel was planning to pursue legal remedies.
Citadel's market making business backs retail orders for brokers like Fidelity and TD Ameritrade. The losses it experienced came from honoring trades that were canceled or changed during a period of around two hours on Friday following Facebook's market debut when a technical glitch led to orders not being confirmed, the source said.
Citadel's hedge fund was not affected.
Nasdaq asked firms to give it estimates of their losses by Monday night, after which the Financial Industry Regulatory Authority will evaluating the filings and put out a report on the matter in about four weeks according to the source.