The Securities and Exchange Commission (SEC) has approved a $62 million (£40 million) compensation plan to Nasdaq OMX, offering cash to broker dealers affected by technical problems during Facebook’s initial public offering (IPO).

Nasdaq promised to provide compensation to customers using its stock exchange platform during the highly anticipated Facebook IPO, which was subject to major disruptions when trading was delayed for 30 minutes due to glitches in Nasdaq's pre-auction process software. Traders were unaware of whether orders had been placed, affecting an estimated 30 million shares’ worth of trading.

Nasdaq initially intended to provide a compensation fund of $40 million (£26 million), however this was subsequently increased, against a backdrop of protest from companies affected such as Citigroup, which accused Nasdaq of "grossly negligence". Those affected by the system difficulties during the IPO claimed that the amount put forward by Nasdaq is some way short of the $350 million (£225 million) reported losses.

The SEC filing notes that two unnamed parties affected by the system failure demanded Nasdaq provide additional compensation for “downstream operational, technological and customer issues”.  Furthermore it was claimed that the proposed payment pool was an “insufficient” amount to adequately compensate market participants.

According to the SEC report, Nasdaq said that objections to the compensation are “unpersuasive”, and that it has behaved in line with SEC rules. 

The SEC indicated that, aside from Nasdaq's tabled compensation plan, the stock exchange would only be liable to pay up to $500,000 to those affected.

The Financial Industry Regulatory Authority (FINRA) will now be tasked with evaluating compensation claims to be paid in cash by Nasdaq.

Commenting on the SEC decision, Nasdaq said: "We are pleased that the Securities and Exchange Commission has approved our accommodation plan, which will enable our customers, members and market participants to receive appropriate restitution as FINRA promptly." 

Aside from its proposal to compensate broker dealers, Nasdaq could be on the receiving end of a $5 million (£3.14 million) fine from regulator SEC. The SEC also suggested in the past that it could force Nasdaq to upgrade its systems following the technical difficulties.