NEW YORK (CNNMoney) -- Nasdaq's glitch on Facebook's opening day is costing Wall Street firms millions of dollars, and that tally will probably rise before the saga is over.
Two firms that execute trades on behalf of buyers and sellers of stocks say they've lost between $60 million and $70 million because of Nasdaq's () problems getting orders through its system shortly after Facebook ( ) started trading last Friday.
Knight Capital (), a major trader on Facebook's opening day, estimates its losses between $30 million to $35 million, according to a letter filed with the Securities and Exchange Commission late Wednesday.
Losses incurred by Citadel Securities were in the same range as Knight's, according to a source close the firm. Knight and Citadel declined to comment further.
As a market maker, Knight Capital is one of the major firms that fills orders on Nasdaq and other exchanges for most individuals investors who buy and sell through online firms like E*Trade () and TD Ameritrade ( ) and well as accounts like Fidelity.
Knight's trading activity last Friday accounted for roughly 14% of Facebook's trading volume on its opening day, according to a source with knowledge of the stock's movements over the exchange.
Knight and Citadel's losses set a floor for just how steep the liabilities from those botched trades on Nasdaq could be.
It also exposes a wide crevasse between how much Nasdaq can compensate trading firms and what will actually be owed. By securities law, Nasdaq is only entitled to repay investors and market makers up to $3 million in a given month for problems executing trades.
The exchange has said it will ask the SEC for permission to use $10 million it earned from short positions on Facebook shares last Friday to further reimburse investors and market makers.
Nasdaq declined to comment further on the size of potential losses or when they would provide further information. A spokesperson for the SEC said the agency is waiting for more information from Nasdaq before forming opinions.
Shortly after trading opened at 11:35 a.m. last Friday, Nasdaq's systems didn't take orders for about 20 minutes, and then firms didn't see reports of which trades went through until 1:50 p.m.
Firms like Knight Capital, Citadel and trading desks at firms like Citigroup (Fortune 500) and UBS ( ) racked up two major types of losses because of the glitches.,
During that 20 minute period, reams of investors holding shares of Facebook at $38 tried to sell them immediately at the opening price of $42. When those trades didn't go through, market makers had pay out investors but keep those shares.
In most IPOs, investors can cancel orders until seconds before a stock starts trading. In Facebook's case, Nasdaq failed to cancel many of those orders. Market makers who tried to execute the trades were left holding onto those unwanted shares too. Many of which were priced at the top of Facebook's trading range around $42.
"Regardless of which way the stock moved, the broker loses with these glitches," said a source at one of the primary market makers. Investors mostly pushed the trading firms to make good on the trades when they lost money but not the canceled trades that might have cost customers money.
Over the weekend, executives and traders at these firms started calculating the extent of these losses. Most were holding more shares than they might have imagined. The firms' excess inventory prompted heavy selling when the market opened Monday. Facebook's stock dropped more than 10% to $34.18 in the first minutes of trading.
Nasdaq told investors and brokerage firms to submit claims for their losses by noon on Monday. But there's no indication whether Nasdaq will make up customer losses. Knight's letter filed with the SEC said its second-quarter results will be "adversely impacted" by the glitches.
There's no precedent for how or whether Nasdaq could pay more back to investors, according to several securities lawyers.
"Exchanges are basically a venue for you to trade but they don't offer guarantees about your trades getting done," said Gary Wedbush, head of capital markets at Wedbush Securities and an investor in the BATS exchange.
That's how history has treated exchanges, but it's too early to tell what the fallout will be for these bungled trades and who will bear the cost.
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