Write two to three paragraphs summarizing the Case Study. This document should include a cover page. Write each questions from the case study in bold and then provide your answers. In addition to the textbook, other scholarly papers should be used and referenced. The assignment must be completed in APA format. CASE STUDY #1 T he worlds largest floorless exchange handles hundreds of millions of trades every day. Buys and sells happen so fast that each trade has to be time-stamped to the nano - second. First launched in 2000, Nasdaq OMX is, above all, a technology company, and it successfully competes against the venerable New York Stock Exchange (NYSE) on its breathtaking trading speed. When most people think of an exchange, they think of NYSEs enormous building on Wall Street, with loud-mouthed traders on the floor shouting orders, racing stock tickers, and giant LCD screens laden with charts, numbers, and ticker symbols. In fact, most exchanges are in data centers, not in neoclassical buildings. And they are also for-profit businesses that compete for companies to list their shares and for investors and brokers to conduct their trades. Speed matters, and Nasdaq OMX technology can handle 1 million messages per second. It matters so much that some heavy traders Goldman Sachs, for examplepay Nasdaq OMX for the privilege of locating their own server in Nasdaqs data center, just to avoid the tiny communication delay from Goldman offices. A traders servers can instantly detect any delay and can then automatically check other exchanges to see if the trade can be rerouted. As in other businesses, improved information systems and technology drive prices down. In the early 2000s, NYSE and Nasdaq OMX shared 90% of the market, but competition pushed that figure down to 45%. Traders can use other exchanges with cheaper prices, or they can buy and sell stocks in dark poolsprivate groups whose members trade with one another. Facebooks Public Offering Nasdaqs focus on technology and lightning-fast trading speed were reasons Mark Zuckerberg chose to use that exchange to take Facebook public in 2012 so people could invest in the company directly. The choice was a major competitive win for Nasdaq, which also carries high-tech companies such as Apple, Google, Groupon, and Zynga. However, Nasdaq lost out to other exchanges for Yelp, LinkedIn, and Pandora. Facebooks initial public opening (IPO) was expected to be one of the largest in history. During the first few hours of the first trading day, however, technical glitches at Nasdaq caused many delays and chaos, and the exchange had to switch to a secondary system. At some points, orders even had to be completed manually. The botched opening caused many clients to lose millions, and the technical issues added to uncertainty about pricing. Critics blamed poor decision making at Nasdaq for the costly mess, insisting that the company put profits ahead of risk management. For example, Citigroup claimed that the decision to switch to an untested backup system rather than interrupt trading to fix the problems was a major mistake, one that was mainly driven by a desire to avoid embarrassment during such a high-profile event. After the first days of trading, Facebooks share price dropped about 18%, and those who purchased the new stock suffered huge losses. While other factors may have contributed to the bungled opening, Nasdaq took responsibility for the technical problems and is attempting to make amends. In 2015, the company agreed to pay investors $26.5 million to settle a class action lawsuit. High-Frequency Trading Another looming problem for Nasdaq OMX is computer trading based on algorithms, or algo-trading. With machines talking to machines, racing with one another to close the deal at the best price, trading volume can skyrocket quickly. Humans use their judgment to craft the mathematical rules; once in place, however, the systems can trigger frenzied rounds of trading. Some argue that these high-frequency trades make the markets more efficient and equitable, so the big players on the trading floor dont have an advantage. While Nasdaq OMX and other exchanges compete for the growing number of algo-traders, analysts worry that the sheer technological speed introduces serious risks. When markets dropped a gut-wrenching 9% on one afternoon in 2010, some suspected a clumsy algo-trader who accidentally triggered the event (Figure 1-23). Though the real cause of that roller-coaster flash crash was never clear, such programmed trades were the clear cause of a similar event back in 1987. Nasdaqs Information Challenges: Facebooks Botched Public Opening and High-Frequency Trading