Knight OK with Nasdaq

Knight Capital Group supports Nasdaq OMX Group’s proposal to pay $62 million to companies that suffered losses in Facebook’s public debut, it said in a letter to the Securities and Exchange Commission.

The market maker joined Citadel LLC in backing the plan to reimburse members for losses resulting from technology errors on May 18, the first day of trading in Facebook shares. Citigroup asked the SEC last week to reject Nasdaq’s proposal, and UBS, which said it lost more than $350 million in trading related to Facebook, urged the agency to work with the exchange company to increase the amount paid.

Knight, along with Citigroup and the Securities Industry and Financial Markets Association, recommended a broader discussion of the limitation of liability that exchanges enjoy for financial losses resulting from their own technical mishaps. Nasdaq’s reimbursement plan is voluntary.

“As exchanges have evolved over the years, with greater and greater emphasis on profits and business expansion, the time is right for a [fuller] discussion on this issue,” Knight said in a letter dated yesterday. The broker asked the SEC to approve the $62 million payout and defer commenting on “issues relating to liability limitations and/or regulatory immunity until there can be a more comprehensive discussion,” it said.

Knight suffered a trading malfunction on Aug. 1 that depleted the firm’s capital and forced it into a rescue plan.