The New York Stock Exchange is planning a practice sale of the much-anticipated Snap IPO hoping to avoid technical glitches ahead of the company’s long-awaited public debut.
Snap, parent company of the popular photo-sharing app Snapchat, is expected to raise $3 billion when it prices. The massive deal would dwarf all of last year’s tech IPOs combined, according to research group and ETF provider Renaissance Capital.
A NYSE spokesperson said the Feb. 25 rehearsal allows firms to send in sample orders based on anticipated volume. The exchange also held dry runs before the 2013 Twitter offering and Alibaba’s $25 billion megadeal in 2014.
Test runs have become fairly common procedure for massive tech offerings after the botched Facebook pricing in May 2012.
“Despite widespread anticipation that the Facebook IPO would be among the largest in history with huge numbers of investors participating, a design limitation in NASDAQ’s system to match IPO buy and sell orders caused disruptions to the IPO,” according to a 2013 settlement order by the SEC. Some 30,000 orders got “stuck” in NASDAQ’s processing system “when they should have been promptly executed or canceled.”
According to the SEC, “several members of NASDAQ’s senior leadership team convened a ‘Code Blue’ conference call and decided not to delay the start of secondary market trading in Facebook with the expectation that they had fixed the system limitation by removing a few lines of computer code.”
The SEC charged the exchange with poor systems and decision-making during the offering and in secondary market trading.
“Too often in today’s markets, systems disruptions are written off as mere technical ‘glitches’ when it’s the design of the systems and the response of exchange officials that cause us the most concern,” said Daniel Hawke, chief of the SEC enforcement division, in a statement at the time.
NASDAQ agreed to pay a $10 million penalty to settle charges — the largest ever against an exchange.
Snap has 158 million daily active users and is expected to price in early March.