The New York Stock Exchange (NYSE) is preparing its infrastructure for Twitter’s IPO, expecting a rush of interest from investors.
The exchange, run by NYSE Euronext, will let firms test their trading systems in a mock opening auction of Twitter’s stock. The dry run is set for Saturday, Oct. 26, according to a memo sent to traders and a subsequent Wall Street Journal report.
NYSE is also hoping to avoid some of the technical issues experienced by its rival NASDAQ when Facebook filed for its initial public offering. Facebook went public in May 2012 to a series of mishaps. NASDAQ’s systems experienced glitches and halted trading for 30 minutes. Would-be investors reported they couldn’t get confirmation of stock purchases or cancellations. These problems resulted in hundreds of millions of dollars in losses, and lawsuits brought by investors and trading firms.
“As we have seen with the issues at NASDAQ, failing to fully test a web site for peak demand, leads to extremely dissatisfied users and severely impacts the reputation of the web site owner,” said Tom Lounibos, chief executive of web testing company SOASTA, in an interview. “With the advances in cloud computing, organizations have the ability to simulate millions of users globally, so there really isn’t any excuse not to test for peak traffic.”
In May, Nasdaq paid $10 million to settle charges brought by the Securities and Exchange Commission, although it has not taken responsibility for any wrongdoing.
These technical issues may have also prompted Twitter to select NYSE over NASDAQ. NASDAQ is thought of in the industry by analysts and investors as being a strong option for tech companies (Google, Yahoo, and others are currently listed), while NYSE has a reputation as a global platform. In the past year or so, however, NYSE has been marketing itself as the “new king of tech IPOs.”
Twitter’s debut on the public markets could take place as early as November, according to press reports. The roadshow is expected to begin at the end of October.
It’s not clear whether these tests will prevent a Facebook-NASDAQ debacle. According to NASDAQ’s chief executive Robert Greifeld, the exchange did perform early tests in the wake of Facebook’s IPO and didn’t find any flaws with the system.
Rackspace‘s chief technology officer John Engates, said that with hindsight the NYSE knows exactly what went wrong with NASDAQ’s handling of Facebook’s public offering, and “wont make the same mistakes.” He added, that NYSE will likely “over-invest in testing and infrastructure” to ensure that Twitter’s public debut will not go awry.