An Open Letter To Mark Zuckerberg About Why It Doesn’t Matter Where You List Your Stock

February, 2012


Dear Mark Zuckerberg,

Congratulations on your IPO filing. We understand that you are faced with a difficult decision soon on where to list your stock. You have probably heard from your bankers that the NASDAQ exchange is for tech savvy companies like Google and Apple and the NYSE is where the blue chip companies like GE and Caterpillar choose to list. You may think that the NASDAQ market is more of an electronic exchange where dealers place competing bids and offers to help facilitate institutional client trades. You may look at financial television and see scenes from the NYSE and think that the NYSE market is more of a floor based auction model where your stock would trade at a “post” on the exchange. You may be thinking that regardless of which exchange you pick, your stock will help investors create wealth for themselves by investing in your company for the long-term.

We hate to break the bad news to you but the fact is, in today’s market, it doesn’t matter where you list. Your stock is about to become one of the biggest casino chips on Wall Street. Ever hear the terms rebate arbitrage or latency arbitrage? Ever hear of colocation? Do you know what an exchange private data feed is? How about an actionable IOI or a dark pool? We bet you have probably never heard of these terms (maybe you have been too busy coding lately or ducking those Winklevoss twins). These terms are really what stock trading is all about nowadays.

Your stock will now be traded by high frequency traders who have an average holding period of 22 seconds. The majority of them won’t care about your earnings, or your new “likey like” button that you just launched. They won’t care about how many gazillion users you just signed up or how many eyeballs are on your site. They will only care about flipping your stock for a very small profit – millions of times per day. They will only care about getting paid a rebate 1/3 penny per share to “add liquidity” in your stock. They are not looking to invest in Facebook, they are looking at it as a tool to help them make money in their high speed arbitrage world.

Before you make your decision on where to list, also keep in mind that one third of your stock will be traded in dark pools that are off-exchange and away from the public’s eye . Know that even though the spread in your stock will be one penny (most of the time), your stock will not necessarily be liquid. Sure your stock will trade a lot of volume, but this is not the same as liquidity. Know that when your stock starts to move around intraday by 3-5%, there will be no one to call to ask what is going on.

You may be thinking now, how did this happen? How did the stock market get so screwed up? What ever happened to the goals of capital raising and investor protection? Well, it’s a long story. One that is much too long for this letter. Maybe if you have some time, give us a call and we’ll explain what happened.

Best of luck on the IPO. If you pick the NYSE, know that the podium looks much bigger on television.

Themis Trading


Joseph Saluzzi ( and Sal L. Arnuk ( are co-heads of the equity trading desk at Themis Trading LLC (, an independent, no conflict agency brokerage firm specializing in trading listed and OTC equities for institutions. Prior to founding Themis, Sal and Joe worked for more than 10 years at Instinet Corporation, pioneers in the field of electronic trading, and at Morgan Stanley.

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