(Image credit: Mark Lennihan/AP Photo)

The Nasdaq stock exchange announced a $40 million fund today to compensate investors who were "disadvantaged" by technical problems during Facebook's rocky IPO on May 18.

The Nasdaq OMX Group board said an accommodation program will pay qualifying member firms with cash or in trading discounts in a step to re-build its reputation after a technical glitch confused investors about their trading orders.

The IPO orders that qualify for the program are those that were "directly disadvantaged due to a clear error on the part of Nasdaq" and the member had specific "uncertainty" regarding their order. No orders entered after 11:30 a.m.  will be considered as part of the review process, Noll said.

"I would also like to make clear that this is a member firm accomodation policy because we have only the relationship with our member firms, not with brokers or investors or people who are customers of our member firms," said Eric Noll, a Nasdaq exec, said in a video outlining the plan. "We are only in a position really to discuss accomodations to those member firms, not beyond that."

A spokesman for Nasdaq declined to comment on how this fund will affect retail investors who are customers of the member firms.

"I think it's unclear at this point how this process is going to work," Gaston Ceron, equity analyst with investment firm Morningstar, said.  "A lot will depend on how the firms perceive their liability."

Ceron called the announcement a "good step" in repairing some of the exchange's damaged credibility, but it remains to be seen if it is a "sufficient" step.

"Memories last a long time," he said. "As to whether it will be enough only time will tell."

Nasdaq said three types of transactions would qualify for the program: sell orders at or below $42 that did not execute, sell orders at $42 or less that executed at an inferior price and buy orders at $42 that were executed but not immediately confirmed.

The Nasdaq board decided on the $40 million amount for the voluntary accommodation fund with factors like Nasdaq's estimated $7 million Facebook-related revenues over the next five years and the $10.7 million profit from the first day of trading.

"Nasdaq obviously will want it to be enough but they want to limit their exposure financially," Ceron said. "They are a public company and have to work for shareholders, but they also have to manage their image."

The exchange said about $13.7 million would be paid in cash to member firms, though the details of the program are subject to review by the Securities and Exchange Commission.

"It is important for us and I think for everyone else that this is be an objective process," Noll said. "It is taking a while I think to get everyone comfortable with it but it is an effort we are certainly engaged in as we go forward. "

Facebook's IPO has been one of the worst-performing in decades. The shares are down 33 percent from their first-day closing price to a low of $26.