(Reuters) - After initially criticizing Nasdaq OMX Group for its response to Facebook's botched initial public offering, trading firm Knight Capital Group Inc said it accepted the exchange's latest plan to pay back brokers a portion of their losses.

Knight's support comes after Nasdaq increased the payback fund to $62 million in cash from an earlier $40 million made up mostly of trading rebates, the market-making firm said in a letter to the U.S. Securities and Exchange Commission, dated August 29.

Knight, which facilitates trades for other firms, had called Nasdaq's earlier plan "inadequate," and said it was considering legal action over the May 18 IPO.

"Although we would have preferred that the accommodation pool cover all losses sustained by Nasdaq members, we do support Nasdaq's proposal to increase the accommodation pool from $40 million to $62 million," Knight said in the letter obtained by Reuters.

Knight and other retail market-making firms and brokers together lost more than $500 million in the IPO.

Some firms, like UBS AG, which disclosed it lost more than $350 million, and Citigroup's Automated Trading Desk, which is said to have lost up to $35 million, have rejected the plan, saying Nasdaq should be responsible for all of the losses, because it acted in a for-profit manner in the IPO.

Liabilities at U.S. exchanges, which have some regulatory duties, are capped in most instances. Nasdaq's cap is $3 million a month.

Knight said it lost more than $35 million in the IPO, but it urged the SEC to leave the discussion of liability limitations and regulatory immunity to another day.

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