Stay informed with free updates
Simply sign up to the Financial services myFT Digest — delivered directly to your inbox.
Brokerages such as Charles Schwab, Vanguard and Fidelity experienced outages on their trading platforms on Monday, leaving some retail investors unable to trade during one of the sharpest market routs in years.
The S&P 500 and Nasdaq indices tumbled after the markets opened, led by sharp fall from big tech stocks such as Nvidia, which briefly dropped 15 per cent before clawing back some ground.
Brokerage customers began reporting outages around 9:30am ET, according to DownDetector.com, which collects third-party reports of online service disruptions.
None of the brokerages immediately identified the cause of the technical difficulties or confirmed the duration of IT problems affecting customers, but the industry has historically experienced outages on days of market volatility when huge numbers of customers flock to online platforms to trade.
As late as 11:30am, Schwab had a red alert banner across its website that read: “Due to a technical issue, some clients may have difficulty logging in to Schwab platforms and may have difficulty reaching us by phone.”
Retail investors gathered on social media platform Reddit to discuss the volatile markets.
On the WallStreetBets forum, which has 16mn members, a user posted a screenshot from his Fidelity account of the losses he had sustained, and other group members chimed in demanding to know how the member was able to access his account when they had been locked out of theirs.
Another complained about how the site was “slow AF” while he had been trading. By 11am, access to Fidelity had been restored.
Schwab said in a statement: “A technical issue experienced by some clients has been resolved. We apologise for the inconvenience.”
Vanguard did not immediately respond to requests for comment.
“We are aware some customers experienced intermittent issues earlier today,” a Fidelity spokesperson said, adding that the company worked “urgently” to fix the issue. “This is now resolved.”
Brokerage platforms have struggled with outages in frenzied markets in the past. In March 2020 Robinhood failed due to “unprecedented” trading activity on the platform, preventing investors from trading on two of the most volatile days in markets since the financial crisis. Vanguard has also reported outages on busy trading days in the past.
There have been consequences for the tech failures. In 2021, Robinhood was fined by the Financial Industry Regulatory Authority, which ordered it to pay around $70mn for failures the agency said hurt investors, including its operational outages.
A person familiar with Robinhood’s operations said the company’s trading platform remained operational since the market opened on Monday morning, but was affected by cancelled trades placed overnight through Blue Ocean Alternative Trading Systems, a US broker-dealer that offers extended trading hours for US stocks and certain exchange traded funds.
Robinhood, which normally offers 24-hour trading from Sunday evening to Friday evening, said on its website that Blue Ocean imposes price bands to prevent stocks trading well above or below a certain price and may limit trading in individual securities if they exceed those bands.
Blue Ocean did not immediately respond to a request for comment.
The brokerages’ tech issues are the latest disruption for investors, coming a few weeks after global IT provider CrowdStrike experienced widespread problems affecting millions of computers due to a faulty update.
Read the full article here
