SCHW Charles Schwab Corporation

By Geoffrey Rogow and Dawn Lim 

Outages and interruptions rattled investors using some of the largest online brokers on Wednesday.

Charles Schwab Corp., Vanguard Group, Fidelity Investments and several other online brokerages reported service disruptions, either to clients directly or on their social-media accounts. The new technical issues come after brokerage customers already encountered brief delays executing trades this week or temporarily lost access to vital account information.

The service disruptions have come during a period of frenetic trading, with shares of companies such as GameStop Corp. shooting wildly higher. The volatility has been largely driven by individual investors and unmoored to the fundamentals of the underlying companies. The rising prices have prompted bearish investors to buy back shares they had sold short to cut their losses, pushing the stock higher still.

None of the brokerages commented on the reason for the issues. Some surprised customers by imposing new guardrails on trading.

On Wednesday, TD Ameritrade told customers that the firm was blocking some trades on GameStop, AMC Entertainment Holdings Inc. and certain securities.

"We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors," read a notification to clients when they logged into their accounts.

Schwab, which recently bought TD Ameritrade but runs an independent brokerage for now, also restricted certain transactions in GameStop and other securities. "It is not uncommon for Charles Schwab to place restrictions on some transactions in certain securities in the interest of helping mitigate risk for our clients," a Schwab spokeswoman said.

Schwab clients have been barred since Jan. 13 from using GameStop as collateral for a margin loan.

More broadly, several of the firms have sent notices about the larger outages to customers.

"Due to a technical issue, some clients are experiencing issues with online trading. We're working to resolve the issue as quickly as possible. Please do not place trades again, as duplicate orders may be created. We apologize for any inconvenience," a notice on Charles Schwab's Twitter account read Wednesday morning. The firm told users on social media later in the day that "access has been restored to our platforms."

A spokeswoman for Fidelity said Wednesday it was "aware that some clients have experienced issues this morning and we are working on a resolution. We apologize for the inconvenience."

Later, the spokeswoman said the issue had been resolved, without elaborating.

A spokeswoman for Vanguard said: "We understand some Vanguard clients experienced difficulties accessing their accounts this morning. The issue has been resolved and we thank clients for their patience."

Individual investors have driven a surge in trading volumes for many online and retail-focused brokerages in the past year. Devin Ryan, an analyst with JMP Securities, said individual trading volume hit a record last year, with many brokers and wealth managers adding two or even three times as many new accounts as in 2019.

Still, most trading is controlled by institutional investors.

"These brokers are not systemically important players. They aren't critical to the functioning of markets. But they do speak to investor confidence," said Paul Rowady, director of research for market research and advisory firm Alphacution Research Conservatory.

David DeKok, 67, a nonfiction author who lives in Harrisburg, Pa., said that when tried to trade Monday on his Schwab account, he got a message that he entered the wrong ticker even though he hadn't. On Wednesday, he tried to sell out of an investment that was falling -- and gave up after receiving that error message.

"I take it in stride," he said. "If this keeps happening, I'd consider changing platforms."

A Schwab spokeswoman said the company "will work with all clients to ensure their situations are made right."

Write to Geoffrey Rogow at geoffrey.rogow@wsj.com and Dawn Lim at dawn.lim@wsj.com

(END) Dow Jones Newswires

January 27, 2021 17:40 ET (22:40 GMT)

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