Outages Continue to Plague Online Brokerages -- 2nd Update
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
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
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
Still, most trading is controlled by institutional
"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
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 email@example.com and Dawn Lim
(END) Dow Jones Newswires
January 27, 2021 17:40 ET (22:40 GMT)
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