Retail brokers affected by outages in US stock market sell-off

Charles Schwab and Vanguard, as well as Fidelity, experienced outages in their trading platforms Monday, preventing some retail investors from being able to trade. This was during one of most severe market declines seen in recent years.

After the opening of the markets, both S&P 500 indices and Nasdaq indices fell sharply, led by big tech stocks like Nvidia. The stock briefly dropped 15% before clawing some ground back.

According to DownDetector.com which collects reports from third parties about online service disruptions, brokers began reporting outages at around 9:30am ET.

The industry has experienced IT outages in the past on volatile days when large numbers of traders flock to online platforms.

Schwab’s website had a banner that said: “Due a technical problem, some clients might have trouble logging into Schwab platforms, and may find it difficult to reach us by phone.”

Reddit, a social media platform for retail investors, was crowded with people discussing the volatile market.

A user on the WallStreetBets Forum, which has over 16 million members, posted a screenshot of his Fidelity account showing the losses that he had suffered. Other group members demanded to know how he was able access his account, when they were locked out of theirs.

Another user complained that the site was “slow as a molasses” when he was trading. Fidelity was restored by 11am.

Schwab issued a statement saying: “An issue that affected some clients is now resolved.” We apologize for any inconvenience.

Vanguard has not responded to comments immediately.

Fidelity’s spokesperson confirmed that some customers had intermittent problems earlier today, and said the company was working “urgently to fix the problem.” This issue has been resolved.

In the past, brokerage platforms have experienced outages due to frenzied market conditions. In March 2020, Robinhood was unable to function due to the “unprecedented trading activity” on its platform. This prevented investors from trading during two of the most volatile trading days since the financial crises. Vanguard also experienced outages during busy trading days.

The tech failures have had consequences. The Financial Industry Regulatory Authority fined Robinhood in 2021 for its failures, including its operational problems, that it said had hurt investors.

Persons familiar with Robinhood operations say that the trading platform has been operational since Monday’s market opening, but it was affected by cancelled overnight trades through Blue Ocean Alternative Trading Systems. This US broker-dealer offers extended trading hours on US stocks and exchange traded funds.

Robinhood, who normally offers 24 hour trading between Sunday evening and Friday evening, stated on its site that Blue Ocean has price bands in place to prevent stocks from trading above or below certain prices. They may also limit the trading of individual securities when they exceed these bands.

Blue Ocean didn’t immediately respond to our request for a comment.

After a software update that caused widespread issues, CrowdStrike, a global IT provider, experienced similar problems.

Post Disclaimer

The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.

This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.

The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.