Online brokerages were hit with widespread technical disruptions Monday as users rushed to trade amidst a sharp market downturn, driven by fears of a US recession.
Customers of Charles Schwab and Fidelity were unable to log into their accounts during a period of significant market volatility, with Wall Street's main indexes plummeting at the opening amid a triple-whammy of weak economic data, disappointing quarterly earnings from big tech companies, and geopolitical tensions.
Multiple media outlets chronicled reports from panicked and frustrated retail traders as they took to social media. Many voiced their complaints on X, the platform formerly known as Twitter, with some threatening to switch to other brokerages.
"What's scaring people more than the fact that the market is selling off is that Fidelity's and Schwab's trading platforms crashed today," Jason Britton, president and chief investment officer at Reflection Asset Management, told Reuters. "Those are the things that cause real panic - when people can't see what their portfolios are doing."
Technical issues can hit trading platforms at any time, but they can be exacerbated by extreme market volatility, leading to concerns about the brokerages' capacity to handle high trading volumes. Retail investors, especially those looking to "buy the dip" or sell off their holdings, the time they lose during those outages can feel like missed opportunities.
At the height of the disruptions, Downdetector.com, the outage-monitoring website that collates status reports from multiple sources including user submissions, reported nearly 14,500 users experienced issues with Schwab, while over 3,600 users reported problems with Fidelity.
Schwab acknowledged the issue on its official X account, stating, "A technical issue experienced by some clients has been resolved. We apologize for the inconvenience."
Fidelity issued its own announcement via X, confirming, "We are aware some customers experienced intermittent issues earlier today. This is now resolved."
Robinhood Markets, another popular platform among retail investors, resumed overnight trading after a brief pause earlier in the day. Vanguard also reported service disruptions but stated the issues had been resolved by the afternoon.
Meanwhile, Interactive Brokers disclosed that as of mid-day Monday it hadn’t received any indication of system-wide outages.
"As of 11 a.m. ET, we have executed 5 million trades, and on Friday, we had 5.9 million trades, which was already a busy day," executive vice president of marketing and product development, Steve Sanders said in a statement.
As global equity markets faced another significant drop, with the Dow, S&P 500, and Nasdaq all down over 2 percent in late afternoon trading, the SEC said it was keeping an eye on the situation.
"We are actively monitoring for the orderly functioning of markets," a spokesperson for the federal securities regulator told Reuters.
This is the second major outage for brokerages in recent weeks, following similar disruptions in July during the CrowdStrike outage that affected numerous trading platforms.
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