Wednesday, February 28, 2007

Markets Made a Mess

The domino effect, set off when the Chinese markets took a dive, pushed the U.S. markets off a small cliff on February 27.  Volumes were way way up, and I started getting emails about online broker sites that were having problems.

So I popped into a bunch of the sites that I can still access, thanks to my online broker story.  I also fired up a few of the software programs that I have on my computer. 

Basically, the bigger the broker, the slower the site.  Most of the large brokers’ infrastructures can only allow a small fraction of their customer base to log on simultaneously.  I poked around Schwab.com, Etrade.com, TDAmeritrade, Fidelity, Scottrade, optionsXpress, OptionsHouse, TradeKing and thinkorswim’s website.  I looked at quotes, searched for a covered call to trade, and tried to enter an order. 

Of those, Schwab was running veerrrrrrrryyyy slllllloooooooooowwwwly, and actually tossed me out when I tried to enter an order.  When I tried to enter a covered call order on E*Trade, the option quote wouldn’t come up.  TD Ameritrade shifted to delayed quotes (instead of real-time), but I was able to enter an order.  Fidelity was sluggish but still let me enter an order.  OptionsHouse, TradeKing and optionsxpress seemed a little slower than they did last week, but they weren’t running glacially slow.  All three of those sites let me enter an order.  Thinkorswim was plugging along as though there was nothing extraordinary happening.

I brought up software from CyberTrader, MB Trading, Interactive Brokers and Terra Nova Trading.  Cyber was OK even though the web-based Schwab offerings (including Street Smart Pro) were slow.  The others looked fine too.  Quotes, especially NYSE, seemed to be loading slower than usual, but reports have since come in of exchanges being swamped, so the quote issue might not be endemic to the brokers.

I received a blurb from Keynote Systems that said, “Keynote, The Mobile and Internet Performance Authority™, observed significant performance slowdowns for some of the nation’s leading online stock trading sites, most likely triggered by an increased volume in stock selling due to growing concerns regarding economic slowdowns in the U.S. and China.

“Many of the nation’s most popular Web sites for stock trading took a performance hit in speed and availability according to Keynote’s online stock trading index, a leading index of online stock trading performance that measures the time it takes to conduct a stock site transaction from geographic locations across the U.S.

Sites on the index, including Ameritrade, Fidelity, Firstrade, Muriel Siebert, Schwab, ShareBuilder, TD Waterhouse and Wells Fargo, began slowing down beginning at 10:30 a.m. Pacific.”

Abelardo Gonzales, web performance manager at Keynote, says, “Keynote has never seen such significant slowdowns and limited availability among online trading sites since the index began in 2000.” Gonzales says that there was a 25% drop in the overall number of successful trades Keynote was able to carry out on the broker sites that comprise their index, which means it’s possible that upwards of 25% of investors attempting online trades between 1:30 p.m. and 4:30 p.m EST on Tuesday may not have been successful.

“I would imagine that this time was frustrating for online brokerage users,” he says.

By Wednesday morning, all the sites were back to normal, says Gonzales. 

Posted by twcarey on 02/28 at 10:00 AM
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