BrokerChooser’s analyst team is constantly on the lookout for emerging trends in the retail brokerage world. With the Reddit-Gamestop frenzy, the availability of a broker's services, whether they are working (uptime) or unavailable (downtime, or outages) came into renewed focus.
For this reason, we looked at the publicly available data of brokerages to understand the drivers behind outages seen at brokerages in Q1 2021.
To give this some context we also dove into some historical data. Read on to learn what we’ve found.
GME volatility crashed brokerages
Both in 2020 and in January 2021, outages at brokers increased massively at times of significant market volatility. Out of 50 brokers monitored, 18 had outages between January 20 and February 5, according to BrokerChooser’s Uptime Monitor. When the true range volatility indicator for GameStop (GME) jumped above 100 on January 27, brokers started to crash. The number of recorded outages at broker platforms skyrocketed to the tens of thousands.
Note to the chart: True range is calculated as the largest of the following:
- Current day’s high minus the Current day’s low
- Current day’s high minus the Last day’s close
- Last day’s close minus the Current day’s low
Source: downdetector.com, barchart.com, BrokerChooser
Market volatility affects broker outages
Volatility increased significantly in 2020 as well due to the COVID-19 market crash. As a result, the number of outages reported grew sharply.
Note to the chart: the VIX (or Volatility Index) is used to measure stock markets’ volatility
Source: downdetector.com, Yahoo! Finance, BrokerChooser
Robinhood and TD had the most outages
Among US brokers, Robinhood and TD Ameritrade recorded the most outages over the past three years, with a total of 560,000 and 490,000 reported events, respectively. Many of Robinhood’s major outages were related to its roll-out of new services, such as multileg options and crypto trading. You can see in the chart below the outages for 2018 and 2019.
Notes to the chart:
- BrokerChooser considered periods when the broker had more than 2,000 reported outages in a month while other brokers had less than 2,000 in that same month.
- Robinhood introduced crypto and options trading in 2018. Major outages BrokerChooser found were related to these services.
- TD Ameritrade didn’t share any information on social media or in the news about the reasons for its outages.
Source: downdetector.com, Robinhood’s Twitter, TD Ameritrade’s Twitter, BrokerChooser
Outages are most likely to happen after market opens
The percentages in the chart below indicate the aggregate number of outages reported between January 2018 and January 2021 in the various time periods at Robinhood, TD Ameritrade, Charles Schwab, E*TRADE, Interactive Brokers, Fidelity, Vanguard and Webull.
Notes to the chart:
- The percentages are the aggregate number of outages reported between Jan 2018 and Jan 2021 at Robinhood, TD Ameritrade, Charles Schwab, E*TRADE, Interactive Brokers, Fidelity, Vanguard, and Webull.
Source: downdetector.com, BrokerChooser
You can download a copy of our report here.