Though trading on-line during last week's market turmoil had its glitches, the existence of the Internet meant that investors had more stock price information than in 1987, when those phoning brokers could not get through.
San Francisco-based E-Trade Group and Charles Schwab & Co., Boston-based Fidelity Investments, and New York-based Quick and Reilly all reported that their Web-based trading systems continued to work throughout Monday and Tuesday. However, some acknowledged there were delays in getting trades completed due to the sheer number of users.
Last Tuesday, when a record 1.2 billion shares changed hands on the New York Stock Exchange, the emerging on-line brokerage business showed more maturity than on July 15, 1996, when the Dow Jones industrial average dropped 161 points. On that day many on-line trading systems broke down completely, leaving thousands of investors frustrated and unable to trade.
This time it appears Web-based trading glitches were less widespread.
Tuesday's rebound in the U.S. equities markets-when the Dow regained 337 of the 554 points it had lost Monday-may partly reflect individual investors' ability to get news and stock quotes fast over the Web, some players noted.
It was a different story in the pre-cyber world of October 1987, a Quick & Reilly spokesman said. "We felt that part of the reason the drop in prices was so exasperating was (customers) were without information.
"People couldn't find where their stocks were, because they couldn't get through by phone," he said. "Technology has transformed the situation."
But it wasn't all smooth sailing last week. Schwab, one of the largest Internet brokers, said there were periods Tuesday when its Web site slowed down because of volume. But the system was always operational, the firm said.
Schwab officials said they sent out an electronic message Tuesday to all of the firm's on-line clients, telling them to try alternative methods, including its telephone voice-response system, or to call a Schwab broker. Customers were not charged the usually higher fees for non-Internet trades.
The volume of trades executed Tuesday on-line was "staggering"-about twice normal - despite the glitches, the spokesman said. At one point Tuesday almost 10,000 people were accessing Schwab's Web site, he said.
Late last week the firm announced that in the future investors who have to wait longer than five minutes during such heavy-volume markets to execute trades by phone or on-line can trade commission-free if they go to a branch office. And Schwab is now looking at ways to add capacity to its on-line trading system.
Other on-line brokers boasted about their success last week in handling the higher volume of trades. Officials at E-Trade also reported a record number of simultaneous users-about 6,000-and a record volume of trades- over 40,000-on Monday, nearly double its normal transaction volume.
"Everything worked out beautifully," said the Quick and Reilly spokesman. "This was the first real stress test."
However, some of Monday and Tuesday's problems were beyond the control of on-line brokers. Throughout the week, slowness was experienced by all sorts of investors-not just on-line traders-as a result of problems with Nasdaq and other stock exchanges' trade confirmation systems.
Additionally, heavy traffic over the Internet caused many on-line investors to experience delays because their own Internet service providers were backed up.
"We will find out in the coming weeks how each Internet broker did," said Alex Stein, principal with Boston-based Gomez Advisors, the leading market research firm devoted to on-line investing. "We do know that while most Internet brokerages stayed up serving pages, they had inadequate systems capacity to meet the high demand."
