On-line trading companies are adding more Internet connections and examining their relationships with service providers in hopes of averting traffic jams like those of Oct. 27 and 28.
Many on-line brokerage customers had trouble executing trades during the stock market tumult, and on-line trading services do not want to undermine customer confidence any further.
Several Internet investment providers, including Charles Schwab & Co., E-Trade Group, and Fidelity Investments, said they will add capacity to the servers that process electronic buy and sell orders.
In addition, firms are scrutinizing how their Internet service providers-companies like GTE, MCI Communications Corp., and Worldcom Inc.'s UUNET-handled the flood of incoming traffic on the heavy October days. Some are considering setting up connections with multiple network service providers as a hedge.
These actions are appropriate, said Alex Stein, principal with Gomez Advisors, a Boston-based research and consulting firm. "Most of the problems were under the brokers' control."
"They need to add more servers, have multiple points of entry to the Internet, and redesign their data bases to be more efficient."
Mike Quinn, vice president of electronic services for discount broker Quick & Reilly, said his discount firm already has two network providers, MCI and UUNET, and will consider adding a third.
But there may be a limit to the steps the company will take. "You can do everything to avoid a breakdown, but there is a cost. And we must ask, 'What are probable odds this will happen again?'" he said.
E-Trade, the all-electronic brokerage based in Palo Alto, Calif., plans to spend more than $70 million over the next year to increase simultaneous- user capacity and address the network access issue, said spokeswoman Kim Shepherd.
Officials at Keynote Systems Inc., which sells performance measurement software for commercial Web sites, said its Internet traffic-monitoring systems found the performance of electronic brokerages to be especially poor on Tuesday, Oct. 28, when investors rushed into post-crash buying opportunities.
The geographic locations of cyber-investors affected how fast they could get into Web sites. Internet users in Detroit, New York, and Washington experienced much longer delays than those in Kansas City or Boston, Keynote officials said.
Gene Shklar, vice president of marketing for the San Mateo, Calif.-based company, said that in addition to beefing up computer capacity, on-line brokers need to "better understand how the performance of a site looks to users in various parts of the country over time."
He said the sites could have been prepared for the crush of traffic "if the companies measured how fast their sites delivered the content and proactively fixed them, rather than being surprised by the sudden upsurge in trading."
On-line brokers can work with their Internet service providers to fine- tune their network capacity during times of need, Mr. Shklar said.
"They can get a performance profile for the different cities and, by working with the access providers, change the path to get the content to the users faster," he said.
