Frantic trading takes toll on gridlocked online brokers

B CARRICK
Globe and Mail Update

October 15, 2008 at 6:00 AM EDT

Investor Alan Harries has been getting consistent service from his online broker during the past weeks of stock market swings, which is to say it's all bad service.
Whether the market is soaring, like it did yesterday, or plunging, as it did last week, Mr. Harries has found his broker to be slow and unreliable.

“When the market is busy, I haven't been able to execute trades,” Mr. Harries, an investor from Peterborough, Ont., with decades of experience in the markets, said yesterday. “I'm extremely frustrated. On a day like last Friday, when you're trying to sell, all you can see is money being lost because you can't make a trade. And then today, you lose the opportunity to make money because your trades won't go through.”

Online brokers say they're handling trading volumes these days that are double the normal level or more. Some websites are bogging down or timing out on clients, and the wait to talk to a trader on the telephone can be close to an hour at worst at some firms.

“This morning, it's been completely insane,” Doug Coulter, president of RBC Direct Investing, said around 10:30 a.m. yesterday as the S&P/TSX composite index soared more than 1,000 points. “I heard that our telephone volumes were up more than 300 per cent.”

It was much the same story over at the online broker TD Waterhouse. “We're unbelievably busy,” said John See, the firm's president. “Last week alone, we had had two of our top three all-time trading days.”

Online brokers are supposed to be a way for do-it-yourselfers who need no advice to get quick, cheap access to the stock market (they also sell bonds and mutual funds, of course).
But the latest round of service glitches highlights the limitation of online brokers: When the markets are crazy, they sometimes can't deliver.

This is a problem that investors haven't had to deal with since 2000, when frenzied trading of technology stocks routinely caused websites to malfunction and phone queues to stretch endlessly. Most online brokers spent big bucks to add new staff and strengthen their technical capabilities and, until recently, investors had reaped the benefit through largely trouble-free trading.

Mr. Harries' experience shows how the recent surge in trading has again swamped online brokers. “Today was an exercise in frustration,” he said after tussling with his broker's online stock-trading service. At one point, he actually submitted a sell order indicating he'd accept less than what other investors were offering to pay for a stock simply to expedite the trade.
The transaction never went through and he ended up using a market order, something savvy investors usually prefer to avoid, to get the trade executed. Market orders mean you'll accept the going market rate for a stock and you can never be sure of what kind of a price you'll end up with.

For individual investors, problems with their online brokers have been compounded by issues related to the Toronto Stock Exchange.

Brokers say there have been sporadic delays in getting trades confirmed and, yesterday, trading in 100 TSX-listed stocks, closed-end funds and exchange-traded funds was halted for two hours. TSX spokesman Jean-Charles Robillard said such halts are prompted by factors such as unusual price moves in a security. All the affected stocks were trading again by 11:30 a.m.
Roughly nine in 10 trades handled by online brokers are submitted over the Internet these days, which reflects the fact that the commissions are much lower than they are for trades placed over the phone with a trader.

Investors have complained lately about problems logging in at their broker's websites and also about having the screen freeze on them as they're submitting trades.

But people who want to talk to a real person have it worse these days. Christopher Wicks, vice-president of investor services at TD Waterhouse, said clients had to wait as long as 49 minutes to speak to someone at the market open yesterday, and then as long as 36 minutes by the later morning.

A heavy volume of calls is part of the issue at TD, but so is the amount of time that clients are spending on the phone. “We're having longer conversations,” Mr. Wicks said. “People are asking questions, expressing their uncertainty and concerns.”

There are a couple of things investors can do to minimize trading problems with an online broker on the kind of busy days we've seen lately. One is, where possible, to avoid trading at the peak periods of the day – market open and market close. If you do want to place a trade around the 9:30 a.m. market open, log in at your broker's website well in advance.

“Right around market open, the number of simultaneous sign-ons is unbelievable,” TD's Mr. See said.

While he admits to some “slowness” at TD Waterhouse these days, Mr. See says today's problems in the online brokerage business are not as bad as they were back in 2000. “What I've told clients is that in some cases, we've bent, but we certainly haven't broken. We haven't had systems go down.”

Who's the best broker?

The Globe and Mail's 10th annual ranking of online brokers will be published on Oct. 25. Check it out to see how 13 firms compare in such areas as fees, resources and customer satisfaction.

Conservative Minority Wins The Election

CAMPBELL CLARK
Globe and Mail Update
October 15, 2008 at 2:30 AM EDT
OTTAWA — Stephen Harper's Conservatives have won a stronger minority government on the strength of gains in Ontario and British Columbia.

But the Tories paid dearly for campaign missteps in Quebec, as their failure to make gains there was a big reason they fell short of outright control of the Commons.
In two and half years of minority government, Mr. Harper had sought to woo Quebeckers, seeing them as the path to a majority government.

With almost all of the results in, the Tories lost one of their 11 seats there. The Bloc Québécois again defied early-campaign predictions of collapse, winning almost two-thirds of the province's seats.

Mr. Harper had called the election on Sept. 7, appealing for a stronger mandate to manage the economy in uncertain times. He won more seats, but not clear control, although as he took the stage in Calgary for his victory speech, he appeared elated, not disappointed, with his larger minority — and struck perhaps the most non-partisan, co-operative tone of his political career.
Mr. Harper pledged to fulfill his party's election platform, but also to govern for Canadians who had voted for other parties, too — and at a time when a faltering economy poses challenges for any government, offered co-operation with opposition MPs.

"This is a time for us all to put aside political differences and partisan considerations and to work cooperatively for the benefit of Canada. We have shown that minority government can work, and at this time of global economic instability we owe it to Canadians to demonstrate this once again," he said.

"We stretch out a hand to all members of all parties, asking them to join together to protect the economy and weather this world financial crisis."

The Conservative gains came largely in Ontario, where near-complete results show them winning 51 of the province's 106 seats — a gain of 10 from when the election was called.
And in B.C., the Tories were on track to pick up four or five seats.

Stéphane Dion's Liberals were poised to drop almost 20 of the seats they held when the election was called — a defeat, but not as bad as some Liberals had feared in mid-campaign.
The Liberals were on track to be knocked down to only six or seven seats west of Ontario. A rare bright spot was a small gain in Quebec, where Justin Trudeau, son of late prime minister Pierre Trudeau, won in Papineau riding.

Jack Layton's NDP was making gains of seven or eight seats — the second-highest tally in the party's history. But it was still not the major breakthrough they had hoped for, and their share of the vote was essentially unchanged from the last election.
But the New Democrats made substantial gains in Northern Ontario, gained a toehold in Newfoundland with Jack Harris's win in St. John's East, and held on to deputy leader Thomas Mulcair's lone Quebec seat in Outremont.

The election results turned not as much on more votes for Mr. Harper's Conservatives, but the softening of Liberal support.

The Conservatives have won about 37 per cent of the popular vote, up one percentage point from 2006.

But Mr. Dion's Liberals garnered the lowest share of popular vote the party had ever tallied — lower than the 28 per cent the John Turner-led Liberals garnered in 1984.
The Grits lost about four percentage points from 2006, leaking a little to the Tories, but also to the Greens.

The results will likely lead some to question whether Mr. Dion's deal with Green Party Leader Elizabeth May, in which he agreed not to run a candidate against her in Central Nova and lobbied for her inclusion in the leaders' debates, was a losing strategy.

Mr. Dion conceded defeat with grace, but appeared to indicate that he expects to lead the Liberals in opposition in coming months, saying he told Mr. Harper in a phone call that he would work with him in the new Parliament to confront the global economic crisis.
"My priority, the priority of the official opposition, will be the economy, will be the economic storm that we see around the world, will be to protect Canadians, our savings, our homes, our jobs, our pensions," he said.

But Mr. Dion's control of his own party has never been solid, and he will almost certainly face pressure to step down.

Two possible front runners, Toronto MPs Bob Rae and Michael Ignatieff, were both re-elected, and the fourth-place finisher from the party's 2006 leadership race, Gerard Kennedy, was elected in Toronto's Parkdale-High Park riding.

For Mr. Harper, it was a mixed bag — a larger caucus, but no majority. He was shut out in Newfoundland, did poorly in Quebec, but won handily from Ontario westward to B.C.
Only one of his cabinet ministers, Michael Fortier, who resigned from the Senate to run for a Commons seat, lost; he was beaten easily by Bloc Québécois incumbent Meilli Faille in Vaudreuil-Soulanges.

Former foreign affairs minister Maxime Bernier, forced out of cabinet for leaving classified documents at the home of former girlfriend Julie Couillard, was handily re-elected in his riding of the Beauce, southeast of Quebec City.

In Saskatchewan, another cabinet minister who gaffed, Gerry Ritz — who made tasteless jokes about the victims of the tainted-meat crisis — was also re-elected.
In Atlantic Canada, the Conservatives gained a few seats but were swept out of Newfoundland by the backlash over the Atlantic Accord.

Green Party Leader Elizabeth May, the first leader of her party ever to take part in national leaders' debates, lost her bid to unseat Tory Defence Minister Peter MacKay in Nova Scotia's Central Nova riding — finishing second, but not close.

But when Mr. Harper forms another Conservative government after tonight, he will do so without a minister or MP in Newfoundland. Premier Danny Williams' Anything But Conservative movement appeared to strike a chord with Newfoundlanders who felt betrayed by Mr. Harper's change in stance on offshore resource revenues.

Mr. Harper lost all three of his Tory seats in Newfoundland, including both St. John's seats, where Loyola Hearn and Norm Doyle did not run again, and Avalon, where MP Fabian Manning was defeated by his Liberal challenger, Scott Andrews.

And in Nova Scotia, MP Bill Casey — who was kicked out of the Conservative caucus for voting against the budget because he believed Mr. Harper broke his promise to leave offshore resource revenues untouched under the Atlantic Accord — won by a huge margin to keep his seat as an Independent.

Still, the Conservatives ticked up elsewhere in Atlantic Canada, eking out small gains by picking up seats from the Liberals in New Brunswick and Nova Scotia and PEI.
In his speech to supporters late in the evening, Bloc Québécois Leader Gilles Duceppe said Quebeckers had rejected the Conservatives' cuts to arts and culture and his hard-line approach to youth justice.

He pointed out that the Bloc won five times as many Quebec seats as Mr. Harper's, and two-thirds of Quebec's ridings.

"That's strong," Mr. Duceppe said. "Without the Bloc Québécois, Stephen Harper would be forming a majority government."

Canadians headed to the polls on a day when the stock market climbed sharply higher. Plummeting markets appeared to shake voters' confidence last week, but while voters trooped out today, the S&P/TSX Composite Index was climbing, closing the day up 9.8 per cent.
In fact, early numbers put voter turnout at about 60 per cent, which would be the lowest in Canadian history

When the election was called Sept. 7, the Conservatives had 127 seats, the Liberals 95, the Bloc Québécois had 45, and the NDP 30. There were 4 independents, including former Liberal Party MP Blair Wilson who briefly sat as a Green Party MP, and 4 vacant seats.