The central computers of online stock brokerages groaned under a crush of trades at the height of Monday's stock market plunge, but most of them continued to operate without a hitch.
The online brokerage sites of such firms as E-Trade Group Inc., Charles Schwab & Co. and Fidelity Investments all reported slow response times because of record trading activity, but none stopped working or failed to execute a trade for customers, company representatives said.
By some estimates, the online stock-trading business has been doubling every six months, yet some investors have been leery about opening online accounts.
The emerging industry faces a perception that investors would not be able to execute trades during a stock market crash because of heavy Internet traffic and clogged phone lines.
The steady performance of brokerage sites on a day when the Dow Jones industrial average had its biggest point drop in history--554.26 points, to a close of 7,161.15--could boost the image of the industry.
"Today is very much a watershed day in the confidence of the investor," said Christos Cotsakos, chief executive of online trading pioneer E-Trade. "The speed to access content, market information and execution was markedly faster electronically than through a human."
Cotsakos said E-Trade's online trade execution system performed "flawlessly," even though it faced double the normal trading activity.
Other popular trading sites--such as eSchwab, Fidelity Brokerage Services and Discover Brokerage Direct--also had record traffic. Representatives of each said their systems worked without a glitch.
"We had no downtime," said Blake Darcy, spokesman for investment bank Donaldson Lufkin & Jenrette Securities Inc., which runs the DLJ Direct online site. "Trading volume was 40% above normal, even considering that [stock exchanges] took an hour out of the trading day."
The New York Stock Exchange, Nasdaq and other exchanges stopped the trading of almost all financial securities for about an hour on Monday. Online brokerages, like other brokerages, could not execute trades during the halt.