Investors suffering from brokerage trading snarl-up
Volume hasn't slowed as expected after RRSP season
Thomas Hirschmann
Financial Post
Peter Redman, National Post
Investor Miodraag Cvitkovic is upset after trying to reach his broker unsuccessfully for several days. "This is a tragedy-comedy," he said.
The official line was that the doubling and tripling of volumes in the run-up to the RRSP season was bogging down the discount brokerages and causing a snarl-up of trading traffic. But the deadline has come and gone and investors are complaining that service has reached a new low.
"This is a tragedy-comedy," said Miodraag Cvitkovic, an investor at TD Waterhouse Group Inc. who is amused at the absurdity of it all, but dismayed by the reality. "This is criminal and it is negligent."
Adrienne Jones, an investor at Royal Bank Action Direct, said service has not improved at all in the past week. In fact, it's worse.
"These delays significantly affect my being able to make an informed decision," she said. "Worse, I've lost money because orders take so long to process, or waiting in line for a rep is agonizingly slow."
Ms. Jones said she would write a letter of complaint to Michael Bastian, the president of Action Direct, but what good would it do? "They know it's a problem."
Mr. Bastian admitted he had expected a slowdown after RRSP season, but confirmed that volumes have in fact gone up.
The discount brokerages have been on a hiring binge trying to address the situation, but regulations state that people have to have 90 days of industry experience before they can execute a trade, so progress is slow. Action Direct has hired 160 people in the past two months and is looking to hire 500 to 600 more.
The delays facing those making trades is particularly aggravating to long-time customers who have been accustomed to good service and now are being treated as poorly as people who signed up last week.
Mr. Cvitkovic has been an investor with TD Waterhouse in its previous incarnations for over 10 years. He has never had to complain before, but service has deteriorated to the point that he can no longer hold his tongue.
He said that he has been trying to sell a stock for the past week and has been unable to get through via telephone.
He has heard that going online is faster, but that doesn't do him any good. "I'm not online, I'm not wired. I need good old-fashioned service."
He may not need to fret about being offline. Investors have complained that they often wait more than half an hour for confirmation of trades. Grant Murray, an investor at Action Direct said the Web-based NetDirect service is terribly slow. He said it has taken between one and two hours for trades to be executed online. "The stocks I'm playing change quickly, and part of my strategy is speed of execution. An hour can make all the difference."
More and more people are switching over to the Internet said Mr. Bastian at Action Direct. "There's another hiccup and adjustment going on there."
He added that recent problems with electronic systems have also added to the chaos. "You get an electronic glitch and it's like a stick in the spokes of your wheel."
But one U.S. trader was incredulous when told about the problems the Canadian investment industry is having ramping up its operations. "That's ridiculous."
Mr. Cvitkovic agrees. "People in the U.S. wouldn't stand for this. We should walk away from these guys. That's what competition is all about."
He said that after more than 10 years, he is ready to sever his relationship with the largest Canadian discount brokerage. He can't go on watching the money drain away while trying to sell a stock his old broker put him into years ago. "I'm losing money by not being able to sell the damn thing."
And that money can be significant in this market. Grant Murray said that one stock went up from $14.50 to $15.50 while he was waiting for the trade to be executed. Another investor at Scotia Discount Brokerage said he saw the position he intended to take in two stocks climb a combined $1,300 one day while he was waiting.
Service has been deteriorating at the discounters since technology stocks started going crazy in November.
Conal Hancherow, a Scotia Discount investor in Edmonton, said he has been trying to sell his stocks and close down his account since then. He has been trying to transfer his RRSP account to TD Waterhouse, but has been frustrated on both sides. "It's the same everywhere. It's almost like it's a ploy to make discount brokers so bad that people will go back to full service where they make more money." |
