comsec article in smh

apologies if posted elsewhere - about time the media got stuck into them.

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Share panic leaves online traders in the lurch


Sell, sell, sell ... online share traders have reported having problems accessing their trading accounts during this week's share market dive.

Asher Moses and Edmund Tadros
January 24, 2008 - 12:05PM


Australia's largest online broker, Commsec, is struggling to cope with high trading volumes, with customers saying they are sometimes unable to make trades when there is heavy market activity.

Tuesday's share price meltdown - the biggest in almost two decades - pushed the share broking site beyond its breaking point, leaving it offline for 30 minutes between 10.05am and 10.35am.

Commsec customers have told smh.com.au that this is not the first time. They say that on several occasions in the past year - usually when there is a major move in the sharemarket - they have had problems accessing their internet broking account and its associated phone broking service.

This is despite a Commsec spokesman, Bryan Fitzgerald, saying the problem was isolated to the website and that customers were still able to make phone trades on Tuesday morning.

One Commsec customer, Frankin Cheung, 29, said he was unable to access the website all morning and faced a 30-minute wait when he tried to call the Commsec phone broking service.

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"Basically it just didn't load all morning," he said.

"It was only after lunchtime that it was back to normal where you could use the website.

"You try to call someone for the number and you could be there for 30 minutes because no one is answering."

Mr Cheung, who has a portfolio worth hundreds of thousands of dollars, said he had experienced similar problems with Commsec on at least four occasions in the past year including during August and October.

"I think the major problem is when it happens there is nothing you can do," he said.

The trader said he had never had problems with his accounts on rival online broking services ANZ Bank's ETrade and the Suncorp Share Trading site.

"The only reason I keep using Commsec is because they are cheaper and their user interface is less convoluted," he said.

"If they have that many clients then they should provide the service, especially the ugly days."

Another trader, Cameron Laird, 38, said he had also experienced repeated problems with Commsec.

There are reports that some customers of ETrade were unable to trade certain key shares during the height of the panic sell-off, but a spokesman for the bank has denied this.

On February 28 last year, smh.com.au reported how record trading volumes caused online outages at CommSec, ETrade and Westpac's online share trading service.

After last year's meltdown the Australian Securities and Investments Commission (ASIC) said it was looking into whether the online brokers had breached the Corporations Act by apparently failing to maintain a competent service, but a formal investigation was not launched.

The terms and conditions of most online broking services - which customers agree to before signing up - state that the brokers are not responsible for any losses incurred where dealing could not be completed due to the failure of a technological service, such as their websites.

But smh.com.au understands that ASIC regulations would override these terms.

Comment is being sought from ASIC.

"Online brokers should have the capacity to deal with days where there is high volume," Stuart Wilson, chief executive of the Australian Shareholders Association, said.

"I think there is a commercial imperative for these online brokers to make sure that they are online during trading hours, so I don't think that us jumping up and down about it is going to have as much of an impact as the lost profits over that period."

Part of the Australian Securities Exchange's responsibilities is to maintain an "orderly market", but spokesman Matthew Gibbs said the ASX would not get involved in the relationship between a broker and its customers.

"It's not something that we would comment on because that relationship is between CommSec and their customers rather than between the participant [broker] and ASX," Gibbs said.

Despite the repeated downtime, CommSec spokesman Bryan Fitzgerald insisted last year's crash was caused by a separate problem. He said customers should have confidence in the CommSec system.

"It was a separate problem this time - there was a coding change done to the CommSec system earlier in the week which failed yesterday, and that caused the problems," he said.

Fitzgerald said CommSec processed a record 123,000 trades on Tuesday, way above its average of 50,000-60,000 trades a day.