Robinhood and IG sites buckle during volatility

Not really good enough hey, if you are going to build a broker or trading site and your servers can’t handle a bit of vol, meaning that clients can’t get their trades off during choppy markets, then do you really deserve to accept those trades in the first place?

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Seeing IG struggle yesterday gave me dark flashbacks to 2008 when my savings with an Icelandic bank were temporarily locked out (luckily I eventually withdrew them before the bankruptcy, but scary nonetheless!)

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“bit of vol” :joy:

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Inferior tech stack:

Looking at Freetrade, is the team comfortable about managing times of unusually high volatility such as the days we are living?
From my personal experience, most of my orders were rejected, including for assets with relatively stable prices and seemingly deep volumes (Gold, GILTS). The explanation was the usual one (noone willing to offer/pay a good price), but I am not fully convinced.
If a platform with several years of history like RH has issues, it’d be reasonable to expect (not that I hope for it) Freetrade to face challenges as well, although the customer base is of course still smaller.
Thoughts?

Established brokers are all making a ton of money. IG Group is doing fine - £149mm of revenue in three months (versus £108mm a year ago). Plus500 generated $317mm of revenue and reported $232mm of operating profit (also over three months). That’s a nice EBIT margin of a very scalable fintech business.

Volatility and once in a decade massive bear market (and a recession) is an opportunity for :freetrade:. Robinhood (and Airbnb) was launched after 2008 and should’ve gone public at a high valuation before the frothiness disappeared in 2019 - now at least one of them had had a down-round (reduced valuation).

FT:

Revenue at online trading platform Plus500 jumped nearly 500 per cent in the first quarter after market volatility caused by the coronavirus pandemic spurred a boom in bets.

The London-listed broker reported revenue of $316.6m in the three months to March, far exceeding analysts’ expectations of about $185m and up from $53.9m in the same period a year earlier. The amount was equivalent to about 90 per cent of Plus500’s total revenue in 2019.

Profits for the full year are likely to be “substantially ahead” of expectations, although it is impossible to predict whether future quarters will be as dramatic as the first, Asaf Elimelech, chief executive, said on Tuesday.


The group reported earnings before interest, tax and depreciation of $231.6m, which it said was a 1,863 per cent year-on-year increase.

Plus500’s performance follows that of rival online trading platform IG Group, whose revenue jumped nearly a third in the first quarter after global markets began whipsawing in late February.

https://www.ft.com/content/a1b62002-2c98-467c-b812-e932066078d7

Also:

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