Exchanges Ramp; Retail Brokers on Post U.S. Election Volatility

Exchanges and retail brokers have been under study, following the recent outages within their industries. They have spent months preparing for any post U.S. election trading volatility. Now their preparations will face the ultimate test.

Glitches at Euronext (PA:ENX) impacted trading in several European countries earlier this month. The worst-ever outage for the world’s third-largest equity market happened after a hardware failure at the Tokyo Stock Exchange (TOPX).

In August, cyberattacks hit New Zealand’s stock exchange. For the second time since April, a Deutsche Boerse trading platform briefly hobbled in July. There have been many market malfunctions in recent years that can erode investor confidence.

Exchange operators have said they’ve taken measures to ensure they can handle any election-related trading volatility.

Kevin Kennedy, head of U.S. options at Nasdaq Inc (O:NDAQ), said this thing could take days, weeks, months. So they embarked on a journey of increasing their capacity by multiple times.

In March, Nasdaq executives began looking ahead to the Nov. 3 election. After the COVID-19 pandemic whipsawed markets and sent trading volumes soaring, he said.

In March, the number of stock trades at Nasdaq soared to two-and-a-half times their 2019 peaks, while options volumes tripled. Then the decision to boost capacity came, said Tal Cohen, head of the exchange operator’s North American markets.

He also added that during the March trading surge, Nasdaq’s systems performed without a hitch.

Many Companies Had Undergone Testing

Fintech startup Robinhood has experienced several outages since early March, particularly on high-volume days. The company received credit for helping introduce a new generation of investors to trading through its app.

The Silicon Valley-based brokerage was asked what steps it has taken ahead of the election. The firm said its priority is to ensure its platform performs as its customers need and expect it to. 

Retail broker TD Ameritrade , had an outage on its desktop platform in August. TD Ameritrade and new parent company, Charles Schwab Corp, said they have prepared for a potentially volatile period in the markets.

Moreover, exchange operator Cboe Global Markets said its testing has shown it is ready to handle anticipated increased volatility.

Unrelated to the election, exchanges, banks, brokers and market utilities, held an industry wide business continuity and disaster recovery plan test. This was to show they could operate from their backup sites in the case of an emergency.