Surge in trading amid bitcoin, pot stock crazes tests limits of online brokers

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Online discount brokerages at Canada's Big Six banks are continuing to see a surge in trading volumes and new account openings amid the investor frenzy centred on cannabis and cryptocurrency-related stocks.

The increased activity has been testing the limits of what some of the brokerages can handle during peak periods in the North American trading day.

Royal Bank of Canada's RBC Direct Investing experienced outages on Tuesday morning that blocked some investors from accessing their online trading accounts for approximately an hour.

Meanwhile, Toronto-Dominion Bank has had to postpone a new online system for opening accounts, forcing investors to visit branches in person and endure at least a one-week waiting period.

Earlier this month, both RBC and TD acknowledged intermittent outages on their direct investing platforms. At the time, a TD spokesperson told The Globe and Mail the primary issue was "capacity" on its systems, while RBC blamed "heavy trading volumes."

Officials for other online brokerages at Bank of Montreal, National Bank of Canada, Canadian Imperial Bank of Commerce and Bank of Nova Scotia have all confirmed they also have been seeing higher-than-normal trading volumes.

For some of them, account opening requests have been running more than three times the average rates of 2017.

RBC says it continues to work toward solutions to mitigate any client interruptions. "Our capacity and server upgrades are mitigating intermittent service clients experienced recently due to heavy trading volumes," a RBC spokesperson said in an e-mail to The Globe on Friday. The spokesperson would not comment further on Tuesday.

The timing of the outages could not have come at a more inconvenient time for TD's platform known as TD WebBroker. It's in the midst of launching a new online account opening procedure, which – ironically – was intended to shorten the time and effort needed to open accounts. The TD online account-opening system has been temporarily shut down on the company's website and clients are being redirected to make an appointment with their nearest branch to apply for a new online trading account. The current wait period is "at least a week" before credentials are mailed out allowing clients to begin trading, said Tony Ierullo, vice-president of wealth digital innovation at TD Wealth Management.

"I think the timing [of the outages] caught us off guard," said Mr. Ierullo. "Coming back from the holidays, volumes just took off."

Now, the new platform may not launch for several more weeks. Mr. Ierullo still hopes it will be launched before the end of the RRSP season.

For investors who are in a rush to open an account, TD may be at risk of losing business to other bank competitors – or independent platforms such as Questrade Inc. – which can open an account in less than 24 hours.

Scotiabank confirmed it has seen an increase of account openings of more than three times the daily average of last year, as well as almost double the trading volume than expected for this month.

BMO InvestorLine has seen its traffic volume increase steadily each month since September; since November, it has a 26-per-cent increase in new accounts, according to the bank.

"We continue to see unprecedented trading activity during this peak time, including new account openings and transfers," Silvio Stroescu, head of digital investing at BMO, said in an e-mail to The Globe on Friday.

Retail investor trading volumes have been running high in the United States as well. TD Ameritrade on Tuesday reported record activity in its most recent quarter and directly linked it to the upsurge in marijuana and cryptocurrency stock plays.

"Enhanced consumer interest in blockchain and cannabis-related securities drove a further surge in engagement in the final weeks of the quarter, particularly among first-time investors," Ameritrade president and CEO Tim Hockey said on a conference call on Tuesday. "New account growth is at record levels."

In Canada, TD's Mr. Ierullo attributes recent high market returns largely for piquing the interest of new investors, but added there is also some correlation with the recent spike in the marijuana sector.

"If you look at the markets in general, they have been pretty healthy," Mr. Ierullo says. "Certainly there is demand in pot stocks and I think that is definitely contributing to the volumes we are seeing."

With a report from James Bradshaw