Online Brokers Grapple with Success

Numerous troubles and complaints have been reported since online trading took off with a bang when deregulated trading commissions took effect last October 1. The murmuring began the first day, when several of the brokers that went online, including Nomura Securities, Orix, E*Trade, and DLJ direct, received complaints ranging from interminable connection delays to difficulties accessing order pages. Industry watchers say the problems were caused primarily by the lack of line capacity.

Monex clients had trouble logging on to the trading site on its opening day. Further system troubles preventing orders from going through occurred during a busy morning on October 18. Matsui Securities, one of the first trading houses to go online (it did so before deregulation), also had problems updating its system, and was unable to accept orders for a one-hour period on October 4. Due to an unstable system environment, Japan Online Securities had to postpone its service start date from mid-November 1999 to January 21, 2000, disappointing the 3,000 subscribers who had already signed up for the service.

Most of the problems could have been avoided if the number of new users had been accurately forecast. According to Bloomberg, the number of online traders in Japan rose from 200,000 at the end of September 1999 to 380,000 by the end of November, thus almost doubling in a two-month period. Figures are certain to climb as Japanese investors become increasingly wired.