The future of online trading could be in doubt as the New York Attorney General launches an investigation into the industry following as a number of glitches with US online brokerage Etrade.
Etrade, the world's third largest online brokerage, suffered an outage on two consecutive days preventing customers from accessing their accounts or customer service.
The company on Thursday issued a statement saying the problems were caused by a software upgrade malfunction and not trading volume or system capacity, a problem which has previously hit rivals Charles Schwab and Waterhouse Securities.
The New York State Office of Attorney General Eliot Spitzer will be sending letters to online brokers asking them to co-operate by providing documents, reports and other information regarding their services.
US congressmen also expressed concerns on Thursday about the reliability of online stock trading.
One of the selling points of online trading is that it allows the customer to be confident they are actually buying at the price they see on-screen, in real time. However, according to the Spitzer?s office, customers have complained of losing thousands of dollars due to slow trading.
?The public knows there are always risks involved in investing in the stock market, but part of that risk should not include questions about whether trades will be executed promptly or whether online brokerage firms can deliver on the services they?ve promised,? said Spitzer in a statement.
There is much hope for online trading, but reports of complaints received about frequent system crashes, server unavailability and long delays in executing trades could hinder further success, particularly in Europe where the Web is a less established medium for trading.
US company Charles Schwab has already set up in Europe and a UK launch for Etrade is planned for the first half of this year. Etrade UK Holdings will be a joint venture with Electronic Share Information (ESI) and has signed up PSInet as the service provider. (See 'Newswire' 12 June 1998)
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