Inaccessible securities accounts, unstable trading apps, and then not even answers from customer support: the neobroker Trade Republic recently experienced its Waterloo, when erratic US tariffs policy resulted in major fluctuations on the markets. Many customers wanted to do what one does in such market phases – reallocate the portfolio to either take advantage of short-term trading opportunities, or to sell in order to weather-proof the portfolio for continued volatility.

The problem: many customers were unable to access their securities accounts for several hours on 7 and 9 April. This took on considerable dimensions on these two trading days and can be seen from the disruption reports measured via online portals, as well as the extensive complaints from customers on social media. Even people who are well disposed to Trade Republic are now looking for alternative brokers. „Growth is great, but reliability is essential,“ said one user in a post on LinkedIn that attracted a lot of attention. Many other reports of shortcomings were also left in the comments.

Many investors have come to the conclusion that you basically need more than one securities account to be able to act – and as can be heard in the market, other brokers have taken on more new customers in recent days, who can now register, go through the identification process, and then start the transfer of their securities account. However, there are BaFin requirements for this: The process can take a maximum of three weeks.

BaFin asked those institutions that experienced technical faults to comment on the problems and their causes. This is linked to a request to rectify any faults or impairments as quickly as possible. The institutions contacted must now respond, and had better have good explanations, as BaFin is likely to focus on taking supervisory action. Trade Republic had already experienced restrictions in trading four years ago during the Gamestop hype, when it was hardly possible to determine the price of individual highly volatile shares.

In addition to Trade Republic, several other brokers were also affected, most notably Scalable Capital. But ING and Deutsche Bank also experienced restrictions. Only FlatexDegiro and Tradegate actively reported that they had significantly increased volumes while everything could be processed without any problems.

This brings one circumstance into focus: a brokerage platform must be designed in such a way that it can absorb trading spikes – both on the settlement side and with regard to the volume in the app, where access to the securities account and thus to the trading orders must be available. This raises the question of whether there are any shortcomings in the market structure now that the number of German shareholders has risen to 12 million in recent years (+20% compared to 2018).

Tradegate has adopted the following approach to ensure the platform's performance: After the last trading spike in November 2021, which resulted from the uncertainties surrounding a new corona variant, capacities have been significantly increased, Karsten Haesen, member of the Management Board at Tradegate AG, told Börsen-Zeitung. Taking the 2021 peak as a benchmark, Tradegate ensures that a volume four times as high as on that day can be processed. „This is a safeguard for the future – and you have to add to it on a rolling basis in order to be prepared for future peak loads.“ On the two busiest days in the week beginning 7 April, volume was twice as high compared to the old peak in 2021, says Haesen. Thanks to the capacity expansion, Tradegate was able to perform well.

However, Haesen also points out that it is impossible to be prepared for all exogenous shocks – for example if an excavator damages electronic infrastructure, as happened years ago at Frankfurt Airport. And what happened in trading recently is something he has never experienced in over 20 years on the stock exchange.

Wesselin Kruschev from the banking consultancy Capco emphasises that there are many young customers on the neobrokers' platforms who have never experienced a real drawdown, in other words a sharp downward market reaction. Accordingly, many do not know how to deal with this, especially those who primarily invest in ETF savings plans. He sees the cause of problems at peak times in the server infrastructure, which is not properly designed. Maintaining additional capacity is expensive, but essential. Kruschew expects that BaFin will oblige individual providers to do just that. „The regulator should then send letters and write a few things into the brokers“ requirements," he says.