E-Trade Suffers Outage

By JEFFREY SCHWARTZ

In the latest of a series of problems faced by brokerages that offer online trading, E-Trade Securities Inc. was unable to execute trades for more than an hour this morning.

A spokeswoman for E-Trade confirmed the outage, which took place between 10:15 and 11:29 ET. An overnight software update to its trading system was to blame, she said.

"As soon as we identified the problem we backed it out," the spokeswoman said. "This had nothing to do with capacity, it was just not good luck."

Nevertheless, E-Trade senior vice president and CIO Debra Chrapaty told InternetWeek in late December that E-Trade would be ready to handle any transaction loads that might come its way this year. "I can say that without reservation," she said at the time.

But online trading volumes were up 34 percent in the last quarter, to 340,000, said Bill Burnham, electronic commerce analyst for Credit Suisse First Boston Corp. In a report released last week by CS First Boston, E-Trade gained 0.9 percent market share. It ranks No. 3 behind Charles Schwab & Co. and Waterhouse Securities, both of which have reportedly experienced some glitches with their systems in recent weeks.

Analysts said with such unpredictable volumes, such outages are often unavoidable; but for the most part, it will not dissuade customers from trading online. "It's always going to happen once in a while, but I don't think it's a deep-rooted problem," said Octavio Marenzi, an analyst at Meridien Research, which tracks brokerage technology.

For its part, E-Trade said such outages are unacceptable--today's situation notwithstanding. "We have strict quality standards when changes are made," the E-Trade spokeswoman said. "Something happened where we didn't meet the standard and that's what we are investigating."

She would not say the specific nature of the upgrade other than to say that it only affected its trading operation, not the rest of its site.

Much of E-Trade's transaction processing centers around BEA Systems' M3, the object-oriented implementation of Tuxedo. It was not clear if that had anything to do with today's outage.

Acknowledging the surge in volumes, the spokeswoman said E-Trade will be cutting over its third trading facility next month. That operation will be in Georgia.