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Don't expect to trade instantly at all times, warns AJ Bell boss

Michael O'Dwyer
·3-min read
Andy Bell
Andy Bell

The boss of AJ Bell has warned customers to expect future blackouts on his trading platform at times of market turmoil, after thousands of users were unable to rapidly buy and sell shares when markets rocketed on vaccine results last month.

Andy Bell said that the firm's 295,000 customers should be prepared for hold-ups if demand surges when there are major share price moves.

It comes after AJ Bell and rivals such as Hargreaves Lansdown suffered delays that prevented customers from buying and selling shares on Nov 9 as markets soared and trading volumes surged following confirmation of the first viable Covid-19 vaccine and rising expectations of Joe Biden becoming US president.

Many users complained they missed out on a chance to cash in as a result.

Mr Bell said: “It is probably somehow [about] managing the expectations of customers that when the market gets [extremely busy] they will not be able to trade. And it may be for a short period of time - a few hours - but there will be times when it just is not possible.

“Like any functioning market, it will close down in times of volatility."

He said the Nov 9 problem was caused largely by a backlog when market-makers refused to allow trades to go ahead amid massive uncertainty, rather than because of IT problems at his firm. 

Mr Bell said: “We want to make sure that we get things right, but I'm not sure what would have been different for a lot of that period where the market-makers stopped offering us quotes." 

Several platforms in the US and UK suffered delays on the day but some avoided problems, including AJ Bell competitor Interactive Investor. 

Cliff Weight, a director at retail investor group ShareSoc, urged AJ Bell and Hargreaves Lansdown to make sure there is enough capacity for surges in demand.

He added: "They have prioritised the demands for short term profitability over long term investment. ShareSoc is not only concerned about the issue about being able to trade, but also the levels or liquidity and the spreads that apply. When the busy trading days happened, spreads widened and ShareSoc is concerned that individual investors may have been short changed in the mayhem that occurred."

AJ Bell and rival IG have both enjoyed share price jumps during the pandemic, though Hargreaves Lansdown has slipped.

Mr Bell’s comments came as his firm announced a 29pc rise in pre-tax profits to almost £49m for the year to September. Revenues jumped more than a fifth to £127m. 

It attracted a record 63,200 new customers, taking its total to more than 295,000. This was helped by a rise in the number of new customers under 40 - a group it targeted in marketing campaigns. 

The investment platform declared a final dividend of 4.66p a share, increasing total payout for the year by 28pc in line with its policy of handing out two-thirds of profits to shareholders. 

Mr Bell defended the decision to reduce exit fees for customers leaving the platform, instead of abolishing them as some rivals had done. He said transferring shares to another company carried a cost and this should be borne by those customers who chose to leave rather than through higher bills for everyone. 

Shares in AJ Bell rose close to 5pc to 444p, slightly above where they started the year.