An Update from Robinhood’s Founders • Hacker News Board

Re: An Update from Robinhood’s Founders

#131

Post by 0xDEEPFAC » Wed, Mar 04, 2020, 5:59 AM UTC

"Multiple factors contributed to the unprecedented load that ultimately led to the outages. The factors included, among others, highly volatile and historic market conditions; record volume; and record account sign-ups. "

What a sad press release, I am sure people at their corporate office were sweating over this. The long and short of it is that users trusted the service would work and had possibly a great deal invested only to get a comment when everything breaks down deflecting blame "OMG we weren't prepared for what our users did!"

We live in a sad state of software. I expect things like this and the Equifax scandal to continue if things like software security, reliability, and performance aren't taken into account.

Re: An Update from Robinhood’s Founders

#132

Post by hcknwscommenter » Wed, Mar 04, 2020, 6:03 AM UTC

solidasparagus wrote: post #42

jennyyang wrote: post #34

I know quite a few people that were personally affected by this and lost money due to the two outages and they are all pulling their money from Robinhood. The fact that they can't offer any compensation might be a big problem for them, since they already have zero trading fees, which is what most brokerages offer as compensation. Personally it doesn't pass the smell test for me. The load was much higher the previous…

Failures due to high load can take a while to resolve - you often need to fix the broken infrastructure, process the backlog, and catch up to live.

You can't process the backlog on a trading platform. If i put in a trade at 2:20 pm and the system goes down, I don't want my trade to execute next morning at market open. That's insane. Especially the RH flavor of YOLO infinite leverage call option nonsense.

Re: An Update from Robinhood’s Founders

#133

Post by hcknwscommenter » Wed, Mar 04, 2020, 6:05 AM UTC

asah wrote: post #75

throwsprtsdy wrote: post #48

Earlier quoted context omitted.

I think it's unlikely that Robinhood (or any brokerage) would compensate people for losses on hypothetical trades that could have been made during an outage. Such a policy would allow customers to pick their entry and exit points, and extract money from the brokerage at will. Even if the trades were well-defined at the time the outage occurred, there would still be an asymmetry between people demanding compensation o…

Are expiring in-the-money options a "hypothetical trade" ?

Absolutely. Why wouldn't they be?

Re: An Update from Robinhood’s Founders

#134

Post by hcknwscommenter » Wed, Mar 04, 2020, 6:09 AM UTC

0xy wrote: post #8

Still silence on the traders who lost tens of thousands of dollars? Are they going to be compensating or not? This blog post doesn't appear to say anything. It's not an apology, it's not an explanation, it doesn't say what they're going to do in response. This is after the incident in which there was no status updates or support availability for multiple hours of time. Why can't they commit to updates every hour or e…

Dude. They are NOT compensating. This is clear.

Re: An Update from Robinhood’s Founders

#135

Post by hcknwscommenter » Wed, Mar 04, 2020, 6:10 AM UTC

0xy wrote: post #46

SkyPuncher wrote: post #28

Earlier quoted context omitted.

I'm having a really hard time understanding this argument. Unless I have an SLA with a provider outlining penalties, they don't owe me anything if they go down. How is this any different?

The difference is regulation. There are very few regulations and oversight on cloud compute providers, whereas an average person cannot just spin up an app and begin selling securities in a month as you can being a cloud provider. While RH's ToS does theoretically absolve them of technical issues, they are obligated to comply with 'best execution' securities mandates, no? Separately, it'd be extremely bad for busines…

You mean "case-by-case" denial delay and obfuscation.

Re: An Update from Robinhood’s Founders

#136

Post by radicaldreamer » Wed, Mar 04, 2020, 6:16 AM UTC

hcknwscommenter wrote: post #132

solidasparagus wrote: post #42

Earlier quoted context omitted.

Failures due to high load can take a while to resolve - you often need to fix the broken infrastructure, process the backlog, and catch up to live.

You can't process the backlog on a trading platform. If i put in a trade at 2:20 pm and the system goes down, I don't want my trade to execute next morning at market open. That's insane. Especially the RH flavor of YOLO infinite leverage call option nonsense.

Exactly, you have to default to fill or kill within the trading day. You just can’t treat certain products like a standard queue... sometimes time is the most important component

Re: An Update from Robinhood’s Founders

#137

Post by triceratops » Wed, Mar 04, 2020, 6:19 AM UTC

idnefju wrote: post #31

triceratops wrote: post #11

Earlier quoted context omitted.

> I think they have really democratized stock trading I would think Vanguard did that already. Most people should be trading ETFs, not individual stocks.

I believe you still need a broker for ETFs, which usually carry brokerage fees.

Vanguard doesn't charge brokerage fees for their own ETFs. They also went fee-free for individual stocks this year.

Re: An Update from Robinhood’s Founders

#138

Post by dehrmann » Wed, Mar 04, 2020, 6:24 AM UTC

Itsdijital wrote: post #86

benmanns wrote: post #79

Earlier quoted context omitted.

Additionally Robinhood self clears options (or for some other reason?) and does not charge the Options Clearing Corp fee of $0.055/contract or the Options Regulatory Fee of $0.0388/contract which all other brokers charge (incl. ones with $0 or flat rate commissions/fees like WeBull, Gatsby, Tradier). All you pay is the FINRA and SEC fees on sells of about a penny each for small trades. Actually, if anyone knows of an…

Trust me, please trust me, you really really really want to be paying a competent broker when trading options. If it's chump change you're trading, sure, use RH. If it's serious money, the $0.65/contract or whatever pays for itself many times over. Even if it's just the ability to regularly get filled between the spread it pays for itself.

I've always been told trading, but especially trading options, is asking the big boys to take your money.

Re: An Update from Robinhood’s Founders

#139

Post by ivalm » Wed, Mar 04, 2020, 6:29 AM UTC

titanomachy wrote: post #38

SkyPuncher wrote: post #28

Earlier quoted context omitted.

I'm having a really hard time understanding this argument. Unless I have an SLA with a provider outlining penalties, they don't owe me anything if they go down. How is this any different?

You could view it as a business decision. Will they lose reputation and customers if they don't compensate for the outage? Do they expect that the long-term cost of that loss would be more than the one-time hit of paying out now? They may not have a legal/contractual obligation here, but that doesn't mean that treating their customers poorly is without consequence.

Almost certainly they cannot compensate. If average user lost $1k that's a cool $10b they would need to compensate.

Re: An Update from Robinhood’s Founders

#140

Post by ivalm » Wed, Mar 04, 2020, 6:31 AM UTC

endorphone wrote: post #54

cdurth wrote: post #21

Earlier quoted context omitted.

Yesterday was the largest upswing in market history and the entirety of RH missed out.

The close of today is effectively the open yesterday, so everyone is back where they were. Of course the problem with the "compensate me" arguments is that a lot of people were going to make decisions that would have turned out poorly yesterday (indeed, the market is balanced and every transaction has a counterparty), though of course with the amazing clarity of hindsight few would recognize or admit that. So if they…

Lots of RH are gamblers with short term options. Today's implied volatility and time-value for those options is way lower.