An Update from Robinhood’s Founders • Hacker News Board

Re: An Update from Robinhood’s Founders

#41

Post by conanbatt » Wed, Mar 04, 2020, 2:06 AM UTC

ska wrote: post #14

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…

I agree the level of feedback isn't great, but what would people be compensated for? Did they misplace actual orders?

You couldn't execute or cancel orders.

Re: An Update from Robinhood’s Founders

#42

Post by solidasparagus » Wed, Mar 04, 2020, 2:08 AM UTC

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.

Re: An Update from Robinhood’s Founders

#43

Post by cx4life » Wed, Mar 04, 2020, 2:09 AM UTC

majormajor wrote: post #27

cdurth wrote: post #21

Earlier quoted context omitted.

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

"Missed out" doesn't seem like the right phrase here. If you already owned the stock, you still held it, no? So people who were going to continue to sell off got lucky that they couldn't make that trade, and people who were going to buy got unlucky? Does anyone seriously expect compensation, or think that it's deserved, or is it group wishful thinking? How would it even work? Would they just take people's word for th…

There could be folks holding leveraged Bear ETFs or similar after last week's downturn, who were waiting to see how the market moved Monday morning to decide whether to sell or hold. I could see those folks losing quite a bit of money due to the inability to sell off those types of positions after the market reversed course on Monday.

I suspect you're right though, that it's mostly sour grapes concerning the opposite case - inability to buy as the market rallied.

Re: An Update from Robinhood’s Founders

#44

Post by solidasparagus » Wed, Mar 04, 2020, 2:10 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.

That one-time hit would be massive. With the benefit of hindsight, everyone is going to say they lost money by missing the perfect trades.

Re: An Update from Robinhood’s Founders

#45

Post by tbrock » Wed, Mar 04, 2020, 2:16 AM UTC

ra1n85 wrote: post #32

ajsharp wrote: post #24

Earlier quoted context omitted.

Wait, what?? There's an invisible DNS server running inside your VPC? I get what you're saying wrt cached DNS lookups but this seems wild.

It's a DNS resolver that runs on the hypervisor hosting every instance.

Yes and they limit you to throwing 1024 packets per second per network interface at it.

Of course you could run your own dns cache per host/pod whatever.

Re: An Update from Robinhood’s Founders

#46

Post by 0xy » Wed, Mar 04, 2020, 2:16 AM UTC

SkyPuncher wrote: post #28

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…

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 business if they refused compensation.

The point is moot anyway, since they're offering "case-by-case" compensation.

https://techcrunch.com/2020/03/03/robinhood-outage-cause/

Re: An Update from Robinhood’s Founders

#47

Post by ksherlock » Wed, Mar 04, 2020, 2:17 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.

With mutual fund companies, including Vanguard, generally you can open an account directly with them and buy directly from them (including partial shares, automatic monthly purchases, and dividend/capital gain reinvestments).

Re: An Update from Robinhood’s Founders

#48

Post by throwsprtsdy » Wed, Mar 04, 2020, 2:25 AM UTC

dilly_li wrote: post #20

Start from the email notification. They have been asking themselves the easy questions. Just look at the top questions in their email: * Are the funds in my account safe? Yes, your funds are safe. * Was my personal information affected? No, your personal information was not affected. * Can I use my Robinhood debit card? Yes. If you have a debit card, you should have been—and should still be able to—use your card, but…

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 on their profitable trades while eschewing losses on their bad trades. It's doubtful any brokerage would be willing to eat that.

Execution risk is a risk.

Re: An Update from Robinhood’s Founders

#49

Post by GaryNumanVevo » Wed, Mar 04, 2020, 2:53 AM UTC

tempsy wrote: post #36

Sad that there isn’t an actual apology anywhere to be found in the letter at all. And now with the fed rate cut the interest on cash is only 1.3%, with more cuts expected later in the year, which was the last big differentiator. I don’t see how they don’t see massive net withdrawals going forward.

Yeah because if they're culpable then they can be sued via class-action