February 3, 2021 | AtoZ Markets – London-based brokerage firm IG Group has suspended new account opening due to technical problems associated with extreme market volatility in some stocks.
The coordinated action of retail traders on the popular WallStreetBets Reddit thread brought to its knees many of the major hedge funds that have been short in stocks like GameStop, AMC Entertainment and a few others.
These securities rose sharply, which led to the unwinding of the bullish trend. New traders were rushing to join the pump for quick profits. However, this influx of customers has disabled many trading platforms, including the IG Group.
“We are at the epicenter of a storm in global markets as it continues to drag in new traders who want to sign up on platforms to continue coordinated purchases of certain stocks,” IG Group CEO June Felix explained in a letter to clients." This has resulted in a significant increase in trading volume and increased demand for our platform."
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He acknowledged the company's responsibility for service disruptions and assured clients that he would take action to prevent such situations.
IG Group suspended New Accounts Opening To focus On Existing Customers
While most measures to restore services are commonplace, the suspension of registrations looks odd and can cause anger.
“We have temporarily suspended opening new accounts to focus on serving our existing clients at the level they deserve,” the letter said.
Earlier brokerage companies such as Trading212 also suspended registration of new clients, noting that they could not cope with the load. Meanwhile, TradeZero registered an average of 200 times more invoices per day last month than it did in 2020.
IG is one of the many brokers that have suspended trading in volatile stocks like GameStop.
“We will continue to closely monitor this rapidly changing situation. We will take additional measures if necessary and try to remove any trade restrictions as soon as possible, ”added Felix.
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