London-listed IG Group (LON:IGG) has suspended the opening of new accounts as the trading platform is facing technical issues with the ongoing frenzy with some stocks.
The coordinated short squeeze by the amateur traders on popular subreddit, WallStreetBets has brought many major hedge funds to their knees, which held short positions on stocks like GameStop, AMC Entertainment and a few others.
The pump skyrocketed the value of these stocks and more and more retail traders jumped in the frenzy to take quick profits. However, this broke the technical backbone of many platforms, including IG Group, which had multiple outages.
“We are in the midst of an unfolding situation in global markets which is attracting a significant number of new traders to trading platforms to buy particular stocks in a coordinated way,” IG Group CEO, June Felix wrote in a letter sent to the platform’s clients.
“This has caused a significant increase in trading volumes and demands on our platform.”
He acknowledged the disruption of services on the part of the brokerage and assured the clients of implementing measures of further disruptions.
A Tough Time for Brokers
Though most of the service restoration measures are usual, the suspension of the new accounts is an odd one and might result in some backlash.
“We have temporarily paused new account opening so that we can focus on providing our existing clients with the service they deserve,” the letter read.
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Earlier, brokerages like Trading212 suspended onboarding new clients with a massive influx of new traders. On the other hand, TradeZero registered 200 times more average daily accounts last month, compared to 2020.
IG is one of the many brokers which suspended trading with volatile stocks like GameStop and will continue to keep the suspension intact.
Due to extreme volatility, and to prioritise the service we give our existing clients, we are not allowing any new positions to be opened on the US stocks GameStop and AMC Entertainment.
These restrictions will be reviewed regularly.
— IG (@IGcom) January 30, 2021
“We will continue to closely monitor this quickly evolving situation. We will bring in additional measures if necessary and seek to remove any trading restrictions as soon as possible,” Felix added.