Robinhood faces third outage since start of last week

Robinhood, the stock trading app, suffered its third outage since the start of last week as US stocks fell sharply when trading opened on Monday.

Trading in stocks, options and cryptocurrencies faced a “major outage”, the firm stated on its website. “We are working to resolve this issue as soon as possible.”

The outage is the third large scale disruption to the popular stock trading app after service was down for all but a few minutes of the day last Monday. The following day, the platform suffered a two-hour disruption after the Federal Reserve unveiled its surprise 0.5 percentage points cut to interest rates.

The disruption occurred after US stocks dropped 7 per cent in the first few minutes after the market opened, triggering a circuit breaker that paused trading for 15 minutes. When trading resumed, stocks trimmed their losses to a drop of 5.5 per cent in mid-morning in New York.

The outages have sparked broad criticism online from Robinhood customers who have threatened to sue the company and join rival platforms. The first lawsuit was filed against the group on Thursday in federal court in Florida.

Last week, Robinhood warned of more disruptions to trading as it addressed the underlying issue that has caused the outages, which relates to the heavy trading volume overcoming its domain name system, a core part of its infrastructure that helps one computer talk to another.

Finra, the US regulator, has contacted the company and is monitoring the situation, it said in a statement to the Financial Times last week.

The outages put new pressure on the start-up, which reached a $7.6bn valuation in its last round of fundraising. The company was among the first to offer free trading in US stocks, a move larger retail brokerages have mimicked, increasing the competition for customers.