ADP upgrade glitch causes online trading problems

Problems with a routine upgrade of mainframe software at Automatic Data Processing Inc. (ADP) caused a system crash on Nov. 3 that temporarily left customers of at least five brokerages unable to get real-time updates of key information such as the cost of the online stock trades they were making.

Officials at Roseland, N.J.-based ADP, which claims its brokerage services business processes 25 per cent of the online stock trades in North America, this week confirmed that technical problems with one of the company’s computers disrupted the transaction-matching system it uses to track incoming buy and sell orders.

Two New York-based brokerages, Quick & Reilly Inc. and TD Waterhouse Group Inc., said they were affected by the system crash. ADP spokeswoman Arlene Driscoll said five brokerage firms took the company up on its offer to help update-trading records during the weekend of Nov. 4.

However, Driscoll refused to specify the number of financial services firms that were affected by the problems or even to say how many brokerage clients ADP has. She also declined to release specific details about the cause of the system crash, beyond saying that it occurred while workers at ADP were installing a “mainframe-based software upgrade.”

ADP immediately contacted its clients about the problem and repaired the so-called order-match system after the stock markets closed on Nov. 3, Driscoll said. The company then offered to help all affected clients update their records, she said.

ADP didn’t disclose the names of the five brokerages that asked for assistance.

Glitches Happen

Customers of the brokerages were still able to make trades while the transaction-matching system was down, but they couldn’t receive immediate confirmation of the cost of their trades. Quick & Reilly said its customers were also unable to get confirmation that their trades were being made, forcing the company to manually issue notices to that effect.

Larry Tabb, an analyst at TowerGroup in Needham, Mass., called the incident “a fluke” and said he hadn’t heard of many similar technical problems at ADP.

“ADP has a pretty good track record,” Tabb said. Such glitches are typical during upgrades, he added, because complete testing and performance modeling is “virtually impossible” because of the massive amounts of information involved.

Rob Sterling, an analyst at Jupiter Communications Inc. in New York, said he agreed. “Technical glitches do happen,” Sterling said.