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Betterment shut down trading post-Brexit to dodge 'trading blindly into extraordinary volatility'

The New York-based robo takes a 150-minute time-out saying to do otherwise would have been 'irresponsible'

Author Lisa Shidler June 24, 2016 at 7:08 PM
no description available
Tom Kimberly: Given the magnitude of today's news and the corresponding market reaction, we have elected to suspend trading during this initial period of increased volatility.


Bill Winterberg

Bill Winterberg

June 24, 2016 — 8:07 PM

Visions of ETF trading and price dislocation on August 24, 2015 come to mind…



June 24, 2016 — 8:47 PM

Another reason why I pulled all of my money out of these robo advisors



June 24, 2016 — 9:46 PM

Particularly bad decision on the part of Betterment imo. It’s one thing to discourage irrational trading through an email, it’s wholly another to dis-allow trading altogether based on their discretion. Maybe it’s in their client retail & institutional relationship agreements, but I’ve got to think they run the risk of exposing themselves to lawsuits at some point in the future.

I think the next few months should be particularly interesting times for the robos generally.

Aidan Yeaw

Aidan Yeaw

June 24, 2016 — 11:05 PM

This is a really bad precedent for Betterment. This can quickly become a slippery slope.

From Betterment’s website:
“Many investors believe (or act as if they believe) they can beat the market through timing their deposits or asset allocation.”
Do as I say not as I do, eh Betterment?


Tad Borek

Tad Borek

June 25, 2016 — 12:46 AM

There is no doubt more to the story for why trading was suspended until noon. Looking at the usual suspects, ETF volatility appeared to be extremely high only very early in the trading day, within the 30-minute window mentioned as being off limits normally. What’s the reason for the next two hours’ suspension? Pull up price charts, it looks like normal intra-day price discovery. And while the delay may have (by chance) benefited buyers, for anyone selling, a VWAP that included the period before noon would be higher than a VWAP including only the period from noon onward (in English, selling later netted less money on average).

Since the dawn of robo-ETF-allocators my question has been: can they block trade ETFs in volume? Especially, on days like June 24, 2016 when trading and market microstructure gets interesting.



June 26, 2016 — 11:12 PM

Things are not challenged when all is well…they are challenged when all is not so well (stress for example). This stuff just doesn’t work…some class action legal team is licking their chops. Good luck



June 27, 2016 — 12:58 AM

Follow the money. Or resources, or lack thereof?

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Mentioned in this article:

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

Betterment, LLC
Financial Planning Software
Top Executive: Jon Stein

Top Executive: Tom Kimberly

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