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About a month ago I posted a note here asking for brokerage
recommendations for a large account at a firm which would offer highly
reliable internet order entry service, readily available phone backup
for the internet order system, accept stop orders for both NYSE and
NASDAQ stocks, and provide a linked money market account with
competitive rates. After a couple of months of using the brokerage
service at Vanguard, we had become exasperated and needed a better
alternative.
We received quite a number of recommendations to use Fidelity Brokerage.
After what we thought was a thorough investigation, we funded a trial
account with Fidelity. Last night (28Sep) we attempted to enter our
first order - a limit order to purchase BGP at $14 - NYSE: Borders Group
closed 28Sep at 13 3/4. The Fidelity order system rejected the order
claiming that the price was too far away from the market, which of
course was closed. Checking the market we saw a bid of 1/32 and ask of
27 1/2 - it is common for most NYSE small and mid-cap stocks to display
after hours bid of 1/32 (or 1/64) and an ask which is double the closing
price e.g. RBK, CDN, NBR, and so on.
On contacting a Fidelity customer service supervisor last night we were
told that the problem was in the quote vendor's b/a stream and that the
order process was out of Fidelity's control. We proceeded to place the
order on Vanguard Brokerage with no more inconvenience than a warning
that the limit was above the last trade.
This morning we spoke to a Fidelity trading supervisor who told us that
limit orders more than 30% away from the ask are rejected, that this is
for the protection of Fidelity customers (how they are protecting
customers by rejecting limit orders which are under the ask is beyond
me), and that there is nothing they can do about it, however their phone
reps will accept such orders at the phone commission rate.
Alternatively, we could wait to enter such orders until shortly before
the open when these spurious b/a quotes are cleared. I again pointed out
the absurdity of rejecting limit orders when the b/a spread is obviously
spurious and the limit is close to the last trade. I also pointed out
that internet based order entry is for the convenience of customers and
that I see no reason why I should be unable to prepare my orders during
the evening when it is convenient for me.
The general attitude (not unique to Fidelity) seems to be that that's
the way the systems are programmed and far be it for any human being to
use common sense and of course God-forbid that a customer should
actually be able to actually reach a corporate executive who might fix
such stupidity. Aside from the frustration of this particular experience
at this particular firm, I find it frustrating that every firm seems to
have a "gotcha" which is impossible to anticipate and discover prior to
going through the hassle of opening an account.
Earl
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