The impact of COVID-19 on markets and DEGIRO

The COVID-19 virus is having an immense impact on people’s health, financial situations and day-to-day living. As most of you are aware, markets across the world have also been heavily affected. Moreover, due to these market conditions DEGIRO is experiencing a surge in new clients onboarding. This in combination with measures concerning COVID-19, has affected our service capacity and it takes us longer to respond to phone calls and e-mails.

Impact on financial markets

Aside from the health concerns, the actions taken to combat the disease are impacting the economy and the financial markets. During these turbulent and unprecedented times, markets are constantly responding to the situation at hand and continue to make headlines.

On the 12th of March, the STOXX Europe 600 saw its worst one-day drop, closing 11% lower than the day before. This occurred after the US banned travel from Europe and the decision of the European Central Bank (ECB) to not change rates. On this same day, the Euro STOXX Volatility Index, which is considered to be a fear gauge, hit its highest level since 2008. Four days later, on the 16th of March, the STOXX Europe 600 fell 4.5% to its lowest since 2013.

Before the COVID-19 outbreak, the US markets were setting all-time high records. For example, since 2009, the S&P 500 was in its longest running bull market. This came to a halt on the 12th of March when the S&P 500 entered into a bear market. A bear market occurs when prices fall more than 20% from recent highs. Other major US indices, such as the Dow Jones Industrial Average, are also experiencing lows. On the 17th of March, the Dow saw its worst day since ‘Black Monday’ in 1987.

Trading halted

So far this month, US markets have seen 4 circuit breakers. Circuit breakers are intended to curb panic-selling and calm the markets. There are 3 different levels of circuit breakers, depending on how much an index drops. The four mentioned circuit breakers have all been level 1. With a level 1 circuit breaker, if the S&P 500 drops more than 7%, trading is halted for 15 minutes. The last time a circuit breaker was triggered was in 1997.

Ban on short selling

While trading has been halted on US markets for short periods of time, some European governments are taking measures of their own. Spain and France have both implemented one-month bans on shorting and Italy has imposed a three-month ban on short selling.

Impact on DEGIRO and services

Like the vast majority of businesses, we have to take measures in response to the COVID-19 virus. It is our responsibility to ensure that business runs smoothly as usual for you as our client, while also prioritising the well-being of our employees. In an effort to control the big increase of clients and service our existing clients, we have put our marketing campaigns on hold where possible.

While we are making our best efforts to limit disruptions in our services, there have been a few changes/implications which we kindly ask you to take into account:

Long queues for phone calls and e-mails

We are reorganising our Service Desk processes to mitigate COVID-19 risks, which limits our capacity. Because of this, our Service Desk´s response times are longer than usual. We are working as hard as possible to minimise these wait times and appreciate your patience and understanding.

If you would like to contact our Service Desk as this point, please send us an e-mail instead of calling. We also invite you to visit our Help Centre to find answers to some of the questions you may have.

Temporary limit on new registrations

The significant increase in client registrations and the reorganisation of departments and processes to mitigate COVID-19 risks for our employees have limited our capacity. To focus on our core task of helping existing clients with their trading activities and related questions, we have decided to create a waiting list for new registrations.

Suspension of all (new) portfolio transfers

Additionally, we have decided to suspend all new requests for portfolio transfers. We want to make sure there are no lengthy delays in the portfolio transfer process which would also pose a risk for the client in today’s volatile markets.

Delay in the US subscription introduction

Last year, we promised a new US subscription model to trade US stocks for $2.50 a month without transaction costs. Unfortunately, we now have to delay the introduction of this offer. As soon as there is an update, we will inform you.

We hope that you, your loved ones and your community remain healthy and strong during this period and thank you again for your patience when contacting our Service Desk.

The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks. You can lose (a part of) your deposit. We advise you to only invest in financial products which match your knowledge and experience.

Sources: Bloomberg, Reuters, Time, Financial Times